Tax News Nov 29 - Dec 3

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News
FRIDAY
Senate Showdown Saturday: Tax Cut Votes on the Way
The two Saturday votes will be on the House-passed bill to extend tax cuts for Americans earning under $250,000 a year and another from Sen. Chuck Schumer, D-N.Y., to raise the threshold to $1 million a year.
Tax-Cut Vote Shows Democratic Divide
House Passes Extension Excluding Higher Incomes, a Largely Symbolic Effort Reflecting Unhappiness With White House.
DREAM Act Would Cost Taxpayers $6.2 Billion Per Year, Group Says
The CIS says its $6.2 billion estimate is conservative and does not include the "modest" number of illegal immigrants expected to attend private institutions.

THURSDAY
Panel pitches $3.9 trillion in federal deficit cuts
...with a vote slated for Friday, more than half its members — including both Democrats and Republicans serving in Congress — appear ready to sign a plan that would slash spending, raise taxes and make Medicare and Social Security less generous.
IRS Chief Warns Against Delayed Action on Expired Tax Breaks
The Internal Revenue Service warned lawmakers of filing-season delays and operational challenges in 2011 if Congress doesn’t act this month on tax breaks that expired at the end of 2009.
RETIRING: The Ins-And-Outs Of Roth IRAs
Under current law, contributions to Roth IRAs are made on an after-tax basis and distributions are tax-free. But given the federal deficit, is it possible the government will revise laws to make distributions from a Roth IRA taxable?
Senate Republicans Vow to Block Dem Legislation Until Tax Cuts, Budget Pass
Throwing down the gauntlet, all 42 members of the GOP caucus are sending the letter to Senate Majority Leader Harry Reid warning him that they will bring matters to a standstill unless he swiftly brings those tax-and-spending issues to the floor.
House to Vote on Middle Class-Only Tax Cuts
House Democrats scheduled a vote for Thursday to extend Bush-era tax cuts for the middle-class while letting breaks for high earners expire, a plan House Republican Leader John Boehner of Ohio called, "a Washington stalling tactic with job-killing implications."
Signs Point to Extending All Tax Cuts Temporarily
Republicans and Democrats Wednesday sat down to negotiate a compromise on extending Bush-era income tax cuts—an effort that could be the first step toward a deal this month that many strategists in both parties believe will temporarily extend current tax rates for all income levels.
Inmates Cash In By Claiming Tax Refunds
Nearly 50,000 prison inmates claimed more than $130 million in tax refunds this year without providing any wage information to the IRS, a government investigator says in a report to be released Thursday.

WEDNESDAY
Who will get Bush tax cuts? Congress can't decide.
Unable to agree on who should be eligible to continue to receive the Bush tax cuts, which expire Jan. 1, President Obama and congressional leaders decided to convene a panel Tuesday.
Mortgage Tax Break in Crosshairs
The chairmen, who head the National Commission on Fiscal Responsibility and Reform, told reporters Tuesday they would delay a final vote on their package until Friday, because they wanted to give the group's 16 other members more time to study their recommendations.
State Tax Revenue Continues Rebound, Grows 3.9% In 3Q
Tax collections increased 3.9% in the third quarter compared to a year earlier, based on data from 48 states, the report said; 42 of them showed gains in overall tax revenue.

TUESDAY
Value-added tax, or VAT, back as proposal to solve revenue ills
Seven months after the Senate knocked down the idea of a value-added tax, the VAT is back on the table -- one of a host of familiar proposals that has been recycled as a proposed answer to the nation's financial problems.
Republicans Send Mixed Signals Ahead of Meeting With Obama
The looming expiration of the Bush tax cuts was expected to take centerstage as the president sat down with Republican and Democratic congressional chiefs Tuesday morning.
Pence embraces flat tax
Indiana Republican Rep. Mike Pence would scrap the current tax system and replace it with a flat tax for all citizens.

MONDAY
How Congress' tax-cut decision may affect economy
It isn't just a debate over how much money high-income Americans should get to keep. It's about how much their tax cuts might aid the economy.

Economist Comments
FRIDAY
Tax squabbling earns Congress failing grade
If members of Congress were taking a tax policy course, chances are good they'd get an "F."
The White House's Tax Blink
Is the president getting serious about striking a deal with Republicans?

THURSDAY
Taxpayers, who has your back?
Washington continues to spend U.S. taxpayers' dollars with reckless abandon, with the IMF's bailout of Ireland being just the latest example.
Slash the deficit! (But cut the payroll tax)
Tucked in among the controversial spending cuts proposed by President Obama's debt commission Wednesday, was a little piece of stimulus -- a tax break that could benefit workers.
Cut Tax Expenditures, and Taxes
Unless tax expenditures are balanced out with lower rates so that there is no net revenue gain to Uncle Sam, higher taxes and higher marginal tax rates mean that individuals will work less, hire fewer employees, invest less in their businesses, and look to invest more resources overseas.
Nancy Pelosi's Unwelcome Christmas Gift
A couple earning $80,000 could lose hundreds per month if the Bush tax rates aren't extended.

WEDNESDAY
The Dead Enders
Even after their defeat, Democrats keep insisting on a tax increase.
Ugly Tax Bill Is Washington As Usual
Americans may have voted for change in November, but for now it is business as usual in Washington. Just take a look at the messy tax legislation that is working its way through Congress under the euphemism of a ‘tax-extenders' bill.
Why the Spending Stimulus Failed
New economic research shows why lower tax rates do far more to spur growth.
Keep the Cuts, Cut the Breaks
A better approach would be to keep all the cuts, but only on the condition that we pay for them by junking the tax breaks that corrode our economy.

TUESDAY
Will Congress 'Lame Walk' the '03 Tax Cuts?
It is vitally important to get tax policy right because, while its primary function is to raise revenue for the government, tax policy also figures prominently in the business plans of businesses in operation as well as those still on the drawing board.

MONDAY
Zero in on 2011's Tax Time Bomb and Leave 10-Year Plans for Later
The president can't possibly make any tax change permanent, since his term of office ends in two years.
FACT CHECK: Small business caught in tax battle
Both can't be right. And both are playing number games as the lame-duck Congress prepares to take up one of the most contentious issues of the postelection season: what to do about an array of about-to-expire Bush-era tax cuts?
Lame Ducks Will Take the Plunge on Bush Tax Cuts
A lame-duck Congress returns this week to decide the fate of the Bush tax cuts, the debt ceiling, and whether to extend unemployment insurance to millions.
Why Tax Filing Will Be Worse Than Usual
Millions of Americans will get their tax refunds late because of Congressional foot-dragging on the AMT.

Blogs
FRIDAY
Taxes and Uncertainty
...investors and businesses will face continuing uncertainty and the real prospect of a tax increase in one to three years.
Framing the Tax Debate for This Weekend
Increasing the top marginal tax rates to generate $650 billion to $900 billion in federal revenues over the next 10 years means that the same amount of money won’t be invested in the economy as consumption or savings.
Who Pays for Big Government?
Because the individual income tax is one of the few truly progressive taxes, and other taxes are regressive, the overall tax systems in Western Europe may not be as progressive as you might think.
American Taxpayers Should Not Bail Out the European Union
This I-told-you-so attitude is not very mature on my part, but one hopes that American politicians will learn the right lessons and something good will come from this mess.

THURSDAY
Taxes and Uncertainty
No details yet, but reports are that they will extend the current tax rates for one to three years. That means investors and businesses will face continuing uncertainty and the real prospect of a tax increase in one to three years.
Fareed Zakaria's Right to Pay Higher Taxes Stops at My Right Not To.
We are in debt because we spend too much, not because we make too little as a country.
Robert H. Frank’s Non-argument for Higher Tax Rates
...several major studies showing that pushing the highest marginal tax rates even higher is extremely dangerous to economic growth; Stanford economist Michael Boskin lists half a dozen of them in his latest Wall Street Journal op-ed.
Secondary Sources: Hoenig on Banks, Tax Plan, German Imbalance
Howard Gleckman notes differences on taxes between the draft and final plans of the fiscal commission.
Estate Tax Bootleggers
The bootleggers and baptists model of regulatory influence strikes again.

WEDNESDAY
Robert Gibbs Signals Temporary Extension of All Tax Cuts
President Obama’s only “line in the sand”, according to Gibbs, is opposition to a “permanent” extension of the tax cuts for the wealthy.
Death Tax and Democracy
The toll the death tax takes on family-owned businesses has been clearly documented as has its infeasibility as a federal budgetary tool.
The Booming Business of Bootlegging
With that kind of savings on the consumer end and that kind of money to be made on the bootlegger's side, we can say with confidence that New York's cigarette smuggling problem is only going to get bigger.
The Futility of Tax Hikes in Pictures
Our federal deficit problem can not be solved by raising taxes. The expected revenues will never materialize. Cutting spending, shrinking government, and allowing for more economic growth is the only way we can climb out of the hole we are in.
Tax Exemption for Health Benefits On Its Last Legs?
That policymakers have started tacitly acknowledging the exemption's problems is encouraging - let's hope the prognosis stays good.

TUESDAY
Three Cheers for Switzerland as Voters Reject Class-Warfare Tax Hike in National Referendum
...Swiss voters, like voters in Washington state earlier this month, understood that giving politicians more money is never a solution for any problem.
Hauser’s Law: This Reality Isn’t Negotiable
...the federal government has never been able to get much more than 19 percent of GDP in tax revenues, no matter how high the top marginal tax rate goes.

Reports
FRIDAY
The Economic Impact of a 25 Percent Corporate Income Tax Rate
The Heritage Foundation’s Center for Data Analysis (CDA) conducted a dynamic simulation of a reduction of the corporate income tax rate to 25 percent, comparing it to a baseline forecast of the economy with the current policy of a 35 percent corporate rate. The results of this simulation show the U.S. economy growing faster than the baseline in the 2011–2020 forecast horizon.