Tax Break

Essential reading: Analysis finds middle class taxes rise under Republican plan, and more

June 20, 2012

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

* Middle class would face higher taxes under Republican plan, analysis finds. Lori Montgomery – The Washington Post. The tax reform plan that House Republicans have advanced would sharply cut taxes for the wealthiest Americans and could leave middle-class households facing much larger tax bills, according to a new analysis set to be released Wednesday. The report, prepared by Senate Democrats and reviewed by nonpartisan tax experts, marks the first attempt to quantify the trade-offs inherent in the GOP tax package, which would replace the current tax structure with two brackets — 25 percent and 10 percent — and cut the top rate from 35 percent. Link

* SEC seeks Big 4 audit papers from China: source. Dena Aubin – Reuters. The Chinese arms of all of the Big Four audit firms have been asked by U.S. regulators to turn over documents related to audits of China-based companies listed in the United States, a person familiar with the matter said on Tuesday. The formal requests made by the U.S. Securities and Exchange Commission ratchet up the tension in a standoff between U.S. authorities, the companies and Chinese officials over access to the auditors’ work papers. Link

* Baucus weighs bipartisan tax renewal plan. Kim Dixon – Reuters. The top tax-writing lawmaker in the U.S. Senate expressed interest in a bipartisan proposal to extend all tax cuts expiring at year’s end, coupled with a mandate to force Congress to revamp the tax code within a set time frame. Senator Max Baucus’ receptiveness to the idea reflects one strand of thinking among some Democrats: that despite their preference for letting tax rates rise only for the wealthy, a more likely scenario in an end-of-the-year deal with Republicans may involve extending the low rates for all taxpayers at least for a short period of time. Link

* IRS loses Scottish Power tax deductions case. Kim Dixon – Reuters. The U.S. Tax Court ruled on Tuesday against the Internal Revenue Service in a closely watched dispute over the legality of interest tax breaks taken by UK utility Scottish Power, in the first major decision in years weighing the issue. The IRS challenged $932 million in interest deductions taken by Scottish Power on $4 billion in notes issued between company units. The IRS argued the deals should be treated as equity, which would nullify the tax breaks. Link

* Christie blasts Democrats for stalling on tax cut. Heather Haddon and Sharon Adarlo – The Wall Street Journal. As he continues his push for a historic tax cut in the last days of the legislative session, New Jersey Governor Chris Christie attacked state Democrats Tuesday for dragging their heels. Christie is in a showdown with the Democratic-controlled legislature over the 2012-2013 budget, which must be passed by the end of the month. Link

* Mark Ruffalo joins call for a tax on Wall Street. William Alden – The New York Times. The push to tax Wall Street is getting some star power. The actor Mark Ruffalo, who fights alien invaders in “The Avengers,” takes on Wall Street earthlings in a new video calling for a tax on financial transactions. The video, financed by several advocacy groups, supports a proposed “Robin Hood tax,” a levy of less than half of 1 percent on every Wall Street trade, being billed as a way to raise hundreds of billions of dollars to help reduce the federal deficit. Link

* Wasting Warren Buffett. Thomas Friedman – The New York Times opinion. The “Buffett Rule” plan had no chance of passing, would have made only a small dent in the deficit and was rightly decried by experts as a gimmick that only diverted attention from what we really need: comprehensive tax reform that can substantially raise revenue in a fairer manner. The Buffett Rule has largely faded away. What a waste of Warren Buffett’s credibility. Link

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