Obama and Congress must tackle fiscal cliff

Published: Sunday, November 18, 2012 at 10:22 AM.

 

Now that the election is over, the crowd in Washington is finally beginning to focus on the “fiscal cliff.”

First, we face the threat of higher tax rates for some or all taxpayers on Jan. 1. Second, there’s also a possibility of a “sequester” - automatic budget cuts that also are scheduled to take place on Jan. 1.

And politicians have been spending so much money that we’re about to bump up against the nation’s debt limit.

So it’s likely that all these issues will get joined as President Obama and congressional leaders attempt to negotiate a deal.

The higher tax rate portion of the fiscal cliff exists because 2001 and 2003 tax cuts are scheduled to expire at the end of the year. All taxpayers would see more of their earnings confiscated by the IRS beginning in January if Washington fails to act.

All tax brackets would increase, taxes on dividends and capital gains would rise, and families would see their child tax credits slashed.



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