I am happy Canada speaks up. This one size fits all approach making criminals out of the anyone with assets overseas is ridiculous. FATCA is adding another unnecessary layer of paperwork, i.e. Form 8938, for those who live and work overseas. See http://www.irs.gov/businesses/corporations/article/0,,id=236664,00.html
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December 7, 2011 addendum: The IRS backed off after Canada complained, see http://www.accountingtoday.com/news/IRS-Ease-FBAR-Penalties-Americans-Canada-60977-1.html
Here is an article, entitled, "Is FATCA anti-American?"
http://www.abbl.lu/news-publications/news-archive/abbl-news/fatca-anti-american
__________
Original article:
http://money.msn.com/taxes/canada-tells-irs-to-back-off-marketwatch.aspx?GT1=33009
By Bill Mann, MarketWatch.com
Tax crackdown could ensnare tens of thousands of innocent US citizens, and our neighbor to the north is having none of it.
Does anyone really need to state the painfully obvious -- that "Canada is not a tax haven"? Apparently so, and to his credit, Canadian Finance Minister Jim Flaherty did just that the other day. And I'm glad he did.
"Back off our taxpapers, Flaherty tells U.S.," read the recent headline in Canada's Financial Post after Flaherty fired off an angry letter to the Washington Post, The New York Times, and The Wall Street Journal blasting a new Internal Revenue Service tax crackdown that could ensnare tens of thousands of innocent Americans living in Canada. Stop targeting "innocent and law-abiding people" who owe no U.S. taxes, added the angry Conservative Cabinet minister.
'Stress and fear'
The simmering cross-border battle over new rules applying to dual-citizen Canadian residents is spreading "unnecessary stress and fear," wrote Flaherty, referring to a little-known IRS proviso that requires all U.S. citizens to file annual returns with the IRS, regardless of where they live and work. Many transplanted Yanks had no idea of this requirement. The Toronto Globe and Mail reports there are roughly a million Canadian-American citizens living in Canada. (That figure seems a bit high to me, coming from a country of 34 million, but it's possible.)
"Most of these Canadian citizens, many of which have only distant links to the United States, have a very limited knowledge of their reporting obligations to the U.S.," Flaherty added.
Flaherty also addressed pending U.S. legislation that would compel Canadian banks to turn over their information on American clients to the IRS, a giant headache Canadian banks have resisted. Because of their objections in July, the IRS agreed to delay enforcement of that new rule until 2014. It was originally scheduled to kick in a year earlier. Canada banking authorities say this battle is not over.
Flaherty noted that many of the transplanted Yanks are not the real targets of a crackdown on tax evasion -- "high rollers with offshore bank accounts."
Maybe not, but they're still feeling the revenue heat from a country desperate to vacuum up money wherever it can -- anything to avoid raising taxes on the wealthy and upset the dismal House Speaker John Boehner bunch.
"These are people who have made innocent errors of omission," said Flaherty of the dual citizens affected.
Bridges, roads still being maintained
If most of the people the IRS is targeting wanted to dodge taxes, this one-time Canada resident can testify, they certainly wouldn't have come to Canada, which has a tax rate -- federal and provincial -- considerably higher than does the U.S. Then again, Canadian residents expect to have to pay for things like schoolteachers, firefighters, and keeping parks open and roads and bridges maintained, and so they pay higher taxes than Americans.
The concept of "there is no free lunch" hasn't really sunk in down here in the U.S. yet.
What's especially ludicrous and galling about this new IRS directive, say Canadian tax experts, is its "one-size-fits-all" provisions that lump Canada with countries like Panama and the Bahamas.
Canada not only -- let's say it once more -- is NOT a tax haven , it's also not a banana-belt country, climatologically or politically. Just the opposite. And, it has a stronger banking system than the U.S. does.
Flaherty added that "to impose FACTA (the Foreign Account Tax Compliance Act) on our citizens and financial institutions would not accomplish anything but to waste resources on both sides." That pretty much sums it up. Flaherty also points out that there's already a bilateral tax treaty to deal with tax evasion.
The deadline passed two weeks ago for Americans who hadn't filed income-tax forms in the past to throw themselves on the mercy of the court -- i.e., the IRS. I can't find any reports -- yet -- about the IRS prosecuting any malefactors in Canada, but I'll be watching this carefully.
The last word on this ridiculous policy today goes to Jamie Golombek, the director of tax and estate planning for CIBC Private Wealth Management.
After noting in the Financial Post that Canadians affected by the tax crackdown would take comfort in the Canadian government finally stepping up with objections to the misguided tax-enforcement cross-border battle, he added that this all comes down to the fact that the U.S. -- having come close to defaulting on its debt this summer -- "is in dire need of revenue."
The IRS needs to send its enforcement bloodhounds in directions other than north.
Wednesday, September 21, 2011
Tuesday, September 20, 2011
Obama's stimulus plan: a flop for many small businesses
http://money.cnn.com/2011/09/20/smallbusiness/stimulus_plan_hiring/index.htm
By Catherine Clifford
NEW YORK (CNNMoney) -- The $447 billion stimulus plan that President Obama unveiled earlier this month won't change hiring plans for many small businesses, according to a survey released Tuesday.
Almost 70% of small businesses polled said that the plan, should it pass, would not spur them to add jobs, said Manta, a small business website.
Of the 1,648 businesses polled, only 11% of those businesses said they would hire if the jobs package becomes law. Another 13% said it depends on what version of the proposal is passed. Another 7% said they just weren't sure.
The American Jobs Act promises to cut the payroll tax businesses pay in half -- to 3.1% -- on the first $5 million in wages. Also, if a business hires a new worker or gives an existing worker a raise, all payroll taxes will be waived. The act would also extend a tax benefit allowing businesses to write off their expenses more quickly.
The president said it would also reduce regulatory burdens for small businesses looking to obtain capital. But it gave few details.
Dear Mr. President...
'Crisis of Confidence': "I have a crisis of confidence problem," said Chris Shirer, the CEO of Madison & Fifth, a 10-year-old digital marketing firm in Columbus, Ohio.
Shirer is giving raises and bonuses with any extra money she makes to her staff of four people. She would be eligible for some tax relief for the raises. "That is great, "she said. "But I was going to give those raises anyway."
The most pressing issue is access to capital. "I am not somebody who makes widgets," said Shirer. Manufacturing businesses have machines and equipment that they use to back loans. Shirer doesn't have heavy machinery or equipment for collateral. Still, she needs capital for hiring and marketing.
But her experience getting it from a bank has not been good. During the recession, her bank slashed her credit line and raised her interest rate. She attempted to apply for a loan through the Small Business Administration, but filling out the paperwork was so complicated that she gave up in frustration.
Two-thirds of small businesses "highly unsatisfied" with the government: "There is this weird dance going on between the government and the banks that is hogtying businesspeople," said Shirer.
She doesn't have much more confidence in the nation's political leaders. She gives the president's stimulus plan a 50% chance of being passed. "They are in a seemingly intractable battle with each other," said Shirer about the president and Congress. "I don't think these folks can talk to each other."
Shirer is not alone in her frustration with the government. Two-thirds (67%) of the 2,324 businesses that Manta polled at the end of August said they are "highly unsatisfied" with the government's effectiveness. By contrast, only 2% of the respondents were "highly satisfied."
Hiring: Yes. No. Maybe so.
When asked which political party best supports small business, more than one-third of respondents (35%) answered "none."
A boon for some: Despite widespread dissatisfaction with the proposed legislation, the tax credit would encourage some small businesses to hire.
"We would add probably one to two extra employees with the tax incentives," said Jim Janosik, the owner of GoGreenPrinting.Biz, an environmentally friendly printing company, in Columbus, Ohio.
He has been thinking off adding to his staff of three. If the jobs bill were passed, "it would drive us to do it sooner, rather than later," he said.
Janosik was mostly pleased with the president's proposal and expects it to pass. "There is more good than bad in this proposal," he said. "I do have faith that it will pass, but it won't be his exact plan."
__________
Watch this CBS interview with Dave Ramsey on Obama's job act and small businesses, http://www.cbsnews.com/video/watch/?id=7381703n
By Catherine Clifford
NEW YORK (CNNMoney) -- The $447 billion stimulus plan that President Obama unveiled earlier this month won't change hiring plans for many small businesses, according to a survey released Tuesday.
Almost 70% of small businesses polled said that the plan, should it pass, would not spur them to add jobs, said Manta, a small business website.
Of the 1,648 businesses polled, only 11% of those businesses said they would hire if the jobs package becomes law. Another 13% said it depends on what version of the proposal is passed. Another 7% said they just weren't sure.
The American Jobs Act promises to cut the payroll tax businesses pay in half -- to 3.1% -- on the first $5 million in wages. Also, if a business hires a new worker or gives an existing worker a raise, all payroll taxes will be waived. The act would also extend a tax benefit allowing businesses to write off their expenses more quickly.
The president said it would also reduce regulatory burdens for small businesses looking to obtain capital. But it gave few details.
Dear Mr. President...
'Crisis of Confidence': "I have a crisis of confidence problem," said Chris Shirer, the CEO of Madison & Fifth, a 10-year-old digital marketing firm in Columbus, Ohio.
Shirer is giving raises and bonuses with any extra money she makes to her staff of four people. She would be eligible for some tax relief for the raises. "That is great, "she said. "But I was going to give those raises anyway."
The most pressing issue is access to capital. "I am not somebody who makes widgets," said Shirer. Manufacturing businesses have machines and equipment that they use to back loans. Shirer doesn't have heavy machinery or equipment for collateral. Still, she needs capital for hiring and marketing.
But her experience getting it from a bank has not been good. During the recession, her bank slashed her credit line and raised her interest rate. She attempted to apply for a loan through the Small Business Administration, but filling out the paperwork was so complicated that she gave up in frustration.
Two-thirds of small businesses "highly unsatisfied" with the government: "There is this weird dance going on between the government and the banks that is hogtying businesspeople," said Shirer.
She doesn't have much more confidence in the nation's political leaders. She gives the president's stimulus plan a 50% chance of being passed. "They are in a seemingly intractable battle with each other," said Shirer about the president and Congress. "I don't think these folks can talk to each other."
Shirer is not alone in her frustration with the government. Two-thirds (67%) of the 2,324 businesses that Manta polled at the end of August said they are "highly unsatisfied" with the government's effectiveness. By contrast, only 2% of the respondents were "highly satisfied."
Hiring: Yes. No. Maybe so.
When asked which political party best supports small business, more than one-third of respondents (35%) answered "none."
A boon for some: Despite widespread dissatisfaction with the proposed legislation, the tax credit would encourage some small businesses to hire.
"We would add probably one to two extra employees with the tax incentives," said Jim Janosik, the owner of GoGreenPrinting.Biz, an environmentally friendly printing company, in Columbus, Ohio.
He has been thinking off adding to his staff of three. If the jobs bill were passed, "it would drive us to do it sooner, rather than later," he said.
Janosik was mostly pleased with the president's proposal and expects it to pass. "There is more good than bad in this proposal," he said. "I do have faith that it will pass, but it won't be his exact plan."
__________
Watch this CBS interview with Dave Ramsey on Obama's job act and small businesses, http://www.cbsnews.com/video/watch/?id=7381703n
Are rich taxed less than secretaries?
http://news.yahoo.com/fact-check-rich-taxed-less-secretaries-070642868.html
By STEPHEN OHLEMACHER - Associated Press
WASHINGTON (AP) — President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries.
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said Monday. "That's pretty straightforward. It's hard to argue against that."
The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
In his White House address Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the "Buffett rule," named for billionaire investor Warren Buffett.
The rule says, "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay."
"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."
Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, but all of those rich guys are getting bigger tax breaks than we're getting, which is also the case."
Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.
"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.
By STEPHEN OHLEMACHER - Associated Press
WASHINGTON (AP) — President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries.
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said Monday. "That's pretty straightforward. It's hard to argue against that."
The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
In his White House address Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the "Buffett rule," named for billionaire investor Warren Buffett.
The rule says, "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay."
"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."
Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, but all of those rich guys are getting bigger tax breaks than we're getting, which is also the case."
Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.
"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.
Friday, September 16, 2011
IRS Receives 30,000 Disclosures of Offshore Bank Accounts
http://www.accountingtoday.com/news/IRS-Disclosures-Offshore-Bank-Accounts-60005-1.html
By Michael Cohn, Accounting Today
The Internal Revenue Service has gotten 12,000 new applications under its 2011 voluntary disclosure program of offshore bank accounts, pushing the total number of disclosures to 30,000 since 2009, when the IRS began offering a way for U.S. taxpayers to voluntarily disclose their foreign bank accounts.
The IRS said it has collected $2.2 billion to date from taxpayers who participated in the original 2009 voluntary disclosure program from the 80 percent of those cases that have been closed so far. The IRS held open the program an extra long time because more and more taxpayers came forward, and it introduced a newer program this year with the stricter penalties for those taxpayers who did not come forward under the original program.
The IRS said it has also collected an additional $500 million in taxes and interest as down payments for the 2011 offshore disclosure program, a figure that will increase because it doesn’t yet include penalties.
The IRS has been ramping up its efforts to prod taxpayers into disclosing their secret bank accounts, in some cases teaming up with the Justice Department to pursue banks like UBS and Credit Suisse to encourage them to reveal information on their U.S. customers.
“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman in a statement. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”
Global tax enforcement has turned into a top priority at the IRS. Shulman claimed progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and the Justice Department have increased their efforts at criminal investigation of international tax evasion.
The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative, which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program that ended on Oct. 15, 2009. The programs gave U.S. taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.
The 2009 program led to approximately 15,000 voluntary disclosures and an additional 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some extra applications still being counted. From these efforts, taxpayers came forward and made a total of 30,000 voluntary disclosures.
“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
In new figures announced Thursday from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from bank accounts in 140 countries.
The IRS said it is beginning to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.
“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”
People hiding assets offshore have received jail sentences running for months or years, and have been ordered to pay hundreds of thousands and even millions of dollars, the IRS noted. UBS AG, Switzerland’s largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.
The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion. The IRS said it would use this information to continue its international enforcement efforts.
By Michael Cohn, Accounting Today
The Internal Revenue Service has gotten 12,000 new applications under its 2011 voluntary disclosure program of offshore bank accounts, pushing the total number of disclosures to 30,000 since 2009, when the IRS began offering a way for U.S. taxpayers to voluntarily disclose their foreign bank accounts.
The IRS said it has collected $2.2 billion to date from taxpayers who participated in the original 2009 voluntary disclosure program from the 80 percent of those cases that have been closed so far. The IRS held open the program an extra long time because more and more taxpayers came forward, and it introduced a newer program this year with the stricter penalties for those taxpayers who did not come forward under the original program.
The IRS said it has also collected an additional $500 million in taxes and interest as down payments for the 2011 offshore disclosure program, a figure that will increase because it doesn’t yet include penalties.
The IRS has been ramping up its efforts to prod taxpayers into disclosing their secret bank accounts, in some cases teaming up with the Justice Department to pursue banks like UBS and Credit Suisse to encourage them to reveal information on their U.S. customers.
“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman in a statement. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”
Global tax enforcement has turned into a top priority at the IRS. Shulman claimed progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and the Justice Department have increased their efforts at criminal investigation of international tax evasion.
The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative, which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program that ended on Oct. 15, 2009. The programs gave U.S. taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.
The 2009 program led to approximately 15,000 voluntary disclosures and an additional 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some extra applications still being counted. From these efforts, taxpayers came forward and made a total of 30,000 voluntary disclosures.
“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
In new figures announced Thursday from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from bank accounts in 140 countries.
The IRS said it is beginning to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.
“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”
People hiding assets offshore have received jail sentences running for months or years, and have been ordered to pay hundreds of thousands and even millions of dollars, the IRS noted. UBS AG, Switzerland’s largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.
The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion. The IRS said it would use this information to continue its international enforcement efforts.
Monday, September 12, 2011
Tax the rich: How Obama will pay for his stimulus package
http://money.cnn.com/2011/09/12/news/economy/stimulus_package/index.htm
By Jeanne Sahadi @CNNMoney
NEW YORK (CNNMoney) -- President Obama proposed Monday to pay for his $447 billion stimulus package largely by taxing the rich more.
Obama's largest proposed pay-for -- which the White House estimates would raise roughly $400 billion over 10 years -- would limit itemized deductions and certain other exemptions for individuals with adjusted gross incomes of $200,000 or more ($250,000 and up for married couples).
The tax measure would go into effect on Jan. 1, 2013, when the White House assumes the top two income tax rates would revert to 36% and 39.6%, up from the current 33% and 35% as a result of the Bush-era tax cuts.
Obama's proposal would cap itemized deductions at 28%. That would mean for every $100 in deductions the rich claim in 2013, they would be able to reduce their tax bill by only $28. That would be less than the $36 or $39.60 they would get if they are in the top two tax brackets.
Relative to other federal tax filers, high-income households benefit disproportionately from itemized deductions -- including those for mortgage interest and charitable contributions.
What's in Obama's stimulus package
Obama's plan is similar to one he offered in each of his three budgets. But the proposal has gone nowhere in Congress.
The president put forth other repeat proposals on Monday to pay for the stimulus package.
So-called carried interest -- a portion of the money paid to managers of hedge funds and other investments partnerships -- would be taxed as ordinary income under Obama. Translation: It would be subject to rates as high as 39.6%, up from the current preferential rate of 15%. The White House estimates this change could raise $18 billion over 10 years.
Obama also wants to repeal various oil subsidies for an estimated savings of $40 billion. And he would impose a less-generous depreciation rule for the purchase of corporate jets. That measure would raise an estimated $3 billion.
All told, the pay-for proposals would raise roughly $467 billion, White House budget director Jacob Lew told reporters.
Lew noted that the White House measures "intentionally overachieve" on savings to compensate for likely differences in estimates that will be made by the Congressional Budget Office, which is the official cost-and-savings arbiter for Congress.
"We've built in a cushion for the differences that happen," Lew said.
The president's pay-for proposals will likely meet with stiff opposition from Republicans. Many GOP lawmakers don't want to raise taxes on anyone and aren't keen on the president's jobs plan to begin with, even though it contains more than $200 billion in tax cuts.
And at a time when Congress' debt super committee is working to cut deficits by at least $1.2 trillion over 10 years, Obama's pay-for plan would reduce the committee's revenue-raising options.
On the other hand, many career deficit hawks support measures to spur the economy now, so long as they are paid for eventually and paired with a long-term debt reduction plan.
For more, read this AP story at http://news.yahoo.com/obama-hike-taxes-pay-jobs-bill-200510620.html
By Jeanne Sahadi @CNNMoney
NEW YORK (CNNMoney) -- President Obama proposed Monday to pay for his $447 billion stimulus package largely by taxing the rich more.
Obama's largest proposed pay-for -- which the White House estimates would raise roughly $400 billion over 10 years -- would limit itemized deductions and certain other exemptions for individuals with adjusted gross incomes of $200,000 or more ($250,000 and up for married couples).
The tax measure would go into effect on Jan. 1, 2013, when the White House assumes the top two income tax rates would revert to 36% and 39.6%, up from the current 33% and 35% as a result of the Bush-era tax cuts.
Obama's proposal would cap itemized deductions at 28%. That would mean for every $100 in deductions the rich claim in 2013, they would be able to reduce their tax bill by only $28. That would be less than the $36 or $39.60 they would get if they are in the top two tax brackets.
Relative to other federal tax filers, high-income households benefit disproportionately from itemized deductions -- including those for mortgage interest and charitable contributions.
What's in Obama's stimulus package
Obama's plan is similar to one he offered in each of his three budgets. But the proposal has gone nowhere in Congress.
The president put forth other repeat proposals on Monday to pay for the stimulus package.
So-called carried interest -- a portion of the money paid to managers of hedge funds and other investments partnerships -- would be taxed as ordinary income under Obama. Translation: It would be subject to rates as high as 39.6%, up from the current preferential rate of 15%. The White House estimates this change could raise $18 billion over 10 years.
Obama also wants to repeal various oil subsidies for an estimated savings of $40 billion. And he would impose a less-generous depreciation rule for the purchase of corporate jets. That measure would raise an estimated $3 billion.
All told, the pay-for proposals would raise roughly $467 billion, White House budget director Jacob Lew told reporters.
Lew noted that the White House measures "intentionally overachieve" on savings to compensate for likely differences in estimates that will be made by the Congressional Budget Office, which is the official cost-and-savings arbiter for Congress.
"We've built in a cushion for the differences that happen," Lew said.
The president's pay-for proposals will likely meet with stiff opposition from Republicans. Many GOP lawmakers don't want to raise taxes on anyone and aren't keen on the president's jobs plan to begin with, even though it contains more than $200 billion in tax cuts.
And at a time when Congress' debt super committee is working to cut deficits by at least $1.2 trillion over 10 years, Obama's pay-for plan would reduce the committee's revenue-raising options.
On the other hand, many career deficit hawks support measures to spur the economy now, so long as they are paid for eventually and paired with a long-term debt reduction plan.
For more, read this AP story at http://news.yahoo.com/obama-hike-taxes-pay-jobs-bill-200510620.html
Friday, September 9, 2011
Financial numbers you should know
MSNBC Money by the Numbers: Vera Gibbons illustrates limits on borrowing and savings toward retirement, aired on September 8, 2011:
http://money.msn.com/money-video/default.aspx?vid=82b71386-47df-4b91-b567-337da45297d3
http://money.msn.com/money-video/default.aspx?vid=82b71386-47df-4b91-b567-337da45297d3
- 0% of take home pay on credit card debts, definitely no more than 5%
- 15% or more of gross set aside for retirement savings
- 25% of take home pay is maximum for housing costs, including mortgage payment, property tax and insurance, or 30% for rent.
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