Green Tax Credits
June 23, 2009 | 
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Going Green? Energy efficiency is on everyone’s mind and was even a platform run on by President Obama. The Government is working hard to incentivize businesses and individuals to go Green. There are several tax credits available for purchasing energy efficient products. Some of the tax credits are new while others are just improved. For individuals, many Energy Star products qualify:
The Proposed Cell Phone Tax
June 15, 2009 | Subscribe to our RSS Feed
The IRS has recently proposed taxing employees up to 25% of the value of their work cell phone.
A 1989 law treats employer-provided cell phones as a taxable fringe benefit, so this new proposal is to make it easier to enforce this law. However, several issues arise, making it seem more of a burden to employers and employees, rather than a clarification or simplification.
Income Tax – Some Historical Perspective
June 10, 2009 | Subscribe to our RSS Feed
No one likes paying higher taxes, of course, but there’s nothing like a little historical perspective to make you realize how low even a 39.6% rate is. Here’s an abridged tour of our income tax rates: when the income tax was enacted in 1913, the top rate was 7% on income over $500,000 (over $13 million in today’s dollars, using a 3.5% inflation rate); it has never been that low again. To illustrate, in 1918, the top rate was 77% on income over $1 million, in 1942-43, it was 88% on income over $200,000, and in 1944-45, it was 94% (the all-time high) on income over $200,000. After World War II and into the ’60s, the top rate was mostly 91% on income over $200,000 (the brackets started distinguishing among types of taxpayers in the 50’s; spouses could income-split as of 1948). By the mid-60’s and through the 70’s, the top rate had dropped to 70% on income over $100,000 for single taxpayers (brackets started to get indexed for inflation in the late 70’s). In the early 80’s, the top rate dropped to 50% on income over $41,500 (single taxpayers); by 1984, that rate applied to income over $81,800. The Tax Reform Act of 1986 dropped rates significantly, and introduced the 28% rate (a 33% “bubble” recaptured the benefit of the 15% rate for higher earners). In 1991, the top rate went to 31% on income over $49,300 for single taxpayers. In 1993, the top rates of 36% and 39.6% came into play (the latter applied to income over $250,000 for single taxpayers).
Warning About Lapsing Insurance Policies
June 1, 2009 | Subscribe to our RSS Feed
Life insurance policies are in serious trouble because of low interest rates. An insurance plan issued years ago, when interest rates were higher, may no longer be earning the investment returns it needs to pay premiums. This leaves the owner to cover the shortfall, costs, and a potentially large death tax bill.
The policies in the most danger were those issued in the 1980s and 1990s, when the interest rates used for the projections were much higher. The most troubled policies are universal and variable-life, but whole-life policies are beginning to fail as well.