The Financial Landscape: American Dreams, Tax Loopholes, and Swipe Fees

A roundup of news from around the world of finance:

Still Dreaming of White Picket Fences:
A New York Times/CBS News poll shows that "nearly nine in 10 Americans say homeownership is an important part of the American dream," even after all that has happened in the housing market since the financial meltdown, the bursting of the housing bubble and the recession that followed. More ominously, the poll also shows that 39% of adults now believe the United States has entered a period of "permanent" economic decline.

Obama Takes Aim at Tax Loopholes for the Rich:
In his first press conference since March, President Obama insisted on the need to end tax benefits for wealthy Americans and corporations as part of a deal that would cut spending and lift the debt ceiling. Among the targets the president mentioned: owners of private jets. "Under Democratic proposals," The New York Times explains, "owners of corporate jets would have to write off the aircrafts' cost in fewer years, which would generate an estimated $3 billion for the Treasury over a decade." Taxes would also rise for hedge funds and private-equity investors, and oil and gas companies would see deductions and credits phased out to the tune of $40 billion in additional revenue for the federal government. The Wall Street Journal reports, "Democrats and Republicans have agreed on about $1 trillion in spending cuts over at least 10 years. The final sticking point is whether to include some tax changes, as Democrats insist, or none, as Republicans want."

Fed Relents on Debit Card Fee Cap: In a partial victory for big banks, the Federal Reserve made a smaller than expected cut in debit card swipe fees. The new variable fees will be in the 21 cent to 24 cent range, instead of the initially proposed 12 cent per transaction cap. Banks will still lose billions of dollars in revenue -- they currently charge an average fee of 44 cents per transaction -- but had furiously lobbied against the more stringent cap championed by Sen. Dick Durbin (D-Ill.). The Fed also delayed implementation of the new rule until October. It was previously to take effect on July 21.

Durbin pronounced himself disappointed. "The inflated cap and extended delay that the Fed announced today will unnecessarily take money out of the pockets of consumers and small businesses and give it to big banks," he said.

But according to The New York Times, "Consumers are unlikely to see any immediate change at the register because they do not pay the fees directly." Merchants, who fought for a lower cap, "have complained that as the cost of debit fees -- a charge for processing payments -- has risen in recent years, they have had to add it to the prices they charge. The new lower fees may eventually be reflected in lower retail prices for consumers or, most likely, in a slight slowing of price increases. But banks said the reduced fees would not pay for the cost of operating their electronic debit card networks, and have warned that their customers can expect higher fees for other banking services as a result." Either way, it seems, consumers lose.

Shares of credit card companies Visa (V) and MasterCard (MA) rose in the wake of the announcement of the softer cut, The Wall Street Journal reports.

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yes cuts company taxs here it at %35 so a company hire say 100 people they cut there tax by say .10% and when they hire say 35,000 people then cut there taxs by 15% but when they laid off people say 100 then there taxs go up .10% and if they hire 100 people over seas then there taxs go up .20% this way it be fair if you hire more people here taxs fall the reason taxs would go up is your has less people working so you pay more in taxs and if you try to hide over seas you pay more in taxs

July 05 2011 at 1:26 PM Report abuse rate up rate down Reply

Hi, is this taxation of companies going to include General Electric??? where Mr. Obama was a featured guest at a lavish corporate gala banquet. General Electric made 14 billion dollars in clear profit last year and did not pay 10 cents tax. So to me bull is bull . Mike

July 04 2011 at 11:44 AM Report abuse rate up rate down Reply
Felix Branson

The latest version of the Fed’s final debit interchange rule has not changed much. It is still good news for retailers and bad one for issuers. It is also still bad news for consumers who are already feeling the rule’s side effects, even before it has taken effect. Anticipating lower revenues, banks have begun creating new or expanding existing revenue sources. As a result, free checking accounts are going away, new bank fees are being introduced and old ones increased, interest rates are being hiked, rewards are being slashed, etc.

So the damage to consumers is already done and it will not be reversed, even if the Fed eventually decided not to change the interchange status quo after all. What we have here is a government-mandated redistribution of revenues from one industry to another, something it has no business doing.

July 01 2011 at 11:04 PM Report abuse rate up rate down Reply

Start your own business and cheat on your taxes. It isn't right but that seems to be what people do.

July 01 2011 at 10:52 PM Report abuse rate up rate down Reply

Watch out rich people Dems want to steal your money. Move offshore. Republicans believe in personal responsibility. Dems believe in gimme, gimme, gimme.

July 01 2011 at 9:43 PM Report abuse +1 rate up rate down Reply

After dealing with several lenders in Austin, I finally called "123 Refinance".I am an agent, and have several relationships in the mortgage business including major banks. I wish I would have been introduced to 123 sooner. They got solution to lower your interest

July 01 2011 at 8:35 AM Report abuse rate up rate down Reply

tubo time says gonna pay!

June 30 2011 at 6:56 PM Report abuse rate up rate down Reply
1 reply to dterraman's comment

uh, turbo tim....without question, he says you will pay!

June 30 2011 at 6:57 PM Report abuse rate up rate down Reply

at least he is only talking about the rich that own corporate jets. i wonder, when obama takes a vacation on airforce one, why isn't he taxed? must be another tax loophole, because any personal use on a business car is taxable. however, as usual, the only good tax is one that somebody else pays. i see obamination is no different.

June 30 2011 at 5:54 PM Report abuse +1 rate up rate down Reply

The Tax Cuts for the Wealthy was a very stupid mistake. It was initiated by Former President Bush. He knew it was helping the rich. Yet he said the "trickle down effect" in our economy will help the Middle and Lower Classes. The Middle Class does not exist now. The rich Are NOT investing on hiring more workers right now. They are buying frivilous items that don't make any sense. Everyday we see people moving to Extended Stay Hotels, Homeless sleeping in the Park. People who have signs on the expressways and store parking lots looking for any odd jobs and a dollar. They do not even have enough money to purchase 1 case of water, a bag of ice and a styroform cooler to sell water on the streets. We were always taught: "To Whom Much is Given, Much is Expected". Please give to those less fortunate than you.

June 30 2011 at 2:23 PM Report abuse rate up rate down Reply
1 reply to eternalhealth1's comment

The tax cuts initiated by Bush disproportionately went to middle income tax payers. In the aftermath of these tax cuts, an even greater percent of the federal tax burden was borne by the wealthiest Americans. How much have YOU given to those less fortunate than yourself?

June 30 2011 at 7:10 PM Report abuse +1 rate up rate down Reply

Is this guy durbin an ass or what--really? Check the stupidity of his quote? Big banks--that are sitting with a portfolio of bad loans--bad mortgages and an uncertain Federal required capital position. I guess this Chicago asses is to just always say something. Not sure i know who's worse him or Schummer.

June 30 2011 at 12:23 PM Report abuse rate up rate down Reply