Analysis: Democrats' discord undercuts Obama estate tax push

WASHINGTON (Reuters) - Divisions among Democrats are undermining President Barack Obama's push to raise the U.S. estate tax on inherited wealth, just weeks before the arrival of the "fiscal cliff" could drive the present estate tax rate even higher than Obama proposes.
Action on the estate tax could be postponed. But in his successful re-election campaign, Obama called for wealthy Americans to pay more in taxes - and it is overwhelmingly the wealthy who pay the estate tax.
The outcome may hinge on whether Obama insists on his estate tax proposal - or something close to it - as forcefully as he has insisted on raising individual income tax rates for high income-earners, or whether he lets the issue be put off.
If a single facet of the complicated partisan stand-off over taxing the wealthy best captures Capitol Hill's fiscal gridlock, it may be the estate tax - a long-standing and volatile issue - that may finally be coming to a head.
"If you look at where the public is on tax issues compared to the last time this was debated - it is night and day," said Frank Clemente, campaign manager for left-leaning Americans for Tax Fairness. "They are deep into this tax fairness position."
The "fiscal cliff" is a collection of federal tax increases and automatic government spending cuts that, if allowed to take effect as scheduled early in 2013, could push the U.S. economy into recession, according to economists' forecasts.
Part of the picture is the estate tax.
Under laws signed a decade ago by former Republican President George W. Bush, the estate tax is applied to inherited assets at 35 percent after a $5 million exemption. That means a deceased person can pass on an inheritance of up to $5 million before any tax applies.
Inherited wealth passed to a spouse or a federally recognized charity is generally not taxed.
Obama wants to raise the rate to 45 percent after a $3.5 million exemption. If the Bush rates are allowed to expire and Congress does nothing, the rate will shoot up next year to the pre-Bush levels of 55 percent after a $1 million exemption.
SCHUMER ON ESTATE TAX
New York Senator Charles Schumer on Thursday said the Democrats' proposal to avert the "fiscal cliff" involves $1 trillion in immediate deficit reduction that includes new revenue from raising the estate tax to the level proposed by Obama.
No less a power broker than Democratic Senate Finance Committee Chairman Max Baucus said this week, however, that he wants to hold the estate tax steady at current rates.
Baucus is up for re-election in 2014 from Montana. He says ranch and farm owners in his state would stand to lose if federal taxes rose on passing property to heirs.
"Rural Montana is much different than urban America," Baucus told Reuters in a brief interview in the U.S. Capitol.
He told a Montana newspaper on Sunday that he would even support scrapping the estate tax altogether, as most Republicans favor. A spokesman for Baucus - the Senate's top tax law writer - said he will seek as much estate tax "relief" as he can get.
At least three other rural-state Democratic senators have proposed extending current estate tax rates: Claire McCaskill of Missouri, Jon Tester of Montana and Mark Pryor of Arkansas.
Spokesmen for Pryor and McCaskill said everything is on the table as Congress struggles to deal with the "fiscal cliff."
But one thing is clear: the voice of farming lobbyists is registering with Democrats on the volatile estate tax issue, although it is only marginally about farms and ranches.
BEYOND FARMS AND RANCHES
The estate tax's impact extends beyond farmers and ranchers. It applies mostly to very wealthy Americans, whose taxes have been specifically targeted for increase by a president whom voters returned to the White House just three weeks ago following a tough campaign in which taxes were a key topic.
Of the 3,600 estates subject to the estate tax this year, only 100 are classified as farming estates, according to the congressional Joint Committee on Taxation.
The wealthiest 10 percent of Americans pay nearly all of the estate tax under current rates, according to the Tax Policy Center, a non-partisan fiscal policy think tank.
The number of estates subject to the tax would double under the plan proposed by Obama. About 300 farming estates would be subject to the tax under Obama's terms, which would raise about $100 billion in new revenue for the government over 10 years.
Republicans have benefited previously from Democratic division over the tax. In July, Senate Democrats shelved a plan to raise the estate tax with a symbolic extension of the Bush tax rates for the middle-class.
A senior Senate Democratic aide said the tax was pulled from the bill because Obama felt strongly about boosting the tax. It is unclear how hard he will fight for his position this time.
BY ANY OTHER NAME
The divide between the political parties over the tax is so wide that they cannot even agree on a name for it. Democrats call it the estate tax, as it is described in law.
Republicans, who generally want to repeal it, have another, more provocative name. They call it the "death tax" and characterize it as a penalty on being wealthy and successful.
First enacted nearly a century ago to combat the rise of dynastic wealth and check income disparity, the estate tax is the most progressive tax there is. That means it hits the wealthy much more than lower income groups.
It was a Republican president, Teddy Roosevelt, that proposed the first permanent inheritance tax, arguing that inheritance of "enormous fortunes" does a society no good.
"No advantage comes either to the country as a whole or to the individuals inheriting the money by permitting the transmission in their entirety of the enormous fortunes which would be affected by such a tax," Roosevelt said.
Another decade passed before it was adopted in 1916, partly to fund World War I. The rate has waxed and waned, hitting a high of 77 percent prior to World War II.

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Canadian year-to-date budget deficit narrows in September

 Canada's federal budget deficit dropped in the first six months of the fiscal year, falling to C$8.9 billion ($9.0 billion) in April to September from a C$11.8 billion shortfall in the same period of last year, the Department of Finance said on Friday.
The monthly deficit in September fell slightly to C$2.69 billion from C$2.75 billion in September 2011.
Revenues in the first six months of the fiscal year were up by 2.8 percent, compared with the same period in 2011, reflecting higher income tax revenues, excise taxes and duties, the finance department said.
Program expenses rose by 1.4 percent, mainly due to higher transfer payments.
September revenues fell by 0.1 percent from September 2011 while program expenses increased by 0.6 percent. Public debt charges fell by 7.6 percent.

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Number of ND 'income millionaires' jumps by 102

A record number of North Dakotans reported seven-figure incomes last year, many of whom are benefiting from the state's oil bonanza, the state Tax Department says.
Figures released to The Associated Press show a record 634 people reported incomes of more than $1 million on their 2011 individual tax returns, up from 532 in 2010 and 384 in 2009. In 2006, while North Dakota's oil boom was in its infancy, there were 339 so-called "income millionaires."
About 90 percent of the drilling in western North Dakota occurs on private land.
Tax Department analyst Kathy Strombeck said the increase in the number of North Dakotans with million-dollar incomes comes largely from royalties paid to mineral owners by oil companies.
"Oil has a lot to do with it," she said. "I imagine we'll see growth for a while as we ratchet up projection."
Through September, North Dakota already has set an oil production record for the fifth consecutive year and the state is on pace to best the previous mark by more than 50 million barrels. The state Department of Mineral Resources said crude production through September totaled more than 173.9 million barrels, up from the record 152.9 million barrels set last year.
Tax Department records show the average adjusted gross income in the state increased from $53,036 in 2010 to $60,947 last year. The average adjusted gross income on 2006 returns was about $43,300.
The number of returns has jumped from 339,000 in 2006 to 403,625 last year. The total reported income has increased from $14.6 billion to $21.9 billion during those years, data show.
Tax Commissioner Cory Fong said the higher incomes and the increase in the number of people filing tax returns in the state "adds to the narrative of what we've got going on here in North Dakota."
The oil industry has helped grow wages throughout the state and created hundreds of high-paying jobs. It also has an effect on other industries, including wholesale trade and manufacturing, he said.
"In a way, it's lifting all boats," Fong said.
A strong overall economy and healthy agriculture sector also are factors, Fong said.

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Obama says Republican "fiscal cliff" plan out of balance

President Barack Obama rejected a Republican proposal to resolve a looming fiscal crisis on Tuesday as "still out of balance" and insisted any deal must include a rise in income tax rates on the wealthiest Americans.
Obama told Bloomberg Television that the Republicans' reliance on eliminating tax deductions instead of letting taxes rise on Americans making more than $250,000 a year would not raise enough money to fund the government.
House of Representatives Speaker John Boehner of Ohio, the top Republican in Congress, laid out a proposal on Monday that called for spending cuts but did not give any ground on Obama's call for an increase in tax rates for the top 2 percent of U.S. earners.
"Unfortunately, the Speaker's proposal right now is still out of balance. You know, he talks, for example, about $800 billion worth of revenues, but he says he's going to do that by lowering rates. And when you look at the math, it doesn't work," Obama said.
Obama, who won re-election last month, said it was important for Republicans to acknowledge that tax rates had to rise for top earners to raise revenue sufficient to balance spending cuts.
"We're going to have to see the rates on the top 2 percent go up. And we're not going to be able to get a deal without it," he said.
Obama said on Tuesday that while tax rates must go up for a "fiscal cliff" deal, it may be possible to lower rates at the top end of the scale late next year as part of tax reforms that would close loopholes and limit deductions.
"Let's let those go up," Obama told Bloomberg in an interview, referring to tax rates for the wealthiest Americans.
"And then let's set up a process with a time certain, at the end of 2013 or the fall of 2013, where we work on tax reform, we look at what loopholes and deductions both Democrats and Republicans are willing to close, and it's possible that we may be able to lower rates by broadening the base at that point."
Obama acknowledged there were more spending cuts that could be made and he pledged to work with Boehner to trim what he called excessive healthcare costs in the budget but that a deal was not possible without raising tax rates on the wealthy.
"There's probably more cuts that we can squeeze out, although we've already made over $1 trillion worth of spending cuts," he said.
Obama said there was not enough time this year to come up with an overhaul of the U.S. tax system and entitlement programs that Republicans want as a condition for an agreement to avoid the so-called fiscal cliff, a combination of tax hikes and spending cuts set to start in 2013 that economists predict will throw the economy into depression.
He said that despite weaknesses in Europe and Asia, he believed the U.S. economy is "poised to take off."
Obama added he is considering bringing a top business executive onto his economic team, but that the Senate confirmation process can be so difficult that some business executives shy away from government service.

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Grocery giant Kroger wins $567 million tax fight

 Kroger Co said Thursday it won a tax battle with the U.S. Internal Revenue Service, which has dropped an effort to collect $567 million in disputed deductions from the grocery giant.
The U.S. Ninth Circuit Court of Appeals earlier this month dismissed the government's claims against Kroger, the Cincinnati-based company disclosed in a securities filing.
The dismissal by a three-judge panel came several weeks following a government move to drop its claims, after pursuing Kroger for nearly a decade, court papers showed.
An IRS spokesman declined to comment. A spokesman for Kroger did not immediately return calls requesting comment.
The Justice Department's tax division had appealed an IRS loss last July of two Kroger-related cases in U.S. Tax Court centered on the tax consequences of a transaction involving two grocery chains later acquired by Kroger.
In a securities filing in August, Kroger said that losing the cases would have required it to make an immediate cash payment of up to $567 million to the IRS.
The dispute between Kroger and the IRS centered on a deal involving two Kroger units: Ralphs Grocery Co. and Fred Meyer Inc. Kroger acquired Fred Meyer, a competitor that owned Ralphs, for $13 billion in 1999.
Prior to being bought by Kroger, Ralphs was owned by the Federated Group of Stores. As part of a Chapter 11 bankruptcy reorganization that involved other Federated units, Ralphs was transferred in 1992 to a group of creditors. In that transaction, the value of Ralphs for tax purposes rose.
Federated had large net losses at the time. As a result, the transfer to creditors generated generous tax deductions, in the form of depreciation, for Ralphs. But over the mid-1990s, the IRS disagreed with the tax consequences of the transfer.
The agency said it was actually a tax-free reorganization that did not allow Ralphs to take the depreciation deductions.
Kroger inherited the IRS dispute through the Fred Meyer acquisition, said Roger Jones of McDermott Will & Emery, the law firm that represented Kroger in the just-dismissed case. He declined to speculate on why the government had dropped its case, saying only that it "spent a long time pursuing it."
Kroger challenged the IRS position in Tax Court in 2006. In 2011, the IRS lost the case and filed an appeal.

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Mark Cuban: Nokia Lumia 920 ‘crushes’ the iPhone 5

In the eyes of outspoken entrepreneur Mark Cuban, the battle for smartphone supremacy has been fought and won… by Nokia (NOK). While hosting an AMA session on Reddit — a series of posts where the original poster instructs Reddit users to “Ask Me Anything” — Cuban, who famously sold Broadcast.com to Yahoo (YHOO) for around $5 billion at the height of the dot-com boom, was asked what kind of laptop he uses. “I have a MacBook Air, but am trying the new Acer with Windows 8 [laptop],” wrote Cuban. “I really, really like Windows 8 on my phone. I have [two] phones. First is Samsung (005930) the [second] was an iPhone 5. The new Nokia with windows replaced my iPhone 5.” When asked to elaborate, Cuban said that the Lumia 920 “crushes the iPhone 5. Not even close.

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If Santa Were a Hipster

Shot like a twee Wes Anderson movie, Fourgrounds Media reimagines Santa as a black-bearded dude who looks more like he's from Williamsburg than the North Pole. This Santa plays Radiohead on his ukulele, is into both vinyl and Instagram, smoking and veganism. His idea of a good gift for a child is an iPod loaded with Arcade Fire selections and, of course, he keeps his tunes list in the cloud.
[More from Mashable: So You Just Got a Wii U. Now What?]
Should you expect to see Hipster Santa next year? Not by the looks of it. As Santa notes, the whole thing has gotten way too commercial.

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The Problem With Windows 8

We now know what we've suspected for months: Windows 8 isn't selling very well. We've seen the pattern since Microsoft's big launch event in late October -- the mixed reviews, the cautionary words from hardware manufacturers, the desperate fast-tracking of plans to expand the retail availability of the Surface -- but now we've got numbers.
[More from Mashable: How to Track Santa on Christmas Eve in 2012]
According to the researchers at NPD, sales of Windows PCs dropped 13% year-over-year for the period between October and the first week December, a statistic first reported by the New York Times. Considering that's the exact time Windows 8 devices arrived on the market, it's pretty damning evidence the new operating system isn't catching on.
Certainly, some people are downloading Windows 8 for upgrades without buying new hardware, but let's get real: Windows 8 is all about the hardware. The new OS is tailor-made for touch screens, and touch-screen PCs -- the multi-finger kind that Windows 8 was designed to work with -- have only been available since Oct. 26. As we all know, Microsoft went so far as to build its own tablet to showcase the platform.
[More from Mashable: Microsoft Veteran Steven Sinofsky’s Next Gig: Harvard Professor]
Now one has to ask: Should it have bothered? For all its promise, Windows 8 doesn't seem to be winning over many buyers. To be sure, one report doesn't a failure make, but Microsoft worked meticulously to craft the OS to work with touch, the cloud and social networks -- the very needs of today's connected consumers and businesses. It's fair to ask why they didn't respond, especially since Windows 8 was marketed like crazy.
Windows 8's Stumbling Blocks
Windows 8 is a powerful operating system, but it's also perplexing to new users. The built-in tutorial is very brief, amounting to a few instructions on how to perform some basic actions with a mouse or finger. If you want to engage snap mode or scroll through apps running in the background, good luck figuring them out without someone holding your hand. Even finding the restart button is a little challenging. It all amounts to a pretty steep learning curve, even for longtime Windows users.
And in the end, what's the benefit? For all of the hype from Microsoft on launch day, there are scant few Windows 8 apps. The limited selection is holding back some of the OS's potentially groundbreaking features -- such as the hard-wired Share button -- since they're only as powerful as the apps on board the device.
SEE ALSO: Windows 8 Is Bold and Powerful [REVIEW]
Moreover, for what people tend to use PCs for -- which is to say, productivity-skewed tasks such as document creation, task management and email -- Windows 7 suits them fine. The big thing Windows 8 adds to the equation is "consumption" activities because now the same device can be your PC and your tablet.
However, tablets have gotten so cheap that it's hard to make a case that spending $500+ on a new Windows 8 machine is better than just keeping what you have and spending $200 on a cheap tablet. That goes double when the cheap tablet in question has hundreds of thousands more apps. Throw in an unfamiliar user interface, and you're basically telling people to please leave the Microsoft Store.
The iPad in the Room
Contrast the launch of Windows 8 with the initial iPad debut. When Apple first rolled out its tablet, there was a lot of skepticism, and probably even fewer apps. However, the iPad wasn't entirely unfamiliar -- the OS worked almost exactly like the iPhone's, so there was no learning curve.
At the same time, the iPad delivered on its promise of a better overall experience for some key tasks: reading, watching video, browsing photos and casual messaging. Have you tried to use a Windows 8 device such as the Lenovo Yoga or Dell XPS 12 as a tablet? Trust me, they're not iPads.
To be fair, those machines were designed to be laptops first and tablets as a supplementary function, but then we're back to: Why make the jump to Windows 8 when Windows 7 provides a good enough experience on that score? You can save money by just sticking with your current PC (or buying an ultra-cheap one) and buying, say, a $199 Google Nexus 7 if you want a tablet experience.
There's at least one Windows 8 product that provides an experience on par with the iPad's, and that's the Microsoft Surface. However, for what the Surface can do for you today, it's overpriced. Not only does it have far fewer apps than both the iPad and Android, but won't even run older Windows apps, negating a big reason for longtime PC owners to get one. With the Surface, you really do need a separate device for productivity, and you will for a long time.
Chairs Are Like Windows 8
Microsoft has a couple of aces up its sleeve to help boost Windows 8, but they're far from trump cards. Microsoft Office, the ultimate productivity app suite for many, comes free with the Surface (or any Windows RT device). However, as many have discovered over the past few years, there are many alternatives (such as QuickOffice) to Office on tablets. Far from making the Surface (and tablets like it) a "gateway drug" for business use, the presence of Office on Windows RT devices will only ensure enterprise customers don't completely ignore them.
There's also the Xbox 360, a bona fide Microsoft hardware success story if there ever was one. The Xbox is a great platform, but its ability to help goose Windows 8 penetration is limited. Gamers are only a subset of the larger Windows customer base and those who aren't a part of it generally have little interest. And the worst thing Xbox could do is wall itself in by tying itself more directly to Windows -- indeed, its recent moves with SmartGlass apps have taken the opposite approach, introducing apps for iOS and Android. That's good for Xbox, but it won't help Windows 8.
SEE ALSO: The Philosophy Behind Windows 8, From One of Its Creators
So where does that leave Windows 8? Inadvertently making Microsoft's "sophomore jinx" a reality -- that every other version of Windows is a success (95, XP and 7) and the others, not so much (98, Vista and now 8) -- though for different reasons.
Before anyone declares Windows 8 a flop, however, let's pause for a second to remember the tale of the Aeron chair. Yes, different industry, different time, different everything, but the analogy is apt: Company launches product that doesn't sell well at first but goes on to redefine an entire category because there was nothing else like it. People didn't "get" the Aeron when it first debuted, but it was too good to not be influential.
Is Windows 8 the Aeron chair of a new digital age? Perhaps. But consider that the Aeron was an eventual success because the product was exceptional -- it met the needs of office workers far better than anything that came before. Windows 8 has some powerful features, but will they ever win over the buying public?
You tell us. Did you buy or consider buying a Windows 8 machine in the past two months? Tell us why you made your decision in the comments.
Image by Mashable
BONUS: A Tour of Windows 8
Windows 8, Fully Formed
The new Windows is here. Windows 8 is a dramatic departure from Windows 7, blowing up the Start menu into a vibrant Start Screen that's electric with activity and well suited for touch devices like tablets. Despite some inconsistencies (particularly with the traditional desktop, which still exists), the new interface is powerful, fast and convenient.

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Samsung expects to ship more than half a billion phones in 2013

Samsung (005930) had a big year and despite some legal setbacks, the company saw record profits led by its mobile division. In 2012, Samsung became the world’s largest cell phone vendor with shipments estimated to have reached about 420 million units. According to the Korea Times, the company expects to ship 510 million phones in 2013, an increase of 20% over this year. More than half, or 390 million, of the devices are expected to be smartphones and the other 120 million units will be budget feature phones. Along with its popular line of Android-powered Galaxy smartphones, the company will ship devices powered by Microsoft’s (MSFT) Windows Phone 8 operating system and handsets running the new Tizen platform.

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Review: Making Facebook a warmer, smaller space

 A woman I haven't spoken to in six years is pregnant with her second son. Another college acquaintance reads the Bible a lot. A high school classmate likes to rant about politics. A college dormmate thinks he works too much.
On Facebook, I'm connected to a lot of people who are not my friends. Over the years, as my Facebook friend list grows, it's made me increasingly uncomfortable that I seem to know so much about people that I don't actually know.
So as the new year approached, I decided to review my Facebook life. I took a four-week break — a "Facebook Fast" — from the world's biggest online social network. The break this fall spanned the presidential campaign and election, Superstorm Sandy, fighting in the Middle East and my college's homecoming weekend — all events I cared about. These were all reasons for me to crave Facebook as a way to check the zeitgeist.
What did I learn? Sure, there are sleazy and annoying aspects to Facebook. It connects us to each other like tabloids connect readers to celebrities, and it compels us to gossip. It often makes us voyeurs accidentally immersed in the intimate lives of people we barely know.
But after eight years on the network, I rely on it for pictures and news of faraway friends and relatives. I can't quit. Like it or not, Facebook is an important part of my life.
Facebook Inc. is in the midst of trying to make its privacy policies more intuitive for users. It has added a little padlock icon at the top right of the website. When you click on it, Facebook walks you through how to change who sees what you post, who can contact you and how to review what others are writing about you.
But if you're trying to curate your Facebook life, there are more steps you need to take. Here are some tips for remaking the network so it's less a tabloid feed of unwanted updates and more a warmer, personal space that better reflects your real-life social circle.
CUT BACK ON TOTAL TIME SPENT
I used to keep Facebook open on my work computer, checking in periodically throughout the day. I relied on the Facebook app on my phone to entertain me whenever I was waiting in line or riding in a taxi. I would also log in at home.
It was overkill. I check Facebook less often now. The goal: Read less and write more.
First, I disabled the app on my phone.
I also enabled email notifications for whenever someone sends me a message, tags me in a photo, or posts on my profile or in one of my groups. If someone's trying to get in touch with me, I still want to know and be able to respond. Because I get the notifications, I don't need to keep Facebook open at work or check on it constantly at home.
Here's how to get those notifications: Click on the wheel icon at the top right corner of Facebook and choose "privacy settings" on the menu that pops up. Then click on "notifications" on the left. Then, you can edit what Facebook sends you over email — as well as via texts and phone alerts.
RESTRICT ACCESS
I hate it when people send me personal messages by broadcasting it on my profile page, or timeline, for everyone to see. I'd rather that person send me an email or a private Facebook message that I alone could see. But many people still insist on posting such messages on my timeline anyway.
To address that, I effectively turned off my timeline. Someone can still post on it, but I've adjusted the settings so that person and I are the only ones who can see that note. I can still publicly share things that I want seen broadly, like a post I wrote promoting my sister's new yoga business. To make these adjustments, choose "privacy settings" under the wheel again. Then click on "timeline and tagging" on the left.
Facebook alerts me when somebody else has attached my name to a post or picture, and I need to approve it before others can see it. The settings for this are found under the same "timeline and tagging" page. Turn on reviews for posts you've been tagged in.
FRIENDS OR "FRIENDS"?
My news feed — the stream of friends' links, photos and life comments — was too cluttered with information about people I didn't know anymore. De-friending people seems rude and aggressive to me (although it may be a good idea down the road as decades of friends pile up).
Without severely paring down your friend list, here's how to get Facebook to show you only what you want to see:
— Determine who shows up more on your news feed. When you're on your timeline page, click on "friends" at the top, near your profile picture, to see a list of all of your friends. Each person has a "friends" button next to his or her picture. To see more of that person's posts, choose "close friends." To see less, click "acquaintances." Friends won't know that you've sorted them this way. You can also do this by hovering over the name of the person posting on your timeline. A box will pop up with the person's profile picture and the same "friends" button.
— To tweak what kind of updates you get from each friend, click "settings" under the same "friends" button. You can choose to see only updates on major life events and pictures, for example, while ignoring updates about their comments and likes on other people's posts.
— If specific posts in your news feed annoy you, you can hide them. Hover over the top right corner of the post, click on the box that pops up, and choose "hide..." That will remove the post from your news feed, although you will still get future updates from that person.
— You can also cut off all updates from a friend. After hiding a specific post in your timeline by that person, click "change what updates you get from..." Under the drop-down menu that comes up, click "unsubscribe." You can also ignore a person's Facebook activity by unchecking "show in news feed," under the same menu that lets you sort friends into "close friends" and "acquaintances."
Curating your news feed in this manner is burdensome if you have hundreds of connections. But the result is less tabloid magazine, more personal messages and cute pictures from people who are actually your friends.
SMALLER CIRCLES
One of the great benefits of Facebook is that it helps you keep in touch with a handful of people who have a shared interest. Hundreds of Facebook friends don't need to see the intimate interactions I have with a few closer friends. So I created private spheres for smaller circles — smaller than the lists Facebook automatically generates based on your school information, hometown and employer.
I created such a group with three friends — one from England, one from France and one from Los Angeles — I had spent several days with in a small town in Colombia while on vacation. The four of us use that to post silly photos of ourselves from the trip and write each other personal updates. That spares everyone else from having to hear about the next time we're going to see each other.
To set up a group, go to your news feed by clicking on "home" up top. Then click "create group," which is on the left of the page, in the "groups" section. I typed in the three friends to add and chose to make the group "secret," which means only members of the group can see that it even exists. I also get notifications from Facebook whenever anyone posts to the group. You can turn those on from the "notifications" page under the wheel icon.

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