Tax Break

Essential tax and accounting reading: Bain’s IRAs, E&Y cleared on Olympus, Biden attacks Romney tax plan, and more

March 29, 2012

* Germany to agree to tougher Swiss tax deal-paper. Emma Thomasson – Reuters. Germany is set to agree a revised deal with Switzerland on secret offshore accounts that involves higher rates of taxes than originally planned to meet objections from the opposition, a Swiss newspaper reported on Thursday. Citing unnamed sources, the Tages-Anzeiger daily said German state premiers meeting in Berlin on Thursday should sign off on the deal after the opposition Social Democrats (SPD) and Greens apparently accepted Swiss concessions to tighten the agreement. Link

* Panel clears Ernst & Young unit in Olympus scandal. Kana Inagaki – The Wall Street Journal. Closing another chapter in probes into the scandal that rocked Olympus Corp. last year, an independent panel of lawyers and professors on Thursday cleared Ernst & Young ShinNihon LLC of legal responsibility in its audit of the company’s accounts. But the panel also called on the accounting industry to take measures that go beyond existing legal obligations to better spot potential fraud. Ernst & Young ShinNihon commissioned the four-member panel in December after a separate panel appointed by Olympus’ board raised questions over the hand-over process when Ernst & Young took over the auditing of the company from KPMG AZSA LLC in 2009. KPMG AZSA audited Olympus’ accounts from 1974 to 2009. Link

* Cameron hits back over claims of elitism. George Parker – The Financial Times. British Prime Minister David Cameron has attempted to dispel Labour claims that he leads an elitist “out of touch” government, when he declared his love of Cornish pasties, one of the hot foods that will be taxed more under budget value-added tax rules. The comments came after George Osborne announced a Budget measure on takeaway food, putting a 20 per cent VAT charge on food “sold above ambient temperatures” – immediately named a “pasty tax”. Labour has revelled in the government’s discomfort. Link

* Biden attacks Romney on taxes, outsourcing. John McKinnon – The Wall Street Journal. Vice President Joe Biden attacked Republican presidential candidate Mitt Romney for his tax plan at an Iowa campaign event. “Our tax cuts go to companies that create jobs over here. The Romney tax cut goes to companies that create jobs overseas,” Biden said. The comments show how Democrats hope to use once-obscure international business tax issues in the 2012 campaign, as a way of shifting blame for the nagging job shortage onto big businesses and their GOP allies. Link

* Federal budgets and class warfare. Michael Bloomberg – The Wall Street Journal opinion. I don’t believe in class warfare, and not because I don’t want to pay more in taxes. I think the Bush tax cuts should expire for all Americans as part of a long-term plan to rein in the deficit. We are all in this together. Pitting one group against another not only divides us in counterproductive ways but offers one group the false promise of something for nothing. Nearly every CEO and business leader I speak with says virtually the same thing: They are hesitant to make major investment decisions until they know how Washington intends to grapple with its huge deficits. That uncertainty is a major drag on job creation because the price of uncertainty for business is paralysis. Link

* Jerry Brown’s big lie. Allysia Finley – The Wall Street Journal opinion. The fate of California Gov. Jerry Brown’s tax initiative depends on whether voters buy his sales pitch that the new revenues will benefit schools. They won’t — and the only chance Republicans have of defeating the Democrat-backed initiative is to explain why. Link   

 * Bain gave staff way to swell IRAs by investing in deals. Mark Maremont – The Wall Street Journal. Bain allowed employees to co-invest via tax-deferred retirement accounts, and to do so by buying a special share class that cost little but yielded much larger gains than other shares when deals proved successful. Bain’s co-investment arrangements, not previously reported in detail, offer a possible explanation of the large size of Republican presidential candidate Mitt Romney’s IRA: between $20.7 million and $101.6 million, according to his finance disclosures. It is unusual for such an account, a vehicle devised to help workers save for retirement and one to which contributions are limited, to grow so large. Link

U.S. President Barack Obama and Vice President Joe Biden following remarks on the extension of the payroll tax cut and unemployment insurance, Washington February 21, 2012. REUTERS/Jason Reed

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