Category Archives: Taxes

Is a Value Added Tax in Your Future?

The first time I every heard of value added taxes was in the early 1970s, and all the stuff I saw then said the VAT was a bad tax, you raised as much from a sales tax with far lower administrative costs. The economic and policy literature was as one-sided as I have ever seen […]

Martin Wolf on the Need to Rein in Finance

I always enjoy reading the Financial Times’ editor, Martin Wolf, but I sometime forget how refreshing and pointed he can be when he decides to let loose at a deserving target. Today’s lesson is the almost ludicrous efforts of the financial services industry to explain why the debacle that they just foisted on all of […]

The Bad Bank Assets Proposal: Even Worse Than You Imagined

Dear God, let’s just kiss the US economy goodbye. It may take a few years before the loyalists and permabulls throw in the towel, but the handwriting is on the wall. The Obama Administration, if the Washington Post’s latest report is accurate, is about to embark on a hugely expensive “save the banking industry at […]

"An Open Letter to the Western Banking Establishment"

Reader Tim C pointed us to a post on Tim Price’s blog, “The Price of Everything,” which provides astute financial and sometimes social commentary. Below is an excerpt: Dear Western banking establishment, I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore […]

"The Tarp is a fiscal straitjacket"

This comment by Jeffrey Sachs in the Financial Times is broader than its title suggests. It says that the US should not run willy-nilly into enacting massive spending plans in haste. Sachs makes two core points: a lot of compromises are being made that will render big chunks of the plan ineffective and/or wasteful, and […]

Quelle Surprise! Summers Says Banking Industry May Need More Dough

The Administration has evidently launched a campaign to warn the American public that the black hole banking industry will need more in the way of recapitalization funding than is currently on offer. Mind you, we are NOT opposed to this sort of thing were it done correctly: tough minded banking industry reforms, seizure of the […]

CBO: Seeing Stars? ($1.2 Trillion Deficit Edition)

Willem Buiter is being proven right even sooner than he probably expected. The CBO provided a simply atrocious (but I imagine not surprising if you are up on such matters) report that the Federal budget deficit will come in just shy of $1.2 trillion, and that before any stimulus related deficits are added in, which […]

Obama Considering $310 Billion Tax Cut

The Wall Street Journal has sent a news alert that says that Obama is mulling a stimulus plan that will rely more heavily on tax cuts than initially envisaged as a way to win needed Republican support. The Journal says tax cuts could be as much as $310 billion, or 40%, of a total package […]

States Running Out of Unemployment Funds

This is seriously not good, particularly since extending unemployment benefits is one of the preferred mechanisms for economic stimulus (unlike other ways of getting money to citizens, this mechanism is likely to lead to pretty much all being spent, which is the object of the exercise). Now some way will be found to make sure […]

California to Repudiate Treasury on Treatment of Net Operating Losses?

In the geeky but important category, the California legislature attempted but failed to pass a budget that included a provision that effectively repudiated the recent Treasury directive to eliminate the limitation on acquiring banks’ ability to use the net operating losses of acquired banks. That rule change was widely described as instrumental in the catfight […]

Senator Grassley Targets Goldman-Treasury Conflicts, Net Operating Loss Gimmie

We had mentioned in Links a few weeks ago tax law change allowing banks acquiring other banks with crappy assets to use the tax losses (the net operating loss carryforward) of the acquired company: Major Tax Incentive For Bank Purchases: IRS Eliminates the Limitation on Banks’ Built-In Losses Post-Purchase Jones Day (hat tip reader Richard). […]

Has UBS Ruined Switzerland’s Standing as a Financial Haven?

Personally, I would lay more blame for any damage to the Swiss banking brand to the fear of the possible compromise of Switzerland’s standing as a tax haven. However, as we will discuss, the giant Swiss bank UBS has lost a lot of prvate banking clients over worries about the bank’s soundness, something completely contrary […]