Tax Break

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

April 18, 2012

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

* California deficit may widen by $1 billion or more, Brown says. Michael B. Marois – Bloomberg. California’s $9.2 billion budget deficit may widen by $1 billion or more because lawmakers resisted early spending cuts and lawsuits blocked other reductions, Governor Jerry Brown said. Democrats who control the Legislature have balked at about $1 billion of reductions to social services and higher education that Brown proposed in January, saying they want to wait until revenue estimates are revised in May. Link

* Are Democrats playing an away game on taxes? Chris Cillizza – The Washington Post. Democrats fare better with voters on such matters as education and healthcare while Republicans have enjoyed a trust advantage on such issues as national security and, yes, taxes. Republicans have almost always won the tax argument because their message is simpler: Don’t raise taxes. The Democratic argument — that increases in revenue (particularly on those who make the most) are, at times, necessary — is more nuanced and therefore tougher to sell in an election context. Link

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