This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fiscal Cliff to Hit Military Families Hard

NEW YORK ( TheStreet) -- The Tax Foundation pegs the tax increase figure at the bottom of the Jan. 1 fiscal cliff at $514 billion.

The Washington-based nonprofit tax analysis group says the average U.S. family will see its taxes rise by 8%.

While middle-income families will feel the hit, the Tax Foundation says that high-income and low-income taxpayers will really feel the pain from landing hard after falling off the fiscal cliff.

All in all, it's not a pretty picture for U.S. families. Here's how the foundation explains it in a recent statement:

Dramatic changes to both tax and spending policy at the federal level are scheduled to take place at the end of the current year unless Congress acts. On the tax side, the most significant changes are the expiration of Bush-era income tax cuts and provisions relating to the Alternative Minimum Tax, which will increase liabilities nationwide. When ranked by city, the heaviest impacts will fall in Texas, Georgia, Oregon and Arizona, with metropolitan areas in Arizona, California and Virginia filling out the top 10.

"We found that higher- and lower-income areas tended to be affected more than middle income areas -- higher-income areas from changes to the Alternative Minimum Tax and lower-income areas from the Bush tax cuts," said Tax Foundation analyst Nick Kasprak.

One U.S. consumer demographic that is particularly vulnerable to the fiscal cliff is military families.

According to First Command, a Fort Worth, Texas-based investment firm, budget cuts and higher taxes are a painful one-two punch for military families. In fact, about 50% of that demographic are already cutting back on spending to cope with the fallout from the economic cliff dive.

The First Command Financial Behaviors Index, released last week, says that about 66% of middle-class military families (mostly senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) say the U.S. government won't cut a deal by the end of the year.

"The fiscal cliff is a major concern for service members and their families," says Scott Spiker, CEO of First Command Financial Services. "Roughly seven in 10 believe that a failure to resolve the fiscal cliff stalemate will mean an increase in their taxes and a slowdown in job growth. Two-thirds of survey respondents fear the U.S. economy might slip back into recession."

Then there's the "sequestration" issue, in which the U.S. defense budget is set to be cut automatically and significantly.

"While the looming fiscal cliff deadline has been making the headlines, military families may be even more troubled by the spending reductions that are already in process," adds Spiker. "Defense downsizing will affect one-sixth of the military, impacting retirement pay and benefits. Promotion rates will decline. The result is an uncertain future for many military families."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 0.21%
FB $116.73 0.00%
GOOG $691.02 0.00%
TSLA $249.50 0.72%
YHOO $36.75 0.44%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs