Latest news with #taxation
Forbes
8 hours ago
- Business
- Forbes
New Washington State Tax Law Threatens Active Traders
Traders with high-volume activity could face tax on gross trading gains—even if they lose money overall. Washington State B&O Tax: Are Traders At Risk? Self created Darren Neuschwander, CPA, and Adam Manning, CPA, contributed to this blog post. Washington State has taken an aggressive stance on taxing investment and trading income under its Business & Occupation (B&O) tax regime. The October 2024 Antio court ruling and the enactment of HB 2081 in May 2025 have reshaped the landscape, potentially pulling active traders—both individuals and entities—into the tax base. The B&O tax applies to gross receipts, not net income. RCW 82.04.080 defines gross income to include trading gains, interest, dividends, and investment income—without deducting trading losses. This poses a major risk to traders with large volumes of proceeds but net losses overall. HB 2081 carved out exemptions for Family Investment Vehicles (FIVs) and Collective Investment Vehicles (CIVs). However, these exemptions are narrowly defined. FIVs are limited to estates, trusts, and certain educational savings plans. CIVs require unrelated investors and external managers—criteria typical hedge funds meet, but not personal or family trading entities. Most active traders operating through husband-wife LLC/partnerships, or S-Corps, will not qualify for either entity exemption. Individual traders claiming federal Trader Tax Status (TTS) and reporting expenses on Schedule C and gains under Section 475 MTM could inadvertently signal 'business activity,' triggering B&O tax liability. We submitted a formal letter to the Washington Department of Revenue requesting guidance on whether traders are considered 'engaged in business' under state law and whether net trading results—not just gross gains—can define the taxable base. Washington-based traders seeking federal tax savings through TTS may now face unexpected state tax obligations. The situation demands clarity from the state and awareness among traders. Please look at the longer-form version of this blog post on which includes a letter I sent to the WA DOR.
Daily Mail
a day ago
- Business
- Daily Mail
Dimon warns of threat that is bigger than China
By Published: Updated: JPMorgan Chase CEO Jamie Dimon has sounded the alarm about the 'enemy within' the US, which he warned is a bigger threat than China. Dimon claims America is suffering from a worrying 'mismanagement' issue which has the potential to 'kill us'. 'China is a potential adversary. They're doing a lot of things well, they have a lot of problems,' he said at the Reagan National Economic Forum on Friday. 'But what I really worry about is us. Can we get our own act together - our own values, our own capability, our own management?' Dimon, the top boss of America's biggest bank, cautioned that the 'mismanagement' that occurs at all levels of government could be the biggest catalyst for the nation's economic demise. 'The amount of mismanagement is extraordinary - by state, by city, for pensions, and that stuff is going to kill us,' the billionaire banker told the forum. The banking expert predicted the US could grow 3 percent per year if leaders fixed the issues surrounding permitting, taxation, regulations, immigration, health care, and schools in the inner city. He added: 'We have to get our act together. We have to do it very quickly.' Dimon also claimed the US should be taxing carried interest, a loophole that has allowed private market investors to benefit from lower taxes. 'We absolutely should be taxing carried interest,' he said, adding to President Donald Trump's recent campaign to close the provision long-cherished by investors. He suggested the revenue can be used to double income tax credits for individuals with children, adding that the money will flow directly into the communities. Carry - which refers to the part of private fund managers' compensation tied to profits generated - is currently taxed as a long-term capital gain, allowing fund managers to pay lower taxes compared to ordinary income. Closing the loophole has been a bipartisan issue for over a decade, with successive administrations promising to close the loophole. A 2021 Congressional Budget Office estimates that doing so would raise tax revenue by $14 billion over 10 years. Private equity and hedge funds have opposed such legislation, saying it could potentially hurt small businesses as well as institutional investors, such as endowments, foundations and pension funds. Industry groups in February had opposed Trump's plan to close the lucrative tax workaround. Dimon, 69, has run JPMorgan Chase, the largest US bank, for more than 19 years, outlasting many other CEOs, and is one of the most prominent voices in corporate America . His remarks at Friday's forum come just days after he delivered a sobering assessment of the US economy and warned the true fallout from Trump's sweeping tariff policy has yet to be felt. During dramatic appearance at JPMorgan Chase's annual investor day, Dimon said behind the scenes of a soaring stock market lies a deep and under-appreciated risk. He is known for his measured analysis but he believes rising costs, uncertain trade flows, and an American economy perched precariously atop artificially inflated asset prices make for an uncertain time. 'There's an extraordinary amount of complacency,' the nation's most powerful banker said on May 19. 'The last time the country saw 10 percent tariffs on all trading partners was 1971.' Dimon pulled no punches as he described Trump's tariff strategy as 'pretty extreme,' even in its scaled-back form following an April 2 announcement that placed most tariffs on a temporary 90-day pause. A federal appeals court temporarily reinstated the most sweeping of Trump's tariffs on Thursday - a day after a US trade court ruled the president had exceeded his authority in imposing the duties and ordered an immediate block on them. While the exact level of tariffs that will remain on trading partners is unknown, traders expect the levies to persist in some form. White House trade adviser Peter Navarro said on Thursday that the Trump administration will seek to enact tariffs through other means if it ultimately loses the court fights over its trade policy. Investors remain concerned that tariffs will slow growth and reignite inflation , though deals to drop tariff increases on China and the European Union as they negotiate trading terms have reduced pessimism over the US economic outlook.
Reuters
a day ago
- Business
- Reuters
JPMorgan's Dimon says US should tax carried interest, CNBC reports
May 30 (Reuters) - JPMorgan Chase (JPM.N), opens new tab CEO Jamie Dimon said at the Reagan National Economic Forum that the U.S. should be taxing carried interest, CNBC reported on Friday. The comment from the biggest U.S. bank's top boss comes at a time when U.S. President Donald Trump has also been hinting at closing the carried interest loophole. Carry, which refers to the part of private fund managers' compensation tied to profits generated, is currently taxed as a long-term capital gain. This has enabled fund managers to pay lower taxes than on ordinary income.
Reuters
a day ago
- Business
- Reuters
German digital ministry treads cautiously over online platform levy
BERLIN, May 30 (Reuters) - Germany's new digital ministry said any levy on online platforms would have to be internationally coordinated and not result in higher prices for end consumers, in a sign on Friday of possible divisions within government over plans for such a tax. The Minister of State for Culture Wolfram Weimer had said in an interview published on Thursday that officials were working on a levy which would hit platforms such as Alphabet's Google (GOOGL.O), opens new tab and Meta's Facebook (META.O), opens new tab. A levy of 10% would be reasonable, he said - without specifying if this were a tax on revenue or profit. Germany's ruling parties agreed earlier this year to consider the introduction of a digital services levy, but this was not on the list of projects the coalition wants to prioritise. Weimer's proposal had not yet been agreed upon by the government, officials had said. "The decisive factors in evaluating such a levy are that it is designed in a targeted manner, is internationally coordinated and compatible with EU law, that any potential revenue benefits Germany as a hub for innovation, and that ultimately no higher prices are passed on to end consumers," a spokesperson for the digital ministry said. The proposal comes as Chancellor Friedrich Merz is expected to travel to Washington soon to meet with U.S. President Donald Trump, although a trip has not yet been officially announced. Trump has in the past said he will not allow foreign governments to "appropriate America's tax base for their own benefit". Industry association Bitkom warned that the levy could lead to price increases that would impact businesses, public administrations, and consumers. "These price increases will hinder and slow down the urgently needed acceleration of the digitalization of public services and the digital transformation of companies," said Bitkom President Ralf Wintergerst. "What we need is not more, but fewer financial burdens on digital goods and services."
Forbes
a day ago
- Business
- Forbes
Peeking Behind The Code—IRS Just Open-Sourced Direct File
WASHINGTON, DC - FEBRUARY 13: A sign for the Internal Revenue Service (IRS) is seen outside its ... More building on February 13, 2025 in Washington, DC. Members of Elon Musk's Department of Government Efficiency (DOGE) arrived at the Internal Revenue Service to begin examining the agency's operations. (Photo by) You would be excused if you didn't notice, as it was not widely reported—but the IRS just open-sourced Direct File—more specifically, it released the codebase underlying the free filing program on GitHub. It isn't every day that the IRS drops something that reads like a blend of legal code, logic theory, and open government idealism. But that is exactly what it did, laying Direct File bare—and releasing it into the public domain—for the world to scrutinize, fork, or admire in stunned silence. At the heart of this code disclosure is something called the Fact Graph, a dry name for a tool that is quietly revolutionary: a logic engine that parses ambiguous tax scenarios and infers relationships while consistently applying tax rules. In a world where the tax code is a labyrinth and the software undergirding governmental operations usually obscures more than it ever reveals, the IRS has done something rare—it has made (at least a portion of) its logic visible. That transparency, more than any refund or deadline extension, might be the most transformative thing the agency has done in years—and with Direct File on the ropes, it may be the project's enduring legacy. Technically, Fact Graph is a declarative system written in XML and Scala, designed to represent relationships between discrete data points—like income types, deduction criteria, and filing status—in a way that broadly mimics logical reasoning. It is, at base, something of a rules engine that reasons through ambiguity. From a cursory review of the code, it appears that if a taxpayer says they had self-employment income but neglects to refer to any business expenses, the Fact Graph will flag the missing piece, evaluate what it knows already about the filer, and suggest a path forward. What makes this novel, as against for-profit tax prep software, is that the rules aren't buried in opaque code or obscured behind paywalls—it is all open and available to be built upon. The system models tax law as less of a linear checklist and more of a web of interrelated and conditional facts. Fewer hard-coded assumptions, allowing the program to evaluate what information from the taxpayer is missing and what might be contradictory. This all matters in an age when public trust in institutions is frayed and when algorithms, or artificial intelligence (AI), increasingly mediates our rights and obligations. If the tax code is going to be enforced by machines, and the preparation calculated and handled by the same, the rules those machines follow should be legible and contestable. The open-sourcing of Direct File hints at a future where regulatory logic and automated decision-making isn't hidden, but published like case law—reviewable, revisable, and maybe even improved by the very public it serves. Of course, publishing a bunch of code doesn't solve everything. Direct File is still limited in scope, and may be on its way out, casting taxpayers back into the jungle of for-profit tax preparation software. The Fact Graph doesn't eliminate the complexity of the tax code, but it makes it more legible. By turning the machinery of tax enforcement into something transparent and inspectable, the IRS has—without fanfare—laid a foundation that could extend far beyond the next filing season. State tax agencies, benefit programs, and even AI driven rulemaking efforts by governments could adopt similar approaches—building systems where the logic is not just executed but actively exposed and subject to scrutiny. The IRS just open-sourced its tax preparation brain, maybe the rest of government should consider following suit.
