Monday, October 24, 2016

Corporate Tax Problems And Solutions

“True nobility is not being better than anybody else, but being better than you used to be.”
~ Dr. Wayne Dyer

 Jack Townsend,  Is Stupid a Defense to a Tax Crime? That would certainly be a boon to our elected officials

Experts dismiss HMRC’s shrinking tax gap estimate ExecReview

UK Companies that use large numbers of agency or self-employed staff to be investigated It is understood that the new HMRC unit – called the employment status and intermediaries team – will proactively investigate companies that declare they use significant numbers of self-employed workers and will also act on intelligence and complaints about alleged abuses of the rules around self-employment.
 Ministers order HMRC crackdown on ‘gig economy’ firms

Political recklessness has resulted in $28 billion in transport infrastructure cost overruns since 2001 ...
The huge $28 billion cost of transport infrastructure cost blowouts

The cashless world is arriving in Sweden
After 14 years and nearly $50 million in investment, South Australia’s auditor-general has warned the state’s new revenue system has left the government's Treasury vulnerable to fraud. ( SA Auditor General )

The RISTEC program has been a thorn in the side of the Department of Treasury and Finance for years, with delays, budget blowouts, and the ditching of whole project phases characterising the replacement of its 20-year-old tax database.  In a report delivered this week [pdf], auditor-general Andrew Richardson said the latest budget figures place the cost of the project at $48.8 million. The business case had originally been approved at $22.6 million but was later expanded to $45.5 million after the work was taken to market Sloppy tax system controls threaten South Australian revenue base. ( Report RevenueSA Information Online system: October 2016 )

New York Times op-ed: We Can Fix Corporate Taxes, by David Leonhardt

New York Times op-ed: The Big Companies That Avoid Taxes, by David Leonhardt:
Donald Trump has become the country’s most notorious tax shirker. And while his long avoidance of federal income taxes is extreme, it’s also part of a larger problem.
The most affluent and powerful parts of our society have too easy a time legally avoiding taxes.
Consider corporate taxes, which ultimately tend to be paid by the well-off, because they own the most stock. The official corporate rate is 35 percent, infamously higher than in any other advanced economy. Yet there are so many loopholes that companies often pay relatively little in tax.
Many companies work hard to shroud how much they really pay, sprinkling various figures throughout their complex financial statements. But companies must report one number that provides a good glimpse. It’s called cash taxes paid — the combined amount that a company pays in federal, state, local and even foreign taxes.
I asked the analysts at S&P Global Market Intelligence to calculate this number since 2007 for this country’s 500 largest public companies, and the results reveal a broken tax system. Fixing it should be an early priority for the next president. If Hillary Clinton wins, it may well be.
Corporate Tax Problems And Solutions

A graphic from the Tax Foundation illustrates how bad it’s gotten:
Calling it the “length of the tax code” is wrong. That is “only” a few hundred pages. But it this is still a reasonable rough summary of the complexity taxpayers have to deal with.
We need another round of simplification. The cost of individual compliance for individuals continues to go up. Our corporation tax system is arguably the worst in the developed world. The tax law is sowed with land mines ready to explode the finances of taxpayers for innocent paperwork missteps. But given how awful our politics are, another round of tax reform seems far away.

David Gamage (UC-Berkeley, moving to Indiana) presents Tax Cannibalization and Fiscal Federalism in the United States, 111 Nw. U. L. Rev. ___ (2017) (with Darien Shanske (UC-Davis)), at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:
The current structure of U.S. federal tax law incentivizes state governments to adopt tax policies that inflict costs on the federal government, at the expense of national welfare. We label this the “tax cannibalization problem.”
This article introduces the tax cannibalization problem to the law and policy literatures for the first time. This article also explains how U.S. federal tax law might be restructured so as to alleviate the tax cannibalization problem — to counteract the perverse incentives currently leading U.S. state governments to design their tax systems so as to, in effect, wastefully devour federal tax revenues.

It's time to reduce the amount of physical cash floating around the globe to help combat tax evasion and other illicit activities, Harvard professor and renowned economist Ken Rogoff told Mr Mitchell this week ...
Harvard economist Kenneth Rogoff believes that the solution is to get rid of cash. In a new book, he argues that abolishing $100, $50, and perhaps even $20 bills will seriously inhibit crime and tax evasion while doing little to hamper legitimate commerce.  Ken Rogoff

Former IRS Special Agent Indicted on 9 Tax Fraud Charges, Faces up to 41 Years in Prison

Orwell should be read in conjunction with Dostoyevsky, as the NSW government's promotion of this project as "A western city bypass of the CBD" and as an improvement in "travel time and reliability for bus services" on this strategic road corridor is an exercise in doublespeak.
 Letters: WestConnex, tax cuts and political farce 

Sunday, October 23, 2016

Thomas Piketty rocks the full Opera House Down Under

This post was created over Summer and One Eyed Rye ale at the oldest pub the Lord Nelson and it was spirited by the Swedish Newsagency based in Sydney who happen to discuss the current state of the world laughable leadership at our revolutionary tables ... The revolution will happen ... it is unknown whether the next revolution will look more like the French as in red or more like the Bohemian as in velvet ...  

(Toma in a nutshell, The super-rich could survive on a bit less Oxfam, letter to The Guardian; Economists wrestle with tricky jobs data)

A World of Struggle: How Power, Law, and Expertise Shape Global PoliticalEconomy

“I feel deeply about poverty, but at least I believe in redistribution! I fight poverty by advocating for redistribution.” IS INCREASING INEQUALITY INEVITABLE? REFLECTIONS ON CAPITAL IN THE 21ST CENTURY THOMAS PIKETTY 23 OCTOBER 2016

Andrew Leigh introduced Toma to 2000 souls ... If Australia continues to become more unequal – as Piketty’s capital theory suggests it might – then it will become increasingly difficult to hang on to these values. A veneer of fairness might persist, but a shallow equality of manners would be a poor substitute for the deeper egalitarianism that has traditionally characterised our nation. How much should we let inequality grow? There is no right answer to this question, but we should not shrink from asking it... 

Thomas Piketty's  presentation was peppered with charts  and French humour aimed at 1% of rich Australians ...

Australia's level of inequality is at a historical high since the post-war period and public policy should be geared towards addressing the widening inequality, says French economist Thomas Piketty.

Addressing a nearly full Concert Hall at Sydney Opera house on Sunday, the author of Capital in the Twenty-First Century said meritocracy was a "fairy tale" perpetuated by the beneficiaries of the capitalist system.
"There is a western illusion about modern inequality as opposed to ancient inequality. Meritocracy is largely a myth invented by the winners of the system," he said, noting forces such as racial discrimination and access to finance and resources such as oil helped to create and sustain inequality.Professor Piketty said Australia had a tradition of being an egalitarian country with a small income gap between the wealthy and the poor compared to other countries. However, inequality has been on the rise and in 2013 Australia hit the highest level of inequality since 1951, he said.

"Relative to this tradition, the country has become more unequal in recent decades"
His observation comes as Australia is battling unaffordable housing in capital cities, bracket creep in the progressive income tax system and the Coalition's push for company tax 
During a question and answer session with shadow assistant minister Andrew Leigh, Professor Piketty said there was a danger rising inequality could lead to rising populism globally because populist leaders can blame foreign countries and immigration for rising levels of inequality.

"In the US by and large the bottom and middle social groups have been neglected and today we're paying to some extent the consequences of this neglect," he said.

Professor Piketty said the British economist Tony Atkinson's idea of giving capital endowment to all would allow people to build wealth at a time it is needed.

Every generation rallies around a singer, an actor, a writer, and – although less evidently – an economist. Thomas Piketty  is all the rage nowadays. Everyone has heard about him and everyone has an opinion on his theories, truly a feat in a profession where recognition is limited to academic circles. Piketty is the economist of this generation, having dethroned Paul Krugman — or perhaps sharing the altar with him, given their political 

How much do you need to save to build a 10 per cent deposit within 10 years, if property prices keep going up at the same rate?  Avocado economics for first-home buyers

I am neither a member of Syriza nor do I support the party. I am merely trying to analyze the situation in which we find ourselves. And it has become clear that countries cannot reduce their deficits unless the economy grows. It simply doesn't work. We mustn't forget that neither Germany nor France, which were both deeply in debt in 1945, ever fully repaid those debts. Yet precisely these two countries 
are now telling the Southern Europeans that they have to repay their debts down 
to the euro. It's historic amnesia! But with dire consequences.

Piking on the Piketty Sydney show

Achieving the SDG target to reduce inequality will require a huge shift in how economies and political systems operate right around the world. Some Latin American countries, such as Brazil, demonstrate that sustained reductions in inequality are achievable, when there’s a fairly explicit shift in the social contract, enabling politically difficult decisions to be taken and sustained over a long period. As Angus Deaton tells us, humanity has made amazing progress in reducing income poverty and raising health standards. The next big task is reducing inequality so that we can all enjoy a better life.
Reducing inequality in every country will be extremely difficult. But a growing tide of protest and its consequences (sometimes socially progressive and sometimes regressive) may persuade the 1% that they will not get the world they want for their grandchildren if business continues as usual How has billionaire Donald Trump become the voice of those left behind?​

Cato has produced an excellent little report which looks at 5 of the great myths about inequality in America in recent decades. By and large the American rich have made their own money, not inherited it for example. Look at the listings of rich people compiled by this very magazine for examples, they are dominated by those who made their own money, not those just spending grandpa’s. It’s also not true that the rich stay rich while the poor languish over the generations. Social mobility perhaps isn’t as high as we’d like it to be but it’s comparable with other nations, even with much more equal places like Sweden. We also have to note that inequality and poverty are simply not the same thing. It’s entirely possible to have a more unequal society which has less poverty in it than a comparator. The US is more unequal than Sweden for example, and yet the average living standard of the bottom 10% in each society is within a percentage point or two of being the same. The US is more unequal than Romania but has very much less real poverty. It’s also not true that inequality distorts the political process–not unless we’re going to start shouting that people offering untrue statistics on the subject do so.

But the one big one that they point to, the one most important to my mind, is the simple fact that inequality is not at an historical peak. Simply nowhere near being so. For:

Most claims that income inequality is at a record high in the United States, including Piketty’s, are based on a measure of “market income,” which does not take into account taxes or transfer payments (or changes in household size or composition). The failure to consider those factors considerably overstates effective levels of inequality.23
One Of The Five Great Myths Of American Inequality - Redistribution Has Risen

According to this week's magazines, France needs not just a new president but a complete change of presidential style. Are any of the current contenders sufficiently austere to take on the mantle of Charles De Gaulle? Economist Thomas Piketty says the presidency of François Hollande has been a disaster for France. And the world's very rich are getting poorer French weekly magazines review 23 October 2016 By Michael Fitzpatrick 

The Tax Code for the Ultra-Rich vs. the One for Everyone Else The Atlantic