Tax Break

Essential reading: Obama fills in blanks of Romney’s plans, and GOP sees falsehoods, and more

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

 * Obama fills in blanks of Romney’s plans, and GOP sees falsehoods. Michael Cooper – The New York Times. The President Barack Obama campaign is taking advantage of the many unknown details of Mitt Romney’s policy proposals by filling in the blanks in the least flattering light, often relying on the findings of research organizations. The Obama campaign is running an ad based on an analysis of Romney’s vague proposals by the Tax Policy Center, a nonpartisan group, which found that it was impossible for his plan to achieve all of its stated goals. Link  

* Ayrault says wealthy ready to pay 75% tax. Hugh Carnegy – The Financial Times. Jean-Marc Ayrault, France’s prime minister, defended the imposition of a 75 percent marginal income tax rate on the eve of its introduction by his socialist government, insisting that many high earners were ready to pay the levy. The budget is set to be the toughest France has faced for 30 years, requiring 30 billion euros ($38.58 billion)in savings. Link 

* Swiss-German tax deal may face referendum hurdle. Nel Maclucas – The Wall Street Journal. Resolution of a long-running tax dispute between Switzerland and Germany may face a further hurdle in the form of a national referendum on the deal, initiated by a populist group opposed to the watering down of the Alpine country’s banking-secrecy laws. While the tax deal with Germany has been passed by the Swiss parliament, it could still founder on growing opposition from German opposition politicians. Link

* Spain’s crisis budget aims at spending cuts not tax rises. Andres Gonzalez and Paul Day – Reuters. Spain announced a crisis budget for 2013 based mostly on spending cuts on Thursday in what many see as an effort to pre-empt the likely conditions of an international bailout. The conservative government said tax revenue would be higher than originally budgeted in 2012 — partly due to a hike in VAT — allowing it to comfortably cut the public deficit to 6.3 percent from close to 9 percent last year. Link  

* The 47 percent here? Far fewer escape city’s income tax. Sam Roberts and Patrick McGeehan – The New York Times. In New York City, the “47 percent” is only 35 percent. That’s the share of city tax filers who, according to an analysis by the city’s Independent Budget Office released Thursday, paid no city income tax in 2010 — as opposed to the 47 percent of Americans that Mitt Romney, the Republican presidential nominee, said depend on government handouts, pay no federal income taxes and will vote for President Obama. Link  

How Mitt Romney’s offshore income jumped

Reuters tax reporter Lynnley Browning explains for Reuters TV in the clip below how Presidential candidate Mitt Romney’s offshore income jumped in 2011, also the subject of her recent story.YouTube Preview Image

Essential reading: US tax policies delay $2 billion Chinese loans, and more

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

* US tax policies delay $2 billion Chinese loans. Henry Sender – The Financial Times. A loan worth nearly $2 billion from China Development Bank to help fund an ambitious San Francisco housing project is being delayed as a result of Chinese concerns about the effect of tax policies in the US, a person familiar with the situation said. The measures include the controversial Foreign Accounts Tax Compliance Act (FATCA), which comes into effect in 2014 and could force foreign banks to pay a 30 percent withholding tax on the interest income on any loans made to US entities or persons. Link  

* Romney tempers tax plans. Sara Murray – The Wall Street Journal. Republican presidential candidate Mitt Romney, seeking to emphasize his deficit-cutting ambitions, is warning Americans that his tax-cut plan might not decrease their tax bills as much as they expect. The campaign is still exploring options to broaden the taxable-income base, which would mean limiting or cutting deductions and credits for certain taxpayers. Link 

 * How to make Mitt Romney’s tax plan add up…sort of. Suzy Khimm – The Washington Post. Mitt Romney’s tax plan is “mathematically impossible,” according to analysts at the Tax Policy Center, who calculated that Romney would have to raise taxes on lower- and middle-income Americans by $86 billion for the numbers to add up. Curtis Dubay of the Heritage Foundation says they’re wrong. Link  

Corporate tax avoidance subsides when IRS audit threat increases, study finds

U.S. companies that face a higher probability of being audited by the tax-collecting Internal Revenue Service voluntarily pay more taxes, a new study has found.

The finding proved especially true among companies with poor corporate governance, according to the study published in the September/October issue of the American Accounting Association’s Accounting Review.

 If that seems obvious, study co-author Jeffrey Hoopes, a doctoral candidate at the University of Michigan, said there was plenty of evidence that seemed to point in the other direction.

Essential reading: Pension managers become opportunistic amid volatility, and more

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

* Pension managers become opportunistic amid volatility-survey. Min Zeng – The Wall Street Journal. Greater volatility after the 2008 global financial crisis has conquered and divided the investing community. The latest report from a global survey of investors by asset management firm Principal Global Investors and U.K.-based consultancy CREATE-Research indicated that while retail investors have become more conservative, professional managers have responded with a more dynamic, opportunistic approach. Link  

* New York Attorney General rebuffs Congressional Republicans. Nicholas Confessore – The New York Times. Attorney General Eric T. Schneiderman of New York on Monday rebuffed demands from Congressional Republicans to refrain from requesting tax returns and other information from tax-exempt groups that have spent heavily on campaign ads. In a letter to Senator Orrin G. Hatch of Utah, the ranking member of the Senate Finance Committee, and Representative Dave Camp of Michigan, the chairman of the House Ways and Means Committee, Mr. Schneiderman asserted the right to request federal tax documents from such groups and subpoena them if necessary. Link

Essential reading: Pension crisis looms despite cuts, and more

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

 * Pension crisis looms despite cuts. Michael Corkery – The Wall Street Journal. Almost every state in the U.S. has made cuts to its public-employee pensions, seeking to dig out from the economic downturn, but so far the measures have fallen well short of bridging a nearly $1 trillion funding gap. Since 2009, 45 states have rolled back pension benefits for teachers, police, firefighters and other public workers, including cuts by Michigan and California this month. Next week, Republican Ohio Gov. John Kasich is expected to sign legislation requiring, for example, that certain teachers work longer and pay more toward their pensions. Link 

* Romney, in interview, says his tax rate is “fair.” Reuters. U.S. Republican presidential candidate Mitt Romney said he thinks it is “fair” that he pays a lower tax rate on his investment income of $20 million last year than someone who made $50,000 annually. Romney released his 2011 return on Friday, which showed he paid an effective tax rate of 14.1 percent. Link  

* Next tax argument: Romney’s foreign investments. John McKinnon – The Wall Street Journal. President Barack Obama’s campaign officials on Friday sought to highlight the issue of the Romneys’ foreign investments. Over half the 2011 return’s 379 pages are devoted to about 50 separate filings of Form 8621, which indicate holdings in offshore investment firms. Link 

Essential reading: GOP retreat on taxes likely if Obama wins, and more

Members and supporters of the Tea Party Patriots rally on Capitol Hill in Washington, March 24, 2012. REUTERS/Jonathan Ernst

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

 * GOP retreat on taxes likely if Obama wins. Lori Montgomery and Paul Kane – The Washington Post. Senior Republicans say they will be forced to retreat on taxes if President Obama wins a second term in November, clearing the biggest obstacle to a deal with Democrats to defuse a year-end budget bomb that threatens to rock the U.S. economy. Republicans have long resisted tax increases of any kind. But taxes are a major battleground in the campaign between Obama and Republican Mitt Romney, Capitol Hill veterans say, and the victor will be able to claim a mandate for his policies. Link  

* Tax credit in doubt, wind power industry is withering. Diane Cardwell – The New York Times. On top of the business challenges, the industry is facing a big political problem in Washington: the Dec. 31 expiration of a federal tax credit that makes wind power more competitive with other sources of electricity. This year, the tax break has become a wedge issue in the presidential contest. Link

Calendar

Some important tax and accounting events in the week ahead:

Monday, Sept. 24

* Financial Accounting Standards Board webcast on proposed changes to the 2013 taxonomy for the eXtensible Business Reporting Language (XBRL).

Friday, Sept. 28

* Public Company Accounting Oversight Board member Jay D. Hanson speaks to the University of Nebraska-Omaha’s 2012 speakers series. Omaha, Nebraska.

* Director of the PCAOB’s division of enforcement and investigations, Claudius Modesti, addresses the New York County Lawyers’ Association meeting “Lawyers and Accountants – An Interdisciplinary Dialogue: Issues and Understandings.” New York.

Essential reading: Next school crisis for Chicago is its dwindling pension, and more

Chicago teachers ended their strike and went back to the classroom September 19. REUTERS/John Gress

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

 * Next school crisis for Chicago: Pension fund is running dry. Mary Williams Walsh – The New York Times. One of the most vexing problems for Chicago and its teachers went virtually unmentioned during the strike: The pension fund is about to hit a wall. The Chicago Teachers’ Pension Fund has about $10 billion in assets, but is paying out more than $1 billion in benefits a year — much more than it has been taking in. Link  

* US tax net closes on Americans living in Britain. Vanessa Houlder – The Financial Times. The US tax net is closing on hundreds of Americans living in Britain who have failed to file returns, as further details emerge about the planned transfer of their banking details to the Internal Revenue Service. Banks will have to identify all their US customers by 2015, according to a consultation paper spelling out the implementation of a pioneering agreement on tackling tax evasion that the US and UK governments signed last week. Link  

Essential reading: L.A. pension proposal would hike retirement age, cut benefits, and more

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

 * L.A. pension proposal would hike retirement age, cut benefits. David Zahniser and Kate Linthicum – The Los Angeles Times. Setting the stage for a legal battle with employee unions, the Los Angeles City Council is weighing a new plan to reel in pension costs by hiking the retirement age and cutting benefits for thousands of future civilian employees. The proposal, unveiled the same day that the council backed a three-year business tax break worth roughly $50 million, would set the retirement age at 65 and establish new financial penalties for those who retire earlier. Link  

* IASB warns of reduction in bank lending. Adam Jones – The Financial Times. Banks could be deterred from lending under a new approach to bad loan provisioning being developed in the US, according to the head of the body that sets rival international accounting rules. In another sign of how attempts to create global accounting rules have unraveled, Hans Hoogervorst, International Accounting Standards Board chairman, criticized a more conservative attitude to bank accounting that has gained favor in the US. Link  

* Much of Romney’s view on taxes conflicts with longtime GOP stand. Annie Lowrey and Michael Cooper – The New York Times. On Monday, Mitt Romney waded into an ideological clash pitting two strands of conservative thinking against each other: the longstanding goal of reducing the tax burden on the poor with tax credits versus the growing anxiety that the nation’s “takers” are now overtaking its “makers.” Link