What tax reform conversation? Our view
The editorial board of the USA Todayoffered its two cents on the tax reform plan introduced by House Ways and Means Committee Chairman Dave Camp (R-MI) yesterday.
“Calling for a simpler tax code is one of the surest-fire applause lines in American politics,” the editorial stated. “Sure fire, that is, until someone actually puts a credible plan on the table. Then what happens is like the clichÃ© about why Congress can't balance the budget: Everybody wants to go to heaven, but nobody wants to do what it takes to get there. Any serious tax or budget plan requires hard trade-offs, and it's so much easier to be for the idea of simpler taxes than do what it takes to make that happen.”
Despite being far from perfect, the editorial board praised Camp for “putting out a plan that he knew would be shelled from all directions, which is more than President Obama and top congressional Democrats have done, despite their professed support for tax simplification.”
US tax reform plan: No tax breaks for ‘violent’ games
And here are thoughts from the video gaming community, courtesy of the website PSXExtreme.com:
“The document in question includes an ‘improved, permanent R&D tax credit’ that will give American companies the ‘certainty they need to compete against their foreign competition who have long had permanent R&D incentives.’ Well, great. However, this tax credit won't be available across the board; specifically, studios that make ‘violent video games’ won't qualify. The blueprint includes a provision for ‘preventing makers of violent video games from qualifying for the R&D tax credit.’
“Of course, it doesn't say how the government will label a game ‘violent.’ They could use the ESRB rating, but that doesn't get applied until after the game is complete. If we're talking about research and development, everything is pretty darn vague at that point in the design process. So, is it just a judgment call on the part of the government?
“I don't know who dropped in this little tidbit of idiocy, but it better go away. Either that, or we need a fantastic explanation.”
Lobbying fury begins over tax revamp unlikely to advance
Richard Rubin and Julie Bykowicz of Bloombergwrote today that US business groups, backed by large corporations and their lobbying budgets, are escalating the political pressure on Camp and other lawmakers to prevent provisions that harm them from becoming law.
“This carries with it a seriousness that many view as the start of what will be a multiyear process,” said Micah Green, a partner at Patton Boggs LLP in Washington who is a lobbyist for companies such as Lloyd’s of London Ltd, according to the Bloomberg article. “It’s the ultimate trial balloon, and either it gets shot down or continues to rise.”
Lawmakers in both parties don’t expect Camp’s plan to become law this year. House Republican leaders have distanced themselves from the details and haven’t committed to allowing a vote, the article stated. While the plan doesn’t change the amount of revenue generated for the US Treasury Department, Democrats want to use some of the revenue raised from limiting tax breaks to reduce the budget deficit or pay for more spending.
“Still, Leonard Burman, director of the nonpartisan Tax Policy Center in Washington, said Camp’s proposal is worth studying as it will become a starting point for future tax policy,” Rubin and Bykowicz wrote. “In that sense, he said, Camp has done a ‘real service’ by showing the tradeoffs needed to pay for rate cuts and simplification.”
Paul Ryan’s reserved response to tax reform
A possible successor to Camp as chairman of the House Ways and Means Committee, Representative Paul Ryan (R-WI) applauded Camp’s “courage” for releasing a comprehensive tax overhaul on Wednesday, but ducked questions on the proposal’s substance, Jake Sherman and Lauren French of Politicowrote yesterday.
“This is the beginning of a good debate,” Ryan said in an interview, according to the article.
But how this process plays out could prove key to Ryan’s future, according to Sherman and French.
“That’s why he is closely watching how his party reacts to the proposal, which could inform his future in Congress – and his next steps in national politics,” they wrote.
“If tax reform fails in 2014 – a near certainty – Ryan could work on rewriting the code with Senator Ron Wyden, an Oregon Democrat he’s worked with in the past. That could add yet another two-party deal to Ryan’s repertoire.”
Understand the House GOP tax-reform proposal in four simple charts
In case you need a visual aid, Zachary Goldfarb of the Washington Post has you covered. Click here for the four charts on Camp’s proposal.
Some companies alter the bonus playbook
Michael Rapoport of the Wall Street Journalreported yesterday that US companies are moving away from US Generally Accepted Accounting Principles (GAAP) and are increasingly using unconventional earnings measures in determining bonuses, making it easier for them to appear more profitable when they reward executives with big paydays.
Last year, 542 companies said they determine compensation using financial measurements that differ from US accounting standards, according to an analysis performed by consultant Audit Analytics for the Wall Street Journal. That is more than double the 249 companies that did so in 2009.
Rapoport wrote the practice can be controversial because it strips out various costs – from employee stock payments to asset write-downs – that can depress profits.
“Companies are allowed to use nonstandard measures in setting executive pay, and some observers said they better represent a company's health and its executives' performances by excluding items the companies don't see as relevant to their core operations. Others disagree,” the article stated.