Tuesday, July 10, 2012

558 Fiscal Cliff: Class War reaches a climax as public opinion turns against Tax Avoidance by the Rich

Fiscal Cliff: Class War reaches a climax as public opinion turns against
Tax Avoidance by the Rich

(1) Class War reaches a climax as public opinion turns against Tax
Avoidance by the Rich
(2) 80 top CEOs tell Obama, Romney to slash social spending
(3) Public tussle over US deficit plans masks bipartisan agenda
(4) Warren Buffet proposes a Minimum Tax on the Wealthy
(5) Democrats Like a Romney Idea to Cap Tax Deductions
(6) Swiss banks closing U.S. accounts in wake of new US tax law against
Tax Avoidance
(7 New Transfer Pricing laws will tax Multi-Nationals' profits in Australia
(8) Argentina battles bondholders

(1) Class War reaches a climax as public opinion turns against Tax
Avoidance by the Rich

- Peter Myers, December 6, 2012

Capitalists, Trotskyists and Anarchists live for class war; more
sensible people prefer class unity.

Since the advent of Thatcherism about 40 years ago, the Rich (now called
the 1%) have pursued policies of class war against the working class and
middle class. Privatization, deregulation, tax havens, zero tariffs,
offshoring, open border immigration, shareholder value ... these have
been tools of the class war.

They reversed the New Deal type policies introduced in the 1940s and 50s
which had produced Class Unity - relative equality, full employment,
stakeholder value, tariffs, immigration controls, high tax rates on the
rich, public ownership and management of much of the economy.

The new policies were co-ordinated by the Mont Pelerin Society, the
mother Think Tank which spawned all the others and functioned as the
Comintern of Capitalism. Despite its key role, it took a low profile and
is almost unknown to the public.

The changes could only take place because the political Left, which
otherwise would have opposed and blocked them, was taken over by
Internationalists - that is, Trotskyists, Anarchists, Fabians and Greens.

Australia's Trotskyists announced their support for the changes, in a
1979 book published by Pathfinder Press in Sydney. This book, entitled
Socialism or Nationalism: Which Road for the Australian Labor Movement?,
by Jon West, Dave Holmes and Gordon Adler, argued for Free Trade, for
the abandonment of tariffs, and against the 1950s economic model. The
book condemned all the other Communist parties as Stalinist and Nationalist.

Opposing Protectionism, which had been a feature of New Deal and Postwar
economies of the 1950s and 60s, they argued,

"Perhaps the worst aspect of the adoption of protectionism as a policy
for fighting unemployment is that it is seen as a substitute for a
class-struggle approach" (p. 29).

In other words, Free Trade and Laissez Faire policies would increase
Class War, giving the Trots a chance to claim leadership of the Working
Class and overthrow the Capitalist System.

Karl Marx took a similar line, in a speech on Free Trade which he gave
in Brussels on January 9, 1848, around the same time as he wrote the
Communist Manifesto.

He said,

"But, generally speaking, the Protective system in these days is
conservative, while the Free Trade system works destructively. It breaks
up old nationalities and carries antagonism of proletariat and
bourgeoisie to the uttermost point. In a word, the Free Trade system
hastens the Social Revolution. In this revolutionary sense alone,
gentlemen, I am in favor of Free Trade."

In other words, Nationalists impose Tariffs and pursue policies of
relative equality, while Communists would rather have inequality, to
give them a chance of overthrowing the system.

Marx opposed Ferdinand Lassalle, a Jewish socialist who showed Bismarck
how to introduce socialism on a national basis. It was known as State
Socialism, and was the forerunner of similar systems in other countries,
including Australia from the 1940s to the 1980s:

State Socialism was an alternative to Revolutionary Socialism:

Marx opposed Lassalle because Marx wanted Socialism to be revolutionary
and world-wide.

American "Libertarians", who oppose all kinds of socialism, are playing
into the hands of the 1%. The Big End of town is so powerful that it can
only be controlled by a strong socialist state. The "Libertarians" would
have the economy operate like a football game with no referees, no
linesmen and no managers. This is Anarchy.

Romney lost the election, despite a collapsed economy and disillusioned
populace, because he continued to champion the policies of the 1%, the
same policies that had caused the Financial Crisis. That he had stashed
his own fortune in tax havens showed where his priorities lay.

We can no longer turn a blind eye to the long hours, low wages and poor
working conditions in the "developing" world. Since offshoring allows
companies to move our jobs there, those low wages etc are a threat to
our conditions too. We must undertake a worldwide campaign to stop
exploitation by our offshored corporations. The same apples to the
exploitation of backpackers and migrant workers in our own countries.

(2) 80 top CEOs tell Obama, Romney to slash social spending


80 top CEOs tell Obama, Romney to slash social spending

By David Walsh

26 October 2012

The chief executives of 80 large US corporations have issued a “Deficit
Manifesto,” calling on the next president to “fix America’s debt” by
making substantial “changes in the federal budget.” The statement was
published by the Wall Street Journal on Thursday.

Behind the innocuous phrases is the demand by some of the richest
individuals in America for the slashing of Medicare, Medicaid and Social
Security and a general offensive against the working class.

The CEOs’ letter, signed by a “Who’s who” of CEOs at giant US banks,
financial firms and industrial corporations, calls on politicians to
acknowledge “that our growing debt is a serious threat to the economic
well-being and security of the United States.” It calls for Washington
to adopt “an effective plan [to] stabilize the debt as a share of the
economy, and put it on a downward path.”

The plan should be enacted now, “but implemented gradually to protect
the fragile economic recovery and to give Americans time to prepare for
the changes in the federal budget.” In other words, their proposals
would worsen life for wide layers of the population, who need to
“prepare” themselves for a drastic decline in their conditions.

Making no reference to the trillions of dollars made available to the
banks during the financial bailout nor the trillions more that go toward
imperialist war and the global defense of their economic interests, the
company heads insist that the target of a plan to “fix America’s debt”
should concentrate on the programs that assist tens of millions of
working people, the poor and retirees.

They argue that a plan must “Reform Medicare and Medicaid, improve
efficiency in the overall health care system and limit future cost
growth” and “Strengthen Social Security, so that it is solvent and will
be there for future beneficiaries.” These are code words for gutting
these programs, which the wealthy consider an intolerable drain on

The CEO statement also calls for “comprehensive and pro-growth tax
reform, which broadens the base, lowers rates, raises revenues and
reduces the deficit.” Felix Salmon of Reuters comments, “You can’t have
lower rates and higher revenues—not without eviscerating pretty much all
of the tax deductions which much of the middle class has learned to rely
upon. Mortgage-interest tax relief, the charitable deduction, even the
deduction for state and local taxes: pretty much all of them would have
to go.”

Salmon comments sardonically that “the letter basically just says
‘please cut our taxes, raise taxes on everybody else, and cut the
benefits they get from Medicare, Medicaid, and Social Security, which
are programs we individually don’t rely upon.’”

The statement concludes by calling on Washington to implement the
recommendations of the 2010 bipartisan Bowles-Simpson Commission.

Those included some $4 trillion in budget savings to be achieved almost
entirely at the expense of the working population: new taxes on
consumption and employee health care benefits and cuts to the federal
old-age insurance programs, Social Security and Medicare, and to the
jobs and pay of government workers. At the same time, Bowles-Simpson
called for large tax cuts for the rich and corporations.

In fact, the Wall Street Journal points out that the CEO manifesto “was
organized by the Fix the Debt campaign, a bipartisan effort largely
inspired by Republican Alan Simpson and Democrat Erskine Bowles, who
chaired a 2010 deficit panel appointed by President Obama and have been
crisscrossing the country sounding fiscal alarms.”

The new “manifesto” comes on top of a letter issued last week by 15 CEOs
of banks, brokerages and insurance companies calling for the federal
budget to be reduced and warning that failure to take action by the end
of the year could result in renewed financial crisis and economic slump.
Among its signatories were Jamie Dimon, CEO of JP Morgan Chase; Lloyd
Blankfein, CEO of Goldman Sachs; Michael Corbat, CEO of Citibank; John
Stumpf, CEO of Wells Fargo; and Brian Moynihan, CEO of Bank of America.
(See “Wall Street issues its orders to Obama, Romney”)

Dimon, Blankfein and Moynihan also attached their names to this week’s
open letter. Among its other signers were the CEOs of Alcoa, AT&T,
Boeing, Caterpillar, Delta Airlines, Dow Chemical, GE, Merck, Microsoft,
Time Warner, UPS, Verizon, etc. Financiers, speculators and asset
managers are also on the list, including Leon Black of Apollo Global
Management, Larry Fink of BlackRock (with $3.3 trillion in assets under
management, the world’s largest such firm), Martin L. Flanagan of
Invesco and Thomas M. Joyce of Knight Capital Group.

It seems probable that every one of the 80 on the list is a
multi-millionaire, simply on the basis of his or her annual
compensation. A little investigation reveals that the following
signatories did well for themselves last year: David Cote of Honeywell
took in $56 million in total compensation (fifth-highest paid executive
in the US), Dimon of JPMorgan Chase earned $42 million, Paul Jacobs of
Qualcomm made $36 million, Randall Stephenson of AT&T, $26 million,
Alexander Cutler of Eaton Corp., $26 million also, BlackRock’s Fink, $23
million, Jeffrey Immelt of GE, $21 million, Goldman Sachs’ Blankfein,
$21 million as well, and Glenn A Britt of Time Warner, $17 million.

How many billionaires are there among the “Deficit Manifesto” signers?
Steve Ballmer of Microsoft, worth $16 billion and the 19th richest
person in America, according to Forbes, is one. Fellow billionaires Leon
Black, Andrew and James Tisch of Loews Corporation, Bill Ackman of
Pershing Square Capital Management and Steven Roth of Vornado Realty are
also on the list.

Eighty corporate-financial thieves, who between them are largely to
blame for the financial disaster of 2008, who are collectively
responsible for the destruction for countless jobs and entire
communities, publicly inform the political powers that be what the
policies of the next government—theoretically still elected by the
populace—are to be.

And, of course, the response of the Obama and Romney camps to the CEO
letter was sympathetic and even enthusiastically supportive. The Journal
cites the comment of Obama campaign spokesman Ben LaBolt: “There’s a
strong and growing consensus that the only way to reduce the deficit
while also growing the economy is through a balanced approach that
includes both tough spending cuts and increased revenue.”

Romney campaign spokeswoman Amanda Henneberg told the newspaper, “As
president, [Romney] will bring his record of bipartisan success to
Washington and put us on a path to achieve more than the Simpson-Bowles
commission ever proposed—balancing the budget within the next 10 years.”

(3) Public tussle over US deficit plans masks bipartisan agenda


By Barry Grey

5 December 2012

Republican leaders of the House of Representatives on Monday responded
to a White House proposal with a counter-plan to slash the deficit and
avert the so-called “fiscal cliff”—some $600 billion in tax increases
and automatic spending cuts slated to start on January 1 if no
deficit-cutting deal is reached before then.

Both the Democrats and the Republicans are using the artificial fiscal
emergency to call for cuts in the basic federal health care programs,
Medicare and Medicaid, as well as Social Security, the government
pension program for the elderly, along with reductions in outlays for
education, transportation, food stamps and other social needs. At the
same time, they are pushing for a revamping of the tax system to slash
rates for corporations and the rich and eliminate or reduce tax
deductions that benefit working people.

The real impact of the changes being negotiated—their profound and
reactionary implications for a large majority of the population—are
being deliberately concealed behind a stage-managed and cynical show of
partisan warfare. President Obama is attempting to con the public and
give his liberal and “left” backers a fig leaf to cover their support
for anti-working class policies by insisting that any budget deal allow
the Bush-era tax cuts for the rich to expire on January 1.

The Republicans are for now rejecting any increase in tax rates for the
rich, demanding instead that increased tax revenues be derived solely
from the elimination or curtailment of unspecified tax deductions.
Behind the supposed stalemate over this issue—which involves at most a
token, and temporary, tax hike on the wealthiest 2 percent of US
households—both parties are moving to impose deep and permanent
structural changes in bedrock social programs that will have devastating
consequences for tens of millions of people.

On Monday, House Speaker John Boehner and other House Republican leaders
sent a letter to the White House rejecting the administration plan,
submitted last week, and laying out a counter-proposal that would keep
the Bush tax cuts for the rich in place and cut social spending by twice
as much as the Democratic proposal.

The letter called for increased tax revenues of $800 billion over the
next decade and $1.2 trillion in cuts in social programs. It called for
$600 billion in cuts to Medicare and Medicaid, $300 billion in cuts to
other mandatory social programs (such as food stamps), and another $300
billion in cuts to discretionary social spending (education,
transportation, etc.).

Leading Republicans have made it clear that these cuts would be achieved
in part by raising the eligibility age for Medicare from 65 to at least
67 and expanding means-testing for the health care program for seniors.
The latter proposal is aimed at transforming Medicare from a universal
program to a poverty program, opening the way for repeated cuts and its
eventual dismantling.

The Republican plan also included changing the formula for
cost-of-living adjustments for Social Security and other federal benefit
programs to lower benefit increases, saving an estimated $200 billion
and bringing the total deficit-reduction package to $2.2 trillion.

Last week, the Obama administration submitted a $2.2 trillion plan to
Boehner and the House Republicans calling for $1.6 trillion in increased
tax revenues, largely generated by ending the Bush tax cut for
households making more than $250,000 a year. The plan also included $350
billion in Medicare and Medicaid cuts and $250 billion in cuts in other
social programs.

Obama’s chief budget negotiator, Treasury Secretary Timothy Geithner,
made it clear in multiple talk show appearances Sunday that the
administration wants to “reform” Social Security as well as Medicare and
Medicaid, but believes Social Security cuts should not be part of the
“fiscal cliff” negotiations. Instead, the White House wants to reach an
agreement on Social Security in separate negotiations next year.

Both the Democratic and Republican plans are in addition to $1 trillion
in spending cuts agreed to last year by the White House and Congress as
part of the deal to raise the federal debt ceiling.

The White House quickly rejected Boehner’s proposal on Monday, but did
so in a manner calculated to signal that it is open to discuss all of
the social cuts proposed by the Republicans. Echoing previous statements
by Geithner and Obama, Gene Sperling, director of the White House
National Economic Council, stressed that the main obstacle to reaching
some kind of budget deal and averting the “fiscal cliff” was the
Republicans’ refusal to accept any increase in the income tax rate for
the top two tax brackets.

On Tuesday, Sperling told a forum sponsored by the Campaign to Fix the
Debt, “Recognition that we must raise rates on the highest-income
Americans stands today as the critical key to unlocking the door to a
bipartisan budget agreement.” The Campaign to Fix the Debt is comprised
of corporate CEOs who are using a $60 million war chest to lobby
Congress for a budget deal that sharply cuts social spending and raises
revenues on the basis of a pro-corporate “reform” of the tax code.

Obama himself went out of his way in an interview Tuesday on Bloomberg
TV to stress that he was proposing only a temporary tax increase on the
wealthy, to be followed in 2013 with a tax “reform” that would slash tax
rates to below their current levels. “And then let's set up a process
with a time certain, at the end of 2013 or the fall of 2013,” he said,
“where we work on tax reform…and it’s possible that we may be able to
lower rates by broadening the base at that point.”

He declared several times that he was anxious to cut entitlement
programs, saying he was “prepared to work with the speaker and Democrats
and Republicans to go after excessive health care costs in our federal
health care system.” Asked about calls from Republican leaders to raise
the Medicare eligibility age and cut cost-of-living increases for Social
Security beneficiaries, Obama said, “You know, I am willing to look at
anything that strengthens our system.”

In an effort to reassure Wall Street, he spoke of private White House
meetings with dozens of CEOs and declared that his intention was “not to
punish success or go after folks just because they're wealthy.”

A number of prominent Democrats have openly backed key aspects of the
Republican plan. Roger Altman, a Wall Street financier who served as
deputy treasury secretary in the Clinton administration, published a
column Tuesday in the Financial Times in which he wrote: “Steps such as
means testing Medicare, modernizing cost of living adjustment formulas
and others could save another $600 billion.”

However the negotiations on the “fiscal cliff” pan out, they are seen on
both sides as the prelude to a fundamental restructuring of social
programs and taxes to slash the US deficit at the expense of the working
class. Both sides understand that any deal reached before January 1 will
represent a down payment on more far-reaching changes to be enacted in
the course of 2013.

Republican columnist David Brooks aptly summed up the cynical
calculations underlying the “fiscal cliff” talks and the consensus
agenda of the ruling class in a column published Tuesday in the New York

He wrote: “Republicans should go to the White House and say they are
willing to see top tax rates go up to 36 percent or 37 percent [from the
current 35 percent] and they are willing to forgo a debt-ceiling fight
for this year. This is a big political concession, but it’s not much of
an economic one. President Obama needs rate increases to show the
liberals he has won a “victory,” but the fact that he is raising revenue
by raising rates is not that much worse for the economy [read: the rich]
than raising revenue by closing loopholes, which Republicans have
already conceded.”

Brooks continued: “In return, Republicans should also ask for some
medium-sized entitlement cuts as part of the fiscal cliff down payment,”
setting the stage for “tax and entitlement reform bills” next year that
would “bring the debt down to 60 percent of GDP by 2024 and 40 percent
by 2037.”

This is a formula for a savage austerity program similar to that being
carried out currently in Greece, Portugal, Spain and other parts of Europe.

(4) Warren Buffet proposes a Minimum Tax on the Wealthy


A Minimum Tax for the Wealthy


New York Times, November 25, 2012

SUPPOSE that an investor you admire and trust comes to you with an
investment idea. “This is a good one,” he says enthusiastically. “I’m in
it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax
rate will be on the gain you’re saying we’re going to make. If the taxes
are too high, I would rather leave the money in my savings account,
earning a quarter of 1 percent.” Only in Grover Norquist’s imagination
does such a response exist.

Between 1951 and 1954, when the capital gains rate was 25 percent and
marginal rates on dividends reached 91 percent in extreme cases, I sold
securities and did pretty well. In the years from 1956 to 1969, the top
marginal rate fell modestly, but was still a lofty 70 percent — and the
tax rate on capital gains inched up to 27.5 percent. I was managing
funds for investors then. Never did anyone mention taxes as a reason to
forgo an investment opportunity that I offered.

Under those burdensome rates, moreover, both employment and the gross
domestic product (a measure of the nation’s economic output) increased
at a rapid clip. The middle class and the rich alike gained ground.

So let’s forget about the rich and ultrarich going on strike and
stuffing their ample funds under their mattresses if — gasp — capital
gains rates and ordinary income rates are increased. The ultrarich,
including me, will forever pursue investment opportunities.

And, wow, do we have plenty to invest. The Forbes 400, the wealthiest
individuals in America, hit a new group record for wealth this year:
$1.7 trillion. That’s more than five times the $300 billion total in
1992. In recent years, my gang has been leaving the middle class in the

A huge tail wind from tax cuts has pushed us along. In 1992, the tax
paid by the 400 highest incomes in the United States (a different
universe from the Forbes list) averaged 26.4 percent of adjusted gross
income. In 2009, the most recent year reported, the rate was 19.9
percent. It’s nice to have friends in high places.

The group’s average income in 2009 was $202 million — which works out to
a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming
they’re paid during lunch hours.) Yet more than a quarter of these
ultrawealthy paid less than 15 percent of their take in combined federal
income and payroll taxes. Half of this crew paid less than 20 percent.
And — brace yourself — a few actually paid nothing.

This outrage points to the necessity for more than a simple revision in
upper-end tax rates, though that’s the place to start. I support
President Obama’s proposal to eliminate the Bush tax cuts for
high-income taxpayers. However, I prefer a cutoff point somewhat above
$250,000 — maybe $500,000 or so.

Additionally, we need Congress, right now, to enact a minimum tax on
high incomes. I would suggest 30 percent of taxable income between $1
million and $10 million, and 35 percent on amounts above that. A plain
and simple rule like that will block the efforts of lobbyists, lawyers
and contribution-hungry legislators to keep the ultrarich paying rates
well below those incurred by people with income just a tiny fraction of
ours. Only a minimum tax on very high incomes will prevent the stated
tax rate from being eviscerated by these warriors for the wealthy.

Above all, we should not postpone these changes in the name of
“reforming” the tax code. True, changes are badly needed. We need to get
rid of arrangements like “carried interest” that enable income from
labor to be magically converted into capital gains. And it’s sickening
that a Cayman Islands mail drop can be central to tax maneuvering by
wealthy individuals and corporations.

But the reform of such complexities should not promote delay in our
correcting simple and expensive inequities. We can’t let those who want
to protect the privileged get away with insisting that we do nothing
until we can do everything.

Our government’s goal should be to bring in revenues of 18.5 percent of
G.D.P. and spend about 21 percent of G.D.P. — levels that have been
attained over extended periods in the past and can clearly be reached
again. As the math makes clear, this won’t stem our budget deficits; in
fact, it will continue them. But assuming even conservative projections
about inflation and economic growth, this ratio of revenue to spending
will keep America’s debt stable in relation to the country’s economic

In the last fiscal year, we were far away from this fiscal balance —
bringing in 15.5 percent of G.D.P. in revenue and spending 22.4 percent.
Correcting our course will require major concessions by both Republicans
and Democrats.

All of America is waiting for Congress to offer a realistic and concrete
plan for getting back to this fiscally sound path. Nothing less is

In the meantime, maybe you’ll run into someone with a terrific
investment idea, who won’t go forward with it because of the tax he
would owe when it succeeds. Send him my way. Let me unburden him.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

A version of this op-ed appeared in print on November 26, 2012, on page
A27 of the New York edition with the headline: A Minimum Tax for the

(5) Democrats Like a Romney Idea to Cap Tax Deductions


Democrats Like a Romney Idea on Income Tax


Published: November 12, 2012

WASHINGTON — With both parties positioning for difficult negotiations to
avert a fiscal crisis as Congress returns for its lame-duck session,
Democrats are latching on to an idea floated by Mitt Romney to raise
taxes on the rich through a hard cap on income tax deductions.

The proposal by Mr. Romney, the Republican presidential nominee, was
envisioned to help pay for an across-the-board income tax cut, a move
ridiculed by President Obama as window dressing to a “sketchy deal.” But
many Democrats now see it as an important element of a potential deficit
reduction agreement — and one they can claim to be bipartisan.

The cap — never fully detailed by Mr. Romney — is similar to a
longstanding proposal by Mr. Obama to limit income tax deductions to 28
percent, even for affluent households that pay a 35 percent rate. But a
firm cap of around $35,000 would hit the affluent even harder than Mr.
Obama’s proposal, which has previously gotten nowhere in Congress.

“Let’s just say there’s a renewed interest,” said Senator Kent Conrad,
Democrat of North Dakota and chairman of the Senate Budget Committee.
“Part of it is people reflecting on Obama’s proposal, but when Romney
said what he said, it just added fuel.”

“I was a little surprised Romney proposed a dollar cap when he did it,”
Mr. Conrad added.

The attention on the plan is evidence that ideas on deficit reduction
are beginning to take firmer form as the January deadline for dealing
with expiring tax cuts and automatic spending reductions draws close.
The lame-duck session that begins Tuesday could be one of the most
pivotal in years, and the political atmosphere is considerably different
than when lawmakers left in October for the fall campaigns.

President Obama has been re-elected convincingly. Democrats, once in
danger of losing control of the Senate, instead gained at least one
seat. House Republicans held control, but as many as 16 incumbents lost,
including some of the party’s most uncompromising voices, like
Representatives Joe Walsh of Illinois and Allen B. West of Florida, who
refuses to concede his seat despite his continuing deficit in the vote
count. The somber mood among Republicans could ease negotiations to
avert more than $500 billion in automatic spending cuts and tax increases.

“The worst time to work together on a bipartisan basis is right before
an election,” said Representative Jeb Hensarling of Texas, chairman of
the House Republican Conference. “The best time to work on a bipartisan
basis is right after an election.”

Returning lawmakers will find a long to-do list greeting them Tuesday
and seven short weeks to do it. In the House, members may once again try
to grapple with the farm bill, which expired during the recess. Dairy
farmers in particular are clamoring for a resolution, and a year of
record drought gave urgency to a bill.

Across the Rotunda, the Senate may once again take up a cybersecurity
bill. An earlier measure that would have established optional standards
for the computer systems that oversee the country’s critical
infrastructure was stopped by a filibuster as some leading Republicans
yielded to the concerns of major business interests; members from both
parties would like to see a renewed effort on a bill as soon as
possible. A military policy bill, which generally passes easily on the
floor, was caught up in the fight over looming Pentagon cuts and did not
make it to the floor.

But the most pressing task is averting the sudden expiration of all the
Bush-era tax cuts, a payroll tax cut and unemployment benefits at the
same time that across-the-board military and domestic spending cuts kick
in. Most economists believe that “fiscal cliff,” if not mitigated, would
send the economy back into recession. Democrats say any plan to avert
the crisis must include a combination of tax increases on the rich and
spending cuts. Republicans say they are willing to overhaul the tax code
to increase federal revenue, but they refuse to raise income tax rates.

That has kicked off a scramble to find ways to raise revenue without
higher rates by closing loopholes and tightening deductions and tax
credits. Senior Democrats made clear Monday that the search for such tax
changes should not be seen as a replacement for higher tax rates on the

Representative Chris Van Hollen of Maryland, the top Democrat on the
House Budget Committee, said the Romney proposal to cap deductions would
work only in concert with allowing the top two income tax rates to
revert to the level of Bill Clinton’s presidency, 36 percent and 39.6
percent, up from the current 33 percent and 35 percent.

To come close to the level of deficit reduction needed to get the
nation’s fiscal house in order, the presidential deficit reduction
commission known by the names of its chairmen, Erskine B. Bowles and
Alan K. Simpson, assumed those top rates would jump, Mr. Van Hollen
said. But beyond those rate increases, more revenue will have to be raised.

“This is a promising idea for tax reform,” Mr. Van Hollen said, “if you
start at the higher Clinton era rates for high-income earners.”

The idea gained currency when Martin Feldstein, a prominent Republican
economist and former chairman of Ronald Reagan’s Council of Economic
Advisers, embraced it during the campaign to show that Mr. Romney’s tax
plan was not as far-fetched as Democrats portrayed it. Maya MacGuineas,
president of the Committee for a Responsible Federal Budget and
something of a ringleader in the search for a bipartisan deficit deal,
has also embraced the idea.

But with the presidential campaign over, it is taking on new salience.
The Democratic centrist group Third Way has made it the centerpiece of a
package of tax changes that it says could raise nearly $1.3 trillion
over 10 years without raising rates.

The Third Way proposal would limit tax deductions to $35,000 but would
exclude charitable giving. Universities, foundations and other
philanthropies have been the biggest impediment to passing Mr. Obama’s
more modest 28 percent limit, which did not exclude the charitable tax

Jennifer Steinhauer contributed reporting

(6) Swiss banks closing U.S. accounts in wake of new US tax law against
Tax Avoidance


Swiss banks closing U.S. accounts

Published: Oct. 20, 2012 at 12:03 PM

BERN, Switzerland, Oct. 20 (UPI) -- Swiss bankers say they are
restricting or denying service to "the few American clients" they have
because compliance with new U.S. tax law is cost-prohibitive.

The Foreign Account Tax Compliance Act, passed in 2009 and to be phased
in over the next several years, has made working with U.S. clients
"evermore elaborate," said a spokesman from the bank Postfinance.

"It's simply not economical to maintain a team of experts to ensure
compliance for the few American clients that we have," the spokesman said.

The Wall Street Journal reported Saturday that expatriates in
Switzerland are having trouble finding financial services and some banks
are telling their U.S. clients to take their business elsewhere.

Scott Schmith, 50, a photographer living in Switzerland, said the new
law that prompted his bank to request he close out his account "was the
straw that broke the camel's back."

Instead, Schmith applied for Swiss citizenship and turned in his U.S.

"I have nothing to hide, but my heart is here, my business is here, and
my life is here," Schmith told the Journal.

U.S. officials said those wishing to disclaim their U.S. citizenship
must prove they have been in compliance with tax laws for five years
before they renounce. Otherwise, authorities can cancel revoke the
permission to renounce citizenship.

"In practice, people shouldn't assume they'll never have to deal with
the United States again," said Scott Michel, an attorney in Washington.

"Foreign tax evasion is a drain on the federal budget worth tens of
billions of dollars, and it puts an unfair burden on law-abiding
American taxpayers to fill that gap," said an aide to Sen. Max Baucus,
D-Mont, the Senate Finance Committee chairman and sponsor of the bill
known as Fatca.

Finance business groups such as the European Banking Federation and the
British Bankers' Association are working with the IRS and other U.S.
agencies to straighten out details on the law's implementation that have
yet to be fine-tuned. In the meantime, banks are claiming the
regulations are too expensive and breaking the law risky.

"High costs stemming from implementing additional controls and ensuring
compliance just don't make sense for us," said a spokesman for Walliser

(7) New Transfer Pricing laws will tax Multi-Nationals' profits in Australia


Govt seeks fair tax from multi-nationals

Date: November 22 2012

The federal government has released proposed legislation aimed at
ensuring multi-national companies pay their fair share of tax on profits
made in Australia.

Releasing an exposure draft of proposed amendments to reform transfer
pricing laws on Thursday, Assistant Treasurer David Bradbury said these
will help protect Australia's tax base.

"Australia's transfer pricing rules play an important role to ensure
that multi-national firms pay their fair share of tax on profits in
Australia - based on an amount of income which reflects the economic
activity attributable to Australia," Mr Bradbury told a conference in

He said these reforms will align domestic law with international best
practice, while improving the integrity and efficiency of the tax system.

"If enormous multi-national corporations aren't paying their fair share
of tax on economic activity in Australia, then that's not fair game," Mr
Bradbury told the Institute of Chartered Accountants Australia national
tax conference.

Mr Bradbury gave a few examples where big companies make big profits,
including in Australia, but pay relatively little tax.

Google Australia paid just over $781,000 in tax, when it has been
estimated its annual advertising revenue from Australia is more than $1
billion-a-year, with Australian firms buying their advertising from an
Irish subsidiary of Google.

"I am not suggesting that these companies are in breach of the law as it
stands," Mr Bradbury said.

Tax counsel at the institute, Paul Stacey, said ensuring Australia's
transfer pricing rules accord with current best practice is part of the
answer to meeting the nation's increasing expenditure needs.

While welcoming what is the second tranche of the transfer pricing
reforms, he stressed that going it alone is not the answer.

"If Australia is going to revise our approach to taxing multi-nationals,
we need the buy-in of our international trading partners - going alone
is not the answer," he said in a statement.

Submissions on the exposure draft legislation close on December 20.

(8) Argentina battles bondholders


Argentina Must Pay $1.33 Billion to Owners of Bonds

By Bob Van Voris, Katia Porzecanski and Daniel Cancel - Nov 23, 2012
6:50 AM ET

Argentina’s bonds fell the most in a week and the cost to insure its
debt against default surged after a U.S. court ruling ordered the South
American country to pay $1.33 billion to holders of defaulted securities.

Argentina must pay so-called holdouts, led by a unit of billionaire
hedge fund manager Paul Singer’s Elliott Management Corp., next month if
it proceeds with scheduled payments of more than $3 billion to owners of
its restructured bonds, according to a copy of the ruling by a U.S.
judge obtained by Bloomberg News. District Judge Thomas Griesa in
Manhattan ordered Argentina to pay the money into an escrow account
while an appeals court considers his rulings in the case. The ruling
couldn’t immediately be confirmed in online court records.

Argentine bonds have fallen the most in emerging markets this month
after a Oct. 26 U.S. appeals court upheld an earlier ruling by Griesa
that said holders of defaulted debt should be treated the same as
investors who accepted two restructurings following the country’s record
$95 billion default in 2001. Speculation Argentina will stop payments on
its performing bonds rather than pay holdouts has made its debt the
costliest in the world to insure against default.

“Argentina must pay the debts which it owes,” Griesa, 82, wrote in his
ruling. “After ten years of litigation this is a just result.”

Economy Minister Hernan Lorenzino said today during a press conference
in Buenos Aires that the ruling is “unfair,” violates local laws and
will be appealed. Argentina will make a bond payment that falls due on
Dec. 2 and is trusting in a favorable response on its appeal by Dec. 15,
when the country is scheduled to pay more than $3 billion on warrants
linked to economic growth, Lorenzino said.

“We will take all the necessary legal steps” to defend the country’s
interests, and will go to the U.S. Supreme Court if needed, Lorenzino said.

Warrants Payment

Griesa specified that the Dec. 15 coupon on the warrants cannot be paid
unless Argentina ensures a payment to the defaulted bondholders in the
escrow account beforehand or at the same time. ...

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