Unstructured Finance

Essential reading: Candidates split over tax credit for wind energy, and more

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

* Candidates split over extending tax credit for wind energy producers. Catherine Ho – The Washington Post. President Obama and presumptive Republican nominee Mitt Romney clashed last week over a federal tax credit for businesses that produce wind and other alternative energy. In campaign events in Colorado, Obama emphasized his support for extending the tax credit and attacked Romney for opposing the extension, framing his opponent’s stance as a threat to job creation. Link

* Ryan wants to give the wealthy even bigger tax cuts than Romney does. Suzy Khimm – The Washington Post. In picking Paul Ryan, Mitt Romney has doubled down on his own campaign promise to give big tax breaks to the wealthy, uniting himself with a candidate who goes even further to do so: While Romney would bring taxes for top incomes down to 28 percent, Ryan has proposed bringing the top rate down even lower, to 25 percent. Meanwhile, Ryan’s plan would actually increase the effective tax rate on the very poorest Americans by getting rid of tax breaks that benefit low earners. Link

* Paul Ryan gave Romney camp several years of tax returns. Reuters. Mitt Romney released two years of his own tax returns to the public, but that didn’t appear to be enough when he vetted running-mate Paul Ryan and other vice presidential candidates. The campaign team for Romney, the Republican presidential candidate, reviewed several years of tax returns from Ryan and others, according to the head of Romney’s VP search process Beth Myers. Link

* Apologetic Swiss banks sweat it out as U.S., Europe mull redress. Katherina Bart – Reuters. Swiss banks hoping to atone for decades of complicity in tax evasion may be left to sweat it out for months as the United States and Germany ponder the right level of punishment. Eleven Swiss banks are under investigation in the United States and there is pressure too from Europe where burdened taxpayers want scalps after numerous banking scandals. The Swiss need a deal to remove the taint from their financial industry. Link

* Japan sales tax increase passed, on pledge of early election. Hiroko Tabuchi – The New York Times. Prime Minister Yoshihiko Noda’s plan to double Japan’s sales tax was approved by Parliament on Friday after months of haggling, but only after Noda promised opposition lawmakers that he would call early elections — a move that is likely to end his term in office and his party’s hold on power. Despite low popularity ratings, Noda, who took office last September, has pushed ahead with the plan to raise the tax to 10 percent from 5 percent by 2015, an increase he says is necessary to start reducing the country’s debt. Link

Essential reading: Attack targets Romney’s role in Marriott tax deals, and more

Mitt Romney speaks at the 38th annual Conservative Political Action Conference meeting at the Marriott Wardman Park Hotel in Washington, February 11, 2011. REUTERS/Larry Downing

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

* Attack targets Romney’s Marriott role. Laura Meckler – The Wall Street Journal. The Obama campaign Thursday released another TV ad suggesting that rival Mitt Romney may not have paid any income taxes at all in prior years, the latest in a relentless campaign centered on his refusal to release more than two years of tax returns. It highlights his role on the audit committee at Marriott International Inc., a period during which the company used improper tax strategies. The ad alleges Romney approved “son of BOSS” tax shelters. Link

* Romney on not releasing more tax returns: ‘I’m not a business’ Aaron Blake – The Washington Post. The man who once said “corporations are people” apparently doesn’t believe the inverse. When pressed on why he’s not releasing more tax returns in an interview with Bloomberg Businessweek, Mitt Romney justified it by saying: “I’m not a business.” “I have met with that requirement with full financial ­disclosure of all my investments, but in addition have provided and will provide a full two years of tax returns.” Link

Calendar

Some important tax and accounting events in the weeks ahead:

Wednesday, August 15• A number of lawyers for the U.S. Internal Revenue Service and Department of Justice speak on an American Bar Association, Section of Taxation, webcast entitled “International Tax Enforcement and Globalization: Can the Tax Police Keep Pace with the Criminals?” 1 p.m. EDT.

Thursday, August 16• Brenda Zent, attorney-adviser in the U.S. Treasury’s Office of International Tax Counsel, speaks on a Grant Thornton webcast about international tax matters related to cross-border mergers and acquisitions. 3 p.m. EDT.

Monday, August 20 – Friday, August 24• Tax Executives Institute conference on international tax issues. Atlanta.

Essential reading: Watchdog says U.S. IRS allows bogus taxpayer IDs, and more

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

* U.S. IRS allows bogus taxpayer IDs-watchdog report. Patrick Temple-West – Reuters. The U.S. Internal Revenue Service has recently issued thousands of tax identification numbers to ineligible people and, in some cases, IRS managers condoned the practice, the tax collection agency’s watchdog said on Wednesday. The accusation by the Treasury Inspector General for Tax Administration, or TIGTA, comes at a time of intense national debate about illegal immigrants, many of whom apply for and get taxpayer ID numbers instead of Social Security numbers. Link

* In Iowa, Romney leaves a stance on wind power unsaid. Trip Gabriel – The New York Times. Seeking support in the swing state of Iowa, Mitt Romney on Wednesday called for developing a laundry list of energy resources that included wind power, but he pointedly did not mention that he opposes a tax credit for the wind industry that the state’s Republican leadership strongly favors. Republican Governor Terry Branstad and members of Iowa’s Congressional delegation have criticized Romney in recent days for not backing a longstanding tax break for wind energy in a state where the industry employs about 7,000 workers. Link

* Japanese premier cuts a deal on tax bill. Toko Sekiguchi and Alexander Martin – The Wall Street Journal. Japanese Prime Minister Yoshihiko Noda promised to call elections soon in exchange for the support of the main opposition parties in a deal to save his sales-tax legislation from defeat. The agreement Wednesday to hold general elections “in the near term” ended a revolt that could have derailed the measure and raised more worries about the country’s troubled fiscal condition. Link

Essential reading: Indigestion for the French in a plan for higher taxes, and more

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

* Indigestion for ‘les Riches’ in a plan for higher taxes. Liz Alderman – The New York Times. A chill is wafting over France’s business class as President Francois Hollande presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies. But because there are relatively few people in France whose income would incur such a tax — perhaps no more than 30,000 — the gains might contribute but a small fraction of the 33 billion euros in new revenue the government wants to raise next year. Link

* Japan’s Democrats offer polls in ‘near future’ to save tax plan. Yuko Yoshikawa and Tetsushi Kajimoto – Reuters. Japan’s ruling Democrats on Wednesday offered to call an election in the “near future” to save their sales tax increase plan after the opposition demanded a commitment to early polls in return for backing the bill in an upper house vote. The opposition has yet to formally respond to the pledge, but first reactions suggested it was too vague. Link

* Cayman Islands drops plan to tax foreign workers’ income. Shurna Robbins – Reuters. The Cayman Islands has dropped plans to impose an income tax on foreign workers nearly two weeks after proposing it in a last-ditch effort to overcome budget woes. The Cayman Islands, which has had no income tax, is known as a tax haven for the mega-rich. The irony of imposing the tax was not lost on the financial industry workers who came out in droves to protest a measure that they said could hurt the industry that has made the beach-lined British territory one of the richest in the Caribbean. Link

Essential reading: Auditors question PwC reform role, and more

Dennis M. Nally, chairman of PwC International REUTERS/Arnd Wiegmann

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

* Auditors question PwC reform role. Adam Jones – The Financial Times. The involvement of a PwC expert in the political process of reforming European accounting law has prompted fresh concern about links between the biggest auditors and those who are supposed to regulate them. The Cypriot government borrowed a PwC technical expert to assist it with pushing forward accounting reform during its six-month presidency of the European Union, which began last month. Link

* GOP assails Harry Reid on Romney tax charge. Jeffrey Sparshott – The Wall Street Journal. The argument over Mitt Romney’s personal tax returns heated up Sunday, with Republicans calling Senate Majority Leader Harry Reid a liar for suggesting the GOP presidential candidate hadn’t paid taxes for a decade. Reid revived the debate last week when he said “an extremely credible source” had told him Romney didn’t pay taxes for 10 years. “It’s clear Romney is hiding something,” Reid said. On Sunday, the GOP launched a countercharge. “I am not going to respond to a dirty liar,” Republican National Committee Chairman Reince Preibus said on ABC’s “This Week.” Link

* Romney persona non grata in Italy for Bain’s deal skirting taxes. Jesse Drucker, Elisa Martinuzzi and Lorenzo Totaro – Bloomberg News. Bain Capital funneled profits from a telephone directory company through subsidiaries in Luxembourg, a common corporate strategy for avoiding income taxes in other European countries, according to documents reviewed by Bloomberg News. The buyer, Italy’s biggest telephone company, now has a total market value less than what it paid Bain and other investors for the directory business. In Italy, the deals have spurred at least three books, separate legal and regulatory probes and newspaper columns alleging investors made a fortune at the expense of Italian taxpayers. Link

Essential reading: Republicans waver over wind tax credit

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Wind-state Republicans in tough spot. Siobhan Hughes – The Wall Street Journal. Mitt Romney‘s opposition to a $5.2 billion wind tax credit is roiling Capitol Hill, where wind-state Republicans are scrambling to figure out how to save the credit without exposing sharp differences with their party’s presidential candidate. Republicans and Democrats had agreed to include the tax break, known as a production tax credit, in a package designed to extend expiring business tax breaks. But after Romney came out against the tax credit, Republicans were put in a tough spot. The result: The tax credit was omitted from a tax-extenders plan announced shortly after midnight that is to be voted on Thursday in the Senate Finance Committee. Link

* House votes to extend tax cuts in symbolic vote. Kim Dixon and David Lawder – Reuters. The Republican-controlled House of Representatives on Wednesday passed a largely symbolic plan to extend all expiring individual income tax cuts, leaving a deep rift over tax policy unresolved until after November’s elections. Link

Essential reading: Payroll tax cut on track to quietly expire

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Payroll tax cut on track to quietly expire. Naftali Bendavid – The Wall Street Journal. Amid a high-decibel fight over the nation’s budget, there is one emerging area of agreement: Both parties appear willing to quietly let a major tax cut expire—a payroll tax break enjoyed by about 122 million people. Republicans were unenthusiastic about the tax cut to begin with, preferring instead a broad overhaul of the tax code and contending it would weaken Social Security. Now the party is openly opposed to extending the tax break. Link

* Study: Romney tax plan would result in cuts for rich, higher burden for others. Lori Montgomery – The Washington Post. Mitt Romney’s plan to overhaul the tax code would produce cuts for the richest 5 percent of Americans — and bigger bills for everybody else, according to an independent analysis set for release Wednesday. The study was conducted by the Brookings Institution and the nonpartisan Tax Policy Center. To cover the cost of his plan — which would reduce tax rates by 20 percent, repeal the estate tax and eliminate taxes on investment income for middle-class taxpayers — the researchers assume that Romney would go after breaks for the richest taxpayers first. Link

Will FHFA opposition to principal reductions boost eminent domain efforts?

By Matthew Goldstein and Jennifer Ablan

There’s nothing surprising about FHFA head Ed DeMarco’s decision to nix the idea of writing down some of the debt owed by cash-strapped homeowners on mortgages guaranteed by Fannie and Freddie. DeMarco, whose agency regulates Fannie and Freddie, has been a consistent opponent of principal reductions–something we pointed out last October in our story on the need for a “great haircut” on consumer loans and including student and mortgage debt to stimulate the economy.

But DeMarco’s renewed opposition comes at a time that there is a growing consensus that something needs to be done on the housing front to get the U.S. economy going, as opposed to simply churning along at the current anemic rate of growth. More and more economists are saying that reducing mortgage debt will not only reduce foreclosures, it will give ordinary Americans more money to spend on goods and services.

It doesn’t take an MBA from Harvard to know that when people have spending power it translates into more demand and that usually prompts employers to hire more people to fill that demand.

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