Tax News Roundup

New York Times: Turning the Tax Tables to Help the Poor:

Now that the Republicans have solidified their control over the presidency and both houses of Congress, progressives might assume that the idea of helping the poor is off the table. But it doesn't have to be this way. If Democrats are crafty enough, they can sneak some progressive policy into the Republican agenda by focusing on specific tax relief, military benefits and President Bush's "ownership society" initiative.

New York Times: With Checkbook in Hand, Think of Uncle Sam:

The time between Thanksgiving and New Year's Eve is known as the giving season, but the important date is really April 15. Tax questions big and small color many decisions on donations. Thanks to the income tax deduction for charitable donations, a $1,000 gift actually costs a donor in the top federal income tax bracket of 35 percent only $650, but to get that benefit in April, taxpayers need to make their gifts to charity by the end of this year. Here are tips from four financial advisers on how to make the best use of the tax code's provisions on charitable gifts.

New York Times: If a Tax Overhaul Has Winners, It Will Also Have Losers:

The American tax system is too complicated. It is a drag on the economy because it does so little to encourage saving and investment. The tax rate paid by affluent, productive people is so high that they have little incentive to take on extra work. More middle class families each year are stuck with paying the steep alternative minimum tax. Those views are at the heart of President Bush's determination to overhaul the tax system, with the stated aim of making it simpler, fairer and more conducive to economic growth.

Reaching that goal is a daunting prospect, even though every important politician and presumably every taxpayer would like to get there. The reason is that "for every winner, there are bound to be losers," said Ronald A. Pearlman an assistant treasury secretary under President Ronald Reagan who was instrumental in developing the last thorough overhaul of the tax laws, in 1986.

New York Times: Gauging the Cost of a Loophole:

When President Bush and Congress get around to grappling with a rewrite of the tax code, much of the focus will be on closing loopholes to raise revenue so tax rates can be lowered. But some analysts doubt that anything substantive will be accomplished because administration officials have indicated that two of the most cherished loopholes - the deduction of interest paid on mortgages and deductions for charitable contributions - are not going to be touched.

New York Times: Tax Rules Give Temporary Oil Price Relief:

U.S. accounting rules, which can bolster end-year oil prices by encouraging companies to run down stocks, are this year helping to cool overheated markets by creating a glut of prompt supply, analysts said. Each year oil companies seek to manage stock levels to avoid tax through U.S. Last In/First Out (LIFO) accounting methods according to which firms pay tax on the value of crude inventories they hold at the end of the year.

The race to run down stocks in December can push up oil futures prices as investors anticipate a shortage. But near-term crude prices sink lower as refiners step back from buying and physical crude markets become oversupplied. The effect has been amplified this year as high prices increase incentives to lower year-end stockpiles.

Wall Street Journal: Questions for the President on Tax Reform:

U.S. President George W. Bush sounds serious about pushing reform of "our complicated and outdated tax code." He also sounds like a man who hasn't decided exactly what he means by "reform."

"The fundamental purpose of the tax system," the Treasury's then-top tax official, Pamela Olson, reminded then-Treasury Secretary Paul O'Neill in a November 2002 memo, "is to raise sufficient revenues to fund government functions." (Note to White House: Be sure this objective doesn't drop from the must-do list.)  "A world-class tax system would raise revenue in a simple, efficient, fair and predictable manner. It is painfully obvious...that our current tax system falls far short," she wrote. "But it is less clear how we should reform the current tax system."

It still isn't clear. Here are three questions Mr. Bush has yet to answer:

• Why Are We Doing This?
• Who Loses?
• How Does This Get Through Congress