Tax Break

Essential reading: Payroll tax cut is unlikely to survive into next year, and more

October 1, 2012

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

* Payroll tax cut is unlikely to survive into next year. Annie Lowrey – The New York Times. The 160 million American wage earners will probably see their tax bills jump after Jan. 1 when the temporary payroll tax holiday ends. Its expiration means less income in families’ pocketbooks — the tax increase would be about $95 billion in 2013 alone — at a time when the economy is little better than it was when the White House reached a deal on the tax break last year. Link

* Pressed to explain Mitt Romney’s tax plan, Paul Ryan ducks. Suzy Khimm – The Washington Post. Fox News’ Chris Wallace tried to get Republican vice presidential candidate Paul Ryan to explain how the Mitt Romney tax plan achieved its goal and pointed out that the plan was “not revenue neutral unless you take away the deductions,” but the Wisconsin Republican deflected the question. Link

* Facing ‘fiscal cliff’ Obama would quickly fill Treasury job. Damian Paletta – The Wall Street Journal. If re-elected, President Barack Obama is expected to move quickly in November to nominate a new Treasury secretary, and that person could play a key role negotiating with Congress about the looming “fiscal cliff” of tax increases and spending cuts, people familiar with the planning said. The two people most frequently mentioned by current and former administration officials as likely successors to Treasury Secretary Timothy Geithner are White House Chief of Staff Jacob Lew and Clinton administration Chief of Staff Erskine Bowles. Link

* Number of the week: Expect higher tax bill in 2013. Phil Izzo – The Wall Street Journal. $1,001.08: How much more someone making the median household income in 2011 is likely to spend on payroll taxes next year. No matter which party comes out on top in the November elections, nearly every working American is likely to pay higher taxes in 2013 than 2012. Link

* Property owners face a new surtax. Carolyn Geer – The Wall Street Journal. The housing market may indeed be recovering, as many experts suggest, but investors are still struggling to understand what, if any, taxes they’ll owe upon selling their homes. At issue is how the new “Medicare tax” will apply to real-estate transactions. Passed in 2010 to help fund the health-care overhaul, this 3.8 percent surtax kicks in next year on many forms of investment income. Link 

* Entertainment union, groups hail state film tax credit extension. Richard Verrier – The Los Angeles Times. A broad coalition of unions representing the entertainment industry hailed Governor Jerry Brown’s decision to sign into law a two-year extension of California’s film and television tax credit. Link

* French tax burden to be reduced in 2015: minister. Reuters. French households and businesses can expect lower taxes in two years’ time, but tough choices to fix an indebted welfare system are still needed, Budget Minister Jerome Cahuzac said on Sunday. The Socialist government unveiled a tough 2013 budget on Friday that slaps higher levies on business and a 75-percent tax on the super-rich but does not reduce public spending, to the dismay of business and most economists. Link

* For the wealthy, a 28 percent solution. Richard Thaler – The New York Times opinion. Everyone knows that America’s tax code is a mess, yet despite considerable talk when elections come around, we’ve done nothing substantial to fix it. What is odd is that there is broad agreement on what should be done. Link

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