As inflation trends near a 13-year high, middle-income workers will benefit from automatic annual adjustments to tax provisions such as the standard deduction for income taxes. Some other provisions are frozen in time, stuck to specific dollar amounts from decades ago. Those provisions tend to pinch higher-income households.
For example, the standard deduction for married couples is likely to rise to $25,900 from $25,100, according to Wolters Kluwer NV, which provides tax services to accountants and others. As nominal wages and prices rise, that adjustment will shield more money from taxation and block inflation — currently above 5% on an unadjusted annual rate — from causing a sharp tax increase.
Some home sellers, however, will be squeezed because married couples can exclude up to $500,000 in gains from capital-gains taxes. That figure hasn’t changed since a 1997 law, while the median home sale price has more than doubled since then.
The Beveridge curve is one of the most robust regularities in economics, as it holds in different time periods, across countries2 and at the aggregate and disaggregated (or sectoral) level. When shown in a graph, it plots the job-vacancy rate (on the x-axis) against the unemployment rate (on the y-axis). The curve generally slopes downward, indicating that vacancies tend to be higher when the unemployment rate is lower, and vice versa.
Figure 1 shows the Beveridge curve for the monthly data collected in the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) from December 2000 until August 2021 (the most recent data point). Each dot represents a combination of the unemployment rate and the job opening rate.3 The sample is divided into four distinct periods, which correspond to the period up to the financial crisis, the ensuing recession and recovery up until 2017, and the period between January 2018 and March 2020, during which the unemployment rate was persistently below 4.5 percent. The fourth period — April 2020 through August 2021 — captures the COVID-19 months.
Author(s): Thomas A. Lubik
Publication Date: October 2021
Publication Site: Federal Reserve Bank of Richmond
In the new world, inoculation had a very rough reception. When John Dalgleish and Archibald Campbell began inoculating individuals in Norfolk, Virginia, an angry mob burned down Campbell’s house. Similar incidents occurred in Salem and Marblehead, Mass. In Charleston, S.C., an inoculation control law of 1738 imposed a fine of £500 on anyone providing or receiving inoculation within two miles of the city. A similar law was passed in New York City in 1747.
The measures in New England were so draconian that Benjamin Waterhouse noted the paradox: “New England, the most democratical region on the face of the earth voluntarily submitted to more restrictions and abridgements of liberty, to secure themselves against that terrific scourge, than any absolute monarch could have enforced.” (This, strangely prescient, anticipates the current debate about liberty versus public health). It was in the middle colonies — Maryland, Pennsylvania, New Jersey — that inoculation was most tolerated in the second half of the 18th century. That’s why Jefferson made the long journey to Philadelphia to be inoculated in 1766.
Jefferson first became aware of the discovery of a true smallpox vaccine from the newspapers he read in Philadelphia and the new capitol in Washington, D.C. Then, on Dec. 1, 1800, just after Jefferson’s election to the presidency, Benjamin Waterhouse sent him his pamphlet on the vaccine with a lovely cover letter saying that he regarded Jefferson as “one of our most distinguished patriots and philosophers.” Jefferson responded immediately, thanking Waterhouse for the publication and declaring, with his usual grace, that “every friend of humanity must look with pleasure on this discovery, by which one evil the [more] is withdrawn from the condition of man: and contemplating the possibility that future improvements & discoveries, may still more & more lessen the catalogue of evils. in this line of proceeding you deserve well of your [country?] and I pray you to accept my portion of the tribute due you.”
The Road Carriers Local 707 Pension Fund , which was the first plan to seek bailout money under the PBGC Special Financial Assistance (SFA) program for troubled multiemployer plans, has their 425-page application uploaded on the SFA website.
412-425)SFA calculations which is a fairly simple spreadsheet calculating the present value of the liabilities of all current participants (pages 419-420) and coming up with one amount ($706,400,534) to cover all their liabilities through 2051. New entrants presumably will be covered by new negotiated contributions and, after 30 years though if any of the current participants survive until 2051 they will presumably need another bailout.
The problem PBGC has with this filing appears to be that an interest rate of 5.32% was used for valuing liabilities which happens to be 2% plus the first HATFA Segment Rate when it is the third PPA Segment Rate to which the 2% should have been added. Per the IRS website (scroll down a little to Funding Table 3), that rate would likely have been the April, 2021 rate of 3.52% which would have made 5.52% the rate to be used for valuing liabilities (thus lowering the liability value as the higher the interest rate the lower the value). The tricky part is that the PPA third Segment Rate has been going down and is now 3.34% as of October, 2021.
Nearly $1 of every $4 in state aid sent annually to Louisiana’s public schools disappears before it reaches classrooms, siphoned away to pay retirement obligations that cost $853 million a year, according to a new report from the legislative auditor.
The retirement debt payment amounts to $1,302 per student and swallows an average of 10% in the total funding available for schools from state, local and other sources, according to the 44-page review from Legislative Auditor Mike Waguespack’s office.
The Advocate reports the audit said the Louisiana Legislature might want to consider revamping how the retirement debt for former teachers is handled in a way “that could be less burdensome for participating schools.”
State aid for public schools totaled $3.9 billion for the 2019-20 budget year reviewed by auditors. The teacher debt obligation grabbed 24% of that allocation, the report says. A total of 1,355 traditional and charter schools take part in the retirement system.
Heather Gillers : So alternative investments are typically not assets that can be traded on the public market like stocks and bonds, where you know the price, you can buy them and sell them any time. They’re fairly liquid, very liquid. Alternative assets. On the other hand, are private market assets, they’re typically illiquid. So examples would be like private equity where you’re investing in private companies, not in publicly traded stocks, or infrastructure like roads and bridges, or real estate, apartment buildings, hedge funds was a long time popular alternative asset that’s lost some of its favor with public pensions. Private credit is one that’s gaining steam. That’s private loans to companies. Not bonds that are traded on the public markets, but private loans.
J.R. Whalen : So from an investment perspective, how are these alternatives different from traditional things like stocks and bonds?
Heather Gillers : So stocks and bonds are traded on public markets. You can pretty much always find a buyer. You can always find out how much it costs. And most importantly, like you can pretty much cash out any time. Whereas an alternative investment, you’re probably planning to hold it for 5 or 10 years at the minimum. And if you do have to sell it in an emergency, you could end up getting a lot less than you hoped.
We call it the “Zombie Index” based on the work of Edward Kane, a prolific and respected finance professor at Boston College. Back in 1985 and 1989, Ed wrote two books warning about taxpayer exposure to losses from bank deposit insurance schemes, before we knew what hit us in the savings and loan crisis. Ed coined the term “zombie bank” to identify effectively-insolvent banks that were allowed to remain open by regulators and others. Deceptive accounting principles greased the wheels for regulatory forbearance, making “zombies” appear to be solvent.
Zombies had incentives, in Ed’s terms, to “gamble for resurrection.” Insiders could capture the upside of riskier investments, while prospective losses could be socialized through the government’s sponsorship (and ultimately, bailout) of deposit insurance systems. These incentives ended up magnifying taxpayer losses during the 1980s deposit insurance crisis. Those losses ran in the hundreds of billions of dollars and helped set the stage for the massive financial crisis of 2008-2009.
An astounding 96,000 Americans died from drug overdoses over that one-year period, the latest figures released by the Centers for Disease Control reveal. That’s a 29.6 percent increase from the previous year.
“This has been an incredibly uncertain and stressful time for many people and we are seeing an increase in drug consumption, difficulty in accessing life-saving treatments for substance use disorders, and a tragic rise in overdose deaths,” National Institute on Drug Abuse Director Dr. Nora Volkow said earlier this year.
A cybersecurity professor who verified the vulnerability that left the Social Security numbers of upwards of 100,000 teachers accessible on a Missouri website is demanding Gov. Mike Parson apologize after he threatened those who exposed the weakness with prosecution.
An attorney for University of Missouri-St. Louis Professor Shaji Khan sent a letter Thursday to Parson, the Missouri Department of Elementary and Secondary Education (DESE) and other agencies telling them to preserve records related to the episode — often a first step before a lawsuit.
The letter is the first indication that Parson may face a legal challenge over his response to a St. Louis Post-Dispatch story last week detailing how Social Security numbers had been left exposed on a DESE website. The day after publication, Parson called a news conference where he threatened the newspaper, its journalists and those who helped them with prosecution — and said law enforcement would investigate.
Author(s): Jonathan Shorman and Jeanne Kuang, The Kansas City Star
While Democrats in Congress negotiate over trillions of dollars in new spending, the Biden Administration is quietly advancing its agenda through regulation. Witness a little-noticed proposed rule last week by the Labor Department that will add new political directives to your retirement savings.
The Administration says the rule will make it easier for retirement plans to offer 401(k) funds focused on ESG (environmental, social and governance) objectives. In fact, the rule will coerce workers and businesses into supporting progressive policies.
An important Trump Labor rule last fall reinforced that the Employee Retirement Income Security Act (Erisa) requires retirement plan fiduciaries to act “solely in the interest” of participants. The rule prevented pension plans and asset managers from considering ESG factors like climate, workforce diversity and political donations unless they had a “material effect on the return and risk of an investment.”
The Biden DOL plans to scrap the Trump rule while putting retirement sponsors and asset managers on notice that they have a fiduciary duty to include ESG in investment decisions. The proposed rule “makes clear that climate change and other ESG factors are often material” and thus in many instances should be considered “in the assessment of investment risks and returns.”
The ONS (‘Office of National Statistics) produces annual updates on period life expectancy in the UK – the so-called National Life Tables. The latest tables are based on the 2018 to 2020 period, and therefore are the first to pick up the impact of the COVID-19 pandemic. Given the significantly increased death rates seen in 2020, this fall in life expectancy is not unexpected. However, it is important to note that the headline figures hide a wide variety of underlying impacts at a more granular level.
Catastrophe losses of $61 billion in 2020 were notably more severe than in 2019, with a record number of catastrophic events in the United States in 2020.46 Despite the more severe catastrophic event losses, lower losses in personal and commercial auto and workers’ compensation lines kept total loss and loss adjustment expenses flat from 2019 to 2020. Reserve development was again favorable in 2020, adding to underwriting profits. Figure 24 shows losses from catastrophic events in the United States since 2016, and Figure 25 shows reserve development over the same period.47 The expense ratio decreased very slightly from 2019 to 2020.