Barring any Congressional action, a series of tax increases and spending cuts will begin January 1. Observers have named that series of monetary policy actions as the "fiscal cliff" because it would send a shock through the U.S. economy. A number of tax cuts would expire, including several that lower income and payroll taxes and limit the alternative minimum tax. Some 90% of Americans would see their taxes rise. Just as significantly, large amounts would be slashed from the government budget. This would, for example, reduce spending on defense and lower some government benefits. Sources: Congressional Budget Office; Tax Policy Center: Toppling Off The Fiscal Cliff: Whose Taxes Rise And How?
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