Tax Break

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

 * L.A. pension proposal would hike retirement age, cut benefits. David Zahniser and Kate Linthicum – The Los Angeles Times. Setting the stage for a legal battle with employee unions, the Los Angeles City Council is weighing a new plan to reel in pension costs by hiking the retirement age and cutting benefits for thousands of future civilian employees. The proposal, unveiled the same day that the council backed a three-year business tax break worth roughly $50 million, would set the retirement age at 65 and establish new financial penalties for those who retire earlier. Link  

* IASB warns of reduction in bank lending. Adam Jones – The Financial Times. Banks could be deterred from lending under a new approach to bad loan provisioning being developed in the US, according to the head of the body that sets rival international accounting rules. In another sign of how attempts to create global accounting rules have unraveled, Hans Hoogervorst, International Accounting Standards Board chairman, criticized a more conservative attitude to bank accounting that has gained favor in the US. Link  

* Much of Romney’s view on taxes conflicts with longtime GOP stand. Annie Lowrey and Michael Cooper – The New York Times. On Monday, Mitt Romney waded into an ideological clash pitting two strands of conservative thinking against each other: the longstanding goal of reducing the tax burden on the poor with tax credits versus the growing anxiety that the nation’s “takers” are now overtaking its “makers.” Link

* Some surprises in income-tax-free households. John McKinnon – The Wall Street Journal. More than 40 percent of households between $30,000 and $40,000 paid no income tax in 2011, according to a recent study by the nonpartisan Tax Policy Center. About 30 percent of households in the $40,000 to $50,000 income range had no income tax liability in 2011. Link

* The great American tax debate. Eduardo Porter – The New York Times. The great American tax debate may feel like a stale, perennial feature of our politics. But it is important. The controversy is not merely about how much we pay in taxes. An equally important question is about who pays them. The liberal end of our political spectrum strongly believes that tax policy should aim to reduce inequities in pretax income. Link 

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

* The sales-tax effect on Amazon: Nada. Greg Bensinger – The Wall Street Journal. A new survey by Wells Fargo analyst Matt Nemer showed that consumers in Texas, the second most populous state in the nation, essentially haven’t changed their buying habits since the online sales tax went into effect in July. Link  

* Credit Suisse to reveal more data, staff names in U.S. tax probe. Katherina Bart – Reuters. Credit Suisse said it would transfer more information on its money management arm for wealthy Americans to U.S. officials, including more names of its own employees, as part of an effort to settle a tax evasion probe. For the first time, Credit Suisse employees will be told before their names are disclosed to U.S. officials, a bank spokesman said, after previous transfers of information by banks drew criticism. Link  

* Lawyers focus on new tax crackdown. Vanessa Houlder – The Financial Times. London lawyers are set to be targeted by tax inspectors in an intensive crackdown on evasion that is expected to yield 3 million pounds ($4.88 million). HM Revenue & Customs will announce on Tuesday that the London legal profession is one of five high-risk sectors around the country to be scrutinized by specialist taskforces. Inspectors will visit premises to examine records and carry out other investigations. Link

Some important tax and accounting events in the week ahead:

 Wednesday, Sept. 19

* Center for Audit Quality forum on investor confidence. 8:30 a.m. EDT, Willard InterContinental hotel. Washington.

* Columbia University School of Law panel on how to improve the tax code and what tax policies might boost economic growth. 6:15 p.m. EDT, Jerome Green Hall, Columbia Law School. New York.

Thursday, Sept. 20

*U.S. Senate Committee on Finance and the House Ways and Means Committee joint meeting on tax reform and the tax treatment of capital gains. 10 a.m. EDT, Capitol Visitor Center. Washington.

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

 * Financially troubled parts of Europe consider taxing Catholic Church properties. Ariana Eunjung Cha – The Washington Post. Cash-strapped officials in Europe are looking for a way to ease their financial burden by upending centuries of tradition and seeking to tap one of the last untouched sources of wealth: the Catholic Church. Thousands of public officials who have seen the financial crisis hit their budgets are chipping away at the various tax breaks and privileges the church has enjoyed for centuries. Link  

* An expiring tax credit threatens the wind power industry. Kate Galbraith – The New York Times. Wind power companies are closely watching developments in Washington, where a tax credit benefiting wind farms is due to expire at the end of this year. The implications of that could be especially significant in Texas, the top wind power state, which contains about a fifth of the nation’s turbines and is building expensive transmission lines to support more growth. Link  

* House-Senate hearing planned on capital gains taxes. John McKinnon – The Wall Street Journal. The House Ways and Means and the Senate Finance committees, one run by Republicans and the other by Democrats, will sit down for a rare joint hearing next Thursday, this time on the topic of capital gains taxes. It’s the third in a series of joint hearings that the two committees have held during the current Congress on the broad topic of overhauling the bulky U.S. tax code. Link  

California Governor Jerry Brown announces the Public Employee Pension Reform Act of 2012, August 28, 2012. REUTERS/Mario Anzuoni

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

 * California workers to shoulder more pension costs. Vauhini Vara – The Wall Street Journal. California will begin overhauling pensions for government workers in January, after Gov. Jerry Brown signed a law Wednesday to boost current employees’ contributions and cut benefits for future workers. The new law mandates that, beginning in January, people who start working for California and many of its cities will face higher retirement ages and smaller pensions when they retire. Link  

* Obama ad hits Romney on tax cuts. David Jackson – USA Today. President Obama’s latest television ad attacks Mitt Romney over his proposed $5 trillion tax cut, saying it will wind up actually raising taxes on the middle class. The ad also makes reference to Romney’s refusal to release more than two years of tax returns. Link  

A statue of company founder Henry Ford overlooks part of the historic Rouge Plant complex in Dearborn, Michigan. REUTERS/Gary Cameron

Tax cuts are the key to job creation, or so Mitt Romney, running mate Paul Ryan and the 2012 Republican platform all say. But what does the empirical evidence show? Is the rhetoric in line with the known facts?

Studies examining the impact of cutting personal income tax rates on job growth or economic activity generally have been inconclusive, said Will McBride, chief economist for the Tax Foundation.

A worker collects products at the Amazon.com warehouse facility in New Castle, Delaware. REUTERS/Tim Shaffer

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

* Amazon, forced to collect a tax, is adding roots. David Streitfeld – The New York Times. Amazon’s multibillion-dollar building frenzy comes as the company is about to lose perhaps its biggest competitive edge — that the vast majority of its customers do not pay sales tax. After negotiations with lawmakers, the company is beginning to collect taxes in California, Texas, Pennsylvania and other states. But Amazon hopes new warehouses will allow it to provide better service, giving it the ability to up-end the retailing industry in an entirely new way. Link  

* Top managers avoid pension tax caps. Alison Smith – The Financial Times. More than two-fifths of the executives with defined-benefit (DB) pensions at the UK’s 100 largest quoted companies by market value are escaping new rules aimed at capping the tax-free amounts paid into their retirement packages. But executives with DB pensions from the next band of big companies – ranked in the FTSE 250 – are far more likely to have contributions inside the tax net, with only one in 20 protected from the new regime limiting tax relief. Link  

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

 * Californians face rival ballot initiatives that would raise taxes and aid schools. Brooks Barnes – The New York Times. California’s Proposition 30 would increase statewide sales taxes by one-fourth of a cent and impose an income tax surcharge on Californians who earn more than $250,000 annually. The sales tax increase would expire after four years, and the income tax component would last for seven years. Some of the new money would go to public safety programs, like the supervision of parolees. Link  

* Tax hike cuts tobacco consumption. Dennis Cauchon – USA Today. A giant federal tobacco tax hike has spurred a historic drop in smoking, especially among teens, poor people and those dependent on government health insurance, a USA TODAY analysis finds. President Obama signed the tax hike — the biggest to take effect in his first term — on his 16th day in office, reversing two vetoes by President Bush. The federal cigarette tax jumped from 39 cents to $1.01 per pack on April 1, 2009. Since then, the change has brought in more than $30 billion in new revenue, tax records show. Link

* Romney on defensive over lack of tax detail. James Politi – The Financial Times. During an April fundraiser in the backyard of a large private home in Palm Beach, Florida, Mitt Romney offered donors a brief glimpse of what it would take for his tax plan to work. To prevent his proposals to slash income taxes by 20 percent from blowing a massive hole in the US budget, he would be willing to limit some of America’s most prized tax breaks. Link  

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

* Chicago tops nation in tax burden for travels. Hugo Martin – The Los Angeles Times. For an average visit to downtown Chicago, a traveler will pay about $40.31 in combined taxes per day, according to the GBTA Foundation. The lowest taxes imposed on travelers can be found in the Florida cities of Fort Lauderdale, Fort Myers and West Palm Beach. Link

 * Romney’s tax plan leaves key variables blank. Annie Lowrey and David Kocieniewski – The New York Times. If any single question can be said to dominate the presidential campaign, it is whether the conservative policies advocated by Mitt Romney would help or hurt the middle class. And no issue hits the heart of that question more than taxes. Link 

 * Romney blasts debt-ceiling deal that Ryan backed. Thomas Ferraro and David Morgan – Reuters. Republican vice presidential candidate Paul Ryan denied that Mitt Romney’s proposal to cut taxes and eliminate yet-to-be-identified tax loopholes amounts to a “secret plan.” “What we don’t want is a secret plan,” Ryan said, explaining that the details are not being kept under cover but instead have not yet been worked out. Ryan suggested that eliminating tax loopholes would hit higher income people harder. Link 

Some important tax and accounting events in the week ahead:

Monday, September 10

*Martin F. Baumann, Chief Auditor and Director of Professional Standards for the Public Company Accounting Oversight Board, speaks to the American Institute of Certified Public Accountants’ national conference on financial institutions. Washington.

Tuesday, September 11

* House Ways and Means Oversight Subcommittee hearing on the Internal Revenue Service’s implementation and administration of healthcare reform legislation. 10 a.m. EDT,  Longworth House Office Building. Washington.

Wednesday, September 12

International Tax Institute conference on tax treaty limitation on benefits clauses. 12:15 p.m. EDT, Grand Hyatt Hotel. New York.