Well, they made a deal, but I am not sure of all of the ramifications. I think it would have been better to go off the "fiscal cliff' instead of taking the miserable deal that President Obama agreed on.
Taxes will increase on people making over $400,000 and everyone will have to pay social security tax on the first $113,000 they earn every year.
I heard a lot of rich people belly-aching that increase taxes on them will prevent them from creating jobs (perhaps in China, as we all know they are not creating any here).
This is in spite of the fact that traditionally as taxes go up on the wealthy unemployment goes down. While economists have not been able to find a logical correlation for this it still has happened historically. I have a theory, I think when the wealthy start getting extra-taxes dumped on them, they create jobs in order to have the tax burden shifted off of them and back on to the middle-class and poor.
If my theory is correct and the increased taxes on people making over $400,000 a year is sustained, I think we could see unemployment drop within the next year or two.
I think things would have been even better if they had raised taxes on people making over $250,000 per year as originally proposed. Unless you live in California or the Northeastern/Mid-Atlantic United States, $250,000 per year is a lot of money. In any other place in the United States you would really be considered rich, because your cost of living is so low.
We will see how things will go with this deal, but frankly, I'm not very optimistic.
