The Next Big Thing In Corporate-Tax Avoidance
It’s no secret that big corporations are adept at paying as little in taxes as possible, and that one of the most commonly used strategies for tax avoidance is keeping profits earned at foreign subsidiaries abroad in order to escape the U.S.’s relatively high corporate tax rate on those earnings. But according to a recent article in the Wall Street Journal, it turns out that these firms are actually able to tap this cash after all, simply by taking out loans and using foreign cash as collateral. According to the Journal: “U.S. multinational companies routinely set up units in low-tax jurisdictions to pool cash from their global operations and lend to other parts of the business, tax lawyers and corporate treasurers say. These units operate as internal banks or captive commercial-paper markets, they say, facilitating intracompany lending and charging and paying interest rates along the way.” The IRS sets strict rules governing this behavior, however. The loans must be short term. ...
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Panasonic unit in U.S. bribery investigation: WSJ
NEW YORK - A unit of Japan's Panasonic Corp is under investigation by U.S. authorities looking at whether the company paid bribes overseas to airline employees or government officials to help land business, the Wall Street Journal reported.
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Reuters
New Mortgage Rules: Protection From Banks, or Ourselves?
The federal government’s consumer watchdog will introduce new mortgage rules today. They are designed to protect homebuyers from big bad banks. But they are also about protecting consumers from themselves, which is a slippery slope. Post-financial crisis, it’s deemed too much to expect individuals to read and understand a mortgage document. Dozens of studies suggest we are a financially illiterate society; attempts to teach people about all manner of credit and personal financial matters have largely failed. For our own good, then, the government must mandate “plain vanilla” products that a child could understand. So the Consumer Financial Protection Bureau is set to unveil standards for something called a “qualified mortgage.” If lenders meet certain criteria for simplicity and transparency, borrowers will have limited ability to sue for damages should things not work out. Basically, banks are being required to dumb down the process and make sure their clients can afford the ...
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Sandy Bump? Where Business Is Brisk After the Storm
No one should anticipate that a “Sandy stimulus” will kick the economy into a higher gear. Even so, Sandy has caused businesses of all shapes and sizes to be exceptionally busy—including a few you wouldn’t expect. As the Philadelphia Inquirer noted, economists don’t think that the post-Sandy cleanup, rebuilding, and increased spending by governments, homeowners, and consumers will prove to be a major, long-lasting stimulus to the economy: Economist Kevin Gillen, senior research consultant at the University of Pennsylvania’s Fels Institute of Government, recalled that after Hurricane Katrina in 2005, similar expectations never were realized. “Tons of federal money poured into New Orleans after Katrina,” Gillen said. “Did you see their economy boom?” Nonetheless, there are a few industries, pockets of small businesses, and even individual entrepreneurs that have been benefiting—or will soon—in the post-Sandy world. Here are a few: Pay Phones In New York City, pay phones ...
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Goldman Sachs switches support to Romney
Tuesday, October 9, 2012 - 11:22 RICHARD A. BROOKS/AFP/Getty Images Goldman Sachs has long supported Democrats in the presidential contest. But not this year. Why Goldman and other Wall Street banks are throwing their support behind Mitt Romney. Goldman Sachs has long supported Democrats in the presidential contest. Goldman employees gave generously to then-Senator Barack Obama in 2008. But not this time. Goldman, along with the majority of people who work at big Wall Street banks, are backing former Massachusetts Gov. Mitt Romney instead. One big reason? Dodd-Frank. Banks initially opposed the federal government's 2010 regulation of the financial sector. Perhaps even more significant, however, was the sense that Goldman and other highly influential institutions suddenly seemed a little less influential in Washington. Accustomed to members of Congressional Financial Services committees coming in for office visits, and frequent telephone communication, under Obama's White House, communciation ...
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