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Bramwell's Lunch Beat: Cruz’s ‘Sneaky’ VAT, Hillary Eyes Estate Tax, IASB Leases

Jan 13th 2016
Staff Writer and Editor AccountingWEB
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Marco Rubio says Ted Cruz's tax plan contains a ‘sneaky' VAT
Republican presidential candidate Sen. Marco Rubio (R-FL) is taking on Sen. Ted Cruz (R-TX) on tax policy, calling a key piece of his rival's plan an “intentionally sneaky” idea that would expand government, wrote Richard Rubin of the Wall Street Journal. Without naming Cruz, Rubio said, “Republican candidates today try to hide their support for the value-added tax (VAT) by renaming it a ‘business flat tax.' But don't be fooled. If it acts like a VAT, taxes like a VAT, and grows government like a VAT – it's a VAT.” Cruz's 16 percent business flat tax would replace the corporate income tax and payroll taxes and become the government's primary funding source, alongside a 10 percent individual income tax. Businesses would pay taxes on their gross revenues minus payments to other businesses and capital investments. They wouldn't deduct wages and profits, making it economically equivalent to VATs used in other countries.

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[More from Richard Rubin on the Rubio-Cruz tax spat can be found here.]

Clinton wants higher estate tax, closed hedge-fund ‘loopholes'
Democratic presidential candidate Hillary Clinton on Tuesday called for increasing the estate tax and closing tax “loopholes” used by hedge funds and the wealthy, as her campaign touts ways she'd tax the rich, wrote Jennifer Epstein of Bloomberg. Clinton wants to reduce the threshold at which estates are subject to tax – to $3.5 million for individuals or $7 million for married couples, down from $5.45 million and $10.9 million currently. She'd also raise the estate tax rate to 45 percent, from the current 40 percent. Clinton's campaign identified two other loopholes she would seek to close as president: one related to a maneuver hedge funds use to route investments through Bermuda reinsurance companies and another that allows for multimillion-dollar, tax-advantaged retirement accounts. Clinton also repeated her call for closing the “carried interest loophole” that allows hedge-fund and private-equity managers to pay a lower tax rate.

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IASB changes rule on accounting for leases
Michael Rapoport of the Wall Street Journal wrote that an accounting change issued by the International Accounting Standards Board (IASB) on Wednesday will require companies outside the United States to add substantial amounts of leases to their balance sheets, a move which could make some companies appear more leveraged than they do now. The new IASB rule, together with a parallel rule for US companies enacted by the Financial Accounting Standards Board last fall, is expected to add $3.3 trillion in leases to corporate balance sheets worldwide, the IASB said. The idea is to give investors a clearer, fuller picture of companies' obligations when they lease items ranging from real estate to office equipment. Some companies have assumed tens of billions of dollars in lease-payment obligations that are akin to debt. But under current rules, those leases aren't carried on the companies' balance sheets. They are disclosed only in the footnotes to the companies' financial statements.

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Official: EU to propose binding multinational tax rules
Francesco Guarascio of Reuters wrote that the European Commission will propose a new set of binding rules by the end of January to curb corporate tax avoidance, in another move to counter unfair or illegal tax practices of multinationals, according to European Union (EU) officials. Multinationals have long been in the crosshairs of EU authorities because of the way they can reduce their tax bills by basing themselves in low-tax centers or negotiating special deals with governments. Some of the new proposals will oblige EU countries to accept as binding a set of voluntary guidelines, known as Base Erosion and Profit Shifting (BEPS), which aim to close gaps in existing international tax rules. EU commissioner Pierre Moscovici told EU lawmakers on Monday he plans to propose stricter rules on taxes applicable to controlled foreign companies and on hybrid financial products that may avoid taxation because of their complexity.

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By mauroboca
Feb 10th 2017 15:55 EST

please close my account.

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