Fiscal Cliff

[yankeehater]

yankeehater:
the post you found is, as i understand it accurate.
especially the part about debunking that chain email that made its way around the globe it seemed.
the key explanation is everything AFTER the line "we are going to review the facts again now"

I was at a manufacturing conference a few weeks back and all I heard was uncertainty. I hear it from customers, big and small, and I think this is a prime example. No one individual or business, knows how they are going to be affected until it all is put in place.

 

[Irish YJ]

ND NYC... Another nice slice of fact and data. Reps again.

To your point about spending changes in anticipation, I can tell you first hand that we've seen it several times over the last 3 months. I work for a small technology business with several contracts with Fortune 500 corps. Execs that I work with (2 top 20 corps) have been crystal clear that they are holding dollars until post election, and post fiscal cliff. One project, for a top 100 corp basically told us that they would sign if Romney was elected, and would have to wait until after 1Q to revisit if Obama was elected.

Many of our partners are experiencing the same. One of my vendors/partners (large electrician / cable company) has seen a good portion of their funnel stall out. His close rate on deals is down 70% over the last 2 months (compared to seasonal average and this years run rate through July). Most have provided the same honesty that my clients have.

Sadly, this equates to layoffs, etc.. all around the holidays in some cases.

 

[IrishinSyria]

Greece is trying this and it is not going well.

The differences between the Greek economy and the US economy are legion. If you really believe the deficit is our biggest economic problem, then the fiscal cliff should be viewed as a blessing, since it amounts to an emergency deficit reduction plan.

 

[Rizzophil]

Regarding additional components of the financial cliff, Obamacare taxes pickup January of 2013.

More and more states are billions of dollars in the red. They are bleeding cash. The US government doesn't have money to lend them because we are already borrowing $.40 on every dollar. (Or we are buying our own debt which is going to bite us hard)

 

[beryirish]

I've put my financial advisor on speed dial that if we go over the cliff to liquidate all my stock market holdings, stock market will plunge like no other.

Not to mention if you have long term capital gains you will be taxed on them 15%....if the tax breaks expire it will bump it up to 20%

 

[FLDomer]

So does anyone find it ironic that our country is heading towards a "Fiscal Cliff" and we just re-elected a man who's campaign slogan was "Forward"??

 

[RDU Irish]

From LPL Financial's chief economist -

$255 Billion tax increase from Bush Tax Break expiring ($50B for "high" earners versus $205B for "middle" earners - low earners pay no tax, thus got no break)

$112B Payroll tax cut expiration (2% lower FICA on Employees last few years)

$110B spending cuts from sequester (half defense)

$38 billion AMT "patch" - passed every year to adjust AMT so it doesn't b!tch slap more people.

$21 billion Obamacare tax of 3.8% on investment income

TOTAL - $536 billion = 3.5% of GDP

That means the economy would need to grow at 3.5% to avoid a recession, not happening.


Note that 80% of the cliff is tax increases.

My bet, Bush tax cuts get extended for one year, whole hog. Holding 80% hostage to stick it to 20% allocated to "rich" won't happen, Republicans are already hanging 700K jobs on the $50B. Throw on the AMT patch and we are far enough out of the woods to make this work.

Payroll tax cut won't extend, spending cuts through sequester seem like a chicken sh!t way to get to reduced spending. They know it has to happen but can't man up to the problem.

 

[RDU Irish]

Regarding additional components of the financial cliff, Obamacare taxes pickup January of 2013.

More and more states are billions of dollars in the red. They are bleeding cash. The US government doesn't have money to lend them because we are already borrowing $.40 on every dollar. (Or we are buying our own debt which is going to bite us hard)

Sovereign nations with their own currency do not go bankrupt. How do you go broke when you can just print more money? Medicare and Social Security own 1/3rd of our national debt, but are turning to the red - i.e. cashing in bonds instead of buying more - just as we are ramping up our borrowing.

The Fed owns $1.6 Trillion of the debt, making up for other borrowers' lack of interest. Fed's Balance Sheet Edges Up in Latest Week How does the Fed "buy" all of this? Well, it is nice to own the printing press.


It is a bigger indication of the war on poverty. We destroy the poor, retired and middle class with inflation, making their entitlements worth less.

 

[Irish YJ]

So does anyone find it ironic that our country is heading towards a "Fiscal Cliff" and we just re-elected a man who's campaign slogan was "Forward"??

Just like lemmings.

 

[ND NYC]

Fiscal Cliff 2012 - US Business News — Who Gets Hurt the Most If US Goes Off 'Fiscal Cliff' - CNBC

good article and good video within on the fiscal cliff

 

[tadman95]

I heard it described this morning as more of a financial slope, less of a cliff. The Fed has some flexibility when some of the changes are actually implemented so it won't all happen January 1st.

There was also some discussion that the politicians may not mind it so much as it gives both sides cover, ie. Let the Bush cuts expire, then implement other cuts afterwards. The Republicans can claim they didn't raise taxes technically and can then claim they cut taxes with new cuts. Obama gets his increases on the wealthiest. There is some convoluted wisdom there I guess.

In other words we should expect anything, it could be months before things settle out.

 

[Irish Houstonian]

FYI, this is the gist of Fiscal Cliff bill passed (American Taxpayer Relief Act):


Employee portion of Social Security: was 4.2%, now 6.2%

Employee portion of Medicare: was 1.45%, now 2.35%

Social Security wage limits: was $110,100, now $113,700

401(k) limits: was $17,000, now $17,500

Reimbursable mileage rates (per mile): was $0.555, now $0.565

 

[Cali_domer]

FYI, this is the gist of Fiscal Cliff bill passed (American Taxpayer Relief Act):


Employee portion of Social Security: was 4.2%, now 6.2%

Employee portion of Medicare: was 1.45%, now 2.35%

Social Security wage limits: was $110,100, now $113,700

401(k) limits: was $17,000, now $17,500

Reimbursable mileage rates (per mile): was $0.555, now $0.565

(-) 275.00 month for me.(Including wife)

 

[chicago51]

FYI, this is the gist of Fiscal Cliff bill passed (American Taxpayer Relief Act):


Employee portion of Social Security: was 4.2%, now 6.2%

Employee portion of Medicare: was 1.45%, now 2.35%

Social Security wage limits: was $110,100, now $113,700

401(k) limits: was $17,000, now $17,500

Reimbursable mileage rates (per mile): was $0.555, now $0.565

For what its worth the SS and Medicare tax were always 6.2% and 2.35%. They were lowered in 2010 as temporary move to stimulate the economy. They expired so they are now back at the levels they always were. Not defending it going up, perhaps it should have been extended just pointing out the facts.

Also part of the act. Singles making over $400,000 and couples making $450,000 now pay 39.6 perecent in taxes instead of 35 percent. FYI only the income over 400k and 450k is taxed at 39.6 percent. So someone who makes $401,000 would only have $1000 taxed at 39.6 perecent.

Also Capital Gains (money from stock divendends, and bonds) taxes over $400,000 went up from 15% to 20%. The capital gains folks ala Mitt Romney to me are the real winners as their money is taxed at a lower rate than someone making $50,000.

They slightly increased the Estate tax rate of estates over 5 mil. Not sure by how much.

So basically everyone's taxes go back 2009 rates unless you make over 400K then you go back to 2000 rates.

 

[irish1958]

Estate tax is 40% above 5M..
Tax rates are back to Clinton levels for the most part. I would like to point out our most prosperous time in history was the decade of the 90's. And we had a surplus and were paying down the national debt. Imagine if we had not gotten into two wars and had kept the same tax rate instead of what we (Bush) did how much better off we would have been and would be now.

 

[NDFANnSouthWest]

My pay check took a hit. wtf. I remember a promise that ppl making <250k will never pay higher taxes. smh

 

[IrishLax]

For what its worth the SS and Medicare tax were always 6.2% and 2.35%. They were lowered in 2010 as temporary move to stimulate the economy. They expired so they are now back at the levels they always were. Not defending it going up, perhaps it should have been extended just pointing out the facts.

Also part of the act. Singles making over $400,000 and couples making $450,000 now pay 39.6 perecent in taxes instead of 35 percent. FYI only the income over 400k and 450k is taxed at 39.6 percent. So someone who makes $401,000 would only have $1000 taxed at 39.6 perecent.

Also Capital Gains (money from stock divendends, and bonds) taxes over $400,000 went up from 15% to 20%. The capital gains folks ala Mitt Romney to me are the real winners as their money is taxed at a lower rate than someone making $50,000.

They slightly increased the Estate tax rate of estates over 5 mil. Not sure by how much.

So basically everyone's taxes go back 2009 rates unless you make over 400K then you go back to 2000 rates.

I hate fuzzy math like that. Capital gains tax is lower than income tax for a number of completely intuitive and logical reasons.