Congress Passes First Joint Budget Agreement in 6 Years

For the first time since 2009, Congress is in agreement on its fiduciary goals for the country. This month, the Senate passed a budget agreement, the first joint budget resolution to be passed in six years.

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The proposal passed 226-197 in the House of Representatives and 51-48 in the Senate. All Democrats in the House and Senate voted against the agreement.

The proposal outlines deep cuts in domestic spending to eliminate the deficit within the next 10 years. It keeps in place the across-the-board spending cuts known as the sequester, but adds nearly $90 billion to a supplemental war fund that is not held to the budgetary curbs.

“No budget will ever be perfect, but this is a budget that sensibly addresses the concerns of many different members,” Senate Majority Leader, Mitch McConnell, said in a press conference.

There are, however, few indications these spending cuts will take hold in the immediate future. Budget resolutions are used as an outline to set spending levels on future separate appropriations bills.

President Barack Obama has said he will not sign any spending measures that keep the sequester in place. He has also said he wants to see equal increases in military and domestic spending.

White House press secretary John Earnest said the budget proposal would hurt middle-class families, which rely on the domestic programs Republicans hope to cut.

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“Congressional Republicans propose drastic cuts to programs that support the middle class and provide ladders of opportunity for those seeking to reach the middle class,” he said.

Also included in the budget was a procedural tool for passing bills known as reconciliation. This measure allows for legislation to pass through both chambers of Congress with a simple majority vote. Most bills will require 60 votes to overcome procedural challenges, and Republicans currently control 54 seats.

Republicans say they plan to use this tool to repeal parts of the Affordable Care Act, despite the Obama’s vow to veto any legislation intended to unravel or repeal the health care law.

2014 Ends With Strong Employment Numbers

The year 2015 begins with a rosier economic outlook for many Americans, with the unemployment rate shrinking and more jobs being added to small businesses.

As of December 2014, the unemployment rate in the U.S. has dropped to 5.6 percent, the lowest it has been since June 2008, according to the National Employment Monthly Update.

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About 252,000 jobs were created in December, above average for rest of the year, though 2014 still saw a great deal of growth.

Overall last year, the unemployment rate dropped by 1.1 percentage points, and about 1.7 million people became employed.

A similar picture is reflected in the numbers the payroll provider ADP reported in its National Employment Report, which is derived from actual, anonymous payroll data of clients the company serves.

According to ADP 241,000 jobs were added to the private sector, with the greatest increase being seen in small businesses with 1-49 employees.

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In total, small businesses added about 106,000 employees, an encouraging statistic as these businesses make such an important contribution to overall economic growth in the country.

Employment data for January 2015 will be released in early February, but if the previous year is any indication, Americans can look forward to a better economic climate in the coming year.

Overburdened IRS Expected to Reach Record Low Customer Service

For 2015, Federal taxpayers can look forward to the worst customer service from the Internal Revenue Service in at least 14 years, according to a recent report.

National Taxpayer Advocate Nina E. Wilson released her 2014 Annual Report to Congress yesterday, which seeks to create a dialogue about taxpayer’s problems, protecting their rights and easing their burden.

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Most notable in the report was Olson’s expressed concern for the level of service to taxpayers in the coming year.

The IRS is expected to answer as low as 43% of the calls it receives, with those that do get through to a representative waiting as long as 30 minutes.

It’s a significant backslide from 2004, when the IRS reached a pique in its customer service. During that time, the IRS answered 87% of calls and call wait times averaged about 2.5 minutes.

The drop in service is largely due to increased workload and changed budgetary environment, according to Olson.

The IRS is receiving 11% more returns from individuals, 18% more returns from businesses and 70% more telephone calls than even 10 years ago.

Adding to this and future years’ workload is the implementation of the Patient Protection and Affordable Care Act and the Foreign Account Tax Compliance Act.

The IRS’s budget has been reduced by about 17% since 2010. As a result, the IRS has already eliminated almost 12,000 employees and is expected to further reduce its workforce in the coming year.

Simply put, there’s more work to do, with less people to do it.

“Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” Olson wrote.

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What this means for both businesses and individuals is that filing assistance from the government will be in short supply, to say the least.

It also means business owners concerned with tax penalties as a result of the employer mandate in the Affordable Care Act can sleep a little easier. Implementing these new tax laws will be a monumental undertaking for the already overworked IRS.

It’s a task only made more cumbersome as the GOP-dominated Congress continues to move forward in changing the current law’s requirements.

Optimism Grows for Start-Ups

According to a recent survey, Americans were more optimistic about starting a business in 2013 than in any year since 2001.

Of 5,698 U.S. adults polled from April-June, 2013, 47% felt there were “good opportunities” for starting a new business (up from 43% in 2012, and 25% in 2006).

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Stephen Bronars, an economist in Washington, D.C., notes that people are more likely to launch businesses during stronger economic times because they have greater access to capital from a bank, investor or family members.

Unfortunately, the survey findings conflict with a report released in April, 2014, that showed a decline in the creation of new businesses in the U.S. The study was done by the Ewing Marion Kauffman Foundation, a Kansas City, Mo., advocacy group for entrepreneurship, and is based on data from the U.S. Census Bureau and the Labor Department. The findings conclude that only about 476,000 new U.S. businesses were started each month in 2013, down 7% from 2012 and 12% from 2011.

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According to David Neumark, professor of economics at the University of California, Irvine, “it can be very difficult to measure” when a business starts using census data and other government sources. Some people may not report income taxes because their new businesses aren’t yet making any money.

Another factor in survey responses is how respondents define a start-up. Some may not consider a business a true start-up until it begins making money.

Please read the article by Sarah E. Needleman in its entirety here.

Half of Employers Hiring More Employees Aged 50+ in 2014

According to a recent Career Builder Survey, 53% of employers plan to hire employees aged 50 and over in 2014 (up from 48% last year). Even though many of these workers are over-qualified, 77% of employers said they would hire them for entry level positions.

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The survey brings “good news for workers looking for a new job at the end of their career,” says Michael Erwin, a spokesperson for CareerBuilder. “In ongoing discussions with employers, we constantly hear that mature workers are good hires because of the intellectual capital that they bring to the team.” Less money has to be spent training mature workers and “they can act as mentors to the younger teammates. It makes good business sense to have a diverse workforce as companies continue to come out of the recession,” Erwin adds.

Although the recession caused many workers to delay retirement plans or forego them completely, 50% of those over the age of 60 said they would be able to retire within 4 years.  Women are more likely than men to delay retirement (71% of women vs 49% of men; 18% of women over 60 say they will never be able to retire, while only 7% of men said the same).

Reasons given for delaying retirement include:

  • financially can’t afford to (79%)
  • need the health insurance and benefits (61%)
  • like their job (49%)
  • enjoy where they work (46%)
  • afraid retirement will be boring (27%)

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The good news is that as retirement funds and the economy rebound, fewer people are delaying retirement than at the height of the recession. More people are finding they are able to retire without needing a part-time job, and if they are seeking work, they are more likely to be hired according the survey findings.

Please read the article written by Melissa Winn in its entirety here.