Tax Break

Essential reading: Supreme Court ruling casts tax shadow over US healthcare law, and more

June 29, 2012

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

* Supreme Court ruling casts tax shadow over US healthcare law. Kim Dixon and Kevin Drawbaugh – Reuters. Republicans seized on a momentous U.S. Supreme Court ruling on Thursday to accuse President Barack Obama of hiding a tax increase in his healthcare law, an argument likely to intensify a congressional tax policy war already under way. The court ruled the 2010 law was valid because Congress has the power to impose taxes. The Obama administration played down the tax factor, but Republican opponents pounced on the decision, seeking to elicit political points from a legal issue. Link

* US IRS steps up scrutiny of tax-exempt political groups. Patrick Temple-West and Alina Selyukh – Reuters. The U.S. Internal Revenue Service is signaling that it will increase its scrutiny of tax-exempt political organizations, which are becoming a force in elections by raising tens of millions of dollars from undisclosed donors. The IRS has been corresponding with such groups and is preparing questions to ask them as part of effort to determine whether their fundraising or advertising work runs afoul of tax law. IRS spokesman Terry Lemons said on Thursday the scrutiny will affect a range of tax-exempt groups. Link

* Rotation not enough to improve audits-experts. Dena Aubin – Reuters. Making U.S. companies switch or rotate auditors every few years would not end audit failures, and regulators should consider additional measures to protect investors, former securities regulators and legal experts said on Thursday. The auditing profession has become a comfortable oligopoly and its basic product has become suspect, said Harold Williams, former chairman of the U.S. Securities and Exchange Commission, at a forum in San Francisco. Link

* Tax regime not competitive, says study. Vanessa Houlder – The Financial Times. The UK has one of the least competitive corporate tax regimes in the industrialized world, according to new analysis that casts doubt on George Osborne’s efforts to propel the business tax system to the top of the league. The Treasury rejected the findings published by the Oxford University Center for Business Taxation, arguing it took too narrow a view of competitiveness. Link

* Noda’s tax success may fail to end Japan deadlock. Linda Sieg – Reuters. After years of policy paralysis in Japan, Prime Minister Yoshihiko Noda has pushed a much-needed but unpopular sales tax hike through the lower house of parliament, but the chances of further reform in the world’s third-largest economy seem unlikely. Noda, 55, is low key and likened himself to a “dojo” bottom-feeding fish when he took office in September last year. However, the sixth prime minister since 2006 is set to achieve a breakthrough that has eluded several of his predecessors. Link

* A confused opinion. Richard Epstein – The New York Times opinion. What Chief Justice John Roberts took from Congress with one hand, he gave it with the other: a broad reading of the taxing power. His decision is wrong. As a matter of constitutional text, legal history and logic, the power to regulate commerce and the power to tax should not be separated. It is not good for the court or the country that the chief justice’s position in such an important case is confused at its core. Link

* The tax duck. The Wall Street Journal opinion. The duck test—if it looks like a duck, swims like a duck and quacks like a duck, it probably is a duck. As the basis for the majority opinion in the Obama healthcare decision, Chief Justice John Roberts argued that the law’s individual mandate to buy health insurance is valid because it is a tax, citing Congress’s power under the Constitution to “lay and collect taxes” for “the general welfare of the United States.” Link

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