Daily Tax Update - December 4, 2012: Bowles Rejects Republican "Bowles" Counteroffer

BOWLES REJECTS REPUBLICAN “BOWLES” COUNTEROFFER:  Erskine Bowles, the former Clinton White House chief of staff who helped lead the Simpson-Bowles Commission disavowed the counterproposal put forth by House Republicans  yesterday.  Bowles’ statement said, "While I'm flattered the Speaker would call something "the Bowles plan,’ the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson‐Bowles plan, nor is it the Bowles plan.  In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid‐point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time.  The Joint Select Committee failed to reach a deal, and circumstances have changed since then.  It is up to negotiators to figure out where the middle ground is today.  Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy."

  • In remarks today at the "Fix the Debt Conference," Senate Finance Chairman Max Baucus said, "I want to commend Erskine Bowles, Senator Alan Simpson and the entire Coalition for your laser-like focus on this issue.  You are engaging the American people and drawing attention to the fiscal challenges that threaten our future.  I know many here today are proponents of the Simpson-Bowles plan.  As you may know, I served with Senator Simpson and Mr. Bowles on the National Commission for Fiscal Responsibility and Reform.  While I agreed with many of the final report’s proposals, there were several aspects that I could not support at the time.  However, this report has helped advance the national dialogue and has taken on increasing importance, and it should absolutely be part of our debt reduction debate."  Baucus continued, "To give families and businesses certainty, we must agree in the next few weeks on specific spending cuts and revenue increases that reduce the deficit to avoid the fiscal cliff.  We should not put off the hard decisions with gimmicks or triggers.  That’s what got us here in the first place.  It’s time to bite the bullet and make the tough decisions, and make them now.  The first thing we should do is immediately and permanently extend the middle-class tax cuts.  This will provide needed certainty to America’s families, businesses and the markets.  This decisive action will ensure that millions of American families don’t see a tax hike of more than $2,000 starting next month.  Any year-end agreement must also include a long-term extension of the debt ceiling.  America cannot afford another debilitating fiscal showdown.  It has to be a package deal.  And then we need to enact a long-term and comprehensive deficit solution."  Baucus added, "We are simply not raising enough revenue. We need real, significant new revenue this month.  Once that revenue is locked in, we can then turn to overhauling our tax code for the modern economy.  I’m committed to tax reform, and I could have no better partner in this mission than my good friend Dave Camp.  I’ve been developing a plan that will help create jobs, spark innovation and expand opportunity.  We have a lot of work to do in a short amount of time, but I am optimistic.  We can restore confidence in America.  A balanced solution will provide America a fiscal course correction.  And when we reach a meaningful deal — and I am confident we will — every credit rating agency will have restored America’s AAA rating."

US, SWITZERLAND INITIAL AGREEMENT ON FATCA IMPLEMENTATION:  The United States and Switzerland initialed an agreement on the simplified implementation of FATCA yesterday.  The simplifications apply in particular to Social Security, private retirement funds and casualty and property insurances, which are exempt from FATCA, as well as to the due diligence requirements of financial institutions.

According to the Swiss State Secretariat for International Financial Matters, the initialed agreement provides for the following simplifications for significant segments of the Swiss financial industry:

  • Social Security, private retirement funds as well as casualty and property insurances are exempt from the application of FATCA.
  • Collective investment vehicles as well as financial institutions with a predominantly local clientele are deemed, under certain requirements, to be FATCA-compliant and are subject only to a registration obligation.
  • The due diligence obligations on the identification of U.S. clients to which the rest of the Swiss financial institutions are subject are created in such a way that they can reduce the administrative burden.

The statement by the Swiss State Secretariat for International Financial Matters added, "The agreement ensures that accounts held by US persons at Swiss financial institutions are reported either with the consent of the account holder or by administrative assistance channels through group requests.  If consent is not given, the information will not be exchanged automatically, but only on the basis of the administrative assistance provision in the Swiss-US Double Taxation Convention.  The agreement is subject to the approval of the Swiss Parliament and to an optional treaty referendum.  The text of the agreement will be published after the agreement is signed."

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