Five myths about TARP, according to Treasury Secretary Tim Geithner

The Troubled Asset Relief Program officially ended last week, and many Americans are wondering about how the money was spent. To clear up misunderstandings surrounding the program, Treasury Secretary has personally penned an article for the Washington Post on 5 common myths about TARP. You can find a segment of Geithner’s article below.

Born at the peak of the financial crisis in 2008, the Troubled Asset Relief Program expired last week, ending what was perhaps the most maligned yet most effective government program in recent memory. Despite new evidence about the low ultimate cost and positive impact of the TARP, there is still a chasm between the perceptions of the program and its overwhelmingly favorable effect on the U.S. economy.

The TARP was doomed to be unpopular from inception, because Americans were rightfully angry that the same firms that helped create the economic crisis got taxpayer support to keep their doors open. But the program was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. And it helped achieve all that at a lower cost than anyone expected.

As we put the TARP to rest, let's also put to rest some of the myths about the TARP.

The TARP cost taxpayers hundreds of billions of dollars.

1. The true cost of the financial crisis will always be measured by the devastating losses of jobs, homes, businesses, retirement savings and fiscal revenues. But the cost of the TARP, which succeeded in reducing the overall economic damage, will be considerably lower than once feared. In fact, the direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion -- $300 billion less than estimated by the Congressional Budget Office last year. And taxpayers are likely to receive an impressive return (totaling tens of billions) on the investments made under the TARP outside the housing market.

Continue reading at Washington Post.com…

Common Franchise Myths Debunked

The Roni Deutch Tax Center had another guest blog entry published on Franchise Business Review.com. This new article debunks a haldful of common franchise myths. If you have ever been mislead to believe that Starbucks is the worlds largest coffee franchise, or thatall chain restaurants are franchises, then you will want to check out this informative new guest blog entry.

All Chain Restaurants are Franchises

Whenever people see a chain restaurant, from Outback to Olive Garden, they always assume it is a franchised unit. However, there are two business models that these chains commonly use. The first involves selling franchises, and the other involves hiring individual store managers to run corporate owned locations. You might be surprised to learn that the following chains do not franchise: Cheesecake Factory, Lone Star Steakhouse, O Charleys, and Bob Evans.

Buying a Franchise Means Guaranteed Success

Although your odds of success are statistically higher with a franchised business, there are no guarantees. Even with a proven business concept, no business venture is without risks. Hundreds of franchised businesses do close every month, however studies show that the most common reason a franchise fails is because they do not follow the system.

It’s Wasteful to Invest in a Franchise, Just Open your own Business

All franchises have an initial fee that must be paid to open a location, and some people may view this as a waste of money. However, studies show that nearly 95% of franchised businesses remain open for at least 5 years, and 94% of franchise business owners consider themselves successful. The money you give the franchisor lets you in on a proven business model that will make your business much more likely to succeed.

Starbucks is the Worlds Largest Coffee Franchise

As we mentioned earlier, there are two business models used by large chains, and although many people assume Starbucks franchises their stores, they actually do not. The only Starbucks locations that are not corporate owned are those inside hotels and grocery stores.

Continue reading at Franchise Business Review.com…

5 Myths About your Taxes

From the Washington Post:

1. The poorest and the richest Americans pay no taxes.

About 45 percent of households will owe no federal income tax in 2010, according to our estimates. Half of them earn too little, while the other half -- mostly middle- and lower-income households -- will take advantage of tax credits such as the earned income credit, the child and child-care credits, the American Opportunity and Lifetime Learning credits, which help pay for college, and the saver's credit, which subsidizes retirement saving.

But even citizens who pay no income tax still pay other kinds of taxes. They pay Social Security and Medicare taxes when they work, sales taxes when they buy things and property taxes on their homes. Drivers pay gasoline taxes, and smokers and drinkers pay excise taxes on tobacco and alcohol. According to our research, more than 75 percent of us will pay at least some form of federal tax in 2010.

Those who pay no federal taxes are mostly the low-income elderly or very poor families with children. Even about half of those with annual incomes under $10,000 pay some federal tax, most often payroll taxes on wages.

And yes, the richest Americans pay taxes, too. Though a tiny minority manage to avoid federal income tax through elaborate tax planning, 99.7 percent of those with annual incomes above $1 million will pay federal taxes this year, surrendering 27 percent of their earnings to the government. The average American taxpayer pays 18 percent.

2. Americans are overtaxed.

In 2007, federal, state and local taxes claimed about $3.8 trillion, or 27 percent of U.S. gross domestic product. That's nearly $13,000 for every American. Two-thirds of tax revenues went to the federal government.

Continue reading at WashingtonPost.com…