Now that congress has passed a deal to avert the fiscal cliff, it is important to look at how it will impact on average Americans.
Overall the deal was good for most Americans considering the alternative of massive tax increases and drastic spending cuts that would have occurred if there were no agreement.
The good news is that for 99 percent of Americans their income tax rates will not go up. Tax rates will go up only for individuals with income over $400,000 and families earning more than $450,000.
The downside is that President Barack Obama made raising tax rates on the top 2 percent or those with income over $250,000 a centerpiece of his campaign. This means less revenue for the government, less going toward reducing the deficit and the strong probability of more spending cuts to make up the difference.
Most Americans will still end up paying more federal taxes in 2013.
An estimated 77 percent of American households will face higher federal taxes in 2013 under the agreement, according to the Tax Policy Center, a nonpartisan Washington research group.
The Tax Policy Center estimates that households making between $40,000 will face an average tax increase of $579 in 2013. Households making between $50, 00 and $75,000 will face an average tax increase of $822.
The deal also delays sequester, a series of automatic cuts in federal spending, for two months. This means there will be another inevitable battle in Congress. Now that the debate over tax rates is over, Republicans will focus their attention on demanding deep spending cuts.
The agreement is good for most Americans for what it does not include as well. The age of Medicare eligibility will not be raised from 65 to 67 as proposed by some Republicans. The agreement does not include any cuts to Social Security, Medicare and Medicaid as advocated by Republicans.