The approaching 2012 US Presidential election is perhaps one of the most unique and important elections in recent history from an economic perspective. In choosing its leader for the next four years, America will likely be determining the path for near-term economic growth, medium-to-longer term fiscal stability and monetary policy at a time when the stakes are exceptionally high. Whether or not the US economy returns to recessionary conditions in 2013, the US sovereign debt rating and the broader credibility of the US government to Americans and foreigners alike all hang in the balance. There are three factors that set the 2012 election apart. Having said that, the election itself it not the end as there are a plethora of more important issues that must be dealt with, most important of which is the looming fiscal cliff. Among the topics that will be negotiated under the cliff are the fates of many tax issues that millions of Americans should be concerned about. Consider the following key issues according to MarketWatch with our commentary added in italics:  

• Payroll Tax Holiday
• Small business owners are and their employees are definitely aware of this tax issue. The holiday is where the Social Security tax on salaries is held is reduced by 2 percent. As this directly keeps money in the pockets of both employees and employers, you will likely see this tax cut extended. The hiring threats, consumption drag, and political fallout that would follow its expiration would be deemed too great by politicians to allow something like that to occur.
• Bush Tax Cuts on Ordinary Income
• The Bush tax cuts have been in place so long that it should really just be considered “the current tax rates” and anything that would allow them to expire should be essentially considered a tax hike. Indeed, the current 10%, 15%, 25%, 28%, 33%, and 35% rate tax brackets would be replaced next year by the pre-Bush era 15%, 28%, 31%, 36% and 39.6% tax brackets. Although this would help tackle our Nation’s debt problem over the next decade the short term drag this would put on the economy could easily tip us back into a recession. The odds favor a short term extension of these brackets until a more comprehensive tax reform can be developed by Congress.
• Bush Tax Cuts on Long-Term Capital Gains and Dividends
• Related to the above mentioned tax cuts, the Bush era tax policy also included cuts on long term capital gains and dividends. Specifically, the current rates are 0 and 15 percent but are set to jump to 10 and 20 percent. Although capital games may not be of much concern to lower income Americans, they do matter to business owners in positions to hire new workers. Therefore, expect to see these rates extended as well but with the likely exclusion of the top most income earnings.
• Harsher Marriage Penalty
• Personal Exemption and Itemized Deduction Phase-Outs
• Alternative Minimum Tax Patch
• Estate Tax
• Gift Tax

Click on the link below to see the details for the rest of the tax issues.