Florida Man Drives Porsche on Sidewalk to Make a Point, Gets Arrested
We love a good Florida Man story around here. And today, that man just happens to work at PwC. Exciting! David Clarke became a principal at the firm when PwC acquired his digital consultancy BGT in 2013. So, obviously, he didn't come up in the firm because if there's one thing these firms drill into you, […]
NASBA, AICPA Agree to Hug It Out Over Private Accounting Standards
After a month of some public and private sniping, NASBA and AICPA seem to be burying the hatchet and have issued a joint press release promising to work together: The AICPA and NASBA are committed to engaging in an effort to ensure that the FRF for SMEs, as a non-authoritative framework, is not confused with […]
(UPDATE) Oh Look, The Romney Campaign Doesn’t Like the Tax Policy Center’s Most Recent Analysis of Its Tax Plan
Those mischievous little number crunchers over at the Tax Policy Center are at it again! They pulled out their calculators and concluded that even with a cap on tax deductions, Mitt Romney's tax plan won't raise enough money to pay for his 20% across-the-board tax cuts and repeal of the alternative minimum tax. Naturally, the […]
The Wall Street Journal, For One, Has No Problem Making Mitt Romney’s Tax Plan Mathematically Possible
Late yesterday (or for you nostalgic types, in today's print edition), the Wall Street Journal published an editorial that goes after the Brookings Institution and Tax Policy Center for their analysis of Mitt Romney's tax plan. The long-short of the analysis is that, given what has been said by Mittens re: tax reform, there is […]
Oddly, Chuck Schumer Didn’t Appreciate the Nazi Comparison
Last week, tax slayer Grover Norquist chimed in on the Ex-PATRIOT Act, legislation that was introduced by Senators Chuck Schumer (D-NY) and Bob Casey (D-PA). The Senators were concerned that ultra-rich dudes who no longer fancy American citizenship – namely Facebook co-founder Eduardo Saverin – were turning their backs on the USofA to avoid taxes. This […]
Frank Wolf Has Grover Norquist’s Attention
Earlier we learned that Virginia Congressman Frank Wolf is completely creeped out by Tax Terminator Grover Norquist’s BSD status in the Republican Party.
It’s been bothering Mr. Wolf so much that his “conscience” compelled him to give a speech on the House floor today to remind everyone what kind of Grover company keeps (i.e. the “unsavory” kind).
And since Grover has Viking DNA coursing through his veins, you’d be a monkey’s uncle if you thought that he was going to let this shit slide:
Norquist branded Wolf’s speech a “hissy fit” and a “compilation of whack job criticisms.” He added that he thought the Virginia Republican, one of the relatively few GOP members of Congress to have not signed the tax pledge, was lashing out at him because he did not want to call out his Republican colleagues. “He is the only Republican arguing that tax increases are a good idea,” Norquist told The Hill. “What he has is a problem with the American people and the modern Reagan Republican Party.”
But hey, GN is old political cat; he knows how the game is played:
“[I]f he wants to chew on my ankles, I can take it.”
How’s that for a visual?
Norquist: GOP lawmaker’s criticism ‘beneath him’ [OTM/The Hill]
Berkshire Hathaway: Wall St. Journal Is Wrong About Our Taxes on Bank of America Deal
Last week, folksy octogenarian (81 years today!) billionaire Warren Buffett announced that he was going to invest $5 billion in Bank of America. Some are questioning The Oracle’s intentions with this investment but considering WB came up with the idea in a place where all good ideas originate – the tub – it’s plausible that this investment will turn out okay for Berkshire shareholders (isn’t that the point?).
Regardless, some don’t think a guy who says that he doesn’t want to be “coddled” and needs – nay, WANTS! – to pay higher taxes shouldn’t be throwing around money and should just put his money where his Blizzardhole is. Accordingly, The Wall St. Journal published an editorial today accusing Buffett of being a little dodgy when it comes to Berkshire’s tax liability as it relates to his BofA investment.
Mr. Buffett’s recent decision to invest in Bank of America represents another tax-avoidance triumph for the Berkshire chief executive. U.S. corporations are subject to a top federal income tax rate of 35%, the second highest in the world. But the Journal’s Erik Holm notes [Ed. note: Thanks for linking!] that Mr. Buffett and the Berkshire bunch won’t pay anything close to that on their investment in BofA preferred shares.
That’s because corporations can exclude from taxation 70% of the dividends they receive from an investment in another corporation. This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn’t 100%.
With the 70% exclusion for Mr. Buffett and his fellow shareholders, Berkshire will enjoy an effective tax rate of 10.5% on the $300 million in dividends it will receive each year from Bank of America.
So, a 10.5% effective rate. Not bad, right? Well, Berkshire says it’s wrong and issued a brief press release to rebut the Journal’s op-ed account and not so subtly suggests that they bone up on tax law:
An editorial in today’s Wall Street Journal says that “Berkshire Hathaway will enjoy an effective tax rate of 10.5% on the $300 million in dividends it will receive each year from Bank of America.” That statement is incorrect.
Virtually all of the stocks that Berkshire owns are held in its property-casualty subsidiaries, and that will be the case with the Bank of America preferred.
The tax treatment for dividends paid by U.S. corporations to property-casualty insurance companies was materially changed by a law passed in 1986. The changes were described in detail in the chairman’s letter included in Berkshire’s 1986 annual report.
A minor change in rate was made in 1993. Since that time dividends that insurers receive from U.S. companies incur an effective tax rate of 14.175%. For Berkshire, that rate will apply to dividends it receives from Bank of America.
So, in other words, suck it editorial board. If you know Buffett like you should know him, then you know that if he could save that 3.675%, he would.
Buffett’s Latest Tax Break [WSJ]
Berkshire Hathaway Inc. News Release [Business Wire (a Berkshire Hathaway Compay!)]
If You Thought Grover Norquist Was Done with Tom Coburn Just Because He Got Some Republicans to Vote for the Ethanol Tax Credit Repeal, You’d Be Wrong
As we’ve mentioned, the scourge of tax policy pragmatism, Grover Norquist, has been battling anyone that utters a word about raising taxes or eliminating tax credits without corresponding tax cuts. His main nemesis in this battle has been Oklahoma Senator Tom Coburn, who was a member of the Gang of Six until he was determined the gang couldn’t get jack squat accomplished.
Today, a vote was held in the Senate that repealed the tax credits for ethanol, something that Coburn has been advocating strongly to his GOP colleagues. The idea has been floated that many Republicans who signed Americans for Tax Reform’s Taxpayer Protection Pledge would be violating said pledge by voting for the repeal, and thus incur the wrath of Grover & Co. Yesterday, Norquist insisted that the vote for the repeal isn’t a pledge violation because Senator Jim DeMint (R-SC) has an estate tax repeal waiting in the wings that would allow these Republicans to atone for their sins and thus making Coburn a loser again:
“Coburn tried. He failed. I’m sure he’ll try again,” Norquist told The Hill, asserting that Coburn had tried to trick his colleagues into voting for a tax increase. “We checkmated him.”
As we said Coburn did try again and now that the ethanol tax credit repeal has passed, Norquist will be counting on those senators wash away their ‘impure thoughts’ with a vote on DeMint’s amendment and allowing he and ATR to prevail once again, like the Roadrunner over Wile E. Coyote or Ronald Reagan over Communism.
He added that he had commitments from Senate GOP leadership to not agree to a deal with what he calls a net tax increase: higher rates or ending tax expenditures without an offset.
“Coburn’s going to be out in the cold by his lonesome,” Norquist said.
Senate kills off ethanol tax credits in possible break with tax pledge [E2 Wire]
Norquist denies he has lost momentum in tax scrap [On the Money]
Former Senator Alan Simpson Is Having Trouble Expressing His Thoughts on Grover Norquist
“What kind of a nut is this guy?” former Wyoming Sen. Alan Simpson said of Norquist.
He told an audience at Wednesday’s Peter G. Peterson Foundation fiscal summit that Norquist was “some guy just wandering around the swamps taking a pledge from people when America was flush, and then pushing people like Orrin Hatch off the cliff as if he were a commie.” Simpson has said similar things to Norquist’s face. [The Hill]
Navistar Says Deloitte Sucks at Auditing; Deloitte Not Amused
Last week Navistar International Corp. sued Deloitte for $500 million alleging “fraud, fraudulent concealment, breach of contract and malpractice” on audits from 2002 to 2005. That, in and of itself, isn’t too unusual. What is pretty fun (not fun in a “man, the circus is fun” kind of way but in “you’ve gotta love this stuff” kind of way) is when a company comes right out and says that Deloitte lied about its competency to provide audit services.
In other words, not only is Navistar saying that Deloitte is a buncha liars, they’re saying, “Biggest accounting firm in the world, you say? How about the suckiest accounting firm in the world?” They’re saying that Deloitte isn’t qualified to be in business. In essence, that the firm shouldn’t even exist. Because such fighting words simply can’t be taken sitting down, Deloitte spokesman Jonathan Gandal emailed the ‘Berg (which is good because he never calls us back) to express the firm’s position: “A preliminary review shows it to be an utterly false and reckless attempt to try to shift responsibility for the wrongdoing of Navistar’s own management,” Gandal said in an e-mailed statement. “Several members of Navistar’s past or present management team were sanctioned by the SEC for the very matters alleged in the complaint.” HA! Now who’s a bunch a liars? So who’s really to blame here in this round of ‘liar, liar pants on fire’? Well, over at Fraud Files Blog, our friend Tracy Coenen tries to shed some light on this spat: Navistar’s story about the fraud seems to keep changing. Early on in the case, the company denied wrongdoing and said the problem was with “complicated” rules under Sarbanes-Oxley. I’m not sure how SOX is to blame for management having secret side agreements with its suppliers who received “rebates.” Or improperly booking income from tooling buyback agreements, while not booking expenses related to the tooling. Or not booking adequate warranty reserves. Or failing to record certain project costs. And now the company says Deloitte is to blame. Here’s what’s funny about lawsuits like this: They essentially say… Our employees committed fraud and actively took steps to avoid discovery by the auditors. The auditors did not discover the fraud (at all, or soon enough), and now we’re going to hold them responsible for that failure. In the case of Navistar, the each of the fraudulent accounting schemes above are nearly impossible to detect. The company failed to book items or provide information about them to the auditors, yet they are suing the auditors for failing to find the items. So it appears that Navistar was expecting Deloitte to have some magical powers of fraud detection that even the likes of Tracy or Sam Antar don’t possess. Does that make them incompetent? You tell us. Navistar Sues Its Former Auditor Deloitte & Touche [Bloomberg]
Navistar v Deloitte: Blame the auditors for fraud committed and concealed by employees [Fraud Files Blog]
Did the Georgia Tea Party Call Grover Norquist a Socialist?
Maybe! As you know, Grover Norquist is the President of Americans For Tax Reform and has a staunch record of opposing any legislation – federal or state – that increases taxes and evokes Ronald Reagan (who hated taxes, dontchaknow) in every possible context, no matter how irrelevant. Grover and ATR are willing to get into a tussle (usually by sternly-worded letter) with whomever thinks that raising taxes will amount to anything positive (because that’s impossible). From the Illinois legislature to the American Lung Association to Lance Armstrong, if you give the slightest impression that higher taxes are a good idea, you can expect Grover & Co. to get Viking on your ass.
However, we learned this morning that in ATR’s most recent spat with the Georgia Legislature over that state’s tax overhaul bill, it appears that Grover has been out-Grovered by the Georgia Tea Party. You see, GN has informed the Georgia pols that he won’t give them any shit for supporting HB 387 after opposing their initial efforts.
This however, did not sit well with the GTP (our emphasis):
”One can not just look at the tax rate cut, one has to look at the deductions/exemptions that are slashed and, in many cases, removed in this bill. Taxes will be raised for some and will be cut for others. In other words, this bill re-distributes wealth.“
Okay, so…WHOA. Maybe we’re reading too much into this but take a gander at “socialism” and tell us what you think. So far there doesn’t appear to be a response over at ATR but this sort of aggression will likely elicit some sort of a response.
Your morning jolt: Grover Norquist, tea party split on tax overhaul [AJC via Joseph Thorndike]
Senator Tom Coburn Would Like ATR to Back Off a Bit
“Rather than demanding that Senate conservatives violate their consciences and support distortions in the tax code that increase spending and maintain Washington’s power over taxpayer’s lives, your organization should assist our efforts. Calling for the elimination of tax earmarks without qualifications would be a good start,” Coburn wrote. “Continuing to issue blanket defenses of all tax expenditures is a profoundly misguided embrace of progressive, activist government and a strategy for tax complexity, tax deferment, excessive spending and unsustainable deficits.” [The Hill]