Street Talk

Street Talk: Remember that merger between Mercantile and Firstbank?

Tax facts.

April 18, 2014
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It hasn’t happened yet.

When announced last August, the merger between Mercantile and Firstbank was expected to be a done deal by the end of 2013, but then came an objection in October to the Federal Reserve Board, which must review and approve such mergers.

The protest, under the terms of the Community Reinvestment Act, was lodged by Matthew R. Lee of the Bronx, who has an online organization called the Inner City Press/Fair Finance Watch. Lee, an attorney/activist, told the FRB he believes Mercantile discriminates against minorities who apply for loans.

Mercantile previously had received good CRA Performance Evaluations from the Federal Deposit Insurance Corp.

Lee’s protest started an investigation by the FRB.

In late November, FRB spokesperson Susan Stawick told the Business Journal she could not comment on the board’s timetable for resolving the issue.

In December, Mercantile moved back its estimated completion date for the merger to “later in the first quarter of 2014.”

On April 11, Stawick told the Business Journal the “application is still pending, so no decision yet.”

Then the Business Journal asked Mercantile CEO Michael Price if the delay was having an impact on the merger plans. He replied quickly, noting that the parties were entering the final stages of the approval process, and he was not able to make any public comment until it was complete.

Stay tuned.

A timely comeback

Today is the running of the Boston Marathon, which is probably getting more media attention than anything else happening in America.

There was a one-sentence reference to the Boston Marathon last week at a Kent County commission meeting, but it was more or less a coincidence.

Jack Stewart, Kent County Emergency Management director, came before the county commission’s Finance and Physical Resources Committee to request they approve the acceptance of a $242,220 grant from Homeland Security.

Stewart said some of the money would be used to buy and install more public security cameras on the Medical Mile, where a lot of medical workers and patients come and go at all hours.

District 9 Commissioner Nate Vriesman of Byron Center wasn’t so sure it was a good idea. He allowed as how all the surveillance cameras situated on public streets and sidewalks smacks of “Big Brother.”

“That’s the type of technology that caught the Boston Marathon bombers,” replied Stewart.

Later Stewart told the Business Journal that the various levels of federal, state and local government work together to try to enhance public safety, preparing for all kinds of emergency situations. Security cameras are just a small part of the tools provided “to help fight the bad guys.”

“Terrorists only have to be lucky once. We have to be vigilant 100 percent of the time,” added Stewart.

Free at last

Each year, the Tax Foundation in Washington figures out how many days it takes from Jan. 1 for the average taxpayer to earn enough money to pay off that year’s tax bill.

Congratulations, Mr. and Mrs. America: Today’s the day.

The Tax Foundation, which bills itself as the nation’s “leading independent tax policy research organization,” says Tax Freedom Day 2014 is three days later than last year. It speculates this may be due to a recovering economy, with people making more money this year.

Tax Freedom Day tends to vary, but the one that took the longest to arrive was in 2000, when it came on May 1. Was it because the economy was better then and people were making more money? Or was it that the tax rates were higher than now? The foundation notes that year, “Americans paid 33 percent of their total income in taxes.”

In 1900, Americans paid slightly less than 6 percent of their income in taxes. Tax Freedom Day was Jan. 22 that year. So, yeah, taxes were a lot lower 114 years ago.

But the stats published this year by the Tax Foundation led tax expert John V. Zadvinskis to comment that maybe things aren’t so bad now. Zadvinskis, a Grand Rapids tax attorney who has been practicing since 1978 and has clients all over the state of Michigan, noted that the Tax Foundation stated it took 33 days this year to pay the tax bill and another 27 days to cover the annual Social Security tax (or FICA).

Zadvinskis said that surprised him because he would have guessed it took more days to pay the income tax and fewer days to pay the FICA.That may be an indication Americans are actually paying less in taxes, he suggested.

And then there’s the capital gains tax.

When Zadvinskis started doing tax work 30 years ago, the highest marginal rate on earned income was 50 percent. Now it’s 39 or so. And the highest marginal rate on unearned income — capital gains, dividends, interest — was 70 percent. Way, way higher than it is in 2014.

It means that over the years, the tax code has flipped, with the rates on unearned income far less today than on earned income. “So if you’re a trust baby, it’s seventh heaven,” cracked Zadvinskis.

The foundation says Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes. Zadvinskis said that surprised him, too, because he would have thought the federal amount would be higher than that in comparison to the state/local tax bill.

Zadvinskis mentioned the late-night TV commercials from law firms that promise IRS settlements for “pennies on the dollar” for those in tax trouble. He said such settlements really do happen — he’s done it for his clients.

But, as usual, there’s a catch: You genuinely have to be in dire straits due to situations such as bankruptcy, unemployment, huge medical bills ...

“You have to be poor,” he said, “to get a great deal like that.”

“The IRS has a vehicle for people who are suffering hardships and really have a legitimate inability to pay. I think that’s the biggest positive change since I’ve been doing tax work — the fact that the IRS has a formal procedure called ‘offer and compromise’ for people who actually need help”— those who, for various reasons, “are really never going to be able to pay off their debt” to the IRS. And that, he added, is a positive safety valve for Americans.

“So I guess the system has some justice in it, and you have to give the IRS credit for that,” said Zadvinskis, because most states — Michigan included — don’t have a formal settlement process in their tax codes.

When it comes to taxes, he said, “it’s not a perfect world, not a perfect system. And they (the IRS) are understaffed, by the way. Which isn’t good, actually, if you’re looking at the big picture.”

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