A recent report to Congress revealed that effective tax rates (ETRs) for large corporations were lower than the statutory rates– a lot lower.Continue Reading...
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It’s no surprise that acting IRS Commissioner Steven T. Miller submitted his resignation this week. Many were calling for his head, others for the obliteration of the agency altogether. Miller’s departure is the first of many slaps on the wrist for an agency struggling to wipe away the stain on its already fragile reputation.Continue Reading...
Corporate tax evasion is a growing global phenomenon. The amount of money corporations stash in tax havens is greater than the size of the U.S. economy. What’s more absurd, 18,857 companies call a five-story building in the Cayman Islands “home.”
The U.S. alone stockpiles nearly $2 trillion foreign tax shelters to evade some of the highest effective tax rates in the world. Check out the following infographic on tax havens, which outlines some shocking figures concerning the state of foreign tax avoidance.Continue Reading...
The U.S. Senate voted overwhelmingly on Monday to approve a measure allowing states to collect sales tax from online purchases. In a vote that split party lines, the Marketplace Fairness Act (MFA) passed by a margin of 69-27 (See vote breakdown on right).
Despite its ease of passage through the Senate, the bill faces an uphill battle in the Republican-controlled House.
“We place a 30 percent probability that the bill is signed into law by the end of the year” primarily due to opposition in the House, said Guggenheim Securities analyst Chris Krueger, “Our odds will increase following passage of this bill in the Senate provided it receives a big vote of support,” he said (Reuters).
The bill received support from prominent Republicans such as U.S. Senators John McCain (Ariz.), Lindsay Graham (N.C.) and Saxby Chambliss (Ga.), but may be less favorable with House Republicans who have been reluctant to attach their names to anything that hints of a tax increase.
“Call me a conservative, but I believe the right approach to tax fairness is to reduce rates – not force higher rates onto others,” said Tom Graves, a House Republican from Georgia (Reuters).
Anti-tax activist Grover Norquist tweeted that the MFA represents a “struggle against new and higher taxes.” His sentiment is shared by lawmakers from states with no sales tax (Alaska, Delaware Montana, New Hampshire, Oregon), and online merchants such as eBay Inc, and Overstock.com Inc.
The bill’s co-sponsors are Illinois Sen. Dick Durbin (D), Wyoming Sen. Mike Enzi (R) and Tennessee Sen. Lamar Alexander (R). Corporate backers include Best Buy Co Inc, Wal-Mart and Amazon.com Inc. The bi-partisan National Governors Association also strongly supports the MFA:
“Marketplace fairness is about collecting taxes that are already owed on retail sales—it is not a new tax nor a tax on the Internet. Annually, states fail to collect more than $23 billion from taxable transactions conducted over the Internet or through catalogues. This legislation levels the playing field between Main Street and e-street. It means fair competition for consumers, helps states collect what is owed and does not cost the federal government a dime” (National Governors Association statement released 02/14/2013)
One of the biggest hurdles to passing the MFA is its perception as hurting small businesses. EBay Inc Chief Executive John Donahoe said the legislation unfairly burdens small online merchants; in an unprecedented lobbying effort, he sent an e-mail to over 40 million eBay sellers urging them to oppose the MFA.
Most eBay sellers won’t be effected by the legislation though, since the MFA exempts businesses with annual out-of-state sales of $1 million or less. Rex Solomon, owner of a Houston jewelry store that uses eBay, told cpapracticeadviser.com that “eBay is working to preserve special treatment for a handful of multi-million dollar sellers that puts my business at risk.”
Donahoe, for his part, is pushing to raise the ceiling to $10 million.
The MFA will be reviewed by the House Judiciary Committee, where it will undergo hearings. “Judiciary Committee Chairman Robert Goodlatte, a Republican, has reservations about the legislation, including its complexity and potential impact on small businesses, a spokeswoman said,”(Reuters).
Interestingly, the MFA mandates something that both parties support – tax simplification. If implemented, states could only begin collecting sales tax from online merchants only if they simplify their tax code. As instructed in the MFA, the tax simplicity requirement can be met either by adopting the Streamlined Sales and Use Tax Agreement, or by meeting a list 5 simplification measures described in the bill.
24 states have already simplified their sales tax laws to make it easier for multistate retailers, according to Tax Cloud, a sales tax service for online retailers.
The MFA is independent from Congress’ effort for broader tax overhaul. Continue Reading…
On the heels of one of this year’s most highly contested policy changes — raising taxes on the top 2% of income earners through changes in the American Taxpayer Relief Act (the fiscal cliff deal) — the argument that the wealthy are footing too much of the bill still reigns as a benchmark argument in Washington.
Are the wealthy really paying too much, or are they “not paying their fair share,” as many congressional Democrats still insist?Continue Reading...
There is no perfect solution to our fiscal problems. However, we believe strongly and sincerely that an agreement on a comprehensive plan to bring our debt under control is possible if both sides are able to put their sacred cows on the table in the spirit of principled compromise. — Erskine Bowles and Alan Simpson in “A Bipartisan Path Forward to Securing America’s Future” — Feb. 2013
Erskine Bowles and Alan Simpson threw a new sequestration alternative into the mix today. The leaders of Obama’s 2010 fiscal commission released a framework outlining $2.4 trillion in deficit reduction; greater than the White House goal of $1.5 trillion, but not enough to satisfy the GOP’s lust for getting a balanced budget in 10 years (necessitating more than $4 trillion/10 years).
Health care reform is one of the most complex issues the US is confronted with. Despite high levels of public interest in the debate, keeping up with even the most basic elements can be a drag. Check out this handy interactive infographic from H and R Block’s blog, Block Talk, which helps explain some of the more common terms you need to know to be a part of the discussion.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.