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Financial Reform May Change the Face of Finance

October 29th, 2010

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The Dodd-Frank Wall Street Reform and Consumer Protection Act — signed into law by President Obama on July 21, 2010 — will likely revolutionize the country’s financial system. The sweeping legislation is the most far-reaching financial reform since the Great Depression, touching virtually every corner of the financial world.

The new law is designed to help shield consumers from abusive financial practices, protect taxpayers from funding bailouts for institutions considered “too big to fail,” and improve accountability and transparency in the financial system.

Only a portion of the provisions included in the lengthy act actually became effective when the bill was signed. It will be the job of various regulatory agencies to write the rules that govern the act’s implementation. Consequently, it may be weeks, months, or even years before consumers understand how the changes will work, and even longer before their economic consequences are fully known.

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Are Higher Taxes Ahead?

October 27th, 2010

Evidence is mounting that high-income taxpayers will face higher taxes in the near future. Sweeping tax reforms enacted in 2001 and 2003 — which reduced tax rates on ordinary income, dividends, and capital gains for most U.S. taxpayers — are set to expire at the end of 2010, which means many Americans could face higher taxes starting in 2011.1

And beginning in 2013, single filers with modified adjusted gross incomes exceeding $200,000 ($250,000 for joint filers) will face a 3.8% Medicare unearned income tax on net investment income and a 0.9% Medicare payroll tax on earned income exceeding these thresholds.2

If you are concerned about how these and other potential taxes could affect you, the following ideas may position your portfolio to help reduce the effects of anticipated tax increases.

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