Tax Break

Essential reading: UK tax evaders face higher penalty, challenges of fixing U.S. taxes, more

April 19, 2012

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

* Tax evaders face higher penalty. Vanessa Houlder – The Financial Times. British tax evaders with secret accounts in Switzerland will pay more than originally planned to legitimize their holdings under a revised deal signed on Wednesday. Revenue & Customs demanded that Switzerland increase the maximum one-off penalty to cover former unpaid tax from 34 per cent to 41 per cent, after a similar revision to the Swiss-German tax deal earlier this month. The program is expected to bring in billions of pounds. Link

* US pressure over India tax law. James Politi and James Crabtree – The Financial Times. US business groups are putting pressure on Tim Geithner, the treasury secretary, to intervene to try to stop India from enacting a contentious retroactive taxation law that they argue would have “severe consequences” for American investors in the country. They have asked him to “raise concerns” about the tax bill in talks with Indian officials during the spring meetings of the World Bank and International Monetary Fund this week. Link

* What Hong Kong knows about China. Joseph Sternberg – The Wall Street Journal. In a bit of virtuous contagion, a coughing fit of accounting honesty concerning Chinese companies appears to be spreading from the U.S. to Hong Kong. The earnings season just concluded has seen a mini-spate of delayed accounts. Trading in 13 companies’ shares is currently suspended pending incomplete audits. Link

 * The tax code is a complicated, horrible mess because we like it that way. Derek Thompson – The Atlantic. Federal income taxes pay into a general fund that pays for everything from education to defense. We tinker with it all the time to award and punish behavior. Running social programs through tax breaks in the federal income tax code has complicated repercussions and we should stop, but taxpayers love the breaks. Link 

* Romney’s plan to close loopholes. David Leonhardt – The New York Times Economix Blog. Tax reform is hard. If Mr. Romney eliminated the deductions he mentioned to donors over the weekend – mortgage interest on vacation homes and the deduction for state and local taxes – he would need to come up with at least 10 times as much loophole-closing — and maybe 20 or 30 times as much — to keep his tax plan from adding to the deficit. Link

* Bipartisan tax gimmickry. The Wall Street Journal Opinion. Senate Democrats lost their latest attempt at tax flim-flam on Monday when their 30 percent minimum tax (the Buffett rule) went down to easy defeat. House Republicans plan to counter as early as Thursday with their own tax gimmick, albeit a business tax cut. They are both walking advertisements for tax reform. Link

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