Join me in Savannah!

Join me at the Savannah Book Festival Feb. 18! I’ll be speaking about my book, “Rich is Not a Four-Letter Word,” my love letter to Americans who want to make it on their own and become financially successful. You’ll hear some of my time-tested solutions for beating back some of the toughest financial problems facing American families, like the high cost of college debt. I’ll talk about the strategies and techniques that go into being successful and address how I coped with the biggest personal challenge I faced, breast cancer. The event will be free and open to the public but there are limits on seating so you will want to get there early!

Visit: http://www.savannahbookfestival.org/saturday-schedule/

How illegal aliens receive billions of dollars from the IRS

Happy Tax Day, or should I say Happy Chump Day! At least that’s the way I felt after I learned about the abuse of a little known tax break called the Additional Child Tax Credit or ACTC. The ACTC is a refundable tax credit, which is to say the credit cuts your tax bill (not taxable income like a deduction), or if you don’t have a tax obligation, you get a check from the government.

The credit, according to Curtis Dubay, a fellow at the American Enterprise Institute, is simply, put, means-tested welfare and a way for the federal government to assist American working families living in poverty. Unfortunately, he says, it is being abused by illegal aliens because the IRS doesn’t require filers to have a Social Security number to get the credit. Instead, the filers can use an Individual Taxpayer Identification Number, which is not proof of citizenship.

Unfortunately, some $4.2 billion dollars is given to people claiming the credit who should not receive it, according to the Treasury Inspector General for Tax Administration, the oversight agency for the IRS which studied the issue extensively. The improper payments are about 25 percent of the total credits paid in a given year, and over the years, Congress has expanded the credit making it an even bigger lure for scofflaws. According to TIGTA, one gimmick used by filers hoping to score a big government check is making multiple claims for previous tax years. In 2010, for example, 238,000 ITIN filers submitted more than 608,000 tax returns, claiming more than $1 billion in credits or an average claim of $1,800. But 9,000 individuals claimed $10,000 or more.

In a report, TIGTA says the credit actually encourages illegal immigration. “The payment of federal funds through the tax benefit appears to provide an additional inventive for aliens to enter, reside and work in the United States without authorization which contradicts federal law.”

Congress has tried to change ACTC filing requirements to include a Social Security number, but the IRS has resisted those efforts. "How illegal aliens receive billions of dollars from the IRS"

RICH IS NOT A FOUR-LETTER WORD is on sale April 19th from Crown Forum. Order now: AmazonBarnes & NobleiBooks.

Just in time for tax day: How Congress wastes your taxpayer dollars!

Only Congress could believe that $40 million dollars is chump change. Just in time for tax day, this year’s 2016 Citizen’s Against Government Waste report shows just that.

The annual expose on pork-barrel spending reveals Congress setting aside $40 million dollars to upgrade the M1 Abrams tank, a move that has been opposed by the Department of Defense. In fact, 2,000, M1 tanks languish in the California desert even as Congress doles out more money for the very same model. The M1 tank was designed 36 years ago and while production facilities are based in Lima, Ohio, parts suppliers are located all over the country.

Congress put the kibosh on this kind of spending five years ago with a moratorium on the use of earmarks in 2011. Even so, the 2016 budget included 123 earmarks, up 17 percent from 2015. Spending, naturally, is rising, too, up 21 percent to $5.1 billion from the prior year.  Total pork barrel spending since 1991, according to CAGW, is $323 billion, which is not chump change.  CAGW’s most famous example of government waste was a program to test the health of shrimp by putting them on tiny treadmills. No kidding.

Some other examples of your wasted tax dollars: The East West Center in Hawaii. Using earmarks, Congress is plowing $5.9 million into the organization, the stated aim of which is to promote better relations with Pacific and Asian nations. It may sound good, but the center was established with no Congressional hearings and over the State Department’s objections.

And, then there’s the $163.9 million program to stop invasive aquatic plants. The government is designing underwater pesticides to kill what it regards as threats to the nation’s water supply. Might that not be a better job for private industry? And, finally, another $10 million is going to the Rural Electrification Administration, despite the fact that 98.7 percent of homes now have electricity.

It’s worth remembering as you sign your tax bill just how much of your hard-earned taxpayer dollars Congress continues to waste. 

RICH IS NOT A FOUR-LETTER WORD is on sale April 19th from Crown Forum. Order now: AmazonBarnes & NobleiBooks.

The Candidates on Healthcare: Can Obamacare survive?

The nation's biggest health insurer, UnitedHealth Group has announced it is calling it quits in two state Obamacare markets, Georgia and Arkansas. The move comes after the company announced in January that it had lost $475 million on Obamacare policies in 2015 and expected to lose another $500 million this year. The company declined to say whether it would exit other markets. 

UnitedHealth's move is just the latest exposing deep problems with the President's signature healthcare law, the Affordable Care Act or Obamacare.

Health care has become a pivotal issue in this country and even more so after the passage of Obamacare. Signed into law six years ago, Obamacare remains a target of the right. All three Republican candidates call for the repeal and replacement of the president's signature health care law. But it's not just the Republican candidates calling for change. Bernie Sanders, if elected, would rewrite Obamacare by nationalizing Medicare and transforming it into a single-payer health care system. The candidate doesn't just believe that affordable care should be available to everyone but that healthcare is a "human right," that taxpayers should pick up the tab for. And while Clinton backs Obamacare, she also would also change the Affordable Care Act. Acknowledging that Obamacare premiums are too expensive, she advocates increasing tax subsidies for coverage, raising the program's costs to taxpayers.

Ultimately, the objections of even Democratic candidates reveals the deep disaffection with the law. And, it's no surprise why. Obamacare has missed the mark. Originally intending to help 40 million people without health care coverage, government insurance policies have been accessed by just 9.4 million to 11.4 million Americans, well below enrollment levels forecast by government analysts. (The CBO estimated 21 million would ultimately enroll.) Worse, while the president promised that Obamacare would allow Americans to keep their doctor and their insurance plan, those guarantees dissolved as the law when into effect. "Bending the cost curve" ended up meaning American families paid more for coverage.

The reality of Obamacare is far different from the promise. Costs are excessive whether you're looking at the ultimate price tag paid for the program by taxpayers or the tab for consumers. There are a total of two dozen new or higher taxes imposed by Obamacare and the law is already the single biggest driver of entitlement spending by the government, according to the American Enterprise Institute. For families who do enroll, deductibles and premiums skyrocketed. The promise that quality healthcare coverage could be offered by the government for less than the cost of a cell phone -- an idea the president once touted -- has turned out to be simply wrong.

Unfortunately, coverage of the shortcomings of Obamacare have largely faded from view. We were riveted by the failures of the Obamacare website itself. Remember then then Health and Human Services Secretary Kathleen Sibelius attempted to defend the law's implementation before a Congressional committee? Throughout her testimony, in which she claimed Obamacare was working for "millions of Americans," the website was down, unavailable to the Americans who had paid for it. Cable networks broadcast split images, one of Sibelius and the other of the failed Healthcare.gov homepage. Though the media's attention has moved on to the election, problems continue for Americans seeking affordable care.

The reality is this: It's on your shoulders to find care that fits your needs and your families at a price you can afford. Obamacare's solutions have come up short. But the frustration with care in this country is climbing. One young family I know that lives in the suburbs of Dallas has opted out of the system altogether, preferring to pay the law's penalties for lack of coverage rather than the expensive premiums. They pay out of pocket for care. This is precisely what Obamacare was intended to prevent, but this family can't afford Affordable Care coverage.

Fortunately, there are ways of reducing costs and forcing the medical establishment to reduce its costs. For more on how to fight back, check out my book "Rich is Not a Four-Letter Word."

RICH IS NOT A FOUR-LETTER WORD is on sale April 19th from Crown Forum. Order now: AmazonBarnes & NobleiBooks.

Which candidates can solve the $1.2 trillion student debt crisis?

More than 40 percent of borrowers – that’s 22 million Americans with federal student loans -- are not making payments on those loans. Another one in six or 3.6 million were in default, meaning they had gone at least a year without making a payment. The data was contained in a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio.

     Strangely, the numbers represent an improvement and that is because more and more students are entering President Obama’s “Pay as You Earn” program, that allows them to reduce payments. Enrollment in that program has jumped 48 percent to 4.6 million borrowers. And, that raises the question, what should be done about student loan debt dogging grads, their parents and even their grandparents. Front runners in the presidential race say they have answers.

     Bernie Sanders believes that education is a right, not a privilege, and would make public colleges and universities free, paid for by a tax on stock, bond and derivative trading. He wants lower interest rates on federal student loans and existing loans refinanced at lower rates. Hillary Clinton similarly supports lower rates on debt, but doesn't go so far as instituting a free ride for students. She wants students to attend public college without taking on debt. To do that, she proposes that states work with colleges to cut costs and award needs-based grant money, and that student and parents contribute only what they can afford. She also favors tuition-free community college.

     Neither Donald Trump or Ted Cruz favor the free lunch proposed by their Democratic rivals, and both have talked about dismantling the Department of Education, which funds college grants, subsidized loans and work study programs. 

     What's astonishing is that no candidate has proposed a major initiative to cut the costs of college, which have been ticking along at an average increase of 3 percent every year, even during the recession. Without relief from prices increases, the burden of education will continue to rise whether it's paid by taxpayers, college students or their families.

RICH IS NOT A FOUR-LETTER WORD is on sale April 19th from Crown Forum. Order now: AmazonBarnes & NobleiBooks.

The best candidates for your wallet

Tax day is less than two weeks away and that raises an important question: Just how much would your taxes change under each of the leading presidential candidates? And, what would be the impact of their tax plans on the economy over time? 

     Let's start with the tax plans for individual filers that the candidates are calling for. On this score, Democrats call for the biggest increases. Bernie Sanders would raise income taxes across the board with four new tax brackets of 37 percent, 43 percent, 48 percent and 52 percent. That top rate would apply to earners of over $10 million. All other brackets would see higher rates of 2.2 percent. Sanders would tax capital gains and dividends for households earning more than $250,000 at ordinary income tax rates.

        Like her fellow Democrat, Hillary Clinton's plan also raises taxes, but targets the wealthy imposing a 5 percent surtax on taxpayers earning over $5 million. She also wants to raise rates on capital gains, targeting investments held for less than six years, to between 24 percent and 39.6 percent. Both Clinton and Sanders would steepen estate tax rates. 

     Not surprisingly, the Republicans call for tax cuts. Donald Trump would establish four tax brackets with rates of 0 percent, 10 percent, 20 percent and 25 percent. The top rate applies to income over $150,000 for single filers and $300,000 for joint filers. Trump also favors eliminating the net investment income surtax. Ted Cruz, meanwhile, has called for eliminating the IRS altogether. He promotes a flat tax rate of 10 percent on all ordinary income and lowers the rate on capital gains and dividend income to 10 percent. Both Republican candidates are calling for eliminating the estate tax altogether.

     The National Tax Foundation took a look at the impact these plans would have on the economy over ten years. Cruz' plans crushes the opposition. NTU calculates that eliminating income taxes and establishing a flat tax would juice the economy by an additional 13.9 percent over and above what the government is currently projecting over the next decade. Likewise, Trump's plan would promote 11.5 percent growth over the same period. Keep in mind these 10-year growth rates would work out to 1.39 percent at 1.15 percent additional growth annually, under NTU calculations.

     Sanders' plan would force the economy to contract 9.5 percent over 10 years while Clinton's program is pretty much a wash, reducing growth by 1 percent over ten years. 

     It's important to remember one thing: It would be a rare event a new president to get element of a tax plan through Congress. And, changing the tax code dramatically by, say eliminating income taxes and imposing a flat tax, would be a high hurdle for any president. 

RICH IS NOT A FOUR-LETTER WORD is on sale April 19th from Crown Forum. Order now: AmazonBarnes & NobleiBooks.

THE WEEK AHEAD

A big week ahead for the markets and one that could impact the presidential horserace. First off, already today, pending home sales handily beat expectations, coming in at a seven-month high. That metric matters because it is the only forward-looking number in the residential real estate industry. Unfortunately, personal spending was revised down for January, significantly so. Guess those macro economists will have to continue looking for better household spending.

On Tuesday, consumer confidence numbers, and a speech by Janet Yellin, Federal Reserve chairman at the Economic Club of New York (hang on to your bond coupons!). Yellin isn't the only Fed official going public this week. Dallas Fed President Rob Kaplan speaks at two venues Tuesday, and San Francisco Fed President John Williams is at the dias Tuesday as well. Chicago Fed President Charles Evans speaks Wednesday and Cleveland Fed President Loretta Mester speaks Friday.

The big kahuna report is the March jobs report released Friday. Consensus on Wall Street is for the addition of 185,000 jobs. My attention will be riveted on income and wages. Why? Because we NEED better income and wages!!

 

 

What your wallet says about your politics

    How much do we know about the wallets of the supporters of the Presidential candidates? Credit Sesame set out to understand just that. The personal finance website has seven million users and recently polled more than 1,500 of them to develop a financial profile of the supporters of each candidate.

     Surprisingly, the supporters of Donald Trump and Hillary Clinton have a lot in common when it comes to their money. The difference in median credit scores of followers of the two camps is just two points. Trump supporters have a median credit score of 660, while Clinton supporters' have a 658 score. (By the way, any score 670 or below is considered subprime.)

     Supporters of both candidates have an average of three credit cards. Hillary's followers have a credit card balance of $1,690, versus $1,469 for The Donald's followers. Twelve percent of supporters in both camps have filed bankruptcy.

     Senator Marco Rubio's followers have the highest median credit scores, while Sen. Ted Cruz' supporters have the lowest at 653.

      Despite promises by Senator Bernie Sanders and Clinton to promote more widespread college debt forgiveness, the candidate with the largest proportion of supporters with college debt is Rubio. Forty-seven percent of his supporters said they had college debt. Among Sanders supporters, the number is 41 percent. 

       Forty-one percent of Cruz followers have a mortgage, but among those who have a mortgage the highest balances belong to Sanders' camp. Trump's voters are least likely to have a mortgage at 21 percent, and of those who do, their balances are the lowest at $116,000. Overall, Trump voters seem to avoid debt the most money, but that isn't leading them to have the best credit scores in the pack.

      Rubio's followers skew the wealthiest, with the largest proportion of supporters earning $100,000 and up, while income in Sander's camp tends to be clustered in the $25,000 to $75,000 range.

How to Cheat on Your Spouse (Financially)

Thirteen million American cheat on their spouses or live-in partners, not physically, but financially. According to a new survey from CreditCards.com, one in 20 people have either a credit card or a bank account that their spouse doesn't know anything about.

 Fights over secret money seem to pop up all the time among business and entertainment celebrities. Last week, for example, former Apple CEO John Scully was sued by his ex-wife of 32 year who claims he was hiding $25 million in assets when they divorced. But what's interesting about the CreditCards/com survey, is that financial infidelity occurs at every income level.

According to the survey, forty-one percent of people have spent over $100 without their spouse's knowledge and 19 percent have spent more than $500. Men are more likely than women to cheat, according to the survey, which showed men are almost twice as likely as women to have spent more than $500 without alerting a spouse or a partner.

The middle class is most forgiving. Of all the income groups, they were most approving of a spouse or partner spending money without notifying the other. Just 24 percent of respondents in the survey said it is okay for a spouse to secretly spend $500.

Of course, it's easier than ever to pull off keeping an account secret with banks pushing consumers to drop the paper statements and receive monthly statements to their email inbox. Two income families are more likely to have separate accounts than families with a single income and that makes it less likely that information about spending is shared.