American Shareholders Association

ASA on Location at Resource Bank

I will be at Resource Bank for the balance of the week.  If there's anything of interest to post, I'll be back.  Otherwise, see you Monday.

ASA Comments on 401(k) Fee Disclosure

ASA sent a letter to the Hill today commenting on fee disclosure.  Here's an excerpt:

No one—not investors, employers, the 401(k) industry, policymakers, nor regulators—have any problem whatsoever with 401(k) fee disclosure.  In fact, the Department of Labor has already proposed and is moving to finalize strong mandates in this regard...Where H.R. 3185 falls short is in effectively discriminating against service providers who choose to bundle their fees.  Seventy-five percent of employers, particularly smaller employers, use these bundled arrangements.  Using a single provider eliminates the need to monitor multiple service providers to a plan.  H.R. 3185 could serve to increase 401(k) fee costs, since the economies of scale small businesses currently enjoy would be endangered.  Fee disclosure that investors aren’t clamoring for isn’t worth imperiling the retirement security of millions of workers.

Dems in White House? Get Ready to Take a Nest Egg Hit

Good article today (not the least of which because I'm quoted) in SmartMoney.com on the capital gains and dividends rate and the 2008 Presidential elections:

Ryan Ellis, executive director of the American Shareholders Association, a political advocacy group pushing for lower investment taxes, says all investors — not just those with taxable accounts — should be aware of the impact of the candidates' policies. "Most Americans own stocks in 401(k)s and IRAs, but even if they're not directly paying these taxes in their retirement accounts raising the cap-gains rate has a high correlative effect on the stock market's performance," says Ellis, who says he only has tax-advantaged accounts.

"If you own a share worth $100 and you're anticipating a higher capital-gains rate, there's going to be a discount because your future profit isn't as high, and therefore the share is worth less because people aren't willing to pay as much," Ellis says. "If shareholders are aware of the difference between the Democratic nominee and McCain, there's not a starker contrast than on the tax issue. Maybe the Iraq war is bigger, but that's about it."

Dividends for the Rich? Tell That to Utility Company Investors

The Edison Electric Institute and the American Gas Association recently released a study entitled, "The Dividend Tax Rate Reduction."  In 2003, the top tax rate on dividends received by individuals was cut from nearly 40% all the way to 15%.  It makes sense to see what the characteristics are of these households.  A few interesting nuggets:

• The utility industry has the highest dividend yield of any sector, at 3.3%.  That would explain why many older Americans hold utilities for current income.  Utilities also pay out almost half of their net income as a dividend every year.  You can't get much more transparent with profits than cold, hard cash
• 60% of Americans reporting "qualified dividends" had income of less than $75,000 per year
• 60% of Americans reporting "qualified dividends" were age 50 or over
• These older taxpayers with dividend income were very likely (90% chance) to own utility stock shares

If nothing is done to change the path of current law, the dividend tax rate will go from 15% to nearly 40% in 2011.  Since dividends are not deductible to the payer, the ideal rate for individuals should actually be 0%--but I digress.

The numbers bear out that if and when that scheduled tax hike occurs, it will fall most heavily on seniors making less than $75,000 per year.  So much for "taxing the rich."

Timeline of a Payoff:Michelle Obama and U. of Chicago Hospital's Earmark

Michelle Obama worked for the University of Chicago for years--even before her husband Barack decided to run for the United States Senate.  Apparently, she did a really good job (source on these wages is Obama tax returns):

2002: $98,826
2003:  $64,287
2004:  $121,910  (89.6% raise)
2005:  $316,962 (159.9% raise)
2006:  $273,618
2007:  $103,663

In 2006, Senator Barack Obama requested a $1 million earmark for the University of Chicago Hospital System.  Click here to read details about it.

When was the last time you got a 160% raise (or a 90% raise, for that matter)?  I guess it helps if your senator-husband gets your boss a $1 million earmark.