Dec 5, 2012

Free Falling: The Fiscal Cliff Explained

What is the "fiscal cliff?"

“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. The Budget Control Act of 2011 was enacted due to the failure of the 111th Congress (bunch of suckas) to pass a Federal Budget and therefore as a compromise to resolve a dispute concerning the public debt ceiling.

Why should we care about the fiscal cliff?

A lot of tax laws are at stake that could affect our income. Among the laws set to change at midnight on December 31, 2012, are 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, the end of the 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. If that is not enough to worry you, according to Barron's, over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts."

What is the Republicans position?

Not to piss off anti-tax super lobbyist Grover Norquist and his infamous Tax Pledge.

What is the Democrats position?

Not to piss off President Obama and the 62,611,250 Americans that supported him in the 2012 election.

What are the chances that a compromise is reached before January 1, 2013?

I’m no political expert but I think at the last minute Congress will extend the tax laws for another year. Therefore, we will be dealing with the same mess next year around this time.

How can you take action?

First, stop being so angry at the IRS and do some research. The IRS is only the enforcer of the tax laws. Begin to direct your attention at the politicians that pimped your vote. Politicians in Washington make our national tax laws. Tell them that they need to stop playing games and come up with a compromise. I’m not here to pick a side and tell you who is right or wrong. However, I do believe that we did not vote for politicians to play such childish games with our money. Write, call, email, or tweet your elected officials.



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