Yes, the Treasury Department Can Help Achieve Tax Reform, but Congressional Action Would be Far Better


| | Bookmark and Share

In a Tax Notes article published Monday, Harvard Law School professor Stephen E. Shay bemoans the recent wave of corporate inversions and suggests that if Congress does not take legislative action, the Obama Administration could take regulatory action to prevent them.

No longer an arcane term, a corporate inversion is when a U.S. company merges with a foreign company and, for tax purposes, subsequently restructures to claim the address of the foreign company as its headquarters even while maintaining operations in the United States. This practice has made headlines lately in part because inversions are another way for companies to avoid U.S. taxes and in part because of the volume of large companies who have announced plans to do so.

Read more...


Nike's Disappearing Tax-Haven Subsidiaries: Lost at the Beach?


| | Bookmark and Share

It's far more common to see bare feet than sneakers on the streets and beaches of Bermuda, but major athletic footwear manufacturer Nike reports having six subsidiary companies on this island nation with population of about 65,000 people.

That's six less than the dozen it reported last year, but it's still a lot. If it sounds a bit fishy, it's because it is.

Read more...


Stop the Bleeding from Inversions before the Corporate Tax Dies


| | Bookmark and Share

If you were listening to last week's Senate Finance Committee hearing on corporate inversions, you might have thought you'd accidentally stumbled into a HELP (Health, Education, Labor & Pensions) Committee hearing on some strange new epidemic. Finance Chairman Ron Wyden (D-OR) and several witnesses used medical analogies to talk about the wave of corporate mergers that are allowing U.S. companies to invert into foreign-based companies and avoid U.S. taxes.

In his opening remarks Sen. Wyden noted that inversion virus, multiplying every few days, is the latest outbreak of a tax code infected with the chronic diseases of loopholes and inefficiencies.

But witness Allan Sloan, senior editor at Fortune Magazine and author of the recent Fortune cover story on inversions, put it best--comparing the inversions to an emergency-room patient who is bleeding out. First you put on a tourniquet, stabilize the patient, and then deal with the underlying problem.

Read more...


New Study Shows Rich New Yorkers Not Fleeing High Taxes


| | Bookmark and Share

A new study released by the New York City Independent Budget Office confirms what countless other studies already have: the wealthy aren't ditching Manhattan for Manhattan, Kansas. Of households that left the city in 2012, 42 percent of households earning over $500,000 annually moved to other locations in New York State; second place was New Jersey (22 percent), which has had a "millionaire's tax" since 2004. Third place is Connecticut (12 percent), hardly a tax haven. California took fourth place, with 9 percent. In total, 86 percent of wealthy households moving from NYC went to these "high-tax" states, almost double the proportion of non-wealthy households moving to the same places.

Read more...


House Approves Bill that Would Shift Child Tax Credit from Poor to the Better Off Families


| | Bookmark and Share

On July 25 the House of Representatives approved a Republican bill that would expand the child tax credit for better off families while doing nothing to extend or make permanent a 2009 provision that expands the credit to the working poor. President Obama has proposed to make permanent the 2009 provision before its scheduled expiration date at the end of 2017, which Congressional Republicans have refused to do.

Read more...


Simply Changing One Rule Could Yield More Transparency Regarding Corporate Profits/Taxes


| | Bookmark and Share

While most of us consider ourselves upstanding, taxpaying citizens, imagine if Uncle Sam had a rule that stated individuals must report all their income to the IRS-unless it's "not practicable" or too difficult to do so. And imagine the government left it entirely up to taxpayers to decide what "too difficult" means.

Under such loose standards, federal revenue from individual taxes likely would plummet and more taxpayers would take advantage and stash their income in such a way that they could claim it would be impractical to report it to Uncle Sam. The problem is that this "not practicable" standard is not imaginary. It actually exists and is applied to corporations' offshore income.

Read more...


Gene Simmons Should Stick to Breathing Fire on Stage


| | Bookmark and Share

Gene Simmons rocks. The front man for glam-band Kiss rocked decades ago, he rocks now, and he will continue to rock into his old age. Few Americans who came of age in the 1970s would contest this assertion.

But Simmons' views on tax policy are a little more questionable. Earlier this week, Washington Post, fact-checker Glenn Kessler usefully picks apart Simmons' recent claim that "[t]he 1 percent pays 80 percent of all taxes" and that "[f]ifty percent of the population of the U.S. pays no taxes."

Read more...


Despite Court Ruling, Obamacare Tax Subsidies Are Almost Certainly Here to Stay


| | Bookmark and Share

Odds are that a Tuesday D.C. circuit court ruling declaring health care subsidies to be illegal is not a real threat to the Affordable Care Act, but it is an important reminder about the crucial role that tax subsidies play in making health insurance more affordable for millions of Americans and the lengths that some politicians are willing to go to block them.

On July 22, the U.S. Court of Appeals for the District of Columbia Circuit ruled in Halbig v. Burwell that Affordable Care Act (ACA) tax subsidies are illegal in the 36 states that do not have state-run health exchanges. If the D.C. Circuit Court ruling holds, it would mean that 5 million Americans who received subsidies could see their premium costs go up as much as 76 percent.

Read more...


Hedge Fund Managers in the Hot Seat


| | Bookmark and Share

On Tuesday the Senate Permanent Subcommittee on Investigations questioned hedge fund managers about their use of a complicated financial derivative known as "basket options" to avoid both taxes and regulatory limits on excessive borrowing. Representatives from Barclays and Deutsche Bank, which developed the strategy that they sold to hedge funds, also testified.

It's just the latest in a series of investigations about the misuse of derivatives for tax purposes. See, for example, earlier reports about the J.P. Morgan Whale Trades and how offshore entities use derivatives to dodge taxes on U.S. dividends. While there are plenty of reasons why financial managers use derivatives, chief among them is avoiding taxes.

Read more...


Tax Policy and the Race for the Governor's Mansion: Iowa Edition


| | Bookmark and Share

The gubernatorial race in Iowa pits veteran incumbent Terry Branstad (R) against challenger Jack Hatch (D). Branstad, 67, is asking Iowa voters to reelect him to an unprecedented sixth term as governor; if he wins, he will be the longest-serving governor in American history. In addition to his career in political office, Branstad has been an attorney, financial advisor, and president of Des Moines University. Hatch, 64, is a state senator from Des Moines and a former member of the Iowa House of Representatives. He is a real estate developer and businessman who founded Hatch Development Group, a company that builds affordable housing.

Read more...

Sign Up for the Tax Justice Email Digest

CTJ Social Media


ITEP Social Media


Categories