• Congress Forging Ahead on Financial Regulatory Reform  
• How to Make U.S. Financial Regulation Work Again  
• Plan to Expand Financial Oversight May Add New Risks  

BANKRUPTCIES RISING – The AP reports that the number of bankruptcies is rising with a vengeance amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts.  One attorney says he is working seven days a week and "There's no end in sight. To be doing this well and having this much business, it is depressing. It's not a laugh-a-minute job."

SPEAKING OF BANKRUPTCY – The government is apparently asking for GM to "bite the bullet" and enter bankruptcy. You can "bank it" and the only problem we see is that it should have happened before the taxpayers threw billions down the toilet.

DEFICIT AND BUDGET SHORTFALL - The U.S. has posted a record budget deficit for the first half of fiscal year 2009 of $956.8 billion, a number inflated by governmental spending on financial and economic programs, and this year's budget shortfall is more than triple 2008's deficit. For March, the government filed a record monthly deficit of $192.27 billion. For the same month last fiscal year, the gap was only $48.21 billion. 

TRADE BUBBLE PLUS - The trade bubble continues to collapse...and that's good news. Imports are down 33% over the past year, but the trade deficit, a key part of the global financial crisis, needs to narrow further. The huge deficit was an essential part of the global financial crisis. For one, it reflected massive borrowing by households to buy imported goods, with money they did not have. Second, it reflected massive lending by foreigners in the U.S., which eventually morphed into subprime mortgages and other risky assets.

MORE HOMEOWNER HELP INFORMATION - The $75 billion the government is injecting into housing could help some nine million homeowners refinance - or, if they're in dire straits, modify the terms of their loan. The refinancing program is aimed at homeowners who are current on their payments but whose mortgages have fallen below the 20% equity threshold because of declining home values. Under the new program, you're eligible for refinancing if your loan is owned or was packaged for sale in the secondary market by Fannie Mae or Freddie Mac. To find out whether you qualify, call the lender to which you make your payments, or contact Fannie Mae at 800-732-6643 or visit www.fanniemae.com; or contact Freddie Mac at 800-373-3343, www.freddiemac.com/avoidforeclosure. The new loan can't exceed 105% of the current market value of your home, and you can't get any cash out. The program ends in June 2010.

TEACHER SHORTAGE – Another cheerful thought. More than one-third of the 3.2 million teachers in the U.S. could retire by the year 2013...a transition which will affect both schools and taxpayer-financed retirement systems.

PUBLIC PENSION DEFICIT A CONCERN – What is the deal here? Has everybody been asleep? A current article proclaims that investment losses from the current financial crisis have significantly eroded the funding status of public pension plans, affecting entities from school districts, to local governments, to state governments, and there is growing concern that increasing deficits in public plans will force taxpayers to make up for the shortfall.

FEDS NOW PLAN TO AVOID INFLATION – Federal Reserve policymakers warned that while the economy will skid more deeply into recession in coming months, it is time to start planning how to wind down spending to avert an inflationary surge. Well, they may be a few days late and a few trillion dollars short. 

ING SHIFTS EMPHASIS – ING says insurance operations will continue to be a "key building block" but, in the United States, "a fundamental shift in the risk profile will be achieved by focusing on individual life and retirement services and a transition of the variable and fixed annuities business to low-risk rollover products. For the non-core businesses, including employee benefits, group reinsurance and the existing annuity books, strategic options will be reviewed. The U.S. financial products division will be reduced as assets mature. We are taking ING back to basics on all levels. We will be focusing on fewer but more transparent products." Hope you understand but we don't. See complete details at www.lifeandhealthinsurancenews.com.

WHAT THIS COUNTRY NEEDS IS MORE SMOKERS - Smoking takes years off your life and adds dollars to the cost of health care. Yet nonsmokers cost society money...by living longer.  House members described huge health care costs associated with smoking as they approved landmark legislation last week giving the Food and Drug Administration authority to regulate tobacco products. No one mentioned the additional costs to society of caring for a nonsmoking population that lives longer. A White House statement supporting the bill, which awaits action in the Senate, echoed the argument by contending that tobacco use "accounts for over a $100 billion annually in financial costs to the economy." However, smokers die some 10 years earlier than nonsmokers, according to the CDC, and those premature deaths provide a savings to Medicare, Social Security, private pensions and other programs. Vanderbilt University studied the net costs of smoking-related spending and savings and found that for every pack of cigarettes smoked, the country reaps a net cost savings of 32 cents. Sell just 10 trillion packs and we can pay for the Obama budget!

• $3.5 million estate tax exemption for 2010, with inflation adjustments annually thereafter; same exemption for gift taxes, thus reunifying the two; generation-skipping tax exemption would also be set at $3.5 million
• Top estate tax rate of 45%
• Any unused exemption would go to a surviving spouse and be available for use when he/she dies, meaning that a married couple would be entitled to a full $7 million exemption; end result would simplify estate planning for couples
• Special-use valuation for farms and business real estate would be raised to $3.5 million

• 31% will use part of the money to pay credit card bills, compared to 17% a year ago.
• 19% will pay utility bills, compared with 10% a year ago.
• 17% will pay rent or mortgage payments, compared with 7% a year ago.
• 11% will take a vacation, a slight increase from a year ago.
• 5%  will make a down payment on a car, also a slight increase.
• 4%  will buy stocks or bonds, about the same as a year ago.
• 8% who owe taxes said they are likely to use a credit card to pay their tax bill.

• Taxes. Single taxpayers earning more than $200,000 a year and couples earning more than $250,000 are going to pay more. The top tax rate will almost certainly jump from 35% to 39.6% at the start of 2011. The budget would cap itemized deductions, such as those on mortgage interest and charitable giving, at a 28% rate (compared with 35% currently). But that will be a tough sell, given the dire straits of the housing industry and a wide swath of nonprofits whose endowments and funding have been hard-hit by stock-market losses. Calculations from Deloitte Tax show that a married couple with two children and a $500,000 annual income would owe about $11,000 more in taxes if all of the budget's tax provisions were enacted.  But middle-income taxpayers would see lower tax bills as cuts that were part of the recent economic-stimulus legislation (including a credit worth up to $400 for individuals and $800 for couples) become permanent. Deloitte calculates that a married couple with two children and an income of $125,000 a year would pay nearly $4,000 less in taxes, thanks to the Making Work Pay credit and a long-term fix for the downward creep of the alternative minimum tax.
• Investments. Capital-gains rates for high earners could jump back up to 20% in 2011 from 15% now; ditto for the rate on dividends.
• Health care. Half of the $630 billion over ten years earmarked as a down payment on health-care reform is slated to come from tax hikes on top earners. Higher-income Medicare participants would also pay bigger premiums for drug benefits. Revamping Medicare Advantage, a private alternative to the traditional government plan, could lead to fewer benefits for Advantage participants. But the 80% of Medicare enrollees in the traditional plan could expect premiums to be lower than they would have been.
• Retirement. The budget lays the groundwork for workers to be automatically enrolled in their employer's retirement-savings plan, or in a direct-deposit IRA if the employer has no savings plan. Workers could opt out, but inertia could end up boosting participation rates to 80%. Families earning less than $65,000 could see an expansion of the Saver's Credit with a 50% match on the first $1,000 of retirement savings.
• Education. You can count on the $2,500 college-savings tax credit, enacted as part of the stimulus bill, becoming permanent. Need-based Pell Grants could grow to a maximum $5,550 for the 2010-11 school year, be indexed to inflation thereafter, and receive guaranteed funding each year.

• Phishing: the scam artists dupe filers with an email address that appears to come from legitimate organizations, like the IRS.
• Dishonest Preparers: Some skim off the top of their clients' refunds and/or charge excessive fees.
• There is no secret trick that can eliminate a person's tax obligations. Be wary of anyone peddling any of these scams.
• Exaggerating or falsifying income deductions
• Abusing donations to tax-exempt organizations by overvaluing or never actually making the donation.
• Abusing limits set on contributions to IRAs. The IRS has also seen
• Trusts being misused in an effort to avoid income tax liability and hide assets
• False tax deductions
• Using offshore banks to hide assets and income.
• Forming false corporations to hide assets.
• Fileing false returns to get refunds they do not deserve. Some apply for a tax abatement without even having filed a tax return in the first place.
• Claiming income is zero on false documentation.