Did the Japanese Consumption Tax Hurt the Economy?

WAS the decision to raise a key tax this year a big mistake? For years, the political consensus has been that Japan’s consumption (ie, value-added) tax needs to go up in order to control a ballooning public debt. In April the government of Shinzo Abe carried out a decision made by the previous government and lifted the tax from 5% to 8%. That is still low by developed-country standards, but it seems to have inflicted more pain than most predicted. Reports from Tokyo’s brothel districts to the country’s rural regions suggest the move has hurt an already limp recovery.

The last time politicians dared raise the consumption tax was back in 1997. It helped push a recovering economy back into recession. Then, however, the move coincided with a financial storm in Asia and a bad-loans crisis at home. This time, politicians seemed surer that people would soon head back to the shops. Yet the fall in household demand has proven even sharper than in 1997 (see chart), and a recession is again on the cards. The economy shrank by an annualised 7.1% in the second quarter of the year. Economists are growing nervous about Japan’s third-quarter GDP, to be published on November 17th.

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Australian Tax Office Declares Bitcoin, Cryptocurrencies to be Property

The Australian Tax Office has finally released their tax guidance ruling on the how they will treat Bitcoins and all cryptocurrency, which include Litecoin and Dogecoin. The verdict? Bitcoin, and the rest, will be considered property.

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Bitcoin Miners to Owe Self Employment, Social Security & Medicare Taxes

The IRS made a very important ruling recently regarding the status of bitcoins in the eyes of the government. According to the IRS, bitcoin is not a currency. The IRS views bitcoin as a taxable property. Any capital gains from spending bitcoins or converting them into real currency is also taxable. This ruling has been applied to all past and future transactions and mining efforts involving bitcoins. For the early adapters who have been in the bitcoin business from the start will need to go back and report all their bitcoin activity applicable to the IRS.

It has also been determined that Bitcoin minors are self-employed individuals. That means they will need to report all Bitcoin earnings both past and present when filing their taxes. They will have to pay self-employment taxes, which include social security and Medicare withholding.

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Libra Tax: a Bitcoin Tax Startup

“Accountants are going to want a very accurate transaction history and value of Bitcoin at the time it was purchased and used or sold,” says Jake Benson, 25. At least one Bitcoin tax service — Bitcointaxes.info — invites users to manually enter their Bitcoin trades to calculate taxes, or to import it their trading activity from their chosen wallet service, such as Coinbase, Bitstamp or (eek) Mt. Gox. Founder Colin Mackie, a Seattle-based software engineer, started the service after he realized he needed it himself. “I was trying to calculate my own taxes [this Christmas], opened up Excel, and realized that was going to be impossible,” he says via chat. “So I started writing something.”

He says that approximately 400 people have used the site since it launched in February. That was before the guidance from the IRS came out; now he plans to update the service to incorporate the self-employment tax that Bitcoin “miners” are expected to pay, per the new guidance. Mackie says that 4,000 people visited his site the day the guidance came out, which is a “lot more” than usual.

But Benson says tracking Bitcoin trades could be even more automated. He launched Libra Tax in December, incorporated it weeks ago, and says he found an angel investor (today coincidentally). A responsible taxpayer would simply plug his or her Bitcoin wallet addresses into his service. Because Bitcoin is one huge public ledger, the service could pull data about all the Bitcoin that moved in and out of the wallet, automatically compute the value of the Bitcoin at the time, and calculate the tax burden. Users will be able to decide which exchanges they want to use to value the Bitcoin (Mt. Gox or Bitstamp or BTC-E…) and whether they want to “cash in” the first bitcoins they bought (the ones from years ago purchased for $2) or the last ones in (in case they want to claim capital losses for those purchased in November for $1,100).

Sounds great! Unfortunately, it’s not built yet.

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Did the IRS Just Shoot Bitcoin in the Head? Bitcoin is a Security for Tax Purposes, not a Currency

The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue.

Today’s IRS guidance will provide certainty for Bitcoin investors, along with potential income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of income for the coffee shop.

“The Internal Revenue Service’s guidance today provides clarity for taxpayers who want to ensure that they’re doing the right thing and playing by the rules when utilizing Bitcoin and other digital currencies,” Senator Thomas Carper, a Delaware Democrat, said today in a statement.

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Did the IRS just shoot bitcoin in the head?

Falciani Has Been Doing a Snowden on Tax Evaders Hiding in the Bank HSBC

WHAT Edward Snowden is to mass surveillance, Hervé Falciani is becoming to private banking. In 2008 the now 41-year-old native of Monaco walked out of the Geneva branch of HSBC, where he had worked for three years, clutching five CD-ROMs containing data on thousands of account holders. The theft lobbed a bomb into Europe’s private-banking market, spawning raids and tax-evasion investigations continentwide. In the latest, this week, Belgian agents swooped on the homes of 20 HSBC clients, including some with ties to Antwerp diamond dealers.

Mr Falciani went on the run when the Swiss charged him with data theft. After moving to Spain he was imprisoned, but freed when a judge denied a Swiss extradition request. At one point, he claims, he was kidnapped by Mossad agents who wanted a peek at the clients’ names. He has now taken refuge in France, where the government has offered him protection in return for helping it hunt for tax dodgers.

Several countries have used the data to bring cases against suspected evaders. Revelations that dozens of Greek public figures hid money offshore have magnified the tumult in that country’s politics. Spain and France have fingered hundreds of high-level cheats and retrieved €350m ($610m) in back taxes. Mr Falciani maintains that his CDs provided support for an American probe into weak money-laundering controls at HSBC, which led to a $1.9 billion settlement. HSBC disputes this.

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huh. Not heard of this before now, but head is in the science circles, not financial.

Whatever happened to the data that Assange et al claimed to have on the American banking sector? Just hot air?