SavvySugar

"Tax me", Some Rich Americans Tell Obama

MartiniLush — Sat, 15 Aug 2009 20:35:25 -0700

Raise my taxes, says millionaire Chuck Collins.

The scion of the Oscar Mayer family supports a House panel’s healthcare plan that would boost taxes for families earning more than $350,000 a year. He also advocates ending the Bush tax cuts for the rich right away, rather than when they expire at the start of 2011, and closing foreign tax havens to Americans.

Although the financial burden would be sizable, Mr. Collins is busy urging other wealthy Americans to sign a tax-me petition.

“The good news is there are still people out there willing to pay for the common good,” says Collins, whose nonprofit Wealth for the Common Good is collecting the names.

As of July 21, some 210 wealthy people had signed. Collins hopes to get more than 1,000 signatures before delivering it to President Obama and House leaders. The idealist wealthy are “not as small a minority as one might think,” says Eric Schoenberg, an investor and Columbia University Business School professor, who also signed the petition.

It is “reasonable and fair” for “the people who have done best out of the economic system in the last 20 years” to pay in extra taxes the bulk of the cost of healthcare reform, says Mr. Schoenberg. “Healthcare ought to be a basic right of citizenship.”

His research suggests the really rich are more willing than the modestly rich to share their wealth for the common good.

There are other indications of idealism among business people and the well-to-do:

•Responsible Wealth, a nonprofit group that includes several wealthy members, has been advocating for years that the estate tax be retained.

•A group of business owners and leaders called Business for Shared Prosperity welcomed the July 24 rise in the federal minimum wage from $6.55 to $7.25 an hour, although it costs their firms more money.

“It is an unsustainable and dangerous downward spiral to push American workers into poverty and expect taxpayers to pick up the bill for the consequences,” states Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce.

But wait! Don’t these taxes on the rich burden the very people who start the most firms and create the most jobs? Statistics suggest the burden is not overwhelming. Households with incomes over $250,000 have saved more than $700 billion from the Bush tax cuts of 2001 and 2003. The proposed graduated surtax under the House Ways and Means Committee’s healthcare plan would take back $544 billion over the next 10 years, providing about half the cost of the entire plan, calculates the Joint Economic Committee of Congress.

What that means is that even after digging deeper to help pay for expensive healthcare reform, the wealthy would still be paying less in taxes than during the Reagan administration – and far less than in President Eisenhower’s time.

In 1955, the top 400 US taxpayers paid 51 percent of their average income of $12.3 million (adjusted to 2006 dollars), according to Sam Pizzigati, a fellow at the Institute for Policy Studies in Washington. In 2006, the most recent data available, the top 400 paid 17.2 percent of their average income of $263 million in federal taxes.

That 17.2 percent rate is also “much lower” than tax rates for the rich in Britain, France, Germany, or Japan, he adds.

Nor, some economists note, did the US economy grow more slowly when taxes on the rich were far higher in the 1950s and 1960s – or grow more swiftly after the Bush tax cuts.

Source

Taxes. A closer look at the tax-rate --- and a scary look at the past...

syako — Tue, 12 May 2009 07:08:04 -0700

White House Unveils Tax-Rate Details
Higher Rates Would Hit Couples at 'Taxable-Income' Levels Starting at About $235,000

Images: Everett (Roosevelt, Johnson, Reagan); Associated Press (Wilson, Obama) Note: From 1948, rates are for married persons filing jointly. Rates exclude the effect of most tax credits as well as add-on taxes levied in certain years, with some exceptions. For some years, rates shown were subject to maximum effective rate limitations or a maximum rate on certain income. Source: IRS

WASHINGTON -- The Obama administration provided more details on the scope of its tax proposals, showing the impact of rate increases on higher earners would hit couples with about $235,000 of "taxable income," or income after deductions and exemptions.

The administration also revealed new details of its initiatives to shut down offshore tax shelters used by some investors and businesses, and to raise taxes on the overseas earnings of many U.S. multinationals.

During the presidential campaign, Barack Obama said he wouldn't raise taxes on couples earning less than $250,000 but didn't give a precise definition of the term. On Monday, the administration published more details of how exactly the rate increases, if approved by Congress, would be implemented.

The Treasury Department's description, known as the "green book," showed that the new 36% rate would apply to an adjusted gross income of $250,000 "less the standard deduction and two personal exemptions." Those items effectively represent the minimum that a couple could subtract from adjusted gross income, officials said. A senior administration official estimated that that produces taxable income of about $235,000.

Many couples with adjusted gross income of $250,000 have itemized deductions that would put their taxable income well below that $235,000 threshold...

...The administration also laid out plans to attack several offshore tax shelters, including one that aims to help investors receive corporate dividends without incurring U.S. withholding tax.

Two other proposals would go after techniques that multinationals use to minimize taxes by shifting around intangible property and internal debt among overseas subsidiaries. Yet another proposal would seek to put further limits on the foreign tax-credit system. The newest proposals would raise about $10 billion in the decade.

Business leaders have been sharply critical of the administration's proposed crackdown on offshore tax avoidance, including limits on companies' ability to defer U.S. taxes on their overseas income. The deferral system was intended to put overseas operations of U.S. companies on the same footing as their foreign counterparts.

"The proposed tax increases on U.S. companies by the Treasury threaten the jobs of tens of millions of U.S. workers and our future economic growth," said John Castellani, president of the Business Roundtable. "Adopting these changes will hamstring American competitiveness."...

John D. McKinnon at john.mckinnon@wsj.com - Wall Street Journal

Full text here.

New York Fiscal Watch: Tax Refugees

Cassandra57 — Mon, 18 May 2009 08:47:45 -0700

* PUBLIC POST *

Golisano gone
E.J. McMahon

Well, what do you know? Barely a month after its enactment, New York State’s biggest income tax hike since 1961 has already driven away one of the Empire State’s wealthiest and most productive residents. Make that former resident, as the Rochester Democrat and Chronicle reported:

Rochester-area billionaire Tom Golisano said he’s had enough of New York’s high taxes and is changing his residency to Florida - where he figures he’ll save a stunning $13,800 each day in personal income taxes.

“I can put that money to a lot better use, whether it be charitable contributions or even to try to change the system,” the Paychex Inc. founder and three-time gubernatorial candidate told reporters after delivering a speech [last] Thursday at the Hyatt Regency.

Golisano, 67, owns a home in Naples, Fla., where he already spends three or four months a year, and said he had considered changing his residency for some time. But after the new state budget increased income taxes on the wealthy, “It was a very quick decision.”

Changing his residency to Florida, one of seven states with no personal income tax, will save him at least $5 million a year, he said. Forbes magazine last year listed Golisano’s wealth at $1.7 billion.

Proponents of the just-enacted income tax hike (actually, they pushed for an even larger increase) assured us this kind of thing simply wouldn’t happen. As Dan Cantor of the Working Families Party wrote last fall:

“Opponents of a tax on millionaires repeat the mantra that asking the wealthy to pay a modest increase in income taxes would drive them out of the state. But all the evidence and recent experience says that simply isn’t so.”

Then there was Iris Lav of the Center on Budget and Policy priorities, as quoted recently in The Capitol:

“Most people are not as tax-sensitive as we think they are .. There are a lot of reasons why people live where they live. They live there because their businesses are there, because they like it, because their families are there. State income taxes are pretty low on their list because it just doesn’t make that much difference to them.”

Go figure: Golisano was unwilling to sit still for an apparent $1.2 million increase in his already heavy New York tax bill. While he is far wealthier than most people affected by the tax hike, Golisano is typical of many filers in the new 8.97 percent top bracket (up 31 percent from the previous rate) in that he already has a second home in Florida - so it was all too easy for him to shift “domiciles” once he got fed up.

But Ms. Lav had a point: most people affected by a state tax hike, even a large one, do not react by immediately moving–if only because, for one reason or another, they can’t. Then again, it won’t take many movers to make a difference; for every 1,000 mere $1 million-a-year earners follow Golisano out of state, the income tax loss to New York will come to nearly $90 million. Many others will stay in New York but shelter more of their income, or shift more of it (quite legally) to sources beyond the reach of New York income taxes. Still others, while keeping at least a part-time home in New York, will decide to steer more of their business investments elsewhere, with an inevitable impact on employment in the state.

For some, perhaps many, the money involved in the tax hike will matter less in the long term than the decidedly business-unfriendly attitudes exhibited by the vocal class warriors who successfully pushed for the increase, and who now seem to increasingly dominate Albany politics. For example, as the Post reported:

Working Families Party Executive Director Dan Cantor, who championed the tax hike, called Golisano’s move “selfish.”

“It’s a disgrace that this is how he pays back the state where he was presumably educated and that’s been so good to him,” Cantor said. “Taxes are the price you pay for civilization. He’s moving to a space where there’s a little bit less civilization.”

In fact, while Golisano may have wasted millions on three quixotic gubernatorial campaigns, he is also one of those rare “selfish” people whose name frequently arises in close proximity to phrases like “largest donation ever” (try Googling it and see). His foundation has given away $100 million over the past decade. He is one of the most successful entrepreneurs in the history of upstate New York. Few–whatever their opinion of his political ventures–would deny that the region has benefited greatly from Tom Golisano’s presence.

Florida may never be “civilized” enough for some people, but it is now home to one more formerly New York-based fortune.

http://www.nyfiscalwatch.com/?p=1175

=====================================

I'm making this a public post because it's an important issue that deserves fair discussion.

I love how they term his move "selfish" (their tax grab isn't?) and the author's observation that he is a generous philanthropist. I guess the tax-and-spend crowd feels the government can better determine who is deserving of those charitable donations.

Over 8 in 10 corporations have tax havens

Grandpa — Sat, 17 Jan 2009 15:37:12 -0800

Report: Over 8 in 10 corporations have tax havens

Jan 16, 6:28 PM (ET)

By KEN THOMAS
WASHINGTON (AP) - Eighty-three of the nation's 100 largest corporations, including Citigroup, Bank of America and News Corp. (NWSA), had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.

The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. (C) and Morgan Stanley (MS) all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.

Insurance giant American International Group Inc. (AIG), which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. (JPM) had 50 units and Wells Fargo & Co. (WFC) had 18; both financial institutions received government bailout money.

Sens. Carl Levin, D-Mich., and Byron Dorgan, D-N.D., who requested the report, have pushed for tougher laws to fight offshore tax havens around the globe. Levin, who leads the Senate Permanent Subcommittee on Investigations, has estimated abusive tax havens and offshore accounts cost the U.S. government at least $100 billion a year in lost taxes.

"I think we should take action to shut down these tax dodgers and we will be introducing legislation to do just that," Dorgan said.

General Motors Corp. (GM), which received $13.4 billion from the federal rescue package, had 11 offshore subsidiaries while GM's financing arm, GMAC LLC (GOM), had two offshore units. GMAC, whose majority owner is private equity firm Cerberus Capital Management LP, received $5 billion from the Treasury Department in late December.

Citigroup said in a statement that it has more than 4,000 subsidiaries around the globe "which enables us to serve hundreds of millions of individuals and institutions in more than 100 countries." A News Corp. spokeswoman declined comment. Messages were left with several of the companies identified in the report.

Separately, the GAO said 63 of the 100 largest federal contractors maintain subsidiaries in 50 tax havens.

Levin noted that many competitors use the tax havens to varying degrees. PepsiCo Inc. (PEP) has 70 subsidiaries while the Coca-Cola Co. (KO) has eight units. Caterpillar Inc. had 49 while Deere & Co. had three.

"We need to put an end to the use of offshore secrecy jurisdictions as tax havens," Levin said.

The GAO said the subsidiaries could be established in the countries "for a variety of nontax business reasons" and said having a business unit in one of the countries "does not signify that a corporation or federal contractor established that subsidiary for the purpose of reducing its tax burden."

Citigroup had 427 units in 23 countries, including 91 subsidiaries in Luxembourg and 90 in the Cayman Islands. Morgan Stanley had 273 units, News Corp. had 152 and Bank of America had 115. Procter & Gamble Co. had 83 subsidiaries and Pfizer Inc. had 80 in the jurisdictions.

Several major corporations have announced plans to leave Bermuda, a leading offshore business center, amid the global financial crisis and fears of tighter tax rules. Tyco Electronics Ltd., which makes electronic components, and Foster Wheeler Ltd., an engineering and construction company, are reincorporating in Switzerland - which has a tax treaty with the U.S. - for tax and other reasons. Covidien Ltd., a health care products company, is heading to Ireland.

Taxes, Taxes, Taxes

mymellowman — Tue, 17 Jun 2008 10:02:18 -0700

http://apnews.myway.com/article/20080617/D91BMDJ00.html

McCain, Obama offer different visions on taxes
Email this Story

Jun 17, 3:21 AM (ET)

By LIZ SIDOTI

WASHINGTON (AP) - Make more than $250,000 a year? Watch out. Barack Obama wants to raise your income taxes. Social Security taxes, too.

Run a corporation? Lucky you. John McCain wants to cut your business taxes.

Those positions illustrate pieces of two vastly different approaches to the economy, an issue at the forefront of voters' minds given that the country is teetering on the brink of - if not already in - a recession as gas prices soar and layoffs rise amid a credit crisis and a housing slump.

Obama, the Democrat, seemingly has a traditional liberal outlook of taxing the rich more while having the government help people of more modest means through tax breaks. McCain, the Republican, advocates a classic conservative vision of cutting taxes - many geared toward businesses - to promote competition within a free-market system.

Neither plan is cheap.

The Tax Policy Center, a nonpartisan joint project of the Brookings Institution and the Urban Institute, gives a preliminary estimate that over the next decade, McCain's tax proposals would reduce federal revenues $3.7 trillion while Obama's cuts would amount to $2.7 trillion.

The center said the cuts would slice roughly 10 percent and 7 percent, respectively, of the federal revenues scheduled for collection under current law. But the center's estimate - seemingly the first nonpartisan comprehensive comparison of the plans - is incomplete because it doesn't account for health care tax proposals or, at least in McCain's case, consider how proposals to slash spending would offset some costs.

A crusader against wasteful spending, McCain asserts that he will veto bills that are too costly and cut the federal budget enough to make up for the costs of tax cuts and other proposals, although he has yet to show he can save enough to do it. At the same time, the Republican says that Congress must continue to fund an Iraq war that already has cost more than $500 billion.

Obama, in turn, has proposed billions of dollars in spending to create jobs and pad government programs aimed at helping the less fortunate. He has said that the money will come from ending the Iraq war, slicing tax breaks for corporations, and raising taxes on high-income earners, efforts he says are intended to shift more of the tax burden to wealthy Americans.

The two candidates have been haggling over the economy for more than a week now and seem to agree only on one point when it comes to it - that they disagree on just about every other point.

"On tax policy, health care reform, trade, government spending, and a long list of other issues, we offer very different choices to the American people," McCain says at every turn.

Concurs Obama: "When it comes to the economy, John McCain and I have a fundamentally different vision of where to take the country."

Major changes to the tax code are at the heart of both candidates' sweeping economic plans, given that most cuts enacted since President Bush took office expire at the end of 2010 and the alternative minimum tax (AMT) is poised to hit much of the middle class - two years into the next president's first term.

In 2001 and 2003 to jump-start a lackluster economy, Bush proposed and Congress passed a series of tax cuts - including rate cuts for most taxpayers, increasing to $1,000 the per-child tax credit, relief from the so-called marriage penalty and estate tax cuts. The AMT was enacted in 1969 to make sure the wealthy paid at least some tax, but it now also threatens about 20 million additional taxpayers - many in the middle class - with levies averaging $2,000 if Congress doesn't annually renew a so-called patch to fix the problem.

Making permanent Bush's tax cuts and making sure the AMT keeps pace with inflation would have a direct cost of $3.6 trillion over the next 10 years, according to the Joint Committee on Taxation and Congressional Budget Office estimates, with government borrowing costs rising more than $800 million over the same period.

McCain, a four-term Arizona senator, twice voted against Bush's tax cuts, probably the significant domestic accomplishment of his presidency, but now embraces them and wants to permanently extend them for low-income and high-income people alike. He also long has said he would eliminate the AMT, and while some middle-income taxpayers would benefit, so would the wealthy, who no longer would have to pay it.

Obama, the first-term Illinois senator, wasn't in the Senate when they first passed, but he's willing to go along with permanently extending them except for their chief beneficiaries, the rich. Those who make more than $250,000 a year would see their taxes increase; Bush's tax cuts for them would be rolled back.

In the vein of taxing the rich more, Obama also supports making some higher wage-earners pay Social Security taxes on more of their income. He has called for higher payroll taxes on wage-earners making more than $250,000 annually, a step that would affect the wealthiest 3 percent of Americans.

The 6.2 percent payroll tax is now applied to all wages up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to wages between that amount and $250,000. But Obama has said all annual salaries above the quarter-million-dollar amount would be taxed under his plan.

Conversely, McCain has ruled out higher payroll taxes for now - an adviser says that McCain would not consider an increase "under any imaginable circumstance" - but the Republican has said he would consider "almost anything" as part of a compromise to save the senior citizens' program.

Both want to slice the estate tax, McCain more so than Obama.

The estate tax is phasing out and is completely eliminated for 2010, but it snaps back to 2001 levels - a 55 percent top rate with the first $675,000 exempt - at the end of that year. McCain wants a 15 percent rate, and a $5 million exemption, while Obama advocates a 45 percent rate and a $3.5 million exemption.

Overall, the Tax Policy Center said people with very high incomes would benefit the most under McCain's proposal, while low- and middle-income taxpayers would see larger tax breaks under Obama's plan and wealthy taxpayers would see their taxes increase.

Seeking to spur growth, McCain proposes cutting the maximum corporate income tax rate from 35 percent to 25 percent, and he would allow businesses to immediately deduct the full cost of capital business equipment in one swoop, instead of gradually over several years.

McCain also wants to increase the $3,500 income-tax exemption for dependents by $500 each year beginning in 2010 until it reaches $7,000.

Among Obama's other proposals: raising the tax on capital gains and qualified dividends. However, Obama has raised the possibility of deferring some of his tax hikes on the wealthy given the ailing economy.

To help others, Obama has offered a series of tax breaks, including eliminating the income tax for senior citizens who make less than $50,000 a year and giving a $1,000 income tax credit for families with income of between $8,000 and $75,000; individuals would receive half that amount. Obama also proposes a universal mortgage credit that would allow people who don't itemize their taxes to be eligible for a 10 percent tax credit of their mortgage interest up to $800.

New Jersey Property-tax rebates / Reform vs. gimmick

tdsollog — Thu, 24 Apr 2008 10:29:09 -0700

From the Press of Atlantic City:
Property-tax rebates / Reform vs. gimmick
Published: Thursday, April 24, 2008

A little time travel to the recent past:
Remember just one year ago, when state lawmakers were touting property-tax rebates of 10 to 20 percent for most state taxpayers as permanent property-tax reform?

Remember when they shelved or watered down dozens of tough measures to rein in the cost of government in favor of what some considered a gimmick - a gimmick subject to the vagaries of the economy and politics?

Well, those same lawmakers are now apparently poised to roll back those "permanent" rebates. Under Gov. Jon S. Corzine's budget plan, people earning between $150,000 to $250,000, who received a 10 percent rebate last year, would get nothing. Those earning between $100,000 and $150,000 would see last year's 15 percent rebate cut by about a third, and those earning less than that would still get the 20 percent rebate - but based on 2006 taxes, not 2007. Renters will also see sharply lower rebates.

There has been little debate in the Legislature over the proposal so far. That's not surprising. It's a major cut that saves more than half a billion dollars, money that would be difficult if not impossible to find elsewhere this year. But it does underscore the Legislature's shameful failure to provide real property-tax reform last year.

And that's why a measure proposed last week by state Sen. Barbara Buono, D-Middlesex, is so welcome. It's an important step toward future, permanent savings in the state's financially strapped pension system, savings that filters down to all levels of government.

Buono, who heads the Senate Budget Committee, wants to dust off some of the property-tax reform measures proposed last year but never adopted relating to public-employee pensions. She said she is drafting legislation that would bar part-time government workers from the state's pension system, would end pension credits for more than one job at a time, would raise the retirement age for new state employees from 60 to 62, and would roll back for new state workers the 9 percent pension boost lawmakers gave to public employees in 2001.

The reaction of the Corzine administration was largely negative. State Treasurer David Rousseau agreed with ending pensions for part-timers - now defined as anyone earning more than $1,500 per year, a ridiculously low threshold. But the rest of the proposals, he said, should be considered in the context of contract negotiations.

Wrong. As Buono points out, the 9 percent boost, as well as rollbacks in retirement age, were passed by the Legislature outside negotiations. They can - and should - be repealed by the Legislature as well.

These are the kinds of measures that could rein in the runaway costs of government on all levels - not immediately but slowly, with bigger savings in future years.

Most important, they could bring real relief to state and property taxpayers, not a gimmicky rebate plan that barely lasted a single year.

Taxes under the new candidates

RCLdesigngirl — Tue, 29 Jul 2008 08:09:38 -0700

This was in my inbox this morning, and I haven't had time to check its validity, but I wanted to post it just to get the conversation started...

A few points to remember and consider: You can verify the tax information at http://money. cnn. com/news/specials/election/2008/index.html, if you'd like.

(INTERESTING DATA JUST RECEIVED ON TAXES & PROPOSED CHANGES IN TAXES AFTER 2008 GENERAL ELECTION.)

Time to consider your pocketbook:

CAPITAL GAINS TAX

MCCAIN:
0% on home sales up to $500,000 per home (couples). McCain does not propose any change in existing home sales income tax.

OBAMA:
28% on profit from ALL home sales

How does this affect you?
If you sell your home and make a profit, you will pay 28% of your gain on taxes. If you are heading toward retirement and would like to down-size your home or move into a retirement community, 28% of the money you make from your home will go to taxes. This proposal will adversely affect the elderly who are counting on the income from their homes as part of their retirement income.

DIVIDEND TAX
MCCAIN : 15% (no change)

OBAMA : 39.

How will this affect you?
If you have any money invested in stock market, IRA, mutual funds, college funds, life insurance, retirement accounts, or anything that pays or reinvests dividends, you will now be paying nearly 40% of the money earned on taxes if Obama becomes president. The experts predict that 'Higher tax rates on dividends and capital gains would crash the stock market, yet do absolutely nothing to cut the deficit.

INCOME TAX (find your bracket)
MCCAIN (no changes)

Single making 30K - tax $4,500
Single making 50K - tax $12,500
Single making 75K - tax $18,750
Married making 60K- tax $9,000
Married making 75K - tax $18,750
Married making 125K - tax $31,250

OBAMA (reverse all tax cuts)

Single making 30K - tax $8,400
Single making 50K - tax $14,000
Single making 75K - tax $23,250
Married making 60K - tax $16,800
Married making 75K - tax $21,000
Married making 125K - tax $38,750

Under Obama, your taxes will more than double!

How does this affect you? No explanation needed.

This is pretty straight
forward.

INHERITANCE TAX

MCCAIN 0% (No change, Bush repealed this tax)

OBAMA Restore the inheritance tax

How does this affect you?
Many families have lost businesses, farms, ranches, and homes that have been in their families for generations because they could not afford the inheritance tax. Those willing their assets to loved ones will only lose them to these taxes.

NEW TAXES BEING PROPOSED BY OBAMA

New government taxes proposed on homes that are more than 2400 square feet.

New gasoline taxes (as if gas weren't high enough already)

New taxes on natural resources consumption (heating gas, water, electricity)

New taxes on retirement accounts, and last but not least....

New taxes to pay for socialized medicine so we can receive the same level of medical care as other third-world countries!!!

RPT-FEATURE-Corporate oil booms in low-tax Switzerland

Grandpa — Thu, 12 Mar 2009 18:15:49 -0700

RPT-FEATURE-Corporate oil booms in low-tax Switzerland
Companies seek Swiss domiciles despite tax row
* U.S. political climate may be helping
* Appeal as corporate location may outlast offshore dispute

By Sam Cage Reuters
ZUG, Switzerland, March 12 (Reuters) - The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom.
Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration.
In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes' drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.
It still has a chocolate-box old town with views over a lake to the high Alps, but is now surrounded by gleaming corporate offices -- including commodity trader Glencore and oil refiner Petroplus -- shopping malls and housing developments.
Local authorities say about 13 percent of full-time jobs in Zug canton are in the raw materials sector.
Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focused engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.
"Switzerland has a stable and developed tax regime and a network of tax treaties with most countries where we operate," Transocean Chief Executive Bob Long said in a statement in October, when it announced its move. "As a result, the redomestication will improve our ability to maintain a competitive worldwide effective corporate tax rate."
Guido Jud, head of Zug's tax office, said about 1,200 companies had set up shop there in 2008 -- in line with the long-term average, though it is difficult to assess how many of those are foreign companies until they file tax returns.
Swiss cantons are free to set their own tax rates. For example in Zug, corporate tax is about 16 percent but can fall as low as 9.5 percent for companies that do most of their business outside Switzerland. That compares with an average global corporate tax rate of 25.9 percent, according to consultancy KPMG.
"One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland," said Martin Frey, a partner at law company Baker & McKenzie. "That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them."

CORPORATE APPEAL
The moves come as the Alpine country is under pressure to stop providing a haven to rich individuals who have been illegally dodging taxes: the U.S. political climate could be contributing to the corporate relocations as authorities seek to crack down on tax avoidance and boost their own revenues.
A bill introduced in the U.S. Congress in March targeting "offshore tax dodges" by individuals and companies names Switzerland among tax havens for evaders.
Offshore tax abuses cost the U.S. Treasury an estimated $30-60 billion in lost revenues from corporation tax, plus $40-70 billion from individuals, according to the office of Senator Carl Levin, who is sponsoring the bill.
Switzerland holds around $2 trillion of estimated global undeclared assets, according to the Boston Consulting Group. Revenue generated from this could be squeezed as a U.S. probe of its biggest bank UBS dilutes banking secrecy.
Yet analysts say the Swiss, whose GDP in 2008 was about 530 billion Swiss francs ($460 billion) according to the International Monetary Fund, are less likely to meet opposition to the low-tax regimes that draw foreign companies: these are deemed less harmful tax avoidance, rather than evasion.
"They are still making some money by having lower taxes on companies," said Lee Sheppard, contributing editor to Tax Notes, a tax journal based in Washington DC.
"But they're not ever going to be making the amount that other governments are annoyed about losing."
Analysts note that because Switzerland has its own tax treaty with the United States, blacklisting it at a corporate or individual level could cause unproductive diplomatic incidents.
Low-tax jurisdictions like Bermuda or the Cayman Islands look more vulnerable because they have less diplomatic clout, which is prompting some companies to head for Switzerland.
The European Commission, the European Union's executive body, has said the tax regimes in cantons like Zug, Schwyz and Obwalden are a form of state aid: it wants Switzerland to end favourable treatment of foreign-earned profits.
Switzerland, which is not a member of the EU, denies the cantons' special status violates its free trade deal with the bloc and rejects negotiations with Brussels on fiscal matters.
But it has pledged to consider some other company taxation regulations the EU has objected to, such as the status of foreign companies, aiming to ensure these go beyond thinly staffed headquarters to invest and create jobs in Switzerland.

CONTINUING TREND
Baker & McKenzie's Frey thinks more companies will shift to Switzerland, and Zug's Jud also highlighted the country's neutrality and reliability as an attraction to energy companies who do business in less stable countries.
"We are not reckoning on an unusually strong boom, but a continual and sustainable growth on the scale of the last few years and decades," Jud said.
Companies say Switzerland's attractiveness as a corporate location goes beyond tax to include easy and efficient transport, a high quality of life high and well-trained staff.
In the current climate, the attractions for the companies that move clearly outweigh one drawback: by making the switch they potentially sacrifice inclusion in stock market indexes such as the closely watched benchmark Standard & Poor's 500.
"In the past and most recently with Transocean, Standard & Poor's has ruled that the process of redomesticating to Switzerland renders a company 'ineligible for continued inclusion' in the S&P 500," said Macquarie Research analyst Angie Sedita in a note.
In buoyant times, inclusion in such indexes has offered access to equity capital. But the S&P 500 has fallen more than 50 percent since October. (Additional reporting by Braden Reddall in Houston; Editing by Sara Ledwith) ($1=1.158 Swiss Franc)

The Tax Capital of the World

brookrene — Sat, 11 Apr 2009 14:27:36 -0700

The Tax Capital of the World
States are raising taxes despite the 'stimulus'; New York is No. 1

Like the old competition to have the world's tallest building, New York can't resist having the nation's highest taxes. So after California raised its top income tax rate to 10.55% last month, Albany's politicians leapt into action to reclaim high-tax honors. Maybe C-Span can make this tax competition a new reality TV series; Carla Bruni, the first lady of France, could host.
[Review & Outlook] Getty Images

They can invite politicians from the at least 10 other states that are also considering major tax hikes, including Oregon, Illinois, Wisconsin, Washington, Arizona and New Jersey. One explicit argument for the $787 billion "stimulus" bill was to help states avoid these tax increases that even Keynesians understand are contractionary. Instead, the state politicians are pocketing the federal cash to maintain spending, and raising taxes anyway. Just another spend-and-tax bait and switch.

In New York, Assembly Speaker (and de facto Governor) Sheldon Silver and other Democrats will impose a two percentage point "millionaire tax" on New Yorkers who earn more than $200,000 a year ($300,000 for couples). This will lift the top state tax rate to 8.97% and the New York City rate to 12.62%. Since capital gains and dividends are taxed as ordinary income, New York will impose the nation's highest taxes on investment income -- at a time when Wall Street is in jeopardy of losing its status as the world's financial capital.

But who and where are all these millionaires to pluck? More than any other state, New York has been hurt by the financial meltdown, and its $132 billion budget is now $17.7 billion in deficit. The days of high-roller Wall Street bonuses that finance 20% of the New York budget are long gone. The richest 1% of New Yorkers already pay almost 40% of the income tax, and the top 0.5% pay 30%.

Mr. Silver thinks he can squeeze more from these folks without any economic harm, arguing that recent income tax hikes didn't hurt New Jersey. (Yes, the pols in New York actually hold up New Jersey, whose economy and budget are also in shambles, as their role model.) The tax hike lobby in Albany points to a paper by Princeton researchers reporting that the number of "half-millionaires," those with incomes above $500,000, increased by 60% from 2003-2006 after New Jersey taxes rose (the top rate is now 8.98%). But this was a boom time for the national economy, especially in the financial industry where many New Jerseyites work, or at least used to work.

The better comparison is how New Jersey compared to the rest of the nation. According to the study's own data, over the same period the U.S. saw an increase of 76% in half-millionaire households. E.J. McMahon, a budget expert at the Manhattan Institute, calculates that New Jersey lost more than 4,000 high-income taxpayers after the tax increase.

Mr. Silver says of the coming tax hikes: "We've done it before. There hasn't been a catastrophe." Oh, really? According to Census Bureau data, over the past decade 1.97 million New Yorkers left the state for greener pastures -- the biggest exodus of any state. New York City has lost more than 75,000 jobs since last August, and many industrial areas upstate are as rundown as Detroit. The American Legislative Exchange Council recently said New York had the worst economic outlook of all 50 states, including Michigan. And that analysis was done before these $4 billion in new taxes. How does Mr. Silver define "catastrophe"?

Oh, and it isn't just high earners who get smacked. The new budget raises another $2 billion or so on top of the $4 billion in income taxes with some 100 new taxes, fees, fines, surcharges and penalties to be paid by all New York residents. There are new charges for cell phone usage, fishing permits, health insurance (the "sick tax"), electric bills, and on bottled water, cigars, beer and wine. A New York Post analysis found that a typical family of four with an income below $100,000 would pay more than $800 a year in higher taxes and fees.

This is advertised as a plan of "shared sacrifice," but the group that is most responsible for New York's budget woes, the all-powerful public employee unions, somehow walk out of this with a 3% pay increase. The state is receiving an estimated $10 billion in federal stimulus money, and Democrats are spending every cent while raising the state budget by 9%. Then they insist with a straight face that taxes are the only way to close the budget deficit.

And so Albany is about to make a gigantic gamble on New York's economic future. The gamble is that the state with the highest cost of doing business can raise taxes on everyone who lives, works, breathes, eats or drinks in the state and not pay a heavy price for it. If they're wrong, New York will enhance its reputation as the Empire in Decline State.

Original Link:
http://online.wsj.com/article/SB123940286075109617.html

Middle Class Tax Cuts

Shopaholichunny — Wed, 03 Dec 2008 14:15:11 -0800

***PUBLIC POST***

Coming soon: Middle class tax cuts?

By Jeanne Sahadi, CNNMoney.com senior writer

Remember all the talk during the presidential campaign about a middle-class tax cut? It could be showing up in your paycheck early next year.
As the debate heats up over how to pull the economy from the ledge, it's likely that tax cuts for the middle-class will play a central role.

President-elect Barack Obama hopes to have a massive economic stimulus plan waiting for his signature when he takes office on Jan. 20. It's expected to include hundreds of billions in spending on infrastructure and green energy, but he also made clear last week that he wants it to also feature tax cuts to lower- and middle-income Americans.

Tax cuts are "part and parcel of what we need when it comes to stimulus," Obama said last week.

"We're going to be putting money in people's pockets so that they can spend on buying a new computer for their kid's school, so that they can, you know, make sure that they are able to deal with heat and groceries and all the other strains on the family budget," he added.

The long-term benefit, in his view: It would create more fairness in the tax code.

One promise he made but may hold off on for awhile: the reversal of some of the Bush tax cuts for high-income taxpayers, who are roughly defined as individuals making more than $200,000 and couples making more than $250,000. Specifically, Obama has said he would increase the top two income tax rates and the capital gains rate to their pre-2001 levels.

Mindful that a tax increase during a recession might do more harm than good, he and his advisers have left open the possibility that they might wait to implement the increases until 2011, rather than next year. "Whether [the tax rate changes are] done through repeal or whether that's done because the Bush tax cuts are not renewed is something that my economic team will be providing me a recommendation on," Obama said at a press conference last week.

Tax cut considerations
Some economists think tax cuts for the middle class might be one way to create or save some of the 2.5 million jobs Obama has promised over the next two years if lawmakers put together the kind of stimulus package he envisions.

Others say it's a bad idea.

"It would be a serious mistake to enact tax cuts aimed at increasing already excessive consumption," wrote Stephen Roach, chairman of Morgan Stanley Asia, in the New York Times last week. "The Obama administration needs to encourage the sort of saving that will put consumers on sounder financial footing and free up resources."

So what kind of tax cuts are being considered? Obama's transition team isn't offering details yet and one Democratic aide on the Hill told CNNMoney.com that specifics have not yet been discussed.

But in talking about his economic recovery package, Obama has mentioned his campaign promise to offer a "net tax cut" for "95% of American workers."

One option that could get Obama a good way toward that 95% is his proposed Making Work Pay credit -- a centerpiece promise in his campaign. The credit would essentially work as a payroll tax credit equal to $500 for individuals and $1,000 for couples.

The credit would have an income threshold. Only those making $75,000 or less ($150,000 or less for couples) would get the full credit. Individuals making between $75,000 and $85,000 (and couples making between $150,000 and $170,000) would get a partial credit.

The credit also would be refundable, meaning that even tax filers without any tax liability -- typically very low-income workers -- would receive one.

Rather than mail out checks to consumers, the IRS, together with employers, could coordinate a change in how much money is withheld from workers' paychecks, so they'd simply get a bigger paycheck.

Economist Mark Zandi, however, believes a payroll tax credit like the kind Obama has proposed could be tricky to implement because it's based on income. As a result, it could take longer to take effect than, say, an across-the-board payroll tax holiday -- a temporary suspension of the payroll tax viewed by some as another way to boost spending.

"Under the Obama payroll tax credit, payroll and other accounting software would have to be recoded and implemented across many businesses," said Zandi, chief economist for Moody's Economy.com.

Even though the short-term impact of such a credit could be muted, it has more potential bang for the buck in the long run than a tax holiday.

"A payroll tax credit would provide more of a spending boost since it is a permanent change in the tax code," Zandi said. "Households are more likely to spend a tax cut if it is the result of a permanent change rather than a temporary one."

yahoo link: http://biz.yahoo.com/cnnm/081202/120208_obama_stimulus_taxcut.html?.&.pf...