Tax News Oct. 18-22

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News
FRIDAY
Despite State Tax Credit California Home Sales Decline
California home sales declined more than 17% in September on a year-ago basis according to a San Diego-based real estate research firm.

THURSDAY
America's Best Days
Only 25% Prefer a Government With More Services, Higher Taxes
Cash-strapped governments ramping up tax-collection efforts
Together, Washington-area localities are owed more than $40 million in overdue real estate taxes from fiscal 2010 alone. Additional millions in unrecovered fines, fees and personal property tax revenues compound those shortfalls.
Tax dreams of drug decriminalization
Supporters of legalization claim that treating marijuana like other legal vices – for example, tobacco and alcohol — could generate $1.4 billion in badly needed new tax revenue for California. This is more than alcohol and tobacco cigarette taxes, combined, now generate.

WEDNESDAY
State Tax Revenue in U.S. May Increase Third Straight Quarter, Study Shows
Even with three quarters of gains, state revenue was still 15 percent lower in the second quarter than during the same period in 2008, according to the report. For the year ending in June, which corresponds to the budget years in most states, tax collections dropped by $19 billion, or 2.7 percent, from the prior year and were down $84 billion from 2008.

TUESDAY
From Obama, the Tax Cut Nobody Heard Of
What if a president cut Americans’ income taxes by $116 billion and nobody noticed?
Companies in appeal for US tax amnesty
JPMorgan research estimates that 30-40 per cent of the almost $1,000bn in cash held by non-financial S&P 500 companies is in foreign jurisdictions.

MONDAY
White House Stands by Call for Tax Hike on Wealthy
David Axelrod, the president's senior adviser, said Sunday that the Obama administration still wants the tax cuts extended for middle-class families making up to $250,000.
Has Obama Raised Taxes? That Depends on Whom You Ask
Americans for Tax Reform (ATR) point to the cost of Obama's health care legislation as proof that the president has violated his pledge not to raise taxes on families earning less than $250,000 and on individuals earning less than $200,000.

Economist Comments
FRIDAY
Obama, Tax Hikes, Foreclosures and Downward Spirals
I have long said that raising taxes in a down economy is like throwing a drowning man an anchor. Given Obama’s “don’t need it” view, you can amend that to say “it’s like throwing a drowning man an anchor and telling him to swim harder.”
U.S. Debt Is Child Abuse: Laurence Kotlikoff, Richard Munroe
Two tax hikes were passed this year and another is likely. These new taxes are supposedly being levied just on the rich. But over time, they will hit most of our kids. And they are just the beginning of our children’s and grandchildren’s tax trauma, given Congress’s inability to curb spending.
The IRS’s Tax Rate on Google’s Foreign-Source Income Is 2.4 Percentage Points Too High
...the bigger issue is that the IRS should not be taxing economic activity that occurs outside U.S. borders. This is a matter of sovereignty and good tax policy.

THURSDAY
An Unthinkable Tax Code
Today, with shrinking the federal budget deficit ever more urgent, politicians are unlikely to get rid of the income tax and replace it with the VAT. Instead, as has happened in European countries, they are talking about keeping the income tax and layering the VAT on top of it.

WEDNESDAY
The Overseas Profits Elephant in the Room
There's a trillion dollars waiting to be repatriated if tax policy is right.
EDITORIAL: The Democrats' tax burden
Mr. Cooper's subtext was that the president ought to get more credit for his beneficence. What the article failed to grasp is that Mr. Obama doesn't deserve any gratitude for minimal tax cuts when his policies are responsible for dramatically raising taxes much more.
The Small Business Myth
When the government tries to help small businesses, it hurts businesses (and taxpayers) of all sizes.
Tax Reform, Her Majesty's Style
At least the president hasn't suggested that we all send our salaries to the IRS, which would then send back to us however much it believed to be appropriate.

TUESDAY
Will Congress Take a Pass on the Estate Tax and Send Us Back to 2001?
According to The Hill newspaper "one issue is how to stop the estate tax from returning to pre-2001 levels, which means estates worth more than $1 million are hit with a tax that could be as high as 55 percent."
Tax Increase Would Kill Economic Growth, Jobs
According to the Treasury Department, 8 percent of small businesses earn enough to pay at the top two income-tax rates, but those businesses earn 72 percent of all small-business income. They also pay 82 percent of all income taxes paid by small businesses.
Better tax treatment would help free trapped cash
If $600bn already at hand domestically, an extremely favourable debt market and ultra-low interest rates haven’t done it so far, the issue is clearly not money but fear of the uncertain economic outlook.
Washington State's Union Tax
Bill Gates Sr. supports a state income tax on wealthy Washingtonians, but public unions are the real muscle behind the initiative.
The Story of the 1990s Economy
...it’s worth taking a brief look at the actual engine of 1990s growth: improved productivity in information technology (IT) manufacturing and increased investment in IT equipment. The research examining the IT-led expansion from 1995-2000 shows it to be a unique and surprisingly unanticipated event that has no bearing on the tax decisions confronting Congress today.

MONDAY
KNIGHT: Reinter the death tax
The death tax was reduced to zero this year but will lurch from its grave on Jan. 1 and haunt small businesses worth $1 million or more. The 55 percent rate, if not repealed, will destroy many family-owned enterprises.
Canada vs. U.S.: Where to set up shop
The S&P/TSX is trading at two-year highs, large corporations are flush with cash, Canadian trade with most parts of the world is up and consumers are spending on big-ticket items. So what's missing in Canada's economic recovery? Many experts will tell you a rebound in small- and medium-sized business activity.

Blogs
THURSDAY
The Deservedly Forgettable Obama Tax Cuts
The Obama tax cuts were not productive tax cuts. While Cooper does mention that Americans were allowed to take home slightly higher paychecks, he also completely fails to mention that the policy is temporary.
A 60% Estate Tax Rate Could Be Around The Corner
What’s the true federal estate tax rate next year? Anywhere from 41% to 60% depending how much you’re worth when you die, and bizarrely it’s not the wealthiest who are stuck paying the top 60% rate.
Hoover, FDR and Clinton Tax Increases: A Brief Historical Lesson
The obvious reason to prevent a tax hike by extending current tax rates is that doing so will prevent further economic harm to an already flat economy. How do we know that tax increases will cause economic harm? Three examples: 1932, 1937 and 1993.

WEDNESDAY
Americans Prefer Social Security Upper Income Benefit Reductions to Tax Hikes
...63% of Americans said they would support those spending cuts. On the contrary, 64% of Americans thought it was a bad idea to increase Social Security taxes for all workers.
NFIB calls for action on Bush tax cuts
The organization states that 75 percent of small businesses are taxed as individuals and will be negatively affected by the tax increase scheduled to occur on Jan 1.

TUESDAY
Taxhiker in Chief Takes On Social Security
In 2010, the first $106,800 of wage income is subject to the 12.4 percent Social Security tax. The president wants to lift the cap, effectively raising the top federal income tax rate on labor income to 53.2 percent.
Then and Now, Taxes
"In 2010-dollar terms, the “astonishing” tax year with the highest federal revenues – 1963 – Uncle Sam’s receipts totaled $756 billion. During the period 2000 through 2009, the year with the lowest federal revenues – 2009 – Uncle Sam’s receipts totaled $2.1 trillion – or 178 percent more real revenues than in 1963."

MONDAY
A Clever British Campaign against Higher Capital Gains Tax Rates
With Obama pushing for higher capital gains rate in America, it’s important to find the most persuasive ways of educating people about the damage of class-warfare tax policy.
Can You Name the Greatest President of the Past 100 Years?
"Coolidge’s commitment to low taxes came from his concept of property rights. He viewed heavy taxation as the legalization of expropriation."
The IRS, College Tax Credits and Congress’ Plain Writing Hypocrisy
The truth is, the IRS can’t produce forms, instructions, publications or tax returns understandable to ordinary Americans so long as the politicians keep piling on temporary and permanent credits, deductions and gotchas that make the tax code both erratic and nearly impossible to explain, understand or administer.
Raising Taxes Won’t Stimulate the Economy
...even if tax hikes on high earners did occur, the revenue generated would be lower than expected as a result of reduced economic growth. CDA’s simulation shows that the President’s plan would generate only 34 percent of the revenue predicted by the CBO’s static model.
Secondary Sources: Value Added Tax, Rich Spending, Trade Risks
A roundup of economic news from around the Web.
How Many Times Should We Rebate Payroll Taxes for Low Earners?
Over at e21, Chuck Blahous—the Bush White House’s point man on Social Security and now a public Trustee for Social Security and Medicare—discusses a Social Security reform proposal from the Committee for a Responsible Federal Budget, which is designed as a middle-ground plan that could achieve some level of consensus on reform
What’s the Biggest Tax Mistake That Might Be Made This Year? A Freakonomics Quorum
Consider the ingredients: a frail economy, a toxic political environment, looming hard deadlines and massive uncertainty in the business community — the perfect circumstances under which to write some great federal tax policy!

Reports
TUESDAY
Family Tax Returns in Doubt As Expiration Approaches for Bush and Obama Tax Cuts: Three Likely Policy Scenarios
Here we clarify the impact for taxpayers by calculating the tax bills of several hypothetical families in 2011 under the three likeliest policy scenarios.