Tax Break

Essential reading: Payroll tax cut on track to quietly expire

August 1, 2012

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

* Payroll tax cut on track to quietly expire. Naftali Bendavid – The Wall Street Journal. Amid a high-decibel fight over the nation’s budget, there is one emerging area of agreement: Both parties appear willing to quietly let a major tax cut expire—a payroll tax break enjoyed by about 122 million people. Republicans were unenthusiastic about the tax cut to begin with, preferring instead a broad overhaul of the tax code and contending it would weaken Social Security. Now the party is openly opposed to extending the tax break. Link

* Study: Romney tax plan would result in cuts for rich, higher burden for others. Lori Montgomery – The Washington Post. Mitt Romney’s plan to overhaul the tax code would produce cuts for the richest 5 percent of Americans — and bigger bills for everybody else, according to an independent analysis set for release Wednesday. The study was conducted by the Brookings Institution and the nonpartisan Tax Policy Center. To cover the cost of his plan — which would reduce tax rates by 20 percent, repeal the estate tax and eliminate taxes on investment income for middle-class taxpayers — the researchers assume that Romney would go after breaks for the richest taxpayers first. Link

* House lawmakers head toward election-year tax votes with political messaging on their minds. Associated Press. An election-year tax faceoff between Democrats and Republicans in the GOP-controlled House is heading toward a predictable outcome Wednesday. Republicans are poised to pass a bill to renew a full slate of Bush-era tax cuts for every working American. Democrats are countering with a doomed plan that would extend the tax cuts for all but the highest-earning Americans. Link

* Leaders reach tentative deal on spending to avoid fight before election day. Jennifer Steinhauer – The New York Times. Congress is nearing another budget deadline, and Republicans still want to cut spending. But this time, the presidential and Congressional elections are just months away. As a result, House and Senate leaders on Tuesday, with little fanfare and no drama, said they had reached a tentative agreement that would pay for federal government operations through next March, averting the prospect of another messy shutdown debacle. Link

* Atlanta transport referendum falters. Cameron McWhirther – The Wall Street Journal. Voters here appeared to reject a referendum Tuesday to increase their sales taxes by a penny to raise billions of dollars for roads and mass transit, a proposal that had been strongly backed by local companies and political leaders from both parties. As of midnight, with 87 percent of precincts reporting, the referendum was failing, with 63 percent voting against it and 37 percent voting for it, according to the Associated Press. Link

* No Internet taxation without representation. Senator Jim DeMint – The Wall Street Journal opinion. Our nation was born from the idea of “no taxation without representation”—that citizens should not be taxed by governments in which they have no political voice. Yet now lawmakers in Washington want to overturn that bedrock principle in order to extract more revenues from American consumers. The Marketplace Fairness Act recently introduced in the Senate would require online retailers to collect and pay sales taxes to states where they have no physical presence or democratic recourse. Overstock.com, eBay and the like could have to pay sales taxes to any state from which an Internet user placed an order, even if the company’s headquarters, warehouses and sales staff are located entirely in other states. Link

* Dramatic estate tax battle delivers fresh lessons. Amy Feldman – Reuters opinion. A dramatic family legal battle over a $100 million estate does not often lead to life lessons for the masses. But the California probate court decision in the case of the Tweten family, who got caught up in the one-year disappearance of the federal estate tax in 2010, offers some simple life lessons in estate planning. Link

 

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