We've all heard the term Taxmageddon or Fiscal Cliff ... but what will it mean for your budget when a series of tax cuts expire and spending cuts simultaneously go into effect come January? The non-partisan Congressional Budget Office says the combination will cut $607-billion out of the U.S. Economy in 2013.
Among the taxes break scheduled to expire are those in the following categories: Payroll Tax, Alternative Minimum Tax, Marginal Tax Rates (or Bush Tax Cuts), Estate Tax and Capital Gains Tax.
Jeff Gramlich is the LL Bean/Lee Surace Professor of Accounting at University of Southern Maine and crunched some numbers for us.
"A single 20-something Mainer who does not own a home currently pays $2,603 in taxes," says Gramlich. "They are scheduled to pay $1,035 more when they file their 2012 tax return."
For a family of four where parents bring in about $100,000 and own a home, Gramlich says they currently pay $11,235 in taxes and should plan to pay an increase of $3,050.
When a family of four brings in $250,000, they currently pay $51,718. They should plan to pay $9,954 more in 2012.
Gramlich says while the numbers are intimidating ... not taking steps to reduce the deficit is even more disturbing. "Right now, the deficit breaks down to $50,000 per American. That's whether you are 6 months old, 16 years old or 60," Gramlich warns. "We cannot continue to push this problem off on our children."