The Ubuntu smartphone (which no one will use) is a glimpse of the future

Ubuntu's new mobile software will let users run their PC from their phone.

NEW YORK (CNNMoney)

Ubuntu developer Canonical unveiled a new interface on Monday reimagined for touch devices, with a design that borrows cues from Android and Windows 8. The hard sell here isn't simply that Ubuntu now works on mobile devices. Canonical hopes that future devices (read: arriving sometime in 2014) will not only run the new mobile OS, but will also boot the desktop variant of Ubuntu when docked to a keyboard, mouse and monitor.

That would let you literally use your phone to power your PC.

This concept isn't entirely new, as Canonical revealed similar plans last year to attach its desktop software to devices running Android. Before that, Motorola tried to turn Android phones into laptops with its Atrix line of phones and docks. And let's not forget the hybrid operating system experiment that is Windows 8.

But no one -- not even Microsoft (MSFT, Fortune 500) -- has attempted to serve up its own phone OS and desktop OS in a single package. Despite its desktop-like features, Android considers itself a phone and tablet system, while Microsoft still has Windows Phone 8 operating autonomously from the tablet and desktop-centric Windows 8.

Is Ubuntu's new creation good enough to make even the tiniest inroads against the likes of Android, Apple's iOS and Windows Phone?

Video footage previewing the new software shows off an attractive user interface and some clever ideas for navigation, but there's no indication that the wheel has been reinvented.

You'll be able to swipe from the edges of the phone to switch apps and access menus. You can log in to your favorite online services, and Ubuntu will assimilate that data into its own framework. In general, the emphasis seems to be on getting you the info you need in a quick and easy-to-digest way. From the looks of things, the desktop build will have its own interface tailored to mouse and keyboard, but Canonical envisions a single installer app having both desktop and mobile builds.

This would all be great if the only challenge for a mobile operating system was offering up a solid product. It's not. Carving out a niche in the seemingly unshakable mobile space -- ruled by the Android-and-Apple duopoly -- still requires a critical mass of users and a lively ecosystem of app developers.

Realistically speaking, the chances of this even upstaging Windows Phone or BlackBerry 10 are slim. At best, Ubuntu seems like a sandbox for the most enthusiastic early adopters and a cheap enterprise solution for companies on a tight budget.

Still, pushing aside the concerns about market viability, this could be a very real glimpse of how we compute in the future. The central brain for all our computing needs might eventually live in our smartphones, and we'd simply attach them to whatever form factor the situation calls for.

That differs from some current experiments, like Microsoft's vision for the Surface tablet: a single piece of hardware that can be used in multiple ways. It seems just as valid a solution, though, for the inevitable convergence of mobile and desktop computers.

First Published: January 2, 2013: 5:07 PM ET

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No word on tax refunds

Don't hold your breath waiting for your tax refund.

NEW YORK (CNNMoney)

Congress' late action on the fiscal cliff tax provisions has caused headaches for the Internal Revenue Service, which now has to program its systems and issue tax forms based on the revised laws. It has not announced when taxpayers can start filing their 2012 returns, which means refunds will most likely be delayed. Filing usually begins in mid-January.

"The IRS is currently reviewing the details of this week's tax legislation and assessing what impact it will have on this year's filing season," said the agency, adding it will issue additional guidance "soon."

It's not the first time the IRS has had to deal with this. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on many of the same issues. That delayed the opening of the tax season to mid-February, affecting some 9 million taxpayers that year.

Related: How much more tax you'll pay

This year, the situation is even more complicated since Congress didn't act until New Year's Day. While the IRS has published Form 1040 for 2012, several lines are listed as "reserved." The designation is a "placeholder" for several fiscal cliff provisions, an agency spokesman said. The IRS has yet to publish an instruction booklet for filling out the tax forms, leaving tax preparers in a holding pattern.

Had Congress not acted on the alternative minimum tax, up to 100 million taxpayers would not have been able to file their returns -- or collect refunds, if owed -- until late March, Steven Miller, the agency's acting commissioner, said last month. (The AMT itself would hit nearly 30 million filers with higher tax bills, and delay returns for other filers as the IRS adjusted its systems.)

Most of the people looking to file returns early are hoping to get their refunds quickly to pay expenses or cover Christmas bills, accountants said. They are often people whose income is just from wages and who take the standard deduction, making their returns fairly simple. Many are low-income families who file for the earned income tax credit.

First Published: January 2, 2013: 6:21 PM ET

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Wall Street's biggest headwind: Washington

While investors are relieved that the fiscal cliff was avoided, most Wall Street experts surveyed by CNNMoney say that uncertainty out of Washington is still the market's biggest headwind as lawmakers shift their focus to the debt ceiling debate and a long-term debt reduction plan.

NEW YORK (CNNMoney)

In fact, of the 30 investment strategists and money managers surveyed by CNNMoney, most said that uncertainty out of Washington remains the market's biggest headwind.

That's because the deal struck by lawmakers fails to address the debt ceiling and postpones most of the automatic spending cuts that were otherwise scheduled to take effect Wednesday.

"The last-minute deal was no grand bargain that would have reduced investor uncertainty about many long-term debt and deficit issues," said Gary Thayer, chief macro strategist at Wells Fargo Advisors. "Instead, investor uncertainty is likely to persist while the administration and lawmakers deal with the debt and deficit issues in incremental steps rather than all at the same time."

Related: 3 more fiscal cliffs loom

The first big hurdle for the market will be debt ceiling debate. The $16.4 trillion debt limit was officially hit on Monday, but the Treasury Department has bought lawmakers some extra time by starting a series of financial maneuvers that will create $200 billion of headroom and covers about two months' worth of borrowing.

That means lawmakers have to agree to raise the debt ceiling by late February or early March. And while experts aren't sure if the fight will be as ugly as the August 2011 debt ceiling debate, which led to the country losing its top credit rating by Standard & Poor's, and rocked the stock market, they know it won't be pretty

Related: Full survey results

"Democrats and Republicans did the least they could possibly do to avoid the fiscal cliff, and the question now is will they do the least amount again when it comes to raising the debt ceiling, and how will the rating agencies view that," said Oliver Pursche, president at Gary Goldberg & Company.

Credit rating agencies have already warned that the United States could face a downgrade if Congress doesn't come up with a viable long-term plan to reduce the nation's debt.

Related: U.S. credit ratings test is yet to come

Once again, political brinkmanship will likely go down to the wire, said Peter Tuz, president of Chase Investment Counsel.

A repeat of the August 2011 debt ceiling debacle could spark a 10% stock sell-off , said Tuz, who expects that after "caving" on the fiscal cliff deal, Republicans will hang tough in the debt ceiling fight, and in particular, demanding spending cuts as part of the increase.

During the 2011 fight, Congress was finally able to reach consensus on raising the debt ceiling by also agreeing to a so-called sequester, which was slated to set off $1 trillion worth of broad spending cuts and reduce the budgets of most agencies and programs by 8% to 10% at the start of the year. But the fiscal cliff compromise delayed that by two months.

Now lawmakers have until the beginning of March to figure out a smarter way to reduce deficits.

"Congress has just kicked the can down the road for a couple months, so there are a lot of big negotiations still looming," said Tuz. "That's going to make for a very acrimonious and volatile trading environment."

First Published: January 2, 2013: 8:28 PM ET

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Fiscal cliff deal would hit the rich - but it could have been worse

The House must still vote on the fiscal cliff deal, which hits the rich.

NEW YORK (CNNMoney)

Those making a million and up would pay $122,560 more in federal taxes, on average, according to new estimates by the Tax Policy Center. That means this group, which includes those bringing home many millions of dollars, would see a 5.7% drop in after-tax income.

Those with comparatively paltry incomes of between half a million and a million bucks would pay nearly $7,000 more in federal taxes, and see a 1.4% drop in after-tax income.

Less than 1% -- actually only 0.7% -- of tax filers overall would see a tax increase. Everyone else, including a wider swath of the middle class, would be virtually unaffected, though all wage earners will see a 2 point increase in the payroll tax that goes toward Social Security.

"It's profoundly a compromise," said Clint Stretch, a Washington tax expert. "We have a new definition of the middle class that seems to include virtually everybody."

The agreement, which has yet to be approved by the House, calls for the top rate on joint filers earning more than $450,000 to return to 39.6%, up from the 35% rate in place since the Bush tax cuts of 2001.

These folks would also pay a top rate on dividends and long-term capital gains of 20%, up from 15%.

Upper-income Americans would also enjoy fewer tax deductions. Married couples earning more than $300,000 would see their itemized deductions and personal exemption phase out. Couples earning more than $422,500 would not be able to take a personal exemption at all.

Also, estates of more than $5 million would be subject to a top tax rate of 40%, up from 35% now.

And this doesn't include two new taxes that will hit the rich to pay for President Obama's health reform package, including a 0.9% tax on earnings above $250,000 for couples and an additional 3.8% levy on investment income for wealthy filers.

Related: Fiscal Cliff: What's in the deal ... what could have been

But it could have been even worse for the rich.

For one thing, more people could have been classified as wealthy. Obama and Democratic policy leaders were originally looking to raise rates on filers with incomes above $250,000.

The higher threshold would helps the rich too since a smaller share of their income will be subject to the highest tax rate.

Another concession for the rich in the Senate deal is the rate on dividends. They would be subject to a top rate of only 20%, rather than 39.6%. This is especially important since a substantial portion of wealthy household's income comes from investments.

First Published: January 1, 2013: 5:59 PM ET

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World markets react to fiscal cliff

Vice President Joe Biden helped broker the Senate bill. Some House Republicans have been quick to express their dislike for the measure.

HONG KONG (CNNMoney)

The Senate passed a compromise measure Tuesday that would extend the Bush-era tax cuts for the vast majority of Americans and spare tens of millions from the Alternative Minimum Tax.

But the deal, crafted over the long weekend by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, still must be approved by the House. Passage is not ensured, and some House Republicans have been quick to express their dislike for the Senate bill.

All major global markets were closed Tuesday for the New Year's holiday, and the open of markets in Asia and Australia Wednesday provided the first clues about investor sentiment.

Australia's ASX All Ordinaries index was the first major market to open, adding 0.9% in early trading on hopes that Congress will act. South Korea's KOSPI gained 0.9% and the Hang Seng in Hong Kong advanced 1.2%.

Tokyo's Nikkei and the Shanghai Composite will remain closed for holiday celebrations, but will reopen later in the week.

Investors in the U.S. will get their first shot at reaction when markets open in New York. U.S. stock futures were pointing to a higher open.

Exuberance is likely to be muted, however, as it's not clear whether there are enough votes in the House to pass the Senate bill.

Related: Fiscal Cliff: What's in the deal ... what could have been

Even if the Senate bill clears the House, investors could well find the substance of the Senate bill lacking. While the agreement would provide some short-term certainty, it would leave a range of big issues unaddressed.

The bill does not resolve the issue of when and how lawmakers raise the debt ceiling, setting up a major showdown in February.

The legislation also creates a new cliff deadline over spending cuts around the same time the debt ceiling will need to be raised.

And tax and entitlement reform, both are key to long-term deficit reduction, are not included in the compromise proposal.

First Published: January 1, 2013: 8:06 PM ET

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Stocks in 2013: Get defensive

Click chart for more market data

NEW YORK (CNNMoney)

According to more than 30 investment strategists and money managers surveyed by CNNMoney, the S&P 500 should finish 2013 at 1,490, up 4.5% for the year. While that's not anything to scoff at, it's a far cry from last year's 13% increase.

Investors are facing a number of headwinds, not the least of which is the ongoing uncertainty out of Washington. But experts are primarily pinning their modest forecasts to a slowdown in earnings growth.

It's that very concern that's made ING Investment Management chief market strategist Doug Cote less of a bull going into 2013.

"I'm not predicting Armageddon, but I do think it will be prudent to take a more defensive position in the market this year," said Cote, who has a 1,515 year-end target for the S&P 500.

Related: Best performing stocks

While Corporate America reported year-over-year earnings growth for 11 straight quarters, that streak was broken during the third quarter of 2012. Overall, Cote expects earnings growth in 2013 to be flat to slightly negative.

"Negative earnings growth is a rare event, and it's a predictor of future negative earnings growth," he said. "This goes beyond the fiscal cliff. It's a signal of a real slowdown in the global economy."

For Cote, that means trimming back on stock exposure and adding to his global bond portfolio.

Related: Full survey results

The slowdown in earnings growth has made Ben Halliburton, chief investment officer at Tradition Capital Market, even more bearish. His 2013 target for the S&P 500 stands at 1,200, down a whopping 16% from the end of 2012.

Halliburton noted that over the past three years, companies have done everything they can to cut costs and improve efficiency, the combination of which has boosted profit margins near record highs.

"Everyone is already working with bare bones," he said. That means any additional weakness in the United States or the broader global economy will have a magnified impact on earnings growth, he added.

Related: Worst performing stocks

Though the majority of experts are forecasting single-digit gains, there are a handful of strategists who are a bit more optimistic.

Ryan Detrick, equity strategist at Schaeffer's Investment Research, is expecting the S&P 500 to rise 15% this year.

While he acknowledges that investors are approaching 2013 with caution and fear, much like they did 2012, he believes the market will continue to ratchet higher, just as it did last year.

"Market pullbacks are to be expected," said Detrick, "But the Dow and S&P 500 will take out their 2007 high in late 2013, as naysayers and underperformers finally buy into the bull market that has been in place since early 2009."

First Published: January 1, 2013: 10:02 PM ET

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Fiscal cliff's new definition of rich

The Senate is negotiating a fiscal cliff deal that could raise taxes on couples earning $450,000 and above, which President Obama suggested.

NEW YORK (CNNMoney)

That's a lot higher than the $250,000 threshold that policy makers had long marked as the dividing line between the middle class and the rich. Just under 2% of filers, or 2.85 million, have adjusted gross incomes above $250,000.

By contrast, only 0.6% of joint filers, or 965,000 households, have incomes above $500,000, according to the closest estimate the Tax Policy Center has done to the fiscal cliff deal.

Raising the bar cuts out about 28% of the income that would have been subject to higher tax rates, bringing in less revenue overall.

The center did not determine how increasing the threshold would affect overall tax revenue, but President Obama in a speech Monday said "The agreement being worked on right now would further reduce the deficit by asking the wealthiest 2% of Americans to pay higher taxes for the first time in two decades.

Of course, some people who make a lot of money don't feel rich. After all, the cost of living say in New York eats up a lot more money than it does in Boise.

"Who's rich? It's a good question," said Roberton Williams, a senior fellow at the center. "Rich depends on where you live and with whom you are comparing yourself."

First Published: December 31, 2012: 6:01 PM ET

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It's official: U.S. hits debt ceiling

Congress has about two months before it must raise the debt ceiling or risk causing the government to default on its bills and financial obligations.

NEW YORK (CNNMoney)

"I can confirm we will reach the statutory debt limit today, Dec. 31," a Treasury Department official said.

As expected, Treasury Secretary Tim Geithner submitted a letter to Congress on Monday saying he had begun a "debt issuance suspension period" that would last through Feb. 28. That means Treasury will employ a series of "extraordinary measures" so it does not exceed the debt limit, currently set at $16.394 trillion.

Such measures include suspending the reinvestment of federal workers' retirement account contributions in short-term government bonds.

By taking those steps, Treasury can buy about $200 billion of headroom. That normally can cover about two months' worth of borrowing, although continuing uncertainty about tax rates and spending make it hard to determine precisely how long the extraordinary measures will last.

The bottom line: Congress will have to raise the debt ceiling soon -- as soon as late February.

And that sets the stage for yet another fight on Capitol Hill, where some Republican lawmakers view the debt limit as leverage in negotiations with President Obama over spending cuts and reforms to Medicare and Social Security.

Last year, political brinksmanship over the debt limit led to the downgrade of the country's credit rating, roiled stock markets and raised questions about the country's willingness to pay all of its bills on time.

A report in July by the Government Accountability Office said the 2011 debt ceiling fight wasted $1.3 billion in taxpayer money because of the uncertainty it wrought on the complex task of federal borrowing.

First Published: December 31, 2012: 6:20 PM ET

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Families worried about their tax credits

The Shivers family stands to lose thousands of dollars worth of tax credits next year unless Congress takes action.

NEW YORK (CNNMoney)

Charlie and Jessica Shivers currently receive a Child Tax Credit of about $1,000 for each of their two children. But if Congress fails to extend the credit as it stands, that will drop to no more than $500 each.

And it doesn't stop there. Jessica works as a stay-at-home mom. But Charlie, a federal employee, earns about $84,000 so has received an annual $1,700 boost from the payroll tax cut passed in 2010. But that extra money is likely to disappear because Congress is not expected to extend the tax cut.

Many families like the Shivers could also end up worse off by hundreds or thousands of dollars next year if a deal to avert the fiscal cliff isn't reached.

Four of the biggest tax breaks for families on the chopping block are the Child Tax Credit, Earned Income Tax Credit, Child and Dependent Care Credit and the American Opportunity Credit. All are scheduled to revert to lower levels with the start of the new year.

Meanwhile, the expiration of the payroll tax cut would cause paychecks to shrink for 160 million working Americans, regardless of whether they have children.

Related: Parents await fate of four key tax breaks

President Obama said Monday that a deal would extend at least some of these credits, but nothing has been finalized yet.

For the Shivers, losing $2,700 would mean a cutback in spending. They would delay home improvements, take fewer road trips to see their family and eat out less often.

"As far as being a consumer, we're going to cut back significantly," he said.

It would also stunt the progress they've made paying off their student loan debt, and they wouldn't be able to put as much money into retirement and college savings.

The tax hit wouldn't be "the difference between putting food on the table or not," but it would definitely "still hurt", said Charlie.

Related: Why your paycheck will shrink, no matter what

Another parent, Linda Sadlouskos, is frustrated that she may not be able to take advantage of the American Opportunity Tax Credit, which is scheduled to revert to the Hope Credit and drop from a maximum of $2,500 to $1,800. It would also no longer be refundable, and it would be available for only two years rather than four.

Her son is attending the University of Medicine and Dentistry of New Jersey this year, and she makes too much to qualify for need-based grants.

"My family income is too high for him to have ever qualified for any outright grants, so this is the only form of assistance we would receive toward his education," she said. "Since I'm a single mom trying to get him his education, every bit helps, because we're on a pretty tight budget."

But most of all, she said it's "unforgivable" that Congress can't get its act together and that parents like her have been left not knowing what to expect going into the new year.

"It seems really callous of all of our lawmakers to be leaving us hanging on New Year's like this," she said. "This is no way to treat the public."

First Published: December 31, 2012: 6:31 PM ET

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Why your paycheck is getting smaller, no matter what

Come 2013, much of the country's 160 million workers will pay from $700 to $2,200 a year more if the payroll tax cuts expire.

NEW YORK (CNNMoney)

President Obama is trying to push through legislation to keep broader middle class income taxes from rising by Monday night. But they may still have to pay at least 2% more in payroll taxes.

That's because the government had temporarily lowered the payroll tax rate in 2011 to 4.2% from 6.2%, in an effort to keep more cash in the pockets of Americans and provide a boost to the economy. The tax cut, which applies on the first $113,700 in annual earnings, is expiring in December.

Come 2013, most of the country's 160 million workers will see smaller paychecks. No one is expecting the payroll tax cut to be extended, even as lawmakers in Washington meet for budget talks to avoid the fiscal cliff.

Monthly paychecks will have $50 less for those earning $30,000 annually, and will shave off $189.50 for those with incomes totaling $113,700.

The amounts could be large enough to deal a blow to middle class Americans' spending budgets, especially at a time when the economic recovery is still struggling to gain a foothold.

Related: Forget the rich, fiscal cliff would hit everyone else too

Already Americans are feeling jittery. The latest reports show that consumer confidence took a dive in December as fiscal cliff fears weighed on the country. A closely watched consumer confidence index, which measures the American public's sentiments every month, sank six points. It was major turnaround from October, when the index reached a four-year high.

It was also the largest drop in consumer confidence since the nation's credit rating was lowered in August of last year.

Concern over these tax hikes are already holding shoppers back.

During the holiday shopping season, between Oct. 30 to Dec. 24, shoppers spent just 0.7% more than they did last year, according to a MasterCard Advistors SpendingPulse report released last week. That's compared to the 2% sales growth in the same period in 2011.

President Obama's top economic advisers have also warned that if Congress didn't prevent tax hikes on middle class families, consumer confidence could decline, retailers could be hurt, and jobs may be cut.

"As we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can't afford the threat of tax increases on middle class families," the report said.

Payroll taxes are used to fund Social Security, and the tax cut has cost about $120 billion each year. The Treasury Department has made up for the difference with money from general funds.

First Published: December 30, 2012: 1:45 PM ET

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