Although the deficit will increase by another eight billion dollars, the President is hopeful that the deficit will drop to 1.1 trillion dollars in 2012, after the initial all time high of this year. The budget submitted plans for the United States to reduce it’s total deficit to 1.1 trillion dollars over the next decade.

Although there have been critics on both sides of the political fence regarding this issue, President Obama has assured people that budget cut decisions were made with the greatest care, to eliminate any pointless expenditures.

Whether or not you agree with the President on his plan, it is admirable that he is at least committed to the idea of fiscal responsibility and reducing the overall deficit that the United States owes.

The thought of losing recent years’ tax cuts would alarm many people—especially those dreading a large hit. Imagine buying a company’s stock, in hopes of enjoying its 7.1% dividend yield for the long haul.

On an investment of ten thousand dollars you’d collect about seven hundred and ten annually right now, with a maximum 15% tax hit on those payouts. Now imagine hearing that your tax bill might soar to over a hundred dollars more per payout in 2011—not something which makes you feel great, but try to look at it in a new way.

Yes, the currently reduced dividend rate is due to revert to citizens’ ordinary income tax rate. That would be 39.6% under the proposed budget, but only if you have taxable income of more than three hundred thousand dollars in 2011.

Furthermore, the Obama administration seems to want to limit the increase in dividend taxes to just five percentage points, from 15% to 20%. That’s a meaningful jump, especially for those collecting a lot of dividends in retirement, but it’s not 39.6%.

Critics are also trying to spread alarm about the estate tax. Unless Congress decides otherwise, it will revert in 2011 from 45% to 55%, with an exemption of one million dollars.

It’s estimated that a one million dollar exemption would lead to just over forty four thousand households owing estate tax in 2011 — and they’d only pay taxes on any value beyond that initial one million. This is an irritation for the wealthy, but those problems can be significantly avoided by simply hiking the exemption, which seems likely sooner or later.

Here are several ways that well-known companies reduce their U.S. tax bills. Forbes recently noted that these companies paid relatively little in taxes in 2009, based on accounting provisions.

Many companies take advantage of lower tax rates abroad. For instance, a well known gas company had an eight billion tax bill globally, but it only paid two hundred million to the United States. A well known electric company was cited for losing money on paper, and therefore not owing taxes in the U.S., while at the same time making lots of money overseas, where tax rates are lower.

A computer company paid almost two billion in taxes –but that represented just 19% of its pre-tax income, thanks to lower tax rates abroad. Companies are using tax losses in past years to shelter current and future income.

A leading bank reported over four billion in pre-tax income, but was able to take advantage of deductions and credits to lower that below zero. It still has tens of billions of dollars in credit losses that will shield it from taxes for quite a while.

A prestigious car company reported three billion in pre-tax income, but only paid sixty nine million, thanks to losses carried over from previous years. Even companies that pay income tax now may get huge breaks later.

Another leading bank paid a solid 30.3% of its pre-tax income in taxes, but investors have reason to smile about the future. The company has a twenty five billion dollar allowance for losses on loans.

When those losses are realized, they will offset tax liabilities. The Government Accountability Office found in 2008 that 55% of U.S. corporations actually reported no federal income tax liability in at least one year between 1998 and 2005.

Suddenly, the thought that changing tax laws might make them pay a bit more to the IRS doesn’t seem so bad. Try to resist scare tactics designed to get you alarmed.

Dig a little deeper into the facts about tax changes, and keep the big picture in mind. Yes, some taxes may go up in the coming years, but most of us won’t be affected.

Besides, our nation is facing massive financial challenges right now. Perhaps a few more taxes might not be a bad thing.

Bank of America’s Merrill Lynch, the world’s largest brokerage with more than 15,000 financial advisers and about $2.2 trillion of client assets, will let customers trade stocks, mutual funds and options online starting June 21, through Merrill Edge, Dean Athanasia, head of banking and the direct investment division for Bank of America Global Wealth and Investment Management has said in a recent interview.

Customers of Merrill Edge will pay from $4.95 to as much as $8.95 a trade, depending on the size of their accounts, Athanasia said. Those with at least $25,000 in total banking and brokerage accounts will get 30 free equity trades a month. Users may open investment and retirement accounts on the site and those with more than $20,000 to invest may contact advisers, who are separate from Merrill Lynch’s full-service advisers, by phone.

The Bank of America site that allows customers to trade online will become Merrill Edge on June 21, 2010.

On a final note, just so you know, most Americans spend more money on taxes than on food, clothing, and shelter combined during the year.

Celebrate April 9th and have a great day.

I’m wondering why we are okay with our government spending our taxes to encourage us to buy foreign cars? I have no problem with people buying a Toyota if that is what they are interested in. What I do have a problem with is my government giving my tax money to people so they can buy foreign cars. We need the money back in our economy.

Education spending will be hit hard in this year’s budget cuts. Nine billion dollars of education spending has been cut from the budget. What does this mean for school systems in California? A rough year. With the unemployment rate over 11% and the housing market still in shambles, the Californian economy has had a rough year and state programs will bear the brunt of the budget deficit.

The number of students per classroom will undoubtedly rise and supplies will be limited. Although California is already projecting a shortage of college graduates to fill future employment needs the University of California and California State University systems will face budget cuts as well. Enrollment will be reduced by 40,000 students this next year – in a state where only 56% of high school graduates go onto college. Tuition and fees will increase by at least 10 % while community colleges may charge significantly more. This will undoubtly hurt higher education in the state as well, but with such large defecits there were limited alternatives. The numbers are scary, but they speak for themselves.

These officials have reported a surprisingly optimistic outcome from these tests. While the Nation still has a long road ahead to recovery, according to a New York Times article, the losses are “manageable.” The purpose of the test was to determine whether these top few banks would need significantly larger amounts of capital to handle the economic recession. The results of the test will expose each bank’s currrent situation, in order to aid investors in deciding which entity they will trust with their money.

One goal of the stress test was to boost public confidence in the banks and thus raise stock prices. These effects have been witnessed so far in a few of the Nation’s leading banks-Wells Fargo, Citigroup, Bank of America and JP Morgan. Will this optimism last? The Obama Administration sure hopes so. If not, the new President may have to ask congress for billions more dollars in order to help out these struggling banks. So I guess all we can do is wait with bated breath until Thursday rolls around and the results of the test are shared. Let’s hope public opinion is affected enough to boost stock prices and begin aiding our struggling economy.

Credit is a simple thing to understand. For whatever reason, it is almost completely avoided in schools and practically never taught at all. Our liberal education system feels its more important for kids to understand arts, poetry and other useless skills and information. So if you, like me, didn’t learn about credit in school and had to learn it on your own, or still need to learn it, here’s a summary.

APR stands for Annual Percentage Rate. When you receive credit, you are given a certain amount of money from a lender. That lender then charges you to borrow the money. Of course, it would defeat the purpose if the money was charge up front. So payment plans are available in which borrowers pay back what they owe in small steps. The APR determines how much the fee is going to be. The term is how long the loan will be out, or the time you have to pay it back.

Now the big thing here is the term. APR doesn’t mean much if the term is one day. You have to know how long the term will be. Hence the phrase ‘short-term credit.’ This means credit extended for a very short period of time.

Short-term credit cannot survive on 36% APR. When you do the math, this means that 3% of your loan is collected as a fee per month. Since short-term credit is typically two weeks or so, the interest collected would be 1.5% of the loan amount.

In other words, if you borrow $500 for two weeks, at 36% APR you only have to pay back $507.50 at the end of your loan term. That’s practically free money. You hardly have to pay the lender anything at all to borrow their money for a short period of time.

That’s why Durbin’s bill makes no sense. It effectively shuts down any and all short-term credit, because no one will be able to make money with it. So what happens if you need to pay rent on Monday but don’t get paid until Friday? What happens if your car breaks down and you don’t get paid until next week? What happens when your phone bill is due a week before your next paycheck?

I will tell you what happens. A) Take the late fee on the bills B) Take the bounced check fee C) Take the overdraft fee or D) Cry. You may be surprised to know that all four will happen. Try paying your rent with a bad check. When it bounces, you get that fee, you get the late fee, and if you use a card, replace the bounced check fee with an overdraft fee, the worst fee of all.

So be sure to write to Dick Durbin and thank him for screwing millions of Americans in need of payday loans. Kiss your short-term credit options good bye if this joke of a bill passes.

The median household income is right around $35,000. If you fall in that area, you will pay less taxes, about $400 less per person in your household.

If you make anywhere from $35,000 to $125,000, you will get the same benefit. $400 for an individual, $800 for a couple. Not bad.

If you make between $125,000 and $250,000, your taxes will not change. Nothing more, nothing less. You are unaffected by the tax plan.

If you make $500,000 or more, basically you are very wealthy, you stand to pay a lot more in taxes. The Bush tax cuts will expire and your tax bracket and rate will increase.

You can see more details at MSN Money.

The answer is no. You’ll find if you dig deep that the lobbyists and consumer advocacy groups trying to ban them are all funded by banks and credit unions. You see, they are in the payday loan business too. The only difference is, what they charge you is considered fees, what a payday lender charges you is considered interest.

Why does that matter? Which sounds worse, you owe me $20 or 400% APR? What if I told you that 400% APR was on a $100 loan for a week. Which one sounds worse and which one is worse? Exactly…

Banks know there is big business in short term loans. They want it all for themselves. They’ll spread every lie imaginable to get payday lenders out of business so they can be free to charge what they want how they want.

The central argument is around the APR. Ask yourself, do you measure your shoe size in kilometers? No? Why not? Because the size of a shoe is better scaled to centimeters maybe?

So why measure a ten day loan in ANNUAL percentage rate? Why not look at the daily percentage rate? At 400% APR, a payday loan would cost you just over 1% per day. After 10 days, you pay somewhere around 11% in interest. It’s all about context.

Now, if you don’t pay back a payday loan quickly, the interest can increase quickly. That’s why you borrow responsibly. Don’t borrow more than you can pay back. Don’t take out multiple loans at the same time. Be smart about what you’re doing.

As always, lawmakers feel it is the government’s job to dictate to us what is good for us and what isn’t. Oh please…

I’ve got kitchen knives that could do great harm if not used properly, should we ban them? I could squirt a lemon in my eye and hurt myself, should lemons be outlawed? I can lose my life savings in Vegas, should the city be shut down?

Likewise, you can borrow like an idiot and take way too much money and do it from multiple lenders. Or you can borrow responsibly and only get what you can pay back by next payday. It’s on ourselves to be educated and informed about the decisions we make.

But government gets bigger and bigger and runs more and more aspects of our lives. We stand idly by and watch as more people get put out of business and more freedoms are taken away from us. When will enough be enough?