Tax Break

Essential tax and accounting reading: Politicians and taxes: U.K., French and U.S. editions, NYSE to keep tax break on Grasso pay, Brazilian tax aims to dampen real

In Brazil a new tax on loan sales aims to dampen inflation as prices of food and other consumer staples rise. REUTERS/Nacho Doce

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

* Parsing Santorum’s proposals. Floyd Norris – The New York Times opinion. Election-year tax rhetoric has never been notable for its frankness. A promise to raise someone’s taxes does not seem particularly likely to win that person’s vote, and no one wants to follow in the footsteps of Walter Mondale, the last major-party nominee to propose a general tax increase. But this year has been worse than any campaign I can remember. The most amazing proposal came from Rick Santorum. He would reduce almost everyone’s taxes. He would slash tax rates for all, his campaign Web site promises, while preserving “deductions for charitable giving, home mortgage interest, health care, retirement savings and children.” Link

* NYSE wins dispute over Grasso pay. Jacob Bunge – The Wall Street Journal. The Internal Revenue Service has backed down from efforts to claw back $161 million in tax deductions taken by the New York Stock Exchange linked to the pay of former Chief Executive Richard Grasso. The IRS in late 2009 sought to disallow deductions taken by the Big Board from 2001 to 2003 for compensation paid to Grasso, and two years ago the exchange’s parent NYSE Euronext challenged the U.S. government on the matter. Grasso led the NYSE for eight years and his $187 million pay package sparked outcry when he departed the exchange in 2003. In October 2011 the IRS determined, following an appeal process, that “there was no deficiency in the tax returns filed by NYSE for the years 2001, 2002 and 2003, thereby resolving the matter in favor of the NYSE,” according to documents filed by the exchange group late Wednesday. Link

* Osborne to defy calls to remove 50p tax rate. Jim Pickard – The Financial Times. U.K. chancellor George Osborne is to defy calls for the removal of the 50 percent upper rate on income tax and will instead instigate a clampdown on wealthy homeowners in an attempt to demonstrate that the rich cannot avoid Britain’s austerity programme. The chancellor will target people who avoid paying stamp duty when buying a home and is considering a more extensive tax raid on wealthy owners of central London homes. Among ideas being discussed by Tories is a change in the rule that means non-UK residents are exempt from capital gains tax. Mr Osborne’s aides are also still considering a higher council tax band to hit the most affluent homeowners. Link

* Brazil confirms trade financing loan tax to contain real’s gains. Rogerio Jelmayer and Matthew Cowley – The Wall Street Journal. The Central Bank of Brazil late Thursday confirmed it has imposed a 6 percent tax on trade financing loans with maturities of more than one year, in what market participants consider another step to contain the appreciation of the Brazilian real against the U.S dollar. The bank also said that only importers will be allowed to take out such loans. Link

Essential tax and accounting reading: California’s Facebook tax windfall, Big Four in China, GE’s taxes, and more

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

* California likes Facebook IPO tax possibilities. Vauhini Vara – The Wall Street Journal. California could reap a tax windfall of as much as $2.5 billion from Facebook Inc.’s initial public offering, a state analyst said Monday, in the first official forecast of the IPO’s impact on the cash-strapped state. The offering is forecast to bring in $500 million of income-tax revenue through stock sales in fiscal 2012, ending in June, followed by $1.5 billion in 2013 and $450 million from 2014 to 2016, according to a report from the Legislative Analyst’s Office, a nonpartisan government entity that advises the legislature. Facebook has planned for an IPO this spring. Link 

* Barclays at center of UK tax avoidance clampdown. Steve Slater – Reuters. Barclays Plc said it was the bank at the centre of a clampdown by Britain on two tax avoidance schemes that the government said would close loopholes and raise more than 500 million pounds ($792 million) in tax. Barclays said it notified Britain’s tax office about its plan to buy back its own bonds, on which it and other banks have made hefty profits in recent years. Tax avoidance is legal, but the Treasury said on Monday the scheme and another one were “highly abusive.” Link  

* “Big Four” auditors brace for big changes in China. Rachel Armstrong – Reuters. The Big Four global audit firms, which dominate the Chinese market, are negotiating with Beijing to lessen the impact of forced changes that could mean only accountants with Chinese qualifications can be partners in their audit practices. The overhaul comes at a delicate time for an audit industry reeling from a rash of accounting scandals at Chinese companies. Any reduction in the audit capacity of KPMG, Deloitte, Ernst & Young and PricewaterhouseCoopers (PWC) would increase foreign regulators’ and investors’ concerns about Chinese auditing. Link

Foster Friess: wealthy should “self-tax” through philanthropy

Wyoming multimillionaire Foster Friess, whose super PAC strongly supported Rick Santorum’s candidacy, argues the best kind of taxation would be none at all.  Government should step back and let the wealthy “self-tax” and so choose where to spend their money rather than letting the government do so, he says.

Citing philanthropic efforts by Bill Gates and others, Friess praises them not only as the creators of jobs and great products, but also as people who embrace the idea of helping their fellow man.

In this video interview with Chrystia Freeland of Reuters, he urges the country to “honor and uplift the one percent.”

Who pays no income taxes?

Who pays no federal income taxes?

Republicans grabbed onto a headline number last year from a respected tax policy group noting that nearly 50 percent of Americans pay no income taxes.

The statistics from the Tax Policy Center (TPC) came up again Wednesday at a hearing of the House tax-writing Ways and Means Committee, as lawmakers grilled Treasury Secretary Timothy Geithner about President Obama’s tax proposals.

“Mr. Secretary, you know the facts: the bottom half of earners in this country pay no federal income taxes,” Dave Camp, the panel chairman,  a  Republican, said.

Essential tax and accounting reading: Obama’s budget, Japan’s economy, the EU’s carbon tax, and more

Japanese Prime Minister Yoshihiko Noda REUTERS/Yuriko Nakao

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

* Obama faces task of selling dueling budget ideas. Jackie Calmes – The New York Times. With the election-year budget he unveils on Monday, President Barack Obama more than ever confronts the challenge of persuading voters that he has a long-term plan to reduce the deficit, even as he highlights the stimulus spending and tax cuts that increase deficits in the short term. In his budget Obama again will commit to $4 trillion in deficit reduction over 10 years, including $1.5 trillion in tax revenue from the wealthy and from closing some corporate tax breaks, and reductions in spending for a range of programs, including the military, Medicare, farm subsidies and federal pensions. But Republicans are sure to criticize the president’s proposals as heavy on gimmickry and double-counting, and reject his proposed tax increases. Link.


* EU say it’s ‘flexible’ on carbon tax. Eric Yep and Gaurav Raghuvanshi – The Wall Street Journal. The European Union is willing to be flexible with its emissions tax on airlines, but won’t suspend the tax unless countries can agree on an ambitious alternative, EU Transport Commissioner Siim Kallas said Monday. Several countries have expressed opposition to the tax, with some threatening retaliatory measures against the EU. It is unclear whether a global agreement is possible by April 2013, when the first payments are due. Link.

* Japan’s big GDP drop a worry for PM tax plan. Tetsushi Kajinoto – Reuters. Japan’s economy shrank much more-than-expected in the fourth quarter, as Thai floods, a strong yen and weak demand hurt exports, casting doubt on hopes for a quick pick up in activity that could bolster government plans to raise the sales tax. Prime Minister Yoshihiko Noda hopes to contain the rise in the debt pile – now already twice the size of the economy – by doubling the national 5 percent sales tax by late 2015, but has yet to win over a combative opposition and a skeptical public. Link.

Tax clips from the web: A Superbowl winner, retail relief and offshore assets

New York Giants middle linebacker Chase Blackburn (L) intercepts a pass intended for New England Patriots tight end Rob Gronkowski during the third quarter in the NFL Super Bowl XLVI.

And the winning play goes to…

One of the more sensational plays on Superbowl Sunday last weekend took place in Las Vegas, where Jona Rechnitz was given 50 to 1 odds on the first scoring play in the game between the New York Giants and the New England Patriots being a safety. For those who missed it, a safety is something like a player throwing into or being tackled in his own end zone…Or something like that. Actually, Tax Break does not follow football really, so you can catch up on those details elsewhere. Anyway, the safety did occur, and Rechnitz won a cool $60,000 on the bet, Don’t Mess With Taxes writes.

Some of that win was shaved for taxes by the casino before it even paid out, and the rest is taxable on Rechnitz’s own tax return. That is – it would be. He told some tabloids that he will donate the money to charity, in which case he can deduct the whole kit and caboodle on his tax return.

Robert Shiller lays out a tax plan to address U.S. inequality

Influential Yale economics professor Robert Shiller favors a system of taxation that would keep inequality in check. He argues that such a system would help maintain harmony in the United States and benefit all, including the well-to-do.

Shiller is especially well known as co-creator of the S&P/Case-Shiller home price indices, and for two prescient calls: a 2000 forecast of the dot-com bubble’s bust, and a 2005 prediction that the housing boom would cause a recession.

In this talk (video below) with Chrystia Freeland of Reuters, Shiller said he was not trying to abolish inequality but to keep it within limits. He sees a system that addresses the outer bounds of inequality as a way to “prevent class war” and keep a harmonious nation.

Essential reading: payroll tax talks, state income tax cuts and a Swiss bank fine

Swiss bank Julius Baer, Bahnhofstrasse, Zurich. REUTERS/Arnd Wiegmann Welcome to the top tax and accounting headlines from Reuters and other sources.  

* Payroll tax negotiations heat up again. Rosalind Helderman – The Washington Post.

U.S. House and Senate negotiators appointed to reach a compromise over how to pay for extending the expiring payroll tax cut hold a key meeting early on Tuesday. Ongoing discussions between the 20-member conference committee, as well as House and Senate leaders, will make clear whether Democrats and Republicans will reach a quick deal by Feb. 17 to extend the tax cut for the remainder of the year. Democrats and Republicans remain split on how to pay to extend the tax cut. Link.  

Essential reading: Chinese airlines, Swiss banks and more

 

Air China planes on the tarmac of the Beijing Capital International Airport. REUTERS/David Gray

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

* China bars airlines from EU tax plan. Simon Rabinovitch – The Financial Times. The Chinese government has barred the country’s airlines from complying with a European Union charge on carbon emissions, escalating a dispute that officials have warned could turn into a trade war. Chinese airlines had previously said they would not pay the EU carbon tax, but the formal prohibition by the State Council, or cabinet, puts Beijing in direct opposition to Brussels. China has notified all Chinese airlines that, without government approval, they cannot join the EU emissions trading scheme or charge customers extra because of it, state-agency Xinhua said. The impact on Chinese airlines with routes to Europe was unclear. Although the EU’s carbon scheme went into effect for airlines on January 1, Brussels has not started charging them yet. Link to The Financial Times.

Taxes not just certain, they’re right thing to do-survey

Internal Revenue Service office near Times Square in New York.

Most Americans believe strongly that it’s a civic duty to pay their “fair share” in taxes, that cheating on taxes is wrong and that cheaters should be held accountable, said a survey from the U.S. Internal Revenue Service’s Oversight Board released on Monday.

Created by Congress in 1998 to keep an eye on the IRS, the oversight board does its survey annually. This year’s is consistent with past results showing strong support for the tax obligations of citizenship and low tolerance for those who shirk it.

Despite chatter on the political fringes about taxes being a form of theft, 96 percent of those surveyed said they completely or mostly agreed that  ”it is every American’s civic duty to pay their fair share of taxes.”