Tax Break

Essential reading: Watchdog says U.S. IRS allows bogus taxpayer IDs, and more

August 9, 2012

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

* U.S. IRS allows bogus taxpayer IDs-watchdog report. Patrick Temple-West – Reuters. The U.S. Internal Revenue Service has recently issued thousands of tax identification numbers to ineligible people and, in some cases, IRS managers condoned the practice, the tax collection agency’s watchdog said on Wednesday. The accusation by the Treasury Inspector General for Tax Administration, or TIGTA, comes at a time of intense national debate about illegal immigrants, many of whom apply for and get taxpayer ID numbers instead of Social Security numbers. Link

* In Iowa, Romney leaves a stance on wind power unsaid. Trip Gabriel – The New York Times. Seeking support in the swing state of Iowa, Mitt Romney on Wednesday called for developing a laundry list of energy resources that included wind power, but he pointedly did not mention that he opposes a tax credit for the wind industry that the state’s Republican leadership strongly favors. Republican Governor Terry Branstad and members of Iowa’s Congressional delegation have criticized Romney in recent days for not backing a longstanding tax break for wind energy in a state where the industry employs about 7,000 workers. Link

* Japanese premier cuts a deal on tax bill. Toko Sekiguchi and Alexander Martin – The Wall Street Journal. Japanese Prime Minister Yoshihiko Noda promised to call elections soon in exchange for the support of the main opposition parties in a deal to save his sales-tax legislation from defeat. The agreement Wednesday to hold general elections “in the near term” ended a revolt that could have derailed the measure and raised more worries about the country’s troubled fiscal condition. Link

* Suburban taxpayers vote to support Detroit Museum. Patricia Cohen – The New York Times. The Detroit Institute of Arts was saved from devastating budget cuts Tuesday night after voters in three Michigan counties agreed to institute a property tax increase earmarked specifically for the museum. The levy — known as a millage tax — is expected to raise $23 million a year and put the arts institute on secure financial footing for the first time in two decades. Link

* Kansas voter uprising. The Wall Street Journal opinion. After Tuesday’s primary, Kansas Governor Sam Brownback now has a conservative majority and a voter mandate to finish the job of simplifying the Kansas tax code and maybe phasing out the income tax. Conservatives for the first time in decades next year will have a governing majority with at least 26 of the 40 Senate seats. Link

* Americans need to face the harsh truth and pay more tax. Jared Bernstein – The Financial Times opinion. Data from the non-partisan Congressional Budget Office reveal that, when it comes to federal taxation, U.S. households are less taxed now than 30 years ago, and that is not just a function of the recession. The CBO data began in 1979 when the typical, or median, household paid 19 percent of their income in federal taxes. In 2009, that share had fallen to 11 percent. Democrats should be forthright with the fact that we’re way below where we need to be in terms of revenue collection. Link

* Romney’s tax plan makes no sense. Robert Samuelson – The Washington Post opinion. It’s not just that the politics are poisonous. The economics don’t make sense, either. Many wealthy Americans already have lower-than-average tax rates, because their incomes derive heavily from capital gains (profits on the sale of stocks or other assets) and dividends. These are taxed at a preferential 15 percent rate. Although the wealthiest 5 percent still pay about 40 percent of federal taxes, it’s questionable whether further reducing their tax burden would bolster the economy. Link

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