Gallup Poll Defining “Rich” Americans

As our nation’s elected officials debate over future taxation, much discussion has occurred regarding higher taxes for the rich.  A recent Gallup poll from Nov. 28 to Dec. 1 reveals an interesting mixed opinion of Americans as to who is “rich.”  The results, as seen here indicate Americans’ perception that a median annual income of $150,000 is considered rich.  These perceptions are notably different from the publicized discussions to increase taxes for [rich] taxpayers earning more than $250,000.  A similar Gallup poll from 2003 revealed Americans’ opinion that a median of only $120,000 would define someone as rich.

                                                                                                                                                  

This recent poll also concluded that someone with a median net worth of $1 million (no change from the 2003 poll results) is considered rich.

Do you wonder how your household income and/or wealth compares with other taxpayers?  A fun calculator can be found on the Wall Street Journal’s website.  Click here.

November 2011 Market and Planning Update

"Better three hours too soon than a minute too late”

William Shakespeare (birthdate unknown – April 23, 1616 - Famed English poet and playwright

We selected this quote for our last 2011 commentary because of the temptation everyone has to wait until the perfect time to act, which is invariably too late.  Whether it is in planning steps or investment decisions, our belief is that acting sooner than the crowd will provide long-term benefits.

PLANNING COMMENTARY

As we approach the end of the year there are certain planning strategies that should be implemented or evaluated.  While many of the items below may have been crossed off your list earlier in the year, some may still remain.  While this may be the busiest time of year for many, taking some time out of your schedule to cross some of these year-end planning items off the list will surely provide lasting benefits. 

If you have any questions or want to discuss how one of these items may apply to you, please call us!

1. Fund your Indiana CollegeChoice 529 plan to obtain the 20% state tax credit.  Remember that your first $5,000 of contributions qualify for the credit.
2. Make a contribution to your favorite charity.  If it will be a particularly bad tax year you may consider making some of your planned 2012 donations by the end of this year to reap the benefit of the deduction a year earlier when it is especially needed.
3. Consider a tactical contribution to your Donor Advised Fund or Family Foundation.  You should be sure this makes sense from a tax perspective and fits in your intermediate and long-term charitable giving plans.

A New D-Day for Europe

On Friday, December 9^th the leaders of the European Union (EU) meet in Brussels, Belgium.  Guidance from these leaders has set market expectations of progress towards achieving agreement in principle of significant revisions to the EU Treaty, bringing about greater fiscal union that enforces fiscal discipline.  The absence of sufficient agreement over fiscal controls has been the core problem within the 17 countries that share the Euro as their currency.

 

There will be many challenges to reaching agreement over greater fiscal union, but the core challenge is that of political courage.  Will the European leaders recognize that some of their sovereign autonomy, possible even their political jobs, must be sacrificed in order to preserve the Euro Zone?

If the leaders can summon sufficient courage and begin to work towards true fiscal union, then the European Central Bank might reasonably be expected to act as the lender of last resort and begin to purchase bonds of the various countries in large enough quantities to stabilize the markets.  They may also move towards issuing Euro bonds backed by all of the countries.  All of this would begin to lessen the huge cloud of Euro concerns that has rocked markets.  This would be no quick fix, but would choose the path that would preserve the Euro Zone.

If the Dec 9th summit proves a bust, it may well be followed with a disorderly process of European common currency implosion and accompanying market volatility.

Private Sector Jobs

Employment in the private sector showed its largest increase since December 2010 this past month according to the payroll processor ADP. The report shows that private sector employment rose by 206,000 jobs in November, which may also have led to a reported increase in consumer confidence over the past month. These numbers are a good indication to investors that the economy is stabilizing and provides more reassurance that we will avoid a “double-dip” recession. Having said that, the job market must show strong, consistent growth that reduces the unemployment rate before it will have a significant influence on the equities markets, something unfortunately we have yet to see.

Note that the unemployment rate is expected to remain at 9% for the month.