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Bramwell's Lunch Beat: KPMG Audits, Wall Street Tax, Carly’s 3-Page Tax Code

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Nov 12th 2015
Staff Writer and Editor AccountingWEB
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Audit regulator finds 28 deficient audits by KPMG in annual report
The Public Company Accounting Oversight Board (PCAOB) found 28 deficient audits at KPMG LLP in its latest annual inspection of the Big Four accounting firm, an increase from the level of problems found a year ago, wrote Michael Rapoport of the Wall Street Journal. The 28 deficient audits were out of 52 KPMG audits and partial audits reviewed by the PCAOB in its annual inspection report issued on Tuesday, for a deficiency rate of 54 percent. That is up from a year ago, when PCAOB inspectors found 23 deficient audits out of 50 reviewed, for a rate of 46 percent. KPMG said in a statement that it has “taken robust steps” to improve audit quality, leading to “significant improvements which will be reflected in future inspection reports.” PCAOB inspections are aimed at helping the firms improve their work and don't lead to any penalties.

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Democratic candidates take aim at Wall Street
The top three Democratic presidential candidates – Hillary Clinton, Sen. Bernie Sanders, and Martin O'Malley – are pushing a Wall Street tax as a way to corral financial markets, wrote Bob Davis of the Wall Street Journal. While each offers a different version of a financial transactions tax, all three would impose a levy on the sale of securities. Sanders is pushing a 0.5 percent tax on the sale of stocks and smaller levies on bonds and derivatives. A similar though smaller tax is favored by O'Malley, a former Maryland governor. Clinton, the Democratic front-runner, is backing a much more limited levy, aimed at ending certain practices involved in ultrafast computerized trading – although details of how big the tax would be and how much it could raise have not been released by her campaign. All three candidates say Wall Street is ripe for an overhaul.

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Carly Fiorina wants a 3-page tax code: Here's what she means
Jeanne Sahadi of CNN wrote that if GOP presidential candidate Carly Fiorina had her way, the tax code would be just three pages long. So how would she accomplish this? Fiorina threw her support behind a 1995 bill that proposed what's known as a Hall-Rabushka flat tax, named after two economists at the Hoover Institution. The bill basically says, “Let's replace the entire US tax code with these three pages.” It is a mere 1,010 words, divided into four chapters. The Hall-Rabushka bill would tax salaries and wages at 19 percent minus personal allowances for individuals and their dependents. And it would tax companies' income minus their business expenses at 19 percent as well. So can you simplify the tax code enough to keep at just three pages? “There'd need to be hundreds of pages of regulations to make it work,” said Len Burman, who runs the Tax Policy Center. “[Otherwise] it would invite endless litigation from aggressive taxpayers.”

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Paul Ryan keeps tax reform hope alive
During a recent interview with Bloomberg TV, new House Speaker Paul Ryan (R-WI) reiterated his hope that international tax reform could happen next year, wrote Kelsey Snell of the Washington Post. “I believe we need to show the country what a new tax code looks like,” Ryan said. “I think we're getting to consensus on how to reform our international tax code.” Ryan said he would love to see international tax reform completed in 2016 as a standalone measure. He said he was working on the issue when he was chairman of the House Ways and Means Committee, and the recent trend of companies moving their tax base overseas to avoid paying US taxes and foreign corporate takeovers could drive that reform.

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Quick Links:

  • Christie's much-touted tax vetoes meant scanty services at home (Bloomberg)
  • GOP ‘simple' flat tax proposals simply don't add up (CNBC)
  • The flat tax goes mainstream (New York Times)
  • Here's the problem with the GOP's flat tax proposals (Fiscal Times)
  • Carson calls for eliminating the mortgage interest and charitable deductions (Tax Foundation)
  • Here are the biggest corporate tax issues on Congress' plate right now (MarketWatch)
  • Congress should extend tax incentives that encourage investment and create jobs (The Hill)
  • The painless tax companies should pay to fix our roadways (New York Post)
  • The GOP debate: Squabbles over refundable credits, deductions, and conservatism (TaxVox)
  • Should governments tax products that are fun but harmful? (TaxVox)
  • More than a surrender when it comes to taxing business (Tax Analysts)
  • The European predictability paradox (Tax Analysts)
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