Essential reading: Groups test political tax rules, and more

May 28, 2013

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

 * Groups targeted by IRS tested rules on politics. Nicholas Confessore and Michael Luo – The New York Times. A close examination of some conservative groups and others reveals an array of election activities that tax experts and former IRS officials said would provide a legitimate basis for flagging them for closer review. Link  

* High-end health plans scale back to avoid ‘Cadillac tax’. Reed Abelson – The New York Times. Companies hoping to avoid the tax are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care. Link  

* Former IRS chief recalls defying Nixon. David Dykes – USA Today. In the early 1970s, when embattled President Richard Nixon sought to use the Internal Revenue Service as a weapon to investigate his enemies, the administration turned to Johnnie Mac Walters, head of the tax agency, to do the dirty work. Walters, now 93, said he refused. Link  

* Microsoft’s Gates supports corporate tax scrutiny. Enda Curran – The Wall Street Journal. Microsoft Corp. co-founder Bill Gates said he supports a wide-ranging debate on corporate tax, as governments in the U.S. and elsewhere step up scrutiny of the tax practices used by multinationals on their overseas income. Link 

* Small islands enjoy big rewards from their role as tax havens. Vanessa Houlder – The Financial Times. Fifty years ago, many of the small islands that now play a central – and controversial – role in the global economy, were desperately poor. The mosquito-ridden Cayman Islands was dependent on remittances from seamen. Link  

* Tax avoidance debate ‘risks harming investment into UK’. Ferdinando Giugliano – The Financial Times. Britain’s manufacturers have warned the government that the current debate on tax avoidance could undermine the efforts to attract investment to the UK, ultimately hindering economic growth. Link  

* China plans to cut tariffs for Swiss watches. Laurie Burkitt – The Wall Street Journal. China plans to cut import duties by 60 percent on Swiss watches in the next decade as part of its coming free-trade agreement with Switzerland, a move that may be good news amid a slowdown in China that has recently weighed down the watch industry. Link

* Getting to tax reform. Bruce Bartlett – The New York Times opinion. The furor over the Internal Revenue Service and accusations that it targeted conservative groups almost certainly means there will be bipartisan legislation to make sure this doesn’t happen again, thus providing a legislative vehicle for tax reform. Link

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