The 9 Layers of the Fiscal Cliff

fiscal cliffI sat in on a presentation yesterday by DoubleLine portfolio manager Jeff Sherman.  There were several interesting things that came out of the discussion, including the below chart on the fiscal cliff.  The chart shows two things:

1. The tax increase which will come if there is not a compromise on the fiscal cliff, divided into 5 groups.  Each group represents 20% of tax payers, with the 1st column on the left representing the bottom 20% of earners and the 5th column from the left representing the top 20%.  It then breaks out what the increase would look like for the 99%, the 1%, and all tax payers combined.

2.  Then it takes the increase for each group, and breaks it down by the 9 different components of the fiscal cliff.

The purpose of the slide was to show how many different groups of taxpayers this affects and how many different components there are two negotiate before any real solution is reached.  I think it also shows why there is almost no chance of any comprehensive agreement outside of kicking the can down the road in 2013.

Fiscal Cliff Breakdown

If you would like to see the full presentation you can find the slides here.  For more on the fiscal cliff go here.

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