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Wednesday, January 2, 2013
Fiscal Cliff
Over the break the President and Congress compromised on a piece of legislation. Research that bill and write how you think it would impact America if an agreement could not be worked out.
There was a compromise to give higher taxes to individuals who make over $400,000 and to families who make over 450,000. The Bush tax cuts continue only until 2018. There was no real compromise on the government spending yet. The taxes will affect 1% of the population. Although this does not provide a major solution, it does enough to temporarily fix the fiscal cliff. If this was not solved, our economy would have gotten worse, families would have suffered as well as businesses. The fiscal cliff was not solved, it was temporarily put back until Republicans and Democrats try to agree on a definite plan on what to do about the tax cuts and deficit.
It makes permanent the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. It raises rates on those who make more than that from 35% to 39.6%, bringing back a top tax bracket from the Clinton administration, and will raise roughly $600 billion in new revenues over 10 years. The bill also extends unemployment insurance and delays for two months the threat of sequestration a series of automatic, across the board cuts in federal spending.
The fiscal cliff is a term used to describe the changes that would happen if Congress did not take action on an issue they had 507 (five hundred and seven) days to discuss. The fiscal cliff was averted (for now) 3 hours before the deadline. It addressed only revenue issues and postponed any discussion of spending cuts for another two months.
The "solution" raised the debt ceiling, which will later be reached again this year, bringing along another fiscal cliff.
Among the changes that were set to take place at midnight on December 31, 2012 were the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. Over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts." Of the two, the tax increases were seen as the larger burden for the economy.
If an agreement could not be worked out, the economy could have entered into another recession (think 2008 but less severe). An estimated 2 million jobs would have been lost, increasing the unemployment rate by 1%, and decreasing the country's GDP by 4%.
In general, Republicans wanted to cut spending and avoid raising taxes, while Democrats sought a combination of spending cuts and tax increases. This leads to political gridlock and much difficulty in coming to an agreement. Americans, though, can come to an agreement: they are very dissatisfied with the way Congress is being run.
The American Taxpayer Relief Act of 2012 is the bill that was signed into law by President Barack Obama on January 1, 2013 as a partial resolution to the fiscal cliff issue. Basically, this bill has brought upon tax provisions such as an increase on tax rates for marginal incomes and capital gains on individuals who have an annual income of $400,000 and $450,000 for couples. Those who make less than these salaries would retain the same tax rates as 2012, with the top income rate increasing from 35% to 39.6%. In addition, many corporate tax breaks had been extended, such as the "active financing" tax exemption, which would relate to major corporations. While the fiscal cliff has been averted with tax provisions, the deal had only delayed any talks of spending cuts by two months to allow more time for negotiations on deficit reduction.
If Congress had not been able to develop a deal to avert the fiscal cliff, many would experience high tax increases, another major increase in unemployment, and major cuts in spending in important programs such as Medicare. While the issue is not completely solved, it has been averted by tax provisions. The next step is for Congress to negotiate on spending cuts and reducing the deficit in America.
Democrats want to extend the tax cuts for the middle class while letting them expire for the top 2% of earners, specifically individuals making more than $200,000 a year or households bringing in more than $250,000 annually. Republicans, on the other hand, want to continue the tax cuts for all taxpayers. There have been arguments over the break, but the President and Congress finally compromised on a piece of legislation. only revenue issues were addressed and discussions of spending cuts are postponed again. The bill, which prevents a fiscal cliff, extends expiring jobless benefits, prevents cuts in Medicare reimbursements to doctors, and delays for 2months billions of dollars in across-the-board spending cuts in defense and domestic programs. Individuals making over $400,000 and families who make over $450,000 will have higher taxes. The plan would raise roughly $600 billion in taxes over 10 years. The tax cuts were initially proposed by President Bush and passed by Congress, but the law came with a 2010 expiration date. President Obama and Republicans worked out a deal to extend the Bush era tax cuts in 2010 for another two years. If there was no compromise and America headed over the “fiscal cliff”, the nation would’ve faced a recession again because taxes would rise by over $500 million in 2013 and consumers would be unwilling to spend and stimulate the economy. Taxes would have increased by over $500 billion, millions of job would have been lost, employment would have increased, and the country’s GDP would have decreased as well.
The legislation President Barack Obama signed on January 2nd, 2013 merely postponed the fiscal cliff crisis - the issue has not yet fully been resolved, however The American Taxpayer Relief Act sets back any type of major recession and loss of jobs in the United States.
The legislation increased Social Security withholding taxes to 6.2 percent, which will affect many people in America. For starters, civilian employees will get a minimum of at least 2 percent reduction in net pay; military personnel will also see a change in their net pay. Additionally, the compromise Act allows the rate of Bush tax cuts to be lowered, while retaining a high tax rate for upper income people. This decision will hurt some citizens in the US, such as those with higher incomes, but will benefit those who previously had higher taxes and will now have lower income tax rates, such as the "semi-wealthy people." The Act also raises the top rate for capital gains and dividends to 20 percent - an increase from the Bush era.
If an agreement could not be worked out, America would simply go over the Fiscal Cliff that had been pushed back time and time again by members of the Congress. This means that the United States would have gone into a recession, as stated by several of the students above. Even now that a legislation has been agreed upon, yet the Fiscal Cliff crisis has not been fully averted, many groups, organizations, and businesses are waiting to hear the final verdict of what there renewed budgets will be for the following year. Without any set taxes, budgets for the new year cannot be calculated. Now we must wait for any updates on the crisis and legislation, and wait to see if The American Taxpayer Relief Act will become law.
The compromise stated to give higher taxes to individuals who make over $400,000 per year and families who earn over $450,000 per year. It also raises rates from 35% to 39.6% and will raise close to $600 billion in new revenue.
If this compromise does not work out, the economy could enter another recession.
The fiscal cliff, in the United States, is basically a decline in the budget deficit that was to occur at midnight on December 31, 2012. The increased taxes and the reduced spending are what had enacted the laws to be ever considered. According to the CBO - Congressional Budget Office projections, the federal budget is to be cut by $503 Billion between 2012 and 2013. Those who make over $400,000 - 450,000 are to pay these higher taxes.The deficit would be up to $606 Billion of tax cuts, new taxes and automated spending cuts will take effect. The impact could be as much as 4%- 5% of GDP/ The economy can reach a significant stop or slow down for financial markets. The economy would overall become worse in time soon even reaching a depression. The middle class and wealthy even would overall be effected. Extensions of unemployment would rise and overall hurt the people. The fiscal cliff was overall not solved due to a put back. The Republicans and Democrats could not agree on a definite solution to the problem. The republicans wanted to avoid raising taxes and somehow cut spending. While Democrats wanted to cut spending and increase taxes. Taxes overall in 2013 are thought to rise about $500 Million.
This bill brought upon tax provisions such as an increase on tax rates for people who have an annual income of $400,000 and $450,000. Those who make less would have the same tax rates as in 2012, with the income rates rising from 35% to 39.6%. The bill also extended unemployment insurance and delays for two months. If Congress had not been able to come to an agreement to turn away from the fiscal cliff, many people, especially the middle class, would experience high tax increases. There would have also been a greater increase in unemployment.
The compromise that happened over the break stated that they are going to raise the tax rates for the individuals who make $400,000 and for the couples that make over $450,000 from 35% to 39.6%. This will raise $600 billion dollars in new revenues over 10 years.In addition, the Congressional Budget Office estimates that 3.4 million or more people will lose their jobs.
The bill that temporarily held off the fiscal cliff was the American Taxpayer Relief Act that was signed on New Year's Day. This bill did not fully prevent the fiscal cliff, it only put it off. This newly piece of legislation makes it permanent that those who make less than $400,000 a year will have tax cuts and so will couples who make under $450,000 a year. Rates will be raised for those who make more than those set incomes, from 35% to 39.6%. This will increase $600 billion in new revenues over the next ten years most likely. The bill also extends unemployment insurance and delays for two months cuts in federal spending. If this deal wasn't made, then another recession would take place, causing unemployment for many.
The bill, signed by President Obama while on vacation in Hawaii, makes the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000 permanent.It will also raise rates on those individuals who make more than that from 35% to almost 40%. This raise in rates will raise approximately $600 billion in new revenues in the following 10 years. The bill also extends unemployment insurance. Obama has also promised to raise tax rates for the top-earning 2% of Americans which include households with incomes above $250,000 and individuals that earn more than $200,000. These provisions would likely lead to a higher unemployment rate (as Maggie and Jackie mentioned) and a worse economy resulting in a deeper recession. Extending unemployment would not motivate people to look for jobs and benefit the economy. The fiscal cliff problems could not be worked out and would likely not be worked out because the Democrats and Republicans cannot agree on a common denominator and compromises will not be reached.
The bill that was passed will increase the national debt by $3.9 trillion in 10 years because of tax hikes. Payroll taxes are going up to their original amount of 6.2% after being at 4.2% for the past two years. The bill also increased taxes for households making annual salaries of $400,000 and above.
If an agreement could not be worked out, America would probably enter another recession, before we fully recovered from the 2008 one. Workers would be laid off again and budget cuts would impact political programs, as Mona stated.
The American Taxpayer Relief Act of 2013 solidifies the Bush tax cuts for those who earn $400,000 per year and couples earning less than $450,000. For these Americans, taxes paid on dividends and capital gains will increase from 15 percent to 20 percent.
The deal will raise taxes on 77.1% of U.S. households. Americans earning $30,000 a year will lose $50 per month and those earning $113,700 will lose $189.50 a month.
Congress estimates that the bill will raise about $600 billion in new revenues over 10 years, but the Congressional Budget Office approximates increased deficit of $3.9 trillion in the same time period. The bill also extends unemployment insurance and delays federal spending cuts for two months. In addition, the government debt situation is still not resolved and reaching the debt ceiling is still a concern.
If the fiscal cliff was not resolved, the employment rate would have increased, leading to the loss of 2 million jobs in 2013. Sure, these people are only insured for one more year, but that's one more year of delaying a possible recession. Also, if the fiscal cliff deal was not worked out, the flow of money and production would have decreased the national GDP by 4%.
The bill makes the Bush administration's tax cuts permanent.It will raise rates to about 40%. This is supposed to create new revenue. The richest people, the top 2%, will have higher tax rates as well. The bill also extends unemployment insurance. With all of this in mind, if they can not come to an agreement, there will most likely be another recession.
The compromise will give higher taxes to families who earn over $450,000 per year. Those who make less would have the same tax rates as in 2012, with the income rates rising from 35% to 39.6%. The Bush tax cuts continue only until 2018. It will raise rates to about 40%. Republicans and Democrats try to agree on a definite plan on what to do about the tax cuts.
The bill makes the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000 permanent.It will increase rates on those individuals who make more than $400,000 from 35% to almost 40%. This increase in rates will raise about $600 billion in new revenues in the following 10 years. In addition, the bill extends unemployment insurance. Obama has promised to raise tax rates for the top-earning 2% of Americans. As maggie said, this may result in increased unemployment and another severe recession. If the Democrats and Republicans could not reach a compromise before reaching the fiscal cliff, the economy would go from bad to worse, and a solution wil be farther out of reach.
Last year’s temporary payroll tax cuts resulted in a 2% tax increase for workers and temporary taxes related to the Obama health care law. These tax cuts result in over 1000 government programs (mostly regarding defense budget and Medicare) to face serious cuts. Republicans accepted higher taxes for wealthy Americans while Democrats settled for a higher threshold of people facing the new taxes. Meaning instead of raised taxes for households with annual incomes of over $250,000 or individual income of over $200,000; taxes will be raised only for individuals with income over $400,000 and families earning more than $450,000. Despite Obama’s original plans, the agreement merely caps some deductions for individuals making $250,000. 12 Billion in spending cuts are will be split between defense and nondefense spending according to the Senate plan. The majority of the senate supported the bill while Republicans in the house almost completely rejected it, despite John Boehner’s support. Still, the cut on payroll taxes has expired meaning Americans are likely to receive smaller paychecks. Indeed, the two percent payroll tax cut (reducing pay roll tax to 4.2% in 2011 and 2012) returned to 6.2. This is expected to take about $120 billion out of the economy, leading to negative impacts on about seven-tenths of one percent on GDP growth. This plan did little to assess the debt load of 16.4 million and counting and could lead to further debt, having a negative impact on Americans as a whole. The combination of higher taxes with spending cuts might reduce the deficit by almost 560 million, but it will also reduce GDP by four percentage points, plummeting the economy further downward. Additionally, it is predicated that unemployment would rise by almost a full percentage point- leading to the loss of about 2 million jobs. Furthermore, if this problem is not resolved, America is likely to hit a debt ceiling again by April. I feel that if the fiscal cliff not finalized and is further postponed (as it has been until the last hours of 2012) unemployment and debt will raise drastically.
A compromise has been made to give higher taxes to individual people who make more than $400,000 annually and to families who make more than $450,000 annually. The individuals or families who make less than the amount stated above will have the same tax rates as they had in 2012, along with a 4.6% increase in income rate. If Congress had not been able to agree to decline the fiscal cliff, then many people, specifically the middle class, would have experienced increased tax rates. Also, around 3.5 million people would be assumed to have lost their jobs.
To Avoid the increased taxes on all Americans and the potentially disastrous effects that could have on a slowly improving economy an agreement was made on the basics of the Fiscal Cliff with the finer points being pushed back until further discussion. Tax Rates would remain the Same from under the Bush Cuts with those under $400,000 and $450,000 for couples while raising on anyone who makes above this bracket. Over ten years this will create 6 billion dollars in new revenue while solving most of the tax discussions. In two months we will see the full effects of the Fiscal Cliff but for now this is a much welcome compromise.
The fiscal cliff is a sharp decline in the budget deficit that could have occurred beginning in 2013 due to increased taxes and reduced spending as required by previously enacted laws. To avoid the fiscal cliff, President Obama and Congress made a compromise and created the American Taxpayer Relief Act of 2012 on January 1, 2013. It eliminated much of the tax side of the fiscal cliff, increased revenue and increased spending. This Act caused for individuals who make more than $400,000 per year and families that make more than $450,000 per year to be given higher taxes and it extended the Bush tax cuts until 2018. This Act, however, only delayed the fiscal cliff. It did not completely get rid of it, so President Obama and Congress still have a lot of work to do. If an agreement could not be worked out, every single person in this country would be affected. People would begin to lose their jobs, the country would enter another recession and it would be put in danger of falling into another depression. Basically, if the government did nothing to avoid the fiscal cliff, the country would be in bad shape.
The compromises made have brought about a tax increase for individuals earning more than $400,000 a year, and to families earning more than $450,000 a year. These changes will prevent falling off the Fiscal Cliff, but definitely do not ensure permanent economic stability. In order to avoid further economic decline, Obama and Congress must agree on future plans to work on the national debt and budget.
The tax cuts will remain in effect for individuals making less than $400,000 per year and for couples making less than $450,000 per year, extending these bush tax cuts to 2018 (as Michelle K said, this really only delayed some of the fiscal cliff, so people shouldn't feel too relieved). However, those making above these number nows have an increased tax percentage of 39.6% as opposed to the prior 35%. An expected $600 billion in revenue is expected to raised in 10 years. As Jackie Hanna said, if an agreement had not been reached, and taxes and product prices drastically rose, consumer spending would drastically decline, leading to another recession.
The solution to the fiscal cliff was the signing of the American Taxpayer Relief Act of 2012. This act expands the federal income tax rate reductions that were first enacted in 2001 and were meant to expire by the end of 2012. This solution however, did not completely solve the problem at hand. Instead, it merely postponed the issue for two months and by then, another decision will have to be made.
If an agreement could not be reached, the American public would suffer harsh tax increases. For example, 10 percent individual income tax bracket would increase to 15 percent for 2013. This would likely make life more difficult for the general American public
Taxes will be raised on the wealthiest two percent of Americans while preventing a middle class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America. I think this will have positive effects on America. It will improve the economy and at the same time Middle Class families won't have to give in too much of their income. But, if an agreement wouldn't be worked out then, the taxes might have to go up for the middle and high classes. This might cause a lot of protests from the middle class. Also, it might cause the economy to become worse.
Although Obama averted the fiscal cliff bill, it was agreed upon the matter of taxes that Bush tax cuts remain for the citizens making less than 400,000 a year. This does not settle the issue fully although provides a first step. Hopefully in the upcoming months, a deal can be fixated upon which the budget and deficit can be managed and decided upon. This again places emphasis on the need for Republicans and Democrats to place aside their differences and stop the political gridlock within Congress
Although the fiscal cliff deal was not fully comprimised by President Obama or Congress, it was decided upon that citizens making less than $400,000 will continue to recieve the Bush tax cuts. This averts the crisis and cuts overall. However, it places stress on the gridlock Congress to reach a comprimise, which will require the Republicans and Democrats to end their rivalry and differences and instead work a deal which will help the country overall
According to "Congress Passes Fiscal Cliff Deal" by Janet Hook, Corey Boles, and Siobhan Hughes, the fiscal cliff agreement "blocked most impending tax increases and postponed spending cuts largely by raising taxes on upper-income Americans." However, I do not think this agreement will do much because it did not do much. But increasing taxes on the wealthy, only a small portion of money that's needed to bandage up the national deficit is amassed. More cuts will be needed in order to fix a little bit of the economy. However, I do believe this was a good start. If there was no agreement at all, America would most likely fall back into a recession because the more we wait without doing anything, the higher our debt will become. However, the agreement has a long way to go to come up with any sort of positive outcome.
If no agreement had been reached, there would have been a $500,000,000,000 tax increase, which would have worsened the recession, and increased unemployment, because there wold be less money for employers to spend on hiring new employees, and consumers would make less purchases to compensate for the tax increase. However, the economy may not be moving anywhere after the deal, because taxes still increased a little for Americans making over $400,000, some deductions were capped for people making over $250,000, payroll tax cuts will expire, but 80% of the Bush tax cuts were kept.
The “Fiscal cliff” is the conundrum that the U.S. government will face, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. Last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect.
The key elements of the deal are: an increase in the payroll tax by two percentage points to 6.2% for income up to $113,700, and a reversal of the Bush tax cuts for individuals making more than $400,000 and couples making over $450,000 (which entails the top rate reverting from 35% to 39.5%). Investment income is also affected, with an increase in the tax on investment income from 15% to 23.8% for filers in the top income bracket and a 3.8% surtax on investment income for individuals earning more than $200,000 and couples making more than $250,000.
While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $560 billion, it is estimated that the policy would send the economy into a recession. At the same time, it's predicted that unemployment would rise by almost a full percentage point, with a loss of about two million jobs.
The piece of legislation that President Obama and Congress agreed on is the American Taxpayer Relief Act of 2012. Signed literally on the first day of the new year, the act is mostly towards less budget spending, individuals making over $400,000 ($450,000 for couples), not extending the two-year old cut to payroll taxes, etc. As far as I know, those who make under $400,000, their tax rates for income, capital gains, and dividends remained at the same levels as from 2012.
If the fiscal cliff did hit the United States, some of these might happen. Our stock market will take a massive hit. Many people will lose their retirement wealth, that would be independent investors savings and pension funds. We will again be demolished in the eyes of the world.
On December 31, Congress averted the "fiscal cliff" with a mere three hours. Congress was very irresponsible for leaving this big of an issue to the last day. If we went over the fiscal cliff,Bush tax cuts would be ended, which would likely cause a recession. At the last minute congress passed a bill that would extend Bush tax cuts and raising taxes to 39.6% for those making over $400,000 a year and couples making more than $450,000 per year. This would raise 600 billion dollars over the next ten years. However, we are going to keep spending much more than that. Congress has not yet passed a bill about spending cuts. This means our budget is still very unbalanced.
32 comments:
There was a compromise to give higher taxes to individuals who make over $400,000 and to families who make over 450,000. The Bush tax cuts continue only until 2018. There was no real compromise on the government spending yet. The taxes will affect 1% of the population. Although this does not provide a major solution, it does enough to temporarily fix the fiscal cliff. If this was not solved, our economy would have gotten worse, families would have suffered as well as businesses. The fiscal cliff was not solved, it was temporarily put back until Republicans and Democrats try to agree on a definite plan on what to do about the tax cuts and deficit.
It makes permanent the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000. It raises rates on those who make more than that from 35% to 39.6%, bringing back a top tax bracket from the Clinton administration, and will raise roughly $600 billion in new revenues over 10 years. The bill also extends unemployment insurance and delays for two months the threat of sequestration a series of automatic, across the board cuts in federal spending.
The fiscal cliff is a term used to describe the changes that would happen if Congress did not take action on an issue they had 507 (five hundred and seven) days to discuss. The fiscal cliff was averted (for now) 3 hours before the deadline. It addressed only revenue issues and postponed any discussion of spending cuts for another two months.
The "solution" raised the debt ceiling, which will later be reached again this year, bringing along another fiscal cliff.
Among the changes that were set to take place at midnight on December 31, 2012 were the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. Over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts." Of the two, the tax increases were seen as the larger burden for the economy.
If an agreement could not be worked out, the economy could have entered into another recession (think 2008 but less severe). An estimated 2 million jobs would have been lost, increasing the unemployment rate by 1%, and decreasing the country's GDP by 4%.
In general, Republicans wanted to cut spending and avoid raising taxes, while Democrats sought a combination of spending cuts and tax increases. This leads to political gridlock and much difficulty in coming to an agreement. Americans, though, can come to an agreement: they are very dissatisfied with the way Congress is being run.
The American Taxpayer Relief Act of 2012 is the bill that was signed into law by President Barack Obama on January 1, 2013 as a partial resolution to the fiscal cliff issue. Basically, this bill has brought upon tax provisions such as an increase on tax rates for marginal incomes and capital gains on individuals who have an annual income of $400,000 and $450,000 for couples. Those who make less than these salaries would retain the same tax rates as 2012, with the top income rate increasing from 35% to 39.6%. In addition, many corporate tax breaks had been extended, such as the "active financing" tax exemption, which would relate to major corporations. While the fiscal cliff has been averted with tax provisions, the deal had only delayed any talks of spending cuts by two months to allow more time for negotiations on deficit reduction.
If Congress had not been able to develop a deal to avert the fiscal cliff, many would experience high tax increases, another major increase in unemployment, and major cuts in spending in important programs such as Medicare. While the issue is not completely solved, it has been averted by tax provisions. The next step is for Congress to negotiate on spending cuts and reducing the deficit in America.
Democrats want to extend the tax cuts for the middle class while letting them expire for the top 2% of earners, specifically individuals making more than $200,000 a year or households bringing in more than $250,000 annually. Republicans, on the other hand, want to continue the tax cuts for all taxpayers. There have been arguments over the break, but the President and Congress finally compromised on a piece of legislation. only revenue issues were addressed and discussions of spending cuts are postponed again.
The bill, which prevents a fiscal cliff, extends expiring jobless benefits, prevents cuts in Medicare reimbursements to doctors, and delays for 2months billions of dollars in across-the-board spending cuts in defense and domestic programs. Individuals making over $400,000 and families who make over $450,000 will have higher taxes. The plan would raise roughly $600 billion in taxes over 10 years.
The tax cuts were initially proposed by President Bush and passed by Congress, but the law came with a 2010 expiration date. President Obama and Republicans worked out a deal to extend the Bush era tax cuts in 2010 for another two years.
If there was no compromise and America headed over the “fiscal cliff”, the nation would’ve faced a recession again because taxes would rise by over $500 million in 2013 and consumers would be unwilling to spend and stimulate the economy. Taxes would have increased by over $500 billion, millions of job would have been lost, employment would have increased, and the country’s GDP would have decreased as well.
The legislation President Barack Obama signed on January 2nd, 2013 merely postponed the fiscal cliff crisis - the issue has not yet fully been resolved, however The American Taxpayer Relief Act sets back any type of major recession and loss of jobs in the United States.
The legislation increased Social Security withholding taxes to 6.2 percent, which will affect many people in America. For starters, civilian employees will get a minimum of at least 2 percent reduction in net pay; military personnel will also see a change in their net pay. Additionally, the compromise Act allows the rate of Bush tax cuts to be lowered, while retaining a high tax rate for upper income people. This decision will hurt some citizens in the US, such as those with higher incomes, but will benefit those who previously had higher taxes and will now have lower income tax rates, such as the "semi-wealthy people." The Act also raises the top rate for capital gains and dividends to 20 percent - an increase from the Bush era.
If an agreement could not be worked out, America would simply go over the Fiscal Cliff that had been pushed back time and time again by members of the Congress. This means that the United States would have gone into a recession, as stated by several of the students above. Even now that a legislation has been agreed upon, yet the Fiscal Cliff crisis has not been fully averted, many groups, organizations, and businesses are waiting to hear the final verdict of what there renewed budgets will be for the following year. Without any set taxes, budgets for the new year cannot be calculated. Now we must wait for any updates on the crisis and legislation, and wait to see if The American Taxpayer Relief Act will become law.
The compromise stated to give higher taxes to individuals who make over $400,000 per year and families who earn over $450,000 per year. It also raises rates from 35% to 39.6% and will raise close to $600 billion in new revenue.
If this compromise does not work out, the economy could enter another recession.
The fiscal cliff, in the United States, is basically a decline in the budget deficit that was to occur at midnight on December 31, 2012. The increased taxes and the reduced spending are what had enacted the laws to be ever considered. According to the CBO - Congressional Budget Office projections, the federal budget is to be cut by $503 Billion between 2012 and 2013. Those who make over $400,000 - 450,000 are to pay these higher taxes.The deficit would be up to $606 Billion of tax cuts, new taxes and automated spending cuts will take effect. The impact could be as much as 4%- 5% of GDP/ The economy can reach a significant stop or slow down for financial markets. The economy would overall become worse in time soon even reaching a depression. The middle class and wealthy even would overall be effected. Extensions of unemployment would rise and overall hurt the people. The fiscal cliff was overall not solved due to a put back. The Republicans and Democrats could not agree on a definite solution to the problem. The republicans wanted to avoid raising taxes and somehow cut spending. While Democrats wanted to cut spending and increase taxes. Taxes overall in 2013 are thought to rise about $500 Million.
This bill brought upon tax provisions such as an increase on tax rates for people who have an annual income of $400,000 and $450,000. Those who make less would have the same tax rates as in 2012, with the income rates rising from 35% to 39.6%. The bill also extended unemployment insurance and delays for two months. If Congress had not been able to come to an agreement to turn away from the fiscal cliff, many people, especially the middle class, would experience high tax increases. There would have also been a greater increase in unemployment.
The compromise that happened over the break stated that they are going to raise the tax rates for the individuals who make $400,000 and for the couples that make over $450,000 from 35% to 39.6%. This will raise $600 billion dollars in new revenues over 10 years.In addition, the Congressional Budget Office estimates that 3.4 million or more people will lose their jobs.
The bill that temporarily held off the fiscal cliff was the American Taxpayer Relief Act that was signed on New Year's Day. This bill did not fully prevent the fiscal cliff, it only put it off. This newly piece of legislation makes it permanent that those who make less than $400,000 a year will have tax cuts and so will couples who make under $450,000 a year. Rates will be raised for those who make more than those set incomes, from 35% to 39.6%. This will increase $600 billion in new revenues over the next ten years most likely. The bill also extends unemployment insurance and delays for two months cuts in federal spending. If this deal wasn't made, then another recession would take place, causing unemployment for many.
The bill, signed by President Obama while on vacation in Hawaii, makes the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000 permanent.It will also raise rates on those individuals who make more than that from 35% to almost 40%. This raise in rates will raise approximately $600 billion in new revenues in the following 10 years. The bill also extends unemployment insurance. Obama has also promised to raise tax rates for the top-earning 2% of Americans which include households with incomes above $250,000 and individuals that earn more than $200,000. These provisions would likely lead to a higher unemployment rate (as Maggie and Jackie mentioned) and a worse economy resulting in a deeper recession. Extending unemployment would not motivate people to look for jobs and benefit the economy. The fiscal cliff problems could not be worked out and would likely not be worked out because the Democrats and Republicans cannot agree on a common denominator and compromises will not be reached.
The bill that was passed will increase the national debt by $3.9 trillion in 10 years because of tax hikes. Payroll taxes are going up to their original amount of 6.2% after being at 4.2% for the past two years. The bill also increased taxes for households making annual salaries of $400,000 and above.
If an agreement could not be worked out, America would probably enter another recession, before we fully recovered from the 2008 one. Workers would be laid off again and budget cuts would impact political programs, as Mona stated.
The American Taxpayer Relief Act of 2013 solidifies the Bush tax cuts for those who earn $400,000 per year and couples earning less than $450,000. For these Americans, taxes paid on dividends and capital gains will increase from 15 percent to 20 percent.
The deal will raise taxes on 77.1% of U.S. households. Americans earning $30,000 a year will lose $50 per month and those earning $113,700 will lose $189.50 a month.
Congress estimates that the bill will raise about $600 billion in new revenues over 10 years, but the Congressional Budget Office approximates increased deficit of $3.9 trillion in the same time period. The bill also extends unemployment insurance and delays federal spending cuts for two months. In addition, the government debt situation is still not resolved and reaching the debt ceiling is still a concern.
If the fiscal cliff was not resolved, the employment rate would have increased, leading to the loss of 2 million jobs in 2013. Sure, these people are only insured for one more year, but that's one more year of delaying a possible recession. Also, if the fiscal cliff deal was not worked out, the flow of money and production would have decreased the national GDP by 4%.
The bill makes the Bush administration's tax cuts permanent.It will raise rates to about 40%. This is supposed to create new revenue. The richest people, the top 2%, will have higher tax rates as well. The bill also extends unemployment insurance. With all of this in mind, if they can not come to an agreement, there will most likely be another recession.
The compromise will give higher taxes to families who earn over $450,000 per year. Those who make less would have the same tax rates as in 2012, with the income rates rising from 35% to 39.6%. The Bush tax cuts continue only until 2018. It will raise rates to about 40%. Republicans and Democrats try to agree on a definite plan on what to do about the tax cuts.
The bill makes the Bush administration's tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000 permanent.It will increase rates on those individuals who make more than $400,000 from 35% to almost 40%. This increase in rates will raise about $600 billion in new revenues in the following 10 years. In addition, the bill extends unemployment insurance. Obama has promised to raise tax rates for the top-earning 2% of Americans. As maggie said, this may result in increased unemployment and another severe recession. If the Democrats and Republicans could not reach a compromise before reaching the fiscal cliff, the economy would go from bad to worse, and a solution wil be farther out of reach.
Last year’s temporary payroll tax cuts resulted in a 2% tax increase for workers and temporary taxes related to the Obama health care law. These tax cuts result in over 1000 government programs (mostly regarding defense budget and Medicare) to face serious cuts. Republicans accepted higher taxes for wealthy Americans while Democrats settled for a higher threshold of people facing the new taxes. Meaning instead of raised taxes for households with annual incomes of over $250,000 or individual income of over $200,000; taxes will be raised only for individuals with income over $400,000 and families earning more than $450,000. Despite Obama’s original plans, the agreement merely caps some deductions for individuals making $250,000. 12 Billion in spending cuts are will be split between defense and nondefense spending according to the Senate plan. The majority of the senate supported the bill while Republicans in the house almost completely rejected it, despite John Boehner’s support. Still, the cut on payroll taxes has expired meaning Americans are likely to receive smaller paychecks. Indeed, the two percent payroll tax cut (reducing pay roll tax to 4.2% in 2011 and 2012) returned to 6.2. This is expected to take about $120 billion out of the economy, leading to negative impacts on about seven-tenths of one percent on GDP growth. This plan did little to assess the debt load of 16.4 million and counting and could lead to further debt, having a negative impact on Americans as a whole. The combination of higher taxes with spending cuts might reduce the deficit by almost 560 million, but it will also reduce GDP by four percentage points, plummeting the economy further downward. Additionally, it is predicated that unemployment would rise by almost a full percentage point- leading to the loss of about 2 million jobs. Furthermore, if this problem is not resolved, America is likely to hit a debt ceiling again by April. I feel that if the fiscal cliff not finalized and is further postponed (as it has been until the last hours of 2012) unemployment and debt will raise drastically.
A compromise has been made to give higher taxes to individual people who make more than $400,000 annually and to families who make more than $450,000 annually. The individuals or families who make less than the amount stated above will have the same tax rates as they had in 2012, along with a 4.6% increase in income rate. If Congress had not been able to agree to decline the fiscal cliff, then many people, specifically the middle class, would have experienced increased tax rates. Also, around 3.5 million people would be assumed to have lost their jobs.
To Avoid the increased taxes on all Americans and the potentially disastrous effects that could have on a slowly improving economy an agreement was made on the basics of the Fiscal Cliff with the finer points being pushed back until further discussion. Tax Rates would remain the Same from under the Bush Cuts with those under $400,000 and $450,000 for couples while raising on anyone who makes above this bracket. Over ten years this will create 6 billion dollars in new revenue while solving most of the tax discussions. In two months we will see the full effects of the Fiscal Cliff but for now this is a much welcome compromise.
The fiscal cliff is a sharp decline in the budget deficit that could have occurred beginning in 2013 due to increased taxes and reduced spending as required by previously enacted laws. To avoid the fiscal cliff, President Obama and Congress made a compromise and created the American Taxpayer Relief Act of 2012 on January 1, 2013. It eliminated much of the tax side of the fiscal cliff, increased revenue and increased spending. This Act caused for individuals who make more than $400,000 per year and families that make more than $450,000 per year to be given higher taxes and it extended the Bush tax cuts until 2018. This Act, however, only delayed the fiscal cliff. It did not completely get rid of it, so President Obama and Congress still have a lot of work to do. If an agreement could not be worked out, every single person in this country would be affected. People would begin to lose their jobs, the country would enter another recession and it would be put in danger of falling into another depression. Basically, if the government did nothing to avoid the fiscal cliff, the country would be in bad shape.
The compromises made have brought about a tax increase for individuals earning more than $400,000 a year, and to families earning more than $450,000 a year. These changes will prevent falling off the Fiscal Cliff, but definitely do not ensure permanent economic stability. In order to avoid further economic decline, Obama and Congress must agree on future plans to work on the national debt and budget.
The tax cuts will remain in effect for individuals making less than $400,000 per year and for couples making less than $450,000 per year, extending these bush tax cuts to 2018 (as Michelle K said, this really only delayed some of the fiscal cliff, so people shouldn't feel too relieved). However, those making above these number nows have an increased tax percentage of 39.6% as opposed to the prior 35%. An expected $600 billion in revenue is expected to raised in 10 years. As Jackie Hanna said, if an agreement had not been reached, and taxes and product prices drastically rose, consumer spending would drastically decline, leading to another recession.
The solution to the fiscal cliff was the signing of the American Taxpayer Relief Act of 2012. This act expands the federal income tax rate reductions that were first enacted in 2001 and were meant to expire by the end of 2012. This solution however, did not completely solve the problem at hand. Instead, it merely postponed the issue for two months and by then, another decision will have to be made.
If an agreement could not be reached, the American public would suffer harsh tax increases. For example, 10 percent individual income tax bracket would increase to 15 percent for 2013. This would likely make life more difficult for the general American public
Taxes will be raised on the wealthiest two percent of Americans while preventing a middle class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America. I think this will have positive effects on America. It will improve the economy and at the same time Middle Class families won't have to give in too much of their income. But, if an agreement wouldn't be worked out then, the taxes might have to go up for the middle and high classes. This might cause a lot of protests from the middle class. Also, it might cause the economy to become worse.
Although Obama averted the fiscal cliff bill, it was agreed upon the matter of taxes that Bush tax cuts remain for the citizens making less than 400,000 a year. This does not settle the issue fully although provides a first step. Hopefully in the upcoming months, a deal can be fixated upon which the budget and deficit can be managed and decided upon. This again places emphasis on the need for Republicans and Democrats to place aside their differences and stop the political gridlock within Congress
Although the fiscal cliff deal was not fully comprimised by President Obama or Congress, it was decided upon that citizens making less than $400,000 will continue to recieve the Bush tax cuts. This averts the crisis and cuts overall. However, it places stress on the gridlock Congress to reach a comprimise, which will require the Republicans and Democrats to end their rivalry and differences and instead work a deal which will help the country overall
According to "Congress Passes Fiscal Cliff Deal" by Janet Hook, Corey Boles, and Siobhan Hughes, the fiscal cliff agreement "blocked most impending tax increases and postponed spending cuts largely by raising taxes on upper-income Americans." However, I do not think this agreement will do much because it did not do much. But increasing taxes on the wealthy, only a small portion of money that's needed to bandage up the national deficit is amassed. More cuts will be needed in order to fix a little bit of the economy. However, I do believe this was a good start. If there was no agreement at all, America would most likely fall back into a recession because the more we wait without doing anything, the higher our debt will become. However, the agreement has a long way to go to come up with any sort of positive outcome.
If no agreement had been reached, there would have been a $500,000,000,000 tax increase, which would have worsened the recession, and increased unemployment, because there wold be less money for employers to spend on hiring new employees, and consumers would make less purchases to compensate for the tax increase. However, the economy may not be moving anywhere after the deal, because taxes still increased a little for Americans making over $400,000, some deductions were capped for people making over $250,000, payroll tax cuts will expire, but 80% of the Bush tax cuts were kept.
The “Fiscal cliff” is the conundrum that the U.S. government will face, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. Last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, a rollback of the "Bush tax cuts" from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect.
The key elements of the deal are: an increase in the payroll tax by two percentage points to 6.2% for income up to $113,700, and a reversal of the Bush tax cuts for individuals making more than $400,000 and couples making over $450,000 (which entails the top rate reverting from 35% to 39.5%). Investment income is also affected, with an increase in the tax on investment income from 15% to 23.8% for filers in the top income bracket and a 3.8% surtax on investment income for individuals earning more than $200,000 and couples making more than $250,000.
While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $560 billion, it is estimated that the policy would send the economy into a recession. At the same time, it's predicted that unemployment would rise by almost a full percentage point, with a loss of about two million jobs.
The piece of legislation that President Obama and Congress agreed on is the American Taxpayer Relief Act of 2012. Signed literally on the first day of the new year, the act is mostly towards less budget spending, individuals making over $400,000 ($450,000 for couples), not extending the two-year old cut to payroll taxes, etc. As far as I know, those who make under $400,000, their tax rates for income, capital gains, and dividends remained at the same levels as from 2012.
If the fiscal cliff did hit the United States, some of these might happen. Our stock market will take a massive hit. Many people will lose their retirement wealth, that would be independent investors savings and pension funds.
We will again be demolished in the eyes of the world.
On December 31, Congress averted the "fiscal cliff" with a mere three hours. Congress was very irresponsible for leaving this big of an issue to the last day. If we went over the fiscal cliff,Bush tax cuts would be ended, which would likely cause a recession. At the last minute congress passed a bill that would extend Bush tax cuts and raising taxes to 39.6% for those making over $400,000 a year and couples making more than $450,000 per year. This would raise 600 billion dollars over the next ten years. However, we are going to keep spending much more than that. Congress has not yet passed a bill about spending cuts. This means our budget is still very unbalanced.
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