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1 The Fiscal Cliff: A Primer 1 (2012)

handle is hein.taxfoundation/srcaexz0001 and id is 1 raw text is: FOUNDATION November 13, 2012 No. 204 The Fiscal Cliff: A Primer By Tax Foundation Staff Table I: Tax Changes Taking Effect January I, 2013 Tax Increase On December 31,2012, a large Tax Change (2013 over 2012) lt' a Expiration of the 2001-03 tax cuts (not including estate) $156 billion swath of the federal income tax Expiration of the payroll tax holiday $125 billion code is scheduled to expire, an Failure to patch the Alternative Minimum Tax $88 billion event which has come to be Expiration of business expensing $48 billion Expiration of other tax extenders $40 billion known as the fiscal cliff. New PPACA (Obamacare) taxes $36 billion Among the expiring provisions Expiration of the 2009 stimulus $11 billion are the 2001 and 2003 tax cuts Estate tax increase $10 billion Total, Tax Increases $514 billion enacted under President Bush, a Source: Tax Foundation; Congressional Budget Office; joint Committee on compromise on the estate tax, a Taxation; Office of Management & Budget. patch in the Alternative Minimum Tax (AMT) reducing its impact, the temporary 2 percent payroll tax holiday, increased business expensing, and the extenders package of miscellaneous tax deductions. On January 1, 2013, five taxes enacted as part of the Patient Protection and Affordable Care Act (PPACA)-popularly referred to as Obamacare also take effect, along with sequester spending reductions of $109 billion due to the failure of the supercommittee to reach consensus on budget reductions. Taken together this fiscal cliff, or Taxmageddon, could potentially reduce economic output by hundreds of billions of dollars.1 Congress and the President will have little time to rest after the New Year: in late February, the U.S. government will hit the debt ceiling, exhausting its ability to borrow to finance ongoing spending without an increase by Congress. Finally, the federal government's continuing resolution appropriating spending expires on March 27, 2013. 1 See, e.g., Congressional Budget Office, Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013 (May 2012), htt/wwwcbo gov/ites/default/files/cbofiles/ttachments/FiscalRestraint 0 pdf (estimating economic effect of fiscal cliff provisions to be a 4 percentage point reduction in GDP); Fidelity Viewpoints, Fiscal clff ahead: What it may mean (Jun. 28, 2012), htps:/wwfidelity corn/viewpoints/fisca1-cliff (estimating economic effect of fiscal cliff provisions to be 4 to 5 percentage point reduction in GDP); Douglas Holtz-Eakin & Ike Brannon, The Economic Effects of the Fiscal Clif, AMERICAN ACTION FORUM (Jul. 2012), http:/americanactionforum org/sites/default/files/Fisca 10o2OCliff pdf ( [Wihen considering economic multipliers, the contraction could approach ten percent, which would amount to the biggest year-over-year decline since 1932.).

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