Wednesday, February 24, 2016

Some Financial Laws And Their Namesakes to Be Used in Finance

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Some Financial Laws
While working in a country everything and everyone walks with some laws. If there are no laws in our life it will become a fish market. Laws are step towards happy life. Just like we have laws and rules of our home set by our parents or guardians just like that our country is our home too and to live in it we need some laws. If there will be no laws there will be no peace in the world. For peace and prosperity of human laws take important place for people living in that country. Among these laws financial law is the major of all as it stands to protect financial interest of companies and individual investors. These financial laws are particular type of guarantee for fair competition. These laws are important for small or even large business. There are various namesakes to be used in finance. Only if a person attach to federal legislation can pass a bill by the lawmaker and thus it named after him. If law is named after any person than it is taken as honour for that person and a solid declaration of hard work done by that person. But sometimes this occasion looks like a burden on that person. There are eight different financial laws which are named after people who made them or introduce them.

  1. Bush Tax Cuts is the financial law which was introduced by former President George W. Bush who was in his office at the time of signing the tax changes into law in 2001 and 2003. The major changes made in it were like addition of new lower 10% tax bracket and cutting off the tax rate for highest income earners to 35% while tax on capital gain and certain dividend were also cut off. The top rate moved to 15% where taxpayers in 10%while 15% tax brackets don’t be obliged from any capital gains taxes at all on profits. Scheduled expiry date of this law was 31 December 2010 but it was agreed to keep it throughout 2012 by Congress and Obama administration.
  2. Buffet announced that he is paying lower tax rate than his secretary who gave birth to new financial law named as Buffet Rule according to which people earning $1 million or more have to pay 30% tax rate. The major difference between both tax payers was that Buffet was earning through capital gain and qualified dividends which were taxed at lower rate in Bush Tax Cuts while his secretary was earning ordinary income. The proposal of this law was proposed by President Barack Obama and U.S. Senate Democrats and idea was given by Warren Buffet.
  3. Bowles-Simpsons Plan came into being when President Barack Obama appointed a bipartisan group of Washington Economic and political leaders for come to point where they can get control over the expense of country. At that time Erskine Bowles and Alan Simpson passed a law which was named after them Bowles-Simpsons Plan. Right after ten months of formation of this law a draft was releases and shows less interest of people in it and was called for elimination of popular but costly tax deductions, exemptions or credits for specific categories of taxpayers. It make arguments on mortgage and charitable donation deduction and state that if they get subtracted then current income bracket and tax rate could also be reduced to three like 8%, 14% and 23%. This plan was again revived and rejected.
  4. There was a retirement saving plan announced in 1998 by Roth IRA according to which workers can easily contribute after tax dollars with increment in it till retirement and can withdraw them after retirement. This law was named as Roth IRA and was most favourite of almost every taxpayer because of this they were tension free from tax bills distributed at retirement time. In addition to tax free earning this law allow account holder to contribute as long as they like and the money can stay in Roth IRA as long as they want.
  5. In the honour of U.S. Sen. Paul Coverdell of Georgia a law is made called Coverdell Education Savings Account according to this law only 2000$ should be contributed annually to Coverdell account while the person who can donate the amount can put money in the account which goes further for child’s education. Contributions will not subtracted from donor but increment of earning will take place tax free and after meeting some requirements the money can be withdraw tax free. This money was used in paying for some college expense but mostly for pre college expense like books, tutoring and computer for public, private or parochial schools.
  6. Dodd-Frank Act came into being after Sen. Chris Dodd and Rep. Barney Frank passed an act which was basically passed to address concerns that were highlighted during financial crisis of 2008. Changes made by this act were increased oversight and supervision of financial institutions, stringent regulatory capital requirements, a new resolution procedure for large financial companies and change to corporate governance and executive compensation practices. Due to this act Consumer Financial Protection Bureau was came into being in 2012 which was responsible for implementing and enforcing compliance with consumer financial laws.
  7. Volcker Rule is basically a part of Dodd-Frank Act and named after former Federal Reserve Chairman Paul Volcker. Volcker didn’t play any important role while making the law like Buffet but this rule named after him because of his basic financial rule which states that there should be no conflict between bankers and their customers. According to him if a bank is accepting deposit then they should avoid investing money for financial institutions own gain. The major goal for behind making this rule was prevention of need for future federal bailouts of banks.
  8. Stafford Loan is a law introduced to help financially for college students. This law was first made in 1965 but renamed in 1988 after Robert T. Stafford who was former U.S. Senator as republican lawmaker’s colleagues respect Stafford’s work and thus named this law after him by higher education reforms. These loans are available in both subsidized and unsubsidized forms. According to law the loan rate is fixing for life of loan until it is repaid while recipients might be able to subtract some loan interest on their tax return. Loan through FFEL Program were provided by private lenders and loans through FDL Program are provided by U.S. government to students and their parents.

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