How Will the Fiscal Cliff Impact You? - WLNS TV 6 Lansing - Jackson | Your Local News Leader

How Will the Fiscal Cliff Impact You?

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Along with the new year, the looming fiscal cliff is also on its way. If Congress can't come to an agreement, a combination of spending cuts and higher taxes will kick in.

MSU Professor Charles Ballard says everyone's taxes will go up, but how much will depend on your income. 

Families earning about $40,000 a year will see a $2,700 increase in taxes. Those who earn about a $150,000 will pay $8,000 and in the top bracket, Americans making close to a million a year, will pay nearly $50,000 more in taxes.

The fact that Congress can't come to an agreement to stop the tax hike has a lot of mid-Michigan residents frustrated.

"Come on guys, get together. They've had all the opportunity to work it out and they wait until the last minute," said Laird Eddie.

 "You know it doesn't seem to be benefitting those who are opposing making a deal," said Ann Francis.

"It's unfortunate that Congress can't get things done in a timely manner," said Doug Heym.

Now the bottom line is if Congress doesn't reach an agreement by the end of the year, those tax increases will kick in. Ballard says he doesn't expect them to reach an agreement, but says that's still not a reason to panic. He says it's not likely we'll see a recession because of it.

"The most likely scenario is that we get a deal, but not until after the new year," he said. "It's only if they can't reach a deal for months that we're in real trouble."

 

 

 

He says it's politically difficult to negotiate raising taxes and cutting spending, but the fiscal cliff kicking in will do those things automatically, so politicians don't have to. After the new year, Congress can negotiate the other way, retroactively adding back spending and cutting taxes, which is a lot more popular with constituents.

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