Archive for the ‘investments’ Category

Changes in Income Reported on Federal Tax Returns

January 29, 2015 Comments off

Changes in Income Reported on Federal Tax Returns
Source: Tax Policy Center (Brookings Institution and Urban Institute)

The composition of reported income has changed markedly since 1952. Investment income has continued to grow, along with business income, interrupted only by periodic economic downturns. Meanwhile, salaries and wages have declined as a share of income.

How Does Aging Affect Financial Decision Making?

January 23, 2015 Comments off

How Does Aging Affect Financial Decision Making?
Source: Center for Retirement Research at Boston College

The brief’s key findings are:

  • With the shift from traditional pensions to 401(k) plans, the welfare of retirees depends increasingly on their ability to make sound financial decisions.
  • Using a dataset that follows a group of older individuals in the Chicago area, the analysis examines how aging affects financial decision making.
  • Participants who suffer cognitive decline experience a reduction in their financial literacy but no change in their confidence in managing their money.
  • Perhaps not surprisingly then, while they are more likely to get help with financial decisions, more than half retain primary responsibility for managing their money.

SEC Announces Charges Against Standard & Poor’s for Fraudulent Ratings Misconduct

January 21, 2015 Comments off

SEC Announces Charges Against Standard & Poor’s for Fraudulent Ratings Misconduct
Source: U.S. Securities and Exchange Commission

The Securities and Exchange Commission today announced a series of federal securities law violations by Standard & Poor’s Ratings Services involving fraudulent misconduct in its ratings of certain commercial mortgage-backed securities (CMBS).

S&P agreed to pay more than $58 million to settle the SEC’s charges, plus an additional $19 million to settle parallel cases announced today by the New York Attorney General’s office ($12 million) and the Massachusetts Attorney General’s office ($7 million).

“Investors rely on credit rating agencies like Standard & Poor’s to play it straight when rating complex securities like CMBS,” said Andrew J. Ceresney, Director of the SEC Enforcement Division. “But Standard & Poor’s elevated its own financial interests above investors by loosening its rating criteria to obtain business and then obscuring these changes from investors. These enforcement actions, our first-ever against a major ratings firm, reflect our commitment to aggressively policing the integrity and transparency of the credit ratings process.”

SEC Announces 2015 Examination Priorities; Priorities Focus on Protecting Retail Investors, Assessing Market-Wide Risks and Using Data Analytics

January 16, 2015 Comments off

SEC Announces 2015 Examination Priorities; Priorities Focus on Protecting Retail Investors, Assessing Market-Wide Risks and Using Data Analytics
Source: U.S. Securities and Exchange Commission

the Securities and Exchange Commission today announced its Office of Compliance Inspections and Examinations’ (OCIE) priorities for 2015 which focus on three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity.

The 2015 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, and national securities exchanges.

UK — Scaling community lenders: the role of social investment

January 16, 2015 Comments off

Scaling community lenders: the role of social investment
Source: Cabinet Office

The community lending sector is diverse. It includes credit unions, personal lending Community Development Finance Institutions (CDFIs) and other lenders, including housing associations. This report examines the potential role of social investment in this sector, by exploring 3 ideas:

  • community lenders have limited access to the capital they require to grow
  • community lenders have an immediate need for investment
  • social investment can play a role in meeting some of this demand

CBO — Taxing Capital Income: Effective Marginal Tax Rates Under 2014 Law and Selected Policy Options

December 29, 2014 Comments off

Taxing Capital Income: Effective Marginal Tax Rates Under 2014 Law and Selected Policy Options
Source: Congressional Budget Office

The federal tax treatment of capital income affects investment incentives, both for the amounts invested and for allocations among assets. When tax rates are high, investors require higher before-tax rates of return and thus forgo investments with lower returns that they otherwise would have made. Current law produces significant variations in the taxation of capital income from different investments, thus leading investors to require higher before-tax rates of return on some investments than on others. Those differences reduce economic efficiency—the extent to which resources are allocated to maximize before-tax value.

An effective marginal tax rate (hereafter referred to as an effective tax rate or ETR) measures an investor’s tax burden on returns from an investment. An ETR combines a statutory tax rate with other features of the tax code (various deductions and credits, for example) into a single percentage that applies to before-tax capital income realized over an investment’s lifetime. (In this report, capital income consists of receipts minus the cost of goods sold, operating expenses, interest paid, and an allowance equal to the decline in value of capital assets because of economic depreciation—that is, wear and tear or obsolescence.) The higher the ETR, the greater the distortion in investments, holding all else equal; thus, the greater the variation (or nonuniformity) of ETRs among different investments, the less likely it is that resources will be used efficiently.

For this report, CBO estimated ETRs on income from marginal investments (those expected to earn just enough, after taxes, to attract investors) in such tangible capital assets as equipment, structures, land, and inventories (assets held for resale). In considering both corporate and individual taxation—but only with respect to the permanent features of federal income tax law in 2014—CBO arrived at the following conclusions:

  • The ETR on capital income is, on average, 18 percent;
  • The ETR on income from owner-occupied housing is close to zero; and
  • The ETR on capital income generated by businesses is, on average, 29 percent.

New From the GAO

December 23, 2014 Comments off

New From the GAO
Source: Government Accountability Office


Higher Education: Education Should Strengthen Oversight of Schools and Accreditors. GAO-15-59, December 22.
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Mobile Devices: Federal Agencies’ Steps to Improve Mobile Access to Government Information and Services. GAO-15-69, December 22.
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401(K) Plans: Greater Protections Needed for Forced Transfers and Inactive Accounts. GAO-15-73, November 21.
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Federal Subcontracting: Further Actions Needed to Improve Oversight of Pass-through Contracts. GAO-15-200, December 22.
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Emergency Preparedness: Opportunities Exist to Strengthen Interagency Assessments and Accountability for Closing Capability Gaps. GAO-15-20, December 4.

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Education and Workforce Data: Challenges in Matching Student and Worker Information Raise Concerns about Longitudinal Data Systems. GAO-15-27, November 19.

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Temporary Assistance for Needy Families: Action Is Needed to Better Promote Employment-Focused Approaches. GAO-15-31, November 19.

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Airport Privatization: Limited Interest despite FAA’s Pilot Program. GAO-15-42, November 19.

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Anthrax: Agency Approaches to Validation and Statistical Analyses Could Be Improved. GAO-15-80, December 19.

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Ground Radar and Guided Munitions: Increased Oversight and Cooperation Can Help Avoid Duplication among the Services’ Programs. GAO-15-103, December 19.

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Improper Payments: DOE’s Risk Assessments Should Be Strengthened. GAO-15-36, December 23.
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Federal Food Service Operations: Implementation of the HHS/GSA Health and Sustainability Guidelines. GAO-15-262R, December 23.

Press Release

1. GAO Makes MACPAC Appointments. December 19.

Reissued Report

1. Dodd-Frank Regulations: Regulators’ Analytical and Coordination Efforts. GAO-15-81, December 18.

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