Looming fiscal cliff now ranks as "the greatest hazard to the global economy"
"The Congressional Budget Office recently laid out the grim consequences of dropping off the fiscal cliff. Starting Jan. 1, tax cuts signed by President George W. Bush expire as do Obama’s cuts to payroll taxes. Federal spending on defense and other domestic programs will drop, while emergency unemployment benefits run out."
"The combined effect off all these changes would shrink the economy nearly 3 percent at an annual rate in the first half of next year, the CBO estimates, and push unemployment up to 9.1 percent by the fall. Recent surveys of businesses suggest the threat is already weighing on the minds of executives when they’re making hiring and spending plans."
"For the world’s biggest money managers, the fiscal cliff now ranks as the greatest hazard to the global economy, according to Bank of America’s most recent fund manager survey. It topped the European debt crisis, a collapse in Chinese real estate and even a war between Israel and Iran."
2013 + (Without Any Further Legislation)
The individual income tax rates will revert to 15, 25, 28, 36 and 39.6 percent. The capital gains rate will increase to 20% and dividends will be taxed at ordinary income rates.
Beginning in 2013, the 3.8% Medicare contribution tax on net investment income in excess of $200,000 ($250,000 for joint filers and $125,000 for married filing separately) will apply. Also 0.9% additional Medicare tax on earned income in excess of $200,000 ($250,000 for joint filers and $125,000 for married filing separately) will apply.
I think just about everyone is postponing financial decisions until we see the election outcome and shock waves generated should the fiscal cliff become a reality. While the poor think they can get a free Obama phone (LOL), the young are happy because they can stay on their parents policy up to age 26 --while the older population is not at all happy about the cuts made to Medicare.
Yes, tax increases loom but Grover Norquist will not allow 95% of Republicans to do this. I don't care if my rate goes from 15% to 20% if it will help the country. I think the re-election of the President is baked into the pudding already and trust that the knuckle draggers in the Tea Party will be forced to act as adults. For all the "goodies" we get from government we as a nation will have to decide on a simple premise; "do we want to pay for the government we want?". I think the "fiscal cliff" will be forced down the path during the lame duck congress; I believe the Bush tax cuts will go away. I am paying my income tax this week and while I don't like writing the check I am happy that I actually made money this year.