As the deadline for the fiscal cliff looms less than a week from now, many people are starting to wonder how this package of tax increases and spending cuts will impact them. Matt Kissinger, with Edward Jones in Knoxville, says people should be prepared for what’s to come. He says even if a compromise is worked out, we’ll still likely see higher taxes on income and investments. Kissinger says this would be a good time to put more money in tax-free vehicles such as IRAs, 401ks, and even municipal bonds. He says to talk to your financial planner to find out more about what will specifically impact you.
Central College Economics professor Brian Peterson says that he’s not sure if a deal will be reached until after the deadline, John Boehner is up for reelection on January 3rd and President Obama has less incentive to compromise after winning the election. He says most of the effects wouldn’t be seen until 2013 taxes are due. But one part would impact local economies immediately, the payroll tax holiday. He says that if a deal is reached it will likely have a similar effect to the actual fiscal cliff, but those changes would be made over a longer period of time.