Tax Break

Essential reading: New trial ordered in huge New York tax shelter case, and more

June 5, 2012

The federal courthouse at 500 Pearl Street in New York. REUTERS/Chip East

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

* NY judge orders new trial in huge tax shelter case. Larry Neumeister – The Associated Press. A federal judge on Monday ordered a new trial for three of four people convicted in the largest tax fraud prosecution in U.S. history, saying a “pathological liar” who served as a juror had corrupted the trial. U.S. District Judge William H. Pauley III said the juror had spoiled a three-month trial that included 41 witnesses and 1,300 exhibits. Link

* Senate panel chief to detail tax code vision. Kim Dixon – Reuters. The chairman of the Senate tax-writing committee promised to spell out ideas for revamping the tax code next Monday, providing a glimpse of his plan for major fiscal decisions looming at the end of the year. Senator Max Baucus, the Finance Committee chairman, will deliver “a vision for tax reform” on June 11 at the Bipartisan Policy Center, his office said. Link

* U.S. aims at five EU tax evasion deals this month. Patrick Temple-West – Reuters. The U.S. Treasury Department aims to complete agreements with five EU countries by the end of June to crack down on American tax evasion, and cooperation with more countries should be announced soon, a senior Treasury official said on Monday. The Treasury also hopes by the end of June to complete a second model that will enlist the help of other countries. Link

* UK needs new accounting rules for banks – BoE’s Haldane. Reuters. Britain needs separate accounting rules for banks to allow investors and regulators to properly evaluate risks, as trying to do so now was like trying to “pin the tail on a boisterous donkey”, a senior Bank of England official said. International Financial Reporting Standards (IFRS) give a “hit and miss” view of the solvency of banks, Andrew Haldane wrote in this month’s edition of the accountancy and business magazine Economia. Link

* Roberts is outraged at a tax; Thomas isn’t. Brent Kendall – The Wall Street Journal. If you’re outraged at unfair taxes, Chief Justice John Roberts feels your pain. But the chief couldn’t get two of his fellow conservatives to send what he described as a once-in-a-generation message on the subject. The split came in a Supreme Court review of a tax program in Indianapolis that left a few dozen property owners paying 30 times as much as some of their neighbors. Link

* Filmmakers shoot for breaks. Ethan Smith – The Wall Street Journal. Declining theater attendance and crumbling DVD sales have squeezed profit margins in the movie business, making tax breaks an essential part of producers’ calculations about where to film. Supporters of states’ tax-incentive programs say that every dollar spent directly on a film production results in $5 to $6 in spending at hotels, restaurants, caterers and other contractors—making the incentives an inexpensive stimulus for local economies. Link

* Rich nontaxpayers. Bruce Bartlett – The New York Times opinion. An oft-repeated Republican talking point is that close to half of all federal income tax filers have no tax liability. Prominent Republicans often imply that these people ought to be paying federal income taxes — and that they don’t is a major cause of the budget deficit. Recent Internal Revenue Service data also show that among those with an income over $200,000, many paid relatively low tax rates: 3.3 percent paid less than 10 percent. Link

* McGurn: Illinois blows smoke at taxpayers. William McGurn – The Wall Street Journal opinion. Altogether the new taxes on tobacco products are projected to bring in $350 million. These dollars will be matched with federal funds, for a total of $700 million. In other words, what we have here is a “revenue enhancer”—something Republicans are constantly told they must embrace if they are serious about bringing government budgets into balance. The cigarette tax is projected to raise $350 million in revenue, which is designed to help close a $2.7 billion Medicaid gap. Link

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