Tax Break

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

U.S. Republican presidential candidate Rick Santorum addresses supporters during a campaign stop in Michigan. REUTERS/Rebecca Cook

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

* Tangled tax code primed for pruning. John McKinnon – The Wall Street Journal. President Barack Obama’s business-tax-overhaul plan underscores the growing likelihood of a serious effort to revamp the nation’s much-criticized tax system, no matter who wins the White House. The question now isn’t whether a tax rewrite will happen, but how far it will go, and whether it will stop at business rules or also extend to individuals. Increasingly the answer appears to be that the entire tax code, all 70,000 pages, could be in play. Powerful dynamics are reducing the significance of partisan differences. One is the expiration of Bush tax breaks at the end of 2012. A broad tax overhaul could give each party a way to break the cycle of short-term tax extensions that is frustrating businesses and individuals. Another is the government’s grim fiscal situation. Many Democrats and even some Republicans see a streamlined tax system as a way to generate more revenue. Link

* Plans for US manufacturing may yield more votes than jobs. Andy Sullivan – Reuters. U.S. factories are hiring again, and Democratic President Barack Obama and some of his Republican rivals are pitching tax breaks to fuel a rebound in manufacturing and help rebuild a battered middle class. Economists on the left and the right say promises to bring back factory work may yield more votes than jobs. Industry experts say the United States is long past the days when steel mills, auto plants and machine shops boosted millions of unskilled Americans into the middle class. Economists say the middle class would benefit more from efforts to boost the economy as a whole, rather than a particular sector such as manufacturing. Link 

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.”

Rick Santorum addresses the Detroit Economic Club, February 16, 2012. REUTERS/Rebecca Cook

One thing Rick Santorum’s tax returns, released late on Wednesday, made clear: None of the leading presidential candidates fits into the 99 percent of the populist Occupy Wall Street movement.

Santorum told Politico he isn’t rich. “I don’t have wealth,” he said.