Now that the election is behind us, the largest, single problem the country is facing is the looming and infamous “Fiscal cliff,” a term referring to the challenge facing Congress when the terms of the Budget Control Act of 2011 are scheduled to go into effect at year’s end, at the same time as other taxes commence or change due to their temporary nature. Among the laws set to change at midnight on December 31, 2012, are the end of the Bush era tax rates, which would cause income taxes to rise for all taxpayers, the expiration of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the phase out of certain tax deductions and credits for businesses, shifts in the alternative minimum tax that would take a larger bite out of more taxpayers’ income, and the implementation of investment 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 from within the defense budget and in social safety net programs, are in line for deep, automatic cuts.
To aid businesses and individuals in understanding the legal, political and economic consequences of the “fiscal cliff”, I have published an article in the Philadelphia Business Journal Online, which may be helpful.
Avoiding the Fiscal Cliff - pragmatism vs. hyperbole