Tax Break

Can tax on witch-doctors cure Swaziland’s fiscal pain?

The King of Swaziland King Mswati III arrives at Westminster Abbey for the wedding of Britain’s Prince William and Kate Middleton. REUTERS/Toby Melville

While the inhabitants of Capitol Hill and the White House argue over tax breaks for the wealthy, a member of Swaziland’s parliament has struck upon a potential partial solution to the cash crisis in Africa’s last monarchy: hike taxes on witch-doctors.

According to a Reuters report,  the mediums, known as sangomas in the landlocked southern African nation, pay an annual 10 emalangeni ($1.15) license fee, but MP Majahodvwa Khumalo said they had jacked up their fees fourfold in the last few years and should pay more.

“A majority of our people consult traditional healers but the money they pay to government falls far too short of the money they make,” he told parliament.

Swaziland’s budget deficit, struggling with what has officially been determined to be the continent’s most bloated bureaucracy,  hit 15 percent of its annual economic output in 2010.

Essential reading: Tax arithmetic shows top rate is just a starter, and more

U.S. House Speaker John Boehner speaks to the media outside his office on Capitol Hill in Washington, December 7, 2012. REUTERS/Yuri GripasWelcome to the top tax and accounting headlines from Reuters and other sources.

* Tax arithmetic shows top rate is just a starter. Jackie Calmes – The New York Times. Despite hints in recent days that President Obama and House Speaker John A. Boehner might compromise on the tax rate to be paid by top earners, a host of other knotty tax questions could still derail a deal to avert a fiscal crisis in January. Link

* New taxes take effect to fund healthcare law. Robert Pear – The New York Times. For more than a year, politicians have been fighting over whether to raise taxes on high-income people. They rarely mention that affluent Americans will soon be hit with new taxes adopted as part of the 2010 health care law. Link

Calendar

While tax negotiations continue on Capitol Hill, here are some additional important tax and accounting events in the week ahead:

 Tuesday, Dec. 11

* Claudius B. Modesti, director of the U.S. Public Company Accounting Oversight Board’s division of enforcement and investigations, speaks to the New York City Bar Securities Litigation & Enforcement Institute. New York.

* Nina Olson, U.S. National Taxpayer Advocate, addresses New York State Society of Certified Public Accountants Annual Tax Plenary Conference. New York.

Essential reading: Fiscal talks spur charitable giving, and more

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

Essential reading: Some in GOP urge lawmakers to back tax hikes for changes in safety-net programs, and more

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

* Some in GOP urge lawmakers to back tax hikes for changes in safety-net programs. Lori Montgomery and Rosalind Helderman – The Washington Post. A growing chorus of Republicans is urging House leaders to abandon their staunch opposition to higher tax rates for the wealthy with the aim of clearing the way for a broad deal that would also rein in the cost of federal health and retirement programs. Link

* Plan to limit tax breaks gets a push from Boehner. John McKinnon – The Wall Street Journal. A cap on tax breaks designed by a former Reagan adviser is drawing attention after House Speaker John Boehner floated it as an option this week. The White House and Republican leaders have proposed limiting tax breaks to raise tax revenue under a long-term deficit-reduction deal. GOP leaders want to limit deductions instead of raising individual income-tax rates. President Barack Obama wants to do both. Link

* Small firms fret over higher taxes. Emily Maltby – The Wall Street Journal. As President Barack Obama and Republicans in Congress debate how to address the nation’s deficit and avoid the so-called fiscal cliff, some small-business owners are getting a chance to air their complaints. On Wednesday, 15 business owners made a case against Obama’s proposal to allow tax-cuts to expire for those making upwards of $250,000. Link

Essential reading: GOP in a difficult political spot in tax fight, and more

Speaker of the House John Boehner walks out with Senate Majority Leader Harry Reid after a bipartisan meeting with U.S. President Barack Obama, November 16, 2012. REUTERS/Larry Downing
Welcome to the top tax and accounting headlines from Reuters and other sources.

* In tax fight, GOP seeks a position to fall back on. Jonathan Weisman – The New York Times.
With President Obama insisting on higher tax rates for affluent Americans and winning public support for the idea, Congressional Republicans find themselves in an increasingly difficult political spot and are quietly beginning to look for a way out. Link

* Obama: ‘Fiscal cliff’ deal must include higher tax rates for top earners. Lori Montgomery and Rosalind S. Helderman – The Washington Post. President Obama on Tuesday rejected a GOP proposal to collect new taxes from high earners by limiting their deductions and tax breaks, insisting that any deal to avert the year-end “fiscal cliff” must include an agreement to raise the top income tax rates. Link

Essential reading: Top U.S. firms are cash-rich abroad, cash-poor at home, and more

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

* Top U.S. firms are cash-rich abroad, cash-poor at home. Kate Linebaugh – The Wall Street Journal. Emerson Electric Co. has $2 billion of cash in the bank. But this year it had to borrow money in the U.S. to help buy back shares, distribute dividends and even pay its taxes. As a result, Emerson says, it brings its foreign cash holdings back to the U.S. only if that can be “accomplished tax efficiently.” Link

* GOP makes counteroffer in cliff talks. Janet Hook and Carol Lee – The Wall Street Journal. House Republicans on Monday made a fresh deficit-reduction proposal to the White House that calls for $800 billion in increased tax revenue, half of what President Barack Obama has proposed. Link

* Expect a few more weeks of cliff diving. Paul Vigna – The Wall Street Journal. Sick and tired of the fiscal-cliff debate yet? Hope not, because we’ve got a few more weeks of the proverbial cliff diving before this whole thing is settled. Link

Calendar

Some important tax and accounting events in the week ahead:

Monday, Dec. 3 – Wednesday, Dec.5
• Securities and Exchange Commissioner Luis A. Aguilar, SEC acting chief accountant Paul Beswick, and the chairs of the Public Company Accounting Oversight Board, Financial Accounting Standards Board and International Accounting Standards Board all speak to the American Institute of CPAs conference on SEC and PCAOB developments. Marriott Wardman Park Hotel. Washington.

Tuesday, Dec.4
• Former congressional tax staff speak at PwC’s global tax symposium. The Ritz-Carlton. Washington.

Wednesday, Dec.5 – Friday, Dec. 7
• Treasury Department and Internal Revenue Service tax experts address the Practicing Law Institute conference on tax law strategies for corporate acquisitions, dispositions, spin-offs, joint ventures, financings, reorganizations and restructurings. InterContinental Hotel. Los Angeles.

Essential reading: As companies seek tax deals, governments pay high price, and more

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

* As companies seek tax deals, governments pay high price. Louise Story – The New York Times. A Times investigation has examined and tallied thousands of local tax incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. Link

* Companies quietly push for tax break on foreign profits in ‘fiscal cliff’ debate. Jia Lynn Yang and Suzy Khimm – The Washington Post. Amid the tumult over looming tax hikes and spending cuts, a massive change to the corporate tax code is quietly gathering steam. Link

* ‘Fiscal cliff’ talks at a stalemate over tax hikes. Zachary Goldfarb – The Washington Post. As the White House and Republican leaders enter the final month of negotiations to avoid a year-end “fiscal cliff,” both sides struck an uncompromising tone Sunday, as warnings mounted that they will be unable to forge an agreement to stop an automatic series of deep spending cuts and large tax hikes that could push the economy into recession. Link

Essential reading: Most Americans face lower tax burden than in 1980, and more

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

* Complaints aside, most face lower tax burden than in 1980. Binyamin Applebaum and Robert Gebeloff – The New York Times. Most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. The combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980. Link

* Obama’s cliff offer spurned. Janet Hook, Damian Paletta and Carol Lee – The Wall Street Journal. President Barack Obama made an opening bid in budget talks with Republicans that calls for a $1.6 trillion tax increase, $50 billion in infrastructure spending in 2013 and new power to raise the federal debt limit, a provocative set of demands that Republicans said represented a step backward in efforts to avoid looming tax increases and spending cuts. Link

* Analysis: Democrats’ discord undercuts Obama estate tax push. Kim Dixon – Reuters. Divisions among Democrats are undermining President Barack Obama’s push to raise the U.S. estate tax on inherited wealth, just weeks before the arrival of the “fiscal cliff” could drive the present estate tax rate even higher than Obama proposes. Link

* A menu of revenue-raising options. John McKinnon – The Wall Street Journal.
President Barack Obama and congressional leaders, seeking to raise revenue as part of their high-stakes budget talks, have an extensive menu of options for increasing tax bills. Link