Tag: Tax cuts

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 itsxecutive 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 tans 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 See 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?”