Accounting News Roundup: Times Square Gets Back to the Grind After Bomb Scare; Down with the Corporate Income Tax; The Politics of Spending | 05.07.10
Times Square Goes Back to Work After Bomb Scare [FINS]
FINS checked in with several companies who have locations in the Times Square area to see if things are back to normal after last weekend’s failed bombing. Most companies are officially mum on the issue including our favorite TS resident, Ernst & Young, who was quoted as to have, “reached out [to their employees] on an informal basis.”
And by “informal” apparently that means “nothing” in some cases We checked with a couple of our own sources at E&Y and we were told that they had not received any communication at all. If there’s an email floating around out there, let us know but it sounds like any reassurance of safety was passed around on a post-it note.
A.I.G. Said to Dismiss Goldman [NYT]
Back in the game AIG! Thanks for the good times GS, Citigroup and Bank of America will take it from here. All it took was a little money for AIG to realize that they were in an abusive relationship.
Time to Junk the Corporate Tax [WSJ]
Michael Boskin argues for dumping the corporate income tax in an op-ed in yesterday’s Journal, citing several reasons that it sucks big time including double taxation, “Corporate income is taxed a second time at the personal level as dividends or those capital gains attributable to reinvestment of the retained earnings of the corporation. Between the new taxes in the health reform law and the expiration of the Bush tax cuts, these rates are soon set to explode.”
…And that stakeholders ultimately bear this cost, “the corporation is a legal entity; only people pay taxes. In a static economy with no international trade, the tax is likely borne by shareholders. The U.S. economy is neither static nor closed to trade, and taxes tend to be borne by the least mobile factor of production. Capital is much more mobile globally than labor, and the part of the corporate tax that is well above that of our lowest tax competitors will eventually be borne by workers.”
The Political Economy of Consumption: ‘Tis Better To Give, and Give, and Give [Tax Vox]
This sums up why America’s deficit problems and citizens personal debt problems will never be fixed:
Not to stereotype, but nations do have personalities. Italians eat. Russians drink. Americans spend. And when anything—or anyone—gets between us and our consumption, watch out.
Recessions make us grumpy in part because we can’t consume as much as we like. In the depths of the current downturn, the savings rate in the U.S. topped 5 percent. But retail sales have been rising since October, and the savings rate has fallen in half. I suspect Americans won’t really feel better until we drive our savings rate back to zero.
Accordingly, politicians have to pander to masses about “cutting taxes” and “reducing spending” when it’s very simple and popular to the do the former, while in reality it’s very difficult and unpopular to do the latter.
Scoping | 07.22.09
• BlackRock chief attacks Wall Street earnings – Somebody’s jealous. [FT.com]
• Credit Card Disputes Tossed Into Disarray – “Two major arbitration firms are backing away from the business of resolving disputes between customers and their credit-card and cellphone companies, throwing into disarray a controversial system that prevents unhappy consumers from filing lawsuits.” [WSJ]
• Federal reserve chief heads back to Capitol Hill– “Federal Reserve Chairman Ben Bernanke heads back to Capitol Hill Wednesday, where he’s likely to face more tough questions about the central bank’s extraordinary actions to rescue the economy and its ability to take on even more responsibility.” [AP via Miami Herald]
• Morgan Stanley Loss Misses Estimates on Debt Costs – Creative accounting can’t help MS…[Bloomberg]
• Wells Fargo Says Bad Loans Rise in Second Quarter; Shares Drop – …Or Wells [Bloomberg]