Tax Break

Essential reading: Fiscal talks spur charitable giving, and more

December 7, 2012

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

* Fiscal talks spur charitable giving. Laura Saunders and Hanna Karp – The Wall Street Journal. Tax uncertainty in Washington is setting off a mad scramble among wealthy taxpayers and charities to maximize donations before the end of the year. Their worry: The tax deduction for charitable giving, a fixture of the tax code for nearly a century, is coming under pressure as part of a broader fiscal agreement now being hammered out on Capitol Hill. Link

* In Obama’s plan to tax rich, $250,000 figure may mislead. Catherine Rampell – The New York Times. A close look at the president’s plan shows that a large majority of families making up to $300,000 — as well as hundreds of thousands of families with even larger incomes — would not pay taxes at a higher marginal rate. Because the complexity of the tax code makes it difficult to draw clean lines, they are the beneficiaries of choices the administration has made to ensure that families earning less than $250,000 do not pay higher rates. Link 

* EU seeks to crack down on tax havens. Max Colchester – The Wall Street Journal. The European Union’s executive arm moved Thursday to step up efforts against tax havens, encouraging members to “name and shame” ultralow-tax jurisdictions and crack down on cross-border tax avoidance within the 27-nation bloc. The European Commission presented a 30-point “action plan” against aggressive tax avoidance to ensure that all businesses and individuals contribute to government coffers. Link

* The Starbucks shakedown. The Wall Street Journal editorial. It’s been nearly two months since Reuters revealed that Starbucks has paid just 8.6 million pounds ($13.83 million)in U.K. corporate tax on 3 billion pounds in sales since opening in Britain in 1998. The coffee chain has since endured what is now the default mode of public discourse in Britain: shocked indignation from politicians, calls for a nationwide boycott, a grilling before Parliament. Link

* Obama’s famous tax ‘victory’. Kimberley Strassel – The Wall Street Journal opinion. President Barack Obama claims that raising taxes on job creators won’t hurt the economy. Fine, but if he’s wrong, he alone owns it. There will be no GOP fingerprints on this. The president will also finally have to show his math. Link

* Keep the state tax deduction. The New York Times editorial. As they continue to wrangle over the year-end fiscal deadline, both Democrats and Republicans are considering caps on federal income-tax deductions. That could be very bad news for residents of New York, New Jersey and other states and cities that rely heavily on their own income taxes. Such a cap would reduce the value of the deduction for state and local income taxes. Link

* The death of tax reform. Robert Samuelson – The Washington Post opinion. The story behind the story is that “tax reform,” as we know it, is dying. President Barack Obama insists not only that the rich pay more in taxes (a legitimate demand) but also that their tax rates go up (questionable). This turns traditional tax “reform” on its head. Link

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