1st Qtr, 2008 Issue

BRIEFS:

Internet Protocol

Somewhere between 2008 and 2010 the Internet Protocol (IP) will be running out of IP addresses and the new Internet format, known as IPv6 (IP Version 6),already adopted by European and Asian countries, is built on a 128-bit architecture. Also, IPv6 will enable end-to-end encryption at the host level rather than just at the firewall level. The U S Government is already taking action to make sure every federal government agency is IPv6 compliant by June 2008.   (excerpt from "Business Solutions Magazine")

Business Outlook Survey

A record-breaking 72 percent of Finance Chiefs say they are less optimistic about the economy than they were last quarter, while 9 percent are more optimistic, according to the latest Duke University Survey/CFO magazine Global Business Outlook Survey. A full 40 percent of CFO's predict a recession in 2008.    Most reported feeling little impact from the Federal Reserve's interest-rate cuts to date.   CFO's forecast an anemic domestic employment growth rate of just 0.5 percent for the year.   The confluence of problems started with the sub-prime-mortgage crisis and the tumble in credit availability, the stock-market correction and the plunge in the dollar's value quickly compounded the problem. (excerpt from "CFO Magazine")

Corporate Tax Rates

Last year, eight countries, including Germany and the Netherlands, cut their corporate rates. The year before, five countries did the same, so when will the United States, who has the second-highest marginal tax rate, join the trend.

Obtaining both a lower rate and limited offsets in a "pay-as-you-go" legislative environment, which requires that any new spending be offset by a new source of revenue or cuts, will not be easy. Getting Corporate America to back a single proposal may be next to impossible. Finance chiefs and tax directors care more about their effective tax rates than the official rate. And they have been very adept at using the myriad allowances and deductions in the tax code to their advantage thereby achieving a 24 percent effective rate on average.  

The last round of real tax reform dates back to the Reagan era, when the Tax Reform Act of 1986 slashed the top corporate rate from 46 percent to 34 percent. By 1993, however, the rate had crept back up to 35 percent. Adding state taxes to the mix pushes it to the current 39.3 percent.  (excerpt from "CFO Magazine")

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