The Fiscal “Cliff”
If you’ve opened a newspaper or watched the news lately you’ve probably been bombarded with news about the Fiscal Cliff. So, what is it and how might it affect you?
What is it?
The Fiscal Cliff is the term people are using to refer to a large group of U.S federal tax increases and spending cuts that are due to take effect in 2013. The tax increases and spending cuts are so drastic that many economists will say a double-dip recession and further increases in unemployment would be imminent. How we got to this point would be better explained in another (much longer) post.
On Tuesday, January 1st, after multiple series of negotiations, Congress finally reached a “deal” which preserved most of the Bush-era tax cuts and extended many other lapsed tax provisions. Nothing like waiting until the last minute, right?
Some of the major tax provisions that may affect you and your family are highlighted below.
These are just some of the high points, but there are many other pieces to the fiscal cliff puzzle, especially if you own a business. I think the worst case scenario has been avoided but investors should review the effects of this bill in detail so they know how it will affect their investments going forward.