Tax News

• Boston Globe:  Tax Lobbyists Help Businesses Reap Windfalls: While Congress Fights Over Ways to Cut Spending and the Deficit, Generous Breaks for Corporations Pass with Little Notice:

Lobbying for special tax treatment produced a spectacular return for Whirlpool Corp., courtesy of Congress and those who pay the bills, the American taxpayers.

By investing just $1.8 million over two years in payments for Washington lobbyists, Whirlpool secured the renewal of lucrative energy tax credits for making high-efficiency appliances that it estimates will be worth a combined $120 million for 2012 and 2013. Such breaks have helped the company keep its total tax expenses below zero in recent years.

The return on that lobbying investment: about 6,700 percent.

These are the sort of returns that have attracted growing swarms of corporate tax lobbyists to the Capitol over the last decade — the sorts of payoffs typically reserved for gamblers and gold miners. Even as Congress says it is digging for every penny of savings, lobbyists are anything but sequestered; they are ratcheting up their efforts to protect and even increase their clients’ tax breaks. ...

In the absence of meaningful change, corporations like Whirlpool continue to pursue the exponential returns available from tax lobbying. The number of companies disclosing lobbying activity on tax issues rose 56 percent to 1,868 in 2012, up from 1,200 in 1998, according to data collected by the nonpartisan Center for Responsive Politics. ...

“What we’re doing is running a Soviet-style, five-year industrial plan for those industries that are clever enough in their lobbying to ask all of us to subsidize their business profits,’’ said Edward D. Kleinbard, a former chief of staff at the Joint Committee on Taxation and now a law professor at the University of Southern California. “These are perfect examples of Congress putting its thumb on the scale of the free market,’’ he said. “I’ll be damned if I know why I should be subsidizing Whirlpool.’’

• New York Times:  Tax Credits or Spending? Labels, but in Congress, Fighting Words, by Annie Lowrey:

In budget proposals put forward last week, both Democrats and Republicans called for scrubbing billions of dollars’ worth of the popular deductions, loopholes, preferential rates and credits that litter the tax code, mostly benefit higher-income taxpayers and often reflect undue government interference in economic decisions. But the two sides are sharply divided what should happen to any revenue raised.  ...

At the root of the bitter semantic back-and-forth is a simple truth: every tax expenditure — and there are scores of them, used to encourage employers to provide their workers with health care, to make houses more energy-efficient, to aid timber cutters and much more — benefits a certain group of taxpayers or a specific industry. And nobody wants to give up anything. ...

Spending through the tax code has also proved harder to scale back than spending through the regular appropriations process. Already, Congress has cut more than $2 trillion from health spending and the domestic and military budgets. It has hardly touched tax expenditures. For that reason, lobbyists on Capitol Hill working for specific industries often push for tax provisions, like credits, rather than straightforward federal pork. ...

In the corporate code, expenditures are “just a hidden, ersatz, Soviet-style five-year plan,” said Edward Kleinbard, a longtime Congressional tax expert now at the University of Southern California. “We would never contemplate a world in which the government said, ‘We’re going to write out checks to Nascar because it’s an important resource and we’re going to pay for it!’ People would say, ‘They’re out of their mind!’ ”

Tax expenditures also make it harder to gauge the impact of the federal budget on such crucial activities as housing and retirement security. For instance, the home mortgage interest deduction costs the Treasury about $100 billion a year in lost revenue, and effectively encourages the mostly affluent families who itemize deductions to buy a more expensive home. In contrast, the annual budget of the Housing and Urban Development Department, which generally goes to aiding the poor, is less than $50 billion.  ...

Experts say the most realistic prospects are for Congress instead to put an overall cap on deductions, starting with higher-income families, or to convert deductions into tax credits. “You can make a powerful case that itemized deductions should simply be disallowed completely,” said Mr. Kleinbard of the University of Southern California. “But that’s too heavy a lift, and they’ll start smaller.”

• CNN, Rush to ATMs in Cyprus on EU Bailout Tax
• David Bradbury (Assistant Treasurer of Australia), 'Stateless Income' -- A Threat to National Sovereignty Address to the Tax Institute of Australia's 28th National Convention
• New York Times, Cyprus Set to Reject Tax on Bank Deposits
• New York Times editorial, Taxing Savers in Cyprus
• Wall Street Journal, Cyprus Plan Falls Short of Bailout Target