The Ongoing discussions over the so called fiscal cliff are extremely important to every American because it could mean a tax increase for every American beginning on January 1st, 2013. Many people suspect that the impeding tax increases will only impact the wealthiest of Americans, but the tax cuts that were passed by President George W. Bush are set to expire on January 1st unless congress votes to extend them. Democrats and republicans want to continue the middle class tax cut that brought down rates by 3%, but they do not agree on tax cuts for the wealthy. Democrats have proposed increasing revenue by ending the bush tax cuts for the wealthy and republicans have proposed raising taxes on the wealthy by closing loopholes and deductions. Republicans refuse to raise taxes on the wealthy because many small businesses are taxed at an individual rate and a tax increase for them during an economic recovery would be catastrophic and would lead to a loss in small business jobs. Capital gains tax and dividend tax will return to the levels existent 11 years ago and the marriage penalty will return.
The federal government has tremendous power when it comes to influencing economic activity within the United States. If congress and the President don't agree on a proposal soon there will be a catastrophic impact to an already fragile economy and the economy will certainly fall back into a recession.
http://www.smartmoney.com/taxes/income/how-the-expiring-bush-tax-cuts-affect-you/
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