Tax Break

Essential reading: States refused to abolish taxes, but remain eager to roll them back, and more

June 15, 2012

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

* States refused to abolish taxes, but they’re still eager to roll them back. Suzy Khimm – The Washington Post. Conservatives in a handful of red states have been pushing to abolish some state taxes entirely. But they’ve been hitting a lot of roadblocks. On Tuesday, the overwhelming majority of voters rejected a ballot measure that would have made North Dakota the first state to eliminate property taxes. Earlier this spring, Republican-controlled legislatures in Kansas and Oklahoma also defeated measures that would have abolished the state-income tax, fearing the loss of revenue. But anti-tax momentum has still been growing on the state level. Link

* Obama challenges on vague Romney tax, budget plan. Kevin Drawbaugh and Kim Dixon – Reuters. U.S. President Barack Obama challenged reporters on Thursday to check out his analysis of the Republicans’ plan for taxes, the budget and the deficit – a plan sketched so far only in vague terms. The president said his rival Mitt Romney and other Republicans want to keep the tax cuts approved under President George W. Bush, “add another $5 trillion in tax cuts on top of that,” cut $1 trillion from the budget, and reduce the deficit. Link

* Obama says election will determine course of economy. Laura MacInnis – Reuters. President Barack Obama cast his re-election battle with Mitt Romney as a clash between starkly different economic visions on Thursday and warned that his Republican rival would hollow out the middle class in a speech that could set the tone for months of intense campaigning. Seeking to gain some footing after a string of bad economic news and a political stumble, Obama said the November 6 election would put the United States on one of two paths: an economy built on education and scientific research that delivers a broadly shared prosperity, or a Republican approach that cuts taxes for the wealthy and undermines opportunity for many others. Link

* Business tax break extension still stalled. John McKinnon – The Wall Street Journal. Senate Finance Committee leaders are seeking agreement to extend a raft of now-expired tax breaks for business, as part of an effort to boost public confidence in the economy — and in Congress. But in an election year that’s already awash in tax debates, there’s a strong chance that politics will spill over into the policy process again, delaying final action on the business breaks until the end of the year. Link

* FATCA: The IRS’s very big stick. Christopher Chung – The Wall Street Journal. The U.S. Internal Revenue Service is brandishing a “very big stick,” and it’s called the Foreign Account Tax Compliance Act. That was the opinion of panelists during a Dow Jones webinar earlier today on FATCA, the slowly unfolding law that the U.S. government expects will uncover U.S. investors who are evading taxes by putting their money in foreign funds and institutions. Link

* Lease accounting change renews rules vs. principles debate. Emily Chasan – The Wall Street Journal. This week’s compromise between U.S. and international accounting standard setters could be a step back towards rules-based accounting standards after the boards spent the last decade trying to write more principles-based rules. At a meeting in London this week, the U.S. Financial Accounting Standards Board and International Accounting Standards Board agreed that their upcoming overhaul of lease accounting rules would include two types of leases. Under the compromise, some leases will be treated like financings for accounting purposes and others will be treated as straight-line expenses. Link

* Australia cuts number of firms to pay carbon tax. James Grubel – Reuters. Australia will levy a controversial carbon tax on about half the number of companies originally expected, a government list released on Friday shows, which may limit the economic and political impact of the tax which starts on July 1. Link

* A simple tax code is a fair tax code. Harvey Golub – The Wall Street Journal opinion. Golub, a former CEO of American Express, writes that scores of tax deductions are unfair. “Eliminate all preferences in the tax code and, if we still want to subsidize certain behaviors, pay for them through a legislative appropriations process, making them transparent to the public. Everyone earning the same amount of money should pay the same in federal taxes, regardless of how they earned their money and regardless of how they choose to spend it.” Link

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