Category: Blog

Securing Jobs for Cabinet and Congress Members, Inspector Generals, and Apprentices – and Honoring Capitol Police Officer Eugene Goodman

3 min read

hr35, s35, hr447, hr23, hr22,To provide for an exception to a limitation against appointment of persons as Secretary of Defense within seven years of relief from active duty as a regular commissioned officer of the Armed Forces (HR 35) – Prior to passage of this bill, a former service member could not be appointed as Secretary of Defense until separation from active duty for at least seven years. This legislation allows someone to be appointed after only four years from active duty as a commissioned officer of a regular component of the Armed Forces. The bill was introduced by Rep. Adam Smith (D-WA) on Jan. 15, passed in the House and the Senate on Jan. 22 and signed into law by President Biden on Jan. 22.

Officer Eugene Goodman Congressional Gold Medal Act (S 35) – This act authorizes awarding the Congressional Gold Medal to Capitol Police Officer Eugene Goodman for his actions to protect the Senate chamber during the Capitol security breach on Jan. 6. It passed in the Senate amid a standing ovation. In addition to Officer Goodman’s recent promotion to acting deputy sergeant-at-arms for the Senate, this medal represents the highest honor Congress can bestow. The act was introduced by Sen. Chris Van Hollen (D-MD) on Jan. 22, and passed in the Senate on Feb. 12. The House is also considering plans to honor the officer.

National Apprenticeship Act of 2021 (HR 447) – This bill was introduced by Rep. Robert Scott (D-VA) on Jan. 25. The purpose of the legislation is to amend the 1937 National Apprenticeship Act to include youth apprenticeships, and for other purposes. The legislation authorizes the establishment of criteria for quality standards, apprenticeship agreements and acceptable uses for grant funds awarded under this act. The bill passed in the House on Feb. 5 and is currently in the Senate for consideration.

Inspector General Protection Act (HR 23) – This act requires the president to notify Congress any time an inspector general is placed on nonduty status, and to nominate a new inspector general within 210 days after a vacancy occurs. Otherwise, within 30 days after the end of that period, the president must explain to Congress the reasons why there is not yet a formal nomination, with a target date for making that nomination. The bill was introduced by Rep. Ted Lieu (D-CA) on Jan. 4. It passed in the House on Jan. 5 and is currently under consideration in the Senate.

Regarding consent to assemble outside the seat of government (H.Con.Res. 1) – In light of the disruption of Congressional duties due to the coronavirus, the House passed this concurrent resolution authorizing the Speaker of the House and the Majority Leader of the Senate to assemble the House and the Senate outside the District of Columbia whenever the public interest warrants it. Introduced by Rep. James McGovern (D-MA), this bill was both presented and passed in the House on Jan. 4. It is currently under consideration in the Senate.

Congressional Budget Justification Transparency Act of 2021 (HR 22) – This bill was introduced by Rep. Mike Quigley (D-IL) on Jan. 4 and passed in the House the next day. It would require federal agencies to make budget justification materials accessible to the public on a website managed by the Office of Management and Budget. Available information should include a list of the agencies that submit budget justification materials to Congress and the dates they were submitted, with links to the actual materials. This bill is currently under review in the Senate.

How to Budget During a Pandemic

4 min read

How to Budget During a PandemicRight now with everything that’s going on, navigating your finances might feel overwhelming. However, there are some strategies that will help you manage cash shortfalls. Mariel Beasley of Duke University’s Common Cents Lab offers ways to help you manage during these trying times.

Use Mental Accounting

Translated, this means prioritizing what’s most important and cutting back in those areas that aren’t. While pretty obvious, the finer point according to Beasley is this approach will help you stick to your spending plan by reminding you of your opportunity costs — i.e. what trade-offs you might be making with each purchase. For instance, you might not be able to buy that special something you’ve had your eye on, but you will be able to buy food. Here are the three buckets she recommends for your budget:

  1. Your Bills: Non-negotiable monthly bills like rent, mortgage, utilities, child care, car payment, insurance, phone, and internet.
  2. Weekly Expenses: These costs might vary, but they include groceries, gas, food delivery, and other miscellaneous expenses.
  3. Future Expenses: What’s leftover after you pay your bills and current expenses? Even if you think you don’t have much left, set aside this cash for an emergency fund or retirement savings in high-yield saving accounts like the American Express® High Yield, or Marcus account by Goldman Sachs. Alliant Credit Union even offers a 0.55 percent interest rate on savings accounts. By comparison, the national savings average is 0.05 percent APY. Make sure your money works as hard as it can.

Try Per-Spend vs. Per Month

Instead of budgeting $200 for groceries for the whole month, decide how many times you’ll go to the supermarket during the month (five times), then stick to a per trip budget ($40). You might not spend as much as you think you will. (Tip: Buy store brands, as they’re cheaper and just as good.) Whether you work a job that pays you regularly, you’re on unemployment or you’re living on Social Security, Beasley says that this will help you stretch your money longer between paychecks.

Think Ahead

This might seem like a no-brainer, but it bears repeating. Instead of waiting until you’re at a crisis point, act now to protect yourself. Here are some ways to do this:

  1. Identify Local Food Pantries. Feeding America is a nationwide network that helps you locate a food bank near you. Organizations such as churches and charities are also pitching in, offering everything from food donations to job search assistance. Government programs such as SNAP (food stamps) and Medicaid are options, as well as HEAP (heating your home), should you need something like this.
  2. Have a Plan for Your Rent/Mortgage. If you’re concerned about eviction, understand your rights as a tenant, and most importantly, stay in communication with your landlord. One solution is to get a roommate to share expenses. If you’re running behind on your mortgage, seek out help from your mortgage broker. One way to generate income is to rent out an extra room in your home. If you have family or friends who can help, reach out to them. While the latter might feel like a last resort, you could consider bartering: provide a service to them they might usually pay for like car washes, dog walking, or house cleaning in exchange for the financial help.
  3. Talk to Your Creditors. Contact your creditors to see if you can get a reduced interest rate on any of your payments. You also might ask for discounts and deferment options. Many card issuers are offering financial hardship assistance (waived late fees, flexibility with payments, even skipped payments) during the coronavirus pandemic.

The key to all this is slowing down and focusing on the basics – getting through each week and each day. While the pandemic might feel like it will never end, it will: it’s inevitable. Until then, these tactics can help you take control and stay afloat.

Sources

https://www.cnbc.com/select/how-to-budget-during-coronavirus/

https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts

Coronavirus: Credit Card Issuers Offer Financial Assistance (cnbc.com)

New Year-End Tax Provisions

5 min read

2020 2021 Tax Law ChangesIn late December, Congress passed the Consolidated Appropriations Act, which in addition to providing COVID-19 relief provisions also included many tax provisions and extenders. The Act contained many COVID-related tax provisions, as well as a slew of extenders ranging from one year to permanent. This article will focus on the miscellaneous tax and disaster relief provisions, which are more applicable to most taxpayers.

Miscellaneous Provisions

Charitable Contributions – For tax years 2020-2022, starting in 2020 non-itemizers can deduct $300 in charitable contributions, and starting in 2021 non-itemizer can deduct $600 for married couples filing jointly.

Full Business Meals Deduction – Typically, business meals are only 50 percent deductible; however, the new tax law provides for a 100 percent deduction for restaurant meal expenses incurred in 2021 and 2022.

Low-Income Housing Tax Credit – Starting in 2021, a 4 percent rate floor is established for calculating credits related to the acquisition of and bond-financed low-income housing developments.

Minimum Interest Rate for Certain Life Insurance Contracts – The bill ties the rates going forward for section 7702 fixed interest rates for life insurance contracts to benchmark interest rates that are periodically updated.

Minimum Age for Distributions – Certain qualified pensions can make distributions to workers who are 59½ or older and still working, with a special allowance for some construction and building trade workers, where the age is lowered to 55.

Modified Charitable Contribution Limits – An extension for one year through 2021 is given for CARES Act increased limits on deductible charitable contributions for corporations and taxpayers who itemize.

Disaster Relief

Disaster tax relief provisions are available for individuals and businesses in presidentially declared disaster areas on or after Jan. 1, 2020, up through 60 days after enactment.

Use of Retirement Funds – Residents of qualified disaster areas can take up to $100k in qualified distributions from retirement plans or IRAs, penalty-free. Taxpayers have up to three years to pay the distributions back without penalty.

Disaster Zone Employee Retention Credit – A tax credit of up to 40 percent of wages (capped at $6,000 per employee) is available to employers who are actively engaged in a trade or business in a qualified disaster zone.

Disaster Relief Contributions – Corporations are allowed qualified disaster relief contributions of up to 100 percent of their taxable income for 2020.

Tax Extenders

Aside from the miscellaneous and disaster relief provisions, the act extended numerous existing tax laws anywhere from one to five years or even permanently. Below is a list of the extended provisions. Due to the number of extender provisions, only a table is provided below.

One-Year Extensions

  • Sec. 25C 10% credit for qualified nonbusiness energy property.
  • Sec. 30B credit for qualified fuel cell motor vehicles.
  • Sec. 30C 30% credit for the cost of alternative (nonhydrogen) fuel vehicle refueling property.
  • Sec. 30D 10% credit for plug-in electric motorcycles and two-wheeled vehicles.
  • Sec. 35 health coverage tax credit.
  • Sec. 40(b)(6) credit for each gallon of qualified second-generation biofuel produced.
  • Sec. 45(e)(10)(A)(i) production credit for Indian coal facilities.
  • Sec. 45(d) credit for electricity produced from certain renewable resources.
  • Sec. 45A Indian employment credit.
  • Sec. 45L energy-efficient homes credit.
  • Sec. 45N mine rescue team training credit.
  • Sec. 163(h) treatment of qualified mortgage insurance premiums as qualified residence interest.
  • Sec. 168(e)(3)(A) three-year recovery period for racehorses two years old or younger.
  • Sec. 168(j)(9) accelerated depreciation for business property on Indian reservations.
  • Sec. 4121 Black Lung Disability Trust Fund increase in excise tax on coal.
  • Sec. 6426(c) excise tax credits for alternative fuels and
  • Sec. 6427(e) outlay payments for alternative fuels.
  • The American Samoa economic development credit (P.L. 109-432, as amended by P.L. 111-312).

Two-Year Extensions

  • Sec. 25D residential energy-efficient property credit (the bill also makes qualified biomass fuel property expenditures eligible for the credit).
  • Sec. 45Q carbon oxide sequestration credit (through 2025).
  • Sec. 48 energy investment tax credit for solar and residential energy-efficient property.

Five-Year Extensions

  • Sec. 45D new markets tax credit.
  • Sec. 45S employer credit for paid family and medical leave.
  • Sec. 51 work opportunity credit.
  • Sec. 108(a)(1)(E) gross income exclusion for discharge of indebtedness on a principal residence.
  • Sec. 127(c)(1)(B) exclusion for certain employer payments of student loans.
  • Sec. 168(e)(3)(C)(ii) seven-year recovery period for motorsports entertainment complexes.
  • Sec. 181 special expensing rules for certain film, television, and live theatrical productions.
  • Sec. 954(c)(6) lookthrough treatment of payments of dividends, interest, rents, and royalties received or accrued from related controlled foreign corporations under the foreign personal holding company rules.
  • Sec. 1391(d) empowerment zone designation.
  • Sec. 4611 Oil Spill Liability Trust Fund financing rate.
  • Sec. 1397A increased expensing under Sec. 179 and Sec. 1397B nonrecognition of gain on rollover of empowerment zone investments are both terminated for property placed in service in tax years beginning after Dec. 31, 2020.
  • The Sec. 1394 empowerment zone tax-exempt bonds and Sec. 1396 empowerment zone employment credit, which expire Dec. 31, 2020, were not extended.

Permanent Extensions

  • Sec. 213(f) reduction in medical expense deduction floor, which allows individuals to deduct unreimbursed medical expenses that exceed 7.5% of adjusted gross income instead of 10%.
  • Sec. 179D deduction for energy-efficient commercial buildings (the amount will be inflation-adjusted after 2020).
  • Sec. 139B gross income exclusion for certain benefits provided to volunteer firefighters and emergency medical responders.
  • Sec. 45G railroad track maintenance credit; however, the credit rate is reduced from 50% to 40%.

Conclusion

The Consolidated Appropriations Act passed in December 2020 not only extended many existing tax laws and instituted COVID-19 relief, but it also changes many typical tax laws (at least temporarily). Taxpayers should pay attention to these year-end tax law changes as they can significantly impact their tax situations.

Business Process Management Systems Provide Variety of Benefits to Owners

4 min read

BPMS - Business Process Management SystemsAll businesses have one thing in common, and that is processes. Business processes – whether direct or indirect – are crucial when it comes to providing products or services to customers.

Business process management (BPM) plays an important role in enhancing processes and offers numerous benefits to businesses. But imagine what greater benefits can be achieved if you choose to implement a technology product that supports your specific business process management.

Why BPM Software?

First, a little bit about BPM. Business process management was introduced to help accomplish workflow quickly and easily. Simply put, BPM enables users to design, model, implement, automate and analyze business processes of a company or an organization.

Some businesses have been doing things manually or with a number of different software applications. However, the invention of BPM software that came about with the technology evolution allows business processes to be digitized.

With the growing adoption of artificial intelligence, BPM systems are able to offer more. This is because analytics and data can be turned into actionable insights to offer optimized processes. Through machine learning, it is also easy to detect and learn patterns, organize unstructured data, and enhance the user experience with upgraded interfaces that allow voice commands and chatting.

All this is necessary due to high competition, the need to reduce costs, and the need to increase productivity.

Implementing BPM software helps a business design and analyze processes such as employee onboarding, account management, expense reporting, invoice management, customer requests, compliance management, project management, and much more.

Benefits of BPM Software

Apart from the obvious benefits, such as gaining a competitive edge, reducing costs, and improving business agility, BPM software also can provide:

  1. Business process modeling: a visual process design tool that enables you to create and test multiple processes and workflows within your business.
  2. Business rules engine: design business rules and conditions for each business process.
  3. Workflow management: design, test and implement advanced workflows by integrating team members, robust communication, other systems, and data.
  4. Overall visibility of business operations and performance: enhance process automation, allowing you to track how different processes function as well as how they are performing in real-time. This enables necessary improvements.
  5. KPI Monitoring and Measurement: easily monitor and track the performance of different processes.
  6. Integrations: combine various systems from different business domains (both internal and external).
  7. Collaboration: social collaboration software that facilitates effective communication within a company.
  8. Data Analytics: define metrics, get insights in real-time, and run reports on demand.
  9. Produce faster: due to high demands and competition, businesses are required to produce more and at a faster rate. Digitizing your business processes allows for more efficiency.
  10. Scale quickly and easily: as your business grows so do the tasks, causing your workflow to get complicated. A BPM system will help you make necessary adjustments to accommodate the growth.

Considerations Before Purchasing a BPMS

Before purchasing a BPMS because it is popular, it’s important to consider the following: first, define and analyze your business’ key processes. You should also consider your business goals, your budget, return on investment (ROI), future scalability, and deployment options whether on-site or software as a service.

A good BPM system should include a workflow, ease of use, ability to customize and collect data, regulatory compliance, and enhanced business agility.

Final Word

Business process management in any business is vital, and BPM systems are meant to make your business more efficient.

Some business owners might shy away from investing in these systems for fear of high costs. Luckily with cloud computing, you don’t need on-premise solutions – especially if you are a small business. You can choose from available software as a service option.

Businesses today have no option but to work with real-time data that will help in speed, agility, and innovation. This has been especially evident with the global COVID-19 pandemic that has affected many businesses, demanding they have systems in place to deal with unexpected situations.

How Firms Can Restore Balance Sheets to Better Health

4 min read

Covid 19 Restore Balance SheetsAccording to the World Bank Group, for businesses in emerging markets and developing economies, the bottom fourth percentile of the non-financial corporate (NFC) sector saw their balance sheets deteriorate. Looking at these businesses’ Interest Coverage Ratio, the average figure dropped to 0.06 from 0.35 between the fourth quarter of 2019 and in the midst of the coronavirus pandemic’s ongoing effects.

The ICR is a measure of a firm’s ability to repay their debt in accordance to existing obligations, whereby a higher ratio indicates a better ability to do so. This is calculated by dividing earnings before interest and taxes by Interest expense.

With businesses seeing losses of as much as three-quarters of revenue in a three-month timeframe, as McKinsey & Company explains, a “cash war room” needs to be established to address this liquidity crisis. McKinsey & Company wants companies to look at every possible way to improve their financial situation due to their experience with the COVID-19 pandemic.

Cash and Sales Collections

One of the first things McKinsey & Company recommends doing is evaluate current and future cash collections and sales collections. If there’s a large percent of overdue or chronically overdue invoices, shifting employees to collections may provide substantive positive cashflow. However, if a business’s working capital is insufficient, other aspects of the balance need to be addressed to increase business health.

Tackling Debt Obligations

Whether it’s used to maintain operations or for ongoing investments, debt can be a useful tool. However, if a company takes on too much debt and is hit by an unexpected event like the COVID-19 pandemic, severely reducing sales, debt can become a burden for the company. Along with increasing the level of risk for investors, if a company can’t reduce its debt load eventually, it could be forced to declare bankruptcy or default on loans.

However, there are a few things a business can do to tackle its debt. Publicly traded companies can offer more shares for sale. Businesses can contact their lenders to see if interest rates can be lowered, payments can be frozen or spread out over longer timeframes. Reducing staff levels or renegotiating leases on machines or real estate also can free up excess cash burn.

According to the Office of the Comptroller of the Currency, part of the U.S. Department of the Treasury, a March 2020 report titled “Small Business Road Map to Financial Resources” revealed that crowdfunding might be a good alternative to taking on additional loans. Whether a business owner or entrepreneur, they can exchange “token rewards” for donations from individuals without sacrificing any interest in their company’s ownership.

Improve the Balance Sheet’s Current Ratio

Another way to improve one’s balance sheet is to determine the company’s current ratio and make adjustments accordingly.

Looking at the formula, Current Ratio = Current Assets / Current Liabilities, businesses can get an answer quickly.

If the ratio is below 1, then there needs to be some attention paid to figuring out how to better pay debts needed to be paid within 12 months, or short-term liabilities, with current assets or assets convertible to cash within the same timeframe.

Use a sweep account, which is a bank account that transfers money not needed for day-to-day operations into a different, but easily accessible account that earns more interest. Other ways include reducing the need to rent additional space, using machines/cloud services less often, and dialing back labor/marketing.

Taking action, including these for balance sheet health, can increase the chance of business survival during the pandemic and beyond.

Sources

https://blogs.worldbank.org/allaboutfinance/covid-19-and-corporate-balance-sheet-vulnerabilities-emerging-markets

https://www.occ.treas.gov/topics/consumers-and-communities/minority-outreach/small-business-road-map-fin-march-2020.pdf

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-cfos-role-in-helping-companies-navigate-the-coronavirus-crisis

Protecting American Ports, Federal Buildings, Allies, Oceans, and Whistleblowers

3 min read

Congress protects WhistleblowersSave Our Seas 2.0 Act (S 1982) – This bill was introduced by Sen. Alan Sullivan (R-AK) on June 26, 2019. The purpose of the legislation is to improve efforts to clean up marine debris, encourage recycling and strengthen domestic infrastructure to prevent the creation of new marine debris. The bill passed in the Senate in January 2020, the House in December, and was signed into law by President Trump on Dec. 18, 2020.

Digital Coast Act (S 1069) – This bill revised the National Oceanic and Atmospheric Administration Digital Coast program for critical coastal management and data tracking for the ocean and the Great Lakes coasts. It was introduced by Sen. Tammy Baldwin (D-WI) on April 9, 2019, passed in both Houses, and was signed into law on Dec. 18, 2020.

Criminal Antitrust Anti-Retaliation Act of 2019 (S 2258) – This Act was introduced by Sen. Chuck Grassley (R-IA) on July 24, 2019. It is designed to prohibit employers from retaliating against employees who report criminal antitrust violations to the federal government. The bill authorizes an employee to seek relief by filing a complaint with the Department of Labor or a lawsuit in the US. district court if he believes he is discharged or otherwise discriminated against by his employer for reporting violations. The legislation passed in the Senate in October 2019, in the House in December 2020, and was signed into law on Dec. 23, 2020.

Consolidated Appropriations Act, 2021 [Including Coronavirus Stimulus & Relief] (HR 133) – With overwhelming bipartisan support, this legislation is the vehicle for both the government funding bill for 2021 and another phase of economic stimulus in response to the coronavirus pandemic. It is the fifth-longest bill to be passed by Congress in the history of the country. The Act was signed into law by President Trump on Dec. 27, 2020.

Secure Federal Leases from Espionage and Suspicious Entanglements (LEASE) Act (S 1869) – This bill requires disclosure of ownership of high-security space leased to a Federal agency, including whether that owner is a foreign person and the country associated with the entity. It was introduced by Sen. Gary Peters (D-MI) on June 13, 2019, passed in the Senate in March 2020, the House in November, and was signed into law by the president on Dec. 31, 2020.

Securing America’s Ports Act (HR 5273) – This Act requires the Secretary of Homeland Security to develop a plan to increase by 100 percent the rate of scanning commercial and passenger vehicles and freight rail entering the United States via land ports. The plan will utilize large-scale non-intrusive inspection systems, such as X-ray and gamma-ray imaging technology. This bill was introduced by Rep. Xochitl Torres Small (D-NM) on Nov. 26, 2019. It passed in the House in February 2020, the Senate in December, and was enacted on Jan. 5 by President Trump.

Eastern European Security Act (HR 2444) – This bill authorizes the president to offer low-cost loans to NATO Eastern European allies (formerly part of the Soviet Bloc that still rely on Russian military gear) in order to more easily purchase U.S. weapons and equipment. The goal is for them to invest in American defense innovation instead of Russian or Chinese hardware. The bill was introduced by Rep. Michael McCaul (R-TX) on May 1, 2019, passed in the House last March, and in the Senate on Jan. 1. It was one of the last pieces of major legislation passed by the 116th Congress and was signed into law by President Trump on Jan. 13.

While Many Suffer Financially, Some Manage to Profit off Pandemic

4 min read

Billionaires in CovidThe Federal Reserve recently reported that the 50 richest people in the United States increased their net worth by $339 billion during the first half of 2020. There are two primary contributors to this near-unprecedented level of growth. The first is that many either owned or were heavily invested in tech companies that thrived during the pandemic. Increased technology demands for remote work, online shopping, streaming entertainment, and socially-distanced socializing created a lucrative COVID-19 economy in some sectors.

Another reason is that the U.S. Treasury and Federal Reserve proactively infused the economy with stimulus capital. That helped mitigate long-term market disruption that might have otherwise occurred.

The short explanation of how to leverage assets for greater wealth during a pandemic is to be well-capitalized and invested in the stock market. To wit, over 88 percent of the equity in corporations and in mutual fund shares is owned by the wealthiest 10 percent of Americans. In other words, they’re not sitting on their cash; it is continually working for them.

In fact, nearly every tragedy has some form of silver lining investment opportunity. For example, hurricanes, floods, tornadoes, and earthquakes are good for the construction and contracting industries. The pandemic is interesting because it has large and almost exclusively benefited technology companies – in as much as they serve other industries.

The obvious pandemic winners are streaming services such as Amazon and Netflix, but also consider the proliferation of video conference technologies, online financial services, and telemedicine. All of these innovations existed before COVID-19, but it took a global pandemic for them to become mainstream services. Moreover, it is unlikely that their popularity will wane once the virus is contained. After all, we love convenience, and few things are more convenient than being able to conduct daily activities – such as work and doctor’s appointments – from the comfort of your own home.

But just as the coronavirus boosted fortunes in many market sectors, it depressed others, such as cruise lines, movie theaters, and airline stocks, as well as oil prices. Unless you have a crystal ball, it’s always a good idea to diversify your portfolio across a variety of asset classes and market sectors. That way losses in some investments are likely to be offset by gains in others.

In recent years, the wealthy also have benefited from generous tax breaks provided by the Tax Cut and Jobs Act. To diversify gains achieved during the pandemic, they may take advantage of provisions from this legislation, such as the conservation easement charitable deduction. This can be claimed when purchasing land with strong development potential and then donating it to a land trust or government agency. This might create a higher tax deduction based on the appraised value. A similar approach can be used with the Opportunity Zone tax break. This eliminates taxes on capital gains earned from long-term investments in businesses or developments in specific low-income areas of the country.

Rest assured, while vaccines will lead the way to recovery from the pandemic, other crises will follow – as will opportunities to make money on them. Some of them are even easy to predict. After all, the exacerbation of climate change is evident in the increase and severity of extreme weather events. This offers two avenues for an investment opportunity. The first is reactive, such as rebuilding what has been damaged or destroyed. The second is preventive, which means investing in renewable energy resources that reduce carbon emissions, such as solar, wind, hydro, tidal, geothermal, and biomass energy solutions.

It is important to recognize, however, that we can’t always predict what type of crisis will happen next. Therefore, it is inadvisable to try to time the market for investments, particularly when saving for a long-term goal such as retirement. Instead, consider aligning your assets with investments that help build a stronger society, such as sustainable energy, technology advances, and healthcare innovation.

The biggest takeaway here is that the key to crisis opportunism is to be well-capitalized with liquid assets that can repositioned quickly. It is no accident that economic declines are often most advantageous to the extremely wealthy. If you were able to save more money during the pandemic due to less opportunity to travel or spend on other indulgences, consider using this windfall to position your investment portfolio for crisis opportunism in the future.

Deciding if a Roth IRA Conversion is For You

2 min read

Deciding if a Roth IRA Conversion is For YouRoth IRAs can be a powerful tax tool, but they are often misunderstood and misused. Investment income in Roth IRAs compound tax-free and most distributions are tax-free as well. Another benefit is that there are no required minimum distributions (RMDs) throughout the original owner’s life. Long-term Roth distributions are tax-free to the beneficiaries who inherit the IRA as long as they fully distribute the Roth within 10 years of inheriting.

As the annual contribution limits are rather small, most Roth IRA contributions are made by converting a traditional IRA to a Roth IRA. The downside to conversion is that you’ll have to pay tax on the gross amount converted. Considering this can require a substantial cash outlay and that all the Roth IRA benefits are backloaded, deciding to make a conversion can be a difficult call.

Most people aren’t sure it will pay off in the long term and don’t like the idea of paying taxes now instead of in the future. Consequently, too often people try to make a conversion decision through intuition instead of objectively considering the important factors.

It’s best to use a spreadsheet to do an analysis or work with a tax advisor because you will need to consider many factors, including assumptions about tax rates, investment returns, how long you’ll own the accounts, how much you will convert, etc.

Generally, a conversion becomes more advantageous if tax rates increase and this impact is compounded by higher investment returns. Finally, remember that you can leave the Roth to your heirs who can take distributions tax-free.

Roth IRA conversions are not the right option for everyone, but where it’s appropriate the benefits can be substantial.

Paying the Price for Vice: The Evolving Landscape of Excise Taxes in America

4 min read

Excise Taxes in AmericaWhile excise or vice taxes have long been a part of the American tax landscape related to alcohol and cigarettes, the recent invention of vaping and legalization of marijuana and other substances is changing the landscape.

What Are Excise Taxes?

Excise taxes are taxes on specific types of consumable products such as alcohol or tobacco for one of two reasons. First, as vice taxes in order to raise revenue to cover the costs related to consumption; and second, to deter consumption itself. Unlike other types of consumption taxes such as sales tax, these are specific to certain products.

Do They Change Behavior?

Theoretically, when you increase the price of a product such as alcohol through the addition of excise taxes, demand should go down. While this may be a deterrent and limit demand, excise taxes certainly haven’t proven to be a feasible way to eliminate behaviors. A pack of cigarettes can cost upward of $15 in major cities, but there are still people smoking. It’s a similar situation with drinking and gambling.

It’s All About the Benjamins

While we think of excise taxes as vice taxes today in many respects, the main point isn’t to change behavior – it is to raise revenue. Excise taxes pre-date the United States and were one of the main forms of government funding in America before income tax was created. Alcohol taxation goes back to George Washington’s presidency and incited the infamous Whiskey Rebellions. Cigarette taxes were introduced as a way to pay for the Civil War. In the end, it’s about the money generated as there are easier and more effective ways to regulate behavior.

New Products Equal New Taxes

The legalization of marijuana by states raises the issue of excise taxes on this product. Unlike tobacco, where one of the goals is to decrease consumption, the situation here is more one of legalizing something to raise consumption and generate revenue as a result.

Marijuana taxation is more akin to alcohol in the years following prohibition. In both cases, you have large-scale illegal operations and illicit consumption with the aim of moving them to legitimate status. In this sense, it’s different than other vice taxes. 

Initially, at least, the authorized market will have to operate in parallel with the black market for the same product, limiting the amount of taxes that can be raised when there is still an unregulated and untaxed alternative.

Beyond Marijuana

Aside from marijuana, there are other new products that could be taxed and generate revenue, the most notable being vapor products. While vaping products are not really that new, the market is just growing to a substantial size.

Taxing vaping products is more complicated and problematic. Some consider these products to be just as harmful as cigarettes, while others not so much. There is evidence that nicotine consumed via vaping is less harmful than through smoking cigarettes.

Theoretically then, the government should apply less taxes as a result if the harm and therefore cost to society is less.  The problem with this is that less revenue is raised. As noted before, we come back to the issue that vice taxes are often revenue-raising tools disguised as public safety measures.

Too Successful For Its Own Good

Vice taxes can be too successful, with tobacco as the best example. While people may stop buying cigarettes, they don’t stop consuming cigarettes; instead, they buy them elsewhere.

For example, more than 50 percent of cigarettes consumed in New York are purchased out of state. If you push too far, people will react.

Conclusion

Excise and vice taxes are here to stay. While varying arguments can be made that they benefit society by shaping behaviors, it is undeniable that state, local and the federal government are addicted to the revenue generated.

Standalone 5G Networks: Potential Vulnerabilities that Could Result in Denial of Service for Customers

4 min read

Standalone 5G Networks5G networks promise high speeds, lower latency, and more robust security compared to its predecessors – and this has created a lot of buzz. As a result, there is a lot of competition among operators to roll out the network while manufacturers are already producing 5G devices.

The deployment of 5G around the world has also been facilitated by a need for always-connected computers, widespread internet of things (IoT), and dependence on smartphones. All of this is constraining the 4G LTE technology.

With the current uptake in remote working due to COVID-19, 5G is expected to see more deployment.

However, despite the promised benefits, there are varying concerns about the potential vulnerabilities of this network. Since there are various security concerns, this article will highlight those involving the standalone 5G networks.

What is 5G Standalone Network?

5G stands for the fifth generation of networks that are designed to address gaps and errors existing in the architecture of previous generation networks. However, its implementation is through a gradual phasing out of the existing networks.

Note that the 5G network involves two streams, which include the standalone (SA) and non-standalone (NSA). The NSA relies on the existing 4G infrastructure because 5G standards are not fully finalized.

On the other hand, the standalone is a completely new, end-to-end 5G network. To offer ultra-low latency and high capacities, service providers will have to fully implement the standalone 5G infrastructure.

Despite the radical and beneficial transformation promised by 5G networks, there are concerns that it might become a multidimensional cyberattack vulnerability.

Vulnerabilities for Subscribers and Mobile Network Operators

Unlike previous networks, 5G is a software-defined network and involves network function virtualization, which makes it more vulnerable.

The previous networks implement hardware choke points because they are centralized and hardware-based; whereas 5G digital routing lacks inspection and control chokepoints.

This new architecture has seen various research carried out to check its viability. As a result, industry professionals and government officials have already raised concern over the network’s security and overall architecture.

An investigation by global cybersecurity firm Positive Technologies focused on 5G standalone core in terms of its architecture security, the interaction of network elements, as well as subscriber authentication and registration procedures.

The examination revealed that “the stack of technologies in 5G potentially leaves the door open to attacks on subscribers and the operator’s network. Such attacks can be performed from the international roaming network, the operator’s network, or partner networks that provide access to services.”

The vulnerabilities were discovered in two protocols that are, PFCP and HTTP/2, which are used in 5G standalone networks.

Exploitation in Packet Forwarding Control Protocol (PFCP) would result in denial of service. This is because the PFCP is used to manage subscriber connections. A PFCP session includes three procedures: session establishment, modification, and deletion. It’s at this point that denial of service can be carried out by attackers through a session deletion request, a session modification request, or redirection of data through a session modification request.

For the HTTP/2, the Positive Technologies research found that an attacker could obtain the network functions profile and impersonate any network service. This is because the HTTP/2 protocol is responsible for vital network functions that register and store profiles on 5G networks. The attacker then would have access to authentication status, current location, and subscriber settings for network access. It’s also possible that an attacker would be able to delete NF profiles, which could result in a financial loss as well as damage subscriber trust.

If not handled correctly, the 5G standalone network security issues will place critical infrastructures such as hospitals, transport, and utilities at risk.

Solution and Conclusion

According to the report, the vulnerabilities would appear due to misconfigurations. With vendors competing to launch 5G networks, attackers will take advantage of poor configurations.

Therefore, it calls for proper configuration of the architecture to stop these types of attacks. Unfortunately, errors still might occur. To detect configuration errors in the networks, regular security audits should be performed.

It’s also vital that apart from ensuring proper equipment configuration, security monitoring, and enhancing the implementation of firewalls are also top priorities.

In conclusion, 5G’s high speeds, low latency, and high bandwidth will be highly beneficial. However, potential security holes could cost more than the cost of implementing this technology. As a business owner considering the 5G network, do not let your guard down just because the new network promises to address gaps and errors in previous generation networks.