Tag: Forbes

Sooner Or Later, The Supreme Court Will Be Forced To Decide The Tax Future Of 2 Million Workers

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/03/18/sooner-or-later-the-supreme-court-will-be-forced-to-decide-the-tax-future-of-2-million-workers/

Excerpt:

New Hampshire and Massachusetts are fighting over whether the Bay State still has the right to tax the incomes of 103,000 former commuters now working from home in New Hampshire. But this tax spat deals with issues that spread far beyond the Massachusetts border — it has national implications and could impact millions of Americans.

Because of this, scores of tax organizations and states have filed briefs with the U.S. Supreme Court in support of the Granite State. In fact, an analysis by the National Taxpayers Union Foundation estimated at least 2.1 million Americans that previously crossed state lines for work are now working from home in accordance with public health guidelines.

Author(s): Liz Farmer

Publication Date: 18 March 2021

Publication Site: Forbes

What Is The Pension Provision In The Stimulus Package?: An Explainer

Mary Pat Campbell

Link: https://www.forbes.com/sites/teresaghilarducci/2021/03/15/what-is-the-pension-provision-in-the-stimulus-package-an-explainer/?sh=411b24f957d1

Excerpt:

The multiemployer pension crisis was not caused by poor decisions by the pension funds. Factors out of their control: recessions, government decisions, industry deregulation (trucking for example) and quirks in the pension regulation law, ERISA are responsible. Some, including the New York Times blame the pension actuaries for high rates of return assumptions, but for most of their existence, the plans were much more conservatively run than high-flying single corporate plans.

Because of deregulation, bankruptcies of major carriers, and the 8-year policy of the George W. Bush administration to avoid contracting with union carriers, the Central States pension fund did not have enough money to pay Jack. The 2007 financial crash, caused by inadequate government regulation, and the Pandemic recession, further accelerated the expenses in Jack’s pension fund, one of the largest multiemployer plans.

Government regulation also did not move fast enough. Unlike single employer plans where ERISA encourages the PBGC to step in and take over the plans before the sponsors end up in bankruptcy there is no pre-crises help from the government agency, the PBGC, for multiemployer plans. Not acting quickly the aid needed soared. If the aid came 12 years ago the expense would have been much smaller about $10 billion.

Author(s): Teresa Ghilarducci

Publication Date: 15 March 2021

Publication Site: Forbes

How The American Rescue Plan Act Will Help More Than A Million Retirees And Workers

Mary Pat Campbell

Link: https://www.forbes.com/sites/nextavenue/2021/03/12/how-the-american-rescue-plan-act-will-help-more-than-a-million-retirees-and-workers/

Excerpt:

Good news on the retirement-income front. Some 1.5 million workers and retirees faced the real risk that their pension incomes would be slashed over the next 20 years or significantly sooner. But the American Rescue Plan Act just signed by President Joe Biden will prevent that from happening.

That’s because the massive legislative package includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. It restores to financial health more than 100 failing pension plans known as multiemployer plans (they covered more than one company’s employees) for union workers. Most notably, the Teamster’s storied Central States, Southeast & Southwest CSWC +0.3% pension, covering some 400,000 workers and their families.

Author(s): Next Avenue

Publication Date: 12 March 2021

Publication Site: Forbes

New York City Comptroller Scott Stringer Loosening City Pension Private Equity Rules Will Help Him, Hurt Pensioners

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/02/24/new-york-city-comptroller-scott-stringer-loosening-city-pension-private-equity-rules-will-help-him-hurt-pensioners/?sh=6bdb3ceb2592

Excerpt:

What a remarkable coincidence that New York City Comptroller Scott Stringer is looking to loosen strict rules that govern private-equity firms managing the city’s pensions when the Democrat is running for mayor in this year’s election. Presumably, private equity firms who may earn hundreds of millions in fees if the pension restrictions are lifted will let him know just how grateful they are.

Author(s): Edward Siedle

Publication Date: 24 February 2021

Publication Site: Forbes

Can States Be Trusted To Manage Retirement Savings? Two New Reasons For Concern

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/02/28/can-states-be-trusted-to-manage-retirement-savings-two-new-reasons-for-concern/

Excerpt:

Readers, I have long been of the opinion that it’s a sensible approach to enable savers to choose among multiple retirement funds, so that they are able to reflect their particular ethical concerns, whether this means an “ESG” (environmental, social, and governance-issue focused) fund or a religious-screening approach, such as excluding companies which donate to Planned Parenthood (Ave Maria Funds) or which are in the alcohol industry (GuideStone Funds).

But no state official should be using investors’ money to play politics — not the money of individual investors through state-run IRAs or the retirement savings accounts of state employees, and not the money of public pension funds. And, frankly, I find it appalling that these sorts of actions aren’t universally considered to be wholly out of bounds — but I suppose living in Illinois (newly-declared the third-most-corrupt state, with Chicago as the most-corrupt city), I suppose I should lower my expectations. Readers in the remaining 49 states, however, should watch carefully.

Author(s): Elizabeth Bauer

Publication Date: 28 February 2021

Publication Site: Forbes

$350 Billion Covid “Bailout” To States, Cities, And Counties – Here’s What You Need To Know

Mary Pat Campbell

Link: https://www.forbes.com/sites/adamandrzejewski/2021/03/03/350-billion-covid-bailout-to-states-cities-and-counties–here-are-the-details/?sh=626de35e661c

Graphic:

Excerpt:

This week, the U.S. House passed, along party lines, the $1.9 trillion American Rescue Plan Act of 2021. A vote in the U.S. Senate is expected soon.

Buried within the 591-page bill is a $350 billion bailout for 50 states, tribal governments, U.S. territories, and more than 30,000 cities and counties.

Our auditors at OpenTheBooks.com finally located the $350 billion allocation, line-by-line, in a supplemental database hidden on the back end of the House Oversight Committee’s website.

Map Link: https://www.openthebooks.com/maps/?Map=90043&MapType=Pin

CBO data: https://www.openthebooks.com/assets/1/6/CD13263501.pdf

Author(s): Adam Andrzejewski

Publication Date: 3 March 2021

Publication Site: Forbes

People With Dementia Are Twice As Likely To Get Covid-19 And Four Times More Likely To Die From It

Mary Pat Campbell

Link: https://www.forbes.com/sites/mishagajewski/2021/02/09/people-with-dementia-are-twice-as-likely-to-get-covid-19-and-four-times-more-likely-to-die-from-it/

Graphic:

Excerpt:

Patients with dementia are at higher risk for Covid-19 and are more likely to have worse outcomes, according to a new study published today.

The study, led by Case Western Reserve University researchers, reviewed electronic health records of 61.9 million adults in the United States and found that the risk for contracting Covid-19 was twice as high for people with dementia compared to the general population.

The risk was even greater still for African Americans with dementia, who were found to be close to three times as likely to be infected with Covid-19.

….

The study, which was published in the journal Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association, also found that certain types of dementia had a greater risk than others.

Author(s): Misha Gajewski

Publication Date: 9 February 2021

Publication Site: Forbes

Private Equity Pays To Silence Investor-Whistleblowers Aware Of Fraud

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/02/28/private-equity-pays-to-silence-investor-whistleblowers-aware-of-fraud/?sh=45191ea71cee

Excerpt:

For fiduciaries overseeing other people’s money, private equity’s disparate treatment of investors, abusive industry practices and alarming lack of transparency should be deal-breakers. To the contrary, pensions in recent years have dramatically increased their allocations to private equity funds—either because they don’t understand the dangers lurking in the shadows or simply don’t care as long as above-market returns are promised (which will supposedly reduce severe pension underfunding).

….

Securities and pension regulators have paid little attention to the “side letter” agreements private equity funds enter into with investors granting preferential treatment. It’s no secret that these agreements exist—the practice of entering into them is disclosed in offering memoranda and is openly discussed throughout the industry. As a result of increasing institutional investor domination of private equity, and the regulation applicable to these investors, it is now standard practice in the industry for each investor to demand its own side letter. As a consequence, there has been a proliferation of the number of side letters being negotiated with investors, as well as the kinds of arrangements and provisions included in them.

Author(s): Edward Siedle

Publication Date: 28 February 2021

Publication Site: Forbes

California’s Pension Woes Are Made Worse By Moving Emergency Services In House

Mary Pat Campbell

Link: https://www.forbes.com/sites/ikebrannon/2021/02/28/californias-pension-woes-are-made-worse-by-moving-emergency-services-in-house/?sh=40f419203629

Excerpt:

However, there is no significant budgetary reform in the offing, and California’s cities and counties feel no compunction to address the issue. In fact, these days several municipalities are taking steps that will ultimately serve to exacerbate the shortfall by bringing in all of their emergency services “in house,” rather than contracting out emergency services to a private entity. 

The rationale typically given for such steps is that doing ambulance and fire services completely in house helps coordinate emergency responses and creates efficiencies, improving services and saving them money. 

However, such efforts rarely manage to help towns—or the state, for that matter—to save money. Contracting out ambulance services is typically done by smaller communities that don’t have the demand to support a full-time ambulance crew, which can be expensive—a tricked-out ambulance alone costs over $150,000. Combining with another nearby community generates economies of scale. 

Author(s): Ike Brannon

Publication Date: 28 February 2021

Publication Site: Forbes

Red State Budgets Are Suffering The Most In This Recession

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/02/18/red-state-budgets-are-suffering-the-most-in-this-recession/?utm_source=newsletter&utm_medium=email&utm_campaign=follow&cdlcid=5f3d53896be319c3c36cff29&sh=7f2620337b69

Graphic:

Excerpt:

Of those states suffering at least a 3% drop in revenue since the start of the pandemic in March 2020, two-thirds (eight in 12) are red states. Alaska, Florida, North Dakota and Texas are seeing some of the worst revenue losses of 9% or higher over the comparable period in 2019, according to the latest data from the Urban Institute.

Across the 47 states from which the institute has full data, total state tax revenues were down by $14 billion in the first ten months of the pandemic (between March and December 2020) compared to the same period a year earlier. That’s an average drop of 1.8% and is largely driven by declines in sales tax revenue.

Author(s): Liz Farmer

Publication Date: 18 February 2021

Publication Site: Forbes

Public Pension Roundup: Reform And Regression

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/02/19/public-pension-roundup-reform-and–regression/

Excerpt:

Now, generally speaking, when an employer switches from a traditional pension to a defined contribution plan, this means a significant drop in plan benefits for employees. In Florida, that’s not the case — at least nominally not so: the employer contribution rate is the same for either type of plan, and varies only by employment class. (Of course, this doesn’t take into account any additional contributions needed to remedy funded status.) In addition, regular readers will know that I insist whenever the opportunity arises that state and local employees should participate in Social Security just as much as the rest of us do; as it happens, that is already the case for public employees in Florida. In addition, unlike the 8 year vesting of the traditional pension plan, the employer contributions to the defined contribution plan vest after only a year of service.

Author(s): Elizabeth Bauer

Publication Date: 19 February 2021

Publication Site: Forbes

Don’t Tax Book Income

Mary Pat Campbell

Link: https://www.forbes.com/sites/shivaramrajgopal/2021/02/17/dont-tax-book-income/?sh=13874daa2f1f

Excerpt:

There are rumors that the Biden administration is thinking of a 15% minimum tax on companies with book or accounting income (“GAAP” income) of $100 million or more. This proposal tends to bubble up on the national policy agenda off and on with unfailing regularity. For example, in April 2019 Senator Elizabeth Warren raised a similar proposal in the early days of her presidential campaign and the Joint Committee on Taxation, as far back as 2006  examined Treasury’s advocacy of such a tax.  Sadly, this was tried once and was a failure. In 1986, the corporate minimum tax was amended to include an adjustment for book-tax differences, being applied from 1987 to 1989 before it was not renewed.

There are many pitfalls associated with the idea of taxing book income. For starters, companies that meet the threshold will try and minimize GAAP income to pay lower taxes. One could argue that is desirable as we often suspect that companies today inflate GAAP income to look better to their shareholders. Tying tax rates to book income would imply that earnings management, or attempts to artificially inflate GAAP earnings, will now incur a real cash outflow cost in terms of higher taxes. However, the usefulness of GAAP earnings would be severely compromised and if distorted by tax related maneuvers, will give managers and speculators even more fuel to spin narratives to justify wild valuations. One can even imagine a world where stock return volatility driven by uninformative earnings numbers might drive away uninformed investors from equity markets.

Author(s): Shivaram Rajgopal

Publication Date: 17 February 2021

Publication Site: Forbes