Finance & Enjoyment Blog

 

We recently attended Colorado Medical Society’s annual meeting and Colorado Medical Group Management Association’s Fall conference. We enjoyed meeting many of their members and discussing a topic that is looming larger every day. That topic is the “Fiscal Cliff” that our nation is facing come January 1,, 2013. 
 
The term “Fiscal Cliff” was coined by Ben Bernanke, the current Chairman of the Federal Reserve,. In February of 2012, he used this to term to describe “a massive fiscal cliff of large spending cuts and tax increases" set to take effect in 2013. These cuts and taxes include the following:
 
-          The expiration of the Bush Tax Cuts
-          Sequestration – Spending cuts required due to the failure of the Supercommittee last fall
-          Expiration of the 2% payroll tax holiday for employees
-          New taxes imposed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2012
-          Implementation of the cuts imposed by the Sustainable Growth Rate to control Medicare spending
-          Return of the Alternative Minimum Tax threshold back to the year 2000 levels
 
As this is an election season, there are a large number of ads about what each party and candidate wants to do with respect to taxes. “Wants to do” and “will do” are two very different things. Nothing will get done before the election to address any of the items above. This task will fall to a lame duck session of Congress that appears to be too divided to address these issues before the first of the year. 
 
In this series of blogs about this fiscal cliff, we will take a look at each of the above items and discuss its impact not only on our clients, but also on our economy. For example, the sequestration spending cuts currently mandated call for $109.3 billion in annual reductions in government spending through 2021. This will definitely have an impact just not on government contractors, but on the economy as a whole. 
 
Tax season could start very early this year depending upon Congress’ response to this Fiscal Cliff.


Posted in Your Financial House » Retirement and Exit Strategies » Rules and Regulations »



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