Essential reading: For some of the wealthy, a 0 percent tax on capital gains, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* For some of the wealthy, a 0 percent tax on capital gains. Arden Dale – The Wall Street Journal. Financial advisers are helping a surprising group take advantage of a 0 percent capital-gains rate set to rise to 10 percent next year: affluent retirees, business owners and even some wealthy philanthropists. The rate only applies to those in the bottom two tax brackets, a group not usually associated with the wealthy. Link
* Starbucks finance chief denies tax claims. Louise Lucas and Vanessa Houlder – The Financial Times. Starbucks has admitted a quarter of its 600 UK-owned stores are running at a loss, in a rebuttal of accusations of tax avoidance, blaming its low corporate tax payments on overexpansion. In an interview with the Financial Times, Troy Alstead, chief financial officer of the global coffee chain, said: “I look forward to the day when we pay a lot more tax.” Link
* Obama’s remarks aside, no imminent deal on ‘fiscal cliff.’ Jonathan Weisman – The New York Times. President Obama set heads spinning on Capitol Hill when he declared on Monday night during the final presidential debate that sequestration — $1 trillion in across-the-board spending cuts over the next decade — “will not happen.” But no one should conclude that a secret deal to resolve the problem is imminent. It is not. Link
* After federal jolt, clean energy seeks new spark. John Broder – The New York Times. In recent months a discussion of imposing a carbon tax has been percolating in Washington as part of a broader tax reform and deficit reduction plan. Such a tax might generate new money for clean energy development, but in the current fiscal and political environment such tax revenue is more likely to be devoted to other purposes. Link
* Nations have flexibility with corporate tax rates, research suggests. John McKinnon – The Wall Street Journal. A new paper says the apparent global race to the bottom regarding corporate tax rates might actually be more of a ramble in the countryside, and that nations still have flexibility to chart their own paths. The paper suggests that financial globalization in particular seems not to exert much downward pressure on corporate rates. Link
Essential reading: Checking tax facts from the presidential debate, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Fact check: The ‘territorial tax.’ Josh Hicks – The Washington Post. The president said on Monday that Mitt Romney wants to provide more tax breaks for companies that move overseas. He was referring to Romney’s proposal to enact a “territorial tax” system that would allow U.S.-based companies to bring foreign-earned profits back home without paying U.S. taxes. Link
* Congressman Chris Van Hollen wants to consider another payroll tax holiday. Suzy Khimm – The Washington Post. Neither party seems particularly keen on extending the payroll tax cut for another year. But its defenders are slowly beginning to emerge on the left. Link
Essential reading: Democrats threaten payroll tax cut consensus, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Democrats threaten payroll tax cut consensus. James Politi – The Financial Times. Some Democrats in Congress are seeking to include an extension of the $120 billion payroll tax cut in negotiations over the looming “fiscal cliff”, shaking what had appeared to be a bipartisan consensus to allow the measure to expire as planned at the end of the year. The move could complicate the budget talks due to begin after the November presidential election and alarm rating agencies. Link
* How Romney tackled tax changes. Damian Paletta – The Wall Street Journal. As governor of Massachusetts, Mitt Romney pushed changes in the state’s corporate tax code that raised hundreds of millions of dollars, particularly from banks, to help close an annual budget gap of more than $1 billion. Now, as a presidential candidate, Romney is promising an overhaul for the federal tax code. Link
Calendar
Some important tax and accounting events in the week ahead:
Monday, Oct. 22 • Tax Policy Center roundtable discussion of the fiscal cliff and federal budget politics includes Alice Rivlin, former director of the Office of Management and Budget, and former vice-chair of the Federal Reserve. 9 a.m. – 10:30 a.m. EDT, Urban Institute. Washington.
Monday, Oct. 22 – Thursday, Oct. 25 • Federation of Tax Administrators conference on tax expenditures, incentives and the long-term fiscal sustainability of state and local governments, among other topics. Providence, Rhode Island.
Essential reading: Missouri political donor thrives with no limits, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Missouri political donor thrives with no limits. Nicholas Confessore – The New York Times. Since 2008, when Missouri abolished contribution limits, donor Rex Sinquefield has donated more than $20 million to local candidates and political action committees. More than half of that money has gone to advance his signature cause: eliminating state and local income taxes in Missouri, a major source of government revenue, and replacing them with sales taxes. Link
* JPMorgan: If the payroll tax cut falls, so does growth. Suzy Khimm – The Washington Post. JPMorgan no longer thinks the payroll tax holiday will survive the fiscal cliff negotiations. It’s downgraded its GDP growth forecast for the first quarter from 1.5 percent to just 1 percent and revised its second quarter forecast from 2.25 percent to 1.5 percent. Link
Essential reading: Officials say Obama could veto a bill blocking ‘fiscal cliff’ without tax hike for rich, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Officials: Obama ready to veto a bill blocking ‘fiscal cliff’ without tax hike for rich. Lori Montgomery – The Washington Post. President Obama is prepared to veto legislation to block year-end tax hikes and spending cuts, collectively known as the “fiscal cliff,” unless Republicans bow to his demand to raise tax rates for the wealthy, administration officials said. Freed from the political and economic constraints that have tied his hands in the past, Obama is ready to play hardball with Republicans, who have so far successfully resisted a deal to tame the debt that includes higher taxes, Obama’s allies say. Link
* Voters with questions at debate still have them. Trip Gabriel – The New York Times. Debate questioner Mary Follano, 54, a respiratory therapist with six grown children, some struggling with part-time jobs, said she agreed with President Obama on raising taxes on incomes above $250,000. But she was sympathetic when Mitt Romney said raising taxes on high earners would hurt small-business owners, who create jobs. Link
Essential reading: California unions fighting fundraising proposal rather than pushing for tax hike, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* California’s labor’s big-money focus on fundraising law may hurt chances of tax hike. Chris Megerian – The Los Angeles Times. California’s Labor unions are pooling their money to fight Proposition 32, which would eliminate their primary political fundraising tool — paycheck deductions — at the same time Gov. Jerry Brown is counting on their support for his tax-hike initiative also on the ballot next month. Link
* Why tax reform could help growth. Dylan Matthews – The Washington Post. In large measure, what you think about the tenability of Mitt Romney’s tax plan depends on what you think his tax reform proposal can do for economic growth. Optimistic growth estimates have predicted only a mild economic boost from Romney’s proposal — $53 billion of the $360 billion annual cost of the plan would be recouped from higher revenues that result from faster growth. Link
Essential reading: Manhattan, where everything is lavish except the property taxes, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Where everything is lavish except the property taxes. Elizabeth Harris – The New York Times. The shimmering limestone tower at 15 Central Park West, where apartments routinely trade for upward of $20 million, has become symbolic of the most luxurious upper reaches of New York’s real estate market. Yet despite the residential portion of that Manhattan building is officially valued by the city, for tax purposes, at only $332 per square foot. Link
* Treasurers worry over accounting for money fund changes. Emily Chasan – The Wall Street Journal. As Treasury Secretary Timothy Geithner moved to reintroduce money market reforms last month, corporate treasurers who invest in the funds are focused on how structural changes might complicate accounting for them. Corporate treasurers are planning for various scenarios, but are getting stumped on accounting issues, Ronni Horillo, assistant treasurer at Google, said on a panel at the Association for Financial Professionals conference in Miami on Monday. Link
When it comes to auditing, just what does familiarity breed?
Financial Times columnist Lucy Kellaway has published a piece encouraging UK regulators to see the positives in the fact that many leading financial executives come from one of the Big Four audit firms – Deloitte, Ernst & Young, KMPG and PwC.
Following on a UK Competition Commission report published last week that found two-thirds of all chief financial officers used to work for a Big Four firm, hampering competition, Kellaway writes that there could be under-appreciated benefits to such closeness. Someone who once worked at an audit firm — or a newspaper — knows more about how their work is done and where the potential weaknesses lie, she writes.
So an honest thumbs-up from a current employee means quite a lot. But one from a former one means even more.
Essential reading: New Jersey lags on sales tax, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* N.J. lags on sales tax. Heather Haddon – The Wall Street Journal. A new analysis set to be released this week shows New Jersey is one of only nine states in the U.S. that saw a decline in sales-tax revenue this spring, a sign that consumers are holding back spending as the state’s economy struggles to recover. Link
* IASB chairman laments delays to reform. Adam Jones – The Financial Times. The chairman of the International Accounting Standards Board has delivered a scathing assessment of its progress in carrying out urgent reforms, saying repeated delays had shaken people’s faith in the body’s ability to meet deadlines. Hans Hoogervorst said the slow pace was redolent of “dysfunctional working processes and dysfunctional decision-making”. He added: “We have broken deadlines so often that nobody believes in them any more.” Link
