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Tax Reform Around the World.

Tax Reform Around The World

Let me begin with the fact that the book is mistitled. Large segments of the world have been omitted: New Zealand (population approximately three million) is included, while Brazil (population about 130 million) is excluded. The Far East is poorly represented--by Japan only--where one would have expected Indonesia, Malaysia and Singapore to be included. The omission of China and India is also disquieting. It is surprising to see the omission of the Netherlands, and there is not even one African country discussed in this book. So much for the title.

Next, the advertisements. On the rare occasions that I watch television, I have to concede that the purpose of commercial television is not entertainment but marketing. I consequently have to accept and suffer the constant commercial interruptions, but I do not accept advertisements in a book. Page 6, the so-called Foreword, is an advertisement for Ernst & Whinney. Page 99 is an advertisement for the Money Manager's Library. Page 100 is an advertisement for Eurostudy. Page 101 is an advertisement for the International Tax Report, published by Eurostudy. The advertisements include tear-out requests for further information and a "special introductory subscription offer."

When a technical book is riddled with typographical errors, one cannot be sure that the information it contains is accurate. How can we know that tax rates or allowances are correct, when there has obviously been no proofreading before publication? For example, on page 11, deductibility is mispelled; on page 13, remuneration; on page 34, purchases; on 41, acquisition; on page 87, existence; and on page 88, penalties. In addition, someone should explain to the authors (or perhaps to the Editor) the difference between "i.e." and "e.g."

A further example of slopping is the reference on page 58 to "Exhibit I (see p. xxx)" not even taking the trouble to complete the page reference! In view of the generally high quality of other tax material published by Ernst & Whinney International, it is surprising that the firm did not insist on having their own staff proofred this book before it went our under their imprint. No professional firm can afford to let clients and potential clients see sloppy work with the firm's name on the front cover.

On page 42, French tax incentive areas listed include ". . . Aubagne, La Ciotat ... . ." These are not two separate areas, but one. Here is a specific example of misinformation through inadequate proofreading.

The Editor's Note (page 5) and the International Summary, which follows the first advertisement, are clicheridden--to use an appropriate cliche. It may be fashionable now to split infinitives, but I still shudder at ". . . to more thoroughly tax . . .," ". . . to better match . . ." and ". . . to carefully examine . . ." on pages 8 and 9.

My principal complaint of substance is the inclusion of too much basic general tax information. After all, the book is said to be about "tax reform." If the authors had started from the assumption that the reader knows nothing whatever about the foreign tax system and that, therefore, all tax reform has to be put into perspective, a much thicker volume would have been required. If, on the other hand, the reader can be assumed to have some basic general knowledge of taxation, less general information is required, and that, I believe, should have been the starting point for this book.

Some of the explanations read as though they have been translated from the original language by someone not entirely conversant with the foreign tax system. What is one to make of: "Inthe case of partnerships formed by professionals or technicians to render professional services, there is no corporate tax, as well as in the case of individual professionals."? I am left with the uneasy feeling that someone is trying to tell me something about Chilean taxation.

Infelicitous phrases abound. For example: "Principal shareholders and individuals trading in shares emigrating from Denmark . . . ." The concept of a share emigrating from Denmark is interesting. I don't really appreciate "dividends continue to enjoy a preferential tax bite" either. I have visions of a Great White Shark chewing on my Canadian dividends.

In the section on Belgium, there is an unexplained reference to "T-zone, reconversion and innovation companies." I wonder what most readerw ill make of that? For that matter, what are "The forfeitary deduction of business expenses for employees . . ." and ". . . 'extralegal' insurance? An indepth knowledge of Belgian taxation has been assumed by the author and apparently accepted by the Editor. This is hardly fair to the reader.

I was amazed to see no direct reference in the Argentine section to the imposition of wealth tax on individual foreign shareholders having a direct or an indirect interest in an Argentine company. This is one of the most insidious taxes imposed in recent years and it is spreading through Latin America like a virus. It has already infected Peru. (Interested readers may refer to my article on the subject in the December 1987 issue of the Bulletin for International Fiscal Documentation. The title tells it all: "The Argentine Wealth Tax and its Transborder Effects--or tax Foreigners--They Have No Vote.") It is inconceivable that the local Ernst & Whinney office was not aware of this deplorable tax; one is left to speculate about the reason it was omitted.

On page 41, there is a statement that the maximum French personal tax rate has been reduced to 58 percent from 65 percent. The table imediately following shows a top tax rate of 56.8 percent. The difference of 1.2 percent is unexplained. In the section on New Zealand, there is a statement (on page 66) that the rate of corporate tax has been reduced from 48 percent to 28 percent, yet three pages later, a formula is given for calculating the maximum imputation credit ". . . taking a 48 percent company tax rate. . . ."

In the section of Spain, there is an Appendix described as "Personal Tax Rate Data" with an extraordinary column headed "Rest of Taxable Amount up to %." This looks like a literal translation of something or other from the Spanish. The section on Switzerland has one page about tax changes and then three pages discussing current tax rules.

Exhibit 4 on page 63 (Mexico) is incomprehensible. Let me reproduce part of it:

a) June 1987 index 517.500

b) May 1980 index 12.213

c) Indexation factor a)++ b) = 42.372

. . . not in may arithmetical system, it's not!

Exhibit 5 has similar arithmetical nonsense, with the added subtle distinction between (a + b) and (b + a), which I must confess is too subtle for me.

In the short section on Venezuela we read: "When considered in the national interest, the Ministry of Finance may authorize the deferral of tax payments applied to dividends and other analogous participations obtained by corporations incorporated abroad and domiciled in Venezuela." This raises a number of questions. What kind of tax payments can be deffered? What are "other analogous participations"? Could we be given an example of "the national interest"? These problems may stem from a literal translation of something written primarily for home consumption, where the reader can be expected to understand the point in the original Spanish.

The quality of individual sections is so variable that there was obviously a crying need (cliche!) for competent editorial attention. One wonders why, in a book like this, it was necessary to include a Canadian proposal for a sales tax rate change on wallpaper and paint or, for that matter, minor changes in the tax on Canadian telephone services.

One advertisement for this publication says "If you are involved in international tax planning you need to have this valuable ready-reference source of tax reform information to hand whenever you make a decision." With respect to Ernst & Whinney, I do not agree. I am surprised that they have allowed their name to be attached to a rather poor publication, which I do not recommend.

Editor's Note: The author of the foregoing reviews, H. Arnold Sherman, is an international tax consultant in Calgary, Alberta, and a frequent contributor to The Tax Executive.

Practical business


Warren, Gorham & Lamont recently released Federal Tax Accounting, which is designed to rovide tax executives and practitioners with guidance in planning for and compying with the increasingly important area of tax accounting. The 800-page, $96 volume., which was written by Stephen F. Gertzman, analyses tax accounting rules and regulations, including those contained in the Tax Reform Atcs of 1984 and 1986 and in the revenue Act of 1987. (A supplement will presumably bring the readers up to date with the accounting changes made by the Technical Corrections and Miscellaneous Revenue Act of 1988, as well as the substantial guidance provided by the IRS since the book was published.) Among the topics discussed are inventories, time value of money, installment sales, the rules regarding the adoption and use of accounting methods, rules regarding changes in accounting methods, techniques for changing accounting methods without IRS approval, and the scope and limits of the IRS's discretion in matters of tax accounting.

The publishing house has also released the fifth edition of Federal Income Taxation of Real Estate, by Gerald J. Robinson The single-volume, 900-page reference, which also costs $96, examines the tax implications of a variety of real estate transactions--from house closings, salesleasebacks, and syndications, to installment sales and open-end exchanges. The book also discusses pitfalls and opportunities in buying, operating, and selling real estate; points, mortgages and equity financing, and the application of the interest tracing rules; and the application of the S corporation and partnership rules to real estate ownership.

This must be $96 season at Warren, Gorham & Lamont. W, G & L has recently published Federal Income Taxation of IIndividuals, which was developed by Boris I. Bittker and Martin J. McMahon. This 3000-page reference, which costs--that's right--$96, focuses on the unique problems of the individual taxpayer, such as the definition of "income," fringe benefits, exclusions, personal and business deductins, gains and losses on the sale of property, and nonqualified deferred compensation. Also discussed are concepts introduced or expanded by the Tax Reform Act of 1986: the passive loss rules, restrictions on the interest deductions,and the alternative minimum tax.

Although costing less than the foregoing three books, W, Q & L's 250-page book on Financial Accounting Standard No. 96 may prove the most timely. In teaming up with Price Waterhouse to publish Accounting for Income Taxes: Analysis and Commentary, the publishing concern has striven to prepare readers for implementing the major accounting changes mandated by the Financial Accounting Standards Board. (When released a year ago, FAS N. 96 was to be implemented no later than 1989, though recently a one-year delay in the mandatory implementation was announced.) This 250-page, $39.50 book offers a ray of hope for those financial executives, accountants, and tax executives who must make their way through the complicated, controversial, and far-reaching accounting standard. Through interpretative commentary and frequent illustrations, the book undertakes to simplify the compexity that accompanies the new asset/liability approach to accounting for income taxes.

For additional information about the books, contact Warren, Gorham & Lamont, 1 Penn Plaza, New York, New York 10119.

William S. Hein & Co. has undertaken a formidable task--the compilation and publication of all determinations of the New York State Division of Tax Appeals and the New York City Department of Finance. New York Tax Cases is a three-volume, looseleaf service of all agency determinations constructing New York Tax Law. In addition to providing complete texts of administrative decisions, the service affords subscribers access to statutory and regulations provisions that govern tax appeal procedures and contains comprehensive topical and alphabetical indexes that should prove useful. The indexes are being compiled by Paul R. Comeau and Arthur R. Rosen, the latter a contributor to The Tax Executive. For additional information concerning New York Tax Cases, contact William S. Hein & Co., Inc., 1285 Main Street, Buffalo, New York 14209.

Section 89 of the Internal Revenue Code requires all employers to conduct a series of complex mathematical tests to determine whether their employees benefit plans favor highly compensated employees. Those employers that fail the nondiscrimination tests face stiff penalties (as do their highly compensated employees). Thompson Publishing Group has now published Employer's Handbook: A Practical Guide to Section 89 Compliance by Mary B. Hevener. The 300-page book carries a hefty price tag--$197--but does offer clear, concise explanations of section 89's benefits valuation and nondiscrimination tests; it also offers worksheets for collecting employees and plan data, organizing it for testing purposes. The price, moreover, includes 12 monthly supplements and a monthly news bulletin. The volume is fully indexed and contains an extensive glossary of tax law and benefits administration terminology. For further information, please contact the Thompson Publishing Group, 1725 K Street, N.W., Washington, D.C. 20006.

I must confess an affinity for the authors listed in this issue's Practical Business Reading. I used to practice law with Steve Gertzman, have edited articles written by Art Rosen and have shared the dais on more than one occasion with Handy Hevener. I know personally of these practitioners thoroughness and professionlism, and am confident that readers would benefit from their work.

In the same vein, I acknowledge a brotherly bias but nevertheless do not hesitate to recommend consideration be given to Kiplinger's Successful Tax Planning by Kevin McCormally. This 446-page, $9.95 softcover book strives to remove the confusion, as well as the mystique, from the personal tax rules, and to the extent it is possible in today's "error" of perennial tax legislation, it generally succeeds. Although this book is aimed at the layman, it can prove useful to the professional as well--especially those who normally spend their days dealing not with the ins and outs of the individual tax rules, but rather with the horrific rules affecting large corporations. This book's chapter of questions and answers should prove quite useful: the questions are realistic, and the answers are down to earth. The glossary and detailed index should make it easy to track down quick answer to frequently asked questions. In this day of overserious (and over-long) tax books, a refreshing features is the frequent use of cartoons. Not only is a picture worth a thousand words, it can be a lot funnier. Copies of the book may be obtained at most bookstores or ordered from Kiplinger Books, Editors Park, Maryland 20782-1976.
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Author:Sherman, H. Arnold
Publication:Tax Executive
Article Type:Book Review
Date:Sep 22, 1988
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