Tax Break

Essential tax and accounting reading: taxing the rich, MF Global accounting under review, Simpson-Bowles cuts get a vote, tax hike helps New York budget, and more

Fiscal Commission co-chairs Alan Simpson (L) and Erskine Bowles April 14, 2011. REUTERS/Kevin Lamarque

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

* The case for raising top tax rates. Eduardo Porter – The New York Times. The wealthy are feeling defensive about their taxes. Most Americans may think the rich pay too little but, not surprisingly, only 30 percent of the rich agree. More than two-thirds of families earning a quarter of a million dollars a year or more tell Gallup’s pollsters that their taxes are too high. It is true that high-income Americans carry the biggest tax burden. While fewer than 1 in 20 families make more than $200,000, they pay almost half of all federal taxes. However they feel about the tax man, there is a case to be made that they can pay much more. The reason has nothing to do with fairness, justice or ideology. It is about economics and math. Link

* US FASB weighs reform to accounting used by MF Global. Sarah Lynch – Reuters. The U.S. accounting standard-setting board could this year revamp the accounting treatment that MF Global used to mask risky European sovereign debt exposure, an official at the board will tell lawmakers on Wednesday. “Moving forward with this project will involve a series of public education and decision-making meetings and the exposure of a proposed standard for public comment,” said Financial Accounting Standards Board Technical Director Susan Cosper in prepared testimony. Cosper noted that while historically most repo-to-maturity transactions have involved U.S. Treasury securities, the range of instruments involved has broadened over the years to include other debt instruments such as those seen in the MF Global case. Link

* House could vote this week on budget pan modeled on Bowles-Simpson ideas. Rosalind Helderman – The Washington Post. The House of Representatives could vote for the first time this week on a bipartisan deficit-cutting plan, modeled on the suggestions of a presidential commission chaired by officials Alan Simpson and Erskine Bowles, that calls for both spending cuts and new tax revenue. Presented as an alternative to a GOP budget blueprint authored by Rep. Paul Ryan, it is expected to lose to Ryan’s plan. Any support for a proposal calling for $1.2 trillion in new revenues, particularly from tax-increase-adverse Republicans, could signal new hope for efforts in the coming year to get the kind of grand deficit-reduction bargain that eluded Obama and House Speaker John Boehner in talks over raising the debt ceiling last summer. Link

* U.S. airlines seek action on EU carbon tax. Doug Cameron – The Wall Street Journal. The trade group representing the largest U.S. airlines has called on the Obama administration to take action against the European Union in a bid to end the bloc’s carbon-trading market. The Airlines for America lobbying group dropped its own lawsuit against the EU and called on the administration to bring a case through the International Civil Aviation Organization, a branch of the United Nations. Link

Tax and Accounting Calendar

Some important events in the week ahead:

Sunday, March 11 – Wednesday, March 14  
The National Association of State Boards of Accountancy will hold its conference in San Antonio, Texas.

Tuesday, March 13
Comment letters due to the Financial Accounting Standards Board on proposed standards on revenue recognition from contracts with customers.

Wednesday, March 14
The Practising Law Institute briefing on hedge fund tax issues that have attracted IRS attention will touch on ”effectively connected income” loan origination and dividend withholding, tax penalties, and managing an IRS hedge fund audit.

The coming week’s tax and accounting calendar

Some events in the week ahead:

Monday, February 6

Comment letters due on the Financial Accounting Standards Board’s proposed accounting standards updating the cumulative translation adjustment following the sale of a nonprofit or foreign business.

Tuesday, Feburary 7

The U.S. Congress Joint Economic Committee (JEC) will hold a hearing on extending the two-percentage-point payroll tax cut and continuing emergency federal unemployment insurance benefits through the end of 2012, including examining the economic impact of extending these policies versus allowing them to lapse.

Witnesses:

    Dr. Mark M. Zandi, Chief Economist, Moody’s Analytics Mr. James Sherk, Senior Policy Analyst, The Heritage Foundation Ms. Judith M. Conti, Federal Advocacy Coordinator, National Employment Law Project

Wednesday, February 8

Tax and accounting this week

Some events in the week ahead:

Tuesday, January 31

1. Senate Finance Committee Chairman Max Baucus to convene a hearing to discuss the 50-plus tax provisions that expire annually or biannually, termed “tax extenders.” The Joint Committee on Taxation has estimated that a one-year extension of all would cost $37 billion over the next decade. Witnesses will be:

    Dr. Rosanne Altshuler, Professor and Chair of the Economics Department, Rutgers University Dr. Jason J. Fichtner, Senior Research Fellow, Mercatus Center, George Mason University Calvin H. Johnson, Andrews & Kurth Centennial Professor of Law, The University of Texas School of Law Caroline L. Harris, Chief Tax Counsel and Director of Tax Policy, U.S Chamber of Commerce

2. The Financial Accounting Standards Board to hold an open meeting with its investors’ technical advisory committee in Norwalk, Connecticut.

3. The Congressional Budget Office to release its annual budget and economic outlook, with director Douglas Elmendorf to testify on it before the House Budget Committee on Feb. 1 and before the Senate Budget Committee on Feb. 2.