No legislation is perfect though, amiright? You’ve got to take the good with the bad. The latest of the bad comes courtesy of everyone’s favorite bureaucratic nagging mother-in-law, the Treasury Inspector General for Tax Administration. The TIGTA has come out with a new report that shows that the FTHBTC program hasn’t really gotten any better at weeding out the unscrupulous activity.
TIGTA estimates that 14,132 individuals received erroneous credits totaling at least $26.7 million. These erroneous credits included:
• 2,555 taxpayers receiving credits totaling $17.6 million for homes purchased prior to the dates allowed by law.
• 1,295 prisoners receiving credits totaling $9.1 million who were incarcerated at the time they reported that they purchased their home. These prisoners did not file joint returns, so their claims could not have been the result of purchases made with or by their spouses. Further, TIGTA found that 241 prisoners were serving life sentences at the time they claimed that they bought new primary residences.
•10,282 taxpayers receiving credits for homes that were also used by other taxpayers to claim the credit. (In one case, TIGTA found that 67 taxpayers were using the same home to claim the credit.) TIGTA auditors have not fully quantified the total of these erroneous credits, but all indications are that the total will be in the tens of millions of dollars.
But wait! There’s good news! Inspector General J. Russell George was happy to report that there has been improvements, “The good news is that the IRS has made significant strides resolving problems associated with this program. For example, no minors received the Credit, according to our report.”
Progress! They’ve managed to keep the under-eighteen crowd under control. But do we prefer this to prisoners doing life getting our tax dollars? Seems like a toss-up.
The bill is inspired by a Supreme Court decision that overturned a cap on corporate contributions to political campaigns. So to compromise and soften the hard-ass bill a little bit, they threw in an exemption for certain non-profits that meet specific requirements.
They must have more than 1 million members, be at least 10 years old and receive no more than 15% of their contributions from corporations to receive this exemption. OK, how many non-profits could that be?
Reform at its finest, I guess.
Just a note, Charity Navigator doesn’t do the NRA for the following reason:
We don’t evaluate National Rifle Association.
Why not? We don’t evaluate 501(c)(4) organizations because they are allowed to spend a substantial portion of their revenue on lobbying our government and not every donation to them is tax-deductible. You may be interested in our evaluation for The NRA Foundation.
If you’re curious, “DISCLOSE” stands for Democracy Is Strengthened by Casting Light On Spending in Elections and I don’t think light is what we need in this situation. Companies, unions and other groups that spend more than $10,000 would be required to disclose donors who have given $1000 or more.
Why does this matter? Should lobbying groups really receive any tax deductions at all?
New Accounting Rules Ruffle the Leasing Market [NYT]
The convergence efforts by the FASB and the IASB have managed to produce a consensus on lease accounting and it has repercussions on both sides of the balance sheet.
“The two boards have come up with a new standard, which will be completed next year and enacted in 2013, that will require companies to book leases as assets and liabilities on their balance sheets. Currently, American and foreign companies list many leases as footnotes in their financial statements. As a result of the change, public companies will have to put some $1.3 trillion in leases on their balance sheets, according to estimates by the Se e Commission. Because many private companies also follow GAAP accounting, the number could be closer to $2 trillion, experts said.”
Middle-Class Tax Boost Is Broached [WSJ]
Reaction to Steny Hoyer’s call in a speech for Congress to quit lying to themselves was not met with enthusiasm.
The Journal reports that the GOP has different ideas, including House Orange leader John Boehner is quoted in the Journal, “Mr. Hoyer’s speech brought a round of criticism from Republicans, who emphasize spending cuts instead, and oppose allowing any Bush tax cuts to expire. House GOP Leader John Boehner of Ohio said Mr. Hoyer was admitting ‘that he supports raising taxes on the middle class to pay for more government spending.’ ”
Rep. Oompa Loompa obviously didn’t hear the part of the speech where Hoyer addressed the “cut spending” broken record, “The eagerness of so many to blast spending in the abstract without offering solutions that come close to measuring up to the size of the problem.”
California could turn license plates into ad revenue space [Silicon Valley/San Jose Business Journal]
The latest out of the brain trust in Sacramento, “As California faces a $19 billion deficit, the Legislature is considering whether to allow license plates to become traveling ad spaces.
When the vehicle is moving the license plate would look like the ones we’re used to now, but when the vehicle stops for more than four seconds a digital ad or other message would flash. The license plate number would always be visible.”
Madoff crony sprung [NYP]
“Earlier yesterday, former Madoff CFO Frank DiPascali Jr. was released to house arrest.
A grizzled-looking DiPascali refused to answer questions about the report in Monday’s Post that Madoff told fellow jailbirds that DiPascali knows the identity of three people the Ponzi king gave money to shortly before his arrest.
A judge initially refused prosecutors’ requests that DiPascali be released so he could assist in their ongoing probe, but in February he won a $10 million bail package based on his extensive cooperation.”
BP confirms Bob Dudley in key Gulf clean-up role [AP]
Knock ’em dead!
Business Leader Slams ‘Hostile’ Policies on Jobs [WSJ]
“In comments marking one of the sharpest breaks between top executives and the Obama White House, [Verizon Communications CEO Ivan] Seidenberg used a speech at Washington’s Economic Club to unleash a list of policy grievances over taxes, trade and financial regulation.
Mr. Seidenberg’s comments are particularly notable because he heads the Business Roundtable, a group encompassing the chief executives of the nation’s largest listed companies whose members have enjoyed frequent access to the president and his top aides. Its leaders have advised the White House on topics from economic recovery to health care to clean energy.”
SEC Self-Funding Is A Mistake! [The Summa]
“In support of SEC self-funding, SEC chairs always argue in public that they lack sufficient and consistent funding to enforce securities laws and regulations. As proof, they point out that Congress occasionally cuts back on SEC funding.
What they don’t mention is that the budgetary review process provides an opportunity for Congressional oversight of the SEC. When the SEC is performing poorly, say due to the atrocious leadership of the Chairs (i.e., Cox and Schapiro), a Congressional budget cut is a natural and effective response. Of course SEC chairs want self-funding, it gives them a pass from oversight. Who wouldn’t want that?”
Accounting Body Picks New Chief [WSJ]
“Former Italian Finance Minister Tommaso Padoa-Schioppa has been named to head the group that oversees international accounting rulemakers. Mr. Padoa-Schioppa will assume the chairmanship of the trustees of the International Accounting Standards Committee Foundation in July. The foundation’s monitoring board appointed him chairman for a three-year term. The IASC Foundation oversees the London-based International Accounting Standards Board, selects its members and raises funds for its operations. It also helps promulgate the move toward a single set of accounting rules used world-wide.”
New York Reaches Deal to Raise Cigarette Tax [NYT]
Smokers might want to start hoarding cartons as Governor David Paterson and legislators have reached a tentative agreement to raise the cigarette tax in New York. Taxes on cigarettes in NYS, currently $2.75 a pack, would rise an additional $1.65. Taxes in New York City would rise to $5.85 a pack, marking the first city in America with a tax of greater than $5 on cigarettes.
The proposal would raise $440 million this year, according to the Times. The state’s budget deficit is approximately $9 billion.
Open Letter to the Securities and Exchange Commission: Is Medifast Complying with Revenue Accounting Rules? [White Collar Fraud]
Sam Antar is a little skeptical about a plethora of Medifast’s financial reporting and disclosures including: revenue recognition policy, “the company is possibly recognizing revenue up to 8 business days too early”; their low allowance for doubtful accounts, “the $100,000 reported for such an allowance does not seem reasonable enough given Medifast’s volume of revenues and the dates it either ships or delivers its orders to customers after processing them.”; and lack of deferred revenue liabilities, “Medifast’s financial reports going back to 2004 disclose no deferred revenue liabilities for customer orders processed before each fiscal year ended and either shipped or delivered after those respective fiscal years.”
This trifecta has Sam concerned enough that he’s asking the SEC to poke around a little more than they did the last SEC review in 2007, when the SEC found…nothing.
BP Chief Draws Outrage for Attending Yacht Race [NYT]
Probably seemed like a nice idea at the time, “BP officials on Saturday scrambled yet again to respond to another public relations challenge when their embattled chief executive, Tony Hayward, spent the day off the coast of England watching his yacht compete in one of the world’s largest races.”
BP, Transocean tap a well of Washington lobbyists and consultants [WaPo]
The obvious solution to CEOs attending yacht races, Joe Biden-esque articulation and such is paying someone a lot – a lot – of money to rep these companies. It’s pretty much the only option they have left.
Since the the stench of last-minute pandering to voters is in the air today, Howard Gleckman points out over at TaxVox that while many candidates are quick to launch in with “I will cut taxes!” or “I believe in smaller government!” to catch some of the hot Tea Party action, these candidates (and many of the Tea Party types themselves) don’t really qualify as fiscal conservatives (if you go by the Wikipedia definition) who support balanced budgets and deficit reduction:
They are plainly interested in tax cuts—a core belief that appears repeatedly on Websites, position papers, and speeches throughout the movement. And while tea partiers say they favor smaller government, many in fact propose to shrink it in only trivial ways—by cutting earmarks or waste and abuse. Candidates elected on platforms supporting very large tax cuts and small spending reductions are likely to oppose aggressive efforts to reduce deficits, not back them. While some analysts see the tea partiers as the 21st century progeny of Ross Perot’s fiscal conservatism, nothing could be further from the truth.
One of Gleckman’s examples is Sharon Angle who claims to be the “one true conservative” (presumably that means a fiscal conservative) and is running for the Republican nomination in Nevada to face off against Harry Reid. Here is one of her ads:
There’s the mantra: “Limited Government!” “Lower Taxes!” As Mr Gleckman notes, Ms Angle would “abolish the Internal Revenue Code but doesn’t quite say how she’d finance government.” That’s a bit of a problem, especially since she says in her “On the Issues” page under healthcare that “the government must continue to keep its contract with seniors, who entered into the system on good faith and now are depending on that contract.”
Since this essentially represents the Tea Party’s position on healthcare we’ll agree with Gleckman when he says, “This view makes deficit reduction a challenge at best, especially when paired with big tax cuts.”
The point here is this – if you’re beating the drum of tax cuts and limited government to pander to a hot political movement but if you’re going to largely continue to spend tax dollars with the same fervor as George W. Bush, that doesn’t make you the second coming of Ross Perot.
Yes, the brain trust known as the U.S. Senate has managed to prolong the agony on the estate tax. There was a deal on the table as of yesterday but you can forget it! Hard to believe this could happen. Was it a fundamental disagreement on the proposal? Was it because everyone was broken up that Arlen Specter?
No, it’s mostly because some people (the R’s) don’t like that other people (the D’s) are being fraidy cats about not having enough votes:
Senate Minority Whip Jon Kyl (R-Ariz.) said the accord, which was all but forged a week ago, began to dissolve Monday night and broke down Tuesday after talks between leaders in both parties.
After talks with Senate Finance Chairman Max Baucus (D-Mont.) and Senate Minority Leader Mitch McConnell (R-Ky.), they scrapped a plan to move forward with the tax that expired at the end of 2009.
The reasoning, Kyl said, is that Senate Democrats aren’t allowing any legislation to reach the floor that doesn’t have support from the majority of its members.
“We no longer have an agreement because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they’re not going to allow it on the floor, at least not voluntarily,” he said. “So we have to find a way to get a reasonable permanent estate tax reform to the floor where members can vote on it.”
For crissakes. This is this biggest case of “I’m taking my ball and GOING HOME” we’ve seen this week.
Joe Kristan does put the whole thing in perspective however, “Congress has been botching the estate tax for almost ten years now; why should they start getting anything right now?”
FEI Implores FASB, IASB to Slow Down [Compliance Week]
Financial Executives International is concerned that the FASB and IASB have gotten a little too ambitious in their convergence efforts and has written a letter to the Boards’ respective Chairmen that basically says, “Easy, tiger.”
Everyone knows that those knowitalls at the G-20 were insisting the accounting rule mavens to make convergence happen by next summer but FEI is trying to take pragmatic approach to this:
Arnold Hanish, chairman of FEI’s Committee on Corporate Reporting, said in his letter to the two boards the group is concerned about the “unprecedented volume as well as the complexity of proposed standards” that the two boards are developing. The committee fears the vast scope and aggressive timeline for the proposals will not allow adequate analysis of how the rules will work, which will lead to implementation problems and amendments further down the line.
In other words, this isn’t quantum mechanics, but it’s not Fisher Price either. Mr Hanish did his best to remind Bob Herz and Sir David Tweedie just how overambitious this little project is:
Our member companies are extremely concerned with the 10+ Exposure Drafts (EDs) that are in final stages and will be released for public comment through the third quarter of 2010. During any single period in time in its 38-year history, the FASB has had no more than 3 or 4 significant EDs out for public comment.
FEI doesn’t seem convinced that this unprecedented overachieving by Herz and Tweeds is going to result in the “one set of high quality standards.” They would prefer that hte Boards get this right the first time so they don’t have to slap the proverbial duct tape all over the efforts later.
Cabbies, Accountants Look to Chip-Fat Fuel on Cost, Environment [Bloomberg]
PricewaterhouseCoopers’ London office is trying to do its best for the environment by using local chip-fat converted into biodiesel to supplement its energy needs:
PwC is seeking local sources for 45,000 liters of biodiesel to meet one quarter of its monthly office fuel needs, said Jon Barnes, head of building and facilities services at the firm.
“I’m trying to locally source used chip fat from restaurants,” he said. “It’s a pretty pointless exercise of using biofuel if it’s been all round the world on a ship.”
Sounds like a bang-up idea but P. Dubs is always looking for an angle, “Having a renewable source for some of PwC’s office’s energy needs could help the company sell its services to clients wanting to do the same.”
House Holds Hearing Today on Tax and Internet Gambling [TaxProf Blog]
The House Ways & Means Committee is holding a hearing today to kick around the possibility of legalizing Internet gambling here in the US of A (and taxing it, of course). It kicks off at 9:30 am ET and with any luck, you’ll be legally losing your mortgage payments for the 2010 football season.
After the wisdom displayed by Senators in the Goldman Sachs hearing a couple weeks ago, it must have become evident to a group of concerned organizations took it upon themselves to voice concern with regard to any elected official that might give consideration to tipping his or her toe into the accounting standard waters.
Enter Son of Ohio, Sherrod Brown (D) who has proposed amendment SA 3853 to the financial regulation reform bill. The amendment would legislate financial reporting standards by forcing companies to “submit reports to the commission under this section record all assets and liabilities of the issuer on the balance sheet of the issuer.”
But don’t worry if you can’t figure out what the value of a liability is because you can just leave it off altogether granted that you don’t mind explaining:
“(i) the nature of the liability and purpose for incurring the liability; (ii) the most likely loss and the maximum loss the issuer may incur from the liability; (iii) whether any other person has recourse against the issuer with respect to the liability and, if so, the conditions under which such recourse may occur; and (iv) whether the issuer has any continuing involvement with an asset financed by the liability or any beneficial interest in the liability.”
While this seems all very well thought out, the CAQ, CFA Institute, AICPA, FEI and a gaggle of others smelled amateur hour and wrote a letter to the old boys in the Senate letting them know, in no uncertain terms, that this pretty much the worst idea they’ve ever heard:
[W]e are concerned with any amendment that would legislate accounting standards, including Brown amendment SA 3853 regarding “Financial Reporting.”
The accounting standards underlying such financial statements derive their legitimacy from the confidence that they are established, interpreted and, when necessary, modified based on independent, objective considerations that focus on the needs and demands of investors – the primary users of financial statements.
We believe political influences that dictate one particular outcome for an accounting standard without the benefit of a public due process that considers the views of investors and other stakeholders would have adverse impacts on investor confidence and the quality of financial reporting, which are of critical importance to the successful operation of the U.S. capital markets.
So in other words, Sherrod Brown, you can suck it. The FASB might not be hottest piece of ass around but by GOD, it’s what we’ve got. And we’ll be damned if you’re going to propose your hocus pocus American people Main St. financial statement Act.
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.
• Rangel Challenged by a Historic Foe [WSJ]
Someone finally realized that Charlie Rangel’s constituents in New York’s 15th District have maybe had enough of Chuck and his “pay taxes as I wrote them, not as I pay them” ways. Rangs will be challenged in the primary by New York State Assemblyman Adam Clayton Powell IV, according to the Journal. Not only does Mr Powell have an upper hand in the ad campaign department but there’s a bit of history here.
Powell Number III, sire of IV, was defeated by ChaRang back in 1970 amid his own ethical trubs. ACP 4th Edition insisted to that this had nothing to do with sweet, sweet revenge, “It has nothing to do with revenge or anything like that. Anyone with that record in public service would be interested in higher office.”
It won’t be easy for ACP4 however. He was flicked away by Rangs in a primary challenge back in 1994 and was recently convicted of “driving while impaired,” which actually seems worse than hogging rent-controlled apartments, since that could result in, you know, someone getting killed.
• My Paycheck, My Self? [FINS]
Does your salary define you as a human being? Or, at the very least, does it feel that way? Master pay czar Ken Feinberg had to snoop around some people that pull down some hefty scratch and he found out that the human psyche can easily be affected by their pay stub.
• PCAOB Issues Staff Audit Practice Alert on Auditor Considerations of Significant Unusual Transactions [PCAOB]
Don’t worry about the plain old vanilla transactions auditors, the PCAOB needs you to be on the lookout for significant unusual transactions. What that entails, we don’t really know but we’ll assume that means any transaction, and the PCAOB means any transaction, that looks remotely out of the ordinary, has a funny name (that may or may not include a “105”), requires smokey-filled room approval etc., definitely give it a second look. Or a third.
• Porn Nightmare Never Ends for SEC Official [FINS]
Whatever your porn preferences, you’re probably not sharing them with complete strangers. If you are, the cloud of awkward around you has got to be so thick that you may as well have leprosy. However, if you have the unfortunate luck of getting caught viewing this art form at work, then you might be forced to discuss your preferences, how often you’re engaging in the activity, among other things:
[T]he really juicy stuff begins when he’s asked about accessing Web sites like tgirlhotspot.com and ladyboyx.com (warning, very NSFW) : “Our records show that on Wednesday, August 13, 2008, beginning at 1:57 p.m., you made approximately 85 attempts…to access a Web site called tgirlhotspot.com. Do you have any recollection of attempting to access this site?”
The employee answers: “I do not personally have recollection of it, but it would not surprise me.” To which the inspector — and the reader — responds: “Okay. That’s fair.”
Seriously, who can remember every instance that they’ve visited ladyboyx.com? Does the guy have a photographic memory? Maybe on certain images but date, time, and spreadsheet you had open that you could quickly jump to in case someone came to close? That’s asking a little much.
• Should the U.S. Forget about Private-Company GAAP? [CFO Blog]
Now that the Blue Ribbon Panel for private company GAAP has been announced, it makes some people wonder if the non-SEC types will just ignore this whole song and dance the Commission is doing get with the IFRS program ASAP. Ahh, the advantages of being a private company…
Even though both the BRP and the SEC will release their musings on their respective topics in 2011, private companies already have options, “[T]he U.S. private sector has already set some IFRS wheels in motion. In 2008, AICPA recognized the IASB as an official standard-setter, which means U.S. auditors are allowed to issue opinions on private-company financial results filed using IFRS.”
It’s doubtful that IFRS reporting will spread like H1N1 among private companies but while the SEC twiddles the private sector seems to recognize where all this is ultimately going.
• Jason Chaffetz: Ax Hill staff tax cheats [Politico]
Since all the members of the House are up for reelection this year, everyone needs something solid to campaign on and apparently Jason Chaffetz (R-UT) has found his stump.
Chaffetz is introducing legislation that would extend an IRS policy — termination employees that haven’t paid their federal taxes — to all federal departments and agencies.
In 2008 alone, 447 House employees and 231 Senate workers didn’t pay their taxes, according to figures from the IRS, Office of Personnel Management and Department of Defense.
“We have over 600 staffers on Capitol Hill not paying their taxes. That’s just not acceptable,” Chaffetz said in an interview with POLITICO. “It’s disingenuous to take federal taxpayer dollars and not pay your full share of taxes. It’s wrong.”
Between to the two bodies in Congress, over $8 million are owed in taxes. We don’t have to remind anyone how little money this is grand scope of the federal government. But hey! Rep. Chaffetz has an election to win and by God, this could be the ticket. Some other notable delinquent federal employees include the Postal Service at $257 million; Dept. of Veteran Affairs at $131 million; Army and Navy owe $81 million and $61 million respectively.
But pointing out those people wouldn’t make for very good press.
• Rangel Loses Support in House [WSJ]
You can ignore what’s written below, except the part about rent-controlled apartments.
Charlie Rangel will
not be quitting (temporarily sayeth Charlie Rangel) as the Chairman of the House Ways & Means Committee. If you (read: Republicans) want him out, you’ll have to vote him out. Bad news for Chuck is that the Republicans in the House and several of his fellow Democrats are poised to do just that, “As many as 30 House Democrats could join 178 House Republicans in voting to oust Mr. Rangel as head of the Ways and Means Committee…a substantially higher number than in previous votes on his removal.”
Never mess with people when it comes to rent-controlled apartments. They’ll turn on you like Judas.
In the meeting, Mr. Rangel refused to quit as chairman of the Ways and Means Committee and instead said he’d think overnight about the matter before deciding whether to step down or face an uncertain vote.
After the one-hour meeting broke, Mr. Rangel told reporters he would stay on.
“You bet your life,” he said. Pressed further, Mr. Rangel, raising his voice, said emphatically: “Yes, and I don’t lie to the press.”
There you have it. You want Rangs out? It’ll be over his dead body. Since he’s 79, it might just come to that.
• Taxpayers Have $1.3 Billion in Unclaimed Refunds [TaxProf Blog]
That’s just for 2006. California leads the charge with over $150 million, followed by Texas with $114 million, and Florida with $110 million. 1.4 million tax-hating Americans have until April 15th of this year to claim and then the money goes straight to Goldman Sachs.
• SEC to beef up its NYC office in 2010 [Reuters]
Here’s a possible gig for those of you that are still looking for work. The not-so-new but constantly improving (?!?) SEC is looking to hire a few good men and women for its New York office. Having got the scratch to put a few more hands on deck, the Commission is looking for 18 people for its enforcement team and 15 for its examination staff. There’s no indication that this will solve the SEC’s “idiots” problem but maybe you can at least land a job.
Okay, so New York is in a dire fiscal situation and David Paterson is pulling out all the stops. Last week, he started kicking the idea around of temporarily freezing New York State tax refunds for individuals and businesses until a state budget is in place.
Naturally, the Governor is putting this on the New York State legislature saying that if they do not ‘act, and close this deficit with real and recurring deficit reductions, not made-up, phony revenue enhancers that don’t really exist’ then the state could go bankrupt. Don’t blame him, New Yorkers! He’s trying to fix this damn mess.
According to a report from WRVO, the state would freeze $500 million in taxpayer refunds and $200 million in business refunds to April 1st. Are people really getting their tax returns filed that quickly? Is there some kind of recessionary trend that shows that tax returns are filed more quickly during bad economies? Nothing is official yet so don’t worry but sounds like they’re running out of ideas up there.
Regardless of the suggestion, Paterson’s critics are not down for this, as Assembly Minority leader Brian Kolb called the withholding tax refunds “an absurd and crazy idea.”
Since “absurd and crazy” seems to be par for the course in Albany, we can’t really say that this is the worst idea David Paterson has ever had. He’s talking to Eliot Spitzer again, isn’t he?
In case you haven’t heard, it’s go time for the Obama administration to cover its continually-growing deficit with no sign of increased foreign investor demand for unstable and uncertain US debt. What happened to passing a health care overhaul before Christmas? And what about those 140 failed banks in 2009? And hey! What became of that $700 billion in stimulus money that was supposed to save and create bazillions of jobs?
Here’s the solution. Tax their asses.
President Obama will try to recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, administration and Congressional officials said Monday.
In a desperate scramble to come up for cash, the administration has thrown out a couple of unpopular ideas (unpopular if you’re a banker, of course) including excessive taxes on bonuses and bizarre financial transaction taxes. Like squeezing blood from turnips, apparently these guys forget that it was less than a year and a half ago that Hank Paulson appeared on the Hill threatening full-on financial doomsday were TARP not instituted rightf*ckingnow. So much for pulling out the bazooka in his pocket.
And let us not forget that shit rolls down hill. Who do you think would ultimately be responsible for these additional monies? The banks or the idiot customers who continue to shovel out ever-increasing fees to said banks? Exactly.
Lobbyists for bankers, taken by surprise, immediately objected to any new tax. They said financial institutions had been repaying their portion of the bailout money in full, with interest. Losses from the $700 billion bailout fund — estimated to run as high as $120 billion — are expected to come from the automobile companies and their finance arms, the insurance giant American International Group and programs to avert home foreclosures, and the president is aiming to recoup that money.
I really, really hate to side with the bankers here but they are absolutely right. If retribution for the financial crisis is our goal, taxing them to death isn’t the way to achieve that. If paying our government’s bills is the goal, however, I could see how this could easily be spun into populist payback for the pain and suffering of the last 2 years.
Hate to break it to you, America, but any money potentially recouped by this genius scheme has already been spent and certainly wouldn’t result in any long term benefit to us as a country. I’d use the pay day loan analogy again but hell, isn’t it played out by now?
Since he’s such a passionate guy, Glenn Beck will not hesitate to call someone out if he feels that they are cheating the American people. He’s a crusader for justice, after all.
For example, Tim Geithner, Health and Human Services Secretary Kathleen Sebelius, Tom Daschle, Labor Secretary Hilda Solis and others were all called “tax cheats” by GB early last year and he also mentioned that he wouldn’t entrust his children to them (nice touch).
So it’s more than a little awkward for Becks when Politico reports that Mercury Radio Arts, his production company, has had some of its own tax troubles:
Mercury, a private corporation that lists Beck as chief executive officer and his wife, Tania Beck, alternately as vice president or secretary, since 2007 has fallen behind on its New York City business income taxes and has been cited for filing errors related to its obligations under Texas franchise tax and New York state workers’ compensation insurance rules.
Politico reports that the company owed just over $25k in back taxes and penalties but since everything has been cleared up it’s NBD. However, we do seem to have a little bit of a pot and kettle situation. What’s even more stupid is that everyone is all bent out of shape over these people screwing up their taxes even though no one was willfully trying to dodge the tax law:
Dean Zerbe, national managing director for a company called alliantgroup that provides specialty tax services to accounting firms, said Beck’s situation “has the look and feel of somebody who is confronting an extraordinarily complicated tax situation — or at least the people he’s hired to do these things are — and is trying to comply but isn’t doing everything perfectly.”
The same, however, could be said of most of the Obama nominees Beck has blasted for tax problems, said Zerbe, who called them “people who were trying to comply with the spirit and the intent of the law.”
As it has been mentioned, our tax system is complicated and that’s putting it lightly. The fact that all these people made mistakes doesn’t go so much to anything about them as Americans as it does the tax system being a giant shitshow. So if that is indeed the case, does this mean that all this name calling and finger pointing is politically motivated? GET THE HELL OUT OF HERE.
What if it’s Beck with a tax ‘accident’? [Politico]
Editor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
Of the 111 comment letters FASB published on Fair Value Measurements and Disclosures: “Improving Disclosures about Fair Value Measurements”, this one was my favorite:
Please don’t require Companies not SEC registered to spend any more money on reports under this rule.
The usual suspects left the usual complaints; BDO said excessive disclosures would be both costly and useless, Uncle Ernie implied it was an interesting concept but an expensive flop in practical application, and PwC prefers once a year disclosures instead of quarterly.
Verizon even got in on the action, insisting, “proposed additional extended sensitivity disclosures would unnecessarily complicate financial statement disclosures without providing any meaningful benefit to financial statement users.”
I think it is entirely reasonable to point out that FASB is feeling the pressure to converge and the IASB is encouraging slightly less optimistic financial statements. The IASB openly admits that it is under outside pressure to adopt such a stance:
Responding to requests by the G20 leaders and others, in June 2009 the IASB published a Request for Information on the practicalities of moving to an expected loss model. The responses have been taken into account by the IASB in developing the exposure draft.
The IASB continues:
The IASB will also cooperate closely with the US Financial Accounting Standards Board (FASB) with a view to agreeing a common approach to the impairment of financial assets.
Since when is this for the IASB to decide?
Political influences are nothing new to accounting rulemakers but what happens when those influences come from foreign bodies far outside of our control? It is a known fact that the European Union has a large stake in IASB, so how can we be sure their intentions are pure as we move forward at their urging?
The Financial Crisis Advisory Group, an international body set up by the IASB and FASB to advise them on standard-setting issues related to the financial crisis, warned recently that that political pressure on accounting standard-setters posed a threat to “the very existence of international accounting standards.”
Integrity in financial statements? Keep looking, not going to find any of that here.
Election Day isn’t even over and while most of you probably don’t feel bad about not going to the polls, Deloitte is already getting you amped for next year’s state gubernatorial elections:
[The] 2010 election cycles are shaping up some of the most consequential state elections in decades. Many of the nation’s largest states, from California to Pennsylvania to Florida, will see new governors in 2011. All in all, there will be at least 17 open races for governor, the most in years. Control of state legislatures is also expected to be highly competitive.
Because you can never get started too early on diving into dense policy issues, Deloitte lists seven “featured insights” that will be crucial in “regain[ing] the public’s trust” in 2010. Wow, this firm is looking out for you or what? Thanks Deloitte! You’re better than Fox News!
And just in case you didn’t think Deloitte was serious about getting you informed about the issues, the 2010 site is introduced by none other than Tom Ridge, who — unbeknownst to us — is a Senior Advisor to Deloitte.
One would think that it would be impossible for us to be saturated by election coverage for next year prior to it even starting. BY AN ACCOUNTING FIRM. Deloitte, you’ve outdone yourself.
2010 Gubernatorial Elections [Deloitte]
For those of you that don’t concern yourselves with civics nonetoomuch, Chuck is the chair of the House Ways and Means Committee. Ways and Means writes the tax laws for this fair land of ours. Get it?
Anyhoo, Rangs has a bit of a problem. People are shouting from the rooftops that this guy has to go. Why? A small matter of forgetting to list some assets on his disclosure forms.
Minor omissions, after the jump
…in the Washington Post today decrying some of the newest revelations from last week, including a Merrill Lynch account valued between $250,000 and $500,000, tens of thousands in municipal bonds, and between $30,000 and $100,000 in rent from a Harlem brownstone that he owns, all of which he failed to list on his congressional disclosure forms from 2002 to 2006.
And if you remember:
This comes on top of the news last year about the four rent-stabilized apartments he rented at below-market rents, his use of government stationery to raise money for a pet project, his failure to report income from his sale of a Florida condo, and his failure to pay taxes on rental income from another home in the Dominican Republic.
According to the WaPo piece, Rangs’s net worth doubled-ish, “from between $516,015 and $1,316,000 to between $1,028,024 and $2,495,000”.
Yeah, so, that’s kind of a big change. We’re thinking that Chuck is way too busy being a tax wonk to track all this stuff. Or maybe he’s just too tired. Either way, it’s way easier to forget about four rent-controlled apartments than you think.
Rangel Under Pressure to Step Down [Web CPA Debits & Credits]
As you may know, the mere thought of Congress legislating accounting rules makes us nauseous to the point of passing out. Barney Frank, in an attempt to alleviate this common malady among accountants, has been quoted by Web CPA saying that “We will never legislate accounting while I’m chairman [of the Financial Services Committee]”.
According to the piece, Barn says that when he, and the rest of the committee, whipped Bob Herz, FASB Chairman, into submission over changes in mark-to-market rules, this was not legislating, this was “exerting pressure”.
Depending on who you ask (ahem, Hank Paulson), exerting pressure could easily be confused with “threatening” and threatening is clearly how legislation gets done in this country, whether it’s got a signature on it or not. So call it what you like, Barney-boy, we’re on to your doublespeak .
Wealthy taxpayers now have some legit data that allows them to give the finger to all the rabid populist outrage that’s been going around. According to the most recent data provided by the IRS, the top 1% of taxpayers pay more taxes than the bottom 95%. The wealthiest 1% picks up 40.4% of the tax bill while the bottom 95% gets 39.4%.
This amounts to pretty inconvenient data for lots of
Democrats politicians who have been screaming for years that the wealthiest Americans need to pay more taxes.
Tax Burden of Top 1% Now Exceeds That of Bottom 95% [Tax Policy Blog via TaxProf Blog]