Tax Break

Essential tax and accounting reading: Obama and rival offer tax plans, UK considers a mansion tax, and more

February 22, 2012

 

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

 * Obama to propose corporate tax rate of 28 percent. Kim Dixon – Reuters. The Obama administration will propose cutting the top tax rate for corporations to 28 percent, and pay for it by eliminating dozens of tax loopholes companies now use to lower their rates, a senior administration official said. Most analysts doubt that the convoluted tax system could be revamped by a deeply divided Congress in an election year, but the announcement is certain to fuel debate in the run-up to November’s elections. The plan, over a year in the making, is President Barack Obama’s first official foray into reform of the tax code, which most experts believe badly needs a revamp after years of being loaded up with special provisions. The centerpiece is a cut in the top corporate rate – now at 35 percent, among the highest in the industrialized world. That will appeal to businesses, which gripe that the current U.S. rate puts them at a competitive disadvantage. Controversy will erupt when officials lay out which “loopholes” they want to cut. The proposal makes a special carve-out for manufacturing – cutting that tax rate to 25 percent – and proposes a minimum tax on profits earned in low tax countries. Link 

* Romney says wants ‘flatter, simpler’ tax system. Steve Holland – Reuters. Battling to come back in Michigan, Republican Mitt Romney said on Tuesday he wants a tax system that is flatter and simpler as he laid the groundwork for a major economic address coming up in days. Romney is expected to release an updated tax plan on Wednesday ahead of the Republican candidates’ debate in Phoenix. “I want to see taxes flatter, and fairer and simpler, because I want our tax policies to encourage growth,” Romney said on Tuesday. Link

* Heralding end of ‘dark times,’ Christie offers budget that is bigger and cuts taxes. Kate Zernike – The New York Times. After two years of enforcing austerity, Gov. Chris Christie argued on Tuesday that New Jersey could afford to have it all, presenting a budget he said would cut income taxes by 10 percent at the same time it gave money to schools, provided for the poor and met the state’s pension obligations. The governor proclaimed that “we have left the dark times” as he proposed a $32 billion budget, a 3.7 percent increase over last year’s spending. While still less than the budget of 2008, when the economy faltered, it would be the largest of his tenure. Democrats argued that the income tax cut, which would be phased in over three years, was aimed more at presidential primary voters in Iowa than wallets in New Jersey. Link  

* UK Treasury looks again at mansion tax. Jim Pickard and Chris Giles – The Financial Times. The idea of a “super council tax” is a form of mansion tax and was pushed “hard, very very hard” during last year’s budget talks by senior British Liberal Democrats Vince Cable and Danny Alexander. Yet it has long been anathema to many Tories who believe it would be unfair and anti-aspirational and would hit Conservative voters hard. But it is one option being considered anew by the Treasury, which likes the idea of taxing wealth rather than income and particularly focusing on assets, such as homes, that are not easily moved abroad. There are an estimated 155,000 homes in England and Wales worth more than 1 million pounds ($1.58 million), and about 80 percent of them are in London. People buying 2 million pound ($3.16 million) or more homes already paid a fifth of the total stamp duty revenue raised in Britain. Link

($1 = 0.6321 British pounds)

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