Well, House Republicans Went Ahead With Their ‘Tax Reform 2.0’ Legislation Anyway
Despite reports surfacing last week that House Republicans were having second thoughts about pushing a second round of tax cuts this month, they must have said, “Screw it, let’s do it anyway.” House Republicans introduced legislation on Sept. 10 that would lock in individual tax provisions contained in the Tax Cuts and Jobs Act that […]
Republicans Planning to Unleash ‘Tax Cuts 2.0’ in September, Stick It to Democrats
Despite public support for the recent tax code overhaul plummeting in the past two months, Republicans think another round of tax cuts is a good idea. So, it’s likely the House of Representatives will vote on new tax legislation in September, said House Ways and Means Committee Chairman Kevin Brady (R-TX). Brady, who spoke at […]
Accounting Firm Partners Everywhere Managing Expectations at Home
CPAs’ cats everywhere are all like… It’s been a wild week in the tax world, even if it’s mostly been bluster. Talk of tax cuts has corporate executives, rich people, and sitting U.S. Presidents all hot and bothered. But it probably has a lot of accounting firm partners fantasizing too, not only because they’re dreaming […]
The Fiscal Cliff: As a CPA, People Expect You to Know this Crap
You spent five (or more) years studying to be an accountant, passed the hardest professional licensure exam that exists, and people expect you to know some shit about taxes. They don't care that you're "an auditor" because they don't know what that means. Now when you go to parties, somebody will be like, "Hey, Mark, […]
Hold the Phone, John Boehner Didn’t Say Anything About Taxes Going Up
Admittedly, The Speaker sounds like he's ready to deal but you'd be a damn fool to think that he's going to roll over: With President Obama reelected and Republicans returned to a slightly smaller majority in the House, Boehner (R-Ohio) said Tuesday’s election amounted to a plea from voters for the parties to lay down […]
Understanding the Estate Tax: The Rich Lose Because They Have To Pay It, and the Poor Lose Because They’re Poor
If I've learned anything from the Pirates of the Caribbean ride at Disneyland, it's that dead men tell no tales; however, the rich ones still pay taxes which is good news, especially for those who can't afford Disneyland. Some Americans are in favor of radically increasing the taxes on the rich while others want to […]
Chuck Schumer Won’t Have Any of This Tax Cuts for the Wealthy Talk
Sen. Charles Schumer (D-N.Y.) noted that many of the reform plans that are under discussion in Washington would cut tax rates for everyone by eliminating or reducing deductions — the same model that was used during the last major rewrite of the tax code in 1986. “But in the upcoming talks on the fiscal cliff, […]
Here’s What the Fiscal Cliff Looks Like
The Tax Policy Center released a new paper today that should be sufficient for scaring the living daylights out of anyone that doesn't like the idea of taxes going up. The paper's abstract states: Almost 90 percent of Americans would see their taxes rise if we topple off the cliff. For most households, the two biggest […]
Mitt Romney: Yeah, about those tax cuts…
Everyone needs to adjust their expectations: “By the way, don’t be expecting a huge cut in taxes, because I’m also going to lower deductions and exemptions,” Romney said, according to various news media reports. Um, yay? “All the rates come down,” Romney said. “But unless people think there's going to be a huge reduction in […]
You Can Safely Assume That Jenna Jameson Is a Fan of Tax Cuts
And by extension, might be willing to sign the Taxpayer Protection Pledge should she ever run for office: "I'm very looking forward to a Republican being back in office," Jameson said while sipping champagne in a VIP room at Gold Club in the city's South of Market neighborhood. "When you're rich, you want a Republican […]
Report Goes Out on a Limb, Suggests That Democrats Will Use Study Findings to Their Advantage in Tax Cut Debate
From Reuters: Letting tax rates for the wealthy rise will not put a short-term damper on the economic recovery, according to a report by the non-partisan research arm of the U.S. Congress. The study by the Congressional Research Service is likely to be used by Democrats in the looming battle over whether to extend tax cuts […]
Congressional Leader Clearly Knows Nothing About Congress’ Capabilities
The Hill reports that jolly orange giant John Boehner is speaking at the Peter G. Peterson Foundation today and he's telling the crowd that when Congress finally gets around to tax reform, they'll be coupled with an extension of the Bush tax cuts. “Any sudden tax hike would hurt our economy, so this fall — […]
George W. Bush Still Doesn’t Like the Bush Tax Cuts Being Called the Bush Tax Cuts
Stop me if you've heard this before. "I wish they weren't called the Bush tax cuts. If they were called someone else's tax cuts, they'd be less likely to be raised," the former President told some people who still listen to him speak about anything. Just save us the trouble and play it on a […]
Another Festivus Miracle! Payroll Tax Compromise Reached
The Speaker of the Hizzous just finished speaking to reporters. "Sometimes it's hard to do the right thing," he said. Boehner also hinted that if some people would have been willing to stick around and work over the holidays, maybe they coulda got this thing done but you know how people can get around this time […]
David Cay Johnston: President Obama Has Out-Norquisted Grover Norquist
Granddaddy of tax gazetteers, David Cay Johnston, is poking at Grover Norquist again, this time over the quagmire that the Republicans find themselves in over President Obama’s payroll tax cut proposal. The very proposal that could make Obama the biggest Grinch of 2011. Ruined holidays aside, DCJ points out that if the Republicans shoot this down, they do so at the behest of what seems to be a very popular idea:
[N]umerous opinion polls show overwhelming public support for continuing tax cuts for workers and for raising taxes on millionaires. That has left Republican leaders no choice but to silently cry uncle and agree to the president’s request to extend and possibly expand the payroll tax cut.
The reason that Republicans aren’t so hot on the payroll tax cut is that it’s “temporary.” They’d rather see “permanent” tax cuts enacted, although those “permanent” tax cuts are never “permanent.” The “permanent” Bush tax cuts, for example, had to be “extended” last year because they were about to “expire” which basically makes them “temporary.” The payroll tax cut was originally enacted last year with the Bush tax cuts but as Paul Ryan says, it’s supposed to be like a holiday, which is to say, “We lived through it and we’ll just move on with our lives and never to speak of it again.” DCJ writes that this means Obama has beat the Republicans at their own game:
Having outsmarted Norquist, Obama gets to run for a second term as the champion of at least a $100 billion tax cut. Obama can even say that if Republicans had had their way, working people’s taxes would have gone up while taxes on billionaires would have gone down. And he gets to tell small business owners that, but for Republicans, their taxes would have gone down too.
This is a marketing fiasco for Republicans to rival the Ford Edsel and New Coke. Already more than 40 congressional Republicans have taken steps to distance themselves from Norquist, who scowls at the mere mention of what could have been his, but is now Obama’s, very popular tax cut.
In other words: Whose shorties are snagged now?
Republicans paint themselves into a tax-cut corner [DCJ/Reuters]
President Obama Just Might Ruin His Family Christmas for the Payroll Tax Cut
That’s what Harry Reid is saying anyway. I’m not a parent, so I’m not exactly sure how a man would explain to his daughters that they’ll have to spend Christmas on the beach without Dad but he can always Skype in from the West Wing, or he could take the Paul Ryan approach. [Reuters]
Somewhere in Mitt Romney’s 59-point Economic Plan, There’s Something About Tax Reform
That’s right boys and girls. Our economy is such a jumbled clusterfuck that Presidential Ken Doll Mitt Romney and his team had to lay out 59 specific proposals to get this thing turned around. In a USA Today op-ed, Mittens laid out a little preview of this plan and it includes – YEP! – cutting taxes and ultimately overhauling the tax code:
Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated. Our corporate tax rate is among the world’s highest. It leaves U.S. firms at a competitive disadvantage and induces them to park their profits abroad, benefiting the rest of the world at our expense. I will fix these problems with permanent solutions. Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation.
Romney seems to be following Jon Huntsman’s lead but for fortunately for Mittens, Huntmsan’s plan wasn’t bulleted and no one heard the speech.
GOP Congressman: All Tax Cuts Are Good But Some Are Gooder Than Others
The Associated Press is reporting that some Republican Members of Congress are fighting their natural inclination to extend all tax cuts to infinity. The tax cut at risk of expiration is employees’ share of the social security tax of 6.2%. Last year the rate was cut to 4.2% for one year. President Obama would like to extend this cut, while some aren’t so keen on it.
But wait a minute! Doesn’t this go against every fiber of Republican orthodoxy? Won’t Ronald Reagan be spinning in is his grave? Did Grover Norquist’s marching orders get lost in the mail?
Republicans say no, as this position is “consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.”
Okie dokie, then. But if that’s the case, it’s a little strange to discover that House Speaker John Boehner hasn’t made up his mind on whether to extend this tax cut (or put another way “raise taxes”). Perhaps, that’s because he’s already said that tax hikes are off the table. So what gives?
Fortunately, we have Texas Representative Jeb Hensarling to explain it to us:
“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling, “but not all tax relief is created equal for the purposes of helping to get the economy moving again.”
So wait…not all tax cuts are effective at “getting the economy moving”? Is that what he’s saying? Or is this simply an Animal Farm approach to tax policy? Grover needs to get involved ASAP so everyone can get on the same page. The troops seem confused.
GOP may OK tax increase that Obama hopes to block [AP via BI]
Letting the Bush Tax Cuts Expire May Not Be a Violation of the Taxpayer Protection Pledge But Grover Norquist Would Still Advise You Against That Course of Action
As you well know, signing Grover Norquist’s Taxpayer Protection Pledge is the equivalent to having your name written in the Fiscal-Conservative-Starve-the-Beast Book of Life. If you break t servative credentials will go up in a poof of red, white and blue smoke, you’ll be bludgeoned to death with a rolled up copy of the U.S. Constitution and hopefully Ronald Reagan will have mercy on your soul.
Lately though, partly due to this little debt ceiling debate, the Pledge has come under increased scrutiny and after the Senate approved a repeal of ethanol tax credits without a corresponding reduction in tax rates, some suggested that it is meaningless. Since this is obviously nonsense, Grover has gone on a PR offensive, in order to spell it for the RUBES out there so they can understand what constitutes a violation and what does not. Everything seemed to be back on the up and up until today, the Washington Post ran an editorial that may further muddy the waters:
Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.
In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.
Naturally, some DOPES out there got all worked up as The Hill reports, “Democrats had jumped on that quote, suggesting it was a sign that Norquist was willing to be more reasonable on taxes than many congressional Republicans.”
As you can see, the words “Norquist,” “reasonable,” and “taxes” are in extremely close proximity which indicates that these “Democrats” are what I’d like to call “COMPLETE IDIOTS.” Problem is, whomever grabs the loudest megaphone first in DC usually gets dibs on what the dish is so Americans for Tax Reform has AGAIN clarified how this Pledge thing works:
ATR opposes all tax increases on the American people. Any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people. In addition, the failure to extend the AMT patch would increase taxes. The outlines of the plans are deliberately hazy, but it appears that both Obama’s Simpson-Bowles commission proposal and the Gang-of-Six proposal dramatically increase taxes on the American people.
It is a violation of the Taxpayer Protection Pledge to trade temporary tax reductions for permanent tax hikes.
In other words, if you let the “Bush Tax Cuts” expire that’s fine but you just be sure replace them with “Obama Tax Cuts” to ensure there’s no trouble.
Out from under the anti-tax pledge [WaPo]
Grover Norquist tries to clarify Bush tax cut remarks [The Hill]
ATR Statement on Washington Post Editorial [ATR]
Senator Tom Coburn Explains What Tax Expenditures Are and What They Are Not
Earlier, we shared with you the thoughts of Americans for Tax Reform on Oklahoma Senator Tom Coburn’s rock-inspired “Back in Black” deficit reduction plan. Despite a silver lining that will allow whiny rich liberals to pay more taxes if they so choose, ATR wasn’t impressed, calling it a “Trillion Dollar Tax Hike.”
This is partly because Senator Coburn proposes the elimination of many tax expenditures. Of course, if you’re confused about what exactly a “tax expenditure” is, Senator Coburn took the time to explain it to everyone:
Tax expenditures are not tax cuts,” he said. “Tax expenditures are socialism and corporate welfare. Tax expenditures are increases on anyone who does not receive the benefit or can’t hire a lobbyist or special interest group to manipulate the code to their favor.”
It doesn’t appear that ATR has weighed in on this yet (and they are fond of quoting Coburn) but we don’t mind waiting.
House pursues balanced-budget bill; need for backup plan acknowledged [WaPo via TaxVox]
Earlier:
Did the Georgia Tea Party Call Grover Norquist a Socialist?
Bill Clinton Wants a Lower Corporate Tax Rate
“We’ve got an uncompetitive rate,” Clinton told a crowd at the Aspen Ideas Festival on Saturday.
“We tax at 35 percent of income, although we only take about 23 percent. So we should cut the rate to 25 percent, or whatever’s competitive, and eliminate a lot of the deductions so that we still get a fair amount, and there’s not so much variance in what the corporations pay.” [HP]
Paul Ryan: Payroll Tax Cuts Are Economic Red Bull
The Hill reports that Congressman Paul Ryan isn’t interested in getting the economy all hopped up like an adolescent trying to cram for a mid-term,“I’m not a Keynesian, so I don’t think sugar-high economics works.”
And that this discussion is old hat, “We’ve sort of proven this already, a number of times. Temporary tax rebates don’t work to create economic growth. Permanent tax changes do.” [The Hill]
Deloitte Tax Expert Makes Statement That He’s Likely to Regret
“If there are Republicans who break with Grover Norquist’s position, I think that’s an important thing,” said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP in Washington.
“I think it signals a willingness on their part to have the fight with him over whether every tax expenditure is a legitimate reduction in effective tax rate, or whether there are some that should be regarded the way they regard spending programs.” [Bloomberg, Earlier, Earlier]
Presidential Candidate Tim Pawlenty Doesn’t Want to Bore You with the Gory Details About How He’ll Pay for His Proposed Tax Cuts
Former Minnesota Governor Tim Pawlenty wants to cut taxes. He’s a Republican after all and Grover Norquist probably has lewd photos and several sternly-worded letters waiting in the wings should TP give the impression that he’ll do anything but slash rates.
Pawlenty’s plan calls for two rates, 10% for on the first $50k/$100k (single, married) earned and 25% for anything above that. He’s also proposing a flat 15% corporate tax rate. He would eliminate the capital gains, dividends, interest and estate taxes.
Pretty expensive proposition so it’s got to be paid for, right? Pawlenty’s got a plan for that too:
To pay for the tax cuts, Pawlenty said he would eliminate unspecified tax loopholes and subsidies. “The Tax Code is littered with special interest handouts, carve-outs, subsidies and loopholes,” he said. “That should be eliminated.”
This is one of those instances where a reporter may ask the follow-up question, “Governor, which tax credits would you eliminate?” To which Pawlenty answers, “Yes.”
[via AT]
Newt Gingrich Has Some Imaginary Tax Policy Proposals for His Imaginary Presidency
To trigger job growth, Gingrich proposed to cut the U.S. corporate tax rate from 35 percent to 12.5 percent, a deeper cut than some other Republican politicians have offered. He would extend income tax cuts that expire in 2013, which were the subject of a pitched battle late last year when President Barack Obama tried to let tax reductions for wealthier Americans expire. And he would completely eliminate the capital gains tax on stock profits. Gingrich, proposed that the country move toward an optional flat tax for Americans of 15 percent, and strengthen the dollar by returning to “Reagan-era monetary policies,” and reform the Federal Reserve to promote transparency. [Reuters]
Paul Ryan Is No Ronald Reagan
Charles Krauthammer […] writes that the “most scurrilous” criticism of House Budget Committee Chairman Paul Ryan’s fiscal plan is that it would cut taxes for the rich. This would, he says, be akin to making the same claim against the Ronald Reagan-Bill Bradley 1986 tax reform. Krauthammer goes on to assert that Ryan’s plan is “classic tax reform” that … broadens the base by eliminating loopholes. The facts are otherwise. The Ryan plan, at least what we know of it, would inarguably cut taxes for the rich. It in no way resembles the 1980s tax reforms of either President Reagan or Senator Bill Bradley and Representative Dick Gephardt. And it most assuredly fails to eliminate loopholes. [TaxVox, WaPo]
More Appeasement in Obama’s Proposed Budget
President Obama presented his nearly $4 trillion budget, proposing to cut more than $1 trillion from Federal programs over the next ten years, with $200 billion in cuts to occur over the next two years. Although these cuts may appear, at first glance, significant to the average American, in light of the recently enacted tax cuts of $858 billion over the next two years, that $200 billion of proposed spending cuts leaves $658 billion of tho ted for.
In balancing our national budget, Obama and Congress are focusing on the wrong side of the financial equation. The projected deficit in 2011 is $1.65 trillion; however, the whole non-defense discretionary spending budget in 2010 was $477 billion. Even if all non-defense discretionary spending were eliminated, there would still remain a deficit of over $1.1 trillion. The math is clear that Congress cannot eliminate deficit spending by budget cuts. Taxes will need to be raised.
Some of the cuts that President Obama is proposing in his budget include $300 million for community block grants, $2.35 billion for low income home energy assistance program, and $400 billion from a five-year domestic spending freeze, as well as reductions in pell grants, graduate school loans, community access, etc. But all of these cuts do not come close to offsetting the lost revenues from the extension of the tax cuts to the rich.
A pattern has emerged in Obama’s dealings with the Republicans. Obama agreed with the Republican argument to give tax cuts to the rich to help the economy. Now he is proposing to cut programs for the middle class and the poor to balance the budget. In doing such, Obama is moving the political fulcrum to the right. His approach of pre-emptively offering something—whether it be tax cuts for the rich or budget cuts affecting the poor and middle class—instead of negotiating a quid pro quo, is effectively pushing the Republicans further to the right, seeing the prospect of gaining even more ground.
Although compromise is demanded in politics, leadership cannot be defined by compromise alone. There are principles worth fighting for; and leaders must be willing to mobilize public opinion in support of those principles. Since our political system is rigged because of campaign finance and lobbying, a leader professing change and reform needs to present a different narrative to the populace. Churchill, Teddy Roosevelt, and Franklin Roosevelt recognized the value of the bully pulpit. Despite his rhetorical skills, Obama has failed to do so. His posture of appeasement will in all likelihood allow the Republicans to balance the budget on the backs of the working class and low income Americans to the benefit of Wall Streeters and Multinational Corporations, who offshore jobs, brought about the financial crisis, and robbed trillions from the American people. Since Obama is seeking re-election in 2012, and is charting his own course, he will not lead the American people to the Promised Land.
America needs major tax reform. The extension of tax cuts to people who need them the least was the last thing Congress needed to do. Some Democrats want to cut $40 billion in subsidies to the oil companies for five years; however, Republicans refuse to cut these subsidies to the oil companies, preferring to cut programs for the poor and middle class. Moreover, in spite of two wars costing $120 billion per year and an inflation adjusted military budget larger than those in the Bush years and the Cold War, neither party desires to cut military spending, which constitutes 58% of the discretionary spending budget.
Reform will never come from Congress nor a President like Obama. It will require people outside of Washington working with allies inside Congress in order to stop this disconnect between what is transpiring in Washington and what this country needs. It will require people coming together as they did in Egypt in a pro-democracy movement. The question is, can and will the people of America come together before it is too late.
Poll: This Balanced Budget Idea Starts with Higher Taxes for the Wealthy
Republicans take control in the House of Representatives this week and boy, are they ever ready. With the ink safely dry on the extension of the Bush tax cuts, the GOP is moving on to spending cuts, supporting the troops, restoring honor, launching investigations and whatever hell else was in that pledge. Wait, that last one wasn’t in there?
Anyhoo, the idea of lower taxes and spending cuts to get the federal budget in ship shape has been the GOP song and dance long before Ronnie had his own float at the Tournament of Roses Parade but a recent poll has discovered that lots of people don’t agree with that sentiment:
Raising taxes on the rich beats out cuts to defense spending, Medicare and Social Security as U.S. adults’ top preference on how to close the deficit, according to a 60 Minutes/Vanity Fair poll.
Sixty-one percent of Americans said that increasing taxes to the wealthy should be the first step toward balancing the budget.
By contrast, 20 percent of respondents preferred cuts to defense spending as the first option, while 4 percent said that cutting Medicare would be the best way to start cutting the deficit. Three percent said they preferred cutting Social Security.
Now you might expect a major backlash from the more affluent citizens, you know, grumbling at polo matches, yacht races and beside the swimming pools filled with gold doubloons but surprisingly, quite a few of them are okay with it:
Increased taxes on the wealthy tops those four options even among higher earners who might be most affected by a tax hike, the poll suggested. Fifty-eight percent of respondents making between $50,000 and $100,000 per year rated tax hikes as the best first step to balancing the budget, while 46 percent of those making more than $100,000 said it was their top choice, as well.
But as we have learned, the GOP isn’t really down with this. Besides, tax rates won’t be an issue again the until the second and third weeks of December 2012, so they’d prefer we concentrate on things that aren’t already safely chiseled into the political dogma.
Some People Need to Get Some Perspective on This Tax Cut Compromise
“The fact that the Republicans got a reduction in the death tax from 55 percent to 35 percent I think made the deal even better. […] I’m a little surprised that some Republicans are scoffing at it.”
~ Steve Forbes can’t quite believe what he’s hearing.
George W. Bush Would Prefer if the Bush Tax Cuts Were Called Something Other Than the Bush Tax Cuts
As far as the policy is concerned, W is obviously cool with it but if the name could get tweaked (hint being: drop the “Bush”) maybe getting it through Congress wouldn’t such a BFD.
[via BI]
(UPDATE 2) Bernie Sanders Didn’t Convince Too Many People (Pretty Much No One!)
~ Update includes clarification on vote tally and addition to first paragraph. ~ Update 2 includes finally vote tally.
Despite Friday’s epic speech by Bernie Sanders, the Senate passed elected to finish debate on the tax cut/unemployment compromise this afternoon to set up the final vote before it moves on to the House.
At 4:12 ET, the vote was 62-7 with Sanders, Patrick Leahy (D-VT), Russ Feingold (D-WI), Tom Udall (D-NM) (CSPAN originally showed Tom as voting “no” and has now disappeared), Jeff Bingaman (D-NM), Kirsten Gillabrand (D-NY) and Sherrod Brown (D-OH) voting “no.”
If you’ve got nothing better to do, you can watch the live feed here.
UPDATE, circa 5:00: Vote is 73-10 with John Ensign (R-NV), Mark Udall (D-CO), Kay Hagan, (D-NC), Carl Levin (D-MI) voting “no.”
UPDATE 2, circa 6:30: Finally vote of 83-15.
Obama’s Appeasement on Tax Cuts
The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.
For those of you unfamiliar with the history of World War II, Neville Chamberlain was the prime minister of Great Britain just prior to the advent of World War II. He is most remembered for his “Munich Agreement“, in which he deeded over Czechoslovakia to Nazi Germany with Germany’s promise that it would not pursue further aggression. Of course, this was making a deal with the devil; Adolf Hitler was Satan incarnate, for certain. Consequently, his name has become the emodiment of total naivete, if not utter stupidity and idiocy. You cannot make a deal with the devil. Shown here in the picture to the right is Neville Chamberlin upon his return from Munich in 1938 after meeting with Adolf Hitler with the scrap of paper that was to “ensure peace in our time”; the paper was signed by Hitler.
The question now is whether Barack Obama is another Neville Chamberlain. Obama is supporting the tax cuts for the rich, claiming that unless we agree to these demands by the Republicans, our economy may dip back into recession, as Chamberlain asserted that unless England and Europe gave Nazi Germany Czechoslovakia, that a war with Germany might occur. Whether you are for the tax cuts or against the tax cuts, the majority of Americans were surprised, if not flabbergasted, by Obama’s immediate acquiescence to Republican demands for inclusion of the rich in the tax cuts, including a very generous exemption from estate taxes: under the plan, as much as $10 million may be exempt from any estate tax, with the estate tax rate on any excess being reduced from 55% to 35%!
Certainly, Barack Obama is no Winston Churchill. Maybe he does his fighting only on a basketball court; however, he certainly did not fight the good fight before conceding to the Republican demands, merely accepting in return a 13 month extension of unemployment benefits for 2 million Americans, a reduction in payroll taxes, and an extension of a grab bag of tax credits for college tuition and other items. Like Chamberlain, who only received Hilter’s signature on a scrap of paper promising never to go to war again with England, Obama got very little in return for the big gift to the rich and privileged.
A recent CBS poll found 70% of Americans were not in favor of these tax cuts for the rich—resulting in huge deficits of $700 billion dollars—when our national debt is already $14 trillion. Many feel that no tax cuts would have been preferable to this agreement, since no deal would spare us from an additional $980 billion of debt.
Obama is justifying these tax cuts through a fear tactic: unless we give the rich these tax cuts, our country may lapse back into another recession.
Dear President Obama: for your information, we are still in this recession. And in 2012, we will still be in this recession in terms of unemployment. Jobs have been going overseas for years now and with the further consolidations of mega-size corporations, more layoffs are looming. Of course, the unemployment numbers will become meaningless since after a certain period of time, the long-term unemployed are no longer included in the current rate of unemployment.
After hearing Harvard’s Larry Sumners endorsement of these tax cuts for the rich and his prediction of another recession if they are not enacted, I suspect that President Obama may still be listening to the counsel of his former Economic Advisor. Consequently, I am not surprised by Obama’s use of fear tactics today to drum support for these tax cuts for the rich.
If this is the kind of way Obama negotiates with Republicans over tax cuts for the rich, imagine how he would negotiate with the Iranians and North Korea? LOL! And then imagine how Hillary Clinton would have negotiated if she had been elected President of the United States. In the immortal words of Yogi Berra, it’s deja vu [Neville Chamberlain] all over again.
(UPDATE) Bernie Sanders Is Getting His Filibuster On
NPR reports that the Vermont Senator has been going for over 90 minutes to delay the vote on the tax deal President Obama made with Republicans and judging by the live feed from CSPAN2, he’s not showing any sign of stopping. NPR quotes Berns:
“You can call what I am doing today whatever you want, you it call it a filibuster, you can call it a very long speech. I’m not here to set any great records or to make a spectacle. I am simply here today to take as long as I can to explain to the American people the fact that we have got to do a lot better than this agreement provides.”
Here’s a snip from feed the (a pie chart!):
And a bar chart!
He’s doing you proud Green Mountain Staters!
UPDATE: Entering hour six! It’s like he’s got an IV of pure Green Mountain joe!
Alan Grayson Attempts to Explain Why He Doesn’t Support the Tax Cut Deal
The only problem is, MSNBC host Lawrence O’Donnell (an unabashed Democrat who supports the deal) IS NOT HAVING IT.
Visit msnbc.com for breaking news, world news, and news about the economy
Some favorite moments:
• “I use that term specifically, ‘caved in.'” – Because that’s what Dems do, baby!
• Circa :54 – any use of the term ‘pernicious’ is welcome in our book; Some bald guy is shaking his head incessantly; Arianna Huffington looks like an amused heiress (which is what she always looks like).
• At 2:27 – Larry officially starts flipping out.
• “You are WRONG, sir.” – Grayson is already fanning the heat with his hands at this point.
• “When you’re out of office in January and watching this from the sidelines.” – Too soon!
• At 3:25 there’s an audible sigh by Grayson that gives us the impression he can’t keep from laughing.
• “BE AN ADULT ABOUT THIS CONGRESSMAN!”
[via BI]
Wealthy Canines Not Spared Democrat’s Ire During Tax Cut Debate
Somewhere in the whole mishmash of yesterday’s events leading up to the House’s passage of chicken crap, Joseph Crowley took to the floor to remind us know that it’s just not wealthy humans that stand to benefit greatly from tax cuts.
[via Gothamist]
The House Decides Tax Cut Extension Is Not Chicken Crap After All
Our favorite minority attention whore, House Republican leader and next Speaker of the House John Boehner, seems to feel as though all this nonsense over extending the Bush tax cuts is chicken crap, whatever that is supposed to be. Did he mean bullshit? Just tell us what’s on your mind, Mr Boehner, we won’t hold it against you if you say bullshit on C-SPAN. “I’m trying to catch my breath so I don’t refer to this maneuver going on today as chicken crap, all right?” he said. “But this is nonsense, all right? The election was one month ago. We are 23 months from the next election, and the political games have already started trying to set up the next election.” No no, homie, this has nothing to do with the next election, this has to do with y’all just getting around to this now when no one’s cared since 2002.
If there are any doubts as to the stimulative or depressive effect of a tax rate change in terms of tax receipts received by the Treasury, check out this WSJ op-ed by W. Kurt Hauser which tells us that historically, tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised.
Anyway, regardless of our feelings on the matter (many of which include expletive-filled rants like “WTF, why are you guys just now trying to figure this out?!”, “please! Can’t you work well with others for just once in your life” and/or “Gee, maybe if we addressed the problem of an overly complicated tax system this wouldn’t be such an epic pain in the assets”), the House has finally made a decision. Frankly we couldn’t be happier to see the light at the end of the W-2 on this at last.
A mere 29 days before the scheduled December 31st Tax Cut Armageddon, the threats votes have been counted and it appears as though the yeas have it. With 6 minutes to go on the vote and with little help from House Republicans, Democrats rallied together to get the 218 votes they needed to extend tax cuts to those earning up to $250,000 and then some.
It doesn’t really matter because there’s no way the Senate is going to let this fly so you may go back to whatever you were doing and start socking away a few bucks for your 2011 tax bills.
Ahhh political process. It’s like watching a car crash in slow motion from the driver’s side.
The House Will Have a Half-Ass Vote on Tax Cuts Tomorrow
Don’t get too excited, the vote will only be on the tax cuts for those of you earning less than $250k. The vote that really counts (for the people that may be able to afford Snooki!) is being slapped onto the extension of unemployment benefits.
The bulk of the tax cuts — for lower and middle-class incomes — will be considered in a separate vote on Thursday. Democrats have long sought to only renew tax breaks for households under $250,000 in income, but Republicans have insisted on an extension of current tax rates for everyone.
Right, then. So this is a political play by the Democrats to show everyone that they don’t suck as much as the election results would have you believe. Republicans, however, do not care for this maneuver. Rep. Dave Camp (MI) is especially annoyed and evokes small business in the process:
“This is disappointing and a sign of bad faith after the president agreed to bipartisan, bi-cameral talks. There will be bipartisan opposition to the Democrats’ push to raise taxes on small business,” Camp said.
Gotta say, it is a pretty shrewd move by the Democrats (where was this spunk in October?) but at least everyone will have to get off their ass tomorrow and do something. God forbid the Republican members of Congress actually vote on something during the lame duck session.
House Democrats set Thursday tax vote [Politico]
House GOP Balks at Middle-Class Tax Cut Vote Scheduled Thursday [Fox News]
Extending All the Tax Cuts Would Allow for Some Great Holiday Gift Ideas
For the wealthiest among us, anyway. Sure, Alan Grayson’s ideas were helpful but sometimes you need something extra special, you know?
Some People Aren’t Convinced Nancy Pelosi Wants to Compromise on Tax Cuts
President Obama is darn sure that a deal will get made on the expiring tax cuts before the end of the year despite the ‘logjam’ between the two political parties.
He’s confident because hard-working families need it, the economy is fragile yada yada yada and now that Tim Geithner and OMB Director Jack Lew are on the case, this thing is a shoe-in.
While the next Speaker of the House, John Boehner, is not quite on the same page as the President, he’s pretty much in the same chapter:
“Republicans made the point that stopping all the looming tax hikes and cutting spending would, in fact, create jobs and get the economy moving again,” said Representative John Boehner, who will become Speaker of the House next year.
“We’re looking forward to the conversation with the White House over extending all of the current rates, and I remain optimistic,” he said.
Well, as close as to the two will likely get in public anyway. However, this a slightly more optimistic stance than what some people have for Nancy Pelosi, who would, presumably, rather give up her Armani suits than hand the wealthy a tax cut:
“There is some thought that the last thing that Nancy Pelosi wants to do on her way out of the Speaker’s office is to have Congress approve an extension for tax cuts for the wealthy,” said Brian Gardner, an analyst for investors at Keefe, Bruyette and Woods.
“She could muck things up a little bit.”
Well! This should be fun! Stay tuned.
Chris Van Hollen Isn’t Buying the “Tax Cuts Create Jobs” Story
In case you needed another sign that we are heading full speed towards a stalemate on tax policy, the Representative from Maryland would like to be recognized for calling BS on the popular Republican rhetoric:
“It’s clear that the tax cuts for the folks at the very top have not created any jobs. After all, we’ve had them in place now for more than eight years, and we know what the jobs situation is,” Van Hollen said during an interview Monday on MSNBC.
“The notion that you’ve got to continue them in order to somehow boost the economy, when those are in place right now and we have a lot of people unemployed, is a clear indication that they are not a big job creator.”
Eric Cantor’s rebuttal will sound similar to this:
“Taxes shouldn’t be going up on anybody right now.”
[…]
“This election … was really the American people saying they are tired of the lack of results in Washington,” he said. “They want to see more jobs for more Americans. They want to see us … cut government spending, rein in the size of government so we can get this economy growing again. That was the prescription, that was the mandate that came from the people.”
So there’s no middle ground to be found here, guys? No chance you can put down the ideological rhetoric for the sake of, ya know, screwing the American people?
Van Hollen: Tax cuts for wealthy ‘not a big job creator’ [The Hill]
Alan Grayson Gives Rich People Some Ideas on How to Spend Their Money Saved From Tax Cuts
Grayson, who got smoked in the election earlier this month, will be heard before he leaves the House.
[via TaxProf]
Tim Geithner Doesn’t Think a Tax Cut Compromise Should Be Complicated
He’d take care of this right here, right now if he could.
[via DB]
Accounting News Roundup: Obama Sticking to His Guns on Tax Cuts; Backdating Scandals Made Little Noise; Area Tax Con to Be Contestant on TV | 11.12.10
Obama says he’s not caving on tax cuts [CNN]
President Barack Obama declared Friday that his “number one priority” is preserving tax cuts for the middle class, and sharply denied that comments by his senior adviser David Axelrod suggest that his administration is about to cave in to Republicans who also want to extend the Bush tax cuts for the wealthy.
“That is the wrong interpretation because I haven’t had a conversation with Democratic and Republican leaders,” Obama said of a Huffington Post article suggesting that in advance of negotiations with lawmakers next week, the White House has calculated that giving in on tax cuts for the rich is the only way to get the middle too.
Companies Would See Big Tax Shifts [WSJ]
Tax-reform plans proposed by President Obama’s deficit-cutting commission would radically change corporate tax policy and, business groups say, could improve U.S. competitiveness in global trade. But they also could create winners and losers among U.S. companies.
Business groups and economists have long sought fundamental changes to the tax code, which hasn’t been overhauled since 1986.
Pwning the social debate [AccMan]
Proceed with caution. Sayeth Dennis Howlett, “If the title of this post bamboozled you, the rest will make your head explode.”
House Dem leaders’ reactions to fiscal panel report differ sharply [The Hill]
Speaker Nancy Pelosi (D-Calif.) came out swinging, calling the proposals “simply unacceptable,” while the two men battling to be her deputy, Majority Leader Steny Hoyer (Md.) and whip James Clyburn (S.C.), released muted responses. Neither Hoyer nor Clyburn criticized the commission, avoiding a politically explosive set of ideas as they wrestle for support from their Democratic colleagues for the post of minority whip.
Backdating Scandal Ends With a Whimper [DealBook]
“These prosecutions went out with a whimper rather than a bang,” said Christopher J. Clark, a criminal defense lawyer at Dewey LeBoeuf who has done work on backdating cases. “With few convictions and no substantial sentences, juries and the courts simply did not agree with the government’s position that stock option backdating represented a serious financial crime.”
Richard Hatch still surviving life’s rocky road [Providence Journal]
Survivor champ, convicted tax dodger and “l’m living on borrowed 15-minutes-of-fame time” Richard Hatch is now going to be on the Celebrity Apprentice.
A QuickBooks Alternative for the Accounting-Phobic Owner [You’re the Boss/NYT]
Spooked by QuickBooks? WorkingPoint may be the solution for the debit-credit disinclined.
Newsweek, Daily Beast Set Merger [WSJ]
Under the proposed agreement, expected to be disclosed Friday, the two news organizations will be combined in a 50-50 joint venture called the Newsweek Daily Beast Co. The deal comes three weeks after the two sides abandoned talks of a merger over a disagreement about control.
Tax Experts Weigh in on the Fiscal Commission Report
Plenty is being said about Bowles and Simpson’s Fiscal Commission report but we prefer to go with experts on the matter. Some musings from around the tax blogosphere
Joe Kristan loves the zero option, harkening back to the Reagan days:
If no “tax expenditures” were added back, the plan would reduce individual rates to 8, 14 and 23%, with a flat 26% corporate rate. There would be no reduced rate for capital gains, greatly simplifying tax lives for most of us.
This is an excellent idea. I would only apply more of the savings to reducing rates and add a dividends paid deduction to integrate the individual and corporate systems — a huge simplification. Nancy Pelosi isn’t craz friends didn’t like the first zero option either.
From the aforementioned Tax Policy Center:
[T]his proposal is so provocative it almost seems as if Bowles and Simpson realize they have no chance of building consensus on their own commission. As a result, they may have decided to take their best shot now rather than watch their plan get nibbled to death. If so, it may not have been a bad idea. The fiscal panel may fade away in shame, but I have a feeling this plan may live on.
Tax Foundation’s Tax Policy Blog notes there’s plenty of displeasure to go around:
On the spending side, hawks will wince at the defense cuts while defenders of entitlement spending will dislike the higher retirement age and lower cost-of-living adjustments. One line item calls for all earmarks to be eliminated. Federal employee unions will not like the idea of a 3-year federal pay freeze and a reduction in non-defense employment by 10 percent through attrition.
On the tax side, there are certainly tax hikes for tax-haters to hate: gas taxes, dividend and capital gains taxes, and payroll taxes on high earners. Also, the revenue cap that the chairmen suggest, 21% of GDP, is higher than revenue has been in two generations.
Robert Flach is pleasantly surprised by the report but warns:
By just saying “add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero expenditure low” without limitations or restrictions we all know that the supporters of every single existing “tax expenditure”, as well as proposed new ones, will fund a lobby to throw money at Congress to keep or add their particular benefit. And individual Congresscritters will negotiate back and forth – “I’ll support your tax break if you support mine”. Before you know it we will end up with the same mucking fess we have now!
Meanwhile Dan Meyers needs oxygen:
[T]he report was nothing if not breathtakingly audacious by Washington standards.
Kay Bell notes the contention that has already begun over Social Security:
The debate over what typically is an inviolable government benefits program (remember Dubya’s failed attempt to privatize Social Security?) is going to rage for a bit…Perhaps most of the other members are as upset with the Social Security and tax suggestions as a lot of other people are right now. When the points of view of those 16 other commission members are taken into account, some of the recommendations might change … or disappear.
As Joe mentioned above, Nancy Pelosi hates the report, quoted by The Hill as, “simply unacceptable,” plus we gave you Dick Durbin’s thoughts yesterday.
Personally, we’re fans of the report because if nothing else, it forces politicians to entertain real solutions rather than hide behind the bullshit rhetoric we hear about “tax reform” and “cut spending.” And finally, as Gerald Seib writes at the Journal, there aren’t any more excuses:
By making their ideas public, they made it harder for other commission members to run and hide. The commission now can’t simply bury controversial or unpopular ideas. It has to say to the world that it has rejected them and take responsibility for having done so.
It’s about time.
Eric Cantor Will Not Be Entertaining Any of This Talk of Compromise on Tax Cuts
The presumed next Majority Leader in the House has gone on the record (with Fox News no less) that any pragmatism on the President’s part will be slapped away like a homeless vet’s outstretched hand:
The Obama administration’s hopes of reaching a tax deal with Republicans that would decouple rates on the rich from the middle class appear dead.
House GOP Whip Eric Cantor (Va.) threw cold water on the proposed plan, which would temporarily extend tax cuts for the wealthy while permanently extending tax cuts for the middle class. “Taxes shouldn’t be going up on anybody right now,” Cantor said.
So, in other words President Obama, you can take any of this “compromise” talk and stick it in your tea because that’s what was mandated by the people:
“This election … was really the American people saying they are tired of the lack of results in Washington,” he said. “They want to see more jobs for more Americans. They want to see us … cut government spending, rein in the size of government so we can get this economy growing again. That was the prescription, that was the mandate that came from the people.”
So a fair amount of ellipsises there, so maybe he’s not exactly sure what he’s saying but Cantor is a fool if he thinks that “cutting government spending” and” reining in the size of government” is not part of the GOP agenda despite what Paul Ryan writes in the Financial Times.
Security Agency spending seems to be a pretty big piece of the shopping spree; doesn’t it make sense to start there? If not, are we going to continue buying predator drones on the credit card and cut education again since raising taxes is absolutely out of the question?
Cantor, Republicans signal Obama tax proposal is dead in the water [The Briefing Room/The Hill]
Accounting News Roundup: Signs of Compromise on Tax Cuts; KPMG Caught in Between IRS, Wells Fargo; BDO Elects New Board Members | 11.05.10
White House signals compromise on tax cuts [Reuters]
A conciliatory White House said on Thursday it was willing to negotiate with Republicans on tax cut extensions, but Senate Republican leader Mitch McConnell took a hard line against compromises with President Barack Obama in a new Congress.
In the first possible policy shift since Democrats suffered heavy election losses two days ago, White House spokesman Robert Gibbs signaled Obama was open to talks on a temporary extension for the wealthy of Bush-era tax cuts that expire at the end of the year.
New York Court Sends “Amazon Tax” Case Back for More Information [Tax Foundation]
[T]he intermediate court of New York handed down its long-awaited “Amazon tax” opinion in Amazon.com, LLC v. New York State Department of Taxation and Finance. New York requires companies with no property or employees in New York to collect New York sales tax if the non-resident company receives revenue from in-state independent affiliates.
Qantas Blames Rolls-Royce for Engine Failure [WSJ]
Qantas Airways Ltd. Chief Executive Alan Joyce on Friday said the design of Rolls-Royce Group Plc engines could have caused a mid-air failure that forced one of its A380 super jumbos to make an emergency landing in Singapore.
“This is an engine issue and the engines were maintained by Rolls-Royce since they have been installed on the aircraft,” Mr. Joyce told reporters at the company’s headquarters in Sydney. “We believe this is most likely a material failure or some kind of design issue.”
BBC strike silences Today and hits TV news [FT]
BBC journalists ignored the pleas of their editor-in-chief on Friday, taking strike action over plans to cut their pension benefits and driving familiar morning news programmes off the air.
The Today programme on Radio 4 was replaced with pre-recorded material, including a documentary on bird life in the Humber estuary, while Radio 5 Live and the BBC’s morning television news were produced with skeleton staff and unfamiliar presenters.
IRS looks into Wells Fargo tax deductions [MST]
A dispute between the Internal Revenue Service and Wells Fargo & Co. that has been quietly taking shape in a Minneapolis federal court could cost the bank hundreds of millions of dollars.
The clash involves “sale-in, lease-out” (SILO) transactions in which a tax-exempt entity transfers tax benefits to a taxpayer like Wells Fargo, in exchange for a fee. The IRS says Wells Fargo has claimed nine-digit losses for tax purposes on such deals, but the government considers them an illegal tax dodge.
BDO USA, LLP Announces Results of Board Elections [BDO]
Brian Eccleston, Scott Hendon, Albert Lopez and Brad Schrupp have each been elected to the firm’s board of directors. These elections, which are for a three-year term, are effective immediately.
“The partnership has shown wise judgment in electing these very deserving individuals and I am confident that the firm will benefit from the insight they will bring to the process,” said Jack Weisbaum, CEO of BDO USA.
Actress’ name is mud in tax man’s eyes [Tax Watchdog/Detroit News]
Jaime Pressly is the actress and she owes $376k.
Lame Duck Tax Policy Prognostication
From tax policy cynic Joe Kristan:
It’s unlikely that the lame ducks will accomplish much.
Jesus, that’s no way to start.
I expect an AMT patch to pass (though you should bet the other way if they offer points). I would bet against the extenders getting past the lame ducks, though it could happen. Action on the Bush tax cuts and the estate tax seems unlikely to me. It would require a triumphal GOP to work out a deal with a President whose response to disagreement so far has been to repeat himself slower and louder. The same dynamics bode poorly for the next Congress when it meets in January.
After such an ugly campaign, we wouldn’t put it past a bunch of losers (read: Democrats) to spite the entire country just because they couldn’t effectively communicate any accomplishments from the past two years. Of course, that’s us being cynical to a fault.
Thinking a little more practically, we agree with Joe on his AMT patch prediction. The rules are such a mess that it could stand a complete overhaul but we realize that’s nothing short of water into wine with less than two months left in 2010.
As far as the tax cuts are concerned, the shred of political capital that the members of Congress who will remain in DC have left simply cannot be lost. And besides, the President and Congress fundamentally agree on a major portion of the policy – that is, to extend tax cuts for the middle class. Again, this could be a pipe dream, but compromising on the extension of the cuts for the wealthiest Americans for two years seems like a simple solution (as bad of an idea as it is).
As for the estate tax – it’s toast. No one seems to give a shit about it except for Jon Kyl but once the first decrepit billionaire (who is unwilling to pull the plug on themselves) kicks the bucket in 2011, thus paying 55% tax on the estate, it will only take one phone call and Congress will spring into action.
Sigh. Place your bets.
After Tomorrow, a Bunch of Losers Will Have to Quit Their Pouting and Come Up with Some Tax Policy Solutions
Lots of those losers will be Democrats. And if they feel like sticking it to the rich one last time, at least they can say a Reagan OMB Director and Bill Gates are on their side!
[via TaxProf]
Accounting News Roundup: Brits Investigating Services KPMG Provided BAE Systems; How Many Times Did Harry Reid Vote to Increase Taxes?; PwC Scoffs at ‘Big 5’ Idea | 10.25.10
BofA Finds Foreclosure Document Errors [WSJ]
The Charlotte, N.C., lender discovered errors in 10 to 25 out of the first several hundred foreclosure cases it examined starting last Monday. The problems included improper paperwork, lack of signatures and missing files, said people familiar with the results. In certain cases, information about the property and payment history didn’t match.
KPMG investigated over BAE audit [Accountancy Age]
The investigation by the Accountancy and Actuarial Discipline Board (AADB) focus British Aerospace/BAE Systems between 1997 and 2007, looking at commissions paid by BAE to subsidiaries, agents or other companies.
Any professional advice, consultancy or tax work provided to BAE by KPMG during that period will also come under the microscope in relation to commission payments. The investigation will focus on commissions connected to three legal entities: Red Diamond Trading; Poseidon Trading Investments; and Novelmight.
Key Tax Breaks at Risk as Panel Looks at Cuts [WSJ]
The tax benefits are hugely popular with the public but they have drawn the panel’s focus, in part because the White House has said these and other breaks cost the government about $1 trillion a year.
At stake, in addition to the mortgage-interest deductions, are child tax credits and the ability of employees to pay their portion of their health-insurance tab with pretax dollars. Commission officials are expected to look at preserving these breaks but at a lower level, according to people familiar with the matter.
Harry Reid Voted to Raise Taxes ‘Only’ 51 Times [TaxProf Blog]
Apparently there was some talk that it was actually in the ballpark of 300.
Reflections on the Basel Committee Principles for Enhancing Corporate Governance [Marks on Governance/IIA]
News you can use.
Business leaders press administration for repeat on tax break [On the Money/The Hill]
The National Association of Manufacturers and other groups argue allowing companies to “repatriate” money earned abroad to the U.S. at a lower tax rate could spur the economy by providing businesses with a burst of cash they could invest in their companies.
“The business community is looking at ways to jumpstart the economic recovery and here is one you could do without increasing the deficit,” Dorothy Coleman, vice president of tax and domestic economic policy for the manufacturers.
PwC slates FRC idea to create Big Five [Accountancy Age]
Paul Woolston, head of public sector assurance at PwC, criticised the Financial Reporting Council’s suggestion the Audit Commission be used to create a fifth player in the audit industry, currently dominated by the Big Four – PwC, Ernst & Young, Deloitte and KPMG.
“It is at least ironic that the FRC has said what it has, in that the Audit Commission itself has operated with a large monopoly,” he said.
“It is odd that the FRC is concerned about any one organisation having the market share.”
SEC Aims to Streamline Complaint Process [WSJ]
The launch is a step in the agency’s efforts to avoid bottlenecks and duplication in the handling of complaints, which traditionally have been fielded by individual SEC offices and filed there. Complicating matters is the variety of forms in which such complaints come—mail, phone calls, emails and interviews.
“This process is going to ensure that it’s all transferred into a structured format so that it can be more easily searched and analyzed,” Robert Khuzami, director of enforcement, said in an interview.
“We will have all of it in one place, searchable, which will do a lot for us in the long run,” he said.
Thus Far under Obama, the Only Individuals Paying Higher Taxes Are Smokers and Tanners, But They May Have Company Soon [Tax Foundation]
Jersey Shore quips go here.
Accounting News Roundup: Tax Cut Political Football Goes Flat; Google’s Remarkable Tax Planning; Yes, IRS Agents Are Strapped | 10.21.10
Tax Cuts Slide To Back Burner On Campaign Trail [WSJ]
It’s a sign that a decision by Democratic leaders, to put off a vote on extending the tax cuts until after the Nov. 2 elections, may be paying off politically.
“It’s harder to write an ad portraying a vote that hasn’t happened yet,” said Brian Gaston, a former senior aide to House GOP leaders and now a lobbyist at the Glover Park Group.
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes [Bloomberg]
Google y $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
TUI Travel CFO Quits After Accounting Error [Dow Jones]
In an embarrassing admission, the company said an ongoing audit for the fiscal year ended September 2010 had highlighted the accounting error in the integration of IT systems in its U.K. mainstream business that had accrued over a period of four to five years and which increased its total write-off for 2009 from GBP29 million to GBP117 million.
Chief Executive Peter Long told Dow Jones Newswires that the issue had been identified when it reported its third-quarter results but continued to investigate the matter and “only last night were we able to determine the scale of the problem.”
Banks Clueless on Foreclosure Mess Severity [Jonathan Weil/Bloomberg]
The biggest U.S. mortgage lenders and servicers say they’re putting the foreclosure mess behind them, and that it never was a major problem. The reality is these companies are so big and unmanageable, the people in charge of running them have no way to know if that is true.
One thing that remains unknowable is how many flawed home- mortgage records and foreclosure proceedings are out there waiting to be unearthed. Dozens of federal and state agencies are investigating. It’s anyone’s guess what they might turn up.
NJ man cashes $158G check IRS mistakenly sent him [Asbury Park Press]
He figured no one would notice.
For ‘B-to-B’ Companies, Finding Facebook ‘Friends’ Can Be a Struggle [WSJ]
These days, even small “business-to-business” concerns like Bill.com are experimenting with social media, perceiving the popular online hangouts as low-cost, easy-to-use venues for attracting new customers and retaining existing ones. But unlike their consumer-focused counterparts—retailers that sell smartphones, jeans, games and other personal products—so-called B-to-B businesses seem to be having a harder time connecting with their target audience.
Some IRS agents carry guns, too, agents tell UAB accounting student group [Birmingham News]
“My first day on the job, I thought, ‘Why are they carrying guns?'” said Donald Smith, a UAB graduate and special agent with the IRS-Criminal Investigation unit.
Korea wants G20 to delay accounting standard consolidation [Korea Times]
Apparently they have a say in the matter
Accounting News Roundup: America’s Fiscal Conundrum; FASB Attempting to Price Convergence; Rent and Healthcare Are Both Too Damn High | 10.20.10
Pledging Our Way to Fiscal Disaster [Tax Vox]
Three-quarters of Americans believe that entitlement programs such as Medicare and Social Security “will create major economic problems” over the next 25 years. But two-thirds are opposed to addressing these challenges by reducing benefits, and 56 percent are against raising taxes.
And congressional candidates, who read the polls, are scrambling to pander to the free-lunch beliefs of their respective bases. As a result, they are locking themselves into opposing both reductions in future benefits and tax increases.
NFIB calls for action on Bush tax cuts [On the Money]
“Increasing the individual rates will mean that business owners have less money for business investment and job creation,” the NFIB stated. “One study found that a 5 percent increase in individual tax rates decreases business investment by 10 percent.”
Democratic leaders have repeatedly promised that rate cuts for all but the top two brackets will be extended into next year, allowing most businesses to avoid a tax increase. The NFIB states their plan will still hit small businesses.
FASB Seeking Input on the Costs of Convergence [JofA]
FASB issued a discussion paper to gather input from stakeholders about the time and effort that will be involved in adapting to several anticipated new accounting and reporting standards and when those standards, which are part of the FASB and International Accounting Standards Board (IASB) convergence projects, should be effective. The board said it will use the input it receives to develop an implementation plan that helps companies and other stakeholders manage both the pace and cost of change.
“We issued this discussion paper to gather the information we need to create a realistic, cost-effective plan for transitioning to the new standards,” Acting FASB Chairman Leslie F. Seidman said in a press release.
Paul V. Stahlin Elected Chairman of the AICPA [PR Newswire]
Stahlin said the United States is emerging from a period of economic turmoil that has “driven demand for new business practices, new regulations, new oversight and new solutions,” in his inaugural speech, titled “Seize the Future.” He said CPAs have been finding solutions for more than 100 years.
“We as CPAs have the unique ability to make sense of a constantly changing complex world,” Stahlin said. “Employers, our clients and our country turn to us to make sense of the most complex developments in business and regulation. We best understand how a business ticks.”
Bob Evans Financial Chief To Depart At Year’s End [Dow Jones]
Tod Spornhauer wants to do something different.
Yahoo 3Q profit doubles, revenue still lackluster [AP]
Bartz and CFO Tim Morse are still in process of turning this thing around.
J&J CFO: Healthcare Spending Growth Is Decelerating [Dow Jones]
Certain medical expenses are simply too damn high.
Jimmy McMillan: Rent is Too Damn High! [CBS]
Speaking of, in case you missed it yesterday (or Monday night):
What Happens When Congress Says, “We’ve Got Time. We’ll Get to It”
“Ever since the tax cuts were enacted in 2001 and 2003, policy makers have known the law would expire at the end of 2010. That ‘drop dead’ date offered an auspicious way to galvanize a systematic effort to reform a tax system that is badly in need of repair. Instead, policy makers pretty much ignored the issue until just before the 2010 Congressional recess, when politically tinged efforts to extend some or all of the tax cuts finally began — a ‘debate’ that was too little, too narrow, and too late.”
~ William G. Gale, Miller Chair at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center
Jon Kyl Has His Money on a Two-Year Extension of All Tax Cuts
Does the Arizona Senator know how to pick a long shot or what?
Americans know they are facing a large tax increase on Jan. 1 unless Congress prevents it. President Obama wants Congress to raise taxes on wealthier Americans (including many small businesses). Republicans oppose raising taxes on anyone, especially in this weak economy. Democrats ducked the issue until after the election. The result is that Congress must act in a post-election session; and while economists tell us that permanent tax policies are best, the most likely scenario in this divided Congress is a temporary extension of current rates for all Americans, probably for two years.
Politics is a tricky game. You can’t do away with all the tax cuts since that would result in hell fire raining down all across the land. And extending all the tax cuts indefinitely is a sure fire way to bring back the torches and pitchforks. It doesn’t take a Kennedy School grad to figure that one out.
But Kyl is realistic and that’s not the worst thing in the world. He simply wants to get to a point where we can reform the tax system ans that, dare we say, is a good thing.
Would we prefer him to go off on a wild-ass tangent about how the expiration of tax cuts will mean an uprising of Founding Father proportions? Of course. But we’re talking about a U.S. Senator. Everyone knows the craziest of crazies are in the House. Unless some IRS abolitionist finds his way into the upper chamber. Or a witch. That could ratchet things up a notch.
Accounting News Roundup: Ernst & Young Reports Sluggish Revenues; Obama Shifting Tax Rhetoric; Wipfli Makes Another Acquisition | 10.06.10
Ernst & Young revenues fall slightly to $21.3 bln [Reuters]
“For the full fiscal year ended June 30, revenues were down 0.9 percent to $21.3 billion from $21.4 billion in fiscal year 2009, Ernst & Young said.
Revenues from advisory services grew by 2 percent, but other areas of the firm, including tax and audit services, posted declines.”
Goldman Sachs Says U.S. Economy May Be `Fairly Bad’ [Bloomberg]
Or ‘very bad.’ Either way, it’s there’s no good to be found.
Deloitte 2010 Annual Review: Reaching new heights, As One [Deloitte]
In coordination with the “We are the champions” announcement, D rolled out its annual glossy detailing what a bang-up year it was.
Obama’s Tax Pitch: Income Gap That Millionaires Should Fill [Bloomberg]
“President Barack Obama has shifted his central argument against the Bush-era tax cuts to make the income gap as much a voter concern as the budget gap.
Since Sept. 3, Obama has chided Republicans for wanting to extend tax cuts for “millionaires and billionaires” — a line he repeated in a morning television interview, a weekly radio address, backyard chats in Des Moines and Albuquerque, and three times during one speech at a community college in Cuyahoga County, Ohio. Before then, administration economists cast taxing the wealthy largely as a matter of fiscal prudence — a way to free up $700 billion from the deficit over the next 10 years.”
Wipfli acquires Illinois firm [The Business Journal of Milwaukee]
“Wipfli LLP, a CPA firm headquartered in Milwaukee, said that officers and associates of Rockford, Ill.-based Lindgren Callihan Van Osdol & Co. Ltd have joined Wipfli through an acquisition.
The transaction was effective Oct. 1 but was announced late Tuesday. Terms of the deal were not disclosed.
Lindgren Callihan Van Osdol, which was founded in 1963, specializes in audit, accounting and consulting services to businesses and to individuals. The acquisition is one of the largest in Wipfli’s history, said managing partner Rick Dreher.”
Karl Rove group, other tax-exempt orgs under fire for alleged political activities [Don’t Mess with Taxes]
Hard to believe that Karl Rove would be involved in anything shady.
Sun Chips Bag to Lose Its Crunch [WSJ]
YOUR LUNCH WILL BE QUIETER SOON.
Old Rich Guy Makes It Clear Where He Stands on Taxes
“The question is, Do we get more money from the person that’s gonna serve me lunch today, or do we get it from me? I think we should get it from me.”
Tax Policy Nerds Try to Debunk Each Other’s Debunking Over “The Largest Tax Hike in History”
You may have seen some tax-hating, freedom-loving types waving flags, flying planes with banners and screaming from the rooftops that if the Bush tax cuts expire that it will be “the largest tax hike in history.”
The argument has been made and questioned ad nauseum but yesterday Ryan Ellis of Americans for Tax Reform (founded by Grover Norquist, so you get the context) felt the urge to prove the point once again that this will be the largest freedom-hijacking ever:
CBO projects that nominal GDP over the next decade will be $187.7 trillion over this decade. In order for the Obama tax hikes to be bigger than THE TO WIN WORLD WAR II, it would need to be at least 5.04 percent of this, or $9.46 trillion.
Gerald Prante over at the Tax Foundation’s Tax Policy Blog isn’t amused with this latest attempt:
Ellis is thereby admitting that it’s simply not the largest tax hike in American history. When you say “history,” that includes the 1940s. If you want to exclude WWII, say peacetime. Furthermore, the Treasury study that Ellis bases these claims off only goes back to the 1940s, which means that we don’t even know the relative size of tax hikes pre-1940, such as when the individual income tax was initiated and ramped up. So in summary, we can say that you have to knock off about 170 years of American history in order to make Ellis’s claim only possibly defensible.
Hmmm. We have to give that point to Prante there. You can’t just say “the biggest tax hike in history” and then say “except for that one time.”
And while we’re splitting hairs, we (i.e. the US of A) can’t really take credit for killing Hitler, can we? The Führer killed himself under duress from the Soviets. So there’s that.
Anyhoo, back to the subject – Ellis than tallies up all the tax “hikes”:
The 2011 income tax hikes. These are the rate hikes, the capital gains and dividend hikes, the return of the marriage penalty and the death tax, etc. CBO score: $2.567 trillion
Failing to index the alternative minimum tax (AMT) to inflation. CBO score: $558 billion
Failing to stop dozens of business tax hikes (“extenders”). CBO score: $1.969 trillion
Interactive effects of all these. CBO score: $606 billion
Obamacare tax hikes. CBO score: $525 billion
Add all of these up, and you get to $6.225 trillion over the next decade.
Prante fires back, noting that Ellis is making an auditor to tax accountant comparison:
Ellis classifies a compilation of “tax hikes” that are set to go into effect as one giant tax hike, including AMT expiration, the extenders bill, Making Work Pay, and even health care reform. There are two problems with this. First off, Ellis and ATR have a countdown clock on the ATR website (which is off by one hour by the way due to Daylight Savings Time) saying “countdown to the biggest tax increase in American history.” Well, virtually all of the health care tax hikes, which he counts in his tax hike amount, don’t kick in until 2013 (731 days from January 1, 2011). Therefore, this is inconsistent. Furthermore, summing up all the tax hikes and counting them as one big tax hike is inconsistent with the Treasury study cited earlier. If you want to count all the “tax hikes” occurring under Obama as one big tax hike, then shouldn’t you do the same for previous administrations?
Right! If you’re going to have a countdown clock, shouldn’t it be accurate?
Wrapping up, Ellis says:
Expressed as a percentage of the economy, this is 3.31 percent of GDP. That’s the largest tax hike in history, except for the one that was used to fight simultaneous wars in Europe, North Africa, and the Asian Pacific Rim.
You got us, guys. It’s a mere 3.31 percent of GDP.
Final retort from Prante:
The Treasury study referenced wouldn’t even consider letting the tax cuts to expire to be a tax hike because there was no act of Congress. Has Ellis done a review of history to make sure that no tax cut has expired elsewhere in history that was not counted in this Treasury study (given that Ellis considers an expiring tax cut to be a tax hike)?
This is a good question. Have you done your research into historically impotent and unwilling legislative bodies? Because if you haven’t, then you’d find that the group we’ve got up there now seems to have pretty awesome ability to do exactly nothing (read: estate tax).
Whether past flaccidity demonstrated by Congress has resulted in larger “tax hikes” remains unknown but something tells us that since none of this is getting resolved any time soon, we’ll get an answer.
Largest Tax Hike in History? Outside of Killing Hitler, Yes. [ATR.org]
Is Allowing Tax Cuts to Expire the Largest Tax Increase in American History? The Question Revisited [Tax Foundation]
White House Takes The UPS Approach to Explain Tax Cuts
Keeping it simple for the folks: colors, shapes, numbers.
Not really too subtle with the “Blue=Good; Red=Bad.”
You Won’t Hear This on the Campaign Trail
“The tax cuts need to be canceled. If not now, due to the weakness in the economy, then three years from now.”
~ Ezra Klein is not seeking reelection.
Accounting News Roundup: ‘Won’t Somebody Think of the Small Businesses?!?’; Facebook’s New Arbitrary IPO Date; Debunking The ‘Failure’ of Bush Tax Cuts | 09.28.10
Analyzing the Small-Business Tax Hysteria [You’re the Boss/NYT]
“The rhetoric on this subject has become counterproductive. It can’t be helping consumer confidence, and it’s certainly not creating any jobs. In what used to be a running joke on ‘The Simpsons,’ whenever trouble arose, Reverend Lovejoy’s wife would shriek, ‘Won’t somebody please think of the children?!!!’ The emerging counterpart to that cry in our real-life politics seems to be, ‘Won’t somebody please think of the small businesses!’ ”
AOL in Talks to Buy TechCrunch [WSJ]
“A deal would mark a high-profile marriage between the Internet giant and one of Silicon Valley’s most high-profile blogs, which has often been discussed as a possible acquisition target.
It would also be the latest in a series of alliances between content and Internet companies, which are seeking to draw more users and advertisers by pumping out inexpensive articles on popular topics like fashion, news and sports.”
Facebook IPO likely after late 2012: board member [Reuters]
“Facebook, the world’s largest online social network, is likely to go public sometime after late 2012, a board member said, satisfying investors’ appetite for a slice of one of the Internet’s biggest growth stories.
A stock market debut by a company valued in the tens of billions of dollars would be one of the most highly anticipated initial public offerings of the decade.
But Facebook board member, venture capitalist and PayPal co-founder Peter Thiel stressed on Monday that will not happen until after late 2012, and would depend on the company hitting certain revenue targets and how its business model develops.”
Auditors Aren’t Forcing Full Repurchase Risk Exposure Disclosure [Re:The Auditors]
Auditors looking the other way for their banking clients. Again.
BlackBerry Maker RIM Enters Tablet Scrum [WSJ]
“RIM Co-Chief Executive Mike Lazaridis on Monday showed the device, dubbed the PlayBook, at a conference for BlackBerry developers in San Francisco. The PlayBook has a seven-inch touch screen and high-definition cameras on the front and back sides, but the device won’t connect directly to cellular networks.
RIM said its tablet won’t go on sale until early next year in the U.S. and the second quarter elsewhere in the world, meaning it will miss the key holiday season. The timing also puts RIM behind iPad competitors from Samsung Electronics Co., Dell Inc. and others.”
IRS won’t be mailing tax forms next year [AP]
They’re saving $10 million a year, presumably on stamps and envelopes.
News Corp. SVP Kevin Halpin named Dow Jones CFO [AP]
Kevin Halpin is taking the reins from Stephen Daintith.
Correlation Proves Causation, David Cay Johnston Edition [Tax Foundation]
“I agree with Johnston that tax cuts are not the correct response to every economic situation, and I do not believe that letting the Bush tax cuts expire would cause an economic armageddon. If the federal government’s proclivity for deficit spending can’t be curbed by reducing tax revenue – the ‘starve-the-beast’ approach – then permanently extending the Bush tax cuts for any and all taxpayers is a worse policy than letting the cuts expire because the country will drive off the fiscal cliff even sooner.”
Nancy Pelosi Guarantees a Tax Cut
“America’s middle class will have a tax cut. It will be done in this Congress. There is no question about that.”
~ The Speaker of the House says that a vote may even happen before the election despite the old boys’ (and a few ladies) club has all but thrown in the towel.
Accounting News Roundup: Doubt Over Taxes Reaching Fever Pitch; E&Y to Hire 6k Off Campus in FY11; Honest Answers on Tax Policy in an Election Year | 09.24.10
‘Consumers Are Paralyzed’ Over Tax Doubt [WSJ]
“Congress halted plans to pass a major tax bill before the November elections, leaving taxpayers and financial advisers unsure of how to plan for the future.
One of three scenarios face Congress when it returns from the election recess: It will extend all of the Bush tax cuts of 2001, which expire this year; it will hammer out a new law, perhaps using some of President Barack Obama’s budget proposals; or lawmakers will let the cuts expire, which would mean higher rates for all taxpayers.
Meantime, ‘consumers are paralyzed,’ said Dean Barber, a planner who heads the Barber Financial Group near Kansas City. ‘They have money to spend but they aren’t going to until they know where the tax burden will lie next year.’
The problem extends to business as well. ‘There are 29 million private businesses in this country, and they interact with our members,’ said Barry Melancon, head of the American Institute of Certified Public Accountants. ‘Universally we are hearing that businesses are paralyzed by lack of capital and uncertainty over taxes.’ ”
SEC Hiring for Multiple Offices [FINS]
“The SEC is hiring qualified talent for both its Division of Enforcement and its Office of Compliance Inspections and Examinations (OCIE). The agency is looking for candidates with experience in risk management, operations and accounting and other specialties.
In testimony given yesterday at a Senate Banking Committee hearing, Robert Khuzami, director of the Division of Enforcement and Carlo di Florio, director of OCIE, spoke to their respective units’ hiring needs.”
Ernst & Young Previews New Campus Recruitment and Social Media Strategies [PR Newswire]
E&Y is hiring 6,000 campus recruits – both interns and new associates – this fiscal year. That’s an increase over last year’s numbers (although the press release doesn’t say by how much). The firm also states that 60% of its workforce will be Gen Y by the end of 2011.
Tax Policy in an Election Year [Tax Updated Blog]
Joe Kristan answers questions that politicians won’t.
Comtech Telecommunications Does the Right Thing by Fixing Errors in Latest Report [White Collar Fraud]
Sam is sending an autographed “WANTED” poster of his cousin “Crazy” Eddie as an “attaboy” for Comtech CEO Fred Kornberg for “[taking] the high road and corrected its errors without attacking a critic.” That “critic” being Sam, who reported on Comtech’s erroneous EBITDA calculation last July.
Whether this type of nostalgic temptation works for the other company execs that are on Sam’s radar remains to be seen.
Pastors to challenge IRS by endorsing candidates [AP]
One hundred men and women of the cloth will be endorsing political candidates from their pulpits this Sunday. If the IRS is doing its job, agents should be kicking down doors at many of God’s homes on Monday.
U.S. Senate Continues to Successfully Bicker Over Tax Cuts
Dick Durbin is über-confident that nothing is going to happen prior to election day, which means he and his colleagues will have to sneak it in between then and December 31st when the cuts expire.
“The reality is we’re not going to pass” the tax cuts before the election,” said Durbin of Illinois. He blamed politics, saying “we are so tightly wound up in this campaign” that a bipartisan agreement to act won’t be reached.
Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said “it’s clear there aren’t 60 votes for any proposal, so no proposal is going to pass at this point.”
Sixty votes would be needed for a tax-cut extension to advance in the Senate.
Our concern is that some of Durbin’s friends in the Senate will be losers come November 2nd and may feel like sticking it to the entire country purely out of spite. It would be a mistake for anyone to overestimate the maturity level of any member of Congress.
Durbin Says Senate Won’t Pass Tax Cut Extension Before Election [Bloomberg]
Earlier:
Gerri Willis Doesn’t Care What A Couple of Old Men Think About Tax Cuts
Gerri Willis Doesn’t Care What A Couple of Old Men Think About Tax Cuts
In case you haven’t heard, there’s a bit of a debate over what to do about the expiring Bush tax cuts. And because it’s an election year, they make for a perfect political pigskin to throw around.
Fox Business Network is marking this momentous occasion with Taxed to Death Week (a demise that we do wish for our worst enemies) and w ons to Gerri Willis of the Willis Report.
Going Concern: Tax cuts are a pretty popular way for politicians to pander to their constituents. It seems pretty convenient that they are set to expire right after the mid-term elections. Who should we blame for this?
Gerri Willis: There are plenty of people to blame – George W. Bush put them into place way back in ’01 and ‘03 and we knew way back then they had an expiration date – so take yer choices, there are plenty of politicians to point the finger at.
GC: And God knows Americans need someone to blame. Since Congress let the estate tax expire, is there a real risk that the tax cuts could expire without any action?
GW: Sure, it’s actually the easiest action to take because it requires absolutely no effort on the part of anybody – Congress doesn’t have to do anything. The President doesn’t even have to pick up a pen to sign the bill. They could all just dither until midnight December 31. Whoosh! Tax hikes.
GC: Just like tornadoes in Brooklyn. And that’s not good for anybody. Anyway, there’s a lot of information and misinformation out there with regard to the tax cuts. Can we safely assume that objectivity is taking a back seat to political gain and Americans are at the mercy of the rich and powerful (who, incidentally, are the ones greatest affected by the ultimate outcome)? How can Americans know what’s really going to happen? How can accountants best sort through all the noise to best serve their clients?
GW: Surprise! Politics are involved – of course they are, but Americans aren’t stooges. There are plenty of places to get objective information on the tax cuts. I’d suggest Fox Business and The Willis Report. Frankly there is no way for accountants or anyone else to know what is going to happen – Congress is really holding us hostage – my financial advisor sources say nobody is going on vacation in December because they know that something can happen anytime that will change the landscape.
GC: Here’s something strange – Warren Buffet has indicated that he’s in favor of eliminating tax cuts for the wealthiest Americans. Alan Greenspan is in favor of letting all the tax cuts expire. So we have one of the richest people in the world saying he’s willing to pay more taxes and the former head of the Federal Reserve saying that everyone should pay more taxes. Generally speaking, these are smart guys. Are they onto something or is this a sign that we need to start ignoring everything that old men say?
GW: Okay, to be fair here there is wealthy and then there is wealthy, right? $250,000 in San Francisco or LA or NYC is not the same thing as $250,000 in Omaha or Comanche TX. And, Greenspan simply continues to try to resurrect his reputation which was harmed by the mortgage meltdown.
GC: Ultimately though, the one thing Congress agrees on is that tax cuts for the middle class should stay and the big debate is whether the wealthy get a short extension on their cuts or a “permanent” (although it’s not really permanent) one. But do rich people really need an additional moderately-priced BMW?
GW: Heehee. Maybe they won’t buy a BMW – maybe they’ll hire someone! The thing for the middle class to know is that it isn’t just your income taxes at stake – there are a handful of beloved middle class tax credits at stake too – write-offs for college loan interest; child tax credit; and of course there is no AMT patch yet this year – if that doesn’t come to pass tens of thousands of Americans could owe AMT — a tragedy.
Accounting News Roundup: The End of Summers; KPMG Adds More Restructuring Talent; Back to Basics | 09.22.10
Summers exit lets Obama retool team and message [Reuters]
“The departure of economic adviser Larry Summers opens the way for President Barack Obama to shake up leadership of his economic team and show he is taking seriously growing public frustration over the sluggish economic recovery.
Whoever replaces Summers ions constrained by a record $1.47 trillion budget deficit and the possible Democratic loss of control of the House of Representatives in November 2 congressional elections.”
The Obama Tax Plan: Who’s in the Crosshairs? [TaxVox]
“President Obama’s plan to raise taxes on the nation’s highest income households may not quite mean what you think. A closer look suggests that fewer people may get whacked than either Obama or his Republican critics suggest. And for many of the victims, the club won’t be the president’s plan to raise rates to 36 percent and 39.6 percent. Those rate hikes may be getting most of the attention, but the real cudgel would be higher taxes on capital gains and dividends going to high-earners.”
H&R Block Announces New Chief Financial Officer [MarketWatch]
“H&R Block (HRB 12.82, -0.08, -0.62%) announced today the appointment of Jeff Brown as chief financial officer. Brown has been the company’s interim CFO for the past five months. As an eight-year veteran of H&R Block, Brown has played an important role in a variety of financial functions.
‘I am very pleased with the leadership Jeff has provided me and the organization in his interim role,; said Alan Bennett, H&R Block’s president and chief executive officer. ‘Jeff has all the talent and personal characteristics needed to be highly successful as the permanent CFO. He has earned my full confidence, as well as that of the board of directors.’
Most recently, Brown served as H&R Block’s corporate controller. Prior to that, he was the corporate controller and vice president of finance (Americas) at Bacou-Dalloz, now Sperian Protection, and served in key positions at KPMG. Brown has a business administration degree from the University of Nebraska and is a certified public accountant.”
Sentencing of Petters’ accountant is postponed [Minneapolis Star-Tribune]
“Tuesday’s scheduled sentencing of James Wehmhoff, the accountant who helped Tom Petters file false tax returns, has been postponed until sometime in October. The postponement was ordered by U.S. District Judge Richard Kyle at his own behest.
Wehmhoff faces a prison sentence of between 70 and 80 months on tax charges, but federal prosecutors have asked Kyle to consider Wehmhoff’s cooperation in the Petters investigation and his previously “unblemished” career before he hooked up with Petters Group Worldwide. The government also noted that Wehmhoff was not part of the $3.65 billion Ponzi scheme that Petters and others orchestrated for more than 10 years.”
KPMG Continues to Add Restructuring Talent With Appointments of Tony Murphy, Tom Bibby [PR Newswire]
The House of Klynveld must be counting on more companies falling prey to their massive debt loads with the appointment of Tony and Tommy who both have “proven track records” as restructuring professionals.
Accounting Basics: A Guest Post From Robert B. Walker [Re:The Auditors]
“[New Zealand] follows an American model in which people who are to become accountants are ‘educated’ in Universities. There is minimal emphasis on double entry. Most of the courses are dedicated to theory, bullshit sociology, complex management accounting, auditing and so on. None of this makes any sense to a student if they first do not know the basics of accounting and that can only be gained by actually practicing the discipline.”
Comparing the Ethics Codes: AICPA and IFAC [JofA]
“Sharp increases in the number of multinational audits being performed by U.S. accounting firms means that more CPAs are performing services under the International Federation of Accountants (IFAC) audit and attest standards. Although auditors must comply with the specific standards adopted in each jurisdiction, familiarity with IFAC’s International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (IESBA Code) in addition to the AICPA Code of Professional Conduct (AICPA Code) is a critical first step. When specifications differ, members should comply with the more restrictive of the applicable standards.”
Paul Krugman Doesn’t Like Being Included in GOP Tax Cut Talking Points
“The point is that I’m not a real small businessman, but I play one in anti-tax propaganda.”
~ The Professor was a little too sarcastic the first go round.
Accounting News Roundup: Liz Warren to Be Geithner’s Sidekick; Chicago Accountant Gets 23-Year Sentence for Ponzi Du Jour; Gibbs, Boehner Tweet Over Tax Cuts | 09.16.10
White House Taps Consumer Adviser [WSJ]
“President Barack Obama this week will appoint Elizabeth Warren to a lead role setting up the new Bureau of Consumer Financial Protection, two Democratic officials said, a move that will allow the White House to avoid a messy Senate fight over her role.
Ms. Warren, currently a professor at Harvard Law School, will be named an assistant to the president and special advisor to Treasury Secretary Timothy Geithner in charge of launching the new agency and setting its mission. She was a candidate to be the agency’s first director, a position that remains unfilled, but would likely have confirmation because of opposition in the Senate.”
What is Accounting? [White Collar Fraud]
It’s sort of like arithmetic but not really. Former Sam Antar nemesis, Howard Sirota, explains in a video over at WCF.
Chicago-Area Man Is Sentenced to 23 Years for Running 22-Year Ponzi Scheme [Bloomberg]
“Frank Castaldi, who ran a Chicago- area Ponzi scheme for 22 years that cost victims $31.6 million, was sentenced to 23 years in prison today in federal court.
For 22 years, Castaldi, 57, of suburban Prospect Heights preyed upon elderly Italian immigrants, U.S. District Judge John Darrah said today before handing down the sentence.
‘This is an offense of huge magnitude,’ the judge said after hearing from victims of the scheme in a packed courtroom. ‘It involved hundreds of victims. It involved millions of dollars.’
In an August 2009 plea agreement, Castaldi said he had raised more than $77 million from 473 groups and individuals. First charged in January of last year, he admitted to mail fraud and to trying to thwart a U.S. Internal Revenue Service probe.”
Regulators to Target ‘Window Dressing’ [WSJ]
“Federal regulators are poised to propose new disclosure rules targeting “window dressing,” a practice undertaken by some large banks to temporarily lower their debt levels before reporting finances to the public.
The Securities and Exchange Commission is scheduled to take up the matter at a meeting Friday and is expected to issue proposals for public comment. The action follows a Wall Street Journal investigation into the practice, which isn’t illegal but masks banks’ true levels of borrowing and risk-taking.”
Banks take over record number of homes in August [Reuters]
“A record number of homeowners lost houses to their banks in August as lenders worked through the backlog of distressed mortgages, real estate data company RealtyTrac said on Thursday.
New default notices decreased at the same time, suggesting that lenders managed the flow of troubled loans and foreclosed properties hitting the market to limit price declines, the company said.
Root problems of high unemployment, wage cuts, negative home equity and restrictive lending practices persist, however, pointing to lingering housing market pain.”
Jon Stewart: Robert Gibbs and John Boehner on the Bush Tax Cuts [TaxProf Blog]
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Faces of Debt | ||||
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Accounting News Roundup: GOP Senators Not Caving on Tax Cuts; NY Court of Appeals Hears In Pari Delicto Cases; Convicted Ex-PwC Employee Loses Case to Get MBA Back | 09.14.10
~ Good morning capital market servants. It’s Dan Braddock’s favorite day of the week. Just another reminder that we’ll be on a lighter posting schedule today as TPTB continue to interrogate us about our lack of influence. We’ll pop in from time to time today to make sure everyone is playing nice and be back to a full schedule tomorrow.
A Career in Accounting [WSJ]
“[W]hile jobs dried up during the economic crisis, hiring in accounting wasn’t hit as hard, and cutbacks have created a need for more hiring as the econ my Thompson, the U.S. campus recruiting leader at PricewaterhouseCoopers. She’ll be hiring 3,000 people this year, up from 2,600 last year.”
Does Anyone Really Want to Be an Accountant? A Tailgate Survey [Re:Balance]
Jim Peterson articulates two time-honored traditions: college football and accounting. The former’s popularity is never in question but Jim talked to some young tailgaters that might make you doubt the substantive popularity of the latter.
Senate Republicans firm on tax cuts for rich [Reuters]
“Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.
Taxes have become a flashpoint going into a November 2 election in which Republicans are seeking to wrest control of Congress from the president’s fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.”
AIG Plots End to U.S. Aid [WSJ]
“American International Group Inc. and its government overseers are in talks to speed up an exit plan designed to repay U.S. taxpayers in full while enabling the giant insurer to regain independence, according to people familiar with the matter.
Under the plan, which could commence as early as the first half of 2011, the Treasury Department is likely to convert $49 billion in AIG preferred shares it holds into common shares, a move that could bring the government’s ownership stake in AIG to above 90%, from 79.8% currently, the people familiar said. The common shares would then be gradually sold off to private investors, a move that would reduce U.S. ownership and potentially earn the government a profit if the shares rise in value.”
Auditors Anticipate NY Ruling on Malpractice Exposure [Compliance Week]
“A group of investors in the reinsurance firm American International Group are suing the company’s audit firm, PricewaterhouseCoopers, for failing to detect a long-running bid-rigging and accounting fraud scheme at AIG. PwC won a dismissal of the suit contending AIG shared blame because it was AIG employees who carried out the fraud that PwC failed to identify, a common defense for audit firms against shareholder claims.
The investor group, led by the Teachers Retirement System of Louisiana and the City of New Orleans Employees’ Retirement System, appealed the dismissal and will have their day in the New York Court of Appeals this week. A Delaware appeals court handed the case over to the New York Appeals court, saying ‘a resolution of this appeal depends on significant and unsettled questions of New York law.’ ”
Seeking An Equitable Outcome: NY State Court of Appeals Hears In Pari Delicto Cases [RTA]
Francine McKenna’s take on the case above.
Verizon Finance Chief Joh Killian Announces Plan to Retire After 31 Years [Bloomberg]
Get your résumé in now.
So Then I Guess Accounting Is Mostly Influenced By Middle-Aged White Dudes? [JDA]
“I’m on a roll with offending people lately so let’s just take this all the way and pull the diversity card, specifically when it comes to Accounting Today’s recent list of 100 Most Influential in accounting.
OK so some faces were predictable and totally warranted; soon-to-be-former FASB Chairman Bob Herz (we’re talking about influence in the profession, not sexiest), GASB Chairman Robert Attmore, PwC Chairman Dennis Nally, IRS Commissioner Doug Shulman… you get the idea. No, I mean you really get the idea, as the rest of the list is comprised of middle-aged white guys too except for 13 women and 3 1/2 black men (Barack Obama counts as .5 if we’re looking at this in a strictly statistical way). Yeah, we noticed.”
Convicted Accountant Loses Legal Bid for MBA Degree [BusinessWeek]
“A certified public accountant who hid his conviction for insider trading from his teachers at New York University’s graduate business school wasn’t entitled to the MBA degree that he thought he earned, a judge ruled.
In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course, according to a court ruling.”
Accounting News Roundup: Deloitte Looking at Five-Year Hiring Spree; Boehner Finding Common Ground on Tax Cuts?; Public Companies Who Can’t Calc EBITDA | 09.13.10
~ Ed. note: Posting may be a little light over the next couple of days as TPTB have taxied me to some meetings in an undisclosed location. I’ll break free when I can to help you stave off the madness and be back to a full slate on Wednesday.
Deloitte Touche plans hiring spree [FT]
“Deloitte employs 170,000 people worldwide and said on Monday that it expects to add 250,000 new workers during the next five years as it looks to expand its services and geographic reach.
Regionally, Deloitte had the strongest growth in Asia, where revenues were up by 8.5 per cent to $3.6bn. Revenues were up by nearly 4 per cent to $13bn in the Americas, thanks to increased demand in Brazil, but dipped in Europe, the Middle East and Africa.”
Tax Cuts May Prove Better for Politicians Than for Economy [NYT]
“[E]conomic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.
The nonpartisan Congressional Budget Office this year analyzed the short-term effects of 11 policy options and found that extending the tax cuts would be the least effective way to spur the economy and reduce unemployment. The report added that tax cuts for high earners would have the smallest “bang for the buck,” because wealthy Americans were more likely to save their money than spend it.”
Boehner Opens Door in Tax Talks [WSJ]
“Rep. John Boehner (R., Ohio), speaking on CBS’s “Face the Nation,” reiterated that he preferred extending the Bush-era tax cuts for all earners. But he said he would vote for a bill limited to middle-income Americans if all other options failed.
‘I want to do something for all Americans who pay taxes,’ Mr. Boehner said, adding that extending rates for all income brackets would help the economy grow and create jobs. ‘If the only option I have is to vote for some of those tax reductions, I’ll vote for it.’ ”
Chamber of Commerce Accused of Tax Fraud [NYT]
“At issue in the complaint against the Chamber of Commerce is whether the group mixed funds for charitable and noncharitable political purposes in violation of tax codes.
The chamber, often using expensive mass-market radio and TV spots, has weighed in on many major public policy debates in recent months, including the Obama administration’s health care policy, business regulations, campaign finance laws and Internet rules, as well as job creation and the threat of tax hikes. On many issues, it has pushed for less government regulation in favor of free-market incentives.
Now the chamber’s political arm is turning to the November elections, and it expects to spend $50 million or more to push pro-business candidates, usually Republicans. As part of a wave of new commercials broadcast this week, the chamber’s California affiliate attacked Senator Barbara Boxer — a Democrat running for re-election against Carly Fiorina, the former chief executive of Hewlett-Packard — and accused Ms. Boxer of ‘destroying jobs’ by voting against business.”
The curious amici curiae brief on behalf of PwC [AccMan]
The AICPA and New York State Society of CPAs filed an amicus brief on behalf of PwC in the case of Teachers’ Retirement System of Louisiana and City of New Orleans Employees’ Retirement System v. the firm et al. which Dennis Howlett calls “an alarm bell.”
“From the get go what we are seeing is a trade body coming to the defense of one of its own, not in the interests of the shareholders the auditors should have been serving but in the interests of one of its own. In doing so it invokes inflammatory language designed to deflect away from the underlying problems. In an act of opening gambit cynicism, the brief seeks to confirm a position that auditors apparently enjoy to the exclusion of all other business: ‘costs of which may be passed on to clients in the form of higher fees.’ Whatever happened to the notion of risk and reward?”
Pay freeze blow for FTSE 350 directors [FT]
“More than half of FTSE 350 companies have not increased their executive directors’ salaries over the past year, meaning a two-year freeze for many executives, according to new research.
Two-thirds did not receive a rise the previous year either, says the report by Deloitte, the business advisory firm. Bonuses, however, have become more volatile, with pay-outs rising slightly in the FTSE 100 but falling in the FTSE 250.”
Five More Public Companies Who Need to Learn How to Properly Calculate EBITDA under SEC Rules [White Collar Fraud]
Sam Antar has had it up to here (somewhere between his cigar and non-existent hairline) with amateur EBITDA calculations:
“It’s pathetic that so many public companies miscalculate EBITDA (earnings before interest, taxes, depreciation, and amortization) and violate Regulation G governing the calculation of non-GAAP measures such as EBITDA. It seems that too many CFOs, Audit Committees, and auditors don’t take the time to thoroughly review compliance with all appropriate SEC financial reporting rules.”
After busting Overstock.com for their bogus EBITDA calculations, Sam names a few names over at WCF.
Accounting News Roundup: More Tax Cuts for Small Business?; Scenes from a SaaS Meltdown; SEC Files Charges Against Sachdeva | 09.01.10
No Charges for Moody’s in Ratings Violation [NYT]
“The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative sec e decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.
The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.”
Tax Cuts Weighed to Spur Economy [WSJ]
“The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.
The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.
On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.
Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.”
Lessons from ClearBooks failure [AccMan]
What happens when a SaaS provider has a blow-up? Well, it depends.
“Non-Combat” Troops Remaining in Iraq Will Still Receive “Combat Zone” Tax Treatment [Tax Foundation]
The troops that remain in Iraq will still receive combat zone treatment (i.e. ‘designated hostile fire or imminent danger pay areas’).
Brainiest Cities [The Daily Beast]
Boulder #1; DC #3; Boston #4. Austin comes in at a paltry #16 behind Ames, IA. What’s up with that?
Former Rothstein CFO Stay Gives Up Boat [SFBJ]
Convicted Ponzi Schemer Scott Rothstein’s CFO had to give up her 28-foot 2008 Southport boat in order to settle a claim against her for the $154k loan she received from the firm to buy said boat.
SEC Charges Two Accounting Professionals at Milwaukee-Based Company with Fraud [SEC]
The SEC got around to filing civil charges against Sue Sachdeva. The Commission also charged Senior Accountant Julie Mulvaney with helping S-square conceal the fraud through bogus journal entries.
Accounting News Roundup: Herz Departure Is a Gift for Banks; American Apparel Blames Deloitte for Late Filings; Your Commute Isn’t That Bad | 08.25.10
Herz Leaving Marks Boon for Banks [WSJ]
“A new front has opened up in the war over mark-to-market accounting. Suddenly banks find themselves with an unexpected advantage in the fight over how they should value their vast holdings of financial instruments.
T rprise announcement Tuesday of the departure of Robert Herz as chairman of the Financial Accounting Standards Board. This will give banks an opportunity to push for a successor who is more friendly to their views on the mark-to-market question, as well as the overall idea that accounting should be for more than just investors.”
Former Chief Accounting Officer for Beazer Homes USA, Inc. Indicted on 11 Criminal Counts [FBI]
Michael Rand didn’t have a very good day yesterday.
Block ramped up federal lobbying efforts in second quarter, report says [AP]
H&RB lobbied their asses off from April to June spending $500k talking the ears off at the IRS, Treasury and SEC.
American Apparel Works To File Late 10-Q Before Nov 15 [Dow Jones]
The NYSE has put Dov & Co. on notice that they best get their act together if they don’t want to be sent slumming with the pink sheets. The company is promising to pull things together and if it weren’t for Deloitte quitting, everything would be a-okay.
Fact Checking Minority Leader Boehner’s Claims on “Small Business” and the “Bush” Tax Cuts [Tax Foundation]
In case you didn’t hear, John Boehner suggested that the President fire his entire economic team. Boehner is of the opinion that letting the tax cuts expire will hurt small businesses, citing the Joint Tax Committee. Tax Foundation takes exception with this, saying that the Ohio Congressman and House Minority Leader is misrepresenting the findings of the JTC:
“First off, the businesses that JCT is referring to are not necessarily ‘small.’ Saying the word ‘small business’ sounds good to the electorate because it brings up an image of a mom and pop store on Main Street America. But plenty of large businesses, as defined by net income or gross receipts, file their taxes under the individual income tax as opposed to the corporate income tax. Merely because a business is paying individual income taxes as opposed to corporate taxes does not mean it is ‘small.’ ”
Statement From Chairman Schapiro on Financial Accounting Foundation Developments [SEC]
“I commend the Financial Accounting Foundation for its ongoing efforts to evaluate and improve the effectiveness and efficiency of the structure and operation of the Financial Accounting Standards Board by increasing the size of the Board. The Foundation has determined that this revised structure will facilitate the continuing efforts of the FASB to work with the International Accounting Standards Board on their important convergence work plan. In addition, this should enhance the ability of the FASB to address issues facing the U.S. capital markets and the needs of investors.
“I also would like to commend FASB Chairman Robert Herz for his more than eight years of service. During his tenure, Chairman Herz has served as an effective investor advocate to improve the quality of financial reporting standards around the world. I welcome the appointment of Leslie Seidman as Acting Chairman. During this interim period, I look forward to working with Acting Chairman Leslie Seidman and the FASB as they continue their important work.”
Twenty something day-trader nailed with $172M bill in back taxes, asks ‘What’s the IRS?’ [NYDN]
How does a barely surviving Spaniard end up owing over $170 million to the IRS? For starters, he really doesn’t owe the Service the money. The problem arose because he didn’t file a tax return for one year that he spent day trading. The Service concluded that he made $500 million.
China Traffic Jam Could Last Weeks [WSJ]
Today, be thankful for your commute. No matter how bad it was, at least the drive/ride ended.
TurboTax Jockey Tim Geithner Says Tax Increases Won’t Hurt Small Businesses a Bit
The top individual tax rate is scheduled to jump to 39.6% on January 1, 2011. To those of us who do private business tax returns for a living, one effect is obvious: this will raise the tax rate on LLC and S corporation income.
But now Treasury Secretary Tim Geithner says that all my small business clients thy rich law partners and CEOs (my emphasis):
Ninety-seven percent of small businesses in this country would not pay a penny more due to letting these upper-income tax rates expire.
Now some have argued that even if only a few percent of small business owners make over $250,000, these few make up a vast amount of supposedly small business income.
This argument apparently counts anyone who receives any type of partnership or business income as if they were a small business.
By this standard, every partner in a major law firm and every principal in a major financial institution would count as a separate small business. A CEO who has board fees or speech fees would also count as a small business owner under this overly broad definition.
Well yes, Timmy, “some” have argued for that “overly broad definition” — your friends who say 97% of small businesses won’t be affected by the scheduled tax increase. A 2009 report by the Center on Budget and Policy Priorities is a source of the talking point that only a tiny fraction of businesses will be affected by the expiration of the tax increase. They define a small business 1040 as:
…any tax unit that receives any income (or loss) from a sole proprietorship, farm proprietorship, partnership, S corporation, or rental income.
So while a CEO who has board fees will count as a separate small business — as will President Obama, for that matter — so will every taxpayer that has a schedule C, schedule E or Schedule F. Your office Mary Kay girl or Shacklee dealer counts as a small business. Everybody who moonlights and reports their income is a small business. Everybody who rents out a duplex or vacation home counts, as does every taxpayer who holds, even briefly, an interest in a publicly-traded oil and gas partnership.
So how much small business economic activity will be hit by the increase in the top rate? A lot more than 3%. The center-left Tax Policy Center estimates that 44.3% of taxable income of these “small businesses” will be hit with next year’s scheduled tax increase (hat tip: Howard Gleckman). That seems low, if anything, based on what I see in practice.
It’s the successful, growing and profitable S corporations and partnerships that push their owners into the top tax brackets. Growing businesses typically distribute only enough income to owners to cover taxes — either by inclination or by agreements with lenders. Their remaining earnings go into growing the business or paying off the bank. If you increase their taxes, it either reduces growth and hiring or their ability to service their debt — neither of which does much for the economy.
When Tim Geithner says that the only people who will get hit by his tax increase are rich lawyers and director fee millionaires, it may tell us something about his social world. It tells us nothing about how the tax increase will hit business owners.
Accounting News Roundup: Tax Cuts Debate Rages On; Tax Issues for A-Rod’s 600th; Wyclef’s Campaign Stumbles Out of the Blocks | 08.05.10
Geithner Pushes Tax Boost for Wealthy [WSJ]
“Treasury Secretary Timothy Geithner made the Obama administration’s economic case for letting tax cuts for high earners expire at the end of this year, saying that failure to do so would harm rather than help economic growth.
In a speech Wednesday in Washington, part of the administration’s broader strategy to overcome Republican opposition on the issue, Mr. Geithner said that keeping current tax levels even on a short-term basis “would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.” The government needs the revenue it would get from allowing tax rates for the wealthy to rise, he said.”
PCAOB Logs No Progress on International Inspections [Compliance Week]
“The Public Company Accounting Oversight Board isn’t yet making much headway in catching up on overdue international inspections, but the Dodd-Frank financial reform bill at least clears an obstacle the board has repeatedly blamed for its inability to meet its inspection mandate.”
Regulator fears auditors may abandon scepticism to meet deadlines [Accountancy Age]
“The Auditing Practices Board (APB), which sets standards for the industry, is concerned auditors might be abandoning their professional scepticism to meet contractual audit deadlines, and wants to coach them in how to be sceptical.
Audit contracts are often negotiated on the assumption few problems will be revealed, according to the APB. When a potential issue does arise timetables often have to be extended.”
A-Rod’s Home Run Ball: a Tax Headache for the Record Books? [WSJ]
The ball is reportedly worth around $100k and if the ball is technically Yankees’ property and the team were to give it to A-Rod, then he may owe tax and the Yanks would get a corresponding deduction. The team could also argue that the ball is technically A-Rod’s property and then neither would owe tax.
Of course then the question remains, what if A-Rod sells or donates the ball to a nonprofit? If he sold it, then it would depend on how long he keeps it (less than a year would be at ordinary rates, greater than a year would be at capital gain rates). While donating the ball after one year could net him a near full deduction.
TheStreet.com names Thomas Etergino finance chief [AP]
Tom starts his new gig on September 7th.
IRS Hits Wyclef With $2.1 Million In Tax Liens [The Smoking Gun]
Whether it’s the U.S. or Haiti, this is not how you want to start a Presidential campaign.
Delta Said to Plan New York JFK Hub Renovation for $1.2 Billion [Bloomberg]
Anyone that has been to Terminal 3 at JFK is aware of the problem.
Memo to Washington: Please Consider Tax Reform
“Instead of reprising their partisan, tiresome, and largely unproductive argument about what to do with the Bush tax cuts, President Obama and Congress ought to be asking a very different question: How do we build a tax system capable of generating the revenues we need to fund the government we want in the most efficient and fair way possible?”
What’s the Deal with These Bush Tax Cuts Expiring?
Good question, you say? If you mosey around the web for a nanosecond, you’re likely to run into an article that is debating whether or not the 43rd President’s tax cuts from 2001 and 2003 should be continued. Since Nancy Pelosi is determined to get a vote on this pre-election day, the political rhetoric on this issue is flowing like a river of sewage you dare not dream of.
To help you make sense of it all, we perused some of the tax wonkiest corners of the web to bring you some perspective. And of course, some less bright observations.
• The Tax Foundation has a breakdown of how the expiration of the tax cuts would affect “Average Middle-Income Family, by State and Congressional District.” It’s simple to find your state/district to see the effect that the expiration of the cuts would have on you.
• Over at the Journal, Washington Wire presents the biggest winners and losers from the tax cuts being extended:
Among the states that would save the most from extending the tax cuts, according to a draft of the study: Alaska ($1,959 per family); Connecticut ($1,903); Maryland ($1,756); Massachusetts ($1,831); New Jersey ($1,860) and Utah ($1,779). The lowest savings for middle-income families would be in D.C. ($1,237); West Virginia ($1,316); and Mississippi ($1,355).
• Apparently Alan Greenspan still has a shred of credibility left because he weighed in a couple of weeks ago, telling Bloomberg, “I should say they should follow the law and let them lapse.”
• The Beard doesn’t agree with his predecessor, telling the House Financial Services Committee, “In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy. There are many ways to do that. This is one way.”
• William G. Gale, a senior fellow at the Brookings Institution and co-director of the Urban-Brookings Tax Policy Center, wrote in the Washington Post about five myths around the tax cuts, including their affect on small businesses:
One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to “a job-killing tax hike on small business during tough economic times.”
This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets — individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.
• Derek Thompson is a little more pragmatic than most, arguing that President Obama should extend them for a year in order to buy some time to work on comprehensive tax reform:
The president should extend the Bush tax cuts — yes, the whole dang thing — for a year to temporarily silence his critics. Then he should use 2011 to knock it down and build a tax system that’s right for the next decade. Working off a bipartisan plan, real tax reform would simplify the income brackets and eliminate the multitude of deductions and exemptions that distort the economy with bad incentives and leave hundreds of billions of dollars on the ground.
• Fred Thompson (no relation that we know of) is using his camera moxie to voice his support for the extension of the cuts:
• Ezra Klein agrees that some cuts will be extended temporarily, although the debate among citizens isn’t as clear:
The cuts for the rich are likely to be extended for at least two years. The cuts for the middle class are sure to be extended for even longer than that. Total cost to the deficit over the next 10 years? More than $3 trillion, and maybe more than $4 trillion.
But according to a Pew poll, the American public isn’t as sure about this as the politicians are. A slight plurality — 31 percent — want all the tax cuts repealed. Thirty percent want the cuts for the rich extended. In other words, opinion is divided.
• And even though she needed crib notes, Sarah Palin managed to tell Fox News’ Chris Wallace that letting the cuts expire ‘idiotic’:
“[Obama’s] commitment to let previous tax cuts expire are going to lead to even fewer job opportunities for Americans,” Palin said. “It’s idiotic to think about increasing taxes at a time like this.”
“My palm isn’t large enough to have written all my notes down on what this tax increase, what it will result in,” Palin continued.
Host Chris Wallace noticed that Palin did indeed have something written on her palm. “Can I ask you, what do you have written on your hand?” he asked.
“$3.8 trillion in the next 10 years,” Palin responded, “so I didn’t say $3.7 trillion and then get dinged by the liberals saying I didn’t know what I was talking about.”
But who would ever get the idea that Sarah Palin didn’t know what she was talking about?
Accounting News Roundup: Mazars Would Like to See More Competition in the Audit Market; Citi CFO Settles with SEC; Colbert on Tax Cuts | 07.30.10
Auditors don’t know the meaning of ‘competition’ [FT]
In a letter to the Financial Times, David Herbinet, the UK Head of Public Interest Markets for Mazars, takes issue with the notion (he says ‘puzzled’) that there is robust competition in the audit market, “Figures calculated from the most authoritative research available – the Oxera report that first spurred examination of the issue – show that a FTSE 100 auditor can on average expect to remain in place for an eye-watering 48 years and their FTSE 250 counterpart for 36 years. When the research was conducted more than 70 per cent of the FTSE 100 audits had not been subject to tender for at over, 97 per cent of current FTSE 350 audits are held by just four firms. If this represents fierce competition I would not like to see a stagnant market.”
Facebook Said to Put Off IPO Until 2012 to Buy Time for Growth [Bloomberg]
“Facebook Inc. will probably put off its initial public offering until 2012, giving Chief Executive Officer Mark Zuckerberg more time to gain users and boost sales, three people familiar with the matter said.
Facebook would benefit from another year of growth absent the added scrutiny that comes with a public listing, instead of holding an IPO in 2011 as investors speculated, said the people, who asked not to be identified because Facebook doesn’t discuss share-sale plans. Still, Zuckerberg, who holds board control, could push for a stock sale at any time, they said.”
U.S. Financial System Still at Risk, Says IMF [WSJ]
Get RIGHT out of town. “The International Monetary Fund says the U.S. financial system is “slowly recovering,” but remains vulnerable to crisis, in part because Congress and the administration have failed to streamline a regulatory system marked by turf battles and overlapping responsibilities.
‘We asked many times why bolder action could not be undertaken,’ said the IMF’s Christopher Towe, who oversaw the agency’s first broad review of the U.S. financial sector.”
SEC Charges Citigroup and Two Executives for Misleading Investors About Exposure to Subprime Mortgage Assets [SEC]
That includes former CFO Gary Crittenden who agreed to pay a $100,000 fine.
Colbert on the Expiration of the Bush Tax Cuts [TaxProf]
| The Colbert Report | Mon – Thurs 11:30pm / 10:30c | |||
| The Word – Ownership Society | ||||
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Accounting News Roundup: BP’s Ugly 2nd Quarter; Bernanke Backs Extending Some Tax Cuts; Back-to-school Sales Tax Holidays | 07.27.10
BP replaces CEO and posts $17 billion quarterly loss [Reuters]
“Oil giant BP Plc launched a plan to repair its battered image in the United States on Tuesday, ditching its xecutive and promising to slim down by trebling an asset sale target to $30 billion.
However, the company, the target of public anger over its Gulf of Mexico oil spill, tempted further ire by denying it needed cultural change and offsetting the costs of the spill, including expected fines, against its taxes.
The tax move will cost the U.S. taxpayer almost $10 billion.”
Northern Rock CFO Banned And Fined GBP320,000 Over Bad Loans [Dow Jones]
“David Jones, the former chief financial officer of Northern Rock PLC, was Tuesday fined GBP320,000 and barred from working in finance after the Financial Services Authority found he misled investors about the bank’s bad loans in the lead-up to the bank’s eventual collapse.
Jones most recently was CFO at Northern Rock Asset Management PLC, the “bad bank” of the nationalized lender after a restructuring of its operations. He left the company in April because of the FSA investigation, a week after two former colleagues were fined and banned for their roles in making the bank’s 2006 bad-loan figures appear better than they were.”
Where will those next gen clients come from? [AccMan]
And what will ask of their professional service providers? Right now, Gen X and Millenials don’t compromise much of the client base but that will change quickly when Baby Boomers start retiring en masse. What these new business owners will ask of their service providers is not quite clear. Similar to the demands currently placed on employers, service providers will have to be flexible and innovative.
Bernanke Says Tax-Cut Extension Maintains Stimulus [Bloomberg]
“Federal Reserve Chairman Ben S. Bernanke said extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus and urged offsetting the move with increased revenue or lower spending.
‘In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,’ Bernanke said yesterday under questioning from the House Financial Services Committee’s senior Republican. ‘There are many ways to do that. This is one way.’ ”
Accounting firm Kaufman Rossin & Co. settles case for $9.6M [Miami Herald]
Kaufman Rossin was the auditor of the two Palm Beach funds that invested over a billion dollars with convicted Ponzi Schemer Tom Petters.
And in case you forgot, convicted forensic accountant and suit lover Lew Freeman was the Chief Restructuring Officer for the Palm Beach funds. Quite the cesspool.
How Low Self-Esteem Can Cost You The Job [Forbes]
Are you a low talker? No one is suggesting that you don’t know what you’re talking about but the perception could be that you don’t and in turn, It could be affecting your career.
Lords to probe audit market [Accountancy Age]
“A recent report from the FRC and FSA criticised the role of auditors during the crisis saying they had failed to tackle management bias.
The Lords investigation will look at basic questions such as wether Big Four dominance increases the price of audit and whether the market needs to be opened up.”
Oracle’s Ellison: Pay King [WSJ]
$1.84 billion over the last ten years is not too shabby.
Sales tax holidays 2010 [Don’t Mess with Taxes]
Kay Bell has a rundown of the sixteen states that are having sales tax holidays right before the kids go back to school.
Accounting News Roundup: Geithner Is Ready to Let Tax Cuts Die; Hayward on His Way Out?; PwC Wants Glitnir Lawsuit Tossed | 07.26.10
No new recession, let tax cuts die: Geithner [Reuters]
“The economy is not likely to slip back into recession but letting tax cuts for t ans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.
In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans — those making $250,000 or more a year — will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.”
BP Said to Prepare Dudley as CEO as Board Looks for Recovery [Bloomberg]
“BP Plc plans to name Robert Dudley to succeed Tony Hayward as chief executive officer as the board looks to recover the company’s position in the U.S., two people with knowledge of the matter said.
Dudley, the director of BP’s oil spill response unit, is ready to be announced as the company’s first American chief and to take the helm Oct. 1, one of the people said, asking not to be identified because a final decision hasn’t yet been made. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.”
Madoff Investors Brace for Lawsuits [WSJ]
“Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called “net winners” from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff’s firm than the amount of principal they invested.
‘The people who made money, who got more, have made money at the expense of the people who didn’t,’ said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.
Mr. Picard must file any so-called clawback lawsuits by December, the two-year anniversary of Mr. Madoff’s arrest and the filing of regulatory proceedings against him. ‘We’re not going to wait until the last minute,’ Mr. Picard said.”
Change the world or go home [AccMan]
Dennis Howlett implores you that if you want your firm or business to really stand out then it’s going to take more than a catchy slogan or a boilerplate email to get people’s attention. You best recognize an opportunity when you see one.
“I’ve lost count the number of times I’ve said but it is worth repeating. When disruption like SaaS comes along, it represents an opportunity. From a professional standpoint it should mean that firms can further commoditize what they do by using accounting dashboards that show them the status of their clients’ activity. It is a short step to seeing how this might be integrated into fees, billing, customer satisfaction measurement and the like.”
If You’re Going To San Francisco…AAA Will Be There [FEI Financial Reporting Blog]
Edith Orenstein has the lowdown on this year’s American Accounting Association’s (AAA) annual meeting. This year’s event is in AG’s backyard (she loves giving directions, btw) from July 31 to August 4th and will feature Francine McKenna and Professor Albrecht on one of the panels.
Join Me For a Nice Little CPA Exam Chat on August 3rd! [JDA]
Speaking of Adrienne, she’ll be over at CPA Exam Club to take your questions on everyone’s favorite test on August 3rd. Yes, that’s one week from tomorrow.
PwC Demands Dismissal of Glitnir Lawsuit [Iceland Review]
PwC’s lawyers argue that Glitnir and the firm agreed to do any legal wrangling in Iceland if the poo hit the fan. Late last week they requested that the lawsuit in New York be tossed.
Saltzman Hamma firm details merger with RubinBrown [Denver Business Journal]
“Saltzman Hamma Nelson Massaro LLP, a century-old Denver accounting firm, is merging with St. Louis-based RubinBrown LLP to form what’s expected to be among the 50 largest accounting firms in the United States, principals were set to announce on July 23.
The new entity, which will operate as RubinBrown, will employ 375 people in offices in Denver, St. Louis and Kansas City, Mo. The merger will be effective Aug. 1.”
District Court Denies Charitable Deduction for Donation of Home to Fire Department [TaxProf Blog]
Just donate a car next time. It’s a far worse investment than a house.
IRS Proposes PTIN Fees [JofA]
$50 for your very own preparer tax identification number! Of course there’s also a ‘reasonable fee’ on top of that from “a third-party vendor that will administer the application and renewal process,” that gets thrown in for good measure.
My Life as a White-Collar Criminal [White Collar Fraud]
Sam Antar went on Canadian TV last week to talk about how much fun it is to be a crook. Except the whole possibility of prison part.
Accounting News Roundup: Bush Tax Cuts May Still Have Life; FASB’s ‘Religious War’ Rages; Facebook Might Do an IPO Someday | 07.22.10
Bush Tax Cuts Roil Democrats [WSJ]
“Sen. Kent Conrad (D., N.D.) said in an interview Wednesday that Congress shouldn’t allow taxes on the wealthy to rise until the economy is on a sounder footing.
Sen. Ben Nelson (D., Neb.) said through a spokesman that he also supported extending all the expiring tax cuts for now, adding that he wanted to offset the impact on federal deficits as much as possible.
They are the second and third Senate Democrats to come out publicly in recent days in favor of extending all the tax breaks for the time being. Sen. Evan Bayh (D., Ind.) made similar comments last week.”
Madoff’s Ghost Still Haunts SEC [Washington Wire/WSJ]
In testimony earlier in the week, SEC Chair Mary Schapiro told a congressional committee that many of the people that investigated Bernie Madoff – 15 of 20 enforcement attorneys and 19 of 36 examination staffers – have left the Commission. However, that isn’t good enough for Rep. Bill Posey (R – FL).
“Republican Rep. Bill Posey of Florida –- home to many Madoff victims -– said he wants to know if those SEC employees ended up at other regulatory agencies, working for companies they were supposed to regulate, or retired with government pensions.
‘There’s a necessity to know where they went,; said Posey. ‘It’s like letting a pedophile slink out the door or change neighborhoods. We’re dealing with the same type of problem here.’
Schapiro strongly disagreed. ‘These aren’t bad people. In some cases they were people who were very junior and not adequately trained or supervised.’ In other cases, she said, they were pulled from one project to another.”
Despite the proclivities of some SEC employees, we haven’t seen anything warrant that particular label.
FASB in “religious war” to bring in fair value [Accountancy Age]
Lawrence Smith believes in fair value, you might say, in a fanatical sense. The FASB Member was quoted in AA, “Some people have advised us that we shouldn’t say this, but I’ll say it – fair value, to some of us, is almost like a religious war out there and we are trying to deal with that as best we can.”
This isn’t the first time we’ve heard a FASB member drop the relidge war rhetoric. Marc Siegel used similar language last summer, so there seems to be at least a smidge of seriousness behind .
Plus, at the rate things are going, the debate will soon reach Israel/Palestinian ignorability (word?) levels later this year.
Facebook IPO “when makes sense”, Zuckerberg tells ABC [Reuters]
That is, never.
Trust, but verify [MJS]
Starting now!
Accounting News Roundup: Congress Still Stalling on Tax Bill; ‘Most Americans Have Not Planned Well for Their Futures’; Deloitte’s Schroeder Joining FASB | 07.15.10
As Tax Cuts’ Expiration Date Nears, Little Consensus [WSJ]
“Lawmakers are negotiating a tax bill, but appear increasingly likely to wait until after the November election to take any final action that could anger voters—either by raising taxes, or by cutting them and thereby deepening deficits. Congress ultimately could decide to extend current tax levels for just a few months, leaving the issue for the next Congress to settle. Another option is a short-term extension of a year or two, avoiding for now the huge cost to the Treasury of a permanent extension. It’s even possible Congress might fail to take any action this year.”
From Jail, Conrad Black Fights $71 Million Tax Bill [Forbes]
“Imprisoned former media baron Conrad M. Black is fighting a $71 million bill from the U.S. Internal Revenue Service, which says from 1998 to 2003 he filed no tax returns and paid absolutely nothing on $120 million in taxable income.
In a previously unreported lawsuit in U.S. Tax Court, Black, now serving a six-and-a-half-year-sentence in a Florida federal prison, is challenging the IRS’ demands and asserting the income in question wasn’t taxable in the U.S.”
Americans More Optimistic on Economy Than Their Own Finances, Survey Says [Bloomberg]
Who said Americans only think about themselves? “Americans are generally hopeful, and much of the economic news leads us to conclude that we are out of the recession and a double dip is unlikely,” said Robert Glovsky, chair of the CFP Board and director of Boston University’s program for financial planners. “With that said, most Americans have not planned well for their futures.”
Harvey Golub Resigns as AIG Chairman [WSJ]
“A weeks-long standoff between the chairman and chief executive of government-controlled American International Group Inc. ended Wednesday, when Chairman Harvey Golub resigned, saying, ‘I believe it is easier to replace a chairman than a CEO.’
Mr. Golub’s decision marks a victory for Robert Benmosche, the company’s hard-charging chief, who chafed under Mr. Golub’s oversight. Mr. Benmosche had told the board their working relationship was ‘ineffective and unsustainable,’ Mr. Golub said in his resignation letter.”
FASB hires expert to review how new rules perform [Reuters]
“Mark Schroeder, a recently retired senior partner at Deloitte & Touche [DLTE.UL], will serve as the board’s first “post-implementation review leader” and also serve a similar role for the Governmental Accounting Standards Board, FASB said.
The hiring of Schroeder is one of the big steps that FASB has taken to formalize its process for review of how new standards are performing. Banks and investors had complained during the financial crisis that FASB’s new rules on mark-to-market accounting had contributed to freezing the credit markets, but there was no formal process for reviewing the rules.”
Accounting News Roundup: New Rule from FASB, IASB Will Bring Leases on Balance Sheet; California’s Latest Revenue Idea; Madoff CFO Released to House Arrest | 06.23.10
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?”