With the “fiscal cliff” right around the corner and with the U.S. government brushing up against the debt ceiling again, the U.S. government’s finances will be a focal point for the next few months. However, it would be naïve of any individual to believe that this discussion will disappear. As politicians continue to “worship the great god of reelection,” it has become increasingly frequent that decisions on taxes and spending continue to be pushed off.
The fiscal cliff is coming. What is it and how does it impact your estate planning decisions? The current estate tax table starts at 30% and quickly graduates to 45% of your total taxable estate. Again, this is what the law is today, and with all the talk lately of the need for money by the federal government, and thus far the lack of any legislative attention to the expiring tax law and the impending fiscal cliff, coupled with the uncertainty of the upcoming election, it appears that little action will be taken prior to January 2013.
With 2013 rapidly approaching, there has been growing talk of the impending “fiscal cliff.” This refers to the combination of the tax increases and spending cuts that are currently written into law for the start of 2013. According to the Urban Institute and the Urban-Brookings Tax Policy Center, the fiscal tax increase would amount to approximately $536 billion, or about $3,500 per household. The Congressional Budget Office forecasts that real GDP would contract by 0.9 percent in the first half of 2013 as a result of the fiscal cliff.