Tax Break

Essential reading: Obama to seek one-year extension for some of Bush tax cuts, and more

July 9, 2012

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

* Obama to seek one-year extension for some of Bush tax cuts. Alister Bull – Reuters. President Barack Obama will call on Monday for a one-year extension of Bush-era tax cuts for families earning less than $250,000 a year, according to a White House official, seeking to spare the economy the impact of taxes going up on Jan. 1. Obama, a Democrat, will make the request in a statement at the White House, said the official, who spoke on condition of anonymity. Republicans in Congress, however, are unlikely to be swayed, as they have consistently argued that the Bush tax cuts should be extended for everyone. Link  

* Democrats put pressure on Romney’s taxes. Stephanie Kirchgaessner – The Financial Times. Supporters of President Barack Obama raised the temperature surrounding Mitt Romney’s finances on Sunday, reiterating claims that the presumptive Republican nominee used shell corporations in offshore havens to avoid paying U.S. taxes. Robert Gibbs, the president’s former press secretary, went so far as to suggest that Romney may have skirted the law. Kevin Madden, a senior Romney adviser, said Mr Romney “hasn’t paid a penny less in taxes” even though some of his funds were domiciled in Switzerland and Bermuda. Link  

* Can IRS police both taxes and healthcare law? The Associated Press. Can the Internal Revenue Service police President Barack Obama’s healthcare mandate while simultaneously collecting all the taxes for running the federal government? The question is being renewed in the wake of the Supreme Court’s decision upholding most of the 2010 Affordable Care Act as a tax issue rather than one of interstate commerce. Nearly 2 1/2 years before taxpayers will have to start providing proof on their tax returns that they have health insurance, key Republicans suspect the agency already is diverting resources from collecting taxes to gear up for becoming the government’s healthcare cop. Link  

* Tax-exempt groups shield political gifts of businesses. Mike McIntyre and Nicholas Confessore – The New York Times. Corporations, including Prudential Financial, Dow Chemical and the drugmaker Merck, have poured millions of dollars more into the U.S. Chamber of Commerce, a tax-exempt trade group that has pledged to spend at least $50 million on political advertising this election cycle. there is growing evidence that large corporations are trying to influence campaigns by donating money to tax-exempt organizations that can spend millions of dollars without being subject to the disclosure requirements that apply to candidates, parties and PACs. Link  

* Wind power faces taxing headwind. Mark Peters and Keith Johnson – The Wall Street Journal. The debate over renewing the wind energy tax credit is dividing Republicans, with conservative lawmakers from wind states joining Democrats to push for an extension even as the presumptive GOP presidential nominee, Mitt Romney, has made attacks on government support for clean energy, including wind, a centerpiece of his fight against President Barack Obama. But U.S. wind companies are banking on foreign orders to keep the plants going next year, while hoping the credit will be extended. Link

* States, Congress rallying for an e-sales tax. Amrita Jayakumar – The Washington Post. Online shopping in the Washington region is about to become more expensive. A wave of states, including Virginia, have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year. Other states and the District are pursuing similar measures. And in Maryland, Gov. Martin O’Malley wants to go further and levy a tax on songs and other digital products bought through popular sources such as iTunes. Link  

* Australia Queensland to join mining tax challenge. Reuters. Australia’s northern Queensland state plans to join a challenge to the federal government’s Minerals Resource Rent Tax (MRRT) in the High Court, saying the tax unfairly discriminates against the resource-rich state, the state government said on Monday. Queensland’s attorney-general Jarrod Bleijie told reporters the state will join the legal action launched against the tax by Fortescue Metals Group, Australia’s No.3 iron ore miner. Link  

* The most important tax increase in ‘Obamacare.’ Ezra Klein – The Washington Post opinion. Is the Affordable Care Act really “the largest tax increase in the history of the world,” as Rush Limbaugh so grandiloquently put it? No. It’s not even the largest tax increase in the history of this country. Or of the past 50 years. Or 20. It’s not even the biggest tax increase scheduled to take effect in the very near future. (That’s the expiration of the George W. Bush tax cuts scheduled for New Year’s Day.) Link  

* A short history of Congress’s power to tax. Paul Moreno – The Wall Street Journal opinion. In his Obamacare opinion, NFIB v. Sebelius, Chief Justice John Roberts gave Congress the same advice—just enact regulatory legislation and tack on a financial penalty, as in failure to comply with the individual insurance mandate. So how did the power to tax under the Constitution become unbounded? The first enumerated power that the Constitution grants to Congress is the “power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States.” The text indicates that the taxing power is not plenary, but can be used only for defined ends and objects—since a comma, not a semicolon, separated the clauses on means (taxes) and ends (debts, defense, welfare). Link 

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