If the highest income tax rate increases from its current 35% to 44% (including Medicare and Obamacare tax increases) on the wealthiest taxpayers, a high income family making $500,000 will have $45,000 less to spend. That family may decide to cut out a gardener, housekeeper, vacation, or even a new yacht. A progressive might say "so what, they are rich, and they...
Many of these things will occur even if the cliff is avoided (probably by kicking the decisions--can--down the road. If Obama gets his tax on the rich, their investing will decrease and we'll all pay.
It may not be intuitive to nonbusiness people and economists why increased taxes and reduced federal spending will send the US into a recession. However, it is not hard to understand the economic logic that causes this result.
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