U.S. Housing Market Still On Life Support

With each passing year, the former Oracle of the Fed, Alan Greenspan, is reminded that there really was a housing bubble and lowering interest rates to record lows just matters worse.  Nearly four years after the housing market peak in 2007, record low mortgage rates are no match for falling incomes and 9% unemployment.
The Case-Shiller Home Price Index, released on Tuesday, showed that nation wide home prices did not register a significant change in the third quarter of 2011, with the U.S. National Home Price Index up by only 0.1% from its second quarter level. Home prices are down 3.9% across the board and are now back to their first quarter of 2003 levels.
From August to September, housing prices have fallen the most in Atlanta, with a 5.9% decline, followed by Tampa Bay and San Francisco, both with a 1.5% drop in housing prices.
Boston, New York, Washington and Los Angeles remain the most expensive cities in the lower 48 states.
"The plunging collapse of prices seen in 2007-2009 seems to be behind us," says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "Any chance for a sustained recovery will probably need a stronger economy."

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Home market being held back by wary first-timers

WASHINGTON (AP) — This should be a great time to buy a first home. Prices have sunk to 2002 levels. Sellers are waiting anxiously as homes languish on the market. Mortgage rates are their lowest ever.
Yet the most likely first-time homeowners, especially young professionals and couples starting families, won't buy these days. Or they can't. Or they already did, during the housing boom. And their absence helps explain why the housing industry is still depressed.
The obstacles range from higher down payments to heavy debt from credit cards and student loans. But even many of those who could afford to buy no longer see it as a wise investment. Prices have sunk 15 percent in three years.
"I've looked for a home, but the places we can afford with the money we have are not that great," says Seth Herter, 23, a store manager in suburban St. Louis. "It also doesn't seem smart anymore to buy with prices falling. Buying a home just doesn't make sense to us."
The proportion of U.S. households that own homes is at 65.1 percent, its lowest point since 1996, the Census Bureau says. That marks a shift after nearly two decades in which homeownership grew before peaking at 70 percent during the housing boom.
The housing bubble lured so many young buyers that it reduced the pool of potential first-timers to below-normal levels. That's contributed to the decline in new buyers in recent years.
In 2005, at the height of the boom, about 2.8 million first-timers bought homes, according to the National Association of Realtors. By contrast, for each of the four years preceding the boom, the number of first-timers averaged fewer than 2 million.
Still, the bigger factors are the struggling economy, shaky job security, tougher credit rules and lack of cash to put down, said Dan McCue, research manager at Harvard University's Joint Center for Housing Studies. The unemployment rate among typical first-timers, those ages 25 to 34, is 9.8 percent, compared with 9 percent for all adults.
"The obstacles facing first-time buyers are big, and it's changing the way they look at home ownership," McCue says. "It's no longer the American Dream for the younger generation."
First-timers usually account for up to half of all sales. Over the past year, they've accounted for only about a third.
A big reason is tougher lending standards.
Lenders are demanding more money up front. In 2002, the median down payment for a single-family home in nine major U.S. cities was 4 percent, according to real estate website Zillow.com. Today, it's 22 percent.
And one-third of households have credit scores too low to qualify for a mortgage. The median required credit score from FICO Inc., the industry leader in credit ratings, has risen from 720 in 2007, when the market went bust, to 760 today.
Homes in many places are the most affordable in a generation. In the past year, the national median sale price has sunk 3.5 percent. Half the homes listed in the Tampa Bay area are priced below $100,000.
The average mortgage rate for a 30-year fixed loan is 4 percent, barely above an all-time low. Five years ago, it was near 6.5 percent. In 2000, it exceeded 8 percent.
When the economy eventually strengthens, the housing market will, too. More people will be hired. Confidence will rise. Down payments won't be so hard to produce.
The question is whether first-time buyers will then start flowing into the housing market. That will depend mainly on whether they think prices will rise, said Mark Vitner, senior U.S. economist at Wells Fargo.
"It's a guessing game as to when things will turn around," Vitner said. "But until they do, you won't see young people buying homes."

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First Person: I Repaid My Student Loans While Still in College

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
The first two years of my college experience was spent at a community college. My tuition was covered, but I took out a loan for $20,000 to cover living expenses. Upon transferring to a costly four-year university I received a hefty scholarship, which covered most of my expenses. Still, my loans were at $11,500 per year. The day of my graduation, I received the coveted diploma and a not-so-coveted array of bills for my student loans.
However, the difference between other students and myself was the large sum of money lingering my savings account that I started four years prior. Let me explain how I managed to pay off my bills on the same day that I graduated from college:
Federal Loans Only
The first goal during my college career was to stay away from private student loans because they are nightmares. Trust me, I know. I took out a $5,000 private student loan in my first year of college and watched it as it was passed around from lender to lender and the interest rate jumped around, ranging from 8% to 20%. Not to mention the compounding of interest that increased the loan nearly $1,500 in eight months. Needless to say, I paid that off with every dime that I had to give to it by taking on a job. Please, if you can avoid them, do not take out alternative loans.
The government offers student loans at wonderful interest rates and the government will pay the interest of the loan while you are pursuing your education.
Monthly Payments While in School
Let's evaluate my loans. During years one and two, I took out $7,500 for each year. My plan was to get a job that I could take the money that I would need to pay off the loan in one year and pay it into a high-interest savings account. That meant that for years one and two, I paid $625 into my savings account each month. During years three and four, I took out $11,500 per year, which meant that I had to contribute $960 each month to the savings account. This may seem like a lot of money, but at the time I was single and still didn't have my daughter (until the fourth year), so it was easy to have all of my expenses paid, get a job on the side and contribute all of that money into a savings account.
At the end of the four years, I had contributed $43,000 to my savings account and earned about $1,000 in interest on the money.
On the day of my graduation I was able to pay off my student loans and never had to pay a cent of interest. If you are financially capable to do this, then I suggest that you do it. All it takes is finding extra income through a part time job or funding. You will save thousands of dollars in interest if you can manage this. If you cannot afford to pay the monthly payment, then pay half of it or pay what the interest would be on the loan. That way you can make a lump sum payment at the end of your college education.

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Rate on 30-year mortgage drops to record 3.89 pct.

 Fixed mortgage rates fell once again to a record low, offering a great opportunity for those who can afford to buy or refinance homes. But few are able to take advantage of the historic rates.
Freddie Mac said Thursday the average rate on the 30-year fixed mortgage fell to 3.89 percent. That's below the previous record of 3.91 percent reached three weeks ago.
Records for mortgage rates date back to the 1950s.
The average on the 15-year fixed mortgage ticked down to 3.16 percent. That's down from a record 3.21 percent three weeks ago.
Mortgage rates are lower because they track the yield on the 10-year Treasury note, which fell below 2 percent. They could fall even lower this year if the Fed launches another round of bond purchases, as some economists expect.
Average fixed mortgage rates hovered around 4 percent at the end of 2011. Yet many Americans either can't take advantage of the rates or have already done so.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don't want to sink money into a home that they fear could lose value over the next few years.
Mortgage applications have fallen slightly on a seasonally adjusted basis over the past four weeks, according to the Mortgage Bankers Association.
Frank Nothaft, Freddie Mac's chief economist, said that until hiring picks up and unemployment drops significantly, the impact of lower mortgage rates will remain muted.
Previously occupied homes are selling just slightly ahead of 2010's dismal pace. New-home sales in 2011 will likely be the worst year on records going back half a century.
Builders hope that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
But so far, they have had little impact on the depressed housing market.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan fell to 0.7 from 0.8; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate declined to 2.82 percent from 2.86 percent. The average on the one-year adjustable loan fell to 2.76 percent from 2.80 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.

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First Person: What My College Degree Means to Me

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
My college degree helped me pursue a successful 30-year career in advertising and public relations. However, it only happened after I realized I had not made the right decision in choosing my college major.
Pursuing The Major Course I Wanted
It all began when I had earned four years of tuition under the GI Bill of Rights by serving in the U.S. Navy. Ever since childhood, I had wanted to be an artist, and that was my chance to enroll as a fine arts freshman at the Philadelphia Museum College of Art (now the University of the Arts).
An Enjoyable Fine Arts Education
Throughout my undergraduate years, I appreciated the challenges and encouragement of the school's excellent teaching staff. My courses consisted of drawing, painting, sculpture and other fine arts classes. Some of my paintings were accepted for exhibition at local galleries. I was graduated with top honors and the degree of bachelor of fine arts.
Then it was time for me to earn a living from what I had learned in four years of college. I made the rounds of the many galleries in Philadelphia and New York selling my art, and had some moderate success. However, the sales were few and far between, and my income wasn't nearly enough to support myself.
Had I Made an Error in Judgment?
After a year, I came to the conclusion that I had chosen a field that, while traditionally attractive, wasn't practical in the reality of today's business world. While I hadn't wasted my four years of fine arts studies, they had not prepared me for the necessity of making a living.
I had several choices. I could go on painting, get some kind of part-time job to pay my bills, and hope I'd eventually become a successful exhibiting artist. The other choice was to go back to college and major in practical business subjects.
Fortunately, an application I'd sent to the University of Pennsylvania earned me a lab assisantship and free tuition at the Annenberg Graduate School of Communications there. I majored in mass communications and public relations, with a minor in graphic arts. After two years, and armed with a much more practical resume, I began another job search.
A Favorable Career Turn
Another fortunate opportunity coincided with earning my Master of Arts in Communications degree. Prudential Financial, Inc. was just establishing an Eastern regional office in a Philadelphia suburban area, and hiring a staff of more than 3,000 employees. I applied for the newly-created position of Public Relations and Advertising Manager, and was hired to direct the 30-person creative staff.
I recently retired after 30 years with Prudential. Today I consider my education choices and experiences may be of value to college students in the same situation I was after earning my bachelor's degree. Looking back, I had not realized then the impracticality of attempting a fine arts path in the real world where income opportunities are very limited.
Business-related degrees are essential in finding practical career promises. I believe my decision to enhance my education goals beyond fine arts to communications offered me those opportunities. For today's students, armed with the right credentials and personal determination, there's no limit to the heights that talent, hard work and ambition can earn for them.

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Fixed mortgage rates rise above record lows

WASHINGTON (AP) — Fixed mortgage rates rose slightly this week off their record lows. The year ends much like it began, with few people able to take advantage of the best rates in history.
Freddie Mac says the average on the 30-year home loan increased to 3.95 percent from 3.91 percent. Last week's rate was the lowest average on records dating to the 1950s.
The average on the 15-year fixed mortgage rose to 3.24 percent. That's up from 3.21 percent, also a record low.
Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.

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Fixed mortgage rates end year above record lows

WASHINGTON (AP) — Fixed mortgage rates rose slightly this week off their record lows. The year ends much like it began, with few people able to take advantage of the best rates in history.
Freddie Mac said Thursday that the average on the 30-year home loan increased to 3.95 percent from 3.91 percent. Last week's rate was the lowest average on records dating to the 1950s.
The average on the 15-year fixed mortgage rose to 3.24 percent. That's up from 3.21 percent, also a record low.
Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.
Previously occupied homes are selling just slightly ahead of last year's dismal pace. And new-home sales appear headed for their worst year on records going back half a century.
Next year could be better. More than 5 percent of households said this month they plan to purchase a home within the next six months, according to the Conference Board.
Builders are also hopeful that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
But so far, rates are having no major impact. Mortgage applications have fallen slightly in recent weeks, according to the Mortgage Bankers Association.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that they fear could lose value over the next few years.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan was unchanged at 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate rose to 2.88 percent from 2.85 percent. The average on the one-year adjustable loan ticked up to 2.78 percent from 2.77 percent.
The average fees on the five- and one-year adjustable-rate loans were unchanged at 0.6.

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Credit score focus of new celeb-backed debit card

NEW YORK (AP) — Personal finance media personality Suze Orman is thinking big. She's the   first out of the gate in the fast-growing prepaid debit card market with a card that aims to help its users build a credit score. It's a gamble that could pay off, if it can help create a way measure the creditworthiness of millions who function outside the traditional financial system.
The latest in a string of celebrities to put their stamp on a prepaid card, Orman will likely avoid the criticism about high fees lobbed at earlier offerings, such as those of hip-hop mogul Russell Simmons and reality show stars the Kardashians. Orman's card costs $3 to obtain, and then just $3 a month, rivaling the hugely popular Walmart MoneyCard.
Although some will question how Orman will recoup the more than $1 million she has invested in the card when charging that little, the real twist isn't the low fee structure. Orman is working with credit reporting agency TransUnion to create a new kind of credit score for users of "The Approved" prepaid MasterCard, one that's based on their spending habits.
Right now, using debit cards — both the prepaid kind and those tied to bank accounts — does not influence an individual's credit score, which is calculated with data related to borrowing. If Orman's experiment is successful, this new type of score could be a game-changer for the estimated 60 million Americans who do most or all of their personal business in cash or with cash alternatives like prepaid cards.
The TV adviser said she approached several companies, urging them to agree to develop such a score, and TransUnion ultimately agreed to gather spending data for 18 to 24 months. It will use that data to try to come up with a formula that works as a way to predict whether the user is a good risk for lenders.
"This is truthfully a work in progress," said Orman.
Banks and other lenders are interested in creating ways to measure how prepaid cards are used, because of the huge market they represent. Consumers loaded an estimated $70.7 billion onto prepaid cards in 2011, up from $2.7 billion in 2005, according to consultancy Mercator Advisory Group.
Mercator projects the market will top $120 billion this year if adoption continues at the same pace.
In general, users can be divided into three groups. The first subset is those caught up in the economy — people who had good credit until it was damaged by events like unemployment or foreclosure. Second are those who have not yet built credit histories, mainly the young and recent immigrants. The third group avoids banks, often because of negative experiences, such as racking up high overdraft fees.
"Wouldn't it be fabulous if, for the first time in history, people are literally rewarded for spending cash, versus penalized, in my opinion, for doing so?" Orman said.
The problem with traditional credit scores from FICO Inc. and its competitors is that they measure how well individuals keep up with their payments, but don't pay any attention to their overall financial health, she said. "Scoring doesn't question where the money is coming from to make payments."
Prepaid cards have already filled some of the void for those who don't use banks, especially because they can be used to receive paychecks via direct deposit. But because they don't contribute to credit scores, the cards can't help users get a mortgage, a car loan or a credit card.
Not having a credit score, or having a low one, also drives up the cost of living in other ways. Lower scores can mean higher car insurance rates, higher rent, difficulty getting a job and paying higher interest rates for any credit available. People with little credit history — known as a "thin file" in the industry — are also the most likely to use alternative services like payday lenders, check cashing stores and bill pay services. These are expensive options when compared with credit cards and banks.
FICO Inc. and other companies use data tied to borrowing to determine a score meant to measure the likelihood an individual will pay back future loans. FICO's 300-to-850 scale is based on an individual's history making payments on loans, the percentage of available credit that is being used and how long the individual has used credit, among other data.
Those with thin credit files have a better chance of having their creditworthiness reflected by FICO's "expansion score," which factors in data like utility bill payments and rent payments. FICO CEO Mark Greene said the expansion scores have shown that the population without traditional scores mirrors to the larger population in terms of credit risk. Other credit score providers are beginning to provide measures based on utility payments and other nontraditional data.
One big difference for developing a prepaid score, however, is that these alternatives still measure how well individuals meet obligations, not how they spend the rest of their income.
"Spending is not actually a great indicator of the thing that we're trying to measure, which is the likelihood you're going to pay your bill," Greene said. "We need to be careful about how we approach that issue."
Another issue a prepaid-linked score must address is the fact that the typical reloadable card is used for just three to four months, said Brian Riley, who analyzes the card market for the consultant The Tower Group.
That timeframe is likely to expand, however, because more users are beginning to have their paychecks deposited to reload prepaid cards. Adding rewards and services, and cutting fees, may also increase customer loyalty.
Orman is adamant that her card will carry only a $3-per-month fee for users who load at least $20 per month onto it. Fees will rise only if the user uses ATMs outside the network it is linked to when withdrawing cash. Consumers who use The Approved Card will also get daily text messages updating their balance, along with one after each purchase, and other free services like ID theft monitoring, credit monitoring and free credit reports from TransUnion.
The media star, whose new show on the Oprah Winfrey Network premieres Monday, said she knows creating the score will be an uphill battle, but believes that if successful, it will help both lenders and borrowers. "You've got to start it somewhere, and this is the beginning of that process."

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Rate on 30-year mortgage drops to record 3.89 pct.

Fixed mortgage rates fell once again to a record low, offering a great opportunity for those who can afford to buy or refinance homes. But few are able to take advantage of the historic rates.
Freddie Mac said Thursday the average rate on the 30-year fixed mortgage fell to 3.89 percent. That's below the previous record of 3.91 percent reached three weeks ago.
Records for mortgage rates date back to the 1950s.
The average on the 15-year fixed mortgage ticked down to 3.16 percent. That's down from a record 3.21 percent three weeks ago.
Mortgage rates are lower because they track the yield on the 10-year Treasury note, which fell below 2 percent. They could fall even lower this year if the Fed launches another round of bond purchases, as some economists expect.
Average fixed mortgage rates hovered around 4 percent at the end of 2011. Yet many Americans either can't take advantage of the rates or have already done so.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don't want to sink money into a home that they fear could lose value over the next few years.
Mortgage applications have fallen slightly on a seasonally adjusted basis over the past four weeks, according to the Mortgage Bankers Association.
Frank Nothaft, Freddie Mac's chief economist, said that until hiring picks up and unemployment drops significantly, the impact of lower mortgage rates will remain muted.
Previously occupied homes are selling just slightly ahead of 2010's dismal pace. New-home sales in 2011 will likely be the worst year on records going back half a century.
Builders hope that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
But so far, they have had little impact on the depressed housing market.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan fell to 0.7 from 0.8; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate declined to 2.82 percent from 2.86 percent. The average on the one-year adjustable loan fell to 2.76 percent from 2.80 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.

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First Person: What My College Degree Means to Me

Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
My college degree helped me pursue a successful 30-year career in advertising and public relations. However, it only happened after I realized I had not made the right decision in choosing my college major.
Pursuing The Major Course I Wanted
It all began when I had earned four years of tuition under the GI Bill of Rights by serving in the U.S. Navy. Ever since childhood, I had wanted to be an artist, and that was my chance to enroll as a fine arts freshman at the Philadelphia Museum College of Art (now the University of the Arts).
An Enjoyable Fine Arts Education
Throughout my undergraduate years, I appreciated the challenges and encouragement of the school's excellent teaching staff. My courses consisted of drawing, painting, sculpture and other fine arts classes. Some of my paintings were accepted for exhibition at local galleries. I was graduated with top honors and the degree of bachelor of fine arts.
Then it was time for me to earn a living from what I had learned in four years of college. I made the rounds of the many galleries in Philadelphia and New York selling my art, and had some moderate success. However, the sales were few and far between, and my income wasn't nearly enough to support myself.
Had I Made an Error in Judgment?
After a year, I came to the conclusion that I had chosen a field that, while traditionally attractive, wasn't practical in the reality of today's business world. While I hadn't wasted my four years of fine arts studies, they had not prepared me for the necessity of making a living.
I had several choices. I could go on painting, get some kind of part-time job to pay my bills, and hope I'd eventually become a successful exhibiting artist. The other choice was to go back to college and major in practical business subjects.
Fortunately, an application I'd sent to the University of Pennsylvania earned me a lab assisantship and free tuition at the Annenberg Graduate School of Communications there. I majored in mass communications and public relations, with a minor in graphic arts. After two years, and armed with a much more practical resume, I began another job search.
A Favorable Career Turn
Another fortunate opportunity coincided with earning my Master of Arts in Communications degree. Prudential Financial, Inc. was just establishing an Eastern regional office in a Philadelphia suburban area, and hiring a staff of more than 3,000 employees. I applied for the newly-created position of Public Relations and Advertising Manager, and was hired to direct the 30-person creative staff.
I recently retired after 30 years with Prudential. Today I consider my education choices and experiences may be of value to college students in the same situation I was after earning my bachelor's degree. Looking back, I had not realized then the impracticality of attempting a fine arts path in the real world where income opportunities are very limited.
Business-related degrees are essential in finding practical career promises. I believe my decision to enhance my education goals beyond fine arts to communications offered me those opportunities. For today's students, armed with the right credentials and personal determination, there's no limit to the heights that talent, hard work and ambition can earn for them.

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"Fiscal cliff" creates waiting game for payrolls firms

WASHINGTON/NEW YORK (Reuters) - At payroll processing businesses across the United States, the "fiscal cliff" stalemate in Washington means uncertainty over tax-withholding tables just days before the start of 2013.
The U.S. Internal Revenue Service still has not issued the tables for next year that show how much money employers should hold back from workers' paychecks to cover federal income taxes.
Payroll processors need the tables to get their systems geared up for the new year. The tables are set by many factors, including tax rates and annual inflation adjustments.
In anticipation of late-breaking developments, Rochester, New York-based Paychex Inc will be serving Buffalo chicken wings for staffers working late on New Year's Eve, said Frank Fiorille, an executive at the payroll processing giant.
"Our systems are flexible enough that we can wait almost up until the last minute and still make changes," he said.
The IRS appreciates of the impact of Congress' inaction.
"Since Congress is still considering changes to the tax law, we continue to closely monitor the situation," IRS spokesman Terry Lemons said in a statement. "We intend to issue guidance by the end of the year on appropriate withholding for 2013."
Tax rates are slated to rise sharply for most Americans if Congress and President Barack Obama fail to reach an agreement that averts the "fiscal cliff" approaching at year-end.
"The political process will determine one way or the other what" the IRS must do, said Scott Hodge, president of the Tax Foundation, a business-oriented tax research group.
For now, he said, from the tax-collection agency's viewpoint, "doing nothing is probably the best course." This would be because withholding tables distributed now might only have to be revised if Congress acts in the next few days.
Some payroll servicers are not waiting for formal IRS guidance. The American Payroll Association, which represents about 23,000 payroll professionals, told members on Friday to rely on 2012 withholding tables until the IRS releases the new forms for 2013.
The association said its decision was based on a statement earlier this month from an IRS official.
The agency would not confirm that policy on Friday.
Tax preparer H&R Block Inc said it will use 2012 tax-withholding tables if the 2013 tables are not issued.
Executives said they were frustrated with the uncertainty in Washington, but were doing their best to cope.
"We are not doctors or surgeons and this is not life threatening," said Rob Basso with Advantaged Payroll Services, an Auburn, Maine-based payroll processor that serves 30,000 businesses. "It is annoying and disruptive to people's lives, but we will get through it.

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Future of state estate taxes hangs on U.S. "fiscal cliff"

Not necessarily for some state governments that could begin collecting more in estate taxes on wealth left to heirs if the United States goes over the "cliff," allowing sharp tax increases and federal spending cuts to take effect in January.
In an example of federal and state tax law interaction that gets little notice on Capitol Hill, 30 states next year could collect $3 billion more in estate taxes if Congress and President Barack Obama do not act soon, estimated the Urban-Brookings Tax Policy Center, a Washington think tank.
The reason? The federal estate tax would return with a vengeance and so would a federal credit system that shares a portion of it with the 30 states. They had been getting their cut of this tax revenue stream until the early 2000s. That was when the credit system for payment of state estate tax went away due to tax cuts enacted under former President George W. Bush.
With the return of the credit system next year as part of the "cliff," states such as Florida, Colorado and Texas - which have not collected estate tax since 2004 - could resume doing so. California Governor Jerry Brown has already begun to add the anticipated estate tax revenue into his plans, including $45 million of it in his 2012-2013 revised budget.
Brown may or may not be jumping the gun.
CLOUDY CLIFF AHEAD
The outlook on the "fiscal cliff" coming up at year-end is uncertain. Democratic President Barack Obama has said he hopes for a last-minute deal to avert it. That would need to get done soon, with Congress just now coming back from its holiday break.
Chances of an agreement became more remote last week after Republicans in the U.S. House of Representatives fumbled their own legislative attempt to prevent the fiscal jolt that economists say could trigger a recession.
House Speaker John Boehner abruptly adjourned the chamber for the holidays after failing to gather the votes from within his own party to pass legislation he and other Republicans had drafted, after walking out of negotiations with Obama.
Weeks of inconclusive political drama over the "cliff" have focused largely on individual income tax rates and spending on federal programs such Medicare and Social Security, but many tax issues are also involved, including the estate tax.
At the moment, under laws signed a decade ago by Bush, the estate tax is applied to inherited assets at a rate of 35 percent after a $5 million exemption. That means a deceased person can pass on an inheritance of up to $5 million before any tax applies. Inherited wealth passed to a spouse or a federally recognized charity is generally not taxed.
Obama wants to raise the rate to 45 percent after a $3.5 million exemption. Republicans have called for complete repeal of the estate tax, which they call the "death tax," though Boehner earlier this month called for freezing the estate tax at its present level. It was difficult to determine what the Republicans want after last week's events in the House.
STATES STAND TO GAIN
If Congress and Obama do not act by December 31, numerous Bush-era tax laws will expire, including the one on estate taxes. That would mean the estate tax rate will shoot up next year to the pre-Bush levels of 55 percent after a $1 million exemption.
It would also mean that for the first time in years, a portion of that estate tax would go to the states, through the return of the credit system.
Under that old law, estates paying the tax could get a credit against their federal tax bill for state estate tax payments of up to 16 percent of the estate's value.
If the fiscal cliff were allowed to take hold unaltered by Washington, 30 states would again automatically begin getting their share of federal estate taxes. The state laws are generally written so the state estate tax amounts are calculated under a formula based on the amount of the federal credit.
This would help states that have struggled with lower tax revenues since the 2007-2009 financial crisis and resulting recession, according to research by the Pew Center on the States, though painful federal spending cut backs would also hurt the states.

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Consumer Mattress Reviews Supports Findings in Mattress Inquirer’s Study of Best and Worst Mattresses

Mattress review website Consumer-Mattress-Reviews.com responds to and confirms a recently released study from Mattress-Inquirer.com regarding the best and worst rated mattresses.

Tempe, AZ (PRWEB) December 26, 2012
In an effort to provide consumers a consolidated resource for assessing the best mattress options, the blog Mattress Inquirer recently posted a revealing consumer opinion study. Consumer Mattress Reviews also announced their support for the findings, as they echo many other recent studies.
The news is likely to prove alarming to the traditional bedding industry, which tends to be heavily vested in innerspring mattresses. According to consumer opinions, less than two-thirds of innerspring mattress owners report satisfaction, much lower than the top four “specialty” mattress categories. Indeed, more and more traditional manufacturers are expanding their lines to include memory foam and latex options as buying habits continue shifting.
In the post titled “Worst & Best Mattress Types of 2012” on Mattress-Inquirer.com, it is revealed that a study of over 16,000 customer reviews indicated the top five mattress types, in order from best-rated to lowest, as:
1) Memory Foam Mattresses - 82%

2) Latex Mattresses - 80%

3) Waterbeds - 79%

4) Air Bed Mattresses - 78%

5) Innerspring Mattresses - 64%
The percentages indicate the proportion of owners who report satisfaction with their bed. Consumer Mattress Reviews supports the finding of this study, as the results match closely with their own research, and that from other large-scale polls of consumer satisfaction.
The Mattress Inquirer article goes on to report their recommendation for memory foam is the Amerisleep line of plant-based memory foam mattresses, which receives customer ratings for comfort and satisfaction well above 90% on their website and third party reviews. This also echoes similar findings from Consumer Mattress Reviews which found Amerisleep to be one the best memory foam options in terms of quality, comfort, price and eco-friendliness.
Consumer-Mattress-Reviews.com aims to make shopping easier by researching and compiling reviews on top mattresses. The website analyzes consumer opinions in addition to manufacturer and retailer qualities to provide outlines of the positive and negative aspects of owning specific beds. Prospective consumers can find an ever-expanding collection of mattress reviews ranging from memory foam to air and more, all designed to offer the facts needed to make informed decisions.

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Renowned Master of Wine Jeannie Cho Lee Appointed Professor of Practice (Wine) by PolyU

Jeannie Cho Lee, Asia’s foremost expert in wines, has been appointed by The Hong Kong Polytechnic University (PolyU) as Professor of Practice (Wine) at its School of Hotel and Tourism Management (SHTM) commencing 1 November 2012.

(PRWEB) December 26, 2012
Jeannie Cho Lee, Asia’s foremost expert in wines, has been appointed by The Hong Kong Polytechnic University (PolyU) as Professor of Practice (Wine) at its School of Hotel and Tourism Management (SHTM) commencing 1 November 2012.
The first Asian Master of Wine (MW), Professor Jeannie Cho Lee is also an award-winning author, wine and food writer, wine critic, judge, educator and consultant. A graduate of Smith College and Harvard University, Professor Lee holds a Certificat de Cuisine from Cordon Bleu. She is also a Master Sake Sommelier from Japan’s Sake Service Institute and a Certified Wine Educator from the United Kingdom’s Wine & Spirits Education Trust as well as the US Society of Wine Educators. Professor Lee was born in Korea and has lived in Hong Kong since 1994.
In her capacity as Professor of Practice (Wine), Professor Lee will be able to contribute to the School in different ways, including offering special lectures to both students and industry executives, advising SHTM on curriculum development in relation to wine studies, and facilitating the School’s collaboration with the wine industry through a number of dedicated platforms such as The Food and Wine Academy.
Speaking about the appointment, Professor Kaye Chon, Dean and Chair Professor of SHTM said, “Professor Jeannie Cho Lee has demonstrated excellence and leadership in her field of practice. She will no doubt bring a unique depth of experience to this new position and help bridge the gap between academic and professional practice.”
PolyU’s School of Hotel and Tourism Management is a world-leading provider of hospitality and tourism education. It was ranked No. 2 internationally among hotel and tourism schools based on research and scholarship, according to a study published in the Journal of Hospitality and Tourism Research in November 2009.
With 65 academic staff drawing from 19 countries and regions, the School offers programmes at levels ranging from Higher Diploma to Ph.D. Currently a member of the UNWTO Knowledge Network, the School was recently bestowed the McCool Breakthrough Award by the International Council on Hotel, Restaurant, and Institutional Education (I-CHRIE) recognising its breakthrough in the form of its teaching and research hotel – Hotel ICON – the heart of the School’s innovative approach to hospitality and tourism education.

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Innovative VPN Routers Help Increase Internet Privacy for Home Users

As concerned consumers turn to VPN for privacy, Sabai Technology puts easiest to use VPN Routers on post-holiday discount.

Simpsonville, SC (PRWEB) December 26, 2012
December has been a tough month for internet security geeks. Between the authoritarian win at Dubai’s International Telecommunication Union conference and the continued crack down of the “Great Firewall” in China, even everyday users are beginning to take notice that big brother could be watching.
These trends are causing a rise in consumer Virtual Private Networks (VPN) use from providers like StrongVPN. Traditionally used for business, the privacy, security, and anonymity VPN affords can also appeal to home users looking to protect themselves from the prying eyes of the government or the hacker next door.
However, to extend this privacy to an entire network requires a specialized VPN Router, which historically, are a user’s nightmare in both usability and price. Bucking that trend is Sabai Technology, using brand-name favorite’s like the Linksys E4200 and installing a customized VPN operating system, Sabai OS, with features like Dual Gateway which allows a user to run local and VPN connections from a single router.
For users looking to increase the security of their home network in 2013, Christmas isn’t quite over. Sabai Technology is featuring two of their most popular models, the E3000 and E4200, both manufactured by Linksys, in a post-holiday sale. All Sabai Technology routers come with the Sabai OS pre-installed and boast a 5-minute setup process, extending a single VPN service account to every networked device in the user’s home.
One security conscience Sabai customer says, “I recommend Sabai Technology VPN Routers to everyone and anyone. They are very reliable and the tech support is one of the best I have ever seen.”
Sabai Technology has been called one of the “Technologies That Will Change the World,” and consumers seem to agree. The company has reached record sales in 2012, which they are using to fuel the development fire. “We are looking forward to 2013. Customers new and old are going to see increased functionality and brand new offerings. People will want to be a part of this,” says Sabai President William Haynes. With just a handful of sales promotions a year, it appears that now is a great time to check on your home internet security.

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Muni tax break under threat from bipartisan scrutiny in congress

WASHINGTON (Reuters) - The tax break that U.S. states, cities and counties get on the bonds they issue is in growing jeopardy now that Republicans, in addition to Democrats, are considering limits on the exemption.
As part of the "fiscal cliff" negotiations to raise more federal government tax revenue, Republican lawmakers have joined Democrats in reevaluating the costly tax break, said Republican congressional aides and lobbyists.
Municipal bonds issued by states and localities are a $3.7 trillion U.S. market underpinned by a law that exempts their interest income from taxation. This allows states and localities to tap capital markets more cheaply than private-sector borrowers such as banks and corporations.
"The muni bond exemption is on the table, not only during tax reform, but also during the 'fiscal cliff,'" said Mike Nicholas of the Bond Dealers of America, a lobbying group for fixed-income securities dealers and banks.
That the tax break - deeply embedded in the economy and vital to state and local governments - would draw the interest of Republicans shows how far Washington has come in a short time in considering potentially dramatic tax-and-spending changes.
As the United States grapples with a huge budget deficit and a complex tax code that has not been revamped in 26 years, even once politically untouchable tax breaks are being questioned.
The "fiscal cliff" refers to sharp tax increases and spending cuts that take effect in 18 days unless Congress intervenes soon.
Some lawmakers from both parties are calling for a comprehensive tax code overhaul in 2013 and groups concerned with the muni bond exemption are worried.
"We have not felt this threat level being this real in a long time," said David Parkhurst, legislative director with the National Governors Association, which represents the leaders of U.S. states that rely heavily on the muni bond tax exemption.
SUBSIDIZING STATES, LOCALITIES
The exemption benefits bond investors on one side of the market and state and local governments on the other. Effectively a subsidy for states and localities, the muni exemption cost U.S. taxpayers about $26.2 billion in 2011.
President Barack Obama in 2011 included the exemption among items subject to his proposed 28-percent cap on deductions and other tax breaks for individuals earning more than $200,000.
That proposal alarmed muni bond issuers and investors, who were already on edge because of a proposal to kill the exemption entirely in 2010's Simpson-Bowles deficit reduction plan.
Now, Republicans are rethinking their traditional reluctance to tinker with muni bonds, largely because they want to find ways to increase federal revenues without raising tax rates.
Phasing out the muni bond tax break for individual taxpayers earning more than $200,000 could raise about $10 billion a year - or about $100 billion over a decade - Republican aides said.
In the fight over the "fiscal cliff," Republicans hope to refute Obama's argument that real deficit reduction cannot be achieved without raising tax rates on high-income Americans.
Senator Orrin Hatch, the top Republican on the Senate Finance Committee, said tax breaks of all sorts need to be weighed in the effort to raise revenue and cut the deficit, but that "they are not easy to get rid of."
FROM STATES TO SCHOOLS
New issuance of tax-exempt bonds is expected to hit about $400 billion in 2013, up from about $370 billion this year, according to investment bank Loop Capital Markets LLC.
Jurisdictions that issue tax-exempt bonds range from states to cities, counties and school districts. They defend the bonds as vital to transportation, infrastructure and other public projects, which would be threatened by an exemption roll-back.
"It certainly couldn't come at a worse time," New York State Comptroller Thomas DiNapoli told Reuters last week, referring to the devastation the region suffered during Hurricane Sandy.
"Even before the storm, we had tremendous infrastructure needs that localities were trying to address and now we're going to have even more."
It is unclear exactly what sort of limitations Republicans have in mind. The Obama proposal would apply to all bond issues.
Citigroup Inc muni bond strategist George Friedlander has estimated that Obama's cap, if enacted, would raise state and local government borrowing costs.
The "fiscal cliff" talks and a possible tax code overhaul next year pose "a clear and present danger" for muni bond issuers and investors, Friedlander said in a recent research report.

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Boehner plan would bring top U.S. income tax rate to 39.6 percent: source

WASHINGTON (Reuters) - House of Representatives Speaker John Boehner's latest "fiscal cliff" proposal to President Barack Obama would see the top income tax rates rise to 39.6 percent from 35 percent for those with net incomes above $1 million a year, according to a source familiar with the talks.
The source, who asked not to be identified, emphasized that the income tax rate increase would be in exchange for "significant entitlement reforms/spending cuts." Entitlement programs include Medicare and Medicaid healthcare for the elderly and poor and Social Security retirement benefits.
The White House has not accepted Boehner's proposal, according to another source. Under current law, the top tax rate is scheduled to rise to 39.6 percent on January 1, unless Congress extends the current 35 percent, as Republicans had been urging.

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House Republicans eye limited fiscal cliff bill

WASHINGTON (Reuters) - With time running short before a Dec. 31 deadline, House of Representatives Speaker John Boehner will begin work on legislation that simply would extend current low income tax rates for all families with incomes below $1 million a year, according to an aide.
Negotiations will continue with the White House on a broader tax and spending deal, the Boehner aide said.
Boehner is presenting the plan to rank-and-file Republicans in a closed-door session.
On January 1, income tax increases for most Americans will begin unless Congress acts.
Last July, the Democratic-controlled Senate passed a bill to extend the current low rates for all families with net incomes below $250,000 a year. The House Republican proposal, if passed by the House, would require agreement by the Senate or force a round of negotiations on a compromise between the two chambers.
In excerpts of remarks Boehner was delivering to his Republican members Tuesday morning, the speaker complained that "the White House just can't seem to bring itself to agree to a 'balanced' approach" to deficit-reduction in negotiations. At the same time, Boehner said Republicans were "leaving the door wide open for something better" than just the limited extension of current low tax rates for most Americans.
"Current law has tax rates going up on everyone January 1. The question for us is real simple: How do we stop as many of those rate hikes as possible?" Boehner said.
For months, Democrats have been urging House Republicans to pass a bill protecting middle-class taxpayers from a January 1 rate increase.

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Senator Reid rejects Boehner "fiscal cliff" backup plan

WASHINGTON (Reuters) - House Speaker John Boehner's backup plan that would simply extend low income tax rates for households with incomes below $1 million a year "cannot pass both houses of Congress," Senate Majority Leader Harry Reid said on Tuesday.
Reid, a Democrat, said Boehner instead should focus on reaching a broad deficit-reduction deal with President Barack Obama. "Now is the time to show leadership, not kick the can down the road," Reid said.
Last July, Reid's Democrats passed a bill in the Senate that would have continued low tax rates, which are set to expire on December 31, for families with net incomes below $250,000.

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White House defends offer as 'good faith effort'

WASHINGTON (AP) — The White House is defending President Barack Obama's proposal to set a higher threshold for tax increases than what he vowed to do during his presidential campaign. The White House says Obama has moved halfway to meet House Speaker John Boehner on a "fiscal cliff" deal that raises $1.2 trillion in tax revenue, down from the $1.6 trillion Obama had initially requested.
White House spokesman Jay Carney says that offering to raise taxes on taxpayers earning more than $400,000 rather than the $200,000 he ran on demonstrates, in Carney's words, Obama's good faith effort to reach a compromise.
The new tax proposal is contained in a broader plan that Obama gave Boehner Monday that would cut spending further and lower cost-of-living increases for most Social Security beneficiaries.

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