WEEKLY COMMENTARY

ONCE AGAIN, THE EQUITY MARKETS added gains.  By the numbers, for the week ended Friday, July 31, 2009, the Dow Jones Industrial Average closed at 9171, up 78 points, or 0.9%.  The Standard & Poor’s 500 closed at 987, up 18 points, or 0.8%, and the NASDAQ Composite closed at 1978, up 13 points, or 0.6%.

Microsoft and Yahoo have agreed to join forces to take on Google, which should make for an interesting fight over market share.  The major oil companies reported lower earnings, with year over year demand down, and supplies at nineteen year highs.  U.S. home prices rose in May for the first time in three years.  Alcatel-Lucent reported a second quarter profit, it’s first since the companies joined forces in 2006.

On the tax front, its more of the same, with Congress toying with surtaxes.  Several proposals are being offered, with a three tiered approach being favored by the House.  Under this Robin Hood scheme, singles and joint filers with AGI’s above the $280K/$350K mark would pay an extra 1%, filers with AGI’s above $400K/$500K would pay an extra 1.5%, and filers with AGI’s above $800K/$1 million would pay an extra 5.4%.  By the way, Robin Hood was a common criminal.  www.fairtax.org.

For those of you in California who have been issued IOU’s instead of tax refunds or payment for services – good news.  Interest on the IOU’s is tax free, according to the IRS.  These IOU’s are treated as muni’s for tax purposes.

According to Kiplinger’s Tax Letter, random audits of S corporations have been profitable for the IRS.  Areas of noncompliance targeted for future scrutiny include travel costs, meals and entertainment, car and truck expenses, and taking profits as dividends instead of salary, among others.  The war on capitalism continues.  Once again, www.fairtax.org.

The IRS can seize health savings accounts for back taxes.  In a private letter ruling, the agency says the IRS has power to attach these assets.  Even worse, these distributions will be subject to income tax, and a tax penalty.  Next up, the little black van.

Millions of words have been spoken and written about the administration’s proposed national health care plan.  In lieu of opinion, let’s look at what is actually proposed under the plan.  Based on several analyses of the plan which we have read, here are some highlights.

According to Dr. David Janda, the healthcare plan is based on rationing and denying care. A National Health Care Board will oversee the plan.  The plan mandates the creation of Federal Coordinating Council For Comparative Effectiveness Research.  One of this Council’s goals will be to “slow the development of new medications and technologies in order to reduce costs”.

Doctors and hospitals will be overseen by The National Coordinator For Health Information and Technology.  This coordinator, or its employees, will “monitor treatments being delivered to make sure doctors and hospitals are strictly following government guidelines that are deemed appropriate”.  “Doctors and hospitals not adhering to guidelines will face penalties.”  According to those in Congress, penalties could include large six figure fines and imprisonment.

According to Section 102 of the plan, “Protecting the Choice to Keep Current Coverage”, it will be illegal to maintain private insurance when someone changes jobs, retires, or at similar life events.  According to Section 1233, “Advanced Care Planning”, Americans over age 65 will be required to go to mandated counseling, the goal of which is to help end life sooner.

QALYs, or Quality Adjusted Life Years, have been discussed in medical journals and circles for decades.  America’s Affordable Health Choices Act of 2009, the national healthcare plan, would adopt QALYs as a standard by which to gauge whether someone is deserving of treatment.  In effect, reducing life to a quantitative analysis.  If you can make an economic contribution, and your treatment won’t unduly burden the system, you get treatment.  If you no longer make an economic contribution, or the cost of your treatment outweighs your potential economic benefit, your needs and treatment are ignored or denied – put on the back burner. To make a very gruesome comparison, isn’t that what Hitler did, with a very sadistic racist twist?

If you would like supporting documentation for these comments, or a link to the entire 1018 page document, you are welcome to email us, and we will forward it to you.

It was a pleasure to watch 59 year old Tom Watson make a run for the British Open title.  When 30 year olds win, we stand in awe.  Tom inspires us, gives us confidence that we too, though our body creaks from time to time, can still charge the hill

Quote of the Week

Randy Brunson