<< April 2001  >>

Thursday, April 5, 2001

House votes to repeal estate tax

A story published by the Associated Press reports that the House vote to repeal the estate tax capped a legislative blitz  Wednesday when Republican leaders pushed through the major components of President Bush's $1.6 trillion tax cut.

``It has been a good start,'' said Rep. J.C. Watts, R-Oklahoma. ``We hope the Senate will follow suit.''

Voting 274-154, the House passed a measure that would gradually reduce and then repeal the tax in 2011 at a cost of $185.5 billion. Fifty-eight Democrats joined nearly all House Republicans in favor of the legislation that was similar to a repeal then-President Clinton vetoed last year.

After news of the passage, Bush issued a written statement that called the vote a ``victory for fairness and a vote for economic growth.''

``Today's vote is an important step toward restoring fairness in the tax code by eliminating the double and triple taxation that results from the death tax,'' the president said.

``I look forward to continuing to work with members of Congress from both parties to enact real and meaningful tax relief for the American people.''

At the Senate, however, things were moving in the opposite direction when they voted tentatively to divert $450 billion from the president's tax cut to education spending and debt reduction. Republican Sen. James Jeffords of Vermont, a leading moderate, said he may oppose the tax cut.

Bush's tax cuts have met little resistance in the House. In March, the House passed Bush's across-the-board income tax cut, estimated at $958 billion, and voted for a $399 billion bill to ease the tax marriage penalty and double the child tax credit.

The Senate, divided evenly between 50 Democrats and 50 Republicans, has yet to take up any of the bills amid efforts to reduce the total price.

Rep. Bill Thomas, chairman of the tax-writing House Ways and Means Committee, said the House's quick passage provides momentum, during later negotiations with the Senate, for Bush's biggest domestic priority.

Although each House bill attracted Democratic votes, most Democrats contend that as a whole, the tax relief package jeopardizes national priorities such as education and health care spending and debt reduction, does nothing to guarantee the solvency of Social Security and Medicare, and threatens a return to deficits if projected budget surpluses do not materialize.

``You can break the tax cut into parts, but you cannot break its effect,'' said House Minority Leader Dick Gephardt, D-Mo. ``This is a mistake that we will pay for for years to come.''

To meet Bush's $1.6 trillion figure, Republicans had to perform a juggling act. The estate tax repeal, for example, reduces tax rates moderately during the first eight years, with most of the cost coming with the full repeal in 2011 -- later than Bush's initial proposal.

The tax affects estates of only about 2 percent of people who die each year, mainly because of a $675,000 exemption that will rise to $1 million in 2006. Avoiding the tax, which tops out at 55 percent, will require costly insurance and estate planning, and will cause particular problems for many farmers and small business owners who are often forced to sell land or assets.

Democrats say the gradual phaseout conceals the real cost, which they contend would actually exceed $662 billion if the repeal came immediately. They offered a $39 billion alternative that would raise the individual exemption to $2 million right away and eventually to $2.5 million, which they believe would ease the tax burden for all but the wealthiest estates.

``We can do something real for 99.9 percent of the taxpayers,'' said Rep. Steny Hoyer, D-Md.

But the House defeated the Democratic alternative on a 227-201 vote.

The House-passed bill would make a change in capital gains taxes after the estate tax is repealed. This would alter the way assets are valued for capital gains purposes, in effect increasing that tax when heirs sell the assets. The first $1.3 million in gain would be exempt, $4.3 million if the heir is a surviving spouse.

Mature brides tend to dispense with wedding traditions

A story published today in the New York Daily News notes that mature brides and grooms of today are more likely to break with traditional wedding celebrations.

"They are a little clearer about their own style and they bring that sensibility to their wedding," explains Jill Gordon in the article, a Manhattan wedding planner with many older clients.

Gordon's observation is based on the U.S. 2000 Census, which shows that first marriages are happening later in life. While the median age for women was 20.3 in 1950, according to a report posted by the American Association for Single People, it rose to 25 in 1998. Tode believes that it is surely even later in New York.

Her article goes on to say that not only do older couples tend to have more defined taste, but they usually foot the bill for the festivities - which means that nobody can tell them what to do.

Tode also shares that as an over-35 first-time bride having attended too many cookie-cutter events, she would not like to spend her hard-earned money on something so unoriginal. Their main concern with all the wedding plans is that they throw a really great party rather that finding a perfect wedding gown for the event.

According to Gordon, older couples often choose a shorter ceremony, colorful decorations, nontraditional music and "a fun party in celebration of their wedding."

A large wedding party, reception line, sit-down dinner and bouquet toss is still a main prerequisite that mature couples want to keep. And instead of a giant meringue dress, the bride often chooses a simple gown.

That was not the case for Polly Kreisman, an investigative reporter with WPIX-TV who was 42 when she married. She wore a classic wedding gown with layers of tulle which ended up posing as the only hitch of the day when the top layer got caught and ripped.

But while her dress was old-fashioned, the ceremony was as freewheeling as they come. It took place on a beach in Amagansett, L.I., and the bridesmaids were told to wear anything they liked as long as it matched the ocean. Afterward, the guests piled into a yellow school bus and headed to the reception in a Montauk park.

"We wanted the day to be elegant and simple at the same time," says Kreisman.

Sonia, a 36-year-old professor in Brooklyn, interviewed in the article wanted an intimate wedding. So to keep the numbers down, she only invited her closest friends and family.

"Because I'm older, I think that I was able to make decisions with  more confidence and be more clear about what we wanted to do,"she says.

The candlelit reception on an estate outside Boston was exactly the warm but elegant affair she and her husband had wanted, she notes.

There is one tradition that almost all brides and grooms follow at their wedding, according to Gordon. "The cake is usually the one thing that everybody sticks with."

Tax tips for divorced and divorcing spouses

A story released today by Press Release Newswire reports that  tax season can be complex for divorced and divorcing couples, according to the American Academy of Matrimonial Lawyers.

"As if divorced and divorcing couples do not have enough financial problems to sort through, tax time can suddenly provide an additional layer of financial issues and problems," said Charles C. Shainberg, president of the Academy.

The association offers these tax tips for the top six issues that are regularly encountered by divorced and divorcing couples at tax time:

     -- Alimony is tax deductible for the paying spouse and taxable to the receiving spouse.
     -- Child support is non-deductible to the payor and is not taxable for the recipient.
     -- Capital gains taxes on the sale of a principal residence accrue to the title-holder of the residence, even though the proceeds from the sale are split between spouses as part of the divorce.
     -- The spouse with custody of the children controls the dependency exemption for those children and must release it to the non-custodial spouse, even if the court awards the exemption to the non-custodial spouse as part of the divorce settlement.
     -- If you are filing or have filed joint returns, you and your spouse are liable for unreported or underreported income, taxes, interest and penalties. While there is a provision of the tax code for "innocent spouses" that protects those who unknowingly sign incorrect returns, if you and your spouse are having marital difficulties, it is probably better to file separate returns.
     -- Legal fees incurred to either obtain or defend against alimony claims are tax deductible.

 "In addition, those getting divorced should realize that various tax issues can play an extremely important role in how much of a couple's assets are preserved for them after their divorce," according to Shainberg.

 Those with questions should consult a qualified tax attorney or accountant.

Wednesday, April 4, 2001

Increase in out-of-wedlock births changes marital patterns

A story released today by Child Trends reports that births to couples living together account for current high levels of nonmarital childbearing. Child Trends, an independent, nonpartisan research organization is dedicated to studying children, youth, and families through data collection, analysis, and dissemination, as well as through basic research.

This finding is one of several in Births Outside of Marriage: Perceptions vs. Reality, a research brief that examines nonmarital childbearing, or births to unmarried parents. The research indicates that patterns of childbearing outside of marriage have changed since 1970 when the overwhelming majority of children (89 percent) were born to married couples. Currently, one in three children (33 percent) is born to unmarried parents and an increasing proportion of births are to couples that live together.

"Childbearing hasn't changed as much as marriage," said Kristin A. Moore, Ph.D, president and senior scholar at Child Trends. "Recent declines in the percentage of births to married couples are almost entirely due to an increase in births to cohabiting parents."

Contrary to popular perception, most unmarried mothers have relationships with their child's father. In the early 1990s, 39 percent of nonmarital births were to couples that were cohabiting. This percentage increased from the previous decade.

The recent studies of unmarried women in seven metropolitan areas also show that 45 percent were cohabiting with the father of their child at the time of birth, and another 37 percent were romantically involved with the child's father, although not living with him.

A common view is that nonmarital childbearing is mainly a racial and ethnic minority issue. While it is true that a greater percentage of black and Hispanic children are born outside of marriage, births to unmarried white women almost tripled from 1970 to 1998 (from 13.9 births per 1,000 unmarried women aged 15 to 44 to 37.5 births per 1,000). In contrast, the nonmarital birthrate for unmarried black women declined from 95.5 per 1,000 to 73.3 per 1,000 during the same period.

Hispanic women had the highest nonmarital birthrate in 1998 at 90.1 births per 1,000 unmarried women.

The dynamics of nonmarital childbearing have also changed. The public belief is that nonmarital childbearing is the same as teen childbearing. In1970, half of all nonmarital births were to teenagers. In 1999, teens accounted for less than one-third of all children born to unmarried mothers. Women ages 20 and older accounted for more than two-thirds of all children born to unmarried mothers. Women in their early 20s also had the highest rate of nonmarital births (72.3 per 1,000).

The research also highlighted other findings about nonmarital childbirths:

After rising dramatically for several decades, the nonmarital birth rate has declined slightly since 1994, and the percentage of births to unmarried women has leveled off.

Only half of nonmarital births are first-born children.

Many of the nonmarital births to older women were preceded by teen births.

Most nonmarital births are unintended at conception (58 percent to never married women and 37 percent to formerly married women are unintended).

The authors of the research brief are Child Trends senior research analyst Elizabeth Terry-Humen, MPP, senior research associate Jennifer Manlove, Ph.D, and senior scholar Kristin Moore, Ph.D.

Tuesday, April 3, 2001

Glamour magazine investigates the trend of single-motherhood

A story released today by Entertanment Wire reports that Glamour magazine talked to five women who revealed why having a baby on their own has both frenzied and fulfilled their solo lives. It started with Glamour posing questions to mothers who are single by choice; hundreds of women responded. Of those, Glamour picked five who came to motherhood in very unique  ways for very different reasons. The story then selected excerpts from the article of the trials, tribulations and, most importantly, joys of going solo.

"Single moms by choice is a huge trend," says Judith Stacey, Ph.D., a sociology professor at the University of Southern California in Los Angeles and a founding board member of the Council on Contemporary Families. According to recently published data from the National Center of Health Statistics, 32.8 percent of all births in 1998 were to unmarried women, up from 18.4 percent in 1980. It was just nine years ago that Republican vice president Dan Quayle preached: "It doesn't help matters when prime-time TV has Murphy Brown--a character who supposedly epitomizes today's intelligent, highly paid professional woman--mock the importance of fathers by bearing a child alone and calling it just another lifestyle choice."

"Back in '92, I was one of the people who dared to publicly agree with Quayle," recalls Irina Wolfle, 39, a New York City-based ad executive and the single mother of 11-month-old Jonathon. "But eight years later, after a string of failed relationships, I had to rethink things. When I unexpectedly got pregnant, I thought, well, OK. Here goes." What helps Wolfle tremendously is her close knit circle of loving, caring friends and family.Her sister, Narda Johnson, 43, quit her job to care for Jonathan while Wolfle is at work.

Rachel Pepper, 36, of San Francisco reveals, "When I hit 31, my biological clock started ticking like crazy."  "I'd just opened my bookstore, which was very successful, and I felt that once I was financially stable, there was nothing to hold me back"--with or without a partner. Pepper spent more than a year trying to become pregnant. "As a lesbian, I knew I wasn't just going to get pregnant one night having sex with the person I love." "I so desperately wanted to get pregnant that I considered asking every handsome man I saw. It became an obsession." One year, seven tries with artificial insemination and more than $2000 later, Pepper finally became pregnant with her daughter, Frances, now two and a half. "When I found out, it was the happiest moment of my life."

Beth Bush, 30, a Clinton, Mississippi, native and former administrative assistant, is also proud of raising her one-and-a-half-year-old triplets--Bailey, Arianna, and Olivia--alone. Her baby's father, whom she had been dating only for a few months, left around the same time she got pregnant. Bush says her  former boss, who declined to comment, tried to persuade her to put the babies up for adoption. He even went so far as to find two adoptive families for her. "No words fit to print could describe how mad I was," Bush says. "Financially, life is very difficult," Bush says. The baby's father, who has never seen the girls, has taken a DNA test and signed paternity papers, which require him to pay $300 a month in child support. "That's not even enough to cover their baby food, let alone the 20 diapers a day they go through," says Bush. In an email Bush sent to Glamour after her interview, she summed up her life as a single mom: "Being a single mom is what you make of it. The joy I feel around (my children) is indescribable."

Sunday, April 1, 2001

Book aimed at single buyers gets a mediocre review

A book review published today by the Miami Herald says that "Buying a Home When You're Single," by Donna G. Albrecht (John Wiley and Sons) is mediocre at best.

The reviewer is Robert J. Bruss, a California lawyer and licensed real estate broker.

According to Bruss, this new book, aimed at unmarried home buyers and explains virtually the choices single home buyers need to consider. The author also explains the pros and cons of the many alternatives in buying a house or condo.

Filled with many real-life examples, Donna Albrecht's book includes Internet information sources not only for home listings but also for home mortgages and other essential home buyer information. Although the book is targeted at singles, it is also a good ``how to buy a home'' book for married couples who wish to weigh the typical home-buying decisions.

The primary value of Albrecht's book the reviewer notes is that she shows single home buyers how to overcome home-purchase hurdles. Heavy emphasis is placed on getting preapproved for a  mortgage so the buyer will know the correct price range to consider.

Included in the mortgage quest is information on home-loan alternatives, such as adjustable rate mortgages. However, the other cites that Albrecht neglects to explain new 97 percent and even 100 percent home loans for borrowers with good incomes and credit.

Bruss criticizes the author on certain sections of the book when she occasionally lapses into weird statements that seem to make no sense. To illustrate his point, Bruss cites the chapter on home loans, where  there is a discussion on escrow impound accounts for property taxes and fire insurance. Albrecht says, ``Other lenders may require impound accounts for different reasons by the homeowners association.'' What does a homeowners association have todo with escrow impound accounts?

In another lapse, in a discussion about negotiating, she says, ``As in any negotiation, it is better to start from the low end and go up than start with your top offer and hope to come down.'' Nobody whom I ever heard of makes a high purchase offer for a home, expecting to negotiate downward.

Bruss states that  the book explains the home-buying essentials that singles, especially first-time buyers, need and want to know. For example, Albrecht emphasizes the traditional location considerations, then switches into a discussion of alternative types of housing, such as condos and town houses.

Abundant checklists he believes help readers focus on details that are the most critical to their home choices.

Although this is a perfectly adequate ``how to buy a home'' book, Bruss emphasizes that it has nothing special to commend it. He noted that there are no special graphics to make the book interesting and compelling. The checklists are good tool for homebuyers but he felt it was not exciting.

In conclusion, Bruss rates the real estate book an eight in a scale of ten.

 Friday, March 30, 2001

'Bastard' cut from Delaware code

A story released today by the Associated Press reports that a conservative Delaware lawmaker argued on the House floor yesterday that referring to an out-of-wedlock child as a "bastard" in state code was acceptable if it embarrassed unmarried couples into not having children.

"We should recognize that a sense of shame throughout history has been a wonderful corrective aspect of personal behavior," said Wayne Smith, the republican who also is House majority leader.

"I do not mean to impugn the individuals who are in this situation," he said. "I also feel very strongly that government ought not to sanction behavior, which I think we can mostly agree, is less than desirable."

Despite Smith's argument, the bill deleting the word "bastard" breezed through 35-1, with five representatives absent.

Smith was the sole dissenter against the measure.

The bill would replace the word "bastard" with the phrase "non-marital child" throughout state code.

Rep. Helene Keeley, D-Wilmington, who wrote the bill, said the phrase "non-marital child" was preferred by the American Association of Single People, an organization she said she worked with in drafting the bill.

Keeley said she wrote the bill because she was so upset that children were being openly referred to as "bastards" in places like Family Court.

Other lawmakers supporting spoke in favor of adopting the legislation, noting that the children labeled as bastards had little influence over the behavior of their parents.

"To me the term is a derogatory term and it is attached to the child," said Rep. Bruce Reynolds, a Bear Republican. "I don't think it reflects the shame back to the parent as much as to the child, who had no choice in the decision that was made - or the lack of a decision that was made."

 Smith defended his floor speech, urging votes against the measure.

"I see this attempt to destigmatize this term, change this term, eliminate this term as perhaps giving up the battle of trying to describe the situation as something that is less than ideal or that has a sense of shame," Smith said.

The legislation now heads to the Senate. Several senators already have signed on as co-sponsors.

House passes bill reducing marriage penalty for some, increasing marriage bonus for others

A story published today in the Los Angeles Times reports that the House on Thursday approved a bill that would provide $400 billion in tax cuts over the next 10 years for married couples and people with children.

In a rare show of bipartisanship in a chamber that has been bitterly divided over Bush's budget and tax plans, the bill was approved, 282 to144, with 64 Democrats joining all voting Republicans in support.

The bill aims to reduce the "marriage penalty," a quirk in the tax code that forces almost half of all couples to pay more in taxes after they marry than if they had remained single and filed individually.

But the bill goes far beyond addressing that anomaly, giving tax cuts to all married couples--not just those hit by the penalty. It also includes provisions to gradually double the $500-per-child tax credit that families now receive.

The family tax cuts are the second element of the Bush tax plan to clear the House. Earlier this month, the House voted along party lines to approve across-the-board cuts in income tax rates--the centerpiece of Bush's plan to reduce taxes by $1.6 trillion over10 years.

Next week, the House will vote on a bill to gradually eliminate the estate tax, another element in Bush's plan. But, as approved by the House Ways and Means Committee, the measure would phase out the tax more gradually than the president proposal. The bill would also replace estate taxes with increased taxes on capital gains accrued when an heir sells an inherited asset.

House GOP leaders made these adjustments in response to estimates showing that implementing Bush's repeal would be prohibitively expensive. The focus of the bill passed by the House is to reduce the marriage penalty, paid by about 42% of all joint filers.

The penalty hits hardest on two-earner families. An estimated 25 million married couples pay an average of $1,400 more than if they had remained single. As a result, proponents of the bill argued, the tax code provides a financial disincentive for couples to get married.

As approved, the House bill would:
                    * Allow more of married couples' income to be taxed at the bottom tax rate of 15%. It would do that by widening the 15% bracket so that it would eventually be twice the size of the bracket for single taxpayers. This change would not be fully implemented until 2009.
                    * Increase the standard deduction for couples so that it would be twice the size of the deduction for single taxpayers.
                    * Raise the income threshold for low-income couples to qualify for the earned income tax credit, which provides relief for working couples.

For families with children, the bill follows the Bush plan and would increase the child credit from $500 now to $1,000 in 2006.

But the House bill would make the first step of the increase effective in 2001, instead of 2002, as Bush proposed.

The House rejected Bush's proposal to allow more upper-income people to qualify for the credit by raising the eligibility income ceiling from $110,000 to $200,000 for married couples.

The House bill also would increase relief to lower-income working families whose tax liability is too low to take full advantage of the child credit. Under current law, such families can receive refunds up to the amount they owe in payroll taxes if they have three or more children. The House bill would allow those partial refunds to all families with children.

The House version of the estate tax bill that comes up for floor debate next week would provide $193 billion in relief over 10 years as compared to the $267-billion on Bush's proposal.

The House bill costs less, in part, because it would not completely eliminate the estate tax until 2011 which Bush wanted repealed by 2009.

Right now, only about 2% of people who die actually pay the estate tax because it applies only to inheritances in excess of $675,000, a threshold that is scheduled to rise to $1 million later this decade. There has been strong bipartisan support for
reducing or repealing the estate tax because many farmers and small-business owners have complained that heirs are forced to liquidate their inheritances in order to pay taxes that reach as high as 55%.

In an important change from Bush's proposal , the House bill modified the way capital gains are calculated when an heir sells an asset which would help reduce its cost. Under current law, capital gains taxes are owed only on the difference between the value of an asset at the time it was inherited and when it is sold.

The House bill would change that, calculating the capital gain of an inherited asset by comparing its value at the time of sale to its value when the individual who died acquired it--often many years earlier. That would mean an heir could face much larger capital gains taxes when the asset is sold.

The bill would, however, exempt assets up to $1.3 million for any heir--and up to $4.3 million for a surviving spouse.