Finance, Taxes and the Economy

Georgia Department of Revenue Announces New Anti-Fraud Program

2012-01-17T16:49:00.001-08:00

The Georgia Department of Revenue has put in place new security measures to prevent tax fraud in Georgia. The Department has taken these actions due to the increase in fraudulent filings over the last several years.

The Department will run each return through a process to ensure that the information provided on the return is accurate. If a tax return is flagged by our process because of potential inconsistencies, the taxpayer will be asked to provide the Department with some additional information in order to process the return.

“This new process will help prevent tax fraud in Georgia,” said Department of Revenue Commissioner Doug MacGinnitie. “Stopping fraud is a Department priority, and we will continue to take the steps necessary to protect taxpayers and taxpayer money.”

The Department estimates that the new process will save the state millions of dollars, with little inconvenience to legitimate taxpayers.

“By using this new system, we will cut off a way for criminals to commit fraud against Georgia taxpayers, as well as save the State millions of dollars in revenue,” said Commissioner MacGinnitie.

Georgia Republicans Speak Out on Tax Day

2011-04-15T08:13:00.000-07:00

Monday, April 18, 2011 will mark Tax Day. Members of the Georgia delegation joined together to comment on the impact Tax Day has on American families and small businesses, and how improvements can be made to our tax system. Below are their statements.

Rep. Lynn Westmoreland (GA-03): “Each year as I sit down to prepare my taxes, I am reminded of just how convoluted our tax code has become. It’s filled with confusing and sometimes contradicting language and secret loopholes, creating an unfair system where those who can afford high-priced tax professionals can skirt their obligations while everyday Americans are stuck with an ever-growing tax burden. That’s why I have been a strong supporter of the Fair Tax. The Fair Tax would replace the income tax with a sales tax, eliminating the confusing process of filing your income tax return each year. However, the answer to the confusion of our tax code is absolutely not higher taxes, like those proposed by President Obama. The answer to our current debt problem is less spending in Washington – not higher taxes on the backs of American families and small businesses. ”

Rep. Tom Price, M.D. (GA-06), Chairman of the House Republican Policy Committee: “Washington has a spending problem, not a revenue problem, and yet we are reminded every Tax Day that there are those in Washington who still believe we need to take more from the American people in order to grow government. Every dollar taken by the government is one less dollar the American people can use themselves to pursue their dreams, grow our economy, and create jobs. Rather than higher taxes, we should focus on tax reform that will lower rates and broaden the base to make America more competitive in the global economy and expand opportunities for families.”

Rep. Jack Kingston (GA-01): “Economic growth doesn’t start in Washington, it ends there. That’s why I work every day to keep the tax burden on working Georgians low and to serve as a check on the growth of government. The road to recovery starts with allowing working families and small businesses to keep more of what they make, not siphoning their hard-earned dollars to big government bureaucrats.”

Rep. Austin Scott (GA-08): “This week the President outlined a plan that raises taxes on nearly every single American taxpayer. Americans are taxed enough already. As a small business owner, I can tell you that taking more money out of the American people’s pockets is not the way to create jobs and stimulate our economy. We must continue to cut unnecessary spending and incentivize small business owners instead of taxing them at every turn.”

Rep. Tom Graves (GA-09): “To borrow the famous words of Bastiat, the arrival of Tax Day marks another year of ‘legal plunder.’ As Americans review how much of their hard earned paychecks were taken by the government, the President has made a poorly timed promise to raise taxes on families and small businesses by 2013. With our towering debt and deficits, and the many years of fiscal mismanagement, it defies common sense to give this government a raise. The big government experiment has failed, and I’ll continue to make that case over the next year as we fight to defend the family paycheck.”

Rep. Paul Broun (GA-10): “This year’s Tax Day serves as a painful reminder that Americans across the country are struggling everyday to make ends meet, and unemployment is still skyrocketing in almost every city nation-wide. Our unsustainable debt and imploding deficits continue to raise doubt and uncertainty for job creators, so the economy remains in limbo. Yet, President Obama’s only plan to kick the economy into gear involves raising taxes and expanding the overreach of the federal government. The last thing families and small businesses want to do is hand over more of their hard earned paychecks to the government. Moreover, hiking taxes will only further kill jobs and drive our small businesses deeper into the red. I will continue to fight for meaningful spending cuts, to repeal Obamacare and its job-killing mandates, and to ensure the growth of the private sector – so that next year’s Tax Day won’t be such a sting.”

Rep. Phil Gingrey, M.D. (GA-11): “Today, many Americans and small businesses will file their income taxes, entrusting their government to use those tax dollars responsibly. While most believe their tax burden is already too high, if President Obama has his way, that burden will be even higher,” said Rep. Gingrey. “A tax increase on America’s job creators would be devastating to our economy and would stifle our rate of job growth, which is already painfully slow. The President must understand — in order to prevent the burden of our nation’s fiscal crisis from being passed on to job creators and America’s workforce — the solution to our nation’s fiscal woes is not more taxation, it’s less spending.”
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Fund for local governments keeps top rating

2011-03-23T08:28:00.000-07:00

Gov. Nathan Deal and Georgia Treasurer Tommy Hills today (March 22) announced that the nationally recognized credit rating firm of Standard and Poor’s affirmed its highest money market fund rating of AAA for Georgia’s own Georgia Fund 1.

“Georgia continues to demonstrate excellence in terms of AAA ratings,” said Deal. “The success of Georgia Fund 1 is a reflection of our state’s commitment to sound fiscal management, even during the worst of budget crunches.”

Treasurer Hills echoed his sentiment: “I am gratified that Standard and Poor's continues to assign its highest rating to Georgia Fund 1,” said Hills. “This is a clear signal to Georgians that their governmental funds are being invested in adherence with the highest standards of money management."

For the past 30 years the Office of the Georgia State Treasurer has managed and administered a local government investment pool (LGIP) called Georgia Fund 1. The LGIP is available for the short-term investment funds of Georgia’s county and city governments and school boards, co-investing with the state treasury and Georgia’s colleges and universities. Georgia Fund 1 operates like a traditional money market fund for governments providing all investors with safety, liquidity and competitive investment returns.

Georgia Fund 1 is one of the largest LGIP’s in the nation, and for the past 20 years its investment performance has outperformed the benchmark returns for all LGIP’s. More than $8 ½ billion is currently invested in Georgia Fund 1.

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Census Bureau Reports State Government Tax Collections Decrease $14 Billion in 2010

2011-03-23T08:10:00.000-07:00

/PRNewswire/ -- State government tax collections decreased $14.3 billion to $704.6 billion in fiscal year 2010, the U.S. Census Bureau reported today. There was a $65.8 billion decrease in 2009.

These new data come from the 2010 Annual Survey of State Government Tax Collections , which contains annual statistics on the fiscal year tax collections of all 50 state governments, including receipts from licenses and compulsory fees. Tax revenues also include related penalty and interest receipts of the governments.

"The first response of researchers and analysts, when confronted with a new tax policy question, is to see what the Annual Survey of State Government Tax Collections data tell them about the question," said John Mikesell, a Chancellor's Professor at Indiana University's School of Public and Environmental Affairs. "These data make the public finance world easier to understand and to analyze."

According to the survey, corporate net income tax revenue was $38.2 billion, down 6.6 percent, while tax revenue on individual income was $236.4 billion, down 4.4 percent. General sales tax revenue was $224.5 billion, down 1.8 percent. These taxes comprised 70.8 percent of all state government tax collections nationally.

This survey provides an annual summary of taxes collected by state for up to 25 tax categories. For more information about this survey, visit http://www.census.gov/govs/statetax/.

Eleven states saw increases in total tax revenue in fiscal year 2010, led by North Dakota (9.6 percent), North Carolina (4.8 percent), Nevada (4.0 percent), and California (3.8 percent).

The states with the largest total tax revenue decreases were Wyoming (23.4 percent), Louisiana (14.2 percent), Oklahoma (13.5 percent), and Montana (11.0 percent).

States with the largest percent decrease in revenue from individual income taxes were Louisiana (22.2 percent), Tennessee (22.2 percent), North Dakota (18.0 percent) and New Hampshire (16.2 percent).

Severance taxes — collected for removal or harvesting of natural resources (e.g., oil, gas, coal, timber, fish, etc.) — were down $2.3 billion, a 17.4 percent decrease. This followed a 24.8 percent decrease in fiscal year 2009. The largest decreases in severance tax revenue were seen in the West and South. The Midwest saw an increase in severance tax revenue this year.

Revenue on taxes imposed distinctively on insurance companies and measured by gross or adjusted gross premiums (insurance premium sales tax) increased $754.0 million, up 5.0 percent. This followed a 4.6 percent decrease in fiscal year 2009. The largest increases in insurance premium sales tax revenue were seen in the Northeast and South.

These data do not include employer and employee assessments for retirement and social insurance purposes. Also excluded are collections for the unemployment compensation taxes imposed by each of the state governments. In addition, these data include tax collections for state governments only; they do not include tax collections from local governments.

Although the data are not subject to sampling error, the statistics are subject to possible inaccuracies in classification, response and processing. Every effort is made to keep such errors to a minimum through care in examining, editing and tabulating the data.

The tax revenue data pertain to state fiscal years that ended June 30, 2010, in all but four states. Amounts shown for these four states reflect the different timing of their respective fiscal years, which were the 12-month periods ending on March 31, 2010, for New York; Aug. 31, 2010, for Texas; and Sept. 30, 2010, for Alabama and Michigan.

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Habersham Bank Closed by Georgia Department of Banking and Finance

2011-02-23T11:48:00.000-08:00

/PRNewswire/ -- Habersham Bancorp (OTC Bulletin Board: HABC) announced that the Georgia Department of Banking and Finance closed its subsidiary bank, Habersham Bank, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Habersham Bancorp is no longer the parent of Habersham Bank.

In a virtually simultaneous transaction, SCBT National Association acquired the operations and all deposits and purchased essentially all assets of the Bank in a loss-share transaction facilitated by the FDIC and will continue to operate the Bank, according to an FDIC news release. Customers who have questions about the foregoing matters, or who would like more information about the closure of the Bank, can visit the FDIC's web site located at http://www.fdic.gov/bank/individual/failed/habersham.html, or call the FDIC toll-free at 1-866-806-6128.

In a prepared statement, Habersham Bancorp said: "While we ultimately were unable to save the Bank in the face of unyielding market conditions, the Board of Directors worked tirelessly over the past two years on behalf of the Company and its shareholders and attempted every reasonable solution. In particular, over the last several months, the Board and management team had been working on an offering of common stock to residents of the State of Georgia in an effort to recapitalize the Bank. Our Board and management team also pursued other transactions, including mergers with other institutions and sales of the Bank's assets. Despite our best efforts, the continuing depressed market conditions prevented us from completing these transactions."

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Free Tax Assistance from Clayton State University School of Business Accounting Students, February 19

2011-02-16T11:52:00.000-08:00

Accounting students from Clayton State University have been busy reviewing all the tax law changes for 2010; that’s because they are participating in the Volunteer Income Tax Assistance (VITA) program hosted by the University’s School of Business, that provides free tax support for certain eligible taxpayers.

For the 2011 tax season, this service will be offered at the Clayton School of Business on the following Saturdays; Feb. 19, Feb. 26, Mar. 19 and Mar. 26, from 9 a.m. to 1 p.m. Taxpayers will be assisted on a first come, first serve basis. If taxpayers have further questions they may call the VITA hotline at (678) 466-4527.

VITA has been in existence for 37 years, and provides volunteers with extensive IRS training and testing. The volunteers can then ensure that taxpayers will have their tax returns filled out accurately and timely and receive the tax credits they qualify for, such as the Earned Income Tax Credit and the Child Tax Credit. Students can also benefit from having VITA volunteers prepare their taxes because the volunteers are trained in the recent changes to the credits available for tuition and other school-related expenses. The VITA program also prepares state income tax returns and provides free e-filing options to ensure clients receive their refunds as soon as possible.

Those interested in receiving this assistance must bring the following items:

photo identification,
social security cards for themselves, their spouse, and dependents,
birthdates,
wage and earnings statements from all employers,
interest and dividend statements,
other relevant information about income and expenses including day care expenses,
a copy of last year’s federal and state income tax returns if possible,
bank routing and account numbers for direct deposit.

Please note that both spouses will need to be present to file electronically.

A unit of the University System of Georgia, Clayton State University is an outstanding comprehensive metropolitan university located 15 miles southeast of downtown Atlanta.

Nearly Half of Seniors Receiving Lower Social Security Checks in 2011

2011-02-03T06:58:00.000-08:00

/PRNewswire/ -- Forty-four percent of seniors are receiving lower Social Security checks this year compared to 2010, while even more are dealing with significantly higher expenses. The findings come from an annual survey of elderly Americans, released earlier today by The Senior Citizens League (TSCL), one of the nation's largest nonpartisan senior citizens advocacy groups.

Of seniors receiving lower checks, one in four report receiving at least $50 less per month, and one in nine are receiving at least $100 less per month.

At the same time, nearly two-thirds of seniors (61 percent) estimate their expenses have increased by at least $80 per month compared to last year.

Social Security checks are lower because many seniors have their Medicare Part D or Medicare Advantage premiums automatically deducted, and these premiums have increased in many cases. An annual Cost of Living Adjustment (COLA) typically offsets such premium increases, but seniors are not receiving a COLA for the second year in a row.

"The combination of lower benefits and higher expenses means many more seniors will have a hard time making ends meet this year," said Larry Hyland, chairman of The Senior Citizens League. "More of them will have to make very difficult choices and cut back on basic things such as health care and utilities."

Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries.

TSCL supports emergency COLA legislation and opposes any deficit reduction proposals that would cut the COLA.

SURVEY METHODOLOGY: The survey was conducted through print and electronic surveys from December 13, 2010, through January 31, 2011. It had 1,253 Social Security recipients. Full survey results are available on request.

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Georgia Income Tax Returns Are Being Processed And Accepted Despite IRS Delay

2011-01-29T05:44:00.001-08:00

The Internal Revenue Service announced on January 20 that they will not accept e-filed or paper returns from a select group of taxpayers until mid-February due to changes to the 2010 Federal Internal Revenue Code. However, the Georgia Department of Revenue announced today it is accepting and processing Georgia income tax returns that are e-filed via the joint IRS e-file system.

The affected taxpayers who e-file their Georgia income tax return only will have the return accepted and processed without delay. All paper filed Georgia income tax returns will also be accepted.

The IRS announcement affects all 1040 filers with a Schedule A, among others. For more information on the affected taxpayers, please see the IRS press release which can be accessed here:

http://www.irs.ustreas.gov/newsroom/article/0,,id=234736,00.html?portlet=7

States Set to Go On Bankruptcy Bonanza

2011-01-24T05:06:00.000-08:00

Insolvency talks underway with Obama administration

The most important question for 2011 may be just emerging on the national policy scene: How many states will declare bankruptcy this year?

It would be a first-time ever event, but the New York Times has already reported that state policy makers, congressional leaders and officials in the Obama administration are already involved in behind-the-scenes discussions regarding whether declaring bankruptcy may be the only solution available to states with budget crises that cannot be resolved any other way.

"Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care," Mary Williams Walsh wrote in the Times. "Some members of Congress fear that it is just a matter of time before a state seeks a bailout, says bankruptcy lawyers who have been consulted by congressional aides."

Still, it is doubtful the federal government will bail out near-bankrupt states, despite the severe cutbacks in public welfare services the state budgetary crises are causing.

Federal bailouts of the states would amount to nationalizing the states and could produce a constitutional crisis, especially if the federal government assumes as it usually assumes that the federal government has a right to control whatever the federal government pays for.

By pursuing bankruptcy, a state could seek to get out of contractual agreements to pay public employee pensions the state may no longer be able to afford.

"Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout," Walsh noted.

Inevitably, states declaring bankruptcy could send major shocks through the municipal bond markets, with the unfortunate result that borrowing costs for all state and local governments may escalate dramatically.

The problem is that state governments, unlike the federal government, cannot simply print money.

New Jersey public employee crisis

In December, the State of New Jersey disclosed that the unfunded pension liability for state government employees grew from $45.8 billion to $53.9 billion in 2009, an increase of 18 percent.

New Jersey public employee pension funds currently cover some 800,000 workers in seven different pension funds covering a wide range of government employees, including teachers, police officers, firefighters, judges and bureaucrats.

The Philadelphia Inquirer reported that New Jersey residents have the largest unfunded pension liabilities in the nation.

New Jersey pension funds now have only 62 percent of the funds necessary to pay future promised obligations, down from 66 percent the year before.

To put this in perspective, pension experts generally recommend that state pensions should be funded to at least 80 percent of their current and future obligations.

New Jersey also has an unfunded obligation of $66.8 billion for health-care costs, in addition to the $53.9 billion unfunded pension liability.

Again, to put this in perspective, the entire state budget for New Jersey this year is $29.4 billion.

Gov. Christie recommended a wide range of changes for New Jersey public employment pensions, including rolling back benefits by as much as 9 percent, increasing the retirement age for teachers from 62 to 65, and requiring all state employees to contribute 8.5 percent of their salaries to the state pension system, instead of the 3 percent some public employees now pay.

Still, even these changes might not be enough to make a meaningful dent on the state's unfunded pension obligations.

State budget crisis faces nation in 2011

Last October, the Center on Budget and Policy Priorities reported that to balance their 2011 budgets, states had to address fiscal year 2011 gaps totaling an estimated $125 billion, or 19 percent of budgets in 46 states.

State tax revenues were 8.4 percent lower in fiscal year 2009 than in 2008, and an additional 3.1 percent lower in 2010, reflecting the worst recession since the 1930s.

"States will continue to struggle to find the revenue needed to support critical public services for a number of years, threatening hundreds of thousands of jobs," the Center reported.

The Center sees no diminishment in budget problems in 2012.

Already 39 states have projected budget gaps that are expected to total $112 billion for fiscal year 2012, a budget gap that is expected to grow to approximately $140 billion once all states have submitted their 2010 estimates. Even worse, the federal aid to the states provided by the February 2009 American Recovery and Reinvestment Act and to a smaller extent in the August 2010 jobs bill, estimated at $60 billion in 2011, is expected to decline to $6 billion in 2012.

"Taking all these factors into account, it is reasonable to expect that for 2012, shortfalls are likely to exceed $140 billion with only $6 billion in federal Recovery Act dollars remaining available," the report concluded.

FROM JEROME CORSI'S RED ALERT
By Dr. Jerome Corsi
(c) 2010 RedAlert.WND.com

Shared with permission

ABOUT THE AUTHOR: Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972. He is the author of the #1 New York Times bestselling books THE OBAMA NATION: LEFTIST POLITICS AND THE CULT OF PERSONALITY and the co-author of UNFIT FOR COMMAND: SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY. He is also the author of AMERICA FOR SALE, THE LATE GREAT U.S.A., and WHY ISRAEL CAN'T WAIT. Currently, Dr. Corsi is a Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WorldNetDaily.com.

ABOUT GILFORD SECURITIES: Gilford Securities, founded in 1979, is a full-service boutique investment firm headquartered in New York City providing an array of financial services to institutional and retail clients. From investment banking and equity research to retirement planning and wealth management services, our financial experts are prepared to accommodate the needs of investors. For more information about Gilford Securities please visit, Click Here: http://www.gilfordsecurities.com/financial-services-group.php

The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect Gilford Securities Incorporated's views, opinions, positions or strategies. Gilford Securities Incorporated makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information expressed herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

ABOUT RED ALERT: Jerome Corsi's RED ALERT is your weekly, global financial strategies newsletter. Designed to be your guide to economic trends in the best of times and the worst of times, it is edited by New York Times best-selling author Jerome Corsi, Senior Managing Director of the Financial Services Group at Gilford Securities as well as a WND senior staff writer and columnist. For 25 years, Corsi worked with banks throughout the U.S. and the world developing financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. Corsi developed three third-party financial services marketing firms that reached annual gross sales levels of $1 billion in annuities and equal volume in mutual funds. Corsi received his Ph.D. in political science from Harvard University in 1972.

Camp, Boustany Request Answers From Treasury Secretary Geithner on Tax Refund Pilot Program

2011-01-21T20:03:00.001-08:00

Ways and Means Chairman Dave Camp (R-MI) and Oversight Subcommittee Chairman Charles Boustany (R-LA) sent a letter to Treasury Secretary Timothy Geithner inquiring about a pilot program the Department of Treasury (Treasury) announced on January 13, which would deliver tax refunds to 600,000 individuals through the distribution of pre-paid debit cards.

In the letter, the Chairmen outlined several concerns related to the pilot program, including fees that might be assessed on recipients who receive their tax refunds through a pre-paid debit card. As part of the Committee’s oversight jurisdiction relating to the activities of the Department of the Treasury and the Internal Revenue Service, Camp and Boustany requested Treasury provide information (by February 3) related to the pilot program, including how recipients of the pilot program were chosen, a copy of the program materials and an explanation of all of the fees and charges that will be incurred by some of taxpayers enrolled in the pilot program.

The full letter can be read here.

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Chairman Dave Camp (R-MI), Committee on Ways and Means Hearing on Fundamental Tax Reform

2011-01-20T06:53:00.000-08:00

(Remarks as Prepared)

Ways and Means Chairman Dave Camp (R-MI) today delivered opening remarks at the Committee on Ways and Means Hearing on Fundamental Tax Reform. Below are excerpts, followed by the full remarks.

The Tax Code

“Clearly, the tax code is too complex, too costly, and takes too much time to comply with. All this adds more burdens on families and employers – making it more difficult to create jobs in this country.

“I am under no illusion that the task before us will be easy. To really reform the tax code in a way that lowers the tax rate, broadens the base, and promotes the competitiveness of American companies, we will need to make some tough choices.”

Tax Reform Requires Both Bipartisan Effort and a Conversation with American People
“I don’t think this can be, nor should it be, a partisan exercise. And it cannot happen just because one Chamber passes a bill. It will require the active participation of all Members of this Committee. It will require us to work with the Administration. And yes, we will even have to talk to the Senate.

“More importantly, we will talk to the American people – individuals, families, employers (large and small) – who are actually impacted by the laws we pass here in Washington.”

###

We meet today, in our first hearing of the 112th Congress, to begin what I expect will be a long discussion – and one that I hope will be bipartisan – on the need to reform our federal income tax system.

As I did on Tuesday, let me again extend my appreciation to the Ranking Member for agreeing to allow this hearing to move forward today, even though the Committee did not officially organize until two days ago.

Twenty-five years ago, a Democratic House and a Republican Senate sent to the White House, and the President signed, landmark legislation known today in the tax world as “The 86 Act.”

That law, which marked the successful culmination of years of work, broadened the tax base and lowered tax rates. It remains the basis of our system of taxation.

But it is, in some sense, a shell of its former self.

In the intervening years, Members of Congress – from both sides of the aisle – have loaded the tax code with a dizzying array of credits, deductions, exclusions, and exemptions.

The late economist David Bradford once provided a tongue-in-cheek example to illustrate the concept of tax expenditures and why they are little more than disguised spending.

Bradford proposed to cut the defense budget for weapons procurement to zero, while creating a new Weapons Supply Tax Credit that could be claimed by defense contractors for appropriate weapons “donated” to the Pentagon.

Under this regime, it would appear to the untrained eye that both spending and taxes would be reduced, thus allowing elected officials to claim that government was “smaller.” But in reality, nothing would have changed. A spending program would still exist; it just would be cleverly disguised as a “tax cut”.

Bradford’s cautionary tale seems all too real to those who have parsed the tax code and its mysterious tax expenditures for congressionally blessed industries and activities, both big and small.

Regardless of the merits of any individual tax expenditure, the broader picture is not a pretty one.

The President’s deficit commission that I served on, along with the gentleman from Wisconsin, Mr. Ryan and the gentleman from California, Mr. Becerra, measured the impact of these expenditures in terms of higher tax rates. The Bowles-Simpson report makes clear that taxpayers foot the bill for those expenditures in the form of higher tax rates.

The Bowles-Simpson report called for eliminating all tax expenditures and would moved individual income tax rates to 8, 14, and 23 percent and dropped the corporate tax rate to just 26 percent. And if their plan used all of the higher revenue from eliminating tax expenditures to push down tax rates, those number rates would have been even lower.

As we will hear from Nina Olson, the Taxpayer Advocate, the impact of the changes to the tax code to create, expand, and extend these expenditures can be measured by the tens of thousands of additional pages added to the code or the thousands of changes enacted in the last decade alone.

Clearly, the tax code is too complex, too costly, and takes too much time to comply with. All this adds more burdens on families and employers – making it more difficult to create jobs in this country.

I am under no illusion that the task before us will be easy. To really reform the tax code in a way that lowers the tax rate, broadens the base, and promotes the competitiveness of American companies, we will need to make some tough choices.

I don’t think this can be, nor should it be, a partisan exercise. And it cannot happen just because one Chamber passes a bill. It will require the active participation of all Members of this Committee. It will require us to work with the Administration. And yes, we will even have to talk to the Senate.

More importantly, we will talk to the American people – individuals, families, employers (large and small) – who are actually impacted by the laws we pass here in Washington.

So, this is just the first hearing of many. I have asked our witnesses to confine their remarks at this first hearing to defining the problems of the current income tax system.

I look forward to hearing from many other witnesses, and working with all of you, as we undertake this enormous challenge. As we do so, we will have many further opportunities to consider various solutions. But today, our focus should be on making sure we begin to understand the scope of the challenge.

With that, I yield to my friend, the Ranking Member.
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Big U.S. Tax on Overseas Earnings Means Fewer Jobs Here, Finance Pros Say

2011-01-11T07:03:00.000-08:00

/PRNewswire/ -- U.S. corporations are making fewer domestic hires and investing less in U.S. operations, due to cash trapped overseas, according to a recent survey from the Association for Financial Professionals (AFP). High U.S. corporate tax rates create an incentive for companies to leave cash abroad, often permanently.

In follow-up questions to AFP's recent 2011 Business Outlook Survey, 26% of respondents with operations abroad say that excessive U.S. corporate tax discourages their organization from bringing cash back to the U.S. and using it to invest in corporate growth in the form of new hires, capital investments, or research and development.

Proponents of the current tax rates on repatriated foreign earnings say the tax deters companies from making investments in non-U.S. operations and stems the flow of American-based jobs overseas, but AFP members indicate that this is not the case. Of those with non-U.S. operations responding to the survey, two-thirds indicate that the tax on repatriated foreign earnings at current rates has little to no impact on the decision to begin or continue operations outside of the U.S.

"Capital is mobile. Companies have choices about where to locate and where to invest," said Jim Kaitz, AFP's president and CEO. "For U.S. companies to grow domestic operations and make hires here, AFP believes that the current corporate tax regime must become competitive with that of other nations."

In a January 2011 policy statement, AFP said that U.S. companies should be permitted to repatriate foreign earnings at a tax rate that allows the U.S. to compete for investment of those earnings with other countries that tax those earnings at significantly lower rates. AFP recently delivered the same message to members of the 112th U.S. Congress, the White House and staff of the U.S. Treasury.

Since U.S. companies can choose when and if ever to repatriate earnings that are taxable in the U.S., the lost tax revenue is extremely low. In fact, a more favorable tax treatment might increase tax revenue in both the short- and long-term because companies would no longer have a strong incentive to avoid high U.S. taxes by reinvesting foreign earnings elsewhere. The likely inflow of capital to the U.S. could stimulate capital investment and hiring, contributing to economic recovery and long-term economic growth.

Reported estimates have U.S. corporations holding $1 trillion in cash and cash-like investments abroad.

AFP members, who are responsible for ensuring that their organizations have enough cash on hand to fund operations, are uniquely positioned to observe the cash flows of their organizations, and many of them are directly responsible for tax-related issues. Since they work in a wide range of industries and in both public and private organizations of varying sizes, their opinions reflect a broad corporate perspective that is both operational and strategic.

ABOUT THE SURVEY

From November 29 through December 10, 2010, the AFP surveyed U.S. financial professionals about current and expected business conditions in the U.S., then sent follow-up questions based upon policy issues, which included corporate tax issues for repatriated cash and floating NAV for money market funds. These two issues are the focus of the 2011 AFP Business Outlook Survey Policy Supplement. The original survey generated 808 responses from professionals holding a variety of financial positions within their organizations, including CFO, vice president of finance, treasurer and assistant treasurer. The results produce a margin of error of +/- 3.4 percent.

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Georgia Tax Reform Report a Taxpayer Protection Pledge Violation

2011-01-10T10:04:00.000-08:00

Council on Tax Reform recommends net tax increase on Georgians

Today Americans for Tax Reform announced that a vote in favor of the recommendations of the 2010 Special Council on Tax Reform and Fairness for Georgians would violate the Taxpayer Protection Pledge, as it constitutes a net tax increase. 55 Georgia lawmakers, including Governor Nathan Deal, House Speaker David Ralston, and Senate Majority Leader Chip Rogers have signed the Pledge, a written promise to constituents to oppose and vote against or veto all tax increases.

While the Council proposes some pro-growth reforms, such as the gradual reduction of personal and corporate income tax rates, they are more than offset with net tax increases. The income tax reductions amount to roughly $750 million in savings for Georgians, but tax increases on groceries, tobacco, communications services, the Internet and other services approach $2 billion. ATR believes that tax reform is a noble goal, but not when it constitutes a net revenue increase for state government.

ATR President Grover Norquist issued the following statement:

“In its current form, last week’s tax reform proposal should be a non-starter for fiscal conservatives in the Georgia Legislature. While tax reform is indeed a laudable goal, it should not be presented in a way that increases the net burden on taxpayers and raises even more money for state government. Unfortunately, this report recommends just that.

“A significant reduction in marginal tax rates is long overdue in Georgia, which is wedged between two states – Tennessee and Florida – that levy no personal income tax at all. But if the goal is to use such reductions to mask bigger tax increases on groceries, tobacco, and a variety of services, it is not even worthy of a conversation.

“This is akin to shards of glass in a delicious crème brûlée. It is a bit of desirable tax reform ruined by an overall tax hike. Thankfully, Taxpayer Protection Pledge signers run state government in Georgia. Because they have taken tax increases definitively off the table, I am confident that we can move past this initial foray into tax reform and begin a serious conversation about reducing the size and scope of state government in Atlanta.”

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases. For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email at jkartch@atr.org.
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GBPI Releases New Fact Sheet: Income Tax Evens Out the Burden for Families

2011-01-05T08:44:00.000-08:00

The Georgia Budget and Policy Institute (GBPI) released a fact sheet highlighting the attributes of the income tax that make it a good counterweight to sales taxes, especially for families.

The Special Council on Tax Reform and Fairness for Georgians meets today to finalize recommendations before state legislators return on Monday, Jan. 10. Those recommendations will go to a joint House and Senate committee, which will craft legislation for an up or down vote by legislators.

The Council is likely to recommend a shift from the income tax to the sales tax, based on a presentation by Chairman A.D. Frazier in December.

The income tax is an important mechanism for recognizing the different needs of families and vulnerable populations. For example, the income tax excludes a base amount of income per person to ensure we are not taxing the most basic level of income.

Each person in a four person family receives a personal exemption ($5,400 for the parents and $3,000 for each child). A single person receives a $2,700 personal exemption. Thus, a family of four earning $50,000 pays about $1,900 in state income taxes, compared to about $2,500 in income taxes for a single person earning $50,000. In contrast, the sales tax does not recognize that it takes a larger amount of income to provide for more people.

"The state income tax is a tool that allows us to balance some of the negative aspects of the sales tax," said Sarah Beth Gehl, deputy director of the Georgia Budget and Policy Institute. "A dramatic shift from income to sales tax will likely mean middle class families and vulnerable populations will foot more of the bill for state services."

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New Tax Laws Preempt Existing Trusts Tax

2010-12-20T06:24:00.000-08:00

/PRNewswire/ -- Late Friday afternoon, Congress enacted the most sweeping change in the estate tax law in 29 years. The new law contains some good news for the very wealthy, but it also makes most estate plans obsolete. Everyone who has a living trust (family trust) should update it promptly.

Tax lawyer and estate planning expert Robert F. Klueger notes that, "At a minimum, the new law requires every married couple who wrote an estate planning trust to have that trust reviewed, and perhaps modified. If not, many people will learn that their trust doesn't reduce their taxes but can indeed increase their tax liability."

Klueger & Stein, LLP has prepared a short video featuring Robert F. Klueger that reviews the changes to the estate tax law and how it impacts existing estate plans, with suggestions as to how these plans can be modified. The video can be viewed free of charge at http://www.maximumassetprotection.com or http://www.lataxlawyers.com.

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Fed Proposed Debit Interchange Fee Cap Rule Could Have Unintended Consequences for Government Benefit Cards, Flexible Spending Accounts and Reloadable Prepaid Cards

2010-12-17T16:45:00.000-08:00

/PRNewswire/ -- The Network Branded Prepaid Card Association (NBPCA) is concerned that the interchange fee structure and network routing terms announced by the Federal Reserve in its proposed rulemaking will inevitably increase costs to consumers and issuers. Operational flaws, such as requiring prepaid gift cards and flexible spending account cards to include PIN-based debit, not only serve no purpose but also create inefficiencies, increase risk of fraud and unnecessarily raise costs.

Of particular concern to the prepaid card industry is the proposed rules do not clarify how the critical exemptions for government benefit cards and reloadable prepaid cards would be implemented by the card networks under the proposed interchange fee cap rule, as mandated by the Dodd-Frank Wall Street Reform Act. This fact was noted during yesterday's meeting, when a Federal Reserve official acknowledged the proposed rule permits but does not require card networks to allow a higher interchange fee for government benefit cards, reloadable cards not marketed as gift, or cards issued by banks with less than $10 billion in revenue. The official added if it becomes problematic for the card networks to implement the exemptions, then the lower interchange rate would apply.

"At a time of historic economic hardship, millions of Americans rely upon government benefit cards and reloadable prepaid cards as a secure, convenient, non-stigmatizing payment tool to make everyday purchases," said Kirsten Trusko, NBPCA President and Executive Director.

"NBPCA looks forward to submitting comments to the Federal Reserve and hopes it will clarify how exemptions will be handled in its final rule. Failure to do so could reduce the availability of prepaid cards, resulting in a catastrophic impact on consumers and governments," added Trusko

Financial institutions offer government benefit cards to states at little to no cost because they receive revenue primarily from the debit interchange. Nearly every state in the nation (47 states) either uses prepaid cards or is in the process of setting up programs to administer a variety of benefits, such as unemployment and Temporary Assistance to Needy Families (TANF) to millions of needy Americans.

The US Treasury dispenses Social Security benefits through its Direct Express government benefit card. Not only do states save money from check related costs, which is critical at a time when states are experiencing huge budget deficits, but consumers benefit from receiving their funds more efficiently and quickly through this electronic payment tool. Without the exemption from the lower debit interchange fee, it is likely banks will be forced to reduce or eliminate the availability of government benefit cards to nearly every state in the nation.

Millions of unbanked and underbanked individuals also rely upon prepaid cards to participate in our card based economy. It is quite probable if these cards aren't exempted from the interchange fee cap, prepaid card users will be subject to merchant minimums for credit cards because clerks could confuse the cards with credit cards and deny prepaid cardholders from making basic purchases like milk and eggs.

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Study: Recession Will Cost Baby Boomers Up To $40,000 in Social Security Benefits

2010-12-15T08:45:00.000-08:00

/PRNewswire/ -- Baby Boomers will see greatly reduced Social Security benefits over the course of their retirements due to an unprecedented combination of low wage growth and no annual cost-of-living adjustments (COLA), according to a new study by The Senior Citizens League. And those who first become eligible for Social Security in 2011 will receive lower benefits than retirees born a year earlier.

This is the most comprehensive study ever released to show the recession's impact on Social Security benefits for the first wave of baby boomers.

It found that the combination of rapidly slowing wage growth and no COLA is shrinking the normal increases in initial retirement benefits. An inequity will also be created: people born in 1949 (who turn 62 next year) will receive lower benefits than retirees with similar work histories born just one year earlier. Moreover, the lack of a COLA will reduce lifetime Social Security benefits by as much as $40,000 for many retirees with average earning histories (reductions will be felt regardless of the age at which people begin claiming benefits, and some higher-earning seniors stand to lose even more).

Recent wage and consumer price trends – two of the key factors in determining Social Security benefits – have combined to form a "perfect storm" for the first wave of Baby Boomers. Since the start of the recession, average wage growth has plummeted, and there will be no COLA in 2011 for the second year in a row.

Under normal economic conditions, the initial benefits of each succeeding birth year tend to be slightly higher than the previous birth year as wages rise over time. But average wage growth has been slowing since the 1980s and has dropped markedly since 2008.

Furthermore, low inflation (a situation that government economists expect to continue) led to no COLA in 2010 and 2011. The loss of the compounding effect of a COLA on lifetime benefits is high, and grows the longer a senior spends in retirement. Seniors who turn 62 during the years of no COLA are hit with the full brunt of the compounding loss and stand to lose the most.

Aggravating the situation is the fact that, although general inflation is low, seniors' living costs have increased, especially due to rising Medicare premiums.

Lifetime Social Security Benefits an Average Senior Will Lose Due to No/Low COLAs(1)

Year of Birth	62-Year-Old Retiree	66-Year-Old Retiree
1946	-$30,163.60	-$39,152.50
1947	-$31,436.10	-$39,463.20
1948	-$20,871.00	-$26,130.60
1949	-$8,908.90	-$11,141.30
1950	-$2,229.20	-$2,880.90
1951	-$463.00	-$648.70

(1) Low COLA is defined as less than 2.8 percent, which is the average COLA paid from 1975 through 2009. This chart shows how much low or no COLA will affect benefits over a 20-year (for those retiring at age 66) or 25 year (for those retiring at age 62) retirement.

"Large numbers of seniors will be at risk of outliving their retirement income and being pushed into poverty due to an unprecedented combination of economic factors," said Larry Hyland, chairman of The Senior Citizens League. "The Senior Citizens League is adamantly opposed to deficit reduction proposals that would cut COLAs. Instead, Congress needs to pass an emergency COLA provision or guarantee a minimum average COLA to prevent this disturbing erosion in Social Security benefits."

The Senior Citizens League also recommends that any legislation that changes how Social Security benefits are calculated is devised in a way that is fair to all, to prevent inequities between retirees close in age.

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Consumer Reports Index: Worried Consumers May Make Reluctant Shoppers During Final Weeks of December

2010-12-13T07:52:00.000-08:00

/PRNewswire/ -- While retail spending was strong this November, consumers are feeling the pain of a weak employment picture and increased financial troubles. Americans are showing signs of waning confidence, increased stress and reluctance to spend more in December than a year ago, according to the Consumer Reports Index December report.

The Consumer Reports Retail Index showed that the Past 30-Day Retail Index for December, reflective of November activity, was 12.4, up from both the prior month (10.9) and one year ago (11.2). But with just two weeks left to go in the holiday shopping season, the Consumer Reports Index offers some troubling signs for retailers. The Next 30-Day Retail Index for December (reflecting planned December activity) is down slightly (11.8) versus a year ago (12.2). This was led by the soft performance of planned purchasing of personal electronics relative to last year (27.8% versus 32.9%, respectively).

"Despite all the talk and media attention about positive economic growth, consumers are telling us that they are not seeing or, more importantly, not feeling the difference," said Ed Farrell, a director of the Consumer Reports National Research Center. "The consumer may not be confident enough to continue spending through the holiday season. It may require deep discounting from retailers to get consumers back to the store in the final weeks of December."

After five straight months of improvement, the Consumer Reports Trouble Tracker Index points to an increase in consumer financial difficulties (e.g. missed major bills, job loss, loss of health-care coverage) and is up this month to 52.7 from 49.3 the prior month, but well below one year ago (62.0).

The Consumer Reports Employment Index is down in December to 49.2 from 50.3 in November, and is on par with one year ago (48.9), bringing to a halt three months of modest gains. December's Employment Index is indicative of an economy shedding more jobs than it is creating. In the past 30 days, the proportion of Americans that have lost their job has increased to 7.4% from 4.9% a month earlier. Past 30-day job losses are at their highest level since June (8.6%).

The Consumer Reports Index report, available at www.ConsumerReports.org , comprises five key indices: the Sentiment Index, the Trouble Tracker Index, the Stress Index, the Retail Index, and the Employment Index. Here are the key findings:

Consumer Reports Sentiment Index : 45.1*

The Consumer Reports Sentiment Index (45.1) has slipped slightly from the prior month (46.6), but is up slightly from one year ago (41.8). Sentiment has doggedly refused to enter positive territory (over 50) since it was first measured by the Consumer Reports Index on October 5, 2008 and stood at 45.3.

* The most optimistic consumers: Age 18-34 – 53.5, (down from 58.4 the prior month) and those with household incomes $100,000 or more – 54.5, even with prior month (55.1).
* The most pessimistic consumers: Households with income less than $50,000 (40.2, down slightly from the prior month at 42.2), and consumers age 65 and older (38.7, little changed from a month earlier at 38.4).

* The Consumer Reports Sentiment Index captures respondents' attitudes regarding their financial situation, asking them if they are feeling better or worse off than a year ago. When the index is greater than 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse. The Sentiment Index can vary from a high of 100 to a low of 0.

Consumer Reports Retail Index : Past 30-Day 12.4, Next 30-Day – 11.8*

* The Past 30-Day Retail Index for December (reflective of November activity) is 12.4, up from the prior month (10.9), as well as a year ago (11.2). December's Next 30-Day Retail Index (planned purchases for December), is at 11.8, up substantially from last month (8.0), but is slightly trailing last year at this time (12.2).
* Looking in detail at the categories comprising the Past 30-Day Retail Index* gains were attributable to an uptick in small appliance sales versus the prior month (21.8% versus 16.7%, respectively); gains in home electronics, up to 15.0% from 11.8% a month earlier; and personal electronics (26.2), up substantially from the prior month (19.6). Versus one year ago, sales in the past 30-days were up for home electronics (15.0%) versus 11.9% last year; and for major appliances (8.1%), up from 6.8% a year ago.
* The gain in the Next 30-Day Retail Index* for December, reflective of December activity, was attributable to an increase in planned purchasing of personal electronics (27.8%), up from 18.2% a month earlier; and a gain in planned purchasing for home electronics (16.5%) versus the prior month (10.0%). Compared to last year, however, planned purchasing of personal electronics was down for this December, 27.8% versus 32.9%, respectively.

* The Consumer Reports Retail Index looks at consumer purchases in the past 30 days as well as the outlook for planned purchases in the next 30 days across several categories. The Consumer Reports Retail Index represents the proportion of respondents that made a purchase in the following categories: major home appliances, small home appliances, major home electronics, personal electronics, and major yard and garden equipment. The Retail Index is a weighted calculation. For example, a major appliance is of greater value than a small appliance. Because of their size and frequency, car and home purchases are tracked separately.

Consumer Reports Trouble Tracker Index : 52.7

* Consumers faced more troubles than last month, signaling a halt to five months of improvement. The trouble tracker index increased to 52.7 in December, up from November's 49.3, though the Trouble Tracker Index is much improved from one year ago (62.0).
* Negative developments were led by an increase in consumers that lost their job in the past 30 days to 7.4% from 4.9% in November, and an increase in those that have missed a payment on a major bill (not mortgage) to 9.5% from 8.9% a month earlier.
* A sign of the weak jobs market is the proportion of consumers that have lost or face reduced health-care coverage (9.0%), up slightly from last month (8.7%), but up from a year ago (7.9%).
* On the positive side, there were fewer consumers that could not afford medical bills or medications (13.3%) versus last month (14.5%) and one year ago (15.7%). However, the improvement in the proportion that could not afford medical bills or medication may signal a change in behavior, where consumers are availing themselves of medical services less often.
* Overall, the most prevalent consumer troubles include: the inability to afford medical bills or medications (13.3%) missed payment on a major bill – not a mortgage (9.5%), and lost or reduced health-care coverage (9.0%).

* The Consumer Reports Trouble Tracker focuses on both the proportion of consumers that have faced difficulties as well as the number of negative events they have encountered. The negative events include: the inability to pay medical bills or afford medication, missed mortgage payments, home foreclosure, interest-rate increase, penalty fees, reduced lines of credit or other changes in credit-card terms, job loss or layoffs, reduced health-care coverage, or the denial of personal loans. The Consumer Reports Trouble Tracker Index is then calculated as the proportion of consumers that have experienced at least one of the negative events comprising the index multiplied by the average number of events encountered.

Consumer Reports Stress Index : 60.8*

* The level of stress consumers feel they are under is down to 60.8 from 58.5 the prior month, but is below the level from one year ago (63.0).

* The Consumer Reports Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. It asks whether they are feeling more stressed or less stressed. When the Stress Index is more than 50, consumers are feeling more stress and when it is below 50 they are feeling less stress compared to a year ago. The index can vary from 100 (Total Stress) to a low of 0 (No Stress).

Consumer Reports Employment Index : 49.2*

Regionally, the Northeast is doing slightly better this month, led by declining consumer stress and improved retail activity. The North, Central and South have declined slightly as a result of increased consumer economic difficulties and a decline in Consumer Sentiment.

* The Consumer Reports Employment Index examines the change in employment of those that reported starting a new job versus those that have lost their job or were laid off in the past 30 days. An index below 50 indicates more jobs were lost than gained, while a score more than 50 indicates more jobs were gained than lost in the past 30 days.

For more information regarding the Consumer Reports Index, visit www.ConsumerReports.org .

The Consumer Reports Index, conducted by the Consumer Reports National Research Center, is a monthly telephone and cell phone poll of a nationally representative probability sample of American adults. A total of 1,263 interviews were completed (1,013 telephone and 250 cell phone) among adults aged 18+. Interviewing took place between December 2 and December 5, 2010. The margin of error is +/- 2.8 points at a 95% confidence level. The complete index report, methodology, and tabular information are available.

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New Research from EBRI: Health Law Cut Some Health Costs in Retirement, But Retirees Will Need Big Savings

2010-11-30T08:28:00.000-08:00

/PRNewswire/ -- Even though the new health reform law will reduce some health costs in retirement for many people, retirees will still need a significant amount of savings to cover their out-of-pocket health expenses when they retire, according to a report released today by the nonpartisan Employee Benefit Research Institute (EBRI). Women in particular will need more savings than men because they tend to live longer.

For instance, EBRI finds that men retiring in this year (2010) at age 65 will need anywhere from $65,000–$109,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement if they want a 50–50 chance of being able to have enough money; to improve the odds to 90 percent, they'll need between $124,000–$211,000.

Women retiring this year at 65 will need even more: between $88,000–$146,000 in savings if they are comfortable with a 50 percent chance of having enough money, and $143,000–$242,000 if they want a 90 per-cent chance.

These estimates are for Medicare beneficiaries age 65 and older: Anyone retiring early, before age 65, would need even more.

The new EBRI analysis details how much savings an individual or couple will need to cover Medicare and out-of-pocket health care expenses in retirement, updating earlier EBRI simulation results from 2008. Some prior estimates have been significantly revised downward as a result of changes to Medicare Part D (prescription drug) cost sharing that will be phased in by 2020 due to the recently enacted health reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA).

However, EBRI finds that retirees will continue to need a substantial amount of savings to cover their health care expenses in retirement, and that uncertainty related to health care use, prescription drug use, and longevity will still play a major role in planning for retiree health care. Results are shown by the desired level of probability (50, 75, and 90 percent) of having enough savings to cover health costs in retirement.

The full report is titled "Funding Savings Needed for Health Expenses for Persons Eligible for Medicare," and is published in the December 2010 EBRI Issue Brief, online at www.ebri.org

"Because employers are continuing to scale back retiree health benefits, and policymakers may soon begin to address Medicare's funding shortfall, more of the financial costs of health care will be shifted to Medicare beneficiaries in the future," said Paul Fronstin, director of EBRI's Health Research and Education Program, and a co-author of the report.

Dallas Salisbury, EBRI CEO and also a co-author of the report, noted that "many workers are generally unprepared for both health care expenses in retirement and retirement expenses. In fact, many individuals will need more money than the amounts cited in this report," since the analysis deliberately does not factor in the savings needed to cover long-term care expenses or the fact that many people retire prior to becoming eligible for Medicare.

EBRI notes that in 2007 (the most recent data available), Medicare covered 64 percent of the cost of health care services for Medicare beneficiaries age 65 and older, while retirees' out-of-pocket spending accounted for 14 percent. Private insurance and various other government programs covered the remaining 12 percent of costs.

Among the key findings of the EBRI analysis:

* Single men: Men retiring at age 65 in 2010 will need anywhere from $65,000 to $109,000 in savings to cover health insurance premiums and out-of-pocket expenses, if they want an average (50–50) chance of being able to have enough money. If they want a 90 percent chance of having enough to cover these expenses, they'll need between $124,000 to $211,000.
* Single women: Women retiring at age 65 in 2010 will need anywhere from $88,000 to $146,000 in savings to cover health insurance premiums and out-of-pocket expenses for a 50 percent chance of having enough money, and $143,000 to $242,000 if they prefer a 90 percent chance.
* The near-elderly: Persons currently at age 55 will need even greater savings when they turn 65 in 2020. The needed savings for men retiring in 2020 range from $111,000 to $354,000, while needed savings for women range from $147,000 to $406,000 (in 2020 dollars), depending on their source of health insurance coverage to supplement Medicare, any employer subsidies, prescription drug use, and their savings goal related to their comfort level with having a 50 percent, 75 percent, or 90 percent chance of having enough savings to cover health insurance premiums and out-of-pocket health care expenses in retirement.

EBRI is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions.

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Watch Out for Black Friday, Cyber Monday: Having Holiday Shopping Smarts Will Pay Off in Time and Money

2010-11-17T08:30:00.000-08:00

/PRNewswire/ -- Are you tired of the holidays yet? It's been a winter wonderland in most stores for weeks and prospective shoppers are being bombarded with special deals and offers earlier and more frequently than in past seasons. Retailers are trying to get more consumers in the stores than last year, so deals aren't just happening on one day.

With the increased competition for still limited dollars, the Illinois CPA Society says being aware of the tactics used to lure shoppers will help you spend your time and money wisely. Use this broader shopping season to your advantage – have a strategy, compare prices and stick to a budget. Here's what you'll need to watch out for:

* Black Friday "Month." No longer is there one day designated for kicking off the holiday season. Some stores have already started touting "Black Friday" sales; others will be open on Thanksgiving Day to offer Black Thursday night deals. Shopping can be fun and entertaining, but don't take every opportunity to shop and don't make impulse purchases (especially for yourself).
* Return Policies. If you're shopping early, make sure to read the fine print. Many stores have strict new return policies, especially during the holiday season. If a store won't allow anything to be returned after 30 days, you may want to hold off on purchasing until closer to the date you plan to give it to the recipient. Get gift receipts and keep in mind personal information may be requested on returns. Stores are being more restrictive on return policies and keeping close tabs on return records to prevent fraud.
* Store Credit Cards. If you already have a card from your favorite retailer, see if there are special discounts on Black Friday and the surrounding days. If you're making a large purchase, it may be worth it to open a card for the day, get the discount and immediately pay off the balance. Think twice about opening any new accounts if you can't pay off the balance; they often come with steep interest rates and your holiday savings will be eaten away in finance charges.
* Rebates. Essentially, rebates are big coupons. Spend the money now, but get it back later. The key is to be diligent about sending them in. Make sure you have receipts and any other proofs of purchase needed to process the rebate. Keep copies of these items since rebate submissions can be lost. Note the date you mail the rebate and read the fine print, especially about the dates for submitting the rebate and the time frame you have to purchase the rebate item. Although you're not necessarily saving money immediately upon purchase, think of a rebate as a gift to yourself come January – when the credit card bill is actually due.
* Cyber Monday/Online Shopping. Retailers are making greater use of email, mobile phone apps and texts. They want shopping to be as easy and convenient as possible so you spend as much as possible. Don't get carried away and think before you click. Use those special offers you get through email alerts, but be choosy in giving out contact information so you're not inundated with too many messages. Make sure personal information, like a credit card number, is provided only on secure sites.
* Bank Credit Cards. Choosing your card wisely could net savings and rewards; using too many cards can leave you in deeper credit card debt. See which cards have the best cash back or bonus point offers, which stores and purchases they apply to, and if there are any limits or restrictions.
* Gift Cards. There's good news and bad news with gift cards. Thanks to new government rules, gift cards must remain valid for at least five years from the purchase date. No fees can be charged for cards that haven't been used in the past 12 months. However, cards won't need to show the expiration date and fee policy information until the end of January. You may also be out of luck if the card's lost or stolen; some cards may also still have inactivity fees. And always watch out for the activation fee on some cards – they effectively lessen the total card value.

According to the Illinois CPA Society, the bottom line is making sure you have a game plan. Ask yourself how you're going to pay for all of this and what amount you're budgeting for the holidays. And do you have a list? Sticking to a list will help keep your spending on budget. If you can, try to make all of your purchases using cash or layaway to keep your post-holiday bills low. Be a smart shopper. It's not necessarily a deal just because the store says so, and it's not a deal if you don't need it or it's more than you want to spend.

If you're looking for a little help with your finances, you can find local deals, finance definitions and tips on managing your money on the Society's Twitter consumer resource, @thriftitude.

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Georgians' Holiday Spending Plans Reflect Current Consumer Mindset

2010-11-16T16:37:00.000-08:00

/PRNewswire/ -- While not pulling back to Scrooge-ish extremes, Georgia merchants may again face cautious shoppers this holiday season, according to the latest poll from Georgia Credit Union Affiliates (GCUA).

While about half (52.8 percent) of nearly 6,000 credit union members surveyed statewide said they plan to spend about the same as last year, 44.3 percent indicated that they plan to spend less on the holiday season than in 2009. This statistic appears to reflect a continued trend in austerity around gift-giving, given that 51.2 percent of respondents to GCUA's survey in 2009 said they planned to spend less on the holidays than the previous year.

Backing up the latest poll numbers, data from 39 credit unions statewide shows Georgia consumers have a penchant for bolstering their account balances. During the first nine months of 2010, savings deposits grew by 6.3 percent and checking account balances increased by 11.4 percent.

The poll results and credit union data are included in the latest "Paying Attention" report from GCUA, gauging the mindset of Georgia consumers on economic and personal finance. The report also recaps quarterly lending and saving statistics from credit unions statewide.

"Shoppers who already trimmed their spending in 2009 will be frugal again this year," said Mike Mercer, president and CEO of GCUA. "The poll results appear to bear that out, with just 2.9 percent of respondents saying they plan to spend more this holiday season."

Overall, the poll found that:

* 52.8 percent plan to spend about the same this holiday season as last year, while 44.2 percent plan on spending less. Only 2.9 percent plan on spending more this holiday season than last year.
o In 2009, 51.2 percent said they planned to spend less than the previous year while 45.4 percent planned to spend about the same. 3 percent expected to spend more in 2009 compared to the year before.
* Most shoppers still plan to spend modest amounts on gifts. 43.9 percent of respondents are planning to spend between $100 and $500 while 28.7 percent are planning to spend between $500 and $1,000. In a true turn toward austerity, 16.4 percent said they plan to spend less than $100 in total on gifts this year; conversely, 11 percent plan to spend more than $1,000.
o Last year, 47.9 percent said they planned on spending between $100 and $500 in total, 30.8 percent planned on spending between $500 and $1,000 and 11.4 percent said they were going to spend less than $100, and 9.9 percent planned on spending more than $1,000.
* The majority of respondents (77.8 percent) are planning to pay mostly or completely by cash compared to 17.3 percent who plan to pay using a credit card. 4.9 percent plan to use savings from a Christmas club account or other means.
o In 2009, 75.6 percent said they planned on paying all or mostly by cash compared to 11.8 percent who planned on paying all or mostly by credit card. 12.7 percent said they would pay with savings from a Christmas club account or other means.

Credit Union Data Shows Continued Trend Toward Savings

In addition to the consumer poll, GCUA compiled data from 39 credit unions from across the state representing 90 percent of credit union assets and 82 percent of members in Georgia to gauge current lending and savings trends. The data compare year-to-date figures from the first nine months of 2010 to the same period in 2009. Summarized below, the findings indicate a continued trend toward savings among consumers, while figures for lending varied (all rates are annualized):

* Compared to the same period last year, savings deposits grew by 6.3 percent during the first nine months of 2010 and by 7.1 percent over the past year.
* Checking account balances increased by 11.4 percent between January and September and by 16.5 percent over a 12-month period.
* Money market account balances grew by 23.8 percent during the first three quarters of the year and by 35.6 percent over the previous 12 months.
* New vehicle loan balances decreased by 9.7 percent over the past year; however, balances for used car loans increased more than 7.7 percent in the first nine months of 2010, and 10 percent over the past 12 months.
* First mortgage balances increased by 5.8 percent during between January and September and by 12.5 percent over a 12-month period.
* The number of bankruptcy filings among members rose by 13.8 percent over the past 12 months.

"Credit union members represent a good cross section of middle-class Georgians," Mercer said. "Our latest report shows that Georgia consumers seem to be settling into a routine of conscious saving and cautious spending."

More information is available at www.georgiacreditunions.org or on www.facebook.com/creditYOUnion.

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Will Small Business Jobs Act Boost Economic Growth?

2010-11-01T08:53:00.000-07:00

The recently enacted Small Business Jobs Act of 2010 fulfills a promise U.S. President Barack Obama made to entrepreneurs soon after his election, pledging to create incentives aimed at encouraging small-business creation and growth.

Many experts agree that the package of finance and tax incentives represents some good news for small businesses struggling to cope with weak economic conditions. Although some faculty at Emory University and its Goizueta Business School and other observers praise the new initiative, others wonder if it will have the necessary impact to help jump-start the economy.

"Until now, large companies have been the biggest beneficiaries of stimulus programs and tax incentives," says Thomas Smith, an assistant professor in the practice of finance at Goizueta. "The accelerated tax write-offs featured in the new act are a good idea, since they’re aimed at incentivizing businesses to make capital purchases that can have a ripple effect throughout the economy."

Among other changes under the Small Business Jobs Act, companies can reduce their taxable income by immediately expensing the costs of certain kinds of newly acquired business assets, instead of depreciating them over their "useful life," a period of years determined by the Internal Revenue Service. Generally, companies like to expense their assets quickly as a way to significantly reduce their tax liability.

The asset write-offs, popularly known as Section 179 after the applicable part of the Internal Revenue Code, were previously limited to $250,000 in a given year. The new act raises the threshold to $500,000 of newly purchased assets per year, subject to certain limitations, during 2010 and 2011.

In another bid to get businesses to spend more, the act extends and revises the so-called bonus depreciation rules, which let taxpayers depreciate 50 percent of the cost of certain assets in the first year they are placed in service.

An earlier set of bonus depreciation rules expired at the end of 2009, but the new act extends it to assets placed in service through the end of 2010, and certain assets may qualify even if they are purchased and put into service through 2011.

Some observers have questioned the timing of the legislation, suggesting that few small business owners will risk making significant capital expenditures during the current downturn. They also complain that the bonus depreciation rules, while welcome, have such a limited timeframe that few businesses will not have enough time to plan and get financing for the capital purchases.

Smith, however, isn’t so sure about that.

"The fact is that machinery and equipment is either wearing out—or, in the case of computers and other technology-based assets—is becoming obsolete," he says. "Businesses that want to stay competitive aren’t likely to hold off on necessary purchases just because the economic recovery isn’t moving as quickly as they hoped. Obama’s responses to the recession may not all be perfect, but he’s moving in the right direction."

If Smith was hedging on his view of the tax incentives, another Obama initiative has his full support.

"I think the tax incentives were a good idea, but the $30 billion that’s being released to banks to stimulate small-business lending is even better," he says. "Many small business owners I’ve spoken with have complained that they’ve wanted to take advantage of expansion and other opportunities, but simply couldn’t get loans to finance their plan."

Besides replacing aging assets, some business want to upgrade to more efficient machinery and equipment that can reduce their operating and other costs, adds Smith.

"It’s difficult to say with certainty exactly what the catalyst to spur business activity will be," Smith observes. "But we’ve got to try bold, new initiatives like these, as well as other strategies, to incentivize businesses to start hiring again. To do nothing would be myopic."

Perhaps, but this economy presents some unique challenges, says T. Clifton Green, an associate finance professor at Goizueta.

"Although the recession is officially over, we seem to be having the jobless recovery that people feared, in that unemployment is still very high," notes Green. "The idea behind the $30 billion government bank-loan program and the tax credit initiative is to get small businesses spending to expand their businesses and hire new people."

But large companies can easily borrow at historically low rates, "and they are not using the money to expand," he adds. "Rather than hiring, they're using new debt to buy back stock or replace old technology that they held off replacing during the recession. The recent behavior of large business suggests the small business act may not have the intended new hiring effect."

Indeed, William J. Carney, a chaired professor of corporate law at Emory, stresses that another administration initiative, healthcare reform, may have already undermined any benefit the Small Business Jobs Act may have provided.

"Congress meant well by pushing businesses to provide healthcare insurance," he says. "But it could be counterproductive to hiring, especially among low-wage employers who don't want to take on "Cadillac" insurance programs for minimum-wage workers. We've already seen pushback from McDonald's Corp. and other big employers that complained and are getting limited waivers."

Yet New York City entrepreneur and Goizueta graduate Brett Klasko believes that more credit access could boost businesses.

"Opening up the lending channels is a good idea," says Klasko, chief executive officer of the marketing firm Phinaz whose subsidiaries, Ticket Boosterand Investors Alley, focus on the sports and financial industries, respectively.

"The additional federal funding could give banks an incentive to lend," he adds.

If the effectiveness of this program and others is in debate, then how—or if—such legislation can stimulate a positive response with voters in the midterm elections is even murkier.

"I don’t know if this program and others will really help the Democrats much in the midterm elections," notes Klasko. "For example, the president has been pushing to let some or all of the Bush-era tax cuts expire, and I don’t think that’s a good idea, since it will end up hurting businesses."

Obama may hope that the administration’s most recent stimulus effort will help Democrats in the November elections, but Goizueta finance professor Tarun Chordia does not believe it will help the economy much.

"The act, like the previous "cash for clunkers" and "homebuyers’ incentive," might just move some activity forward," he says. "It might not really create new activity, and we’ll suffer the aftereffects later on."

In contrast to these "small fixes," there’s a real need to upgrade infrastructure, says Chordia. "We currently have spare capacity in the economy, and it is important that the right projects are funded. There is a large debate in economics between those who feel that government spending on infrastructure projects during downturns can help future GDP growth and those who feel that government spending is generally wasteful. It is probably true that projects funded for political reasons, just before the November elections, are likely to be wasteful.

Chordia believes that big issues like the hangover in the housing market will take at least two or three years to resolve, regardless of what the federal government does.

"This recession is different than past slumps," explains Chordia. "In this one, we’ve seen a broad retreat in asset prices, and it will take time to get supply and demand back into balance. At this point the motivation for the stimulus programs seems to be the November election."

From Knowledge@Emory

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The Return of the Holiday Layaway

2010-11-01T06:03:00.000-07:00

/PRNewswire/ --Layaway may sound like an old-school concept, especially in today's "buy now, pay later" society. But the idea of setting aside products to pay for gradually is making a comeback, and is a great alternative to using credit cards this upcoming holiday season.

"The credit card allows shoppers to buy on impulse without the immediate worry of how to pay for their purchases," said Dorothy Guzek , GreenPath Debt Solutions financial counselor. "Unfortunately, when the credit card bill comes due, consumers are left with a surprise balance they can't afford to pay, because they forgot to keep track of each purchase."

Layaway may be the answer for those who can't afford to pay all at once or who simply want to avoid using credit cards this holiday season. An added benefit is that layaway helps keep prying eyes from gifts and presents before the big holiday celebration.

"Our customers are looking for ways to better manage their spending, while still getting the items they need and want," said Salima Yala , Divisional Vice President of Financial Services for Sears Holdings. "Layaway is a financial tool, much like an interest-free payment plan, that allows them to pay over a set period of time."

In addition to traditional in-store layaway, stores like K-Mart and Sears are offering online layaway programs. Online layaway lets you browse and shop for items on the web, pay over time just as you would with traditional layaway, and then pick up the merchandise in-store.

"Layaway provides customers with innovative ways to shop – and with the launch of online layaway, the younger generation of online shoppers are able to manage their budgets, and shopping needs, in a smarter way," said Yala.

GreenPath Debt Solutions offers the following tips for buying on layaway:

1. Get a copy of the store's layaway policies and staple it to your receipt. You may also find layaway policies on the store's website.
2. Make sure you understand the policies such as schedule of payments, late fee policies, refund and exchange policies, markdowns on sale prices and loss or damage of items while in layaway.
3. Be realistic in what you can afford over time and what you put on layaway.
4. Keep clear and accurate records of payments made (staple them to the original receipt and layaway policy statement) in case you have disputes later.
5. When going to the store to make a payment, use the direct in-out method. Walk into the store and directly to the layaway counter to make the payment and then walk back out to your car. Avoid the urge to shop. Preferably, make your layaway payment online and avoid the stores altogether.
6. Don't forget that, until you pay off the items in layaway, the store has your money and merchandise. If the store goes out of business while you're still paying, you could be out both the cash and goods. So only deal with reputable businesses.

Other stores offering layaway this holiday season include Sears, T.J. Maxx, Burlington Coat Factory, Marshalls and Toys R Us, among others. You many find more stores by searching the Internet.

GreenPath's Guzek reminds shoppers, "Regardless of how you decide to shop this holiday season, make a budget in advance, shop from a list, track your expenses and stick with your original plan."

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In 15 of Last 25 Months, Treasury Needed to Borrow Money to Pay Social Security Benefits

2010-10-21T11:45:00.000-07:00

(CNSNews.com) - The U.S. Treasury has needed to borrow money to pay Social Security benefits in 15 out of the last 25 months on record because the Social Security system was in deficit in those months, with the cost of monthly benefit payments exceeding the Social Security tax revenues flowing into the Old Age, Survivors and Disability Insurance trust funds, according to data published by the Social Security Administration.In 15 of Last 25 Months, Treasury Needed to Borrow Money to Pay Social Security Benefits

More Pension Shortfalls...

2010-10-12T05:03:00.000-07:00

Report warns of coming wave of municipal pension shortfalls

By Michael A. Fletcher Washington Post Staff Writer
Tuesday, October 12, 2010; 12:12 AM

The nation's largest municipal pension plans are carrying a total unfunded liability of $574 billion, which comes on top of as much as $3 trillion in unfunded pension promises made by the states, according to a report released Tuesday.
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/12/AR2010101200044.html?utm_source=Newsletter&utm_medium=Email&utm_campaign=Heritage%2BHotsheet&hpid=moreheadlines

Community & Southern Bank Acquires the Assets and Deposits of Three Georgia Banks from the FDIC

2010-09-20T07:09:00.000-07:00

/PRNewswire/ -- Community & Southern Bank has acquired certain assets and deposit accounts and other liabilities of Bank of Ellijay, Ellijay, Georgia, First Commerce Community Bank, Douglasville, Georgia and The Peoples Bank, Winder, Georgia, from the Federal Deposit Insurance Corporation ("FDIC"), as receiver for Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank. Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank were closed by the Georgia Department of Banking and Finance at the close of business on Friday, September 17, 2010, and the FDIC was appointed receiver. Community &Southern Bank will begin operating Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank branch offices as Community & Southern Bank offices immediately.

These are the third, fourth, and fifth acquisitions that Community &Southern has completed. On January 29, 2010, Community & Southern acquired certain assets and deposits of First National Bank of Georgia, Carrollton, Georgia. That acquisition established Community & Southern Bank as one of the market leaders in West Georgia. On March 19, 2010, Community & Southern completed its acquisition of Appalachian Community Bank, Ellijay, Georgia, making Community & Southern the 6th largest Georgia-based bank.

"We're very pleased to announce the acquisition of Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank from the FDIC. The addition of these banks will allow us to serve a wider community throughout Georgia. As we stated previously, our goal is to build a new banking franchise for Georgia, with the strong traditions of service excellence and community support," said Community &Southern Bank's President and Chief Executive Officer, Patrick M. Frawley. "As we integrate these acquisitions, we will first and foremost focus on our customers, our employees, and the communities we serve."

John Spiegel, Chairman of the Board of Directors of Community & Southern Bank and former Chief Financial Officer of SunTrust Bank, added, "The customers of Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank can rest assured knowing that there will be no disruption to the operations and services provided by their bank. Community &Southern Bank looks forward to building upon the traditions and values that are the foundation of our bank. These acquisitions further strengthen our position in our North and West Georgia Regions and establishes us in several new markets in Canton, Winder, and Athens. We welcome all of our new customers into the Community & Southern Bank family as we work to develop the premiere banking franchise across North Georgia."

Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank customers should be aware that their accounts have been automatically converted to Community & Southern Bank accounts. All deposit accounts will continue to be fully insured to the maximum limits allowed by the FDIC. Bank of Ellijay, First Commerce Community Bank, and The Peoples Bank customers should continue to visit existing branches and use their existing checks and ATM/Debit cards to access their funds. All direct deposit and electronic bill pay transactions will continue to be processed normally.

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Taxpayers Will See Relief By Way of Inflation-Adjusted Indexing, But Total Tax Impact Remains Unclear, CCH Says

2010-09-17T15:52:00.000-07:00

/PRNewswire/ -- Taxpayers stuck in the current economic downturn will get at least some relief in 2011 thanks to the mandatory upward inflation-adjustments called for under the tax code, according to CCH, which today released estimated income ranges for each 2011 tax bracket. CCH also projects the growing number of other inflation-sensitive tax figures, such as the personal exemption and the standard deduction.

"Indexing for inflation has become an established part of our tax system, and it's likely to be a part of the tax law for the foreseeable future even as Congress debates changes to the tax rates themselves," according to George Jones, JD, CCH Senior Federal Tax Analyst.

Projections this year, however, are clouded by the uncertainty of expiring provisions in the tax code. If Congress allows the tax cuts within Economic Growth and Tax Relief and Reconciliation Act of 2001 (EGTRRA) to expire as called for at the end of 2010, many taxpayers could lose more ground than they will otherwise gain.

When there is inflation, indexing of brackets lowers tax bills by including more of people's incomes in lower brackets - in the existing 15-percent rather than the existing 25-percent bracket, for example. The formula used in indexing showed a relatively small amount of inflation this year, just under 1.5 percent. However, this is far greater in comparison to the 0.18 percent inflation factor used to set 2010 tax amounts. Therefore, while 2010 inflation-adjusted amounts in many cases stayed flat as a result, most 2011 figures will move higher.

For 2011, however, the big question is not whether the brackets will continue to increase because of inflation - they will. Rather, it is what tax rates will be applied against those brackets. The current 10-, 15-, 25-, 33- and 35-percent rates are now scheduled to sunset to the pre-EGTRRA rate structure of 15, 28, 31, 36 and 39.6 percent. In addition, there are two possible alternative scenarios being debated by lawmakers:

-- Extend the current tax bracket structure in its entirety; or
-- As the proposal from President Obama calls for, keep the current rate
structure except revive the 36- and 39.6-percent rates, starting at a
higher income bracket level; he would also amend the standard
deduction so that it does not revive the marriage penalty that had
been in place prior to EGTRRA.

In other words, Jones noted, it gets complicated quickly without knowing yet which approach Congress will take.

"While we were looking at the very real possibility of deflation in the tax adjustment required under the tax code last year, this year we are 'back to normal' in the sense that the expected upward adjustment in tax benefits from 2010-2011 are taking place," said Jones. "The only wildcard remains how Congress will deal with the sunsetting provisions. We may not know that until a possible lame-duck session of Congress this December."

The examples below show the modest tax savings generated by indexing and how they would be reversed if the EGTRRA tax cuts were to expire wholesale:

-- Because of inflation adjustments, a married couple filing jointly with
a total taxable income of $100,000 should pay $112.50 less in income
taxes in 2011 than they will on the same income for 2010 (compared to
only a $12.50 savings between 2009 and 2010). That savings remains
whether the EGTRRA tax cuts are fully extended or President Obama's
proposal is adopted. However, if the rates and marriage penalty relief
sunset entirely, the couple will end up paying $3,143 more in taxes in
2011.
-- A single filer with taxable income of $50,000 should owe $56 less next
year due to the adjustments (again, compared to only a $6.25 savings
between 2009 and 2010). However, once again, even with savings from
the inflation adjustments, a single filer will owe $834 more in 2011
than in 2010 on the same $50,000 amount if complete sunset of the
rates takes place.
-- For taxpayers with more than $379,150 in taxable income in both 2010
and 2011, the maximum savings from indexing the tax brackets for 2011
will be more dramatic. However, so will the additional tax that would
be owed under either a complete sunset of the EGTRRA tax cuts or
adoption of the Obama proposal, which would continue to give
high-income taxpayers the incremental benefit of the 10-percent rate
bracket as well as allow them an expanded 28-percent bracket.
Inflation-generated savings if all rates were extended would amount to
$330 for a single filer with $400,000 taxable income, for example.
However, that same taxpayer would pay an additional $11,394 under a
full sunset of the rates, and $5,080 more under the Obama proposal
above 2010 amounts.

Inflation Adjustments

Since the late 1980s, the U.S. tax code has required that federal income tax brackets be adjusted for inflation annually, and inflation adjustments have been inserted into the Internal Revenue Code in recent years with increasing frequency.

For example, the Code now requires over 50 other inflation-driven computations to determine deduction, exemption and exclusion amounts in addition to the 40 separate computations needed to inflation-adjust the tax bracket tables each year. In fact, the health care reform legislation passed earlier this year adds an even greater number of inflation-adjustments to the tax code, although health-related indexing won't start until 2013.

Most adjustments are based on Consumer Price Index figures for September through August immediately prior to the adjusted year. However, some inflation-adjusted figures are computed earlier and some later. For example, amounts such as the 2011 vehicle depreciation limits won't be available until 2011 (the $3,060 regular first-year amount for 2010 was not released until February 2010), while the standard business mileage rate (that is currently set at 50 cents for 2010) isn't expected to be computed for 2011 and released until December 2010.

CCH's projections for other indexed amounts are based on the relevant inflation data released September 17, 2010, by the U.S. Department of Labor.

The IRS usually releases official numbers by December each year. CCH tax bracket projections are provided for illustrative purposes only, and should not be used for income tax returns or other federal income tax related purposes until confirmed by the IRS later this year.

Some Items Not Indexed

Jones observed that some items in the Code are not indexed for inflation and stay the same, while others rise by dollar amounts already written into the tax law.

"The exemption amounts for the alternative minimum tax are not indexed, which means that each year Congress must either increase the amounts by statute or expose additional households to the AMT," Jones said.

For 2009, Congress set the AMT exemption amounts at $46,700 for single individuals and $70,950 for married couples filing jointly. Congress has relied on one- or two-year AMT patches to account for inflation from the initially set amounts of $33,750 and $45,000, respectively. However, there is no technical requirement under the tax code to increase those amounts for inflation. No amounts have been set yet for 2010, no less for 2011. While they are scheduled to revert to the default amounts of $33,750/$45,000 without action, the Obama administration tax proposals contemplate further increases.

Standard Deduction, Personal Exemption Rise

The standard deduction and personal exemption amounts are also subject to indexing; however, because of "rounding down," some years show no change at all. After very little movement in the 2010 amounts, 2011 will see a jump in all standard deduction levels. However, a wrinkle occurs if the EGTRRA sunset provisions move forward. In which case, the marriage penalty relief that has been built into the standard deduction for married couples filing jointly will be eliminated. Rather than double the standard deduction for unmarried single filers, the 2011 standard deduction for joint filers would drop by $1,750 to $9,650, even taking the past year's inflation into account.

Assuming that Congress will not let any of the standard deduction amounts sunset, however, the standard deduction for single taxpayers, heads of households and marrieds filing separately will all increase by $100 in 2011. The standard deduction for joint filers would rise by $200, to $11,600. Any increase in the standard deduction, of course, can produce lower taxes by decreasing the taxpayer's taxable income.

The additional standard deduction for those age 65 or older or who are blind will rise by $50 to $1,150 in 2011 for married individuals and surviving spouses, and by $50 to $1,450 for single filers. The personal exemption amount also gets bumped up by inflation by $50, to $3,700 in 2011.

Taxpayers have had to lose a good portion of the value of personal exemptions and itemized deductions when their incomes rise above certain levels, which have also been adjusted for inflation. For 2010, these "phaseouts" disappeared from the tax code, but only temporarily if Congress does not act. As part of the EGTRRA sunset, they are scheduled to return in 2011, with a personal exemption phase-out range starting at $254,350 for joint filers and $169,550 for single filers and a phase-out range for itemized deductions starting at $169,550 for all filers except married couples filing separately whose phase-out range for itemized deductions starts at $84,775.

"The removal of limitations on itemized deductions and personal exemptions, rather than indexing of brackets, will provide major tax savings in 2010 for many well-off taxpayers. The return of these limitations in 2011 would pose an equally important change in the reverse direction," Jones observed.

For a complete look at how income ranges for each tax bracket are projected to shift next, see the CCH chart below.

"Kiddie" Deduction, Gift Tax Exemption

In general, inflation adjustments are rounded to the next-lower multiple of $50, so if the adjustment produces an increase of less than $50, no increase is made. The "kiddie" deduction, used on the returns of children claimed as dependents on their parents' returns, increased only five times in the years 2001 through 2010. It last rose for the 2009 tax year. For 2011 the deduction will remain at that $950 level.

The Code only allows the gift tax exemption to rise when the inflation adjustment would produce an increase of $1,000 or more. The last increase occurred in 2009, when it rose to $13,000. It remains there for 2011.

CCH 2011 TAX PROJECTIONS*




  Married Filing Jointly (& Surviving Spouse)

    Tax
   Rate   2011 Taxable Income
                 Complete              Full
                  Sunset            Extension
     10%  n/a                         $0-$17,000
     15%           $0-$57,650    $17,000-$69,000
     25%  n/a                    $69,000-139,350
     28%     $57,650-$139,350  $139,350-$212,300
     31%    $139,350-$212,300  n/a
     33%  n/a                  $212,300-$379,150
     35%  n/a                           $379,150+
     36%    $212,300-$379,150  n/a
   39.6%             $379,150+ n/a





    Tax                                            2010 Taxable
   Rate            2011 Taxable Income                 Income
                          Obama
                         Proposal
     10%                            $0-$17,000         $0-$16,750
     15%                            $0-$69,000    $16,750-$68,000
     25%                      $69,000-$139,350   $68,000-$137,300
     28%                     $139,350-$237,300  $137,300-$209,250
     31%  n/a                                   n/a
     33%  n/a                                   $209,250-$373,650
     35%  n/a                                            $373,650+
     36%                     $237,300-$379,150  n/a
   39.6%                              $379,150+ n/a





  Unmarried Individuals (other than surviving spouses and heads of
  households)

  Tax Rate  2011 Taxable Income
              Complete Sunset     Full Extension
      10%   n/a                          $0-$8,500
      15%            $0-$34,500     $8,500-$34,500
      25%   n/a                    $34,500-$83,600
      28%       $34,500-$83,600   $83,600-$174,400
      31%      $83,600-$174,400  n/a
      33%   n/a                  $174,400-$379,150
      35%   n/a                           $379,150+
      36%     $174,400-$379,150  n/a
     39.6%             $379,150+ n/a





                                                     2010 Taxable
  Tax Rate     2011 Taxable Income                      Income
                 Obama Proposal
      10%                              $0-$8,500          $0-$8,375
      15%                         $8,500-$34,500     $8,375-$34,000
      25%                        $34,500-$83,600    $34,000-$82,400
      28%                       $83,600-$195,550   $82,400-$171,850
      31%  n/a                                    n/a
      33%  n/a                                    $171,850-$373,650
      35%  n/a                                             $373,650+
      36%                      $195,550-$379,150  n/a
     39.6%                              $379,150+ n/a





  Head of Household

  Tax Rate  2011 Taxable Income
              Complete Sunset     Full Extension
      10%   n/a                         $0-$12,150
      15%            $0-$46,250    $12,150-$46,250
      25%   n/a                   $46,250-$119,400
      28%      $46,250-$119,400  $119,400-$193,350
      31%     $119,400-$193,350  n/a
      33%   n/a                  $193,350-$379,150
      35%   n/a                           $379,150+
      36%     $193,350-$379,150  n/a
     39.6%             $379,150+ n/a





                                                     2010 Taxable
  Tax Rate     2011 Taxable Income                      Income
                 Obama Proposal
      10%                             $0-$12,150         $0-$11,950
      15%                        $12,150-$46,250    $11,950-$45,550
      25%                       $46,250-$119,400   $45,550-$117,650
      28%                      $119,400-$216,400  $117,650-$190,550
      31%  n/a                                    n/a
      33%  n/a                                    $190,550-$373,650
      35%  n/a                                             $373,650+
      36%                      $216,400-$379,150  n/a
     39.6%                              $379,150+ n/a





  Married Individuals Filing Separate Returns

  Tax Rate  2011 Taxable Income
              Complete Sunset     Full Extension
      10%   n/a                          $0-$8,500
      15%            $0-$28,825     $8,500-$34,500
      25%   n/a                    $34,500-$69,675
      28%       $28,825-$69,675   $69,675-$106,150
      31%      $69,675-$106,150  n/a
      33%   n/a                  $106,150-$189,575
      35%   n/a                           $189,575+
      36%     $106,150-$189,575  n/a
     39.6%             $189,575+ n/a





                                                     2010 Taxable
  Tax Rate     2011 Taxable Income                      Income
                 Obama Proposal
      10%                              $0-$8,500          $0-$8,375
      15%                         $8,500-$34,500     $8,375-$34,000
      25%                        $34,500-$69,675    $34,000-$68,650
      28%                        $69,675-118,650   $68,650-$104,625
      31%  n/a                                    n/a
      33%  n/a                                    $104,625-$186,825
      35%  n/a                                             $186,825+
      36%                      $118,650-$189,575  n/a
     39.6%                              $189,575+ n/a





  Standard Deduction Amounts

  Filing Status    2011**                        2010   Increase
  Married Filing
   Jointly (&
   Surviving
   Spouse)             $9,650 (with marriage  $11,400   (-$1,750)
                    penalty relief
                    sunset);
                   $11,600 (without marriage
                    penalty relief
                    sunset)                   $11,400        $200
  Married Filing
   Separately          $4,825 (with marriage   $5,700     (-$875)
                    penalty relief
                    sunset)
                    $5,800 (without marriage
                    penalty relief
                    sunset                     $5,700        $100
  Single                              $5,800   $5,700        $100
  Head of
   Household                          $8,500   $8,400        $100

  **A marriage penalty exists when the combined tax liability of a
  couple filing a joint return is greater than the sum of the tax
  liabilities each would have if they were unmarried. If the EGTRRA
  sunset takes effect, it will trigger a marriage penalty with the
  basic standard deduction for married individuals filing joint
  returns dropping considerably.





  Standard Deduction for Dependents ("Kiddie" Standard Deduction)

        2011                   2010     Increase
             $950              $950              $0





  Income Level at Which 3-Percent Itemized Deduction Limitation Takes
  Effect (Adjusted Gross Income)

                      2011(with
  Filing Status        sunset)    2010***        2009
  Married Filing
   Jointly             $169,550  n/a         $166,800
  (& Surviving
   Spouse)
  Married Filing
   Separately           $84,775  n/a          $83,400
  Single               $169,550  n/a         $166,800
  Head of Household    $169,550  n/a         $166,800

  *** For 2010, these limitations disappeared from the tax code; if the
  limitation rules under EGTRRA are allowed to sunset, the above rates
  will apply for 2011.





  Personal Exemption Amounts

   2011     2010  Increase
  $3,700  $3,650       $50





  Threshold for Personal Exemption Phaseout

                    2011(with
  Filing Status       sunset)    2010****      2009
  Married Filing
   Jointly            $254,350  n/a        $250,200
  (& Surviving
   Spouse)
  Married Filing
   Separately         $127,175  n/a        $125,100
  Single              $169,550  n/a        $166,800
  Head of
   Household          $211,950  n/a        $208,500

  **** For 2010, these "phaseouts" disappeared from the tax code; if
  the phaseout rules under EGTRRA are allowed to sunset, the above
  phaseout levels will apply for 2011.





  Gift Tax Exemption

    2011      2010   Increase
  $13,000  $13,000         $0





  Income Limit for Full Roth IRA Contribution

  Filing Status      2011      2010   Increase
  Married
   Filing
   Jointly       $169,000  $167,000     $2,000
  Single         $107,000  $105,000     $2,000

  Income Limit for Full Roth IRA Contribution
  Filing Status               2011      2010  Increase
  Married Filing Jointly  $169,000  $167,000    $2,000
  Single                  $107,000  $105,000    $2,000

* These numbers are projected for the 2011 tax year and have not been confirmed by the Internal Revenue Service.
CCH, a Wolters Kluwer business (CCHGroup.com) is the leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913.

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US Department of Labor announces final rule for Unemployment Compensation Program funding goals

2010-09-16T12:00:00.000-07:00

/PRNewswire/ -- The U.S. Department of Labor's Employment and Training Administration today announced a final rule regarding the Unemployment Compensation Program. This rule implements federal legislation requiring the department to establish criteria for states to qualify for interest-free federal loans for the payment of unemployment compensation.

"The past few years have really tested the unemployment programs. For that reason, and the future health of unemployment trust funds, it is especially important that states make reasonable efforts to maintain the solvency of their unemployment compensation systems before receiving interest-free federal loans," said Secretary of Labor Hilda L. Solis.

The Social Security Act provides for the federal government to make advances to states that deplete their unemployment trust fund accounts. This arrangement ensures that eligible unemployed workers receive benefits to which they are entitled. These advances are generally interest-bearing; however, states may obtain interest-free advances under certain conditions. Under current law, states owe no interest on amounts they obtain from the federal government during a calendar year if the advances are repaid by Sept. 30 of the same year and no additional advances are made that year.

The purpose of the legislation spurring today's final rule was to encourage states to adequately forward fund their unemployment compensation systems to minimize the need for advances. The final rule conditions a state's receipt of interest-free advances upon the state meeting new funding goals as well as existing requirements.

The rule requires that a state:

1) meet a solvency goal based on a generally accepted measure of trust fund solvency in at least one of the five years preceding the year the advance occurs; and

2) has had no significant tax reductions in the years between the last that the solvency measure was met and the year in which the advance occurs.

Implementation of the final rule will be phased in beginning in 2014 in order to allow states additional time to repay current advances and build sufficient reserves to meet the new requirements for interest-free loans. Full implementation will occur in 2019.

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Sandwich Generation Stretched Thin Financially

2010-09-15T07:26:00.000-07:00

/PRNewswire/ -- Today, Generation Mortgage Company and Zogby International released alarming new data detailing the financial tribulations of the Sandwich Generation -- a sector largely comprised of Baby Boomers who are caring for their aging parents while supporting their own children. The study found that a majority of the Sandwich Generation give their household's current financial situation a negative rating and are having to make tough financial decisions and cutbacks.

The eye-opening results shed light on many financial hardships facing the Sandwich Generation. With unemployment near 10 percent, it is no surprise that 23 percent of those polled have lost a job recently and an additional 24 percent have taken a cut in pay or benefits. This has resulted in 17 percent failing to make a mortgage or rent payment on time due to insufficient funds.

According to the Generation Mortgage/Zogby International survey, finances have forced the Sandwich Generation to make serious cuts in their spending habits to survive during the recession. Seventy-three percent have decreased spending on entertainment, recreation or eating out. Moreover, 43 percent have decreased overall spending on food or groceries and three out of five of those polled say it is difficult to be a caregiver for their parents and/or in laws while financially supporting their children.

"The Sandwich Generation is probably the most financially vulnerable demographic to result from the recession," said Jeff Lewis, Chairman, Generation Mortgage Company. "They are unemployed or under-employed, financially supporting two generations in their family and are saddled with debt from bills and a mortgage. As this group looks to retire, their financial situation, coupled with the state of the economy, is not leaving them with many options."

The study also uncovered that 78 percent of those polled said they are worried about having enough money to retire comfortably and 23 percent have restructured their retirement plan in the last year due to financial reasons. Even more distressing, 52 percent responded that they plan to work part time during retirement to make ends meet.

"As the Sandwich Generation looks towards retirement," commented Lewis, "they should become educated on their available financial options. One of the financial options that is often overlooked is a reverse mortgage."

Zogby International was commissioned by Generation Mortgage to conduct an online survey of 271 adults who have children and are caregivers of parent(s). The survey was conducted from August 9-11, 2010. A sampling of Zogby International's online panel, which is representative of the adult population of the U.S., was invited to participate. Slight weights were added to region, age, race, gender, and education to more accurately reflect the population. The Margin of Error (MOE) is +/- 6.1 percentage points. Margins of Error are higher in sub-groups. The MOE calculation is for sampling error only.

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Consumers Union Report: Prepaid Cards Come With Long List of Fees and Weak Consumer Protections

2010-09-15T07:18:00.000-07:00

/PRNewswire/ -- Prepaid cards continue to grow in popularity, but this new form of plastic payment comes with high fees and weaker protections than those offered by traditional debit or credit cards, according to a new report by Consumers Union, the nonprofit publisher of Consumer Reports.

Prepaid cards are reloadable cards that can be used to make payments similar to debit cards and are becoming the foundation of a second tier banking system used by a growing number of low income consumers.

"Prepaid cards come with a long list of fees that are often hidden deep in the fine print," said Michelle Jun, Staff Attorney for Consumers Union. "Consumers considering prepaid cards should be aware that those fees can add up quickly and that they may be vulnerable to losing their money if their card is lost or stolen."

Prepaid cards are a growing business and usually bear a network logo such as Visa or MasterCard and often have the word "debit" printed prominently on the front of the cards. The Federal Reserve estimated that 312 million transactions were made with prepaid cards in 2006 for a total value of $13.3 billion. These numbers have undoubtedly continued to rise as the prepaid card industry has worked to enroll the millions of unbanked and underbanked consumers.

Consumers Union reviewed the terms and conditions of 19 different prepaid cards and found that consumers face multiple fees and other costly "gotchas":

-- Activation Fees: 12 of the 19 prepaid cards reviewed charged
consumers a fee for activating their cards. These activation fees
ranged from a low of $3 for the Walmart Money card and the nFinanSe
card to a whopping $39.95 for the First Vineyard card.
-- Monthly Fee: 16 of the 19 prepaid cards charged monthly fees ranging
from $2.95 per month for the nFinanSe card to $9.95 per month for the
NetSpend VISA card, Rush card, and AccountNow card. Most prepaid card
issuers will waive the monthly fee if a direct deposit is set up.
Some card issuers will waive the monthly fee if the consumer chooses
the "pay as you go" option. The Green Dot card charges a $5.95
monthly fee unless the consumer maintains a $1,000 balance or has 30
posted transactions.
-- Fees to Get Cash: All 19 prepaid cards reviewed charged fees for
withdrawing cash from ATMs in the U.S. On the low end, consumers
using the nFinanSe card are charged 99 cents per withdrawal.
Consumers using the NetSpend Visa card, AccountNow card, and Bank
Freedom card are charged $2.50 for each withdrawal. In one case (Rush
card), consumers were given two free withdrawals but then charged
$2.50 for each additional withdrawal. Consumers using the Green Dot
card get free withdrawals at in-network ATMs, but are otherwise
charged $2.50 per withdrawal. Fees were even higher for international
withdrawals.
-- Balance Inquiry Fees: 18 of the 19 prepaid cards charged fees for
checking balances at ATMs, ranging from 45 cents to $1. This does not
include any additional fee charged by the ATM owner.
-- Paper Statement Fees: 15 of the 19 prepaid cards charged fees for
providing consumers with a paper statement detailing transactions on
their account. Paper statement fees ranged from $1 to $5.95. All 19
prepaid card issuers provide free access to account statements online.
-- Customer Service: Most pre-paid card issuers provide free customer
service, but consumers using the BuyRight card will be charged $1 to
speak to a customer service representative, while users of the Exact
card will pay $3.95 for doing so. Some prepaid card issuers charge
customer service fees after a limited number of free calls.
-- Fees for Inactivity: 9 of the 19 prepaid cards charged fees when
cards are not used after a certain period of time. These dormancy
fees range from $1.95 per month for the Rush Card (after 90 days of
inactivity) to $9.95 per month for the Exact card.
-- Overdraft Fees: A number of prepaid card issuers claim that they do
not charge fees when users spend more than the available amount on
their cards. However, Consumers Union found that 13 of the 19 cards
it reviewed included overdraft or "shortage" fees. Most of the card
issuers that charge an overdraft fee do not specify the amount of the
fee. Instead, the card agreement indicates that consumers will be
charged "applicable fees" for the shortage.

When prepaid cards are lost or stolen and used by others to make fraudulent transactions, consumers are not protected by the same regulatory and statutory safeguards that enable other debit card users to recover their money. If a consumer contacts a card issuer about a lost or stolen debit card within two business days, the consumer's liability is limited to up to $50 (or up to $500 if the consumer reports the debit card lost or stolen after two business days). By contrast, prepaid cards may only have voluntary protections that could be revised or rescinded at any time for any reason.

Some prepaid cards claim to provide consumers a way to build a credit record or include a credit line feature. However, Consumers Union found that the prepaid card issuers may report "credit building" activity to an alternative, less used credit reporting agency or may report only the payment of the card's high monthly fees. The credit line feature may provide credit which is as expensive as costly overdraft loans and payday loans.

Finally, consumers with traditional bank accounts have peace of mind that their money will not be lost as long as their bank is FDIC insured. But consumers who use prepaid cards have no guarantee that they will be able to recover all their money in the event of a bank failure because the funds may not be insured by the FDIC.

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Consumer Reports Index: Economy Continues to Waiver With Worsening Job Outlook

2010-09-14T08:29:00.000-07:00

/PRNewswire/ -- Consumer difficulties are declining, but the economy continues to waiver, with a worsening job picture and declining retail activity, according to the Consumer Reports Index for September.

The U.S. job outlook remains bleak, the September results for the Consumer Reports Employment Index marks a two-month decline, down in September to 49.1 from 50.2 in August. The share of Americans claiming to have started a new job in the past 30 days is 5.0%, versus 5.9% in August, and down from July's recent high of 7.8%. Job losses in the past 30 days were up, 6.9%, from August, 5.6%. Results show that younger Americans between the ages of 18-34 years have been hit the hardest by job losses (13.7%).

Americans are continuing to pull their purse strings tight. The Consumer Reports Retail Index for August continues to decline. The Past 30-Day Retail Index for September is at 9.8, down significantly from last month's 11.4. September marks an overall decline from a year ago when the Past 30-Day Retail Index was at 11.0, and is at its lowest level since November 2009 (9.0). September's Next 30-Day Retail Index is at 7.6, down from August (8.1), as well as a year ago (8.8). Per capita spending in the past 30 days is down to $185, from $286 in August.

The economy remains unsteady and Americans are cautious, but the Consumer Reports Trouble Tracker continues to show positive developments. It has declined to 53.7 from 56.6 in August, and has posted three months of declines from its recent high in June (63.5). The Trouble Tracker has improved from this time last year when it was at 68.7, a 15-point drop. Positive developments this month were led by a decline in consumers losing or facing reduced healthcare coverage, to 6.7% from 9.7% in August.

As the Trouble Tracker improves, Americans' outlook has yet to brighten. The Consumer Sentiment Index has gradually slipped over the past two months and is currently at 44.1, continuing a slide from July (45.2). This index has changed little since October 2008 when it stood at 45.3.

"The recovery faces serious challenges and is at risk of stalling," said Ed Farrell, a director of the Consumer Reports National Research Center. "Job creation remains the greatest challenge. The growth in the ranks of the employed remains anemic and will dampen consumer outlook moving forward. Americans have not seen any real improvement in their financial situation since the recession hit and this is reflected in our Sentiment Index, which has been in negative territory for the last two years."

The Consumer Reports Index report, available at www.ConsumerReports.org, comprises five key indices: the Sentiment Index, the Trouble Tracker Index, the Stress Index, the Retail Index, and the Employment Index. Here are the key findings:

Consumer Reports Sentiment Index: 44.1
-- Consumer Reports Sentiment Index has gradually declined from 45.2 in
July to 44.1 in September. The most optimistic consumers are between
the ages of 18-34 (49.9), along with households with an income of
$100,000+ (50.7). The most pessimistic consumers are between the ages
of 35-64 (42.3) or age 65+ (41.1), and households with an income less
than $50,000 (40.4).

The Consumer Reports Sentiment Index captures respondents' attitudes regarding their financial situation, asking them if they are feeling better or worse off than a year ago. When the index is greater than 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse. The Sentiment Index can vary from a high of 100 to a low of 0.

Consumer Reports Trouble Tracker Index: 53.7
-- The Consumer Reports Trouble Tracker Index has shown a decline this
month, pointing to fewer troubles for consumers, dropping to 53.7 in
September from 56.6 in August, and is down substantially from a year
ago (68.7).
-- Positive developments were led by a decline in consumers losing or
facing reduced healthcare coverage, to 6.7% from 9.7% in August; a
drop in the proportion of Americans unable to afford medical bills or
medications (13.6%), down from 15.4% in August, and a slight reduction
in the proportion of Americans that faced negative changes to their
credit cards, down to 7.2% from 8.9% in August.
-- The most common difficulties faced by Americans are:
-- Unable to afford medical bills or medications (13.6%), down from
15.4% in August
-- Missed payment on a major bill - not mortgage (9.3%), down from
10.2% in August
-- Credit card increased rates/fees, reduced credit line (7.2%), down
from 8.9% in August
-- Lower-income households, earning less than $50,000 a year, have been
disproportionately affected. In the past 30 days:
-- 22.4% Have been unable to afford medical bills or medications
-- 16.1% Missed payment on a major bill - not mortgage

The Consumer Reports Trouble Tracker focuses on both the proportion of consumers that have faced difficulties as well as the number of negative events they have encountered. The negative events include: the inability to pay medical bills or afford medication, missed mortgage payments, home foreclosure, interest-rate increase, penalty fees, reduced lines of credit or other changes in credit-card terms, job loss or layoffs, reduced healthcare coverage, or the denial of personal loans. The Consumer Reports Trouble Tracker Index is then calculated as the proportion of consumers that have experienced at least one of the negative events comprising the index multiplied by the average number of events encountered.

Consumer Reports Retail Index: Past 30-Day - 9.8, Next 30-Day - 7.6
-- Consumer Reports Past 30-Day Retail Index for September, reflective of
August activity, is at 9.8, down from the prior month (11.4). Per
capita spending for the past 30 days was down significantly for
September, reflecting August activity, to $185, from $286 the prior
month.
-- The proportion of Americans buying across categories in the past 30
days showed the greatest declines in small appliances (16.6%, down
3.7% points), personal electronics (21.4%, down 3.5% points), and
major home electronics (10.7%, down 2% points).
-- Among the non-index categories, past 30 day purchases, reflecting
August activity, were down slightly for new cars (1.7%) versus the
prior month (2.2%), but up for used cars (5.1%) from the prior month
(3.7%). Home purchases were up slightly in September (2.5%) relative
to August (1.6%).
-- Consumer Reports Next 30-Day Retail Index, reflective of planned
purchases for September, is at 7.6, down from the prior month (8.1) as
well as one year ago (8.8).
-- Among the non-index categories, next 30 day planned purchasing points
to new cars declining slightly, 2.5% versus 3.1% the prior month, and
used cars also moving downward to 3.5% from 4.3% for August. Planned
purchasing for homes in the next 30 days, reflecting September
activity, is on par with the prior month (1.5%).

The Consumer Reports Retail Index looks at consumer purchases in the past 30 days as well as the outlook for planned purchases in the next 30-days across several categories. The Consumer Reports Retail Index represents the proportion of respondents that made a purchase in the following categories: major home appliances, small home appliances, major home electronics, personal electronics, and major yard and garden equipment. The Retail Index is a weighted calculation. For example, a major appliance is of greater value than a small appliance. Because of their size and frequency, car and home purchases are tracked separately.

Consumer Reports Stress Index: 60.1
-- According to the Consumer Reports Stress Index, the level of stress
consumers feel they are under (60.1) is unchanged from the prior month
(59.4), but down from one year ago (65.4).

The Consumer Reports Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. It asks whether they are feeling more stressed or less stressed. When the Stress Index is more than 50, consumers are feeling more stress and when it is below 50 they are feeling less stress compared to a year ago. The index can vary from 100 (Total Stress) to a low of 0 (No Stress).

Consumer Reports Employment Index: 49.1
-- The Consumer Reports Employment Index is down in September (49.1) from
50.2 in August, dipping into negative territory.
-- Overall labor force activity has slowed considerably in the past
month, with significantly fewer Americans claiming to have started a
new job in the past 30-days, 5.0% versus 5.9% the prior month.
-- Job losses in the past 30-days (6.9%) were up from the prior period
(5.6%). Job loses have hit younger Americans age 18-34 the hardest
(13.7%).

The Consumer Reports Employment Index examines the change in employment of those that reported starting a new job versus those that have lost their job or were laid off in the past 30 days. An index below 50 indicates more jobs were lost than gained, while a score more than 50 indicates more jobs were gained than lost in the past 30-days.

For more information regarding the Consumer Reports Index visit www.ConsumerReports.org.

The Consumer Reports Index, conducted by the Consumer Reports National Research Center is a monthly telephone and cell phone poll of a nationally representative probability sample of American adults. A total of 1,257 interviews were completed (1,007 telephone & 250 cell phones) among adults aged 18+. Interviewing took place between August 26-August 29, 2010. The margin of error is +/- 2.8 points at a 95% confidence level. The complete index report, methodology, and tabular information are available. Contact: C. Matt Fields, 914.378.2454, cfields@consumer.org.

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AARP Survey Looks at Recession's Impact on Lower-Income Adults 45+

2010-09-13T10:19:00.000-07:00

/PRNewswire/ -- An AARP report released today for the first time paints a picture of the struggles lower-income older adults are facing during the recession. The AARP Closer Look June 2010 survey found that nearly six in 10 Americans 45+ who make less than $25,000 a year say they are either "not at all" or "not too" confident they will have enough money to pay medical and living expenses in retirement, compared to 36 percent of higher income adults.

More than four in 10 (42 percent) lower-income older adults rate their health as "fair" or "poor," compared to only 18 percent of those who earn more than $25,000 a year. Additionally, many report they are struggling to meet basic needs, like paying for food and electricity, heat and water bills.

"While the recession has been devastating for many older Americans, this recent data indicates lower-income folks are being hit particularly hard," said Jo Ann Jenkins, president of AARP's affiliated charity, the AARP Foundation. "Each day, millions are choosing between essentials like buying groceries or paying for prescriptions. It's a devastating choice that no one should have to make."

Similar to the general population, lower-income older adults have cut back, but they are doing so in greater numbers. Nearly 40 percent had to cancel or postpone needed healthcare or dental treatments in the last six months--twice as many as higher-income adults. Twenty-three percent skipped doses, cut pills in half or did not fill prescriptions, compared with 15 percent of higher-income people. Lower-income adults are twice as likely to have looked for more affordable housing in the last six months compared to higher-income levels. And half used their car less to cut down on gas costs.

Additional findings for all income levels indicate the continual struggles older Americans are experiencing in tough economic times:

-- More than one in four adults 45+ (28 percent) stopped contributing to
retirement savings in the past six months, and 14 percent of adults 45
to 64 reported having to prematurely withdraw funds from retirement
savings vehicles--a trend which has increased at a significant rate
over the recession.
-- When asked about current value of retirement savings available, nearly
half (48 percent) reported having less than $50,000 in savings, with
16 percent of those reporting no savings at all.
-- With many older workers currently facing extended unemployment, a
large majority (63 percent) of respondents said that, based on what
they have experienced or observed, older workers face age
discrimination in the workplace.
-- Twenty percent of people 45+ reported problems paying their medical
bills in the last six months. The percentages were significantly
higher for Hispanics (29 percent) and African-Americans (33 percent).
-- More than a quarter of people 45+ have put off or postponed getting
needed health care or dental treatments or services in the last six
months.
-- Gas prices continue to be a challenge for more than a third (35
percent) of people age 45+, but finding adequate public transportation
alternatives is also a problem, 34 percent say.
-- A third of people age 45+ report are fixing up their homes to stay
there longer even as almost half (45 percent) note that their
community lacks affordable housing if they chose to move.

AARP Foundation (www.aarp.org/foundation) and AARP Real Relief (www.aarp.org/realrelief) have resources to help lower-income older Americans make ends meet, including federal benefits assistance, money management programs and tips to cut expenses.

AARP Closer Look is a twice-yearly poll to help understand the effect of social and economic changes on baby boomers and older Americans. The full survey is available at http://www.aarp.org/money/budgeting-saving/info-09-2010/closer-look-econ-0610. html.

Methodology

ICR conducted the Closer Look Survey for AARP via telephone between June 9 and June 30, 2010, among a nationally representative sample of 1,000 respondents 45+. One hundred respondents were Hispanic and 100 were African American. The margin of error is +/- 3.35 percent at a 95 percent confidence level.

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Majority of Voters Expecting Double-Digit Tax Increases in Next 10 Years

2010-09-03T08:00:00.000-07:00

/PRNewswire/ -- PJTV's Tea Party TV today unveiled the results of its weekly Tea Party tracking poll, which revealed that 71 percent of likely voters and 76 percent of Independents believe there will be a tax increase of 10 percent or more if current federal spending habits continue.

"Voters overwhelmingly believe the government's spending habits will force lawmakers to increase taxes by double-digit amounts," said Roger L. Simon, CEO of Pajamas Media. "In the last two years, Washington has lifted the debt ceiling twice, extending the limit by $2.2 trillion. Now, Americans - especially Republicans and Independents - are translating that national public debt into a personal financial burden."

When asked about the potential of a tax hike of 20 percent or more, only Democrats were skeptical. Majorities of Republicans (58 percent) and Independents (50 percent) thought this to be a real concern while only 18 percent of Democrats were anxious of this outcome.

The weekly PJTV/Pulse Opinion Research nationwide survey of 1,000 likely voters tracks Tea Party support as well as provides a snapshot of public opinion regarding the week's top issues. In addition to the weekly Tea Party tracking questions, this week's special question asked voters whether they believed taxes would decrease, stay the same, or increase by 10, 20, or 30 percent.

"The poll revealed that support for the Tea Party movement is holding strong at more than 50 percent," said Vik Rubenfeld, PJTV's Polling Director. "Moreover, we are seeing movement in the portion of likely voters who support the movement in the public arena. Today, 39 percent of likely voters report they publicly support the Tea Party, increasing from 33 percent three weeks ago."

Poll Highlights
-- 71 percent of likely voters and 76 percent of self-identified
Independents believe taxes will increase by 10 percent or more in the
next 10 years. Meanwhile, 42 percent of likely voters and 50 percent
of self-Independents believe they will increase by 20 percent or more.
-- 55 percent of likely voters support the Tea Party movement.
-- 39 percent of likely voters support the Tea Party movement publicly,
compared to 35 percent on August 22 and 33 percent on August 15.

Methodology

The Tea Party Tracking Study is a PJTV survey. The telephone survey of 1,000 Likely Voters was conducted by Pulse Opinion Research on August 29, 2010. Pulse Opinion Research, LLC is an independent public opinion research firm using automated polling methodology and procedures licensed from Rasmussen Reports, LLC. Margin of Sampling Error, +/- 3 percentage points with a 95% level of confidence.

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Study Shows Massive Increase in Consumer Bankruptcy Costs

2010-08-26T10:56:00.000-07:00

/PRNewswire/ -- People currently filing for Chapter 7 and Chapter 13 consumer bankruptcy protection are facing as much as a 55 percent cost increase as one result of the 2005 comprehensive bankruptcy reforms, according to a new study published in the American Bankruptcy Institute Law Review. In addition, as a direct result of these increased costs, unsecured creditors are being paid a smaller percentage on the dollar today than prior to the 2005 reform.

The study, authored by New York bankruptcy attorney Lois R. Lupica of Thompson & Knight LLP and funded by the American Bankruptcy Institute (ABI) and the National Conference of Bankruptcy Judges (NCBJ), reveals that consumer bankruptcy is a "far more complicated process than it was before the 2005 amendments" based on an increased number of conditions and calculations for filers in addition to a corresponding rise in expenses.

"The government's stated goal in passing bankruptcy reform was to eliminate abuse of the system and create a set of higher eligibility standards for consumers, but this is the first time that the financial impact of those standards has been quantified," says Ms. Lupica, who also serves as a Maine Law Foundation Professor of Law at the University of Maine School of Law in Portland.

The study examined data collected from consumer bankruptcy cases in judicial districts located in Florida, Illinois, Georgia, Maine, Utah, and West Virginia. The costs to consumers was defined as debtor's attorney fees and expenses, trustee fees and expenses, filing fees, credit counseling and debtor education fees, and any other professional fees.

For the sample of Chapter 13 cases, the study found that the median cost for consumers was $2,930 in 2003 and 2004, with an increase to $4,077 in 2007 and 2008. For Chapter 7 cases in the same periods, the costs increased from $900 to $1,399.

"Attorney fees are just part of the required administrative expenses that may have contributed to the overall decline of consumer bankruptcies, even in the face of the public's increased debt load, foreclosures, and loan defaults," Lupica says.

While the overall number of consumer bankruptcy filings has declined since passage of the 2005 reforms, the most recently available data reported by the ABI shows that the 149,268 consumer bankruptcies filed in March 2010 represented the highest monthly total of consumer filings since the reforms were enacted. The March filing total represented a 34 percent increase from the February filing total of 111,693 and a 23 percent increase from the March 2009 total of 121,413.

"Greater up-front costs may have hindered some consumers from filing bankruptcy, but there may be other factors at play," Lupica says. "There was a large volume of negative publicity in the aftermath of the 2005 amendments, as well as heightened efforts by aggressive debt collection and consolidation firms."

The publication of the study marks completion of the first phase of a two-part national survey to analyze how the consumer bankruptcy system has changed in the past five years. The full study is scheduled to be published in late 2011.

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Inept Repairs Leave Economy Stalling

2010-08-12T07:04:00.000-07:00

When the Fed's Open Market Committee meets today (Aug 9), its economists will doubtless produce reams of data and theory aiming to explain why GDP growth is fading fast. But there is a very simple - and disturbing - reason why the recovery is sputtering out: The damage we did to our economy during the housing bubble and subprime crisis was far too severe to be fixed by the weak steps our government has taken in response. We tried to cheap out on the repairs to our economy, and they haven't held up.

The leading example is the bank bailout. Only one-third of the TARP funds even went to banks. Instead of using the money to clean the toxic waste out of bank vaults, the Treasury bought just enough bank stock to prop up their share prices. And the money came with almost no stipulations about how the banks could use it.

As a result, the banks aren't back to normal, judging by their anemic lending. Their balance sheets are still stuffed with decaying loans, and they nurse along existing borrowers instead of looking for new ones. Sure, the big banks have all paid back the TARP funds with interest, but so what? Ask the millions of creditworthy people who can't find banks willing to finance their homes or businesses whether the chump change that taxpayers made from TARP was worth it.

Because TARP didn't really fix the banks, the Fed had to step in and take over many of the credit markets they pulled out of, such as commercial paper and mortgage securities. This forced the Fed to use all its financial strength simply to prevent these financial markets from collapsing. That effort used up virtually all the Fed's capacity to do its main job: stimulate the economy.

And then there's the $800 billion stimulus package. Only about one-third of that was actually new spending, which is what it takes to get the economy moving. And this money is spread out over several years, further weakening the power of its economic punch. Another third of the stimulus was in the form of tax cuts, which didn't stimulate the economy because most households used the tax cuts to pay back old loans rather than buy new things. The remaining third mostly tried to replace spending that would have otherwise declined due to unemployment and falling state tax revenues. That is beneficial, but it's no stimulus.

And finally, there is the mortgage relief program. What mortgage relief program, you ask? Exactly. The government bumbled through a series of small and ineffective programs that have created more frustration and dashed hopes than real relief. One of the first steps the government took was to request a voluntary moratorium on foreclosures, which only pushed the foreclosures off to this year. During the moratorium, it tried a voluntary program that refinanced exactly one mortgage during its first six months. The successor program didn't even start until May 2009 and actually tries to avoid reducing the amount the borrower owes. It's no wonder that struggling homeowners would rather negotiate directly with their lenders - or play the default game and stall for time before foreclosure and eviction.

After the buy-now-and-pay-later economy crashed, we chose a buy-now-and-pay-later recovery. Well, it's time to pay. Unfortunately, we can't simply put the programs in place now that we should have implemented back in 2008, such as removing the toxic assets from the banks and passing a true $1 trillion fiscal stimulus. Consumers and firms have moved on, and the economy has changed.

But more importantly, government lost the initiative to take strong action. The Fed committed its resources to supporting the mortgage market. And public sentiment, exemplified by the tea party movement, has turned against further fiscal stimulus. Now we have to pay for the damage by living with lackluster economic growth - maybe years of it.

Will there be a double-dip recession? Probably not - but that would be one of the best things that could happen. The government would once again have reason to take bold action - and get it right this time.

By Connel Fullenkamp

Connel Fullenkamp is director of undergraduate studies and an economics professor at Duke.

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FDIC Urges Stronger Debit Card and Overdraft Oversight; Other Bank Regulators Should Take Action

2010-08-11T18:22:00.000-07:00

/PRNewswire/ -- Statement of CRL president Michael D. Calhoun: "American families, especially those most vulnerable financially, could save millions of dollars a year in costly overdraft fees if guidelines the FDIC proposed today are adopted. The guidelines would encourage the banks the FDIC oversees to offer customers lower-cost overdraft alternatives rather than charge unlimited high-cost overdraft fees--as many banks do, even on small debit card transactions.

Under the proposal, a bank would contact a customer who incurs six overdraft fees within 12 months and offer--and explain--less costly options. The bank would be encouraged to provide the customer with a reasonable opportunity to choose one of them. Banks the FDIC oversees also would be discouraged from re-ordering transactions to maximize overdraft fees.

Banks and credit unions frequently promote their most expensive form of overdraft coverage, which typically imposes a $34 fee per overdraft--twice the amount of the typical debit card purchase that triggers an overdraft--rather than reasonably priced options like a low-interest line of credit or an affordable small-dollar loan. Financial institutions earn $24 billion annually from these high-cost programs.

The proposal comes just days before new Federal Reserve's August 15th rules take effect requiring banks and credit unions to obtain a customer's signature before enrolling them in a costly overdraft program for debit cards. But many banks don't give consumers real choices among alternatives; instead, they steer customers into the highest cost overdraft coverage they offer. The FDIC's proposed guidance indicates the Fed's rule is not sufficient to stop unfair and abusive overdraft practices by lenders: The Fed addresses neither the size of the fees nor how many can be charged.

A decade ago, most banks declined debit card transactions, and at no charge, when a customer's account lacked sufficient funds. Citibank has never charged overdraft fees on debit cards, and Bank of America is stopping the practice. But another big bank, Wells Fargo, continues to charge over a billion dollars a year in debit card overdraft fees. Wells also continues to market a cash advance product that, like payday lending, carries triple-digit annual interest rates.

To comprehensively address abusive short-term loan products, including unfair overdraft practices, the Federal Reserve and the Office of the Comptroller of the Currency must join the FDIC's efforts and explicitly limit overdraft fees to no more than six per year. In addition, all regulators should require that the size of the overdraft fee reflect a lender's cost and risk, and they should ban the manipulation of transaction postings."

For CRL's research on banks' overdraft marketing efforts, see http://www.responsiblelending.org/overdraft-loans/research-analysis/banks-targ et-mislead-consumers-as-overdraft-deadline-nears.html.

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AARP Applauds House Introduction of Automatic IRA Bill

2010-08-11T13:56:00.000-07:00

/PRNewswire/ -- AARP Executive Vice President Nancy LeaMond offered the following statement in reaction to U.S. Representative Neal's introduction of the Automatic IRA Act of 2010. The bill would provide millions of Americans the opportunity to automatically save for retirement in the workplace:

"AARP is pleased to see momentum building around helping Americans save for retirement. Representative Neal and his colleagues who cosponsored the bill - Representatives Schwartz, Blumenauer and Stark - are to be commended for their leadership on this very important issue.

"To date, both chambers of Congress have introduced legislation that would expand access to retirement savings in the workplace, giving approximately 42 million more workers an opportunity to build their own nest egg.

"The Automatic IRA proposal is a simple, low-cost and common-sense solution to the problem that too few Americans are saving for their retirement. If enacted, this legislation would give tens of millions of employees a new saving option at work through regular, automatic payroll deductions. Studies show that contributions to 401(k) accounts rise dramatically when individuals can contribute to them automatically. The proposal gives employees the choice to opt out of the savings plan, but the goal is to make saving as simple and streamlined as possible for those who wish to do so.

"AARP looks forward to working with Representative Neal to build bipartisan support for this common-sense legislation and make it easier for Americans to save for their own retirement."

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AARP Survey: Americans of All Ages Plan to Rely on Social Security

2010-08-11T12:54:00.000-07:00

/PRNewswire/ -- With the 75th anniversary of Social Security approaching, AARP released a new survey report that shows that three in four (75%) adults age 18+ rely on or plan to rely on Social Security for their retirement income, including a large majority (62%) of younger adults age 18-29. The survey also showed a strong majority of those polled oppose reducing Social Security benefits for deficit reduction (85%), and support the infusion of additional revenues into the system to provide the same level of benefits in the future (57%).

Changes to Program Should Strengthen for Long Term, Not Reduce Deficit

The AARP survey found that regardless of age, 85% of adults oppose cutting Social Security to reduce the federal deficit, with more than seven out of ten (72%) strongly opposing it.

However, many support other changes to keep the program strong for future retirees. Over three-quarters (77%) of non-retired adults are worried that they may not have enough money to live on in retirement. To that end, 50% of non-retired adults are willing to pay more now in payroll taxes to ensure Social Security will be there for them when they retire, a finding that has remained consistent over time. Over half (57%) of adults under age 50 would prefer to pay more into Social Security so they can get the same level of benefits provided today as opposed to keeping payroll tax rates at current levels in exchange for lower benefits.

Eight in ten Americans 18+ (81%) believe the government made a commitment to Americans about Social Security being there for them when they retire, and that the government cannot break its promise. In addition, over eight in ten Americans (83%) agree that regardless of income, everyone who pays into Social Security should receive it, a finding that has not changed over time.

"The message from people of all ages to Washington is clear - don't erode the one bedrock of retirement security that unites all Americans," said AARP Executive Vice President Nancy LeaMond. "Americans see Social Security as a benefit they've earned over a lifetime of hard work, and they oppose it being used to reduce the deficit."

Lack of Confidence Does not Diminish Support, Including Among Younger Adults

Although confidence in the future of Social Security has consistently been low over the last 25 years, Americans of all ages strongly support the program. Consistent with previous surveys, a strong majority (63%) believe Social Security is one of the very most important programs in this country, with nine out of ten (90%) younger adults age 18-29 saying that Social Security is an important government program. Among non-retirees who are not confident about the future of Social Security, 84% agree with the statement that "Maybe I won't need Social Security when I retire, but I definitely want to know it's there just in case I do."

In addition, the public's lower level of confidence in the future of Social Security can be partially explained by the lack of awareness about solvency. Only one in five (21%) Americans knew that if the Social Security trust fund is exhausted in 2037, Social Security could still pay reduced benefits.

"Americans overwhelmingly understand that Social Security has literally been a lifeline to millions of friends, family members and neighbors for 75 years," added LeaMond. "More importantly, they want to make sure it will still be there for future generations. Younger Americans, although worried about whether Social Security will be there for them, value the program with unquestionable support, and want to know that they can rely on the benefits when they retire."

Social Security Provides Financial Security for Families

The AARP survey found widespread understanding and support for Social Security as an important resource for families and their loved ones.

Americans overwhelmingly support Social Security's protections for people who are disabled and for children and widowed spouses of deceased workers (91%). Almost two-thirds of Americans 18+ (65%) say that their family would be hard hit if Social Security were cut, including 72% of adults whose household annual income is less than $50,000. Eighty percent of Americans appreciate that Social Security alleviates the financial burden of taking care of parents and 88% of non-retired adults believe Social Security helps older Americans remain independent.

With increased attention on Social Security's future, the survey assessed Americans' attitudes toward key features of the program. Across all ages, nearly eight in ten (79%) Americans surveyed agree that Social Security should continue to provide guaranteed benefits while few (19%) think that it should be more like an investment account, subject to risk of possible losses. Half of Americans believe that Social Security payments for retirees are too low.

"We are celebrating Social Security's 75 years of success in reliably helping millions of people age with dignity, confidence and independence," said LeaMond. "We encourage leaders in Washington to reassure all Americans - in words and in actions - that Social Security will be strengthened, not treated as a piggy bank for deficit reduction, so that we can celebrate again 75 years from now."

During the August Congressional recess, AARP is engaging Americans of all ages in activities around the country to demonstrate to lawmakers the importance of Social Security. The organization is going to state fairs, holding community conversations, and collecting petitions that ask the President and Members of Congress on both sides of the aisle not to cut Social Security benefits for deficit reduction and to keep Social Security strong. AARP has already collected 1.5 million petitions over the past few months.

AARP commissioned GfK Roper, a national survey research firm, to conduct a national random digit dial (RDD) telephone survey of 1,200 adults aged 18 or older. A total of 781 respondents were not retired and 419 were retired. Interviews were conducted from July 15th to 27th, 2010. The results from the study were weighted by age, sex, race, region, and education. The margin of sampling error is approximately +/- 3%.

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Reverse Mortgage Proceeds Likely to Decrease October 1

2010-08-11T06:22:00.000-07:00

/PRNewswire/ -- Seniors should be informed that the budget proposals working their way through both the House and Senate, as currently drafted, bring a 150 percent increase in annual FHA (Federal Housing Authority) insurance premiums, as well as reductions in available proceeds on FHA-insured HECM (Home Equity Conversion Mortgage) reverse mortgage loans.

"Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall," said Jeff Lewis, Chairman of Generation Mortgage Company.

According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form. "With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages," commented Lewis. "Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income."

In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration's reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167. It is not yet clear when the bill is headed to the Senate.

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Saving for College: UTMAs and 529 Plans

2010-08-11T06:16:00.000-07:00

/24-7/ -- With the costs of attending college increasing every year, many parents wonder what is the best way for them to save for a child's education. While there are several different options for saving for college, two of the most popular choices are UTMA accounts and 529 plans.

UTMA Basics

UTMA (Uniform Transfers to Minors Act) accounts are custodial accounts that can be set up at any financial institution. One parent generally serves as the custodian over the account. UTMA accounts allow parents to put securities, bonds and other investments in a child's name. Once their child reaches the age of majority, the assets in the account become the child's property. In Illinois, the age of majority under the Act is 18 for most types of investments and 21 for gifts.

The investments placed in the UTMA account can be used to pay for college or for anything else, so long as it benefits the child. Any assets placed into the account are forever the child's - the parents may not transfer them back. This is known as an "irrevocable gift." Once the child reaches the age of majority, however, the custodian loses control over the account and the child can use the assets for whatever he or she wants, which may or may not include education expenses.

529 Plans

Parents looking for a way to save for college also have the option of opening up one of the many state-sponsored 529 plans. These plans are offered by each individual state, so there is variation in the types of 529s available and the benefits offered. However, there are some common denominators for all of the plans, including federal tax benefits. The money placed in 529 plans grows tax-free and may be deducted without federal tax consequences so long as it is used for educational expenses.

Unlike UTMA accounts, a child does not gain control over the funds in a 529 account once he or she reaches 18. Instead, the parents always retain control over the assets in the account. Additionally, the parents can use the funds in 529s for other purposes besides the child's education, although they will have to pay taxes on the money and a penalty for doing so. The account also is transferable and can be transferred to another child if the intended child beneficiary decides not to go to school.

Pros and Cons of the UTMAs and 529s

There are benefits and drawbacks to UTMAs and 529 plans. Some of the factors parents should consider before opening either type of account include:

Tax benefits

UTMAs used to provide a significant tax shelter, but the rules have since been changed. Now, any assets in the account valued at more than $1900 are taxed at the same rate as the parent's income.

The money placed into a 529 plan is tax-free and can be taken out of the account tax-free, so long as it is used for qualified educational expenses. The money can be taken out for non-educational expenses, but it is then subject to federal taxes as well as a 10% penalty. States also may offer state income tax benefits to their residents who invest in their 529 plans.

Financial aid eligibility

Assets in a UTMA account are attributed to the child for purposes of determining financial aid. Depending on the value of the account, this can have a profound effect on the child's ability to get need-based financial aid.

Assets in 529 plans, on the other hand, are considered the parents' assets. While they still will be considered when determining financial aid eligibility, it will have less of a potential impact on the child's ability to obtain federal financial aid.

Limits on contributions

There is no limit on the amount of contributions that may be made each year to a UTMA account. However, parents who give more than $13,000 individually or $26,000 jointly may be required to pay gift taxes on the transfer.

Most 529 plans will have either an annual cap or a plan cap on the amount of money that may be placed in the account. As with UTMA accounts, parents who contribute more than the federal limits for gifts may be subject to gift taxes.

Degree of involvement in investing

In UTMA accounts, the custodian has complete control over the types of investments that are made. 529 plans do not offer this type of control. Instead, an administrator is selected by the institution sponsoring the plan, who then determines how to invest the money. 529s also limit the amount of times that parents can change the plan's portfolio, which is generally only once per year.

With the current uncertainty in the market and the losses many suffered to their retirement accounts and 529 plans, parents may be uncomfortable relinquishing control over the account's investments. For those who want complete control over how the funds are invested, UTMA accounts are a better choice.

Control

The custodian only has control over UTMA accounts until the child reaches the age of majority. At that time, title to the assets goes to the child, who then is free to do as he or she pleases with the assets.

In 529s, the parent retains control over the account and how the assets are used at all times.

Flexibility

While the custodian still has control over a UTMA account, the assets can be used for anything so long as it is for the child's benefit. This may include paying tuition, but also could include purchasing a car. Once the child reaches the age of majority, the assets can be used by the child for any purpose, educational or otherwise.

The assets in a 529 plan should be used for education expenses to maximize the tax benefits of the account. However, the account can be used for other expenses, but will be subject to income tax and a penalty.

Legal Issues With UTMA Plans

It is important for parents considering setting up a UTMA plan to remember that any contributions they make to this plan are irrevocable gifts that belong to their child. This means that while the parent has custodial authority over the account, the investments and funds in the account must be made for the child's - not the parent's - benefit.

Thus, a parent falling on hard times cannot sell, transfer or otherwise use the assets in the UTMA account for his or her own purposes. Likewise, the parent cannot transfer the assets back to him or herself. Moreover, a custodian who does not act in the best financial interests of the child beneficiary may have legal liability for his or her acts.

Conclusion

Deciding how best to save for your child's future is an important decision. For more information on UTMA and 529 accounts, contact an experienced attorney today.

Article provided by Van Schwab, Attorney at Law

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Treasury Department Proposes End to Checks for Federal Benefits

2010-08-10T08:30:00.000-07:00

/PRNewswire/ -- Under new regulations proposed by the Treasury Department, Americans who receive federal benefits like monthly Social Security and Supplemental Security income will no longer be able to get these funds by check. Instead, beneficiaries will have to switch to electronic payments, either by having funds deposited directly into their accounts or onto a prepaid debit card issued by the government.

In comments filed with the Treasury Department, Consumers Union urged the agency to allow consumers to continue receiving their benefits by check and to limit the fees and improve the customer service associated with the Direct Express prepaid card for those consumers who choose this option.

"Electronic payments are not safer, easier, and more convenient than checks for all types of benefit recipients," said Michelle Jun, Staff Attorney for Consumers Union, the nonprofit publisher of Consumer Reports. "Consumers should be able to choose the option that is best for them, including paper checks. And if the government is going to encourage benefit recipients to use prepaid cards, it should do more to limit the fees charged for using them and make them easier to use."

The Treasury Department has received numerous comments from consumers who have raised concerns about the switch to electronic payments. Those comments and Consumers Union's concerns are summarized in the letter linked below:

http://www.defendyourdollars.org/FINALCmt31CFR208_8.9.10.pdf

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Bankers Mislead, Cajole Customers on Overdraft Fees as Opt-In Deadline Nears

2010-08-05T12:47:00.000-07:00

/PRNewswire/ -- As the August 15th deadline nears for bank and credit union customers to opt in to high-cost overdraft programs, a new CRL analysis finds these firms market most aggressively and often misleadingly to their most vulnerable customers. Banks target these customers because they likely live on the edge financially and therefore are most likely to repeatedly overdraw accounts. To induce these customers to accept overdraft coverage, many marketing campaigns use scare tactics or incomplete information. For example, they fail to emphasize customers can have debit card transactions declined at no cost rather than incur a $34 overdraft fee. [For the full report, go to http://www.responsiblelending.org/overdraft-loans/research-analysis/banks-targ et-mislead-consumers-as-overdraft-deadline-nears.html.]

CRL's report includes:

-- Bank consultant pitches on pinpointing customers who will overdraft
most.
-- Evidence these customers are likely to be low-income, single,
nonwhite.
-- A cost comparison of overdraft programs.

Under new federal rules, banks must obtain explicit consent from existing customers by the 15th before enrolling them in a costly overdraft program for debit cards. Banks have had to obtain consent from new customers since July 1. These opt-in rules provide a first-line defense against high-cost overdraft fees, but the Federal Reserve Board and, eventually, the new Consumer Financial Protection Bureau must end all unfair overdraft practices, especially those that disproportionately hurt the most vulnerable.

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Capitol Bancorp Receives Approval to Consolidate Three Georgia Banks

2010-08-03T05:24:00.000-07:00

/PRNewswire/ -- Capitol Bancorp Limited (NYSE:CBC) announced today that it has received regulatory and shareholder approval to consolidate Bank of Valdosta, Peoples State Bank and Sunrise Bank of Atlanta. Effective July 30, 2010, all three locations began operating as Sunrise Bank.

Capitol's Chairman and CEO Joseph D. Reid said, "To date, Capitol's consolidation strategy has resulted in a reduction of 34 bank charters into seven. These bank consolidations have positioned us to preserve core capital, strengthen operational efficiencies and enhance risk management oversight."

Leadership for the consolidated bank will be headed by Clinton Dunn, who will serve as the Chairman and CEO of the consolidated bank. Joining Dunn on the executive management team are Matt Stanaland, who will serve as President and Kay Howell, who will serve as the Market President of Jeffersonville.

"We will continue to provide the same great service that our customers have grown accustomed to. At Sunrise Bank, we remain committed to supporting our local communities through community involvement and local decisions," added Dunn.

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New Survey Shows Significant Local Government Jobs Losses

2010-07-27T13:59:00.000-07:00

/PRNewswire/ -- New survey research announced today shows that local governments are now facing a fiscal crisis that will force job losses approaching 500,000 and significant cuts in much needed public services. Representatives from the National League of Cities (NLC), United States Conference of Mayors (USCM) and the National Association of Counties (NACo) jointly released the survey results at a press conference on Capitol Hill earlier today and were joined by several members of Congress offering their support to cities and counties during these difficult economic times.

Local governments are a lifeline for their communities providing essential services to their residents. Unfortunately, according to the survey of local governments, these services are being cut and will continue to be cut over the course of the next 18 months as local governments attempt to balance their budgets in response to the on-going economic crisis. Most of the cuts are coming from public safety, public works, public health, and social services.

"For local governments, unemployment and foreclosures resulting from the Great Recession translate into too few revenues making it increasingly difficult to fund or satisfactorily maintain many basic services--not only parks, libraries, and public works projects but also public safety, police and fire services," said Ron Loveridge, NLC President, Mayor of Riverside, California.

Loveridge continued, "Cities are not only the engines of their local communities, they are also the backbone of their regional economies, where investments in infrastructure and services provide a platform for private sector investment and growth. And cities are the wealth of nations. We are where economic recovery must take place... we are where jobs are increased, or more commonly lately, are lost. We must change that equation."

Local governments continue to make the difficult choices in balancing budgets and finding news to operate. "As families all across our country have tightened their budgets, so have our nation's counties. Services to the public have been cut, county employees have been laid off or furloughed and capital expenditures have been reduced," said Judge B. Glen Whitley, NACo President, Tarrant County, TX.

But the report demonstrates that all of the cost cutting will come at a price to our nation's recovery and families. The report makes clear that federal action is critical to helping city leaders stabilize local economies and serve families. Continued Whitley, "The Local Jobs for America Act will help ensure that our county employees who fight crime, protect our communities from fire and natural and man-made disasters, and teach our children, are able to continue performing these vital functions. For this reason as a Republican and President of the National Association of Counties I support passage of H.R. 4812/S.3500."

The three organizations also emphasized there can be no national economic recovery as long as unemployment remains high and the ability of local governments to respond to the needs of their residents is hindered.

U.S. Conference of Mayors Second Vice President, Michael Nutter, mayor of Philadelphia, Pennsylvania, concluded, "As a nation, we made a good start with the American Recovery and Reinvestment Act. But make no mistake about it: the bleeding at the local level is hurting our nation's march toward recovery. And people in America's cities don't understand news reports that refer to a rebounding economy when companies still are not hiring.

"The nation's mayors support the Local Jobs for America Act because it will help people access jobs. These are the same people who own homes, pay taxes and send children to school in our communities. What message does it send to hard-working people if we helped Wall Street, but we can't help create jobs for Main Street?"

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Eight Tips to Help Homeowners Get Their Loan Modification Application Reviewed by Mortgage Company

2010-07-27T13:54:00.000-07:00

/PRNewswire/ -- Many homeowners seeking a loan modification to lower their monthly mortgage payments and avoid foreclosure continue to find the application process a complex web, often causing them to give up before their application is ever reviewed by their mortgage company.

Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.

"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."

Here are CredAbility's recommendations for homeowners seeking a loan modification:

Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.

Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.

Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.

Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.

Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.

Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.

Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.

Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.

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Pew Report Finds Credit Cards More Transparent, Yet Problems Remain

2010-07-22T07:06:00.000-07:00

/PRNewswire/ -- Most of the practices deemed "unfair" or "deceptive" by the Federal Reserve have disappeared from new credit card offers since federal passage of the Credit CARD Act last year, according to a new report by the Pew Health Group's Safe Credit Cards Project. Yet new trends have emerged that could cost cardholders significantly.

The report finds that issuers have eliminated practices such as "hair trigger" penalty rate increases (disproportionate charges for minor account violations), unfair payment allocation, and raising interest rates on existing balances. However, Pew's research also highlights a sharp rise in cash advance fees, continued widespread use of other penalty interest rates and an emerging trend of credit card companies failing to disclose penalty interest rates in their online terms and conditions.

"While it's been less than a year since passage of the Credit CARD Act, the new law appears to be working for millions of Americans who have credit cards," said Shelley A. Hearne, managing director of the Pew Health Group. "The elimination of most of the 'unfair' or 'deceptive' practices of the credit industry since we last surveyed the marketplace marks a major milestone in the move to make credit cards safer, transparent and more fair for consumers. Most of the news is good, but we are seeing the rise of new harmful behavior."

The study, Two Steps Forward: After the Credit CARD Act, Cards Are Safer and More Transparent--But Challenges Remain, is the latest in a series of reports from the Pew Safe Credit Cards Project that has examined all consumer credit cards offered online by the nation's 12 largest banks and 12 largest credit unions. Together these institutions control more than 90 percent of the nation's outstanding credit card debt. For this latest report, which measures how the industry has changed since the passage of the Credit CARD Act, Pew gathered data in March 2010 on nearly 450 cards. Full details, including previous research, can be found at www.pewtrusts.org/creditcards.

Key findings show:

-- Many of the most troublesome practices of the credit card industry
have been eliminated. A credit card issuer can no longer unilaterally
decide to raise interest rates on existing balances. Likewise,
practices including "hair trigger" penalty rate increases, unfair
payment allocation, and overlimit fees without prior consent are a
thing of the past. Earlier Pew research found that before the
implementation of the law, 100 percent of the credit cards surveyed
included at least one of these practices.
-- Beyond the requirements of the new law, there are new practices that
benefit consumers. Less than 25 percent of all cards examined had an
overlimit fee, which is down from more than 80 percent of cards in
July 2009. Additionally, mandatory arbitration clauses, which can
limit a consumer's right to settle disputes in court, are now found in
10 percent of cards compared to 68 percent in July 2009.
-- Predictions that legislation would spawn the growth of new fees have
yet to materialize. There was minimal change in the number of cards
that include an annual fee (down 1 percentage point from July 2009 to
March 2010). During that period, the median size of these fees
increased from $50 to $59 for banks and from $15 to $25 for credit
unions.
-- Some disclosures stopped including the size of penalty interest rates
even as issuers reserved the right to impose them. At least 94 percent
of bank cards and 46 percent of credit union cards came with interest
rates that could go up as a penalty for late payments or other
violations. But nearly half these warnings failed to inform the
consumer of the actual penalty interest rate or how high it could
climb.

"Although we applaud changes by the card industry to create a fairer and more transparent marketplace, our research shows that some challenges remain," said Nick Bourke, director of Pew's Safe Credit Cards Project and report co-author. "For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go. Federal regulators should pay attention to this problematic new trend. When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk, which is why federal regulations have long required issuers to disclose their rates and fees up front."

Two Steps Forward includes a number of policy recommendations to address new challenges, including:

-- Federal bank regulators should enforce existing regulations that
require companies to disclose full and reliable credit card penalty
rate information.
-- The Federal Reserve should prohibit issuers from charging penalty
interest rates that are higher than initially disclosed when the
consumer opened the card account.

The report also shows that surcharge fees for cash advances rose sharply between July 2009 and March 2010. Bank cash advance and balance transfer fees increased on average by one-third during this period, from 3 percent of each transaction to 4 percent. Credit union cash advance fees went up by one quarter, from 2 percent to 2.5 percent.

Other pricing data is also included in the report, showing recent increases in a variety of credit card interest rates and fees.

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Direct Deposit Push Exposes Social Security Recipients to Bank Payday Loans

2010-07-20T07:11:00.000-07:00

/PRNewswire/ -- The federal government's push to require all recipients of Social Security and other benefits to receive payments by direct deposit will expose many seniors to predatory payday loans made by banks.

That's the conclusion of "Runaway Bandwagon: How the Federal Government's Push for Direct Deposit of Social Security Benefits Has Exposed Seniors to Predatory Bank Loans," a new report issued by the National Consumer Law Center.

"Treasury must stop banks from making these high-cost, short-term loans to Social Security recipients," said Margot Saunders, an attorney with NCLC and an author of the report. "These loans are only made because they are fully secured by a borrower's next direct deposit of federal funds."

"While federal law protects Social Security and other benefits from seizure by creditors, banks regularly take those benefits as repayment for what are essentially payday loans that they have made without even assessing borrowers' ability to afford those loans," Saunders added.

"Runaway Bandwagon" spotlights account advance loan products - some with Annual Percentage Rates as high as 1,800% - that some banks offer to customers with checking accounts or prepaid debit cards. Banks help themselves to funds from customers' accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and payday loans.

"With these loans, banks profit from vulnerable and hard-pressed recipients of federal benefits, trapping them in a cycle of mounting debt and high borrowing costs," said Leah Plunkett, an attorney with NCLC and an author of the report. "In effect, these high-cost loans are used to hijack benefits federal law intends to provide for the basic needs of elderly and disabled citizens."

More seniors and vulnerable benefits recipients will become the targets for such loans as the Treasury Department moves forward with its plan to require electronic payments to all federal benefit recipients by 2013. New protections are needed to prevent the victimization of seniors and other vulnerable consumers and preserve income from Social Security and other social insurance programs that many seniors depend upon for survival.

Treasury must ensure that when accounts used for benefit deposits are used to secure loans, those loans are made only after an evaluation of the borrower's ability to afford repayment, carry APRs including fees of no more than 36%, have a term of at least 90 days or one month per $100 borrowed and allow repayment in multiple installments. Treasury must also prohibit banks and other lenders from requiring borrowers to provide as security electronic access to a bank account. Borrowers who do allow lenders such access must be permitted to end that access at any time and at no cost.

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New Uniform Law Protects Family Land

2010-07-16T08:46:00.000-07:00

/PRNewswire/ -- The adoption yesterday of a proposed uniform state law aimed at preserving home ownership for vulnerable families nationwide marks a crucial step in helping low-wealth and minority communities retain their family property.

The Uniform Partition of Heirs Property Act, drafted and approved by the Uniform Law Commission (ULC), establishes a number important protections for owners of heirs property, family land that has been passed down without a will, restricting access to the land's value and leaving families vulnerable to unfair dispossession. The act will now be sent to all states for adoption.

"Once enacted, new state laws will not only protect family land, but help families with heir property qualify for credit and otherwise access the land's value," said Appleseed Executive Director Betsy Cavendish. "The act addresses the largest cause of black land loss in the South, and Appleseed applauds its adoption by the ULC."

Craig H. Baab, Appleseed's Heirs Property Project Director, served as an official observer to the ULC drafting committee and was heavily involved in developing the act over the past three years, and Appleseed Centers in Alabama, Georgia, Louisiana, South Carolina and Texas are engaged in local efforts to address the problem through state legislation, attorney training and community education.

Among the protections adopted by the ULC are improved notification practices, broader judicial consideration - courts, for example, would consider how long a family has owned the land and whether that family would be rendered homeless if it were sold - and the establishment of priorities for buy-outs and physical divisions of the land before a forced sale would be permitted.

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Consumers, Small Businesses Win as Senate Passes Swipe Fee Reform, Says NACS

2010-07-16T05:45:00.000-07:00

/PRNewswire-USNewswire/ -- The convenience and petroleum retailing industry's nearly decade-long battle to rein in outrageous interchange fees became a reality July 15 as the U.S. Senate voted 60 to 39 in support of the financial reform package known as the Dodd-Frank Bill.

Today's (July 15) vote removes the last hurdle in getting this bill enacted into law, given that President Obama has said that he will sign the legislation once it clears Congress. The House of Representatives passed the legislation on June 30.

Provisions within the package, known as the Durbin Amendment, direct the Federal Reserve to issue rules to ensure that debit card interchange fees, also known as swipe fees, are reasonable and proportional to the processing costs incurred. Visa and MasterCard currently charge debit swipe fees of around 1 percent to 2 percent of the transaction amount -- among the highest rates in the industrialized world.

Swipe fees have been the convenience and petroleum retailing industry's top pain point and second largest expense item -- behind only labor costs -- for a number of years.

"Today's vote demonstrates the value of retailers engaging with their elected officials," said NACS President and CEO Hank Armour. "This is why NACS exists - to help bring together the industry to amplify its voice and make a difference on issues important to all of us. Last year we said that 2010 will be the year that we achieve meaningful interchange reform if we can combine the power of skillful lobbying with dramatic grassroots activity. Through consistent engagement with Congress, combined with massive consumer petition campaigns, we have clearly seen that great things are possible when our industry is engaged."

The vote to pass the financial reform package followed intense lobbying by the banking industry in opposition to the Durbin Amendment.

"From the phone calls and letters that flooded congressional offices in support of this legislation to the record-setting 5.4 million customer signatures that our industry collected demanding reform, we have made our voices heard and Congress has listened," added Armour.

"This victory shows what we can accomplish as an industry working together," said NACS Chairman Jay Ricker, chairman of Anderson, Ind.-based Ricker Oil Co. "The power of grassroots advocacy is immense, and the possibilities are endless when we fight for what is right."

The legislation includes a provision directing the Federal Reserve to issue rules preventing card networks from requiring that their debit cards can only be used on one debit card network -- ensuring that retailers will have the choice of at least two networks upon which to run debit transactions. In addition, the amendment would allow merchants to choose to decline credit cards for small dollar purchases because swipe fees often exceed profits on such sales. The amendment also clarifies that retailers can offer discounts to consumers who choose to pay with cash, check or debit card.

"At its core, this legislation simply introduces competition to a market that has not had any," said NACS Vice Chairman of Government Relations Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. "Both consumers and retailers will see benefits as debit card fees will be aligned more closely with the cost of checks, as opposed to credit cards."

Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and petroleum retailing, representing more than 2,100 retail and 1,500 supplier member companies. The U.S. convenience store industry, with nearly 145,000 stores across the country, posted $511 billion in total sales in 2009, with $328 billion in motor fuels sales.

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We're Teaching Kids to Earn Money - Are We Teaching Them to Manage It? Money Management International Survey Shows Nearly 7 in 10 Children Participate in Fundraisers

2010-07-15T10:04:00.000-07:00

/PRNewswire/ -- Money Management International (MMI), the largest nonprofit credit counseling agency in the nation, released a survey showing that nearly 7 in 10 kids in America are asked to participate in fundraisers on behalf of their school or organization.

According to MMI's 2010 Kids and Money Survey, the majority of parents say they take advantage of fundraisers as an opportunity to teach their children financial lessons. Two-thirds of parents say they teach children financial responsibility and basic math skills. Roughly half of parents use fundraisers to teach their children goal setting or basic business skills, and 4 in 10 parents use the opportunity to teach budgeting or charitable giving.

School and organization fundraisers offer kids the opportunity to earn money and practice raising funds, but lessons in responsible money management come mostly from parents taking the initiative. For parents wanting to take fundraising lessons a step further, MMI offers some ideas on teaching kids important financial life lessons while fundraising.

Teach goal setting. Many fundraisers make teaching goal setting easy because they offer a tiered system of prizes for kids who sell a certain amount of items. Before the fundraiser begins, talk to your child about their goals and help them set a realistic expectation of what they can sell based on the time and resources available. Make sure to explain to them that the funds they raise don't just earn them a prize at the end, but result in the greater prize of benefiting their organization or school.

Teach basic math skills. Help your children count back change to customers, total the funds they've raised, and calculate how much they still need to earn in order to reach their goals.

Teach basic business skills. Capitalism is the heart of the American economy. Use fundraisers as an opportunity to prune your little entrepreneurs' goal setting, budgeting, and customer service skills.

Teach responsibility. Responsibility was the lesson cited as the most taught by parents when it comes to fundraising, probably because responsibility encompasses more than pure financial skills. Remember that a single fundraiser will not teach kids responsibility as much as you setting a consistent example of responsible money management with your family's finances.

"Parents are highly influential when it comes to kids learning how to responsibly earn and manage money," says Cate Williams, vice president of financial literacy at MMI. "Parents should use fundraisers as a tool to expand on the financial lessons their children will use for life."

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While Large Cap Transactions Remain Challenged for Second Half, Looming Tax Increases Will Light Fire Under Middle Market Merger & Acquisition Activity, According to PricewaterhouseCoopers

2010-06-23T04:12:00.000-07:00

/PRNewswire/ -- Despite earlier improvements in credit and equity markets and corporate balance sheets, U.S. merger and acquisition (M&A) activity remained sluggish in the first half of 2010. Unforeseen economic events in the last two months triggered a global ripple effect reviving sentiments of uncertainty -- setting the stage for a challenging M&A environment for large cap transactions in the second half, according to the Transaction Services practice at PricewaterhouseCoopers, LLP (PwC). However, PwC contends that the middle market may be a different story.

"Going into the second half, record dry powder in the private equity space and unprecedented cash levels on the balance sheets of corporate America will combine with the desire of family held businesses and private equity backed management teams to sell prior to looming tax increases," says Bob Filek, partner with PricewaterhouseCoopers' Transaction Services.

U.S. M&A activity was down three percent compared with the same period in 2009. The number of closed deals in the first half of 2010 represents the lowest deal volume this decade, according to PwC. For the first five months of 2010, there were 2,969 closed deals representing $317 billion, compared with 3,065 deals valued at $323 billion in the same period of 2009.

While deal value and volume are down, willing lenders and open credits markets are available for transactions, according to PwC. "Banks and institutions are providing capital to execute deals," says Greg Peterson, partner with PricewaterhouseCoopers' Transaction Services. "They are lending more conservatively, but credit is available from a variety of sources and in a variety of types -- including traditional leveraged loans."

Corporate buyers continue to employ strategic deal making, pursing attractively valued companies and seeking out 'mergers of productivity' as a means to capture benefits of scale and cost savings, maintains Filek. "Companies are taking advantage of depressed valuations -- looking for deals to grow and diversify at discounted prices. Even with the uncertainty in Europe, a hesitant consumer and volatile markets, it's still an attractive time to buy."

The median deal size in the first half was $107 million, indicating that smaller, middle market deals have become the new 'normal.' "While there is still ambition to complete mega deals, the 'hit rate' will be low. The sweet spot for deals will be one to five billion dollars and below, with a mega deal or two sprinkled in," says PwC's Peterson.

PwC expects divestitures, carve-outs and spin-offs to continue to contribute to deal activity as companies separate certain assets and operations no longer seen as core to the business. The likely candidates to acquire these assets are private equity players who have strong relationships with large corporations that may be interested in selling certain assets. Business units within the industrial products and technology sectors are among the industries where PwC expects to see increased divestiture activity.

"Private equity players will also remain active in the distressed area, using their debt, hedge and distressed funds to find deals in untraditional ways," continues Peterson. "While there are concerns about stricter regulation for certain alternative investment classes, private equity is a resilient and innovative business run by sophisticated investors who will still get deals done, regardless of what transpires in Washington."

The current private equity overhang at nearly $850 billion (three and a half times the overhang in 2000) represents 54% of all capital commitments made between 2004 and 2009. Over 85% of the $850 billion is in funds larger than $1 billion, including 48% in funds larger than $5 billion, according to Cambridge Associates.

Declining values of the Euro and Pound are also providing a strong backdrop for cross-border deals, particularly in Europe. "Typically, during U.S. downturns, European companies take advantage of a poor U.S. economy, but this time, foreign buyers have to deal with issues at home, including a challenging financing market, reduced demand and declining currency values," according to PwC's Filek. "As a result, we expect the inverse to occur. U.S. corporates are going to see good opportunities to acquire high quality franchises and brands in Europe."

Sectors ripe for consolidation include:

-- Aerospace & Defense - Activity in the security, surveillance and
homeland security sectors are expected to continue as suppliers seek
to diversify their offerings and seek growth areas away from
traditional defense budgets. Look for organizational conflict of
interest concerns to drive some activity, with A&D companies
evaluating options to exit such activities through a sales process.
-- Automotive -- With crashing 2009 assembly volumes in the rear-view
mirror, companies with strong balance sheets and access to capital are
poised to re-enter the deal market. Over the next three to five
years, M&A will be driven by new technologies, regulations and
consumer requirements. Tier one suppliers will work to realign their
product portfolios to take advantage of the restructured industry.
Developed markets will focus on fuel economy, hybrid and electric
vehicles and infotainment and communications in vehicles, while
developing markets will focus on delivering low cost vehicles and
acquiring technologies.
-- Entertainment, Media & Communications -- Private equity interest
remains strong with new investment in and through platform companies.
High-profile acquisitions over the past several years, as well as
numerous middle-market acquisitions, have led private equity's
interest and influence via platform investments to expand across the
E&M landscape. As private equity investors continue to assess the
cyclical and structural issues within certain E&M subsectors, PwC
expects that interest to permeate even further via bolt-on
acquisitions as well as new platform company investments.
Additionally, more traditional, well-capitalized corporates in this
space appear to be stabilizing and interested in potential M&A
activity.
-- Financial Services -- Until the impact of U.S. financial regulation is
fully realized, uncertainty will be cause for continued stagnation of
deals in the sector, other than some continuing interest in FDIC
supported takeovers. However, opportunities exist for companies to
divest non-core assets and consider capital raising alternatives such
as debt or equity raises. Consolidation in the property and casualty
insurance is still expected in light of continued soft premium pricing
and desire to maximize scale, while life insurance consolidations will
likely continue to be a less active space given returning investment
portfolio valuations and focus on product redesign.
-- Healthcare -- As the full impact of U.S. healthcare reform becomes
better understood, look for increased industry M&A and joint venture
activity. Consolidation will accelerate in the services and health
insurance/managed care sectors, driven by the need to reduce costs,
increase productivity and develop more integrated business models.
Technology will play an even larger role; and leaders will embrace
strategies and innovations that will lead to more collaboration across
all health industry sectors.
-- Oil & Gas -- Oil & gas commodity price differential will drive
companies to increase their oil positions through acquisitions.
Equipment and service companies will expand their product and
geographic footprint through transactions. The offshore drilling
moratorium will be an obstacle for those highly levered to Gulf of
Mexico E&P projects but will likely not dampen the growing level of
transactions in the sector.
-- Power & Utilities -- Despite uncertainty surrounding energy policy and
regulatory changes, M&A activity in the sector has been a pleasant
surprise, as significant regulated and merchant company transactions
have been announced in the first two quarters of 2010. PwC expects
this trend to continue, with a cautious eye towards regulatory
approvals of the announced transactions. IOUs continue to shed
non-core assets and M&A activity remains strong in the renewable
space. Expect to see continued sales of merchant power plants,
particularly driven by the current and projected commodity prices.
-- Retail/Consumer Products -- Watch for the strongest sectors to lead
the way in accelerated activity focused on growth. Food and household
products companies will look to expand portfolios and enter emerging
markets as a way to boost revenue growth. Retailers faced with a
lackluster U.S. consumer will be focused on business models that make
sense for them in emerging markets. European specialty companies
depressed by the recent downturn could be attractive to opportunistic
U.S. buyers.
-- Technology -- Record profits and favorable revisions in investors'
expectations will drive M&A as a means of accelerating innovation
cycles. The 'new R&D' will continue to drive mid-market transactions.
PwC expects software incumbents to round-out offerings or acquire
industry-specific applications and as major hardware players expand
into end-to-end solutions. Look for semiconductor deals to come to
the fore as the long-awaited cyclical rebound begins to take hold.
Consumer technology and Internet majors will continue to work their
way along the value chain to capture market and mindshare as mobile
computing, entertainment and communications markets converge on
intelligent and user-friendly devices.

According to PwC, the wild card in the second half will be just how much incentive looming tax increases give buyers to sell. "The economics could be compelling enough to drive a rush to exit by December 31, which could mean a busy holiday season for deal makers," says Filek.

*The accuracy of our previous forecasts does not guarantee future accuracy.

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Fannie Mae Notifies NYSE and Chicago Stock Exchange of Intention to Delist

2010-06-16T13:58:00.000-07:00

/PRNewswire/-- Fannie Mae (NYSE:FNM) today reported in a filing with the U.S. Securities and Exchange Commission (SEC) that the company had notified the New York Stock Exchange (NYSE) and the Chicago Stock Exchange (CSE) of its intent to delist its common and preferred stock. This notice was made in response to notification by the NYSE on June 15, 2010 that the company no longer met NYSE continued listing standards relating to the minimum price of Fannie Mae's common stock and to the issuance of a directive dated June 16, 2010 by the Federal Housing Finance Agency (FHFA), Fannie Mae's conservator, for Fannie Mae to delist its common and preferred stock from the NYSE and any other U.S. stock exchange where its common and preferred stock are listed.

According to a press release by FHFA, the Acting Director of FHFA directed both Fannie Mae and Freddie Mac to take such actions.

In accordance with SEC rules and regulations, Fannie Mae intends to file a Form 25 (Notification of Removal from Listing under Section 12(b) of the Securities Exchange Act of 1934) on or about June 28, 2010. Fannie Mae anticipates that the delisting of its common and preferred stock from the NYSE and CSE will be effective 10 days after Fannie Mae files the Form 25 with the SEC.

After the delisting of its stock, Fannie Mae expects that its common stock and all series of preferred stock that were previously listed on the NYSE will be traded in the over-the-counter market and quoted on the OTC Bulletin Board (OTCBB), a centralized electronic quotation service for over-the-counter securities, under a ticker symbol that has yet to be assigned. Fannie Mae expects that its common stock and preferred stock will continue to trade on the OTCBB so long as market makers demonstrate an interest in trading in the common and preferred stock.

Fannie Mae does not expect that the transfer of the trading of its common and preferred stock to the OTCBB will affect, in any way, Fannie Mae's ability to fulfill its mission to provide liquidity and stability to the mortgage market, or its focus on home-retention, foreclosure-prevention, and refinance efforts under the Making Home Affordable Program. The transition to the OTCBB also will not affect the company's obligation to file periodic and certain other reports with the SEC under applicable federal securities laws.

Certain statements in this news release may be considered forward-looking statements within the meaning of the federal securities laws, including those relating to our intention to take steps to cause the company to be delisted from the NYSE by filing a Form 25; the expectation that our common stock and series of preferred stock will continue to be traded in the over-the-counter market and quoted on the OTCBB; and the expectation that the transfer of trading from the NYSE to the OTCBB will not in any way affect our ability to fulfill our mission. Although Fannie Mae believes that the expectations set forth in these statements are based upon reasonable assumptions, future conditions and events may differ materially from what is indicated in any forward-looking statements. Factors that could cause actual conditions or events to differ materially from those described in these forward-looking statements include, but are not limited to legislative or other governmental actions relating to our business or the financial markets; our ability to manage our business to a positive net worth; adverse effects from activities we undertake to support the mortgage market and help borrowers; the investment by Treasury and its effect on our business; changes in the structure and regulation of the financial services industry, including government efforts to improve economic conditions; the conservatorship and its effect on our business (including our business strategies and practices); the depth and duration of weakness in the housing market and economic conditions, including the extent of home price declines and unemployment rates; the level and volatility of interest rates and credit spreads; the accuracy of subjective estimates used in critical accounting policies; and other factors described in Fannie Mae's quarterly report on Form 10-Q for the quarter ended March 31, 2010, and Fannie Mae's annual report on Form 10-K for the year ended December 31, 2009, including the "Risk Factors" and "Forward-Looking Statements" sections of these reports.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

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Former Federal Reserve Economist Tells Lawmakers to Slow Down

2010-06-04T08:49:00.000-07:00

/PRNewswire/ -- As lawmakers begin meeting next week to mull over legislation aimed at averting another financial crisis, a former Federal Reserve economist cautions that such sweeping reform could have serious unintended consequences. "This is very ambitious and hugely complicated legislation that is being done very fast," says Robert Bliss, who is now a professor at Wake Forest University Schools of Business. "Some of the changes are positive, but others could create bigger problems than the ones they are trying to solve."

A House-Senate conference committee will try to reach a compromise on the financial regulatory reform bills passed by the House in December 2009 and the Senate a few weeks ago. Headed by Senator Chris Dodd and Rep. Barney Frank, the committee will work to reconcile the two versions with the goal of passing a final bill by July 4th. Among the issues the committee will be seeking to resolve is the regulation of the over-the-counter derivatives market, expanded audits of the Federal Reserve Board, and the creation of a new consumer protection agency.

But rather than trying to pass such sweeping legislation with an eye toward the November election, lawmakers would be better off taking more time to seek expert opinion. Bliss said lawmakers would benefit from bringing in more business and economic experts to advise them rather than approaching the legislation as a political issue. It also is important to take the reform's worldwide implications into account.

"The legislation and these proposals are entirely domestic, and the financial system is entirely international," said Bliss, who formerly served as a senior financial economist at the Federal Reserve Bank of Chicago.

"Although the 2008 financial crisis started in America, it impacted Europe because their banks were buying our subprime mortgages, and now we're looking at a situation where there's a major financial crisis brewing in Europe and that's going to feed back in the U.S. financial markets and our economy," he added. "In today's global markets, we can't have our heads in the sand about the reform's international implications."

Despite the inherent risks involved, Congress is likely to pass the legislation in the weeks ahead. "The financial crisis of 2008 has passed, and now we're talking about a response to it," Bliss said. "But the consequences will continue to play out well into the future."

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Funding Status of U.S. Pensions Falls to 82.0 Percent in May, According to BNY Mellon Asset Management

2010-06-04T05:24:00.000-07:00

PRNewswire-- Falling stock markets in May sent pension plan assets lower, resulting in the worst funded status for the typical U.S. corporate pension plan since October 2009, according to monthly statistics published by BNY Mellon Asset Management. The funded status in May declined 4.3 percentage points to 82.0 percent.

Through the end of May, the funded status of the typical U.S. corporate plan is down 3.5 percentage points for the year.

The falling stock markets resulted in a decline of 4.8 percent in assets at the typical U.S. corporate plan, while liabilities were little changed in May, rising 0.3 percent, as reported by the BNY Mellon Pension Summary Report for May 2010. Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Lower yields on these bonds result in higher liabilities.

"U.S. stocks in May had their worst month since February 2009, declining nearly eight percent, while a weakening euro helped to send international stocks down more than 11 percent, said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "May's results wiped out equity gains on a year-to-date basis. Unfortunately, there was no relief on the liability side as the Aa corporate discount rate remained essentially flat despite a 30-basis-point widening of spreads to Treasuries."

Austin added, "The May 6 U.S. market flash crash reminds us that the equity markets remain very sensitive. Continuing fears over the European sovereign debt crisis and the fragility of the global economic recovery are likely to result in increased market volatility for the near term. In response to this expected volatility, we are hearing from a growing number of corporations that are seeking new solutions to manage financial risks posed by their pension plans. There appears to be growing interest for funding strategies that seek to establish deadlines to achieve and maintain specific funding levels, with the goal of providing a buffer against wide swings in either the equity markets or in interest rates."

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Governor Signs Legislation Creating Tax Reform Council

2010-06-02T12:46:00.000-07:00

Governor Sonny Perdue yesterday announced that he has signed House Bill 1405, legislation creating the Special Council on Tax Reform and Fairness for Georgians. The Governor was joined by House Speaker David Ralston and Lt. Governor Casey Cagle.

“Throughout my term and during this challenging economic time, we have transformed state government by implementing efficiencies and cost-savings measures in our agencies,” said Governor Perdue. “This legislation sets up a framework that will allow for a serious examination of our tax code and ensure that it works for Georgians.”

The members of the council, as specified in the legislation, are Governor Perdue, Dr. David Sjoquist of Georgia State University, Dr. Jeffrey Humphreys of the University of Georgia, Dr. Roger Tutterow of Mercer University, Dr. Christine Ries of Georgia Tech, the 2010 chairperson of the Georgia Chamber of Commerce, the 2010 Georgia chairperson of the National Federation of Independent Business and two members each appointed by the Lt. Governor and Speaker of the House.

The Special Council on Tax Reform and Fairness for Georgian will conduct a study of the state’s current revenue structure. Following their study, the Council will make a report of its finding and recommend legislation to the Speaker of the House and the Lieutenant Governor.

Under the legislation, the Council will make a recommendation to the Special Joint Committee on Georgia Revenue Structure. The Special Joint Committee will then write a bill which will be voted on by the General Assembly without amendments.

This process is similar to the federal Defense Base Realignment and Closure (BRAC) Commission from the mid-2000s.

NFIB/Georgia, the state’s leading small business association with 7,900 members statewide, praised the legislation

“This is a big victory for small business,” NFIB Georgia State Director David Raynor said. “Small business is the heart and soul of Georgia’s economy and one of the challenges facing our entrepreneurs and small, family businesses is high taxes. We thank the governor for signing HB 1405 into law, and we thank the House and Senate leadership for making NFIB/Georgia a part of the reform process. The decision to put the chairman of the NFIB/Georgia Leadership Council on this council shows us that our elected officials understand the crucial role small business plays in Georgia’s economy and will play in its recovery.”

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One Georgia Bank Approved by the United States Department of Transportation to Assist Minority, Women and Veteran Owned Small Businesses

2010-06-02T07:28:00.000-07:00

(BUSINESS WIRE)--One Georgia Bank and the U.S. Department of Transportation announces a partnership whereby One Georgia Bank will be a Participating Lender with DOT’s Office of Small and Disadvantaged Business Utilization (OSDBU). The Short Term Lending Program (STLP) is aimed at helping qualified small and disadvantaged businesses compete for government contracting opportunities.

“One Georgia Bank is already a leader in providing solutions to small business owners with our SBA and USDA guaranteed lending programs”

Under STLP One Georgia Bank will provide a line of credit that will be secured primarily by receivables from transportation contracts. The US DOT will fully guarantee the line. Companies eligible for STLP are certified Disadvantaged Business Entities or businesses certified by the U.S. Small Business Administration Section 8(A) Program, Hubzone, Disabled Veteran or Service Disabled Veteran Owned Business. The maximum loan amount is $750,000.

“This program will go a long way to providing the type of targeted assistance that small businesses competing in the transportation industry need right now,” said OSDBU Director Brandon Neal. “It will really help level the playing field for smaller companies eager to compete.”

“One Georgia Bank is already a leader in providing solutions to small business owners with our SBA and USDA guaranteed lending programs,” stated Willard “Chuck” Lewis, President & CEO of One Georgia Bank. “STLP gives us another tool to bring to market that will help businesses go to the next level.”

STLP eligible activities include maintenance, rehabilitation, improvements, or revitalization of any of the nation’s transportation modes which include public, commercial, Federal, State, or local agency. One Georgia Bank is currently processing its first application under the program.

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Is Your Spouse a Secret Spender?

2010-05-26T05:51:00.000-07:00

/24-7/ -- The success of a marriage may not be directly affected by a couple's financial situation, but according to recent polling, it is a factor. According to PayPal, which holds an annual survey in Australia, Canada, Italy, Mexico, the Netherlands, the United Kingdom and the United States, nearly a third of all the couples surveyed (and 43 percent of all American couples), state that the recent worldwide recession has led to an increase in arguments.

Of all couples surveyed in the United States and Mexico, 14 percent admit to ending a relationship because of money, and in the United States, nearly a quarter of all couples (23 percent) have hidden purchases from their partner. It is a combination of these factors, made even more stressful by the increased financial instability since the PayPal survey last year, that may cause couples to look for signs that partners are being less than truthful about spending. Geoff Williams, the co-author of "Living Well With Bad Credit", writing at WalletPop, outlined 10 signs your spouse may be hiding spending from you.

- Unexplained items around the house. Do new items suddenly appear around the home with no explanation? It could be that your spouse made a purchase, but is hoping you don't notice, or, if you do, that you accept the flimsy explanation about their origin.
- Spouse is secretive about money. A spouse who demands to keep finances separate, even as little as a joint checking account, could be a sign that your spouse's finances are not in as good condition as they should be.
- Spouse receives a "dock" in pay. If your spouse comes home from work claiming to have received a dock in pay, but you've never seen the paycheck that shows it, the possibility exists that there was no dock in pay, and your spouse is simply keeping the "lost" money.
- Spouse is eager to get the mail. Has your spouse suddenly become extra interested when the mailman delivers the mail? It could be because an extra credit card bill is in there, extra purchases are being shipped to your address, or that your credit card bill contains extra charges you aren't supposed to see.
- Spouse applies for credit card in your name. One sign you and your spouse need immediate financial help is when your spouse applies for a new credit card in your name. Definitely a red flag that someone's finances are completely out of order.
- Receiving collection calls from unknown creditors. Calls from collection agencies aren't uncommon, but what happens when you answer a call regarding a credit card or debt you know nothing about? Time to see what purchases have been made without your knowing.
- Spouse starts paying less on monthly credit card bills. A spouse who suddenly starts paying the minimum could mean your finances aren't as healthy as you thought. Sometimes this is because the extra money is going to new purchases, or to pay off purchases you know nothing about.
- Grocery bill grows unexpectedly. With today's supermarkets becoming more like shopping malls, the grocery bill that unexpectedly balloons could be from non-essential impulse purchases made in the checkout line.
- Spouse is "extra" nice. Always the stereotypical response to having done something "bad." In some cases your spouse put a ding in the car, but other times you might be being buttered up to break bad news about extra debt.
- Spouse handles all the bills. Couples should really share in everything, and so when your spouse offers or demands to take care of the bills without your help, it could be a sign that the bills are out of control, and the spouse doesn't want you to know.

Of course, any of these signs could have nothing to do with poor finances or secret spending. But add up too many of them, too close together, and there could be a problem. So, while money troubles might not be the prime factor in divorces, distrust certainly is, and so everything ties together. Extra spending, secrets and distrust are a bad mix, so cutting off this pattern of behavior before it gets too common is the key to keeping your marriage intact and your finances in good shape.

Article provided by Jeffrey W. Goldblatt Law Office
Visit us at www.jgoldblattlawfirm.com

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Georgia Power Announces Planned Redemption of Series O 5.90% Senior Notes and Series R 6% Senior Notes

2010-05-25T10:37:00.000-07:00

PRNewswire -- Georgia Power today announced the planned redemption June 24, 2010 of all $150 million aggregate principal amount of its Series O 5.90% Senior Notes due April 15, 2033 and all $200 million aggregate principal amount of its Series R 6% Senior Notes due October 15, 2033.

The redemption price for the full redemption of the Series O 5.90% Senior Notes due April 15, 2033 (NYSE:GPD) and the Series R 6% Senior Notes due October 15, 2033 (NYSE:GPJ) will be 100% of the principal amount thereof ($25 per senior note), plus accrued and unpaid interest to the date of redemption.

As trustee, The Bank of New York Mellon is expected to notify each registered holder by first class mail on or about May 25, 2010. The Bank of New York Mellon is located at 101 Barclay Street, 1st Floor East, New York, New York 10286.

Georgia Power is the largest subsidiary of Southern Company, one of the nation's largest generators of electricity. The company is an investor-owned, tax-paying utility with rates well below the national average. Georgia Power serves 2.3 million customers in all but four of Georgia's 159 counties.

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US Real Estate Markets Moving Toward Recovery

2010-05-19T05:47:00.000-07:00

/PRNewswire/ -- The US economy is recovering and it is beginning to show in job growth. The Bureau of Labor Statistics reported an increase of 290,000 jobs for April. The largest share, 27.5% was in professional and business services with 80,000 new jobs. The federal government followed with 66,000 new temporary workers to assist with the decennial census. Health care also grew, adding 20,000 workers and increasing its year-to-date total to 244,000. For the year, employment has expanded by 573,000 with 483,000 or 84% added to the private sector.

Meanwhile, unemployment increased from 9.7% to 9.9%, which oddly is a "good" sign. The increase is the result of people re-entering the employment market; meaning the economy is starting to recover in earnest. Thus far, the data is reflecting the traditional pattern of a slowly recovering economy.

Looking at past recessions the 1980s appears to be the most similar. It was capital constrained much like we are today. In the 1990s we were over-built and had the S & L crisis to resolve. The cry was "stay alive to '95." In early 2000 we had the dot com crisis and accounting scandals. Looking at the recession of the early 1980s as a guide, it may be 3 years or more before life begins to feel like "normal." The recession of the 1980s lasted 16 months running from July 1981 to November 1982. As a result of that downturn, unemployment peaked in November of 1982 at 10.8%. From that point it took 38 months for the economy to fully recover and for unemployment to fall below 7.0%. It was another 10 months before the economy was consistently below 7.0%. So, full recovery this cycle is likely 3 years away with an optimal selling period 3 to 4 years away at the earliest. Current signals suggest now is an optimal buying period.

Thus far, the current economy is consistent with expected patterns and our forecasts. Other data is also suggesting recovery. This is further illustrated in the most recently available quarterly data extracted from the National Council of Real Estate Investment Fiduciaries (NCREIF). Beginning in the second quarter of 2009, decreases in total returns began to steadily abate, and as of the most recent quarter turned slightly positive. This offers another strong signal that the market has reached bottom and is beginning to turn upward. This is also a strong signal that we are entering an optimal buying period.

With the use of our research Blumberg Capital Partners, our parent organization recognized this cyclical pattern early, and sold its assets between 2006 and 2008, near the cycle peak and closed its prior Fund. Now the trend is reflecting a market nearing bottom and moving toward recovery. In response, Philip Blumberg CEO of Blumberg Capital Partners is launching a new fund, the Blumberg Strategic Asset Fund and is again looking to acquire assets.
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Ameris Bancorp Announces Acquisition of Satilla Community Bank

2010-05-18T04:51:00.000-07:00

PRNewswire -- AMERIS BANCORP (Nasdaq-GS: ABCB), announced May 14 that its wholly-owned subsidiary, Ameris Bank, has entered into a definitive agreement with the Federal Deposit Insurance Corporation to assume the deposits and acquire certain assets of Satilla Community Bank, a full-service, single-office bank located in St. Marys, Georgia. The Georgia Department of Banking and Finance declared Satilla Community Bank closed May 14 and appointed the FDIC as receiver. As a result of this acquisition, Ameris Bank will assume approximately $134.0 million in total deposits and acquire approximately $142.3 million in total assets.

As a branch of Ameris Bank, the St. Marys office of Satilla will be open and serving customers on Monday, May 17, 2010, during the bank's normal business hours. Satilla depositors will automatically become depositors of Ameris Bank, and deposits will continue to be insured by the FDIC. With this acquisition, Ameris Bank will now operate 54 locations in Georgia, Florida, Alabama and South Carolina.

Edwin W. Hortman, Jr., President & CEO of Ameris, commented, "We are excited to welcome the Satilla Community Bank customers and employees to the Ameris Bank family. Customers can be confident that their deposits are safe and readily accessible. Ameris Bank has supported the financial needs of local communities since 1971. Our St. Marys and Kingsland locations have been an important part of our four-state footprint since late 2005. We look forward to continuing that tradition through this FDIC-assisted transaction."

Ameris Bancorp is headquartered in Moultrie, Georgia. For additional information about Ameris Bank, please visit our web site at www.amerisbank.com.

Ameris Bancorp Common Stock is quoted on the NASDAQ Global Select Market under the symbol "ABCB". The preceding release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe", "estimate", "expect", "intend", "anticipate" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates which they were made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

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134 National and State Associations Endorse Swipe Fee Reform Amendment

2010-05-12T08:11:00.000-07:00

/PRNewswire/ -- In a letter addressed to all members of the U.S. Senate, 134 trade associations endorsed an amendment (S. Amdt. 3932) to the Restoring American Financial Stability Act of 2010 sponsored by Senate Majority Whip Richard Durbin (D-IL) that will address excessive debit card swipe fees and the anti-competitive practices of credit card companies and the big banks that issue their cards.

The common-sense amendment would free merchants of anti-competitive restrictions imposed by the credit card companies, allowing merchants to offer discounts when customers use less expensive forms of payment. The amendment would also direct the Federal Reserve to issue regulations to ensure that swipe fees imposed on debit card transactions are 'reasonable and proportional' to the cost incurred in processing the transaction.

More than 80 percent of all interchange fees are collected by the 10 largest banks. The amendment offered by Sen. Durbin exempts all banks, credit unions and thrifts with assets less than $1 billion, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.

According to the letter signed by 57 national associations and 77 state trade associations,

"Despite Congress' efforts to reign in abusive practices, credit card companies continue to take advantage of a major loophole in financial regulation. In fact, they announced interchange rate increases just months after the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), effectively circumventing many of the reforms instituted by Congress. More recently, Visa Europe announced last month that it was voluntarily dropping debit card interchange fees to 0.2% in Europe, a decrease of 60%, while earlier in the month Visa increased rates on similar transactions in the United States by some 30%. Quite literally, at a rate of approximately 2.0% on debit card interchange fees, which is 10 times higher in the United States, American businesses are subsidizing European transactions.

"Simple, common-sense reforms are needed to correct this market imbalance, which would give our organizations' members additional tools to manage our costs related to interchange fees. First, the amendment would give the Federal Reserve the authority to conduct an open and fair rulemaking - without prescribing an outcome - in order to develop regulations to ensure that interchange fees imposed on debit card transactions be 'reasonable and proportional' to the cost incurred in processing the transaction. Debit transactions are not an extension of credit and are directly drawn from a consumer's checking account, yet the interchange rate on debit transactions continues to increase. Small banks, credit unions and thrifts with assets of under $1 billion would be carved-out from these rules, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.

"Second, the amendment would prohibit anti-competitive restrictions on discounts and the setting of minimum transaction levels, providing entities with the freedom to choose their preferred method of payment. Under current rules, any business, charity or government agency that accepts credit or debit cards is prohibited from setting a minimum transaction level, such as $3, even though the entity may actually lose money on the transaction because of slim profit margins. Visa and MasterCard can and do impose fines on small businesses up to $5,000 per day for such offenses, which has the effect of ensuring that the card companies and big banks turn a profit even if the small business loses money on the transaction. In addition, the amendment allows businesses to incentivize the use of one card network over another (e.g., a discount may be provided for Discover cards if they carry a lower interchange rate) and allows businesses to offer discounts on certain forms of payment (e.g., a discount may be offered for cash, check, PIN debit, etc., all of which carry lower rates than credit cards). This amendment would not enable merchants to discriminate against debit cards issued by small banks and credit unions. Visa and MasterCard require merchants to accept all cards within their networks, and this amendment does not change that requirement."

In the last year, small business owners have gathered nearly four million petition signatures from their customers and delivered them to Members of Congress, calling on them to reform these unfair fees.

In addition to the Retail Industry Leaders Association, organizations signing the letter included American Association of Motor Vehicle Administrators, American Dental Association, International Franchise Association, National Grocers Association, National Restaurant Association, Arkansas Hospitality Association, Louisiana Restaurant Association, Retail Council of New York State, and the Wyoming Lodging and Restaurant Association.

RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Full letter text and list of organizations below:

May 12, 2010

TO THE MEMBERS OF THE UNITED STATES SENATE:

The undersigned organizations, representing a diverse array of interests including small business, state organizations, dentists, retailers, restaurants, grocery stores, convenience stores and others, write in strong support of S. Amdt. 3932, sponsored by Senator Richard Durbin, regarding interchange fee reforms to S. 3217, the Restoring American Financial Stability Act of 2010 now before the Senate. Unless relief is granted, interchange "swipe fees," which amounted to $48 billion in 2008, will continue to rise as card companies and issuing banks seek even higher profits, primarily on the backs of our organizations' members. This comes at a time when businesses, state agencies and charities - all of whom pay interchange fees - are struggling to help the economy grow again and when consumers can least afford pricing increases.

Despite Congress' efforts to reign in abusive practices, credit card companies continue to take advantage of a major loophole in financial regulation. In fact, they announced interchange rate increases just months after the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), effectively circumventing many of the reforms instituted by Congress. More recently, Visa Europe announced last month that it was voluntarily dropping debit card interchange fees to 0.2% in Europe, a decrease of 60%, while earlier in the month Visa increased rates on similar transactions in the United States by some 30%. Quite literally, at a rate of approximately 2.0% on debit card interchange fees, which is 10 times higher in the United States, American businesses are subsidizing European transactions.

Simple, common-sense reforms are needed to correct this market imbalance, which would give our organizations' members additional tools to manage our costs related to interchange fees. First, the amendment would give the Federal Reserve the authority to conduct an open and fair rulemaking - without prescribing an outcome - in order to develop regulations to ensure that interchange fees imposed on debit card transactions be "reasonable and proportional" to the cost incurred in processing the transaction. Debit transactions are not an extension of credit and are directly drawn from a consumer's checking account, yet the interchange rate on debit transactions continues to increase. Small banks, credit unions and thrifts with assets of under $1 billion would be carved-out from these rules, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.

Second, the amendment would prohibit anti-competitive restrictions on discounts and the setting of minimum transaction levels, providing entities with the freedom to choose their preferred method of payment. Under current rules, any business, charity or government agency that accepts credit or debit cards is prohibited from setting a minimum transaction level, such as $3, even though the entity may actually lose money on the transaction because of slim profit margins. Visa and MasterCard can and do impose fines on small businesses up to $5,000 per day for such offenses, which has the effect of ensuring that the card companies and big banks turn a profit even if the small business loses money on the transaction. In addition, the amendment allows businesses to incentivize the use of one card network over another (e.g., a discount may be provided for Discover cards if they carry a lower interchange rate) and allows businesses to offer discounts on certain forms of payment (e.g., a discount may be offered for cash, check, PIN debit, etc., all of which carry lower rates than credit cards). This amendment would not enable merchants to discriminate against debit cards issued by small banks and credit unions. Visa and MasterCard require merchants to accept all cards within their networks, and this amendment does not change that requirement.

By providing these and other important reforms, the Congress will send a strong message that it supports modernizing and updating our financial payments systems while providing relief to businesses owners who have seen their interchange credit card assessments skyrocket - for many businesses exceeding the cost of providing health care benefits to their employees.

In closing, we are very concerned about the unintended consequences of not addressing interchange fees will have on our industries as the card companies and big banks continue to seek higher profits as a direct result of financial regulatory reform legislation, and other failing portfolios, through ever increasing interchange fees. We ask that you support S. Amdt. 3932, sponsored by Senator Durbin, to the Restoring American Financial Stability Act of 2010 when it comes up for a vote in order to ensure that financial regulation reform is comprehensive and complete. We look forward to working with you and your staff to incorporate these meaningful, common-sense reforms as part of the financial regulatory reform legislation.

Sincerely,

National Trade Associations
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American Apparel & Footwear Association
American Association of Motor Vehicle Administrators
American Beverage Licensees
American Booksellers Association
American Dental Association
American Home Furnishings Alliance
American Hotel & Lodging Association
American Nursery & Landscape Association
American Veterinary Medical Association
Automotive Aftermarket Industry Association
Consumer Electronics Association
Consumer Electronics Retailers Coalition
Digital Media Association
Drycleaning & Laundry Institute
Entertainment Merchants Association
Food Marketing Institute
Footwear Distributors and Retailers of America
International Association of Airport Duty Free Stores
International Association of Amusement Parks & Attractions
International Council of Shopping Centers
International Festivals & Events Association
International Franchise Association
Jewelers of America
National Association of Chain Drugstores
National Association of College Stores
National Association of Convenience Stores
National Association of Recording Merchandisers
National Association of Shell Marketers
National Association of Theatre Owners
National Associations of Concessionaires
National Council of Chain Restaurants
National Franchisee Association
National Golf Course Owners Association
National Grocers Association
National Home Furnishings Association
National Parking Association
National Restaurant Association
National Retail Federation
National Ski Areas Association
National Small Business Association
NATSO, Representing America's Travel Plazas and Truck Stops
Outdoor Amusement Business Association, Inc.
Outdoor Industry Association
Pet Industry Joint Advisory Council
Petroleum Marketers Association of America
Petroleum Retailers & Auto Repair Association
Retail Industry Leaders Association
Service Station Dealers of America and Allied Trades
Small Business Majority
Society of American Florists
Society of Independent Gasoline Marketers of America
Specialty Equipment Market Association
Taxicab, Limousine & Paratransit Association
Tire Industry Association
Travel Goods Association
United States Association of Importers of Textiles and Apparel
World Floor Covering Association

State Trade Associations
------------------------

Alaska Cabaret, Hotel, Restaurant & Retailers Association
Arizona Petroleum Marketers Association
Arizona Restaurant and Hospitality Association
Arkansas Hospitality Association
Arkansas Oil Marketers Association
California Independent Oil Marketers Association
California Retailers Association
Colorado/Wyoming Petroleum Marketers Association
Delaware Restaurant Association
Empire State Petroleum Association
Florida Petroleum Marketers Association
Florida Restaurant & Lodging Association
Fuel Merchants Association of New Jersey
Georgia Oilmen's Association
Georgia Restaurant Association
Hawaii Restaurant Association
Idaho Petroleum Marketers and Convenience Store Association
Illinois Petroleum Marketers Association /Illinois Association of
Convenience Stores
Independent Connecticut Petroleum Association
Indiana Hotel & Lodging Association
Indiana Petroleum Marketers and Convenience Store Association, Inc.
Indiana Restaurant Association
Kentucky Petroleum Marketers Association
Kentucky Restaurant Association
Louisiana Oil Marketers & Convenience Store Association
Louisiana Restaurant Association
Maine Energy Marketers Association
Michigan Petroleum Association
Michigan Restaurant Association
Mid-Atlantic Petroleum Distributors Association
Minnesota Petroleum Marketers Association
Mississippi Petroleum Marketers & Convenience Stores
Missouri Petroleum Marketers and Convenience Store Association
Montana Petroleum Marketers and Convenience Store Association
Montana Restaurant Association
Nebraska Petroleum Marketers & Convenience Store Association
Nebraska Restaurant Association
Nevada Petroleum Marketers & Convenience Store Association
New Jersey Restaurant Association
New Jersey Retail Merchants Association
New Mexico Petroleum Marketers Association
New Mexico Restaurant Association
New York State Restaurant Association
North Carolina Petroleum & Convenience Marketers
North Dakota Petroleum Marketers Association
Ohio Petroleum Marketers & Convenience Store Association
Ohio Restaurant Association
Oklahoma Petroleum Marketers & Convenience Store Association
Oregon Petroleum Association
Pennsylvania Petroleum Marketers and Convenience Store Association
Pennsylvania Retailers' Association
Petroleum & Convenience Marketers of Alabama
Petroleum Marketers & Convenience Store Association Kansas
Petroleum Marketers & Convenience Stores of Iowa
Restaurant Association Metropolitan Washington
Restaurant Association of Maryland
Retail Council of New York State
Rhode Island Hospitality Association
South Carolina Petroleum Marketers Association
South Carolina Hospitality Association
South Dakota Petroleum & Propane Marketers Association
South Dakota Retailers Association
Tennessee Fuel & Convenience Store Association
Tennessee Hospitality Association
Texas Petroleum Marketers and Convenience Store Association
Texas Restaurant Association
Utah Petroleum Marketers & Retailers Association
Vermont Fuel Dealers Association
Virginia Petroleum, Convenience and Grocery Association
Washington Oil Marketers Association/Pacific Northwest Oil Heat Council
Washington Restaurant Association
West Virginia Hospitality & Travel Association
West Virginia Oil Marketers and Grocers Association
Western Petroleum Marketers Association
Wisconsin Petroleum Marketers & Convenience Store Association
Wisconsin Restaurant Association
Wyoming Lodging and Restaurant Association

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New Study Released on the Non-Government Response to the U.S. Economic Crisis

2010-05-06T07:16:00.000-07:00

/PRNewswire/ -- A new study shows America's foundations were swift, flexible and targeted in their response to the worst economic crisis since the Great Depression - using on-the-ground knowhow to make a significant impact. The study from The Philanthropic Collaborative (TPC) is the first of its kind to analyze the private-sector response to the crisis and shows that the federal government's response was not the only story.

"The ability of foundations to be swift and flexible in their response allowed them to modify their giving throughout the crisis and ensure the grants went to those most in need," said Doug Holtz-Eakin, author of the study. "During the U.S. economic collapse, we saw grant-making shift, expand and follow the larger unemployment and housing needs that developed and became acute in communities across the country. Even when foundations themselves faced financial stress from the very same crisis, our analysis shows a very clear shift in grant-making patterns to meet emerging economic needs."

The study analyzed a sample of 2,672 grants that totaled $472 million of foundation giving from 2008 to 2009, and early planned giving for 2010. In the area of preventing mortgage delinquencies and foreclosures, private and community foundations saturated their grant-making in states with higher than average delinquency rates. In 2009, for example, 95% of sampled grant-making, or $296 million, went to high-delinquency states. As unemployment became a larger economic problem between 2008 and 2010, the analysis shows foundations devoted more activity to states suffering higher unemployment.

"In the City of Detroit, we have found working with the foundation community has been beneficial for our community and our residents. The foundations allow the city to stretch current budget dollars to plan for the future while continuing to provide services to the residents," said Detroit Mayor Dave Bing. "The study by The Philanthropic Collaborative is representational of the impact foundations have on the City of Detroit," he added.

"Foundation grant-making is fundamental in helping to improve the lives of families during time of economic crisis," said Denver Mayor John Hickenlooper. "Private and community resources, when quickly targeted to local community needs, can play a major role in collective efforts to get local economies back on track. We have seen foundation giving in the Mile High City leverage positive social change with meaningful, measurable results."

"Some in our communities have been devastated by the economic crisis, which has taken a toll on municipal and state resources" said Providence Mayor David Cicilline. "While the responses from the federal and state governments are critically important, we cannot lose sight of the targeted and timely response from community foundations. Without their work, many more individuals and families would fall through the cracks in our system. Foundations are effective because they are part of our community, know the people, can bring aid to where it's needed most and act with speed and precision. They also embody another important attribute - they are able to provide assistance without the red tape and bureaucracy. This entrepreneurial approach is what makes them so effective and welcome in our efforts to ensure people have the means to weather this economic storm."

"I've said many times that government cannot do it all by itself. It must be a citizen movement," Toledo Mayor Michael Bell. "Organizations like to the Toledo Community Foundation and the Stranahan Foundation help provide aid during times of economic distress for people who may otherwise slip through the cracks. We have to be involved as a community and philanthropy plays a vital role in our ability to provide for our citizens."

"This study illustrates the critical role foundations are able to play in assisting Americans and communities in crisis," said John Tyler, Chairman of TPC. "As impressive and encouraging as this is, though, it is only part of the story because previous TPC research has told us that each dollar of grant support from these foundations can generate on average more than eight times that amount of value in direct, economic benefits," he added.

The study analyzed a sample of grants for the years 2008 to 2009, and early planned giving for 2010, obtained from the Foundation Center, which maintains the most comprehensive database of foundations' grant-making activities. The data provides information on the amount, activity and target audience of each grant. Grants averaged $176,608 but ranged from $500 to $5 million.

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Federal Income Taxes On Middle-Income Families at Historically Low Levels

2010-04-14T10:44:00.000-07:00

/PRNewswire/ -- The following release by Chuck Marr and Gillian Brunet was released today by the Center on Budget and Policy Priorities:

Middle-income Americans are now paying federal taxes at or near historically low levels, according to the latest available data. That's true whether it comes to their federal income taxes or their total federal taxes.

-- Income taxes: A family of four in the exact middle of the income
spectrum will pay only 4.6 percent of its income in federal income
taxes this year, according to a new analysis by the Urban
Institute-Brookings Institution Tax Policy Center. This is the
second-lowest percentage in the past 50 years.
-- Overall federal taxes: Middle-income households are paying overall
federal taxes -- which include income as well as payroll and excise
taxes -- at or near their lowest levels in decades, according to the
latest data from the Congressional Budget Office (CBO).

Federal Income Taxes Have Declined Significantly in Recent Decades

Federal income taxes on middle-income families have declined significantly in recent decades.

In 2000, the year before the 2001 tax cut that President Bush and Congress enacted, the median-income family of four paid 8.0 percent of its income in individual income taxes, according to Tax Policy Center estimates -- a smaller share than in any year since 1967 (except for 1998 and 1999).(1) The Bush tax cuts further reduced middle-income tax obligations.

This year, the Making Work Pay tax credit, which President Obama and Congress enacted as part of the 2009 American Recovery and Reinvestment Act, is providing a credit of $800 to married joint filers ($400 to single filers). A median-income family with two children thus will receive an $800 tax cut in the return it files this year.

With the new tax cut, the median family's federal income taxes will equal just 4.6 percent of its income in 2009. That is lower than in any year since 1955 (the first year for which these data are available) except for 2008, when another stimulus-related tax cut was in effect.

The 4.6 percent effective tax rate -- the percentage of its income that a family pays in taxes -- is well below the 15 percent marginal tax rate that a family of four in the exact middle of the income spectrum faces. Typically, such a family reduces its effective tax rate by taking the standard deduction (or, in some cases, itemized deductions), personal exemptions, and tax credits such as the child tax credit. The Making Work Pay tax credit further reduces that family's effective tax rate.

Overall Federal Taxes Also at Low Levels

The decline in income taxes on middle-class households in recent years has driven a decline in these households' overall federal taxes.

Households in the middle fifth of the income spectrum paid an average of 14.2 percent of their income in overall federal taxes in 2006, the latest year for which data are available, according to CBO.(2) This is just slightly above this group's effective tax rate of 13.8 percent in 2003, which was the lowest level since at least 1979.

Most Americans pay more in payroll taxes, which support Social Security and Medicare, than they do in income taxes. Thus, the 14.2 percent figure reflects the impact of payroll taxes far more than income taxes.

Due to the impact of the recession and the temporary tax cuts in the Recovery Act, particularly the Making Work Pay tax credit, CBO data for 2009 (when they become available) will likely show that middle-income families faced significantly lower effective overall federal tax rates than in 2006.

This analysis, and other reports that provide a greater understanding of trends in taxation, are posted to: www.cbpp.org.

The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.

NOTES:

(1) Tax Policy Center, "Historical Federal Income Tax Rates for a Family of Four," April 12, 2010. The Tax Policy Center's estimates were derived by updating (using Treasury's methodology) a 1998 Treasury Department analysis that examined changes since 1955 in the percentage of income that the median-income family of four pays in federal income taxes.

(2) The CBO study covers the 1979-2006 period and includes federal income, payroll, and excise taxes. Congressional Budget Office, "Historical Effective Federal Tax Rates, 1979-2006," April 2009.

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Consumers Union Urges Fed to Require Banks to Roll Back Recent Unfair Credit Card Interest Rate Hikes

2010-04-14T06:30:00.000-07:00

/PRNewswire/ -- After Congress passed legislation last year reining in some of the worst credit card lending practices, many banks responded by hiking interest rates before the new rules went into effect, including on customers with perfect bill paying records. Now Consumers Union, the nonprofit publisher of Consumer Reports, is calling on the Federal Reserve Board to require banks to roll back those unfair interest rate hikes and to put stronger limits on the size of penalty fees and interest charges.

The Fed has already proposed new regulations that would limit penalty fees and require banks to reconsider interest rate hikes imposed during the year leading up to the enactment of key CARD Act protections on February 22, 2010. But the proposed regulations don't go far enough according to Consumers Union and should be strengthened to ensure consumers are more likely to see their old interest rates reinstated and don't face unfair penalty fees and charges in the future.

"Last year's shameful frenzy of credit card interest rate spikes has saddled millions of Americans with high cost debt, including many consumers who always paid their bills on time," said Lauren Bowne, staff attorney for Consumers Union. "The Fed should undo that damage by requiring banks to lower interest rates for customers who were treated unfairly before the new credit card protections went into effect."

The Fed's proposed regulations would require banks to review interest rate hikes made on customers between January 2009 and February 22, 2010 and to reduce those rates "as appropriate." But under the proposal, banks are allowed to keep secret their review process with no oversight by the Fed.

Banks could keep the higher interest rate if the reason for the old rate hike still exists, or if the bank decides to come up with a new reason for the higher rate. Banks would not be required to start this "look back" process until six months after the regulations go into effect - in other words, starting in late February 2011.

Consumers Union urged the Fed today to strengthen the rate review proposal by:

-- Requiring banks to reinstate the old interest rate if the reason for
the rate hike would not have been allowed under the new protections
afforded by the CARD Act.
-- Requiring banks to disclose the methodology they use to review rates
and to report to the Fed twice each year the number of rate increases
reviewed and the number of rate reductions that result.
-- Requiring banks to begin reviewing rate increases on August 22, 2010,
when the rate review provision goes into effect.

Thousands of consumers have contacted Consumers Union over the past year to complain that their credit card interest rates were raised unfairly. Many consumers reported that their banks acknowledged that interest rates were raised because of the economy or a change in market conditions and not because of anything wrong done by the consumer. Other consumers reported that their interest rates doubled or tripled after they were a day or two late making their payment or for other minor mistakes. Before the new credit card protections started on February 22, banks were allowed to raise interest rates on existing balances at any time for any reason.

Starting on February 22, banks were prohibited from raising interest rates on a credit card customer's existing balance unless the customer has a variable rate card, a promotional rate has expired, or if the customer is more than 60 days late making the minimum payment.

The Fed also has proposed regulations required by Congress under the CARD Act that are meant to ensure penalty fees and charges are "reasonable and proportional" to the customer's violation of the credit card contract. However, the Fed's proposed rule only applies to penalty fees such as those imposed for going over the limit or being late with a payment and not penalty interest rates.

Under the Fed's proposal, penalty fees would be allowed only if a bank can show the fee is a reasonable proportion of the total cost to the bank caused by the customer's violation of the credit card agreement or if the bank proves that the fee amount is necessary to deter the same kind of violations in the future. The rule also proposes a complicated "safe harbor" provision which allows a bank to pick a permissible fee amount without doing the cost or deterrence analysis.

Consumers Union urged the Fed to broaden its proposed regulation so it extends to the size of penalty interest rate hikes in addition to fees and to limit those rate increases to no more than seven percentage points above the non-penalty interest rate. Consumers Union called on the Fed to simplify and strengthen the "safe harbor" provision for penalty fees by setting it at five percent of the violation or no more than $10.

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Stimulus Programs Remain Untapped by Most Americans: AICPA Survey

2010-04-14T06:24:00.000-07:00

/PRNewswire/ -- The overwhelming majority of Americans haven't taken advantage of the U.S. government's programs to stimulate the national economy, according to a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive.

Nine out of 10 Americans (91 percent) said they haven't capitalized on the job stimulus plan covered under the American Recovery and Reinvestment Act, the housing stimulus tax credit of 2009 and Cash for Clunkers.

The AICPA commissioned the survey in recognition of April as Financial Literacy Month. In 2007 the Institute began conducting an annual survey of Americans to determine their attitudes toward their finances.

"The government's stimulus efforts and the hard financial challenges people have faced over the past year emphasize the essential role financial literacy plays in our lives," said Carl George, immediate past chairman of the AICPA's National CPA Financial Literacy Commission, which seeks to help Americans become financially astute and achieve financial well-being. "Individuals can't always control the events that affect their finances, but they can learn to control their finances. We want everyone to understand that financial literacy can and should be a major part of their lifestyle."

Four percent of the survey respondents said they've taken advantage of the housing tax credit to buy their first home. That figure represents 5.1 million Americans(1). The housing stimulus tax credit, which now includes homebuyers who've owned their previous residence for five years and are seeking a new principal home, expires on April 30.

Only 2 percent said they applied for jobs through the stimulus program, and another 2 percent received rebates when purchasing new cars through Cash for Clunkers, the 2009 legislation that encouraged citizens to replace their gas-guzzling cars with more fuel-efficient vehicles. The U.S. government reported creating 608,000 jobs in the fourth quarter of 2009. The government also reported that Cash for Clunkers resulted in the sales of 680,000 vehicles.

The CPA profession's financial literacy efforts encourage Americans to educate themselves and consider all financial decisions in the context of their individual circumstances, George said. "Americans potentially interested in a housing stimulus credit must consider basic questions: What does the program offer? How do the provisions relate to their own personal situations? Can they afford the mortgage payments even after the stimulus credit? What is the overall financial commitment? Does it make sense for them to apply?"

Sixty percent of Americans said they were delaying major decisions because of financial concerns. Interestingly, out of a list of nine, buying an automobile is the most common financial decision Americans are putting on hold (27 percent). Buying a home ranked fourth, behind "some other major purchase or decision" and medical procedures.

The National CPA Financial Literacy Commission oversees two programs to help Americans achieve financial well-being. The first, 360 Degrees of Financial Literacy (www.360financialliteracy.org), educates Americans on how financial issues affect them at 10 life stages, from childhood to retirement. The free Web site, devoid of all marketing and advertising, includes tools and articles on homeownership and financial considerations of a job search.

A second campaign, Feed the Pig (www.feedthepig.org), created with the Advertising Council, encourages Americans aged 25 to 34 to begin preparing for long-term financial security. Ad Council research has shown that individuals who have seen or heard a Feed the Pig public service announcement are more likely to change their financial behavior for the better.

Methodology

In an effort to understand how the economic crisis has affected behaviors and attitudes among the general public, the AICPA participated in the Harris Interactive March 2010 Harris Poll Quorum telephone omnibus study. The interviewing took place from March 17 to 21, 2010. The Harris Poll Quorum is a bi-monthly survey among 1,009 U.S. adults ages 18 and older.

(1) Based on a total of 129,065,264 housing units as reported by the U.S. Census Annual Estimates of Housing Units as of J uly1, 2008.

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LPS' Mortgage Monitor Report Shows Total Delinquent Loans 21.3 Percent Higher Than Last Year; Foreclosure Rates At Record High

2010-04-12T06:42:00.000-07:00

/PRNewswire/l/ -- The latest Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE:LPS) , a leading provider of mortgage performance data and analytics, shows that the total number of delinquent loans was 21.3 percent higher than the same period last year. Although the data showed a small 1.45 percent seasonal decline in delinquencies from January 2010 to February 2010 month-end, the national delinquency rate still stood at 10.2 percent. The report is based on data as of February 2010 month-end.

The nation's foreclosure inventories reached record highs. February's foreclosure rate of 3.31 percent represented a 51.1 percent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years. More than 1.1 million loans that were current at the beginning of January 2010 were already at least 30 days delinquent or in foreclosure by February 2010 month-end.

As a result of the federal government's Home Affordable Modification Program (HAMP), delinquent loans that were modified and that remained current through HAMP's three-month trial period - called "cures-to-current" - have increased. Advanced delinquency rolls, however, remain elevated from a historical perspective.

Other key results from LPS' latest Mortgage Monitor report include:

Total U.S. loan delinquency rate: 10.2 percent
Total U.S. foreclosure inventory
rate: 3.3 percent
Total U.S. non-current* loan rate: 13.5 percent
Florida, Nevada, Arizona,
Mississippi, California, New
Jersey, Georgia, Illinois, Ohio and
States with most non-current* loans: Indiana
North Dakota, South Dakota, Alaska,
Wyoming, Nebraska, Montana,
States with fewest non-current* Vermont, Colorado, Washington and
loans: Minnesota

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Note: Totals based on LPS Applied Analytics' loan-level database of mortgage assets.

LPS manages the nation's leading repository of loan-level residential mortgage data and performance information from approximately 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report.

To review the full report, listen to a presentation of the report or access an executive summary, visit http://www.lpsvcs.com/NEWSROOM/INDUSTRYDATA/Pages/default.aspx.

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With Tax Deadline Looming Remember the Newer Nastier IRS

2010-04-08T10:24:00.000-07:00

/PRNewswire/ -- As taxpayers finish their 2009 returns, one tax resolution attorney has a warning: Today's IRS is nastier than ever.

"Those of us who fight the IRS every day know this is not true. The US Treasury is desperate for cash and the IRS has been told to get tougher in collecting old debts," says Anthony E. Parent, founder of IRS Medic, Wallingford, CT (www.irsmedic.com).

According to Atty. Parent, the IRS has three new scary tactics:

New Revenue Officers

The IRS has hired many new and forceful Revenue Officers who will come to people's home, businesses or even to a Rotary Club meeting to find delinquent tax payers. "These Revenue Officers tend to be overly aggressive because they think that this will impress their superiors and get them promoted," he cautions.

Seizures of Personal Residences

For the first time, taxpayers' primary residences are up for grabs by the IRS. "The IRS is now willing to seize a taxpayer's primary residence if they feel there is enough equity to satisfy the tax obligation. They can be convinced to back off if you offer a reasonable collection alternative. It's not easy, but it's possible," says Atty. Parent.

Seizures of Retirement Accounts

In the past, the IRS would not seize retirement accounts, but that too has changed. "The IRS is getting bolder," says Atty. Parent. "They can and will wipe out a taxpayer's entire retirement savings if they feel they can collect enough money. There are legitimate ways to prevent this, but you need to know what you're doing."

The moral is anyone owing money to the IRS needs to be proactive and not wait for the IRS to come to them. "We've had clients who came to us after the IRS has pursued them. That makes helping them a lot harder. If someone comes to us early in the game, we have more options. Don't ignore the IRS. They have to send you a certified letter before they levy or seize your property, but people refuse to pick up those letters. And when the IRS takes aggressive action against them -- like wiping out a bank account or levying wages -- they were surprised. You do not want to be surprised by the IRS. It won't be pleasant and the longer you wait, the more shocking it will be."

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Free Credit Report Ads Carry New Disclaimer

2010-04-05T16:26:00.001-07:00

Must point out product is not the Annual Free Report from the government
From now on, print and Internet ads for FreeCreditReport.com will have a new look. Under a settlement with the Federal Trade Commission, advertisers of commercial credit reporting services must point out to consumers they aren't the free service required by law.

Broadcast ads must carry the disclaimer later this year.

Read more: http://www.consumeraffairs.com/news04/2010/04/credit_report_ads.html#ixzz0kGsnllZJ

Heath Proposes to Eliminate State Ad Valorem Tax

2010-03-18T19:33:00.000-07:00

Georgia citizens continue to contact their legislators asking about tax relief, particularly property owners. Recently the Georgia Senate passed property tax assessment and appeal reform, but State Sen. Bill Heath (R-Bremen) has gone one step further.

Heath has proposed to eliminate Georgia’s state ad valorem tax. His bill, Senate Resolution 1287, would remove the state quarter mil ad valorem tax on each dollar of assessed property values. The prohibition of the tax begins once state reserve funds reach $500 million.

“Owning your own home is an American Dream, but it is not a dream to be over-taxed. We should do everything we can to relieve taxpayer burdens,” said Heath. “We must get the state out of the ad valorem tax collection business. Local governments should have the ability to manage their taxes at the local level.”

The State of Georgia currently levies an ad valorem tax on all property, and is a component of local property tax bills. The state millage rate is a quarter mil (.25/$1,000 assessed value). Counties argue that the state requires them to do property assessments and to collect ad valorem tax. Heath’s resolution is a major step in allowing local governments to have more control over property taxation. Removing the state ad valorem tax will have no effect on counties, cities and school funding.

Because this measure is a Constitutional Amendment, it will require a two-thirds vote in the Senate and the House before going to the voters for approval on the November 2010 ballot.

Sen. Bill Heath serves as Chairman of the Retirement Committee and Governor Sonny Perdue’s Floor Leader in the Senate. He represents the 31st Senate District which consists of Haralson and Polk counties and portions of Bartow and Paulding counties. He may be reached at 404.651.7738 or by email at billheath@billheath.net.
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Dept of Audits Says State Will Gain at Least $355 Million Beginning July 1 if Law Passes

2010-03-18T12:43:00.000-07:00

Lawmakers can balance deep cuts to the state by passing House Bill 39, which picks Georgia's cigarette tax up off the bottom of the national ranking and brings the state squarely to the middle.

Raising the tax $1 a pack from 37 cents, even accounting for declining sales, doubles Georgia's tobacco revenue, according to the state's official fiscal note.

"Given Georgia's multi-billion deficit and slashes to vital services such as child protection, public safety, hospitals, and elder servies, this additional revenue is very important," said Sarah Beth Gehl, the Georgia Budget & Policy's tax expert and deputy director.

Bottom line: New revenues should be part of a balanced approach to resolving Georgia's revenue problem.

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Taxpayer Pleads Guilty to Four Counts of Tax Theft

2010-03-15T14:00:00.000-07:00

Vera Steward of McDonough, Georgia, entered a guilty plea on Friday, March 12 before Judge Allen Keeble in Troup County Superior Court to three counts of theft and one count of computer theft.

A Georgia Department of Revenue review by the Office of Special Investigations noticed that Steward’s tax return for tax year 2005 contained a higher than normal withholding tax amount on an accompanying W-2 form. Further investigation, including interviews with Steward, revealed that she had filed returns with fabricated W-2’s four separate times, resulting in undeserved tax refunds totaling $13,687.25.

Steward, who is medically disabled, received a 15-year probated sentence. As a special condition of her probation she is to perform 960 hours of community service, repay restitution to the Department of Revenue in the amount of $13,687.25, and pay a $1,000.00 fine. The case was investigated by Special Agent Jim Winn of the DOR. Prosecution of the case was handled by Senior Assistant Attorney General Kim Schwartz of the Office of the Attorney General.

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States may hold onto tax refunds for months

2010-03-12T09:31:00.000-08:00

Residents eager to get their state tax refunds may have a long wait this year: The recession has tied up cash and caused officials in half a dozen states to consider freezing refunds, in one case for as long as five months.

States from New York to Hawaii that have been hard-hit by the economic downturn say they have either delayed refunds or are considering doing so because of budget shortfalls.

http://www.usatoday.com/news/nation/2010-03-11-tax-refunds_N.htm?csp=34

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