Essential reading: California unions fighting fundraising proposal rather than pushing for tax hike, and more

October 17, 2012

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

 * California’s labor’s big-money focus on fundraising law may hurt chances of tax hike. Chris Megerian – The Los Angeles Times. California’s Labor unions are pooling their money to fight Proposition 32, which would eliminate their primary political fundraising tool — paycheck deductions — at the same time Gov. Jerry Brown is counting on their support for his tax-hike initiative also on the ballot next month. Link  

* Why tax reform could help growth. Dylan Matthews – The Washington Post. In large measure, what you think about the tenability of Mitt Romney’s tax plan depends on what you think his tax reform proposal can do for economic growth. Optimistic growth estimates have predicted only a mild economic boost from Romney’s proposal — $53 billion of the $360 billion annual cost of the plan would be recouped from higher revenues that result from faster growth. Link  

* Chances of going over fiscal cliff may be higher than experts think. Jeff Sparshott – The Wall Street Journal. What are the odds of the U.S. running off the so-called fiscal cliff — the mix of spending cuts and tax increases that would likely tip the U.S. into recession? On average, economists in the latest Wall Street Journal economic forecasting survey put the probability at just 17 percent, but some economists and analysts say that may be too low. Link  

* Finance executives see no relief from uncertainty after elections. Emily Chasan – The Wall Street Journal. The U.S. presidential election alone will not resolve some of the major uncertainties corporations face, such as tax policy expirations, the sluggish economy and regulatory changes, corporate finance executives say. 63 percent of finance executives expect no significant change in future business conditions and 71 percent do not anticipate making changes to their level of investment following the election, according to a poll of nearly 1,000 executives. Link  

* Gifting booms before new tax laws kick in. Arden Dale – The Wall Street Journal. In the final months of 2012, wealthy Americans are ramping up plans to gift-away cash, stock, real estate and artwork before new tax laws kick in next year. Some have even turned to banks for loans so that they can make big gifts before year’s end. Under the federal gift-tax exemption, an individual can now give away up to $5.12 million in his lifetime tax-free. But that limit will fall back to $1 million and the top gift-tax rate will rise to 55 percent from 35 percent in 2013 unless Congress steps in. Link  

* High returns and a tax break in one investment. Conrad de Aenlle – The New York Times. With payouts on conventional investments miserly and tax increases looming on Jan. 1, financial advisers are talking up an alternative investment that offers much greater income and tax breaks: master limited partnerships, or M.L.P.’s. These are shares of businesses that, with a few exceptions, produce, transport or store oil or natural gas. Link  

* France rules out wealth tax on art works. Hugh Carnegy – The Financial Times. After incurring the wrath of business with a 75 percent income tax rate and jump in capital gains tax, François Hollande’s government has quashed proposals to tax works of art owned by the wealthy following protests from France’s cultural establishment. Jean-Marc Ayrault, the prime minister, said on Tuesday the government would not accept an amendment to its tax-heavy 2013 budget put forward from within the ruling Socialist party to include all works of art worth more than 50,000 euros ($65,100)in the newly increased wealth tax. Link

($1 = 0.7679 euros)

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