Bramwell’s Lunch Beat: Obama Budget Proposes Tax on Firms’ Overseas Earningsby
Ryan looking for ‘common ground’ on tax reform
House Ways and Means Committee Chairman Paul Ryan (R-WI) said on Sunday he still stands ready to compromise with President Obama on tax reform if they can “find common ground,” wrote Trevor Eischen of Politico. “We want to work with this administration to see if we can find common ground on certain aspects of tax reform. And we want to exhaust that possibility,” Ryan said on NBC’s “Meet the Press.” “If and when that possibility is exhausted, then we will put out what we think ought to be done. So, we fully intend on the Ways and Means Committee of showing what full, comprehensive tax reform for everybody, individuals and families alike, looks like.”
Obama proposes one-time tax on overseas earnings
President Obama is making an opening bid on overhauling corporate taxes and linking it to boosting infrastructure spending, a move that could clear a rare path toward common ground in a deeply divided capital, wrote Nick Timiraos and John D. McKinnon of the Wall Street Journal. In his 2016 budget plan due on Monday, Obama wants US companies to pay a 14 percent tax on the approximately $2 trillion of overseas earnings they have accumulated. They would face a 19 percent minimum tax on future foreign profits. Companies could reinvest those funds in the United States without paying additional tax. Obama’s corporate tax proposal, contained in his budget plan for the fiscal year starting Oct. 1, would pay for part of a six-year, $478 billion infrastructure upgrade. Some conservative insiders think the proposal could mark the opening of productive negotiations with Republicans, who control both houses of Congress.
Inheriting grandma’s house comes with tax under Obama plan
President Obama is proposing a fundamental change in tax policy that would limit what many Americans can leave to their heirs, wrote Richard Rubin and Margaret Collins of Bloomberg. Obama’s proposal, which will be detailed in his budget plan on Monday, would impose a capital gains tax at death on the growth in the value of assets since they were purchased, except for those donated to charity. The plan, which would raise an estimated $210 billion over a decade, also raises the top capital gains rate to 28 percent from 23.8 percent. There would be a $200,000 exemption plus a $500,000 exemption for homes. For the $1 million home initially purchased by a married couple for $250,000, that would mean $500,000 of the gain would be exempt and a federal tax of up to $70,000 would be owed on the remaining $250,000 in appreciation.
White House to request $1.7 billion for SEC
The Obama administration is expected to seek a modest funding increase for the US Securities and Exchange Commission (SEC) when the president unveils his proposed 2016 budget on Monday, wrote Andrew Ackerman of the Wall Street Journal. The SEC would see its funding levels rise about $200 million to $1.7 billion under the White House’s 2016 budget blueprint. The blueprint is widely seen as an opening bid for budget negotiations with congressional Republicans and is unlikely to be enacted without tweaks. It marks the second consecutive year the White House has sought $1.7 billion in funding for the SEC. For the current fiscal year, lawmakers agreed to boost the agency’s funding by $150 million – $250 million less than what the White House sought – as part of a last-minute federal spending plan enacted in December.
Strategy on tax breaks eludes GOP
The House is scheduled to vote in the coming week to permanently extend several tax breaks, including a key incentive for small business expensing, that expired at the end of 2014. But don’t call it a strategy yet, wrote Bernie Becker of The Hill. Congressional aides and lobbyists say that GOP lawmakers as a whole don’t yet have a handle on how to deal with the dozens of preferences, commonly known as extenders, that were at the center of a big fight just months ago. House Majority Leader Kevin McCarthy (R-CA) suggested in his memo laying out the February agenda that the votes to revive the incentive for writing off small business purchases and certain tax breaks for charitable contributions were more for political messaging than for sketching out a path forward legislatively. “To build a healthy, opportunity economy, our tax code must protect hardworking taxpayers,” McCarthy wrote. “We don't need higher taxes. We need a more efficient, effective tax system.”
IRS technical guidance roundup (week of Jan. 26)
The IRS issued the following technical guidance last week:
Notice 2015-09 provides limited relief for taxpayers who have a balance due on their 2014 income tax return as a result of reconciling advance payments of the premium tax credit against the premium tax credit allowed on the tax return.
Advanced Emissions falls after accounting firm KPMG resigns
Advanced Emissions Solutions Inc., a developer of clean-coal technologies, fell the most since 2003 after saying KPMG LLP had resigned as the company’s accounting firm, wrote Justin Doom of Bloomberg. Advanced Emissions tumbled 46 percent to $10.61 at the close in New York on Friday. Earlier it declined 51 percent, the most intraday since Oct. 23, 2003. KPMG told the company that it had “inadequate management oversight” over financial reporting and “inadequate accounting resources,” according to a filing Thursday with the SEC. KPMG resigned on Jan. 23, according to the filing. Highlands Ranch, Colorado-based Advanced Emissions, which is seeking a new accountant, said it expects to have its shares delisted from the Nasdaq because it “does not believe that it can make the required financial filings and regain compliance.”
Former Deloitte partner cleared of misconduct
An appeal tribunal has cleared former Deloitte partner Maghsoud Einollahi of deliberate professional misconduct regarding his involvement in the collapse of MG Rover, wrote Robert Lovell of AccountingWEB UK. The tribunal allowed the appeal by Deloitte and Einollahi of eight charges relating to deliberate misconduct, but upheld five counts against the Big Four firm of failing to account for conflicts of interest. The tribunal investigated the role of Einollahi and the Phoenix Four – Peter Beale, Nick Stephenson, John Edwards, and John Towers – who bought MG Rover in 2000 before its collapse. MG Rover later collapsed in 2005 with debts of £1.3 billion and the loss of 6,000 jobs. Deloitte was fined £14 million and given a severe reprimand when the Financial Reporting Council (FRC) published its final report in September. The FRC concluded Deloitte had failed to act in the public interest in its role as financial advisers to the collapsed company.
Barcelona accused of tax evasion in $107 million Neymar deal
A Spanish prosecutor said four-time European soccer champion Barcelona and its former president should stand trial for evading about 9 million euros ($10.2 million) in taxes in the signing of Brazilian playmaker Neymar, wrote Alex Duff of Bloomberg. Barcelona and former executive Sandro Rosell committed two crimes against the Spanish treasury, with Rosell responsible for a further company crime, the prosecutor, Jose Perals, said in a written filing at the National Court. Current team president Josep Maria Bartomeu should also be investigated after Barcelona failed to withhold 2.8 million euros in taxes last year on income paid to N&N Consultoria Esportiva e Empresarial Ltda, a company owned by Neymar’s parents, Perals said. In February 2014, after the National Court opened an investigation, Barcelona paid 13.6 million euros to tax authorities to cover a possible shortfall in its signing of Neymar. The club has denied any wrongdoing.