A bipartisan task force, led by Alice Rivlin, a member of President Obama’s debt commission, and former senator Pete Domenici, released their plan to cut the deficit. The plan would rely on spending cuts and a debt-reduction sales tax which the task force believes would save $6 trillion by 2020. Law professor Daniel Berman, director of the Graduate Tax Program and both a Treasury and Congressional tax counsel, offers the following commentary:
“Adding a consumption tax probably is the only way to raise sufficient revenue while keeping marginal income tax rates low and maintaining the major tax expenditures that our citizens demand.
“To reject such a structure because of its ‘ties to Europe, ‘ irrespective of its merits or demerits, is simply irresponsible national leadership. In this economic challenge we must learn from other countries rather than reject their choices out of hand.”
Contact Daniel Berman, 617-353-3105, email@example.com
The International Monetary Fund recently endorsed the use of capital controls by governments to avoid asset bubbles. Now it’s backing off a bit, saying such policies could cause distortions in domestic and international markets. International Relations Professor Kevin Gallagher, a specialist in globalization and development who has written about the IMF and capital controls in Foreign Policy magazine, says the IMF is waffling.
“On capital controls the IMF seems to be stuck making one step forward, two steps back. Capital controls are instrument to correct for distortions, not create them.”
Contact Kevin Gallagher, 617-353-9348, firstname.lastname@example.org
The troubles for Toyota keep mounting with a recall of 311,000 of its 2010 Prius expected this week. BU College of Communication Professor and veteran PR reputation management expert Peter Morrissey offers his thoughts on the embattled carmaker:
“Toyota’s reputation is its most valued asset. They are putting it at unacceptable high risk and they will pay dearly for this in the short and long run. They need to wrestle back control of the situation. Like putting toothpaste back in the tube – hard to do and very messy.”
Contact Peter Morrissey, 617-353-1020, email@example.com
The Swiss government says it may have to renegotiate that deal with the U.S. Internal Revenue Service to hand over names of thousands of tax cheats in return for ending legal proceedings against the Swiss banking giant UBS. Law Professor Daniel Berman, a former U.S. Treasury deputy international tax counsel, says the Swiss government has no choice but to comply with the agreement.
“If doing so will require a change in the domestic laws of Switzerland, then Switzerland will have to modify its laws.”
Contact Daniel Berman, 617-353-3105, firstname.lastname@example.org
President Obama has proposed taxing banks that have benefited from TARP bailouts and restricting banking trading activities so depositor funds are not put at risk. In a Boston Globe op-ed, Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says it would be more effective to make too-big-to-fail institutions return every dollar of the subsidy they get by being able to borrow funds at a lower rate than less complex institutions.
“We must remind ourselves and Obama that the subsidy comes out of taxpayers’ pockets.”
Contact Cornelius Hurley, 617-353-5427, email@example.com
Despite fury over Wall Street’s pay culture, major banks and securities firms are headed toward a record compensation total of around $145 billion for 2009 when all the numbers are out. Economics Professor Laurence Kotlikoff, a senior economist in the Reagan administration whose new book, “Jimmy Stewart is Dead,” about the banking industry, will be published next month, says the idea of taxing Wall Steet now is a “transparent joke.”
“Wall Street is continuing to play craps with the taxpayers’ chips and to lay the ground for a financial earthquake of even greater magnitude than we’ve just experienced.”
Contact Laurence Kotlikoff, 617-353-4002, firstname.lastname@example.org
The Securities and Exchange Commission is upgrading itself, creating specialized units within its enforcement arm and offering financial-insider informants immunity from prosecution. Law Professor Elizabeth Nowicki, a veteran of both the SEC and Wall Street, says the immunity for witnesses can help insure investors that the market is still relative safe.
“Offering immunity to a securities fraud participant in exchange for testimony is a small price to pay for the ability to bring down major fraud schemes that would otherwise be hard to prove.”
Contact Elizabeth Nowicki, 617-353-2807, email@example.com
Insurance giant AIG, bailed out by taxpayers to the tune of $180 billion, had promised to return $45 million of the $165 million in bonuses it paid despite the bailout. But most of that remains unpaid, the Washington Post reports. Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance at BU’s School of Management and whose book “Uncontrolled Risk” about the fall of Lehman Brothers will soon be published, says AIG is just greedy.
“If these executives do not want to honor their obligation to refund bonuses, then the government should impose an AIG bonus tax to have these funds returned. At minimum, the government needs to remind AIG executives who they are now owned by.”
Contact Mark T. Williams, 617-358-2789, firstname.lastname@example.org
Proctor & Gamble has agreed to sell its prescription drug business for $3.1 billion to the Irish pharmaceutical firm Warner Chilcott. School of Law Professor Kevin Outterson, an authority in pharma law and marketing, says the deal is evidence of further consolidation in the prescription drug industry.
“P&G evidently decided they couldn’t compete at at scale with only $2.3 billioin in annual revenues.”
Contact Kevin Outterson, 617-353-3130, email@example.com