Your Final Examination is this Tuesday August 11th!! Do not miss this extremely important exam. Make sure you bring a pencil and a pen.
Study, Study, Study!!!!!
.
Wednesday, August 5, 2009
HW # 10
Taxing Those With Insurance to Pay for Those Without
By REED ABELSON
Published: May 7, 2009
It is an alluring way to pay for the ambitious plan to expand health coverage to the nearly 50 million people who are now uninsured. Simply put, the government would tax the people who already have the most expensive health benefits, as provided by their employers.
By one Congressional estimate, taxing this “Cadillac coverage,” as some call it, could yield $100 billion in revenue over five years. No wonder Senator Max Baucus, the Montana Democrat who is a leader of the health reform effort, seems keen on the idea. And although the candidate Barack Obama criticized the notion last year when Senator John McCain promoted it, the concept now has some support in his administration as part of an overhaul of the health care system.
“There aren’t that many pots of gold to pay for health reform,” said Jonathan Oberlander, a health policy expert at the University of North Carolina.
But Mr. Oberlander and some other experts say Congress may have a difficult time devising a new tax on health benefits that does not threaten to do more harm than good.
If the plan is not designed carefully, they say, the additional taxes could affect many workers who are far from affluent and put the cost of adequate coverage further beyond the reach of many Americans. Some critics also warn that the taxes could undermine the employer-based coverage that is the bedrock of the nation’s health insurance system.
The details have not yet been worked out. But critics say a tax could add to the burden of many employees, who already pay a hefty portion of their own insurance premiums and have additional out-of-pocket costs in the form of deductibles and annual co-payments.
And many people have high-priced insurance that is expensive for reasons unrelated to the quality of the coverage because they live in a high-cost city or work for a small business with old or sick employees.
“We too often equate expensive health insurance with generous health insurance, and they’re not the same,” Mr. Oberlander said. “It’s not clear that you are going after ‘Cadillac’ health plans at all.”
Right now, the amount that an employer spends on a worker’s health insurance is not taxed as income, and employees can pay their share of premiums with before-tax earnings. The proposals being debated in Congress would start considering some part of the value of the health benefit as income and tax it accordingly.
Representative Charles B. Rangel, the New York Democrat who is chairman of the House Ways and Means Committee, which presides over tax legislation, made clear on Wednesday that he opposed a change in the tax treatment of health benefits.
And employer groups and labor officials have also come out against the idea. They say taxing benefits could endanger the current system of employer-based coverage, which now is responsible for insuring nearly two-thirds of Americans who are under 65 years old and have coverage.
“If we began to tax employee benefits, there would be mutiny at the gate,” said J. Randall MacDonald, an I.B.M. executive who is chairman of the HR Policy Association, which represents corporate human resource professionals. “It’s just counterintuitive to the problem we’re trying to solve.”
The challenge for Congress, aside from the political battles already stirring, is whether policy makers can come up with a proposal that addresses opponents’ concerns, by limiting the tax to the wealthy, or otherwise fine-tuning it.
Proponents argue that the revenue could be raised by taxing only the most expensive policies for those people who can afford the few hundred or thousand dollars at stake — money they say is essential to government’s ability to provide basic coverage to more people.
“We need the money,” said Len Nichols, a health economist at the New America Foundation, which supports overhauling the current insurance system to give more people access.
Some supporters of these plans say the current system gives an advantage to people who get coverage from their employer and to people with high incomes.
“There is a huge consensus that this is inequitable and unfair tax treatment,” said Robert E. Moffitt, a policy analyst with the Heritage Foundation, which has long supported changing the tax laws and contends this is an area that might have significant bipartisan support.
What is more, some economists and policy analysts say the current system encourages overly generous coverage, which they say helps drive up the cost of medical care by keeping patients insulated from the true costs. “One of the arguments for doing it is trying to achieve higher value through the health care system,” said Katherine Baicker, a health economist at the Harvard School of Public Health.
But the political opposition remains fierce.
Union officials, for example, say that the proposed policy could translate into higher taxes for some of its members, many of whose contracts call for generous health benefits. “Capping the tax exclusion would undermine the place where most Americans now get their coverage, before we have built a proven effective, sustainable alternative to employer-based plans,” said Gerald M. Shea, an official with the A.F.L.-C.I.O. in recent testimony before Congress.
And there is little doubt that more expensive coverage does not always mean more generous coverage. Small companies, for example, typically pay more for the same benefits than large employers do. And some companies pay more in premiums because more of their employees are older or sicker.
Moreover, the cost of insurance varies in different parts of the country, so that someone with the same plan in New York or California will pay more than someone in North Dakota.
Congress may be able to balance these issues. But the problem, some policy analysts say, is that if a grand compromise ends up too narrowly defining the group of people who will end up paying the new tax, the amount of money raised might not be enough to make a difference in paying for health reform.
“I think it’s got some traction, but what happens when push comes to shove?” asked Paul Fronstin, an analyst for the Employee Benefit Research Institute, who recently completed a lengthy analysis of changing tax policy.
“If it’s not going to buy them much, why do it?” he asked.
Is it a good idea tax those with insurance to help pay for those without? Use information from the article to answer this question. Write a half page response.
By REED ABELSON
Published: May 7, 2009
It is an alluring way to pay for the ambitious plan to expand health coverage to the nearly 50 million people who are now uninsured. Simply put, the government would tax the people who already have the most expensive health benefits, as provided by their employers.
By one Congressional estimate, taxing this “Cadillac coverage,” as some call it, could yield $100 billion in revenue over five years. No wonder Senator Max Baucus, the Montana Democrat who is a leader of the health reform effort, seems keen on the idea. And although the candidate Barack Obama criticized the notion last year when Senator John McCain promoted it, the concept now has some support in his administration as part of an overhaul of the health care system.
“There aren’t that many pots of gold to pay for health reform,” said Jonathan Oberlander, a health policy expert at the University of North Carolina.
But Mr. Oberlander and some other experts say Congress may have a difficult time devising a new tax on health benefits that does not threaten to do more harm than good.
If the plan is not designed carefully, they say, the additional taxes could affect many workers who are far from affluent and put the cost of adequate coverage further beyond the reach of many Americans. Some critics also warn that the taxes could undermine the employer-based coverage that is the bedrock of the nation’s health insurance system.
The details have not yet been worked out. But critics say a tax could add to the burden of many employees, who already pay a hefty portion of their own insurance premiums and have additional out-of-pocket costs in the form of deductibles and annual co-payments.
And many people have high-priced insurance that is expensive for reasons unrelated to the quality of the coverage because they live in a high-cost city or work for a small business with old or sick employees.
“We too often equate expensive health insurance with generous health insurance, and they’re not the same,” Mr. Oberlander said. “It’s not clear that you are going after ‘Cadillac’ health plans at all.”
Right now, the amount that an employer spends on a worker’s health insurance is not taxed as income, and employees can pay their share of premiums with before-tax earnings. The proposals being debated in Congress would start considering some part of the value of the health benefit as income and tax it accordingly.
Representative Charles B. Rangel, the New York Democrat who is chairman of the House Ways and Means Committee, which presides over tax legislation, made clear on Wednesday that he opposed a change in the tax treatment of health benefits.
And employer groups and labor officials have also come out against the idea. They say taxing benefits could endanger the current system of employer-based coverage, which now is responsible for insuring nearly two-thirds of Americans who are under 65 years old and have coverage.
“If we began to tax employee benefits, there would be mutiny at the gate,” said J. Randall MacDonald, an I.B.M. executive who is chairman of the HR Policy Association, which represents corporate human resource professionals. “It’s just counterintuitive to the problem we’re trying to solve.”
The challenge for Congress, aside from the political battles already stirring, is whether policy makers can come up with a proposal that addresses opponents’ concerns, by limiting the tax to the wealthy, or otherwise fine-tuning it.
Proponents argue that the revenue could be raised by taxing only the most expensive policies for those people who can afford the few hundred or thousand dollars at stake — money they say is essential to government’s ability to provide basic coverage to more people.
“We need the money,” said Len Nichols, a health economist at the New America Foundation, which supports overhauling the current insurance system to give more people access.
Some supporters of these plans say the current system gives an advantage to people who get coverage from their employer and to people with high incomes.
“There is a huge consensus that this is inequitable and unfair tax treatment,” said Robert E. Moffitt, a policy analyst with the Heritage Foundation, which has long supported changing the tax laws and contends this is an area that might have significant bipartisan support.
What is more, some economists and policy analysts say the current system encourages overly generous coverage, which they say helps drive up the cost of medical care by keeping patients insulated from the true costs. “One of the arguments for doing it is trying to achieve higher value through the health care system,” said Katherine Baicker, a health economist at the Harvard School of Public Health.
But the political opposition remains fierce.
Union officials, for example, say that the proposed policy could translate into higher taxes for some of its members, many of whose contracts call for generous health benefits. “Capping the tax exclusion would undermine the place where most Americans now get their coverage, before we have built a proven effective, sustainable alternative to employer-based plans,” said Gerald M. Shea, an official with the A.F.L.-C.I.O. in recent testimony before Congress.
And there is little doubt that more expensive coverage does not always mean more generous coverage. Small companies, for example, typically pay more for the same benefits than large employers do. And some companies pay more in premiums because more of their employees are older or sicker.
Moreover, the cost of insurance varies in different parts of the country, so that someone with the same plan in New York or California will pay more than someone in North Dakota.
Congress may be able to balance these issues. But the problem, some policy analysts say, is that if a grand compromise ends up too narrowly defining the group of people who will end up paying the new tax, the amount of money raised might not be enough to make a difference in paying for health reform.
“I think it’s got some traction, but what happens when push comes to shove?” asked Paul Fronstin, an analyst for the Employee Benefit Research Institute, who recently completed a lengthy analysis of changing tax policy.
“If it’s not going to buy them much, why do it?” he asked.
Is it a good idea tax those with insurance to help pay for those without? Use information from the article to answer this question. Write a half page response.
Monday, July 27, 2009
HW # 9
John Christoakos, his wife Roxanne and daughter Molly check out the new Ford Escape.
Hey feds, thanks for the new wheels! Brooklyn family takes advantage of Cash for Clunkers.
It’s the end of the road for these clunkers.
Drivers of aging gas guzzlers clanked and rattled their way to dealerships across the city on Saturday to turn in their worn-out wheels for up to $4,500 off new ones during the first major shopping day of the new Cash for Clunkers program.
“There was traffic on the way, and I just couldn’t wait to get here,” said John Christakos at Premier Ford on Glenwood Road in Brooklyn after he turned over his beat-up 1998 Dodge Durango for a steep discount on a brand-new Ford Escape.
“When we heard about Cash for Clunkers, I said, ‘That’s it,’” recalled Christakos, who had been pining for a new car for two years but just couldn’t bring himself to pull the trigger.
“We got $4,500 for my truck,” he added proudly from the East Flatbush dealership. “We wouldn’t have gotten $500 for it.”
The $1 billion federal program, which was launched Friday, aims to jump-start sagging auto sales and to get old gas guzzlers off the road by giving buyers thousands of dollars off more fuel-efficient cars.
It seems to be working.
Across the same Brooklyn showroom, Aurora Colon, 60 — who had just gotten $4,500 off a $17,900 Ford Focus — said she never would have ponied up the cash for a new car without the discount.
* Why would our government give Mr. Christakos $4500 for his car even thought it is only worth $500?
Use the internet to find out about President Obama's "car allowance rebate system." Answers should be a half page, email them to me or hand me a hard copy in class.
Thursday, July 23, 2009
Wednesday, July 22, 2009
Monday, July 20, 2009
Wednesday, July 15, 2009
Mid Term Exam!
Your Mid Term Examination is this Tuesday July 21st!! Do not miss this extremely important exam. Make sure you bring a pencil and a pen.
Study, Study, Study!!!!!
Monday, July 13, 2009
Thursday, July 9, 2009
Exam # 1
http://www.ncee.net/cel/test/
Click on this link.
Enter the required information, and take the exam.
Copy and past your results page in an email and send it to me.
Keep taking the exam until you pass!
Click on this link.
Enter the required information, and take the exam.
Copy and past your results page in an email and send it to me.
Keep taking the exam until you pass!
Tuesday, July 7, 2009
Thursday, July 2, 2009
How does the Stock Market Work?
Let us start from the basics. When a company is started, it needs a capital for its startup. Capital is all the money that is invested to start a business. Capital can be raised in two ways. One is by borrowing money, which will be paid back later. Second option is issuing stock to those, interested in sharing the profits of the company. By this we mean, people who buy the stock will help in the venture of the company in return of which they will have a share in the profits the company makes. By issuing stock, the company can raise more capital and it does not have to bear the interest as in case of repayment of debt. But one of the disadvantages involved in issuing stock is that shareholders share the company ownership and have a say in deciding the company policies.
What causes stock prices to go up and down?
Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies.
The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn't going to stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company's results surprise (are better than expected), the price jumps up. If a company's results disappoint (are worse than expected), then the price will fall.
It's a fairly straightforward connection to make that stock prices are somehow related to a company's earnings. But exactly what makes stock prices move, and how? It's important to understand the answers to these questions so that you can develop a reliable investment strategy. The fact is that a stock's price rises or falls based on changes in the market's perception of the stock's future earnings and the confidence (or lack thereof) investors have that those earnings will be achieved.
What causes stock prices to go up and down?
Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many answers to this problem and just about any investor you ask has their own ideas and strategies.
The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn't going to stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company's results surprise (are better than expected), the price jumps up. If a company's results disappoint (are worse than expected), then the price will fall.
It's a fairly straightforward connection to make that stock prices are somehow related to a company's earnings. But exactly what makes stock prices move, and how? It's important to understand the answers to these questions so that you can develop a reliable investment strategy. The fact is that a stock's price rises or falls based on changes in the market's perception of the stock's future earnings and the confidence (or lack thereof) investors have that those earnings will be achieved.
Wednesday, July 1, 2009
HW # 1
Read the article "Eight things I should have learned about money in high school...."
In your opinion why is this information important?
Answer this question using the article, 1/2 a page answer.
In your opinion why is this information important?
Answer this question using the article, 1/2 a page answer.
Tuesday, June 30, 2009
Eight Money Lessons.......
Eight Money Lessons You Should Have Learned In High School But Didn't
By TSC Staff Writers
“I asked for a car, I got a computer. How's that for being born under a bad sign?” griped Ferris Bueller (Matthew Broderick) in the 1986 classic Ferris Bueller’s Day Off (VIA). Ferris Bueller may not have gotten the new set of wheels, but he did use his creative hijinks to score the free one-day use of a 1961 Ferrari 250GT California, while at the same time motivating his peers to collect money for a new, albeit unnecessary, kidney.
Back in the real world, most high school students graduate without a basic financial education, are unable to save for a medical emergency and can only dream of sitting in a Ferrari. Forty states teach some level of personal finance, according to the National Council on Economic Education. But that doesn’t mean most high school grads have a basic understanding of how to manage money. The actual implementation of personal finance into high school education is dismal. Only nine states require a course with personal finance content to be offered and only seven states require students to take a personal finance course in high school to graduate (Georgia, Idaho, Illinois, Louisiana, Missouri, South Dakota and Utah).
After graduating and beginning to work is when people should be making quality personal financial decisions, not when they should begin learning how personal finances work.
Here are eight subjects that aren't taught in high school (but should be):
1. Realities of Credit Cards
Lack of understanding of how credit cards work causes far more financial problems for people than should ever happen. Credit cards aren't evil, but they can seem that way if you don't know how to properly use them. When you already have a credit card is not the time to be learning how they work, unless you want to receive some extremely costly lessons. Teaching people in high school that using a credit card is not using free money and comes with a huge cost over time would keep a lot of people from the early personal-finance disasters these cards can cause.
It would also help reduce the vast amounts of credit card debt that Americans continue to rack up.
2. How to Budget
One of the first places people get into money trouble by not knowing how to budget. Learning how to set up a basic budget and stick to it can be the difference between being financially secure and running up large amounts of debt.
3. The Importance of Saving
The importance of saving and creating an emergency fund cannot be overestimated for basic personal financial stability.
It's not the everyday things that get most people into trouble, but the unexpected events that happen in life that cost more than anticipated (think Cameron crashing the Ferrari in Ferris Bueller’s Day Off). Learning to prepare for the unexpected can mean the difference between going into a debt spiral or escaping financial emergencies with your finances intact.
4. The Meaning of Frugality
In the consumer-driven world, there seems to be nobody teaching the importance of frugality. Frugality is often ignored or even scorned, but it is a sure way to personal-finance success. Learning to make the most of what you have, to get a good value in all that you buy and to not waste are lessons that would help every young adult handle their finances better.
5. How to Invest
The earlier people start investing for their future, the easier it is for them to reach their financial goals due to the magic of compound interest. Understanding the basics of investments and learning where they should be placing their money should be understood when they leave high school rather than having to experiment as young adults.
The time to know about investing is before you have money to invest rather than by trial and error when receiving a paycheck.
6. Basics of Real Estate
Understanding the fundamentals of real estate and how different mortgages work is extremely important as many are finding out with the current subprime mortgage meltdown.
A good grasp of what is important when purchasing real estate and how different mortgages work rather than whether you can make the monthly mortgage payment at the time of signing it would have saved a lot of people their homes.
7. Retirement Issues
The first step that any new employee should do when joining a company is to join the 401(k) plan they offer up to the match, since not doing so is essentially throwing away free money.
Yet since high school doesn't teach it, many young adults don’t take advantage of company matching. If schools taught high school students how easy it is to become a millionaire if they only begin saving for retirement early through 401(k) and IRAs, many more would embrace saving and investing early.
8. Finer Points of Entrepreneurship
When it comes to financial security, putting all your eggs in one basket contains a lot of risks. In today's work environment, there is no guarantee of lifelong employment. Learning basic entrepreneurship and building a part-time business on the side is something that everyone should do for both the income and tax benefits. Schools should not only teach the basics to be able to work for somebody else, but also how to work on your own if you choose.
Since most high schools don't teach personal finance, teenagers most in need of this education (those students with parents that have good finances and are likely teaching them at home) are left to try and figure out this information on their own after they graduate. Ferris Bueller may have called high school “childish and stupid,” but if seniors graduate with a base knowledge of personal finance, they’ll be better off than learning it once they’re already in the workforce.
By TSC Staff Writers
“I asked for a car, I got a computer. How's that for being born under a bad sign?” griped Ferris Bueller (Matthew Broderick) in the 1986 classic Ferris Bueller’s Day Off (VIA). Ferris Bueller may not have gotten the new set of wheels, but he did use his creative hijinks to score the free one-day use of a 1961 Ferrari 250GT California, while at the same time motivating his peers to collect money for a new, albeit unnecessary, kidney.
Back in the real world, most high school students graduate without a basic financial education, are unable to save for a medical emergency and can only dream of sitting in a Ferrari. Forty states teach some level of personal finance, according to the National Council on Economic Education. But that doesn’t mean most high school grads have a basic understanding of how to manage money. The actual implementation of personal finance into high school education is dismal. Only nine states require a course with personal finance content to be offered and only seven states require students to take a personal finance course in high school to graduate (Georgia, Idaho, Illinois, Louisiana, Missouri, South Dakota and Utah).
After graduating and beginning to work is when people should be making quality personal financial decisions, not when they should begin learning how personal finances work.
Here are eight subjects that aren't taught in high school (but should be):
1. Realities of Credit Cards
Lack of understanding of how credit cards work causes far more financial problems for people than should ever happen. Credit cards aren't evil, but they can seem that way if you don't know how to properly use them. When you already have a credit card is not the time to be learning how they work, unless you want to receive some extremely costly lessons. Teaching people in high school that using a credit card is not using free money and comes with a huge cost over time would keep a lot of people from the early personal-finance disasters these cards can cause.
It would also help reduce the vast amounts of credit card debt that Americans continue to rack up.
2. How to Budget
One of the first places people get into money trouble by not knowing how to budget. Learning how to set up a basic budget and stick to it can be the difference between being financially secure and running up large amounts of debt.
3. The Importance of Saving
The importance of saving and creating an emergency fund cannot be overestimated for basic personal financial stability.
It's not the everyday things that get most people into trouble, but the unexpected events that happen in life that cost more than anticipated (think Cameron crashing the Ferrari in Ferris Bueller’s Day Off). Learning to prepare for the unexpected can mean the difference between going into a debt spiral or escaping financial emergencies with your finances intact.
4. The Meaning of Frugality
In the consumer-driven world, there seems to be nobody teaching the importance of frugality. Frugality is often ignored or even scorned, but it is a sure way to personal-finance success. Learning to make the most of what you have, to get a good value in all that you buy and to not waste are lessons that would help every young adult handle their finances better.
5. How to Invest
The earlier people start investing for their future, the easier it is for them to reach their financial goals due to the magic of compound interest. Understanding the basics of investments and learning where they should be placing their money should be understood when they leave high school rather than having to experiment as young adults.
The time to know about investing is before you have money to invest rather than by trial and error when receiving a paycheck.
6. Basics of Real Estate
Understanding the fundamentals of real estate and how different mortgages work is extremely important as many are finding out with the current subprime mortgage meltdown.
A good grasp of what is important when purchasing real estate and how different mortgages work rather than whether you can make the monthly mortgage payment at the time of signing it would have saved a lot of people their homes.
7. Retirement Issues
The first step that any new employee should do when joining a company is to join the 401(k) plan they offer up to the match, since not doing so is essentially throwing away free money.
Yet since high school doesn't teach it, many young adults don’t take advantage of company matching. If schools taught high school students how easy it is to become a millionaire if they only begin saving for retirement early through 401(k) and IRAs, many more would embrace saving and investing early.
8. Finer Points of Entrepreneurship
When it comes to financial security, putting all your eggs in one basket contains a lot of risks. In today's work environment, there is no guarantee of lifelong employment. Learning basic entrepreneurship and building a part-time business on the side is something that everyone should do for both the income and tax benefits. Schools should not only teach the basics to be able to work for somebody else, but also how to work on your own if you choose.
Since most high schools don't teach personal finance, teenagers most in need of this education (those students with parents that have good finances and are likely teaching them at home) are left to try and figure out this information on their own after they graduate. Ferris Bueller may have called high school “childish and stupid,” but if seniors graduate with a base knowledge of personal finance, they’ll be better off than learning it once they’re already in the workforce.
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