It would appear the IMF’s dirty little fingerprints are all over this latest piece of legislation in Ukraine. The Ukraine Finance Ministry is proposing to take a very-similar-to-Cyprus approach to bailing in its despositors:
*UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
*UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS
In September of 2011, when looking at the insurmountable debt catastrophe that the world finds itself (which has only gotten worse in the past several years) we warned that “the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world’s financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path.”
Two years later, the financial asset tax approach, in the form of depositor bail-ins, was tried – successfully (as there was no mass rioting, no revolution, in fact the people were perfectly happy to accept the confiscation of their savings) – in Cyprus, further emboldening the status quo, in this case the IMF, to propose, tongue in cheek, that the time has come for the uber-wealthy to give back some (“it’s only fair”), and to raise income taxes through the roof (which of course would mostly impact the middle class as the bulk of current income for the 1% is in the form of dividend income, ultra-cheap leverage extraction on assets and various forms of carried interest).
And now, a new tax is not only on the horizon but coming fast and furious to allow the insolvent global regime at least one more can kicking: one which will impact current and future homeowners across the world.
California lawmakers want to put a carbon tax on gasoline and other vehicle fuels to curb carbon dioxide emissions and fight global warming. Golden State residents already face some of the highest energy and fuel costs in the country, but carbon tax proponents say the tax would go to help mitigate the effects of global warming on the poor.
The Los Angeles Times reported that Democratic state Senate President Pro Tem Darrell Steinberg proposed legislation that would slap a 15 cents per gallon tax on fuels sold in the state which would rise to 24 cents per gallon in 2020. The fuel tax is expected to raise $3.6 billion in the first year and would fund public transit projects as well as a new tax credit for families earning less than $75,000 per year.
Steinberg justified his gas tax increaseas aid for the poor, who are most impacted by global warming.
While the propaganda surrounding Europe’s “recovery” has reached deafening levels, what is going on behind the scenes is quite the opposite, and in the latest example that Europe is increasingly formalizing a regime of implicit capital controls, we learn that Italy has just ordered banks to withhold a 20% tax on all inbound wire transfers: a decree which on to of everything will apply retroactively to February 1. As Il Sole reports, “the deductions will be automatic (unless prior request for exclusion), and then it will be up to the taxpayer to prove that the money is not in the nature of compensation “income.” In other words, as of this moment, but really starting two weeks ago, all Italians are money launderers unless proven innocent. Continue reading »
We previously discussed Puerto Rico in these pages in October of last year (see “Puerto Rico’s Debt Crisis – Another Domino Keels Over”). At the time, the public debt crisis looked increasingly worrisome – in fact, it seemed as though Puerto Rico would eventually have to apply for a federal bail-out, and if it failed to get one, it might have to restructure its debt (it actually cannot do that, see further below). Several months have now passed and the situation apparently hasn’t gotten better. Before we continue, allow us to point out though that noted contrarian Jeff Gundlach thinks that Puerto Rico will eventually be rescued – he believes that too many politicians have a vested interest in not letting anything bad happen:
“Municipal bonds are slightly overvalued, he said. Investors who are willing to tolerate volatility will get rewarded for the risk in Puerto Rico’s bonds. Too many politicians rely on votes tied to the stability of Puerto Rico to allow a crisis there, according to Gundlach. “Puerto Rico’s bonds are going to make it to the other side of the valley,” he said.”
U.S. Olympic gold medal winners could owe almost $10,000 to the IRS
As 230 U.S. Olympic athletes gear up to compete in the 2014 Winter Games, the only thing colder than the slopes at Sochi is the fact that any prizes awarded by the U.S. Olympic Commission (USOC) will be taxed by the IRS. Many Americans don’t realize that the U.S. taxes income earned abroad, and as such even the winnings of Olympic athletes are subject to the reach of the IRS.
The USOC awards prizes to U.S. Olympic medal winners: $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Relative to each athlete’s income tax bracket, some top earners such as Shaun White could end up paying over a third (39.6 percent) of their winnings to the IRS.
After it recently suggested a “one-off capital levy” – a one-time tax on private wealth as an exceptional measure to restore debt sustainability across insolvent countries – it has now called for “revenue-maximizing top income tax rates”.
The IMF’s team of monkeys has been working around the clock on this one, figuring that developed nations can increase their overall tax revenue by increasing tax rates.
They’ve singled out the US, suggesting that the US government could maximize its tax revenue by increasing tax brackets to as high as 71%.
Coming from one of the grand wizards of the global financial system, this might be the clearest sign yet that the whole house of cards is dangerously close to being swept away.
Think about it– solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. They’re raising this point because these governments are desperate. And flat broke.
Mayor Bloomberg’s crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first “New Normal” nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world’s fattest country and is “notorious for its love of sweets, fried foods and pastries” and where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.
Mexico’s weight problem in context:
The WSJ reports on what can only be described as Mike Bloomberg’s wet dream:
The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.
The tax, which was proposed just this week, is sure to stir controversy among big Mexican and foreign food companies that operate here. It comes on top of another planned levy on sugary soft drinks of 1 peso (8 U.S. cents) per liter that was passed by the same committee, an effort that New York Mayor Michael Bloomberg supported.
With Harry Reid in deep negotiations with crony Republican fraud Mitch McConnell, the American public is surely in the process of getting royally screwed once again. Thus, it seems like an appropriate time to revisit an interview in which Mr. Reid claimed on camera that income taxes are “voluntary.” He must have accidentally described the way members of Congress view taxes, you know kind of like how they view insider trading.
As you watch, try not to get too distracted by Jan Helfeld’s tie. Where can you even buy something like that?!
While Europe, and especially Germany has been understandably “displeased” with having to provide billions in bailout upon bailout funding to Greece every year starting in 2010, all the more so following recent news that Greece has already spent some 75% of its bank bailout cash with no discernible improvement in its economy to show for it, Europes’ taxpayers will unlikely be any more pleased to learn that as of the end of June, a whopping €60 billion in past due taxes (an all time record) was owed by Greek businesses and individuals to the state. This is an amount that is 20% greater than the entire external cash handed over by the Troika to keep Greek banks afloat, and represents nearly 30% of imploding Greek GDP.
Perhaps instead of spending money on trips by its premier and/or think-tanks on how to mutually assure itself another few billion in Troika cash to plug this budget hole or that, Greece should invest a few grand to buy the ink it needs to print tax forms, streamlining its tax collection department (on those days it is isn’t on strike of course) and generate some real IRR.
Why did the U.S. government spend 2.6 million dollars to train Chinese prostitutes to drink responsibly? Why did the U.S. government spend $175,587 “to determine if cocaine makes Japanese quail engage in sexually risky behavior”? Why did the U.S. government spend nearly a million dollars on a new soccer field for detainees being held at Guantanamo Bay? This week when I saw that the IRS was about to pay out 70 million dollars in bonuses to their employees and that the U.S. government was going to be leaving 7 billion dollars worth of military equipment behind in Afghanistan, it caused me to reflect on all of the other crazy ways that the government has been wasting our money in recent years. So I decided to go back through my previous articles and put together a list. I call it “The Waste List”. Even though our politicians insist that there is very little that can still be cut out of the budget, the truth is that the federal budget is absolutely drowning in pork.
The following are 66 crazy ways that the U.S. government is wasting your hard-earned money… Continue reading »
The latest casualty of Europe’s berserk pursuit of tax evaders everywhere: not some Russian oligarch with a $1 billion Cypriot bank account but famous Italian designers, Dolce and Gabbana. WSJ reports that a Milan court has convicted the designers Domenico Dolce and Stefano Gabbana of tax evasion. The pair were found guilty Wednesday of failing to declare €1 billion ($1.3 billion) in income tax to authorities. The court sentenced them both to one year and eight months in jail. Prosecutors argued that the pair had evaded taxes on income of €416 million each and €200 million through a Luxembourg-based company. The statute of limitations ran out on a charge of misrepresenting income. The designers have denied the charges.
At this point we have all heard of the IRS being caught redhanded with regard to its political targeting, but revelations of corruption and cronyism get worse and worse each day. Yesterday, we found out that the IRS has wasted tens of millions of dollars on hundreds of conferences over the past few years. Conferences where in one instance $17,000 was spent to make paintings of Michael Jordan, Albert Einstein and Bono. Believe it or not, the story gets even better.
We actually don’t even know how much taxpayer money the IRS has blown. Why? They didn’t keep their receipts. You couldn’t make this stuff up.
“Since Mr. Krugman tells us all this spending and debt issuance/guarantees are not only good and necessary but in the long run, painless, why are we bothering with personal income taxes?
The US government will collect approximately $2.0bn this year in Personal Income and Payroll taxes. But why? Why are we even bothering with this when today’s leading economists and politicians are telling us that debts/deficits don’t matter and running up astronomical debts is a long-term painless process? It’s practically patriotic. So why shouldn’t we just add our tax burden to the list of items the Fed should be monetizing? Seriously. Why not relieve the burden on every tax paying citizen in the United States (about 53% of us according to Mitt Romney)? You want an economic recovery? Reduce my taxes to zero and see how fast I go out and start spending some of that extra income.”
Thought Experiment: Why Do We Bother Paying Personal Taxes?
“Stupidity combined with arrogance and a huge ego will get you a long way.”
– Chris Lowe
I will admit right up front, I am not a fan of the views of Paul Krugman. If Paul Krugman was to be given his way – and by and large he is being given his way – my children and grandchildren will be burdened in the future with paying back untold amounts of public debt just so his life and the lives of countless other Boomers can remain comfortable and embarrassment free today.
This is the essence of his grand plan for a US recovery – MOAR and MOAR debt.
Wow. Genius. Why I didn’t I think of that? Just keep borrowing and printing, borrowing and printing. Got it. Now that I understand it, do I get a PhD?
Who’s going to pay the money back? How will it effect future generations? How will it effect the markets? What will this do to civil society?
• Speaker: Nigel Farage MEP, Leader of the UK Independence Party (UKIP), Co-President of the ‘Europe of Freedom and Democracy’ (EFD) Group in the European Parliament – http://nigelfaragemep.co.uk
• Joint debate: European Council meeting (22 May 2013) – tax fraud and tax havens
“Thank you. Well there is a great degree of unity here this morning, with a common enemy – rich people, successful companies evading tax, which of course is a problem.
Avoiding tax, which is not illegal, but it gives this whole chamber this morning a high moral tone.
And as Mr Barroso says it is all about the perception of fairness. Because there is the added bonus of course that it drives a wedge between the United Kingdom, the Channel Islands, the Isle of Man, and the Caymans.
But before we declare our virtues, perhaps we ought to look just a little bit closer to home.
And I hope that the taxpayers all over Europe listen to this. If we look at the EU officials who work for the European Commission and the European Parliament, the highest category [the most common grade is AD12] are people that earn a net take home pay of just over 100 thousand pounds a year. And yet under EU rules they pay tax of 12 per cent. It is tax fraud on an absolutely massive scale.
And Mr Barroso I would say to you, how can that be deemed to be fair? How can people out there struggling – the 16 million people unemployed in the eurozone – how can they look at these institutions, not only paying people vast sums of money but allowing them tax and pension benefits on a scale not seen anywhere else in the world? So I suggest we have a bit less of this high moral tone.
And what have these officials given us? Well, they were the architects of the euro, which is a complete disaster. Their obsession with global warming which chimes very strongly here means we are despoiling our landscapes and seascapes with these disgusting wind turbines and driving up energy prices.
But never let it be said that I cannot acknowledge success when I see it. And I am sure the citizens of Europe will all clap and cheer loudly that the grave, mortal danger of olive oil in dipping bowls has been removed by the officials. Well done everybody.”
Corporate tax avoidance has risen to the top of the political agenda in Europe following revelations in the past couple of years about how little big names like Apple Inc., Starbucks, Google and Microsoft pay in tax in markets where they reap billions of dollars in sales.
Canadians using bitcoins, the decentralized crypto-currency that recently went mainstream, must report their incomes and pay taxes as with other earnings, Canada’s Revenue Agency (CRA) confirmed following a media request.
The issue was clarified in response to a letter by the Canadian Broadcasting Corporation (CBC) ahead of the country’s tax season.
Two separate tax rules are applicable to the electronic currency, CRA spokesperson Philippe Brideau told CBC in an email.
When bitcoins are used as money to buy goods and services, the transaction is treated as barter and is taxable as such. When they are traded at a market for profit, they may be taxed as capital gains.
“When bitcoins are bought or sold like a commodity, any resulting gains or losses could be income or capital for the taxpayer depending on the specific facts,” the CRA ruled.
The Internal Revenue Service issued more than $11 billion in improper payments through its Earned Income Tax Credit program last year, according to an inspector general’s report released this week. Treasury Department deputy inspector general Michael McKenney found that the IRS has failed to comply for two consecutive years with the Improper Payments Elimination Act, which President Obama signed in 2010. The law requires federal agencies to reduce erroneous payments to a rate of less than 10 percent.
The IRS estimates that at least 21 percent of its EITC payments in 2012 were faulty. That rate showed a decline compared to the previous nine years, but improper payments over the same period increased about 22 percent, rising to at least $11.6 billion, according to the inspector general’s report.
As we have vociferously warned since September 2011, and most recently as the Cyprus debacle exploded explained why it is just beginning, Germany’s Council of Economic Experts (or so-called ‘Five Wise Men’) just confirmed a wealth tax is coming. As the Telegraph reports, confirming our expectations, Germany warns that states in trouble must pay more for their own salvation, arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. They further added that targeting deposit-holders is also a mistake, since the “resourceful rich just move their money to banks in northern Europe and avoid paying,” preferring instead taxes on property or other less-mobile assets, “for example, over the next 10 years, the rich should give up a portion of their assets.” As we noted here and here, the differences between mean and median wealth in the peripheral nations suggest that people in the bailed-out countries are often better-off than those in Germany – – “this shows that Germany has been right to take a tough line of euro rescue loans.” However, the implications of a wealth tax – implicitly impacting the pro-euro Southern European uber-rich – raises the specter of EU breakup once again.
Any serious move to a wealth tax could the erode the pro-euro ardour of South Europe’s uber-rich. The ECB bond buying policy has largely rescued the wealthiest strata while the full brunt of EMU austerity has fallen on ordinary people and the unemployed. Continue reading »
The number of people giving up their US citizenship to become British has surged thanks to complex tax rules introduced by the American tax authorities.
London-based American lawyers, who specialise in tax and immigration, report a threefold increase over the last five years in the number of American citizens who are giving up their citizenship – a process known as “renunciation”.
Across the world 1,781 Americans renounced their citizenship in 2011 compared with just 231 in 2008, when US tax laws changed, although it remains unknown how many are adopting British rather than any other nationality.
Many decide to give up their American citizenship after tiring of the lengthy US tax return process, which requires them to pay tax on their total income regardless of where they live.
The federal income tax is a bad joke and it needs to be abolished. All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantly coming up with new ways to extract money from all of us every single year. Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes. In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don’t pay a dime in taxes. Tax avoidance has become a multi-billion dollar industry in the United States. Those that have the resources to “play the game” use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible. Meanwhile, the rest of us get absolutely hammered. This is fundamentally unfair. The federal income tax system is irreversibly broken at this point, and it is time to abolish it. If you think that the federal income tax system can be “fixed”, then you probably have never studied it. Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy. We should come up with a better, fairer way to fund the government. The United States once prospered greatly without a federal income tax, and it could do so again.
A California man born in Israel agreed to plead guilty to conspiring with people at Bank Leumi Le-Israel Ltd. and Mizrahi Tefahot Bank Ltd. to hide offshore accounts and income from the U.S. Internal Revenue Service, according to court filings and people familiar with the matter.Zvi Sperling was accused Feb. 14 by federal prosecutors in Los Angeles of conspiring with people at two Tel Aviv-based banks, identified only as Bank A and Bank B. The charging document and plea agreement didn’t identify the banks. Bank A is Mizrahi, according to a person who wasn’t authorized to speak publicly about the case. Bank B is Leumi, according to a second person, who similarly asked not to be identified.
Since 2008, U.S. prosecutors have cracked down on offshore tax evasion, charging at least 83 U.S. taxpayers or foreign bankers, lawyers or advisers with tax crimes. UBS AG, the largest Swiss bank, avoided prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over account data on 250 clients. It later disclosed information on about 4,450 more accounts. Wegelin & Co., a Swiss bank, pleaded guilty last month. No Israeli bank has been charged.
It hasn’t drawn much attention, but Facebook’s first annual earnings report contains an accounting gem:a multibillion-dollar tax deduction for the cost of executive stock options and share awards.
Even though Facebook (FB) reported $1.1 billion in pre-tax profits from U.S. operations in 2012, it will probably pay zero federal and state taxes—and even receive a federal tax refund of about $429 million—according to a Feb. 14 statement from Citizens for Tax Justice.
French Prime Minister Jean-Marc Ayrault himself presided over Monday’s meeting of the National Anti-Fraud Committee—“a first for a head of government,” he said at the press conference afterward, to hammer home just how important this was. But he wasn’t worried about run-of-the-mill fraud that might fleece some old lady of her life savings. He was worried about people not paying their taxes.
Everyone knows that for the better part of the past year Apple, Inc. (“AAPL”, or “The Company”) was the world’s biggest company by market cap, with Exxon finally regaining that title on Friday, following AAPL’s latest price drop in the aftermath of its disappointing earnings. Most know that AAPL aggressively uses all legal tax loopholes to pay as little State and Federal tax as possible, despite being one of the world’s most profitable companies.Many also know, courtesy of our exclusive from September, that Apple also is the holding company for Braeburn Capital: a firm which with a few exceptions (Bridgewater; JPM’s CIO prop trading desk) also happens to be one of the world’s largest hedge funds, whose function is to manage Apple’s massive cash hoard, with virtually zero requirements, and whose obligation is to make sure that AAPL’s cash gets laundered legally and efficiently in a way that complies with prerogative #1: avoid paying taxes.
What few if any know, is that as part of its cash management obligations, Braeburn, and AAPL by extension, has conducted a mindboggling $600 billion worth of gross notional trades in just the past four years, consisting of buying and selling assorted unknown securities, or some $250 billion in 2012 alone: a grand total which represents some $1 billion per working day on average, and which puts the net turnover of some 99% of all hedge funds to shame!
Finally, what nobody knows, except for the recipients of course, is just how much in trade commissions AAPL has paid over the past four years on these hundreds of billions in trades to the brokering banks, many (or maybe all) of which may have found this commission revenue facilitating AAPL having a “Buy” recommendation: a rating shared by 52, or 83% of the raters, despite the company’s wiping out of one year in capital gains in a few short months.