Go ahead, blame the accountants
Bloomberg View columnist Jonathan Weil yesterday called the MF Global Holdings malpractice complaint against PwC “one of the most ridiculous lawsuits I have ever seen.”
He said one part of the complaint that stood out was this contention: “But for PwC’s erroneous accounting advice, MF Global Holdings could not have – and would not have – invested heavily in European sovereign debt to generate immediate revenues and would not have suffered the massive damages that befell the company in 2011.”
“That line is a doozy,” Weil wrote. “You see, it wasn't MF Global's fault that it bought all of that European debt or went bankrupt. Blame the accountants! As if [ex-MF Global CEO Jon] Corzine, who once was co-chairman of Goldman Sachs, was the sort of Wall Street executive who made investing decisions based on advice from accountants.”
[Click here to read AccountingWEB’s article on the MF Global Holdings lawsuit against PwC.]
Thank you, Dave Camp
House Ways and Means Committee Chairman Dave Camp (R-MI) will leave behind an enormously important achievement. At a time when too many of his fellow lawmakers substitute easy partisan rhetoric for hard work, Camp wrote a serious tax reform plan, Howard Gleckman, Resident Fellow at the Urban Institute and editor of TaxVox, the Tax Policy Center blog, wrote today.
“His plan won’t become law. But when Congress finally gets around to rewriting the tax code, many of its elements will be in the final version,” he wrote. “And perhaps even more important, Camp’s fully realized bill will change the political dynamic of the reform debate. His courage has made it possible for other lawmakers to candidly confront the need to cut specific tax preferences as part of any serious reform. And he has set a benchmark that will make life blessedly difficult for those who try to claim that they can magically reduce tax rates by merely eliminating unnamed ‘loopholes.’
“Dave Camp has made it easier for all of us to ask the obvious question of the authors of future half-baked reforms: But how are you going to pay for your tax rate cuts? How will your plan differ from Camp’s?”
Gleckman noted that Camp’s proposal isn’t perfect, but it is also filled with dozens of good ideas.
“I hope that when some future president finally signs a tax reform law, Dave Camp will be invited to the ceremony,” he wrote. “He will deserve the thanks of whoever finally gets credit for rewriting the revenue code. And he deserves our thanks.”
Corporate lobbyists assail tax overhaul they once cheered
Two days after he released a sweeping overhaul of the nation’s tax code, Camp traveled to Park City, Utah, for a fundraiser attended by lobbyists from some of the nation’s largest corporations.
The event was intended to honor the Michigan Republican, whose 979-page tax plan would cut the overall corporate tax rate by creating a new bank tax and a surtax on the very wealthy, among many other changes.
“But this gathering ended up serving a decidedly different purpose: the unofficial kickoff of a push to make sure that Mr. Camp’s tax plan dies, a campaign that is highly likely to succeed, particularly now that Mr. Camp himself essentially conceded defeat, announcing this week he will not seek re-election this year,” Eric Lipton and Jonathan Weisman reported today.
“The twist reflects how lobbying in Washington – and the millions of dollars in fees that lobbyists collect – are often about stopping action and preserving the status quo. Whenever Congress considers major changes to the tax code, lobbyists buy insurance on both sides of the fight. It also reflects a pivot by lobbyists who had spent months cheering Mr. Camp’s three-year effort to draft this giant package, given that its stated purpose was to lower corporate tax rates and simplify the tax code, and who are now working to make sure that the package never becomes law.”
Senators question Caterpillar tax strategy
Construction machinery giant Caterpillar avoided $2.4 billion in US taxes by negotiating a corporate deal with Switzerland and shifting profits to a wholly owned Swiss subsidiary, according to testimony at a Tuesday hearing of the Senate Permanent Subcommittee on Investigations, Kevin McCoy of the USA Today reported.
The panel’s chairman, Senator Carl Levin (D-MI), said the Peoria, Illinois-based company cut its tax bite by $8 billion through an agreement that transferred its international parts-distribution division to the subsidiary, the article stated. Despite the $8 billion profit shift, no Caterpillar personnel or business activities moved from the United States to Switzerland, and most of the firm's parts business remains in the United States, said Levin.
Executives from Caterpillar and PricewaterhouseCoopers, the accounting giant that audits the manufacturer and was also paid approximately $55 million for working on the tax strategy, were scheduled to testify later Tuesday, McCoy wrote. In prepared written testimony released before the hearing, Julie Lagacy, a Caterpillar vice president, said the manufacturer “takes very seriously its obligation to comply with the tax laws enacted by the Congress, by the states” and other jurisdictions.
“Caterpillar's effective income tax rate averages about 29 percent,” relatively high among US firms, said Lagacy, according to the article. The company has added about 13,000 US jobs in the last 15 years and “is proud to pay its fair share of taxes right here in the United States,” said Lagacy.
Senate panel schedules action on tax breaks bill
The Senate Finance Committee will consider a package extending a grab bag of expired tax provisions on April 3, Bernie Becker of The Hill wrote today.
The measure Senate Finance Committee Chairman Ron Wyden (D-OR) hashed out with Senator Orrin Hatch (R-UT), the top Republican at Finance, would extend 45 provisions for two years and leave others on the chopping room floor. More than 50 incentives expired at the end of 2013.
“This bipartisan extenders package is the product of a Finance Committee that came together to provide needed certainty to the economy, protect jobs, and maintain important priorities for working families,” Wyden said in a statement Tuesday, according to the article. “With that said, I am determined this will be the last extenders bill on my watch. It’s high time we focus on creating a new, 21st-century tax code, because the status quo is unacceptable.”
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- Should tax reform be sold on values instead of economics (TaxVox)
- True Detective, taxes, and the suspension of policy disbelief (Forbes)
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- Top 10 tax mistakes to avoid at all costs (Forbes)
- PCAOB reaches agreement with Swedish audit regulator (Journal of Accountancy)
- Tax the childless (Slate)
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