Tax Break

Essential reading: Obama challenges Republicans to keep tax cuts for middle class, and more

July 10, 2012

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

* Obama challenges Republicans to keep tax cuts for middle class. Jeff Mason and Alister Bull – Reuters. President Barack Obama called on Monday for a one-year extension of Bush-era tax cuts for families earning less than $250,000 a year, seeking to steer the election-year debate away from high unemployment and portray himself as a champion of ordinary Americans. The tax proposal is unlikely to sway Obama’s Republican opponents in Congress, who argue that the cuts should be maintained for everyone, including higher earners. Link

* Tax bill aims to encourage small business hiring. Corey Boles – The Wall Street Journal. Senate Democrats will try this week to pass a targeted tax relief package aimed primarily at encouraging small businesses to hire new workers. The $28 billion bill, the latest in a series of election-year tax maneuvers by the political parties, would provide a tax credit to all firms that hire new workers or increase pay for existing staff. Companies could earn a maximum credit of $500,000 against their 2012 income tax liability under the bill. Link

* Maine Governor LePage apologizes for “Gestapo” comment. Reuters. Maine Governor Paul LePage apologized on Monday for calling the U.S. Internal Revenue Service the “Gestapo” during criticism of President Barack Obama’s healthcare law. The Republican governor compared the tax agency to Nazi secret police during a weekend radio address on healthcare. Link

* The need to agree to agree. The New York Times editorial. Taxes are supposed to be complicated and contentious. Yet, speaking from the White House on Monday, it took President Obama less than 15 minutes to make a strong and sensible case for letting the high-end Bush-era tax cuts expire at the end of 2012. The strength of Mr. Obama’s argument is unlikely to sway Republicans. But he’s right on fairness and the facts, and will, we hope, prevail in this debate. Link

* Off the tax cliff he goes. The Wall Street Journal editorial. So the 2013 tax cliff is a big enough economic problem that President Obama now wants to postpone it for some taxpayers. But it isn’t so big that he’s willing to curb his desire to raise taxes on tens of thousands of job-creating businesses. Obama’s call for lower taxes on those making less than $250,000 is a political gambit designed to protect Democrats who are starting to feel queasy about opposing GOP plans to extend all of the Bush rates as the economy weakens again. The ploy could help Democrats if Republicans fall for it, but it won’t reduce the economic damage to the country. Link

* Pension accounting for dummies. The Wall Street Journal editorial. The Governmental Accounting Standards Board has issued new rules that aim to crystallize government pension liabilities. It failed on that count, but it did succeed, albeit inadvertently, in making the case for defined-contribution plans. GASB’s new rules allow governments to continue discounting their liabilities at their anticipated rate of return so long as they project enough future assets to cover their obligations. At the time they forecast they’ll run out of assets, they must begin discounting their liabilities with a high-grade municipal bond rate. The idea is that governments would have to issue bonds to pay retirees when their pension funds go broke. Link

* Obama’s tax triple axel. Marc Thiessen – The Washington Post opinion. When the individual mandate was before Congress, Obama argued it was not a tax. Then when it was before the Supreme Court, he argued that it was a tax. And now that the issue is before the American people, he is once again arguing that it is not a tax. That’s not a flip-flop — it’s a triple-axel. Obama and his supporters should be careful attacking Romney for flip-flopping on the issue. Compared to the president, Romney has been a paragon of consistency — and that is saying something. Link 

* One man’s tax cut is another man’s tax increase. Chris Cilizza – The Washington Post. It is a political reality that will be proven — yet again — in the aftermath of President Obama’s decision to call on Congress to extend the Bush era tax cuts for those making under $250,000 — and, therefore, for those not making more than $250,000. Make no mistake: This proposal isn’t going anywhere legislatively before the election. Link

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