August 31, 2010 US Government Takes Control of Banking System Unstated to the American public was that the Dodd-Frank Wall Street Reform Bill has just caused the US government to take control of the Banking System. Effective July 21, 2010, federal regulators have the authority to seize “a failing US financial company”, stabilize the firm, and then wind down its activities in an “orderly liquidation”. The regulators will define what “failing” means and can decide, like they did in Bear Stearns and Washington Mutual, who politically will live and who politically will die. The Obama Administration has now seized control of the Banking Industry, Auto Industry, Energy Industry, Higher Education Financing, who is next? A New Bubble will be determined by the new Financial Stability Oversight Council which will meet within the next 90 days in order to identify a “market bubble” (i.e. real estate, stocks, bonds, credit market) before it bursts. I can now sleep better at night because the US government will be able to remove the bubble just as well as they deliver the mail, enforce the tax system, enforce world tranquility, provide for our retirement, improve our health care, etc. My Solution To The Financial Industry Mess There is a big difference between financial institutions that are partnerships where the partners’ own money is at stake and publicly owned entities where the monies earned or lost come from the public. There isn’t a partnership where there is outrageous compensation and lack of accountability of the trader, loan officer, etc. Break up the big public financial entities and have them go private! Wealthy Migrate South To Avoid Taxes People are looking for ways to hide from the impending federal tax increase. One way to do that is to change their state income tax rate. In addition to Florida, the states that do not tax income are Alaska, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee only tax dividend and interest income. In New York, the marginal state individual tax rate has gone from about 7% last year to almost 9% this year. In New Jersey, when Corzine and the Democratic Legislature raised the rate from 6.3% to 10.7% jobs, people and businesses started to flee the state. If you are considering a residency move, please call us for a consultation since there could be factors that state tax agents take into consideration when judging residency for tax purposes. Investment News 8/10/10. More Audits to Come The IRS will be performing more correspondence examinations, limited scope audits by mail, that typically focus on a small number of issues. IRS officials believe that correspondence audits deliver more bang for the buck than office audits or face to face examinations. The exams of employee business expenses are bearing fruit since most taxpayers who are challenged agree they overstated their deductions. IRS officials state they will be targeting the earned income tax credit, large charitable deductions and tax credits for home buyers. Deductions claimed by self-employed taxpayers will focus on advertising expenses, vehicle expenses and meals and entertainment. Kiplinger 7/23/10. As always, if you have any questions about these or any other matters, do not hesitate to call me. Remember, We’re Here For You!!