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Fiscal Cliff Deadline Looms, How Americans Will Be Impacted

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As millions of families enjoy the Christmas holiday together, some are also expressing concern at the looming deadline for the country to avoid going off the so-called fiscal cliff.

Lawmakers left Washington late last week without reaching a deal. They’re expected to return later this week, potentially working through New Year’s Eve to avert automatic tax increases and spending cuts.

Should Washington lawmakers fail to reach a deal, the Bush-era tax cuts would expire. In addition, a 2 percent payroll tax holiday instituted under President Obama would end. About $1.2 trillion in spending cuts would be triggered, following the failure of the “super committee” to reach a compromise on spending cuts last year. On top of that, a lack of an alternative minimum tax patch would mean as many as 100 million Americans would be delayed in filing their income tax returns and receiving their refunds, according to the IRS.

The nonpartisan Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, found the average family would owe $3,500 more in taxes next year should lawmakers fail to avoid going off the cliff.

“As I’ve asked leaders of Congress to work towards a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans,” President Barack Obama said late last week.

Speaker of the House John Boehner (R-Ohio) has met privately with Obama for weeks, though no deal has been struck.

“The president’s solution of raising tax rates would still leave red ink for as far as they eye can see, and it would hurt jobs,” said Boehner.

On CNN’s State of the Union Sen. Joe Lieberman (I-Connecticut) said he believed the country will go over the cliff.

“If we allow that to happen, it will be the most colossal, consequential act of Congressional irresponsibility in a long time,” said Lieberman.

Experts say it’s possible lawmakers could work in the days immediately following New Year’s to pass measures affecting aspects of the fiscal cliff they generally agree on in order to minimize the effects on Americans.