Stale Green Light

Are you prepared for a change in the green?

  • Jul 26

    Doomsayers who claim that we’ll soon be crushed by a bevy of new taxes — including dividend taxes that could skyrocket from 15% to 39.6% — may be exaggerating the severity of the situation. True, some tax rates will inevitably rise, and a few people will feel a greater pinch, but most individuals and companies won’t see much of a change at all.

    The thought of losing recent years’ tax cuts would alarm many people—especially those dreading a large hit. Imagine buying a company’s stock, in hopes of enjoying its 7.1% dividend yield for the long haul.

    On an investment of ten thousand dollars you’d collect about seven hundred and ten annually right now, with a maximum 15% tax hit on those payouts. Now imagine hearing that your tax bill might soar to over a hundred dollars more per payout in 2011—not something which makes you feel great, but try to look at it in a new way.

    Yes, the currently reduced dividend rate is due to revert to citizens’ ordinary income tax rate. That would be 39.6% under the proposed budget, but only if you have taxable income of more than three hundred thousand dollars in 2011.

    Furthermore, the Obama administration seems to want to limit the increase in dividend taxes to just five percentage points, from 15% to 20%. That’s a meaningful jump, especially for those collecting a lot of dividends in retirement, but it’s not 39.6%.

    Critics are also trying to spread alarm about the estate tax. Unless Congress decides otherwise, it will revert in 2011 from 45% to 55%, with an exemption of one million dollars.

    It’s estimated that a one million dollar exemption would lead to just over forty four thousand households owing estate tax in 2011 — and they’d only pay taxes on any value beyond that initial one million. This is an irritation for the wealthy, but those problems can be significantly avoided by simply hiking the exemption, which seems likely sooner or later.

    Here are several ways that well-known companies reduce their U.S. tax bills. Forbes recently noted that these companies paid relatively little in taxes in 2009, based on accounting provisions.

    Many companies take advantage of lower tax rates abroad. For instance, a well known gas company had an eight billion tax bill globally, but it only paid two hundred million to the United States. A well known electric company was cited for losing money on paper, and therefore not owing taxes in the U.S., while at the same time making lots of money overseas, where tax rates are lower.

    A computer company paid almost two billion in taxes –but that represented just 19% of its pre-tax income, thanks to lower tax rates abroad. Companies are using tax losses in past years to shelter current and future income.

    A leading bank reported over four billion in pre-tax income, but was able to take advantage of deductions and credits to lower that below zero. It still has tens of billions of dollars in credit losses that will shield it from taxes for quite a while.

    A prestigious car company reported three billion in pre-tax income, but only paid sixty nine million, thanks to losses carried over from previous years. Even companies that pay income tax now may get huge breaks later.

    Another leading bank paid a solid 30.3% of its pre-tax income in taxes, but investors have reason to smile about the future. The company has a twenty five billion dollar allowance for losses on loans.

    When those losses are realized, they will offset tax liabilities. The Government Accountability Office found in 2008 that 55% of U.S. corporations actually reported no federal income tax liability in at least one year between 1998 and 2005.

    Suddenly, the thought that changing tax laws might make them pay a bit more to the IRS doesn’t seem so bad. Try to resist scare tactics designed to get you alarmed.

    Dig a little deeper into the facts about tax changes, and keep the big picture in mind. Yes, some taxes may go up in the coming years, but most of us won’t be affected.

    Besides, our nation is facing massive financial challenges right now. Perhaps a few more taxes might not be a bad thing.

  • Jul 19

    When it comes to financial safety, learning how to safely use your credit cards online can be extremely important. Here is a tip to help you do so.

    First of all, look for what is called a Secure Socket Layer. Also known as SSL, the SSL protocol of a website uses a level of encryption to scramble the communication between your computer and the person you are making a payment to.

    This means that anyone who tries to intercept the communication will be unable to read it because it has been translated into a type of secret code. You can check whether the website you are making a payment to is encrypted with SSL to protect your details.

    First, look at the URL in the address bar at the top of your internet screen; a secure website will begin with https:// where as an unsecure site will only have http://. Each internet browser will also have its own way of telling you the site is secure too.

    For example, Netscape version 4.0 and higher will show a locked padlock in the bottom left corner of the screen, while Microsoft Internet Explorer will show a lock on the status bar when SSL is active on a webpage. This is the first step to insuring privacy and protection.

  • Jul 6

    PennyWhat started out as a new idea in Europe, has become a huge success in America.  Penny Auction sites are popping up literally every day.

    Bidsauce is just one of many sites where bidders are winning products at only fractions of the cost.  All products start at a price of $0 and rise by only a few cents with each bid.  Bidders do not put a price on how much they will pay, but simply state that they want to bid and the price rises by an arbitrary amount.

    Many people are asking themselves if they should start in on the craze or if this is another “too good to be true” fad.  The only real way of finding out if you enjoy it in this case is to give it a try.

    Bid packs are typically low in cost and are reasonable for anyone not sure if they really want to go all in.

    I guess we will see how long it takes for more people to start using penny auction sites like Bidsauce.