While politicians are wrestling with the details of new tax laws that will prevent America from going over the “fiscal cliff,” many are left wondering what this fiscal cliff is all about.
Coined by Chairman of the Federal Reserve Ben Bernanke, the fiscal cliff is looming with big financial consequences on the American economy, if it goes unresolved.
At midnight, December 31, 2012, laws are set to change concerning several areas including payroll taxes; business taxes, meaning the end of some breaks for businesses; increases in federal income tax, long-term capital gains and dividends; and the implementation of the health care law. There could also be deep cuts in over 1,000 government programs.
On the positive side, the deficit is expected to be sharply reduced.Economists, politicians and many experts believe if no action is taken and the Bush tax cuts from 2010 are allowed to expire the ramifications could be worse than the debt crisis that Europe has faced. Experts also think that most everyone in the U.S. will be affected.
Waiting around to see what type of deal the politicians will come up with is probably the worst thing anyone can do when thinking of their personal finances.
No matter what the outcome of the fiscal cliff, you don’t want to be left with an ill-equipped plan that could result in an uncertain future. Contact a tax attorney at Ourednik Law Offices today to start planning and preparing for the New Year.