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.