The Fiscal Cliff… why you’ll be hurt this year, and not next.

Almost all of the public who are following the Fiscal Cliff theater thinks that the tax pain will start next year in 2013, and that Congress will quickly sort out the problems so that middle class taxpayers won’t feel anything. As you know, the Democrat’s theme is that you’ve got to soak the rich, the ones who work hard and solve problems resulting in them making a very good income. In that way only the rich will be punished for making too much money.

Wrong!

The problem is that middle class married taxpayers, for example, who made over $75,000 this year will be subject to the AMT, the Alternative Minimum Tax in 2012 if we go over the cliff. I estimate that their will be about 30 million citizens who will not be happy when they find out.

That’s this tax year and not next.

So, no matter what Congress, using its infinite lack of wisdom, does next year to reach a deal, you’ll probably be paying a minimum of $3,500 more on April 15th because of the retroactive feature of the AMT. So if you are looking forward to a nice refund from the IRS after you file, it may turn into a check written to the IRS. Ouch.

Most of the news media will start reporting it next year, when they figure it out. It will be too late, so look forward to complaining loudly if a Fiscal Cliff deal is not made until next year.

It’s unlikely to happen and if it is, it’ll be a last minute kluge.