tax reform

Americans For Tax Reform Backs Simple Tax Form For Seniors

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By Tax-News

Tax Reform

Americans for Tax Reform (ATR) has urged all members of Congress to support a bill aimed at simplifying tax filing for American seniors.

The president of the taxpayer advocacy group, Grover Norquist, wrote to Congressman Bill Posey (R – FL), who is introducing the Seniors’ Tax Simplification Act. The bill would create a new tax form, 1040SR, aimed at senior citizens with relatively simple tax affairs. It would include the most common types of income reported by seniors on it, such as interest, dividends, capital gains, Social Security benefits, and pension payments.

Norquist noted that a similar form already exists: form 1040EZ. However, this covers some forms of income not relevant for those who have retired.

He suggested that introducing form 1040SR could benefit some 23 million taxpayers.

Norquist said “All members of Congress should have no hesitation supporting and co-sponsoring this helpful legislation.”

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

US Pass-Throughs Set Out Tax Reform Wish List

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Tax-News

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The Parity for Main Street Employers business coalition has issued a new letter that calls on the US Congress to enact tax reform “that is comprehensive, restores tax rate parity for all businesses, and reduces or eliminates the double tax on corporate income by integrating the corporate and individual tax codes.”

The March 17 letter, signed by more than 110 business associations and addressed to the Chairmen and Ranking Members of the House of Representatives Ways and Means Committee and the Senate Finance Committee, noted that tax reform needs to be comprehensive, so as to encompass both C corporations and pass-through entities, including partnerships, sole proprietorships, and S corporations.

Pointing out that, with nearly 70m workers employed at pass-through entities, whose profits are passed directly to their owners and are taxed on their individual tax returns, tax reform should “ensure that we avoid harming these critical employers, [and therefore] needs to be comprehensive and improve the tax code for corporations and pass-through businesses alike.”

The letter also urged that Congress should “restore rate parity by reducing the tax rates paid by pass-through businesses and corporations to similar, low levels. The 2012 fiscal cliff negotiations resulted in pass-through businesses paying, for the first time in a decade, a significantly higher top marginal tax rate than C corporations.”

“Taxing business income at different rates penalizes pass-through businesses and encourages planning to circumvent the higher rates,” it added, “ultimately resulting in wasted resources and lower growth.”

Finally, it recommended that “Congress should eliminate the double tax on corporate income [at both the corporate and the shareholder levels] by integrating the corporate and individual tax codes. … A key goal of tax reform should be to continue to reduce or eliminate the incidence of the double tax and move towards taxing all business income once.”

US Senate Finance Committee Chairman Orrin Hatch (R – Utah) has recently confirmed that he is working on a proposal for corporate tax integration. However, this year’s tax reform efforts in the House of Representatives are being concentrated on international tax reform, with indications that it could include a corporate rate cut (which would increase the disparity with individual tax rates).

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Could Wal-Mart spur tax reform?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

Wal-Mart, the world’s largest retailer, is both loved by millions of bargain-seeking consumers and hated by millions of others, including activist groups who see it as the epitome of corporate greed.

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The Bentonville, Arkansas-based company also might be the catalyst that prompts Congress to finally act on long-stalled tax reform.

This week the Americans for Tax Fairness, or ATF, a liberal-leaning Washington, D.C., consortium of other advocacy groups, released a report charging Wal-Mart with using an “extensive and secretive web of subsidiaries located in countries widely known as tax havens.”

And although ATF questions the legality of some of Wal-Mart’s financial moves, most tax experts say the company is adhering to convoluted corporate tax laws.

Wal-Mart in Luxembourg

So just what is Wal-Mart accused of doing in the international tax arena?

ATF says that research compiled by the United Food & Commercial Workers International Union shows Wal-Mart has 22 shell companies in Luxembourg. Twenty of the companies were established since 2009 and five in 2015 alone, according to the report.

But as for retail outlets, ATF says that Wal-Mart does not have one store in that European nation, which is infamous as a tax haven country.

Dollar-wise, ATF says Wal-Mart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011.

And as for taxes, the company reported paying less than 1 percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013.

Added to a long international tax list

Wal-Mart is not alone in using its global presence to trim, or even eliminate, its U.S. tax liability. Other well-known American firms with worldwide reaches — Apple, Amazon, Starbucks, Goodyear Tire and Wynn Resorts to name a few — have managed to pay the U.S. Treasury very little or even nothing by making specific tax code moves.

Typically, these companies set up subsidiaries in lower tax nations and get U.S. tax credits for the payments they make abroad. Others move their corporate headquarters to a foreign location, on paper at least — a process known as inversion.

Problem with repatriation

But would changes to the U.S. international tax system be better or worse? One of the most frequently discussed ways to return U.S. companies fully to the domestic tax fold is to offer incentives.

This possibility, contends ATF, is part of what it calls the big box retailer’s long game.

Wal-Mart, says the advocacy group, “apparently hopes the U.S. Congress will reward its use of tax havens by enacting legislation that would allow U.S.-based multinationals to pay little U.S. tax when repatriating current low-taxed foreign earnings (such as to fund infrastructure spending) and pay no tax with the adoption of a territorial tax system.”

Tax change isn’t easy or cheap

Point taken. But any tax code changes will produce winners and losers. The goal is to offset the short-term losses in exchange for longer-term corporate tax benefits – not for just the companies, but also for Uncle Sam.

Changes to U.S. taxation of multinational companies already have been getting a closer look. Our combined state/federal corporate tax rate of 39 percent is the highest among global developed countries and there is bipartisan agreement that changes need to be made to bring that rate down so that truly U.S.-based firms remain internationally competitive.

Now that Wal-Mart’s role in corporate tax-reduction maneuvers is under the spotlight, the company’s size and notoriety might just spur Congress to finally make some Internal Revenue Code changes.

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