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Business & Finance Archives - Invest Smart https://invest-smart.org/tag/business-finance/ Asset Protection and Investment News Tue, 08 Mar 2016 20:46:00 +0000 en-US hourly 1 https://wordpress.org/?v=6.2.4 Do IRS Budget Cuts Mean Fewer Audits? https://invest-smart.org/irs-budget-cuts-mean-fewer-audits/ Mon, 15 Feb 2016 16:54:12 +0000 http://invest-smart.org/?p=1415 The IRS has learned to live lean since 2010, and no one seems to be complaining. At least, no one who makes less than $1 million dollars.

Budget slashes, enacted throughout the last five years¹, have reduced the IRS to a shell of its former self, and the powers-that-be must pick and choose their audits carefully. Naturally, high earners enjoy a higher likelihood of falling into The Taxman’s sights.

According to The Wall Street Journal, 2015 marked the lowest rate of taxpayer audits in ten years—an astonishing .84%—while the percentage of audited millionaires rose by 2.5%. 2014 saw 7.5% of millionaires audited; 2015 raised the percentage to 10%².  

IRS Commissioner John Koskinen cites the fact that the IRS now operates on its lowest budget since 1998, but there’s an added catch—there are now 27 million more tax returns to file than in the late 90s³. As a result, taxpayers experienced more frustration than usual trying to get IRS representatives on the phone in 2015. The cuts certainly present a mixed bag of results; here is the simplified version.

 

  • One-fifth of the IRS budget has been cut since 2010.
  • Last year marked a ten-year low in personal taxpayer audits—less than 1%.
  • Last year also presented historically bad “customer service.”
  • With fewer resources, the IRS must carefully choose whom it audits.
  • The lucrative target, $1 million dollar earners and up, reached a new high in audits—10%.

In reality, the worst result to the average American taxpayer is a prolonged wait on the phone—”Such cuts have made it nearly impossible for many taxpayers to reach the agency with questions,” said John Koskinen, as cited by CBS News. “Fewer than half of the calls placed to the IRS were answered in fiscal [year] 2015, and callers who did get through waited on hold for an average 23 minutes.”

While the thought of calling the IRS probably hasn’t crossed your mind, the additional 2.5% percent chance that high earners will be audited—from 7.5% to 10%— means your accountant should get busy soon. One in every ten millionaires? Those aren’t odds to be joked about.

The most insidious result of the budget cut remains: corporations and individuals engaging in tax fraud will have increasingly high chances of escaping unscathed. With corporate tax avoidance experiencing unprecedented levels of success, perhaps this isn’t the right time to wish for sweeping IRS budget cuts.

At any rate, American high net worth individuals are now the object of IRS affections.

 

  1. http://www.cbpp.org/research/federal-tax/irs-funding-cuts-continue-to-compromise-taxpayer-service-and-weaken-enforcement
  2. http://fortune.com/2016/02/23/irs-audits-millionaires/
  3. https://www.irs.gov/uac/Written-Testimony-of-IRS-Commissioner-Koskinen-before-the-House-Ways-and-Means-Committee
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War and Peace: What to Do With Gold in Times of Geopolitical Instability https://invest-smart.org/war-and-peace-what-to-do-with-gold-in-times-of-geopolitical-instability/ Thu, 04 Jun 2015 21:48:15 +0000 http://invest-smart.org/?p=1361 In June, tensions between the Iraqi government and insurgent collective, ISIS escalated—and so did gold prices.

It was roughly the same scenario late last year. Gold prices soared by up to 9 percent after a horrific chemical attack in Syria left hundreds dead and sparked talks of out-and-out U.S. military intervention.

“Gold can smell war,” as pundits say.

While there can be no doubt about the sensitivity of gold in times of geopolitical instability, investors should nonetheless know how exactly the metal reacts to these kinds of situations. As you will see, the behavior of gold before, during, and after military engagement is highly nuanced.

Why do gold prices rise in war?

Gold is the currency of conflict. In wartime, this commodity holds court as money, whereas paper money is rendered relatively insignificant.

In view of this, governments keep vast reserves of gold just in case of armed provocation: Weapons and war machines are essentially bought with gold. This is why the NY Federal Reserve ended up with the bulk of the world’s gold deposits right after World War II.

In fact, a government can treat gold as a bargaining chip, with the ability to cripple a rogue power. Just take a look at Syria. In 2012, at the height of sanctions from the international community, the Assad-ruled nation desperately sold almost 26 tons of its gold reserves. Apparently, one of Europe’s sanctions against Syria forbade its governmental institutions from trading in gold, silver, and other precious commodities.

When to buy gold

Times of political turmoil can actually be ideal for going on a gold-buying spree. Gold practically went into orbit in the days leading to the bloody Gulf War, specifically as Iraq was invading Kuwait in 1990. Prices somewhat leveled off thereafter before rising steeply once more when Operation Desert Storm launched in Iraq in 1991.

Gold was just as responsive when the US was fomenting another Gulf War. In December 2002, three months before Operation Iraqi Freedom, the value of gold vaulted to a six-year high after the Bush administration somehow managed to accuse Iraq of flouting UN’s disarmament resolution.

Similarly, Bush was mulling war with Iran in 2007 when the price of gold reached $806 an ounce, a peak unseen in 27 years.

That said, it’s worth noting that gold prices in these examples did not peak during the war itself. The tendency, it seems, is that gold attains its zenith either in the run-up to or at the onset of military aggression after which, the metal tends to slide to pre-war prices.

Takeaway

Demand for gold reaches intensity like no other event than during war. Rumours of war alone are enough to catapult the metal to historic highs. For obvious reasons, wartime is when you would want to unload your gold, if only because there is no assurance that the event would have permanent repercussions on bullion prices.

Of course, you should take into account other factors. Consider buying or selling gold when the economic indicators of war are palpable, e.g. a flailing US dollar and loosening of a central bank’s monetary policies. Put another way, when the world is in peace and prosperity, the price of gold tends to be unexciting, and you should make an investment decision accordingly.

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Workplace Absences Cost UK Economy £100bn Annually https://invest-smart.org/workplace-absences-cost-uk-economy-100bn-annually/ https://invest-smart.org/workplace-absences-cost-uk-economy-100bn-annually/#comments Mon, 17 Mar 2014 10:14:59 +0000 http://invest-smart.org/?p=1129 The consequences of workplace injuries can be devastating for employees, but employers that do not protect the health and fitness of their workers can also face substantial difficulties. These do not just include inflated insurance premiums due to accident at work compensation claims and industrial illness claims, but also disruption to the business and a loss of productivity.

Research by the British Heart Foundation (BHF) revealed that almost 650,000 people in the UK call in sick at work every week, with this impacting the country’s economy by £100 billion annually.

The organization’s Public Administration and Defense sector sees the highest number of workplace absences. This sector, which includes public sector workers, sees around 51,000 absences in the average week.

But poor health and safety standards are not just damaging productivity when employees are absent or make industrial illness claims or claim accident at work compensation. The study also showed that of the eight million people who experienced health problems that lasted over 12 months, almost half (44%) said they are unable to perform all of their working duties fully, despite being able to make it back into work.

Improving the health and fitness of workers

The BHF noted that these high levels of sickness absence and significant reductions to productivity could be prevented if employees had a healthier lifestyle. The BHF highlighted its Health at Work program as an example of ways employers could improve the health of their workforce.

Personal injury solicitors note that health and safety regulations are developed so employers can prevent accident at work compensation claims and other personal injury claims and should help employers prevent any unnecessary employee absences.

Employers are legally obliged to take all reasonable steps to protect their employees. If they are negligent towards this duty, then they can end up paying out significant sums of money – either by themselves or through their insurers – through personal injury claims, and could also encounter fines and prosecutions from the Health and Safety Executive. They may also encounter prolonged workplace absences, rapid employee turnover and poor worker morale. However, while these economic arguments may provide the most compelling reason for businesses to ensure the health and fitness of staff, being responsible for the ill-health of an employee could see employers face emotional problems such as guilt, and it is arguably more important to ensure employee safety from a moral standpoint than from a financial one.

What Employers Can Do

Any employers who are unsure whether or not they are effectively protecting the health and safety of their personnel ought to speak with a consultant and examine the BHF’s Health at Work program before it is too late.

Businesses that focus on employee health and fitness will see productivity increase and sickness absences decrease. Unfortunately, too many businesses are missing the opportunity to improve the productivity, health and morale of their workforce, and may face severe financial problems as a direct result of this.

About the Author

Carol Smith is working with the team of personal injury compensation solicitors and also many years experienced in health care sector. She is constantly striving to deliver the highest possible standards of patient welfare and to ensure hospitals abide by the strictest health and safety regulations.

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Malaysia Plans to Leverage Strengths in Islamic Finance to Become Global Financial Hub https://invest-smart.org/malaysia-plans-leverage-strengths-islamic-finance-become-global-financial-hub-2014/ Sat, 01 Mar 2014 00:22:14 +0000 http://invest-smart.org/?p=1109 With Islamic finance expected to see aggressive growth last year, Malaysia is already setting in motion plans to become a major Islamic financial hub in the world. The government has recently unveiled plans to transform Kuala Lumpur into a financial center to attract international investors and promote trade. Through investments in the construction of 11 new buildings, the capital will be home to a new financial district designed to keep up with regional financial powerhouses Singapore, and Hong Kong.

Malaysia is currently ranked 22nd in the Global Financial Centers Index. The country is included in Asia’s Top 10 Financial Centers, wherein Singapore and Hong Kong are the frontrunners to take on their Western counterparts over the next decade. Shanghai and Shenzhen are also top contenders.

Kuala Lumpur aims to increase its chances of becoming a global financial superpower with the Tun Razak Exchange (TRX) project. The government is expected to capitalize on one of Malaysia’s economic strengths, which is the fast-growing Islamic financing marketplace. TRX, under which the financial district dubbed as “Asia’s Canary Wharf” will be developed, should lay the foundation for Kuala Lumpur’s goal to compete with international financial hubs, starting from its Asian neighbours.

Expected Boom in Islamic Finance

Islamic finance has grown particularly strong in the cities of Dubai and London, according to the AlHuda Centre of Islamic Banking and Economics (CIBE). The institution projects Islamic assets to exceed $2 trillion in 2014. Growing interest in Islamic finance among countries in North Africa, like Libya, Morocco, Senegal, and Tunisia, will drive the growth. There is also an increased uptake in Europe and the UK.

Islamic bonds—sukuk—will rise in popularity, to account for about 16% of the total industry, according to CIBE chief executive Zubair Mughal. Islamic banking is estimated to make up for 78% of the industry while Islamic funds or takaful will hold 4%. Islamic microfinance, meanwhile, will make up 1% of global Islamic financing.

Demand for Islamic products is expected to continue going on an upward trend this year, partly supported by a growing Muslim population. To non-Muslim investors, Islamic investment products are attractive because of the level of risk—low to zero—they present. The industry has also become easier to track with its inclusion in international rating systems like Dow Jones, FISE, S&P, and MSCI.

Islamic finance operates on concepts of shared responsibility and thoughtful decision-making. It also promotes socially responsible investments, thus becoming a highly viable option for governments and private organizations looking to make green investments.

Challenges for Malaysia

The TRX project is in line with the government’s goal to become a high-income economy by 2020. With the project already being rolled out, Malaysia is hoping to invite more foreign investments to speed up its economic growth, leveraging on its status as a solid Islamic financial center. There are also plans to offer tax breaks and incentives for businesses who will choose to operate in the new financial district.

Malaysia could attract major players away from its more established competitors if it finds a solution to some of its weaknesses, one being  the apparent lack of educated English-speaking workers in Islamic finance. Other challenges Kuala Lumpur needs to overcome include the need to outperform its Asian rivals in several area such as ease of doing business, the employability of new graduates, relations with international markets, and general competitiveness.

About the author:

Gilbert Bermudez is a contributor for CompareHero, a Malaysian comparison website that focus on comparing local financial services for free.

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At Tiger 21, Nation’s Wealthiest Provide Peer Support https://invest-smart.org/tiger-21-nations-wealthiest-provide-peer-support/ Fri, 07 Feb 2014 16:54:39 +0000 http://invest-smart.org/?p=1062 The Most Exclusive Club in North America

Everyone wants to be wealthy, but some amounts of wealth come with their own price tag. Along with their success, the country’s richest investors have gained huge responsibilities. Some have also discovered that it can be lonely at the top.

That’s where Tiger 21 comes in. Tiger 21 is a club for the highest net worth investors in the U.S. and Canada. The club has about 220 members across 18 different chapters. Its members have an average net worth of $75 million. Collectively, they managed about $20 billion in investible assets. Even among the wealthy, these people have assets that most could never dream of.

The group represents an array of fields, from real estate to robotics. Tiger 21 allows them to share one of their most valuable assets with each other: expertise. “Everyone assumes you’re brilliant because you made a lot of money, but most members know very little outside their domain or expertise,” Tiger 21 founder, Michael Sonnenfeldt told Forbes.

Tiger 21 has opened 18 different chapters since its founding in 1999. Its newest division, based in Dallas, was founded in 2007.  Members of the Dallas chapter include asset protection attorney, Joe Garza, among several of the city’s prominent investors, entrepreneurs, and philanthropists. As Tiger 21 continues to expand, it sets its sights on other metropolitan areas with thriving economies.

Wealth Preservation

At a Tiger 21 meeting, members speak candidly about their financial and personal lives. It’s an opportunity for them to share insights and offer critiques of each other’s financial decisions. According to member William Ade, many have never shown their personal balance sheet to anyone, so they don’t realize what they could be doing better.

For that reason, members must undergo what’s known as a “Portfolio Defense.” It’s an hour long process that occurs during each Tiger 21 meeting. According to the club’s website, every member is “required to present to the Group the complete and intimate details of his/her personal investment portfolio for review and analysis in the context of his/her stated philosophy and goals.” The group encourages each other to make responsible philanthropic decisions as well. Most consider this responsibility to include investing in promising entrepreneurs.

Planning for the Year Ahead

Tiger 21 is a valuable source of advice and information for its members. But the group has also become something of a financial compass for the country. Members aren’t keeping information to themselves; in fact, Sonnenfeldt recently appeared on CNBC to talk about the group’s projections for 2014.

“Last year was such a great market, some of our members are nervous about where it’s going from here,” he confided. A poll of Tiger 21 members revealed that 66% believe that 2014’s financial markets will be worse than 2013.

But members are also confident they’ve found this year’s best opportunities in private equity. Sonnenfeldt was quick to point out that private equity investments require more than sitting back and watching your money grow. “It’s an opportunity to roll up our shirtsleeves and get involved,” he said.

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Feds: Recent Economic Growth Mostly Attributed to Recovering Housing Market https://invest-smart.org/feds-recent-economic-growth-mostly-attributed-to-recovering-housing-market/ Wed, 17 Apr 2013 18:47:38 +0000 http://invest-smart.org/?p=595 The Federal Reserve released a report this week stating that U.S. economic expansion remained “moderate.” The Feds attribute most of the recent economic gains to the recovering housing market.

“Most districts noted increases in manufacturing activity since the previous report,” the central bank said in its Beige Book business survey, which is based on reports from the Fed’s 12 regional banks from late February to early April. “Particular strength was seen in industries tied to residential construction and automobiles.”

Most regions reported that residential and commercial real estate had improved substantially. With housing sales on the rise nationwide and home lenders issuing more loans, the market was slowly showing signs of national recovery.

“Employment conditions remained unchanged or improved somewhat,” the report said.

Many policy makers are stating that the Fed should keep the April stimulus in effect until more recovery has been realized, particularly in lieu of the recent defense spending cutbacks that have effected the gross economies of a dozen states.

With moderate gains in auto sales and housing, most analysts said an increase in taxes was also working against recovery and hindering growth. At the same time, however, analysts were cautiously optimistic that moderate growth would continue.

“Continued modest growth right now is most likely,” said Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset manager overseeing $228 billion, and a former Fed senior economist in Washington. FOMC members “thought that if the outlook for labor-market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end,” he concluded.

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Obama to Congress on ‘14 Budget: Cut Social Security Benefits, Tax the Wealthy https://invest-smart.org/obama-to-congress-on-14-budget-cut-social-security-benefits-tax-the-wealthy/ Fri, 12 Apr 2013 18:59:44 +0000 http://invest-smart.org/?p=584 Over this past week, President Barack Obama sent his 2014 budget package to Congress. The package entails a $3.8 trillion blueprint for spending that Obama Camp says is designed to create the “ultimate bargain.” The goal of the spending package is to reduce runaway spending deficits by raising taxes on the wealthy and reducing benefits of Social Security and Medicare.

The President’s budget package is intended to reduce the deficit by $1.8 trillion over the next decade by means of increased taxes on the wealthiest Americans and reduction in key benefits that the elderly enjoy on programs related to Social Security. The goal of the blueprint is to counter nearly $1.2 trillion in automatic budget cuts.

The proposed budget by Obama for 2014 would increase our nation’s budget by 2.5 percent in 2014. The budget for the current year is at about $973 billion, and under Obama’s proposed plan, it would be reduced to $744 billion in 2014, which would earmark the first time our budget has been below $1 trillion since 2008.

“I have already met Republicans more than halfway, so in the coming days and weeks I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficit and debt as they claim to be,” Obama said in the White House Rose Garden in a statement to the press.

The budget is expected to be met with fierce resistance by Republicans in Congress, who are unlikely to approve increased taxes on the wealthy. The most recent increase of $660 billion to the top income earners was fought against fervently by Congress, but was ultimately passed as a deal to avoid automatic budget cuts and a government shutdown.

Over the past four years, Obama has witnessed federal deficits of more than $1 trillion for each year. And the budget plan that was pass by the GOP-controlled House is estimated – and intended – to reach a balance by 2023, a year in which the Obama administration projects there will only be a $439 billion deficit.

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China on Pace to Overtake American Economy by 2016 https://invest-smart.org/china-on-pace-to-overtake-american-economy-by-2016/ Fri, 22 Mar 2013 17:31:46 +0000 http://invest-smart.org/?p=519 A stunning report that was issued by the Organization for Economic Cooperation and Development has stated that China is on course to overtake the U.S. economy a lot sooner than we had thought: by the year 2016. Last year, the economy in China grew by a whopping 7.8 percent. And according to the OECD report, the economy there is set to grow by 8.9 percent in 2014.

The analysis compared price shifts, inflation, worldwide economies, markets and many other factors when predicting that it is highly possible that Chinese economy becomes larger than the U.S. economy inside of the next three years. The primary factor, however, was investment spending, something China has been adamant about in recent years.

The one thing that’s really been holding China back is the state’s firm lockdown on trade and companies. The rampant monopolies in China, the counterfeiting epidemic and the lack of ability for real foreign competitiveness also play a strong role of doubt. Since 2005, leaders of this nation have promised to open the doors to foreign competition and clamp down on monopolies, a pledge that they still have yet to live up on.

Richard Herd, the chief author of the OECD’s report wrote: “What’s needed is to make these changes effective and really open up some of these sectors,” adding, “and really there has been no result.”

The World Bank concurs with Herd, stating that the country needs to tackle monopolies and ease state control over enterprise to truly grow and nourish its economy.

“China has weathered the global economic and financial crisis of the past five years better than virtually any OECD country and than many other emerging economies,” said the OECD. “It is well placed to enjoy a fourth decade of rapid catch-up and improving living standards.”

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D.C. Braces for Post-Sequester Fallout https://invest-smart.org/d-c-braces-for-post-sequester-fallout/ Mon, 18 Mar 2013 20:52:48 +0000 http://invest-smart.org/?p=504 D.C., Virginia and Maryland are more frustrated by the sequester budget cuts than Detroit is, rest assured. That’s because these three states combined earn 10 percent of their economy from defense spending annually. This is according to a late February report by Mark Vitner and Michael Brown, both Wells Fargo economists.

“Cuts in nondefense outlays would likely trigger significant furloughs, layoffs at civilian contractors and generally less business for supporting services, including law firms, caterers, airlines and hotels,” the report stated.

The law does afford a full fiscal year for states to put the budget cuts into place. However, many states and defense contractors have already started tightening their belts in anticipation for what’s looking to be a grueling defense cutback. The Defense Department has also followed suit, notifying nearly 800,000 employees that salary cuts, layoffs and furloughs are certain to follow.

Virginia will be sorely impacted. More than 174,000 federal workers reside here. The state hosts 19 military installations, inclusive of Norfolk, the largest naval base, and the Pentagon. Virginia is also host to 90 federal offices, 550 leased federal spaces and more than 25,000 federal contractors.

On the heels of this sequester, Republican Gov. Robert McDonnell even wrote a letter to U.S. President Barack Obama. The letter outlined the severity of the impact of these looming federal budget cuts to his state. In the letter, it warned that Virginia stood to lose $2.6 billion in revenue over the next five years, or 0.6 its gross domestic product, should the cuts go into place.

“In the event that you and the Congress take no action and allow sequestration to proceed, we are estimated to lose approximately 82,000 direct jobs at federal agencies and contractors, and an additional 82,000 indirect jobs supported by business and personal spending that will be impacted by the cuts,” McDonnell wrote.

Virginia is in line with two other states that stand to lose big time defense dollars from the cuts. Texas and California, which each received more than $30 billion over the past fiscal year in defense funds.

Alaska is not immune, either.

“In addition, Alaska with its Air Force, Army and Naval operations would also be disproportionately impacted from defense cuts,” the Wells Fargo report said.

The sequester is being fomented by the 2011 Budget Control Act.

According to a report that was published by NBC News, this Act entails:

The 2011 Budget Control Act – which created the sequester time bomb when enacted in August 2011 – has cut federal funding for a wide range of state and local services, including education, water treatment, law enforcement, and others, to the lowest level in four decades as a share of the economy. If the full impact of the sequester cuts take effect, states will lose another $6 billion in federal funding, according to the CBPP.

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