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NSA Reportedly Put Spyware on Consumer Tech Products
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Representative Paul Ryan (R-Wisc.) hinted recently that he intends to introduce tax reform legislation to the U.S. House of Representatives in the first quarter of 2014. While we don’t know yet exactly what Mr. Ryan plans to propose, let’s hope that he’s planning to call for more than just the corporate tax reform that President Obama suggested earlier this year. Our economy and our sense of fairness both demand it.
Corporate tax reform makes sense. America’s corporate tax rate is the highest in the developed world, a situation that hinders American competitiveness. Our corporations waste huge sums of money to comply with a maddeningly complex tax code. They face strong incentives to spend their money unproductively, hiring accountants and lawyers to reduce their tax expenditures rather than to boost profits by hiring additional workers and making capital investments. Finally, our high corporate tax rate encourages multinational corporations to park their profits overseas where taxes are lower, rather than repatriate them to the United States, where they can contribute more to domestic economic growth and job creation.
But corporate tax reform alone is an insufficient goal. Broader tax reform is necessary to boost economic growth and job creation. Corporate tax reform fails to address the problems small business owners face with a complex and inefficient tax code because three quarters of them are structured as “pass-through entities” – partnerships, sole proprietorships, limited liability companies, and S-corps that pay taxes as individuals, not as corporations. Moreover, the majority (54 percent) of business income is earned by pass-through entities, the Tax Foundation reports. With small businesses accounting for half of private-sector employment and contribution to GDP, failure of tax reform to affect small company owners will mean that its effects on economic growth and job creation will be muted.
Broader-than-just-corporate-tax reform would also be fairer. Because most small businesses are pass-through entities, they generally face higher marginal tax rates than larger businesses, which are structured as corporations. Moreover, this difference would widen considerably if the corporate tax rates were cut, hitting 14.5 percent if the corporate tax rate were reduced to 25 percent as some have proposed. Requiring businesses that produce the same profits through the same activities to pay different tax rates simply because of their business structure is simply unfair.
Washington risks raising the small-business tax burden if it focuses only on cutting corporate tax rates. Given our current budget deficit, policymakers face pressure to ensure the revenue neutrality of any tax-reform plans. If cutting corporate tax rates would reduce tax revenues, policymakers would face pressure to make up that revenue loss by boosting individual tax rates, or otherwise raise taxes on pass-through entities.
Our complex tax code imposes a heavier administrative burden on small companies than on large ones. Not only do small business owners lack an army of accountants and lawyers to find loopholes and deductions to cut their taxes, but also their tax-compliance costs are higher. Because of economies of scale, per-employee costs of complying with tax laws for companies with fewer than 20 employees are three times higher for small companies than with 500 or more workers the Office of Advocacy of the U.S. Small Business Administration (SBA) reports.
Small business owners and their advocates might would be wise to spend their time this holiday season preparing a message for Representative Ryan. If he cares about small business, his tax reform proposal should go beyond corporate taxes to address the problems that the tax code creates for Main Street.
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Target confirmed Friday that debit card PIN data was stolen in its recent massive breach, reversing its earlier stance that the codes were not part of the hack.
However, the retailer believes the PINs remain “safe and secure.” In a statement, Target(Fortune 500) spokeswoman Molly Snyder said the PINs are “strongly encrypted” and were never stored on Target’s systems in plain text. ,
In other words, from the moment a customer entered a PIN after swiping a debit card, Target’s payment system translated that number into an indecipherable string of code. Target claims that the PINs remained encrypted after they were stolen.
Not only are the PINs encrypted, Target says the numbers can only be decrypted by the independent payment processor, which holds the decryption key. That key is necessary to translate the unintelligible code back into the PIN. Target said the key was not stolen as part of the breach, because it never existed within the company’s systems.
Target says it uses the Triple Data Encryption Standard to encrypt its PIN codes. Per Thorsheim, an Independent password security consultant, said the PINs encrypted with the Triple DES algorithm would be “difficult or impossible to decrypt,” if the payment processor’s decryption key was robust enough. Target declined to comment on the identity of its payments processor.
That means it is very unlikely that thieves would be able to withdraw money from ATMs using stolen debit card information. Consumers are protected from certain instances of debit card fraud, but cash withdrawals and purchases made with a PIN can be tricky to reverse.
As a precaution, Target customers who shopped at Target when the breach occurred should contact their banks to request a replacement card and change their PIN.
The PIN theft revelation means that Target’s payment systems breach was larger than initially thought. That is common in credit card breaches. When Marshalls’ and TJ Maxx’s parent company TJX (Fortune 500) was hit with a massive breach in 2007, the company initially said 45 million accounts were hacked but upped that number to 94 million months later. ,
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A tax break for struggling mortgage borrowers ends Jan. 1 and that could mean big tax bills — and financial hits for their neighbors.
Say a family is behind on their mortgage and the bank cuts them a deal, maybe reducing the loan principal or forgiving the mortgage balance after a “short sale” in which the seller owes more than the final price.
Under traditional IRS rules, the amount of that debt forgiveness would be taxable income.
That temporarily changed in 2007 when Congress passed the Mortgage Foreclosure Debt Forgiveness Act. That law is set to expire at year’s end.
A return of the tax could affect many of the nearly 10 million Americans who owe more on their loans than their homes are worth, according to the National Association of Realtors (NAR).
In a short sale, if a property with a $400,000 mortgage sells for $250,000, the forgiven debt of $150,000 will be taxed after Jan. 1. The hit could top $35,000.
Consumer advocates consider the tax unfair: “The money being taxed was ‘phantom income’ that existed only on paper,” said Elyse Cherry, CEO of Boston Community Capital, a non-profit, neighborhood stabilization group.
It will also damage foreclosure-prevention efforts, said Cherry. Many at-risk homeowners could not participate in programs if a big tax bill accompanies the fix.
“The program only works when we can save homeowners money,” she said.
Chances of passing an extension before the year’s end seem slim, according to J.P. Delmore, an assistant vice president for government affairs at the National Association of Home Builders.
The best hope is that Congress will gets its act together sometime in 2014 and extend the tax break retroactively to the beginning of the year, he said. Even that may be a challenge, given the current climate in Washington