Impact of Fiscal Cliff i.e. If no action is taken and legislations are allowed to expire : What is worrrying the US analysts and economists is that federal government allowed the above two events to proceed (revenue increase and spending cuts) as planned, they could have a detrimental effect on an already shaky US economy. The results can lead even sending the economy back into an official recession as it cut household incomes, increased unemployment rates and undermined consumer and investor confidence. At the same time, it was predicted that going over the fiscal cliff would significantly reduce the federal budget deficit. There are wild talks that in case Congress and President Obama do not act to avert this perfect storm of legislative changes, USA will, fall over the cliff. Among other things, it will mean a tax increase the size of which has not been seen by Americans in 60 years. The Tax Policy Center estimates that middle-income families are likely to pay an average of $2,000 more in taxes in 2013. Many itemized deductions will be subject to phase-out, and popular tax credits like the earned income credit. Bright Side of the Fiscal Cliff : Certainly there are few who feel Fiscal Cliff would have a long-term positive impact. These people argue that the U.S. has to certainly tackle its deficits at some point of time. It is better to bite the bullet at this stage and this initiative can prove a step the right direction. Although the short-term impact could be severe (recession in 2013), the bullish argument would hold that the long-term gains (lower deficits, lower debt, better growth prospects, etc.,) would be worth the short-term pains. for more #Bankingterms details click on: on.fb.me/1cHnpJO
Posted on: Mon, 29 Dec 2014 17:10:07 +0000
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