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During the first night of the Republican National Convention, despite recent political turmoil and the shooting at a rally, the primary focus was on the economy. Speakers supported former President Donald Trump's claim that his return to office would resolve inflation and restore prosperity. Trump, noted for lacking detailed economic policies and legislative plans, suggests reducing corporate taxes slightly and imposing tariffs on trade partners. His platform promises vast improvements like defeating inflation and boosting fossil fuel production, but critics argue these plans could spur severe economic repercussions. Economists and Democrats warn that Trump’s policies might trigger rampant inflation, burden the middle class, and significantly increase the national debt by over $5trn. While Trump refrains from detailing his strategies, his stance on high tariffs could potentially exacerbate inflation and cost U.S. households significantly. Meanwhile, President Joe Biden presents a detailed economic vision, contrasting sharply with Trump’s approach, which some see as a potential repeat of his first term's policies with heightened extremities.

 

AP News

J.D. Vance, running as former President Donald Trump's VP candidate, has publicly supported Federal Trade Commission Chair Lina Khan's robust stance on antitrust enforcement. As a member of a faction of Republican lawmakers known as "Khanservatives," Vance advocates for a broader interpretation of antitrust laws, focusing not only on consumer prices but also on promoting competition and regulating Big Tech's market power. This endorsement indicates potential policy directions regarding antitrust enforcement in a possible second Trump administration, highlighting internal debates within the conservative movement about the scope and aims of regulatory bodies like the FTC. Vance's backing of Khan's policies underscores a commitment to using antitrust laws as a tool against corporate dominance, aligning with his previous calls to dismantle major tech companies like Google. This stance reflects a broader concern about the impacts of corporate consolidation on workers and consumers alike. 

 

U.S. News

The Supreme Court ruling in Loper Bright Enterprises v. Raimondo, which overturned the Chevron precedent, is significantly influencing tax regulation, shifting power towards large corporations in disputes against the government. reports that Wall Street Journal. This landmark decision has quickly impacted ongoing tax lawsuits, including those involving major companies like FedEx and 3M, by limiting the deference courts typically grant to federal agencies in interpreting ambiguous laws. Legal experts predict this ruling could challenge IRS regulations on various financial matters, from cross-border transactions to electric vehicle credits and more. The decision has spurred companies to initiate tax disputes they previously might have avoided, foreseeing a more favorable outcome under the new judicial approach. This shift could affect how the IRS and Treasury respond to ambiguous legislative language, especially in hastily drafted statutes like the 2022 Inflation Reduction Act, potentially leading to a significant impact on federal tax regulation and enforcement. 

 

Wall Street Journal

Combining a form of leverage with a "long-short" stock strategy can help highly concentrated clients diversify with bigger tax savings than using direct indexing, according to a study by Joseph Liberman and Nathan Sosner of AQR Capital Management. The study suggests that variable prepaid forwards, which defer potential taxes while providing upfront capital, can be used in combination with long-short funds to avoid more capital gains and aid in diversification. The authors question whether direct indexing would offset enough capital gains as part of a variable prepaid forward strategy to harness the most after-tax returns. The study recommends combining variable prepaid forwards with tax-aware long-short factor strategies for better wealth outcomes.

 

Accounting Today

A new report from the Institutie of Internal Audits (IIA) and the Internal Audit Foundation (IAF) highlights the need for internal audit practitioners to embrace emerging technology and expand their services. The report reveals that technology will increase the complexity and volume of data available for auditors to analyze, and new technology will allow audit functions to develop better insights. However, only 48% of participants are currently involved in AI-related activities. Anthony Pugliese, President and CEO of the IIA, emphasizes the need for internal audit to embrace technology and provide strategic insights to stay ahead of emerging trends and risks. The report also emphasizes the importance of expanding advisory services, with 79% of participants agreeing that advisory work will become more essential. Warren Stippich, President of the Internal Audit Foundation (IAF), urges internal audit functions to be versatile and agile in providing support beyond traditional assurance. The report also highlights challenges such as preserving independence, shifting perception of the profession, and growing the talent pipeline.

 

CPA Practice Advisor

The FASB has officially issued the final chapter of its Conceptual Framework, which focuses on the measurement of items in financial statements. This new chapter, known as Chapter 6, integrates into FASB Concepts Statement No. 8, rounding off the board's foundational framework for financial reporting. The FASB chair, Richard Jones, highlighted the completion as a critical milestone, thanking all involved for their contributions over the years. The framework serves as a nonauthoritative guide that aids the FASB in creating standards that fulfill the objective of financial reporting and enhance clarity for stakeholders, including investors, lenders, and donors. This completion marks a significant step in standard-setting by providing a comprehensive basis for future accounting practices and standards development.

 

The Accountant Online

The AICPA has submitted comments to the IRS and Treasury on proposed regulations regarding reporting transactions with foreign trusts, receiving large foreign gifts, and dealing with loans and property from foreign trusts. The submitted recommendations aim to simplify filing for taxpayers and practitioners, reduce the administrative burden on the IRS, and are consistent with AICPA's prior comments on foreign trust and foreign gift reporting issues. The AICPA has also requested to testify at the Aug. 21, 2024 IRS hearing on the proposed regulations. Eileen Sherr, AICPA's director of Tax Policy & Advocacy, stated, "Practitioners have needed guidance in this area for more than 25 years."

 

CPA Practice Advisor

A new community, CFO Forum, has been launched as a strategic initiative to support CFOs of rapidly scaling companies. The forum is a collaborative effort between Cooper Parry's High Growth team and Founders Forum Group, aiming to bridge the gap in resources available for senior financial leaders. The forum will offer access to a network of like-minded CFOs, curated events, and valuable insights into navigating economic challenges and opportunities in venture capital, private equity, and public markets. The initiative will feature an invite-only community, hosting over 100 CFOs from founder-led and fast-growing UK companies at its inaugural event in September. This event will include fireside chats and roundtable discussions tailored to the strategic needs of CFOs. The partnership marks the first step in a broader financial services offering being developed by Founders Forum Group and Cooper Parry, enhancing Founders Forum’s professional services suite. 

 

International Accounting Bulletin

Federal Reserve Chair Jerome Powell indicated on Monday that the central bank is likely to keep interest rates steady at its upcoming meeting on July 30-31, with potential rate cuts considered for later meetings, particularly in September. Speaking at a session in Washington, Powell noted that inflation and economic activity have moderated, aligning with the Fed's forecasts. This shift increases confidence that inflation will return to the Fed's target, although Powell remained non-committal about a rate cut in July. Despite improvements in inflation and cooling labor market conditions, Powell emphasized a cautious approach, stating decisions will be taken "meeting by meeting." He highlighted the challenge of balancing the risks between delaying rate cuts, which could lead to a sharper economic slowdown, and moving too soon, potentially allowing inflation to remain above target. Chicago Fed President Austan Goolsbee also expressed concerns about the current rate potentially being too restrictive given the recent drop in inflation from over 4% to around 2.5%.

 

NBC	Wall Street Journal

Singapore is ranked as the fourth-most dependent economy in the world when it comes to relying on large multinational enterprises (MNEs) for corporate income tax revenue. According to the Organisation for Economic Cooperation and Development's (OECD) Corporate Tax Statistics report, MNEs accounted for 73% of Singapore's total corporate income tax revenue in 2021, and this dependency on MNEs has been increasing in recent years. Singapore offers various tax incentives and schemes to encourage specific industries and activities, which brings down the effective tax rates companies pay. However, with the introduction of the OECD's global minimum tax initiative, Singapore will implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) to ensure a minimum effective tax rate of 15% for MNEs. The new global minimum tax is expected to stabilize statutory corporate tax rates worldwide.

 

Business Times SG