Several years ago, I was surprised to receive my first Social Security Estimated Benefits Statement. Now, three statements later, it turns out those mailers will no longer be going out in a cost cutting move (it costs around $70 million a year). Personally, I welcome the change because I’m all for reducing paper waste (which I see these reports as) but I don’t like how I can’t view my actual report online. The best you can do is use their estimator, but you need to enter in your information manually. Thumbs down to that.

The SSA announced that the change was going to start in April and since the reports are mailed out three months prior to your birth month, anyone born in July or later won’t get one this year. In fact, when the fiscal year resets, they are only planning on mailing the statements out to people aged 60 and older who haven’t started to receive benefits.

While some people see the mailers as a work of fiction, others use it as part of retirement planning and so I can understand why people are upset they can’t see actual numbers anywhere. I’m all for electronic records, I don’t need the piece of paper, but you can’t suspect paper reports without offering electronic access. It’s like a credit card company saying they are doing paperless statements but you can’t actually log on anywhere to view your statement.

(Photo: thehi)

While I was on the Amtrak train to New York for a business meeting yesterday, I tweeted news that Ally Financial was in talks to buy ING Direct. It’s still very early in the process but the news came from The NY Post and there isn’t much additional news other than they’re “in talks.” The article cited sources that ING Direct could go for as much as $10 billion, which ING would be use to repay $13B in loans from the Dutch government.

It makes for some good chatter, so let’s chatter! What do you think about these two guys potentially combining into one? How do you like my “Paintshop” skills?

I was watching the Mets play the Phillies last night when there were suddenly chants of “USA USA USA” in the crowd. After a few minutes, the announces realized that the reason the crowd was chanting was because news of Osama Bin Laden’s death was circulating the crowd. That’s how I learned that bin Laden had been killed. I immediately switched to a news channel and there was only a little analysis of the situation (not much news had been released yet) and just a notification that President Obama would speak about the subject soon (that would take another 45 minutes). Here’s his speech:

If you’re curious about how they found him or how they got him, this article on the Guardian.co.uk has the most detailed explanation and play-by-play I’ve seen so far. They found him in an affluent neighborhood at Abbottabad, Pakistan, not a remote cave. It makes for fascinating reading, especially since it was published just a few hours after the announcement of bin Laden’s death.

My vote for most interesting part of this whole thing:

At around 1.15am local time on Monday, Abbottabad residents became aware that something was happening. “Helicopter hovering above Abbottabad at 1am (is a rare event),” tweeted one local, Sohaib Athar (@ReallyVirtual); following that some minutes later by: “A huge window shaking bang here in Abbottabad Cantt. I hope its not the start of something nasty :-S”

I’m sure the pundits will analyze all this into oblivion but for now we can all agree: this was a good thing.

The Durbin Amendment, which would limit debit interchange fees on debit cards to a mere 12 cents, is set to take effect soon but large banks are already cutting reward programs in anticipation of the amendment.

If you have a reward debit card from a large bank (over $10 billion in assets), then expect to see them kill your reward program. Wells Fargo is no longer offering the program to new customers as of March 27th for Wachovia customers and April 15th at Wells Fargo customers (existing customers will keep the program for now). JPMorgan Chase told its customers that the program will end on July 29th. SunTrust will end its program April 15th. (link)

Curious if you’re bank is a large one? This list from the National Information Center shows the top fifty bank holding companies and each one has over $10 billion in assets. What you won’t find on this list, usually, are those smaller regional banks that offer reward checking accounts, which need debit interchange fees to pay for the higher yields.

The writing is on the wall: If you like your debit reward cards, you’ll need to find a smaller bank.

Robert Frank at the WSJ looked at the latest audit statistics in the IRS Data Book and discovered that the IRS audited more than 18% of returns with income of at least $10 million. This is an increase of 80% from 2009, when only 10% were audited. Audit rates increased for other income groups as well, though most sharply for the higher brackets.

If you look at the statistics, it’s actually quite fascinating. Every income range in the Data Book showed an increase in audits, though the $10mm or more crowd saw the greatest jump. Here are the increases:
(click here to continue reading…)

Representative Jan Schakowsky (D-Illinois) introduced new legislation, the H.R. 1124 Fairness in Taxation Act, on Wednesday, March 16th, that would introduce new tax brackets for those who earned more than $1 million dollars a year. The current top income tax rate is 35% on income starting at $373,650 and the new legislation would introduce five new brackets, starting at $1 million dollars.

The new brackets would be:

• $1 – 10 million: 45%
• $10 – 20 million: 46%
• $20 – 100 million: 47%
• $100 million – 1 billion: 45%
• $1 billion+: 45%

I don’t know what’s more stunning: the reality that there are people who make over a $1 billion a year or that there are people who make over a billion a year and pay the same tax rates as someone making a fraction of that.

In addition to adding new brackets, the bill would also tax capital gains and dividend income as ordinary income for those whose income was over $1 million. According to the Citizens for Tax Justice, these new rates and changes would raise $78 billion, though it’s unclear how that number was calculated.

As for historical precedence, the last time the top rate was over 40% was back in 1986 when the top rate was 50%. Just a few years earlier, in 1981, the top rate was 70% for incomes over $215,400 ($524,421.99 in 2011 dollars). Before you think those rates were high, the top rates have always been very high, peaking into the ninety-percents through World War 2 until the early 60′s. The Tax Foundation has a list of historical tax rates since 1913.

What do you think of these new rates? Would youl ike to see them implemented?

“Happiness is making $1 more than your sister-in-law’s husband.”

I don’t know who said it but I consider it one of the most accurate quotes about our society’s relationship with money. A recent Fidelity Investments survey, discussed on the WSJ Wealth Report blog, found that of the 1,000 millionaires surveyed, 42% said they didn’t feel “wealthy.” The average net worth of the group was $3.5 million.

They don’t feel wealthy because wealth is relative. It would be the same as if you asked them whether they felt successful. If you earn $1,000,000 a year and everyone around you earned $50,000, you’d feel wealthy. If you got promoted while everyone else stayed the same, you’d feel successful. Our view of our own successes and wealth is based on our environment.

A 4% raise feels bad when people around you are getting 5%. It feels great if no one got raises or if there were layoffs.

This is why 42% of those millionaires didn’t feel wealthy, because the people around there were even wealthier. This Slate series by Timothy Noah on income inequality is fantastic and discusses a variety of subjects on the topic of income inequality.

Fortunately, the path to happiness isn’t paved with gold bars if you don’t want it to be. Just make a dollar more than your sister-in-law’s husband… and hope he doesn’t line his driveway with Au.

The Durbin Amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act is set to be official in a little over a month. The amendment would have the Federal Reserve limit interchange fees on debit transactions, the fee a bank charges to process card transactions, to a mere 12 cents. It’s a proposal they put out for comment late last year and it’s drawn a lot of criticism. There are two alternative interchange fee standards:

• Fee standard based on the costs with a safe harbor at 7 cents per transaction and a cap at 12 cents per transaction.
• A standalone cap at 12 cents per transaction.

By the Fed’s own calcluation, this is 70% lower than the 2009 average and the rule is set to take effect on July 21st, 2011. In addition to putting this 12 cent hard cap, the regulation would prohibit an issuer from restricting on which networks the debit transaction could be processed

What does this mean for consumers? If the banks are to be believed and 12 cents is below the cost of doing business, banks will severely curtail the use of debit cards or find some other way to charge for the convenience of debit cards, which generates $16 billion a year. If you rely on your debit card, you may find that there will be new fees or restrictions associated with it if the banks are to recover some of this revenue.