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Whether it is the payroll take hikes, the fiscal cliff or the sex scandals with the American generals, president Obama sure does not have an easy time during his presidency. Even in the first term he had the mother of all economic problems to deal with. Fortunately for all of us it was not as bad as everybody thought it might be. I know that many folks have lost jobs, lost their homes and lost their savings. My heart really goes out to these people. I wish it had never happened. However as bad as it was and still is for many, it still was not as bad as the depression in the 30’s. At least that is what the historians have said.

Payroll Tax Hike – Pay our Bills

This is also why we are approaching the so called fiscal cliff when the Bush tax cuts will be stopped. Tax hikes will kick in for many people and for many businesses. Is it really a fiscal cliff or is it a dose of reality. At some point we need to pay our bills and that includes the US government.

The only ones that can pay for this debt is the consumer and the business people and of course the rich. Obama wants to tax the rich who make more than $250,000 a year. That is a lot of money and the majority of people in the US do not come anywhere close to that number! You would think that it would be a no brainer for to vote for this measure to tax the rich more than they already are.

Reasons Why the Tax Hike for the Rich will Not be Approved

There are at least two things wrong with this approach, although I want to say at the outset that I am agreement that the rich need to pay more in taxes and distribute the wealth more to help put the country. The first problem is that even if you only raise taxes on the rich, it will not be enough. There simply are not enough people to pay the debt or have any kind of impact on the debt.

They should pay more, but the average consumer needs to pay more as well, to pay for the debt and to pay for more debt for health care and the wars that this country always seems to get involved in. So unfortunately I think that we all are going to pay more taxes.

Another Major Problem

The other major problem is that all of these senators and house members make more than $250,000 a year or very close to it. Now why would they vote themselves more taxes to pay. Why would the alienate all of their donors that pay big money to their campaigns  by voting in a tax hike for the rich and not touch the average consumer? This is probably the biggest reason alone why this tax hike is not going to happen and the US will approach the fiscal cliff.

There are probably lots of other reasons as well that will come into play. Lots of noise will be made by everyone about raising taxes. But no one will talk about the fact that no senator or house member really wants to vote himself a tax increase.

There will be a lot more discussion over the next month and half about making a decision. There will be lots of talk after words as well regarding whether the right decision was made. In the end the consumers will have to live with this. They will have to bear the discontent as well as the budget cuts that will come with a no decision.

The Markets Will React

The markets meanwhile are going to be very volatile until something is decided. If you cannot stand the turmoil , it is probably already too late to get out of the market. Since there was a large downturn just after the election. This downturn apparently was driven by the fiscal cliff uncertainty and the payroll tax hikes that will be coming.

Hold on to your hats for the ride. It will be exciting. For more discussion regarding tax issues concerning the masses, click here.

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