People's United: What is the Fiscal Cliff? - WCAX.COM Local Vermont News, Weather and Sports-

People's United: What is the Fiscal Cliff?

Posted: Updated:
SOUTH BURLINGTON, Vt. -

 Patrick Talcott, Senior Vice President with People's United Wealth Management, joins us to talk about the fiscal cliff and what it means for your finances.

Q. Alright, everybody is talking about it, but in simple terms, what is the 'fiscal cliff'?

A. In a nutshell, the fiscal cliff is a combination of tax increases and government spending cuts that will kick in automatically in January if the White House and the Republicans in Congress can't reach an agreement before the end of the year.

Q. What are some of the spending cuts we should expect to see?

A. We're looking at $1.2 Trillion in broad based spending cuts over the next several years with roughly $109 Billion in 2013. These cuts are split evenly between two categories - Defense Spending and Non-Defense Spending. Non-Defense Spending would include cuts to Medicare providers such as hospitals as well as cuts to education, and many other programs.

Q. What are some of the tax increases that might affect individual taxpayers?

A. Similar to the spending cuts, we would be looking at across the board tax increases as what we call the Bush Tax Cuts would expire. This means higher income taxes with the lowest bracket going from 10% to 15% and the highest going from 35% to 39.6%. It also means higher taxes on your investments as both capital gain and dividend taxes would increase substantially. The 2% reduction in social security payroll tax we've enjoyed over the last two years will go away and if you're looking for a double whammy, individuals with a net worth in the $1-5 million range should be very concerned as the estate and gift tax limits are set to lower from $5.12 million to $1 million with the top tax rates increasing from 35% to 55%.

Q. How did we get to this point?

A. In November of last year, there were a lot of headlines as the US had reached our borrowing limit. Our politicians agreed to raise the limit, but only if serious discussions would take place to reduce the federal deficit. What was called the Super Committee was formed and as motivation to work together, if a deal could not be reached $1.2 Trillion in broad based spending cuts would automatically trigger. Unfortunately, the parties could not come to an agreement so here we are today talking about the fiscal cliff.

Q. Do you have any advice for people like me looking to avoid these tax increases?

A. Everyone should expect their paycheck to be smaller in January. Just remember to take full advantage of pre-tax savings vehicles such as you workforce retirement plan, IRA accounts or a health savings account.

  • Local NewsMore>>

  • Snowmobile season officially ends

    Snowmobile season officially ends

    Wednesday, April 16 2014 1:08 AM EDT2014-04-16 05:08:12 GMT
    Today marks the end of the snowmobile season. The Vermont Association of Snow Travelers reports a banner year with the best riding conditions in years. VAST says next year snowmobilers will be able toMore >>
    Today marks the end of the snowmobile season. The Vermont Association of Snow Travelers reports a banner year with the best riding conditions in years. VAST says next year snowmobilers will be able toMore >>
  • A big honor for a Burlington teen

    A big honor for a Burlington teen

    Wednesday, April 16 2014 1:06 AM EDT2014-04-16 05:06:26 GMT
    16-year-old Yusuf Abdi was named 2014 Vermont Boys & Girls Club Youth of the Year. He received the award during a celebration at the State House today. Judges called him extraordinary for his age, articulate,More >>
    16-year-old Yusuf Abdi was named 2014 Vermont Boys & Girls Club Youth of the Year. He received the award during a celebration at the State House today.More >>
  • Blood donor honored for his contributions

    Blood donor honored for his contributions

    Wednesday, April 16 2014 1:04 AM EDT2014-04-16 05:04:54 GMT
    There are your average blood donors who might give once or twice a year and then there is Frank Sklenarik. He's donated 140 units or 17-and-half gallons of blood since becoming a donor in 1996. Today theMore >>
    There are your average blood donors who might give once or twice a year and then there is Frank Sklenarik. He's donated 140 units or 17-and-half gallons of blood since becoming a donor in 1996. Today theMore >>
  • Weather rollercoaster wreaks havoc across the state

    Weather rollercoaster wreaks havoc across the state

    Wednesday, April 16 2014 12:07 AM EDT2014-04-16 04:07:42 GMT
    Rain, flooding and now snow. This weather rollercoaster is causing problems all around our region. Temps have dropped so the heavy rainfall has switched to snow. Rivers are spilling their banks, roadsMore >>
    Rain, flooding and now snow. This weather rollercoaster is causing problems all around our region. Temps have dropped so the heavy rainfall has switched to snow.More >>
  • Rutland mom caught stealing Easter goodies

    Rutland mom caught stealing Easter goodies

    Wednesday, April 16 2014 1:07 AM EDT2014-04-16 05:07:35 GMT
    A Rutland mom is busted for stealing goodies for her child's Easter basket.  22-year-old Monica Barker pleaded guilty to swiping about $70 in merchandise from Wal-mart. Police say most of the stolen itemsMore >>
    A Rutland mom is busted for stealing goodies for her child's Easter basket.  22-year-old Monica Barker pleaded guilty to swiping about $70 in merchandise from Wal-mart. Police say most of the stolen itemsMore >>
  • Warnings about rising rivers across our region

    Warnings about rising rivers across our region

    Tuesday, April 15 2014 8:08 PM EDT2014-04-16 00:08:37 GMT
    Flood warnings are in effect around our region as heavy rains begin to move through. There is already localized flooding at some of the typical problem spots, like the wrong-way bridge on Route 15 inMore >>
    Parts of our region are already flooding and others are bracing as heavy rains move through. Not only is rain falling fast, but warm temperatures Monday melted snow, adding to high waters.More >>
  • Man rescued from Black River in Springfield

    Man rescued from Black River in Springfield

    Tuesday, April 15 2014 7:06 PM EDT2014-04-15 23:06:00 GMT
    A man had to be pulled from the Black River in Springfield Tuesday morning. The Hartford Fire Department says it's working to pull a man out from the river. They say he got stuck about 75 feet out inMore >>
    Vermont emergency workers have rescued a man stranded in the middle of a treacherous section of river in downtown Springfield.
    More >>
  • NH agrees Vt. man was insane during killing

    NH agrees Vt. man was insane during killing

    Tuesday, April 15 2014 2:49 PM EDT2014-04-15 18:49:26 GMT
    A Vermont man charged with stabbing a stranger to death in the lobby of a New Hampshire hotel last year will plead not guilty by reason of insanity.More >>
    A Vermont man charged with stabbing a stranger to death in the lobby of a New Hampshire hotel last year will plead not guilty by reason of insanity.More >>
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WCAX. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.