Unstructured Finance

Essential reading: Most Americans face lower tax burden than in 1980, and more

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

* Complaints aside, most face lower tax burden than in 1980. Binyamin Applebaum and Robert Gebeloff – The New York Times. Most Americans in 2010 paid far less in total taxes — federal, state and local — than they would have paid 30 years ago. The combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980. Link

* Obama’s cliff offer spurned. Janet Hook, Damian Paletta and Carol Lee – The Wall Street Journal. President Barack Obama made an opening bid in budget talks with Republicans that calls for a $1.6 trillion tax increase, $50 billion in infrastructure spending in 2013 and new power to raise the federal debt limit, a provocative set of demands that Republicans said represented a step backward in efforts to avoid looming tax increases and spending cuts. Link

* Analysis: Democrats’ discord undercuts Obama estate tax push. Kim Dixon – Reuters. Divisions among Democrats are undermining President Barack Obama’s push to raise the U.S. estate tax on inherited wealth, just weeks before the arrival of the “fiscal cliff” could drive the present estate tax rate even higher than Obama proposes. Link

* A menu of revenue-raising options. John McKinnon – The Wall Street Journal.
President Barack Obama and congressional leaders, seeking to raise revenue as part of their high-stakes budget talks, have an extensive menu of options for increasing tax bills. Link

* Deal makers scramble as cliff nears. Telis Demos and David Benoit – The Wall Street Journal. Deal makers and their clients are hustling to sell chunks of stock or whole companies before possible tax increases in the new year. The threat of losing gains to the tax man has some companies, private-equity shops, venture capitalists and corporate insiders looking to book profits in the waning days of the year. Link
* Charities fight to keep tax break on donations. Naftali Bendavid – The Wall Street Journal. Charitable deductions are again in the cross hairs as Washington tries to avert tax increases and spending cuts. After years of successfully fending off such efforts, nonprofits worry this time could be different. Link

* For small businesses, more than income tax rates are at stake in deficit talks. Robb Mandelbaum – The New York Times.
Since the recession, Congress has allowed companies to expense more investment under Section 179, but the cap fell sharply in 2012, and is scheduled to fall sharply again in 2013, to just $25,000. Link

* Big companies set to divulge tax details. Vanessa Houlder – The Financial Times. Big companies are set to divulge more details of their tax affairs as they try to fend off pressure over aggressive tax planning from members of parliament, investors and the media, according to a leading firm of advisers. KPMG, the professional services firm, said there had been a “sea change in mood” towards tax disclosures after intense public criticism of the low corporate tax payments of some multinationals. Link

Essential reading: Mortgage-interest deduction could be in play, and more

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

* Mortgage-interest deduction could be on the table in ‘fiscal cliff’ debate. Brady Dennis – The Washington Post. As Congress and the White House negotiate the first major rewrite of tax laws in decades, changing the generations-old mortgage-interest deduction — which costs the government roughly $100 billion a year — has gone from far-off possibility to part of the conversation. Link

* Energy: The next big idea. Ed Crooks – The Financial Times. One key factor in many energy company deals is the master limited partnership (MLP) structure: a tax-privileged structure, protected under 1987 legislation that allows its use for companies in a handful of industries, including natural resources. As the U.S. frets about the approach of the fiscal cliff, there has been speculation that MLPs’ tax-favored status could be under threat. Link

* Obama is flexible on highest tax rates. Damian Paletta and Carol Lee – The Wall Street Journal. President Barack Obama signaled he wouldn’t insist tax rates on upper-income Americans rise to Clinton-era peaks as part of a deficit-reduction deal. The new clarity of the White House position marks a potentially important moment in Washington’s effort to figure out how to handle tax rates that are due to snap higher next year. Link

Goldman, Moody’s bring some cheer; can the govt build on it?

A battered government has some good news to cheer this week. First, rating agency Moody’s kept the country’s rating outlook at stable, providing a breather after two other global firms downgraded it to negative.

Goldman Sachs on Thursday upgraded Indian equities to ‘overweight’ from ‘market-weight’. The Wall Street investment bank has cited a recovery in growth and inflation moderation going ahead as reasons for its upgrade. It has set an end-2013 end target for the Nifty at 6,600 points, a 14 percent upside from current levels.

And there’s some more good news. Goldman said that economic growth is likely to accelerate to 6.5 percent in 2013 backed by favourable external sector demand outlook and a pick-up in domestic reforms.

Essential reading: Philippine tax sheriff takes aim at cheats, and more

Philippines’ Bureau of Internal Revenue Commissioner Kim Henares inspects her target board during target shooting, Manila, October 26, 2012. REUTERS/Romeo Ranoco.Welcome to the top tax and accounting headlines from Reuters and other sources.

* Philippine tax sheriff takes aim at cheats to hit target. Karen Lema – Reuters. The Philippines’ chief tax collector is constantly thinking about targets. Sometimes she picks up an assault rifle and hits them. Link

* ADT sees low tax rate bolstering cash. Bob Tita and Saabria Chaudhuri – The Wall Street Journal. ADT Corp. predicted that a prolonged stretch of low taxes will help it generate cash, as the home-security service reported a 1.1 percent rise in fiscal-fourth-quarter profit. The company forecast that its actual cash tax rates will be 5 percent to 8 percent through 2019, even though its income statement will reflect rates of 36 percent to 38 percent. Link

Essential reading: On ‘fiscal cliff,’ both sides lay groundwork, and more

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

* On ‘fiscal cliff,’ both sides lay groundwork for debate’s next phase. Zachary Goldfarb and Lori Montgomery – The Washington Post. Private talks between President Obama and top congressional leaders in search of a deal to avoid the year-end “fiscal cliff” are accelerating, officials said Monday, even as the president began ramping up pressure on Republicans to extend tax cuts for the middle class. Link

* Efforts to curb Social Security face resistance. Robert Pear – The New York Times. President Obama’s re-election and Democratic gains in Congress were supposed to make it easier for the party to strike a deal with Republicans to resolve the year-end fiscal crisis by providing new leverage. But they could also make it harder as empowered Democrats, including some elected on liberal platforms, resist significant changes in entitlement programs like Social Security and Medicare. Link

* Congressional proposal could create ‘bubble’ in tax code. Nate Silver – The New York Times. One idea being floated by Congressional negotiators is hard to defend from the standpoint of rational public policy making. Its arithmetic could require that the 300,000th dollar of income was taxed at a rate of about 50 percent – even while the three millionth dollar of income, or the three billionth, was taxed at a lower 35 percent rate instead. Link

Talking straight with money managers, policy makers and econ gurus

By Matthew Goldstein and Jennifer Ablan

We may not be TV people but there’s something to be said for just sitting down and doing a video interview to discuss the big issues of the day. And that’s just what we did as part of this year’s Reuters Investment Outlook Summit and it’s something we hope to keep doing as  a regular feature going forward into the new year.

In advance of this year’s summit, we did videos with noted short-seller Carson Block, bond guru Dan Fuss, OWS bank leader Cathy O’Neill, FBI heads April Brooks and David Chaves, Avenue Capital’s Marc Lasry, economist Henry Kaufman and Steven Gluckstern of eminent domain fame. The videos were frank discussions and to make them seem more natural we went outside the environs of our Reuters newsroom in NYC and conducted them in places like the  middle of Times Square, an ice ream shop and a park.

But best of all these videos broke some news. For instance, we learned the FBI is now using Twitter as an investigative tool and that Carson Block is thinking about starting a short only hedge fund.

Eminent domain or principal reductions, the bottom line is reducing mortgage debt

By Matthew Goldstein and Jennifer Ablan

It’s been almost six months since we first reported on the plan by Mortgage Resolution Partners to find a community willing to use eminent domain to condemn and restructure underwater mortgages and pay a handsome fee to the private investment group for overseeing this process. The proposal has generated a lot interest, debate and heat, but so far  no community is yet willing to go down this road.

Still, Steven Gluckstern, chief executive of the San Francisco-based group, said he’s confident that by early next year some community–most likely one in California–will go forward with the idea of condemning underwater mortgages and rewriting them so cash-strapped homeowners can afford the payments and stay in their homes.

But Gluckstern, in an interview with ReutersTV as part of the Reuters Investment 2013 Outlook Summit, was also a bit realistic and said if nothing gets done in the first-half of next year it may be time for his group to pack it in. In the interview, Gluckstern said he and his investors were a little taken aback by the organized opposition from investors in mortgage-backed securities, who would take a financial hit in any condemnation proceeding.

Essential reading: Consensus on increasing tax revenue, a wide gulf on how to do it, and more

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

* ‘Fiscal cliff’: Consensus on increasing tax revenue, a wide gulf on how to do it. Lori Montgomery – The Washington Post. For the first time in decades, a bipartisan consensus has emerged in Washington to raise taxes. But negotiators working to avert the year-end “fiscal cliff” remain far apart on crucial details, including how taxes should go up and who should pay more. Link

* Geithner to play key negotiation role. Damian Paletta – The Wall Street Journal. Timothy Geithner joined the Obama administration during a crisis. He’s hoping not to leave during one. The White House has tapped the Treasury secretary as its lead negotiator in deficit-reduction talks with Congress. Link

* Tax moves to make now. Laura Saunders – The Wall Street Journal. The annual scramble to make smart tax moves before Dec. 31 is proving especially vexing this year. Huge questions remain unanswered even for the 2012 tax year. Link


Some important tax and accounting events in the week to come:

Tuesday, Nov. 27  * U.S. Senator Dick Durbin, Majority Whip, speaks on the fiscal showdown and deficit reduction. 11:30 a.m. ET, Center for American Progress Action Fund. Washington.

Wednesday, Nov. 28 * Public Company Accounting Oversight Board open meeting on 2013 budget and strategic plan. Washington.

* Lawyers from the tax division of the U.S. Departments of Justice and the Treasury, as well as the private sector join panel discussion of careers in tax law. 12 noon ET, D.C. Bar Conference Center. Washington.

Essential reading: Congress seeking ways to raise taxes but leave tax rate as is, and more

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

 * Seeking ways to raise taxes but leave tax rate as is. Jonathan Weisman – The New York Times. Congressional negotiators, trying to avert a fiscal crisis in January, are examining ideas that would allow effective tax rates to rise for the wealthy without technically raising the top tax rate of 35 percent. They hope the proposals will advance negotiations by allowing both parties to claim they stood their ground. Link  

* Boehner comments show tough road ahead for ‘fiscal cliff’ talks. Roberta Rampton – Reuters. New comments from top Republican lawmaker John Boehner slamming healthcare reforms illustrate how hard it will be for Washington to reach a deficit reduction deal when talks resume next week, analysts said on Thursday. Link  

* Higher gas-tax idea joins fiscal-cliff talks. Josh Mitchell – The Wall Street Journal. States and business advocates are maneuvering to use the current budget negotiations in Washington to win support for a long-sought increase in the federal gasoline tax—one of a grab bag of proposals various groups are seeking to tuck into a deal. Link