If Congress does nothing and the United States plunges off the “fiscal cliff” in three months, taxes would rise for 90% of Americans due to automatic increases in income and payroll taxes and other financial shocks, said a report issued on Monday.
In the latest forecast of trouble ahead if Capitol Hill cannot overcome its fiscal paralysis, the Tax Policy Center, a Washington think tank, predicted taxes would rise by $500 billion in 2013, or an average of almost $3,500 per household.
At the same time, government spending would shrink, reducing the budget deficit. But the economy would likely be thrown back into recession next year, the center said, echoing similar predictions of the devastating impact of going off the “cliff.”
“Lawmakers could soften that near-term hit by delaying or repealing provisions in the ‘cliff’ or by enacting other spending and tax policies that would provide offsetting support for the economy,” the center said.
Because Congress and the White House failed to reach a deal to cut the deficit by an additional $1.2 trillion over 10 years, the federal government is on track for draconian spending cuts in 2013 and beyond unless there is agreement on an alternative before the end of the year.
Lawmakers are expected to take up the matter following the Nov. 6 presidential and congressional elections.
To read more, visit:Â http://www.cnbc.com/id/49247659
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