U.S. Treasury Secretary Timothy Geithner testifies before the Senate Finance Committee, February 14, 2012. REUTERS/Yuri Gripas
The top tax and accounting headlines from Reuters and other sources:
* Tentative deal reached to preserve cut in payroll tax. Jennifer Steinhauer – The New York Times. Members of a House-Senate committee charged with extending a payroll tax reduction and providing added unemployment benefits reached a tentative agreement Tuesday evening, with Republicans and Democrats claiming a degree of political victory in a fight with significant election-year implications. One day after House Republican leaders said they would offer a bill to extend the $100 billion payroll tax rollback for millions of working Americans without requiring spending cuts to pay for it, the Congressional negotiators struck a broader deal that would also extend unemployment benefits and prevent a large cut in reimbursements to doctors who accept Medicare. A vote on the measure would most likely happen by Friday. But senior aides warned that negotiators still had to sign off formally on the agreement and that obstacles could surface given the long-running tensions over the measure. Link
* Obama plan would end dozens of business tax breaks-Geithner. Kim Dixon and Rachelle Younglai – Reuters. The Obama administration’s corporate tax reform plan would end “dozens and dozens” of tax breaks, Treasury Secretary Timothy Geithner said on Tuesday as he defended the White House’s election-year call for higher taxes on the wealthy. Within days, the administration intends to unveil a blueprint aimed at eliminating inequities in the corporate tax system and lowering the top rate. Companies, which pay wildly different levels of taxes, are clamoring for a cut in the corporate tax rate – which tops out at 35 percent – but disagree about how to strip out preferences that benefit selected industries. Geithner spoke before the Senate Finance Committee a day after President Barack Obama unveiled a $3.8 trillion budget-and-tax proposal that called for aggressive government spending to boost the economy and higher taxes on the rich. Link
* Calpers to buyout funds: Give up carried interest. Michael Corkery – The Wall Street Journal. California Public Employees’ Retirement System’s investment chief urged private-equity industry executives to abandon the fight to preserve a lucrative tax break on much of their income or “risk becoming the robber barons of the 21st century.” At issue is the tax break known as carried interest, which gives private-equity and venture-capital executives a relatively low 15 percent tax rate on much of their income because it isn’t taxed like ordinary income. “It’s indefensible,” Joe Dear, who oversees investments at the $230 billion pension fund, said Tuesday in an interview. “They risk becoming the robber barons of the 21st century if they are not careful. And that is an unfortunate characterization of private equity.” Link
* Pressure rises on private equity bosses’ tax. Daniel Schafer and Richard McGregor – The Financial Times. Pressure is rising across the globe to raise taxes for private equity bosses, with German and Swedish authorities pushing for legislative changes and a leading US pension fund investor calling the 15 per cent rate in America “indefensible”. Both the German and Swedish governments are considering proposals to lift tax rates for on the industry’s profit-sharing schemes, in what private equity executives say is likely going to trigger similarly sweeping changes across Europe. In Germany, four regional governments are studying a plan to remove an exemption clause which allows only 60 percent of a private equity manager’s profits to be taxed. In Sweden, tax authorities are pushing key executives from Nordic Capital, IK and Altor to retrospectively pay a 56 per cent rate of income tax. Link
