Showing posts from May, 2013

EU Public Hearing on FATCA


The Great Economic Shift Continues

Ever since the economic turmoil of 2008, I try to split my time between mainstream news and so called alternative news sites.  After all, it was the alternative news sites that called not just the property bubble and CDO’s behind the 2008 turmoil but the dot com bubble that peaked in 2000.  Given the way that the mainstream media depends on staying on the good side of its corporate and political paymasters, it makes sense that they would be the last to see anything coming. 
In this light, it seems that not just alternative sites but increasingly, some mainstream news outlets are pointing to the unsustainability of the current American / British / Japanese system of quantitative easing which is essentially about running the currency printing presses to sustain aggregate demand.  But easy money is no substitute for genuine productivity gains and economic historians are pointing out that without exception, every civilization that has done this in the past has experienced a single outcom…

The Emerging Tax Meme

One thing I enjoy, is connecting dots or looking for patterns.  To this end, I believe that there has been a shift in the way in which tax is being discussed in the main stream.  I have 5 examples to illustrate my point.
Firstly, there is the case of Jack Warner.  It is alleged that the IRS and Homeland Security are looking into the former FIFA Executive’s activities.  One of his sons is allegedly being detained in Florida as his income, as declared on their tax return (US$72 000 per annum), does not sufficiently explain how they could afford certain South Florida real estate purchases (4 condos costing US$400 000 paid for in cash).  Further it has been alleged that Warner’s son is cooperating with the investigating authorities as a sealed indictment has been obtained against their father.
Secondly, there is the case of Jerome Cahuzac, who resigned as Budget Minister and last month bowed to pressure and also resigned from Parliament in France.  The disgraced tax czar and cardiologist…

8 Reasons An Internet Sales Tax Will Hurt Online Retailers: Part 2

Quick Facts About The Proposed Internet Sales Tax Bill: * The tax is supposed to generate $22 Billion to $24 Billion in annual revenues to state and local governments, although not all states want it. * It's a tax that online retailers were supposed to be collecting anyway. * Online retailers with annual sales below $1 million would not have to collect these taxes. * States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. * States are supposed to establish a single entity to receive Internet sales tax revenue, so retailers don't have to send it to individual counties or cities. If this legislation goes through, here are some of the ramifications for online retailers: 1. Fight For Customers And $$$ Will Intensify. Despite the convenience, customers no longer benefiting from not paying online sales tax could lose their incentive to shop online; and when they do (shop online) they may not buy as much.US Tax Singapore * There'…

How The Internet Sales Tax Bill Will Affect Online Competitive Pricing: Part 1

On Monday May 6, 2013, the US Senate passed a bill requiring online retailers to collect sales tax just like their brick and mortar cousins. Although the bill has to pass the House, The Marketplace Fairness Act (also called The Internet Sales Tax Bill), if passed, will seriously affect the way business is done on the internet in the future, including competitive pricing. First, it's important for everyone, retailers and public alike, to know the bill's contents and potential. (It's complicated). I found the best possible explanation of The Marketplace Fairness Act in an article in the UK's The Guardian, by their US Correspondent Dominic Rushe. Marketplace Fairness Act: What does the Internet sales tax bill mean for you? By Dominic Rushe, The Guardian, May 8, 2013 For years retailers have complained that their online rivals in the US have an unfair tax advantage because they do not always collect sales tax. On Monday, amid intensive lobbying from retailers including Walma…

Tax Authorities Playing Games

After being distracted by UKIP last week, I am happy to return to the subject of taxation and the way in which developed countries appear to be more aggressively pursuing tax owed by citizens and residents.  Firstly I would start with FATCA.  By way of background, the Foreign Account Tax Compliance Act (FATCA), which is being phased in from this year, is part of the effort by the US government to prevent money laundering, and reduce tax evasion.  Under FATCA, Foreign Financial Institutions (FFIs could be any financial institution based outside of the US) can either report on the activity of American account holders directly to the IRS or to their own government who will in turn collate and pass on the data to the IRS under the terms of an Inter-Governmental Agreement (or IGA). 
In principle, the real advantage of the IGA is with territories where Data Protection legislation prevents FFIs from remitting data directly to the IRS.  Furthermore, the IGA route can reduce the complexity an…

Game Changers

It was my intention to write about FATCA and taxes today but it is hard to ignore the results of recent local government elections here in England.  I’ve previously written about UKIP in the context of the Eastleigh by-election but last week went on to win over 140 seats and average 25% of the vote in council wards they contested.  UKIP leader Nigel Farage now talks about these gains representing a “game changer”.
Friday night I met up with some former work colleagues and politics came up.  One of my friends is actually a UKIP supporter and as I said to him, I have nothing against UKIP in principle and their focus on their twin pillars of anti-EU and anti-immigration.  What concerns me is the way in which the debate is being framed as an emotional one as opposed to a data driven one.  As long as this is allowed to happen, populism and poli-tricks may be allowed to trump logic and pragmatism.
Firstly there is the anti-EU stance.  Not that I am a defender of the EU as presently constru…