Tax Break

Essential reading: Californians face rival ballot initiatives, and more

September 11, 2012

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

 * Californians face rival ballot initiatives that would raise taxes and aid schools. Brooks Barnes – The New York Times. California’s Proposition 30 would increase statewide sales taxes by one-fourth of a cent and impose an income tax surcharge on Californians who earn more than $250,000 annually. The sales tax increase would expire after four years, and the income tax component would last for seven years. Some of the new money would go to public safety programs, like the supervision of parolees. Link  

* Tax hike cuts tobacco consumption. Dennis Cauchon – USA Today. A giant federal tobacco tax hike has spurred a historic drop in smoking, especially among teens, poor people and those dependent on government health insurance, a USA TODAY analysis finds. President Obama signed the tax hike — the biggest to take effect in his first term — on his 16th day in office, reversing two vetoes by President Bush. The federal cigarette tax jumped from 39 cents to $1.01 per pack on April 1, 2009. Since then, the change has brought in more than $30 billion in new revenue, tax records show. Link

* Romney on defensive over lack of tax detail. James Politi – The Financial Times. During an April fundraiser in the backyard of a large private home in Palm Beach, Florida, Mitt Romney offered donors a brief glimpse of what it would take for his tax plan to work. To prevent his proposals to slash income taxes by 20 percent from blowing a massive hole in the US budget, he would be willing to limit some of America’s most prized tax breaks. Link  

* French tax debate spurs new tension. Noemie Bisserbe – The Wall Street Journal. The conflict over a French billionaire’s decision to apply for Belgian citizenship escalated on Monday after a newspaper printed a front-page banner headline reading “Get lost, you rich jerk.” The incident has played into a nationwide debate over tax policy, even though Bernard Arnault, chairman and chief executive of luxury-goods giant LVMH Moet Hennessy Louis Vuitton SA, has said he will still pay French taxes. Link

* Fund group fights back on tax breaks. John McKinnon – The Wall Street Journal. In a paper that’s expected to be released on Tuesday, the Investment Company Institute makes the case for why tax breaks for tax-advantaged accounts such as IRAs are not actually as lucrative as some critics would suggest. The study appears to be aimed at critics who believe that current retirement-savings incentives are skewed toward the wealthy, and ought to be limited in the course of overhauling the tax system. Link  

* After Sept. 11 and two wars, no way for GOP to defend tax cuts. Matt Miller – The Washington Post. Among the many ways the United States went berserk after the September 11 attacks, the least remarked upon, but most morally revealing, is what happened to Republican thinking about taxes during wartime. Since that awful morning 11 years ago, the United States has been continually at war. But never before in our history has a political party made it a national priority to cut taxes for wealthy Americans at a time of war. Link

* Belgium’s new billionaire. The Wall Street Journal editorial. No doubt Bernard Arnault, France’s richest man, was not thinking about his tax bill when he applied in August for a Belgian passport. Nobody should be surprised if France’s millionaires rediscover old affinities for some charming little country on France’s borders. Link

* Why Facebook is paying the tax tab on employee compensation. Victor Fleischer – The New York Times opinion. Facebook announced last week that it planned to use cash to pay off a $1.9 billion tax bill related to restricted stock units that Facebook had granted to employees over the years. It’s odd timing for a tax bill. Why would Facebook, not the employees, owe tax on compensation income? Link

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