What are the component of Revenue Increases and Spending Cuts resulting from the Fiscal Cliff?
The following represents the revenue and spending measures that are set to expire or take effect at year's end.
Components of Tax Revenue Increases
1. Expiration of Bush Tax Cuts & AMT Patch.
the "Bush tax cuts," will expire on December 31, 2012, raising all income tax rates (top will go from 35 to 39.6 percent), as well as rates on estate and capital gains taxes. The alternative minimum tax (AMT) will also automatically apply to millions more citizens.
2. Payroll Tax Cut.
The Social Security payroll tax holiday will expire December 31, raising the rate from 4.2 to 6.2 percent.
3. Expiration of Research and Experimentation tax credit,
These tax credits are due to sunset at years' end.
4. Affordable Care Act Taxes.
Some provisions in the Obama health-care legislation, including increased tax rates on high-income earners, are set to take effect in January 2013.
Components of Spending Cuts
The automatic spending cuts legislated by the Budget Control Act of 2011 will hit January 2, and half of the scheduled annual cuts of $109 billion per year from 2013-2021 will come directly from the national defense budget, half from non-defense. However, some 70 percent of mandatory spending will be exempt.
1.Extended Unemployment Benefits.
The federal unemployment benefits, last extended in February, will expire at year's end.
2. Medicare "Doc Fix."
The rates at which Medicare pays physicians will decrease nearly 30 percent on December 31.