January 17, 1996

The following tax rates and amounts are effective for 1996:

1. OASDI rate remains at 6.2% but wage base rises to $62,700 from $61,200
2. Medicare rate remains at 1.45% and there is no wage limit.
3. The maximum retirement earnings one can earn before social security benefits will start to be withheld is $11,520 up from $11,280 for those ages 65 through 69 and 8,280 up from $8,160 for those under age 65. There is no lid for 70 and older. Medicare Part B premium is scheduled to drop to $42.50 per month from $46.10 but Congress is likely to keep it at the same level or raise it up as part of Medicare salvage attempt.
4. Personal exemptions rise to $2,550 from $2,500 and exemptions will begin to phase out at $176,950 of AGI for couples instead of $172,050 for `95. For singles, $117,950 up from $114,700.
5. Standard deductions will increase to $6,700 for marrieds in `96, up from $6,550. For children age 14 who must file returns at least $650. Can be as high as $3,900 if they have earned income. The amount of investment income they can have before such income is taxed as if their parents received it, will be $1,300, the same as 1995.
6. Income tax rates for `96 are the same as 1995, 15%, 28%, 31%, 36%, 39.6%.
7. Federal unemployment Tax Rate (FUTA) remains at 6.2%.
8. IRS interest rate on refunds remains at 8% and 9% on taxes owed .
9. Alternative Minimum Tax rate remains at 26% on first $175,000 of income and 28% over that.
10. Back up withholding rate remains at 31%
11. 401(k) pay in limitation will rise from $9,240 to $9,500 for 1995.
12. 403(b) contribution limit remains at $9,500. Will not rise until 401(k) contributions reach $10,000.
13. Business meal and entertainment deductibility remains at 50%. Standard business mileage allowance rises to 31¢ per mile, up from 30¢ for 1995.

Hybrid Stockbrokers

          The stock market is soaring and investors are awash in a sea of financial information. Magazines, telephone hotlines and the Internet have given them access to more data on this bull market than any that has come before.

          So who needs to pay big bucks for stock tips? A growing number of investors have concluded they don`t, and that has led to the rise of discount stock brokers.

          Discount brokers vary widely in the level of services they offer and the commissions they charge, but they hold one thing in common. Unlike their full-service brethren, discount brokers are not permitted to recommend individual stocks and they charge for most services heretofore received for free.

          Full service brokers from giants like Merrill Lynch and Prudential Securities to the local storefront brokerage conduct research that help them guess at which stocks are most likely to improve in price. They recommend those stocks to their customers, who pay higher commission fees for any transactions they make.

          Today there is a middle ground called a hybrid brokerage, that is a discounter which provides a variety of services such as recommending a stock when a customer requests it. We now offer a hybrid brokerage service through CFS Brokerage Corp. with services such as discounted rates, interest bearing money market checking accounts, IRAs, SEPs, Keoghs, asset backed credit cards, and no charge to hold your securities. If you are interested in more information, please talk with me.

Insurance Coverage

          We urge you to take the time to have an annual review of your medical insurance coverage in view of recent increases with a view to raising your deductible or switching companies. We also urge you to consider the use of umbrella insurance coverage to reduce your automobile and homeowner`s cost of insurance. Review these policies to eliminate redundancies.

          We urge you to consider disability insurance coverage.

          We also suggest you look at the insurance benefits offered by the American Express Corporate Card, specifically business overhead insurance.

Don`t Become a Dinosaur

          In today`s environment of downsizing and technical obsolescence you should review your own job description and skills to make yourself less likely to be "excessed". We suggest these ten ways:     

1. Be flexible. Many employers expect staff to perform a range of tasks. Your willingness to comply can impress and teach new skills.
2. Sharpen your grammar and writing skills. Modern technology-E mail, cellular telephone, fax machine, puts a premium on the ability to communicate.
3. Be congenial.
4. Learn your office equipment thoroughly; computers, phone, copiers, fax machine.
5. Study your industry and where your company fits in. Become familiar with the competition, too, and with related fields.
6. Keep computer skills up to date. Business software- word processing, database, spreadsheet, desktop publishing is constantly upgraded.
7. Think critically. Today`s companies want staffers to analyze, prioritize tasks, take the initiative and solve customer`s problems.
8. Look nice. If workers look bad, the company looks bad. Even on "dress down" days, don`t be caught off guard.
9. Take classes, both inside and outside your field. Knowledge increases your value and your options.
10. Be businesslike. You are more likely to be taken seriously and treated with respect if business, not socializing is your focus.

          As always, if you have any questions about these or any other matters, do not hesitate to call me.