Credit Herald

President Barack Obama is calling on Congress to increase taxes on millionaires, reviving a proposal he first pitched last September that aims to draw sharp election-year lines between the president and the Republican opposition.

The plan, scheduled for a vote in the Democratic-controlled Senate on April 16, stands little chance of passing in Congress. But it is a prominent symbol of the efforts the president and congressional Democrats are making to portray themselves as champions of economic fairness. Republicans dismiss the idea as a political stunt with little real effect on the budget.

“We don’t envy success in this country. We aspire to it,” Obama said in his Saturday radio and Internet address. “But we also believe that anyone who does well for themselves should do their fair share in return, so that more people have the opportunity to get ahead _ not just a few.”

Obama calls the plan the “Buffett Rule” for Warren Buffett, the billionaire investor who has complained that rich people like him pay a smaller share of their income in federal taxes than middle-class taxpayers. Many wealthy taxpayers earn investment income, which is taxed at 15 percent. Obama has proposed that people earning at least $1 million annually _ whether in salary or investments _ should pay at least 30 percent of their income in taxes.

The push for the Buffett Rule comes as millions of Americans focus on their taxes with the approach of this year’s April filing deadline.

It also draws renewed attention to the effective tax rate of Republican presidential front-runner Mitt Romney, a millionaire who is paying 15.4 percent in federal taxes for 2011 on income mostly derived from investments.

By contrast, the top nominal rate for taxpayers with high incomes derived from wages, not investments, is 35 percent.

In his remarks Saturday, the president encouraged listeners to pressure their members of Congress “to stop giving tax breaks to people who don’t need them.”

While the plan would force millionaires and billionaires to part with more of their money, Congress’ Joint Committee on Taxation estimated that if enacted, legislation reflecting Obama’s proposal would collect $47 billion through 2022 _ a trickle compared with the $7 trillion in federal budget deficits projected during that period no fax payday loans.

Obama also renewed his call for ending tax cuts for taxpayers earning more than $250,000. Those breaks, enacted during President George W. Bush’s first term, expire at the end of this year.

“Today, the wealthiest Americans are paying taxes at one of the lowest rates in 50 years,” Obama said. “Warren Buffett is paying a lower rate than his secretary. Meanwhile, over the last 30 years, the tax rates for middle-class families have barely budged.”

The new effort comes just days after the Senate fell short of the 60 votes needed to advance Obama-initiated legislation that would have ended $4 billion in annual subsidies to oil and gas companies. Two Republicans voted with Obama and four Democrats voted against him.

In the Republican address, House Speaker John Boehner challenged Obama to get behind energy proposals backed by House Republicans, sustaining a GOP drive to blame the administration for high gas prices in an election year. Boehner called for more oil and gas production in federal lands and for a freeze in new regulations over refineries.

He criticized Obama for pushing the anti-oil subsidy bill and for pressing Senate Democrats to vote down an effort to jump-start an oil pipeline project from Canada to refineries on the Texas Gulf Coast. He said Obama, in a meeting with congressional leaders a month ago, had shown a willingness to embrace some House Republican energy ideas.

“It was a new sign of hope, but unfortunately, only a brief one,” Boehner said.

“The pain at the pump is an urgent issue for hardworking taxpayers and it deserves the same urgency from leaders here in Washington,” he added.

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The U.S. Department of Justice has sued to shut down a tax preparation firm with offices in the St. Louis and Kansas City areas and three other cities, accusing the operators of fraud by attempting to maximize refunds and extract “outrageously” high fees from customers.

A series of lawsuits filed Wednesday alleged that Instant Tax Service franchise offices here and in Chicago, Indianapolis, Las Vegas and St. Louis completed tax returns with fraudulent information that included fabricated deductions, phony businesses, and bogus dependents.

The government said the allegedly fraudulent activity resulted in $16 million in refunds in a single year that should not have been awarded. Large tax preparation fees — described as “junk fees” in the lawsuits — were then “extracted” by the company from the refunds. In one instance, according to the Justice Department, a customer was charged $1,000 for a tax return that took 15 minutes to complete.

The lawsuits seek to shut the offices down.

“Hard working Americans deserve to rest assured that their tax return preparers are not ripping them off,” John DiCicco, an assistant attorney general in the Justice Department, said in the statement.

The franchising company for Instant Tax Service is ITS Financial LLC, based in Dayton, Ohio. It claims to operate the nation’s fourth-largest tax preparation firm, the Justice Department said

Besides suing franchisee owners of offices in the five cities, a lawsuit was filed against ITS Financial and its owner, Fesum Ogbazion, for “deliberately ignoring systemic and pervasive fraud by ITS franchisees.”

Ogbazion, according to the government’s complaint, allegedly said he “wouldn’t be able to sleep” at night if he kept track of customer complaints of alleged fraud no fax payday loans.

ITS Financial also owns Tax Tree, a company that federal officials allege, finances false and deceptive loans to Instant Tax Service customers nationwide. ITS Financial also has franchisees who own offices in other cities that were not the target of the lawsuits filed Wednesday.

ITS Financial executives could not be reached for comment. Semere Tsehaye, named as the owner of one Instant Tax Service store in Kansas City, Kan. and five in Kansas City, could not be reached. A person answering the telephone at one of the Kansas City Instant Tax offices declined to comment.

The complaints filed Wednesday, including the one in federal court in Kansas City, Kan., alleged that the tax preparation firm lured mostly low-income customers by offering them advance loans on their refunds. “The defendants allegedly encouraged their customers to apply for loans knowing that certain customers do not meet the undisclosed criteria to qualify,” the Justice Department said in a statement.

The government suit alleged that returns were often filed without authorization of customers and without necessary documents including W-2 forms that state the wages earned and taxes already collected.

The government’s complaint alleged that ITS Financial encouraged franchisees to “lie to the Internal Revenue Service” about filing returns without W-2s

Over the past few years, the Justice Department said it has successfully criminally prosecuted four individual tax return preparers affiliated with ITS franchises in Missouri and Ohio.

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Jim Yong Kim, the Obama administration’s nominee to head the World Bank, is starting a global tour to promote his candidacy with stops in Africa, Asia and Latin America, the Treasury Department announced Monday.

Treasury officials said that Kim, the president of Dartmouth College, would begin his “listening tour” on Tuesday. He will meet with finance ministers and government officials in seven countries with stops planned in Ethiopia, China, Japan, South Korea, India, Brazil and Mexico. He will wrap up the trip on April 9.

Kim’s nomination for the World Bank job was announced Friday by President Barack Obama. He is competing against candidates from Nigeria and Colombia, but he is considered a heavy favorite for the World Bank post, which has always gone to an American.

Kim’s selection was a surprise pick by Obama over better-known candidates. The administration called Kim the best candidate, citing his work in treating HIV/AIDS and tuberculosis in the developing world payday loans.

The 187-nation World Bank has been led by an American since its founding in 1944. Its sister lending organization, the International Monetary Fund, has always been headed by a European.

Several developing countries sought to break the U.S. hold on the position when current Bank President Robert Zoellick announced he would step down at the end of June.

The other two candidates in the race are Nigerian Finance Minister Ngozi Okonjo-Iweala and former Colombian Finance Minister Jose Antonio Ocampo.

The selection will be made by the World Bank’s 25-member executive board. The board has said they will interview all three candidates with the goal of making a decision before the April 20 start of the World Bank’s spring meetings.

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It’s official, craft beer had a big year in 2011.

Sales by smaller-scale brewers climbed 13 percent by volume from 2010, to 11.5 million barrels, according to new figures out today from the Brewers Association, a craft trade group, even as overall beer sales fell 1.3 percent.

Craft beer - defined as relatively small-batch, and often more flavorful - is now an $8.7 billion business in the U.S., up from $7.6 billion a year prior. The number of breweries increased last year by more than 200,  no surprise to St. Louisans who watched five craft brewers open their doors last year (with three more in the works).

Craft volume is still a proverbial drop in the bucket compared to the behemoths at Anheuser-Busch and MillerCoors, but it now comprises more than 5 percent of all U.S. beer sales. All this growth is spurring various maneuvering in the business, from big new plants for larger craft players to acquisitions by MillerCoors to battles for shelf space.

And if you ask the Brewer’s Association, more growth is coming.

“We look forward to even more success and the continued expansion of the craft beer market,” said the group’s director, Paul Gatza.

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Li Ka-shing, Hong Kong

ST. LOUIS • US Fidelis owes money to scores of businesses, and the Wentzville company has been accused of ripping off thousands of consumers.

But the first creditors to get paid by the bankrupt seller of vehicle service contracts could be former employees who were laid off as the company collapsed amid allegations of consumer fraud. Among the ex-employees to receive payments would be relatives of the company’s founders.

US Fidelis has agreed to pay $1.45 million to 556 former company employees, according to a proposed legal settlement filed with the bankruptcy court in St. Louis.

Lawyers for the workers would keep a third of the settlement, plus up to $25,000 in expenses. The lead attorney for the workers did not respond to a message seeking comment.

Missouri Attorney General Chris Koster plans to object to the proposed settlement at a hearing next month. The settlement has to be approved by the judge in the company’s bankruptcy case.

Koster spokeswoman Nanci Gonder told the Post-Dispatch that the attorney general’s office does not approve of the deal. If it goes through, she said in an email, Koster’s office will likely move to disqualify “multiple former employees from receiving any funds.”

The St. Louis Better Business Bureau, which led a national campaign against US Fidelis, called the proposed settlement “unfortunate.”

“Former employees of US Fidelis, many of whom had a role in the deception of consumers from across the United States, (will be) compensated with funds that could go to help those who lost money through this horrendous scheme,” Michelle Corey, president of the St. Louis BBB, said in a statement.

US Fidelis, once the nation’s top seller of vehicle service contracts, collapsed in late 2009. Consumer advocates and government regulators accused the company of lying to consumers in order to sell auto protection plans riddled with fine-print exceptions and limitations.

US Fidelis critics said the brothers who owned the company — Darain and Cory Atkinson — amassed enormous fortunes by tricking their customers.

In January 2010, workers laid off months earlier sued the company for violating the federal Worker Adjustment and Retraining Notification Act. The law, known as the WARN Act, requires companies to give 60 days’ notice to workers who will lose their jobs in a mass layoff.

For nearly two years, the former US Fidelis workers’ suit seemed stalled.

But this past December, lawyers and regulators involved in the US Fidelis bankruptcy case met in Austin, Texas, to figure out how to split up what’s left of the company’s assets, according to court records. There, they decided to pay off the former US Fidelis employees, if only to speed up a resolution to the bankruptcy case.

David Warfield, a lawyer for a committee representing several creditors, called the proposed deal “the first step in a global settlement that will ultimately provide some restitution to consumers and other creditors.”

Warfield said terms of the larger settlement — involving at least tens of thousands of consumers — will be announced “very soon.” The amount of money that can be distributed has not been made public.

If the settlement for the ex-employees is approved, money will be paid out to all workers who were laid off after Nov. 20, 2009. They would include sales agents who worked the phones in US Fidelis’ telemarketing boiler rooms and the bosses who helped enforce what regulators have described as a deceptive and high-pressure sales strategy.

Shawn Morris, who was described in a US Fidelis press release as the company’s chief marketing officer, would be paid $12,685; and Eddie Struckman, the former US Fidelis general manager who supervised hundreds of workers in the sales and customer-retention departments, would receive $11,817.

Morris and Struckman could not be reached for comment.

In addition to paying US Fidelis managers, the proposed settlement would provide payments to at least eight former employees who are identified in court records as close relatives and in-laws of the Atkinson brothers. This group — which includes the brothers’ sister-in-law, as well as Cory Atkinson’s daughter and son-in-law — stand to get a total of $18,462 from the proposed settlement.

The settlement includes a provision that allows the attorney general of any state to seek court approval to block up to 20 former US Fidelis employees from being paid. If that happens, the money that would have been paid goes to a consumer restitution fund.

The Atkinson brothers would not be affected by the settlement. When US Fidelis filed for bankruptcy, they turned over the company to an independent management team. Months later, that team sued the brothers for allegedly pilfering more than $100 million from the firm.

To settle that suit, the brothers surrendered virtually all their assets to the company, including fleets of luxury cars and boats and houses in St. Charles County, the Cayman Islands and near Lake Tahoe.

In June 2011, Darain and Cory Atkinson were indicted on state charges of consumer fraud, stealing and illegally selling insurance. The case is pending.

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Markets recovered their poise Wednesday as optimism over the pace of the U.S. economic recovery helped offset lingering concerns over the Chinese economy.

Over the past few weeks, stocks have been buoyant as U.S. economic figures were upbeat and concerns over Europe’s debt crisis eased. Many stock indexes are trading at multi-month highs, while the main U.S. markets at their highest levels in nearly four years.

But investors have grown skeptical this week that more gains can be sustained in the near term, especially as recent Chinese economic figures have been slightly disappointing. That’s important for the world economy as China has helped cushion the blow from the financial crisis and the ensuing recession over the past few years.

“Despite the China worries the markets are showing great resilience mainly underpinned by strong U.S. economic data,” said Jordan Lambert, a trader at Spreadex.

In Europe, Germany’s DAX rose 0.2 percent to 7,065 while the CAC-40 in France was 0.3 percent higher at 3,542. The FTSE 100 index of leading British shares was up 0.1 percent at 5,897 ahead of the government’s annual budget.

Wall Street was poised for solid gains at the open, too _ Dow futures and the broader S&P 500 futures were both up 0.3 percent. Later in the day, investors will eye new data for existing U.S. home sales, which are forecast to have risen about 1 percent in February.

The more positive market tone also helped the euro, which was trading 0 cashadvance.3 percent higher at $1.3270.

Earlier in Asia, worries over the pace of the slowdown in the world’s No. 2 economy continued to weigh on sentiment. On Tuesday mining giant BHP Billiton warned that Chinese demand for iron ore _ used to make steel _ was flattening. And in another sign of cooling growth in the world’s No. 2 economy, new home prices dropped in 45 Chinese cities in February as the government implemented measures to cool property speculation.

The Nikkei 225 index in Japan, which counts China as its most important trading partner, fell 0.6 percent to 10,086.49, while Hong Kong’s Hang Seng shed 0.2 percent to 20,856.63. China’s main Shanghai index recovered 0.1 percent to close to 2,378.20, having dropped sharply in the previous session.

The rising cost of crude is also a threat to the global economic outlook as it could spark inflation and hurt consumer spending. On Tuesday, China raised the price of retail gasoline for the second time in two months. Benchmark crude for May delivery was up 59 cents to $106.68 a barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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ST. LOUIS  • Federal prosecutors on Monday began laying out their case against Martin Sigillito, an American Anglican bishop and Clayton lawyer accused of cheating up to 150 investors across the country in a $66 million Ponzi scheme.

The trial, expected to last four weeks, will feature some of the upper crust of St. Louis society, members of the Racquet Club of St. Louis who say they trusted Sigillito with their money because of his lawyer credentials and impressive academic record — and because, according to prosecutors, he talked a good game. The mode for the fraud, according to prosecutors, was a lending project in England that was supposed to pay investors back through smart land purchases.

Sigillito’s attorney, Doug Roller, said the loan agreements told investors that their money would help with the cash flow of the business, and that is what it went toward. He said Sigillito had more than $700,000 of his own money in the program and did what he could to salvage it. He also accused the government of being heavy-handed in its raid of Sigillito’s homes and office, in which they confiscated most of his belongings as part of asset forfeiture proceedings. Sigillito faces 24 counts of wire fraud, mail fraud, conspiracy and money laundering.

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Britain won

Gasoline prices rose again Friday and are now averaging more than $4 in six states plus Washington, D.C.

Retail gasoline prices were up a penny on Friday to a national average of $3.831 per gallon, according to AAA, Wright Express and Oil Price Information Service.

Meanwhile, oil prices rose closer to $106 per barrel and natural gas futures headed back above $2.30 per 1,000 cubic feet.

The average price for a gallon of regular is now above $4 Alaska, California, Connecticut, Hawaii, Illinois and New York.

Gasoline has jumped by almost 56 cents per gallon since Jan. 1 and is the highest ever for this time of year. That’s cost drivers an extra $11.20 to fill up a 20-gallon tank.

Luckily, consumers aren’t seeing similar increases in other areas. The Labor Department said Friday that excluding energy prices, inflation stayed mild in February. Food prices were unchanged for the first time in 19 months.

Oil markets were calmer a day after the government denied reports that the U.S. and the U.K. plan to release some of their strategic crude reserves. Oil briefly dropped near $104 per barrel Thursday on those reports before recouping most of the losses when the White House said there was no plan to provide more crude to markets.

By midday Friday in New York, benchmark oil for April delivery was up $1.14 to $106.25. In London, Brent crude for May delivery rose $1.92 to $124.52 per barrel on the ICE Futures exchange in London.

Natural gas, which has been trading at prices not seen since 2002, rose 4 cents to $2.32 per 1,000 cubic feet.

Heating oil rose 5 cents to $3.27 per gallon and gasoline futures gained 6 cents to $3.35 per gallon.

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