Tax Break

Essential reading: Treasury says firm with ties to President discussed tax break, and more

October 26, 2012

U.S. Treasury Secretary Timothy Geithner outside the Treasury Department in Washington.

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

* Treasury says firm discussed tax break. Eric Lichtblau and Eric Lipton – The New York Times. The Treasury Department said Thursday that a communications firm with close ties to President Obama talked to the administration about allowing tax breaks for its corporate clients on more than $1 trillion in offshore revenues. The firm, SKDKnickerbocker, has insisted that it never spoke with senior Treasury Department officials about the offshore tax issue and that it does not lobby policy makers on issues affecting its corporate clients. Link

* Election proving a cliff-hanger for the dollar. Nicholas Hastings – The Wall Street Journal. The currency market’s focus on the election will be even more intense as it comes as the economy continues to struggle out of recession, after a couple of previous false starts, and as a way to prevent the reversal of previous tax cuts due to take place on January 2, 2013 – the so-called fiscal cliff – has yet to be found. Link

* California colleges’ funding hangs on a ballot measure. Jim Carlton – The Wall Street Journal. California’s Proposition 30, championed by Gov. Jerry Brown, would raise $6 billion in taxes to spare state schools from budget cuts in this fiscal year. Brown and the Democrat-run state legislature put a trigger in this year’s state budget that will cut about $5 billion from public schools and universities if voters reject the measure. Link

* Proposition 38 tries to turn a tax liability into an asset. John Healey – The Los Angeles Times. Proposition 38 would raise state income taxes on a sliding scale for 12 years, generating roughly $10 billion a year. The biggest problem for 38, politically, is that its income-tax increase would hit Californians with as little as $7,500 in taxable earnings. Link to

* Stark tax choice for Californian voters. Matthew Garrahan – The Financial Times. Jerry Brown, California’s governor, has warned that the wealthiest US state will have to close schools for up to an extra three weeks if voters do not back temporary tax increases on the rich. A ballot in next month’s US election will ask Californians to support a tax rise of 3 percent on the wealthiest 1 percent in the state. Link

* Tax tips for the next two months. Tom Herman – The Wall Street Journal. The best strategy for many taxpayers this year may be simply to procrastinate. Many tax laws are scheduled to expire at year end. It’s not clear what will happen to popular tax breaks and other provisions that expired at the end of last year. Link

* CEOs to the tax rescue. The Wall Street Journal editorial. On Thursday a 100-strong group of major business leaders did a Warren Buffett and endorsed a big tax hike, even if it means they’ll have to pay more themselves. Link 

 * New taxes on global reinsurers would hurt response to natural disasters. David Cummins and Bradley Kading – The New York Times. Legislation proposed by Representative Richard Neal, Democrat of Massachusetts, and Senator Robert Menendez, Democrat of New Jersey, would impose punitive taxes that will drive up the costs for consumers and businesses. A similar proposal is included in President Obama’s budget for the 2013 fiscal year. Link

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