Tax Break

Essential reading: Pharma company exploits tax structure, and more

September 7, 2012

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

 * Valeant exploits tax structure in Dedicis deal. Vipal Monga – The Wall Street Journal. Pharmaceutical company Valeant will use a tax structure it inherited from a 2010 merger to shave millions of dollars off of the tax bill of its latest target, Medicis. Link 

* Democrats hint at showdown with GOP after election. Damian Paletta – The Wall Street Journal. Top White House and Senate officials at the Democratic National Convention in Charlotte, N.C., offered new clues Thursday about their strategy heading into the lame-duck session of Congress after the November election, suggesting they plan on a showdown with Republicans over tax and spending policy. Democratic Senator Dick Durbin rejected a suggestion that lawmakers in the next few weeks block spending cuts that are scheduled to begin in January because he said he wants to keep the threat of these cuts looming over Republicans to force them to negotiate. Link  

* New York State tax department attacks fraud on new front. Nanette Byrnes – Reuters. New York State, a pioneer at catching tax scofflaws in the digital age, has a new weapon in its arsenal – data collected from debit and credit card purchases that will help it detect retailers who are under-reporting sales. By checking customer data against retailer tax returns, wholesaler records and other sources, the state hopes to find retailers who either fail to collect or remit the sales taxes due. Link  

* UK unveils oil field tax breaks in bid to drive growth. Reuters. Britain will offer new tax breaks to encourage investment in older oil and gas fields in the North Sea as the government, under pressure to stimulate growth, moves to revive a key part of the economy which has long been a driver of its prosperity. Finance minister George Osborne said on Friday that income from some mature oil fields would be shielded from a supplementary tax charge on producers to encourage them to maximise the amount of oil they pump out of the ground. Link  

* Romney & Ryan on tax. David Cay Johnston – Reuters opinion. Together Mitt Romney and Paul Ryan have put human faces on how the super-rich game the tax system to pay less, pay later and sometimes not pay at all. Both want to expand tax favors for the already rich, like themselves. Their approach favors dynastic wealth with largely tax-free (Romney) or completely tax-free (Ryan) lifestyles, encouraging future generations of shiftless inheritors. What we need instead is a tax system that encourages strivers in competitive markets, not a perpetual oligarchy. Link  

* Tax planning? Or tax cheating. Ed Kleinbard – The Los Angeles Times opinion. For citizens hoping for serious tax policy and budget debates, this has been a dispiriting election cycle. And now, compounding the race to the bottom, Mitt Romney has stepped forward to congratulate corporate tax cheats. Link  

* Desperately seeking middle-class taxes. The Wall Street Journal opinion. Democrats in Charlotte are pounding away at the savage budget cuts that Mitt Romney and Paul Ryan supposedly favor and their phantom plan for “raising taxes on the middle class,” as President Obama puts it. The truth is the opposite, but table that for a moment. The President seems not to realize his critique is really a scorching if implicit indictment of his own time in office. Link 

* Obama and the ghost of Walter Mondale. Reihan Salam – Reuters opinion. Walter Mondale lambasted Reagan for his secret tax plan that would “sock it to average-income families” and “leave his rich friends alone,” just as critics of the Romney-Ryan ticket have alleged that the GOP’s conspicuously vague tax reform ideas would almost certainly mean shifting the tax burden downward. The really interesting part of Mondale’s tax plan that year is that it didn’t just raise taxes on America’s highest-earning households. Link

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