Saturday, February 28, 2015

Elephants of Tax Analogies

“Old poets regurgitate
Pellets of chewed-up paper
Packed with shrew tails, frog bones,
Beetle wings, wisdom.”
Snow Water

Smothered by a Boom in Banking Gretchen Morgenson, New York Times

What Is Money And How Is It Created? Steve Keen, Forbes. Important. Why you must have banks to have money.

... the tax office has begun to acknowledge the presence of the elephant in the room that is the billions lost to the nation's budget by multinational profit shifting. Albeit, they are still patting this elephant rather than proactively shooing it out of the room.
The very funding of our hospitals and schools is at stake here, our children's future, but the committee's modus operandi was more of a fireside chat than a grilling. It was apparently a matter for pride for the ATO that only one suspect was left on its "high-risk" list of corporate taxpayers (from 14 earlier). Westfield enshrines another challenge to revenue. It has restructured and shifted its tax base offshore and pays no tax here. Besides its $US2.3 billion in related party loans, loans to itself offshore that is, it lumped in income tax in the same line in the cash-flow statement as withholding tax, in apparent contravention to AASB107. Profitshifting tax office settles for-patting the elephant in the room

Mr Jordan claimed the culture of paying sources from banks or ­financial services firms meant there was an incentive to expose individuals with offshore accounts and those that facilitate them.
“You have to realise you can’t trust anyone any more. You either have disaffected employees or you want to sell information for money,” he said. “There was one European bank employee who sold data information to the US a few years ago and he got $102m.” Sunlight ; Ali Noroozi on uncertainties in tax treatments

But in what was the most disturbing revelation, House Member attendees were told that the IRS had not even asked for the backup tapes when the ‘hard drive crash’ excuse was first used. That contradicted the prior testimony of IRS Commissioner John Koskinen. He had testified to the effect that recovery efforts had been thorough, and that the tapes couldn’t be accessed.

 Andrew Lundeen, Corporate Tax Cuts Increase Federal Revenue in the Long Run (Tax Policy Blog):
It’s important to note that this increase in revenue would be in the long run, after the economy has fully adjusted (probably about 10 years in the future). In the early years, federal revenue would fall before investment and growth pick up fully as the economy adjusts to a better tax system.
However, tax policy—all public policy, in fact—should be made with a focus on the long-term.