Tax Break

Essential reading: Boxed in on taxes, Romney says Obama dislikes success, and more

July 19, 2012

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

* Boxed in on taxes, Romney says Obama dislikes success. Sam Youngman and Steve Holland – Reuters. Mitt Romney accused President Barack Obama on Wednesday of demonizing business success, as the Republican tried to ignore questions about his personal finances that threaten to damage his presidential bid. Some senior Republicans worry that Romney is becoming boxed in by the Obama team, just at the time in the race when many Americans begin to tune in and form clearer opinions about candidates before the November 6 election. Link

* Defense firms open to higher taxes to avert cuts. Damian Paletta – The Wall Street Journal. Two top defense contractors told a House committee Wednesday that Congress should consider including increasing taxes as part of a package of changes to reduce the deficit, a sign that industry fear over the impact of spending cuts next year could challenge party orthodoxy. Top executives from Lockheed Martin, Pratt & Whitney, EADS North America, and Williams-Pyro told the House Armed Services Committee that the $50 billion in projected military spending cuts set to begin in January already has had a chilling impact on military planning, delaying projects and raised the possibility of layoffs before the end of 2012. Link

* U.S. utilities fear approach of fiscal cliff. James Politi – The Financial Times. The largest US utilities blitzed Capitol Hill this week to lobby for a deal to avert the effects of the “fiscal cliff” on their industry, warning that increases in tax rates on dividends could damage their normally steady shares and delay investments in the country’s electrical grid. The threat of tax increases on dividends has alarmed companies with steady cash flows that pay a lot out to shareholders. Link

* Aiming for Romney, Democrats push for disclosure of offshore accounts. Ashley Southall – The New York Times. Senate Democrats intensified their campaign to pressure Mitt Romney to release more information about his finances with a push for legislation requiring candidates for federal office to disclose holdings in foreign tax havens. Senator Richard J. Durbin, the majority whip, and Senator Carl Levin, took to the floor to urge support for the Financial Disclosure to Reduce Tax Haven Abuse Act. Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee is preparing similar legislation that would require presidential candidates to release at least 10 years of tax returns and disclosures of overseas accounts and other financial transactions. Link

* Obama plan to lift to tax rates would plague millions of small businesses, study warns. J.D. Harrison – The Washington Post. Should Congress allow the tax rates for the nation’s highest earners to expire at the end of the year, millions of small businesses could be forced to cut jobs and wages, placing an enormous strain on the already sluggish economic recovery, according to a new study. Commissioned by a host of pro-business advocacy groups, Ernst & Young conducted this latest study in an effort to predict the long-term economic impact of letting the top rates increase at year’s end — and the findings stand in stark contrast to the repeated assurances from Democrats that their proposal would have minimal effect on small business owners. Link

* UC regents link tuition hikes to Gov. Brown’s tax measure. Larry Gordon – The Los Angeles Times. Most University of California students will get a breather of at least four months without a tuition increase. But then, all bets are off. That’s the result of a UC regents vote Wednesday freezing all undergraduate and some graduate school tuition as part of a funding deal with the state legislature. If Gov. Jerry Brown’s tax hike measure on the November ballot fails, the regents warned that tuition might rise 20 percent, or more than $2,400. Link

* EU queries U.S. seat on global accounting body. Huw Jones – Reuters. The United States may have to give up its seat on a top global accounting body if it continues to drag its feet over the adoption of international book-keeping rules, the European Union’s executive said on Wednesday. Discussions over whether the United States would adopt the International Financial Reporting Standards (IFRS) have been going on for a “very long time and, despite repeatedly expressed commitments from the U.S., things are advancing very slowly”, European Commission spokesman Stefaan De Rynck said. Link

* EU court to rule on tax refund interest. Alex Barker – The Financial Times. The Barclay brothers’ legal battle to recoup up to 1 billion pounds from UK Revenue & Customs reaches a potential turning point on Thursday, as a European Union court rules on how to calculate overpaid taxes. Sir David Barclay and Sir Frederick Barclay are suing the government for failing to add compound interest when it refunded Littlewoods, the retail group, excess value added tax payments spanning more than 30 years. Link

* India outsources await U.S. Senate vote. Dhanya Ann Thoppil – The Wall Street Journal.
Proposed legislation in the United States that seeks to offer tax breaks to get businesses to hire locally has stirred a debate on what it means for India’s software outsourcing companies. The legislation, dubbed the Bring Jobs Home Act, would help companies cover the cost of moving production back to the United States and ban tax deductions for the expenses of moving operations abroad. Link

* Permanent tax holiday. The New York Times editorial. A common election-season complaint is that candidates spend too much time attacking each other and too little discussing issues. That was not the case this week on the question of how to tax U.S. multinational corporations on foreign earnings. President Obama raised the issue at a town-hall meeting in Ohio, discussing his proposals for tax credits for manufacturers in the United States to encourage the creation of new jobs. He said this was greatly preferable to Mitt Romney’s support for a so-called territorial tax system, in which the overseas profits of American corporations would escape U.S. taxation altogether. Link

* Romney should release his tax returns. Joseph Thorndike – The Wall Street Journal opinion.
Democrats have stepped up their calls for Mitt Romney to release more of his tax returns, clearly hoping for more embarrassing revelations about his overseas tax shelters or his long relationship with Bain Capital. Thus far, Romney has released his 2010 returns and estimated returns for 2011. But he has declined to release older ones. Critics point out that Romney’s father, George, set the standard for candidate tax disclosure when, during the Republican presidential primary campaign in 1967, he released 12 years of tax returns. President Obama, for his part, has released all of his returns since 2000. Link

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