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

August 8, 2012

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

* Chinese accounting earns tough stance. David Reilly and Duncan Mavin – The Wall Street Journal. Accounting fraud and China have become synonymous for many investors. It isn’t hard to see why. Billions of investor dollars have been lost on scandals at overseas-listed Chinese companies such as Longtop Financial and Sino-Forest. Audit firms have resigned at dozens of such companies. And some of their resignation letters make for chilling reading with mentions of fake bank statements, made-up invoices and intimidation of audit staff. Link

* Obamacare’s phony deficit reduction. Betsy McCaughey – The Wall Street Journal opinion. The half-trillion dollars in tax hikes and half-trillion dollars in cuts to Medicare funding together total more than the cost of the new entitlements during the next 10 years, according to the CBO, and produce a small $109 billion surplus. Repealing Obamacare would erase that tiny surplus. So what? Repeal also would reduce government spending, lower taxes, and undo the evisceration of Medicare: all good results. Nevertheless, Senate Majority Leader Harry Reid declared that the CBO “confirms what we’ve been saying all along: the Affordable Care Act saves lots of money.” Untrue. Link

* Reid and Romney’s sleazy rhetoric on taxes. The Washington Post editorial. If Senator Harry Reid has any proof, he owes it to Romney, the presumptive Republican presidential nominee, to put it on the record, now. Otherwise, Reid ought to pause and reflect on the record of another senator who once claimed to have a list of Communists and spies at the State Department — and could not substantiate it. Link

* The Romney Hood fairy tale. The Wall Street Journal editorial. As he escalates his class war re-election campaign, President Obama has taken to calling Mitt Romney’s economic plan “Robin Hood in reverse” or “Romney Hood.” The charge is that even though Romney is proposing to cut tax rates for everybody across the board, Romney will finance this by imposing a tax increase on the middle class. His evidence is a single study by the Tax Policy Center, a liberal think tank that has long opposed cutting income tax rates. The political left always says Daddy Warbucks gets all the tax-cut money. So this is hardly news, except that the media are treating this joint Brookings Institution and Urban Institute analysis as if it’s nonpartisan gospel. In fact, it’s a highly ideological tract based on false assumptions, incomplete data and dishonest analysis. In other words, it is custom-made for the Obama campaign. Link

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