Tuesday May 11, 2010

RM Strategic Marketing Tips: volume 6

I hope everyone is gearing up for a great Memorial Day weekend. With the fast approaching unofficial start of summer, the RMSM Marketing Bootcamp preparations are in full swing. This month, we would like to introduce you to our camper, Karlene Readinger.

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Rich White's Marketing Tip

By 2013, high-income U.S. taxpayers could again be facing a 50% marginal income tax bracket.

There are three potential parts to this “bracket creep”: 1) the 3.8% Medicare surtax on unearned income that takes effect in 2013 under health care reform legislation (for single filers with modified adjusted gross incomes over $200,000, or joint filers over $250,000; 2) the scheduled expiration of the Bush tax cuts, which President Obama’s budget does not oppose for high-income taxpayers, scheduled to take effect on 1/1/11; and 3) higher state income tax brackets for top incomes, which states such as California and New York already have enacted.

You can expect tax-exempt municipal bonds to be beneficiaries of “the new 50% bracket.” But don’t let your investors get caught in a mindless rush into munis. Tell them that there are huge differences in quality among municipal bond issuers, and these differences keep getting bigger.

On the state level, there are “blue-chip borrower” states such as North Carolina, Tennessee, Virginia and Minnesota. Then, there are “deadbeat debtor” states such as New Jersey, Illinois, California, Pennsylvania and Rhode Island. Ratings no longer are very useful in evaluating municipal credit.

Financial firms and advisors that can help clients evaluate the municipal market and emphasize sound credit risks will be in huge demand, as 2013 approaches.

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Introducing Karlene Readinger

Karlene Readinger is currently a junior at the University of Delaware. She is working toward a double major in management and marketing, with a minor in international business. Next winter, she will be studying abroad in Singapore and Australia. The study abroad program includes visiting businesses from these areas and learning about their marketing strategies. These experiences, coupled with the RMSM Marketing Bootcamp, will give her the tools she needs to help her decide on a career.

Karlene will be blogging her experiences on the RM Strategic Marketing website in the months to come. Keep an eye out for her thoughts.
 

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