Tax News Nov. 15-19

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News
FRIDAY
Weekend Votes Unlikely for Senate; Tax Cuts Still Up in the Air
Senate Democrats seemed likely to ward off working into the weekend with a vote on food safety legislation Thursday night, but they still had no clear path forward on extending Bush-era tax cuts.
Euro Zone: Careful What You Wish for on Irish Taxes
European politicians tempted to take aim at Ireland's ultralow 12.5% corporate-tax rate might want to think again, and not only because their Irish counterparts seem willing to defend it to the death.
Once Routine, Tax Breaks Pose Test
Senate Democrats plan to push a bill next month that would cut at least $60 billion in taxes by extending breaks for an array of individuals and businesses, setting up an early test of Republicans' deficit-cutting resolve.

THURSDAY
South Korea’s Bond Tax May Spur Other Nations to Raise Barriers
South Korea’s revival of a tax on foreigners investing in its bonds may prompt more emerging markets to act to curb fund inflows driving up their currencies.
Corporate tax threat to Irish industrial policy
Geographically on Europe’s edge, and generally labelled “peripheral” in analyses of the eurozone...

WEDNESDAY
Another Deficit Plan Targets Taxes
The report, co-authored by Democratic budget veteran Alice Rivlin and former Sen. Pete Domenici (R., N.M.), follows a separate proposal last week by the two chairmen of President Barack Obama's deficit commission. The many similarities between the two offer a window into the types of proposals that might win backing as Washington launches into what is likely to be a protracted debate on deficit cutting.
Efforts to Extend Bush-Era Tax Cuts Falter as Talks Are Delayed
President Barack Obama and congressional leaders postponed until Nov. 30 a White House meeting, previously scheduled for tomorrow, to negotiate whether to extend lower tax rates for all taxpayers or just those with incomes of $250,000 or less.
Geithner Expects a Deal on Tax Cuts
Treasury Secretary Says Reaching an Accord Is 'Not Rocket Science'; Temporary Extension of All Bush-Era Rates Seen as Likely

TUESDAY
Bush tax cuts: Cutting through the noise
If the tax cuts do expire and tax rates go up, you may notice the difference in your wallet as early as January, when your employer starts to withhold more taxes from your paycheck.
New Yorkers Favor Higher Taxes Over Spending Cuts, Poll Shows
More than half of New York state voters oppose spending cuts in education or health care, “even if it means raising taxes,” according to a Siena Research Institute poll.

MONDAY
White House, GOP look for middle ground on taxes
The White House and Republican lawmakers set the terms of a looming tax debate Sunday, coalescing around a possible temporary extension of existing income tax rates that would protect middle-class and wealthy Americans from sharp tax increases next year.
Bush tax cuts: What nobody is talking about
Many tax policy watchers are nevertheless convinced that ultimately lawmakers will opt for a temporary one- or two-year extension for everyone.

Economist Comments
FRIDAY
Soda Tax, Will it Actually Help Lower Obesity Rates?
...overall diet and exercise are hugely important and some lucky souls (good genes!) can ingest extra calories with impunity, anyway.
There Ain’t No Such Thing as a Tax Subsidy, Either
Until someone comes up with something pithier than “tax revenue forgone due to targeted tax preferences,” I’ll stick with that.

THURSDAY
Allyson Schwartz: Extend cuts up to $500,000
Schwartz’s proposal is less generous than others circulating on Capitol Hill, including ideas to extend the tax cuts for earnings up to $1 million.
The Done-Nothing 111th and Taxes
Congress could have created tax certainty for 2010 and the years ahead, but it has failed to do so, so far.

WEDNESDAY
Wrong on Taxes
[Hubbard] does regret that the plan isn’t more radical in moving toward a consumption-based tax rather than an income-based one, and he regrets that it proposes to treat capital gains and dividends as ordinary income, since this move continues the tradition of favoring consumption over saving and investment.
Tax Hikes and the Small Business Job Machine
The president says only the rich will be hit with the highest rates. Nonsense.
Lifting the Payroll Tax Cap Will Only Increase Spending
There is roughly $2.5 trillion in the Social Security Trust Fund, made of the extra payroll tax collected from taxpayers since 1983. However, the Social Security Trust Fund is required by law to purchase Treasury securities with its tax income, which means that the fund contains $2.5 trillion worth of IOUs. Treasury has long spent this $2.5 trillion as part of the general fund — so, in other words, since 1983, Social Security taxes have been subsidizing other parts of the federal government. More importantly, it means that if we put more money into the trust funds, it will just increase the federal government’s spending power.

TUESDAY
Taxpayers Taking a Hit in Struggles of Fannie Mae, Freddie Mac, and It Could Get Worse
"It's probably likely to be closer to $500 billion by the time all of this is finished," David Johns of the Heritage Foundation said. "And you and I get to pay that."
Left, Right and Wrong on Taxes
As Messrs. Bowles and Simpson aptly demonstrate, we are in a difficult situation in large part because we have designed entitlements for a welfare state we cannot afford. And, perhaps less obviously, they show how we have used the tax code as a vehicle for special-purpose spending that weakens both the efficiency and fairness of our tax system.
Getting 'Tax Cuts For Rich' Backward
The Obama administration's problem is it's so focused on the distribution of the golden eggs, it's neglected the health of the goose.

MONDAY
What will the lame duck Congress do with the Bush tax cuts?
The returning Congress has only two must-do jobs. It needs to pass a stopgap spending bill to keep the government functioning into next year, and it must address a slew of expiring tax cuts.
Obama: “I Want to Make Sure That Taxes Don’t Go Up”
Of course, the problem is that President Obama does want taxes to go up for business owners, corporate executives, and investors on January 1, the very people whose decisions have the most immediate impact on economic growth and job creation.
New governors: Budget cuts not tax hikes
These newly elected officials, along with the incumbents, are staring at budget gaps totaling least $72 billion for fiscal 2012, which starts in July in most states, according to the state legislatures group.
Reduce out-of-control spending now
Under the Democrats’ one-party reign the last two years, the size of government has exploded and the United States has added an unprecedented $2.7 trillion to the national debt, amounting to nearly $5 billion dollars a day.

Blogs
FRIDAY
Tariffs of Obama-Nation
Maybe this wouldn’t be such a horror story if there was any economic evidence that tariffs were good for an economy.
A Solution to the Tax Mess
Scoreboard has the answer to the tax mess. Put off any tax increase for at least three years, making it a referendum for the 2012 elections.

THURSDAY
Soda Taxes Are Still Not a Substitute for Real Tax Reform
It is ironic then that BPC would suggest pop taxes which have been repeatedly shown to be unfair, unfavorable to economic growth, and impose different tax burden on people with the same income.
Film Tax Credits Aren’t Big Job Generators
In Massachusetts, each job created by the tax credit and filled by a state resident cost $88,000 in tax revenue. In Michigan, $44,561 in revenue is lost for every local job created in connection with the tax credit.
Vero on Tyler on the capital gains tax
"...the incidence of capital gains taxes on new capital is largely, through incidence, bounced onto consumers and labor."

WEDNESDAY
GM Benefits from Tax Law Ruling
A WSJ article of November 3, 2010, by Randall Smith and Sharon Terlep, points to a little-noticed IRS ruling on GM’s tax-loss carryforwards from years prior to the bailout. The amount at issue is potentially $45 billion.
Bowles-Simpson plan raises everybody's taxes
In 2015, the lowest earners would face an average cut in their after-tax income of 3.4 percent or about $400. Middle-income households (those earning an average of about $60,000) would see their after-tax incomes fall by 4 percent or about $1,900. On the other end of the economic food chain, the top one percent of earners (who earn an average of about $2 million) would lose about $77,000 (5.3 percent) while the top 0.1 percent would see their after-tax incomes cut by nearly 8 percent, or close to $500,000.

TUESDAY
Agony Over the Property Tax Cap
At the New Jersey League of Municipalities convention to be held in Atlantic City tomorrow officials will be focused on a central problem, “How are we going to run our towns while keeping property tax growth below 2 percent?”
The Deficit Commission's Plan for Personal Income Taxes
While the Bowles-Simpson zero plan tax proposal lists the tax rates they believe should apply, they didn't specify at what income levels they would apply.

MONDAY
More Money Matters: The Debt Commission Budget Cuts You Haven’t Heard
The United States government is the largest property owner in the country, with 1.2 million buildings, structures, and plots of land totaling 650 million acres. The Debt Commission says 64 thousand of those buildings and structures are either excessive, underutilized, or vacant, and should be sold to the highest bidder.

Reports
WEDNESDAY
Staff Commentary: The Rationale for Low Capital Gains Tax Rates
A number of dynamic analyses have found that the negative economic feedback effects of higher capital gains tax rates mean that the scheduled tax hikes will bring in little to no additional revenue, and could even increase budget deficits.

MONDAY
Punitive Damages and the Tax Code: Punishing Business and the Economy
...eliminating the deductibility of punitive damages will encourage plaintiffs’ lawyers to file even more lawsuits, further clogging dockets across the country and increasing the cost of litigation.
Obama’s Tax Hikes on High-Income Earners Will Hurt the Poor—and Everyone Else
Senior citizens are hurt the most by the imminent tax increases because retired people rely disproportionately on dividend pay­ments for their income.