Other than the taxes going up less than was previously mandated by law, the spending cuts (sequestration) part of the fiscal cliff have been put off for two months, or until the end of February (and may be extended further by an act of Congress). If you make above 250K the fiscal cliff has increased your taxes pretty significantly. Under 200K the only major tax change was the end of the 2 percent payroll tax holiday and a return to the 6.3 percent tax rate for FICA (social security and medicare/medicaid taxes).
If the the spending cuts (sequestration) happen at the end of February 2013, then:
In some direct or indirect way yes you will be affected, depending upon your life circumstances and line of work. If you work in the military or defense industries, then the automatic cuts may affect you, as job losses are likely. If you are obtaining employment via federal funding in some way (the federal government funds a wide variety of things from social programs, to infrastructure spending, to basic research and development), then the automatic cuts may affect you, as job losses are likely. While Americans love to bash federal spending, indirectly they may feel the affects of the fiscal cliff in reduced government spending on things such as transportation infrastructure to health research to environmental protection and cleanup. You may not feel these cuts directly unelss you live next to a Superfund toxic waste site that doesn't get cleaned up or a transportation project like a highway expansion in your area is delayed or cancelled.
I am not criticizing these cuts, as we need to live within our means, but they will affect average Americans one way or another.
It makes things costlier for you. It decreases your savings. It hampers your family budget.In order to maintain your savings at the same rate, youhave to cut down some of your expenses.
It is essentially a made up game by congress. 80% of the Fiscal cliff are tax increases that have already been decided which will not raise any new revenue. Tax revenues are never tied to tax rates. The other 20% is related to spending cuts phased in over a period of many years rather than this instant shock they want everyone to believe will happen. However they're not even really cuts. They are a slowdown in the rate of increase in gov't spending. Gov't has not cut spending seriously since about 1921. They simply use a baseline budgeting trick. For example...a budget that was set to increase at 5% may now increase at 3%. That is a cut in beurocratic language. In the real world, a cut is actually reducing the budget in real dollars.
All this affects you from a spending perspective in that this lack of fiscal discipline requires massive monetary intervention and causes currency devaluation. As the Debt to GDP ratio remains high, growth remains anemic and the Fed likely continues to expand it's balance sheet. The result for the low income American is a further loss of purchasing power. The result for higher earners is more detailed planning to manuer the tax maze and keep your tax liability to a manageable level.
So it sounds like I'm playing a game with the government, chasing these dollars that are essentially non-existant anyways. I think we are on the brink of a major currency change. A cashless society is in sight. Thank yo for your time LandmarkWealth,
What you will see is the result of dealing avoiding the fiscal cliff. the deal which was struck raised taxes on those with incomes or capital gains exceeding $400,000 annually. For the rest of us, the effect we see from that agreement is an increase in the withholding taxes from our paycheck related to a rise in both Social Security and Medicare withholdings. This is the part of the agreement which addresses the increase in revenue to the government starting in 2013. The spending side as far as an agreement on selective cuts in spending have not yet been determined...basically the can has been kicked down the road again. When the next deadline hits, by law agreed to in 2011, cuts must be selectively made in certain areas or defined cuts under the articles of sequestration will kick in. The automatic cuts will eat deeply into our defense budgets and required deep reductions in force size as well as cancellation of some technology development programs downstream. This administration continues to grow spending at every opportunity and that spending has now driven the national debt beyond the level of the annual gross domestic product. In accounting terms as it would apply to analyzing a business, our liabilities now exceed our assets. The question is whether or not that trend can and will be allowed to continue. One counter to that trend would be increased economic growth which will heavily stimulate growth in the GDP but that requires the private sector to come out of hibernation...something Obama is not supporting as he wants to right the ship with growth in government and growth in government spending...flawed Keynesian Economics. Given the status quo, the average American will eventually see more taxes, a devalued dollar a higher inflation rate, a very shaky and poorly performing stock market, and a world that places little value on the U.S. dollar. It could get quite ugly out there. ~WB
It doesn't. The fiscal cliff is a made up event by the mainstream media and politicians to scare people into not cutting spending or raising taxes. In fact we already went off the fiscal cliff a long time ago and now are like the cartoon character still just about to fall. You have to understand a bit about economics especially federal reserve printing to know what is going to happen next: The fed will print to allow the government to pay the bills. This is called fiscal stimulus, but the printing will ultimately fail when we reach hyperinflation. At that point your dollars wont buy anything and the government wont be able to provide all the benefits that it promised. The answer to all this mess is a smaller and more limited government that can't print endless dollars. But we have other things to fear from our government. Basically storm clouds are approaching. Sorry to say. I can advise you to not hold dollars. Instead hold gold, commodities, even real estate. Then try to be informed (if you are not) Don't rely on the mainstream media in any form. Look for the alternative media. Stick to your basic values. Sorry for the ranging response but the topic could be interpreted from a broader point of view.
It appears that the "fiscal cliff" threat is a possible warning to us. The times are approaching when the rich shall prosper and the poor shall become even more poor. The smart ones are gathering gold, silver & land. Others, like me, take another route... we gather Jesus Christ. Although this great land is falling apart, I have found peace in Him. I'm ready for the push. Go ahead and push me off that fiscal cliff... My Savior will catch me!
Great answers on the subject of the fiscal cliff! Hubpages truly has an awesome group of people!
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http://www.youtube.com/watch?v=kTxY-oZu … r_embedded
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