They say that Congress has its own dating service just like eHarmony, except that no one in either party wants to pay. That certainly was validated when the recent fiscal cliff deal kicked the can down the road to Fiscal Cliff II, otherwise known as the debt ceiling.
We are all much better versed on this one, though, since we have had more practice. In the spirit of New Year cheer and good tidings, however, there were some big victories for annuity savers and investors, despite the continued spending like a drunken sailor. In fact, “fiscal cliff” was one of the most terms hated in 2012, so a debt ceiling deuce of the fiscal cliff with the American Taxpayer Relief Act of 2012 is timely and rolling at us like a train. By the time the end of February rolls around, the debt ceiling deal will be just like the terrific book on anti-gravity and Congress will not be able to put it down. It will be like an old sick dying dog that the owner can’t decide what to do with.
1. First, Congress finally agreed to index the alternative minimum tax (AMT) to inflation, sparing 30 million Americans, including this writer, the joy of another round of double taxation. I believe the AMT is another example of giving Congress the power of the purse string. When it comes to the phrase “temporary tax,” run and seek cover. It does not happen. That will impact the annuity industry slightly and help the municipal bond industry, where private purpose bond income is taxed.
Prior to the deal, 35 percent of affluent investors with $100,000-plus in investable assets purchased annuities, and the number is growing, according to Cogent Research. With a doubling down of the debt deal, the Age of Safety continues to include more well-heeled investors. Most of the $450,000 annual income taxpayers, or 2 percent, do not own annuities, although the number is growing as savers and investors seek safe retirement income avenues and buy income riders. Most income recipients will continue to receive income at the same or lower rates they did in 2012.