June 9, 2010 at 1:40 pm
A long fight over how the federal government taxes investment partnerships is ending as Senate Democrats now plan to more than double taxes on private-equity, hedge-fund and certain real-estate managers. It would no longer let people running such partnerships pay the lower capital-gains taxes on what were basically wages. The tax hike on “carried interest” expected to raise $14.5 billion over 10 years. Law Professor Daniel Berman, director of the Graduate Tax Program and both a Treasury and Congressional tax counsel, says that any such compensation from investment performance is still fundamentally pay for services rendered.
“It is common to reinvest after-tax compensation for capital gains. But when the amounts subject to investment risk were awarded in exchange for services but have not yet been recognized as taxable income, those amounts should be taxed as compensation when paid.”
Contact Daniel Berman, 617-353-3105, bermand@bu.edu
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Tagged capital-gains tax, carried interest, Congress, Daniel Berman, Graduate Tax Programs, hedge funds, private equity funds, Senate Democrats, tax hike, taxes, Treasury
June 8, 2010 at 4:02 pm
International relations Professor Augustus Richard Norton, a former U.N. peacekeeper in Lebanon and author of "Hezbollah: A Short History," testified before the Senate Foreign Relations Committee's Subcommittee on Near Eastern and South Asian Affairs about assessing the strength of Hezbollah. In his testimony, Norton made clear that Hezbollah remains a major influence in Lebanon because it's the only military force see as capable of repelling the Israeli army.
“One key to reducing Hezbollah’s mass appeal may be to reduce the threat of war, rather than heighten it. So long as the threat prevails, Hezbollah will be a prime beneficiary.”
Contact Augustus Richard Norton, 617-353-7808, arn@bu.edu
June 7, 2010 at 12:46 pm
After naming his new cabinet, Japan's prime minister-elect Naoto Kan (l.) will be sworn in and begin what the United States hopes is a tighter U.S.-Japan relationship than under his predecessor, Yukio Hatoyama, who resigned abruptly after a turbulent eight-month reign. Political science Professor Thomas Berger cautions that pushing the new government too hard on issues of U.S. interest could be counterproductive and possibly trigger an anti-American backlash.
“While many in Washington clearly hope that with Hatoyama gone U.S.-Japanese relations can get back to business as usual, those hopes are likely to be dashed."
Contact Thomas Berger, 617-353-5351, tuberger@bu.edu
June 7, 2010 at 12:16 pm
Smuggled evidence shows Burma's military rulers are secretly acquiring components for a nuclear weapons program, though it appears the impoverished nation is many years away from developing an actual bomb. Political science Professor Joseph Wippl, a 30-year career CIA officer, says the report developed by the dissident group Democratic Voice of Burma, again shows the need for accurate intelligence collection.
"There is no country so unimportant or so isolated as not to require intelligence and U.S. intelligence community expertise on that country or region."
Contact Joseph Wippl, 617-353-8992, jwippl@bu.edu
June 4, 2010 at 12:33 pm
From the handling of the Gulf oil spill to internal Democratic primary politics, President Obama is under intense political fire and the White House is getting defensive. Political science Professor Graham Wilson, author of "Only in America? American Politics in Comparative Perspective," says some of the criticisms are ironic.
“One irony is that when the health care bill was being blocked by the Republicans, many questioned whether Obama was capable of horse trading and cracking a few heads politically. ‘Too cerebral, insufficiently political’ was the criticism. Now he is being criticized for trying to cut deals.”
Contact Graham Wilson, 617-353-2540, gkwilson@bu.edu
June 3, 2010 at 11:26 am
British regulators fined investment bank J.P. Morgan Chase a record $48 million for failing to keep client money separate from the firm's money -- from 2002 when Morgan merged with Chase until mid-2009 -- which put client money at risk had the company gone insolvent. Law Professor Tamar Frankel, an authority on securities law and author of "Trust and Honesty: America's business Culture at a Crossroad," reminds that client money cannot be viewed as the bank's own.
"The money that clients deposit with a bank to trade on behalf of clients as brokers or any other form of a fiduciary relationship continues to belong to the client -- therefore, it cannot be mixed with the bank's money."
Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu
June 2, 2010 at 5:29 pm
Japan's new prime minister, Yjkio Hatoyama, squandered a historic electoral mandate in only nine months and resigned -- sparking a scramble by his Democratic Party of Japan to find a new leader before July's election. International relations Professor William Grimes, director of the Center for the Study of Asia, says Hatoyama was not prepared to create the new era of party-led politics that his party has promised when they finally ousted the Liberal Democratic Party of Japan which had been in power a half century with near-unbroken rule.
“The best that we can hope is that this episode proves to be another step toward the creation of a new centrist party or coalition that can tackle Japan's problems pragmatically and without pandering.”
Contact William Grimes, 617-353-9420, wgrimes@bu.edu
June 2, 2010 at 4:00 pm
The Congressionally sponsored bipartisan Financial Crisis Inquiry Commission now has cast its eyes on the credit-rating agencies and the impact they may have had on the Great Crash of 2008. Law Professor Elizabeth Nowicki, a veteran attorney from both Wall Street and the Securities and Exchange Commission, says the agencies are both hopelessly plagued by conflicts and in a position to undermine the very stability of the capital markets.
Nowicki: "Today's hearings, then, will serve only as a political tool to emphasize the need for a dramatic response to the financial crisis."
Meantime, School of Management master lecturer Mark Williams, a former Federal Reserve Bank examiner and author of "Uncontrolled Risk" about the fall of Lehman Brothers, says that while the rating agencies weren't the main cause of the credit crisis, but they left the gate open and let the market and its participants behave in a more destructive manner.
Williams: "Meaningful financial reform will require that rating firms devise compensation plans that reward for high rating standards and provide penalties for intentional ratings manipulation."
Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu; or Mark Williams, 617-358-2789, williams@bu.edu
June 1, 2010 at 5:49 pm
After the UN Security Council condemned Israel's open-seas raid on a flotilla headed with humanitarian aid to Gaza, Israel says the 600-plus activists it arrested are being freed and expelled from the country. Law Professor Robert Sloane, an authority on international law, says Israel violated a very basic customary norm of international law: the freedom of the high seas.
"Had Israel waited for the vessels to enter Israeli waters, or at least what's known as the ‘contiguous zone,’ then it arguably could have seized the vessels to enforce its blockade and prevent what it might characterize as smuggling in violation of Israeli law."
Contact Robert Sloane, 617-358-4633, rdsloane@bu.edu
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Tagged Boston University, BU Law School, flotilla, freedom of the high seas, Gaza, humanitarian aid, Israel, law school, Palestinian, Robert Sloane, UN, United Nations Security Council
June 1, 2010 at 11:52 am
Embattled oil company BP is again trying to divert the six-week-old Gulf oil leak by smothering the gushing flow under yet another dome. Geology Professor Cutler Cleveland, director of the BU Center for Energy and Environmental Studies, has updated his entry on the Deepwater Horizon saga in the BU-born Encyclopedia of Earth to discuss the myth that this catastrophe is no different that the oil seeps that release large volumes of oil to the ocean naturally.
“The Deepwater Horizon site releases 3 to 12 times the oil per day compared to that released by natural seeps across the entire Gulf of Mexico ... A sudden, concentrated and massive pulse of oil from an event such as the Deepwater Horizon disaster presents a fundamentally more acute stress to marine and coastal systems."
Contact Cutler Cleveland, 617-353-3083, cutler@bu.edu
