The fiscal cliff uncertainty is causing fear in Americans and leading them to not purchase homes and cars. This fear is an unacceptable consequence of the lack of proper Congressional action. Our Congressional leaders need to protect taxpayers.
Houston, Texas (PRWEB) December 26, 2012
The term fiscal cliff refers to the possible economic effects that could begin to result in 2013 if existing laws are not changed by the end of 2012.
Such effects include spending cuts and tax increases along with a corresponding reduction in the US budget deficit. The deficit refers to the difference between what the government takes in and what it spends; and, if the fall off the fiscal cliff occurs, it is expected to be reduced by roughly half with the process starting in the first days of January 2013.
A reduction in the deficit is needed; however, the Congressional Budget Office estimates that such a sharp and sudden reduction (the fall off the fiscal cliff) would probably lead to an early 2012 mild recession.
Why? The reason is because if Congress chooses to do nothing about the upcoming “fiscal cliff,” the result will be significant tax increases affecting the rich, the poor and everyone in between.
Barry Fowler explains, “Whenever you have a financial concern or uncertainty that has the word cliff in it, you must make decisions to avoid going off of it.”
Whether Congress will initiate any action during the last week of 2012 to avoid a fiscal cliff fall remains unanswered as of today.
Important implications that need to be considered regarding how far the possible fall from the cliff may be, include 2011-2012 Payroll Tax Cuts might expire, meaning that for 2013, payroll
taxes will increase by 2% on earned income up to $113,700. Additionally, the Child Tax Credit could be reduced by half (from $1000 to $500).
As if that were not already too much, a possible 2.3% Medical Device Tax implementation would increase healthcare costs for medical devices by an estimated $20 billion of taxpayer money, affecting items such as prosthetics and pacemakers.
Americans can currently deduct medical expenses for costs that exceed 7.5 percent of their adjusted gross income; that threshold would be raised to that which exceeds 10 percent - meaning higher taxes.
Being aware of the possible ramifications of falling off the fiscal cliff can help Americans adjust their budgets accordingly to prepare their taxation solutions for the higher health care costs and taxation increases that seem likely if the fall occurs.
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