Perspectives Blog

The new tax regime and stock compensation

Abram Claude, Vice President, Columbia Management Learning Center | November 21, 2014

…erica, a portion of compensation comes from one or more forms of stock plans or stock option plans. Compensation income from stock incentives contributes to adjusted gross income, but not net investment income for purposes of calculating the new 3.8% tax on net investment income. The Columbia Management Learning Center is dedicating a series of blog articles to this important and timely “Navigating the New Tax Regime” topic. For many employees i…

The three tax thresholds of the new tax regime

Abram Claude, Vice President, Columbia Management Learning Center | November 3, 2014

…exemptions and itemized deductions for federal taxes. The third threshold is the gateway to the highest federal income tax bracket of 39.6% and the highest general long-term capital gains tax rate of 20%. Affordable Care Act taxes The income thresholds for an additional 0.9% Medicare hospital insurance payroll surtax and the net investment income tax of 3.8% are the same amounts according to the taxpayer’s filing status1 — but what the amo…

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

Income inequality has tended to rise in both developed and EM. Companies look across the globe to determine where they can manufacture their products at the lowest risk-adjusted cost. We believe that the global unit labor cost arbitrage is likely to continue for many decades. By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi Asset Allocation Last week we discussed rising income inequality in developed markets and the degree to…

Does it still pay to hold municipal bonds?

Anders Myhran, Municipal Portfolio Manager | July 29, 2014

…ce of a bond or bond fund, there seems to be little or no recognition of the shock-absorbing effects of a bond’s income component. Don’t forget the income in fixed income Risk, and the fear it often instills, can cloud investors into thinking only about the here and now. Fixed income investing is a balancing act between the shorter-term (price volatility) and the longer-term (income). The short term is often driven by changes in interest rates an…

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

…s are only one component of the return provided by bonds. The main reason investors invest in bonds is for their income, and the income currently available from high yield municipals equals or exceeds income from taxable bonds without even considering the tax advantaged status of municipals. Despite significant volatility in the municipal market resulting from the financial crisis in 2008, fears of tax reform and dwindling market liquidity due to…

What’s the outlook for muni bonds?

James Dearborn, Head of Municipal Bonds | June 19, 2014

…pts and restrained spending — justify tighter credit spreads, especially relative to more volatile taxable fixed income alternatives, such as high-yield and investment-grade corporate bonds. While rates may in fact move higher later this year, we believe that even in such an environment, municipal bond investors will enjoy higher after-tax total returns with the promise of relative outperformance compared to other fixed income investment options….

A port in the storm — Short muni funds can offer refuge in the face of rising rates

Catherine Stienstra, Senior Portfolio Manager | October 2, 2014

…negative effects of a rising rate environment, it will also result in the predicament of nearly eliminating the income from the fixed income portion of a portfolio. Many investors may regret having spent the last several years sitting in cash or money market funds while waiting for interest rates to rise. These investors may want to consider a short-maturity municipal bond fund as an alternative. Note that short muni funds have a floating net as…