It’s time for a status report on the state of negotiations over the fiscal cliff. Here are some frequently asked questions and answers.
1) Q. What is the fiscal cliff?
A. Under existing law, $494 billion in tax increases are scheduled to go into effect on January 1, 2013. There are three main categories of tax increase that are coming. About a third of the increase will come from ending the Bush tax cuts. Those included across-the-board income-tax cuts, reductions in capital-gains and dividend taxes, a reduction in the marriage penalty, and an increase in the child tax credit. About a quarter of the tax increase will come from ending the payroll-tax cut established as a temporary measure several years ago. About a fifth of the increase will come from ending a “patch” that minimized the effect of the Alternative Minimum Tax on the middle class. There are a number of other smaller tax hikes scheduled to go into effect, including a big increase in the estate tax that will produce only $13 billion in revenue but will destroy a lot of family farms and small businesses.
The cost of getting married, and of dying, is about to go up. For a full discussion, see this report.