Tax benefits and penalties of marriage

The Supreme Court has struck down part of a law that denied federal benefits to same-sex couples who were married in states that recognize their unions. The tax benefits of being married, however, are a mixed bag.

Three scenarios:

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A couple with no children. One spouse makes $70,000 and the other makes $30,000, for a combined income of $100,000. They each take the standard deduction.

Combined federal income tax bill if they file as single adults: $13,483.

Tax bill if they were married filing jointly: $11,858.

Tax cut for being married: $1,625.

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A couple with no children. One spouse makes $225,000 and the other makes $75,000, for a combined income of $300,000. They each take the standard deduction.

Combined tax bill if they file as single adults: $71,861.

Tax bill if they were married filing jointly: $77,575.

Tax increase for being married: $5,714.

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A couple with no children. One spouse makes $35,000 and the other makes $15,000, for a combined income of $50,000. The lower-paid spouse gets health insurance benefits provided by the higher-paid spouse's employer.

Combined federal income tax bill if they file as single adults: $4,323.

Tax bill if they were married filing jointly: $3,608.

Tax cut for being married: $715.

Note: Employer-provided health benefits are generally tax-free for workers, spouses and dependents. However, if a worker's unmarried partner is covered, those benefits are taxed.

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Source: The Tax Institute at H&R Block.

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Student debt flunking many first-time home buyers

WASHINGTON — They're not yet an endangered species, but their steadily diminishing presence has some real estate analysts worried: First-time buyers are missing in action in housing markets across the country.

Traditionally first-timers have accounted for around 40 percent of purchases in the resale market. But in May, according to the National Association of Realtors, they were just 28 percent, down from 29 percent in April and 34 percent a year ago.

Big deal? Yes. If predominantly young, first-time purchasers are not entering the home ownership pipeline at anywhere near their traditional rate, at some point the system begins to choke. Owners of modest-priced starter homes find it more difficult to sell and move up. They in turn can't buy the larger homes they crave, reducing demand for houses in the more expensive categories. A shortage of first-time buyers at the intake level eventually triggers problems all the way up.

Where are these previously dependable first-time homebuyers in their late 20s and early 30s? A new national study released last week offers important clues: A lot of them are carrying such heavy debts from student loans that they're postponing buying houses.

Researchers for the One Wisconsin Institute found that the rate of homeownership among individuals who are paying off student loans is 36 percent lower than their peers who have no student debt. The disparity can be seen at all income levels. Among individuals who earn $50,000 to $75,000 a year, those who are still paying down student loans have a 28 percent lower rate of home ownership compared with others in the same income group.

Bulging student-loan balances aren't short term issues, either. The institute's study found that the average payoff time is 21 years, ranging from 17 years for those who attended college but did not get a degree to 23 years for those with graduate degrees.

Worse yet, student loans are exhibiting high default rates — currently about
13.4 percent. That depresses credit scores and makes it more difficult to qualify for a mortgage under today's toughened underwriting standards, where average FICO scores for buyers using conventional mortgages top 760.

Even financial regulators are now acknowledging the troubling linkage between student-debt loads and declining home purchases.

Total outstanding student debt now exceeds $1.1 trillion. Debt loads for recent graduates average just under $27,000, but an estimated 13 percent of outstanding balances range from $54,000 to $100,000.

Student debt troubles are hardly the only barrier keeping first timers out of the market, however. Stan Humphries, chief economist for Zillow, the online real estate site, says there are three additional important reasons behind the trend:

L High down payment requirements for conventional loans — averaging just below 20 percent. The Federal Housing Administration's lower down payment options are attractive, but recent premium hikes can make FHA loans more expensive than competing conventional mortgages.

L Persistent negative 
equity problems among the owners and potential sellers of the lower-priced start-up homes that first-time buyers traditionally could afford are keeping those properties off the market because owners don't want to take a loss at settlement. Roughly 43 percent of owners in the 35 to 39 age bracket are still underwater on their mortgages — nearly double the rate for homeowners overall.

L Cash-rich investor competition. For those affordable homes that do come on the market, first-time buyers frequently are losing out to investors who can pay hard cash.

Problems like these aren't likely to go away anytime soon, Humphries believes, but they could improve gradually. Financing terms could loosen up as interest rates rise and lenders are forced to reach out to purchasers — including first timers — with more favorable deals. Similarly, as home prices rise, investors are likely to cut back on their purchases of starter homes they turn into rentals, thereby opening new doors for first-time buyers.

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Maine fireworks revenues far exceed projections

PORTLAND, Maine — Sales at Maine's fireworks stores have far surpassed initial projections when fireworks became legal last year for the first time in 63 years.

When legislators debated a bill in 2011 seeking to legalize fireworks, the Maine Revenue Services estimated that fireworks stores would generate about $120,000 a year in sales taxes. In reality, the state collected $380,000 in sales taxes for the latest 12-month period ending May 31, according to the agency.

With a sales tax of 5 percent, that means fireworks stores had sales of $7.6 million in the past year.

The Maine Revenue Services' original projections were somewhat conservative since fireworks were new and there was no baseline from which to work, said spokesman David Heidrich. Still, the numbers are impressive, he said.

"The revenues generated by these retailers have far exceeded expectations," he said.

Fireworks became legal in Maine on Jan. 1, 2012, after legislators — with the support of Gov. Paul LePage — repealed a 1949 law that outlawed them. State law limits fireworks to municipalities where they're approved and requires people to be 21 to purchase and use them.

Doug Damon, a former state representative from Bangor, said one reason he sponsored the 2011 bill that legalized fireworks was because he thought it would create jobs and business opportunities.

By last Fourth of July, about a dozen fireworks stores had opened. There are now 18 stores statewide with scores of employees, according to the Maine fire marshal's office, which licenses the stores.

"Fireworks were coming into Maine anyways but without the benefits of jobs or taxes," Damon said.

He's not surprised sales are strong. "This is only the first year," he said. "It's still growing."

Steve Marson owns five Pyro City Maine stores — in Manchester, Winslow, Ellsworth, Edgecomb and Presque Isle — with about 40 full-time employees. Every employee he hired last year was jobless when he hired them, he said.

Sales have been steady, he said, and he expects them to grow as people get used to fireworks being legal. The strongest sales are around the Fourth of July, but he thinks fireworks will become more popular throughout the year as people buy them for other occasions.

"People are using them for cookouts, birthday parties or to have small backyard fireworks displays for entertainment," he said.

The newest store, Black Bear Fireworks in the eastern Maine town of Machias, opened in late May and has five employees, said owner Wesley Graham.

There's plenty of room for growth in the industry in Maine, Graham said, and he eventually hopes to open five more stores.

But store owners have some uneasiness that lawmakers may again outlaw fireworks after investors have spent millions of dollars opening stores, he said.

"One of the big concerns is it will be taken from us, that the rug will be pulled out from under us," he said. "Or maybe there's too much invested at this point by Maine people. Too many jobs are being created and Maine needs that money."

Fireworks opponents have said fireworks are dangerous. There are no official statistics on fireworks accidents, but the state fire marshal last year said there were relatively few accidents on July 4 and nearly all of them were caused by people mishandling or misusing the fireworks.

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Lobster trap limit increased for Maine island

SWANS ISLAND, Maine — Lobstermen on Swans Island off the eastern Maine coast are now allowed to fish more traps.

Gov. Paul LePage last week signed into law a bill allowing Swans Island fishermen to have 550 traps, up from 475.

The law aims to increase economic opportunities by allowing Swans Island lobstermen to take advantage of the plentiful summer lobster harvest. Officials say the higher trap limit won't threaten the lobster resource.

Most lobstermen in Maine are allowed to have up to 800 fishing traps, but Swans Island and some other fishing zones have lower limits. Swans Island is located about five miles south of Mount Desert Island and has a population of about 330.

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Home price gains bring sellers off the sidelines

SAN DIEGO — Robert and Emerald Oravec were itching to sell their condominium late last year to move closer to a favorite surfing spot, but they were stuck. They owed the bank $194,000 and figured the most they could get was $180,000.

When they put their San Diego home up for sale a few months later, they fielded five offers within two weeks. It sold for $260,000 in May, allowing them to invest profits in a new home that's more than twice the size on a large lot and 40 minutes closer to the surfing beach.

"We're stoked," said Robert, 50, a facilities engineer at Solar Turbines Inc., a maker of gas turbines that has employed him for the last 22 years. "It was better to be patient and wait it out."

Soaring prices are leaving fewer homeowners owing more money than their properties are worth, bringing them off the sidelines of the nation's surging housing market and offering relief to buyers who are frustrated by bidding wars. As more homes are put up for sale, price increases are expected to moderate.

Mark Fleming, chief economist at real estate data provider CoreLogic Inc., calls it "a virtuous circle."

"The fact that house prices have increased so dramatically ... has unlocked a lot of that pent-up supply," said Fleming, whose firm found that markets with the largest percentage of "underwater" or "upside down" mortgages often have the lowest supply of homes for sale.

From January to March, 19.8 percent of the nation's mortgaged homes were underwater, down from 23.7 percent a year earlier and 25 percent during the same period of 2011, according to CoreLogic. Gains spread across the country, though regions that rose high and crashed hard remained saddled with homeowners who bought near the peak.

Nevada had a nation-high 45.4 percent of mortgages underwater, followed by Florida at 38.1 percent, Michigan at 32 percent and Arizona at 31.4 percent. Montana had a nation-low 5.6 percent.

Among major metropolitan areas, Tampa Bay had a nation-high 41.1 percent of mortgaged homes underwater, followed by Miami at 40.7 percent. Dallas had a nation-low 8.3 percent.

San Diego, at 19.5 percent, was slightly better than the national rate and California's 21.3 percent. The region's median home sale price hit $406,500 in May, up 21.3 percent from a year earlier amid brisk sales, according to DataQuick.

Housing inventories remain unusually low. There was a 5.2-month supply of existing, single-family homes for sale in May, compared to 6.4 months a year earlier, according to the National Association of Realtors. California had only a 2.6-month supply, compared to 3.6 months a year earlier and well below the six months that is considered a balanced market.

San Diego broker Colleen Cotter began knocking on doors this year after scouring property records to find homeowners who didn't owe money. If someone answers, she makes an all-cash bid on behalf of investors who don't even visit.

Nearly one of three homes sold in Southern California is paid for in cash, putting borrowers at a disadvantage. Some buyers write sellers about how they would cherish a home, hoping to spark a personal connection.

Josh Martin, 26, discovered homes he and wife considered buying had changed hands less than a year earlier at much lower prices. The first-time homebuyers lost nine bids since August— many to cash buyers — until finally landing a home in May for $250,000 in the San Diego suburb of Chula Vista.

"It was very stressful because the prices just kept going up," said Martin, who recently left the Marine Corps. "Our lease was about to end and we didn't want to sign another year."

Economists expect many homeowners will continue to resist selling because they think they can profit more by waiting.

Nancy Randazzo, a 38-year-old public school teacher who owes about $240,000 on an Anaheim condominium that she bought for $335,000 in 2005, figures she might be able to sell for what she owes but wants to rent to Disneyland tourists. One potential snag is that she and her fiancee would need to find a place to buy.

"Prices are going up so fast that I don't know if I can," she said.

The huge price increases produced an unexpected retirement gift for Larry and Diane Plaster, who were resigned in January to selling their San Diego home for less than they owed the bank, known as a short sale. They owed $352,000 but accepted an offer for $290,000.

Their bank rejected the deal four months later, leading the couple to put the home up for sale again. On the second attempt, they took an all-cash offer of $380,000, yielding a windfall of $6,500 after broker fees and closing costs. The Plasters, who live on Social Security income, fulfilled a dream of moving to a geodesic dome they built in Janesville, 130 miles north of Lake Tahoe.

The former Catholic social service workers were so angry when Chase rejected the short sale that they closed their account after more than 40 years.

"Now I guess I should send them a thank-you note," said Diane, 66.

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Supreme Ct. to consider fight over frozen assets

MIAMI — The U.S. Supreme Court is taking up a case this fall over whether the government can freeze the assets of people who have been accused of a crime.

The case involves Kerri and Brian Kaley, who came under federal investigation for allegedly stealing medical devices. The Kaleys took out a $500,000 line of credit on their New York house to hire lawyers. Yet after their indictment in 2007, prosecutors sought to prevent the Kaleys from using the money because the government intended to seize the house.

The case involves both the Fifth Amendment's due process clause and the Sixth Amendment's right to counsel, and could potentially affect thousands of cases each year in which the Justice Department seeks to seize defendants' property.

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Ecuador flower growers in Snowden shock

PIFO, Ecuador — Gino Descalzi used to fret about things like aphids, mildew and the high cost of shipping millions of roses a year from Ecuador to florists in the United States. These days he's worried about a 30-year-old American thought to be stuck in the transit area of the Moscow airport, and he can't believe it.

The Obama administration sent a thinly veiled economic threat to this South American country on Thursday when it indefinitely delayed a decision to eliminate tariffs on imports of roses worth about $250 million a year. The move created leverage over the leftist government seen as likeliest to grant National Security Agency leaker Edward Snowden political asylum that would protect him from U.S. criminal charges.

A week after Snowden began his stuttering, surreal flight across the globe, every passing day without him making progress toward Ecuadorean asylum makes the prospect look less likely. But the men who grow roses, asters and delphinia in the thin air of Ecuador's sun-soaked highlands are deeply concerned that, whatever happens to Snowden, they may turn out to be the most unlikely collateral damage from the geopolitical wrangle over his fate.

"This totally changes the financial panorama for our businesses and seriously affects the structure of our markets," said Descalzi, whose 280 employees produce some 22 million roses a year. "We're just shocked that an event so far from the political and economic life of Ecuador has caused so much commotion and worry."

The rose benefit for Ecuador had been widely expected to be approved. Any delay, they say, puts it into uncomfortably uncertain territory.

Even if Snowden never touches Ecuadorean soil and the U.S. cuts the 6.8 percent tariff on Ecuadorean roses, along with tariffs on frozen broccoli and canned artichokes, Ecuadorean flower growers are worried that the brouhaha has damaged Ecuador in the eyes of the United States, hurting its reputation for stability and reliability among the buyers who must decide between flowers from Ecuador and the already tariff-free blooms from its nearby market-dominant competitor, Colombia.

"This is not a mathematical equation," said Benito Jaramillo, the head of the Ecuadorean flower-growers' association. The graduate of Texas A&M and the University of Illinois at Urbana-Champaign employs hundreds of people growing "summer flowers" — a category of less-flashy blooms like hydrangeas and asters — on his farm about a half-hour from the capital, Quito.

"The point is that there are a lot of other factors that damage our industry's image and competitiveness in the midterm," Jaramillo said.

Flowers are serious business in Ecuador.

The industry says it employs about 50,000 people on about 550 farms across the country and is indirectly responsible for 110,000 jobs, putting it after only oil, seafood and bananas in the ranks of the country's biggest exporters. It boasts that the long days, rich sunlight and cool nights of the Andean highlands mean the heads of flowers, particularly roses, grow fuller and richer than those from Colombia, which they scoff at as more suitable for grocery stores than florists.

Industry representatives spent around a year campaigning hard in Washington for the inclusion of cut roses under the Generalized System of Preferences, or GSP, a mechanism meant to encourage development in lower-income countries. A broader trade pact that covers a wide range of Ecuadorean products, the Andean Trade Preference Act, had been widely expected to expire next month. That now seems certain, not least because Ecuador declared Thursday that it was preemptively rejecting it.

Now, the flower industry has turned its focus to its own government, which it desperately hopes won't offer asylum to Snowden.

A small group of U.S. senators explicitly threatened trade retaliation if Ecuador harbors Snowden. And on Saturday, Vice President Joe Biden asked Ecuadorean President Rafael Correa to turn down any asylum request.

"We can't put the interests of 14 million Ecuadoreans at risk because of a 29-year-old hacker whom we don't even know," Descalzi said. "This gentleman doesn't mean anything to us."

The business impacts of the Snowden affair have infuriated Ecuador's main business groups, who accuse the government of putting ideology before commerce.

The decision to renounce the Andean Trade deal was "permeated by political and ideological motives," said Roberto Aspiazu, chairman of a coalition of Ecuador's largest industries. The country's business sector is calling on the government to manage the relationship with the United States "with the utmost care," he said.

The government said it planned to compensate business damaged by the loss of U.S. tariff benefits and has painted its decision in terms of the nation's sovereignty versus U.S. threats.

However, Correa told The Associated Press in an interview Sunday that his government was not thinking about renouncing the GSP trade benefits that would affect rose exports, along with a host of other Ecuadorean products, because those benefits had not been subject to U.S. threats.

"If they threaten us, we'll take the appropriate decisions. Ecuador doesn't accept threats from anyone, we don't allow blackmail and our sovereignty isn't for sale," Correa said.

When asked how he feels about the whole situation, Jaramillo, the head of the flower association, thought before responding with a single word: "frustrated."

"One isolated issue shouldn't create so much damage," he said.

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AP writer Gonzalo Solano contributed to this report.

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European officials slam US over bugging report

BERLIN — Senior European officials expressed concern Sunday at reports that U.S. intelligence agents bugged EU offices on both sides of the Atlantic, with some leftist lawmakers calling for concrete sanctions against Washington.

The president of the European Parliament, Martin Schulz, said he was "deeply worried and shocked about the allegations of U.S. authorities spying on EU offices" made in a report published Sunday by German news weekly Der Spiegel.

The magazine said the surveillance was carried out by the U.S. National Security Agency, which has recently been the subject of leaks claiming it scanned vast amounts of foreign Internet traffic. The U.S. government has defended its efforts to intercept electronic communications overseas by arguing that this has helped prevent terror attacks at home and abroad.

Schulz said that if the allegations that the NSA bugged European Union offices were confirmed "it would be an extremely serious matter which will have a severe impact on EU-US relations."

Green Party leaders in the European Parliament, Rebecca Harms and Daniel Cohn-Bendit, called for an immediate investigation into the claims and suggested that recently launched negotiations on a trans-Atlantic trade treaty should be put on hold.

They also called for existing U.S.-EU agreements on the exchange of bank transfer and passenger record information to be canceled. Both programs have been labeled as unwarranted infringements of citizens' privacy by left-wing and libertarian lawmakers in Europe.

In Germany, where criticism of the NSA's surveillance programs has been particularly vocal, a senior government official accused the United States on Sunday of using Cold War methods against its allies by targeting EU offices in Washington, New York and Brussels.

"If the media reports are accurate, then this recalls the methods used by enemies during the Cold War," German Justice Minister Sabine Leutheusser-Schnarrenberger. "It is beyond comprehension that our friends in the United States see Europeans as enemies."

Leutheusser-Schnarrenberger called for an "immediate and comprehensive" response from the U.S. government to the claims in the Spiegel report, which cited classified U.S. documents taken by former NSA contractor Edward Snowden that the magazine said it had partly seen.

Spokespeople for the NSA and the office for the national intelligence director in Washington did not immediately respond to requests for comment Sunday.

According to Der Spiegel, the NSA planted bugs in the EU's diplomatic offices in Washington and infiltrated the building's computer network. Similar measures were taken at the EU's mission to the United Nations in New York, the magazine said.

Der Spiegel didn't publish the alleged NSA documents it cited nor say how it obtained access to them. But one of the report's authors is Laura Poitras, an award-winning documentary filmmaker who interviewed Snowden while he was holed up in Hong Kong.

The U.S. has been trying to track down Snowden, who is believed to currently be at Moscow's main airport with plans to travel to Ecuador to seek asylum.

The magazine also didn't specify how it learned of the NSA's alleged eavesdropping efforts at a key EU office in Brussels. There, the NSA used secure facilities at NATO headquarters nearby to dial into telephone maintenance systems that would have allowed it to intercept senior EU officials' calls and Internet traffic, the Spiegel report said.

Also Sunday, German federal prosecutors said they were examining whether the reported U.S. electronic surveillance programs broke German laws. In a statement, the Federal Prosecutors' Office said it was probing the claims so as to "achieve a reliable factual basis" before considering whether a formal investigation was warranted.

It said private citizens were likely to file criminal complaints on the matter, but didn't comment on the possible legal merits of such complaints.

Der Spiegel reported that at least one such complaint was lodged with prosecutors in the state of Hesse last week.

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Frank Jordans can be reached at http://www.twitter.com/wirereporter . Associated Press Writer Raf Casert contributed to this report from Brussels.

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SF rapid transit talks break down; strike possible

OAKLAND, Calif. — Negotiators for San Francisco Bay Area Rapid Transit said they planned to show up for contract talks Sunday as union leaders warned workers will likely go on strike, which threatens to cripple the region's Monday morning commute.

Josie Mooney, a negotiator for the Service Employees International Union Local 1021, said there was "a 95 percent chance" that her union and members of the Amalgamated Transit Union Local 1555 would strike, after contract talks stalled Saturday.

"I'm afraid I don't see a way we will avoid a strike," she said after union leaders left the negotiating table Saturday, claiming they have met with BART's management for only 10 minutes in the past 36 hours. The two unions represent nearly 2,400 train operators, station agents, mechanics, maintenance workers and professional staff.

A walkout could derail the more than 400,000 riders who use the nation's fifth-largest rail system and affect every mode of transportation, clogging highways and bridges throughout the Bay Area. Such a strike could begin Monday after contracts expire at midnight Sunday.

BART spokesman Rick Rice said Sunday that the agency planned to attend talks scheduled for 1 p.m. and hoped union representatives would be there.

"We're certainly expecting to have conversations today," Rice said. "We'll be there."

Mooney said Saturday that the unions have no plans to meet with BART.

Negotiations between BART and the unions had intensified as Sunday night's deadline loomed. Two state mediators were facilitating the negotiations, with each side seated in separate rooms.

As the parties went back to the bargaining table Saturday in Oakland for anticipated around-the-clock sessions, both sides said they were far apart on key sticking points including salary, pensions, health care and safety.

The unions want a 5 percent annual raise over the next three years. BART said Saturday that train operators and station agents in the unions average about $71,000 in base salary and $11,000 in overtime annually. The workers also pay a flat $92 monthly fee for health insurance.

Rice said BART's latest proposal offered an 8 percent salary raise over the next four years, instead of its original offer of 4 percent. The proposed salary increase is on top of a 1 percent raise employees were scheduled to receive Monday, Rice added.

The transit agency also said it offered to reduce the contribution employees would have to make to their pensions, and lower the costs of health care premiums they would have to pay.

On Friday, the ATU asked California Gov. Jerry Brown to issue a 60-day "cooling off" period if no deal can be reached by Sunday's deadline, but the SEIU and BART officials have urged Brown not to issue such an order.

The governor's office has declined to comment.

BART's last strike lasted six days in 1997. On Friday, other area transit agencies urged commuters to consider carpooling, taking buses or ferries, working from home and, if they must drive to work, to leave earlier or even later than usual.

"The bottom line is that a BART strike will be an absolute nightmare for everyone," said Jim Wunderman, president and CEO of the Bay Area Council, a business advocacy organization. "Our transportation system simply does not have the capacity to absorb the more than 400,000 BART riders who will be left at the station. There will be serious pain."

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Economic group urges 'yes' on Springfield casino

SPRINGFIELD, Mass. — The Economic Development Council of Western Massachusetts is urging Springfield voters to approve the July 16 referendum on the MGM Springfield casino proposal.

The council says it believes the agreement between MGM Springfield and the city could provide an economic boost to the region.

The Republican reports (http://bit.ly/12el1pm ) that Allan W. Blair, president and CEO of the Economic Development Council, says the casino proposal and host community agreement need a thorough vetting by the state Gaming Commission.

Hard Rock International has proposed a casino for the Eastern States Exposition Grounds in West Springfield and the Mohegan Tribal Gaming Authority is proposing to build a casino in Palmer.

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Information from: The Springfield (Mass.) Republican, http://www.masslive.com/news/

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