The Bush-Era tax cuts are set to expire at the end of this year, which is now just 27 days away for those of you who can relate to working too hard to remember what day of the month it is. If a deal is not reached between the President and Congress by then, we would likely be going off the Fiscal Cliff in the early half of 2013. Additionally, it is noted that if no deal is reached between the two political offices that we would experience about $800 billion in tax increases, which could put a huge dent in the wallet of those who are already suffering the most; the middle-class families.
The Republicans are asking for a capping of deductions and to lower the cost-of-living sectors of Medicare and Social Security, which is part of why many older folks chose to re-elect President Obama over candidate, Mitt Romney. The democrats, on the other hand, are okay with capping the deductions and closing some loopholes for the richest 2% of Americans. However, they also want to do away with the Bush-Era tax cuts for folks in this tax bracket, which would increase their rate from 35% to over 39%.
The biggest argument between the President and the Congress appears to be what to do with the upper-class bracket. If you raise their taxes too much, you have to remember that many of them are the ones providing jobs to Americans, so any increase in taxes for them might cost a job for someone else. Then, when you add in the fact that they will likely have to offer Obamacare to their employees if they have 50 or more, things could really spiral out of control.
Obama has made it clear that he is not going to compromise whatsoever with the Republicans’ wish of simply limiting tax cuts and loopholes. He says that no deal will be reached unless the Republicans decide to completely compromise on their beliefs and watch the tax rates for the richest 2% increase by over 4%.
In addition to the tax hikes for the wealthiest class, President Obama has also requested to add $200 billion worth of new spending for those who have fallen on hard times due to the economy as well as public maintenance. For now, people will have to hope that the two offices can get things straightened out and do it quickly.