The Fiscal Cliff Will Cost Americans Big Timeby Gerri Willis
I always like to give you the straight poop on everything, and today, well, I’m concerned about the fiscal cliff. In just the past two days, two very well connected professional money managers have spoken to me about the trepidation their clients have about the expiration of the Bush tax cuts and the cutbacks on federal spending.
To put it succinctly, the smart money is worried, concerned, and many are selling.
But to read the stories by the press on the fiscal cliff, you'd think that the changes on the horizon (just 35 days away) don't matter much. In fact, sit back, and relax. The fiscal cliff it's not a big deal.
U.S. News quotes:
“It's unlikely all of these bad things will happen or stay in effect for an extended time. Pundits have been calling it the fiscal slope instead of a cliff. There is also rising support for junking the entire "fiscal" approach as confusing and renaming it the austerity crisis or bomb.”
As if giving the fiscal cliff another name would change the impact of the problems. Look, the reality is this: your taxes are going higher.
Consider these numbers from the tax policy center:
Middle class earners; folks with an income of $64,484 will see their tax rate climb 3.8% or $1,984.
Upper middle class hearings with incomes up to $108,266 will face a 4.2% hike and pay $3,540 more in taxes.
If you make $506,210, watch for a 5.2% hike in taxes, or an amazing $14,871.
In Richie Rich land, earners of more than $2,655,675 will pay nearly an 8% gain in taxes or $633,946. And they say the rich don't pay their fair share. Whew!
Look, the general media may say forget it, it's not important.
I say, take whatever income you can this year and move those bonuses and any extra pay to calendar 2012. Wait to sell your stock losers until next year, and if you are thinking of gifting any money to the kids or grandkids, do it this year when taxes will be far lower.