Showing posts from December, 2013

Paying Nanny Taxes in 2014


The Caribbean Challenge

Last week, a Bloomberg article reported that Barbados is to be fire 3,000 public sector workers by March and freeze wages.  The IMF apparently said that “urgent adjustments” are needed given Barbados’s debt to GDP ratio hit 94% in September.  By comparison, a ratio of 93% forced Cyprus to seek an EU brokered bailout in March.
Finance Minister Chris Sinckler told lawmakers that the government risks “further hemorrhaging” of its reserves and the local currency’s peg to the dollar if nothing is done.  “Weak exports and tourism arrivals, slow growth and expansive fiscal policy have led to a sharp increase in public debt and fiscal financing pressures,” the IMF said in a statement after a 10-day visit to the island of 288,000 people.
Unfortunately Barbados is not alone.  The Caribbean has seen eight debt defaults since 2003 in six countries, including Jamaica, Belize, Grenada, Dominica and St. Kitts & Nevis.   Barbados’s $3.7 billion economy will shrink 0.7% this year while Caribbean …

Facebook ‘Likes’ Tax Schemes to Avoid Paying Uncle Sam

by BRIANNA EHLEY The Fiscal Times

Well, the U.S. government isn’t going to “like” this: Facebook shifted a little over $1 billion in profits earned overseas to the Cayman Islands last year.  The world’s largest social networking site avoids hefty tax bills on most of its international earnings by using a web of subsidiaries in Ireland and the Cayman Islands, a favorite tax haven for many multinational corporations because it has no corporate tax.  Related: Offshore Accounts on the Rise and Costing Taxpayers Facebook uses a tax-avoidance scheme that has been dubbed the “double Irish” because it involves two subsidiaries incorporated in Ireland. Similar strategies have been employed by other large multinationals like Google and Apple. In Facebook’s case, one subsidiary, Facebook Ireland Limited, collects advertising revenue from around the world. In 2012, for example, it boasted a profit of €1.75 billion (or about $2.3 billion), but that quickly turned into a pre-tax loss of €626,000 (or…

U.S. Employee Working in Iraq and Afghanistan Could Not Exclude Portion of Earnings from Income

Because a U.S. employee's tax home was in the United States rather than a foreign country, he could not exclude his overseas earnings from income. Daly v. Comm'r, T.C. Memo. 2013-147 (6/6/13).
James and Candace Daly were married and lived in Utah. James was a U.S. citizen and worked full time for a communications company. In 2007 and 2008, James's employer contracted with the U.S. Department of Defense, and James's work for his employer involved the government contract. During the two years in issue, James was assigned to work in Afghanistan and Iraq. When he worked overseas, James was unable to choose the location or duration of his assignments. While in Afghanistan and Iraq, James was provided with a government authorization to travel and lived and worked on U.S. military air bases. He was not allowed to leave either of the military bases on which he lived and worked or have his family live with him during the duration of the assignments. His wages were deposited elec…

The Education Game

We were raised to be very conscious of formal education and to value it.  A good degree is a ticket, a passport as well as an insurance policy.  I thought that the ‘West’ was a bit too obsessed with formal education until I moved to Asia.  Last month, there was an article in the Economist on South Korea that I think would equally apply to other countries in the region.
As most of us would guess, South Korea comes at or near the top of most international comparisons of reading, maths and science.  But the article is at pains to point out the costs.  Much effort goes into costly credentialism, rather than deep learning.  Furthermore, the system excludes late-developing talent and the expense of educating children is one reason why South Korean has a worryingly low birth rate.  Of course, other education-obsessed countries in Asia face similar problems.  In fact, past South Korean governments tried to help parents by banning out-of-class tutoring with the President of Seoul National Uni…