The Fiscal Cliff is the name given for the 2013 increase of Federal Government taxes and budget cuts. The Bush-era tax cuts expire and the 2013 “Budget Control Act” kicks in, among other budget cuts & new taxes. The Fiscal Cliff is set to reduce the 2013 US Government budget deficit by roughly half; will remove $607 Billion from economy (GDP), resulting in 4% drop, pushing it back into recession; it can NOT be avoided. It must happen to fix the budget deficit; any delay must be paid for later; it will NOT reduce the US debt, only slow down the growth. The Fiscal Cliff’s (new taxes and budget cuts) size and impact are visualized below in physical $100 bills.
Beginning 2013, Americans are to pay more in taxes.
Bush era tax cuts, FICA 2% payroll tax cuts & other tax provisions will expire, Obamacare taxes will show up – this amounts for $400 Billion in new taxes.
Each truck holds $2 Billion, each line is 1.36 miles (7217 feet), for a total truck line length of 2.73 miles, worth $400 Billion.
This is how it could look if taxes were paid physically, instead of electronically.
$222.7 Billion Bonus: Corporate Tax Subsidies
While the taxes are increasing significantly on American citizens, the largest corporations have enjoyed corporate tax loop-holes.
280 of America’s largest companies got $222.7 Billion in tax-breaks between 2008-10, while all of them remained profitable.
67 of the 207 companies’ paid effective three-year tax rate of less than 10 percent– far from the 35% corporate tax code.
The Fiscal Cliff will cut $207 Billion out of Government budget: $65 Billion in cuts will come from “Automatic Sequestration”, a fancy name for automatic spending cuts that are the consequence of the “Super Committee” failing to come up with a plan to cut $1.5 Trillion over 10 years, which they had to do in order to avoid the “Automatic Sequestration”.
The sequestrations cuts will be divided equally between Defense and Non-Defense spending.
$26 Billion in cuts will come from the Unemployment Benefit Extension expiring.
$11 Billion in cuts will come from reduction in Medicare Payment Rates.
$105 Billion will come from other spending reductions.