Tax Break

Essential reading: Biden and Ryan dispute economic toll of raising the top tax rates, and more

October 12, 2012

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

 * Biden and Ryan dispute economic toll of raising the top tax rates – but both are correct. J.D. Harrison – The Wall Street Journal. One of the most politically charged small business matters resurfaced during the vice presidential debate when Paul Ryan and Joe Biden squared off on the connection between high-income tax rates and job creation. The contention centers around the fate of the Bush-era tax cuts that are set to expire at the end of the year. The administration wants to extend the current tax breaks for the middle class but allow them to expire for families earning more than $250,000 a year, while Republicans support reissuing the cuts for all Americans. Link 

 * Biden indicates shift to $1mln threshold for 2013 tax increases. Patrick Temple-West and Rick Cowan – Reuters. Did Vice-President Joe Biden shift on the Obama administration’s tax increase plan for the wealthy? During a debate on Thursday with Republican vice presidential candidate Paul Ryan, Biden signaled a possible change from that figure, saying tax increases would start with million-dollar earners – a level possibly more palatable to lawmakers in Congress. Link  

* Long on promised tax cuts but short on substance in costing. James Politi – The Financial Times. Mitt Romney’s plan is broader than extending Bush-era tax rates to all. The former governor of Massachusetts wants that merely to be a step towards a much broader effort comprehensively to reform the US tax code. This would involve a lowering of all rates by 20 percent – with the top rate falling from 35 per cent to 28 percent. Link  

* Land developer, IRS head for U.S. Tax Court on accounting fight. Patrick Temple-West – Reuters. In a tax fight that could jolt the real estate business, Howard Hughes Corp is challenging the Internal Revenue Service over a $144.1 million tax bill stemming from land sales at Summerlin, an enormous planned community in southern Nevada. The dispute centers on an accounting practice – known as the “completed contract method” – that the IRS has scrutinized for years. A Tax Court trial is scheduled for Nov. 5 in Las Vegas. Link  

* Obama’s disappearing $5 trillion. The Wall Street Journal editorial. In last week’s presidential debate, President Obama seemed stunned to learn that the “$5 trillion tax cut” in his talking points, financed by a mythical middle-class tax increase, does not exist in Mitt Romney’s economic plan. But now, even after the Obama campaign staff has acknowledged the error, why won’t the president? Link  

* Corporate taxes, the myths and facts. John Engler – The Wall Street Journal opinion. What the presidential candidates don’t agree on is whether there is a deduction in the U.S. tax code that encourages companies to move plants overseas. President Obama contended that such a deduction exists. Mitt Romney said, “I’ve been in business for 25 years and I don’t know what you’re talking about.” Link  

* Prop. 39 would end tax giveaway, raise $1 billion for California. George Skelton – The Los Angeles Times opinion. During the middle of a winter night in 2009, sleep-deprived legislators and Governor Arnold Schwarzenegger devised the deal from hell. It included a tax incentive for out-of-state corporations not to build facilities or hire employees in California. You read right. It was nonsensical. Link

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