Bramwell’s Lunch Beat: Lois Pleads the Fifth at Hearing
High-risk gamble of tax reform
Christopher Smith, a former chief of staff for the House Ways and Means Committee and at the US Treasury Department, gave his take today on the tax reform plan unveiled by Ways and Means Committee Chairman Dave Camp (R-MI) last week.
“Whatever you think of the Camp tax reform plan, he is the Washington rarity of a politician who says what he means, and means what he says,” Smith wrote  in a blog for The Hill. “The plan on paper demonstrates the notion, at least according to the nonpartisan budget estimates, that it is technically possible to slash marginal tax rates dramatically, address complexity and inefficiencies in the tax code, and maintain its progressive fairness. But with any reform of its size and scope, closer analysis will reveal important and negative consequences for important constituencies and sectors of the economy. For every winner, there are vocal losers.
“That’s why putting out such a plan, especially now in the run up to the midterm elections, represents a high-risk gamble,” he continued. “Perhaps the biggest risk is that it could open a Pandora’s box of revenue raising provisions for purposes other than what the authors intended.”
Lerner pleads the Fifth – again
Well, that was quick.
This morning’s House Oversight and Government Reform Committee hearing came and went hours ago, and Lois Lerner, the former director of the IRS agency at the center of the Tea Party targeting controversy, refused to answer questions from panel members, according to an article  by Peter Schroeder of The Hill.
Lerner rebutted Republicans by citing her Fifth Amendment rights – as she did the last time she appeared before the committee last May.
“On the advice of my counsel, I respectively exercise my Fifth Amendment right and decline to answer the question,” she said repeatedly in response to questions from Chairman Darrell Issa (R-CA).
Issa asked Lerner several questions about her leadership of the Exempt Organizations office, but each time she refused to provide a substantive response, the article stated.
[If you are interested in seeing photos  of Lerner’s appearance before the House Oversight Committee this morning, Legal Insurrection has you covered. Also, click here  for another article by The Hill this morning in which House Speaker John Boehner (R-OH) said if Lerner does not eventually testify about the IRS’s targeting of political groups, Congress should hold her in contempt.]
What tax plans from Barack Obama and Dave Camp have in common
Robert Schroeder of MarketWatch wrote  this yesterday: “The fiscal 2015 budget unveiled by President Barack Obama on Tuesday has items in common with a plan released last week by House Ways and Means Committee Chairman Dave Camp, a Michigan Republican. The exact details don’t always match, but both proposals would seek to extract more revenue from the wealthy, cut corporate taxes, and treat so-called carried interest as ordinary income. While Camp’s plan angered Wall Street and isn’t expected to get a vote this year, it may serve as a template for future talks with Democrats.”
[Click here  for another article comparing the tax ideas in Obama’s and Camp’s plans, courtesy of Kelsey Snell of Politico.]
A tale of three agendas: Obama, Camp, and Ryan
Forbes contributor Howard Gleckman wrote  yesterday that the foundational documents released recently by Obama, Camp, and House Budget Committee Chairman Paul Ryan (R-WI) describe their agendas and their perspectives on government.
“On one level, they paint vastly different pictures. Yet, a close reading also pinpoints some surprising and important areas of agreement – more perhaps than the players would publicly admit,” the article stated.
The president yesterday unveiled his fiscal year 2015 budget, which included a tax and spending blueprint that would boost revenues by about $1 trillion over the next decade, with the new money divided between funding new programs and reducing the deficit, according to Gleckman. Also yesterday, Ryan released a 205-page report on the federal government’s anti-poverty programs, but Ryan and Obama have found common ground on the Earned Income Tax Credit. And last week, Camp released his much-anticipated tax reform plan.
“Yet Camp also shares common ground with Obama on a wide range of tax issues,” Gleckman wrote. “Both back business tax reform and both would raise taxes on hedge fund managers. Both would cap the value of tax deductions for high-income families – Obama at 28 percent and Camp at an even less generous 25 percent. The two men would close a loophole that allows owners of personal service firms to dodge self-employment taxes. And both would pay for infrastructure spending with some temporary tax revenues they’d generate from rewriting business taxes.”
The IRS is the problem
The editors of the National Review wrote  on March 3 that the two competing models for reforming the IRS’s oversight of the political activities of certain nonprofit organizations – one put forward by the IRS itself, in the form of a regulatory rule change, and a second put forward by Camp – are both insufficient.
“[N]either reflects the reality behind the recent IRS scandal, which was not the result of murky rules or bureaucratic incompetence but rather of what gives every indication of being deliberate misuse of federal investigatory resources for partisan political ends,” the editorial stated. “That there have not been criminal charges in this matter is probably at least as much a reflection of the highly politicized Department of Justice under Eric Holder as it is of the facts of the case. The problem, then, is that both the IRS plan and the Camp plan assume that the IRS ought to be regulating rather than being regulated.”
IFRS 9 leaves IASB with impaired convergence
Stephen Bouvier of Accountancy Age recapped  today why the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have failed to develop a converged accounting standard on financial instruments.
What clients want
By more than two to one, respondents participating in the CFA Institute and Edelman Investor Trust Survey felt the most important thing to them in picking an investment partner is that they feel that they can be trusted to act in their best interest, according to a March 5 article  by Forbes contributor Andrew Klausner. Returns were less important, and fees were at the bottom of the list, the article stated.
“These statistics reinforce the notion that trust is the most important thing in our industry (if you add the 17 percent who mentioned ethics, those two issues represent the most important thing to more than half of the respondents),” Klausner wrote. “Investment managers and others who fail to establish trust first – before they talk about what they do and how much they charge – are putting themselves behind with, on average, one out of every two prospects they will speak with.”