The fiscal cliff and you

Here's a quick way to understand the battle over the fiscal cliff.

By Charley Blaine Dec 7, 2012 12:54PM

The fiscal cliff sounds like a nightmare. But it comes with real numbers that have real impacts on the lives of most Americans. Here's an in-depth look at them:Fiscal cliff/MSN graphicThe fiscal cliff started to affect business decisions this fall. That's why you saw small declines in manufacturing in Friday's jobs report, for example.

It appears to be a worry for consumers now. The University of Michigan's latest consumer sentiment survey shows confidence dropping to a four-month low. That suggests households are concerned about a potentially sharp fall in their after-tax incomes.

The CBO data suggests they might want to be concerned.

The CBO estimates suggest the 20% of households with the lowest incomes might see their taxes rise by $412.

If you're in the middle 20% of income levels -- between $39,791 and $64,484 -- the average increase would be $1,984. If you're in the top 20% -- $108,267 or above -- the CBO is estimating an average increase of $14,173.

If you're in the top 1% -- with income above $506,210 -- the average increase might be about $120,500.

 

The threat of the cliff is the result of Congress' inability in 2011 to come up with a package that would satisfy everyone. It came after threats of a government shutdown, a downgrade of U.S. debt by Standard & Poor's and a short, intense panic in financial markets that sent the major stock market averages down.

The provisions of the cliff were part of a deal made by Congress in an August 2011 budget bill. It set up a so-called Super Committee of members of Congress and the Senate who were supposed to hammer out $1.2 trillion in spending cuts over 10 years. If they couldn't come up with a plan, then a mandatory combination of spending cuts and tax increases would kick

The Super Committee couldn't agree on a plan, with Democrats and Republicans essentially deciding to wait until after the 2012 election to make decisions.

The CBO sees the cliff cutting the federal deficit but also causing a recession, just as the economy is gaining some strength, that might not end until the end of 2013.


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1892Comments
Dec 27, 2012 2:28AM
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You can thank the do nothing GOP for this.
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I'm 3330 LBS and Goverment is bigger than me. Trillion dollars in interest is what this game is costing, get-R-done.
Dec 14, 2012 12:08PM
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Raise taxes - go ahead.  Don't cut Extended Benefits. My son and I were laid off earlier this year - that's 7 people without income and we have diligently looked for work without success. If the UC benefit extension is cut off what do we, and all others who are working hard to find work, use to pay bills and buy food? I worked my way up to management without a degree but now every job my skills qualify me for requires a degree. My car is 19 years old (my son's 10 yrs), live in a small townhouse, shop for the best price - like DarLynn who has a job. Without EB until we find a job, we could lose our home and end up living in our old vehicles - which aren't large enough to house 7. Washington has to stop playing politics by taking the Rep or Dem side - running the country is not a football game, if the American people don't come out the winners then it's zero for the Reps and zero for the Dems - we all lose.

Dec 10, 2012 6:49PM
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This article is like politics. It does not furnish us with details as to why the increase in taxes. Why is the increase in tax for the lowest taxpayers income $412?  Is it due to increased tax rates? Lower deductions.  ????  I don't have deductions! I wish more explanations be put into these articles.
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One of the items that will expire is the current 2% reduction in the social security tax cut ($115 billion) item 2 on the above list. This is one of the Obama tax cuts that will increase social security problems in the future. In my opinion the percentage we contribute to social security is not a tax but our contribution toward our retirement. If one takes the 2% contribution into consideration most people in the lower 40% will not experience an increase in their tax bill.
Dec 10, 2012 5:45PM
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I initially thought the tax increase was only for those who earn over $250k, but I am glad I read this. I was planning to buy a house, but with so much tax increase, I will have to reconsider my decision. Btw, I am surprised at the estimated increase, because this could literally bring the economy down back to where it was in 2009-2010. If people like us can easily foresee spending cut because of tax increase, why can't Obama/govt see it ? Instead the government should focus on sealing the tax loopholes like Google paying 3.2% tax on their incomes, that brings in billions right away. Losing faith and disappointed.

Dec 10, 2012 4:24PM
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Can we see that increased based on % of gross income rather then dollar amount? If I only make a dollar and my boss makes $10 of my $1 an I pay 10 cents on that dollar in tax and he pays 70 cents, yes he is paying more , but paying a lower %on what he is making off my work. So if the middle class is making an average gross of $55K a year and the 1% is averaging, let's be modest and say a gross $1million and both pay the same % in tax the one % would be paying 20 times what the average middle class paid, but still the same % of the money they made off the backs of the middle and lower class, without which they would make nothing. This chart is also showing the average increased based on the fact that the upper 1% have not been paying their share of the taxes for the last 12 years, making this a bogus reflection of the actual distribution of taxes with a cant towards glorifying the impact on the super-wealthy without giving an honest reflection of fair taxation relative to actual income. The current scale with tax breaks is taxing the top 1% with a lower Tax % then the Bottom 20% leaving percentage-wise the middle class carrying the burden. In addition to this, there have been hundreds of people in the upper 1% that have come forwards and stated that the government should increase their taxes and if they were paying their fair share it would be much easier for the government to balance the budget. The increase in this Chart does not even bring the upper end taxes up to where they were before the failed attempts to stimulate the economy by giving the rich tax breaks began, so even with letting tax breaks expire they are still getting a significant tax break that has not been offered to the less wealthy. Note also that money reinvested into companies and development of the US economy is tax deductible and as a business does not count as part of the “income” because it is business expenses. So if the top 1% does invest money into the development of jobs and economic growth of our country that money will not get taxed until it grows into more income. So taking away the special tax breaks from the rich forces them to make a decision, help the economy of pay taxes. Sounds like a tough choice, either way it will help the USA.

Dec 10, 2012 3:23PM
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If the facts are not looked at no one would know that Tennesse, Oregon, South Carolina, Maine, Kentucky, Louisiana,Mississippi,Michigan and West Virginia are the states that rely most on food stamps.  Of this list only Oregon, Maine and Michigan are democratic.  I say give the people what they want cut off their aide lets see what the lives will be like in those great republican states.  They believe only latinos and african americans rely on food stamps hence the discussion.  Cut off all those checks the southern states get and then we can talk about entitlements.
Dec 10, 2012 1:54PM
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So murph......

Just exactly WHEN does the  5 TRILLION or so additional deficit dollars since obama took office become HIS respocibility?

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The chart adds up to 101 percent. If I read the chart correctly the "Highest 20%" also includes the Top 1%. It would be interesting to see the highest 20% broken down into 12%, 5%, 2% and 1% groups. To put income of $108,000 into the same category as $10 million does not make sense. Just proves that figures do not lie; however, liars will figure.
Dec 10, 2012 12:16PM
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SSI give life time benifit for 65 and elder, even if they had never paid tax, and live in a mension.

Medicaid give nursing home for immigration parents, even if even if they had never paid tax.

 

Check the web site:

 

Dec 10, 2012 11:40AM
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No,but you must be on crack if you don't think the Republicans are the ones that got us where we are today. Obama might not be fixing the biggest dunderhead of the 20th centuries awful tenure quick enough for you, but to deny that Bush and his cronies aren't responsible for where we are today, is simply the most retarded notion in the history of American Politics. Oh wait, that's right, the necons are all against academics and think facts are over rated.
Dec 10, 2012 11:39AM
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No,but you must be on crack if you don't think the Republicans are the ones that got us where we are today. Obama might not be fixing the biggest dunderhead of the 20th centuries awful tenure quick enough for you, but to deny that Bush and his cronies aren't responsible for where we are today, is simply the most retarded notion in the history of American Politics. Oh wait, that's right, the necons are all against academics and think facts are over rated.
Dec 10, 2012 11:39AM
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No,but you must be on crack if you don't think the Republicans are the ones that got us where we are today. Obama might not be fixing the biggest dunderhead of the 20th centuries awful tenure quick enough for you, but to deny that Bush and his cronies aren't responsible for where we are today, is simply the most retarded notion in the history of American Politics. Oh wait, that's right, the necons are all against academics and think facts are over rated.
Dec 10, 2012 10:07AM
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So there's how much Obama would get from the people making >$250,000. $52 Billion.


No fix. Stop the Spending!

Dec 10, 2012 4:28AM
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How about we all quit reading this crap and misinformation and actually get educated in this country.  I've seen so many ignorant opinions it's ridiculous.  Most of you don't even know what the tax code that Bush implemented is, that we are discussing today.  News (lmao, i don't call msn news anymore) made up the word FISCAL CLIFF to sensationalize this.  It's no cliff, there's no people falling off of it.  It's made to get you riled up, scared and seemingly to write uninformed, ignorant comments.  You shouldn't have an opinion on a subject you are not educated about! People on here read their two paragraphs of hype and consider themselves knowledgeable. I come on here to laugh (and sometimes be dismayed) at the complete lack of understanding and education there is in America anymore. 

As far as this article is concerned, it's all a what if.  They state the CBO (a private survey company!! not an economist or anyone knowledgable about economics) but a survey company that called Americans and asked what they felt about the fiscal cliff and their reaction to it, LMFAO, you people act like this is Gov't figures being quoted!! Anyways, msn is stating surveyed numbers if taxes for all were to be increased.  WHY? No one, not Obama nor Congress is suggesting or asking that all taxes be increased, so why have an article stating this is what we think would happen if something that no one is asking for would happen. 

Dec 10, 2012 3:00AM
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Life is great!

 

Chris Van Hollen & Elizabeth Warren in 2016 & 2020!

 

God bless Mom & Pop stores!

 

God bless unions and living wages!

 

DIE big and unregulated corporations and DIE Ayn Rand Capitalism, DIE!

 

God bless America!

Dec 10, 2012 2:50AM
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People have to get a grip.  Get over it, and stop complaining.  I am in the low-mid class bracket and I struggle for everything that I have.  I do not get government support, and I am proud of my precious little.  Will these taxes affect me?  Yes they will, but I am strong, and I will make it.  In this day and age, we talk about what we want and the pursuit of the almighty dollar is foremost in people's minds, but you can't take it with you.  When you are gone it can do nothing for you, and if you were responsible parents, you don't have to worry about your kids because they know how to make it for themselves.  In the long run, do you want another country to come in and take over because they have the spending power to, or do you want to pay just a little extra every year (it isn't like they are taking it all at one time) and contribue to the greater good.  Maybe other people ultimately say where our government spends our money, but if you can't trust them, don't elect them.  Start holding yourselves accountable for what is going on around you.  Government doesn't live our everyday lives, we do, so elect viable candidates you can trust with your money and support the legislation that is put in place so that we can balance ourselves out.  Quit being so selfish. 

Dec 10, 2012 2:12AM
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I think it is time to rewrite the tax laws to a flat tax rate based on AIG. Do a way with all deductions completely. If you make less then $250,000.00 AIG then 12.8% for tax, $250,000.00 to $500,000.00 then 15.8% tax. $500,000. to $750,000.00 then 18.8% tax. $750,000.00 to $1,000,000.00 AGI is 21.8% tax. Then if you make more then $1,000,000.00 your tax rate would be 24.8%. That would be the only funds to spend for the government. SSI and Medicare funds would be hands off.
Dec 10, 2012 1:30AM
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It seems that congress is about as interested in doing something about the fiscal cliff problem as a turkey is in thanksgiveing. They are going to show up for work two more days this year and maybe discuss the issue then go home for the Holidays and forget the whole thing. I think its time to fire the whole damn works. If we were no more interested in our jobs than that we wouldn't last a day. We might as well  not worry about it we are going over the cliff. So have a Merry Chrismas and Happy New Year and may the bastards in congress choke on their Prime Rib.
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