Tax Break

Essential reading: IRS under strain, Clinton’s tax proposal, and more

June 6, 2012

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

* Overseer: IRS could face ‘serious problems.’ Siobhan Hughes – The Wall Street Journal. The Internal Revenue Service is under strain as it faces a flood of new demands at a time of budget cutbacks, its government overseer said in a report on Tuesday, posing a risk that the tax collector will experience “serious problems in the future.” Link

* Bill Clinton: Extend all Bush-era tax cuts for a year. Reuters. Former President Bill Clinton on Tuesday jumped into the debate over how to handle the looming expiration of historically low tax rates, putting him somewhat at odds with fellow Democrat President Barack Obama. Clinton, on cable television’s CNBC, said Congress may have to temporarily extend all the low tax rates that expire at year-end to give lawmakers more time to come up with a plan to cut deficits. Link

* Unchanged tax, health policies to explode U.S. debt-CBO. David Lawder – Reuters. U.S. public debt would balloon to twice the size of the nation’s economy in 25 years if current tax and spending policies are extended, Congress’ budget referee said on Tuesday, delivering fresh fodder for a year-end budget brawl. The Congressional Budget Office said in a report that if tax cuts enacted under George W. Bush are allowed to expire as scheduled on Dec. 31, along with some other tax and spending policies, U.S. public debt would shrink significantly, falling to 53 percent of gross domestic product by 2037 from 73 percent this year. Link

* Greece warns of going broke as tax proceeds dry up. Liz Alderman – The New York Times. As European leaders grapple with how to preserve their monetary union, Greece is rapidly running out of money. Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. Link

* Tribunal faces rise in number of tax disputes. Vanessa Houlder – The Financial Times. More than 20,000 tax disputes are queuing to be heard by the recently established tribunal system as the government struggles to crack down on avoidance. The backlog of unheard cases rose by a third over a year to stand at 22,100 in the fourth quarter of 2011, according to the UK Ministry of Justice figures. The number actually heard by the tribunal also rose sharply, from 9,100 in 2010 to 11,000 in 2011. Link

* Top EU court back EDF on state aid. Alessandro Torello – The Wall Street Journal. The European Union’s top court confirmed Tuesday that French utility Electricite de France SA can keep the money from a 1997 tax concession, a blow to the European Commission that had ruled the funds were illegal state aid. Link

* Trust Co. says tax change to hit foreign investment in Australia property. Eriko Amaha – Reuters. Foreigners are likely to cut their investments in Australia’s property market after recent tax changes that will hit returns, according to a company dealing with managed property investments schemes. The federal government announced in May it would increase the withholding tax for foreign investors in Managed Investment Trusts (MITs) to 15 percent from 7.5 percent, reversing its previous policy aimed at attracting foreign capital Down Under. Link

* Obama’s debt boom. The Wall Street Journal editorial. The Obama era is taking America to a place it has never been. Inside of a decade the country will have a debt-to-GDP ratio well into the 90 percent to 100 percent danger zone where economists say the economy begins to slow and risks mount. Link

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