By now I’m sure you’ve heard the term “Taxmageddon” or the “fiscal cliff,” as Ben Bernanke has dubbed it; but if not, you’ll want to keep reading. The discussions have been ongoing regarding the expiration of the Bush-era tax cuts, which is where the term “Taxmageddon” stems. Essentially, if you think you’re paying a ton in taxes now, you can certainly expect that to increase in 2013. A possible step back into a recession is not unlikely, given the simultaneous occurrence of the increase in taxes and the spending cuts for 2013.
This possible increase in taxes could mean working longer than ever to pay the government. Each year a Tax Freedom Day is calculated, which essentially gauges the number of days Americans work to pay their taxes for the year. For 2012, the Tax Freedom Day was April 17, meaning everything Americans earned from January 1, 2012 to April 17, 2012 went to Uncle Sam. States have a specific Tax Freedom Day that usually varies from the total day because of the combination of all the states and cities. Ohio’s Tax Freedom Day in 2012 was April 12, but once you factor in the other jurisdictions, you can see it adds on a few days. Some analysts expect this date to increase as far as May 1. I’m sure most of you are thinking that the majority of your earnings already go to the government, so how much worse could it get? We can only hope that Congress will come up with a solution to the billions of dollars set to leave your pockets in 2013, and go straight into the hands of the government. So whether you refer to this day as “Taxmageddon” or the “fiscal cliff,” it’s clear that 2013 could be a Doomsday.