Tax Break

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

* Boxed in on taxes, Romney says Obama dislikes success. Sam Youngman and Steve Holland – Reuters. Mitt Romney accused President Barack Obama on Wednesday of demonizing business success, as the Republican tried to ignore questions about his personal finances that threaten to damage his presidential bid. Some senior Republicans worry that Romney is becoming boxed in by the Obama team, just at the time in the race when many Americans begin to tune in and form clearer opinions about candidates before the November 6 election. Link

* Defense firms open to higher taxes to avert cuts. Damian Paletta – The Wall Street Journal. Two top defense contractors told a House committee Wednesday that Congress should consider including increasing taxes as part of a package of changes to reduce the deficit, a sign that industry fear over the impact of spending cuts next year could challenge party orthodoxy. Top executives from Lockheed Martin, Pratt & Whitney, EADS North America, and Williams-Pyro told the House Armed Services Committee that the $50 billion in projected military spending cuts set to begin in January already has had a chilling impact on military planning, delaying projects and raised the possibility of layoffs before the end of 2012. Link

* U.S. utilities fear approach of fiscal cliff. James Politi – The Financial Times. The largest US utilities blitzed Capitol Hill this week to lobby for a deal to avert the effects of the “fiscal cliff” on their industry, warning that increases in tax rates on dividends could damage their normally steady shares and delay investments in the country’s electrical grid. The threat of tax increases on dividends has alarmed companies with steady cash flows that pay a lot out to shareholders. Link

* Aiming for Romney, Democrats push for disclosure of offshore accounts. Ashley Southall – The New York Times. Senate Democrats intensified their campaign to pressure Mitt Romney to release more information about his finances with a push for legislation requiring candidates for federal office to disclose holdings in foreign tax havens. Senator Richard J. Durbin, the majority whip, and Senator Carl Levin, took to the floor to urge support for the Financial Disclosure to Reduce Tax Haven Abuse Act. Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee is preparing similar legislation that would require presidential candidates to release at least 10 years of tax returns and disclosures of overseas accounts and other financial transactions. Link

* Obama plan to lift to tax rates would plague millions of small businesses, study warns. J.D. Harrison – The Washington Post. Should Congress allow the tax rates for the nation’s highest earners to expire at the end of the year, millions of small businesses could be forced to cut jobs and wages, placing an enormous strain on the already sluggish economic recovery, according to a new study. Commissioned by a host of pro-business advocacy groups, Ernst & Young conducted this latest study in an effort to predict the long-term economic impact of letting the top rates increase at year’s end — and the findings stand in stark contrast to the repeated assurances from Democrats that their proposal would have minimal effect on small business owners. Link

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

* With or without tax return release, pressure on Romney ramps up from both sides. Felicia Sonmez and Philip Rucker – The Washington Post. The political pressure on Mitt Romney to release more of his personal income tax returns is causing some divisions inside the GOP presidential candidate’s camp, according to a Republican strategist close to the campaign. Although some advisers are arguing privately that Romney needs to release additional filings to curb the political fallout, others are resisting that suggestion, reflecting the candidate’s longtime reluctance to publicly disclose information about his personal finances. Link

* Romney explains Cayman Island investments. John McKinnon – The Wall Street Journal. Mitt Romney, in an interview with the National Review, improved greatly on his campaign’s halting explanation of why he has held investments in the Cayman Islands, a Caribbean tax haven. Romney suggested that his Cayman Islands investments are basically standard-issue private equity partnerships, not tax shelters. Cayman Islands is a favorite destination for private equity managers to locate new partnerships, mostly because foreign investors can participate while avoiding some U.S. tax entanglements. The same often goes for U.S. tax-exempt entities such as pension funds. Link

* Romney’s secrecy becomes focus of Obama’s attack strategy. Jeff Mason – Reuters. Mitt Romney has secrets. Lots of them, perhaps. That provocative claim is at the core of President Barack Obama’s latest attacks on his Republican rival, a strategy that is dominating the narrative of the presidential campaign and leading anxious Republicans to question Romney’s tactics. Unlike most politicians seeking national office, Romney initially declined to release any of his tax returns. In January, under pressure from his opponents in the Republican primaries, he released his 2010 return and an estimate for 2011. Link

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

* President’s populist pitch divides suburban voters. Colleen McCain Nelson – The Wall Street Journal. Barack Obama and Republican challenger Mitt Romney are battling over suburban, upper middle-class voters, a constituency important to both men. The president drew strong support from suburban voters four years ago. The question in the 2012 contest is whether these voters agree with Obama’s more populist economic message —or whether the tax-the-rich rhetoric is pushing them away. The president last week renewed his effort to extend Bush-era tax cuts for families with an adjusted gross income of less than $250,000 and raise marginal tax rates for wealthier Americans. Link

* Senator Murray says Democrats will let tax cuts expire. Jonathan Weisman – The New York Times. Senator Patty Murray of Washington, a member of the Democratic leadership, said on Monday that her party is prepared to allow all of the Bush-era tax cuts to expire and for automatic spending cuts to kick in unless Republicans give up their opposition to tax increases on the wealthy. Murray’s tough line, in a speech at the Brookings Institution, signaled a stiffening of Democratic resolve a week after President Obama reiterated his demand for a one-year extension in the Bush-era tax cuts only for people earning less than $250,000. Link

* Romney rejects calls on tax returns. Patrick O’Connor and Daniel Lippman – The Wall Street Journal.

A rally outside the Amazon.com shareholders meeting in Seattle, Washington, May 24, 2012. REUTERS/Marcus DonnerWelcome to the top tax and accounting headlines from Reuters and other sources.

* Tax break nears end for online shoppers. Monica Langley – The Wall Street Journal. Republican governors, eager for new revenue to ease budget strains, are dropping their longtime opposition to imposing sales taxes on online purchases, a significant political shift that could soon bring an end to tax-free sales on the Internet. The newfound support among Republicans is a dramatic change from just a few months ago, and Republicans in Congress are seizing on the state level shift to push ahead federal legislation. Link

* Democrats threaten to go over ‘fiscal cliff’ if GOP fails to raise taxes. Lori Montgomery – The Washington Post. Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households. Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise. Link

Some important tax and accounting events in the week ahead:

Monday, July 16 • New York University two-week conference begins on corporate income tax, international taxation, wealth-planning and other topics. New York City.

Tuesday, July 17 and Thursday, July 19 • IRS conferences in Buffalo, New York, on July 17 and in Erie, Pennsylvania, on July 19 on the benefits and responsibilities of tax-exempt status, and what must be done to maintain it.

Wednesday, July 18 • Paul Oosterhuis of Skadden, Arps and Lee Sheppard of Tax Analysts debate transfer pricing issues and solutions at a luncheon sponsored by the International Tax Institute. 12:15 p.m. EDT, Grand Hyatt Hotel. New York City.

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Democrats seek to reassure vulnerable senators on tax cuts. Kim Dixon – Reuters. The top U.S. Senate Democrat said on Thursday that politically vulnerable lawmakers will be “just fine” if they back President Barack Obama’s plan to extend tax cuts only for households making $250,000 or less, a vote that could be perilous for some facing re-election in November. Democratic Senate Majority Leader Harry Reid’s remarks to reporters came as he tried to steer Obama’s initiative – a centerpiece of the president’s re-election campaign – to Senate passage by the end of this month. Link

* Republicans block small-business tax break on procedural vote. Lisa Mascaro – The Los Angeles Times. One of the top items on President Obama’s to do list – a 10 percent tax break for small businesses that make new hires – got tangled in an election-year tax debate as Republicans led a filibuster to block the measure. The legislation would have provided the tax credit to companies that hire new employees or otherwise expand their payrolls this year, a typically popular approach among the GOP. Republicans in the Senate did not necessarily object to the measure, but they protested on Thursday after Democrats refused to allow votes on other amendments. Link

Democrats Nancy Pelosi, the minority leader in the U.S. House of Representatives, President Barack Obama, and Senate Majority Leader Harry Reid at the White House in 2010. REUTERS/Larry Downing

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

* Obama, Democrats put tax cuts at center of 2012 agenda. Richard Cowan – Reuters. Congressional Democrats and President Barack Obama on Wednesday plotted their legislative priorities for the months leading up to November’s elections, showcasing an extension of middle-class tax cuts as well as  measures to keep government agencies functioning beyond Sept. 30. Later this month, the Democratic-led Senate is expected to stage a vote on continuing tax cuts for families earning up to $250,000 – an election-year initiative that the Republican-controlled House of Representatives will not go along with. Link  

* Clients of Swiss bank raided in tax probe. David Crawford and Laura Saunders – The Wall Street Journal. German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. Link  

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

* Attacks on Romney for offshore assets, taxes heat up. Jeff Mason and Steve Holland – Reuters. President Barack Obama’s re-election team stepped up attacks on Mitt Romney for holding offshore assets and urged him to release more tax returns, pushing hard on an issue that could be a weak point for the Republican presidential candidate. The Obama campaign and top Democrats took to the Internet and airwaves on Tuesday with accusations that Romney is being secretive about his wealth as they sought to cement an image of the Republican candidate as a multi-millionaire who is out of touch with ordinary Americans. Link 

* Romney tax plan would eat into popular breaks: study. Kim Dixon – Reuters. Republican presidential candidate Mitt Romney’s pitch to slash taxes by 20 percent across-the-board would require cuts of about $320 billion in popular tax breaks to avoid adding to the deficit, a nonpartisan analysis said on Tuesday. The report by the Tax Policy Center found that to pare tax rates to the level promised by Romney, a third of the $1.1 trillion in so-called federal tax expenditures would have to be axed to prevent the federal budget deficit from growing. Link

* Little-known U.S. board stokes hot pension debate. Nanette Byrnes – Reuters. The feedback was swift and often scathing when a little-known public board signaled its intent to toughen the accounting rules governing state and local pension funds of millions of U.S. public employees, intensifying worries over a shortfall of billions of dollars. The plan by the Governmental Accounting Standards Board (GASB) – which was approved on June 25 – drew praise from the American Institute of Certified Public Accountants and from investors looking for transparency in the $3.7 trillion municipal bond markets. Link

House Republicans sought to dramatize the Supreme Court’s ruling upholding President Barack Obama’s health law on Tuesday, when they warned that Congress could slap taxes on those failing to eat their vegetables and jail those who fail to comply.

At a packed room of the Republican-controlled House Ways and Means committee, witnesses called by the majority warned that the court’s opinion could bloat government power to a dangerous new level.

“We must again consider whether the federal government can require people to purchase broccoli,” said Carrie Severino, a lawyer at the Judicial Crisis Network, echoing two other Republican witnesses. “Allowing unrestricted taxes on inactivity will open the door to taxes the likes of which this country has never seen.”

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

* Obama challenges Republicans to keep tax cuts for middle class. Jeff Mason and Alister Bull – Reuters. President Barack Obama called on Monday for a one-year extension of Bush-era tax cuts for families earning less than $250,000 a year, seeking to steer the election-year debate away from high unemployment and portray himself as a champion of ordinary Americans. The tax proposal is unlikely to sway Obama’s Republican opponents in Congress, who argue that the cuts should be maintained for everyone, including higher earners. Link

* Tax bill aims to encourage small business hiring. Corey Boles – The Wall Street Journal. Senate Democrats will try this week to pass a targeted tax relief package aimed primarily at encouraging small businesses to hire new workers. The $28 billion bill, the latest in a series of election-year tax maneuvers by the political parties, would provide a tax credit to all firms that hire new workers or increase pay for existing staff. Companies could earn a maximum credit of $500,000 against their 2012 income tax liability under the bill. Link

* Maine Governor LePage apologizes for “Gestapo” comment. Reuters. Maine Governor Paul LePage apologized on Monday for calling the U.S. Internal Revenue Service the “Gestapo” during criticism of President Barack Obama’s healthcare law. The Republican governor compared the tax agency to Nazi secret police during a weekend radio address on healthcare. Link