By Allison Caramico
Shortly after the fiscal cliff deadline had passed at the end of 2012, Congress passed the American Taxpayer Relief Act of 2012, better known as the fiscal cliff deal.
The fiscal cliff refers to the tax increases and spending cuts that were set to begin on the first of the new year. Because of the fiscal cliff deal, most of the scheduled tax increases were avoided.


Taxes on the middle class were originally scheduled to increase, but  several measures, including child tax credits, will keep this from happening. Unemployment benefits have been extended and businesses will receive tax credits to stimulate the economy. This deal also extended the American Opportunity tax credit, which grants college students up to $2,500 per  year to help pay for their education.
To pay for these tax cuts and benefits,  Social Security taxes have increased by two percent for all Americans. Bush-era tax cuts for the wealthy were allowed to expire and capital gains taxes (taxes on investment income) and estate taxes have increased.
This has caused much controversy, as the government was also scheduled to make significant spending cuts to offset tax cuts, but temporarily delayed the sequester, which means that the decisions concerning budget cuts will be made by March. Total budget reductions could reach $85.4 billion, but will come mostly from military spending.
“Everybody needs to sacrifice to eliminate our country’s extremely gargantuan deficit,” said junior Andy Xu.
While some believe that the tax increases for the wealthy will discourage investment and further harm the economy, others believe that the wealthy should pay more in taxes overall. They see reducing the tax burden on the middle class as the most important factor in improving the economy.
“I think tax increases on the wealthy are fair because the wealthy can afford to pay a little more taxes than others to help the poor people in our country,” said senior Shannon Lord.
Another important issue for the national economy is the federal debt, which is rapidly approaching $16.5 trillion, after breaching the $16.39 trillion ceiling in December.  The budget cuts  now set to take effect in March were part of a compromise that the Republican-controlled House and Democrat-controlled Senate reached during a debate over the budget ceiling (which caused the fiscal cliff).
As part of this deal, Republicans agreed to raise the debt ceiling, so long as spending cuts were made. Many Republicans were angered because the ceiling was raised, although the debt has once again surpassed the limit, and the budget cuts have yet to be decided.
Overall, these tax increases will reduce the current deficit by $620 to $740 billion. This is $3.9 trillion less than the amount that would have been saved had Congress decided not to take action and instead implemented the scheduled budget cuts and tax increases.