“FISCAL CLIFF” DISCUSSION MIGHT MUNICIPAL BOND

As you are probably aware, there have been informal comments regarding the discussions, on Capital Hill, to start the process of Balancing the Budget Deficit.  Both sides appear to have maintained their Hard Lines regarding the discussion, however, there does appear to be some semblance of Common Ground.

The “Fiscal Cliff” will be reached if Congress does not take any action.  Thus, Income Tax Rates would revert to where they were before the so-called Bush Tax Cuts–putting them back to roughly Reagan Era Rates, and there would be across-the-board Spending Cuts for all components of the Federal Budget.

Republicans have stressed reducing taxes accross-the-board which, as I have posted before, never seems to promote the anticipated Economic Growth.  And, the Tax Loopholes, which they promise, would be unsufficient to make the necessary debt in the Budget.  Also, chances are that many would eventually be added back anyway.

The Democrats recommend retaning the Bush Cuts for those (Couples) earning under $250,000 per year, while raising them for those of higher incomes.  (Generally, the impact opf tax cuts on economic growth is mostly lost for higher incoomes.) They also suggest the elimination of some Tax Loopholes, as well as selected Spending Cuts.

It has been hoped that something will be worked-out, before Year-End, when we could potentially go over the Cliff.  Patti Domm, CNBC Executive Neews Editor, notes on the CNBC Blog that the Tax Advantagers of Income from currently Tax-Free Munis (debt issued by State and Local Governements) might be effected.

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