Broker Check

January 26, 2000

Happy New Year!

          The following tax rates and amounts are effective for 2000:

                1) OASDI rate remains at 6.2% but wage base rises to $76,200 
                     from  $72,600                
                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  $17,000,  up from 
                    $15,500  for those ages 65 through 69, and $10,800, up 
                    from $9,600 for  those under age 65. There is no limit on earnings
                    for 70  and  older.   The retirement age for social security begins to 
                    rise this year.  Until now,  the normal retirement age  to  receive  full
                    benefits was  65.   Those turning 62 this year are affected.  They 
                    will  get reduced benefits if they start  receiving  payments before 
                    they  attain  age 65  and  two months.  Those who turn 62 in
                    2001  must wait  until  they  are  65 and four months .  Ultimately,
                    anyone born  after  1959  won’t  get full benefits before age 67.
                4) Personal exemptions rise  to  $2,800  from  $2,750  and  
                    exemptions  will begin to phase out at $189,950 of AGI
                    for couples.  For singles, $126,600. 
               5) Standard deductions will increase to $7,350 for marrieds  in ‘00,  up
                   from $7,200. For children age 14 who must  file returns, it  remains 
                   at $700. Can be as high  as  $4,300 if  they have  earned  income. 
               6) Income tax rates for ‘00 are the  same  as  1998, 15%, 28%,  31%,
                   36%, 39.6% but brackets have been adjusted for inflation.
               7) Federal unemployment Tax Rate (FUTA) remains at . 
               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.  More  people  will pay  this  since
                  brackets  and  exemptions  are  not  indexed  and  there  are 
  fewer  deductions allowed. 
            10) Back up withholding rate remains at 31%
            11) 401(k) pay-in limitation rises to $10,500, up from $10,000.
            12) 403(b) contribution limit rises to $10,500, up from $10,000. 
            13) Maximum level of pay on which pay-ins to plans can be based upon 
                  rises to $170,000 up from $160,000, with the maximum  pay-in  for 
                  profit  sharing  plans  rising to $25,500   from   $24,000,  for   
                  plans putting in  the  maximum  15%.   No  change  to
                  maximum money purchase plan pay-in of $30,000.
            14) Business   meal   and   entertainment deductibility  remains  at  50%.
                  Standard business mileage allowance rises to  32.5¢  per  mile,  up 
                  from 31¢. 
            15) Self-employeds  and owners of corporations can deduct  60%  of
                  medical insurance premiums as an adjustment to arrive at adjusted
                  gross income, the same as in 1999 
            16) Federal estate tax exemption rises to $675,000 from $650,000. 
            17) New York State Disability Insurance employee percentage is  .5%  of
                  wages but not more than 60¢ per week
            18) Threshold for deposit requirements increases from $500 to $1,000.
            19) Maximum amount of  rapid  depreciation  for small  businesses rises to
                  $20,000, up from $19,000 in ‘99.
            20) Simplified per diem allowances are up slightly for ‘00. 
            21) Parents get larger tax credits for children under 17, $500 per  child  up
                  from  $500 in 1999.  Phaseout for  marrieds with  AGI exceeding
                  $110,000 and single over $75,000.
            22) Phaseout for IRA deductions start at $52,000 up from $51,000 and
                  end at  $62,000  for  couples,  up  from  $61,000  an increase  of
                  $1,000. Phaseout for singles is $52,000 to $42,000. 
            23) More interest on some education loans is deductible in ‘00, up to
                  $2,000 from $1,500. Next year to $2,500.
            24) Eligible portion of long term care premium  rises  for  2000, up  to
                  $2,750 for those age 70 and older, $2,200 between ages 60 and 70,
                  $820 between ages 50 and 60, $410 from 40 to 50 and $220 for age
                  40 and under, deductible as medical expenses. It is the age at the end
                  of  2000 that counts. Daily limits for payments is $190. 
            25) Medicare Part B premium remains at $45.50, still less than 1995! 
            26) Luxury car tax drops to 5% for autos costing over $38,000.
            27) The maximum amount of compensation an employee may elect to
                  defer under a SIMPLE plan remains at $6,000.
            28) The nanny tax threshold rises to $1,200 for ‘00 a $100 increase.
                  No social security tax is due for domestics paid $1,200 or less this
                  year. It is  not  indexed  for  inflation.  FUTA  is  due  whenever  a
                 domestic employee is paid $1,000 or more in a calendar quarter in the
                 current or prior year. 
           29) Five year averaging is unavailable on lump sum distributions from
                 pension plans in ‘00. Recipients who were born before 1936 can still
                 use ten year averaging.

Again, We Exceed our Expectations

          In my capacity as a money manager, the  average  of  my  model  portfolios were expected to achieve a 21% return per year on a five year average. For 1999, they achieved in excess of 31% (six percentage points greater than the Dow Jones average and 12 points  better than  the  S & P index).   We  note here  that  past performance does not guarantee  future  performance.   For  more details, please contact Howard Lisch and Lisch  Investment  Services, our  money management division.


          There  will  not  be any action  to fix  social  security in 2000. Congressional Democrats detect a chance to regain control in ‘00, especially the House. A social security  fix  would rob them of  the key  campaign  issue  that  the  GOP threatens social  security. In order for there to be a  social  security  repair  job, Republicans and Democrats must find a way to work together first. This will be more difficult in the wake of the impeachment.

          Before taxes can be cut, social security must be repaired.

More Predictions

          As  predicted,  the  Dow  Jones  Industrial  Average  reached 10,000 by the millennium. I predict it will continue to surge thereafter.

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