Bonds: Avoid the next great bubble

“Fueled by a combination of fear and greed. ” That is how CNNMoney.com describes the bond market bubble. According to CNNMoney.com:

A projected $380 billion will pour into bond funds this year, more than went into domestic stock funds in the past decade. That's on top of a record $376 billion last year. All this money flowing in has made bonds very expensive.

It's true that bonds are less volatile than stocks. But in fact they lose money just as often as equities do. "I don't think the public understands they can lose money in bond funds," says James Swanson, chief investment strategist at MFS, an asset-management firm in Boston.

So that's the fear part. The greed part comes from an entirely different group of people: safety-loving folks who normally park their money in cash, such as bank savings accounts, CDs, or money-market funds. Fed up with the meager interest rates those accounts are paying these days -- the average taxable money-market fund yields 0.03% -- they're venturing into short-term bond funds to eke out a bit more yield.

Why the bubble could burst

One part of the bubble is already leaking air: long-term government bond funds. Because they invest in super-safe U.S. Treasuries and other forms of government-backed debt, they were a popular place to hide during the mortgage meltdown.

But when the economy began improving and rates on 10-year Treasuries began rising (from about 2% at the end of 2008 to as high as 4% in April before slipping to 3.3% today), these funds started suffering. In fact, the Vanguard long-term Treasury bond fund fell 12% in 2009 and, despite the recent run up in Treasury securities, is still down 5% since the end of 2008.

Experts say that's just the beginning. Read about the major factors that could harm bonds further here.

200,000 could lose out on homebuyer tax credit

Many homebuyers, as many as 200,000 buyers according to CNN Money.com, could lose out on the $8,000 homebuyer tax credit. This is because many people are trying to purchase short sales, buying homes from sellers who owe more on their mortgage than the home is worth. Despite the name “short sale,” these deals often take a long time for the lender to approve. It could be anywhere from two to six months. This lag time could mean that buyers will lose out on the tax credit because their pending deals won’t be finalized by the June 30th deadline. Taking even more time are the home inspections. The average foreclosed home comes with many problems to repair, and fixing the issues takes time, slowing the process even further.

Richard Smith, CEO of Realogy, the parent company of several franchise real estate brokers started warning buyers back in January that short sales may not close in time to take the credit.

Read the full article here.

Are BP payments taxable income?

Many people on the Gulf Coast affected by the oil spill are filing claims through the BP oil company and they want to know, “Will the BP payments be taxable income?” This great question came up on the Don’tMessWithTaxes blog, and the answer to the question is: Yes, the payments will probably be taxable, but you never know, maybe not. Basically, the BP payments are considered payments made to individuals in the form of compensation for lost wages that would have otherwise been taxable income. Therefore, taxable. But sometimes people will get special tax treatment if they’ve been affected by disasters. Remember my blog about tax relief to flood victims?

Kenneth Feinberg, head of the Independent Claims Facility, said last week that it hasn't been determined if the payouts will be considered taxable income. Remember, this isn’t a gift from BP, it’s been given to cover money lost for jobs that couldn’t be done. The Treasury would lose a lot of revenue from these checks.

The recommendation is always set aside money for the IRS until you are certain it will not be taxable, just to be safe.

Mortgage rates hit new low

Wow, CNNMoney.com is reporting that 30-year fixed mortgage rates have dropped to an amazing 4.69%. Freddie Mac is saying it is the lowest level since they started tracking it 38 years ago. This means, yes, it is cheaper to buy a house. Unfortunately it is doubtful there will be a spike in home sales with unemployment so high, wages stagnant and tax incentives expiring.

With low home sales, home prices will continue to fall. Economists on CNNMoney.com predict by the end of next year, home prices will be at least 5% lower. However, lower home prices are bittersweet news. It’s great news for buyers, but bad news for all of those in or near foreclosure.

Read the full article here.

New Drill Ban as Oil Still Spews

BP is facing a slew of lawsuits and a criminal investigation as oil still gushes from their ruptured well in the Gulf of Mexico. Top Obama administration officials are also telling lawmakers in Washington that initial findings are showing definite “reckless conduct” leading up to the initial April 20th explosion.

Reuters.com reports the latest lawsuit will most likely be by investors, specifically the New York State pension fund—these investors are angry about the drop of the BP stock price. All the while, scientists estimate the oil leak is spewing up to 60,000 barrels a day!

According to reuters.com, Interior Secretary Ken Salazar said he would soon issue a new ban on deepwater drilling off the U.S. coast that would be more flexible than the suspension overturned a day earlier by a federal judge. He would like the new ban to include: when the ban would end and that it might allow oil companies to drill in certain low-risk areas. However there was no word on when Salazar would reissue this ban.

Let me know your thoughts. Follow me on Twitter @ronideutch or find me on Facebook.

New Credit Card Rules Effective August 22. What you need to know

Credit card companies have done their fair share of making sure they make money at your expense. Before now, they had really come up with their own set of rules. Well, there are new consumer credit card protection rules that are set to begin August 22, 2010.

This set of rules is the latest in a series of regulations that implement the Credit Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act). For other credit card rules that already went into effect February 22, although you can go the the website here. You can see some of the provision below. Here’s what you can expect from these new protections:

Reasonable penalty fees

• Today: Your late payment fee may be as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.
• Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:

1. One of your last six payments was late, in which case your fee may be up to $35; or
2. Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

What’s even better, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can't be more than $20. Similarly, if you exceed your credit limit by $5, you can't be charged an over-the-limit fee of more than $5.

Additional fee protections

• No inactivity fees. Your credit card company can't charge you inactivity fees, such as fees for not using your card.
• One-fee limit. Your credit card company can't charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

Explanation of rate increase

• If your credit card company increases your card's Annual Percentage Rate (APR), it must tell you why.

Plus a Re-evaluation of recent rate increases

• Today: Your credit card company can increase your card's APR with no obligation to re-evaluate your rate increase.
• Under the new rules: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.

Half of all loan modifications delinquent again within year

From CNNMoney.com:

It’s looking like homeowners who received loan modifications last year are already falling behind according to a federal report released Wednesday. I think this is an absolute tragedy—this economy continues to wreak havoc on the lives of many! Here’s what the article had to say:

Modifications made under President Obama's foreclosure prevention program, known as HAMP, had lower re-default rates than non-government modifications. Some 7.7% of HAMP modifications were delinquent after three months, compared with 11.3% of all modifications.

Is this an all-across-the-board problem or were there some loan modifications that fared better? HAMP had lower default rates than other non-government modifications. Under the HAMP program borrows receive incentives for making timely mortgage payments and they have their monthly payments reduced to no more than 31% of their pre-tax income.

Many experts say that servicers must do more principal reduction if they want to halt the foreclosure tidal wave. Homeowners are more likely to walk away if they owe much more than the home is worth, a situation about 1 in 4 borrowers find themselves in.

What are your thoughts on loan modifications or government programs like HAMP? Do you agree with borrowers getting incentives for paying their mortgages on time?

5 Tips for Protecting Your Home from Foreclosure

Many U.S. homeowners are in foreclosure or desperately trying to prevent their home from being foreclosed upon. Maybe they have missed a couple of mortgage payments and they just aren’t sure what to do next. www.federalreserve.gov has posted five 5 tips to protect your home:

1. Don’t ignore your mortgage problem. If you are unable to pay--or haven’t paid--your mortgage, contact your lender or the company that collects your mortgage payment as soon as possible. Mortgage lenders want to work with you to resolve the problem, and you may have more options if you contact them early. Call the phone number on your monthly mortgage statement or payment coupon book. Explain your financial situation and offer to work with your lender to find the right payment solution for you. If your lender won’t talk with you, contact a housing counseling agency. You can find a list of counseling resources at NeighborWorks and on the U.S. Department of Housing and Urban Development's (HUD) website or by calling (800) 569-4287.

2. Do your homework before you talk to your lender or housing counselor. Find your original mortgage loan documents and review them. Review your income and budget. Gather information on your expenses, including food, utilities, car payment, insurance, cable, phone, and other bills. If you don’t feel comfortable talking to your lender, contact a housing or credit counseling agency. Counselors can help you examine your budget and determine the options available to you. They may also advise you about ways to work with your lender or offer to negotiate with your lender on your behalf.

3. Know your options. Some options provide short-term solutions/help, while others provide long-term or permanent solutions. You may be able to work out a temporary plan for making up missed payments, or you may be able to modify the loan terms. Sometimes, the best option may be to sell the house. For information on different options, visit HUD’s website or Foreclosure Resources for Consumers for links to local resources.

4. Stick to your plan. Protect your credit score by making timely payments. Prioritize bills and pay those that are most necessary, such as your new mortgage payment. Consider cutting optional expenses such as eating out and premium cable TV services. If your situation changes and you can no longer meet your new payment schedule, call your lender or housing counselor immediately.

5. Beware of foreclosure rescue scams. Con artists take advantage of people who have fallen behind on their mortgage payments and who face foreclosure. These con artists may even call themselves “counselors.” Your mortgage lender or a legitimate housing counselor can best help you decide which option is best for you. For tips on spotting scam artists, visit the Federal Trade Commission's website, Foreclosure Rescue Scams. Report suspicious schemes to your state and local consumer protection agencies, which you can find on the Consumer Action Website.

Please see my blog entry and video on the same topic, Other Options than Foreclosure here.

Prisoners cashed in on homebuyer tax credit

During many of my tax season interviews, I warned taxpayers claiming the first-time homebuyer credit to beware of IRS audits—even back then it was common knowledge that the IRS would be paying extra close attention to every tax return claiming the first-time home buyer credit. Of the fraudulent tax credit request found by the IRS were made by state and federal prisoners—and the numbers are astounding!

According to a Treasury Department report released Wednesday reported by CNNMoney.com, the inmates defrauded the government of $9.1 million in tax credits reserved for first-time homebuyers.

4,608 state and federal inmates tried to file for the first-time home buyer tax credit. 1,295 of them actually received the fraudulent refunds. 241 of those inmates were serving life sentences!
The Treasury’s inspector general also found that thousands of people filed multiple claims or made claims outside the allotted time period. In all, more than $28 million was given out improperly.

The problem was particularly bad in Florida: 61% of the “lifers” who received credits were incarcerated in the Sunshine State.

"It is possible for an inmate to buy a house while in prison," said Jo Ellyn Rackleff, spokeswoman for the Florida Department of Corrections. "…Many of the inmates have families with children who live outside." She said that one of the reasons why Florida inmates feature prominently in the Treasury report is because the Florida prison system is transparent in providing inmate information to the IRS.

However, it wasn’t just prisoners filing faulty homebuyer credit claims, the report found that the IRS awarded $17.6 million to 2,555 filers who had bought their homes before the credit program kicked in. The inspector general also identified 206 filers who claimed the credit for multiple addresses; these fraudulent filers were awarded a total of $1.4 million.

The report also found that improper filers included 34 employees of the IRS! This is in addition to 53 IRS employees that the inspector general identified last year as improper filers.
More according to CNNMoney: the report included a response from the IRS, which highlighted the huge scope of the program, with $12.6 billion in claims awarded to 1.8 million participants. The IRS said it had ramped up efforts to crack down on criminal activity and would continue to review claims and "recapture" pay-outs determined to be fraudulent.

The IRS claims to be working on finding the identities of the agency employees who are at fault for questionable or fraudulent claims.

Read the full article here:

A Scramble to Finish Bank Rules This Week

President Obama is meeting with world leaders at the Group of 20 Summit this weekend in Korea. Our financial overhaul regulations need to be completed before the President’s trip and Lawmakers are scrambling to sort out their differences on a range of certain provisions. According to the Wall Street Journal, in their debate they are are discussing everything from bank regulations to consumer protection. If they don’t complete their work this week, Obama will go to the Group of 20 Summit without a bill and Congress might not be able to pass a law before their July 4th recess, which is what they have been pushing for.

One provision under debate is the Volcker Rule (originated by former Federal Reserve Chairman, Paul Volcker) which had originally imposed a ban on banks making investments with their own money—a practice called proprietary trading. Lawmakers are looking to compromise with allowing large banks to invest a small amount, like 2%, into certain privately managed funds. "Mr. Volcker wants and expects a really strong bill," said the former Fed chairman's assistant, Tony Dowd. "He doesn't want it to look like Swiss cheese."

They were also divided about how to set up stricter capital rules for banks with more than $10 billion of assets, as required by an amendment Senator Susan Collins (R., Maine) attached to the Senate bill last month. Banks are saying the new rules would restrict their ability to lend. Lawmakers on Monday did reach a deal that would limit the amount of fees banks are allowed to charge retailers for processing debit cards.

The conference committee of congressional negotiators seeking to resolve differences between the House and Senate versions of the bill plans to work through the consumer-protection issues on Tuesday, the Volcker Rule on Wednesday, and derivatives regulation on Thursday. The timing could slip if lawmakers need more time to resolve disputes. The very reason for the Summit is to discuss measures to promote the financial stability of the world—having our domestic issues worked out would sure look better for the President during the Summit.

Nebraska Town Votes to Banish Illegal Immigrants

The New York Times reports the residents of Freemont, Nebraska are trying to pass a law banning illegal immigrants from all other jobs and even rental homes. The new law, if it passes, will try to bar landlords from renting to those in the country illegally, requiring renters to provide information of the person to the police and to obtain city occupancy licenses.

Opponents say paying to defend such a local law would require a significant cut in Fremont city services or a major tax increase — or combination of the two. But advocates feel federal authorities failed to enforce immigration restrictions, forcing places like Freemont, Nebraska with a small but growing Hispanic population to take matters into their own hands.

The advocates of the law complained that illegal immigrants were causing an increase in crime, taking jobs that would once have gone to longtime residents and changing the character of their quiet city, some 30 miles of farm fields from Omaha.

Fremont’s Hispanic population, practically nonexistent two decades ago, has grown to about 2,000 people, according to some estimates. No one knows how many illegal immigrants live in Fremont, and the estimates (depending on which side of this debate one is on) vary enormously—as stated by the New York Times article.

It’s interesting to note how the new law wouldn’t apply to the area’s two largest meatpacking plants –including Hormel. They happen to be just outside official city limits.

This is what the A.CL.U. had to say in a statement about the Nebraska issue, “If this law goes into effect, it will cause discrimination and racial profiling against Latinos and others who appear to be foreign born, including U.S. citizens,” Laurel Marsh, executive director of A.C.L.U. Nebraska , said in a statement issued late Monday. “The A.C.L.U. Nebraska has no option but to turn to the courts to stop this un-American and unconstitutional ordinance before the law goes into effect. Not only do local ordinances such as this violate federal law, they are also completely out of step with American values of fairness and equality.”

Some residents were outraged by the choice, and began collecting signatures on a petition to put the question to a vote — the vote that ultimately came on Monday.

Read the the full article here. Tell me your thoughts on Facebook or @ronideutch on Twitter.

New Jersey Democrats fail to extend millionaires tax

Do you think millionaires should be charged a hefty income tax? What if it was to solve one of the highest budget short-falls in history?

According to Reuters.com, New Jersey Democrats had wanted to reimpose a one-year, 10.75 percent tax on income above $1 million that would have hit 16,000 people. New Jersey's fiscal shortfall, at 37.4 percent of the current year's budget, is the second-highest among U.S. states, second only to Nevada, according to the Center on Budget and Policy Priorities. However, New Jersey Democratic legislators on Monday failed to gather enough votes to extend a tax on millionaires that would have been used to provide property tax relief for senior citizens and the disabled.

The millionaires' tax would have raised $637 million for rebate checks of up to $1,295 for some 600,000 senior citizens who would otherwise face steep increases in their property taxes during fiscal 2011.

Gov. Christie claimed the tax would keep the millionaire business owners from hiring in our tough economy. However, he proposed a constitutional amendment placing a 2.5 percent cap on annual increases in residential property taxes.

Read the full article here. Tell me what you think on Facebook or @ronideutch on Twitter.

The Price of Saving Fuel

We may soon see more “green” vehicles on the road. According to Kiplinger.com, a survey by Capital One Auto Finance found that a third of their participants would likely purchase a green vehicle as their next auto purchase. People are considering one of the alternative-energy vehicles for a number of reasons, including the high price of gas. Some also want to do their part to help the environment, such as our air quality. But no matter the reason, most green vehicles qualify for tax deductions—and this alone is a great reason to buy one. However, you should know you'll pay an average of $5,500 more for a 2010 hybrid than for its gasoline-engine counterpart.

One way to see whether it pays to buy a green vehicle is to calculate the five-year ownership costs. What are your long-term savings at the pump as well as tax credits for the many green vehicles? When we compared the ownership costs of hybrids versus conventional vehicles in early 2009, gas prices we’re hovering just above $2 a gallon, and few hybrids earned back their extra cost with savings at the pump. But with gas now closer to $3 and with more eco-friendly vehicles on the market, you can more often save green by buying green.

The Kiplinger.com article updated calculations, pitting 19 hybrids and 11 diesels against comparable gas-engine vehicles. The numbers assume that you drive 15,000 miles a year and that regular gasoline is $2.85, premium is $3.15 and diesel is $3.08, with a 3.5% annual increase for each fuel. The math also includes depreciation, maintenance and repairs, and it assumes you finance the vehicle with a five-year loan after a 15% down payment. Don’t forget to account for federal tax credits for vehicles that still qualify for them; they've expired for Ford, Honda, Lexus and Toyota hybrids. (If you're hit by the alternative minimum tax, the credit won't help you, so your payback time will be a bit longer.)

Winners and losers according to Kiplinger.com: Diesels pay back their premium more often than hybrids do. Over five years, every diesel except one -- Volkswagen's Golf TDI -- costs less to own than the comparable gas-engine model. The savings range from $307 on the BMW X5 35d to $6,082 on the Mercedes-Benz GL350 Blue-Tec (the $60,825 diesel GL is priced $1,000 below the gas-engine GL450 and has a tax credit of $1,800). Among hybrids, you're more likely to be on the losing end of the deal as long as a gallon of gas still costs about $3. You'll save the most buying the super luxury Mercedes-Benz S400 hybrid ($92,475). It beats the S550 by $6,764 over five years -- mainly because it costs $3,650 less than the S550 and carries a tax credit of $1,150. But in general, the more expensive a hybrid, the less likely it will save money over its gas-engine sibling. For example, the biggest losers are the Chevrolet Tahoe and GMC Yukon hybrids (both about $52,000) -- which would cost you $10,000 more than their gas-engine comparables over five years -- and the Lexus LS 600h L ($109,675), which would cost a whopping $41,428 more to own.

I recently wrote a blog on the topic, 10 Vehicles that Still Qualify for a Federal Tax Credit. Check it at http://ronideutch.blogspot.com/.

Permanent middle class tax cuts too costly

We are entering mid-term elections and thus everything is becoming a “political issue.” Not outside of the norm, tax cuts have become a primary focus. Tax cuts enacted under former President George W. Bush are scheduled to expire at the end of the year, affecting taxpayers at every income level. President Barack Obama proposes to permanently extend them for individuals making less than $200,000 a year and families making less than $250,000 — at a cost of about $2.5 trillion over the next decade.

Many Democrats want to extend them before the elections, so they can campaign on passing tax cuts for the middle class. But Republicans argue that many of the high earners who would face tax increases under Obama's plan are small business owners struggling to stay afloat in a tough economy.

House Majority Leader Steny Hoyer said Tuesday that tax increases will eventually be necessary to address the nation's mounting debt, and pull in revenue, raising a difficult election-year issue.

Hoyer raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He suggested that making them permanent would be too costly.

In the short term, government spending has been necessary to stimulate the economy, Hoyer said. But in the longer term, Congress will have to rein in spending and raise taxes to tackle the debt, he added.

"Raising revenue is part of the deficit solution, too," Hoyer said.

Senate Republican Leader Mitch McConnell said, "It's now official. Top Democrats on Capitol Hill are starting to signal their intention to raise taxes on the middle class."

Read the full Associated Press article here.

Latest Budget Extender Includes Tobacco Taxes

According to an article on msnbc.com, lawmakers in Albany, New York will soon vote on an emergency spending plan in hopes of avoiding a government shutdown. The New York state budget is 80 days late; a large tax increase on tobacco products totaling $290 million is included in the latest bill. For example, the tax on a pack of cigarettes would go from $2.75 a pack to $4.35 a pack. Should the bill pass, the new taxes would take effect September 1. Because all State Republicans have indicated that they would vote ‘no’ on any tax increases. In order to pass, the bill would require all 32 Senate Democrats to vote ‘yes’.

What are your views on “sin taxes” such as these? Comment on my Facebook page or message me on Twitter @ronideutch!

California unemployment falls to 12.4 percent

Here in California the unemployment rate is falling, but not making much of a difference. It fell to 12.4 percent in California last month and the state had its fifth straight month of job growth, but the numbers are still very weak, according to the California Employment Development Department. The statewide unemployment rate fell only a tenth of a point, from 12.5 percent in May, while 28,300 jobs were added. However, most of the jobs were temporary government jobs, probably those from the Census.

In May, California still had the third highest unemployment rate in the U.S., trailing Nevada (14 percent) and Michigan (13.6 percent). May marked the first time since April 2006 that a state other than Michigan had the worst unemployment in the nation.

U.S. banks may end free checking accounts: report

Banks seem to be tightening up their financial purse strings lately. The latest report from Reuters.com states banks are doing away with free checking accounts. It further explains that this move is expected primarily to hurt retail businesses who could be asked to pay new monthly maintenance fees on their basic accounts that do not generate a lot of activity. According to Reuters banks are incurring expenses of $250-$300 a year to maintain each of the approximately 200 million checking accounts. However, some people disagree with this assessment. Don’t banks borrow against the money in checking accounts? And aren’t they already charging customer’s overdraft fees, ATM fees, and dozens of other outrageous fees? What do you think? Are you with a large bank or do you prefer a credit union instead? Let me know your thoughts on my Facebook or Twitter.

Talk Tax With Your Partner

Maybe you’ve already met the one for you and are either in or on your way to marital bliss. If so, congratulations on being so lucky-in-love! When you have decided to spend the rest of your life with someone, please find the time to have a discussion about finances—including taxes. You’ll be doing your love life a favor for years to come. And you’ll ultimately be doing yourself a favor knowing beforehand exactly what financial situation you are getting into.

Here are five tax topics to discuss with your partner:

1. Tax Debt. Have a candid discussion with your partner about whether they currently owe or will owe the IRS. Really, you and your partner should have a number of conversations concerning finances and debt, but just make sure that one is focused specifically on tax debt. This will also help you determine whether or not you will file jointly or separately.

2. Compliance. Has your partner filed all required tax returns? Failing to file a tax return can result in penalties and ultimately a hefty tax bill. It also is a good clue as to who should and shouldn’t be in charge of taxes moving forward.

3. Easy Money. Weddings can be expensive and the temptation to pull from a retirement account to assist with the cost can be difficult to resist. However, there are serious tax consequences for doing so. Another important question is whether or not your partner has already borrowed from a 401K or IRA account. They will likely have to pay taxes (or even a tax penalty) on this amount.

4. Other federal obligations. The IRS has the authority to collect back child support, alimony and federal student loan obligations. The IRS has the ability to withhold all refunds due and apply the funds to the back obligation; so if your partner owes other federal obligations you may want to file separately.

5. Filing status. Jointly or separate. Again, this is an important talking point. Although, the most advantageous filing status for married individuals is married filing jointly, there are instances in which spouses should opt to file separately. See the chart below:

File Married Filing Jointly if:

• All of your financial information is comingled and easy to access
• Neither spouse has a preexisting tax debt or other federal obligation
• You want to take advantage of every tax credit and deduction available

File Married Filing Separate if:

• One or both spouses have pre-existing tax debt or other federal obligation
• Both partners earn equitable income
• One partner has significant itemized deductions that are subject to the AGI floors (e.g. medical expenses, casualty losses, miscellaneous itemized deductions
• One partner has a tendency to use questions tax-filing decisions

Senate: Oil and Gas Industry Tax Breaks Remain

As you know, anti-oil company sentiment is at its peak right now. A recent poll showed that 75% of Americans blame BP “a great deal” for the spill. So, it was no real surprise when the Senate failed to say no to $35 billion worth of tax breaks for the oil and gas industry. Senator Bernie Sanders (I-VT) introduced a provision that would have limited write offs for drilling expenses, eliminated a tax deduction for the capital costs of oil and gas wells and repealed a tax deduction for domestic production of oil and gas. He needed 59 additional votes. He got 34.

Why should such companies receive additional forms of tax relief when the average taxpayer enjoys hardly any at all. Let’s us not forget that we are in a deficit of $13 trillion dollars…yes, that’s with a “T”. So, with such a deficit, a stagnant national unemployment rate and a lingering recession, why are we looking to give tax breaks to oil companies? Especially when over the last decade, the five largest oil companies (Exxon Mobil, Chevron, ConocoPhillips, BP and Shell) made more than $750 billion in profits. This is a no-brainer; these companies simply don’t deserve tax relief.

What are your thoughts? Let me know @ronideutch on Twitter or on Facebook.

How to Find a Low-Tax Place to Retire

For most of us “retirement” means lounging in warm weather, relaxing, and never having to work again! None of us want to pay higher taxes now; so why would we in our retirement?

USnews.com shares an article that goes over major taxes and tax breaks you should take into consideration when deciding to retire: Social Security, Pensions, Income Tax, Property Tax and Sales Tax. Read what they had to say:

Social Security. Most states no longer tax Social Security benefits. Some 35 states don't require residents to pay tax on Social Security income, according to an analysis by tax publisher CCH. Missouri and Iowa are in the process of phasing out their Social Security taxes. And Kansas residents with adjusted gross incomes of $75,000 or less are exempt from paying taxes on their Social Security checks.

Pensions. The tax treatment of pension income varies considerably from state to state. Some states, such as Pennsylvania and Mississippi, exempt all pension income from taxes. Other states exempt a portion of specific types of pension income. In Michigan, for example, all federal pensions and public pensions from specific states are totally exempt from tax. Private pensions were tax-exempt up to $45,120 for individuals and $90,240 for couples in tax year 2009. "When the economy was doing well, pension tax thresholds were moving out further and further, but now we're seeing a freeze on these threshold amounts," says Kathleen Thies, a CCH state tax analyst.

Income tax. Retirees who haven't saved enough to finance their desired lifestyle may need to work during their golden years. If your retirement plans include a part-time job, take a look at state income taxes. Seven states have no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. And two states, New Hampshire and Tennessee, tax dividend and interest income only.
Great advice: While states without an income tax can seem like an obvious choice for retirees, it's also important to look at property and sales taxes, which tend to be higher in income tax-free states. "If you're thinking of retiring in four different places, figure out the total tax cost in all the places and then you can make an effective comparison," advises Paul Erickson, a professor of accounting at Baylor University. "The property tax and sales tax could be higher than what you paid on income tax."

Property tax. The median property tax paid in the United States in 2008 was $1,897, according to a Tax Foundation analysis of Census Bureau data. But taxes paid ranged from a median of just $188 in Louisiana to $6,320 in New Jersey. "Most states give residents over a certain age some type of a break on their property taxes," says Rob Shrum, state affairs manager for the Tax Foundation. Some counties in Florida, for example, allow permanent residents age 65 and older within certain income limits a tax exemption of up to $50,000 of the value of their primary residence. Widows and widowers also get an extra $500 property tax exemption in Florida. Contact a state's department of revenue to inquire about property tax breaks for seniors.

Sales tax. Many cash-strapped states have been increasing their sales tax to raise needed funds. Seven states increased their sales tax rate in 2009, according to Vertex Inc. research. The average sales tax rate in the United States now stands at 5.5 percent. It may also be worth looking at the types of items and services that sales and excise taxes apply to. "Typically elderly people will be purchasing less cars or furniture or big-ticket items than someone with a growing family, but they still need to purchase food and clothing," says John Minassian, vice president of content development for Vertex Inc.

There are five states that levy no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. States with low taxes for shoppers include Colorado (2.9 percent) and Georgia, Hawaii, Louisiana, New York, and Wyoming (all 4 percent). California has the highest sales tax in the country at 8.25 percent in 2010.