Bank Of America Halts All Foreclosure Sales

From CNNMoney.com...

Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.

The announcement came a week after the nation's largest bank said it was freezing home foreclosures in 23 states where foreclosures must be approved by the courts. Friday's announcement by Bank of America extends a review of foreclosure documents to all states, regardless of the required legal processes.

"Our ongoing assessment shows the basis for our past foreclosure decisions is accurate," said Bank of America (BAC, Fortune 500) spokesman Dan Frahm in an e-mailed statement. "We continue to serve the interests of our customers, investors and communities."

The announcement came two days after JPMorgan Chase (JPM, Fortune 500) said it will also halt foreclosures for about 56,000 homeowners after learning that its employees may have approved foreclosures without personally reviewing loan files.

JP Morgan Chase had no comment on Friday's announcement by Bank of America.

$26 Billion for States Passes Key Test Vote

A measure to send federal aid to cash-strapped states passed a key vote in the Senate, putting it one step closer to becoming law. However, if a final vote is not made by the end of the week, the bill will have wait until the end of the month because the Senate has an August recess scheduled to begin next week.

The measure, which passed by a 61-38 vote, contains $16.1 billion in additional Medicaid money and $10 billion in education funding to prevent teacher layoffs.

State officials have been desperately lobbying their representatives, saying they need the money to shore up their budgets. President Obama weighed in Monday, asking lawmakers to pass the bill.

Senate Democrats needed to garner at least 60 votes for the measure to pass this initial vote, meaning some Republicans had to cross the aisle. That help came in the form of Maine Republicans Susan Collins and Olympia Snowe.

A final vote could come late in the week, just before the Senate is scheduled to recess for the long August break. The measure would then have to go back to the House, which has already recessed. So it might not get to President Obama's desk until September.

Continue reading at CNN.com…

More States Woo Retirees With Tax Breaks

From Forbes.com:

Last month, even as they slapped a new tax on hospitals, raised dozens of user fees and eliminated a low-income tax credit, Georgia legislators passed income tax relief for one group: well-off retirees. For residents 62 or older, Georgia already exempts from its 6% tax all Social Security and $70,000 per couple of income from pensions, retirement accounts, annuities, interest, dividends, capital gains and rents. But in 2012, the exemption for couples 65 and older will rise to $130,000, and by 2016 all their retirement income will be exempt--a break Governor Sonny Perdue championed as a lure for well-heeled seniors.

If you're looking for a domestic retirement tax haven, Georgia is hardly the only place worth considering. Seven states--Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming--don't tax personal income at all. New Hampshire and Tennessee tax interest and dividends but not other income. The rest of the states have broad income taxes but give old taxpayers breaks, some quite generous. A recent study by Karen Smith Conway of the University of New Hampshire and Jonathan C. Rork of Georgia State calculates that retirees pay, on average, only half the state income tax of working folks with the same income.

That means the best tax locales aren't necessarily the same for retirees as they are for working stiffs. Some states, such as New Jersey, soak taxpayers of all ages (particularly affluent ones) with stiff income, real estate, sales and estate taxes. But others with a more moderate tax burden might compensate for having no income taxes with high real estate levies. New Hampshire, with no sales tax and a narrow income tax, has among the highest real estate burdens in the nation. Consider, too, the condition of local finances and prospects for tax hikes.

Income Taxes

The most common exemption among states with an income tax is for Social Security benefits; 27 states and the District of Columbia don't tax them at all while the rest provide a partial exemption, according to tax publisher CCH. Three states--Illinois, Mississippi and Pennsylvania--also exempt all private and public pension payouts, including withdrawals from individual retirement accounts. Kentucky exempts up to $82,220 per couple in pension and IRA income.

A Guide to the Biggest Primary Day of the Year (So Far)

Today is an election day. I hope you remembered to get out and vote! Voters from California to South Carolina will choose which candidates will be on the general election ballot in a series of primaries today. What do you need to know on a state to state basis for the election? The New York Times put together a guide of sorts. If you are in California, like me, here is the scoop:

CALIFORNIA: Republicans will select nominees for Senate and governor, with two former business executives poised to become the party’s standard bearers in the fall. Meg Whitman, in the governor’s race, she is the former chief executive of eBay and billionaire, and has invested a small share of her personal fortune in her race against Steve Poizner, the state insurance commissioner, who put up $24 million of his own money into his primary campaign.

It’s a back-to-the-future race. The winner will challenge Jerry Brown, the state’s attorney general, who was first elected governor of California three decades ago.

In the Senate primary, Carly Fiorina, a former chief executive of Hewlett-Packard, is running against Tom Campbell, a former congressman, and Chuck DeVore, whose candidacy has drawn the backing of many Tea Party activists. The winner will face Senator Barbara Boxer, a Democrat, in the fall.

Representative Jane Harman, who represents the state’s 36th District, in Southern California, will find whether she, too, is swept aside by the anti-incumbent sentiment. Ms. Harman, a centrist Democrat, is facing Marcy Winograd, a leading figure in the progressive movement in Los Angeles.

Get the rest of the scoop here.

Short-Run Tax Hikes Being Used to Fill Gaps

From USAToday.com:

Many states and cities coping with hard times are asking residents to open their wallets for the latest fashion in taxation — the temporary tax.

Governments are raising taxes for a specific period of time and promising the hikes will go away when good times return.

Some big temporary taxes:

• Arizona voters decide today whether to approve a three-year sales-tax hike. Republican Gov. Jan Brewer pushed to raise the sales tax from 5.6% to 6.6%, dedicating two-thirds of the new money for schools.

• Kansas hikes its sales tax July 1 from 5.3% to 6.3% for three years. The tax is designed to prevent cuts in education and social programs.

• Mobile, Ala., boosts its sales tax by 1 cent for 16 months starting June 1. The combined state and local rate will be 10%. Goal: avoid laying off police and firefighters.

• A half-dozen other states are eyeing temporary taxes. So are many cities and counties, including King County, Wash., which includes Seattle.

5 Least Tax-Friendly States to Live In

With tax season coming to an end, some taxpayers are satisfied with their tax bill or refund, while others are wondering if they might have paid more or less had they been living in another state. Using information collected by the Tax Foundation, Wallet Pop made a list of the five least tax-friendly states to live. I have included the first two states below, but be sure to checkout the full list here.

1. New Jersey. Not only does New Jersey have the worst NBA team record this year, they have the worst tax record as well. Taking into consideration state and local property, sales and income taxes, those in the Garden State pay out a whopping 11.8% in taxes.

It was no surprise that voters booted existing Governor John Corzine (D) out of office last fall in favor of GOP challenger Chris Christie. Voters cited the economy and the state's high tax burden as their biggest concerns -- a particularly timely gripe since taxes in the state had just gone up (again).

New Governor Christie initially received praise for his handling of what was, all agreed, a fairly substantial economic challenge. He cut spending and made some painful decisions on raising taxes to get the state's budget in order. But his "we're all in this together" stance took a beating when he refused to extend the tax rate to top earners.

Hopefully, the tax burden will turn around in the next four years ... or Christie may find himself joining in a revolving door of New Jersey governors.

2. New York. The Empire State just missed the dubious honor of getting the top spot with a total burden of 11.7% -- just 0.1% behind its neighbor, New Jersey. New York is generally regarded as an expensive place to live because of the cost associated with living in New York City, which has a total population of more than many states (about 19 million). But tax woes aren't limited to the city: The state of New York has been struggling to close an estimated $9 billion deficit. That means no tax cuts for residents. In fact, adding to its already high tax burden, New York is likely to see some additional taxes on everyday items shortly -- a tax on soda tops the list.

Some States Delaying Tax Refund Payments

From CBS News.com:

Some states suffering severe, recession-induced budget problems are holding off on paying tax refunds to individuals and businesses. North Carolina, Hawaii and Alabama are already doing it and others, such as New York and Kansas, might.

The states are holding or may hold onto your money as long as they can because they need to use it for other purposes, tax expert and attorney Barbara Weltman told "Early Show" Saturday Edition" co-anchor Chris Wragge.

You'll eventually get your refund, but when depends on where you live, she explained. Laws differ from state-to-state, but most states have to issue a check (or direct deposit) within 45 days from April 15 or the date the return was filed, whichever is later. So, if you filed your return in February, the refund isn't due until 45 days after April 15. Some states have even longer — up to 90 days — to issue the refunds without having to pay interest.

Weltman says she sees this becoming a long-term problem because, even if the economy recovers, many states will have huge leftover budget gaps. "I think the best strategy for tax payers is to avoid the need to get a refund — which is really just an interest-free loan you've made to the government," she observed.

Are Taxes the Root of Unhappiness?

According to Allysia Finley, of the Wall Street Journal, the states with the highest tax rates also rank as the “unhappiest.” Finely quotes a study that ranks states according to how happy they are. She notes that New York, Connecticut, Michigan, Indiana, New Jersey, California, and Illinois are all among the unhappiest states, who also have the highest tax rates.

Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state.

But first a note on the study. Using data from the 2005-2008 Behavioral Risk Factor Surveillance System and a 2003 economics paper examining quality-of-life indicators, economists regressed the subjective measure of well-being (how people rate their satisfaction) against the objective measure (states' quality-of-life rankings based on compensating differentials). A compensating differential in labor economics refers to the additional amount of income an employer must pay a worker to compensate for the undesirability of a job or the location's lack of amenities (e.g. local and state tax levels, climate, environmental conditions, quality of schools, and crime rates).

For example, employers in New York would have to pay higher wages to compensate for New York's high taxes, traffic congestion, cold weather, and poor schools. Due to these "disamenities," New York ranked lowest on the quality-of-life index.

What's noteworthy about the study is that states' quality-of-life rankings (measured by their compensating differentials) correlated exceedingly well with residents' satisfaction ratings. The correlation between quality of life and satisfaction is statistically significant (P=0.0001; r=0.6; r2=0.36). The coefficient of determination r2 shows how well the regression line fits the data points. While an r2 of 0.36 may not seem large---and in some studies may not be statistically significant---it is unusually high by the standards of behavioral science. To give an idea of the magnitude of this correlation, the r2 of people's satisfaction ratings taken two weeks apart is also 0.36.

Continue reading at WJS.com…

States Offer Tax Evaders with Offshore Accounts a Deal

The Federal governments popular taxpayer amnesty program has allowed hundreds of Americans with offshore accounts come forward and avoid criminal prosecution and/or excessive monetary penalties. After seeing the success of the Federal program, some states – including Connecticut, New York and Hawaii – are offering similar programs as well. You can find a segment of a USA Today article on this new development below.

The IRS isn't the only government agency urging Americans with secret offshore bank accounts to disclose their holdings and pay overdue taxes. Several states have begun similar efforts.

More than 3,000 offshore account owners have applied for an IRS voluntary disclosure program since it began in March, lured by reduced fines and the prospect of avoiding criminal charges.

The IRS started the program amid what proved to be a successful federal court battle to force Swiss banking giant UBS to turn over the names of thousands of Americans with undeclared accounts. UBS recently began notifying American clients their names would be disclosed.

As the Oct. 15 application deadline for federal leniency nears, Connecticut and Hawaii are mounting efforts modeled on the IRS program. Oregon, New York and at least four other states have disclosure programs or amnesties that are open to offshore-account owners.

"It is only a matter of time before we find these taxpayers," said Richard Nicholson, head of Connecticut's Department of Revenue Services, as he announced its program last week.

That's because income-tax-return adjustments and other data the IRS develops under its program may be shared with local tax counterparts, said IRS spokesman Bruce Friedland. The state efforts could get that data faster — and generate tax revenue at a time of budget shortfalls.

States Face More Cutbacks and Tax Hikes

While some experts assert the United States’s economy is improving, state and local governments are reportedly still facing tax increases, setbacks, and budget problems. According to preliminary reports, state agencies in this country will likely face a combined deficit of at least $51 billion next year, which is significantly higher than many had expected.

"These are the worst numbers we've ever seen in the decades of putting together this report," said Scott Pattison, executive director of the National Association of State Budget Officers. "States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending in ways that impact every part of state government."

The full report, which will be released in December, is jointly compiled by the budget officers' group and the National Governors Association. Fiscal year 2010 started on July 1 in 46 states.

Some $135 billion in federal stimulus funding helped states avoid even more draconian cuts, particularly to health services and education. But it was not enough to put the states back on solid footing.

States typically continue to suffer for two years after a national recession is declared over. Many economists predict that the current downturn ended last quarter, when the gross domestic product grew at a 3.5% annual rate.

Continue reading at CNN.com…

Who Is the Small Business Majority?

From the New York Times.com:

The Small Business Majority released a series of state polls today and yesterday that make an astonishing claim: small business owners, by wide majorities, support a mandate that would require that businesses either provide health insurance for their employees or pay a tax to fund government-supported insurance for them. In Iowa, 65 percent support the pay-or-play proposal; in Nebraska, 59 percent favor it. Across 16 states, support for the employer mandate ranges from 59 percent to 72 percent

As far as the Agenda knows, the Small Business Majority research is the only research that has found that small businesses buy in to pay-or-play. All of the other small business advocates claim the opposite, and by greater margins — even the National Small Business Association, whose moderate leanings seem practically radical, at least compared to those of its larger rivals, the U.S. Chamber of Commerce and the National Federation of Independent Business.

The novelty of such a claim raises a whole bunch of questions. We’ll return to the polls themselves another day. But first, let’s take a look at Small Business Majority. The group has gotten a lot of press this spring, first as one of two small business invitees to the White House health care summit in March. Then, last month, it released a study by MIT economist Jonathan Gruber that claimed health care reform proposals that include an employer mandate would save small businesses $855 billion over ten years. Suddenly, the organization is a player. But just what is Small Business Majority, and whom does it really represent?

The group has been around since 2004, founded by a tech entrepreneur named John Arensmeyer. “We really felt there needed to be a more sort of measured, pragmatic voice that was not ideological in the public policy discussions around small business issues,” he says. Chief among its positions is that bearing the cost for effective health care reform is a “shared responsibility” — shared among government, individuals, and employers.

Tax Deductions For Car Purchases Now Apply To All States

From the Boston.com:

[T]he American Recovery and Reinvestment Act (ARRA) passed earlier this year, provides a tax deduction for the purchase of a new qualified vehicle. The Treasury announced last week that this incentive now applies to all states – including those that do not impose a sales or excise tax. This includes Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.

Purchasers of a new qualified vehicle in the states mentioned above can now take an above-the-line tax deduction for fees and other taxes that are imposed by the state or local government. These fees and other taxes must be based on the vehicle's sales price or as a per unit fee in order to qualify for the deduction.

All of the other provisions of this incentive are the same for all states including:

• New vehicles include cars, light trucks, motor homes, or motorcycles.
• The deduction is only available for purchases made on or after February 17, 2009 and before January 1, 2010.
• The deduction is limited to the sales tax, excise taxes, or fees paid on vehicles with a maximum purchase price of $49,500 dollars.
• If you are married and you file a joint tax return have, the deduction gets phased-out once your modified adjusted gross income (MAGI) reaches $250,000 dollars and is completely gone if your MAGI is more than $260,000 dollars. For all other taxpayers, the phase-out range is a MAGI of $125,000 dollars to $135,000 dollars.
• The deduction is available whether or not you itemize your deduction on your tax return.
• The deduction must be taken on your 2009 tax return (which is filed in 2010).

States Give Hollywood A Fortune In Tax Breaks

Earlier today, I came across this interesting Associate Press article discusses how some States – who are hiking taxes elsewhere – are offering huge tax incentives to the entertainment industry, primarily for movie and television. This has gotten taxpayers concerned, as they are wondering if they are going to benefit from the Hollywood tax incentives.

An Associated Press survey found that states competing for projects handed out $1.8 billion in tax breaks and other advantages to the entertainment industry from 2006 through 2008.

Several states have even sweetened their incentives recently or are considering doing so, for fear that if they don't land the next major motion picture, someone else will.

"The industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise," said Bob Orr, a former North Carolina Supreme Court justice who heads an anti-incentives group called the North Carolina Institute for Constitutional Law.

Some states argue that the tax breaks pay for themselves in revenue. Many others contend that even if tax revenue takes a hit, the film industry boosts their economies with an infusion of cash and jobs.

Production companies spend money on sets, props, caterers, and salaries for actors, extras and crew members. Movie crews eat at restaurants and stay in hotels while in town.

Movie shoots can also give a place a little Hollywood glamour, which can, in turn, boost tourism — something that has happened in Durham, N.C., where the 1988 Kevin Costner comedy "Bull Durham" was shot, and in Savannah, Ga., the setting of the 1997 film "Midnight in the Garden of Good and Evil."

"I relate this to creating jobs similar to the way you would turn on a light," said Republican state Rep. Stephen L. Precourt of Florida, who is pressing to increase the state's incentives. "Within days, people could be working here under this incentive program."

Continued on Google News.

Schwarzenegger Announces Spending Plan

According to MercuryNews, “Gov. Arnold Schwarzenegger on Wednesday unveiled what he called a compromise spending plan that includes a 1 cent sales tax increase.

He implored lawmakers to look past their partisan differences in the interest of the state, but Schwarzenegger had privately broached much of the plan with legislative leaders already, to no avail.

The announcement marked the first time that the Republican governor has publicly acknowledged his proposal for a temporary 1-percentage-point sales tax increase, despite campaigning for office twice on a no-new-tax platform. The budget plan, his third this year, also calls for deeper spending cuts than Democrats want and a larger ‘rainy day’ reserve to head off future budget crises. He also wants to raid funds from redevelopment agencies across the state, an idea that could jeopardize or delay downtown and neighborhood projects in San Jose.

‘Republicans must step out of their ideological corner on the right, and Democrats must step out of their ideological corner on the left,’ Schwarzenegger said at a news conference. ‘We must meet in the middle.’ He called it ‘shameful’ that California, reeling from a $15.2 billion deficit, is still without a budget 51 days into its fiscal year.

Still, much of what the governor described simply made public ideas that he's pitched in closed-door – and thus far unproductive – negotiations. The reaction from legislators did not offer much encouragement that his announcement would yield a breakthrough.

Assembly Minority Leader Mike Villines, R-Fresno, said after the news conference that Republicans would not soften their opposition to higher taxes no matter what the governor says. California requires a two-thirds vote to pass the budget, so Schwarzenegger must win over at least six GOP Assembly members and two GOP senators to move his plan through the Legislature.”

Tax Friendly States

CNN has put out a list of the most tax friendly states for 2007. The list was put together by comparing each states total state and local tax burden in 2006. That burden was determined by what residents pay in state and local income taxes, property taxes, sales taxes, luxury taxes and fuel taxes, among others. States that top the list include: Alaska, New Hampshire, Tennessee, Delaware, and Alabama. For the full list go to CNNMoney.com.