Tuesday, January 14, 2014

Back to School: Tax Abuse According to Whom?

The Most Successful Tax Reform in History ~ The Treasury Reading Room: Essential Scratch and Sniff Guide to Becoming A Tax Expert
When enforcement resources are limited, how should the scarce enforcement resources be allocated to maximize compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, “worst-first” methods suffer some underappreciated weaknesses. While “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations Beyond Worst-First Tax Enforcement
In 1996, US Congress banned the Treasury Department from enacting retroactive regulations but provided an important exception, allowing tax regulations to apply retroactively “to prevent abuse.” Congress did not, however, explicitly define abuse; nor did it designate to any specific actor the power to do so ... Tax Abuse According to Whom? McCormack, Shannon Weeks, Tax Abuse According to Whom?
The Justice Department's settlement (press release) of criminal charges against JPMorgan Chase concerning it role in the Bernie Madoff Ponzi scheme prohibits the bank from deducting the $1.7 billion payment to the government:
JPMorgan agrees that the Stipulated Forfeiture Amount shall be treated as a penalty paid to the United States government for all purposes, including all tax purposes. JPMorgan agrees that it will not claim, assert, or apply for a tax deduction or tax credit with regard to any federal, state, local or foreign tax for any portion of the $1,700,000,000 that JPMorgan has agreed to pay to the United States pursuant to this Agreement.
Senators Elizabeth Warren (D-MA) and Tom Coburn (R-OK) on 8 January 2014 introduced legislation to increase transparency of settlements reached by federal enforcement agencies, including mandatory disclosure of any tax deductions and tax credits for settlement payments. What a taxingly interesting start to 2014
In recent decades, (Amerikan, Australian, European) workers have suffered one body blow after another: the decline in manufacturing, foreign competition, outsourcing, the Great Recession and smart machines that replace people everywhere you look. Amazon and Google are in a horse race to see how many humans they can put out of work with self-guided delivery drones and driverless cars. You wonder who will be left with incomes to buy what these robots deliver. What can workers do to mitigate their plight? One useful step would be to lobby to eliminate the corporate income tax Brave New Jobless World; Inside India's Legal Outsourcing Machine
Mr North on Taxation, Tyranny, and Theocracy: A Biblical Response to Susan Hamill
Through a Latte, Darkly: This paper uses Starbucks Corporation, the premier roaster, marketer and retailer of specialty coffee in the world, as an example of stateless income tax planning in action. “Stateless income” comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group’s ultimate parent company, but which is subject to tax only in a jurisdiction that is neither the source of the factors of production through which the income was derived, nor the domicile of the group’s parent company Through a Latte, Darkly: Starbucks' Stateless Income Planning