Tax Break

Essential reading: State, local fiscal burdens drag on economic recovery, and more

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

* State, local fiscal burdens drag on economic recovery. Connor Dougherty – The Wall Street Journal. State and local government tax collections have improved from the recession years, they only recently regained their pre-downturn peak. Meantime, local governments, which unlike states rely on property taxes, continue to suffer from the big drop in real estate prices. Given political pressure to reduce the federal budget deficit, cities and states are likely to get less help from Washington. If that happens they would have to make up the gap with tax hikes of their own or else live more frugally—what they’re doing now. Link

* Public pensions to give ‘clearer picture’ of finances. Lisa Lambert – Reuters. Public retirement systems will have to make major changes in how they disclose their pension assets and liabilities, under new rules that the board in charge of accounting standards for U.S. state and local governments is set to approve on Monday. The Governmental Accounting Standards Board will vote on the changes at an afternoon meeting. The reforms were proposed nearly a year ago to give more detail on how pensions affect governments’ finances. Link

* IRS whistleblower tax take plunges, senator frets. Patrick Temple-West – Reuters. A report from the U.S. Internal Revenue Service’s troubled whistleblower program said tax collections from tipsters fell sharply last year, prompting a U.S. lawmaker on Friday to say he may delay two Treasury Department nominees until the program improves. In fiscal 2011, the IRS collected only $48 million through the program, down from $464 million in fiscal 2010, the agency reported to Congress on June 15. Link

* Germany builds core group for transactions tax. John O’Donnell – Reuters. Germany will work with a core group of European Union countries on introducing a financial transactions tax, its finance minister said on Friday, after efforts to get an agreement among all 27 EU countries fell short. Finance Minister Wolfgang Schaeuble said 10 countries were prepared to use an EU process known as ‘enhanced cooperation’ to push ahead with developing the tax, which Britain and other states, including some in the euro zone, oppose. Link

* MHRC looks to close 2 percent tax loophole. Kiran Stacey – The Financial Times. Tax officials have hinted they could close the six-year-old loophole which may have allowed wealthy people to reduce their tax rate to just 2 per cent by borrowing money from companies of which they were directors. The UK tax-collecting agency HM Revenue & Customs said yesterday its staff were looking into the scheme, which allows people to borrow large sums from their companies, free of tax. Link

Essential reading: Union, liberal coalition pushes Obama tax plan, and more

Union supporters in Las Vegas, September, 2008. REUTERS/David Allio

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

* Union, liberal coalition pushes Obama tax plan. John McKinnon – The Wall Street Journal. A coalition of big unions and left-leaning activist groups has formed to support President Barack Obama’s proposal to raise tax rates on families earning more than $250,000, amid growing signs that Democratic lawmakers want to limit tax increases to people making $1 million or more. Link

* An often procrastinating Congress is raring at the gate on tax cuts. Jennifer Steinhauer – The New York Times. The Bush-era tax cuts, which are set to lapse on Jan 1, have both parties in the House and the Senate eager, perhaps even giddy, to vote for their respective versions of an extension of the cuts this summer, well before the due date. Without any extensions, the expiration would raise taxes next year by $221 billion. Link

* Heard in more states: See you in tax court! Nanette Byrnes – Reuters. Six U.S. states have established or considered establishing independent tax tribunals in the last two years, a trend supported by the business community, but one which also is stirring debate about the need for these new tribunals. Georgia and Illinois approved laws last year to create a tax court. In Alabama, Governor Robert Bentley announced Thursday that he will pocket veto legislation that would create a new state tax tribunal, due to flaws in the bill, but will support its reintroduction in the next legislative session. Link