Fiscal cliff affects Hoosiers

TERRE HAUTE, Ind. (WTHI) - As we approach the end of the year, Politicians and economists continue to warn of another looming end or as they call it the Fiscal Cliff. But what exactly does is the cliff and how does it affect you?
    
It’s a scene that's playing out across your television screen, politicians in Washington arguing about what to do with the approaching fiscal cliff.
    
But before you can understand how it affects you, we decided to find out exactly what is a fiscal cliff?
    
For that we turned to Indiana State economist Robert Guell. He says the major part of the fiscal cliff is a hike for most Americans in federal income taxes

"For the very top end it (tax rate) goes to almost 40 percent, there are other rates that go up as well. Those at the lower end go from 10 to 15,” he said. “Those in the middle from 15 to 25 and so on."
    
It’s called a cliff because those income taxes, pay roll taxes, and healthcare taxes all go into effect on the same day, January 1st 2013.
    
Beyond the taxes you stand to pay, Guell said if Congress doesn't make a change to proposed tax increases the economy could take a turn for the worse.

"All of those tax increases and spending cuts would careen the economy from slow growth where we are now to a full on recession,” he said.
    
That's something that would once again hit Hoosiers hard in the wallet.
    
So what can congress do to avoid this?
    
Guell says it’s up to them to decide which taxes to let rise and compromise on spending cuts. But they have to do it fast.