Tax Break

Essential reading: Middle class tax hikes loom in Obama proposal despite pledge, and more

April 11, 2013

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

 * Middle class tax hikes loom in Obama proposal despite pledge to avoid them. The Washington Post. President Barack Obama proposed a 2014 budget that, if adopted, would break his promise to avoid any tax increases for middle- and low-income people. Link

 * Fund managers warn on taxes in Obama budget. Stephen Foley and Dan McCrum – The Financial Times. President Barack Obama surprised Wall Street by backing a plan that would force investors to pay tax on unrealized derivatives gains, opening up a new front in his attempt to raise revenues through a reform of the tax code. Link

* Hollande creates a prosecutor for fraud and vows to end tax havens. Steven Erlanger and David Jolly – The New York Times. French President François Hollande on Wednesday announced the creation of a position of special prosecutor to pursue cases of corruption and tax fraud, and vowed to eradicate tax havens “in Europe and the world.” Link 

* Split court leaves Brazil foreign-unit tax debt in doubt. Anthony Boadle and Jeb Blount – Reuters. Brazil’s Supreme Court on Wednesday declared a partial end to double taxation of foreign units of Brazilian companies in a split decision that global miner Vale called a “victory” in its $15 billion tax dispute with the Brazilian government. Link

* Accounting class action suits plunged in 2012. James Willhite – The Wall Street Journal. The number of securities class action suits involving accounting allegations fell sharply last year, as the financial crisis receded further into the past and filings against Chinese issuers listed on U.S. exchanges through reverse mergers declined. Link 

* KPMG drama slows accounting industry rebound. Matt Krantz – USA Today. It’s been more than five years since investors had real reason to fret over whether companies were cooking the books. And the resignation of KPMG as the auditor of vitamin maker Herbalife and shoemaker Skechers again puts the focus on auditors gone wrong. Link

* Tips on golf course led to KPMG executive’s downfall. Peter Lattman – The New York Times. Federal agents secretly photographed a former senior KPMG executive accepting a cash payment in exchange for secret information about the companies he audited, according to a person with direct knowledge of the case. Link

* KPMG affair highlights fight for change. Adam Jones – The Financial Times. Investors trying to count the cost of the latest insider trading scandal are being impeded by a regulatory quirk that allows senior auditors in the United States to remain anonymous. Link 

* Island state hits back at tax evasion claims. Vanessa Houlder – The Financial Times. The British Virgin Islands has lashed out at an “illicit” leak of client data that led to the exposure of thousands of investors across the world last week, as it seeks to fight back against allegations that it has facilitated tax evasion. Link 

* Judge approves AIG Settlement. Chad Bray – The Wall Street Journal. A federal judge signed off on a $115 million settlement by former American International Group Inc. Chairman Maurice Greenberg and other former executives to resolve claims they misled investors about the insurer’s financial results. Link 

* Obama likes some sin taxes more than others. David Leonhardt – The New York Times. President Obama’s budget continues the Democratic preference for cigarette taxes over alcohol or soda taxes – even though alcohol and soda consumption may cost society more money than smoking. Link 

* Who likes taxes? Democrats, and no one else. Chris Cillizza and Sean Sullivan – The Washington Post. A clear majority of Americans have an unfavorable view of the federal income tax system, but a majority of Democrats view the tax system in a positive light. Link

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