Finance and Business
Browser Extensions That Save You Money
Playoff Perks For Pro Athletes
6 Financial Benefits Of Spring Cleaning
How The 2014 Obama Budget Could Affect Your Finances
How To Profit From Risk
What Buffett Would Say To The 50K’ers
How Spring Cleaning Can Make You Money
The Most Expensive Sports Trophies
How To Buy Annuities (And When Not To)
The Economics Of Stay-At-Home Moms
6 Tips For Selling Your Home Fast
6 Things You Think Add Value To Your Home - But Really Don't
Making It Big On Wall Street
Predict Inflation With The Producer Price Index
10 Great Summer Jobs For Teens
The Cold, Hard Facts Behind Funding Your Retirement
The Role Of Parents In Financial Education
Broker Commissions Are Here To Stay
Money Tips To Stretch Your Retirement Nest Egg
4 Traits Banks Look For In New Staff
Earnings Guidance: Can It Accurately Predict The Future?
Is Real Estate Ever A Wise Investment For Retirees?
Get A Bank Job In 50 Days
The Diner's Guide To Tipping
How The 2014 Obama Budget Could Affect Your Finances
At 244 pages, not counting supporting documentation, the 2014 Federal budget isn’t exactly light reading (by the way, those supporting documents add 2,176 pages). For that reason, let’s forgive the predominance of citizens who have never read the document. But, make no mistake - it’s full of “suggestions” that will keep both parties complaining for months.

For the American consumer, these suggestions have wide-reaching impact. No one is immune, and if you have done financially well for yourself, expect to feel even more pain.

The Obama administration’s budget proposal, not to be confused with the House of Representatives and Senate proposals, contains $3.77 trillion in spending and, according to The Hill, will add $5.3 trillion in new deficit spending over the next 10-year period.

Digging a little deeper, $580 billion in net revenue will come from higher taxes on high earning Americans. Fifty billion dollars is set aside for mass transit and road repair spending. Two hundred billion dollars in spending cuts will be divided equally between non-defense and defense programs.

If words like “billion” and “trillion” mean about as much to you as “house in the Hamptons,” you would probably be more interested in how this budget would affect you. Depending on which estimate you believe, Obama's proposed budget would raise the tax bill of a household with a yearly income of $50,000 to $75,000 between $63 and $100 per year. However, that’s not all you should know.

Increased Taxes on Cigarettes
Do you smoke? If you do, you probably know that you pay a federal tax on each pack you purchase. Currently that tax is $1.01 per pack but the 2014 budget would raise it to $1.95—a 93% increase. For a one-pack-per-day smoker that will add an extra $343 per year to that expense.

New Inflation Calculation
Before you write this off as one of those heady economics topics you don’t care about, stick with us. The new calculation throws in an assumption. It assumes that if you went to the store and noticed that the price of chicken rose significantly, you would buy a cheaper meat like ground beef.
By making this assumption, the reported rate of inflation would be lower. That’s important because it would lower the yearly increase in programs like Social Security, Medicare and Medicaid, veterans’ benefits, and government pensions. It would save $230 billion over the next decade, but if you receive benefits from any of these programs, the new calculation would lower your yearly cost of living increases. However, to be fair, those decreases would be small.

Pre-School For Moderate and Low Income Families
President Obama first unveiled this program in his State of the Union address. He wants to provide 4-year-olds coming from low and moderate-income households access to high-quality pre-school. Who will pick up the bill for the program? Smokers. That extra tobacco tax will finance pre-school for 4-year-olds.

Buffett Rule
Remember when Warren Buffett famously said (and let’s face it, everything the man says becomes famous) that his secretary pays a higher effective tax rate than he does? That was the beginning of the Buffett Rule, which in Obama’s budget is called the Fair Share Tax.

This will require anybody with a minimum adjusted gross income of $1 million (adjusted each year for inflation) to pay at least 30% in taxes. This would produce between $53 and $100 billion in taxes over 10 years. There are exceptions for charitable donations and a host of other rules that go along with this, but the idea is to make the rich pay their fair share.

Cap on Retirement Savings
Save all you would like but you’re only going to get the tax advantages on your first $3 million. Seemingly, flying in the face of the nation’s push to put more away for retirement, this measure would raise $9 billion over 10 years. As interest rates rise, that $3 million would fall to as low as $2.2 million.

But, you might be thinking, “What do these two ‘suggestions’ - which are obviously geared toward the rich - have to do with me, the average earner?” Some have sounded the alarm that what starts at the top income levels could trickle down. Remember the alternative minimum tax that was originally a tax on upper income earners that now affects some in the middle class?

Will This Budget Pass?
In short, no. Not in its current form. The next step is for congressional negotiators to meet with White House officials in an attempt to combine the three budgets into something Washington (kind of) agrees on.

There is a bright side, though. This year Congress has some incentive. Both houses of Congress passed provisions that will withhold lawmakers’ paychecks if they don’t pass a budget resolution this year. On the other hand, one should remember that the sequester was supposed to be something so ridiculous that it would never become reality. How’d that work out?

The Bottom Line
If you’re concerned about these suggestions, no need to worry - at least not yet - and probably not ever. Assuming the country has a budget at some point this year (and that’s a big assumption), it will look nothing like the three now in existence. Congress agreed that leaving American travelers at airports because of the lack of air traffic controllers was a bad idea. Maybe there’s hope.


How Much Should You Have In Your 401(k) To Retire?
Consequences Of Maxing Out Your Credit Card
Use Caution Trading Pink Sheet Stocks
New Tax Rules Target The Top Tax Bracket
Top 4 Most Competitive Financial Careers
The Best Entry-Level Finance Jobs For 2013
5 Ways To Increase Your Chances Of Getting A Job After College
Is Higher Education Still A Good Investment?
Why You Shouldn't Worry Too Much About New Student Loan Rates
How To Make $1 Million In Finance
Why Clients Fire Financial Advisors
Share 0 Disqus 6 Tough Questions To Ask Before Retirement
Retail Banking Vs. Corporate Banking
How To Be A Top Financial Advisor
The Basics Of A 401(k) Retirement Plan
How To Write An Effective Investment Banking Resume
The Benefits Of An Accelerated Bachelor's/Master's Degree
How Long Will You Work When You Should Be Retired?
The Importance Of Work Experience For Students
8 Clear-Cut Ways To Becoming A Better Saver
The Pros And Cons Of Pension Maximization
Top Business And Finance Degrees For 2013
Will 2014 Mark The Return Of The CD?
How Summer Businesses Survive
Social Finance Careers: Creating A Better World
How To Match Your Savings Goal With Investments
Investment Tax Basics For All Investors
Should You Borrow Money To Make Investments?
5 Secrets Credit Card Companies Don’t Want You To Know
What Determines Your Cost Basis?
Should You Buy An Annuity?
When To Buy A Mutual Fund
How Financial Advisors Are Leveraging Social Media
Maintaining Work/Life Balance For Financial Professionals
5 Financial Gifts Dad Really Wants
The Father's Day Index 2013: Dad’s Value Is Up!
Networking For Financial Professionals: Maintaining A Strong Industry Presence
4 Reasons Why Your Credit Card Company Thinks Your Card Is Stolen
Can Financial Education Rebuild America’s Economy?
4 Ways To Take Your Career To The Next Level
The Hidden Fees In 401(k)s
Is It Foolish To Strive For The American Dream?
5 Easy Fixes For A High Summer Electric Bill
Commuters' University: On-The-Road Learning
What Is The Federal Employees Retirement System (FERS) And How Does It Work?
Summer Money-Making Opportunities For Finance Students
Unexpected Challenges For Self-Employed Finance Professionals
3 Financial Tasks We Think Are Harder Than They Really Are
How To Survive When Prices Double Every Day And A Half
5 Budget Tips For Your European Backpacking Trip
The Financial Fallout Of The DOMA Repeal For Same-Sex Couples
5 Overused Resume Phrases