By now, most of us have heard something about fiscal cliff.
The fiscal cliff has turn into a battle between Republicans
and Democrats. President Obama wanted at the beginning to increase taxes on
those making 250k and above, then he recently changed his position on that and
elected to propose an increase on individuals making 400k and above. Let’s
face, most American make less than 250k even with a combined income between
husband and wife. The increase of tax on those making 250k and above would not
have affected most American. In fact only about 2% of American make 250k and
above according to the US
census Bureau. The more we venture into higher income, the lower the percentage
become. Once can wonder why the adjustment.
Republicans, who tend to have deep pocketed corporations behind
them as well as individuals making well over 250k a year, are looking to stop
and oppose any tax increase. The Republican are instead looking to cut spending
in much needed social services such as Medicare and other services on which so
many Americans depend on.
They argue that an increase in tax rates will not produce a
much needed boost in the budget but rather spending cuts will. Even though
spending costs are very important to minimize money going out but there is also
a need for money coming in as well.
Last week, the mood on the street was very auspicious after
president Obama and House Speaker John Boehner met to discuss the different
options. Some people were so optimistic that they even predicted a resolution
by the end of the current week. But with the way things are going, each day passing
reduces people’s optimism on a solution.
Investors and everybody else are bracing for the US going over
the cliff. We are all aware of the consequences of such action. Nevertheless,
some analysts argue that it might be the best thing to do for the US.
We are all looking at congress to deliver a solution and
help keep the economy on the path to recovery.
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