Month: March 2006

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FDIC Increases Deposit Insurance For Retirement Accounts

On April 1st the Federal Deposit Insurance Corporation (“FDIC”) will
increase its deposit insurance coverage of retirement accounts from
$100,000 to $250,000. [1]  This change represents the first boost to
coverage in over twenty-five years. [2]  Despite coverage for
non-retirement accounts staying at the current level of $100,000, the
increase in coverage for retirement accounts will be beneficial to
consumers and banks alike. [3]

The
last increase in deposit insurance coverage took place in 1980 when it
was raised from $40,000 to $100,000. [4]  However, many Americans now
have much more than $100,000 in retirement savings.  [5]  This meant
they were forced to bank at multiple institutions in order to have all
of their retirement funds insured. [6]  Under the new law, individuals
will be able to have up to $250,000 in retirement funds at one bank.
[7]  This will make banking easier for consumers and increase profits
for banks. … Read the rest

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State-Sponsored Investment Tax Incentives: Classic Competition, or Constitutionally Constrained?

I. Introduction

The
Supreme Court heard arguments on March 1st concerning the
constitutionality of an Ohio investment tax credit offered to the
DaimlerChrysler Corporation.  The credit, entitling DaimlerChrysler to
a "ten-year 100 percent property tax exemption, as well as an
investment tax credit of 13.5% against state corporate franchise tax
for certain qualifying investments," is meant to encourage a $1.2
billion Jeep plant project in Toledo.[1]  The investment tax credit is
being attacked on the grounds that, as a state action, it
unconstitutionally burdens interstate commerce in violation of the
Commerce Clause.[2]  This sort of tax incentive is hardly anomalous;
indeed, 49 states offer similar tax incentives for the purpose of
encouraging in-state economic activity, thereby benefiting the citizens
of the state.[3]  Given that attracting valuable in-state commercial
growth is a fixture of policy in most states, a ruling consistent with
the claim of unconstitutionality from the nation's highest Court

… Read the rest
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The Maritime Labor Convention: New Protections for those who work on the High Seas

I.  Introduction

On February 23, 2006, the International Labor Organization adopted the Maritime Labor Convention. The convention is an attempt to consolidate all existing maritime labor regimes and to provide a comprehensive rights based charter for maritime employees.  The United States participated in the conference in the hopes that by passing this convention more economic benefits may flow to the American maritime industry. The convention may provide a basis for American employees to maintain and enhance traditional rights such as maintenance and cure.

II.  History & Standards

On February 23, 2006, after two weeks of frantic activity and last minute haggling, the International Labor Organization (ILO) adopted the long debated Maritime Labor Convention. [1] The convention, a comprehensive new labor regime for those working in the maritime industry, was adopted by a vote of 314 for, with no votes against, and four abstentions. [2] Two major goals of the treaty

… Read the rest
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Bankruptcy Judges Take on “Inane” Credit Counseling Requirements

While bankruptcy judges are obliged to apply and uphold the rule of
law as specifically set out by Congress, some have chosen to publicly
air their misgivings about the lack of discretion left to  judges to
administer bankruptcy cases by the 2005 amendments to the Code. A
recent order by Judge Monroe of the Western District of Texas has
gained widespread attention for its scathing attack on the credit
counseling requirement. [1] It remains to be seen whether bankruptcy
judges and practitioners will be able to prompt review of this
provision, but the frustration evident in Judge Monroe's decision has
sent Congress a clear message.

The
credit counseling prerequisite to filing a bankruptcy petition is just
one example of how the 2005 Bankruptcy Abuse Prevention and Consumer
Protection Act has made bankruptcy relief more expensive, time
consuming, and restrictive than before. One initial study suggests that
the credit counseling industry … Read the rest

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Out with the Old, In with the New: NYSE Group, Starting a New Tradition

March 7, 2006 will mark the end of a 213 year old tradition, but it will also be the start of new era.  If
all goes according to schedule, tomorrow the New York Stock Exchange
(NYSE) will complete a merger with Archipelago Holdings Inc. (Arca). [1]  The
merger will create a new publicly held corporation, NYSE Group Inc.
(stock symbol: NYX) making the NYSE a for-profit public company. [2]  The
merger has been a long time in the making and is not only significant
for the Big Board, but is also a major milestone in the corporate world
as once again new standards have been set. [3]  The
transaction will give the NYSE, already the world’s biggest exchange,
high tech trading capabilities and 49% of the stock trading market. [4]

 

The Old NYSE

 

It was less than three years ago that the future of … Read the rest

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Purchasing Beachfront Property in Mexico: How Americans Circumvent Mexico’s Constitutional Prohibition

Because of the high-cost of real estate in the most desirable areas of the United States, especially southern California, many Americans are searching for a cheaper, less crowded alternative both for vacation homes and for primary residences.  With thousands of miles of undeveloped coastline, and beachfront property costs at a fraction of those in the United States, Mexico has recently become a hot market for Americans wanting a laid-back atmosphere and an affordable vacation home with warm weather throughout the year.  Though Mexico is the perfect place to build an affordable beachfront home, there is one slight problem for foreigners wishing to re-locate there:  Article 27 of the Mexican Constitution prohibits ownership of beachfront property by foreigners and foreign corporations.  Only persons born in Mexico or corporations established in Mexico can gain title to property within Mexico's "Restricted Zone."  [1] 

How do Americans get around this prohibition?  The answer is

… Read the rest
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Illegal Long-Distance Tax Continues To Be Enforced

Despite the invalidation of communications excise tax, I.R.C. §
4251, by numerous federal courts the IRS is demanding that collection
of the tax continue. [1] The three percent communications excise tax
was originally imposed in 1898 as a temporary luxury tax to help fund
the Spanish-American war. [2] The tax applies to a number of
communications services among which is long-distance or “toll
telephone” service and is paid by everyone, both individuals and
businesses, who makes long-distance calls. [3]

For
purposes of the communications excise tax, the IRS defines toll
telephone service as “a telephonic quality communication for which . .
.there is a toll charge which varies in amount with the distance and
elapsed transmission time of each individual communication.” (emphasis
added) [4] The IRS contends that the word “and” in the statute should
be read as “either,” while those fighting the tax contend that “and”
should be read … Read the rest