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Carl Icahn is from the mean streets of Queens

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atlantic city
Carl Icahn could keep another Atlantic City casino from going out of business, but he might back out of the deal because union workers won’t give up their healthcare plan.

The union can’t bully Carl Icahn. He’s from Queens!

Or that’s what he said, anyway, in an open letter to the Local 54 union, which represents casino workers in Atlantic City, NJ, where four casinos have closed and 8,000 workers lost their jobs, just this year.

“I grew up on the streets of Queens,” wrote Icahn, one of the best-known activist investors. “I learned to fight bullies and that was great training because I later built my fortune fighting the establishment — mostly CEOs and boards that I felt were taking advantage of the shareholders.”

Icahn said he was going to invest $100 million in the Trump Taj Mahal, and save it from becoming the next casino to go out of business.

However, he said he would do it only if the union agreed to give up health care benefits.

So far, the union has refused.

Icahn said he would pay each worker an extra $2,000 and they would be eligible for Obamacare or Medicaid.

(Though Icahn refers to it as the Trump Taj Mahal, the casino doesn’t carry Donald Trump’s name any more.)

Related: The Donald tears his name from Trump Taj Mahal

Icahn said the union is stalling the deal.

“The Taj Mahal is quickly running out of money and will almost certainly close,” he wrote. “Reprehensibly, the union, instead of working with … the company to keep the Taj Mahal alive, is instead doing everything to destroy the possibility of saving the jobs of almost 3,000 employees.”

The Taj Mahal casino is managed by Trump Entertainment Resorts, also is not owned by The Donald. The company also owned Trump Plaza Casino, also in Atlantic City, which went out of business.

Related: Macau trumps Vegas with hefty minimum bet

Icahn said the Taj Mahal was losing $7 million a month.

“I stated that my general rule is not to throw good money after bad,” Icahn said. However, if the company could get the concessions from the union, “I would consider doing my part,” he wrote.

The union was not immediately available for comment.

CNNMoney (New York) First published October 24, 2014: 10:40 AM ET

DACA students fear Arizona tuition ruling will force them to drop out of college

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My life with DACA: Preparing for deportation

Gilbert Olmos should be excited that he’s wrapping up his freshman year at South Mountain Community College and getting one step closer to his dream of becoming a registered nurse.

But instead he’s terrified his college education — and his dream — will come to an abrupt end.

Earlier this month, Arizona’s Supreme Court ruled that students who have gained legal status under the Deferred Action for Childhood Arrivals program can no longer receive breaks on tuition from the state’s colleges and universities. This means costs could almost triple for thousands of DACA status students in Arizona.

DACA has enabled nearly 689,000 young immigrants who were brought into the country as children to come out from the shadows and openly attend school and obtain work permits and driver’s licenses without the fear of being deported.

With his DACA status, Olmos qualified for in-state tuition. But just days after the ruling, he received an email from his school saying his tuition rate might change. In-state tuition is $86 per credit hour at Maricopa Community Colleges. Out-of-state it’s $327 per credit hour. For Olmos, this means his cost per semester will jump from a little more than $1,000 a semester to the out-of-state rate of more than $5,000.

“I fell apart as soon as I heard it,” said Olmos, 19, who is pursing an associate’s degree in applied science at South Mountain in Phoenix.

Related: Despite DACA uncertainty, Dreamers still determined to go to college

He was planning to get his associate’s degree, then transfer to University of Arizona for his bachelor’s before heading to nursing school.

“I’m a hard working student. I’ve been working retail jobs to pay my tuition myself,” said Olmos, whose parents brought him to the United States from Mexico when he was a year-and-a-half old. “Realistically, with the new rates I might not be able to afford college.”

gilbert olmos
Gilbert Olmos said he won’t be able to afford college because of the hike in tuition rates for DACA status college students in Arizona.

If he does have to drop out, Olmos has a temporary backup plan. He’s a certified phlebotomist, trained at drawing blood from patients. Olmos took the six-month course after graduating from high school.

“I would probably have to do this full-time until I figure things out with my education,” he said.

There are currently 2,000 DACA status students enrolled in the Maricopa Community Colleges network, which includes 10 colleges in the Phoenix area.

“Right now we are telling them their tuition might be impacted, but we’re not sure yet when it will go into effect,” said Matthew Hasson, a spokesman for Maricopa Community Colleges.

He acknowledged the higher tuition rates could force students to drop out completely.

“These are wonderful people and some of our best and most hard working students,” said Hasson. “We are working tirelessly to find some way to help them because we don’t want them to leave. At the same time, we know we have to comply with the court ruling.”

My dream has been ‘jerked out of my hands’

Dreamers don’t have permanent legal status, or a path to citizenship, so they aren’t eligible for federal student aid either. Therefore, they must pay for college either on their own, through private donors or rely on scholarships.

ana karen 2
Ana Ascencio is worried about losing her full scholarship from TheDream.US because of the Arizona Supreme Court ruling.

That’s how Ana Ascencio, 18, paid for her freshman year at Maricopa’s GateWay Community College, where she’s a political science major. She received a full scholarship from TheDream.US, a nationwide scholarship fund that helps DACA status immigrants attend one of 75 colleges in 15 states.

But now even her scholarship is in jeopardy.

One stipulation of TheDream.US’s scholarships is that the student be eligible for in-state tuition rates at one of its partner schools.

Ascencio, who came to the US when she was four from Mexico and grew up in Arizona, was eligible for in-state tuition and the scholarship last year. But now she — like the 150 other TheDream.US scholarship recipients in Arizona — doesn’t know if she’ll be eligible for either.

“We are currently working with Maricopa County Community Colleges and Arizona State University to find an affordable path forward for our Arizona scholars to support them in completing [their] college degrees,” said Candy Marshall, president of TheDream.US.

Ascencio wants to go to law school and become an immigration attorney, but everything seems uncertain.

“This court ruling is so surreal. My heart sank and I cried so much when I heard the news,” she said. “My whole college education dream has been jerked out of my hands.”

Related: Who is covered by DACA? Teachers, caregivers and more

Vasthy Lamadrid feels the same way. She is a senior at Arizona State University and is majoring in political science and pursuing a teaching certificate. She has lined up a job that begins in the fall that counts toward her certification.

“I’m scared,” she said. “If my tuition rates jumps and I can’t pay the out-of-state rate, I can’t continue with my teaching certification program in the fall.”

vasthy lamadrid
Vasthy Lamadrid, a DACA-status student at Arizona State is pursuing her teaching certification.

Currently, the in-state tuition rate for undergraduates at the school is $10,792. Out-of-state students pay more than double that at $27,372.

Lamadrid said school administrators have said they want to help DACA students but she’s aware that the school also has to comply with the ruling. She attended a meeting late Thursday with students and faculty where DACA students were told they should expect the new tuition rates to begin this summer.

Arizona State University did not respond to multiple requests for comment.

Lamadrid said she knows many other DACA students at Arizona State who have plans for postgraduate and other advanced degrees. “This ruling will put a halt to these goals,” she said. “Some have already been accepted into those programs. Now they don’t know what to do.”

CNNMoney (New York) First published April 21, 2018: 10:18 AM ET

Pensions ask retirees to pay back tens of thousands

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carole grant pension recoupment
Carole Grant, 75, has been told she owes almost $61,000 for nearly 20 years of pension overpayments.

Some pension plans have overpaid retirees for years — now they’re demanding their money back.

For retirees, it can mean owing tens of thousands of dollars. And with little warning, their pension checks are being slashed to cover their debt.

In April 2011, New Jersey resident Carol Montague received a letter from American Water Works Co.’s pension plan saying it had overpaid her for more than five years and wanted its money back — plus interest. Montague, now 67, was told she owed roughly $45,000.

Two weeks later, Montague’s pension benefits dropped from $1,246 to around $325 a month, or half what she should have been paid all along. The plan takes out roughly $300 a month in order to pay itself back.

Once Montague’s health care premium is deducted, her monthly pension check shrinks to less than $25. She gets another $1,200 a month from Social Security, but it’s not enough. So, in addition to her part-time job as a school crossing guard, she is working as a salesperson at Macy’s.

So far, Montague has repaid almost $9,000 — calculations show that she won’t repay her debt in full until 2024.

Share your story: Are you worried about your pension?

American Water said Montague signed a document verifying the correct pension amount and that they are legally allowed to collect any overpayment, with interest, to protect the viability of the pension fund. Montague acknowledges she made a mistake, but didn’t think she needed to confirm that her benefits matched the amount in the letter she had signed almost a year before she retired.

“I put it away in a steel box. I never looked at it again. It was stupid on my part,” she said. “But it took (almost) six years for them to find out they overpaid me?”

With the help of the Mid-Atlantic Pension Counseling Project, a government-sponsored program, she has appealed to the pension plan to waive the interest, as well as ease some of the overpayment burden. But the plan has refused.

As pensions face increased financial scrutiny — and shrinking funds — pension counseling programs are seeing even more cases like Montague’s.

This year, nearly 600 retired metal workers and their spouses are facing these so-called recoupment demands from the Sheet Metal Workers Local Union No. 73 Pension Fund, based outside of Chicago.

Related: Will your congressman retire richer than you?

In a letter sent to the pension recipients in May, the fund said a 2010 audit found that certain pensions were calculated incorrectly from 1974 to 2004, resulting in more than $5 million in overpayments, according to an IRS filing. The fund is now demanding that the retirees pay back decades worth of mistakes, including interest based on the plan’s rates of return.

In July, the pension fund reduced hundreds of checks to the proper payment amount and then again, to make up for the overpayments, often by as much as 25%.

Since the pension fund is forecasting that many of the retirees will die before their debts are repaid, it is asking many of them to make large upfront payments.

It’s unclear why the pension fund, which did not respond to requests for comment, waited several years to make the adjustments.

Carole Grant, 75, was told by the sheet metal worker’s plan that she owed almost $61,000 (roughly half of which was interest) for nearly 20 years of overpayments on the spousal benefits she received from her deceased husband’s pension. Her monthly benefit of $394 should have actually been $249, the pension fund said.

Related: Are you saving enough for retirement?

As a result, she’s been asked to make an upfront payment of $54,000 and her check has been reduced to $187 a month. While she has other sources of income, she doesn’t think she should have to turn over her retirement savings.

“I don’t feel that I should be penalized for the mistakes that they made,” she said.

Save money without a steady income

Karen Ferguson, director of the Pension Rights Center, a Washington D.C.-based advocacy group, said that, in most cases, retirees have no idea they are being overpaid since “the way a benefit is figured in a typical pension plan is impossible for an ordinary person to fathom.”

She called the sheet metal workers case the “most egregious” she’s seen, underscoring the need for federal regulations, such as imposing a statute of limitations and limiting how dramatically a pension check can be reduced. She also said many retirees don’t realize that plans rarely take legal actions to recover the lump sums.

Money 101: Planning for retirement

While some of the retired sheet metal workers have been able to get their debts forgiven or reduced by filing “hardship waivers,” many have had appeals denied, said Tim Kelly, an attorney representing some of the retirees.

One of his clients, 63-year-old Ed Cochran, has received a disability pension since 1995 and was told he owes the fund nearly $100,000, $42,464 of which is interest. His monthly checks had included an excess $262 a month.

Cochran paid years’ worth of income taxes and child support based on the amounts he received. And he’s heard of many retirees in worse financial shape than him.

“There are so many other older retirees who didn’t plan for rainy days,” Cochran said. “This is all they have.”

Have you received a recoupment demand? Visit the Pension Rights Center website for advice or for pension counseling referrals.

CNNMoney (New York) First published October 24, 2013: 6:59 AM ET

Moonves’ negotiated exit shows the power of #TimesUp

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Watch: Norah O'Donnell reacts to Moonves exit

Months have passed since celebrities first wore Time’s Up pins on the red carpet, but the advocacy organization hasn’t stopped fighting for women facing harassment.

On Sunday, Ronan Farrow published another bombshell investigation in The New Yorker. In his latest story, six new women accused CBS chief executive Leslie Moonves of sexual misconduct.

Moonves, one of America’s highest-paid CEOs, stepped down hours later — but still with hope of an eventual payout from his former employer.

“As of a couple of days ago, they were still talking about potentially letting him leave with a very generous exit package, up to the neighborhood of $100 million,” Farrow said on CNN. “Many of the women found that very, very frustrating. They felt this was a board that has let a powerful man who makes a lot of money for this company, in the words of one person, ‘get away with it.'”

Amidst rumors that Moonves would receive a multi-million dollar “golden parachute” package, Time’s Up, released a statement asking for “real change.”

In lieu of a rumored $100 million payout, Moonves and CBS will now donate $20 million to organizations that support the #MeToo movement and other groups fighting for workplace equity for women. That money will be subtracted from any severance money Moonves ultimately receives, and CBS has promised any payment to Moonves “will depend upon the results” of the ongoing internal investigations at CBS.

Time’s Up responded with a tweet: “A $20 million donation is a first step in acknowledging that you have a problem, @CBS. But it is far from a solution. You have $180 million set aside to pay Moonves. Use that money instead to help women. Cleansing the company of this toxic culture demands real systemic change.”

Progress made

Since January 1, Time’s Up has been hard at work creating some of that change.

In October 2017, stunning allegations against Hollywood heavyweight Harvey Weinstein spurred a nationwide reckoning on sexual harassment. In the following months, Time’s Up launched as a coalition advocating for victims of sexual harassment across all industries.

During awards season, celebrities walked the red carpet with Time’s Up pins and, most memorably, dressed in all in black for the Golden Globes.

Since then, the Time’s Up Legal Defense Fund has raised more than $22 million to help women fight cases of sexual harassment. The fund, housed and administered by the National Women’s Law Center, has so far received more than 3,000 requests from women seeking help with harassment in their own workplaces.

These women are reporting a variety of problems to the Legal Defense Fund: some are battling an unresponsive HR, others are struggling to reporting retaliation.

“We’ve seen a great outpouring of people looking for help,” says Sharyn Tejani, director of the Time’s Up Legal Defense Fund. “It’s people who have been harassed or assaulted at work years ago and are finally coming forward, it’s people who have had something happen to them at work and are not sure at all what to do … So it’s across the map, what we’re seeing.”

From there, Tejani says more than 700 attorneys have worked with Time’s Up to provide free initial consultations for victims. In some cases, Time’s Up works with attorneys to fund these cases as they make their way to court.

Progress still to come

But even when high-profile cases fade from the headlines, the #MeToo movement doesn’t have an end date, according to its leaders. In March at SXSW, Time’s Up founding member Nina Shaw said, “I think there are a bunch of guys waiting for this to be over. It’s never going to be over.”

In the months since, the Legal Defense Fund has continued to fight for the rights of low-wage workers. This summer it announced outreach grants for organizations supporting vulnerable communities. The grants educate workers about rights regarding sexual harassment and the reporting process.

“The important thing here is it started with these women in Hollywood, and then the connections were made that turned it into something broader, much larger and more expansive than that,” Tejani says. “While it may have started in one place, the focus is really on low-wage workers.”

CNNMoney (New York) First published September 10, 2018: 5:33 PM ET

4 tips for investing a big windfall in today’s market

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How to save $1,000 this year

I’m 53 years old and will soon come into a multi-million dollar sum that I need to manage properly for my retirement and for my children’s future. I’m not willing to just hand the reins over to anyone, but I also realize I’m not an experienced investor. I’d like to invest this money so it will continue to grow for all of us, but I don’t know where to begin. Any suggestions?—Lori

Figuring out how to invest a windfall to ensure long-term financial security can be a challenge at any time even for an experienced investor. But this isn’t just any time: interest rates have been rising, stocks have experienced some scary volatility lately and this bull market is looking a little long in the tooth as it enters its ninth year.

And, of course, you’re not a seasoned investor. So suffice it to say I think you’ve got your work cut out for you.

That said, if you go about this task in a thoughtful, methodical and disciplined manner — and are willing to seek help should you run into trouble — I think you should be able to invest this money in a way that can secure your retirement and perhaps your children’s future as well.

Here are four things I suggest you do to improve your chances of success:

1. Get a realistic handle on how much risk you’re willing to take.

If there’s one thing that differentiates a savvy investor from one who’s just winging it, it’s the ability to balance reward vs. risk. Clearly, you want to earn returns high enough to help you attain your financial goals. But you don’t want to take on so much risk that you expose yourself to losses you’re unable to manage.

It would be nice if you could anticipate market selloffs and bail out of stocks just before prices nosedive. But no one’s crystal ball is that good, at least not consistently. Instead, your goal should be to create a portfolio of stocks, bonds and cash that will allow you to participate in the gains when the market is doing well but also ride out market downturns during which stock prices can sometimes drop by half or more.

Your first step toward doing that is to carve out of your windfall enough cash for an emergency fund, basically enough so that a job layoff or large unexpected expense doesn’t force you to sell off investments and disrupt your long-term investing strategy. Whatever amount you decide is right to fund this emergency reserve, the money should go into investments that will hold their value even if the market gets hammered. I’m talking FDIC insured savings accounts, money-market accounts and short-term CDs. Yes, these cash equivalents pay very little. But security, not return, is your focus here (although you can still shoot for competitive returns by visiting sites like Bankrate, GoBankingRates and DepositAccounts).

Related: How should I invest my nest egg for maximum retirement Income?

As for investing the rest of your windfall, the key is deciding on a mix of stocks and bonds that will give you reasonable returns for the level of risk you’re willing to take. Achieving the right trade-off is a judgment call, but you can arrive at a blend of stocks and bonds that makes sense for you by going to this risk tolerance-asset allocation tool. The tool will suggest a mix of stocks and bonds and show you how various mixes have performed in the past.

That’s not to say you have to go with the tool’s exact recommendation. You can fine-tune it if you like. But except for occasional rebalancing, you should largely stick with whatever blend of stocks and bonds you go with. Don’t get into the habit of trying to shift your money around based on what you think (or what some market prognosticator predicts) the market is about to do.

2. Diversify, but don’t overdo it.

Once you know how you want to divvy up your windfall between stocks and bonds, you can focus on specific investments. Here, I recommend you keep it simple. The idea is to diversify so that you’re not overly dependent on the fortunes of just a few companies or sectors of the market, but at the same time not spread your money so widely that you have a hard time keeping track of and monitoring your investments.

There are a number of ways to get no muss-no fuss diversification. One is to create a portfolio of a few broad index funds. For example, combining a total U.S stock market and a total U.S. bond market index fund will give you exposure to virtually the entire U.S. stock and taxable bond markets. Throw in a total international stock and total international bond index fund and you’ll have a portfolio that’s broadly diversified both domestically and internationally. If you want to make things even simpler, you can invest in a lifecycle fund or target-date retirement fund, both of which do the allocation work for you by providing a pre-set mix of stocks and bonds based on your risk tolerance and/or age.

Related: 4 steps you should take when buying an annuity

You may be tempted to add even more investments to your portfolio. Indeed, some advisers contend that to navigate today’s markets you also need to own all manner of “alternative investments,” which could mean anything from commodity funds to private equity to cryptocurrency. My advice: tread very carefully. The more you start loading up your portfolio with niche investments, the harder it can be to manage, and you could end up di-worse-ifying rather than diversifying. Once you have a broadly diversified portfolio and cash reserve along the lines outlined above, I’d say the less you tinker with it, the better.

3. Hold the line on fees and expenses.

I can’t guarantee that sticking to low-fee investments will boost the returns you’ll earn. But Morningstar research on the predictive power of fees has shown that funds with low annual expenses generally outperform those with high costs. And by giving up less to fees and allowing more of your money to rack up gains and compound over the long term, the more money you may have for your retirement and, possibly, to pass on to your children.

Fortunately, it’s pretty simple to home in on low-fee investments these days. For example, you should have no trouble finding broad index funds that charge in the neighborhood of 0.25% or less a year vs. the 1% or more that many funds charge. And if you feel the need to look beyond index funds, you can single out actively managed funds with low expenses by revving up Morningstar’s Fund Screener.

4. Don’t be afraid to ask for help — but make sure you’re getting the right kind.

I get that you don’t want to turn over your windfall to an adviser. Still, given the amount of money involved here, it would be a shame if mistakes stemming from your inexperience were to jeopardize this shot at financial security for you and your family.

I’m not just talking about getting help with investments, although that’s probably the type of assistance that first comes to mind. You also need to think about a host of other planning issues, such as laying the groundwork for your eventual retirement, figuring out how much you can safely withdraw from your investment portfolio after you call it a career and arranging the best way to leave to your children any assets that may remain after you’re gone.

Getting help doesn’t mean you necessarily have to completely “turn over the reins,” as you say. Instead of paying someone to oversee your finances on an ongoing basis, you could instead go to an adviser for guidance on specific issues and pay by the hour. But whatever route you go, you’ll want to make sure that the amount you’re paying is reasonable — and that the person you’re dealing with is competent and trustworthy.

CNNMoney (New York) First published May 30, 2018: 10:21 AM ET

Here’s what’s in the Senate tax bill

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Tax cuts are a big gift to business. But will workers win too?

Republicans crossed another major hurdle in their effort to get a tax bill to President Trump’s desk by Christmas.

In the early hours of Saturday morning, the Senate passed a sweeping tax overhaul bill in largely party-line vote.

Just one Republican, Tennessee Senator Bob Corker, voted against it on deficit concerns. The Congressional Budget Office estimated the bill would cost $1.47 trillion over a decade. Many Republicans continue to say the bill will pay for itself through greater economic growth, despite all analyses to the contrary.

The final Senate bill differs from the tax bill passed by the House in mid-November. Those differences now must be reconciled and a final piece of legislation voted on by both chambers.

Stay tuned for that. Meantime, here are key ways the Senate bill would affect individuals and businesses, and how it differs from the House legislation.

FOR INDIVIDUALS

Changes individual income tax brackets: There are seven brackets in today’s individual tax code: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

The Senate bill also calls for seven brackets but changes the rates on taxable income to:

– 10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
– 12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
– 22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)
– 24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)
– 32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)
– 35% (over $200,000 to $500,000; over $400,000 to $1 million for couples
– 38.5% (over $500,000; over $1 million for couples)

The House bill, by contrast, only calls for four brackets: 12%, 25%, 35% and 39.6%.

Nearly doubles the standard deduction: The House and Senate bills nearly double the standard deduction. For single filers the Senate bill increases it to $12,000 from $6,350 currently; and it raises it for married couples filing jointly to $24,000 from $12,700.

That would drastically reduce the number of people who opt to itemize their deductions, since the only reason to do so is if your individual deductions combined exceed the standard deduction amount.

Eliminates personal exemptions: Today you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. Both the Senate and House bills eliminate that option.

Related: Even with growth, the Senate tax bill still adds $1 trillion to deficits

For families with three or more kids, that could mute if not negate any tax relief they might enjoy as a result of other provisions in the bill.

Kills state and local income tax deduction, limits property tax break: Today itemizers may deduct their property taxes as well as their state and local income or sales taxes.

The original Senate bill called for a full repeal of the SALT deduction. But it was amended to preserve an itemized deduction for property taxes but only up to $10,000, which is identical to the House measure.

Expands the child tax credit: The Senate GOP bill increases the child tax credit to $2,000 per child, up from $1,000 today, and above the $1,600 proposed in the House bill.

Senate GOP tax writers would make the credit available for any children under 18, up from today’s under-17 age limit. But it reverts to under 17 again in 2025, a year before the increase is set to expire under the bill.

But the $1,000 increase won’t be available to the lowest income families if they don’t end up owing federal income taxes. That’s because unlike the first $1,000, the additional $1,000 wouldn’t be refundable. When a credit is refundable, it means you still can get money from the government because of the credit, even when your federal income tax bill is zero.

The Senate bill also greatly expands who is eligible for the credit by raising the roof on the income thresholds where the credit starts to phase out: To $500,000 for married tax filers, up from $110,000 today.

Meanwhile, filers with dependents who are not qualified children may be able to claim a new $500 nonrefundable credit per dependent. Under the House bill, there would be a new $300 per person credit for parents and dependents over 17.

Keeps mortgage interest deduction as is: The Senate bill would still let you claim a deduction for the interest you pay on mortgage debt up to $1 million.

The House wants to cap the loan limit at $500,000 for new mortgages.

Since the House and Senate bills sharply increase the standard deduction, the percent of filers who claim the mortgage deduction would drop sharply.

The Senate bill does make two changes on home-related financing. It disallows interest deductions for home equity loans. And it lengthens the time you must live in a home to get the full tax-free exclusion on your gains when you sell it.

Preserves the Alternative Minimum Tax: The original Senate bill, like the House-passed bill, would repeal the AMT. But to help offset the cost of other late amendments, the final revision of the Senate bill now keeps the AMT in place but raises the amount of income exempt from it.

The AMT, originally intended to ensure the richest tax filers pay at least some tax by disallowing many tax breaks, most typically hits filers making between $200,000 and $1 million today.

Those who make more usually find they owe more tax under the regular income tax code, so must pay that tab instead.

Preserves the estate tax, but exempts almost everybody: Unlike the House GOP bill, Senate Republicans have not proposed repealing the estate tax.

But they are proposing to double the exemption levels — which are currently set at $5.49 million for individuals, and $10.98 million for married couples. Even at today’s levels, only 0.2% of all estates ever end up being subject to the estate tax.

Increases teacher deduction: Teachers who buy their own supplies for the classroom may deduct up to $250 today. The Senate bill doubles that amount to $500.

The House bill, by contrast, eliminates the deduction.

Expands the medical expense deduction: Today itemizers may deduct their medical and dental expenses that exceed 10% of their adjusted gross income.

While the House bill gets rid of that deduction, the Senate bill not only keeps it but temporarily lowers that 10% threshold to 7.5% for tax years 2017 and 2018.

Repeals the individual mandate to buy health insurance: The repeal is intended as a way to offset the cost of the tax bill. It is estimated to save money because it would reduce how much the federal government spends on insurance subsidies, since the assumption is fewer people who qualify for subsidies would purchase insurance if they’re not subject to a penalty.

But policy experts also note it could raise premiums because more healthy people might decide to skip buying insurance.

FOR BUSINESSES

Cut the corporate rate … in a year: Like the House bill, the Senate bill would cut the corporate tax rate to 20% from 35% today. But the 20% rate would not take effect until 2019 under the Senate proposal. The delay would reduce the cost of the measure in the first 10 years.

Make expensing rules more generous: Senate Republicans want to make it possible for businesses to immediately and fully expense new equipment for five years, then phases the provision out by 20 percentage points per year thereafter. A House provision limits it to five years.

Lower taxes on pass-through business income: Most U.S. businesses are set up as pass-throughs, not corporations. That means their profits are passed through to the owners, shareholders and partners, who pay tax on them on their personal returns under ordinary income tax rates.

Both the House and Senate bills lower taxes on the business portion of a filer’s passthrough income.

The House bill dropped the top income tax rate to 25% from 39.6%, while prohibiting anyone providing professional services (e.g., lawyers and accountants) from taking advantage of the lower rate. It also phases in a lower rate of 9% for businesses that earn less than $75,000.

The Senate bill lowers taxes on filers in pass-throughs by letting them deduct 23% of their income, up from 17.4% originally.

The 23% deduction would be prohibited for anyone in a service business — except those with taxable incomes under $500,000 if married ($250,000 if single).

Prevent abuse of pass-through tax break: If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the Senate bill would automatically limit the deduction to half of the W-2 wages of the pass-through entity or its share to the individual taxpayer. The W-2 rule would not apply, however, if the filer’s taxable income is under $500,000 if married, $250,000 if single.

Change how U.S. multinationals are taxed: Today U.S. companies owe Uncle Sam tax on all their profits, regardless of where the income is earned. They’re allowed to defer paying U.S. tax on their foreign profits until they bring the money home.

Many argue that this “worldwide” tax system puts American businesses at a disadvantage. That’s because most foreign competitors come from countries with territorial tax systems, meaning they don’t owe tax to their own governments on income they make offshore.

The Senate bill proposes changes to move the U.S. to a territorial system. It also includes a number of anti-abuse provisions to prevent corporations with foreign profits from gaming the system.

And it would require companies to pay a one-time low tax rate on their existing overseas profits — 14.5% on cash assets and 7.5% on non-cash assets (e.g., equipment abroad in which profits were invested), slightly higher than the 14% and 7% rates in the House bill.

CNNMoney (New York) First published December 2, 2017: 8:14 AM ET

One property claim can cause your premiums to soar by hundreds of dollars

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homeowners insurance claims

File just one property claim to your insurer and you can expect to see your premiums soar by hundreds of dollars in some states.

On average, filing a single claim — for anything ranging from a stolen bicycle to tornado damage — will result in your monthly premium being raised by 9%, according to a report released by InsuranceQuotes.com. File a second claim and premiums climb by an average of 20%.

“Winning a small claim could actually cost you money in the long run,” said Laura Adams, InsuranceQuotes.com’s senior analyst. “Homeowners need to be really careful. Even a denied claim can cause your premium to go up.”

Related: Which natural disaster will likely destroy your home?

And the size of the claim has little impact. Filing a small claim increases your rates by just about as much as filing a catastrophic one. “The insurers have found that people who make a claim are more likely to make another,” said Adams. “You’ve become a riskier customer.”

Yet, the type of claim does matter. Liability claims, such as from personal injuries, are the most expensive type of claim, with insurers raising premiums by an average of 14%, InsuranceQuotes.com found.

A couple tries to rebuild after Sandy

Other claims that lead to big premium increases are theft and vandalism, which often indicate that the home is in a neighborhood that is unstable or falling prey to blight. In bad neighborhoods, these crimes can recur, and the high premiums reflect that.

The premium increases also vary greatly by state. Homeowners in Wyoming saw the biggest increase in their premiums — an average of 32% — after a claim was filed. While the hikes are high, the state tends to charge fairly low premiums of about $770 a year, considerably lower than the $978 national average.

Policyholders in Connecticut, Arizona, New Mexico and California also saw large hikes of 18% or more.

Meanwhile, homeowners in Texas, where insurers are not allowed to raise premiums on the basis of a single claim, saw no increase. And homeowners in New York and Massachusetts paid very little more after filing claims.

Average premiums range from a low of $513 a year in Idaho to $1,933 in Florida, where frequent hurricanes drive insurance costs up.

Once your premiums are raised, it can be difficult to get them reduced.

Insurers keep a database called the Comprehensive Loss Underwriting Exchange, or CLUE, which tracks seven years’ worth of your auto and property insurance claims, as well as any inquiries you may have made about a claim. The database then compiles a report based on your claims history that is then used to determine whether to cover you and how much to charge.

The information is available to all insurers so even if you switch providers, your rate with the new carrier may be just as high.

Related: Damaged home? How to get an insurer to pay up

“You can’t escape your claim history,” said Adams.

But you are not completely without hope. Here are some ways to try and keep your homeowner’s insurance costs down:

Raise your deductible. But not so high that you can’t afford to pay out-of-pocket costs if damage occurs.

Don’t make small claims. Getting a few hundred dollars back if a tree limb falls on your shed may feel good but you could be paying that back to your insurer over the next few years — and then some.

Don’t use homeowners insurance as a maintenance tool. Don’t file a claim to pay for small repairs, such as when wind blows some old shingles off your roof. Use it for catastrophic repairs only.

Shop around often. Look for quotes once a year. There’s lots of competition in the industry and you may be able to buy equal coverage and service for a lower price.

CNNMoney (New York) First published October 19, 2014: 10:12 AM ET

Should Millennials get $13,500 each to close generational inequality?

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The crazy, true story of Nixon and the basic income

Should young people in the United Kingdom be given £10,000 ($13,500) when they turn 25? A top think tank says yes.

The proposal from the Resolution Foundation is one of a number of suggestions for reducing inequality between the young and old.

British Millennials and their peers in other developed countries have fallen behind older generations when it comes to wealth, income and home ownership, a trend that politicians have been slow to address in the wake of the global financial crisis.

“We need not just some tinkering, but some big and dramatic solutions,” said Matt Whittaker, deputy director at the Resolution Foundation.

The £10,000 payment would come with strings attached: Young people would only be allowed to spend it on developing new skills, entrepreneurship, housing or pensions. The payments would cost an estimated £7 billion ($9.5 billion) per year and would be financed by an overhaul of the inheritance tax system.

The researchers suggested dozens of other changes to improve UK housing, education, health care and the employment market in a bid to give young people a boost. They would control rent levels, improve apprenticeship programs and dramatically lower taxes on home purchases.

“We built it as a package. The idea is that doing one of these without the other would be good, but not as good,” said Whittaker.

Brits born during the 1980s and 1990s have faced tough economic challenges since the Great Recession, including an unusual slowdown in wage growth and higher housing costs.

Resolution Foundation research shows that Brits have typically earned more than generations that came before. But the trend stopped with Millennials, who are earning less than Generation X — those born between 1966 and 1980.

“This stalling of generational pay progress is unprecedented,” the researchers said.

Britain’s vote to leave the European Union, which caused inflation to spike, won’t help matters. The Resolution Foundation said that when inflation is taken into account, it will take nearly two decades for pay to return to its peak from before the recession.

Related: Kate and William can afford 3 kids. Many Brits cannot

But would the changes, including the extra £10,000, be enough?

Kay Neufeld, an economist at the Centre for Economics and Business Research, said the payment would be “a massive leg up.”

“I think it would change a lot for a lot of people,” he said, adding that it could make home ownership feel within reach, or encourage someone to go to university.

A spokesperson for the government said it welcomed the report from the Resolution Foundation, and described the gap between generations as “one of the key challenges of our time.” The spokesperson declined to say whether proposals in the report would be considered.

Tom Selby, an analyst at stockbroker AJ Bell, said that politicians wouldn’t be attracted to the suggestions because they might hurt seniors.

“Many of the ideas aren’t new and face the same barrier as other reforms — namely the reality of politics,” he said.

Fix the economy first

Still, the policy suggestions would not address other structural problems in the UK economy, including slow productivity.

“If we could fix the productivity problem then it would make a lot of the problems that we highlight easier to deal with,” said Whittaker.

Yael Selfin, chief economist at KPMG, said the ultimate goal should be a more productive economy.

“The future lies in stronger growth and making sure that young workers are equipped to be more productive, and hopefully earnings will rise,” she said.

CNNMoney (London) First published May 8, 2018: 10:17 AM ET

Millennials may not be able to afford retirement essentials

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retirement calculator screen
Find out if you will have enough to retire. Click the image to use our retirement calculator.

While many Americans are falling short on savings, millennials are most at risk of being unable to afford essential retirement expenses — such as food, shelter and medical care, according to a Fidelity Investments survey released Wednesday.

Fidelity found that about 55% of people surveyed are at risk of being unable to cover these expenses.

Typical baby boomers (born 1946 to 1964) are on track to reach 81% of their retirement income needs, according to the survey. Generation X-ers (born 1965 to 1977) are expected to reach only 71%, and Generation Y or millennials (born 1978-1988) have the largest projected income gap at 62%.

The retirement provider asked over 2,000 Americans a range of questions, from their health to retirement saving habits. It analyzed a variety of factors, including current income, savings rates, home equity and projected Social Security and pension benefits to predict how much money people will need in retirement and whether they are on track to meet that goal.

Related: How to be a 401(k) millionaire

Across generations, many people simply aren’t saving enough, Fidelity found, with 40% of those surveyed saving less than 6% of their salaries — far below the 10 to 15% recommended by financial planners. For millennials, that percentage jumps to 51%.

Also driving the disparity: Boomers are more likely to have some sort of pension benefit and plan to work longer, according to John Sweeney, Fidelity’s executive vice president of retirement and investing strategies.

Boomers had a median desired retirement age of 66, whereas millennials wanted to retire two years earlier than that. Yet today’s young people could live well into their 90s and will have to wait until they are 67 in order to claim full Social Security benefits.

Save a million before you retire

“Some of the older folks had more realistic expectations,” he said.

Many young people are also playing it too safe with investments, he said. Of millennials surveyed, 50% said they had less than half of their investments in stocks. In contrast, common rules of thumb recommend that 30-year-olds should have up to 90% of their portfolio in stocks since they have decades of savings ahead of them.

Related: Will you have enough to retire?

It’s not all bad news though. Sweeney noted that while they have the farthest to go, millennials also have the most time to catch up. Here are some key ways savers of all ages can boost their savings;

Up your savings rate: For young people especially, the most effective move is to sock away more money each month, since money saved when young enjoys decades of compound returns.

Review your asset mix: While you can’t control the markets, you can make sure your investment strategy is age appropriate. Fixing a portfolio that is either too risky or too conservative could significantly help retirement readiness, Fidelity found.

Related: More retirement tips

Retire later: Working longer gives you more time to save, boosts your Social Security benefits and lets you use your retirement savings over a shorter time period.

More than 2,200 households earning at least $20,000 annually took part in the online survey, which used a nationally-representative panel of respondents.

CNNMoney (New York) First published December 4, 2013: 12:29 AM ET

Most valuable car ever auctioned to go on sale later this month

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This Ferrari may soon be the most valuable car ever auctioned

One collector car auction in California this month could potentially set three separate auto auction records: The most valuable car ever auctioned, the most valuable British car and, just possibly, the most valuable American car ever auctioned.

The days leading up to the Pebble Beach Concours d’Elegance classic car show in Monterey, California, are filled with events for high-end car collectors, including auctions at which record prices are frequently paid for the most desirable cars.

On August 25, the day before the Concours, a 1962 Ferrari 250 GTO estimated to be worth between $45 million and $60 million will be auctioned at RM Sotheby’s annual Monterey sale. If the selling price even approaches this estimate, it will set a record for any car ever sold at auction.

Another 1962-63 Ferrari GTO sold for $38 million at a Bonhams auction at Pebble Beach Car Week in 2014. (The car had two model years because it was nearly destroyed in a fatal crash and was rebuilt by Ferrari.) For now, that remains the current record holder for a car sold at auction.

Cars have sold for far more in private transactions rather than at public auctions. The vast majority of collector cars are sold privately. Another Ferrari 250 GTO, a 1963 model, was recently privately sold for the widely reported price of $70 million.

Related: The classic car industry could be hurt by tariffs

Classic Ferrari GTOs are extraordinarily valuable for a number of reasons. First, they were, and are, simply very beautiful cars. Second, these were some of Ferrari’s most successful racing cars. There have been more successful models, such as the 250 LM, which has its engine mounted behind the driver, but the front-engined GTO is more popular because it’s easier to live with and drive.

rm sothebys 1962 ferrari
This 1962 Ferrari 250 GTO is expected to set a record as the most valuable car ever sold at auction.

“The 250 GTO, you open the door like you do on your car, you get in and you go,” said RM Sotheby’s car specialist Jake Auerbach. “It really is that simple.”

All 36 of the 250 GTOs ever made are still running and their ownership has created a very exclusive club. Ferrari 250 owners know one another and sometimes get together for road rallies.

“The GTO tours are, as far as that level of net worth goes, the ultimate event and there really is only one way to get in and that’s to own one of the 36 cars,” said Aurbach.

The GTO being sold at the RM Sotheby’s auction on August 25 won the 1962 Italian GT championship, and had over 15 race victories from 1962 to 1965. Among its drivers were Phil Hill, who is most famous as the first American to be a Formula 1 World Champion. He drove this Ferrari as his practice car before the Targa Florio race in 1962. Gianni Bulgari, later president of his family’s jewelry company, raced the car in 1963.

rm sothebys1963 aston martin
This 1963 Aston Martin is expected to become the most valuable British car ever sold at auction.

Another car being sold at the RM Sotheby’s auction, a 1963 Aston Martin DP215 Grand Touring Competition Prototype, is expected to be the most valuable British car ever sold at auction. It’s estimated to be worth $18 million to $20 million. In its brief racing career, it never won a race but it did set a speed record on the track at Le Mans. It still stands as an important part of British automotive history.

Related: Firm that designed Ferraris will make 250 mph electric supercar

The current record holder for the most valuable British car ever auctioned was also an Aston Martin, a 1956 DBR1 that was sold at RM Sotheby’s Monterey auction last year.

rm sothebys 1966 ford
If it sells for above its estimated value, this Ford GT40 could become the most valuable American car ever auctioned. Given its history, it’s possible.

The American car that will also cross the auction block, a 1966 Ford GT40, would have to sell for more than its estimated value to set a record but, given the car and its history, that’s possible.

The gold-colored race car finished third at the 24-hour Le Mans in France in 1966, one of the most famous car races in history. After being rebuffed in an attempt to buy Ferrari years before, Ford CEO Henry Ford II had demanded the company beat Ferrari on the track. This was Ford’s moment of triumph.

“It doesn’t really get any better in American racing, full stop, than 1966 Le Mans,” Aurbach said.

A movie about that race, “Ford vs. Ferrari” starring Matt Damon and Christian Bale, is slated for release next year.

The cars that finished first and second at that race are unlikely to ever come up for sale, Aurbach said. The availability of this car represents “a generational opportunity,” he said.

The race car’s value is estimated to be $9 million to $12 million. To date, the most valuable American car ever auctioned was the very first Shelby Cobra built by Carroll Shelby in 1962. That car sold for $13.8 million at RM Sotheby’s Monterey auction in 2016.

CNNMoney (New York) First published August 4, 2018: 8:14 AM ET

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