Tax News Dec. 6 - 10

---

News
FRIDAY
Obama Weighs Multi-Year Effort to Overhaul Tax Code
President Obama has instructed his economic team to draft options to close loopholes and lower income-tax rates ahead of what would be a multi-year effort to overhaul and simplify the U.S. tax code, administration officials said Thursday.
Obama predicts success for tax deal
President Barack Obama said Friday he's confident that Congress will pass a compromise tax package despite the objections of House Democrats.

THURSDAY
Businesses racing against the tax clock
In December 2009, nearly 150 companies made extra payments. Experts expect this December to be a banner month and easily top those numbers.
Tax Plan Spurs Deal Making
The sweeping tax package negotiated by President Barack Obama and Republican lawmakers gained new momentum toward passage in the Senate, building pressure on balking House Democrats to accept the controversial deal.
Bush tax cuts 101: Would extension boost the economic recovery?
The short answer is yes. Forecasters anticipate that extending the Bush tax cuts, as well as other measures in the Obama-GOP deal, will breathe life into the economic recovery.
Yields Push Higher on Tax-Deal Fallout
Treasurys extended their slump on Wednesday, sending the 10-year yield to its highest since June, amid a steam of negative news for bonds.
Tax Deal Is Key to Avoid Recession, Obama Adviser Says
One of President Obama’s top economic advisers warned on Wednesday that the nation could slip back into recession if Congress did not pass the administration’s tax cut deal with Republicans, as the White House sought to press Democrats into backing the plan.
Estate-Tax Passage Is Likely
The plan put forward by Republicans and accepted by Mr. Obama would reinstate the estate tax at 35% for two years starting next year, with the first $5 million of a person's estate exempted.

WEDNESDAY
Tax cut deal and surprise stimulus - the cost
The compromise on the Bush tax cuts announced Monday night between President Obama and Republicans could cost between $700 billion and $800 billion if ultimately signed into law as is -- no sure thing given opposition from many Democrats.
Tax-Cut Deal Results in Turmoil for Bonds
The tax deal in Washington led investors to dump government bonds on Tuesday, with yields on Treasurys hitting their highest level in six months and municipal bonds getting hit by the sell-off and by the news that federal subsidies for local debt would not be extended.
Tax deal: Rich aren't the only ones who benefit
...other provisions in the $800 billion deal, including the payroll tax holiday and child tax credit, will greatly assist ordinary Americans. And those who are unemployed will benefit from an extension to file for federal jobless benefits through 2011.

TUESDAY
Payroll Tax Cut: A Short Primer
The proposed 2% rollback of individuals' payroll taxes used to fund Social Security is the latest iteration of an idea that's been kicked around for years as a way to supplement incomes and boost economic growth.
Debt Ceiling Enters Tax Debate
The outlines of a deal to prevent a walloping tax increase from taking effect on January 1 are becoming clearer and may also include a sooner-than-expected vote to raise the federal debt ceiling.

MONDAY
Tax Deal Within Reach
Cuts Could Be Temporarily Extended in Exchange for Unemployment Benefits.
Tax Fear May Move Bonuses Earlier
Congress is debating tax rates, and that has Wall Street nervously eyeing the calendar.
Obama Signals Openness to a Tax-Cut Deal
The U.S. Senate on Saturday defeated two attempts by Democrats to extend the Bush-era tax cuts for the middle class permanently.
In Interview, Bernanke Backs Tax Code Shift
The Federal Reserve chairman, Ben S. Bernanke, said in an interview broadcast on Sunday evening that rising inequality was eroding social cohesion and that Congress could help economic growth by making the tax code more efficient.

Economist Comments
FRIDAY
Pelosi and the Hostage Fakers
Republicans shouldn't make a single new tax concession.
Some Year-End Tax-Planning Tips
If President Obama's tax-cut compromise passes Congress, the investor class can breathe a sigh of relief, says Wall Street tax pro Bob Willens.

THURSDAY
Bond Vigilantes May Thwart Tax Deal
Higher interest rates could offset effect of proposed fiscal measures.
Cheers To Obama On Taxes
A permanent tax plan would have given consumers and businesses more confidence.

WEDNESDAY
Ireland's Low-Tax Path to Fiscal Health
Parliament has endorsed the 12.5% corporate rate as 'an indispensable tool' for job growth.
Tax cut deal: Why it isn't enough
Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University in Arlington, Va., argues that the biggest shortfall of the tax cut compromise is that there was nothing done to address the nation's mammoth budget deficit.
A Taxpayer Bonus
One undiluted piece of good news in the Obama-GOP tax deal is that an extension of the Obama Administration's Build America Bonds (BAB) program is not included.
DeMint Says He Will Filibuster Tax Compromise
In explaining his opposition, DeMint cited the lack of permanency in tax rates, as well as a provision to extend unemployment insurance.
The Bush Tax Cuts Never Went Far Enough
A permanent reduction in capital taxes would increase productivity and wages. Postwar Britain shows how higher capital tax rates reduce investment and damage economic growth.
While His Base Rages, Obama Faces Tax-Cut Reality
The tax deal is certainly better for the economy than political gridlock over extending the tax cuts. How much better is uncertain.
Obamanomics Takes a Holiday
A two-year tax reprieve is better than current law but far from ideal.
The Tax Deal: Budget and Tax Mavens React
Conservative analysts like it; many others don't.

TUESDAY
What will deal on Bush tax cuts mean for the federal deficit?
Extending the Bush tax cuts will prevent as much as $300 billion a year from going into federal coffers, continuing the current federal deficits.
Deal Adds to Uncertainty, Debt
The great uncertainty, bemoaned by Republicans and business groups, is if anything greater than ever.
Did you get your money’s worth from Congress last week?
Last week, taxpayers spent roughly $107 million on Congress.

MONDAY
3 reasons why the mortgage tax break isn't a break
The plan to eliminate the mortgage tax deduction was widely criticized, but the industry overreacted to the proposal. Turns out it's not that great for most of us.
Bush's tax cuts: How did they affect you?
For nearly a decade, the Bush tax cuts — including a second, $350 billion dose in 2003 — have fueled debate in Washington about the proper role of government.

Blogs
FRIDAY
Secondary Sources: Local Governments, Europe, Tax Calculator, Grinchonomics
The Tax Foundation has an interesting calculator that uses several inputs to determine your taxes under several scenarios, including the latest compromise plan.
Morning Bell: There is No Tax Deal
The deal originally cut by Republicans had some good economic policy in it, but it also had a lot of harmful provisions.

THURSDAY
Tax cuts for the rich
It’s also good to remember that payroll taxes are not personal investments and add to the tax burden.
Payroll Tax Cut is Poorly Structured
Greg Mankiw and Bryan Caplan make the same point about Obama's payroll tax: it might better have been done on the employer side.
The rich are harder to stimulate than the poor
...total spending by both low-income and high-income recipients increased more than total spending by average recipients. In other words, though it's not a statistically significant result, both poor people and rich people seem to have been more likely to spend their stimulus checks than average people were.
Taxes in the real world
"When your uncle’s name is Sam, you learn that life in a doghouse is preferable to life in a squirrel cage."

WEDNESDAY
A Good Deal for Democrats on Tax Cuts
Some of the tax cuts, especially the temporary cut in the payroll tax, might even be stimulative. Nonetheless, I would much rather they had expired entirely than that we re-fight this battle in two years, when most of the parties are up for re-election.
Tax Negotiations: No help for 99ers
Just to be clear, the "extension of the unemployment benefits" is an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits. There is no additional help for the so-called "99ers".
How to Think about the Tax Deal
While lamenting the fact that the agreement includes an extension of the 35 percent rate for married couples with incomes above $250,000 (singles above $200,000), the White House is spinning this as the “cost” for getting unemployment benefits extended and for extending certain smaller tax policies created in the stimulus bill.
Right Cut, Wrong Side: Obama Botches the Payroll Tax Holiday
Instead of giving the tax cut to employers, where it would do the maximum good, or splitting it evenly, where it would do intermediate good, he's giving all of it to employees, where it does the minimum good…
The Tax Deal
...the plans for short-run recovery are very definitely consumption-based.
Economists React: Pros, Cons of Tax Deal
Economists and others weigh in on the agreement between the White House and congressional Republicans on a broad tax package.
Tax cuts could hurt Moody's U.S. rating: report
Moody's lead analyst for U.S. sovereign debt, Steven Hess, told Reuters he is not concerned by an extension of the Bush tax cuts on the U.S.'s AAA rating over the next 18 months to two years, but he is worried about what happens after two years when the extensions are set to expire again.
Does Preserving the Bush Tax Rates Doom Us to Massive Deficits? Nope!
...it would be quite easy to balance the budget in 2020 if the government would start early with small, systematic cuts designed to get government outlays about equal to the historic average of government revenue.

TUESDAY
Taxpayer Calculator: Extending Unemployment Benefits
Forty percent of those unemployed right now have been out of work for six-plus months and unemployment has risen to 9.8 percent.
The Good, the Bad, and the Ugly of the Tax Deal
...grading this package depends on your benchmark. This is why reaction has been all over the map, featuring dour assessments from people like Pejman Yousefzadeh and cheerful analysis from folks such as Jennifer Rubin.
On the Tax Burden
In 2008, for the typical household in the top one-percent of income-earning households in America, the percent of its adjusted gross income that it paid in federal income taxes was 23.27. Middle-income households paid less. For households whose earnings put them in the top 50 percent, but below the top 25 percent, of income earners, the percent of their adjusted gross income paid in income taxes was, on average, 6.75.
Holiday Treat for the Bush Tax Cuts?
In exchange, the President got a 13 month extension of Unemployment Insurance benefits — without having to offset the cost – as well as a temporary 2 percentage point reduction in the payroll tax in lieu of an extension of Obama’s ghastly “Make-Work-Pay” tax credit left over from the failed stimulus bill.

MONDAY
The Obama Debt Commission: Too Much Taxes, Not Enough Cuts
While the commission deserves credit for addressing this problem, the report contains far too many tax hikes, and far too little spending cuts to be a workable solution.
The Mortgage Deduction Should Be Done Away With--But It Won't
The reason that we have a special deduction for mortgage interest is not that politicians sat down and calmly, reasonably, worked out a way to reach certain social goals they thought were desirable. The mortgage interest deduction is an artifact of changes to the tax code in the 1980s.
Eugene Robinson Thinks the Government Already Owns Your Entire Paycheck
When the government fails to raise taxes, no one “writes a check.” People who are not taxed don’t get a check from the government, they simply get to keep the money they have already earned.
Obama’s November Jobs Deficit One More Reason to Extend Bush Tax Cuts
President Obama promised during the 2008 campaign (and after) that under his policies the economy would create millions of new jobs by the end of 2010. Well, we’ve reached the end of 2010.

Reports
WEDNESDAY
RCM: Wells Fargo Economics Group: Tax Cut Deal Reduces Uncertainty
The extension of the Bush-era tax cuts has improved our U.S. outlook for next year. The result of this policy decision should be increased consumer spending, business investment, corporate profits and GDP growth.