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News From the Fed on Federal Interest Rates

On Thursday, Federal Reserve Vice Chairman Stanley Fischer announced the Fed will likely start raising interest rates around the middle of next year. The Fed has kept rates near zero since 2008 and has nearly quadrupled its balance sheet to more than $4 trillion through a series of bond purchase programs in an effort to push borrowing costs down further and boost hiring. The Fed is expected to wrap up its bond buying program later this month. Minutes of the Fed’s September policy meeting, released on Wednesday, showed several officials worried that troubling global growth and a stronger dollar could undercut the U.S. recovery.

Fed Keeps Interest Rates Low

Fed Keeps Interest Rates Low

September 19, 2014

Authored by: Matthew C. Jessee

On Wednesday, the Federal Reserve renewed its pledge to keep interest rates near-zero for a “considerable time,” but the Fed also indicated it could raise borrowing costs faster than expected.  In a statement after a two-day meeting of its policy-setting Federal Open Market Committee, the Fed announced a further $10 billion reduction in its monthly bond purchases, leaving the program on course to be shuttered next month.  The Fed also released a new blueprint for how it plans to exit the extraordinary monetary stimulus it put in place to combat the 2007-09 financial crisis and recession.

Investment Advisors Fiduciary Standard

On Tuesday, the House approved legislation that would delay a Labor Department regulation that would impose fiduciary standards for financial advisors.  The measure, sponsored by Rep. Ann Wagner, R-Mo., would prohibit DOL from proposing its regulation until 60 days after the Securities and Exchange Commission finalizes a similar rule to raise standards for brokers providing retail investment advice. The bill attracted the support of 30 Democrats.  On Monday, the Obama administration threatened to veto the legislation, saying that it undermines DOL efforts to protect workers and retirees from conflicted investment advice for 401(k) plans and individual retirement accounts.  Supporters of the bill say the SEC must go first to ensure coordination between the agencies and avoid duplicative and costly fiduciary-duty requirements that would ultimately limit access to investment advice for smaller investors.  Opponents say it would effectively kill the DOL rule if the SEC declines to propose its

President Obama Proposes Changes to the Transfer Taxes

On Wednesday, President Obama released his FY 2014 budget which calls for $3.8 trillion in spending over the next fiscal year and $1 trillion in tax increases over the next 10 years.

Among the proposals in the budget plan, President Obama proposes a return of the estate tax to the law in effect in 2009, which changes would go into effect beginning in 2018.  If this proposal is adopted, it would be a quick end to the “permanency” of the transfer tax law that was enacted at the end of last year.

 

Cliff Diving Averted

Cliff Diving Averted

January 2, 2013

Authored by: Stephanie Moll and Matthew C. Jessee

Effective December 31, 2012, Congress passed The American Tax Relief Act of 2012 which, in part, sets the following policies.  President Obama is expected to sign the bill into law, although he has not said when.  More detailed analysis of the new law to come.

Tax Policy:

· Marginal Rates: Permanent extension of current policy up to $400,000 for singles, $450,000 for married couples.

· Capital Gains & Dividends: Permanent: 15% top capital gains and dividends rate up to $400k (singles), $450k (married); 20% rate for both above threshold.

 · Death Tax: Permanent extension of current policy on portability and unification with a $5M exemption indexed for inflation and a 40% top rate.

· PEP & Pease: Permanent relief from PEP & Pease under $250,000 (single), $300,000 (married).

· AMT: Permanently index AMT for inflation.

· Tax Extenders: Adopts package reported by Finance Committee in 2012, with a 2 year

“Let’s pass the tax relief portion now, let’s take what’s been agreed to and get moving.” — McConnell

Senate Minority Leader Mitch McConnell (R-Ky) announced this afternoon on the Senate floor that he and Vice President Joe Biden have reached agreement on all the outstanding tax issues, although they were still negotiating how to modify the $109 billion in automatic spending cuts set to take effect tomorrow.  He urged Congress to immediately clear the tax deal in order to prevent historic tax hikes get to go into effect tomorrow, stating “Let’s pass the tax relief portion now, let’s take what’s been agreed to and get moving.”

Obama on the Fiscal Cliff

Obama on the Fiscal Cliff

December 31, 2012

Authored by: Stephanie Moll and Matthew C. Jessee

President Obama addressed the nation today regarding the status of negotiations on the fiscal cliff.  According to Obama, a deal is “within sight but it’s not done”.

The current negotiations include:

  • Raising taxes on households that make more than $450,000 per year and individuals who make more than $400,000
  • A permanent patch to the Alternative Minimum Tax
  • A raise in the estate tax rate
  • An extension of unemployment benefits for a year
  • extending several middle-class tax cuts for five years; and
  • a temporary fix to Medicare reimbursement rates.

 

Even if an agreement is reached, it is unclear whether both the House and the Senate will act before the midnight deadline tonight to pass a bill.

Talks From the Top of the Cliff

Overnight negotiations took place between Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden in a last-minute attempt to avoid toppling over the fiscal cliff.  Reports state that they made “major progress” toward a deal, which would increase tax rates for families who earn more than $450,000 and individuals who make more than $400,000.  The estate tax issue has not resolved by the two.

President Obama is scheduled to make a statement about the fiscal cliff at 1:30 EST.

Fiscal Cliff Update

Fiscal Cliff Update

December 27, 2012

Authored by: Matthew C. Jessee

On Thursday, with five days remaining before the January 1st “fiscal cliff,” President Obama and the Senate returned to Washington to broker a deal that avoids the fiscal cliff’s tax increases and spending cuts. On Wednesday, House Republican leaders released a joint statement which urged the Senate to either approve or amend House-passed bills to prevent the fiscal cliff and vowed to call the House back into session if the Senate passes legislation. However, prospects for a deal remained dim when the Senate convened at 10:00 am today and Majority Leader Harry Reid stated that going over the fiscal cliff “looks like that’s where we’re headed.” Reid said Republicans must come up with a plan that can win back-to-back House and Senate bipartisan congressional majorities. However, rumors continue to circulate that President Obama will soon introduce his own bill that both the House and Senate can pass that averts the

Fiscal Cliff Bill Fails in House

Fiscal Cliff Bill Fails in House

December 21, 2012

Authored by: Matthew C. Jessee

On Thursday night, House Republican leaders pulled their “Fiscal Cliff” bill from the floor because it lacked enough votes to pass. The bill known as “Plan B” would have permanently extended all tax rates for income under $1 million including dividends and capital gains. The legislation would also have made permanent the AMT patch and estate tax rates as well as replaced the sequester cuts for one year through a mix of cuts to non-defense domestic programs. With the bill’s failure to even receive a vote, Speaker John Boehner is now unlikely to get any deficit plan through his chamber without relying on Democratic votes. At a press conference Friday morning, Boehner announced the House has recessed until January, and he will not resume talks with the President. However, a deal is still possible before year’s end if the Senate passes a bill that Boehner could muscle through the House