"Americans losing homes for unpaid tax bills as little as $44"

On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.

Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.

All because he didn’t pay a $134 property tax bill.

For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid. Read more >>

NY State to suspend driving licenses of tax delinquents

Approved in March, an initiative to suspend the driver’s license of New Yorkers who owe more than $10,000 in back taxes will begin this week.

The state Tax Department will send the first round of 16,000 suspension notices to tax delinquents this week. Scofflaws will have 60 days to respond before receiving a second notice, giving him or her 15 more days. If taxpayer again fails to arrange payment, the license will be suspended until the debt is paid.

Gov. Andrew M. Cuomo proposed the initiative in January. The state Legislature approved it as part of the state budget, adopted in March. His administration estimates the initiative could generate up to $26 million the first year and $6 million annually after that. Read more >>

Thousands of French Households Taxed Over 100%

More than 8,000 French households' tax bills topped 100 percent of their income in 2012, according to a French newspaper report.

Citing data from France's finance ministry, the business newspaper Les Echos reported on Friday that in addition to those taxed at over 100 percent last year, almost 12,000 households paid taxes worth more than 75 percent of their 2011 income and that a further 9,910 households were taxed at more than 85 percent of their income.

The paper said this was due to a one-off levy imposed on the 2011 incomes of households with assets of more than 1.3 million euros ($1.67 million). The surcharge was introduced by socialist President Francois Hollande in an attempt to offset the cost of a rebate scheme and taxation cap introduced by former President Nikolas Sarkozy, the paper added.

"In 2011, 5,221 households had a tax rate of more than 100 percent on their revenues, Some 6,203 households had a rate of more than 85 percent and 6,343 house holds a rate of more than 75 percent," the newspaper said but households could take advantage of a "tax shield" introduced by Sarkozy to cap an individual's overall taxation at 50 percent of their income. Read more >>

Canada to tax bitcoin transactions

Canada’s Revenue Agency says users of bitcoins are obligated to pay taxes on transactions using the alternative currency, the CBC reported.

The agency told the CBC that two tax rules apply to the digital currency, depending on how it’s used. Barter transaction rules apply to bitcoins used for goods or services, according to the report.  Bitcoins bought and sold for speculative purposes are subject to captial gains or income taxes, depending on the specifics of the case, the agency says.

The real-world implications are beginning to be felt, as one realtor in Saskatoon quoted in the story has listed houses priced in bitcoins. Read more >>

Senate bill jeopardizes tax-free online shopping

States could force Internet retailers to collect sales taxes under a bill that overwhelmingly passed a test vote in the Senate Monday.

Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers a big advantage over brick-and-mortar stores.

The bill would allow states to require online retailers to collect state and local sales taxes for purchases made over the Internet. The sales taxes would be sent to the states where shoppers live.

The Senate voted 74 to 20 to begin debating the bill. If that level of support continues, the Senate could pass the bill as early as this week.

Supporters say the bill is about fairness for businesses and lost revenue for states. Opponents say it would impose complicated regulations on retailers and doesn't have enough protections for small businesses. Businesses with less than $1 million a year in online sales would be exempt. Read more >>

Social Security: Many pay more than they'll get back

Up until now, Social Security has been a windfall for many retirees: They collected far more in benefits than they shelled out in taxes. That's changing. Many of those retiring will have paid more into the coveted entitlement program than they will get back.

Here are the numbers:

A couple who each earned the average wage during their careers and retired in 1990 would have paid $316,000 in Social Security taxes, but collected $436,000 in benefits, according to data crunched by Eugene Steuerle, an economist at the Urban Institute.

Had that couple turned 65 in 2010, however, they would have paid $600,000 in taxes, but could expect to collect just $579,000. This is the first time in the program's history that taxes outweighed benefits for this group, a couple with average earnings.

The imbalance will get more pronounced for future generations of retirees. Couples now in their early 40s will have forked over $808,000 in Social Security taxes by the time they retire, but get back only $703,000 in benefits. Read more >>

The Early Tax Deadline You Can't Afford to Miss

For millions of taxpayers, the April 15 deadline to file your 2012 return already looms large. But for a select group of retirement savers, there's a deadline coming even sooner -- and missing it could cost you a huge amount of money.

That select group includes those who have money in traditional IRAs and 401(k) accounts and who turned age 70½ during 2012.

Under what's known as the required minimum distribution or RMD rules, you have until April 1 of the following year to make your first required withdrawal. In subsequent years, you need to take money out of your account by Dec. 31 to cover that year's RMD. Read more >>

Councilman Proposes Email Tax To Fund Postal Service

A Berkeley city councilman has suggested that a tax on email may be wise way to help fund the United States Postal Service, according to the blog Berkeleyside.

District 8 Supervisor Gordon Wozniak, who represents an area that includes the Claremont Hotel and the eastern end of the UC Berkeley campus, made the comments Tuesday as city officials moved to halt the sale of a Post Office building on Allston Way due to a decline in business.

“There should be something like a bit tax. I mean a bit tax could be a cent per-gigabit and they would still make, probably, billions of dollars a year…And there should be, also, a very tiny tax on email,” Wozniak said at Tuesday’s meeting.

Wozniak said this would not only help fund the cash-strapped post office, but also discourage spam. According to Berkeleyside, the idea was even studied by the United Nations in 1999 as a means of funding global communications infrastructure. Read more >>

The hidden tax Washington doesn't want you to know

Okay, middle-class taxpayers: Listen up. Our national government in Washington is screwing you again. This time the screwing involves the way that two new income tax surcharges, supposedly designed to affect only the "rich," will reach deeper and deeper into the middle class unless something is done now to rein them in.

I'm talking about the 0.9% tax surcharge on the amount by which individuals' "earned income" -- such as salaries and fees -- exceeds $200,000 this year, and the 3.8% surcharge on some or all the investment income of single households with an adjusted gross income of more than $200,000, and married households with an adjusted gross of $250,000 and up.

These surcharges were built into the Affordable Care Act (a.k.a. Obamacare). The screwing isn't the tax surcharges themselves -- it's the fact that the thresholds for them aren't indexed for inflation. This means that unless something is done, more and more people will be subject to these taxes as inflation boosts incomes.
Read more >>

Consumer confidence plunges to lowest level in more than a year

Consumer confidence plunged in January to its lowest level in more than a year, reflecting higher Social Security taxes that left Americans with less take-home pay.

The Conference Board said Tuesday that its consumer confidence index dropped to 58.6 in January. That's down from 66.7 in December and the lowest since November 2011.

Conference Board economist Lynn Franco said the tax increase was a key reason confidence tumbled and made Americans less optimistic about the next six months.

Congress and the White House reached a deal to prevent income taxes from rising on most Americans Jan. 1. But they allowed a temporary cut in Social Security taxes to expire. For a worker earning $50,000 a year, take-home pay will shrink this year by about $1,000. Read more >>

UK Tax Crackdown to Target Middle Class

Middle-class professionals are to be targeted in a new crackdown on tax evasion promised by the chief prosecutor of England and Wales.

The Crown Prosecution Service will dramatically ramp up the number of tax evasion cases it takes on – with a view to prosecution – over the next two years, Keir Starmer, the director of public prosecutions, told the Financial Times. The CPS will increase five fold the number of tax files it handles, to 1,500 a year by 2014-15.

This compares with 200 tax convictions the CPS secured in 2010 – its current conviction rate for tax cases stands at 86 percent.

Tax consultants who push dishonest avoidance schemes – and the professionals who invest in them – are central targets in the strategy.

"There have been some cases involving lawyers, some involving tax consultants, and plumbers," Mr Starmer said in an interview. "Within the ramped-up volume, it's intended that we will select cases to send a clear message as to the breadth of our coverage." Read more >>

Workers making $30,000 will take a bigger hit than those earning $500,000 under new fiscal deal

Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal, according to the nonpartisan Tax Policy Center.

Earners in the latter group will pay an average 1.3 percent more - or an additional $2,711 - in taxes this year, while workers making between $30,000 and $200,000 will see their paychecks shrink by as much as 1.7 percent - or up to $1,784 - the D.C.-based think tank reported. Overall, nearly 80 percent of households will pay more money to the federal government as a result of the fiscal cliff deal.

'The economy needs a stimulus, but under the agreement, taxes will go up in 2013 relative to 2012 - not only on high-income households, as widely discussed, but also on every working man and woman in the country, via the end of the payroll tax cut,' said William G. Gale, co-director of the Tax Policy Center.

'For most households, the payroll tax takes a far bigger bite than the income tax does, and the payroll tax cut therefore - as [the Congressional Budget Office] and others have shown - was a more effective stimulus than income tax cuts were, because the payroll tax cuts hit lower in the income distribution and hence were more likely to be spent,' he added. Read more >>

‘Fiscal Cliff’ Deal Also Doles Out Millions for Hollywood, Railroads, Rum Producers

The mix of tax perks covering the next year, but with budget implications for the next two years includes these:

$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States.  Producers can expense up to $15 million of costs for their projects.

$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50 percent of the cost to maintain tracks that they own or lease.

$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

$70 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to
$1.01 per gallon.

$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes. Read more >>

'Marriage penalty' could cost couples more than $2,000 in higher taxes

The return of the so-called marriage penalty could cost many couples more than $2,000 in higher 2013 taxes if Congress doesn't get its act together and fix the fiscal cliff.

As a result of the Bush tax cuts, married couples get a standard deduction that's exactly twice that of individuals. And the income ranges for the 10% and 15% tax brackets are also doubled. Prior to 2001, many married couples had paid a "penalty" because their standard deduction and income tax brackets were less than twice those of singles.

Next year the imbalance could return. While the standard deduction for single filers should rise to $6,100, married couples would receive a deduction of only $10,150 if lawmakers don't extend the provision, according to estimates by the Tax Foundation. To erase the marriage penalty, it would have to be $12,200.

Married couples would also be moved into higher tax brackets more quickly. Individual taxpayers would be in the 15% tax bracket until they hit $36,250 in taxable income, but married filers could be pushed above it after only $60,550 in income, as opposed to $72,500. Read more >>

Facebook accused of 'dodging tax' by using loophole to channel cash through Cayman Islands

Facebook channelled profits through a series of tax havens in order to pay just  £2.9m of corporation tax on more than £800m of overseas profits in 2011, it has been reported.

Like Google and Apple the social networking site is said to have used its headquarters in Ireland to avoid tax liabilities in the UK before directing earnings to a subsidiary in the Cayman Islands.

British companies that buy advertising on Facebook must do so via Facebook Ireland Ltd which entitles the company to sidestep HM Revenue and Customs and authorities in other higher-tax jurisdictions, reported the Sunday Times today.

As a result less than £240,000 was paid to the UK taxman. The Dublin office, with a staff of 400 people showed a gross profit of £840million in 2011. Despite this, Facebook Ireland posted a loss of £15million for the year after hundreds of millions were routed to a subsidiary in the Cayman Islands and to its parent company in the U.S.

Labour MP John Mann recently spoke out about the company's actions, calling them 'disingenuous and immoral'.

'They benefit enormously from the country's internet infrastructure but do nothing to fund it. It's like driving a car with no tax. We would stand for it on our roads so why stand for it on the net?,' he said.
Accounts for Facebook Ireland revealed that last year £440m was moved into an Irish sister company before being diverted to a subsidiary company in the Cayman Islands. Read more >>

A look at tax breaks that expired this year

While much of Washington is consumed by the debate over tax cuts scheduled to expire next year, a big package of tax breaks already expired this year. Among the biggest, along with the cost to retroactively extend each one for 2012 and 2013:
___

Individual tax breaks

— Relief from the Alternative Minimum Tax. The tax is designed to ensure that wealthy people can't use tax breaks to avoid paying any federal taxes. However, it was never indexed for inflation, so Congress routinely adjusts it to keep it from imposing hefty tax increases on millions of middle-income families. Cost: $132 billion.

— State and local sales tax deduction. Taxpayers can take this itemized deduction instead of deducting state and local income taxes. It is geared for people who live in states without state income taxes: Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas and Wyoming. Cost: $4.4 billion.

— A deduction of up to $4,000 for qualified higher education expenses: Cost: $4.2 billion.

— A tax credit for improvements to make homes more energy efficient. Cost: $2.4 billion. Read more >>

U.S. Firms Move Abroad

More big U.S. companies are reincorporating abroad despite a 2004 federal law that sought to curb the practice. One big reason: Taxes. Companies cite various reasons for moving, including expanding their operations and their geographic reach. But tax bills remain a primary concern. A few cite worries that U.S. taxes will rise in the future, especially if Washington revamps the tax code next year to shrink the federal budget deficit.

"We want to be closer to where our clients are," says David Prosperi, a spokesman for risk manager Aon plc, which relocated to the U.K. in April. Aon has told analysts it expects to reduce its tax rate, which averaged 28% over the past five years, by five percentage points over time, which could boost profits by about $100 million annually.

Since 2009, at least 10 U.S. public companies have moved their incorporation address abroad or announced plans to do so, including six in the last year or so, according to a Wall Street Journal analysis of company filings and statements. That's up from just a handful from 2004 through 2008. The companies that have moved recently include manufacturer Eaton Corp., oil firms Ensco International Inc. and Rowan Cos., as well as a spinoff of Sara Lee Corp. called D.E. Master Blenders 1753. Read more >>

Taxpayers lost $833 million on food supplied by Amtrak

Amtrak was created to take over the shattered passenger rail system in the early 1970's 

Source
Taxpayers lost $833 million over the last decade on the food and beverages supplied by Amtrak, which managed to spend $1.70 for every dollar that received in revenue.

“Over the last ten years, these losses have amounted to a staggering $833.8 million,” said Rep.John Mica, R-Fla., in a statement previewing a House hearing today.  “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15.  Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”

Amazon.com is currently selling 24-packs of 12 ounce Pepsi cans for $8.94 -- which averages to about 75 cents per can.

Amtrak President Joe Boardman tried encourage House investigators by telling them that last year's losses represent an improvement over previous years. "Our ongoing programs have certainly delivered measurable financial efficiencies," Boardman told Congress in his written testimony today. "In 2006, our food and beverage service recovered 49 percent of their costs. In 2011, these services recovered 59 percent of their costs," he testified.

The food service is legally obligated to break even, but Amtrak lost $84 million just last year. “The rail service’s food and beverage operation has 1,234 employees, and taking into account Amtrak’s $84.5 million loss last year, that’s $68, 476 per employee," Mica said.

World's rich hide at least $21T offshore

British Overseas Territory of the Cayman Islands (Photo credit: Wikipedia)

With about 55,000 inhabitants, the Cayman Islands should not be a well-known name in the rest of the world, but the tiny Caribbean territory has become famous as a tax haven for the world's super rich. According to a new report, the Caymans - along with the other dozen or so international havens for wealth like Switzerland and Bermuda - are the holders of so much of the world's capital, entire regional economies could be moved on it.

The Tax Justice Network has just released a report estimating that the world's tax havens house anywhere from $21 trillion to $32 trillion of money that governments cannot tax. "This offshore economy is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and - most importantly - to have very significant negative impacts on the domestic tax bases of 'source' countries," James Henry, the report's author and a former chief economist at consultancy McKinsey told the Guardian.

The problem of money leaving countries to avoid the tax man is not just reserved for the world's economic powers. The amount that has left developing countries for tax havens could have been more than enough to pay off their debts to the rest of the world, The Guardian reports. About $800 billion has left Russia since the early 1990s. Read more >>

UK Tax avoiders may be 'named and shamed'

Photo of Jimmy Carr 

The Treasury will announce a crackdown on tax avoidance schemes on Monday in the wake of the row over the tax affairs of the comedian Jimmy Carr. Promoters of aggressive tax avoidance schemes may be forced to disclose client lists to inspectors, according to David Gauke, the minister with responsibility for tax matters.

It follows revelations about the financial loopholes used by the rich and famous to legally sidestep large tax bills. In one scheme, Carr was paying 1% tax on his income. The plan, which is going out to consultation, has been greeted with scepticism by Labour. One shadow minister said the Tories were so closely associated with tax avoiders they would not have the political will necessary to change the tax system.

Gauke will tell the Policy Exchange thinktank that scheme operators will be "named and shamed" for sharp practice. Officials often hit a dead end when investigating schemes that are based offshore but, under the proposals, UK promoters will be made to hand over customer databases. That information will be used to formally warn clients about the deals they have signed up to and to work out how much the amount of tax they would owe if the scheme failed. Read more >>