Richest households get heftiest federal tax cuts

Filed under: Banking & Finance |

Households worth more than $1 million a year received bigger federal tax cuts from President Bush’s tax overhaul than any group in the country, according to a New York Times report based on study by the U.S. Congressional Budget Office.

Overall, the president’s tax cuts reduced rates for people at every income level, but most significantly for the top 1 percent of earners, according to The New York Times.

The Congressional Budget Office estimated that the overall effective federal tax rate edged up to 20 percent, in 2004, the most recent year for which data was available, from 19.8 percent the year before.

Even with that increase, Americans faced lower tax rates than any time since 1979, according the New York Times.

Ent raises $94,000 for Pikes Peak United Way

Ent Federal Credit Union has raised $94,022 for the “Be Passionate. Be United. Belong to the Effort” campaign, an internal fundraiser that benefits the Pikes Peak United Way.

Fund raising activities included bake sales, penny wars, “EntBay” drawings for donated gift items, Halloween candy- grams and tickets to a breakfast cooked by Ent senior managers. In addition, payroll deduction pledges and direct donations contributed to the effort.

Ent also encouraged employees to participate in community development activities. During Make a Difference Day on Nov. 3, 15 Ent employees spent the day doing yard work at one of PPUW’s partners, Cheyenne Village, Inc., a community program that helps individuals with developmental disabilities live as independently as possible.

NASD launches arbitration awards site

The National Association of Securities Dealers has unveiled its Arbitration Awards Online database, which will allow users to search for cases in a more efficient manner.

The database allows users to search for awards by case number, keywords within awards, arbitrator names and date ranges.

The database will hold all arbitration awards handed down since January 1989 and can be viewed online, printed or downloaded as text-searchable PDF files.

Awards will be posted online within a week of being served to the parties involved.

The database will replace the search tool that NASD has offered through its Web site, www.nasd.com, since 2001.

Hancock alleges BofA knew about ponzi scheme

The John Hancock Life Insurance Co. has sued Bank of America Corp. for its alleged role in the accounting fraud which brought down Italian food-making giant Parmalat Finanziaria .

The insurance company alleges that the collapse came after bank executives helped Parmalat carry out a large ponzi scheme.

Parmalat founder Calisto Tanzi and others at the food company are accused of cooking the books to make the company seem healthy despite losing $17 billion.

Italy charged former employees of BofA’s office in Milan with taking bribes to help conceal the alleged fraud.

Hancock invested $81 million in Parmalat bonds in the 1990s and claims in its suit that BofA should have known about the deceptive accounting.

Hancock also alleges that BofA should have better supervised its Milan employees and added that it bought Parmalat bonds partly on the strength of BofA’s reputation.

Hancock asked a court to void its purchase of the Parmalat bonds and award compensatory and punitive damages.

States vie to slash college savings plan fees

Fees for Section 529 college savings continue to drop, and there appears to be no sign of a slowdown.

Currently, the lowest fees in the country are in the Utah Educational Savings Plan Trust in Salt Lake City, which features index funds from The Vanguard Group Inc. of Malvern, Pa., with fees ranging from 0.28 percent to 0.39 percent.

Beginning in March, pending approval of the seven-year contract by the newly elected Illinois state treasurer, Oppenheimer Funds will add an index fund to the Bright Start plan, with fees of 0.14 percent to 0.25 percent that include a 0.06 percent management fee and a $10 annual account fee.

Expenses for all investment options in the Springfield-based Bright Start program are expected to be reduced by nearly 40 percent, according to Judy Baar Topinka, who was the state’s treasurer until last week.

Overall fees for the plan’s actively managed funds will drop an average of 38 percent to between 0.54 percent and 0.64 percent from 0.99 percent.

Tax break extensions become law

Last month, President Bush signed into a law a $40 billion tax and trade bill, HR 6111, which extends certain tax breaks for individuals and businesses.

The law renews tuition deduction tax credits, along with those for state and local sales taxes, and teachers’ out-of-pocket expenses for classroom supplies.

Research and development tax credits for businesses are included.

The bill also creates an itemized deduction for mortgage insurance premiums for 2007 only.

The extended tax breaks will affect tax years 2006 and 2007.

Rob Larimer is managing editor of the Colorado Springs Business Journal.