Note to U.S. Congress. The People You Represent Hate You.

Note to U.S. Congress. The People You Represent Hate You.

  • Posted on: 9 December 2015
  • By: admin

Note to U.S. Congress. The People You Represent Hate You.

The most recent poll from Public Policy Polling shows that people hate the U.S. Congress more than things like colonoscopies, root canals, Donald Trump, and cockroaches! You can see the release at http://www.publicpolicypolling.com/main/2013/01/congress-somewhere-below-cockroaches-traffic-jams-and-nickleback-in-americans-esteem.html

Why You Should Care

We did this not to pile on to Congress, but because we remain extremely confused that every member of Congress invokes the idea that “the American people deserve better” whenever they are in front of a camera, however, apparently those same American people don’t deserve more from their representatives!

U.S. Congress, you have about a month to negotiate a broad debt and deficit reduction plan that should look at reforming our tax code as well as entitlement programs like social security and Medicare. You have such an amazing opportunity to turn the opinions of the people that you claim to fight for around, a feat that would cause optimism to overtake the stifling pessimism most of us have. Do your job, and work to help this country, and the American people, advance.

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European Economy Showing Initial Signs of Rebound

European Economy Showing Initial Signs of Rebound

  • Posted on: 9 December 2015
  • By: admin

European Economy Showing Initial Signs of Rebound

Although still contracting, the Eurozone economy is contracting…less, and Germany and Ireland have begun to expand again. You can read the Markit press release at http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10527

Why You Should Care

The Eurozone is the largest economic zone in the world with GDP of roughly $17.5 trillion (U.S. is roughly $15 trillion) and it has been contracting for the last 11 months. Although it hasn’t moved into expansion territory yet, the rate of contraction has slowed to the slowest since July 2012 and Germany and Ireland have returned to growth. 

The U.S. has been the only major economy that has been expanding in the last 12 months and now China has resumed their expansion and if we can get Europe on board this train we could begin to see global GDP growth accelerate. Keep your eyes on Europe in 2013!

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New Congress, Same Dysfunction?

New Congress, Same Dysfunction?

  • Posted on: 9 December 2015
  • By: admin

New Congress, Same Dysfunction?

The 113th Congress is being sworn in at noon Eastern and the real question becomes, will they be any better than the 112th? You can read this article from Huffington Post detailing the changeover http://www.huffingtonpost.com/2013/01/03/new-congress_n_2401563.html

Why You Should Care

Although a fresh infusion of new members might give some hope, the real question is can the freshmen really change the system that has stifled the ability to compromise? If the last few freshmen classes are any indication, the answer is a resounding “no”.

But, we need them to push on the old establishment, to alter its course, because we have a great deal of work to do over the next few months. The deal on taxes that happened at the last minute to avert a massive tax hike on all Americans was only the beginning, and the fight over spending cuts, entitlement reform, and the debt ceiling coming up in February is likely to be difficult, to put it lightly. 

I want to believe they can do it. I like being an optimist. Come on Congress, show us you can actually put the needs of the citizens above your own and create some lasting legislation that will actually fix our problems rather than simply postpone the inevitable.

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Speaker Boehner’s Plan B Fails to Gain Support – Where Do We Go From Here?

Speaker Boehner’s Plan B Fails to Gain Support – Where Do We Go From Here?

  • Posted on: 9 December 2015
  • By: admin

Speaker Boehner’s Plan B Fails to Gain Support – Where Do We Go From Here?

Speaker of the House, John Boehner, tried and failed to get his “plan B” Fiscal Cliff legislation passed in the House last night. You can read the CNN story at http://www.cnn.com/2012/12/20/politics/fiscal-cliff/index.html

Why You Should Care

How many times can you take a nation to the brink? This is getting exhausting. Playing politics with 330 million lives isn’t right, and the fact that we again stand on the precipice and don’t seem to have the ability to compromise and get something done is utterly ridiculous and disappointing. 

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Michigan Becomes 24th Right-To-Work State – Another Blow to Unions

Michigan Becomes 24th Right-To-Work State – Another Blow to Unions

  • Posted on: 9 December 2015
  • By: admin

Michigan Becomes 24th Right-To-Work State – Another Blow to Unions

Michigan signed a right-to-work bill into law in another blow to organized labor. You can read the ABC story at http://abcnews.go.com/Politics/michigan-governor-signs-work-bill-law/story?id=17934332#.UMkFJuTBGYQ

Why You Should Care

2012 appears to have been the year of assault on organized labor. From California municipal bankruptcies due to pension costs, to Wisconsin’s removal of collective bargaining, to Boeing moving a manufacturing facility to South Carolina, to the icon of unionized labor, Michigan, becoming a right-to work state. 

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U.S. Treasury Sells Final AIG Shares - Generates $22.7 Billion Profit on Bailout

U.S. Treasury Sells Final AIG Shares - Generates $22.7 Billion Profit on Bailout

  • Posted on: 9 December 2015
  • By: admin

U.S. Treasury Sells Final AIG Shares - Generates $22.7 Billion Profit on Bailout

The U.S. Treasury announced today that it has agreed to sell its remaining ~234 million shares of AIG at $32.50, bringing to an end the government ownership of AIG. You can read the press release at http://www.treasury.gov/press-center/press-releases/Pages/tg1796.aspx

Why You Should Care

All bailouts are not created equal. In the case of the $182 billion bailout of AIG, the U.S. Treasury was able to generate a $22.7 billion gain, or roughly 12.5%. Although it was a difficult decision to ultimately bailout AIG and other institutions, estimates peg the overall loss on TARP at roughly $60 billion, which is a fairly small price to pay to save the financial system.

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How Many Examples of Govt. Waste do we need to see? Dept. of Agriculture spends $2mm on Intern Program….Hires 1 Intern

How Many Examples of Govt. Waste do we need to see? Dept. of Agriculture spends $2mm on Intern Program….Hires 1 Intern

  • Posted on: 9 December 2015
  • By: admin

How Many Examples of Govt. Waste do we need to see? Dept. of Agriculture spends $2mm on Intern Program….Hires 1 Intern

The finding was part of a larger USDA inspector general audit that focused on the agency’s multi-million dollar effort to improve information technology security. The 32-page audit found the agency’s information systems “are still at risk” because the improvement projects were poorly managed “even after expending $63.4 million of funding increases received” in fiscal years 2010 and 2011.

http://www.foxnews.com/politics/2012/08/11/ig-report-ag-dept-spent-2m-on-internship-program-that-resulted-in-just-one-hire/

Why You Should Care

U.S. politicians continue to play chicken with our financial well-being by focusing more on that which provides limited prospects of solving our real crisis–excess debt caused by excess spending. The cowardice seen in politicians’ unwillingness to tackle spending issues is downright pathetic. Whether it is the Democrats that don’t want to touch Medicare, Medicaid, and Social Security (which will eventually consume70% of total revenue, Can you say unsustainable?), or the Republicans insistence that cuts to Defense harm our national security, both are being ridiculous, counterproductive, and neglecting their responsibilities to the citizenry. Our elected officials are too scared to alienate any so-called special interest for fear of losing re-election; and since campaigning is a full time job, it may be a long time before these clowns in D.C. decide to seek solutions to our problems rather than posture for political points.

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Fiscal Cliff – What are you willing to give up?

Fiscal Cliff – What are you willing to give up?

  • Posted on: 9 December 2015
  • By: admin

Fiscal Cliff – What are you willing to give up?

CNBC released their All-American survey results about the fiscal cliff. Watch this video http://video.cnbc.com/gallery/?video=3000133696&__source=yahoo%7Cheadline%7Cquote%7Cvideo%7C&par=yahoo  and take a look at what are the most “palatable” solutions according to politicians. Let me break it down in simple English, more taxes good, spending cuts bad (regardless of party affiliation!). Shocker I know.

Why You Should Care

I’m tired of the fiscal cliff. If you follow it, I’m sure you’re tired of it too. But the same question needs to be asked over and over, and that is “what are you willing to give up?” We all know we spend too much. Even the most liberal person acknowledges that the government wastes a lot of money every year. But, when politicians are asked to cut spending, NO ONE is for it. It’s always ok to raise taxes, but to cut programs and waste is akin to killing the family dog!

The survey results from CNBC tell us what we already knew, but it is still extremely disappointing to see it represented visually. It felt like a punch in the gut. California has the same problem. The ballot initiative allows people to vote for projects and programs while voting against tax hikes. In what world are we living? If you want something, you have to pay for it. When did we become such wimps that we can’t tighten our belts? This is the main reason why people don’t want to pay more taxes, because the government never cuts spending. More people would be willing to pony up more of their hard earned money if they knew real progress on entitlement reform and waste reduction was going to be made.

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Expert's Corner - The Tax Man Cometh in 2013

Expert's Corner - The Tax Man Cometh in 2013

  • Posted on: 9 December 2015
  • By: admin

Expert's Corner - The Tax Man Cometh in 2013
 

Dan Hughes is a Director at CBIZ MHM in Phoenix, Arizona. If you have questions please contact him at DHughes@CBIZ.com or 602-264-6835.

Now that the election is over, it’s time to consider how the upcoming changes in the tax law will effect you. There are many proposed changes on the way that haven’t been fully accepted or implemented so I’ll just focus on the known changes for 2013 and some things that can be done before year end to lessen the tax burden.

0.9% Medicare Tax Withholding Requirement

Taxpayers with wages above $200,000 ($250,000 for married couples filing jointly), or self-employment income above those levels, will be subject to an additional 0.9% Medicare tax beginning in 2013 on that excess income. For married taxpayers filing jointly, the additional Medicare tax will be based on their combined wages, complicating the withholding process for some employees.

The employer must begin withholding the additional Medicare tax in the pay period in which the employee’s wages exceeds $200,000, regardless of the employee’s filing status. As a result, the employee may be subject to the additional Medicare tax withholding even if the couple ultimately doesn’t owe the tax because their combined wages are less than $250,000. In this situation, the extra Medicare tax withholding would be reflected as a tax payment on the couple’s individual tax return and could be used to offset their income tax liability or be refunded.

Health Flexible Spending Account Limits

The amount that can be contributed to a health flexible spending account (FSA) is limited to $2,500, effective for plan years beginning on or after January 1, 2013. The limit does not apply to dependent care assistance, adoption care assistance or amounts applied towards the employee’s health insurance premiums. The $2,500 limit will be indexed for inflation beginning with 2014 plan years.

Increase in Floor for Medical Expense Itemized Deduction

Historically, qualified medical expenses were deductible as an itemized deduction on Schedule A of Form 1040 to the extent that the qualified expenses exceeded 7.5% of the taxpayer’s adjusted gross income (AGI). Beginning in 2013, the 7.5% floor will increase to 10% for most taxpayers. Beginning in 2013, that threshold would increase to $10,000. Expenses that are reimbursed by insurance or paid for with pre-tax dollars are not eligible for the deduction. Taxpayers who are age 65 or older by the end of the tax year are exempt from the increase in the AGI floor until 2017. For married couples, only one spouse needs to be age 65 by the end of the tax year for the couple to be exempt from the increase in the AGI floor, even if the couple files separate tax returns. Taxpayers subject to the alternative minimum tax (AMT) may not feel the effects of the increase in the AGI floor. The medial expense AGI floor for AMT purposes historically has been 10% and will continue as such, even for those taxpayers age 65 and older. 

3.8% Medicare Tax on Net Investment Income

Historically, Medicare tax has only been assessed on earned income. Beginning in 2013, individuals with income over certain levels will be subject to a 3.8% Medicare tax on net investment income. While this new tax does not impact employers directly, many business owners and executives will be impacted.

For individuals, the Medicare tax is equal to 3.8% multiplied by the lesser of:

·         Net investment income, or

·         Modified adjusted gross income (AGI) in excess of $200,000 ($250,000 for married couples filing jointly).

Modified AGI is equal to AGI plus the foreign earned income exclusion, if applicable.

For purposes of the 3.8% Medicare tax, net investment income generally is the sum of the following items in excess of properly allocable deductions:

·         Gross income from interest, dividends, annuities, royalties and rents;

·         Other gross income from any passive trade or business or trade or business of trading in financial instruments or commodities, and;

·         Net gains attributable to the disposition of property.

Investment income does not include:

·         Investment income that is excludable from taxable income (e.g., municipal bond interest, excluded gain from sale of personal residence);

·         Qualified retirement plan distributions; and

·         Income from the active trade or business of a partnership or LLC, S Corporation or sole proprietorship in which the individual materially participates.

Some Planning Tips

·         Consider taking capital gains before year end. Wash sale rules don’t apply to gains so you can reset to a higher basis

·         Review your investment strategy to become more tax efficient. There are still some tax- advantaged investments such as municipal bonds, life insurance and annuities

·         Think about gifting and taking ordinary income in 2012 as opposed to 2013.

·         We still don’t know all the changes yet so you will have to stay tuned and be ready for future changes.

 

The views and opinions expressed are not those of Pathlight Investors and are intended to be for educational purposes only. Pathlight Investors cannot vouch for the accuracy of the information presented. Please contact the author of the article to determine how this information pertains to your specific situation.

 

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Fiscal Cliff - U.S. Farm Bill provides roughly $45 billion in Crop Subsidies Annually

Fiscal Cliff - U.S. Farm Bill provides roughly $45 billion in Crop Subsidies Annually

  • Posted on: 9 December 2015
  • By: admin

Fiscal Cliff - U.S. Farm Bill provides roughly $45 billion in Crop Subsidies Annually

In our continuing effort to illuminate large costs that could be cut to close the budget deficit rather than simply raising taxes, today we take a look at the U.S. Farm Bill and its large cost to U.S. taxpayers and ask again, what are you willing to give up? This link provides answers to some FAQ’s about the farm bill http://www.snaptohealth.org/farm-bill-usda/u-s-farm-bill-faq/

Why You Should Care

The U.S. is supposedly built on the idea of free markets. Well, in farming nothing could be further from the truth. We spend roughly $45 billion a year in taxpayer money to influence what crops are planted, how many acres of a specific crop are planted, and straight cash payments to farmers of specific products so they can compete more effectively with foreign suppliers. 

We all know about the ethanol illusion and how the government buys corn that should be used to lower food costs, to produce ethanol, but do you know that we protect the sugar industry specifically? The U.S. Government imposes trade barriers and levies large tariffs to protect the U.S. Sugar industry. According to a 2007 study by the CATO institute http://www.cato.org/pubs/tbb/tbb_0607_46.pdf,  taxpayer subsidies to the sugar industry are $1.4 billion per year, but the artificially high price of sugar, which is a result of the protections, costs U.S. consumers another $1.9 billion (total of $3.3 billion per year). It is believed that U.S. taxpayers pay $826,000 per job saved in the sugar industry. From a purely price perspective, the average annual cost of raw cane sugar in the world market from 1990-2005 was $0.10/lb while the price for U.S. sugar averaged $0.21/lb.   In the U.S. the sugar industry employs roughly 60,000 people while food manufacturers employ 988,000. Which industry should we protect more? 

What are you willing to give up?

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