We all know about the fiscal cliff; ye gads do we all know. Sadly though most of the rhetoric and press creates the impression that reverting to old tax rules will mostly affect the horrible 1% who can well afford to pay more for capital gains and dividends. Nothing could be further from the truth. For example, take just the reinstatement of 2% higher payroll taxes for working Americans who no doubt have come to use every penny of that ill-conceived “temporary” tax-cut stimulus, but there are more including earned income tax credits and the AMT.
From my perspective, increasing my taxes will cause me to make changes. I am trying to maintain my pre-retirement standard of living on a fixed and much lower income. Part of that includes a monthly contribution to a non-profit middle school that provides a free education to motivated inner city minority children and then arranges for full scholarships to private high schools with great success. Another part includes a modest monthly contribution to college funds to each of my grandchildren.
If my taxes go up I will not be able to continue both payments (and there is other spending that will be cut back). I don’t have to think twice about which payment will stop so I can send money to Washington to be spent on who knows what ill-conceived program or stimulus … Let’s hope it’s one that helps inner city kids get a better education.
What will you stop doing if your tax bill goes up?
Related articles
- What Happens if Congress Extends Tax Cuts For Those Making $500,000? (forbes.com)
- What the fiscal cliff looks like from the back side of the election (iowabiz.com)
QUINNSCOMMENTARY 
What will you do … when your taxes go up?
If you don’t pay attention to the semantic arguments about what is a tax increase and instead focus on outcomes, what you find is that tax increases are inevitable.
If the Bush tax rates remain the same but deductions, preferences and credits are eliminated or limited, most people will have less money in their pockets after tax time. Obviously if the rates go up, everyone except the 47% who don’t pay income tax already will have less money. If the temporary FICA tax reduction goes away, people earning income will have less. People with less money have less to spend. This is bad news for a consumer oriented economy. What happens next with less money in the hands of the public and more in the hands of government? In a perfect world, an overspent government would reduce its deficit but if history is a guide, the Keynesian s in government will require more spending under the guise of stimulus. So in the final analysis we will have transferred money from private hands with its efficiencies to government hands with all its inefficiencies.
As you can see, I am not optimistic about our future.
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