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9th June 2021
IRS leak reveals tax details of America's super-rich
Calls for a wealth tax on the super-rich have grown after a trove of tax data from the IRS was leaked to the investigative journalism organisation ProPublica revealing the tax returns of some of the world's richest people, including Jeff Bezos, Elon Musk, Warren Buffett and George Soros. ProPublica calculated the wealth of the 25 richest Americans collectively jumped by $401bn from 2014 to 2018. They paid, according to ProPublica, $13.6bn in federal income taxes over those years - equal to just 3.4% of the increase in their overall fortunes. Using tax strategies which are perfectly legal, Jeff Bezos paid no income tax at all in 2007 and 2011; George Soros went three straight years without paying federal income tax, while Musk paid nothing in 2018. The leak has prompted figures including Sens Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) to demand President Joe Biden introduce a wealth tax in America “to make the ultra-rich finally pay their fair share.” Administration officials, meanwhile, said on Tuesday that federal authorities were investigating the disclosure of private tax information, which can constitute a criminal offense. IRS Commissioner Charles Rettig said there are internal and external investigations underway, with potential prosecutions to follow. “I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives,” he said during a Senate Finance Committee hearing that had been scheduled before the information was released. “Trust and confidence in the IRS is sort of the bedrock of asking people and requiring people to provide financial information.”
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Rettig asks Congress for authority to collect cryptocurrency transfer data
Also in his Senate Finance Committee testimony yesterday, IRS Commissioner Charles Rettig said that Congress needs to provide clear statutory authority for the tax agency to collect information on cryptocurrency transfers valued at over $10,000 that largely go unreported. "We get challenged frequently, and to have a clear dictate from Congress on the authority for us to collect that information is critical" he said, adding "by design, most crypto virtual currencies are designed to stay off the radar screen." Mr Rettig has said that massive profits from the run-up in crypto asset valuations are escaping the IRS, contributing to a "tax gap" that he estimates at some $1tn a year.
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Biden seeks new coalition for infrastructure bill
President Joe Biden has ended efforts to reach a deal with Senate Republicans on a national infrastructure plan, cutting off negotiations that had failed to persuade them to embrace his bid to pour $1tn into the nation’s public works system and safety-net programs, funded by tax increases. Sen. Shelley Moore Capito, of West Virginia, the lead Republican negotiator, said President Joe Biden had spoken to her by phone Tuesday and ended the talks. A bipartisan group of senators including Bill Cassidy (R-LA), Mitt Romney(R-UT), Rob Portman (R-OH), Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV), met on Tuesday to discuss the next steps on infrastructure. The senators emerged from the meeting encouraged about the discussions, but offered no concrete time line. Romney said they reached fairly good agreement on specific items but were a “a little less solid” on how to pay for them. He said they could release some details in the coming weeks.
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KPMG launches free corporate board diversity tool
KPMG has announced the launch of its Board Diversity Disclosure Benchmarking Tool. Powered by ESGAUGE, the free tool lets corporate leaders, investors, staff and other professionals compare corporate board diversity practices by sector, index (Russell 3000 and S&P 500) and company size in order to best analyze trends. “Diverse boards are more effective, and disclosure drives action,” said Susan Angele, senior advisor at the KPMG Board Leadership Center, in a statement. “As stakeholder calls continue to grow for disclosure of board diversity as well as policies and practices, this tool will help measure progress and highlight gaps.”
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U.S. job openings climb to record levels
Job openings in April soared to a record 9.3m as the economy rapidly recovered from its pandemic depths, well above the 8.3m in March that itself was a new high going back to 2000 for the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). Markets had been looking for a JOLTS number around 8.18m, according to FactSet. The total openings for the month was just below the total considered unemployed. Job availability surged 32.7% in leisure and hospitality, the sector hurt most by the pandemic lockdowns. Quits, which are seen as a gauge of worker confidence that they can find other employment, rose 384,000 to 3.95m; the retail sector saw a particularly sharp rise, up to 4.3% from 3.6%. “This recent surge in openings suggests that firms are having a hard time filling positions, and the number of quits reported in the JOLTS data also has surged largely, suggesting workers are able to find - or confident in their abilities to find - new positions,” wrote JP Morgan economist Daniel Silver. “Both of these factors signal a need for firms to raise wages, and we have seen a variety of related measures pick up lately.”
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Trade deficit narrows amid supply chain issues
The U.S. trade deficit narrowed in April from a record level in March as disruptions in global supply chains and a slowdown in consumer spending contributed to a drop in imports. The deficit in trade of goods and services shrank by 8.2% to a seasonally adjusted $68.9bn in April, the Commerce Department said Tuesday, compared with the record $75bn gap in March. Imports fell 1.4% to $273.9bn, while exports grew 1.1% to $205bn. A declining appetite for imported consumer goods led the import decline. That category fell by $2.6bn, driven largely by a $1.7bn drop in cellphones and other household goods. Automotive vehicles, parts and engines also decreased $1.1bn at a time when a semiconductor shortage has hampered production and caused shutdowns at some auto plants. Services imports actually increased $700m for the month, thanks to boosts from travel and transport.
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Biden's CGT proposal sets estate planners to work
Estate planners for the wealthiest Americans are combing through the Biden administration’s proposed tax increases, hunting for ways to sidestep the potential hit from higher taxes on investment income and new capital-gains taxes at death. The result, so far, is early strategizing about making gifts this year before some changes would take effect. That approach is mixed with acceptance that Congress will pass some significant tax increases and tempered by hope that it won’t. The president has proposed raising the top capital-gains tax rate to 43.4% from 23.8% and taxing appreciated assets at death as if they had been sold. Under current law, appreciated assets held until death escape the income tax. Heirs pay capital-gains taxes only when they sell and only on gains since the prior owner’s death. Among wealthy individuals, “there’s a lot of anxiety and nervousness that’s being generated by all the proposals,” Ani Hovanessian, a partner at Venable LLP., commented. Taxing appreciated assets at death is essential for Democrats’ plan to equalize tax rates on capital gains and ordinary income. “The rule for gains was always: defer, defer, defer,” said Tara Popernik, director of research at AllianceBernstein Holding LP’s private wealth unit. Under the Biden proposal, she said, it may make sense for clients to take gains in smaller chunks while living—for instance, in a year when their income falls under the $1m threshold where the 43.4% rate would start.
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Rep for Sears Canada retirees claims insolvency laws are unjust
A court-appointed representative for Sears Canada retirees said Tuesday that Canada's bankruptcy laws should be changed to avoid future financial hardship for members of other underfunded pension plans. Kenneth Eady, a former Sears Canada management employee who now represents 17,000 other pensioners, told MPs that he doesn't believe it's fair that Canada's two bankruptcy laws give banks more protection than pensioners. In the Sears Canada bankruptcy process, which hasn't yet been completed, there wasn't enough money to fund pension shortfalls after debts to banks and active employees were repaid ahead of other classes of creditors. Mr Eady said that Sears Canada retirees would have been helped if the proposed amendments to the two laws were in place when Sears Canada filed its initial request for court protection in June 2017.
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NYSSCPA elects first woman of color as president
The New York State Society of CPAs (NYSSCPA) announced that Rumbi Bwerinofa-Petrozzello, senior director of consulting at Seramount, began her one-year term as president of the state society on June 1st. She is the 102nd president of NYSSCPA, as well as the first woman of color to be elected to the position. Ms Bwerinofa-Petrozzello said she hopes to make the NYSSCPA a center where professionals can "come together and leverage their many talents, skills, backgrounds and experiences to innovate, develop and grow."
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