Tax Break

Essential reading: Amazon will collect Nevada sales tax, debating tax cuts, more

April 25, 2012

A rainbow appears over hotels on the Las Vegas Strip in Las Vegas, Nevada, REUTERS/Ethan Miller

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

* Amazon agrees to begin collecting sales taxes in Nevada.  The Wall Street Journal. Amazon.com Inc. has agreed to collect a sales tax on items sold in Nevada beginning in 2014, or earlier should proposed federal legislation mandate that online retailers collect sales taxes. The online retailing giant said it will collect taxes in the same manner as traditional brick-and-mortar retailers, an agreement that is expected to raise at least $16 million a year for the state, according to the Las Vegas Sun, which initially reported the news. Link

* German cabinet approves Swiss tax deal. Madeline Chambers – Reuters. German Chancellor Angela Merkel’s cabinet passed a revised deal to tax secret deposits in Swiss bank accounts on Wednesday, betting that the opposition Social Democrats (SPD) will drop their objections and back the accord in parliament. Switzerland and Germany hammered out the new deal earlier this month after a diplomatic spat that lasted years. Link

* OECD head urges Japan to fix finances, hike consumption tax. Kelly Olsen – The Wall Street Journal. The head of the Organization for Economic Cooperation and Development Angel Gurria said Wednesday that he supports Japan’s plan to raise the consumption tax. The Japanese government of Prime Minister Yoshihiko Noda submitted legislation to parliament in March that would raise the tax from the current 5 percent in two stages. But the plan has come under fierce criticism. Link

* Buffett gets a break on fee. Brody Mullins – The Wall Street Journal. NetJets Inc., the private-jet company owned by Warren Buffett’s Berkshire Hathaway Inc., spent more than $1 million over the past three years to lobby Congress to cut a user fee. The reduced fee, part of the recent Federal Aviation Administration bill that took effect earlier this month, will save customers of NetJets and similar companies roughly $83 million over about four years, according to congressional estimates. Link

* Powerful but obscure Tax Court lags on access. Kim Dixon – Reuters. The U.S. Tax Court is a powerful but obscure institution that has been opening itself up to the public, but only very slowly, and it still lags behind other courts on access. The court hears cases that range from warring spouses to high-stakes challenges by major corporations to the practices of the tax-collecting U.S. Internal Revenue Service. One case that could be decided any day, for instance, is a dispute involving Medtronic Inc and nearly $1 billion in taxes the IRS says the medical devices maker owes in relation to its Puerto Rican subsidiary. Link

* How the Obamas can lower their taxes. Laura Saunders – The Wall Street Journal. The Obamas should pay down their mortgage. Meanwhile, the Obamas have roughly $3 million at Northern Trust, mostly in short-term Treasurys that paid $16,000 in interest last year. Those assets earned less than one-third the amount of their mortgage interest. And Obama doesn’t need a retirement plan. He gets a pension for life and can earn lavish speaking fees. Link

* Brown and Warren spar over tax returns. Abby Goodnough – The New York Times. Senator Scott Brown, Republican of Massachusetts, said on Tuesday that he would release his personal tax returns from the last six years and challenged Elizabeth Warren, his presumed Democratic opponent, to do the same. The candidates have been sparring over tax policy, with Warren saying that the nation’s wealthiest households should be taxed at higher rates, and Brown countering that raising taxes only increases government spending. Link

* Ontario liberals pass budget after tax-the-rich deal. Claire Sibonney – Reuters. Ontario’s minority Liberal government passed its 2012-13 budget on Tuesday, hanging onto power a day after striking a deal with the left-leaning New Democrats to introduce a surtax on the rich that allowed the Liberals to avert a snap election. Link

* Obama’s budget means a tax increase on everyone. Glenn Hubbard – The Wall Street Journal. Maintaining President Barack Obama’s higher spending will require raising taxes for all Americans. Assuming the president favors raising marginal tax rates over broadening the tax base (consistent with his failure to consider the tax proposals from Bowles-Simpson), an across-the-board tax increase of 11 percent for taxpayers with incomes under $200,000 would be required to raise the money the president proposes to spend. Gov. Mitt Romney’s budget makes tough choices—tax reform that will require broadening the tax base, spending restraint to return federal spending to 20 percent of GDP by 2016, and reform of Social Security and Medicare to slow the rate of spending growth for more-affluent individuals. Link

* Subsidize students, not tax cuts. The New York Times editorial. In 2007, President George W. Bush signed a bill that cut in half interest rates on subsidized student loans until 2012. Those low rates will expire on July 1 — going back to 6.8 percent from 3.4 percent. House Republicans say the country cannot afford the $6 billion a year that it costs to pay for the lower rates. The Paul Ryan budget, recently approved by the House, would allow the rates to double, and, at the same time, would cut taxes by $10 trillion over a decade. Link

* A payroll tax cut could help Social Security. Andrew Biggs – The Wall Street Journal opinion. Obviously, reducing or even eliminating the payroll tax for older workers would lower Social Security revenues. But increased labor-force participation would raise non-Social Security tax collections. The budgetary question is how these balance out. Cutting the payroll tax on older workers won’t pay for itself. But the fact that it would come so close to doing so illustrates the losses we suffer under current policy and the potential gains to individual welfare and the economy. Link

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