Tax Break

Essential reading: Lawmakers work with Simpson-Bowles for tax deal, and more

May 29, 2012
 

Fiscal Commission co-chairs Alan Simpson (L) and Erskine Bowles speak to reporters in Washington April 14, 2011. REUTERS/Kevin Lamarque

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

 

* Lawmakers work with Simpson-Bowles for tax deal. Kim Dixon – Reuters. Former Democratic White House chief of staff Erskine Bowles said he and former Republican senator Alan Simpson, are working with a bipartisan group of 47 senators and as many House members to frame a compromise on $7 trillion in looming fiscal decisions, Bowles said on CNN’s news program, “Fareed Zakaria GPS.” Without a deal, the end of the year brings higher taxes for most Americans with the expiration of historically low income tax rates enjoyed by nearly every American and expiry of a payroll tax break, along with broad automatic spending cuts that most lawmakers in both parties want to avoid. Link

* With personal data in hand, thieves file early and often. Liaette Alvarez – The New York Times. Besieged by identity theft, Florida now faces a fast-spreading form of fraud so simple and lucrative that some violent criminals have traded their guns for laptops. And the target is the United States Treasury. The criminals, some of them former drug dealers, outwit the Internal Revenue Service by filing a return before the legitimate taxpayer files. Then the criminals receive the refund, sometimes by check but more often though a convenient but hard-to-trace prepaid debit card. Link  

* Barclays says was ‘singled out’ in tax row. Reuters. British bank Barclays said tax authorities singled it out for unfair treatment in a tax row earlier this year that damaged the bank’s reputation. Britain said in February it would close two “aggressive tax avoidance schemes” used by Barclays and retrospectively applied a new tax to a bond buyback the bank did in December. Link

* Britain announces ‘pasty tax’ U-turn. Reuters. Britain’s Conservative-led government is to modify a levy on hot takeaway food after months of criticism that its planned “pasty tax” showed it was out of touch with ordinary people. A Treasury spokeswoman said that Value Added Tax (VAT) would not be applied to hot takeaway food that is cooling down after being cooked – for example the popular Cornish pasties which shops rarely sell straight from the oven. Link  

* Taiwan finance minister quits over scaled-back tax plan. Faith Hung – Reuters. Taiwan’s finance minister resigned on Tuesday in protest against a ruling party proposal to sweeten a capital gains tax plan she had authored that has drawn the ire of stock investors. Under the Nationalist party’s plan, investors have the choice of paying the tax when the market trades above 8,500 points or they can add their stock trading profits to their annual income. The tax rates are also much lower. Link  

* Financial group looking at changes to simplify accounting standards. Danielle Douglas – The Washington Post. The Financial Accounting Foundation, which oversees the boards that set guidelines at the state and federal level for tracking the financial performance of U.S. companies, has established the Private Company Council. The council is charged with identifying, considering and voting on any proposed changes to Generally Accepted Accounting Principles. For now, the Financial Foundation is in the process of pulling together a 9- to 12-member team to serve on the council. The foundation will put out a call for nominations in early June. Link  

* Improvised explosive device tax. The Wall Street Journal opinion. Several of the Affordable Care Act’s worst tax increases are scheduled to begin in 2014, such as the new excise tax on medical devices. The 2.3 percent levy applies to the sale of everything from cardiac defibrillators to artificial joints to MRI scanners. The device tax is supposed to raise $28.5 billion from 2013 to 2022, and it is especially harmful because it applies to gross sales, not profits. Companies at make-or-break margins could be taxed out of existence, especially in an intensely competitive industry where four of five businesses are start-ups or midsized. Link

* Republican Keynesians. Bruce Bartlett – The New York Times opinion. Mitt Romney, in an interview with Time magazine, said he expressed concern about the impending fiscal contraction on Jan. 1, 2013, when the Bush-era tax cuts expire and various large cuts in spending are scheduled to take place – a result of last summer’s budget deal. One would think that Romney would embrace this huge deficit reduction and say, “Bring it on!” After all, his party has long asserted that deficits drain capital from the economy that would better be put to use by the private sector. Romney is in fact embracing Keynesian economics. Link

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