United States Fiscal Cliff
The United States fiscal cliff came into existence in 2013 January whereby, a series of laws previously enacted came into effect simultaneously. The 2001 Bush tax cuts which had received a 2 year extension by the Tax Relief Act of 2010 and were to expire on 31st December 2012 as well as planned spending cuts under Budget Control Act of 2011 at that time also came into play.
In the past, the term ‘fiscal cliff’ has been used for purposes of referring to various fiscal issues. The use of the term came into context with the 2010 expiration of the Bush tax cuts. In 2011, the term started been used to refer to deficit reductions that would occur in 2013 under fiscal cliff scenario. Ben Bernanke, the chairman of the United States Federal Reserve in late February 2012 popularized use of the term for the upcoming tax reduction deficits.
He described the massive fiscal cliff of tax increases and large spending that would take effect on 1st January 2013 before the House Financial Services Committee. Majority of the analysts were not in agreement with the choice of words and argued it should have been called fiscal hill or slope.
They reasoned that such options would have been appropriate since while the cumulative economic effect of 2013 would be substantial, the same would not be felt immediately but gradually with advance in the weeks and months.
There are some key laws that lead to the cliff and some of these are as highlighted below:
- Bush tax cuts expiration as part of the 2001 Economic Growth and Tax Relief Reconciliation Act and the 2003
Jobs and Growth Tax Relief Reconciliation Act as extended by the 2010 Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act. - Spending cuts across the board to most of the discretionary programs directed by Budget Control Act of 2011
- Reverse of Alternative Minimum Tax threshold to the 2000 tax year levels.
- Expiration of 2percent Social Security Payroll tax cut extended most recently by MCTRJCA
Without any new provisions, the provisions were to go into effect automatically on 1st January 2013. There are some provisions that raised the taxes while others reduced spending. Some of the lawmakers had intentions to attach bipartisan extension to expiring wind-power tax credit.
There were proposals to avoid the fiscal cliff which involved passing new legislation or repealing legislation that contained some of the provisions in order to extend the provisions that were about to expire. There were also different proposals aimed at including changes to all or some of the provisions.
At Essays Experts, we are a team of expert essay writers backed by years of professional writing experience committed towards ensuring that you buy an essay that is 100% unique. No one understands better than us the importance of submitting original papers.
Precisely for this reason, we have a quality assurance team that passes each paper through plagiarism checker to ensure it is 100% original. We also have a team of editors who counter-check papers to confirm they are written according to your guidelines.
We guarantee timely delivery, affordable prices and value for your money!
Reference
http://en.wikipedia.org/wiki/United_States_fiscal_cliff
http://www.forbes.com/sites/rickungar/2012/11/10/the-fiscal-cliff-explained/