Some give President’s tough budget stance thumbs up
By Chris Levister
The so-called ‘fiscal cliff’ has serious impact on American households in almost every tax bracket.
Payroll taxes are slated to rise and about 27 million people could face the ‘alternative minimum tax’ for the first time.
If Congress and President Obama don't reach a deal to resolve the fiscal cliff before the end of the year, a series of tax hikes and federal spending cuts will kick in on Jan. 1.
But many people in the Inland Empire aren't paying much attention to the fiscal cliff. Ask holiday shoppers at Riverside Galleria at Tyler about the on-going stalemate and be prepared for a blank stare, a lesson in civility from the mall Santa Claus or this: “Who the hell cares. When you’re given a choice between Cliff and Barbie which one would you take home?” That’s shopper Erie Tyree’s way of saying ‘disinterested’.
Economists say if Americans react to those tax increases by spending less, the fragile economy could tumble back into recession.
There’s growing fear that a drop in consumer spending, which makes up about 70 percent of the economy, will prompt businesses to pull back as well, possibly resulting in layoffs. The cycle of retrenchment that fueled the last recession would then repeat itself.
"I've heard a lot about it, mostly the same old partisan bickering,” said Teresa Robles, who manages a mall clothing store.
“Can’t say that I really know what a fiscal cliff is,” said shopper Benjamin Ahrens. “Is that like bungee jumping without a cord?”
Rich or poor, these people had one thing in common -- they pretty much saw the fiscal cliff crisis as an abstract problem that doesn't have much to do with them. And they weren't too worried about how their own taxes could go up.
But then we showed these people a chart outlining the tax increases that would likely kick in if the U.S. goes over the fiscal cliff.
“That’s a big bite no matter how you slice the apple,” said auto salesman Ahrens. “I’m just getting by. I couldn’t afford that.”
“I think that would be reason to worry,” said Robles.
The numbers, which were compiled by the nonpartisan Tax Policy Center show that middleincome families would pay an average of $2,000 more in taxes next year under the fiscal cliff scenario. People who earn the highest incomes would see their taxes increase by four or five times that.
But whether the estimated tax bite ranged from $500 to $13,000, almost everyone we talked to winced at their potential tax bill.
Whether you have a job or living off retirement money the percentage of taxes on that income will go up. We’re also going to see an increase in the payroll tax. That means someone making $50,000 a year will pay $20.00 extra a week, that adds up to ironically $1,040 a year.
About 27 million people are going to be hit with the alternative minimum tax (AMT) for the very first time. This is a separate calculation that goes along with the regular tax. That’s about $3,700 on average for the person hit by the AMT.
Long term capital gains and investment dividends would be taxed at a higher rate. That’s why many companies are looking to pay out dividends and people are being urged to sell assets before the end of the year.
People who are unemployed and people who are receiving unemployment benefits will also feel the effects of the fiscal cliff. If no agreement is reached, those who once were able to get up to 96 weeks of federal or state unemployment benefits face a maximum of 26 weeks.
Home interest deductions may go away or be capped. That represents a $2,000 saving to the average $100,000 home owner.
No matter how you slice the budget battle this will impact almost everyone.
But while some see the fiscal cliff as a bungee jump without a cord, others like Meredi th and Willie Hughes see the budget war as a chance for the re-elected President Obama to set the course for his second term.
There’s a lot more at stake here than the budget said Meredith. “He’s got to play hardball or he’ll just go down like a wet noodle.”
“He’s got to display political courage and sanity. People want to see him run the country on his terms. Isn’t that why we re-elected him?” said Willie.
At Andre’s Hair Salon in San Bernardino the usual weekend clientele were debating the pros and cons of presidential compromise. “I think it’s time to bring it on. Obama spent the last four years on the ropes,” said salon owner Shaun Rubinson.
“This could be an opening round for negotiating immigration and job creation. It’s like raising children,” said Rubinson. “You got to let them know who’s in charge early on. Besides, the Republicans lost the election. Didn’t they get the memo?”
Even if the president can’t get everything he wants in the budget deal, entirely on his terms, some Democrats and party strategists have said if he can reach a compromise that protects core priorities – a victory could serve as a game changer for bigger battles ahead such as immigration reform and GOP proposals to slash Medicare and Social Security.
“President Obama gained a lot of political capital by winning reelection. Times are different now – get off the ropes,” said Rubinson. “I think Americans want to see him take off the gloves.”
|< Prev||Next >|