The Tax Inversion Argument Goes On—While Banks Rake It In
An article in the New York Times DealBook highlights differences between what some financial institutions say and what they do. Jamie Dimon, the JPMorgan Chase CEO, was quoted as saying",I love America." Lloyd Blankfein, the head of Goldman Sachs, wrote an opinion article saying",Investing in America still produces the best return." But both firms have been the engines creating the mergers in which U.S. corporations have "relocated" to lower tax bills.
The article estimates that investment banks have collected, or will soon collect, nearly $1 billion in fees over the last three years, working with U.S. companies to change their addresses. "What to call the banks enabling them? How about corporate co-conspirators?" asks the article.
The Times could not find one Wall Street bank that declined on principle to help a client with one of these tax inversion deals. "This is an economic game. There are no virgins anywhere", said Stephen E. Shay, a professor at Harvard Law School and a former deputy assistant Treasury secretary for international tax affairs in the Obama administration.
The Latest Recipient of Tax Break Largesse: Late-Night TV
A Don't Mess with Taxes article reported that CBS is getting $16 million in tax breaks. Most of that is in the form of $11 million in tax credits over five years. Plus, Empire State Development is giving another $5 million in grants to renovate the Ed Sullivan Theater for new host Stephen Colbert.
E.J. McMahon, the president of the nonprofit Empire Center for Public Policy, was quoted as calling the CBS deal the "latest in a series of giveaways to the entertainment industry. We're going to basically pay CBS to keep the Letterman Show where it already is."
California is not about to let New York become the new film capital, however. The Golden State launched its Film and Television Tax Credit Program in February 2009. Since then, California has doled out or reserved about $700 million in tax credits for eligible projects. Nevertheless, the battle for market share between New York and California will continue.
Do Taxes Lead to a Mass Exodus of the Wealthy?
The wealthy aren't fleeing certain states just to lower their taxes, according to a CNBC Report. The story quotes billionaire and former NYC mayor Michael Bloomberg as saying that "whether you think it's right or not, the wealthy are mobile." But the article says that few are actually moving to Florida.
The article cites a report from the non-partisan Independent Budget Office, which found that the well-heeled in the Big Apple aren't racing out of town to save on taxes: Only 1.8 percent of those earning more than $500,000 left the city in 2012—the same rate as lower-income households. Of the wealthy who moved, 42 percent moved elsewhere in New York state. New Jersey was next popular at 22 percent, and then Connecticut at 12 percent. Only 2 percent moved to Florida.
Nevertheless, taxes may play a role. The article said that someone moving from NYC to New Jersey would see the income-tax bill reduced to 8.97 percent from a top rate of 12.96 percent. Those moving to Connecticut would might see a tax bill cut in half, and even a move within New York state would allow residents to avoid the city's 3.86 percent income tax.
ASB Issues SAS No. 129 to Amend Letters for Underwriters Auditing Standard
According to the Journal of Accountancy, the ASB released this new statement to amend AU-C Section 920 in order to "address implementation issues and avoid unintended changes to previous practice." It becomes effective for comfort letters issued on or after Dec. 15, 2014, and early implementation is encouraged.
The statement's executive summary, this statement "amends the requirement to inform the requesting party that the auditor cannot provide any assurance regarding the sufficiency of the procedures for the requesting party's purposes by changing 'state in any discussion' to 'communicate' so as to provide the auditor with more flexibility in making this required communication."
It also "clarifies that the requirement for the auditor to read the comfort letter issued by component auditors whose report is included in the securities offering applies to each component auditor, not only those comfort letters related to significant components."
There are several other changes as well.
Grassley Looks to Restore Wind, Biodiesel Tax Credits
Sen. Chuck Grassley (R-Iowa) has proposed amendments that would restore the tax credits for wind energy and biodiesel production, according to an article in The Hill.
Grassley was quoted as saying that "Renewable energy supports thousands of jobs and generates billions of dollars in investment across the country. If the Senate truly wants to create and retain jobs, restoring clean energy tax incentives should be at the top of the list."
Both credits were in a package of tax measures that failed in the Senate in May.
The wind credit has been controversial, says the article. Originally, it was supposed to be just a temporary measure to help the wind energy industry to develop, but ended up as law for more than two decades. Wind energy and biodiesel are both common Iowa industries.
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