Category Archives: Taxes

04.28.13
by

Reuters: Senator Paul stirs business ire over blocking of U.S. tax treaties

Senator Rand Paul is coming under pressure from some multi-national businesses to drop his opposition to tax treaties between the United States and other nations.

Citing privacy concerns about Americans’ tax data, Paul, a Republican and libertarian, has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg that have been signed by authorities on both sides, but have been awaiting Senate review since 2011.

At least six other tax treaties or treaty updates – with Chile, Spain, Poland, Japan, Norway and Britain – may soon be added to the Senate’s queue for confirmation votes.

Major U.S. businesses such as IBM Corp and Fluor Corp are lobbying for Senate action on tax treaties, according to Senate lobbying disclosure documents.

“How many treaties will be held hostage?” asked Cathy Schultz, a lobbyist for the National Foreign Trade Council, a Washington, D.C.-based group that represents companies such asCaterpillar Inc and Pfizer Inc.

Paul has said he is concerned that recent treaties would give foreign governments too much access to U.S. citizens’ tax information, a stance that has some support among like-minded conservative libertarians.

“Rand Paul is not a typical senator who may bend over to business lobbyists,” said Chris Edwards, director of tax policy at The Cato Institute, a libertarian think tank.

“I am very concerned about this increasingly aggressive international exchange of information,” Edwards said.

NO APPROVALS SINCE 2010

No new tax treaties or treaty updates have been approved since 2010, when Paul was elected as the junior senator from Kentucky on a wave of support for Tea Party-aligned Republicans.

Paul recently declined to answer questions from a reporter in a Capitol hallway about the “hold” he has placed on the treaties. Under Senate rules, one senator can prevent a motion from reaching a vote on the Senate floor.

Paul’s staff did not reply to repeated requests for comment.

“There’s never really been an objection of this sort and a hold that’s gone on this long,” said Nancy McLernon, president of the Organization for International Investment, which lobbies in Washington on behalf of foreign companies.

In an effort to sway the senator, McLernon said her group would be lobbying both parties to draw attention to the tax treaties. “Let’s stop with the self-inflicted wounds,” she said.

The United States has tax treaties with more than 60 countries, ranging from China to Kyrgyzstan.

The agreements previously have routinely won Senate approval with little controversy and accomplished their main purpose of preventing double-taxation of income and profits.

In recent years, tax treaties have begun to play an increasing role in efforts by the United States and major European Union countries to crack down on tax avoidance.

The U.S. Treasury in 2012 began signing new tax pacts with countries as part of implementation of the U.S. Foreign Account Tax Compliance Act, a 2010 anti-tax-evasion law.

The law, known as FATCA, which takes effect in January 2014, will require foreign financial institutions to disclose to the United States information about Americans’ accounts worth more than $50,000.

SWISS A DRIVING FORCE

Switzerland, a long-time bastion of banking secrecy, is under international pressure to change its ways, and FATCA has been a driving force in that. The United States and Switzerland in February signed a FATCA implementation agreement that would make more information available to U.S. authorities about the financial interests of Americans in Switzerland.

But the taxpayer information exchange cannot go into force without Senate approval of the U.S.-Swiss tax treaty.

The Senate’s delayed action on tax treaties could convince other countries to stop negotiating with the United States on tax matters, said John Harrington, a former Treasury tax official who is now a partner at law firm SNR Denton.

Paul, seen as a possible 2016 presidential contender, has taken a position that sets up a clash of traditional Republican interest groups: big business and libertarian ideologues.

—

Click below for the full article.

http://www.reuters.com/article/2013/04/28/usa-tax-treaties-idUSL2N0DF0CY20130428?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43

 

04.27.13
by

Forbes: GOP’s Dave Camp: Why Not Put All Federal Employees Onto Obamacare’s Exchanges?

WASHINGTON, DC - DECEMBER 20: U.S. Rep. Dave ...

In response to this week’s brouhaha regarding attempts by members of Congress to avoid having to enroll themselves and their staff members in Obamacare’s health insurance exchanges, Michigan Republican Dave Camp, Chairman of the House Ways and Means Committee, has offered a new proposal: Why not put all federal employees on the exchanges? It’s an attractive idea, but it has some downside: it would dismantle a popular model of market-based health reform.

“If the ObamaCare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress, and federal employees,” said Camp’s spokeswoman in a statement.

The political principle is straightforward, but it would come at a price. Putting all federal employees on the exchanges would obliterate the most market-oriented insurance program run by the government, the Federal Employee Health Benefits Program, or FEHBP. Indeed, the FEHBP has long been considered a model for market-based reform of the Medicare and Medicaid programs.

In the FEHBP, employees get to choose amongst a wide variety of plans offered by private insurers. The employer–the government–then subsidizes about three-fourths of the cost to the employee. The employee can choose a more generous or expensive plan if he wants, but he has to pay for a portion of the difference in price, and vice versa. As a result of this approach, FEHBP plans have organically evolved to contain the benefits and financial features that consumers want. By contrast, any minor change to Medicare requires an act of Congress.

Obamacare’s exchanges are closer in concept to FEHBP than traditional Medicare, but the exchanges heavily constrain the ability of plans to alter their design as consumers’ preferences evolve.

—

Click below for the full article.

http://www.forbes.com/sites/aroy/2013/04/26/gops-dave-camp-why-not-put-all-federal-employees-onto-obamacares-exchanges/

 

04.27.13
by

NBC: Marijuana tax debate stalls in Colorado

Marijuana taxation brought the Colorado Legislature to a standstill early Saturday, with the House giving up and heading home without voting after the pot debate stretched past midnight.

The standstill was not exactly caused by the bill to tax pot more than 30 percent, though Republicans were in the middle of trying to lower the tax rate when the House stopped work. Instead, the breakdown came as a result of frayed nerves after long, divisive debates on unrelated measures, from a renewable energy bill to and education funding debate.

—

Click below for the full article.

http://www.nbc11news.com/home/headlines/Marijuana-tax-debate-stalls-in-Colorado-205005591.html

04.27.13
by

Motley Fool: These 7 States Tax Homeowners the Hardest

Paying income tax is hard enough for those struggling to make ends meet. But with property taxes, even those who have no income end up having to bear their share of the overall tax burden.

Property taxes are typically imposed and collected by local tax authorities rather than state revenue departments, but property tax revenues have a big impact on the decisions that state governments make on where to apply their financial resources. Still, you can get a sense of how much of a property tax burden state residents bear by looking at the average tax paid per person. Using figures from the most recently available data from the Tax Foundation and land and home values from the Lincoln Institute, let’s look at seven states that impose the highest average property taxes on their residents.

7. Rhode Island Property taxes in Rhode Island average $2,083 per person. With average home values of $241,000 just barely putting Rhode Island in the top third of the nation, high tax rates and a high density of urban land help push the state’s overall property tax burden higher. Moreover, with just over 1 million people, Rhode Island doesn’t have many people over which split the fixed costs of state government.

6. Vermont In Vermont, the average property tax bill is $2,166. Vermont’s land values come in just below Rhode Island’s at $239,000, and the state has a much more rural character than Rhode Island’s small size and coastal proximity. As with Rhode Island, Vermont’s small population of around 625,000 provides only a limited base on which to tax.

5. New York New York imposes an average of $2,280 in property taxes per person. Average home values come in at $316,000, putting the state in the top 10. Yet given the huge disparities in real-estate prices throughout the state, that burden is very unevenly spread. Rural tax rates in upstate New York can be relatively reasonable, but in New York City, you’ll see tax burdens that are more in line with those of neighboring states that are dominated more by the city’s metropolitan area.

—

Click below for the full article.

http://www.fool.com/how-to-invest/personal-finance/taxes/2013/04/27/these-7-states-tax-homeowners-the-hardest.aspx

04.26.13
by

The Wall Street Journal: Are You Ready for the New Investment Tax?

It’s time to grapple with the new 3.8% tax on investment income.

The ordeal of 2012 taxes is barely over. But it isn’t too early to understand and cushion the blow of the investment-income levy, which Congress passed in 2010 to help fund the health-care overhaul.

The tax, which took effect Jan. 1, applies to the “net investment income” of married joint filers who have more than $250,000 of income (or $200,000 for singles). Only investment income—such as dividends, interest and capital gains—above the thresholds is taxed. The rate is a flat 3.8% in addition to other taxes owed.

“Affluent investors who ignore this tax will be in for a total shock next April 15,” says David Lifson, a certified public accountant specializing in tax at Crowe Horwath in New York. Such income is typically not subject to withholding, and people won’t be factoring it into their estimated taxes. Lower-bracket taxpayers who receive a windfall large enough to owe the tax will also be in for a surprise.

The new levy is one of several tax increases taking effect this year, including higher top rates on income and capital gains, limits on deductions, and an extra 0.9% payroll tax. But the 3.8% tax will cost many Americans even more.

The reason: an odd interaction between the regular income tax and the alternative minimum tax, or AMT, a separate levy that rescinds the value of some tax benefits. This year, many affluent taxpayers will have higher income because of new limits on exemptions and deductions. But this higher income will also help lower their alternative minimum tax.

—

Click below for the full article.

http://online.wsj.com/article/SB10001424127887324743704578444630080409450.html?KEYWORDS=Are+You+Ready+for+the+New+Investment+Tax

04.26.13
by

US News: What Gen X Doesn’t Know About Social Security

Members of Generation X, those born between 1965 and 1976, are planning to collect Social Security at an average age of 65, according to a recent survey. But that could be a mistake. Gen Xers won’t qualify for the full Social Security payments they have earned until age 67. Those who sign up for Social Security at age 65 will get permanently lower payments for the rest of their lives.

The Social Security full retirement age at which you can claim the entire benefit you have earned is 67 for everyone born in 1960 or later. Gen Xers who sign up for Social Security at age 65, as 29 percent plan to do, will see their monthly payments reduced by about 13.3 percent.

A GfK Custom Research North America survey of 1,000 adults ages 36 to 47 commissioned by the MetLife Mature Market Institute found that 18 percent of Gen Xers plan to claim Social Security benefits as soon as they are eligible at age 62. But workers who sign up at this age will see their payments reduced by 30 percent. For example, a worker who would be eligible for $1,000 per month upon retirement at age 67 would get just $700 per month is he signs up for Social Security at age 62. Another 16 percent of people in their late 30s and early 40s simply don’t know when they will start receiving Social Security benefits.

—

Click below for the full article.

http://money.usnews.com/money/blogs/planning-to-retire/2013/04/26/what-gen-x-doesnt-know-about-social-security

04.26.13
by

Motley Fool: Do These Obamacare Winners Look Like Losers Now?

Have the Obamacare winners become losers? When the Patient Protection and Affordable Care Act, or PPACA, was first passed, most analysts pegged hospital systems as obvious winners from the new law. That viewpoint also held true last year as the Supreme Court upheld much of Obamacare.

The stock market clearly agreed. Immediately after the Supreme Court decision, hospital stocks surged. Community Health Systems  (NYSE: CYH  )  jumped 8%. Health Management Associates  (NYSE: HMA  )  shares rose 7%. The largest private hospital chain, HCA Holdings  (NYSE: HCA  ) , soared by 10%.

Since the high court ruling, few sectors have performed as well as hospitals have. Community Health Systems shares rose as much as 88% by late March. Likewise, HMA stock nearly doubled. HCA shares rose more than 50% during the same period. No hospital stock performed better than Tenet Healthcare  (NYSE: THC  ) , though. Tenet’s shares skyrocketed 140%.

That was then. The performance of these stocks in the month of April thus far tells a much different tale.

Spring backwards? Community Health Systems shares are down almost 13% since the beginning of April. HMA isn’t far behind, with shares falling 12%. HCA stock has dropped 7.5%. What about the biggest winner: Tenet? It’s now the biggest loser, with shares plunging more than 16% this month. Has the luster of Obamacare worn off?

Many hospitals wanted the ACA to succeed. The industry’s lobbying organization, the American Hospital Association, actively supported the legislation and even submitted an amicus brief to the Supreme Court in support of the individual mandate.

The primary reason behind support for the bill stemmed from the prospects of millions of currently uninsured Americans gaining insurance. Many hospitals must write off large amounts of money when individuals with no insurance cannot pay for the care provided. If more people gain insurance under Obamacare, hospitals hope that these write-offs will decrease significantly.

However, many currently uninsured Americans could choose to pay fines rather than obtain insurance. If this scenario becomes widespread, the benefits to hospitals could be dampened.

Others suspect that the costs of the ACA could minimize the advantages for hospitals. Bob Kirby, a director with Fitch Ratings, said last year that “it is unclear if the incremental revenue generated from increased utilization and lower levels of uncompensated care will offset the potential compression in margins.”

All in the timing Obamacare’s timing could also be problematic. Even if millions of uninsured Americans buy insurance as hoped for, that scenario won’t happen until 2014. In the meantime, hospitals are dealing with some of the challenges of the ACA.

—

Click below for the full article.

http://money.usnews.com/money/blogs/planning-to-retire/2013/04/26/what-gen-x-doesnt-know-about-social-security

04.23.13
by

Marketwatch: The slowdown is more than a soft patch, Goldman Sachs got it wrong before they got it right

For months, economists and the media have proclaimed that we are in full-recovery mode. While the markets were at record highs, unemployment had not improved, economic growth was stagnant and most corporate earnings had little to do with an increase in sales and revenue and were based on moves like laying-off thousands of people and shedding non-performing assets.

Last week, Goldman Sachs Group Inc. — one of those bullish outfits projecting enthusiasm — reversed its earlier upbeat message, saying that consumer spending is slowing down, which will likely have a negative impact on future growth. The significance is that most analysts and economists are coming to grips with the fact that the economic data doesn’t support stock-market valuations at these levels.

What economists and analysts failed to connect is the contrast between reality and the stock market — the low consumer spending, paltry economic growth, weak hiring by companies and reckless quantitative easing by the Federal Reserve while the stock market soared.

So, let’s look at everything Goldman Sachs (and many others) missed, and the chain of economic events.

The importance of consumption on the overall economy should not be overlooked. While in the economic cycle, it is production that comes first, as it provides the income necessary for individuals to consume, it is ultimately consumption that completes the cycle by creating the demand.

Despite repeated bailouts, programs, and interventions, economic growth remains mired at sub-par rates as consumers struggle in a low growth/high unemployment economy. Businesses, which have been pressured by poor sales, higher taxes and increased government regulations, have learned to do more with less. Higher productivity has led to less employment and higher levels of profits.

The dark side of that equation is that less employment means higher competition for jobs which suppresses wage growth. Lower wage growth and incomes means less consumption, which reduces the aggregate end demand. In turn, lower demand for products and services puts businesses on the defensive to “do more with less” in order to protect profit margins. Wash, rinse and repeat. This is why deflationary economic environments are so greatly feared by the Fed as that relationship between production and consumption is incredibly difficult to break.

I don’t believe that the current slowdown is just a “soft patch,” but is instead the end of the expansionary cycle that began in 2009. That belief is simply based on the fact that economies do not grow indefinitely but cycle between expansions and contractions.

In the current economic environment, where the consumer is caught in a balance sheet deleveraging cycle, economic contractions occur more frequently than they do under more normal economic conditions. This is not an indictment of fiscal or monetary policies, but simply a statement about the cycles of an economy.

So where does that leave us now and the remainder of 2013?

At some point, despite the ongoing interventions by the Federal Reserve, the stock market will revert to the underlying fundamental story which has been slowly deteriorating over time. The question that remains to be answered is simply how long can the Fed’s artificial intervention programs continue to elevate asset prices?

—

Click below for the full article.

http://www.marketwatch.com/story/the-current-slowdown-is-more-than-a-soft-patch-2013-04-23?siteid=yhoof2

04.23.13
by

Time: Tax-Free Internet Shopping Jeopardized by Bill

Tax-free shopping on the Internet could be in jeopardy under a bill making  its way through the Senate.

The bill would empower states to require online retailers to collect state  and local sales taxes for purchases made over the Internet. The sales taxes  would be sent to the states where a shopper lives.

Under current law, states can only require stores to collect sales taxes if  the store has a physical presence in the state. As a result, many online sales  are essentially tax-free, giving Internet retailers a big advantage over  brick-and-mortar stores.

The Senate voted 74 to 20 Monday to take up the bill. If that level of  support continues, the Senate could pass the bill as early as this week.

Supporters say the bill is about fairness for businesses and lost revenue for  states. Opponents say it would impose complicated regulations on retailers and  doesn’t have enough protections for small businesses. Businesses with less than  $1 million a year in online sales would be exempt.

“While local, community-based stores and shops compete for customers on many  levels, including service and selection, they cannot compete on sales tax,” said  Matthew Shay, president and CEO of the National Retail Federation. “Congress  needs to address this disparity.”

And, he added, “Despite what the opponents say this is not a new tax.”

In many states, shoppers are required to pay unpaid sales tax when they file  their state income tax returns. However, states complain that few people  comply.

“I do know about three people that comply with that,” said Sen. Mike Enzi,  R-Wyo., the bill’s main sponsor.

President Barack Obama supports the bill. His administration says it would  help restore needed funding for education, police and firefighters, roads and  bridges and health care.

—

What do you think about this idea and especially the bold/underline statement above?  Click below for the full article.

http://techland.time.com/2013/04/23/tax-free-internet-shopping-jeopardized-by-bill/#ixzz2RLDPJE86

04.17.13
by

Wall St. Cheat Sheet: Are Your Income Taxes Fair?

With the official tax deadline in the rear view mirror, many Americans can now reflect on how much they paid Uncle Sam. If you feel like you are paying more than your “fair share,” you are not alone.

Unsurprisingly, Americans are losing faith in the fairness of income taxes. According to the latest Gallup survey, only 55 percent of Americans regard the income tax they pay as fair, the lowest reading since 2001. The results are based on Gallup’s Economy and Personal Finance poll and includes adults from all 50 states. It was conducted in the early part of April.

Click below for the full article.

http://wallstcheatsheet.com/stocks/are-your-income-taxes-fair.html/?ref=YF