Tag Archives: Tax

Economy still in Decline

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Written by: Jason Garoutte

Warning sign stating Slow Economy Ahead.

Slow economy ahead.

The economy is still taking a blow and in a state of decline, despite the slight rise in the stock index seen recently as the DOW Jones index rose above 14,000 points for the first time since 2007. The unemployment rate in the United States as of January 2013 still remains at 7.9 percent with 12.3 million Americans still without work.

Another 8 million workers are considered “under-employed”, having been laid off from higher paying careers and having to settle for  lower paying jobs just to make ends meet. An estimated 2 or 3 million more have simply given up looking for work and are not counted in the government unemployment numbers which are based on applications for unemployment insurance from the Federal government.

It appears that these numbers may increase not only in the next few months but in the upcoming years with many giant retailers closing the doors on numerous locations across the country.

Economists measure economic decline by measuring the income for the whole economy, which is called gross domestic product or GDP. For a recession to take place there must be six straight months with a negative GDP report.

Based on that measure, Americans have been facing a recession for years now and even with the slight increase in the stock market index, there does not appear to be a light at the end of the tunnel any time soon. There are many factors why an economy might decline and economists don’t always agree on what those factors might be. Some of those factors include declines in the housing market, high unemployment, inflation, high oil prices, government spending, and taxes.

So why is the unemployment rate still at 7.9 percent? Businesses earn less profit during a recession and lay off workers, which leads to less demand for products. If enough workers lose their jobs throughout the economy, then many businesses will earn less in profits and continue to lay off more workers. Increased taxes and regulations can have a further downward pressure on both large and small businesses struggling to maintain profitability much less increase their profit levels.

This is still happening today as eight giant retailers are forecasting numerous closures in the upcoming years. J.C. Penney, who has been struggling since this recession started, continues to struggle. They are forecasting 300 to 350 store closures nationwide. The video game giant GameStop announced it will close the doors on 200 stores in the year 2013 alone, with 300 to 400 more closures to occur in following years.

Other giant retail companies forecasting closures are Best Buy, Sears, Barnes & Noble, Office Max, and Radio Shack. Between 2010 and 2011, Radio Shack closed over 120 locations with even more forecasted in the near future.

All of these store closures mean more and more citizens becoming unemployed, which would once again add to the unemployment rate, which is a leading indicator of economic decline.

FTC Proposes Consumer Electronics Tax

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Newspaper

Newspaper

In response to the dwindling revenues and subscriptions to print and paper-based news media over the past decade, the Federal Trade Commission has suggested placing a 5% tax on consumer electronics in order to provide support to these organizations.  This suggestion is part of a larger push by the FTC to provide support for the “reinvention of journalism”.  If it is ever passed, the suggested 5% tax would apply to electronics such as PCs, laptops, game systems and iPads, among other devices. 

Although many newspapers have recouped some of their lost revenue through online advertising, the FTC suggests that this income is not sufficient to take the place of the print advertising proceeds newspapers became accustomed to in the 20th century.  The proposed solution to save print media – government funding in the form of up to $35 billion in annual subsidies.  This funding, of course, would ultimately come from US citizens, thus the suggestion for a 5% consumer electronics tax.  The FTC argues that the $35 billion annual allocation to news media is comparable to the commitment the government made in the early 1800’s to subsidize journalism.  The general consensus is that assisting the newspapers and other forms of journalism is for the greater good. 

Obama Has Handled the Tax Issue, And Tea Party’ers Still Deny It

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A few Tax Party opinion signs

Announcing his 2011 budget proposal back in February, President Obama asserted that the government cannot spend as if deficits go without consequence, nor as if American tax-dollars are “Monopoly money.” But, as tax day arrives, many are questioning whether the president will keep his word, or default on a promise. While Tea Party supporters shout “Taxed Enough Already” until their voices crack, some are utterly stupefied by how such people ignore the figures surrounding the American Recovery and Reinvestment Act – aka the stimulus package -which recieves partial credit for for 2009’s record-breaking tax refunds, and a sixty-year low in federal taxes (a figure put forth by William Gale, co-director of the Tax Policy Center and director of the Retirement Security Project at the Bookings Institution.

Wrong, the budget crises is no kryptonite.

So, what does Obama have planned for our hard-earned money? Well, by the close of 2010, Americans are likely to see: A raise of the top two income tax brackets from 33 to 36 percent, and 35 to 39.6 percent; A raise in the capital gains tax rate from 15 to 20 percent – along with an increased tax on dividend income from 15 to 20 percent – for married couples with incomes exceeding 250k.

From these figures, it’s difficult to understand where the protestors get their information; after all, Gerald Prante, a senior economist for the non-partisan research organization, Tax Foundation, admitted that the increases will only reflect upon 2 to 3 percent of the year’s total tax returns.

Capital Gain And Loss To Cut Tax Bills

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Stock market investments are considered assets that can lead to capital gain or loss

Introduction:

The basic theory behind a trade is that it is considered successful when a product is sold at a higher price  than the base cost, i.e., the amount of money spent while buying a product or investing on an asset. Capital Gain and Loss are the important facts you must understand well before investing or selling an asset. This article will help you calculate these profits, losses and the benefits obtained while filing for tax refund.

Understanding Capital Gain and Loss:

Capital Gain is the profit you earn from selling an asset.  Real estate, bonds, mutual funds, gold, diamonds, stock market investments are all considered assets or capital investments. Until you sell a particular asset, you enjoy the benefits without paying any tax. If you sell an asset at a higher price than the amount you invested while buying, you receive a profit out of the sale. This profit is known as Capital Gain. If the asset is sold at a lower price, you face depreciation, which is known as Capital Loss.

Calculating Capital Gain and Loss:

For calculating capital gain and loss you need to know the following information:

Cost Basis – The original cost paid while buying an asset

Sale Price – The current value of the asset – amount you received from the buyer

Cost Basis – Sale Price = XYZ(amount)

If XYZ is higher than cost basis, then that amount is your Capital Gain

If XYZ is lower than cost basis, then that amount is known as Capital Loss

Capital Gain Tax Essentials:

Once you have calculated Capital Gain and Loss, you need to update the amount in the tax form while filing for your tax refund. If the asset is held for more than a year or two, it comes under ‘long term’ gain or loss and a lower rate is applied while taxing. The period you have held the asset determines the tax benefit rate to which you are entitled. The longer the period for which you held the asset, the lower the tax rate.

Conclusion:

In-depth knowledge related to financial information such as investments, wages and taxes withheld makes things easier while filing tax for refund. Even if you plan to work with a finance specialist or tax consultant, it is highly advisable that you understand Capital Gain and Loss, in order to reap applicable benefits.