Economists Assess Impact of "Fiscal Cliff" Monday, December 31, 11:00 AM ET
As negotiators continue to avert to so called "fiscal cliff", economists are starting to predict consequences for all Americans, regardless of whether a deal is reached.
The biggest consequence for most Americans would be an increase of the payroll tax from 4.2 percent to 6.2 percent, which would result in an additional $2,000 in taxes for workers earning $100,000. President Obama has been pushing to preserve tax cuts implemented by George Bush for Americans earning less than $250,000, while Republicans have been pushing for $400,000.
Economists predict that if taxes increase, economic growth may halve during the first quarter of 2012, and a spending pullback could lead to a new recession during the first half of the year, causing the economy to shrink by 0.5 percent.
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