Category: Taxes

City Spending up 5.5%, Property Taxes to Rise 4.35%

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Two interesting perspectives on Wednesday night’s Madison City Council Budget votes:

  • Kristian Knutsen (Posted Thursday @ 10:52p.m.):

    Coming from another perspective, Brandon urges a no vote against this budget since it has a 4.35% increase, stating that no cuts were made “This isn’t the mayor’s budget. The mayor set a clear challenge to us, 4.1,” Brandon states. “We are playing into the state government’s perception, what they portray about us, is that we are big spenders,” he continues. “All we are doing is inviting more levy limits, and at worst, TABOR.”
    Konkel says “we could have done this if we really wanted to,” referring to the failure of the hotel room tax hike, which she states would have brought the levy down to 4.03, also lamenting the failure of several amendments to provide services to the indigent. “I know how I’m going to vote,” Webber says, while Bruer commends the council for the tenor of this year’s budget process. “This administration unlike others in the past did more truth in budgeting,” he says of the mayors role, continuing by pointing out cost-cutting measures undertaken by city departments in his defense of the budget and its process. “To go through all those hours and all that energy,” Bruer says, “I have no problem going out to my constituency and defending this increase” due to its “balance” of attention.

    Knutsen also live-blogged the meetings (which is fabulous)

  • Dean Mosiman (posted 01:10 a.m. 11/18/2005)

    The tax hike, Cieslewicz said, is the third lowest in the past two decades.
    It’s now time for the state to back away from tax caps, let cities make budget decisions based on their own values, and for the state to try to fix how it funds municipalities, the mayor said.
    Ald. Zach Brandon, 7th District, who led the group that made the 4.1 percent tax cap pledge, offered the lone harsh words about the budget.
    “Do you know what this is saying to the rest of the state?” he said, adding that Madison will become a “poster child” for its inability to contain spending and taxes.”

Tax Burden in America’s Largest Cities

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Natwar M. Gandhi:

The reports contain information about the rates and burdens of major taxes in the District of Columbia compared with states and other large cities in the United States. This publication contains two reports: (I) Tax burdens in Washington, D.C., Compared with Those in the Largest City in Each State, 2004 and (II) A Comparison of Selected Tax Rates in the District of Columbia with Those in the 50 States: A Compendium of Tables. This information is requested annually by committees of the U.S. Congress and the District of Columbia Council and is provided pursuant to Public Law 93-407.

Microsoft’s Irish Tax Shelter

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Glenn Simpson:

The citizens of other nations where Microsoft sells its products are less fortunate. Round Island One provides a structure for Microsoft to radically reduce its corporate taxes in much of Europe, and similarly shields billions of dollars from U.S. taxation.

Giant U.S. companies whose products are heavily based on their innovations, such as technology and pharmaceutical firms, increasingly are setting up units in Ireland that route intellectual property and its financial fruits to the low-tax haven — at the expense of the U.S. Treasury.

Much of Round Island’s income is licensing fees from copyrighted software code that originates in the U.S. Some of the rights to these lucrative assets end up in Ireland via complex accounting rules on intellectual property that the Treasury is now seeking to overhaul. The Internal Revenue Service said it is also looking closely at how companies account for such transactions.

In a statement, Microsoft said its European units “report and pay significant amounts of taxes” and that Microsoft “is fully compliant with the tax laws of the United States and all other countries.”

Through a key holding, dubbed Flat Island Co., Round Island licenses rights to Microsoft software throughout Europe, the Middle East and Africa. Thus, Microsoft routes the license sales through Ireland and Round Island pays a total of just under $17 million in taxes to about 20 other governments that represent more than 300 million people.

Microosft is not unique. Many firms route their IP through tax havens such as Ireland, Puerto Rico, Cyprus and others.

This tax saving process occurs in everyday products (for some) as well, such as Pepsi & Coke. Both beverage giants locate their flavor facilities in tax havens.

Number of Pork Projects in Federal Spending Bills

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Andrew Roth:

From Chris Edwards’ new book, Downsizing the Federal Government (which cited CAGW):

2005 – 13,997
2004 – 10,656
2003 – 9,362
2002 – 8,341
2001 – 6,333
2000 – 4,326
1999 – 2,838
1998 – 2100
1997 – 1,596
1996 – 958
1995 – 1439

Using 2005 numbers, by voting down the “Bridges” amendment, the Senate let the country know that it was unwilling to defund 2 out of 13,997 pork projects today. That’s 0.0142887762 percent.

Our Tax Dollars at Work: Congress’s $3B TV Subsidy!

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Jennifer Kerr:

Lawmakers want to spend $3 billion to make sure millions of Americans won’t wake up to blank TV screens when the country makes the switch to all-digital broadcasts.

The subsidy was approved Thursday by the Senate Commerce Committee as part of legislation that would set April 7, 2009, as the firm date for television broadcasters to end their traditional analog transmissions and send their broadcasts via digital signals.

Meanwhile, we lag behind the world in deploying the future, broadband internet.

Tax Shelters: Miers to the Supreme Court While KPMG, etc. are Indicted?

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A rather amazing paradox: Harriet Mier’s Dallas law firm: Locke, Liddell & Sapp provided legal opinions for Ernst & Young’s tax shelters. The firm, unlike KPMG and it’s former partners, has not been indicted.
Allen Kenney has more (PDF):

“Ms. Miers was obviously not directly involved in the CDS opinions. Most otherwise sophisticated non-tax lawyers inside law firms wouldn’t be able to decipher what is or isn’t accurate in a lengthy tax opinion,” said Chuck Rettig, a tax litigator in the Beverly Hills, Calif., firm of Hochman, Salkin, Rettig, Toscher & Perez. “If [E&Y] approved something like CDS, it was historically unlikely to be significantly questioned by other professionals.”
However, members of the Senate Judiciary Committee might be forced to consider whether Locke’s involvement with the opinion letters affects Miers’s fitness to serve on the country’s highest court. President Bush has emphasized her experience managing a major law firm in defending her nomination.
“She had the opportunity to have her ethical antennas tweaked here,” said Paul Caron, a tax law professor at the University of Cincinnati and the operator of the popular “TaxProf Blog” Web site. “Those ethical antennas were, perhaps, not as sensitive that they should have been.”
One item on the Judiciary Committee’s questionnaire for Miers asks her to disclose if her firm has been subject to any investigations: “State whether, to your knowledge, you or any organization of which you were or are an officer, director, or active participant has ever been under federal, state, or local investigation for a possible violation of any civil or criminal statute or administrative agency regulation.” Another item asks Miers to provide the committee with any “unfavorable information that may affect your nomination.”

KPMG Tax Shelters: A Very Strange Indictment

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Robert Weisberg and David Mills:

The recent indictment of some KPMG partners makes for very interesting reading. In the months leading up to it (and the now-rumored indictment of other tax advisors on similar grounds), numerous news stories suggested the KPMG accountants had somehow knowingly participated in tax fraud by creating fake losses for wealthy clients. Whether or not this proves true, the indictment makes no such allegation. While the accountants and their clients may have done some bad things, the notion that their behavior is criminal, and even sufficiently criminal to threaten the very existence of this major firm and its thousands of jobs, casts doubt on the fairness and judgment with which the federal prosecutors have exercised their discretion.

Why did they do so in this case? Probably for the simple reason that they are — quite properly — offended by the proliferation of newfangled and economically questionable tax shelters, yet at the same time exasperated that Congress shows no interest in legislating these shelters out of existence or enacting a clear “business purpose” requirement, in spite of repeated requests from the Internal Revenue Service. The prosecutors seem to be venting their frustration over this failure to act by fashioning felony charges out of ethereal legal material.

Tax Shelters: KPMG and Legal Issues

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Jonathan D. Glater takes a fascinating look at the “Wonderworld” of the Tax Law, the US DOJ and the KPMG Tax Shelter Cases:

Eight former executives of the accounting firm KPMG and one outside lawyer have been indicted on charges stemming from their role in designing and selling questionable tax shelters. Yet so far, no court has decided that the shelters were improper.
One tax shelter promoter has asked a federal judge in San Francisco to tackle that very question: the legality of the shelters. And federal prosecutors in Manhattan appear to be worried that the judge might do that. Lawyers for the government have twice argued that the judge should wait for the criminal case to conclude.

More here.