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Taxpayers, Fannie Mae & Freddie Mac — The Earthshaking Truth

Posted By Staff Reporter, Tuesday, October 2, 2018

 

As we all know, the majority of the properties in this country do not have earthquake insurance. Nationally the number is overwhelming. To paint an even better picture, in California — the nation’s most at risk state — just 13.3% of properties have earthquake insurance.

R Street researchers say the big problem with the lack of earthquake insurance comes because financial institutions don’t demand it in order for someone to take out a loan. The same goes for loans guaranteed by the U.S. federal government.

R.J. Lehmann is R Street’s senior fellow and the director of finance, insurance and trade policy. He said Fannie Mae accounts for 21% of the nation’s loans and Freddie Mac pulls in 12%. Lehmann and policy analyst Daniel Semelsberger say the total mortgage debt outstanding from the two loan generators is $14.99 trillion.

They want to see that debt taken off the public’s back. In a report called Take a Load Off Fannie: The GSEs and Uninsured Earthquake Risk Lehmann and Semelsberger say Fannie Mae and Freddie Mac have $205 billion in uninsured earthquake risk on the books.

If one hits any of those homes, the taxpayer is on the hook for the loss. To get those loans off the taxpayer books, the two researcher came to some conclusions:

  The U.S. Geological Survey says 249 of counties in 21 states have the most earthquake risk

  As of 2016, properties in the 249 counties held $355.71 billion in unpaid principal

  Of that $210.1 billion is held by Fannie Mae and $145.61 billion by Freddie Mac

  The report urges Congress to immediately require a report on how to transfer that money to the private sector

By the way, the California Legislature is very conscious of the danger of earthquakes. It recently passed a bill requiring cities and counties in the most seismically vulnerable areas to put together a list of buildings that could be damaged or totally destroyed and collapse in a major earthquake.

Assemblyman Adrin Nazarian wrote the bill (Assembly Bill 2681). He said, “California contains thousands of buildings that are known to present an unacceptably high earthquake risk of death, injury and damage. Protecting our state’s economy, affordable-housing stock and social fabric from the long-lasting turmoil of earthquakes is of utmost importance.”

Some cities have already done something similar and required building owners to retrofit them. The regulations — however — aren’t even across the state. And even though this law passed, it has no teeth since no funds are attached.

So cities and counties will likely compile lists — eventually — but it will be at their own expense.

By the way, the new law also exempts single-family homes and residential buildings with four or fewer units and buildings owned by the state or federal government. Hospitals and public schools are also exempt.

Source links: PropertyCasualty360.com, The Los Angeles Times

 

Tags:  Fannie Mae  Freddit Mac  PIA Western Alliance  Taxes 

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Taxes, Pass Through Businesses, PIA National & More

Posted By Administration, Tuesday, August 14, 2018

 

In a major win for small-business insurance agencies and brokerages, the proposed regulations issued August 8th by the U.S. Treasury and the Internal Revenue Service (IRS) specifically state that “insurance agents and brokers” are not excluded from taking the 20% pass-through tax deduction that was passed as part of the tax reform legislation signed into law late last year.

 

Many members of the National Association of Professional Insurance Agents (PIA) own independent insurance agencies organized as sole proprietorships, partnerships, or Subchapter S corporations. Such small businesses do not pay corporate income tax. Instead, their income “passes through” the firm and appears directly on their owners’ individual tax returns, where it is taxed as normal income.

 

The 20% deduction — subject to other limitations imposed by law or regulation — will lower the tax bills of these individuals.

 

PIA National Executive Vice President & CEO Mike Becker noted Treasury’s proposed regulations explicitly specify that insurance agents and brokers are not barred from taking the deduction.

 

“PIA has been aggressively advocating for this tax relief for pass-through entities since passage of the tax reform law (P.L. 115-141) last December, on behalf of PIA members. We advocated for the language that was ultimately adopted by Treasury and the IRS in their proposal,” Becker said.

 

Lauren Pachman, Esq. is PIA’s counsel and director of regulatory affairs. “PIA was gratified to see the proposed Treasury regulation explicitly excludes insurance agents and brokers from the category of businesses that are not permitted to take the 20% pass-through deduction. It’s a good day for small-business insurance agencies, whose businesses will be taxed the way pass-through entities were intended to be by Congress,” he said.

 

Insurers might not do so well. The IRS has ruled that companies have to include their aggregate foreign cash position when calculating their one time transition tax from foreign source earnings. That’s the tax imposed on them when they bring their foreign cash back to U.S. soil.

 

The cuts passed by Congress last year treat untaxed foreign earnings as repatriated and puts a 15.5% tax on that cash or cash equivalents. An 8% tax is added to the rest of the earnings. The transition tax — most of the time — can be paid off in installments over an eight year period.

 

That could impact insurers.

 

Treasury Secretary Steven Mnuchin said, “The Tax Cuts and Jobs Act creates a historic opportunity for American companies to bring capital back home from overseas to invest in our domestic economy and create jobs for hardworking Americans. Our administration’s policies are focused on creating a more competitive system for business, which has already led to greater economic and wage growth.”

 

The online publication The Hill did an analysis of the new Treasury guidelines. Like PIA National, the publication said the pass-through businesses will like the new rules.

Owners of multiple related pass-throughs will be especially pleased. It’s not uncommon for many pass-through businesses to have owners who have multiple businesses. They’ll want to aggregate them.

 

The guidance allows for aggregation.

 

Some of the rest of the nation’s businesses will fare well and some won’t.

The Treasury guidelines say real estate — considering the president’s former profession you can now hear those on the left groaning and see them pointing fingers — is the big winner. High earners in brokerage firms don’t do that well but agents and brokers aren’t included in those restrictions.

 

Others so-called winners:

•  Bankers

•  Chefs

•  Web designers

•  Electricians

•  Plumbers

 

The big losers:

Lawyers and patient-seeing doctors are considered service businesses and the high-income owners of those businesses do not qualify for the deduction. Some in those two businesses were looking to get the pass-through deduction but that’s not going to happen.

 

Others:

•  Lobbyists

•  Employees wanting to be independent contractors

 

You can read all of the details in The Hill article.

 

Source links: PIA National, Insurance Business America, The Hill

Tags:  Insurance Content  Insurance Industry  taxes  Weekly Industry News 

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Special Report: Oregon’s Continuing Tax Battle

Posted By Administration, Tuesday, June 6, 2017

PIA Oregon has been carefully watching this unfolding tax battle. The association is about worried will impact independent insurance agents.

Corporate taxing Measure 97’s November election battle ended in a very lopsided no vote. The people of Oregon — after some $50 million was spent on the campaign — gave a resounding no to tax increases on corporate sales of over $25 million a year. Voters appeared to believe those taxes would be passed onto them in the form of higher prices.

Undeterred, Measure 97’s proponents have now moved the battle to the Oregon Legislature and again to the initiative process. One of the more active proponents is the Oregon Education Association (OEA). It is filing a new initiative for the November ballot that would raise $1.75 billion a year for K-12 public schools and for higher education.

And — yes — it’s a corporate tax.

Plus, the union — one of the major members of the tax-raising group Our Oregon — wants a second initiative on the ballot to make it easier for the Oregon Legislature to raise corporate taxes. That permission — said OEA President Hanna Vaandering — would remove the need to get a 3/5th supermajority for a tax raise. But — if passed — the initiative will only let the Legislature do the jump for education purposes.

“Parents and students are fed up with having the third largest class sizes in the nation. Having strong public schools is an Oregon value, but you would never know by looking at the Oregon legislature. These ballot measures seek to put the power back in the hands of the people not the powerful business lobbyists that control Salem,” she said.

The union’s tax proposal would set the rate at 0.95% compared to Measure 97’s rate of 2.5% and it will raise considerably less money.

PIA Oregon Lobbyist Lana Butterfield said the association is currently reviewing the initiative proposals.

Meanwhile, in the Legislature the corporate taxing effort is being led by Beaverton Democrat Sen. Mark Hass. He thinks there’s a good chance a gross receipts tax could actually pass this session of the Legislature.

“We're at a crossroads. We have a choice to do nothing because it’s too hard. We have a choice to do some tried and true short-term changes, tax increases. And third, we have a choice to reform our system that will add a measure of stability and reform I think is the key,” Hass said.

His proposal basically reduces personal income tax rates and while imposing a corporate activities tax of somewhere between 0.4% and 0.7% on gross income over $1 million. Those businesses with gross receipts under $1 million will pay a flat tax of $250. And all businesses operating in Oregon must register with the Oregon Department of Revenue.

In addition to the new tax, Hass’ proposal does away with corporate excise and income taxes and adds what is basically a corporate sales tax.

Lana Butterfield said the PIA Oregon is very concerned and on top of the bill. She said she and others on the PIA Oregon Legislative Committee met with Sen. Hass and Legislative Revenue staff and told them that:

  Insurance agents don’t set the price of their product and can’t pass it along to consumers.

  Insurance agents work on commission.

  The tax reform measure shouldn’t include premium value as gross revenue; insurance agents should be taxed only on commissions.

  The tax reform measure should have a special, much lower rate, for businesses which have high levels of pass through income (such as insurance and advertising).

She said the committee learned, “Agents won't be exempted. They will pay the minimum amount depending on what the floor is finally set at. They will be taxed on commissions, not premiums.”

The idea of another corporate tax battle is not appealing to Oregon’s business community and Republican leadership. The Oregon Business Plan Coalition — who successfully fought Measure 97 — is now called Brighter Oregon. Spokesman Pat McCormick said, “It's disappointing to learn that the government-employee-union-funded ballot measure advocacy group behind last year's failed Measure 97, has filed three new measures for the November 2018 ballot. Oregonians don't benefit when a single interest lobbying group uses the initiative process to work around the legislature just to get its own way.”

He said all that was accomplished in last year’s Measure 97 vote was the spending of $50 million by both sides and deep polarization of conservatives and liberals.

Brighter Oregon contends just raising taxes is not the solution. Any support the group — and other conservatives and conservatives in the Legislature — for the idea will have to be accompanied by spending cuts and especially in public pensions and other benefits.

Democrats have countered that they’ll only consider spending cuts if Republicans agree to increase corporate taxes.

 

Source links: OregonLive.com link 1, link 2

Tags:  business tax  Insurance Content  Insurance Industry  Insurance news  Special Report: Oregon’s Continuing Tax Battle  Taxes  Weekly Industry News 

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Oregon: Compromise on Taxes?

Posted By Administration, Wednesday, May 24, 2017

Oregon has become a tax battleground. The state has a huge deficit and is desperate for more income. Raising taxes is usually the first choice of some politicians. One such effort in Oregon was last November’s Measure 97. It was a corporate tax hike of 2.5% for businesses doing business in Oregon with income over $25 million.

Opponents called it nothing but a sales tax and it went down in flames and became one of the most lopsided ballot measure rejections in history.

Undeterred, Democrats in Oregon’s Legislature are looking at similar proposals to plug some of the $1.5 billion deficit. Oregon Senate Revenue Chairman Mark Hass — a Democrat — has put together a plan that builds on Measure 97 and on a plan introduced earlier in the Legislature by House Speaker Tina Kotek of Portland.

Basically, it replaces the state’s current corporate tax on profits with a tax on sales and gives low and middle-income people personal income tax cuts or credits to offset the higher prices that will no doubt come down because of the corporate sales tax.

The rates in the plan would be lower for manufacturers, wholesalers and retailers. Sales for law firms, real estate agents and doctors and other health care providers would be higher. However, the taxes will only apply to sales over $3 million.

Hass said his goal is “to find exactly the right rates that sync up with where our economy is and don't put a burden on working people. Whatever that ends up being that's what we'll do. My interest is the policy. We've got to make sure we get that right.”

Kotek wants to raise about $2.2 billion for the upcoming biennium. The Hass plan will raise about $640 million.

Republicans are opposed. Hood River Republican Rep. Mark Johnson and others say any news business tax must be accompanied with cuts in state spending and especially in public employee pension costs.

In reality, Johnson wonders why a new tax is needed at all. “Are we simply engaging in an exercise of trying to reform our tax structure because it's in need of reform because of the changes in our economy? Or is this an exercise in trying to acquire additional revenue?” he said.

Source link: OregonLive.com

Tags:  Insurance Content  Insurance Industry  Insurance News  Oregon: Compromise on Taxes?  Taxes  Weekly Industry News 

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Trying to Explain Trump’s Tax Plan

Posted By Administration, Wednesday, May 3, 2017

PIA National — at its just held annual Federal Legislative Summit — said tax reform is a high priority of the association. The PIA supports the creation of a clear and simplified tax code that reduces tax rates for small businesses and opposes the creation of any tax provision or regulations that may impede small business growth.

In its white paper on taxes, PIA National said small business is the backbone of the nation’s economy and has been for 250 years. Small business creates jobs that stimulate the economy and has a history of pulling the country out of recessions.

But the white paper said small business is under duress. “Despite these significant contributions, they are hampered by overly burdensome laws and regulations. Taxes at the state and federal level represent a major cost of doing business and are especially harsh on small businesses.”

PIA Advocates for independent agents by:

  Supporting legislation in Congress to decrease the corporate income tax rate for small businesses.

  Working with Congress, the Small Business Administration (SBA) and the Internal Revenue Services (IRS) to create a simpler tax structure and eliminate unnecessary complexities to create a system that is clear and competitive.

  Monitoring the activities of the IRS and the SBA to ensure that the voices of small business owners are being heard before any changes are made to current tax code

Now President Trump — after hint after hint — has finally released his tax reform plan. Instantly pundits from both sides of the political aisle and financial and tax experts started dissecting the plan and now we’re all confused. ‘

After looking at stories from sources ranging from MSN to The Hill, we — too — are confused. So we’ll give you what we’ve found and let you decide.

Right out of the chute the president radically changed the individual and married couple deduction:

  For individuals, the deduction will go from $6,300 to $12,600

  Married couples will see an increase from $12,700 to $24,000

Individuals will be helped but a huge part of the plan is aimed at business and small business in particular.  

MSN’s report says the Trump plan cuts the corporate tax rate — and many small businesses are corporations — from 35% to 15%. That means small businesses with creative accountants will do well. Those receiving business income via an LLC or other pass-through entities instead of wages could find this a nice loophole.

But that depends on how the bill is eventually crafted. But they could end up being taxes at that 15% rate instead of the top individual income rate of 35% which the Trump plan has cut from 39.6% to 35%.

The 15% corporate tax has some concerned that the rich will take advantage of this and drop their rate from the 35% proposed to 15%. Treasury Secretary Steven Mnuchin said that the administration is aware of that possibility and “will make sure that there are rules in place so that wealthy people can’t create pass-throughs and use that as a mechanism to avoid paying the tax rate that they should be on the personal side.”

What he didn’t specify is what those rules will look like.

Those currently paying the 39.6% rate — as you may or may not know — are those with incomes of $470,000 or more annually. By the way, the plan also drops that 3.8% ObamaCare tax for couples making over $250,000 a year.

The individual tax rates will look like this:

  10%

  25%

  35%

The tax brackets are 10%, 25% and 35% but there is no detail as to the income levels that accompany those brackets. It says tax watchers like the Tax Foundation and the Tax Policy Center are going to find it hard to predict revenue.

Scott Greenberg of the Tax Foundation said, “In order to know how much revenue something will raise, you need to know what it’s taxing.”

And with that he noted the plan also has a child care tax break but no specifics. You also — much to the relief of retailers — won’t see a border excise tax.

The plan also dumps the estate tax for estates valued at $5.5 million or for couples with estates valued at $11 million or more.

Controversially, Trump wants to dump the deduction for state and local income taxes. So, if you live in a state where those costs are high — like just about every state — then it’s a concern.

A story from The Hill said the plan does away with all individual deductions except mortgage interest and charitable giving. And it quotes Ernst & Young’s Mark Weinberger who heads the Business Roundtable Tax and Fiscal Policy Committee as saying it will make business more competitive.

“In calling for competitive tax rates and moving toward a modern international tax system, the President’s proposal reflects the most important elements that must belong to any pro-growth reform,” he said.

A second MSN story outlines the small business plan a bit deeper:

The Home Office: Quoting the IRS, MSN said as long as it is used by professional purposes, you can deduct home office expenses like mortgage interest, insurance, utilities, repairs and depreciation.

“Generally, when using the regular method, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities,” the IRS told MSN.

But there are changes as noted by MSN MarketWatch’s Tax Guy Bill Bischoff. “Such expenses are classified as miscellaneous itemized deduction items, and you can only deduct them to the extent they exceed 2% of your adjusted gross income or AGI. AGI is the number at the bottom of page 1 of your Form 1040. It includes all taxable income items and is reduced by selected write-offs, such as the ones for self-employed retirement plan contributions and alimony paid,” he said.

Employee Business Expenses: Job expenses will be impacted. For the employee, these are items not already reimbursed by your employer. This includes:

  Business travel away from home

  Business use of the personal vehicle

  Business meals and entertainment

  Business travel

  Use of your home

  Education

  Supplies

  Tools of the trade

  Miscellaneous expenses like home office deductions

 

Bischoff said the changes are probably needed because employees have been fairly creative with these items in the past.

“In a 2015 decision, the Tax Court allowed the taxpayer to claim a home office deduction for legal expenses incurred in a cause of action against her condo homeowners’ association (HOA) and to defend herself against related misdemeanor criminal charges. The taxpayer operated her unincorporated IT business out of a home office in her condo. She deducted 50% of various condo expenditures as home office expenses on her Schedule C (Profit or Loss from Business) for the IT business,” Bischoff said.

While much of this looks pretty good, a story from The Hill says the Trump plan came on a one page document with a series of bullet points but is seriously lacking in detail and that could be problematic.

The article points out some unanswered questions. One is capital investments. Republicans want businesses to be able to immediately deduct those investments. The concept is called full expensing and Republicans — and some conservative financial experts — say this could be a major player in economic growth.

Questions have also risen over what tax breaks will go away. And these are breaks that benefit the wealthy and special interests. House Republicans want to drop tax preferences for business except those doing research and development.

The Trump plan leaves that out though he mentioned it during the campaign.

Democrats — predictably — call it a giveaway to the wealthy and a plan that will add to the deficit. Massachusetts Democrat Rep. Richard Neal is the top Democrat on the House Ways and Means Committee. He said, “President Trump’s tax proposal does not do nearly enough for working families and small businesses in this country.”

Oregon’s Sen. Ron Wyden agrees. He is the ranking member of the Senate Finance Committee and said, “Instead of focusing on lowering taxes for teachers, nurses and cops, Trump appears to be piling on the conflicts-of-interest by ensuring he himself will receive an elite giveaway. Yet another reason why it’s critical the American people see his tax returns.”

The president disagrees and told Fox News reporter Martha MacCallum that it’s a great plan that people will love. She then pointed out that it might benefit the rich more than the poor because his rate would likely go from 39.6% to 15%.

Trump disagrees. “I’m going to end up paying more than I pay right now in taxes, all right? I will pay more than I pay right now. The reason I’m going to pay more is because I lose all the deductions. They have deductions on top of deductions. They have hundreds and hundreds of pages of deductions, things that you’ve never heard of before. I have great accounting firms. I’m sure you do. They come in, ‘Well, you’re entitled to a deduction for geese flying over America, you’re entitled to this, you’re entitled to’ — by the time they give all these — all of that stuff goes away. All of it goes away, other than charitable deductions, which we think is important to keep, and interest deductions, which we think is important to keep. But all of the stuff goes away,” the president said.

 

Source links: The Hill — link 1, link 2, MSN Money — link 1, link 2

 

 

Tags:  Insurance Content  Insurance Industry  Insurance News  ObamaCare  taxes  The Affordable Care Act  Trying to Explain Trump’s Tax Plan  Weekly Industry News 

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Taxes: Men Cheat More than Women

Posted By Administration, Tuesday, April 18, 2017

We just finished — or at least most of us did — our annual tax return drill. This year’s extension got us to Tuesday, April 18th instead of the traditional April 15th. It seems that every year the process gets more complicated and — for lack of a better word — painful.

 Many of us struggle with what to claim, what not to claim, how much income to claim, what must be claimed and all. But in the end, the job gets done and we cross our fingers — and if we’re praying people, pray — that we don’t get audited.

 And — be truthful now — from time to time we, to put it nicely, fudge a bit on those returns. Maybe fudge isn’t the appropriate word and it wouldn’t be a word the IRS will use. They’ll say it’s cheating.

 John D’Attoma is a postdoctoral research fellow at the European University Institute. He’s studying tax compliance and in doing so grabbed a couple of co-researchers and did an interesting study on how closely we follow the tax rules. His research didn’t focus solely on the United States. He looked at four different countries:

   The United States

  The United Kingdom

  Sweden

  Italy

 His main conclusion: women — no matter what the state of equality in the country — tend to cheat less on their taxes than men.

 Here’s how he arrived at his conclusion. D’Attoma hired 2,000 students from the four countries. They were told to perform basic clerical tasks and were paid for each entry they took from paper to a computer spreadsheet. Each entry paid them a dime.

 At the end of the experiment they were paid. Then a tax scenario was placed before them. In the end, there were three clerical tasks and nine different tax scenarios:

   One round had taxes paid just because income was reported

  Rounds two and three had all revenue put into a general fund and then redistributed equally among the participant no matter how much they contributed

  Round three had the general fund doubled

  Rounds four through six tax rates were adjusted: 10% in 4, 30% in 5, 50% in 6

  Rounds seven through nine offered two types of progressive taxation

  A last round was a charity round where they could give their tax revenue to a real-world charity

 The caveat is that the students were not required to report all their income. And that’s true for actual taxpayers. At the same time, the students were told there is a 5% chance of being audited.

 Here’s what the research concluded based on the percent of the income reported:

The United States

Men — 60%

Women — 73%

 

United Kingdom

Men — 39%

Women — 61%

 

Sweden

Men — 56%

Women — 81%

 

Italy

Men — 53%

Women — 74%

 

Source link: The Washington Post

Tags:  Insurance Content  Insurance Industry  Insurance News  tax day  Taxes  Taxes: Men Cheat More than Women  Weekly Industry News 

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Special Report: Taxes

Posted By Administration, Tuesday, February 7, 2017

Tax reform is a high priority of President Trump and the Republican-controlled Congress. How the reforms pan out is anybody’s guess at this point. And you can expect a huge battle from Democrats over any proposals — which Trump’s top-tier reduction proposal of 39.6% to 33% possess — that cuts taxes for the rich.

 

That’s a 6.6% drop.

 

Money Talks looked at what’s being proposed and asked some accounting firms to do an analysis. They noted that the president wants to go from seven tax brackets to a simpler three: 12%, 25% and 33%.

 

Ordinary Rate

Capital Gains Rate

Single Filers

Married Joint Filers

12%

0%

$0 to $37,500

$0 to $75,000

25%

15%

$37,501 to $112,500

$75,000 to $225,000

33%

20%

$112,501 +

$225,000 +

 

 

Two groups will see negative changes:

 

  Those in the upper 28% bracket will be forced into Trump’s 33% bracket

  Those in the 10% bracket will move to the 12% Trump bracket

 

The Tax Foundation — which leans right — said:

 

  The Trump tax plan will cut taxes on average by at least 0.8% for every quintile.

  Higher income earners will — however — benefit most and will raise the income of those earners by 10.2% to 16%.

  The estate tax only applies to about 1% and ending it gives them a great concentration of wealth.

 

The Tax Foundation also says the Trump tax plan will reduce income to the federal coffers between $4.4 trillion to $5.9 trillion in the next 10 years.

 

When it comes to deductions, Trump’s proposal caps them at $100,000 for individuals and $200,000 for married couples. He also wants to raise the minimum standard deduction to $30,000 from the current $12,600 for couples and move it to $15,000 for single payers.

 

President-elect Trump proposes leaving itemized deductions in place but capping the deductions you can claim at $100,000 for individuals and $200,000 for married couples. He wants to raise the standard deduction to $30,000, instead of the current $12,600 for couples and allow $15,000 for single payers.

 

The whole article is fascinating and you can find a link to it at the end of this story.

 

We are a tax burdened people for sure. Or at least most of us think so and for sure so does The Tax Foundation. It ranks its definition of tax burden on income, property and sales tax as well as on special taxes like real estate transfer, personal property taxes and special tax district fees.

 

Recently Forbes looked at the data and determined the states with the highest tax burdens and those with the lowest.

 

One PIA Western Alliance state — California — ranks in the 10 worst. It is number 47 and is the fourth from the worst ranking. Meanwhile, two PIA Western Alliance states — Alaska at 2 and Nevada at 8 — are among the least taxed.

 

Worst 10

 

50. New York

 

    State and local tax burden: 12.60%

    Effective state tax rate ($50,000 taxable income): 5.46%

    Highest tax bracket: $1,115,850

    Rate at highest tax bracket: 8.82%

    Per Capita Income: $52,417

 

49. New Jersey

 

    State and local tax burden: 12.30%

    Effective state tax rate ($50,000 taxable income): 2.54%

    Highest tax bracket: $500,000

    Rate at highest tax bracket: 8.97%

    Per Capita Income: $54,422

 

48. Connecticut

 

    State and local tax burden: 11.90%

    Effective state tax rate ($50,000 taxable income): 4.60%

    Highest tax bracket: $250,000

    Rate at highest tax bracket: 6.70%

    Per Capita Income: $60,287

 

47. California

 

    State and local tax burden: 11.40%

    Effective state tax rate ($50,000 taxable income): 4.34%

    Highest tax bracket: $1,000,000

    Rate at highest tax bracket: 13.30%

    Per Capita Income: $45,254

 

46. Wisconsin

 

    State and local tax burden: 11.00%

    Effective state tax rate ($50,000 taxable income): 5.68%

    Highest tax bracket: $240,190

    Rate at highest tax bracket: 7.65%

    Per Capita Income: $40,741

 

45. Minnesota

 

    State and local tax burden: 10.70%

    Effective state tax rate ($50,000 taxable income): 6.20%

    Highest tax bracket: $154,950

    Rate at highest tax bracket: 9.85%

    Per Capita Income: $45,552

 

44. Maryland

 

    State and local tax burden: 10.60%

    Effective state tax rate ($50,000 taxable income): 4.65%

    Highest tax bracket: $250,000

    Rate at highest tax bracket: 5.75%

    Per Capita Income: $52,805

 

43. Rhode Island

 

    State and local tax burden: 10.50%

    Effective state tax rate ($50,000 taxable income): 3.75%

    Highest tax bracket: $137,650

    Rate at highest tax bracket: 5.99%

    Per Capita Income: $44,367

 

42. Vermont

 

    State and local tax burden: 10.50%

    Effective state tax rate ($50,000 taxable income): 4.40%

    Highest tax bracket: $405,100

    Rate at highest tax bracket: 8.95%

    Per Capita Income: $41,634

 

41. Pennsylvania

 

    State and local tax burden: 10.30%

    Effective state tax rate ($50,000 taxable income): 3.07%

    Highest tax bracket: Flat

    Rate at highest tax bracket: 3.07%

    Per Capita Income: $42,268

 

Top 10

 

1. Wyoming

 

    State and local tax burden: 6.90%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $50,805

 

2. Alaska

 

    State and local tax burden: 7.00%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $47,354

 

3. South Dakota

 

    State and local tax burden: 7.10%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $43,212

 

4. Texas

 

    State and local tax burden: 7.50%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $41,269

 

5. Louisiana

 

    State and local tax burden: 7.60%

    Effective state tax rate ($50,000 taxable income): 3.50%

    Highest tax bracket: $50,000

    Rate at highest tax bracket: 6.00%

    Per Capita Income: $37,889

 

6. Tennessee

 

    State and local tax burden: 7.60%

    Effective state tax rate ($50,000 taxable income): 6.00% on DIVIDEND and INTEREST income only

    Highest tax bracket: Flat

    Rate at highest tax bracket: 6.00% (on dividends and income only)

    Per Capita Income: $36,525

 

7. New Hampshire

 

    State and local tax burden: 8.00%

    Effective state tax rate ($50,000 taxable income): Flat 5% on interest and dividend income only.

    Highest tax bracket: Flat

    Rate at highest tax bracket: Flat 5% on interest and dividend income only.

    Per Capita Income: $47,349

 

8. Nevada

 

    State and local tax burden: 8.10%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $39,947

 

9. South Carolina

 

    State and local tax burden: 8.30%

    Effective state tax rate ($50,000 taxable income): 6.02%

    Highest tax bracket: $14,400

    Rate at highest tax bracket: 7.00%

    Per Capita Income: $33,603

 

10. Alabama

 

    State and local tax burden: 8.30%

    Effective state tax rate ($50,000 taxable income): 4.92%

    Highest tax bracket: $3,000

    Rate at highest tax bracket: 5.00%

    Per Capita Income: $34,763

 

The Other PIA Western Alliance States:

 

35. Oregon

 

    State and local tax burden: 10.10%

    Effective state tax rate ($50,000 taxable income): 8.53%

    Highest tax bracket: $125,000

    Rate at highest tax bracket: 9.90%

    Per Capita Income: $38,219

 

27. Idaho

 

    State and local tax burden: 9.50%

    Effective state tax rate ($50,000 taxable income): 6.91%

    Highest tax bracket: $10,717

    Rate at highest tax bracket: 7.40%

    Per Capita Income: $33,741

 

24. Washington

 

    State and local tax burden: 9.40%

    Effective state tax rate ($50,000 taxable income): 0.00%

    Highest tax bracket: None

    Rate at highest tax bracket: 0.00%

    Per Capita Income: $46,456

 

17. Arizona

 

    State and local tax burden: 8.90%

    Effective state tax rate ($50,000 taxable income): 3.06%

    Highest tax bracket: $150,000

    Rate at highest tax bracket: 4.54%

    Per Capita Income: $35,889

 

14. New Mexico

 

    State and local tax burden: 8.60%

    Effective state tax rate ($50,000 taxable income): 4.34%

    Highest tax bracket: $16,000

    Rate at highest tax bracket: 4.90%

    Per Capita Income: $35,328

 

13. Montana

 

    State and local tax burden: 8.60%

    Effective state tax rate ($50,000 taxable income): 5.81%

    Highest tax bracket: $17,000

    Rate at highest tax bracket: 6.90%

    Per Capita Income: $36,407

 

Source links: Money Talks, Forbes

 

 

Tags:  Insurance Content  Insurance Industry  Insurance News  Special Report: Taxes  Taxes  Weekly Industry News 

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Oregon’s Corporation Taxing Measure 97 Push Not Done Yet

Posted By Administration, Tuesday, November 29, 2016

 

For Oregon companies with $25 million in income — and that’s not profit but income — the defeated Measure 97 would have imposed a 2.5% tax on those dollars. Oregonians agreed wholeheartedly — 59% to 40% — the measure was a sales tax on business and not a good idea. Most Oregon voters knew it would ripple through the economy and end up as a 10% tax on most products for consumers.

 

Proponents — not heeding the overwhelming defeat by the voters — vow to go to next year’s Oregon Legislature to get it to pass something similar. Last week a coalition called A Better Oregon said, to start, it wants the Legislature to pass a bill that requires corporations to disclose what they pay in Oregon taxes. Spokesman Brian Rudiger who is the executive director for SEIU Local 503 said, “We know broadly what the overall corporate tax burden is, but we think voters deserve to know how much Comcast is paying as an individual corporation, how much Chevron is paying as an individual corporation. We will be looking to support a policy that would mandate that.”

 

A big problem in the Legislature for A Better Oregon — however — is it does not have a specific plan. Andrea Paluso of Family Forward Oregon said, “We don't want to push forward a revenue solution that happens on the backs of working families or small business. We believe the focus should remain on the largest corporations doing business in our state.”

 

Opponents like Oregon Business Association President Ryan Deckert said there’s a reason the other 49 states haven’t enacted something like this. It puts homegrown firms at a big disadvantage and his group likes the new idea even less.

 

“The ink is barely dry on election 2016 and the proponents of Measure 97 are already back on the attack proposing a law that would be unique to Oregon; asking our businesses to open up all their books for competitors, lawyers…etc. to use against them,” Deckert said.

 

Experts — like University of Oregon economics professor Tim Duy — say the proponents are going to struggle to get anything passed in the Legislature because of the huge percentage of defeat for Measure 97. “Measure 97 (was) far too big and not well structured. As a consequence, (supporters) lost some bargaining power had they started with a smaller and less disruptive tax,” he said.

 

To be fair, the Oregon business community has indicated a willingness to help the state generate more revenue but wants spending controls and how the state puts that revenue to work as part of a deal.

 

Source link: Portland Business Journal

 

 

Tags:  Insurance Content  Insurance Industry  Insurance News  Oregon’s Corporation Taxing Measure 97 Push Not Do  tax  taxes  Weekly Industry News 

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Tax Reform: What Will It Look Like?

Posted By Administration, Tuesday, November 29, 2016

 

President elect Donald Trump has talked a lot about lowering taxes. And for years so has the Republican leadership. Now with a Republican soon to be president and the party controlling both houses of Congress, tax reform is likely to happen.

 

But what will that reform look like?

 

Senate Majority Leader Mitch McConnell wants to lower the corporate tax rate and the individual tax rate simultaneously. He and his allies in the cause say a lot of small businesses file taxes as individuals and we need to be careful not to leave them out. So his plan is to lower taxes for large corporations that he says, “are having a hard time competing with the rest of the world,” and for “most American businesses which are not corporations.”

 

Idaho Republican Sen. Mike Crapo agrees and he is one of the major players on the Senate Finance Committee who has jurisdiction over taxes in the Senate. Crapo said 70% to 80% of all business entities in the U.S. are small pass-through entities who file their taxes under individual rates.

 

“I have talked with many of my colleagues about this so I’m aware that there are some who believe we can do just the corporate. If we do just the corporate then we will create a tax disparity between different types of business organizations that I think would be harmful,” he said.

 

That said, Crapo does agree with some of his colleagues that doing corporate tax reform alone is much simpler, “The solution is easier to achieve, it’s not as complex.”

 

Some want a complete overhaul of the U.S. tax code. It’s something that hasn’t been done since 1986. But that’s complicated and is not as needed as corporate tax reform said Crapo’s Finance Committee colleague Sen. Pat Roberts of Kansas. “Everybody knows the business tax rate is the highest in the world and we’ve got to lower it. Why not do what we know what we can do? It isn’t really absolutely necessary that we do total comprehensive tax reform,” Roberts said.

 

In the House, Republicans have put forth a plan to address the small business issue. It would cap the small business and pass-through entities tax rate at 25% and lower the corporate tax rate to that same 25%.

 

Others — Republicans and Democrats — favor a plan to lower the tax rate for the overseas profits of U.S. corporations. The hope is to entice these corporations into bringing their $2.1 trillion in profits stashed in overseas banks back to the United States.

 

The wild card in the whole discussion is Trump. If he wants to focus on both, then House Speaker Paul Ryan will have more to say than McConnell and his Senate Republicans. Revenue bills all start in the House.

 

For their part, Democrats have expressed interest in tax reform and this is especially true of New York Senator Chuck Schumer who has worked hard on reforming foreign profit taxes for corporations.

 

An aide to an unnamed but senior Senate Democrat said Democrats will work with Republicans if reforms are designed to close loopholes and simplify the tax code. If reform slashes taxes for the wealthiest and for special interests, then Democrats will not participate and will work to block the passage of any bill.

 

If a rewrite of the tax code starts at all, it would begin in the House Ways and Means Committee. It’s headed by Texas Republican Rep. Kevin Brady. House Speaker Paul Ryan hasn’t commented on the entire code but last year he made it clear that corporate tax reform should stand on its own. Ryan worries that the give and take that will be necessary for a complete rewrite will take too long.

 

That said, he is in favor of some individual relief. In June Ryan introduced a broad plan that will — if passed — turn the seven individual tax brackets into three. The highest rate of 39.6% would drop to 33%.

 

Source link: The Hill

 

 

Tags:  Business tax  Insurance Content  Insurance Industry  Insurance News  Tax Reform: What Will It Look Like?  Taxes  Weekly Industry News 

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Talking Taxes: It’s January but April’s Deadline Looms

Posted By Administration, Tuesday, January 26, 2016

It’s January but a lot of us are already preparing for April’s tax deadline. And at this point — as we do just about every year — we start thinking we’re living in a state with unreasonable taxes. Taking that a step further, how often have you said, or heard someone say, you live in the state in the union with the highest taxes, or that is the worst for personal or business income?

 

Lots. Probably.

 

So which states have citizens carrying the largest tax burden? Not surprisingly, three PIA Western Alliance states are in the top 25 most taxed states. They are California — which is in the top-10 — and Oregon and Idaho.

 

Or so says Forbes magazine. Last week it published an online report on taxes. And since taxes are complicated, Forbes settled on five categories and judged taxes based on a single individual with a taxable income of $50,000 per year which it says is “pretty average.” As proof the publication cites the Census Bureau who said from 2009 to 2013 the median household income was $53,046.

 

So Forbes says that $50,000 works. Here are the five categories:

 

  State and local tax burden

  The effective state tax rate ($50,000 taxable income)

  Highest tax bracket

  Rate at the highest tax bracket

  Per capita income

 

1. New York

 

  State and local tax burden: 12.60%

  Effective state tax rate ($50,000 taxable income): 5.46%

  Highest tax bracket: $1,115,850

  Rate at highest tax bracket: 8.82%

  Per Capita Income: $52,417

 

2. New Jersey

3. Connecticut

 

4. California

 

  State and local tax burden: 11.40%

  Effective state tax rate ($50,000 taxable income): 4.34%

  Highest tax bracket: $1,000,000

  Rate at highest tax bracket: 13.30%

  Per Capita Income: $45,254

 

5. Wisconsin

6. Minnesota

7. Maryland

8. Rhode Island

9. Vermont

10. Pennsylvania

 

The PIA Western Alliance states in the top-25:

 

16. Oregon

 

  State and local tax burden: 10.10%

  Effective state tax rate ($50,000 taxable income): 8.53%

  Highest tax bracket: $125,000

  Rate at highest tax bracket: 9.90%

  Per Capita Income: $38,219

 

24. Idaho

 

  State and local tax burden: 9.50%

  Effective state tax rate ($50,000 taxable income): 6.91%

  Highest tax bracket: $10,717

  Rate at highest tax bracket: 7.40%

  Per Capita Income: $33,741

 

Source link: Forbes

 

Tags:  Insurance Content  Insurance Industry  Insurance News  Talking Taxes: It’s January but April’s Deadline L  Taxes  Weekly Industry News 

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