New taxes are coming Jan. 1 to help finance President Barack Obama's health care overhaul. Most people may not notice.But they will pay attention if Congress decides to start taxing employer-sponsored health insurance, one option in play if lawmakers can ever agree on a budget deal to reduce federal deficits.The tax hikes already on the books, taking effect in 2013, fall mainly on people who make lots of money and on the health care industry. But about half of Americans benefit from the tax-free status of employer health insurance.Workers pay no income or payroll taxes on what their employer contributes for health insurance, and in most cases on their own share of premiums as well.It's the single biggest tax break the government allows, outstripping the mortgage interest deduction, the deduction for charitable giving and other better-known benefits.If the value of job-based health insurance were taxed like regular income, it would raise nearly $150 billion in 2013, according to congressional estimates. By comparison, wiping away the mortgage interest deduction would bring in only about $90 billion."If you are looking to raise revenue to pay for tax reform, that is the biggest pot of money of all," said Martin Sullivan, chief economist with Tax Analysts, a nonpartisan publisher of tax information.It's hard to see how lawmakers can avoid touching health insurance if they want to eliminate loopholes and curtail deductions so as to raise revenue and lower tax rates.Congress probably wouldn't do away with the health care tax break, but limit it in some form. Such limits could be keyed to the cost of a particular health insurance plan, the income level of taxpayers or a combination.Many economists think some kind of limit would be a good thing because it would force consumers to watch costs, and that could help keep health care spending in check.Obama's health law took a tentative step toward limits by imposing a tax on high-value health insurance plans. But that doesn't start until 2018.Next spring will be three years since Congress passed the health care overhaul but, because of a long phase-in, many of the taxes to finance the plan are only now coming into effect.http://www.cnbc.com/id/100338999
Bullish Wagers Drop to Six-Month Low on U.S. Budget: Commodities
Investors cut bullish commodity bets to the lowest in almost six months as U.S. budget talks stalled, increasing concern that lawmakers’ failure to reach an agreement with push the world’s biggest economy back into a recession.Enlarge image
Investors turned bearish on wheat for the first time since June 19 as wet weather improved the condition of the U.S. winter crop. Photographer: Simon Dawson/BloombergHedge funds and money managers reduced net-long positions across 18 U.S. futures and options by 5.6 percent to 758,256contracts in the week ended Dec. 18, the lowest since June 26, U.S. Commodity Futures Trading Commission data show. Gold holdings dropped to the lowest since August, while those for silver tumbled 14 percent, the most since July 24. Traders turned bearish on wheat for the first time in six months.House Republican leaders scrapped a plan to allow higher taxes on Dec. 21. Lawmakers won’t vote until after tomorrow’s Christmas holiday on ending the showdown over $600 billion of automatic tax increases and spending cuts scheduled to start in January. U.S. consumer confidence fell to a five-month in December as Americans grow more concerned about the possibility of higher taxes, figures showed the same day.“What you have is a re-pricing of risk on concerns of no resolution to the fiscal cliff,” said Jeffrey Sherman, who helps manage more than $50 billion of assets for DoubleLine Capital in Los Angeles. “By going over the cliff, for the consumer, you have less money in the system and therefore less economic growth.”Prices Drop
The Standard & Poor’s GSCI Index of 24 commodities dropped 1.8 percent this month. The MSCI All-Country World Index of equities added 2 percent, and the dollar slid 0.6 percent against a basket of six trading partners. Treasuries lost 0.6 percent, a Bank of America Corp. index shows.The Thomson Reuters/University of Michigan U.S. consumer sentiment index fell to 72.9 in December, the weakest since July. Economists in a Bloomberg survey projected a final reading of 75. Congress won’t reach a deal this year on a budget plan, Representative Kevin Brady, a Texas Republican, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt.” The Congressional Budget Office says failing to avert the fiscal cliff may cause a recession in 2013.The index of U.S. leading indicators fell in November, pointing to a slowdown in the economy early next year, data from the Conference Board showed Dec. 20. The Federal Reservelowered its outlook for growth next year to 2.3 percent to 3 percent on Dec. 12, and ChairmanBen S. Bernanke warned that the central bank “doesn’t have the tools” to counter the risks to the economy should Congress not reach a budget deal.http://www.bloomberg.com/news/2012-12-23/bullish-wagers-drop-to-six-month-low-on-u-s-budget-commodities.htmlAmericans Miss $200 Billion Abandoning Stocks
I don't feel like I missed a thing. QBAmericans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 percent advance, according to data compiled by Bloomberg and Morningstar Inc. The proportion of retirement funds in stocks fell about 0.5 percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.Enlarge image
Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 percent advance. Photographer: Tim Boyle/BloombergThe retreat shows that even the biggest gain since 1998 failed to heal investor confidence after the financial collapse thatwiped out $11 trillion in U.S. equity value was followed by record price swings in equities, a market breakdown that briefly erased $862 billion in share value and the slowest recovery from a recession since World War II. Individuals are withdrawing money as political leaders struggle to avert budget cuts that threaten to throw the economy into a new slump.“Our biggest liability in the stock market has been the total destruction to confidence,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion, said in a telephone interview. “There’s just so much evidence of this recovery broadening.”
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