2013 February FIRE Policy News

Issue Date: 
February, 2013
Newspaper PDF: 

The February issue of FIRE Policy News reports state legislators in Oregon are considering lowering the state’s capital gains tax rate, one of the nation’s highest. Steve Buckstein, a senior policy analyst for and founder of the Cascade Policy Institute, notes, “The top [capital gains tax rate in Oregon] is now 9.9 percent, compared to 0 percent in our neighbor to the north, Washington.”

Also in this issue:

  • Numerous companies announced special dividends before the close of 2012 in advance of the federal government’s fiscal cliff and expected tax increases.
  • Major banks recently reported their best year since 2006, but bankers worry about upcoming economic and regulatory conditions. The combined profits of the six largest banks, $63 billion, are the most since before the subprime lending crisis struck in 2007. But return on equity, higher capital requirements, below book value stock prices, declining bonuses, industry consolidation, staff cuts, and continuing concerns about the European financial crisis have bankers worried.
  • The chief executive of Hong Kong’s Securities and Futures Commission is warning against allowing U.S. and European financial regulation in Asia, according to the Global Legal Post, an international legal media publication. Meanwhile, Ireland recently became one of the first countries in the world to agree to the U.S. Foreign Account Tax Compliance Act (FATCA), one of the laws that so bothers Hong Kong Securities and Futures Commission CEO Ashley Alder.
  • Homeowners aren’t the only ones feeling the pain from the troubled housing market. The FHA has lost 45 percent of its reserves in a single year, exposed in a recent audit by Integrated Financial Engineering, Inc. of Rockville, Maryland. Down from $4.7 billion in 2010, FHA reserves stood at $2.6 billion in 2011--a drop in the bucket considering that its loan exposure is more than $1 trillion.
  • Critics of the Bush tax cuts often dismiss them as a failed experiment in free-market economics. But the Bush tax cuts had several problems: They were phased in slowly, set to expire within a decade, entailed a Keynesian emphasis on stimulating aggregate demand, and--above all--were undertaken without any effort to reduce spending.
  • Some people believe government debt doesn’t matter because it’s money we “owe ourselves” and therefore doesn’t really involve a transfer of wealth. If this little lullaby (“the debt is something we owe to ourselves”) helps you sleep, you may be in for a rude awakening. Government debt frays the political fabric, and we are feeling its effects already, writes economist Arnold Kling.

Newspaper Articles in this Issue