Posted by Katie Vlietstra- With all of the gloom and doom predictions coming out of Washington, many Americans have simply tuned out, rolling their eyes and lamenting once again how Congress is proving how ineffective they can be when dealing with big issues. But for all the rhetoric, it is important to ask “So, what is this fiscal cliff and how will it impact me?”
Mike Beene, NASE Vice-President and General Counsel had this to say:
“The biggest effect going over the fiscal cliff has is the psychological one. While the face that most taxpayers are getting a several thousand dollar tax hit when times are already tight is of concern for the taxpayer and the economy, the unknown is the true threat. We don’t know the rules, what our taxes will be or even if the world will tire of American debt and drive our interest rates up. The government will not close Jan. 1, and through creative accounting all will continue as normal. But with each run to the edge, Washington steps another step into its beltway cocoon - leaving the rest of us to wonder if they have ever lived with the rest of us on the ground. “
Keith Hall, NASE National Tax Advisor, shares his thoughts:
I still think the most unfortunate part of the cliff is the uncertainty for small business. Following the metaphor, the small-business owner doesn't even know how high the cliff is or how far they will fall. The uncertainly is the worst part of the long term impact.
The impact of the payroll tax reinstatement to 7.65%, depreciation options, and other impacts of the fiscal cliff means that the average small-business owner can expect to pay an addition tax ranging from $2,700 to $4,000 which translates into two to three weeks of earnings for that family.
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As the Obama Administration and Congress continue to dance the tango, seeing how close one group will come to stepping off the cliff, Americans are cautiously proceeding with their holiday shopping, travel, and 2013 budget planning. Each day that passes without a common-sense solution means the opportunity for a devastating “butterfly effect”- it will take just one person to not make that part-time hiring decision or scratch plans for a kitchen re-model to negatively impact the already fragile economy.