ECONOMISTS DOWNGRADE GROWTH PREDICTIONS For the fourth consecutive month, analysts downgraded economic growth forecasts for 2013 amid growing concern over the looming fiscal cliff, according to a Reuters’ poll published on Thursday. The economy is expected to grow at a 1.6 percent annualized rate in the fourth quarter, down from 1.8 percent in last month’s poll, according to more than 60 economists polled by Reuters on Nov 9-15.
"If not for the fiscal cliff, I think we'd probably be looking at GDP growth in the order of 3 or 3.5 percent next year," said Scott Brown, chief economist at RaymondBSE -1.29 % James in St. Petersburg, Florida. He is expecting the economy to grow an annual 1.9 percent next year. - Read more at Reuters
CAPITAL GAINS AND DIVIDENDS ARE KEY TO TAX REFORM Chairman of the Senate Budget Committee, retiring Sen. Kent Conrad, D-ND, said that raising taxes on capital gains and dividends is crucial to having any kind of fair tax system.
Conrad told The Washington Post’s Suzy Khimm that the president’s call to raise $1.6 trillion in revenue over the next decade is mathematically possible by raising capital gains and dividend rates, paired with a cap on exemptions. “If you raise the rate on capital gains and dividends to 28 percent, and if you have for example a $25,000 cap on exemptions, you will raise the amount of money the president is calling for. And of course that would significantly boost taxes on wealthy individuals without raising the top individual rate.” - Read more at The Washington Post
RETIRING ON THE EDGE OF THE FISCAL CLIFF As uncertainty surrounding tax policy increases, experts at Ernst & Young have assembled a fiscal cliff survival guide for retirees, which includes tips on how to protect their retirement savings amid a fiscal crisis.
Double Down on Liquidity To provide a cushion, retirees and pre-retirees should set aside 10 to 12 months of living expenses in a money-market fund.
Go Long, Index Short Investors with significant equity positions in their portfolio should buy longer-term, put options on the S&P 500 index as a type of “insurance” for your portfolio.
Cash Out on Dividends If the Bush tax cuts expire, the tax rate on dividends will increase, making dividend-paying stocks relatively less attractive to income investments like high-yield bonds.
Harvest Long-term Capital Gains Rebalancing your portfolio before year-end with an eye toward tax management and harvesting of losses vs. gains, especially long-term gains. Selling assets that qualify for long-term capital gain treatment in 2012 will lock in the maximum 15 percent long-term capital gains rate. - Read more at MarketWatch
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