Tax Break

Essential reading: Camp vows Republicans will resist tax revenue increases, and more

June 28, 2012

House Ways and Means Committee chairman Dave Camp (R-MI) REUTERS/ Gary Cameron

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

* Camp: Republicans will resist tax revenue increases. James Willhite – The Wall Street Journal. House Ways & Means Chairman Dave Camp said Republicans won’t increase tax revenues to cope with deficits even though “revenue percentage of GDP is at a historic low.” When pressed on whether the Republicans in the House would tolerate offsetting a fourth of spending cuts with revenue increases, Camp said that such a proposal would likely not pass. A simpler tax code with a lower rate and fewer deductions is the goal, Camp said. Link

* Congress inaction risks 2013 tax delay: IRS watchdog. Patrick Temple-West – Reuters. Tax refunds in 2013 could be delayed if the U.S. Congress fails to address major fiscal policy questions soon, said the IRS in-house champion for taxpayers’ rights on Wednesday. National Taxpayer Advocate Nina Olson said in a report that “the 2013 filing season is already at risk” due to inaction by Congress on tax laws that have expired or will soon expire. Link

* U.S. anti-tax pledge creator says oath is strong. Kim Dixon – Reuters. Grover Norquist, the man dubbed by many the most powerful Republican in Washington, said on Wednesday that his anti-tax oath is alive and well despite opposition from senior figures in the party. Norquist, whose 1986 “taxpayer protection pledge” has been signed by the vast majority of elected Republicans, said the numbers prove his case that the oath is still in vogue. More Republicans today have signed the pledge than during the last election cycle, he said. Link

* IRS probes political group tied to Rove. Brody Mullins and Jacob Gershman – The Wall Street Journal. The Internal Revenue Service is taking initial steps to examine whether Crossroads GPS, a pro-Republican group affiliated with Karl Rove, and similar political entities are violating their tax-exempt status by spending too much on partisan activities. The review, which could last for years and is unlikely to be concluded before the November election, could ultimately force many of the political groups to disclose the names of their donors for the first time. Link

* Jerry Brown signs budget that relies on voter-backed tax hikes. Chris Megerian – The Los Angeles Times. California lawmakers finished their work on the budget, and Gov. Jerry Brown signed it late Wednesday, ending the haggling over final details of the state’s spending plan. The budget closes the state’s $15.7-billion deficit with cuts in social services and depends on voters approving more than $8 billion in temporary tax hikes at the ballot box in November. Without a higher sales tax and increased levies on the wealthy, the governor says, the state will cut billions from public schools. Link

* As his optimistic budget falters, Christie comes out swinging. Kate Zernike – The New York Times. Gov. Chris Christie of New Jersey promised a have-your-cake-and-eat-it-too budget for next year, one that would make the state’s pension payments, increase money for schools, provide drug treatment for nonviolent criminals, restore tax credits for the working poor and give every taxpayer a 10 percent income tax cut. But now rosy revenue projections are coming up short. With unemployment in New Jersey still higher than the national average, tax revenues have failed to meet targets for several months in a row. Link

* Juniper CFO says aggressive tax stance not worth risk. Maxwell Murphy – The Wall Street Journal. Every time Juniper Networks releases a new product or service, CFO Robyn Denholm says, it is taking a substantial risk. That’s why, she says, it can’t afford not to be conservative with its tax strategy. Juniper uses techniques like transfer pricing, which allows companies to access some of their overseas cash without paying full U.S. taxes. But such actions have only lowered its total tax rate to about 29 percent, or 27 percent after Juniper takes advantage of research and development tax credits, Denholm said. This compares to a full U.S. corporate tax rate of nearly 40 percent when federal and state taxes are included. Link

* Tax officials reveal scale of probe. Jim Pickard – The Financial Times. More than 4,000 companies are currently under investigation by the tax authorities, senior officials at Revenue & Customs revealed as they faced hours of hostile questioning by MPs over corporate tax avoidance. Jim Harra, director-general of business tax at the Revenue, said the authorities were investigating the tax affairs of “just over 4,000” companies, although he was unable to say how many of these were large corporates. Lin Homer, chief executive of the Revenue, was forced to admit that “sometimes we get things wrong” amid a blizzard of aggressive questions over so-called “sweetheart deals” between the tax authorities and large companies. Link

* China plans tax delay to boost investment. Carrie Ho – Reuters. China is likely to introduce preferential tax policies on pension funds within the year aimed at spurring investment in equity and bond markets, the state-backed China Securities Journal said on Thursday. The government hopes the new scheme will beef up China’s pension system and cut the public cost of supporting the aging population. Economists estimate that the gap between future liabilities and assets of China’s pension funds now stands at 18.3 trillion yuan ($2.87 trillion). Link

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