Unstructured Finance

Essential reading: Google and Starbucks face tax questions in the UK, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * Google and Starbucks face tax questions. Jim Pickard and Vanessa Houlder – The Financial Times. Google and Starbucks will be subjected to United Kingdom parliamentary scrutiny over their tax affairs for the first time next Monday with the public accounts committee set to demand that the two US corporate giants give evidence. Members of the influential committee agreed on Monday evening to call in the two companies to give evidence at a session into Revenue & Customs where inspectors will be asked about their contributions to the exchequer. Link 

* Some investors likely to face new tax bite. A.D. Pruitt – The Wall Street Journal. The presidential election could determine whether the wealthiest Americans will see their income taxes rise or fall. But there is one tax increase that is likely to occur no matter who wins office: an investment surtax that begins on New Year’s Day and will hit thousands of real-estate investors. Link  

* Switzerland: Are its days as a tax haven for foreigners numbered? Helena Bachmann – Time Magazine. Many Swiss are increasingly critical of the preferential tax treatment their government extends to wealthy foreigners. Unlike Swiss citizens, who pay taxes not only on their income but also on their assets, wealthy foreigners can negotiate lump-sum taxation, a figure based on five times the rental value of their Swiss property. Link  

* More evidence key dark money group may have misled IRS. Kim Barker – ProPublica. New signs emerged Monday that a controversial nonprofit may have misled the Internal Revenue Service not only about its political activities but also about support from a purported donor. Link  

* Illogical housing aid. Yonah Freemark and Lawrance Vale – The New York Times opinion. The tax deduction for mortgage interest may not quite be the “third rail” of politics that Social Security is, but politicians on both sides have long been afraid to touch it. So when Mitt Romney recently floated the idea of capping this deduction, Democrats pounced. Link 

Essential reading: Fiscal cliff forces all sides to jockey, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Fiscal cliff forces all sides to jockey. Damian Paletta – The Wall Street Journal. Lawmakers, CEOs, business groups and charities are scrambling to shape the debate over tax and spending policy after the November elections, staking out negotiating positions for what could be a fast-paced brawl. The jockeying is intensifying as Election Day approaches, despite a halt in talks between party leaders about how to avoid a total of $500 billion in annual tax increases and federal spending cuts set to begin in January. Link

* Political pastors offer up Biblical bait to IRS during election season. Greg Bluestein and Katie Leslie – The Atlanta Journal Constitution. A nearly 60-year-old tax law prohibits preaching politics from the pulpit, but with just days before the presidential election, dozens of Georgia’s religious leaders are embracing a movement to challenge the rule. Pastors across metro Atlanta have openly flouted the law in recent weeks, attacking the Internal Revenue Service’s stance as an intrusion of their sacred free speech rights. Link

* Supreme Court takes PPL appeal in tax credit case. Jonathan Stempel and Patrick Temple-West – Reuters. The Supreme Court said on Monday it will take the rare step of considering a tax case, one with hundreds of millions of dollars at stake and broad implications for companies with businesses abroad and for the Internal Revenue Service. Link

Essential reading: Washington Post reports Obama administration looking at new tax cut, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Obama administration looking at new tax cut-Washington Post. Mark Felsenthal – Reuters. The Obama administration is considering a possible tax cut that would increase workers’ take-home salaries and replace the payroll tax reduction set to expire at the end of the year, The Washington Post reported on Friday. The White House said no new tax policy suggestion had been formulated. Link

* Stock pickers game the fiscal cliff. Jonathan Cheng – The Wall Street Journal. A number of companies are seeking to get ahead of the tax increases by paying out big special dividends before Dec. 31. In the past two weeks, at least four Standard & Poor’s 500 companies have announced special payouts. Link

* Greek editor is arrested after publishing a list of Swiss bank accounts. Liz Alderman – The New York Times. The Greek police arrested and then quickly released the owner and editor of a respected investigative magazine on Sunday morning hours after he published a list of more than 2,000 Greeks who were said to have accounts at a bank in Switzerland, throwing new controversy into a scandal over whether the government is actively pursuing suspected tax cheats. Link

Becoming comfortably numb to income inequality

By Matthew Goldstein and Jennifer Ablan

About a year ago, Nobel Prize-winning liberal economist Joseph Stiglitz made a surprise appearance at the Occupy Wall Street camp site in Zuccotti Park, giving a speech to rally the protestors and support their causes of bringing attention to the economic divide between the 1 percent and everyone else in the U.S.

Today, the protestors in lower Manhattan have all but disappeared with the attention on Occupy Wall Street gone along with it.

Stiglitz said the effort wasn’t for nothing, however.

“I think Occupy Wall Street served a function in that it brought to the attention of the American public two things…the distortion of our economy and inequality,” Stiglitz told Reuters TV this week in a wide ranging interview (led by Jenn) at Columbia University, where his a professor. Stiglitz said the protests helped serve notice that while a small group of Americans are doing far better than the other 99 percent, “we all have to get together” for the country to truly prosper.

Essential reading: Treasury says firm with ties to President discussed tax break, and more

U.S. Treasury Secretary Timothy Geithner outside the Treasury Department in Washington.

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Treasury says firm discussed tax break. Eric Lichtblau and Eric Lipton – The New York Times. The Treasury Department said Thursday that a communications firm with close ties to President Obama talked to the administration about allowing tax breaks for its corporate clients on more than $1 trillion in offshore revenues. The firm, SKDKnickerbocker, has insisted that it never spoke with senior Treasury Department officials about the offshore tax issue and that it does not lobby policy makers on issues affecting its corporate clients. Link

* Election proving a cliff-hanger for the dollar. Nicholas Hastings – The Wall Street Journal. The currency market’s focus on the election will be even more intense as it comes as the economy continues to struggle out of recession, after a couple of previous false starts, and as a way to prevent the reversal of previous tax cuts due to take place on January 2, 2013 – the so-called fiscal cliff – has yet to be found. Link

Calendar

Some important tax and accounting events in the week ahead:

Monday, Oct. 29

U.S. Public Company Accounting Oversight Board member Lewis H. Ferguson speaks to the annual meeting of the National Association of State Boards of Accountancy. 11:15 a.m. EDT, Walt Disney World Swan hotel. Orlando, Florida.

 Tuesday, Oct. 30

U.S. Financial Accounting Standards Board meeting on accounting for financial instruments and consolidation. 8 a.m. EDT, FASB office. Norwalk, Connecticut.

Wednesday, Oct. 31

FASB meeting, followed by an education session on going concern and repurchase agreement accounting. 8:45 a.m. EDT, FASB office. Norwalk, Connecticut.

Essential reading: CEOs call for deficit action, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* CEOs call for deficit action. David Wessel – The Wall Street Journal. Chief executives of more than 80 big-name U.S. corporations, from Aetna Inc. to Weyerhaeuser Co., are banding together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts. The CEOs who signed the manifesto deem tax increases inevitable no matter which party succeeds at the polls in November. Link

* Tax Policy Center in spotlight for its Romney study. Annie Lowrey – The New York Times. A small nonpartisan research center operated by professed “geeks” has found itself at the center of a rancorous $5 trillion debate between President Obama and Mitt Romney. No paper put out during the presidential campaign has proved more controversial than an August study by the Washington-based Tax Policy Center, a respected nonprofit that issues studiously detailed tax analyses. Link

* Tax-evasion allegations dog Greece. Philip Pangalos – The Wall Street Journal. A former Greek finance minister on Wednesday accused financial-crime investigators of failing to pursue leads against Greeks who salted away more than 1 billion euros ($1.30 billion) in Swiss bank accounts, fueling a new round of finger-pointing over Athens’ alleged failure to move against wealthy tax dodgers. Tax evasion costs Greece 28 billion euros, according to a study by Margarita Tsoutsoura of The University of Chicago Booth School of Business—an amount equivalent to up to 15 percent of the country’s gross domestic product. Link

Most overvalued asset in the rich world is?

The following is a contribution from our chief Federal Reserve reporter, who is out in the field  at The Economist magazine’s annual economics conference:

By Jonathan Spicer

What is the most overvalued asset across the world’s advanced economies? Vincent Reinhart, the chief U.S. economist at Morgan Stanley, posed that rhetorical question on Thursday at one of New York’s signature economics conferences. After a pause: “The answer is, voters’ expectation of the net present value of the entitlements they … are expecting. Why? Because they by and large don’t have a tax system to support that,” Reinhart said.

It was a cold shot of reality as the United States roars toward the so-called “fiscal cliff” on Jan. 1, when a series of automatic tax rises and spending cuts will take hold and seriously damage the economy – unless lawmakers step in to prevent them. Most economists and investors are still betting the worst of the cliff will be avoided, probably by putting off tough questions on tax reform and longer-term government spending. That means Congress kicking the can down the road – yet again – on finally setting a plan to meaningfully reduce the massive U.S. debt after three straight years of budget deficits topping $1 trillion.

Essential reading: For some of the wealthy, a 0 percent tax on capital gains, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* For some of the wealthy, a 0 percent tax on capital gains. Arden Dale – The Wall Street Journal. Financial advisers are helping a surprising group take advantage of a 0 percent capital-gains rate set to rise to 10 percent next year: affluent retirees, business owners and even some wealthy philanthropists. The rate only applies to those in the bottom two tax brackets, a group not usually associated with the wealthy. Link

* Starbucks finance chief denies tax claims. Louise Lucas and Vanessa Houlder – The Financial Times. Starbucks has admitted a quarter of its 600 UK-owned stores are running at a loss, in a rebuttal of accusations of tax avoidance, blaming its low corporate tax payments on overexpansion. In an interview with the Financial Times, Troy Alstead, chief financial officer of the global coffee chain, said: “I look forward to the day when we pay a lot more tax.” Link  

* Obama’s remarks aside, no imminent deal on ‘fiscal cliff.’ Jonathan Weisman – The New York Times. President Obama set heads spinning on Capitol Hill when he declared on Monday night during the final presidential debate that sequestration — $1 trillion in across-the-board spending cuts over the next decade — “will not happen.” But no one should conclude that a secret deal to resolve the problem is imminent. It is not. Link  

Essential reading: Checking tax facts from the presidential debate, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

 * Fact check: The ‘territorial tax.’ Josh Hicks – The Washington Post. The president said on Monday that Mitt Romney wants to provide more tax breaks for companies that move overseas. He was referring to Romney’s proposal to enact a “territorial tax” system that would allow U.S.-based companies to bring foreign-earned profits back home without paying U.S. taxes. Link

* Congressman Chris Van Hollen wants to consider another payroll tax holiday. Suzy Khimm – The Washington Post. Neither party seems particularly keen on extending the payroll tax cut for another year. But its defenders are slowly beginning to emerge on the left. Link  

* Romney to target tax and regulation. Stephanie Kirchgaessner and James Politi – The Financial Times. A victory for Mitt Romney next month would bring about a sweeping change in the relationship between business and government by putting tax reform and deregulation at the top of the US domestic policy agenda. Link

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