Tax Break

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

September 21, 2012

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

* Microsoft, HP skirted taxes via offshore units: U.S. Senate panel. Kim Dixon – Reuters. Microsoft Corp and Hewlett-Packard Co pushed back against claims by a U.S. Senate panel on Thursday that they used offshore units and loopholes to shield billions of dollars in profits from U.S. taxes. Calling tax avoidance rampant in the technology sector, the Senate’s Permanent Subcommittee on Investigations said tech companies used intellectual property, royalties and license fees in overseas tax havens to skirt taxes. Link  

* Private company accounting board to tackle uncertain tax positions, fair value. Emily Chasan – The Wall Street Journal. The Financial Accounting Foundation named the first members to its new Private Company Council. Once it is up and running, the body plans to tackle accounting rules that private companies have long complained are overly burdensome, such as accounting rules for uncertain tax positions and fair value accounting. Link  

* Rethinking tax-deferral strategies. Arden Dale – The Wall Street Journal. Deferring taxes is a crucial part of most financial plans. But sometimes advisers make the wrong assumptions about which investors stand to benefit most from the strategy. Studies often use flawed logic to conclude that tax deferral gives the biggest benefit to the wealthy who are in high-tax brackets. However, young investors in most cases stand to gain more from the strategy, even when their tax brackets are low. Link

* An Illinois pension bailout? The Wall Street Journal editorial. Now that Chicago’s children have returned to not learning in school, we can all move on to the next crisis in Illinois public finance: unfunded public pensions. Readers who live in the other 49 states will be pleased to learn that Governor Pat Quinn’s 2012 budget proposal already floated the idea of a federal guarantee of its pension debt. Link  

* A strategy of tattletales at the IRS. Victor Fleischer – The New York Times opinion. No one likes a tattletale. But tax whistle-blowers sure are getting compensated for the animosity they evoke. Link

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