US Treasury seeks reporting of cryptocurrency transfers

WASHINGTON - The Biden administration's tax enforcement proposal would require that cryptocurrency transfers over $10,000 be reported to the Internal Revenue Service and would more than double the IRS workforce over a decade, the US Treasury said on Thursday.

The plans were part of a Treasury report detailing the Biden Administration's proposal to invest some $80 billion into the US tax agency through 2031 to improve compliance an revenue collections.

"As with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on," the Treasury said in the report, which noted that these assets, are likely to grow in importance over the next decade as a part of business income.

Cryptocurrency assets currently have a market capitalization of about $2 trillion.

The Treasury disclosure blunted a rally in the dollar value of bitcoin on Thursday - to a 6% gain from an earlier 10% rise. The gains came a day after bitcoin fell as much as 30% and number two digital currency ether fell 45%.

The Treasury's report said the proposed IRS investments would add a total of more than 86,000 full-time equivalent employees to the agency's ranks over the next decade, reversing a long-term decline and more than doubling the 2019 IRS workforce of 73,554 full-time equivalent positions.

It said the investment plan would allow for the hiring of least 5,000 additional enforcement personnel over the decade.

SHRINK THE GAP

The Treasury said its proposal would shrink by about 10% the "tax gap" that it estimates at about $7 trillion or 3% of US economic output over the next decade, raising some $700 billion in a "conservative" estimate.

The tax gap - the difference between taxes legally owed and those collected by the IRS - was estimated at $584 billion in 2019, according to the policy paper.

By the second decade, it estimated that the investments would yield $1.6 trillion in additional revenue, as revenue agents hired in prior years gain experience in dealing with highly complex tax returns filed by wealthy individuals.

The IRS investment plan also would replace the Treasury's 1960s-era computer architecture with new machine-learning-capable systems that will be better able to detect suspect tax returns. IRS is the only federal agency with computers that run on the antiquated Common Business-Oriented Language (COBOL) system, Treasury said. 

-reuters

PH stock market down on light trading

MANILA - Philippine share prices drifted lower on Tuesday in light trading, as investors focused on renewed concerns over the US debt ceiling and the future direction of its monetary policy.

At the Philippine Stock Exchange, the benchmark index fell 16.56 points or 0.26 percent to close at 6,461.38. Except for the marginal gain of the financial counter, the other sub-indices finished in negative territory, with the property, industrial and service sectors losing at least 0.50 percent each.

Decliners outnumbered advancers, 83 to 56, while 43 issues were unchanged. A total of 670.52 million stocks worth P6.62 billion changed hands.

Most actively traded stocks were Alliance Global, PLDT, Universal Robina, LT Group and BPI. The biggest gainers were Millennium Global, AgriNurture and E-Game, while the biggest losers were Mabuhay Vinyl, Vitarich and Solid Group.

"The US remains among the top source of new jitters this time revolving around the debates on the debt ceiling," said Jun Calaycay of Accord Capital Equities Corp.

The US Treasury may hit its borrowing limit by mid-October. The cap must be raised to prevent the world's largest economy from defaulting on its debt.

This not the first time that the US government is faced with this problem. It happened three years ago and again in late 2012, causing a massive selloff in global markets.

"President [Barack] Obama has indicated earlier that he will not 'negotiate' on the issue against hardline Republicans. This puts in peril the creation of a much needed additional federal government borrowing space – a scenario that could lead to a shutdown and a debt default," Calaycay said.

Overnight, the Dow Jones industrial average shed 49.71 points or 0.32 percent to close at 15,401.38 as investors weighed the next move of the US central bank on its monetary stimulus.

"It’s a mix of extending the duration of the stimulus, to shifting focus to priming the real economy and to outright tapering – running the whole gamut of all possible policy alternatives and leaving investors clueless," said Calaycay.

In its last policy meeting, the Federal Open Market Committee (FOMC) decided to postpone the tapering of its $85-billion bond-buying program, a huge driver of stock market rallies in the past.

William Dudley, president of the Federal Reserve Bank of New York, said the current pace of economic growth is not strong enough to withstand the reduction of the US central bank's asset purchases.

This statement came on the heels of conflicting statements of FOMC members signaling the central bank could start reducing stimulus next month, while another criticized the decision not to taper in September.

"Except for the ongoing crisis in three barangays of Zamboanga City and the seemingly diminishing steam of the pork barrel saga, there is very little investors can actually move and act on from the domestic front – except the oncoming end-of-quarter window dressing – from which hopes of a short-term positive action springs," Calaycay said.

source: interaksyon.com

US bailout 5 years ago avoided catastrophe - Treasury

WASHINGTON - The US Treasury said Wednesday the government's massive response to the economic crisis five years ago paid off, avoiding a catastrophic breakdown of the financial system.

In a report marking the anniversary of the bankruptcy of investment bank Lehman Brothers -- which snowballed into the worst crisis since the 1930s -- the Treasury defended deploying hundreds of billions of taxpayer dollars to save other banks, major financial institutions and auto companies.

"Without the government's forceful response, that damage would have been far worse, and the ultimate cost to repair the damage would have been far higher," the report summarized.

While the rescue effort required piling up government debt, it was necessary, said Treasury officials who briefed reporters.

"We prevented a collapse of the financial system," one said on condition of anonymity.

"That's why we did it, and that's the measure of success."

The report says the government recovered what it spent -- or even turned a profit -- in the Troubled Asset Relief Program and the bailouts of housing agencies Fannie Mae and Freddie Mac, both efforts launched late 2008 by the outgoing administration of president George W. Bush.

Of $238 billion pumped into more than 700 vulnerable banks, only $3 billion has yet to be paid back.

From $182 billion allocated to rescue the giant insurer American international Group, the government counts $205 billion in returns, though that includes $17 billion in paper gains still not realized.

In the huge operations to save General Motors and Chrysler from bankruptcy, the government put up $80 billion.

It has since sold Chrysler to Italy's Fiat, and General Motors is back to health, selling cars at pre-crisis levels and relisted on the US stock market.

Even so, the auto sector rescue is likely to come up $15 billion short, the Treasury admitted.

The largest chunk of money went to Fannie and Freddie, whose survival was crucial in turning around the housing sector after it imploded when the recession left millions of Americans unable to pay their mortgages.

The government pumped $187 billion into the two, taking control of them after shareholders were wiped out.

While none of the equity has been recovered, the government has taken $146 billion in dividend payments from them and expects more in the future, the official said.

The downside is a government deficit that rocketed to $1.4 trillion in fiscal 2009 and continued to top $1 trillion until this year. That sent government debt to the current nearly $17 trillion, compared to just $10 trillion five years ago.

Critics of the government say that is why the bailouts were wrong, arguing that taxpayers will continue to bear the cost for years into the future.

But the Treasury officials said keeping the economy together and, especially, keeping the tens of thousands of auto company workers in their jobs were worth the costs.

People "do not really understand what we did," said another Treasury official.

"The run was stopped, the panic was stopped, the system didn't collapse."

"The ripple effects of letting those companies implode would have been huge."

source: interaksyon.com

Obama 'cliff' remarks spark US stocks sell-off

NEW YORK - US stocks tumbled Wednesday as President Barack Obama challenged Republicans to accept tax increases for the wealthy in a deal to avert the year-end fiscal cliff.

After opening higher, helped by Cisco Systems's strong earnings, share prices slid and then turned more sharply downward after Obama laid out his terms for a deal in his first news conference since his re-election.

Wall Street stocks closed at their lowest level in more than four months after Obama drew a hard line against Republicans in the battle for a compromise to avoid automatic spending cuts and tax increases that take effect in January.

"The president's statements failed to inspire investor confidence, thus resulting in an afternoon sell-off," said Briefing.com analysts.


The Dow Jones Industrial Average dropped 185.23 points (1.45 percent) to 12,570.95, its lowest close since June 26.

The broad-market S&P 500 lost 19.04 (1.39 percent) at 1,355.49, while the tech-rich Nasdaq Composite gave up 37.08 (1.29 percent) at 2,846.81.

Bank of America led the Dow rout, sliding 3.6 percent, followed by General Electric, down 3.2 percent.

Dow component Cisco was the sole blue-chip gainer, jumping 4.8 percent after its 48 cents earnings per share for the fiscal first quarter beat analyst expectations by two cents.

Abercrombie & Fitch, the retailer of trendy clothing for youth, soared 34.5 percent after turning in a 40 percent jump in third-quarter profit and sharply increasing its forecasts for the full year.

Office supplies chain Staples added 2.6 percent after reporting an expected quarterly loss due to impairment charges mainly related to its struggling European business.

Excluding that, its earnings per share came in flat, and around analyst expectations.

On the Nasdaq, Dell added 1.9 percent and Facebook gained 12.6 percent, despite a lifting of a share-sale ban for insiders, while Apple fell 1.1 percent.

Starbucks dropped 2.9 percent after announcing it would buy tea chain Teavana for $620 million.

Bond prices were mixed.

The 10-year US Treasury yield was unchanged from Tuesday at 1.59 percent, and the 30-year rose to 2.73 percent from 2.72 percent.

Bond prices and yields move inversely.

source: interaksyon.com