Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
Obama Care Tax
There has been a lot of information released on the Health Care ruling by the Supreme Court this week. I’ve done my best to sift through what is worth reading. For the most part, have limited the sources to the Wall Street Journal and the Tax Foundation.
Anyways, it looks like we’ll have to listen to the health care debate until the elections. I’ve already seen several commercials about the need to repeal the law. It’s just one more reason someone needs to invent an auto mute for commercials.
The Supreme Court upheld the health care law in their 5-4 ruling (193 page decision), with the individual mandate being constitutional as a tax. So much for no higher taxes on the middle class Mr. President.
Basically, if you don’t buy health insurance, the IRS can penalize you with an excise tax. The court ruled that the U.S. government can’t force people to buy health insurance. What the government can do, is impose a tax on those who choose not to buy health insurance.
What is worrisome is this new definition of tax by the Supreme Court. Taxes are a way for a government to raise funds to cover general spending costs. A penalty, however, is a punishment for an unlawful act. How a penalty became a tax is beyond me, but the Supreme Court says so.
penalty tax is phased in over time. Starting in 2014, it is the greater of 1% of household income or $95 per person in the household. After 2016, it will be the greater of 2.5% of household income or $695 per person in the household, up to three people. Current estimates put about 6% of Americans on the cusp of the penalty being cheaper than paying for insurance.
What is yet to be seen, more importantly, is how this ruling will affect hiring and economic growth over the next few years.
A side note, as we pointed out a few weeks ago, broccoli showed up 12 times in the decision.
Little Green Men
I did come across one thing more serious than health care. Aliens! A National Geographic survey revealed that about 36% of Americans believe in UFOs. A few tidbits, if aliens did come to Earth 15% would run and 13% would lock their doors. I don’t see a locked door stopping an alien that just traveled millions of light years in a spaceship. But you never know. Finally, if those E.T.’s attacked, 41% would call a superhero to help.
- Inflation Guide: How Does the Inflation Trend Affect Your Asset Allocation? – A great guide on investment allocation during inflation, deflation, and neither. If you’re concerned about inflation and not sure what to do with your money, it’s a must read and a great reference for the years ahead.
- Asset allocation strategy: What We Can Learn From Rules Of Thumb – Sticking with the asset allocation theme, this post covers several rules of thumb by some of the best finance minds around.
- High-Frequency Traders Are the Ultimate Hackers – An interesting Mark Cuban interview about the concerns and impact of high-speed trading. He always seems to have a good point or two.
- Market Efficiency: A Glaring Oversight In Passive Strategies – Points out the misconception of passive investing and the benefits of a value approach for the individual investor.
- 3 Ways the Individual Mandate in Health Care Act Will Affect Your Investments – The health care law will affect our investments, this post covers three big areas that will be affected the most.