Tax Break

Essential reading: For some of the wealthy, a 0 percent tax on capital gains, and more

October 24, 2012

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

* For some of the wealthy, a 0 percent tax on capital gains. Arden Dale – The Wall Street Journal. Financial advisers are helping a surprising group take advantage of a 0 percent capital-gains rate set to rise to 10 percent next year: affluent retirees, business owners and even some wealthy philanthropists. The rate only applies to those in the bottom two tax brackets, a group not usually associated with the wealthy. Link

* Starbucks finance chief denies tax claims. Louise Lucas and Vanessa Houlder – The Financial Times. Starbucks has admitted a quarter of its 600 UK-owned stores are running at a loss, in a rebuttal of accusations of tax avoidance, blaming its low corporate tax payments on overexpansion. In an interview with the Financial Times, Troy Alstead, chief financial officer of the global coffee chain, said: “I look forward to the day when we pay a lot more tax.” Link  

* Obama’s remarks aside, no imminent deal on ‘fiscal cliff.’ Jonathan Weisman – The New York Times. President Obama set heads spinning on Capitol Hill when he declared on Monday night during the final presidential debate that sequestration — $1 trillion in across-the-board spending cuts over the next decade — “will not happen.” But no one should conclude that a secret deal to resolve the problem is imminent. It is not. Link  

* After federal jolt, clean energy seeks new spark. John Broder – The New York Times. In recent months a discussion of imposing a carbon tax has been percolating in Washington as part of a broader tax reform and deficit reduction plan. Such a tax might generate new money for clean energy development, but in the current fiscal and political environment such tax revenue is more likely to be devoted to other purposes. Link

* Nations have flexibility with corporate tax rates, research suggests. John McKinnon – The Wall Street Journal. A new paper says the apparent global race to the bottom regarding corporate tax rates might actually be more of a ramble in the countryside, and that nations still have flexibility to chart their own paths. The paper suggests that financial globalization in particular seems not to exert much downward pressure on corporate rates. Link  

* HMRC investigations reap millions. Jonathan Moules – The Financial Times. A crackdown by HM Revenue & Customs on small business owners has resulted in a 39 percent increase in revenues from compliance investigations in the last financial year. A total of 434 million pounds ($691.80 million) was raised in tax and fines from investigations into small and medium-sized enterprises during the 2011-12 tax year. This was up from 311 million pounds in the previous 12 months. Link 

* Why the Fed should be buying munis – not mortgages. Joseph Grundfest – The New York Times opinion. Every Fed dollar spent in the muni market would absorb a larger percentage of outstanding debt and is likely to have a greater effect on reducing the bonds’ interest rates than the same expenditure in the mortgage market. The greater the effect in reducing borrowing costs in either market, the more powerful the impact on employment is likely to be. Link  

* A second first term. The Wall Street Journal editorial. Barack Obama won the presidency in 2008 as the anti-George W. Bush and in 2012 he has been trying to win again as the anti-Mitt Romney, without elaborating much of a second-term agenda. He says he will create a million new manufacturing jobs by 2016 via a new temporary tax credit for U.S. companies that expand domestic hiring. Link

($1 = 0.6274 British pounds)

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