The inability to achieve a bipartisan compromise on tax and spending is a failure of epic proportions.
New York, New York (PRWEB) December 31, 2012
Forefront Capital CEO Brad Reifler and other Wall Street executives are preparing to move forward with their 2013 business and capital spending plans, despite the increasing likelihood that Congress may not be able to arrive at a bipartisan compromise to avert the looming fiscal cliff –a dramatic combination of spending cuts and tax increases that will affect most American taxpayers when the clock strikes midnight on December 31, 2012.
“The inability to achieve a bipartisan compromise on tax and spending is a failure of epic proportions,” says Brad Reifler, whose fast-growing asset management company is looking to increase business investment and hiring in the coming year. “Other business leaders I have spoken to are not going to wait to see what Congress and the President may or not be able to cobble together before year end, but are proceeding with appropriate caution and restraint and hopeful that it won’t take a severe market correction to compel a budget deal.”
In addition to a variety of spending cuts that will affect defense and nondefense spending, the expiration of tax cuts passed by George W. Bush to improve the economy, will result in the largest tax increase in American history.
Income tax rates are projected to rise to 15%, 28%, 31%, 36% and 39.6%, up from 10%, 15%, 25%, 28%, 33% and 35% today. The tax rate imposed on capital gains would rise to 20% from 15% for most taxpayers. The tax rate on qualified dividends would rise to the top marginal income tax rate (39.6%) – more than twice the 15% rate paid by most taxpayers. The estate tax exemption falls to $1 million from $5 million; and the estate tax rate rises from 35% to 55. Other significant changes that will come along with a fall from the fiscal cliff will impact the Alternative Minimum Tax (AMT).
“The Social Security tax rate will jump to 6.2%, from 4.2%, on the first $110,100 in wages hurting America’s middle class the hardest,” says Brad Reifler, “let’s hope we don’t witness our Congressional leaders and President squander the historic opportunity to pave the way for meaningful, long-term reform.