Tuesday, April 09, 2019

Lesson From The Tax Court: Telling Stories

The good old corruption was better, when rich people would buy their kids’ entry into the Ivy League by donating a new building, or funding a scholarship for the kids of families without means. Sure, there was corruption involved, but there was also a public good derived from it.

'Something out of Shakespeare': Balmain neighbours in defamation war

Sydney childcare worker awarded $237000 damages for defamation ...

Multinationals are fighting back against a proposal by the Federal Government's tax advisory board to increase transparency, arguing political leaders first need to define what a tax haven is.

Key points:

  • The government's tax advisory board has asked whether greater detail about a company's tax disputes should be revealed
  • Business argues that detailed tax information could be misleading, but community groups suggest reporting should be mandatory
  • The move comes as tax authorities and global investors back moves to have greater tax transparency
A submission by KPMG, one of the big four accounting firms which advises Australian companies and multinationals on their tax structures, also suggests that a proposal to divulge whether a company is at the top of the Australian Taxation Office (ATO) list of the nation's most risky taxpayers, would serve no useful purpose.

Business asks government what a tax haven is, as it fights move to ...

The OECD’s two pillars for taxing the digital economy will become increasingly difficult to apply to blockchain activity, especially in the midst of decentralized networks, anonymous users, and billions of micro transactions. However a possible solution could include building compliance and AI into the blockchain technology and conditioning the ability of a platform to exist legally on tax compliance. But first there must be agreement on the financial transaction tax itself as a starting point Blockchain Could Dictate Future of Digital Taxation - Tax Analysts

Bloomberg, The ETF Tax Dodge Is Wall Street’s ‘Dirty Little Secret’:

One day last September an unidentified trader pumped more than $3 billion into a tech fund run by State Street Corp. Two days later that trader pulled out a similar amount.

Why would someone make such a large bet—five times bigger than any previous transaction in the fund—and then reverse it so quickly? It turns out that transfusions like these are tax dodges, carried out by the world’s largest asset managers with help from investment banks. The beneficiaries are the long-term investors in exchange-traded funds. Such trades, nicknamed “heartbeats,” are rampant across the $4 trillion U.S. ETF market, with more than 500 made in the past year. One ETF manager calls them the industry’s “dirty little secret.”

Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centres such as London and New York. This is not the case. The unpalatable reality is that there are more capital flows into the offshore world from OECD states than from developing countries. The reality is that while OECD origin capital flows erode the tax base and some of the flows amount to illegal tax evasion, the overall effect of the money coming from developing countries, especially the tainted flows, is more damaging from both an economic and a security perspective to those countries.

Tax: inDenmark & Sweden it is a term of affection
In the Nordic nations paying taxes is viewed in a positive light. In fact you might walk in the door and call out for your “skat” or your “treasure” as a greeting to your family. Yet all the Nordic nations are high tax nations (in contrast Australia is a low tax state), & yet they top lists of economic indicators. They make up four of the top twelve on the
Global Competitiveness Index published by the World Economic Forum. They are also among the most equal in terms of income distribution – five in the top nine by one of the most widely used measures, while Australia languishes at number 20.

Why Americans Don’t Cheat on Their Taxes

The weirdly hopeful story of how the U.S. came to be a leader in tax compliance

Tax and Changing Labor Markets: The OECD Weighs In

By: Diane Ring
Across the globe, policy makers are wrestling with the possibility that the nature of work is changing and that those changes might be positive or negative. One of the most prominent changes identified is the rise of “non-standard” work, essentially work that is not part of a traditional employer-employee relationship. The rise of the gig economy, and perhaps its even greater growth in the public imagination, have fueled concerns about the prospect of disappearing employment and its replacement with less stable and less desirable non-employee work options.

Lesson From The  Tax Court: Telling Stories

I teach my tax students that representing a taxpayer is about being the taxpayer’s voice.  They must tell the taxpayer’s story as best they can fit the facts to the law.  Thus, for example, in order to deduct expenses taxpayers must tell a convincing story that the expenses relate to an activity engaged in for profit.  Last week's Lesson concerned taxpayers who said they had converted their former personal residence into income producing property.  The story their representative told was simply too inconsistent with the facts to convince the Court.  Thus they were denied a §165 deduction when they sold the home for a loss.

On the topic of taxes and other certainties such as death (a natural part of life we don’t often talk about), the website Modern Loss has extensive resources for many types of loss. Some places to start:

Andrés Báez (Universidad Carlos III de Madrid) & Yariv Brauner (Florida), Taxing the Digital Economy Post BEPS ... Seriously:
For years the advent of the digital economy has left countries stumped in their attempt to tax income earned by foreign firms without physical presence within their jurisdiction. International organizations and their member countries have failed in their attempts to tweak the rules of the international tax regime and address these challenges presented by the digital economy. This article argues that such conservative approach could not work, and fundamental reform is inevitable.

PROMOTED: There are many different types of leadership styles. However, some of the best IT leaders share common characteristics.