President’s State of the Union Address and the Economy

On January 20th of 2015, President Barack Obama gave his traditional State of the Union speech to the nation. The speech covered a number of topics, ranging from education to immigration. His thoughts regarding the economy provided a number of statements and proposals:

Economic Recovery

Unlike previous occasions in which the President downplayed the improving economic numbers, in his recent speeches, he enumerated the individual data points indicating that the “shadow of the crisis has passed.” He touched these specific facts:

  • The national unemployment rate is now at 5.6 percent.
  • No sign of inflation threatens the economic picture
  • Gasoline prices are down to $2 per gallon, helping the recovery.
  • Consumer sentiment is improving as more people return to work.

Educational Access For New Jobs

To counteract stagnant wages that have beset the country, the President hopes to increase training that will help to prepare workers for better paying jobs in today’s highly technical workplace by offering free community college for students who keep a 2.5 grade point average and graduate on time.

Proposals To Boost the Middle Class

President Obama proposed legislation to require sick pay for the 43 million American workers who do not yet have it, noting that loss of wages during minor illnesses negatively impacts many American families’ financial stability and affects the health of workers across the nation. He also proposed tripling the child tax credit to $3,000, and increasing the federal minimum wage.

Increased Taxes on the Wealthy

One of the President’s proposals asks for a higher tax on long-term gains, such as stocks held for more than one year. In 2014, the maximum tax rate on these investments was 23.8 percent. The President would raise this rate to 28 percent. In addition, he would eliminate the step-up inheritance tax loophole that allows stocks that increase significantly in value to pass on to heirs without taxation of their increased value. However, capital gains of $100,000 for individuals and $200,000 would be tax-free.

Infrastructure Building and Repair

The nation’s infrastructure is in serious disrepair, and the President hopes to correct this problem with a comprehensive bill that would modernize ports, build high-speed rail systems and expand broadband connection to all cities. The President downplayed the building of the Keystone XL pipeline as a significant infrastructure project that would help to create more jobs for Americans.

Trade Policy

One area that President Obama is likely to get more support from the opposition party is on trade. He emphasized the importance of fast-tracking two trade deals that are currently under consideration, one involving the Pacific Rim countries and another involving countries around the Atlantic. Some secrecy surrounds the details of these trade deals, which has made them controversial even in the President’s own party.

The Republicans in Congress, who hold majority votes in both houses, are likely to be a stumbling block for implementation of many of these proposals. However, they may have to contend with significant public support of the programs that would help the vast majority of Americans.

Posted in Economy, Tax Law |

Wages Flatline While Unemployment Goes Down

People in the workforce, particularly those who have come out of college in a time when the economy has been floundering, know what it is like to search for work under such conditions. In 2015, they are starting to see a ray of light, though that glow is larger in some fields than others, but they are not noticing all the benefits of a thriving economy yet.

Wages Continue to Flatline

When the economy is in a recession, people generally know that finding a job is going to be a challenging task, and they likely realize that the wages they receive are going to be lower than normal as well. However, as the economy starts to pick back up and positions open up in the marketplace, the workforce also expects that they are going to start making more money. However, in many fields, wages have not increased. The cost of living has though, and individuals are starting to wonder why they are not making more money and when the changes are going to end.

Nervous Businesses

Employees are not the only people who suffer from the economy is a mess; the owners of companies do as well. Therefore, many of them are nervous about the economy. While it is improving, it is still in a recovery state. They worry that if they begin to pay their employees more money, they will find themselves in a desperate situation if the economy starts to rapidly decline again. Once the economy overall, or at least their niche of the economy, has enjoyed a longer lasting level of stability, they may be more likely to increase wages.

Complacent Employees

The owners are not the only ones responsible for the flatline of wages. In the past, asking for a raise was a fairly commonplace practice. If individuals felt that they had enough experience at the job or had been working there for a long time, they would ask for a raise. However, during the economic downturn, some of these requests were suddenly deemed unreasonable. Companies could not be expected to provide employees with raises when the businesses were threatened themselves. Employees have, in a number of fields, become used to this situation. If they were to speak to their employers about a possible wage increase in the future, then they may be more likely to get one. Other workers are afraid to leave their jobs because they remember how burdensome it was to find this one.

When Changes Will Come

Predicting exactly when wages are going to rise again is impossible. First of all, people have different opinions on the matter. Some believe that the current federal government is at-fault for the way wages currently are, so they often do not believe that a change will come into the power in the country shifts. The specific field is another reason predicting an exact moment of change is impossible. Different fields are doing better than others, so they will likely start to increase wages before fields that are still struggling to survive.

The hope is that all fields will start to increase their wages again in the near future. This hope is held by both employees and employers alike, and both parties need to work together to meet in the middle when it comes to this situation.

Posted in Economy |

The United States’ Strong Dollar

The terms weak dollar and strong dollar are used in the foreign exchange market to explain the relative value of United States currency when compared to other currencies on the market. One must look at the value of two or more particular currencies over a fixed period of time in order to accurately evaluate money in this way. If the dollar has a historically high exchange rate relative to its normal value when compared with another currency, it is considered to be strong. If the dollar has a low exchange rate relative to normal when compared with the value of another currency, the dollar is considered weak. When a currency is strong, it essentially means that investors trust that currency. They expect it to remain relatively stable and to retain its value. Strong currency is usually a sign of a healthy economy, but that is not always the case.

The Current Strength of the U.S. Dollar

The United States currently has what is referred to as a strong dollar. At the close of 2014, it was trading at its highest since 2009. Because it is strong against several major world currencies at a time when the country is still recovering from an unstable economy, the sudden rise in value took many people by surprise. Gas prices dropped significantly all across America during the first few weeks of 2015. This was the result of increased purchasing power. The dollar’s higher value meant being able to buy certain commodities for much cheaper than it could when the dollar was weak.

What contributed to the Rise of the U.S. Dollar?

Several factors explain the rise of the dollar’s strength. Unemployment is decreasing, retail sales are increasing, and more economic growth is expected. The return to normal interest rates by the Federal Reserve is also being pointed to as another major reason that explains why the U.S. dollar is regaining strength. As the American jobs market continues recovering, interest rates are expected to continue rising throughout 2015. Because the measure of dollar value is relative, another reason for the increased value is that other countries’ currencies have weakened. If the American economy continues improving, the dollar’s value is likely to keep gaining strength.

What Are the Upsides and Downsides of a Strong Dollar?

One benefit of having a strong dollar is that the price of certain highly desirable commodities drop. Oil prices in the United States tend to drop, sometimes quite significantly, when the dollar gains strength. This translates to lower prices at the gas pump. For people involved in Forex trading on the foreign exchange market, the upside of a strong dollar is being able to buy foreign currencies at a much more favorable rate than normal. However, there are plenty of downsides. One is that federal interest rates are likely to rise even more. Another downside is that companies that do a great deal of business in foreign markets are likely to be negatively affected. Their sales are likely to drop. Even if those companies’ sales continue at normal rates, their profits will still be lower. Weaker currencies can help a country regain balance after periods economic instability. Since the U.S. is still in the midst of a rebounding economy, not everyone is expecting the return of strong currency to be without its problems.

Posted in Economy |

The Affordable Care Act and Your Tax Return

The Affordable Care Act, known by many simply as Obamacare, is the new healthcare law that requires individuals to purchase health insurance on their own if they do not have insurance provided by an employer. Americans without employer-based insurance may qualify for tax credits that offset the costs of complying with this law. If you did not claim your credit in order to get reduced monthly premiums, you may receive a tax refund for any amount you did not already use. Alternatively, if you did not have health insurance for most of the year, you could face a penalty at tax time.

How the Affordable Care Act Affects Tax Refunds

The Affordable Care Act can affect your tax refund in two ways. People who opted not to get insurance at all may face a tax penalty. You might pay a reduced penalty if you were uninsured for only part of the year. The amount owed will depend on your income and the number of uninsured people in the household. This will be taken out of any tax refund that may be due.

If you had health insurance for at least 10 months of the year, you will not have to pay a penalty. You might actually receive a larger tax refund if you did not take advantage of reduced monthly premiums. If you chose not to claim the tax credit at the time you applied for insurance, you still might be able to claim this refundable credit on your tax return. The amount of the credit will depend on your income, your household size, and the cost of your marketplace premiums. If you did not get health insurance through the marketplace, your premiums may not qualify for the credit since only certain plans are available through the program.

Filing Taxes with the Affordable Care Act in Mind

Because the health tax credit can be used to pay for some out-of-pocket expenses in addition to deductibles, be sure to have all your financial information that relates to these health care costs with you when you file your tax return. You will need to know which health care plan you have and how much the premiums cost. You may also need information about your copayments and coinsurance.

If you file taxes yourself, most online tax programs will guide you through the process of reporting these costs and determining whether you qualify for the tax credit.
If your tax credit was paid directly to your insurance company to lower your monthly premiums, you likely received your total credit throughout the year. However, if you did not use the full amount you qualified for over the course of the year you might receive a partial refund to make up the difference.

The Affordable Care Act has created a few additional steps when filing taxes, so be sure you provide all related information accurately so that you can receive the full credit you might be due or pay the penalty you owe.

Posted in Tax Law |

2015 Tax Law Changes

Tax laws and regulations change from year-to-year. Learning what new tax laws have been created or what former ones have been revised is important for accurate tax returns. Here are five changes to tax regulations for 2015:

  1. IRA Limitation Rollovers
  2. In 2015, the maximum contribution that taxpayers will be able to make to a 401(k), 403(b) and 457 plan, as well as to the federal government’s Thrift Savings Plan, is $18,000. There’ll also be an increase of $6,000 on catch-up contributions for employees age 50 and older. Therefore, the limit will be capped at $24,000 for workers 50 and above.

  3. Roth IRA Contributions Higher Income Limits
  4. There’ll be an increase in how much you can contribute to your Roth IRA in 2015. It will be increased by $2,000 and will affect those with incomes of $116,000 or more but less than $131,000 for individuals ($183,000 or more but less than $193,000 for married partners). If you have both a traditional and a Roth IRA, the maximum contribution that you can make for both accounts is capped at $5,500 (or $6,500 if you’re 50 or older).

  5. IRA Contributors’ Higher Limits
  6. The maximum contribution for an IRA in 2015 for taxpayers under the age of 50 stays at $5,500. If you’re 50 and older, though, you can make an additional catch-up contribution of $1,000 for a total of $6,500. For people who aren’t employed and are on their spouse’s retirement plan, the tax deduction for their IRA contribution will not apply if they are listed as having a joint income of more than $183,000 but less than $193,000 in 2015.

  7. Higher Employer Plan Contribution Limits
  8. The new tax law will restrict you to only one IRA-to-IRA rollover within the year. It’ll also affect the limits on your contribution to the retirement plan you have through your employer. A second one would incur income tax on the rollover, an excess-contributions tax of 6% per year, and a 10% penalty for withdrawing early for as long as that rollover shows up in your IRA. This limits how you distribute all or part of your account to move it into a new IRA. There haven’t been any limitation changes made to trustee-to-trustee transfers between IRAs. There are also no limits on how many conversions you may make from traditional IRAs to Roth IRAs.

  9. Health Expense Accounts
  10. In 2015, changes are planned for how and when you can use your health flexible spending account, or FSA. Before, if you hadn’t used $500 of your FSA, you were able to roll that amount over to be used in the next plan year without restrictions. Now, if you contribute to your FSA in the year 2015, and at the end of 2014 you have a balance in your account and wish to carry over $500 of that balance into 2015, you’ll be considered ineligible to participate in a health expense account. This is a restriction that will be imposed in 2015, but that does not include FSAs that are used specifically for dental or dependent care.

Make sure you understand the restrictions and regulations regarding all of these changes to the tax laws for 2015, before making any financial moves.

Posted in Tax Law |

The If and the When of a Federal Reserve Interest Rate Hike

A great deal of speculation in both the media and the financial industry generally has centered on if and when the Federal Reserve Bank will raise interest rates. Speculation about this issue intensified after a meeting of the Federal Open Market Committee in mid-December 2014. The Federal Open Market Committee is involved in the process of determining Federal Reserve Bank interest rates.

Statement of Fed Chair Janet Yellen on Interest Rate Hike

Following the Federal Open Market Committee meeting, Fed Chair Janet Yellen was compelled to issue a statement addressing speculation regarding when (or even if) interest rates would rise. In her statement, the Fed Chair refused to provide a date certain when interest rates would rise.

The closest the Fed Chair came to making a prediction about when interest rates would climb over the nearly zero percent mark was to note that the issue would be revisited after “a couple” Federal Reserve Board meetings in 2015. When pressed for a more definitive estimate of when interest rates might increase, Yellen clarified only that the issue would be revisited after a couple Board meetings in 2015 and that “couple” means “two.”

When Interest Rates Might Increase

On news of the delay in any potential increase in Fed interest rates, the stock market rallied. Indeed, the New York Stock Exchange rallied to record levels. Thus, in the final analysis, the decision to notch up Fed interest rates will be guided by the overall health of the U.S. economy. The state of the stock market as well as the real estate market represent two of the indicators that are used by the Fed in evaluating the needs for maintaining a virtually zeroed out interest rate.

If the current economic trajectory continues through the first quarter of 2015, at least a minimal increase in Federal Reserve interest rates might be expected in the second quarter of the year. With that said, the economy remains at least somewhat unsteady and no one, including the Fed Chair, is making any hard and fast prediction regarding when (or even if) Fed interest rates will increase during 2015.

Changes Associated with Interest Rates to Date

The Federal Reserve slashed interest rates to virtually zero percent at the peak of the “Great Recession,” in December 2008. Despite some discussion to increase interest rates since that point in time, the Fed has not raised them in an effort to stimulate the economy and aid in recovery from the Great Recession that commenced in 2008.

In addition to chopping interest rates to virtually nothing, the Fed also started what is called the quantitative easing program, or QE. In fact, the Fed ultimately embarked on three quantitative easing programs, aptly named QE I, QE II and QE III. The Fed brought quantitative easing to an end in October, 2008. The Federal Reserve Board concluded that the economy has stabilized to the point that this added infusion of money was no longer necessary. However, the decision was also made to keep interest rates essentially zeroed out into the foreseeable future.

Quantitative easing involves the Federal Reserve purchasing bonds as a means of pumping more money into the economy. Through all three quantitative easing programs, the Fed pumped approximately $4.5 trillion into the U.S. economy. Economists generally credit the slashing of Federal Reserve interest rates and the central bank’s QE programs as the primary reasons why the U.S. economy has rebounded to the extent that it has thus far.

Posted in Economy |

Spain’s Google Tax

Google shut down its Google News page in Spain on December 16 in response to a Spanish law that requires news aggregation sites to pay publishers for posted links to content. Instead of its usual news compilation, the Google News page in Spain displayed a message on Tuesday morning stating, “We’re incredibly sad to announce that, due to recent changes in Spanish law, we have removed Spanish publishers from Google News and closed Google News in Spain.” Google also indicated that it will remove Spanish publishers from all of its international news editions. The company runs over 70 international news sites in 35 languages.

What Spain’s “Google Tax” law requires

Earlier this year, the Spanish government passed an intellectual property law that requires Internet news compilers that post links and excerpts of news articles to pay a fee to the Association of Editors of Spanish Dailies, an organization that represents Spanish newspapers. Set to take effect in January 2015, the law is popularly known as the “Google tax.” The terms of the law provide that news aggregation services that fail to pay the fees as required can incur a fine of up to 600,000 euros, which is approximately $750,000 US. The law does not allow publishers to opt out of its terms nor offer their news content for free. Beyond the “Google tax,” Spain’s new law will also require websites to delete links to material that infringes upon copyright, whether or not the posting sites make monetary profits from the infringing links. Associated sites that provide hosting or payment processing services to copyright-infringing sites will also be subject to the law.

Uncertain legal details

The new Spanish law does not specify how much news aggregation sites must pay for content that they post. This will be decided in additional proceedings during the coming year in which the government and affected parties will take part. The law’s terms also do not definitively prescribe which types of article-linking sites would be subject to the fee requirements, leaving operators of social media sites questioning whether and to what extent the law applies to them. While Spain’s ministry of culture has stated that social media and their users would be exempt from paying the fee required by the new legislation, the law’s impact on social media sites with user-driven aggregation is currently uncertain.

Viewpoints for and against the law

As the Google shutdown loomed last week, the media publishers in Spain who lobbied for the passage of the law maintained their position that news content providers must be given fair compensation for their material when it is used by other parties. On the other side of the viewpoint divide, Google expressed the reasoning behind its Google News closure in Spain. Richard Gringras, the head of Google News, wrote in a recent blog post that because “Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable.” Google and other critics of the law have also noted that news aggregation services provide a benefit by sending traffic to websites with linked content. The Google News shutdown in Spain seems to foreshadow further developments in this new zone of legal debate sparked by this new law.

Posted in Tax Law |

The Drop in Black Friday Spending

Why The Drop in Black Friday Spending This Year?

The Black Friday decline can be attributed to the economy improving and the changing shopping habits of consumers. According to the National Retail Federation (NRF) statistics there was an 11% drop in Black Friday spending in 2014. A survey conducted by the NRF for the Thanksgiving weekend indicated that 55.1% of holiday shoppers were expected to visit stores or shop online over the Thanksgiving weekend. Those numbers are down from last year’s 58.7%. The survey reports that the average Black Friday weekend shopper was expected to spend $380.95, down 6.4% from $407.02 last year. Total spending was expected to reach $50.9 million, down from 2013’s estimate of $54.4 billion.

What caused the drop?

There are several reasons for the decline in shoppers and spending this year. Proper Insight and Analytics surveyed 4,631 consumers (with a margin of error of 1.5%). Their data showed that large retailers added new commercial shopping holidays, such as Gray Thursday, Small Business Saturday, and Cyber Monday, making it possible for shoppers to have more days to shop the holiday sales. This pulled some of the shopping crowds away from Black Friday.

A large percentage of shoppers surveyed said they specifically wanted to shop “Small Business Saturday” (with some cities calling this “Small Boxes Saturday”), a trend with consumers to spend their money in small businesses and to shop local. This pulled numbers and money away from the big box stores.

The decline in Black Friday shopping is the second annual drop in a row. This decline can be attributed, in part, to retailers changing-up the pre-holiday sales days. Target Corporation began its Black Friday sales on November 10th. Wal-Mart Stores, Inc. began its holiday promotions on November 1st. Shoppers now have multiple days to shop for the holidays. Black Friday has morphed into several consumer sale days and shoppers don’t have to miss out by not shopping on Black Friday, according to Elissa Margols, senior vice-president of Disney Store North America at Walt Disney Co. The company has 200 stores in the USA and began promoting online and in-store sales the Monday before Thanksgiving.

Brick-and-mortar retailers increased Web deals with promotions that included free shipping, price-matching online rivals (Such as Inc.) and rolling sales.

Retail trade goups said the number of people shopping over the four day weekend declined 5.2% from last year to 134 million. They suggest that even with improvements in the economy, decreasing joblessness, a rebounding housing market, and two quarters of strong economic growth, many consumers are being cautious and thrifty five years after the recession. Consumers are researching their purchases on the Web for best prices and have limited their impulse buying.

Loss of Enthusiasm

“The Thrill is Gone” for Black Friday shopping according to the Wall Street Journal. Data for Thanksgiving Thursday through Sunday for holiday shopping over the past 8 years was collected by the National Retail Federation. Statistics show that the average amount each shopper spent online in total on this weekend from 2006 to 2014 has declined each year from 2012 to 2014. However, 2009 was year of the lowest point in money spent by consumers. That was the height of the recession. There was a steady rise in sales from 2009 to 2012 until 2014 became the new low point.

Posted in Economy |

Economic Impact of the Immigration Reform

President Barack Obama has announced that he intends to take executive action to address a segment of the population of individuals that are in the United States illegally. The President’s plan is expected to impact approximately of 5 million of the estimated 11 million individuals who are present in the United States unlawfully.

The President’s Plan on Immigration

At the heart of the President’s immigration plan is to grant a reprieve to individuals who have been in the United States at least five years without legal authority. These people must have children who are citizens of the United States. In other words, while in the United States, these individuals have become the parents of children born in the country. In the alternative, these individuals can be parents of children who are illegal residents in the country as well. In other words, the heart of this initiative proposed by the President is to permit people illegally in the United States the ability to remain in the country without fear of deportation if they also have children in the United States.

If a person meets these basic requirements, he or she can then apply for relief. As part of the application process, a criminal background check is run. The individual must pass that background check in order to qualify to remain in the country.

Once the application process is completed, and the individual registers, he or she is able to remain in the country temporarily. As of this juncture, there is no precise time frame regarding how long an individual who qualifies and registers can remain in the United States. The reality is that Congress is able to pass legislation overturning the President’s initiative. The initiative is likely to be challenged in court for its constitutionality. In addition, a new President can reverse this initiative by Obama.

Potential Impact on Unemployment in the United States

There is a considerable amount of debate surrounding the impact the President’s immigrant initiative will have on the issue of unemployment in the United States. Some economists and others contend that it will cause an increase in the unemployment rate. They maintain that granting upwards of 5 million adults legal permission to me in the country will cause what may end up being a marked increase in the unemployment rate.

Not all economists and other analysts are in agreement with the idea that the President’s plan will increase unemployment. These individuals maintain that the bulk of the individuals likely to be impacted by the President’s plan are already working, albeit in a more closeted fashion. They argue that the initiative will have no appreciable impact on the U.S. unemployment rate.

Potential Impact on Average Wages in the United States

There is a concern that the President’s initiative may result in a negative impact on average wages in the United States. In other words, there is an argument being made that permitting upwards to 5 million foreign nationals the ability to work legally in the United States may result in employers engaging their services at rates of pay lower than what they might have otherwise offered. The theory is that these individuals will be willing to work for a lower rate of compensation when their status is legalized, causing an overall drop in average wages in the United States.

Posted in Economy |

What is Common Law?

The Influence of Common Law

In the American court system, common law is also referred to as case law or precedent. It is a type of law that has been developed by using court decisions handed down by judges. This is very different than statutory law. This law is created by legislative bodies contained within a government or action from an executive branch.


Common law is the legal system that originated in England. It was adopted in the United States by the colonies. The phrase “common law” started being used during the 1100s. It was a legal system developed during the rule of Henry II of England. This was a time when law was based on cultural systems. Resolving disputes often involved local customs. The early English tribes all had their distinctive customs. Once the tribes came together and became organized, they needed to develop a common system of resolving disputes. At this time, it was essential a decision-maker view previous cases and how they had been decided. These legal decisions were used to establish legal traditions and guidelines. Some are still followed today.


Common law is designed to bind future decisions to previously decided cases. Opposing parties often disagree which law applies to their case. A common law court would search past precedential decisions from similar courts for an answer. If a dispute has been previously resolved, the court is required to follow the reasoning used in the past case. The Latin term for this is asstare decisis. Should a judge determine the case they are addressing is different from all previous cases, they have the authority and obligation to create new law by making a new precedent. This decision will then become precedent and bind future court decisions.


When common law is practiced in its pure form, it becomes very complicated. One of the problems is that decisions are only binding in a specific jurisdiction. Within each jurisdiction are courts with different levels of authority. In most jurisdictions, the decisions of an appellate court are followed by lower courts in only their jurisdiction. Decisions based on the same set of case facts could provide a different result in a different jurisdiction.

Common Law Benefits

The wording of legislation is often written in very broad terms. Laws provide only the most general type of instruction on how to follow them. Common law provides a way for a court to carefully examine the specific facts of each case. The facts can be more accurately interpreted. This makes it easier to administer a law more in line with the intended result.


The court system and judges should not be influenced by politics. Common law makes it possible for a court to implement important legal reforms. These reforms may not be possible with legislators who are concerned with reelection. The courts are able to provide essential precedent without considering how it will impact of an election.

Legal Change

Common law is a way to provide legislative statutes when no legislative statute authority exists. When there is a need for adapting laws to meet a new situation, common law makes it possible. Changing or creating a new law with the legislative process takes time and will be influenced by politics. Initiating a precedent can provide an opportunity to address a legal situation so essential legislation can follow it. Common law is able to quickly address important changes in society.

Posted in General Law |

The Falling Gas Price

Everyone is enjoying the break in high prices at the gas pump. The questions on the minds of every consumer are why did the prices drop so fast and how long will it last? Prices are expected to fall an additional 10 to 15 cents per gallon before leveling off. Does this mean that it will begin the steady rise in price again? That is not necessarily how this will play out. The reasons behind the dramatic drop in price might signal a steady lowered rate, at least for the foreseeable future.

Why Gas Prices Dropped

Typically the price at the gas pump tends to jump when there is political unrest and civil wars going on in areas that produce large oil supplies. This is because the price of each barrel of oil tends to skyrocket due to disruptions in pumping or transport, but this has not been the case this time around.

The pain experienced of $4.00 and $5.00 per gallon gas prices in recent months has really driven down demand for petroleum based fuels. People have found a way to dramatically reduce the amount used. Domestic oil production by methods such as fracking has also had a large impact on availability. More oil at cheaper rates equals lower gas prices.

How Long Will Prices Stay Low?

The very nature of the price drop could signal a long-term comfortable rate, but it is somewhat dependent on people remaining firm in gas conservation modes of thinking. If the demand begins to spike it could start to climb in price again. If domestic oil production remains at current levels, or increases the prices could settle at the $3.50 per gallon mark nationwide for a long time to come.

Impact of Lower Gas Prices on the Economy

There have some economists that warn that constant lower prices will adversely affect the economy in areas that are oil dependent, but this is not necessarily the case. That might have been a concern in the past when there was more dependency on foreign oil resources, but the increase in domestic production means job security for those in the oil and gas industry. Unless there is an interruption in supply then the current levels of demand will keep the industry strong.

A lowered price in gas also means that people can get out and travel more to visit friends, family and take vacations that have been shelved since record high prices hit the market. That means more people will be on the roads shopping, eating in restaurants and staying at hotels. It could mean a definite surge in the economy that has not been seen in a few years.

Impact of Lower Gas Prices on the Environment

The lower prices may not mean the best outlook for the environment. Global warming concerns have never been more at the forefront of the public eye. At a time when carbon emissions could not have a more detrimental effect on the environment the cost of driving is going down. This means more petroleum products will be used and could add to the existing problem.

The price of gas at the pump may not get much lower than they are now, but the welcome break could not come at a better time. Maybe it is time to make plans to see everyone you have not been able to afford to see in a long time.

Posted in Economy |

Different Types of Business Contracts

Legal agreements, called contracts, are essential for successful business relationships. Contracts help to provide clear parameters for fulfillment of required work or other actions. They also offer protections for both parties if unusual circumstances should arise. Entrepreneurs should educate themselves on the features of common business contracts and engage a business attorney, when necessary, to ensure their legal interests are properly protected when they enter into contracts.

Commercial Leases
Businesses frequently must enter into commercial lease agreements to provide a physical location for their enterprise. State laws generally dictate the terms of these leases, which often include the location and description of the premises, the amount of rent, terms of the lease, terms for renewal, capacity for parking, requirements for signage and security requirements.

Bills of Sale
Bills of sale are generally used to transfer legal ownership of property. These contracts may be used for equipment, vehicles, or other physical property. Bills of sale generally describe the property to be transferred, as well as the purchase price. This information can be important in proving whether merchandise has been delivered or the purchase price has been paid in full.

Nondisclosure Agreements
Nondisclosure agreements may be used for a variety of purposes. These agreements may protect proprietary information during quotation of jobs, during manufacture of parts or when joint ventures are being considered. Information covered by the non-disclosure agreement should be defined clearly to ensure proper compliance for all parties. Some exclusions may be provided in the agreement, such as for information provided by a third party not covered by an obligation of confidentiality, for information in the public domain and for information already disclosed before entering into the agreement.

Manufacturing Contracts
Some types of business may be required to enter into manufacturing contracts to produce various parts to another company. These contracts may include information about quality measures, delivery schedules and other requirements that are necessary for ensuring the proper execution of the contract. Penalties for failure to comply with the contract are also included.

Employment Agreements
High-level executives and key personnel of a company may be required to sign employment contracts when high salary levels and proprietary information may be at stake. Employment contracts generally define the terms of employment, compensation, final compensation at termination, restrictions on competition with the company and methods of having disputes arbitrated.

Government Contracts
Government contracts are often deemed to be highly desirable for business, because they often mean long-term work with clear requirements. However, government contracts may include stringent compliance criteria that can add significant expense to the job. Business owners that do business with the government should consult with an attorney who can help them decipher the often-confusing language of government contracts. They should also be fully aware of the consequences if they breach the contract.

Franchise Agreements
Franchise agreements to operate established brand name businesses can be very complicated and involve both federal and state laws. Any businessperson interested in engaging in a franchise agreement should consult with an attorney who is experienced in these agreements. Franchise contracts generally include requirements for using the, name, trademark or logo of the franchise; payment of fees to join the franchise; legal requirements for use of products, ingredients or other matters determined by the franchise; and the parameters of control over the individual business by the franchise. Because these requirements are often very restrictive, legal counsel is critical to the entrepreneur.

Posted in Business Contracts |

Job Market Looking Up for Americans

The economy is beginning to take a turn for the better, as more jobs open up and the general unemployment rate begins to go down. Here are some things that you can expect in the next few years.

Less Unemployment

The number of unemployed workers is trending downwards. The Bureau of Labor Statistics reports that, from 2013 to 2014, there were 25 states that had significant declines in their unemployment rates. Among these states were the popular worker hubs of California, New York, and Washington, DC. Surprisingly, South Carolina has had the largest decline in unemployment over the year. You can find more information on these statistics here:

An Uptick in Jobs

There is beginning to be a steady increase in the number of jobs. Some industries will do better than others in the next few years. Health care jobs are one area that will grow exponentially. As the country’s population increases, there will be a higher need for health care professionals. The health care sector remained largely untouched during the recession and it will continue to see an above average growth.

Another sector that should do well is the environmental sector. Green building and sustainable business topics have become popular, since consumers are demanding that businesses take more responsibility for protecting the Earth. And as the economy begins to pick up, more companies will be able to afford green specialists to make their businesses more eco-friendly. There will be more job opportunities for environmental consultants, scientists, and green building design specialists.

Although the construction industry has been doing poorly over the past several years, this is one industry where jobs should pick back up as the economy gets stronger. New construction projects will require more architects, engineers, construction workers, and contractors. Because these jobs have declined during the recession, many people have left this industry to look for greener pastures. This could create a shortage of construction-industry workers in the future, which means good job opportunities for people with the right skills.

Positions that Remain Open

Although there are more positions open, this does not mean that they will all be filled. One feature of the current job market is a mismatch between the skills of workers and the needs of employers. Many companies are willing to hold out for an employee that matches all of the company’s credentials and requirements. Although some positions receive a lot of applicants, there’s not always someone who’s actually qualified for the job. This means that some valuable positions stay open for months.

This means a few things for job seekers. First of all, skilled professionals who have backgrounds in popular fields are actually in a shortage. Workers who get degrees in these popular fields, such as business, healthcare administration, and finance, will have the pick of the litter in terms of jobs. Employers may even be willing to subsidize training for employees who meet most of the job requirements. It’s up to each applicant to market the skills they do have and position themselves in an in-demand field. Fortunately, the decreasing unemployment rate is making it easier for all types of professionals to find work that’s in line with their skills and interests.

Posted in Economy |

Profitability of Blogs and Web Videos

With billions of people flocking to the Internet for shopping, news, entertainment and communication, users have taken to the Web at an incredibly fast pace. This technological revolution has changed the way people work as well. Many Internet users have found ways to make money with their websites and create businesses of their own.

Making money with blogs and web videos

Websites who are successful have been creating a slew of great content that compels readers to come back every time they update their site. This type of content is valuable and useful to the reader of the site. It can be easily shared and distributed amongst a network of friends, family members and colleagues.

Readers of these successful websites tend to consume useful and entertaining content on a regular basis. By giving content away for free, the owner of the website is building an audience who digests and expects more content in the future. There is a relationship between the content consumer and the content creator that is strong and secure. This can quickly turn into a string of revenue if the website owner knows what to do.

Successful websites that begin collecting revenue tend to have advertisements on their site. They will also try to use affiliate links. The website owners may recommend specific services or products to their audience. When the reader buys the product, the website owner will receive a cut of the profits.

Website owners who monetize their business will also create their own products and services for their audience. Since the readers already know and trust the website owner, they are more likely to buy from them.

Making a sustainable business

Bloggers and website owners who make their living this way plan their strategy carefully. Creating a balance between free content and paid content, they give back to their readers generously before asking them to buy a product or service.

These creators pursue partnerships with businesses, and businesses ask to partner with them as well. From large to small corporations, the website owner takes their relationships with companies seriously. They tend to partner with companies their readers will like.

Website and blog owners who are successful will also go on to sell books, membership sites and high-end services. They may also be featured in blogs, magazine and television shows.

Websites that create revenue

With this business model, many websites have found a way to make the projects they’re passionate about into a lucrative company. Here are a couple of websites that made their hobbies into a business.

The blog “Oh Joy!” has made its own success with partnerships and products that celebrate color and artistry. Joy Cho is a graphic designer, author and blogger, and posts free content regularly on her blog and video channel.

Collaborating with companies, she creates products, recipes and party ideas for them. She sells items like bowls, serving plates and cake platters for celebrations. She has also written the books, “Blog, Inc.” and “Creative, Inc.”

Pemberley Digital is a digital media company. It produces popular web video series on their website like “Emma Approved” and “The Lizzie Bennet Diaries.” Allowing the videos to be free online, these videos have gained an incredible amount of attention from their avid fan bases.

Now both of these web series shows are featured on larger sites where fans can buy episodes of the series whenever they want. Pemberley Digital also gains money by selling merchandise affiliated with their web shows.

Posted in Business Transactions, Buying or Selling a Business |

What is the Carbon Tax?

What is a carbon tax?

A carbon tax is a tax based on the use of carbon fuels including coal, petroleum and natural gas that when burned gets released as carbon dioxide into the atmosphere. It’s a form of carbon pricing to counteract the effects of global warming triggered from the burning of fossil fuels. Renewable energy resources such as wind, sunlight, and hydropower do not convert to hydrocarbon and don’t harm the environment. Carbon dioxide is considered a greenhouse gas that gets trapped in the atmosphere and contributes to global warming.

A tax on these gases is used to discourage the use of nonrenewable fuel resources and is a tax effective means of reducing greenhouse gas emissions. Furthermore, it’s a regressive tax that may disproportionately affect low income groups. Numerous countries in the world have implemented a carbon tax on energy consuming products and motor vehicles; however, many large users of energy including the United States, Russia and China have not implemented a nationwide policy of carbon taxing.

In America

While there is no nationwide carbon tax in the United States, several states have implemented their own carbon tax policies including Colorado, California, and Maryland. Voters in Boulder, Colorado passed the first municipal carbon tax on carbon emissions in November 2006, which was implemented in residential utility bills. The goal was to reduce emissions and promote renewable energy resources. In May 2008, the San Francisco Bay Area passed a carbon tax on businesses that was 4.4 cents per ton of carbon dioxide emissions. In 2006, the whole state of California proposed a law for carbon tax emissions called AB-32 that has yet to be implemented. Finally, in May 2010, Montgomery county in Maryland passed a carbon tax law of $5 per ton of CO2 emissions.

Supporters of a Carbon Tax

There are several advantages to a carbon tax, but most importantly, it will lower the rate of greenhouse gas emissions released into the atmosphere. Imposing a carbon tax incentivizes individuals to find alternative energy resources and lower their energy consumption rate. Additionally, the use of a carbon tax incentivizes companies to research renewable energy resources because energy derived from fossil fuels becomes far too costly. Furthermore, the money raised from carbon taxes may be used for environmental initiatives such as planting more trees that will reduce CO2 emissions in the long run.

Opponents of a Carbon Tax

There are many opponents to carbon taxes who often cite that it’s difficult to measure the amount of carbon a company or individual produces and the amount of greenhouse gases released into the atmosphere from these emissions. Others believe that it’s difficult to calculate the environmental cost of these carbon emissions for future generations when all theories are still hypothetical.

Other problems include the high possibility of evasion of these taxes. Another criticism is the fairness of subjecting all countries equally to a carbon tax considering most developed countries are responsible for CO2 emissions and that income welfare is higher in developed than developing countries. Finally, without worldwide participation on carbon taxes, some countries are sure to free ride without contributing their fair share of carbon taxes.

In the End

Most of the scientific community agrees that the use of burning fossil fuels is altering the climate and may have serious impacts in future generations. While it’s impossible to accurately calculate the effects of climate change, a carbon tax may be a way to reduce the detrimental impact of greenhouse gas emissions and prevent future environmental disasters.

Posted in Taxation |