Tax Break

Essential reading: Candidates split over tax credit for wind energy, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Candidates split over extending tax credit for wind energy producers. Catherine Ho – The Washington Post. President Obama and presumptive Republican nominee Mitt Romney clashed last week over a federal tax credit for businesses that produce wind and other alternative energy. In campaign events in Colorado, Obama emphasized his support for extending the tax credit and attacked Romney for opposing the extension, framing his opponent’s stance as a threat to job creation. Link

* Ryan wants to give the wealthy even bigger tax cuts than Romney does. Suzy Khimm – The Washington Post. In picking Paul Ryan, Mitt Romney has doubled down on his own campaign promise to give big tax breaks to the wealthy, uniting himself with a candidate who goes even further to do so: While Romney would bring taxes for top incomes down to 28 percent, Ryan has proposed bringing the top rate down even lower, to 25 percent. Meanwhile, Ryan’s plan would actually increase the effective tax rate on the very poorest Americans by getting rid of tax breaks that benefit low earners. Link

* Paul Ryan gave Romney camp several years of tax returns. Reuters. Mitt Romney released two years of his own tax returns to the public, but that didn’t appear to be enough when he vetted running-mate Paul Ryan and other vice presidential candidates. The campaign team for Romney, the Republican presidential candidate, reviewed several years of tax returns from Ryan and others, according to the head of Romney’s VP search process Beth Myers. Link

* Apologetic Swiss banks sweat it out as U.S., Europe mull redress. Katherina Bart – Reuters. Swiss banks hoping to atone for decades of complicity in tax evasion may be left to sweat it out for months as the United States and Germany ponder the right level of punishment. Eleven Swiss banks are under investigation in the United States and there is pressure too from Europe where burdened taxpayers want scalps after numerous banking scandals. The Swiss need a deal to remove the taint from their financial industry. Link

* Japan sales tax increase passed, on pledge of early election. Hiroko Tabuchi – The New York Times. Prime Minister Yoshihiko Noda’s plan to double Japan’s sales tax was approved by Parliament on Friday after months of haggling, but only after Noda promised opposition lawmakers that he would call early elections — a move that is likely to end his term in office and his party’s hold on power. Despite low popularity ratings, Noda, who took office last September, has pushed ahead with the plan to raise the tax to 10 percent from 5 percent by 2015, an increase he says is necessary to start reducing the country’s debt. Link

* In super-rich, clues to what might be in Romney’s tax returns. James Stewart – The New York Times opinion. The Internal Revenue Service made this summer a startling disclosure that six of the 400 super-rich individuals paid no federal income tax. The IRS has never before disclosed that last fact. That data demonstrates that many of the ultra rich can and do reduce their tax liability to very low levels, even zero. Link

Essential reading: Attack targets Romney’s role in Marriott tax deals, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Attack targets Romney’s Marriott role. Laura Meckler – The Wall Street Journal. The Obama campaign Thursday released another TV ad suggesting that rival Mitt Romney may not have paid any income taxes at all in prior years, the latest in a relentless campaign centered on his refusal to release more than two years of tax returns. It highlights his role on the audit committee at Marriott International Inc., a period during which the company used improper tax strategies. The ad alleges Romney approved “son of BOSS” tax shelters. Link

* Romney on not releasing more tax returns: ‘I’m not a business’ Aaron Blake – The Washington Post. The man who once said “corporations are people” apparently doesn’t believe the inverse. When pressed on why he’s not releasing more tax returns in an interview with Bloomberg Businessweek, Mitt Romney justified it by saying: “I’m not a business.” “I have met with that requirement with full financial ­disclosure of all my investments, but in addition have provided and will provide a full two years of tax returns.” Link

* Obama knocks Romney on renewable energy, tax shelter. Jeff Mason – Reuters. Obama portrayed federal tax credits for the wind industry as a critical economic necessity that Romney, the former governor of Massachusetts, would nix. “Renewable energy is creating new jobs in states like Colorado and Iowa, my opponent wants to end tax credits for wind energy producers,” Obama told a crowd of some 3,500 people at the Colorado State Fairgrounds in Pueblo. The industry supports 5,000 jobs across Colorado, and 37,000 jobs would be at risk nationwide without the credits, he said. Link

* U.S. municipal downgrades most in a decade. Vivianne Rodrigues and Nicole Bullock – The Financial Times. Moody’s downgraded nearly 300 US municipal issuers in the second quarter, the most for any quarter in more than a decade and the latest sign of the potential pressure building in the market where states and local governments raise money. Local areas across the U.S. have been struggling for several years after the recession sharply undercut revenues, with three cities in California recently filing for bankruptcy in an attempt to alleviate their financial burdens. Link

* Japan parliament passes sales-tax increase. Toko Sekiguchi – The Wall Street Journal. Japan’s parliament passed a landmark tax bill on Friday, finalizing the legal framework to double the nation’s sales tax by 2015 as a step toward fiscal reconstruction. The upper house enactment of the contentious bill marks the end of Prime Minister Yoshihiko Noda’s tortuous 12-month road to raise the tax to 8% in April 2014 and 10 percent in October 2015. While Noda staked his political career on the bill, he had to make some serious compromises and his attention is likely to quickly shift to fending off calls from the opposition for a general election. Link

* If guns do not kill, tax the bullets. Jim Dwyer – The New York Times. In 1993, Democrat Senator Daniel Patrick Moynihan had a proposal to stop gun violence. His solution: Increase the tax on bullets. He wouldn’t raise the tax on ammunition typically used for target shooting or hunting. But he proposed exorbitant taxes on hollow-tipped bullets designed to penetrate armor and cause devastating damage. “Ten thousand percent,” Moynihan said. That would have made the tax on a 20-cartridge pack of those bullets $1,500. “Guns don’t kill people; bullets do,” said Moynihan, who died in 2003. Link

Calendar

Nanette Byrnes

Aug 10, 2012 13:00 UTC

Some important tax and accounting events in the weeks ahead:

Wednesday, August 15• A number of lawyers for the U.S. Internal Revenue Service and Department of Justice speak on an American Bar Association, Section of Taxation, webcast entitled “International Tax Enforcement and Globalization: Can the Tax Police Keep Pace with the Criminals?” 1 p.m. EDT.

Thursday, August 16• Brenda Zent, attorney-adviser in the U.S. Treasury’s Office of International Tax Counsel, speaks on a Grant Thornton webcast about international tax matters related to cross-border mergers and acquisitions. 3 p.m. EDT.

Monday, August 20 – Friday, August 24• Tax Executives Institute conference on international tax issues. Atlanta.

Tuesday, August 21 – Thursday, August 23• IRS executives and other experts address tax issues in multiple workshops. Chicago.

Friday, August 24• IRS hearing on proposed regulations affecting pension plans which are connected to bankrupt companies. 10 a.m. EDT, IRS Auditorium. Washington.

Essential reading: Watchdog says U.S. IRS allows bogus taxpayer IDs, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* U.S. IRS allows bogus taxpayer IDs-watchdog report. Patrick Temple-West – Reuters. The U.S. Internal Revenue Service has recently issued thousands of tax identification numbers to ineligible people and, in some cases, IRS managers condoned the practice, the tax collection agency’s watchdog said on Wednesday. The accusation by the Treasury Inspector General for Tax Administration, or TIGTA, comes at a time of intense national debate about illegal immigrants, many of whom apply for and get taxpayer ID numbers instead of Social Security numbers. Link

* In Iowa, Romney leaves a stance on wind power unsaid. Trip Gabriel – The New York Times. Seeking support in the swing state of Iowa, Mitt Romney on Wednesday called for developing a laundry list of energy resources that included wind power, but he pointedly did not mention that he opposes a tax credit for the wind industry that the state’s Republican leadership strongly favors. Republican Governor Terry Branstad and members of Iowa’s Congressional delegation have criticized Romney in recent days for not backing a longstanding tax break for wind energy in a state where the industry employs about 7,000 workers. Link

* Japanese premier cuts a deal on tax bill. Toko Sekiguchi and Alexander Martin – The Wall Street Journal. Japanese Prime Minister Yoshihiko Noda promised to call elections soon in exchange for the support of the main opposition parties in a deal to save his sales-tax legislation from defeat. The agreement Wednesday to hold general elections “in the near term” ended a revolt that could have derailed the measure and raised more worries about the country’s troubled fiscal condition. Link

* Suburban taxpayers vote to support Detroit Museum. Patricia Cohen – The New York Times. The Detroit Institute of Arts was saved from devastating budget cuts Tuesday night after voters in three Michigan counties agreed to institute a property tax increase earmarked specifically for the museum. The levy — known as a millage tax — is expected to raise $23 million a year and put the arts institute on secure financial footing for the first time in two decades. Link

* Kansas voter uprising. The Wall Street Journal opinion. After Tuesday’s primary, Kansas Governor Sam Brownback now has a conservative majority and a voter mandate to finish the job of simplifying the Kansas tax code and maybe phasing out the income tax. Conservatives for the first time in decades next year will have a governing majority with at least 26 of the 40 Senate seats. Link

* Americans need to face the harsh truth and pay more tax. Jared Bernstein – The Financial Times opinion. Data from the non-partisan Congressional Budget Office reveal that, when it comes to federal taxation, U.S. households are less taxed now than 30 years ago, and that is not just a function of the recession. The CBO data began in 1979 when the typical, or median, household paid 19 percent of their income in federal taxes. In 2009, that share had fallen to 11 percent. Democrats should be forthright with the fact that we’re way below where we need to be in terms of revenue collection. Link

Essential reading: Indigestion for the French in a plan for higher taxes, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Indigestion for ‘les Riches’ in a plan for higher taxes. Liz Alderman – The New York Times. A chill is wafting over France’s business class as President Francois Hollande presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies. But because there are relatively few people in France whose income would incur such a tax — perhaps no more than 30,000 — the gains might contribute but a small fraction of the 33 billion euros in new revenue the government wants to raise next year. Link

* Japan’s Democrats offer polls in ‘near future’ to save tax plan. Yuko Yoshikawa and Tetsushi Kajimoto – Reuters. Japan’s ruling Democrats on Wednesday offered to call an election in the “near future” to save their sales tax increase plan after the opposition demanded a commitment to early polls in return for backing the bill in an upper house vote. The opposition has yet to formally respond to the pledge, but first reactions suggested it was too vague. Link

* Cayman Islands drops plan to tax foreign workers’ income. Shurna Robbins – Reuters. The Cayman Islands has dropped plans to impose an income tax on foreign workers nearly two weeks after proposing it in a last-ditch effort to overcome budget woes. The Cayman Islands, which has had no income tax, is known as a tax haven for the mega-rich. The irony of imposing the tax was not lost on the financial industry workers who came out in droves to protest a measure that they said could hurt the industry that has made the beach-lined British territory one of the richest in the Caribbean. Link

* Chinese accounting earns tough stance. David Reilly and Duncan Mavin – The Wall Street Journal. Accounting fraud and China have become synonymous for many investors. It isn’t hard to see why. Billions of investor dollars have been lost on scandals at overseas-listed Chinese companies such as Longtop Financial and Sino-Forest. Audit firms have resigned at dozens of such companies. And some of their resignation letters make for chilling reading with mentions of fake bank statements, made-up invoices and intimidation of audit staff. Link

* Obamacare’s phony deficit reduction. Betsy McCaughey – The Wall Street Journal opinion. The half-trillion dollars in tax hikes and half-trillion dollars in cuts to Medicare funding together total more than the cost of the new entitlements during the next 10 years, according to the CBO, and produce a small $109 billion surplus. Repealing Obamacare would erase that tiny surplus. So what? Repeal also would reduce government spending, lower taxes, and undo the evisceration of Medicare: all good results. Nevertheless, Senate Majority Leader Harry Reid declared that the CBO “confirms what we’ve been saying all along: the Affordable Care Act saves lots of money.” Untrue. Link

* Reid and Romney’s sleazy rhetoric on taxes. The Washington Post editorial. If Senator Harry Reid has any proof, he owes it to Romney, the presumptive Republican presidential nominee, to put it on the record, now. Otherwise, Reid ought to pause and reflect on the record of another senator who once claimed to have a list of Communists and spies at the State Department — and could not substantiate it. Link

Essential reading: Auditors question PwC reform role, and more

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Auditors question PwC reform role. Adam Jones – The Financial Times. The involvement of a PwC expert in the political process of reforming European accounting law has prompted fresh concern about links between the biggest auditors and those who are supposed to regulate them. The Cypriot government borrowed a PwC technical expert to assist it with pushing forward accounting reform during its six-month presidency of the European Union, which began last month. Link

* GOP assails Harry Reid on Romney tax charge. Jeffrey Sparshott – The Wall Street Journal. The argument over Mitt Romney’s personal tax returns heated up Sunday, with Republicans calling Senate Majority Leader Harry Reid a liar for suggesting the GOP presidential candidate hadn’t paid taxes for a decade. Reid revived the debate last week when he said “an extremely credible source” had told him Romney didn’t pay taxes for 10 years. “It’s clear Romney is hiding something,” Reid said. On Sunday, the GOP launched a countercharge. “I am not going to respond to a dirty liar,” Republican National Committee Chairman Reince Preibus said on ABC’s “This Week.” Link

* Romney persona non grata in Italy for Bain’s deal skirting taxes. Jesse Drucker, Elisa Martinuzzi and Lorenzo Totaro – Bloomberg News. Bain Capital funneled profits from a telephone directory company through subsidiaries in Luxembourg, a common corporate strategy for avoiding income taxes in other European countries, according to documents reviewed by Bloomberg News. The buyer, Italy’s biggest telephone company, now has a total market value less than what it paid Bain and other investors for the directory business. In Italy, the deals have spurred at least three books, separate legal and regulatory probes and newspaper columns alleging investors made a fortune at the expense of Italian taxpayers. Link

* In Cayman Islands, planned tax on expats triggers worries that sun is setting on tax haven. Associated Press. The Cayman Islands have lost some of their allure by proposing what amounts to the territory’s first income tax. Government data show 91,712 companies were registered in the Caymans as of March 2011. A total of 235 banks, including most of the world’s top 50 banks, held licenses at the end of June as did 758 insurance companies. The new tax is necessary to meet British government demands that the territory diversify its sources of revenue beyond the fees and duties it now relies on, that have left his administration with a budget deficit. Link

* Retiring soon? You probably paid more in taxes than you will get in Social Security benefits. The Associated Press. People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. Previous generations got a much better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades. Link

* The numbers inside a hot-button issue. David Wessel – The Wall Street Journal opinion. The contrasting tax comments from Barack Obama and Mitt Romney underscore their philosophical differences over the roles of the individual and society. But the most tangible disagreement is on taxing the rich. Over the past 30 years, the weight of federal taxes has shifted from the income tax to the payroll tax, which is less progressive. Link

Essential reading: Republicans waver over wind tax credit

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Wind-state Republicans in tough spot. Siobhan Hughes – The Wall Street Journal. Mitt Romney‘s opposition to a $5.2 billion wind tax credit is roiling Capitol Hill, where wind-state Republicans are scrambling to figure out how to save the credit without exposing sharp differences with their party’s presidential candidate. Republicans and Democrats had agreed to include the tax break, known as a production tax credit, in a package designed to extend expiring business tax breaks. But after Romney came out against the tax credit, Republicans were put in a tough spot. The result: The tax credit was omitted from a tax-extenders plan announced shortly after midnight that is to be voted on Thursday in the Senate Finance Committee. Link

* House votes to extend tax cuts in symbolic vote. Kim Dixon and David Lawder – Reuters. The Republican-controlled House of Representatives on Wednesday passed a largely symbolic plan to extend all expiring individual income tax cuts, leaving a deep rift over tax policy unresolved until after November’s elections. Link

* Senators reach tentative deal on business tax breaks. Kim Dixon and Roberta Rampton – Reuters. In a rare bipartisan pact, a group of U.S. senators clinched a tentative deal on Wednesday to renew dozens of business tax breaks that have expired or will lapse at year-end. Crafted by Democrats and Republicans on the Senate Finance Committee, the plan would also prevent the alternative minimum tax, intended to ensure the rich pay some taxes, from creeping into the tax bite on the middle class. Link

* SocGen chief warns on France finance tax. Scheherazade Daneshku – The Financial Times. France’s new tax on financial transactions, which came into force on Wednesday, risked making European assets less attractive, said Frédéric Oudéa, chairman and chief executive of Société Générale. Oudéa said investors already had fears about the eurozone economy and anything that made the region’s assets less attractive relative to other parts of the world, could put a further brake on investment. Link

* Auditor watchdog: U.S. directors can ask for inspection reports. Dena Aubin – Reuters. In a bid to lift some of the secrecy around U.S. audit firms, a watchdog board on Wednesday told corporate directors that they may seek out non-public information about auditor inspections. U.S. law bars regulators from making public key parts of reports on inspections of audit firms. But the law does not prevent audit committees of corporate boards from seeking the reports from auditors, the Public Company Accounting Oversight Board said on Wednesday. Link

Essential reading: Payroll tax cut on track to quietly expire

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Payroll tax cut on track to quietly expire. Naftali Bendavid – The Wall Street Journal. Amid a high-decibel fight over the nation’s budget, there is one emerging area of agreement: Both parties appear willing to quietly let a major tax cut expire—a payroll tax break enjoyed by about 122 million people. Republicans were unenthusiastic about the tax cut to begin with, preferring instead a broad overhaul of the tax code and contending it would weaken Social Security. Now the party is openly opposed to extending the tax break. Link

* Study: Romney tax plan would result in cuts for rich, higher burden for others. Lori Montgomery – The Washington Post. Mitt Romney’s plan to overhaul the tax code would produce cuts for the richest 5 percent of Americans — and bigger bills for everybody else, according to an independent analysis set for release Wednesday. The study was conducted by the Brookings Institution and the nonpartisan Tax Policy Center. To cover the cost of his plan — which would reduce tax rates by 20 percent, repeal the estate tax and eliminate taxes on investment income for middle-class taxpayers — the researchers assume that Romney would go after breaks for the richest taxpayers first. Link

* House lawmakers head toward election-year tax votes with political messaging on their minds. Associated Press. An election-year tax faceoff between Democrats and Republicans in the GOP-controlled House is heading toward a predictable outcome Wednesday. Republicans are poised to pass a bill to renew a full slate of Bush-era tax cuts for every working American. Democrats are countering with a doomed plan that would extend the tax cuts for all but the highest-earning Americans. Link

* Leaders reach tentative deal on spending to avoid fight before election day. Jennifer Steinhauer – The New York Times. Congress is nearing another budget deadline, and Republicans still want to cut spending. But this time, the presidential and Congressional elections are just months away. As a result, House and Senate leaders on Tuesday, with little fanfare and no drama, said they had reached a tentative agreement that would pay for federal government operations through next March, averting the prospect of another messy shutdown debacle. Link

* Atlanta transport referendum falters. Cameron McWhirther – The Wall Street Journal. Voters here appeared to reject a referendum Tuesday to increase their sales taxes by a penny to raise billions of dollars for roads and mass transit, a proposal that had been strongly backed by local companies and political leaders from both parties. As of midnight, with 87 percent of precincts reporting, the referendum was failing, with 63 percent voting against it and 37 percent voting for it, according to the Associated Press. Link