How will the fiscal cliff compromise bill affect you?

us house fiscal cliff

By Shira Schoenberg | | January 3, 2013

With all the discussion about the compromise bill that President Barack Obama signed into law averting the so-called “fiscal cliff,” how will the bill impact you? Here are a few scenarios.

The Unemployed

In November, the state Division of Unemployment Assistancenotified 45,000 Massachusetts residentswho were receiving federal extension benefits that their benefits will end Dec. 29. Those benefits were an additional 28 weeks of unemployment compensation approved by Congress as a way to help those struggling in the recession. The federal benefits were added to the 26 weeks of benefits provided by the state.

The compromise bill extended the federal unemployment benefits extension for another year. Alison Harris, director of communications at the Executive Office of Labor and Workforce Development, said Wednesday that the state is still working to understand the details of the bill – including who will be eligible and for how many weeks people can receive extended benefits. In previous benefits extensions, after the bill was passed, the U.S. Department of Labor would analyze it and give instructions to the states. Harris said anyone receiving unemployment benefits should continue to file for benefits as they would on any other week, as the state works out the details. Read More

Pushed to edge of ‘fiscal cliff,’ small business owners worry about potential tax increase for high earners


By Shira Schoenberg | | November 28, 2012

Joshua Golden is not going to be devastated by a tax increase. But he is reconsidering buying a new condominium in Boston. He is holding off on hiring new agents for his real estate business. He wonders if he will have less money to spend on marketing, advertising and business expansion.

Golden, 38, owns Luxury Residential Group, a Boston real estate firm that represents clients looking to buy or rent luxury condominiums in Boston and the surrounding suburbs. He makes more than $250,000 a year, which means his taxes could increase under Democratic President Barack Obama’s budget proposals.

“Because of the uncertainty about how much my taxes are going to go up, I don’t know how to budget for the next 12 to 24 months,” Golden said.

What to do about tax rates for the wealthy is one of the central disputes between Obama and congressional Republicans as they struggle to reach a compromise on avoiding the “fiscal cliff,” a mix of tax hikes and spending cuts scheduled to go into effect at the end of the year. The uncertainty has generated concern among business people who say the proposed tax increase could affect their business decisions, in addition to their own income. Read More

The fiscal cliff: tax the rich, cut the deficit, and grow the economy


By Barry Bluestone | | November 16, 2012

As we approach the “fiscal cliff” President Obama is adamant about raising tax rates on high income families to help reduce the deficit. House Speaker John Boehner now says Republicans are willing to consider some form of higher tax revenue as part of the solution – but only “under the right conditions.” Lower tax rates for all families, both rich and poor, is one one of them. If the Republicans were to reconsider this position, the President and the Congress could pull off a pretty neat trick – simultaneously reducing the deficit and stimulating the economy.

How could this possibly work?

Right now, the main reason why economic growth is so sluggish is a lack of consumer spending. If we want to increase demand for goods and services, we need to put money in the hands of spenders, not savers. Savers are good for investment, but savings are not our current problem. Businesses are sitting on the sidelines with something like $2 trillion in cash which they could use for investment. They are not investing because in the current economy they fear there is not enough consumer demand to purchase the output this investment would produce.

Right now the nation needs consumers. So who consumes and who saves? This is well-known. In general, savers are rich people. A family in the top 1% of all earners (those with incomes in excess of $569,000) spends only about 49 cents out of every additional dollar while those in the top 5% spend 63 cents out of every dollar. The rest goes into savings accounts, the stock market, and hedge funds – which in the short run create virtually no jobs. Read More

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