Tax Break

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

* China minister calls for tax changes to boost spending. Liyan Qi – The Wall Street Journal. China needs to improve its tax system to stimulate spending, Finance Minister Xie Xuren said Thursday. The central government will study measures to expand a value-added tax trial, and improve China’s consumption tax to “guide reasonable consumption” more effectively, Mr. Xie said in a statement on the ministry’s website. Link

* Obama stands firm against extending tax cuts for rich. Caren Bohan and Thomas Ferraro – Reuters. President Barack Obama’s Democrats traded shots with Republicans on Wednesday about how best to avoid a year-end “fiscal cliff,” as the administration insisted on the need to let tax cuts for wealthier Americans expire as scheduled on January 1. The prospect of higher taxes and automatic spending cuts that kick in next year have spurred calls for Obama to temporarily extend all of the Bush-era tax breaks to coax Republicans into a sweeping debt deal, but the White House stood firm. Link

* Bill Clinton becomes Romney’s favorite surrogate for Obama. Sam Youngman – Reuters. In the space of five days, Bill Clinton went off message on two important issues – tax cuts and Romney’s time as a private equity executive – raising questions about the former president’s motives. This week, Clinton said he favored a temporary extension of George W. Bush-era tax cuts for all Americans, not just the middle class, as Obama prefers. Link

* Scottish Power tests US tax breaks on interest. Kim Dixon – Reuters. The U.S. Tax Court is expected to issue shortly its first major decision in years on the tax deductibility of interest in certain corporate debt transactions in a case that pits the UK’s Scottish Power against the Internal Revenue Service. The IRS is challenging $932 million in interest deductions taken by the power utility on $4 billion in intercompany notes issued between company units. The tax collector argues that the transactions should be treated as equity, which would nullify the deductions taken by the Spanish-owned company. Link

* Tweaking tax code could spur green energy: senator. Roberta Rampton – Reuters. A freshman Democratic senator thinks he may have found a way to encourage investment in wind, solar and biofuel projects without sapping too many taxpayer dollars or injecting new venom into a bitter partisan battle over energy incentives. Chris Coons will introduce legislation on Thursday that would allow a broad range of renewable power generation and transmission projects to qualify for a tax structure used widely by pipeline and other energy-related companies. Link

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

* How Apple sidesteps billions in taxes. Charles Duhigg and David Kocieniewski – The New York Times. As it stands, Apple Inc paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies. Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year. Link  

* KPMG faces inquiry over rescue of HBOS. Helia Ebrahimi – The Sunday Telegraph. Accountancy giant KPMG could face a formal investigation by the UK’s accountancy watchdog for its conduct leading up to the rescue of HBOS by Lloyds TSB. HBOS whistleblower and former head of risk, Paul Moore, has referred KPMG to the regulator in a formal complaint. Moore also has written to Treasury select committee chairman Andrew Tyrie, seeking his support. Moore’s complaint comes a week after it emerged that the former head of HBOS’s corporate bank, Peter Cummings, is to fight a seven-figure fine handed out by the Financial Services Authority for his part in the collapse of the bank. Link  

* Amazon seals sales tax deal with Texas. Barney Jopson – The Financial Times. Amazon has struck an unexpected deal with Texas to start collecting sales tax from consumers at the start of July, in a further sign of its readiness to accept a levy that it had long opposed at state level. Under the deal Amazon will invest at least $200 million to build distribution centers in Texas and create at least 2,500 jobs over the next four years while beginning to collect sales tax on July 1. Link  

A rainbow appears over hotels on the Las Vegas Strip in Las Vegas, Nevada, REUTERS/Ethan Miller

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

* Amazon agrees to begin collecting sales taxes in Nevada.  The Wall Street Journal. Amazon.com Inc. has agreed to collect a sales tax on items sold in Nevada beginning in 2014, or earlier should proposed federal legislation mandate that online retailers collect sales taxes. The online retailing giant said it will collect taxes in the same manner as traditional brick-and-mortar retailers, an agreement that is expected to raise at least $16 million a year for the state, according to the Las Vegas Sun, which initially reported the news. Link

* German cabinet approves Swiss tax deal. Madeline Chambers – Reuters. German Chancellor Angela Merkel’s cabinet passed a revised deal to tax secret deposits in Swiss bank accounts on Wednesday, betting that the opposition Social Democrats (SPD) will drop their objections and back the accord in parliament. Switzerland and Germany hammered out the new deal earlier this month after a diplomatic spat that lasted years. Link

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

* Lawmakers consider changing tax breaks on retirement savings. Lori Montgomery – The Washington Post. The painful trade-offs of tax reform came into sharper focus on Tuesday as lawmakers began considering reducing or otherwise changing specific tax breaks, starting with laws that allow millions of Americans to avoid taxes while saving for retirement through 401(k) plans, employer pensions, IRAs and other programs. Link

* White House says Obama would veto Republican tax cut. Alister Bull – Reuters. The White House said on Tuesday that President Barack Obama would veto a small business tax cut proposal by Republicans in the House of Representatives that his Democrats complain is biased toward helping the rich. Link

* Senate to take up Simpson-Bowles deficit plan. James Politi – The Financial Times. The centrist Democrat who chairs the Senate budget committee will present legislation on Wednesday to implement the recommendations of a 2010 bipartisan debt reduction panel, in a surprise move to force the upper chamber to consider the contentious plan. In a sign that the Simpson-Bowles plan is unlikely to garner much traction in the Senate, Republicans mocked the move. Link

U.S. Park Police Officer Calvin Covington with his horse Harper mails his family's income tax returns at a mobile post office near the Internal Revenue Service building in downtown Washington. REUTERS/Jonathan

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

* Romney’s remarks on limiting tax deductions draw fire. By Sam Youngman and Donna Smith – Reuters. After Mitt Romney was overheard telling supporters at a private fundraiser in Florida over the weekend that he might seek to limit tax deductions for mortgages and eliminate the Department of Housing and Urban Development (HUD), aides said on Monday that Romney was simply throwing out ideas, not outlining policy to help offset his proposal to slash all U.S. tax rates by 20 percent. Link  

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

* Romney specifies deductions he would cut. Sara Murray – The Wall Street Journal. In order to offset the 20 percent income tax cut he has proposed for all taxpayers, Romney would eliminate or limit for high-earners the mortgage interest deduction for second homes, and likely would do the same for the state income tax deduction and state property tax deduction. He also said he would look to the Department of Education and the Department of Housing and Urban Development for budget cuts. Link

* Q+A: The ‘Buffett Rule,’ a minimum tax on the rich. Kim Dixon and Patrick Temple-West – Reuters. President Barack Obama and congressional Democrats are laying a political trap for Republicans to be sprung on Monday when the U. S. Senate is slated to vote on the proposed “Buffett Rule,” which would slap a minimum tax on the highest-income Americans. Link

* For Americans abroad, taxes just got more complicated. David Jolly – The New York Times. Americans overseas face a new form that will add to the hassle of tax time for many and, critics say, set up the unwary for penalties. The new requirement comes courtesy of the Foreign Account Tax Compliance Act, or FATCA, an effort to crack down on offshore tax evasion by U.S. citizens. Link

U.S. President Barack Obama and Vice President Joe Biden in Washington February 21, 2012. REUTERS/Jason Reed

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

* Obamas and Bidens to release tax returns. Mark Landler and Jim Rutenberg – The New York Times. President Barack Obama and Vice President Joseph Biden plan to release their own income tax returns on Friday, along with a statement calling on Republican presidential contender Mitt Romney to do the same, according to an Obama campaign official. Link

* Swiss can’t offer more to Germany, US in tax row-fin min. Catherine Bosley – Reuters. Switzerland cannot make further concessions to Germany and the United States in a dispute over untaxed funds in secret bank accounts, Swiss Finance Minister Eveline Widmer-Schlumpf was quoted as saying in a newspaper interview on Friday. Widmer-Schlumpf also said France and Italy were likely to be watching these developments before themselves seeking agreements to claw back taxes. Link

Feeling cranky about your taxes, ahead of the April 17 deadline?

The Obama campaign wants to remind you of your tax rate, and how it compares with that of millionaire Mitt Romney, in a jab at one of the wealthiest men ever to run for president.

The campaign rolled out an online calculator letting individuals compare their tax rates to Romney’s, the presumed Republican nominee to face President Barack Obama in the Nov. 6 election.

Put $30,000 into the calculator as your annual income income and a box pops up showing such a households pays about 18.6 percent of their income in taxes. That’s followed by a box showing Romney’s 2010 tax rate of 13.9 percent.

U.S. President Barack Obama arrives to speak about tax fairness and the economy at Florida Atlantic University, April 10, 2012. REUTERS/Kevin Lamarque

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

* Soaking the rich might not be a panacea. Vanessa Houlder – The Financial Times. The super rich are under fire across much of the developed world. U.S. President Barack Obama is on the road this week promoting the “Buffett rule”, a minimum tax on millionaires. In France, François Hollande is proposing a 75 per cent tax rate on the rich. In Britain, George Osborne, chancellor, has expressed shock at evidence showing the scale of tax planning by some of the wealthiest people in the country. Link

*Obama to enlist millionaires in Buffett Rule campaign. Margaret Talev – Bloomberg News. President Barack Obama is intensifying his campaign for higher taxes on top U.S. earners, casting the issue against Republican opposition as one of fairness and support for the middle class. Link

A hockey player skates on Lake Louise in the Canadian Rocky Mountains REUTERS/Shaun Best

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

* Obama assails Republican budget plan, aims at Romney. Alister Bull – Reuters. President Barack Obama accused Republicans on Tuesday of favoring the rich with a “radical” budget plan that focuses on cutting popular programs, which the White House sees as a potent vote winner for Democrats in this year’s election. The Republican blueprint proposes broad tax reform, including closing loopholes to raise revenue, while advocating a simplification in the tax code and lowering the top tax rate. White House officials said the goal of Obama’s speech was to hammer home a message that if Republicans win in November, their budget is coming to America. Link

* KKR’s Kravis says U.S. tax overhaul needed. Greg Roumeliotis – Reuters. Henry Kravis, the co-chief executive of private equity group KKR & Co LP, said on Tuesday that a reform of the tax system was necessary to jumpstart the U.S. economy. On Monday, one of Kravis’s peers, David Rubenstein, billionaire co-founder of Carlyle Group LP, defended the lower rate of taxation enjoyed by private equity managers, arguing they are merely following the laws that Congress wrote. Kravis, whose net worth as of March 2012 was $4 billion according to Forbes, refrained from making a prediction about the future tax treatment of carried interest and said he tried to keep his firm out of politics. Link