Instead of tapping its own cash hoard for new buybacks and dividend hikes, Apple is borrowing money to avoid paying billions in repatriation taxes.
Read more here: Apple’s tax dodge
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- Ninety-four per cent of Canadians say they file a personal income tax return each and every year
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US President Barack Obama unveils a $3.77tn (£2.4tn) budget that proposes fresh taxes on the wealthy along with cuts to benefit programmes.
Go here to see the original: Obama unveils $3.8tn budget plan
High-earning head of investment research at financial services company claims high taxes are counterproductive
Mark Dampier earns more than £150,000 a year and is celebrating the fact that his income tax bill will fall from 6 April as the 50% top rate drops to 45%. But the head of investment research for Hargreaves Lansdown reckons the chancellor should ignore the “politics of envy” and cut income tax rates even further.
“The more you put tax up, the more taxpayers try and find ways, legally, to mitigate it. In the last 10 years under Labour and this coalition it is noticeable that people are spending more time on seeking ways to reduce their tax bills, in contrast with the previous time period.
“The more you raise income tax, the more time is spent trying to stop it. A simple relatively low tax regime for all would give far less business to accountants and in the end give more money to the government.
“The problem is politics gets in the way, so at present the politics of envy are all around us. It makes for poor decision-making as it plays to the soundbite and gallery.
“What we need is a government and chancellor with some real guts to centre on reducing taxes and simplifying. Alas, instead we are surrounded by idiots who seem to be financially illiterate and are trapped in a Westminster bubble.”
Private sector can be a driver of development – but only if developed countries address global tax laws
Developing countries fully realise the importance of the private sector in creating jobs, a theme that dominates all national consultations conducted by the UN on any future set of development goals.
Harnessing the power of business for development has long been a subject of discussion. “Productive capacity”, another term for business, featured prominently in the conference of the least developed countries in Istanbul in 2011.
So it is in Bali, where a UN high-level panel appointed by Ban Ki-moon, the UN secretary general, is holding its third substantive meeting on the development agenda after 2015, focusing on global partnerships. In recognition of the role of the private sector, the UN panel includes Paul Polman, the boss of consumer goods giant Unilever.
The private sector is certainly being trumpeted by Justine Greening, the UK’s international development secretary, who is deputising for David Cameron because the prime minister could not make it to Bali due to a diary clash.
In a recent speech at the London Stock Exchange, Greening said she wanted to see “far more businesses joining the development push with the Department for International Development” (DfID). Her enthusiasm for the private sector is not shared by many civil society groups. In a communique released on Sunday, civil society organisations struck a sceptical – if not hostile – note to business.
“The private sector is increasingly emphasised by governments as an important development actor, but it is one that lacks appropriate regulation and accountability: the conditions for private sector engagement risk undermining development gains rather than supporting them, through sharply escalating human inequalities,” said the communique.
The NGO Save the Children has adopted a more nuanced position, acknowledging the private sector as an important driver of development – creating jobs, innovating, providing products that meet development needs and through paying taxes.
Citing the $648bn of inward foreign investment to developing countries in 2011, Save the Children said in a new policy brief (pdf) that the engagement of the private sector in the conception and implementation of the post-2015 development framework is critical to its success.
Businesses, however, should adopt a “do no harm” approach, argued the brief authors. This means analysing the potential harm that products, practices and suppliers and their day-to-day business may do.
“It means they must adhere to legislation, but much more than that, it includes adhering to international human rights standards, respecting international labour and safety conventions, paying taxes appropriately, and addressing environmental impact,” said the report.
That multinationals should pay their fair share of taxes may be one of the concrete results from this high-level panel process, said Claire Melamed, head of the growth, poverty and inequality programme at the Overseas Development Institute thinktank.
“If there is momentum on sorting out tax rules, then it is a big step,” she said. “If developed countries sort out global tax laws, this could be one of the things people will remember from this process.”
The debate on jobs and taxes reflects the Jekyll and Hyde approach of the private sector. Greening neatly – if inadvertently – encapsulated this in her London speech, when she praised SAB Miller, the brewing giant, for working with 1,200 farmers in South Sudan to supply its brewery in the capital, Juba; according to ActionAid, governments in Africa may have lost as much as £20m through SAB Miller’s non-payment of tax.
“You do see companies with a strong corporate social responsibility (CSR) that do everything to avoid taxes,” said one business representative who did not want to be named. “They will say it is within the law but, if they have aggressive tax avoidance, how does that sit with their CSR declaration?”
How indeed. Save the Children is urging the high-level panel to recommend in its report to the UN general secretary in May that all parties to the post-2015 goals ensure greater transparency and accountability by all companies. A potential indicator would be a legislative requirement that all large companies report on their non-financial performance – a commitment that would cover environmental, social and governance impacts.
Such legislation, said Save the Children, could be accompanied by a robust set of guidelines that could take the global reporting initiative – a framework for gauging sustainable businesses – as a starting point.
There are various other instruments on accountability, such the UN’s global compact, which sets out guidelines for corporate behaviour, the EU’s accounting directive and the extractive industries transparency initiative, to name but a few. In fact, part of the problem is the proliferation of transparency mechanisms – hence Save the Children’s favouring of the GRI, which it considers the most sophisticated existing framework.
The commitments to transparency and accountability could be the condition for businesses that want to be “partners” in development, said Melamed. The incentive for businesses would be the chance to tap new markets and make profits, but the quid pro quo would be for them to abide by such principles as the GRI.
“Governments,” said Melamed, “can say to companies that want to be partners, for example, in nutrition goals: ‘You can’t be be in the partnership unless you meet transparency on reporting and labour standards’.”
Pubs chain JD Wetherspoon, hurt by higher taxes and labour costs, reports a 2.7% decrease in profit.
Read the original: Wetherspoon posts 2.7% profit drop
US consumers shrugged off higher taxes to boost retail spending by 1.1% in February, government figures show.
Originally posted here: US retail sales beat forecasts
Paul Ryan misstates the case on federal energy taxes.
Follow this link: Paul Ryan budget fibs on energy costs
Proposed limits on banker bonuses would cause the slow death of what continues to be, despite over regulation and higher taxes, a very profitable industry for Europe.
Originally posted here: European bonus caps won’t see the light of day
Office of Management and Budget report outlines extent of $85bn cuts triggered by failure to reach deal by Friday deadline
The scale and reach of the sequestration spending cuts that will hit the US has been laid bare by government officials who warn that the order for the cuts, which was signed by president Barack Obama late Friday, would be “deeply destructive” to the economy and national security.
The Office of Management and Budget has compiled an official report on the breakdown of the $85bn cuts package, which was triggered by a failure to reach a broader political consensus on deficit reduction. The document reveals a detailed list of how the cuts will hurt spending at every level of government. It shows that research spending at the Department of Agriculture will be hit by $55m of cuts, while $150m will go from the immigration system at the Department of Homeland Security.
The long list of cuts includes relatively smaller sums – like $1m being lost for a dam project on the Colorado River and $6m cut from the Leaking Underground Storage Tank Trust Fund – to larger budgetary swipes, including $30m being removed from cultural exchange programs at the State Department. The Pentagon faces widespread cuts. It is losing some $2.6bn from its Defense Health Program and $3.4bn dollars from the navy’s operation and maintenance budget. The Army faces losing $4.6bn from its equivalent budget.
The OMB issued a stark analysis of the impact of the cuts in a letter to Congress that was issued with the report and signed by Jeffrey Zients, deputy director for management. “The cuts required by sequestration will be deeply destructive to national security, domestic investments and core government functions,” Zients wrote.
On Saturday, Obama warned of a “ripple effect” through the American economy that would cost hundreds of thousands of jobs. Obama said the sequestration was “not smart”. “The pain will be real,” he said in his weekly address. “Many middle-class families will have their lives disrupted in a significant way.”
He added that up to 750,000 jobs could be lost and a half per cent knocked off America’s economic growth this year. “This will cause a ripple effect across the economy. Businesses will suffer because customers will have less money to spend… These cuts are not smart. They will hurt our economy and cost us jobs.”
The sequester originates in a political crisis in 2011, when debates over deficit reduction almost saw the American government default on its debt payments. In order to avert that crisis Democrats and Republicans agreed that unless they struck a deal on shrinking the country’s debt, cuts would be made to federal spending. The idea was that the prospect of cuts to social services would motivate the Democrats and hurting military spending would do the same for Republicans.
Instead, despite Friday’s deadline no grand bargain was struck and the cuts – which neither side had intended to actually happen – are now coming into force. Over the next 10 years they will represent $1.2tn dollars of slashed spending.
The hardest hit part of the government will be the Pentagon, which must dig out some $40bn of cuts between now and September – about 9% of its budget. Defence chiefs have said that the move will delay deployments, such as a recent move of an aircraft carrier to the Persian Gulf, and hurt national security.
But almost every government department, from aviation to the parks service, will be hit, with cuts amounting to about 5% of overall budgets. Only Medicaid and welfare benefits such as food stamps are exempted. The Federal Aviation Authority has said that it will have to close scores of air traffic control towers and the National Labor Relations Boards has given staff 30 days of notice that they could be suspended from their jobs. Over the next few weeks more and more such letters will go out, threatening school services and the smooth running of scores of other government functions.
In his speech, Obama slammed Republicans as being to blame for inaction, saying that their hostility to any sort of extra tax revenues being generated from rich Americans was the root cause of the problem. In recent weeks, and since his victory over Republican challenger Mitt Romney in last year’s presidential election, Obama has not shied away from attacking his opponents as defenders only of the wealthy.
“It’s happening because Republicans in Congress chose this outcome over closing a single wasteful tax loophole that helps reduce the deficit. Just this week, they decided that protecting special-interest tax breaks for the well-off and well-connected is more important than protecting our military and middle-class families from these cuts,” Obama said.
But Republicans want only cuts, on welfare rather than defence, and have insisted on no new taxes. The Republican House speaker, John Boehner, pictured, was adamant at the end of the White House talks Friday that he would not contemplate any new taxes. “The discussion about revenue is over,” Boehner said. That hard line is popular with his party’s right-wing base but has left the party vulnerable to being attacked as being too entrenched in its ideology – especially after Obama’s resounding election victory.
In seeking to lay the blame for the sequester at the door of the Republicans, the Obama administration has run a carefully orchestrated image campaign aimed at focusing on the impact on middle-class American workers and their families. Obama continued that theme on Saturday, saying Republican leaders were out of touch with ordinary people and their own voters. “We just need Republicans in Congress to catch up with their own party and the rest of the country,” he said.
But on Saturday Republicans were still standing firm. In the party’s own weekly address, the congresswoman Cathy McMorris Rodgers attacked “out-of-control government spending” and said there was no point in new taxes, as the money would just be wasted. “Instead of campaigning for higher taxes, the president should lead an effort to begin addressing our nation’s spending problem,” Rodgers said.
But for many observers the fiasco of the sequestration – which has effectively meant both parties are implementing a policy that neither wants and each thinks is damaging – has left many complaining about a broader American political dysfunction. Yet the sequester is just one of several rolling crises that are threatening the smooth running of the world’s biggest economy that is still stuttering to recover from recession.
If Congress does not reach an agreement on a budget for this year by 27 March, the federal government faces the prospect of shutdown. Soon after that, Congress must approve an increase in the federal debt limit: the same move that two years ago created gridlock in Washington and resulted in the sequester. The House of the Representatives is due to vote next week on a deal to prevent a federal shutdown but there is a risk this could end up in a new stand-off between the Republican-controlled House and the Democratic-controlled Senate.