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Congress and President Obama Avert The Fiscal Cliff — For Now

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President Obama and Congress passed a tax package on New Year’s Day. According to the Tax Policy Center, the package will be felt by most Americans The most severe impact is an increment in the payroll tax amounting to about $1,000 per worker for those earning approximately $50,000 per year. The existing payroll tax rate of 4.2 percent will be increased to 6.2 percent on the first $113,700 of worker pay.

The Tax Policy Center estimates that households making between $40,000 and $50,000 will face an average tax increase of $580 for this year. Those making between $50,000 and $75,000 will face an average increment of over $800. High income households should expect higher tax rates for ordinary income, capital gains, dividends and the new health care reform taxes. Income tax rates now will rise for families earning $450,000 a year income or more, and individuals making $400,000 a year and up.

The biggest gains for the Treasury aren’t in tax increases alone. It’s in job growth and the revenue from adding taxes from newly hired workers. According to CNN and Fortune magazine, 2013 will be a better year for college graduates with demand growing for degrees earned in engineering, computer applications, accounting and finance. The most dramatic pickup in construction is expected in 2014, with 300,000 more jobs according to an economic analysis by Moody’s. Even state governments are expected to hire again, with new hires projected to increase slightly.

Lawmakers and President Obama have yet to tackle the details of projected cuts in spending, including defense spending. There are cost savings to be achieved from the historic drawdowns of troop levels in Iraq and Afghanistan. In addition,there are other areas for savings Such as military base closings and procurement for things like drone manufacture.

Various ideas have been discussed concerning the migration of Medicaid funding to the states who may be able to administer the program more cheaply. The states have the databases of information for local residents and therefore some duplicate recordkeeping could be avoided or lessened.

One of the biggest areas for potential revenue is excess consumption taxes for junk food, sugary sodas, cigarettes and even marijuana as an outgrowth of legalization in Washington state. Taxing these items would provide a boom for social programs such as Medicaid, which have come under financial stress.

For now, the first fiscal cliff has been avoided. The stock market is rising on the news of a deal between Congress and President Obama. Americans may look forward to a better year for the economy and employment.

The next hurdle will be the federal debt limit.

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About Dr Joseph S Maresca

I've taught approx. 34 sections of collegiate courses including computer applications, college algebra, collegiate statistics, law, accounting, finance and economics. The experience includes service as a Board Director on the CPA Journal and Editor of the CPA Candidates Inc. Newsletter. In college, I worked as a statistics lab assistant. Manhattan College awarded a BS in an allied area of operations research. The program included courses in calculus, ordinary differential equations, probability, statistical inference, linear algebra , the more advanced operations research, price analysis and econometrics. Membership in the Delta Mu Delta National Honor Society was granted together with the degree. My experience includes both private account and industry. In addition, I've worked extensively in the Examinations Division of the AICPA from time to time. Recently, I passed the Engineering in Training Exam which consisted of 9 hours of examination in chemistry, physics, calculus, differential equations, linear algebra, probability/ statistics, fluids, electronics, materials science/structure of matter, mechanics, statics, thermodynamics, computer science, dynamics and a host of minor subject areas like engineering economics. A very small percentage of engineers actually take and pass the EIT exam. The number has hovered at circa 5%. Several decades ago, I passed the CPA examination and obtained another license in Computer Information Systems Auditing. A CISA must have knowledge in the areas of data center review, systems applications, the operating system of the computer, disaster recovery, contingency planning, developmental systems, the standards which govern facility reviews and a host of other areas. An MBA in Accounting with an Advanced Professional Certificate in Computer Applications/ Information Systems , an Advanced Professional Certificate in Finance and an Advanced Professional Certificate in Organizational Design were earned at New York University-Graduate School of Business (Stern ). In December of 2005, an earned PhD in Accounting was granted by the Ross College. The program entrance requires a previous Masters Degree for admittance together with a host of other criteria. The REGISTRAR of Ross College contact is: Tel . US 202-318-4454 FAX [records for Dr. Joseph S. Maresca Box 646 Bronxville NY 10708-3602] The clinical experience included the teaching of approximately 34 sections of college accounting, economics, statistics, college algebra, law, thesis project coursework and the professional grading of approx. 50,000 CPA examination essays with the American Institute of Certified Public Accountants. Additionally, membership is held in the Sigma Beta Delta International Honor Society chartered in 1994. Significant writings include over 10 copyrights in the name of the author (Joseph S. Maresca) and a patent in the earthquake sciences.