Monday, August 26, 2013

Spitzer Leads NYC Comptroller Race, but Questions Persist

In a July 8, 2013 editorial, the Wall Street Journal questioned whether Eliot Spitzer was a fit candidate for New York City Comptroller. Spitzer famously resigned as governor of New York in 2008 after his use of an escort service became public knowledge, but the editorial focuses largely on his actions while he was New York Attorney General (AG). While serving as AG, Spitzer cultivated an image as a person who would take on the powerful Wall Street interests. But critics allege that he acted inappropriately in wielding his power. For example, John Whitehead, a former chairman of Goldman Sachs, stated that Spitzer threatened him after Whitehead wrote an editorial in favor of Hank Greenberg, a then-CEO of American International Group (AIG) and a Spitzer target. According to Whitehead, Spitzer told him “You will pay the price. This is only the beginning and you will pay dearly for what you have done.

In 2005, Thomas Donahue, then-president of the U.S. Chamber of Commerce, blasted Spitzer’s methods: “Spitzer's approach is to walk in and say, 'we're going to make a deal, and you're going to pay $600 million to the state, and you're going to get rid of this person and that person, and if you don't do it by tonight, we're going to indict the company’...It is the most egregious and unacceptable form of intimidation we've seen in this country in modern times."

Despite valid concerns about Spitzer, his political comeback appears to be on sound footing. As of August 14, 2013, he held a 19-point lead among likely Democratic voters in the September 10th primary.

More News: Joe B. Garza

Wednesday, August 14, 2013

U.S., Cayman Islands Reach Agreement to Stem Tax Evasion

According recent news reports, the Cayman Islands – long heralded by the wealthy for its liberal and lucrative tax havens – has reached a binding agreement with the United States government, in efforts to implement a tax evasion law and address an issue that has long marred relations between the two countries. The issue being addressed is coordination with the island nation to adhere to the Foreign Account Tax Compliance Act (FATCA), a law implemented and created in 2010, and one that goes into effect in 2014.

Officials familiar with the scenario have stated that the nations have reached an agreement called an Inter Government Agreement (IGA) that will remedy this situation and streamline the implementation of this law in 2014.

According to Robert Stack, the U.S. Treasury Department’s deputy assistant secretary for international tax affairs, the IGA agreement will effectively "provide certainty to Cayman's significant fund industry with respect to FATCA implementation.”

The FATCA Act is a law designed to help prevent tax evasions in low tax or no tax countries, which are often used as illegal offshore tax havens by the wealthy. The agreement will mandate that financial institutions abroad inform the Internal Revenue Service of any accounts being held that have a balance which exceeds $50,000 U.S. This act is a direct result of the rampant scandal that was uncovered in the Swiss banking system, which led to its creation.

The Cayman Islands remains a popular destination for offshore funds hording, mostly due to the fact that there is no income tax in this nation and the banking system has consistently appeased to the wealthy. In 2008, President Obama labeled this island nation as a “tax haven” for the wealthy (who were trying to hide their money abroad to evade income taxes). With such a deal in place, wealthy citizens and companies will no longer be able to veil their assets in these offshore holdings.

The U.S. government hopes that the pact will encourage other low tax or no tax nations – such as Luxembourg, Bermuda and the British Virgin Islands – to follow suit and sign on board. Most recently, Ireland and Switzerland have agreed to this FATCA pact. The federal government is currently entertaining the notion to a slew of other popular offshore tax havens in efforts to crack down on income tax evasion.

Texas Lawyer Joe Garza (B) enjoys covering and writing about current tax news when he is not busy practicing asset protection and estate planning law. As a prominent tax attorney with more than three decades of practice, Garza possesses a natural infatuation with tax related news.