Ways and Means to consider six tax breaks
Bernie Becker of The Hill reported that the House Ways and Means Committee will consider six separate tax breaks on Thursday, as part of Chairman Dave Camp’s (R-MI) efforts to stoke momentum for a broader rewrite of the tax code.
The panel will consider a permanent extension of a tax break that allows certain businesses to more quickly write off investments, a provision popularly known as bonus depreciation. It will also mark up five smaller tax breaks dealing with charitable contributions, including two new proposals, Becker wrote.
The mark-up of those provisions comes as both the House and Senate are grappling with how to restore a slew of tax breaks, commonly known as extenders, that expired at the end of 2013.
The charitable incentives to be considered Thursday include three preferences that expired at the end of last year – one that gives a tax break to land owners that conserve their property, another that allows for tax-free donations from retirement accounts, and a preference for companies that donate food to charity, according to the article.
Ways and Means will also consider a proposal to cut taxes on private foundations’ investment income, and another to allow taxpayers to deduct charitable donations made until April 15 on their return for the previous year.
Supreme Court agrees to hear potentially groundbreaking Maryland tax case
Bill Turque of the Washington Post reported yesterday that the US Supreme Court has agreed to hear arguments in a Maryland case that could rewrite tax laws across the country and cost Montgomery County and other localities hundreds of millions in revenue if it decides for the plaintiffs.
The issue in Maryland v. Wynne is the extent to which a state can tax income that residents earn in another state, Turque noted. Maryland allows residents to deduct income taxes paid to other states on their Maryland income tax forms. But that deduction doesn’t apply to income tax the state collects on behalf of counties and some municipalities – what is known as the piggyback tax.
The Maryland Court of Appeals ruled last year that providing the credit for state income tax but not county income tax violates the US Constitution’s commerce clause.
Solicitor General Donald B. Verrilli Jr. urged the court to take the case, in part to clear up conflicting state court rulings on the issue.
“The [Maryland Court of Appeals] decision … has significant financial consequences for Maryland; may lead to challenges to similar tax schemes in other jurisdictions; and is inconsistent with statements made by the highest courts in other states,” Verrilli wrote last month. “This case is a suitable vehicle for addressing the question presented.”
UK accounting watchdog warns over bank audits
Accountants who check the books of Britain’s banks must sharpen their act or could be ordered to take corrective measures, the Financial Reporting Council (FRC) said in a report showing how a core lesson from the financial crisis has yet to be applied, Huw Jones of Reuters reported today.
In its annual audit quality inspections report, the FRC said there was a significant improvement in audits of listed companies in general, but the banking sector continued to lag.
“The overall grading of bank and building society audits is, and continues to be, generally below those of other types of entity,” the FRC said, according to the article.
The inspections during 2013 and 2014 covered audits for the year that ended December 2012, Jones noted. They included the books of five banks and five building societies, all unnamed and none were “good” – the top grading – while 56 percent needed improvements. In particular there was no significant improvement in how accountants check the way banks set aside capital to cover souring loans, known as loan-loss provisioning.
Britain's big banks are all audited by one of the Big Four accounting firms: KPMG, Deloitte, PwC, and EY.
Money-losing post office said to be highway fund source
House Republicans are turning to the money-losing US Postal Service as a way to shore up the Highway Trust Fund, Angela Greiling Keane and Derek Wallbank of Bloomberg reported today.
The Postal Service lost $1.9 million in the quarter ending March 31 while the fund supporting the nation’s highways, bridges, and transit may run short of money to pay its bills as soon as July, according to the US Transportation Department.
But tapping savings from Postal Service changes is one of several ideas being considered to bolster the highway fund, said two Republican legislative aides, speaking on condition of anonymity, the article stated. Passing a highway bill is a priority for Congress this year.
One benefit of funds from the Postal Service: Its spending is considered “off budget,” as the agency supports itself through postage sales, Greiling Keane and Wallbank wrote.
Ending Saturday mail delivery would save about $20 billion over 10 years, according to a December analysis by the Committee for a Responsible Federal Budget, a fiscal advocacy group. The organization, citing Congressional Budget Office analyses, noted that allowing the Postal Service to increase the cost of stamps faster could raise $5 billion to $10 billion, while increasing insurance premiums for postal workers could raise about $10 billion.
A carbon tax is our only hope
Gawker writer Hamilton Nolan wrote this yesterday: “Carbon emissions are causing global warming. Global warming is a slow motion disaster. The consensus is that we must make drastic changes soon. How? We need a carbon tax. A carbon tax is our only hope. Time for a carbon tax now.”
He believes the only hope for bringing about a change in a reasonable period of time is “to make the painful consequences of global warming felt right now. We can't speed up the sea level rise. Outlawing coal power plants is impractical. What we can do is make pollution expensive. We can change the economic incentives. And a carbon tax is the simplest and most effective way to do that.
“We know that carbon emissions are causing global warming, which will impose a disastrous cost on all of humanity in the years to come. So make those who emit carbon pay those costs up front, by taxing them,” Nolan continued. “This is not a new idea in the United States; a modest version of it, known as “cap and trade,” has been favored for decades by Republicans and Democrats alike as a way to control certain emissions in the past. But multiple efforts in the past decade to apply cap and trade to carbon emissions have failed in Congress.”
[Also, check out Howard Gleckman’s blog on TaxVox about turning carbon tax theory into reality.]
Harnessing the tax code to promote college affordability
In a new report, the Center for American Progress highlights ways the US tax code can benefit higher education. Contributions to some college savings accounts grow tax-free, college tuition is often tax deductible, and some student-loan borrowers are able to deduct the interest paid on their student loans just as they would the interest paid on their mortgage.
But, the report says that as tuition costs and student-loan debt have both increased dramatically, tax provisions should change to ensure the best possible outcomes for parents, students, and graduates.
“As tax expenditures increasingly come under scrutiny, policymakers will need to consider which ones work most effectively,” the report concluded. “Streamlining tax incentives for students, making college savings easier and more rewarding for all families, and supporting borrowers during repayment are all steps that should be components of tax reform to improve access, affordability, and equity in higher education.”
- Deloitte reveals the secrets behind the Life at Deloitte Twitter account (Going Concern)
- Grover Norquist hopes Godzilla can teach us about living in constant fear (Going Concern)
- Ex-UBS banker avoids prison time in US tax fraud case (Reuters)
- Pfizer ends AstraZeneca bid but the tax issues it raised lives on (Forbes)
- How to get Social Security’s biggest bonuses (Forbes)
- Capital gains tax gets more complicated (Forbes)
- Tax inversion: How US companies buy tax breaks (Bloomberg)
- Parsing Piketty: Is wealth inequality rising in the US? (New Yorker)
- Ways and Means Committee following right approach on tax extenders (The Foundry)
- Taxing togas and keggers (Tax Analysts)
- Bad ideas are like bad pennies (Tax Analysts)
- Federal workers, including members of Congress and Treasury employees, owe Uncle Sam $3.3 billion in back taxes (Don’t Mess With Taxes)