Tax Break

Essential reading: Google and Starbucks face tax questions in the UK, and more

October 31, 2012

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

 * Google and Starbucks face tax questions. Jim Pickard and Vanessa Houlder – The Financial Times. Google and Starbucks will be subjected to United Kingdom parliamentary scrutiny over their tax affairs for the first time next Monday with the public accounts committee set to demand that the two US corporate giants give evidence. Members of the influential committee agreed on Monday evening to call in the two companies to give evidence at a session into Revenue & Customs where inspectors will be asked about their contributions to the exchequer. Link 

* Some investors likely to face new tax bite. A.D. Pruitt – The Wall Street Journal. The presidential election could determine whether the wealthiest Americans will see their income taxes rise or fall. But there is one tax increase that is likely to occur no matter who wins office: an investment surtax that begins on New Year’s Day and will hit thousands of real-estate investors. Link  

* Switzerland: Are its days as a tax haven for foreigners numbered? Helena Bachmann – Time Magazine. Many Swiss are increasingly critical of the preferential tax treatment their government extends to wealthy foreigners. Unlike Swiss citizens, who pay taxes not only on their income but also on their assets, wealthy foreigners can negotiate lump-sum taxation, a figure based on five times the rental value of their Swiss property. Link  

* More evidence key dark money group may have misled IRS. Kim Barker – ProPublica. New signs emerged Monday that a controversial nonprofit may have misled the Internal Revenue Service not only about its political activities but also about support from a purported donor. Link  

* Illogical housing aid. Yonah Freemark and Lawrance Vale – The New York Times opinion. The tax deduction for mortgage interest may not quite be the “third rail” of politics that Social Security is, but politicians on both sides have long been afraid to touch it. So when Mitt Romney recently floated the idea of capping this deduction, Democrats pounced. Link 

* The risks of tapping your retirement fund for an alternative use. Steven Davidoff – The New York Times opinion. Retirement funds are being used increasingly for anything but retirement. Such maneuvers come with big tax advantages. But they may also leave their users penniless in retirement, while their ability to evade taxes can cost the government. Link  

* Does California want to be No. 1 for taxes? Jon Coupal – The Orange County Register. California leads 46 other states in per-capita tax burden, a dubious honor that helps to explain the state’s ongoing economic struggles. Gov. Jerry Brown’s Proposition 30 wants to increase sales and income taxes to the tune of about $6 billion annually. Link

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