Tax Break

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

* President’s populist pitch divides suburban voters. Colleen McCain Nelson – The Wall Street Journal. Barack Obama and Republican challenger Mitt Romney are battling over suburban, upper middle-class voters, a constituency important to both men. The president drew strong support from suburban voters four years ago. The question in the 2012 contest is whether these voters agree with Obama’s more populist economic message —or whether the tax-the-rich rhetoric is pushing them away. The president last week renewed his effort to extend Bush-era tax cuts for families with an adjusted gross income of less than $250,000 and raise marginal tax rates for wealthier Americans. Link

* Senator Murray says Democrats will let tax cuts expire. Jonathan Weisman – The New York Times. Senator Patty Murray of Washington, a member of the Democratic leadership, said on Monday that her party is prepared to allow all of the Bush-era tax cuts to expire and for automatic spending cuts to kick in unless Republicans give up their opposition to tax increases on the wealthy. Murray’s tough line, in a speech at the Brookings Institution, signaled a stiffening of Democratic resolve a week after President Obama reiterated his demand for a one-year extension in the Bush-era tax cuts only for people earning less than $250,000. Link

* Romney rejects calls on tax returns. Patrick O’Connor and Daniel Lippman – The Wall Street Journal.

* Poll finds Americans favor ending tax cuts for wealthy by 2-1 Jonathan Salant – Bloomberg news. Americans in a national poll say by a 2-1 margin that ending the Bush-era tax cuts on annual earnings of $250,000 or more would help the economy, a position President Obama has stressed in his campaign for another term. The survey by the Pew Research Center released yesterday shows that 44 percent said the higher taxes would be beneficial, while 22 percent said such a move would harm it and 24 percent said there would be no effect. Link

* Tax-exempt group’s election activity highlights limits of campaign finance rules. Jonathan Weisman – The New York Times. To Democrats and some campaign finance watchdogs eager to force more transparency in spending by independent groups, Hope, Growth and Opportunity stands out as the kind of “pop-up” organization that operates in virtual secrecy, with legal impunity. Such groups as Hope, Growth and Opportunity can serve as a conduit for large donors focused on races beneath the radar. The group raised $4.8 million, $4 million from one contributor. Link

A rally outside the Amazon.com shareholders meeting in Seattle, Washington, May 24, 2012. REUTERS/Marcus DonnerWelcome to the top tax and accounting headlines from Reuters and other sources.

* Tax break nears end for online shoppers. Monica Langley – The Wall Street Journal. Republican governors, eager for new revenue to ease budget strains, are dropping their longtime opposition to imposing sales taxes on online purchases, a significant political shift that could soon bring an end to tax-free sales on the Internet. The newfound support among Republicans is a dramatic change from just a few months ago, and Republicans in Congress are seizing on the state level shift to push ahead federal legislation. Link

* Democrats threaten to go over ‘fiscal cliff’ if GOP fails to raise taxes. Lori Montgomery – The Washington Post. Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households. Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise. Link

Some important tax and accounting events in the week ahead:

Monday, July 16 • New York University two-week conference begins on corporate income tax, international taxation, wealth-planning and other topics. New York City.

Tuesday, July 17 and Thursday, July 19 • IRS conferences in Buffalo, New York, on July 17 and in Erie, Pennsylvania, on July 19 on the benefits and responsibilities of tax-exempt status, and what must be done to maintain it.

Wednesday, July 18 • Paul Oosterhuis of Skadden, Arps and Lee Sheppard of Tax Analysts debate transfer pricing issues and solutions at a luncheon sponsored by the International Tax Institute. 12:15 p.m. EDT, Grand Hyatt Hotel. New York City.

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Democrats seek to reassure vulnerable senators on tax cuts. Kim Dixon – Reuters. The top U.S. Senate Democrat said on Thursday that politically vulnerable lawmakers will be “just fine” if they back President Barack Obama’s plan to extend tax cuts only for households making $250,000 or less, a vote that could be perilous for some facing re-election in November. Democratic Senate Majority Leader Harry Reid’s remarks to reporters came as he tried to steer Obama’s initiative – a centerpiece of the president’s re-election campaign – to Senate passage by the end of this month. Link

* Republicans block small-business tax break on procedural vote. Lisa Mascaro – The Los Angeles Times. One of the top items on President Obama’s to do list – a 10 percent tax break for small businesses that make new hires – got tangled in an election-year tax debate as Republicans led a filibuster to block the measure. The legislation would have provided the tax credit to companies that hire new employees or otherwise expand their payrolls this year, a typically popular approach among the GOP. Republicans in the Senate did not necessarily object to the measure, but they protested on Thursday after Democrats refused to allow votes on other amendments. Link

Democrats Nancy Pelosi, the minority leader in the U.S. House of Representatives, President Barack Obama, and Senate Majority Leader Harry Reid at the White House in 2010. REUTERS/Larry Downing

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

* Obama, Democrats put tax cuts at center of 2012 agenda. Richard Cowan – Reuters. Congressional Democrats and President Barack Obama on Wednesday plotted their legislative priorities for the months leading up to November’s elections, showcasing an extension of middle-class tax cuts as well as  measures to keep government agencies functioning beyond Sept. 30. Later this month, the Democratic-led Senate is expected to stage a vote on continuing tax cuts for families earning up to $250,000 – an election-year initiative that the Republican-controlled House of Representatives will not go along with. Link  

* Clients of Swiss bank raided in tax probe. David Crawford and Laura Saunders – The Wall Street Journal. German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. Link  

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

* Attacks on Romney for offshore assets, taxes heat up. Jeff Mason and Steve Holland – Reuters. President Barack Obama’s re-election team stepped up attacks on Mitt Romney for holding offshore assets and urged him to release more tax returns, pushing hard on an issue that could be a weak point for the Republican presidential candidate. The Obama campaign and top Democrats took to the Internet and airwaves on Tuesday with accusations that Romney is being secretive about his wealth as they sought to cement an image of the Republican candidate as a multi-millionaire who is out of touch with ordinary Americans. Link 

* Romney tax plan would eat into popular breaks: study. Kim Dixon – Reuters. Republican presidential candidate Mitt Romney’s pitch to slash taxes by 20 percent across-the-board would require cuts of about $320 billion in popular tax breaks to avoid adding to the deficit, a nonpartisan analysis said on Tuesday. The report by the Tax Policy Center found that to pare tax rates to the level promised by Romney, a third of the $1.1 trillion in so-called federal tax expenditures would have to be axed to prevent the federal budget deficit from growing. Link

* Little-known U.S. board stokes hot pension debate. Nanette Byrnes – Reuters. The feedback was swift and often scathing when a little-known public board signaled its intent to toughen the accounting rules governing state and local pension funds of millions of U.S. public employees, intensifying worries over a shortfall of billions of dollars. The plan by the Governmental Accounting Standards Board (GASB) – which was approved on June 25 – drew praise from the American Institute of Certified Public Accountants and from investors looking for transparency in the $3.7 trillion municipal bond markets. Link

House Republicans sought to dramatize the Supreme Court’s ruling upholding President Barack Obama’s health law on Tuesday, when they warned that Congress could slap taxes on those failing to eat their vegetables and jail those who fail to comply.

At a packed room of the Republican-controlled House Ways and Means committee, witnesses called by the majority warned that the court’s opinion could bloat government power to a dangerous new level.

“We must again consider whether the federal government can require people to purchase broccoli,” said Carrie Severino, a lawyer at the Judicial Crisis Network, echoing two other Republican witnesses. “Allowing unrestricted taxes on inactivity will open the door to taxes the likes of which this country has never seen.”

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

Boeing CEO James McNerney (L) introduces U.S. Republican Presidential candidate Mitt Romney to speak to company leaders at a gathering sponsored by the Business Roundtable. Washington, June 13, 2012. REUTERS/Jason Reed

Despite Democratic attempts to paint the Republicans as the party of the tax dodger, companies run by CEOs with Republican political leanings typically pay more in taxes than those run by Democrats, according to a new study.

Republican-led firms paid 2 percent more than their more liberal counterparts, the study’s authors will report to the annual meeting of the American Accounting Association next month.

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