Tax Break

Essential reading: Cuts debated on tax breaks for retirement savings, Simpson-Bowles vote, more

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

* Lawmakers consider changing tax breaks on retirement savings. Lori Montgomery – The Washington Post. The painful trade-offs of tax reform came into sharper focus on Tuesday as lawmakers began considering reducing or otherwise changing specific tax breaks, starting with laws that allow millions of Americans to avoid taxes while saving for retirement through 401(k) plans, employer pensions, IRAs and other programs. Link

* White House says Obama would veto Republican tax cut. Alister Bull – Reuters. The White House said on Tuesday that President Barack Obama would veto a small business tax cut proposal by Republicans in the House of Representatives that his Democrats complain is biased toward helping the rich. Link

* Senate to take up Simpson-Bowles deficit plan. James Politi – The Financial Times. The centrist Democrat who chairs the Senate budget committee will present legislation on Wednesday to implement the recommendations of a 2010 bipartisan debt reduction panel, in a surprise move to force the upper chamber to consider the contentious plan. In a sign that the Simpson-Bowles plan is unlikely to garner much traction in the Senate, Republicans mocked the move. Link

* How to pay no taxes: 10 strategies used by the rich. Jesse Drucker – BloombergBusinessweek. If you have lots of money, Tuesday, April 17, was one of the best tax days since the early 1930s: Top tax rates on ordinary income, dividends, estates and gifts remain at or near historically low levels. Our era is rife with opportunities to avoid — or at least defer — tax bills, according to tax specialists and public records. Link

* IRS rule threatens bank capital flight: analysts. Kevin Drawbaugh – Reuters. Banks in Texas, Florida and other southern states could face a pull-out of non-U.S. depositors due to a new U.S. rule finalized on Tuesday. The rule, part of efforts to combat offshore tax evasion and issued by the Internal Revenue Service, will require U.S. banks, starting on Jan. 1, 2013, to report to the IRS payments of interest made to non-resident aliens. Link

* Sino-Forest says ex-CEO leaves firm, three fired. Reuters. Embattled Chinese forestry company Sino-Forest Corp said on Tuesday its former CEO had quit his final role at the company and three other executives were fired after securities regulators signaled they could press charges against them. Link

Essential tax and accounting reading: Cuts debated on tax breaks for retirement savings, Simpson-Bowles vote, more Join Discussion

Quality of states’ internal audits varies widely

On March 20 the Center for Public Integrity published a project that had been more than a year in the works. Its ambitious goal: to evaluate each of the 50 states on 13 different measures of integrity.  Campaign finance law, judicial accountability and lobbying disclosure were some of the important topics tackled.

Also among the 13: the quality of each state’s internal auditing.

Internal auditing “tends to be overlooked, obscure and isolated.  But these are really key agencies of accountability,” said Nathaniel Heller, executive director of Global Integrity, an affiliate of the Center that helped design the study.

The Center describes itself as a non-partisan nonprofit that concentrates on ethics and public service, and though critics sometimes describe it as left-leaning, it has a record of critical review of politicians and policies of both parties.

Some of this study’s findings have come in for criticism, including its ranking New Jersey best across all 13 categories.  As Bloomberg columnist Jonathan Weil pointed, out,  New Jersey is the only state ever sued for fraud by the Securities and Exchange Commission. Lying to  municipal-bond investors about the underfunded condition of its two largest pension plans was the central issue. This study gave its state pension fund management an “A”.

Because the study evaluates the systems in place today, past transgressions like those are not factored in.

Most states did not do well in the overall rankings, but internal audit was an exception. Some 32 states got an “A” rating for their internal audits and only one,  Nevada, got a failing grade.

Internal auditing is key to state government accountability, but quality varies widely from state to state. In a recent study, Mississippi got top marks, while Nevada trailed badly, highlighting some important differences in their structure and effectiveness. Join Discussion

Governors call for tax cuts in 2012 despite uncertainty

In December, hopeful children around the world mailed in their requests to Santa Claus. Now it’s January, and governors across the country are standing before citizens and legislatures using State of the State addresses to lay out their wishes for the coming year. Top of the list, with a few notable exceptions, are tax cuts.

State revenues have climbed from 2009 and 2010 lows, largely on increasing individual income tax receipts. Still, that recovery is seen as tenuous due to a generally tepid economy and concerns that pivotal federal funding to the states could be on the cutting block as the country struggles with its growing debt and deficit.

Governors of a few states, including New York and Missouri, are not calling for cuts but say their states can avoid increasing taxes by relying on shrinking government and other moves to balance their budgets.

On Tuesday, President Barack Obama gives his State of the Union address. Though one of the topics is likely to be taxes, in a presidential election year few expect tax talk in Washington to move much beyond the podium.

More action may come at the state level.

Here’s what some governors have called for already in their State of the State addresses and budget proposals:

Alaska: Tax breaks for oil industry

Governors across the country are standing before citizens and legislatures using State of the State addresses to lay out their wishes for the coming year. Top of the list, with a few notable exceptions, are tax cuts. Join Discussion