After months of playing political chicken, Congress managed to avoid the “fiscal cliff” at the very last moment by passing what is inaccurately titled the American Taxpayer Relief Act of 2012. How is this going to impact you and me over the short run?
First, all workers will pay higher taxes this year because the payroll tax is now increased by 2%. This means that a person or couple earning $50,000 will pay an additional $1,000 in payroll taxes. On the flip side, the Bush-era tax cuts have been made permanent. This means that tax rates, capital gains taxes, and tax on dividends in 2013 will be the same as last year for all but those individuals earning more than $400,000. The legislation also provides some economic certainty for small businesses and entrepreneurs to count on which, thankfully, should translate into more job creation.
What Congress failed to address was our out-of-control spending. Remember, Congress intentionally created the Continue reading The Fiscal Cliff