Fiscal cliff deal extends low rates, but not for everybody

Back in 2010, Congress and President Barack Obama went to the mat over the expiring Bush tax cuts, and in that round the Republicans came out ahead. Two years later, in negotiations to avoid the fiscal cliff, the outcome is something closer to a draw.

Obama campaigned on keeping rates the same for lower incomes but increasing them for the wealthy. He agreed in 2010 to an extension for all incomes and in return won another year of unemployment benefits and a one-year reduction of Social Security taxes.

The threat of the fiscal cliff -- overnight spending cuts and tax increases starting in 2013 -- forced Obama and congressional Republicans back to the negotiating table. The deal struck on Jan. 1, 2013, permanently extended the low rates for families earning less than $450,000 and individuals earning less than $400,000. For taxpayers above those income levels, their rates return to the level under President Bill Clinton -- 39.6 percent.

Obama wanted tax hikes on incomes above $250,000 and $200,000, respectively. So in the final fiscal cliff deal, he won the tax hike on the wealthy, though at a higher income threshold than he sought. Republicans won an extension of the Bush-era rates, though not on all incomes as they wanted. On balance, we rate this a Compromise.