Tax Law Changes

Posted on November 8, 2012 by jnc4p

Now that the election is over, it’s time to turn to more important matters, namely avoiding being stuck with the bill.

I’m going to start compiling a list of links to the various tax law changes that are currently scheduled to take effect in 2013, both from the potential expiration of the Bush tax cuts and the implementation of the new Obamacare taxes. Comments on tax planning strategies are welcome.

We’ll start with wikipedia:

  • In 2008–2012, the tax rate on qualified dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.
  • After 2012, dividends will be taxed at the taxpayer’s ordinary income tax rate, regardless of his or her tax bracket.
  • After 2012, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).
  • After 2012, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.

Wikipedia – Capital Gains

Marginal rate tables under three scenarios:

Scenario 1: Tax cuts under the extension of the Bush-era tax cuts for all

Rate Single Filers Married Joint Filers Head of Household Filers
10% $0 to $8,950 $0 to $17,900 $0 to $12,750
15% $8,950 to $36,250 $17,900 to $72,500 $12,750 to $48,600
25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450
28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
33% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350
35% $398,350 and up $398,350 and up $398,350 and up

Scenario 2: Tax brackets under the expiration of the Bush-era tax cuts for all

Rate Single Filers Married Joint Filers Head of Household Filers
15% $0 to $36,250 $0 to $60,550 $0 to $48,600
28% $36,250 to $87,850 $60,550 to $146,400 $48,600 to $125,450
31% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
36% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350
39.60% $398,350 and up $398,350 and up $398,350 and up

Scenario 3: Tax brackets under the expiration of the Bush-era tax cuts for high-income

Rate Single Filers Married Joint Filers Head of Household Filers
10% $0 to $8,950 $0 to $17,900 $0 to $12,750
15% $8,950 to $36,250 $17,900 to $72,500 $12,750 to $48,600
25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450
28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
33% $183,250 to $203,600 $223,050 to $247,000 $203,150 to $227,300
36% $203,600 to $398,350 $247,000 to $398,350 $227,300 to $398,350
39.60% $398,350 and up $398,350 and up $398,350 and up

Forbes Tax Table
Obamacare taxes:

Main individual ones are these:

A 3.8% surtax on “investment income” when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is “investment income?” Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%–if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to 43.8%

A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you’re self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%.

Yahoo Finance

Business Insider

longinvestmentadvisory.com

Anyone know of any I missed?

Filed under: 2013 and beyond, taxes | 15 Comments »

Whew!

Posted on November 7, 2012 by Michigoose

well, jnc4p  was prescient.  And I’m glad it was as relatively clear cut as it was last night, in that Florida is still deadlocked but, as yello points out, irrelevant.  What do you want to see happen in the next four years–and for purposes here let’s not say gridlock (although I know a couple of you think that’s a good thing when it comes to federal government!  :-))

I, for one, am very glad that the PPACA is safe. . . although it’s too much to hope that it can be modified.  I’d like to see the DREAM Act actually become law and I’d like to see one actually liberal Justice get appointed to the SCOTUS.  I’m sure I’ll come up with more as the day goes on.

Plus, what happened with your various states?  I see that pot is now legal in Washington and Colorado (and that last I’m betting had something to do with CO going for Obama last night).

And about that fiscal cliff. . .

Forward!

P.S.  And I’m very glad that ATiM is around to see it happen.

Filed under: 2012, 2013 and beyond, Congress, Elections, Financial Crisis, Open Thread | 92 Comments »

Election Day Open Thread

Posted on November 5, 2012 by Michigoose

I’m going to go ahead and put this post up tonight, since I’m going to go vote before work tomorrow and don’t know when I’ll be able to get it up.  Do any of you have big plans for the morrow?  After I reminded her that tomorrow is Election Day my boss moved our staff meeting back to 10:00 and told everybody to go vote before coming in to work; I don’t anticipate huge lines here (voter turnout in UT is abysmally low), but you never know.  Then tomorrow evening I’m going to some friends’ house to watch the returns with them and a couple of other folks.  Thanks to you guys, I’ve become the Recognized Expert among my friends on all things political. . . hoot!

Remember–vote early and often!

Filed under: 2012, Elections, Open Thread | 159 Comments »

Bites and Pieces: Roll Those Oats

Posted on November 5, 2012 by Fairlington Blade

Oatmeal Oatmeal is my go to breakfast for the family. It cooks while I’m getting lunches or coffee ready, it’s happily eaten, and it’s a substantial breakfast. I tend to wake up about 20 – 30 minutes before the boys on school days, so that gives me enough time to make a basic oatmeal. I like to make it creamy, so I start it off cold and use half milk and half water.

Basic Oatmeal

1 cup rolled oats
1 cup milk
1 cup water
pinch of salt

Combine all ingredients and cook over medium heat, stirring occasionally until thick. Primo likes his sweetened with blueberries and pecans on top. Secondo just goes for maple syrup. I stir some maple syrup in before serving so that it’s not just on top (and a bit sweeter than Primo realizes). For Keen, I serve it in a low soup bowl with blueberries around the edge of the oatmeal, pecans sprinkled on top, maple syrup around the edges and a bit more on top.

Porridge

Better known here as steel cut or Irish oatmeal, this is worth the time. It takes the better part of an hour, so works if I’m a bit sleepless and wake up way too early. We tried a slow cooker recipe once, but didn’t like the results. To do it right, you have to take the time and stir it. It’s also good for a weekend breakfast if I don’t feel like making pancakes or waffles.

1 cup steel cut oats
~4 cups water (or 2 cups each of water and milk)
1/4 tsp. salt or to taste

Bring the liquid up to a near boil and gradually stir in the oats. Bring up to a simmer and cook, stirring occasionally, for about 30 – 40 minutes or until you get the consistency you like. I make mine thick and creamy.

Steel cut oats are variable. We generally buy ours from Trader Joe’s, which calls for a 4 to 1 ratio. I’ve seen higher and lower ratios and different cooking methods, so trust what’s on the box. The steelcut oats have a slightly nutty flavor to them and a bit more chew to the texture. Once made, I serve the oatmeal as with the regular kind. That is, until recently.

Oatmeal Brûlée

Doodles is a restaurant in Lexington, Kentucky, that specializes in breakfast. We stopped there on our last trip between DC and KC. One of their dishes is a bruleed steel cut oats. Basically, oatmeal with a sugar crust. I tried making it myself this weekend, as we’re at my parents and they don’t have maple syrup. Lacking a torch, I caramelized the sugar by heating it in a small pot until it melted and poured the syrup on top of the oatmeal. It worked beautifully. I figured I’d split a large bowl with Keen, but one of my sons became interested. Despite already having had a bowl of oatmeal, he polished off half the remainder.

Savory Oatmeal

For all that, you think I’d love oatmeal. Humphrey Bogart once summed up my feelings about hot breakfast cereals. If me and the boys wanted to eat mucilage, we would have ordered mucilage. I used to think it was an issue with texture, but that can’t be the case. I love risotto, which is Italian for mucilage. Then it hit me. It’s not the texture, but it’s sweetness combined with the texture. I started experimenting with savory oatmeal. I’ve haven’t had a chance to experiment much, but like what I’ve tried. For my first effort, I stirred in some leftover tomato sauce and some sriracha, then topped with grated parmesan cheese and a bit of fresh cracked pepper. Voila! Oatmeal that I enjoyed. Another effort is to mix in some chopped herbs and parseley and top with cheese. I think I’ll try bacon and eggs next. Break up crispy bacon and stir into oatmeal, top with a sunny side up egg. Perhaps a bit of cheddar cheese on top.

Savory oatmeal is not a terribly original concept. I’ve eaten something similar at Café Aurora, an Eritrean restaurant in Alexandria. GA’AT is an Eritrean porridge made from barley, bran, whole wheat flour lightly roasted porridge served with melted butter, spiced red pepper and side yogurt. Here’s a few other takes on the idea.

Olga Berman

Serious Eats

Mark Bittman

So, how do you roll with your oats?

BB

Filed under: Bites and Pieces, food | 2 Comments »

Chili

Posted on November 4, 2012 by Michigoose

Just to give EVERYBODY a head’s up, I’m going to create a post for us that will go up next Sunday with chili recipes.  Mark and okie talking about Mark’s chili got me started, and as I read back through previous Bites and Pieces posts I was reminded that everyone has posted great recipes at one time or another.  I’ve got two that I’m going to post; a white bean/chicken chili, and the one that is a throwback to our childhoods (and you’ll be surprised where it came from).  Don’t worry about formatting in the post, I’ll do my best to make us all look coherent, just stick your recipe in there.  I’m going to schedule it for Sunday at noon EST, and hopefully it’ll have enough recipes to get us through this winter’s weekends!

Filed under: Bites and Pieces | 2 Comments »

Saturday Football Open Thread (Week 10)

Posted on November 3, 2012 by Michigoose

First off, thanks for covering for me last weekend, okie. I had to take care of some unfortunate work-related stuff, but you stepped into the breach beautifully. Second, I’m very, very glad that everyone seems to have made it through Sandy fairly unscathed. Whew!

Does anybody care about the early games? Thursday Ohio routed Eastern Michigan 45 – 14 and Miami (FL) beat Virginia Tech 30 – 12, while last night Washington was at Cal, and won 21 – 13.  Onto today’s offerings. . .

Oklahoma is at Iowa State in a Big Twelve battle (line: OU, spread 13).  This may be the noon (EDT) game to watch (ABC/ESPN3), unless you’re a Big Ten fan, in which case. . . Update: Oklahoma 35 – 13

Michigan is playing at Minnesota, so bsimon and I get to duke it out (line: Michigan, spread 12.5).  Wolverines eat Gophers, Golden or not, for breakfast.  Just sayin’.  Update:  Michigan, 35 – 13

Georgia Tech is playing Maryland (line: GT, spread 7).  This would be a good week for the Yellow Jackets to start making a comeback. Update:  Georgia Tech 33  – 13

Washington State is at Utah in what may be the battle for the basement (line: Utah, spread 12.5).  Should be beautiful weather, if nothing else–go, Utes!  Update:  Utah 49 – 6.  And yes, the weather is gorgeous–I’m sitting on my back patio on my chaise lounge with a light blanket.  Ah, fall!

Pittsburgh is venturing into South Bend, IN.  Can Notre Dame go 9 – 0? (line: The Irish, spread 18.5).  Brian Kelly certainly does seem to have the luck of the Irish this season.  Update:  and they stay perfect in one of the most exciting games I’ve seen in years.  Notre Dame 29 – 26 in 3OT.

And Nebraska is going to Spartan Stadium (line: MSU, spread 1.0).  Go, Spartans!  Oh, and Paul, what should we wager on this one?  Update:  Grrrrrrrrrrrrrr.  Nebraska 28 – 24.  I owe you an Epic brew, Paul.

Illinois is playing osu (line: osu, spread 21).  This would be an especially sweet one if the Illini could pull through for me. . .  Blast:  osu 52 – 22

Penn State is at Purdue (line: PSU, spread 2).  This has been a tough week for PSU, hope their Saturday is better!  Update:  and it is.  PSU 34 – 9

Texas is at Texas Tech (line: Tech, spread 3.5).  Mark??  Update:  UT 31 – 22.  Hook ’em, ‘Horns!!

In the late games, UConn is playing USF (line: USF, spread 9).  Go Bulls!  Update:  USF wins 13 – 6!

And Arizona is playing at UCLA (line: UCLA, spread 3.0).  Go, Wildcats!  Errrrr:  Arizona got shellacked by UCLA, 66 – 10

Off this week: Wisconsin

Filed under: Football, Open Thread | 31 Comments »

Morning Report 11/2/12

Posted on November 2, 2012 by Brent Nyitray

Vital Statistics: 

  Last Change Percent
S&P Futures  1428.8 5.6 0.39%
Eurostoxx Index 2554.3 20.4 0.81%
Oil (WTI) 86.74 -0.4 -0.40%
LIBOR 0.313 0.000 0.00%
US Dollar Index (DXY) 80.44 0.393 0.49%
10 Year Govt Bond Yield 1.76% 0.04%  
RPX Composite Real Estate Index 194.1 -0.3  

Futures are higher on the back of a better-than-expected October jobs report.  Bonds are MBS are down

Nonfarm payrolls increased 171k in Oct and the Sep number was revised upward from 114k to 148k.  The unemployment rate ticked up to 7.9% from 7.8% as the labor force participation rate increased to 63.8%. Weekly hours and pay fell. The report pretty much confirms the labor market is on the mend, albeit slowly.

The Northeast continues to pick up the storm damage, although gasoline shortages are becoming a problem as the lack of power in NJ means that gasoline can’t be pumped out of the large tanks into trucks. This will be an additional drag on the 4Q economic numbers as people stay home instead of shopping. 

We have another glimpse of how long the Fed thinks QE should last – until the unemployment rate falls below 7.25%. Boston Fed President Eric Rosengren cautioned that this was a threshold, not a specific target. Rosengren is one of the most dovish Fed members, but does not have a vote at the moment.  He went further to say that if the unemployment rate falls to 6.5%, it is time to start moving away from ZIRP.

Colony Capital won an auction for 970 Fannie Mae foreclosed homes in Arizona, California, and Nevada. It is a complicated partnership agreement and Colony plans to rent out the properties. It looks like they paid close to BPO $176MM for a portfolio that was appraised at $157MM in Feb.  Since Feb, prices have shot up in Arizona.  Colony will get 20% of the rents as a management fee, and will take 10% of the profits up to $136MM, and then their take grows to 50%.  It looks like they only have to put up something like $34 million.  Fannie was unable to sell the Atlanta portfolio.

The MR will be spotty next week as I am traveling to the Left Coast.

Filed under: Morning Report | 11 Comments »

Things Republican Politicians Do That Drive Me Crazy

Posted on November 1, 2012 by Michigoose

Steve Benen wrote this up today and I am at a total loss as to what the Senate Republicans think this is going to accomplish. Hiding reports doesn’t make the facts go away, and while I understand that you can probably find as many economists to disagree with the report as ones that agree with it, it seems to me that a better solution would be to publish a rebuttal.

In mid-September, the non-partisan Congressional Research Service published a detailed report, documenting the fact that reducing taxes on the wealthy does not, in fact, generate economic growth. Instead, the CRS found, the trickle-down model appears to be “associated with the increasing concentration of income at the top.”

[snip]

But in this case, the CRS presented Republicans with inconvenient truths. A spokesperson for Mitch McConnell said the officials at the research service “decided, on their own, to pull the study pending further review.” While that may be true, the question then becomes how much pressure the CRS officials were under to make this decision “on their own.”

And what is it that Republicans didn’t like about the CRS analysis? McConnell aides offered a series of complaints, including the report’s use of the phrase “Bush tax cuts.”

Apparently, in Republicans’ minds, to say “Bush tax cuts” is to use an inappropriate “tone.”

But putting all of that aside, we simply cannot have a functioning federal system in which neutral, independent offices are ignored, pressured, and/or censored when Republicans don’t like what they have to say. We’ve now seen this recently with the Bureau of Labor Statistics and Congressional Budget Office, and democratic norms dictate that GOP officials cut this out.

Here is the original report, republished by Senate Democrats on their web site.

Filed under: Congress, Economy, GOP, income inequality | 22 Comments »

Morning Report 11/1/12

Posted on November 1, 2012 by Brent Nyitray

Vital Statistics:

 

Last

Change

Percent

S&P Futures 

1409.0

2.2

0.16%

Eurostoxx Index

2523.4

19.8

0.79%

Oil (WTI)

86.5

0.3

0.30%

LIBOR

0.313

0.000

0.00%

US Dollar Index (DXY)

79.9

-0.015

-0.02%

10 Year Govt Bond Yield

1.71%

0.02%

 

RPX Composite Real Estate Index

194.1

-0.3

 

 

Markets are up slightly as we recover from Sandy.  Transportation into NYC is still spotty, so expect lower-than-normal liquidity.  Bonds are down 1/2 a point and MBS are down small.

The US markets were closed Monday and Tuesday.  The last time the US markets were closed two consecutive days for a weather-related reason?  The Blizzard of 1888.

Can FEMA cover the losses from Sandy?  With the expected flood insurance claims, maybe not. 

We have a slew of economic data this morning, starting with ADP Employment Change.  This is supposed to mirror the payroll survey the government puts out.  It showed nonfarm private employment rose 158k in Oct, while Sep was revised downward from 162k to 114k.  ADP has made some changes to their methodology, so this number will be hard to predict / volatile for the near term.

Challenger and Gray reported announced job cuts increased 41% in Oct, largely a result of lackluster earnings reports so far. C&G don’t differentiate between domestic and overseas job cuts, so the impact on the US will be less.  The Markit Final PMI fell to a 37 month low.

Nonfarm productivity came in better than forecast, while unit labor costs unexpectedly fell. Initial Jobless claims came in at 363k.  Consumer Confidence, ISM, and construction spending will be released at 10:00.

Today is the first Thursday of the month, and that means retailers are reporting same store sales.  Generally, they are up across the board, which was pretty much to be expected.  Apparel did the best, while department and drug stores were generally down.

What will be the economic effect of Sandy? According to IHS Global, it could take 1.5% of 4Q GDP. But what about all of the construction workers that will be hired to rebuild?  More of a Q1 event, though overall, not enough to offset the balance sheet effects. Refer to the Broken Window Fallacy.  This will undoubtedly be motivation to prevent the fiscal cliff from occurring, although there seems to be a consensus that everything should be kicked down the road with the exception of the entirely symbolic tax cuts for incomes over 250k.

 

Filed under: Morning Report | 20 Comments »

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