Posts Tagged tax
Are Taxes in the U.S. High or Low?
Posted by Oksana Grebenjuk in Budget, Favourites on Июнь 9th, 2011
Historically, the term “tax rate” has meant the average or effective tax rate — that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.
By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget.
The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan’s administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984.
In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010.
Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again. Read the rest of this entry »
G.M. Is Still Hopeful for Payback to Government
Posted by Oksana Grebenjuk in Business on Июнь 7th, 2011
The chief executive of General Motors said on Tuesday that he hoped the federal government would be able to sell its stake in the automaker soon, and expressed concern about the country’s economic recovery.
The executive, Daniel F. Akerson, said that G.M. was working to maximize its payback to taxpayers, but that the government did not make a bad investment even if it did not recover the full amount given to the company.
“At some level, the government’s got to decide: are they an investor or were they trying to save the industry?” Mr. Akerson told reporters ahead of G.M.’s first annual stockholder meeting since its 2009 government-financed bankruptcy.
A report last week by the White House National Economic Council concluded that the government would probably have to write off about $14 billion of the $80 billion spent rescuing the auto industry by the Bush and Obama administrations.
Mr. Akerson said that a G.M. liquidation would have saddled taxpayers with more than $17 billion in pension liabilities. G.M. has cut its pension shortfall in half since 2009, he said, adding that he wanted the plan to be fully financed during his tenure as chief executive. Read the rest of this entry »
Google enters the bond market
Posted by Oksana Grebenjuk in Favourites, Fund Markets on Май 18th, 2011
Google plans to raise cash by selling bonds for the first time in the company’s history, the Internet search giant said Monday in a filing with the Securities and Exchange Commission.
Google (GOOG, Fortune 500) declined to comment about the size of the offering but news reports peg it at roughly $3 billion in short-to-medium term notes. The bonds are expected to be priced by market close Monday.
The company said it plans to use the proceeds to fund «general corporate needs and to repay the company’s outstanding commercial paper.»
Credit rating agency Moody’s gave the offering an investment grade ‘Aa2′ rating, citing «Google’s substantial financial flexibility as well as its conservative financial philosophy.»
Google currently sits on $36 billion in cash and short-term securities. But the bulk of that cash is tied up in overseas accounts, making it expensive to tap in the United States since Google would have to transfer and pay tax on the funds. Read the rest of this entry »
Move Over, Apple! My Tablet Cost $200
Posted by Oksana Grebenjuk in Trading Markets on Март 15th, 2011
I didn’t want to spend $500 for a tablet computer. I didn’t even want to spend $400. So instead I went online and bought a brand-new tablet for a bit less. The cost? Less than $200 … and about 20 minutes of my time. No kidding.
It’s hardly a perfect comparison—more on this below—but the tablet is perfect for what I want. I’m not talking about one of those junk tablets from a Chinese website, either.
I bought a Barnes & Noble Nook Color tablet (for $190 plus tax from a temporary online promotion, down from the usual $250). And then I downloaded a very simple, perfectly legal software fix from the Internet that turned it into a fully functioning tablet running on Google’s Android platform. The fix, known as a «rooting,» unlocks Barnes & Noble’s proprietary overlay. The instructions came via Ars Technica, a reputable site devoted to technology, and were pretty easy to follow.
I wasn’t really expecting it to work. I tried it as an experiment. But the results were remarkable.
The Nook Color, which was designed mainly for reading books and magazines, is about half the size of an iPad or a Xoom. It weighs about 30% less. It runs on WiFi, but not 3G. It has an absolutely superb screen. And, once you’ve unlocked the software, it runs many Android applications, from email to news readers TweetDeck to, yes, Angry Birds. Read the rest of this entry »
10 Reasons You May be Required to File a Tax Return Even if you had Little or No Income
Posted by Oksana Grebenjuk in Budget on Март 11th, 2011
Every tax season I get calls from clients with a “quick question:” Do I need to file a tax return? I only made seven grand (or some other small amount).
We’re dealing with tax law, so I hate to tell you this, but there’s practically no such thing as a quick question or quick answer anymore. It’s easier to untangle fives miles of Christmas tree lights than to answer a quick tax-related question.
Most people are aware that there are income requirements for filing a federal income tax return. Most people also think that if their income falls below those income requirements, they don’t need to file. This is not necessarily so, in fact, in many cases, filing a tax return will get you an unexpected income tax refund. And naturally, in other cases, where filing is required even if below the income thresholds, you will pay the tax man.
Here are the exceptions to the income thresholds:
1.) If you are self-employed with earnings of $400 or more, you are required to file an income tax return. The self-employment tax, which funds your Social Security, kicks in at that level. You especially want to do so if you have write offs that will result in a net operating loss, which can be carried back to get refunds from taxes paid in prior years or carried forward to offset income in future years. Read the rest of this entry »
2011 Is The Year For Free Tax Return Filing
Posted by Oksana Grebenjuk in Budget on Январь 27th, 2011
If there are ways to file tax returns for free that include free tax preparation help, then that would be an ideal option.
FreeFile Alliance was created some time back by the IRS and some tax-software companies for free tax return filing for seniors and low income earners. This year, major tax software makers offer more free options plus in-person IRS’s VITA and TCE volunteers and AARP’s TaxAide help.
Tax software is becoming more user friendly with most encountered questions of people who often need help to guide you as seen on TaxMama.com’s site.
Emailed questions left unanswered in 24-48 hours can exasperate you that when finally answered, the question may have been forgotten. The answer could even prompt a follow up question that will entail more long hours of wait. This scenario would already require person to person help.
Congress has granted $11 million to fund 177 organizations all over the U.S. with thousands of centers to help, walk-in or by appointment. These are manned by trained volunteers and tax professionals to provide answers and give guidance. For complex tax returns inquiry, you will be referred to someone who can help.
Another program that assists for free is the Volunteer Income Tax Assistance Program (VITA). Their centers are found almost everywhere. The numbers to call to find a near site is 1-800-906-9887. Earners whose income is below $49,000 qualify. Check IRS.gov to see partial VITA sites list. Read the rest of this entry »
Tax cuts raise expectations for economy in 2011
Posted by Oksana Grebenjuk in Trading Markets on Декабрь 23rd, 2010
Expectations for economic growth next year are turning more optimistic now that Americans will have a little more cash in their pockets. A cut in workers’ Social Security taxes and rising consumer spending have led economists to predict a strong start for 2011.
Still, most people won’t feel much better until employers ramp up hiring and people buy more homes. Analysts are predicting economic growth next year will come in next year close to 4 percent. It would mark an improvement from the 2.8 percent growth expected for this year and would be the strongest showing since 2000.
«Looking ahead, circumstances are ripe for the economy to develop additional traction,» said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York. He is estimating growth for 2011 to be above 3.5 percent.
The economy grew at a moderate pace last summer, reflecting stronger spending by businesses to replenish stockpiles, the Commerce Department reported Wednesday. Gross domestic product increased at a 2.6 percent annual rate in the July-September quarter. That’s up from the 2.5 percent pace estimated a month ago. While businesses spent more to build inventories, consumers spent a bit less.
Many analysts predict the economy strengthened in the October-December quarter. They think the economy is growing at a 3.5 percent pace or better mainly because consumers are spending more freely again. Read the rest of this entry »
Bernanke Plays Politics, Loses
Posted by Oksana Grebenjuk in Budget on Декабрь 14th, 2010
The BABs story has gone political. And now the Fed is tossing information into the hopper that just does not pass the smell test. The question is; «Why is the Fed doing this?»
The real story on BABs is that Republicans want to nix the program as it provides a very clear benefit to the three biggest blue states, CA, NY and Il. The opposition does not want to really show their hand as being purely political so they are attacking the extension on the merits. The strongest reason to appose the extension is that it is a federal subsidy that costs the taxpayers money and adds to the deficit. But the problem all along is that no one in D.C. really has a clue how much this is actually costing.
BABs was first sold as being revenue neutral at the federal level. The talk was that the 35% interest subsidy paid by D.C. would be offset by tax dollars created when the bondholders pay federal income on their interest income. It never worked like that at all. The BABs bonds went to tax exempt holders. 401k/501c accounts, foreign banks and other tax-exempts bought the BABs bonds. In my opinion the Treasury is lucky if it gets back 15% of the 35% they are paying out as a result of the tax arbitrage that has been created.
I have consistently heard that some big takers of the BABs were foreign banks. That makes perfect sense. Prior to BABs they had no ability to build up state assets as they had no tax base to offset. But with BABs that issue went away and an attractive asset class with a desirable fixed coupon and long duration was created. The NYT had this to say about foreign bank participation in BABs: Read the rest of this entry »
November 2010 Federal Deficit $150.4 Billion — Highest November on Record
Posted by Oksana Grebenjuk in Budget on Декабрь 13th, 2010
….on an unrelated note, corporations are flush with cash and paid the lowest % of taxes to GDP in history in last year we have records (2008), Americans are being sent cash by the bushel, entitlement spending is through the roof, aid to states is historic, and the stock market propels higher. These items are completely unrelated as long as there is no cost in cost-benefit analysis. 
Just like I suddenly have $50,000 if I borrow $50,000 on my credit card. (no cost of course…only the benefit)
Kind of laughable in retrospect when I hand wringed about half a trillion deficits «back in the day» (Jul 28, 2008: US Budget Deficit to Half a Trillion) — that’s 3-4 months of federal government work nowadays.
Via WSJ
The U.S. government ran its 26th straight monthly budget deficit in November amid wrangling over a package that would extend big tax cuts to Americans trying to recover from recession.
The Treasury Department, in its regular budget monthly statement, said the government spent $150.4 billion than it collected in the second month of fiscal 2011.
Last month’s red ink pushes up the deficit to $290.8 billion for the fiscal year, which began Oct. 1. That figure is a little smaller than the deficit during the same period last year. But President Barack Obama’s administration expects the deficit to top $1 trillion in this fiscal year. (uhhh… that’s an understatement considering this latest $900B package soon to pass). Read the rest of this entry »
Bernanke Threatens Extension Of QE Past $600 Billion
Posted by Oksana Grebenjuk in Favourites, Fund Markets on Декабрь 7th, 2010
Bernanke the chairman of the federal reserve has said that the US might need to extend bond purchases past the the $600 billion announced last month to spur on economic growth. The argument for this extension is based upon fears that the US economy is expanding at a bairly sustainable pace and ongoing fears that the employment sector is still faltering after Non Farms last week. The unemployment rate last month rose to 9.8 percent and surprised the markets after a previous string of positive news, this is the highest level since April and has dampened economic sentiment significantly.
Bernanke appeared on CBS Corp’s ’60 Minutes’ program and defended the Fed’s efforts to prop up the US recovery. He argued thatthe economy was clearly still very weak and that just 39,000 jobs were created in November. He stated that the potential for the purchase of more bonds than previously planned last month is «certainly possible,»; dependant on the outlook for inflation and the US economy over the coming months. Bernanke went on to say that although growth looks set to continue at a slow pace, a return to recession ‘seems unlikely’.
The Fed’s decision to undertake a new bond purchasing program, known as quantitative easing, has been criticized heavily by the worlds finance officials, amidst fears of a global currency war and competitive devaluation. Policy makers in emerging markets have expressed concern that this kind of devaluation could drive down the dollar and cause a re-surgence of capital abroad.
Today has been a relatively quiet day in the currency markets. The week ahead is likely to continue to be dominated by the European sovereign debt crisis. The much awaited budget for 2011 will be a key release for the Euro tomorrow as traders speculate on the austerity measures set to reign in €6bln (3.7%) of GDP. Two thirds of the planned austerity will come from spending cuts with one third from higher taxes. Read the rest of this entry »
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