Can Kicked Down the Road

Well this comes as no shock. We have a temporary fix to the fiscal cliff. The can was kicked down the road. The solution they provided created increased revenues of $600 billion over the next 10 years. This increase in revenues is a very small amount when looking at the $16 trillion. The "highlights" though pretty dim are as follows:

-- The tax rate for individuals making more than $400,000 and couples making more than $450,000 will rise from the current 35% to the Clinton-era rate of 39.6%.

-- Itemized deductions will be capped for individuals making $250,000 and for married couples making $300,000.

-- Taxes on inherited estates will go up to 40% from 35%.

-- Unemployment insurance will be extended for a year for 2 million people.

-- The alternative minimum tax, a perennial issue, will be permanently adjusted for inflation.

-- Child care, tuition and research and development tax credits will be renewed.

-- The "Doc Fix" -- reimbursements for doctors who take Medicare patients -- will continue, but it won't be paid for out of the Obama administration's signature health care law.

These changes don't include the changes in the payroll taxes that will be increased as of January 1. The change in payroll taxes will impact the majority of earners. Payroll taxes were reduced in 2011 and will increase from 4.2% from 6.2% again immediately. This means those earning $30,000 will pay an average of $50 a month more. Those that make near $120,000 will pay $200 a month more. This means there will be less spendable income which, as said before, will slow the economy.