The phrase “fiscal cliff” has been spreading like wildfire through newspapers, books, magazines, blogs, websites, economics classes and discussions around the world. The Council on Foreign Relations explains that “fiscal cliff” refers to a time when, if there are no changes made to the nation’s financial laws, taxes increase, government spending decreases and its deficit slowly reduces. The most immediate effect involves increasing the income tax and stopping the tax breaks.
Income taxes are how much money a person pays to the government, determined by a pre-set percentage rate. The income taxes are separated and dispersed throughout different sectors of the government. Because of the new year and the fiscal cliff, income taxes have increased and citizens will be walking away from work with a little less money in their paycheck.
Makenna Frahman ‘13, a hostess at the Melting Pot of Littleton, noticed these changes as well.
“I didn’t notice it at first,” Frahman says. “But after closely looking at my paycheck from the end of December into the beginning of January, I noticed that I had earned a little less than my previous 2012 paycheck, even though I worked a ton over winter break.”
The payroll tax increased from 4.2% to 6.2%, according to journalofaccountancy.com; a significant change in the amount of final pay stubs. Yet, the minimum wages of some states have increased, closing the monetary gap.by