IRS Desperation: Taxing Frequent Flyer Miles

August 27, 2014

Two things about the U.S. government, they are broke and their tax collection agency the IRS will do anything for revenue. This piece of legal news comes via TaxProf Blog:

The Tax Court yesterday required the taxpayer to include $668 in income as reported by Citibank on Form 1099-MISC as the value of an airline ticket received by the taxpayer upon redemption of 50,000 “Thank You Points” from opening a Citibank account. Shankar v. Commissioner, 143 T.C. No. 5 (Aug. 26, 2014).

Housing Market Will Be Very Slow Next Decade

August 27, 2014

I’ve been seeing some house sales numbers popping up as of late but haven’t really dug into them. This post I’m writing is because I stumbled upon a claim, looked it up and found a trend that maybe reversing……How long Americans stay in their homes they buy. While reading an article from Dave Ramsey on “Homebuyer Mistakes” he had this in the article:

Homeowners stay in their homes an average of just four years, according to the National Association of Realtors.

I found this to be very intriguing and wanted to dig more into this number. First article I found (Longtime Homeowners a Relative Rarity in U. S., Census Shows) dated November 21, 2003. Seems to back up the claim of short ownership of a home.

Although a relative rarity in the United States, where homeowners stay in their homes an average of six years, according to the National Association of Realtors

Now a more recent article I found (Downside of low US mortgage rates? Less selling) written in July of this year shows homeownership economic factors pertaining to the effects of low interest rates caused by in fashion by the Federal Reserve. Shows why the housing market will be very slow the next decade.

More than one-third of homes with a mortgage now have rates below 4 percent, real estate data provider CoreLogic estimates….. As a result, many homeowners with low rates are staying put. Others are moving and buying new homes, but keeping their old ones and renting them. The number of available homes last year was the equivalent of just 4.9 months’ worth of sales, according to the National Association of Realtors.

The big problem of people not being be able to sell is equity issues…..

Another factor is that almost 40 percent of homeowners still don’t have enough equity to enable them to sell. Some are “underwater,” with a mortgage higher than the home’s value. Others may have so little equity that they can’t afford to pay off the sales costs and put a down payment on their next property.

One final note on top of this, many investors and Americans expect interest rates to rise significantly over the next few years. This will be a big pressure on home sales along with the above mentioned.

Food Chains Hit By Inflation

August 25, 2014

Inflation is being reported amongst the bigger food chains this past month. This will ultimately lead to higher costs for the consumer.

CNBC reported in Mid August:

“Food retailers like Red Robin Gourmet Burgers and Noodles & Company are sounding the alarm on inflationary pressures, raising the question: Is this the start to higher food prices for consumers?

“Official data show inflation only gradually rising for the economy as a whole with the personal consumption index gaining 1.6 percent in June; however, a dozen food companies in the past few weeks have warned steeper price hikes hurt results last quarter.

Prices are rising for several restaurant staples like beef, seafood and cheese. But costs aren’t up everywhere: Grain and vegetable prices, for example, have been declining.

“This morning Red Robin said lower margins, which fell 1.3 percent from the same period a year ago, were mainly due to higher food and beverage costs.

“Noodles & Company, which reported last night, posted a two percent drop in margins due to increased costs. During the company’s conference call, CFO Dave Boennighausen said the cost of goods sold rose 70 basis points last quarter as a result of modestly higher pork, dairy and shrimp ingredient costs, as well as more promotional activity.

“Wholesale food inflation rose 4.2 percent in the first six months of the year, its steepest rise since 2011; however, menu and grocery prices – what consumers are paying – were only up 2.2 percent and 1.6 percent, respectively, in the same period, according to the National Restaurant Association.”

These are striking numbers considering the purchasing power(Economies of Scale) these chains have compared too smaller food retailers. The smaller ones which most refer to as “Mom & Pop” will not be able to keep up as inflation keeps increasing. The consumer is still feeling squeezed on normal groceries going up in price. Eating out is a very easily controlled expense to decrease.

Beef Market Supply Dips Lower

August 24, 2014

The beef market supply is still low from the 2012 drought and supply numbers are still dipping which will only keep prices high for the foreseeble future. Here is the latest from the USDA.

According to the U.S. Department of Agriculture’s National Agricultural Statistics Service, beef production came in at 2.09 billion lbs. That’s 9% down from last July. Slaughter totals are also trending down with 10% fewer cattle taken to the packer at 2.6 million head. However, live weights are moving up as feedlots and packers try to compensate for the loss of cattle. This July cattle averaged 1,320 lbs. when entering the processor, up 18 lbs. from last year. Overall red meat production was down 6% nationally. Only 3.91 billion lbs. of red meat was produced in this past month compared to 4.16 billion lbs. in July 2013.

From January to July of 2014 a similar drop off occurred with 3% less red meat produced at 27.4 billion lbs.

Indiana Hoosier Lottery Financial Release

August 22, 2014

Via Indiana Hoosier Lottery -

Hoosier Lottery officials announced Tuesday that the Lottery is providing the State of Indiana with more than $250 million in surplus revenue for fiscal year 2014.
The State uses the contributions to support the Build Indiana Fund, pensions for local firefighters and police officers and retirement funds for Indiana teachers.

The $250 million in surplus revenue for fiscal year 2014 is a 12 percent increase from $224 million in fiscal year 2013. Although final audited figures will not be available until later this year, preliminary totals show sales were $1.018 billion for fiscal year 2014.

The rest of the article is here

Census Bureau: 109 Million on Welfare

August 20, 2014

The Census Bureau released their fourth quarter 2012 results and found 35.4% of all Americans to be receiving welfare. Here is more from a lengthy CNSNews Report.

109,631,000 Americans lived in households that received benefits from one or more federally funded “means-tested programs” — also known as welfare

The number jumps when other programs are added in:

When those receiving benefits from non-means-tested federal programs — such as Social Security, Medicare, unemployment and veterans benefits — were added to those taking welfare benefits, it turned out that 153,323,000 people were getting federal benefits of some type at the end of 2012.

Here is a breakdown of what welfare program is received by Americans and how many on it:

82,679,000 Medicaid
51,471,000 Food stamps
22,526,000 Women, Infants and Children program
20,355,000 Supplemental Security Income
13,267,000 lived in public housing or got housing subsidies
5,442,000 got Temporary Assistance to Needy Families
4,517,000 received other forms of federal cash assistance.

Indianapolis Gen Con Record Attendance

August 19, 2014

Gen Con just wrapped their annual convention in Indianapolis this last weekend and released their attendance information on their website:

Gen Con 2014, completed August 14-17 at the Indiana Convention Center, experienced another year of record attendance numbers and unprecedented growth. For the fourth consecutive year, Gen Con grew by more than 10%. This year, reaching more than 14% year-over-year growth with a weekend turnstile attendance of 184,699 and unique attendance of 56,614. This number surpasses 2013’s previous record of 49,530 unique attendees. Since 2009, Gen Con’s annual attendance has more than doubled.

The convention attendees also helped raise $40,000 for Gleaners Food Bank.

Social Security Disability Insurance Fund Will Be Depleted in 2016

August 17, 2014

Charles Blahous of the Manhattan Institutue recently reported on some findings from the July 28th Social Security Trustees annual report. Social Security and Medicare are two government programs that have been long embedded in government spending. These programs are political hot topics whenever they are suggested to be “reformed” or made more efficient, political dogma ensues. Changes for the most part of these programs are made to give MORE benefits to people and not a regression. I will take some information from Mr. Blahous write up which he did testify in front of Congress about and then turn to two other sources for completion of this summary.

The public must understand the breakdown of how Social Security functions when pertaining to funds

Social Security has two trust funds. Payments for retired workers as well as spouses, children and survivors are made from the Old-Age and Survivors (OASI) trust fund. Payments for disabled workers and their dependents are made from the Disability Insurance (DI) trust fund. It has become commonplace to refer to the two trust funds’ combined operations as though they were one fund. This nomenclature is convenient but not truly accurate. By law each of the two trust funds must separately have a positive balance to allow them to make benefit payments.

Here is big point for people to grasp about this trust fund. Many people who support Social Security at any cost claim the program has too by “law” go on forever no matter what funding issues arise. That is true to a point and here is that BIG point. Once funding for the SS Disability Insurance fund starts going in the red, payments can be greatly reduced “BY LAW”.

The trustees have been warning for several years (long before I became one) that Social Security is on an unsustainable financial trajectory. We have now moved from a long-term problem to an immediate one. The DI trust fund is currently projected to be depleted in two years, in the fourth quarter of 2016. At that point, unless the law is changed disability payments will drop suddenly by 19 percent.

I would suggest reading Charles Blahous article (A Guide to the 2014 Social Security Trustees Report) a few times and even take some time to ponder it. It is a very nice write up and one to keep on file for further events.

Social Security and Medicare produce reports and the federal government then puts together a summary(Status of the Social Security and Medicare Programs) of these two reports. Here are some highlights of the summary pertaining to just Social Security.

Neither Medicare nor Social Security can sustain projected long-run pro- gram costs in full under currently scheduled financing

Social Security and Medicare together accounted for 41 percent of Federal expenditures in fiscal year 2013

The Trustees project that this annual cash-flow deficit will average about $77 billion between 2014 and 2018 before rising steeply as income growth slows to its sustainable trend rate after the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

In October 2013, “60 Minutes” reporter Steve Kroft did a segment called “Disability, USA”.  If you have not seen it, I suggest you take a look at the SS disability situation happening in America.

Final summation: For years many Austrian Economic students have talked about the Social Security situation. They are usually met with resistance by economic pundits who produce wild and complicated graphs that say everything is o.k. Problem with this belief is it defies reality. Real money is being given to real people. This program has real issues that cannot be delayed as the physics of debt take over.

2014 Indiana State Fair Attendance

August 17, 2014

Indianapolis WTHR-TV reporter Matt McCutheon reported on his Twitter account today the Indiana State Fair will top over 900,000 in total attendance this year. This would put it in the Top 5 of attendance records for the fair.

Year To Date Federal Government Deficit $460 Billion

August 14, 2014

The United States Treasury just released up to date tax revenue collection relating to 2014 fiscal government budget. 2014 government budget ends in September.
CSN News provides a more detailed analysis:

Inflation-adjusted federal tax revenues hit a record $2,469,178,000,000 for the first 10 months of the fiscal year this July, but the federal government still ran a $460,450,000,000 deficit during that time, according to the Monthly Treasury Statement.
After the current fiscal year, the second highest federal tax intake in the first 10 months of a fiscal year occurred in the first 10 months of fiscal 2007, when the government collected $2,432,115,460,000 in 2014 dollars – or $37,062,540,000 less than in the first 10 months of this fiscal year.

The total dollar amount already spent by the government stands at $2,929,628,000,000.

You can read the rest of the article here.


Follow

Get every new post delivered to your Inbox.

Join 131 other followers