Tuesday, August 25, 2009

A Global Comparison of Corporate Tax Systems

Price Waterhouse Coopers ranked 181 countries on a number of characteristics related to corporate taxes. Believe it or not, the U.S. ranked 46th on ease of payments. What we need now is a study on personal taxes.

From About the Study

Paying Taxes provides a comparison of the world’s tax systems from the point of view of a case study company. The aim is to provide insights and data, which will assist the process of tax reform and to gain a more in-depth understanding of the results. It is also important to look beyond the rankings to the underlying data. As well as the individual rankings on the ease of paying taxes around the world. The Paying Taxes study highlights how businesses are affected not only by corporate income taxes, but also by many other taxes. In addition, it shows how the procedural burden of tax compliance impacts companies.

See the full list of countries in an interactive table.

Top 10 Vehicles Bought With Clunker Trade-ins

Global Investor lists the top ten vehicles purchased by people trade in clunkers. The Toyota Corolla tops the list.

See Top 10 list.

Credit CARD Act Effective August 20

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (Credit CARD Act) imposes the following requirements on credit card issuers:

 Creditors must provide written notice to consumers 45 days before increasing an annual percentage rate on a credit card account or making a significant change to the terms of a credit card account.
 Creditors must inform consumers in the same notice of the right to cancel the credit card account before the increase or change goes into effect. If a consumer cancels an account, the creditor is generally prohibited from applying the increase or change to the account.
 Creditors generally must mail or deliver periodic statements for credit cards and other open-end consumer credit accounts at least 21 days before payment is due.

Whitehouse News Release

Housing Affordability Near Highest Level in 18 Years

According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), low interest rates and falling home prices are making home ownership more affordable.

The HOI showed that 72.3 percent of all new and existing homes sold in the second quarter of 2009 were affordable to families earning the national median income of $64,000, down only slightly from the record-high 72.5 percent during the previous quarter and up from 55.0 percent during the second quarter of 2008.

Go to report

Employer Sponsored Health Insurance Premiums Increase

This study by the Commonwealth Fund found that family health insurance premiums increased by 119 percent between 1999 and 2008 with an average premium of $12,298 in 2008.

From the abstract:

The rapid rise in health insurance premiums has severely strained U.S. families and employers in recent years. This analysis of federal data finds that if premiums for employer-sponsored insurance grow in each state at the projected national rate of increase, then the average premium for family coverage would rise from $12,298 (the 2008 average) to $23,842 by 2020—a 94 percent increase. However, if health system reforms were able to slow premium growth by 1 percentage point in all states, by 2020 employers and families together would save $2,571 per premium for family coverage, compared with projected trends. If growth could be slowed by 1.5 percentage points—a target recently agreed to by a major industry coalition—yearly savings would equal $3,759. The analysis presents state-by-state data on premium costs for 2003 and 2008, as well as projections, using various assumptions, for costs in 2015 and 2020.

Go to Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes

Sunday, August 16, 2009

HUD Posts FAQs on Real Estate Settlement Procedures Act

From HUD News Release

Under the new RESPA rules consumers will, for the first time ever, be able to use the Good Faith Estimate to easily compare their estimated loan offer with the one to which they actually agree. It will provide clear, transparent disclosure of loan information that consumers can use to shop for the best loan - resulting in lower interest rates and lower origination and settlement costs for borrowers. This will virtually eliminate the kinds of unfair junk fees that surprise so many borrowers at closing. In the end, this greater clarity and transparency will save consumers hundreds of dollars in total loan costs.

The FAQs can be found on the HUD website. Some of the topics covered include requirements and delivery of the Good Faith Estimate, the HUD-1 Settlement Statement and specific information about completion of the GFE and HUD-1 forms.

The new RESPA regulations were published November 17, 2008 and are scheduled to take full effect on January 1, 2010. On that date, HUD will require that loan originators provide borrowers with the new standard Good Faith Estimate and closing agents provide borrowers with the new HUD-1 settlement statement

Saturday, August 15, 2009

Consumers Union Says No To Prepaid Cards

With a prepaid card, you pay the issuer for a card that allows you to electronically pay for goods up to the value of the card. A prepaid card differs from a stored value card. With a prepaid card the funds used to pay for purchases are held by the card issuer. With a stored value card the funds used to pay for purchased are held in an external account owned by the card holder.

CU examines all of the charges that are typically levied on prepaid card from activation to dormancy charges. They conclude that you are better off using a traditional banking account.

Read more.

Thursday, August 13, 2009

Data on Rent-Price Ratio

The Lincoln Institute of Land Policy provides free data on housing rents, prices and taxes. The latest addition is data on the rent price ratio.

Go to the Lincoln Rent-Price Ratio

Rent-price graph: This chart graphs the ratio of the annual rent to price by quarter, starting in 1960:1. After 2000, the red line shows the rent-price ratio when house prices are extrapolated using the Federal Housing Finance Agency (FHFA)—formerly Office of Federal Housing Enterprise Oversight (OFHEO)—“purchase-only” price index. The blue line shows the path of the ratio when house prices are extrapolated using the Macromarkets LLC national house price index (formerly Case-Shiller-Weiss).


Copy of 2009_06_DLM_rents_prices

Wednesday, August 12, 2009

Charges for Out of Network Health Services

American Health Insurance Plans has posted a Value of Provider Networks Survey that lists the prices charged for a range of services relative to Medicare fee for several states. It is unclear whether the prices listed are list prices or the prices actually charged.

Go to survey.

Tuesday, August 11, 2009

Discover and American Express End Over the Credit Limit Fees

USA Today reports that these credit cards have ended over-the-limit fees. This has been an important source of revenue for some banks, but has also angered consumers. When the Card Act of 2009 becomes effective in a few months, card issuers will have to obtain the card holders permission before they can levy these fee. Consumers who do not agree will be denied credit for purchases that exceed credit limits.

Read USA article.

Deloitte Releases Annual Survey of 401k Plans

401(k) Annual Benchmarking Survey: 2009 Edition

Some major findings of the survey:

  • 17 percent of plan providers surveyed indicated an uptick in deferral rate changes, hardship withdrawals, loans, and other similar activities.
  • A third (38 percent) reported their employees decreased their deferral rates for 2009, with the majority (60 percent) holding steady at their current level of contribution.
  • 12 percent of employers surveyed indicated an upswing in opt-outs from auto-enrollment programs.
  • Almost one-fifth (19 percent, up 2 percentage points from last year) of plan sponsors believe “very few” of their employees will be financially prepared for retirement.
  • More than three-quarters (79 percent) of employers surveyed are still fairly confident that their plan is effective for recruiting talent, and 68 percent say it helps with retention.
Read survey.

Monday, August 10, 2009

Social Security Offers Debit Cards

Last year Social Security began issuing debit cards that are automatically updated with each month’s social security benefit. Your first choice should be direct deposit into your bank account. However, for those that do not have a convenient bank account the debit card can be the next best choice.


U.S. Treasury Introduces Direct Express® Debit Card for Social Security Payments

Personal Finance: Getting Social Security payment via debit card By Claudia Buck

FRB: 5 Tips for Dealing with a Home Equity Line Freeze or Reduction

From the Federal Reserve Board

Release Date: August 6, 2009

For immediate release

Homeowners in all regions of the United States are seeing their home equity lines of credit (HELOCs) frozen or reduced and wondering what they can do about it. The Federal Reserve's latest "5 Tips" guide explains consumers' rights and lenders' responsibilities when credit lines are reduced and provides information for those seeking to have a credit line reinstated.

"5 Tips for Dealing with a Home Equity Line Freeze or Reduction" explains that lenders can lawfully reduce or limit a consumer's line of credit regardless of whether the consumer has made timely payments. However, the lender must send a written notice of the action no later than three business days after the freeze or reduction goes into effect.  The notice must include information about any other changes to the HELOC.

The freeze or reduction notice should include specific reasons for the action.  The most common reasons for modifying the terms of a HELOC are a decline in the home's value, or a change in financial circumstances. Understanding why a lender froze a credit line may help a consumer take steps to have it reinstated to the original amount. For example, a lender may not know that significant home improvements have been made that increased the home's value. Or, if a household's financial circumstances have changed for the worse, consumers should look for ways to rebuild their credit rating.

Consumers are urged to protect their credit history by acting responsibly and contacting the lender immediately if they have questions or concerns about a credit line freeze or reduction. Lenders must reinstate credit privileges when the conditions causing the freeze or reduction no longer exist.

"5 Tips for Dealing with a Home Equity Line Freeze or Reduction" can be found at http://www.federalreserve.gov/pubs/heloctips/default.htm. It is one of several publications the Federal Reserve Board provides to help consumers make informed decisions involving home equity lines of credit.

The website also contains links to a mortgage shopping worksheet and a  mortgage calculator.

Read more.

Friday, August 7, 2009

Understanding Inflation-Indexed Bond Markets

John Y. Campbell, Robert J. Shiller, and Luis M. Viceira discuss the history and characteristics on inflation-indexed bonds in this excellent paper. Copies can be freely downloaded from the Social Science Research Network.

"Understanding Inflation-Indexed Bond Markets"  Cowles Foundation Discussion Paper No. 1696


This paper explores the history of inflation-indexed bond markets in the US and the UK. It documents a massive decline in long-term real interest rates from the 1990's until 2008, followed by a sudden spike in these rates during the financial crisis of 2008. Breakeven inflation rates, calculated from inflation-indexed and nominal government bond yields, stabilized until the fall of 2008, when they showed dramatic declines. The paper asks to what extent short-term real interest rates, bond risks, and liquidity explain the trends before 2008 and the unusual developments in the fall of 2008. Low inflation-indexed yields and high short-term volatility of inflation-indexed bond returns do not invalidate the basic case for these bonds, that they provide a safe asset for long-term investors. Governments should expect inflation-indexed bonds to be a relatively cheap form of debt financing going forward, even though they have offered high returns over the past decade.

Impartial Review of Private Health Insurance Provisions of H.R. 3200

“As the fight in Washington over health care reform continues to dominate public attention and media coverage, most Americans are critical of the way news organizations are explaining key elements of the debate.”

Pew Research Center

If you are longing for an impartial analysis of the proposed legislation for restructuring private health insurance, you need to read this report from the Congressional Research Service. The following appears in the Overview.

Overview of H.R. 3200

This report summarizes the key provisions affecting private health insurance in America’s Affordable Health Choices Act of 2009, found in Division A, as ordered reported by House Committees on Ways and Means and on Education and Labor.1 Division A of H.R. 3200 focuses on reducing the number of uninsured, restructuring the private health insurance market, setting minimum standards for health benefits, providing financial assistance to certain individuals, and, in some cases, small employers. In general, H.R. 3200 would include the following:

  • Individuals would be required to maintain health insurance, and employers would be required to either provide insurance or pay into a fund, with penalties/taxes for noncompliance.
  • Several market reforms would be made, such as modified community rating and guaranteed issue and renewal.
  • Both the individual and employer mandates would be linked to acceptable health insurance coverage, which would meet required minimum standards and incorporate the market reforms included in the bill. Acceptable coverage would include
    • coverage under a qualified health benefits plan (QHBP), which could be offered either through the newly created Exchange or outside the Exchange through new employer plans;
    • grandfathered employment based plans;
    • grandfathered nongroup plans; and
    • other coverage, such as Medicare and Medicaid.
  • The Exchange would be established under a new independent federal agency (the Health Choices Administration), headed by a Commissioner. The Exchange would offer private plans alongside a public option.
  • Certain individuals with incomes below 400% of the federal poverty level could qualify for subsidies toward their premium costs and cost-sharing; these subsidies would be available only through the Exchange.
  • In the individual market (the nongroup market), a plan could be grandfathered indefinitely, but only if no changes were made to the terms and conditions of the plan, including benefits and cost-sharing, and premiums were only increased as allowed by statute.
  • This bill would not affect plans covering specific services, such as dental or vision care.
  • Most of these provisions would be effective beginning in 2013.

Read full report.

You can also check out the Kaiser Family Foundation: Side-by-Side Comparison of Major Health Care Reform Proposals

Thursday, August 6, 2009

Working Families With Children Are Most Likely to Have Health Insurance Coverage

The Employee Benefit Research Institute surveys employer provided health coverage. The latest report, Health Insurance Coverage of Individuals Ages 55–64,1994–2007, indicates that adults ages 55–64 and families with children were most likely to have health insurance coverage in 2007. As usual, young adults are in the group least likely to have coverage.

MOST LIKELY TO HAVE COVERAGE: EBRI estimates from the latest Current Population Survey data show adults ages 55–64 were one of two groups—the other was children—most likely to have health insurance coverage in 2007. That year, 12 percent of adults ages 55–64 were uninsured, compared with about 32 percent of adults ages 21–24, 26 percent of those ages 25–34, and 23.5 percent of all younger adults. There were 4 million adults ages 55–64 without health insurance in 2007, accounting for 9 percent of the 45 million individuals under age 65 who were uninsured.

The report also points out that those in the 55-64 age group are most likely to suffer from cutbacks in employer provided health care, especially health care that was voluntarily afforded retirees. This may delay the retirement of workers in this age group.

Read more.

Who is Responsible for a Deceased Relative's Debts?

FTC FYI: 07/31/2009

If your relative leaves unpaid debts when he or she dies, do you have to pay?

According to the Federal Trade Commission, the nation’s consumer protection agency, surviving relatives usually have no legal obligation to pay the debts of a family member who has died. Generally, that person’s estate is responsible for paying his or her debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.

After a relative dies, debt collectors may contact family members and ask them to pay their loved ones’ debts. The rights of surviving relatives are covered by the Fair Debt Collection Practices Act, which the FTC enforces. The FTC has developed a new consumer alert about this issue titled Paying the Debts of a Deceased Relative: Who Is Responsible? To learn more, go to http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt159.shtm.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

Office of Public Affairs

(FYI deceased debts)

The Cost of Raising a Child Updated

Every year Mark Lino updates Expenditures on Children by Families. The USDA has just published the figures for 2008.


WASHINGTON, Aug. 4, 2009 – The U.S. Department of Agriculture today released a new report, Expenditures on Children by Families, finding that a middle-income family with a child born in 2008 can expect to spend about $221,190 ($291,570 when adjusted for inflation) for food, shelter, and other necessities to raise that child over the next seventeen years.

Issued by USDA each year since 1960, the report is a valuable resource to courts and state governments in determining child support guidelines and foster care payments. For the year 2008, annual child-rearing expenses for a middle-income, two-parent family ranges from $11,610 to $13,480, depending on the age of the child.

Read more.

Cost of Renting Significantly Cheaper Than Buying

That’s the conclusion in this new study from the Center for Economic and Policy Research,  “The Gains from Right to Rent,” by Dean Baker and Hye Jin Rho (July 2009).

This paper calculates savings from renting compared with owning a house purchased in 2006 or 2007 in 16 major metropolitan areas. (The appendix includes calculations for 100 cities, including these 16.) The analysis calculates the savings both before- and after-tax, allowing readers to see the impact on ownership costs of the mortgage interest and property tax deductions.


Read more.

Also see: NMHC Quarterly Survey of Apartment Market Conditions

Tracking Jobs in Finance with FINS

From the New Release

Wall Street Journal Launches FINS.com - Career Site for Financial Professionals

NEW YORK ( July 14, 2009) — The Wall Street Journal has launched a new career site - FINS.com - a stand-alone, online resource specifically targeting financial professionals and the finance market. The site covers all major financial sectors with associated jobs and news, in-depth research on companies, and daily columns offering advice and career insight, with the credibility and authority of The Wall Street Journal.

Free to users, FINS.com is a daily destination for both active job seekers and those in the finance industry who want to keep abreast of career-related dynamics in the market. Recruiters and employers have the ability to reach a targeted, high-quality audience through display ads, candidate search and job postings. FINS.com is part of The Wall Street Journal Digital Network, which comprises the flagship WSJ.com, MarketWatch.com, Barrons.com and AllThingsD.com.

2009 Consumer Action Handbook Now Available

From news release: July 2009

When the economy is uncertain, it’s even more important to watch every dime. To help you get the most bang for your buck, avoid credit problems, and resolve shopping hassles, order the 2009 edition of the free Consumer Action Handbook from the Federal Citizen Information Center.

Celebrating its 30th anniversary, this year’s Consumer Action Handbook continues to provide top-notch tips and advice for common consumer issues like buying a car, building good credit and protecting your privacy. Now you’ll also find expanded resources for military personnel, the latest facts on buying a home and even more contact information for major companies.

Has an airline ever damaged your luggage? Ever bought something online or by phone and it was nothing like they promised? Turn to the Consumer Action Handbook’s sample complaint letter. It shows you how to vent effectively about the situation and get the matter resolved. You can get the right address for the company in the Handbook’s “Consumer Contacts” section—featuring thousands of consumer contacts at businesses, federal agencies, state and local consumer offices, and national consumer organizations.

The Consumer Action Handbook is also at your service online at www.ConsumerAction.gov. Search the website to easily access and download all of the information in the printed edition, plus keep up with the latest consumer news and product recalls.

Download the Complete 2009 Handbook (180 pages; PDF) or Only Print the Chapters You Need (PDF)

Keep Track of Sales Tax Holidays

Your state may have special dates when particular purchases are exempt from the state’s sales tax. The Federation of Tax Administrators publishes the states, the dates and links to additional information on the states with tax holidays.

See: FTA: 2009 Sales Tax Holidays

Wednesday, August 5, 2009

Is Your Spouse a Tightwad?

The answer to this question might depend on whether you and your spouse share the same attitude toward spending. Rick, Scott, Deborah Small, and Eli Finkel, "Fatal (Fiscal) Attraction: Spendthrifts and Tightwads in Marriage." Using a questionnaire with a tightwad/spendthrift scale they find that, “people tend to marry spouses with opposing emotional reactions toward spending.”  As probably expected, the more unhappy you are with your own spending habits, the more likely you are attracted to a mate with the opposite characteristics. Moreover, this attraction does not seem to be conscious; most persons state that are searching for others with similar spending habits.

You might expect that these opposing spending habits cancel each other out and put the marriage on an even keel, leading to marital bliss. Although the evidence is not conclusive, the authors state that divergences in spending behaviors have a negative impact on relationship quality. Sometimes you don’t get what you want and  you don’t get what you need.

Are You a Tightwad?

The authors in this  paper, (Rick, Scott, Cynthia Cryder, and George Loewenstein (2008), "Tightwads and Spendthrifts," Journal of Consumer Research, 34 (6), 767-782.) examine the behavioral differences between tightwads and spendthrifts.  The authors suggest that many consumers do not consider opportunity cost when making purchases. Instead, spending may be controlled by the “pain of paying.” In the words of the authors:

Suppose, for example, that dining out at a nice restaurant tonight requires you to forgo dining out at an even nicer restaurant next month. People who experience an intense pain of paying may behave as if dining out tonight requires giving up several nicer dinners next month. That is, their affective reaction to spending may lead them to spend less than their more deliberative selves would prefer. We refer to such consumers as tightwads.

The authors speculate that spendthrifts do not experience a similar anxiety. They test their hypothesis by creating a tightwad/sprendthrift scale based on a questionnaire and conclude that the pain of paying powerfully influences spending behavior.

While we find strong relationships between ST-TW scores and credit card debt and savings, we find little relationship between ST-TW scores and income. This suggests that the differences in credit card debt and savings between spendthrifts and tightwads are more likely attributable to differences in spending habits than to differences in income.

The authors don’t explain why some consumers experience this pain while others do not. Is it nature or nurture? They do point out, however, that situational factors that mask the pain of paying, such as using a credit card. can reduce the pain of paying, turning tightwads into spendthrifts. Although not mentioned by the authors, the results do seem to support the commonplace advice of many credit counselors that you can better control your spending by tearing up those credit cards and using cash.