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Spain's PM says economic recovery 'better then expected'

Yahoo Tax - Fri, 2014-08-01 10:41

The Spanish economy is recovering "better than expected" and is now among Europe's best performers, although it still faces "numerous" problems, Prime Minister Mariano Rajoy said Friday. Economy Minister Luis de Guindos said on Tuesday the government planned to raise its 2014 and 2015 economic projections in September after stronger-than-expected performance over the last six months. The Spanish economy expanded by a better-than-expected 0.6 percent, up from growth of 0.4 percent in the first quarter, with the government crediting its reforms to the banking system and labour market for the stronger growth. His cabinet on Friday approved a major reform to lower both corporate tax and income tax for lower earners, which it hopes will boost economic growth.

Categories: Tax news

10 Tax Tips for New Business Owners - Fox Business

Google IRS Federal Income Tax - Fri, 2014-08-01 10:25

10 Tax Tips for New Business Owners
Fox Business
Business Taxes. According to the IRS, there are five genera federal Business Taxes. You may also be required to file and pay state income taxes, sales taxes and possibly excise taxes. Make sure you familiarize yourself with these responsibilities for ...

Categories: Tax news

IRS Guidance: Employee Income Tax Correction for Same Sex Spousal Health ... - The National Law Review

Google IRS Federal Income Tax - Fri, 2014-08-01 09:07

IRS Guidance: Employee Income Tax Correction for Same Sex Spousal Health ...
The National Law Review
Thereafter, the IRS issued guidance providing that same-sex spouses who were lawfully married under the law of any state — regardless of where those same-sex spouses resided — would be treated the same as opposite-sex spouses for federal tax ...

Categories: Tax news

IRS Can Help You Look After Kids - Fox Business

Google IRS Federal Income Tax - Fri, 2014-08-01 07:12

IRS Can Help You Look After Kids
Fox Business
... not taxable income to you, you cannot use those amounts to help further cut your tax bill. More information on the credit is available in IRS Publication 503, Child and Dependent Care Expenses, or Chapter 32 of IRS Publication 17, Your Federal ...

Categories: Tax news

Florida ID theft 'nightmare' part of $20B IRS fraud estimate - Bradenton Herald

Google IRS Federal Income Tax - Thu, 2014-07-31 17:53

Florida ID theft 'nightmare' part of $20B IRS fraud estimate
Bradenton Herald
The man in charge of collecting trillions in federal income taxes paid a visit Thursday to South Florida, where criminals have turned to stealing other people's identities and refunds into a recurring nightmare for taxpayers and his agency. John ...
Bramwell's Lunch Beat: SEC Turns to Deloitte for Top Accounting
Senate clears Highway Trust Fund patch, punting the issue until May Wyden ...Politico

all 18 news articles »
Categories: Tax news

What to Know about ObamaCare's Premium Tax Credit - Fox Business

Google IRS Federal Income Tax - Thu, 2014-07-31 15:50

What to Know about ObamaCare's Premium Tax Credit
Fox Business
As of right now, if you get your health insurance coverage through a federal or state health insurance marketplace, you may be eligible for a premium tax credit, which will reduce the total cost of coverage for low to medium income households. ... The ...

and more »
Categories: Tax news

Durham woman sentenced in IRS fraud case - Durham Herald Sun

Google IRS Federal Income Tax - Thu, 2014-07-31 14:27

Durham woman sentenced in IRS fraud case
Durham Herald Sun
A Durham woman was sentenced Thursday to 30 months in federal prison for conspiring to defraud the Internal Revenue Service, the U.S. Justice Department and IRS announced. Tasha Renee Smith was sentenced in Greensboro by U.S. District Judge ...

and more »
Categories: Tax news

Avoid State Income Tax With A Personal Tax Inversion - Forbes

Google IRS Federal Income Tax - Thu, 2014-07-31 11:33

Avoid State Income Tax With A Personal Tax Inversion
So while you may avoid state income tax, you would most likely have to pay federal gift tax or at least use up your gift/estate tax exclusion if the drafting attorney isn't careful. A non-grantor trust isn't going to work well if that ... As Neil ...

Categories: Tax news

Inversions May Be the Least of US Corporate Tax Issues - New York Times

Google IRS Federal Income Tax - Thu, 2014-07-31 10:45

Housing Wire

Inversions May Be the Least of US Corporate Tax Issues
New York Times
REITs are big business already, but the I.R.S. seems to be widening its definition of what constitutes real estate. And the telecommunications industry is not ... with Hess the latest to do so on Wednesday. These structures are exempt from federal ...
How REIT Spinoffs Will Further Erode the Corporate Tax BaseForbes
REITs and MLPs make tax inversions a diversionReuters Blogs (blog)

all 11 news articles »
Categories: Tax news

Deadline Today to Apply for Tax Foundation Fall Internships

Tax Foundation - Thu, 2014-07-31 09:15

Tomorrow is the deadline to apply for a fall 2014 internship at the Tax Foundation!

While there are a number of Washington, D.C.-based public policy groups today that cover a broad range of policy issues, only the Tax Foundation provides a principled voice on the impact of tax and fiscal policy at the federal, state, and local levels. We offer a unique internship program designed to introduce undergraduate and graduate students to tax policy principles, and apply them in assessing and advancing public policy. Working directly with our staff in various areas of tax policy, interns gain valuable professional experience and learn about all aspects of our operation.

While data entry and routine tasks are part of the internship, the majority of the work is substantive. Interns are afforded flexibility to attend events, lectures, and seminars around Washington, D.C. As a non-partisan research institution, we encourage interns to develop a broad sense of our principles and find innovative ways to contribute to our mission. We offer internships in federal policy, state policy, legal, communications and outreach, and development and fundraising. Past interns, with the assistance of our staff, have researched and published commentaries on policy in newspapers and journals, participated in area events, and posted on our tax policy blog. We also bring in expert speakers to interact with interns and assign a staff mentor to each intern.

Learn more and apply here!

Categories: Tax news

Maryland Argues There's No Constitutional Bar to Taxing Over 100% of Residents' Income

Tax Foundation - Thu, 2014-07-31 08:15

This fall, the U.S. Supreme Court will hear Maryland v. Wynne, which asks whether Maryland must provide a credit against local income taxes for income taxes paid to another state. The taxpayers in the case, Mr. and Mrs. Wynne, own 2.4 percent of a company doing business in 39 states. As Maryland residents, they paid $123,434 in income tax to Maryland, after applying a credit of $84,550 for taxes paid to other states on income earned outside Maryland's borders. Maryland disallowed the credit to the extent that it offset the county income tax. The Tax Court upheld the assessment, a Maryland circuit court reversed and sided with the Wynnes, and Maryland's highest court (the Court of Appeals) agreed, ruling the tax unconstitutional without a credit. The state has now appealed to the Supreme Court.

The Wynnes are right and Maryland is wrong. While it is true that tax credits and deductions are usually a matter of legislative grace, and that states may impose just about whatever tax it wishes on its own residents, these powers are limited when they involve interstate commerce. If Maryland is right here, taxpayers will be subject to tax on more than 100 percent of their income. The result would be that intrastate income would be taxed once, while interstate income would be taxed over and over and over. This violates the U.S. Constitution's Commerce Clause.

Maryland has now filed their brief in the case. They spend most of the brief reciting all the cases and reasons why states should have the autonomy to tax its own residents as it sees fit, which I don't dispute. They ultimately do address the Commerce Clause argument, writing that since Maryland taxes all income at the same rate, it is not discriminatory against interstate commerce. That of course requires ignoring the effect of the law, which subjects interstate income to multiple taxation. Maryland taxes residents' income, wherever it was earned. Because other states tax income earned within their borders, the result is taxing more than 100% of taxpayers' income.

Frankly, this case has shocked the academic and practitioner community. Most of us took it as a given that a state income tax without a credit for taxes paid to another state is inherently unconstitutional because of these discriminatory effects. We'll be filing a brief in the case and we hope the U.S. Supreme Court agrees with the court below and with the taxpayers.

Categories: Tax news

Child credit scam prompts U.S. tax crackdown on expats in Israel

Yahoo Tax - Thu, 2014-07-31 01:04
By Steven Scheer and Tova Cohen TEL AVIV (Reuters) - It was called the "Israel Project", an operation by the U.S. Internal Revenue Service (IRS) that has uncovered false claims for child tax credits involving an estimated tens of millions of dollars filed by U.S. citizens living in Israel. About 200,000 American citizens live in Israel, one of the largest U.S. expatriate communities, and in a separate inquiry, U.S. regulators are investigating whether Israeli banks helped American clients evade U.S. taxes, mostly at Swiss subsidiaries. As a result of the child credit scam, many Americans in Israel who made legitimate claims have faced costly audits by the IRS. Accountants said claims surged when it was realized U.S. nationals living abroad were eligible for the credit, beginning in the ultra-Orthodox community and spreading from there.
Categories: Tax news

Paul A. Garcia, P.A. Expands International Tax Services for Foreign ... - PR Web (press release)

Google IRS Federal Income Tax - Thu, 2014-07-31 00:11

Paul A. Garcia, P.A. Expands International Tax Services for Foreign ...
PR Web (press release)
Foreign born persons requesting an ITIN should understand that an ITIN is for federal income tax purposes only. This identification number does not change a nonresident's immigration status or right to work in the United States. The Internal Revenue ...

and more »
Categories: Tax news

Letter: Tax-exempts deserve scrutiny - Rochester Democrat and Chronicle

Google IRS Federal Income Tax - Wed, 2014-07-30 21:07

Letter: Tax-exempts deserve scrutiny
Rochester Democrat and Chronicle
The income tax gives government via the IRS immense power over all. Unions can operate ... So, I thought it was quite fair that the IRS should investigate those applying for tax exemption, whether on the right or left of the political spectrum ...

Categories: Tax news

Detroit, Syncora fight over casino money in appeals court-report

Yahoo Tax - Wed, 2014-07-30 15:05
(Reuters) - A federal appeals court panel heard arguments on Wednesday between Detroit and one of its last hold-out creditors over casino tax revenue, with one of the judges promising a careful consideration of the case, the Detroit News reported. The appeal by Syncora Guarantee Inc of a July 11 U.S. District Court's ruling that affirmed Detroit's access to the money was the first case tied to the city's historic bankruptcy case to be argued in the 6th Circuit U.S. Court of Appeals in Cincinnati. Syncora, which insures some of the city's pension debt and interest-rate swaps, had initially appealed an Aug. 28, 2013 ruling by U.S. Bankruptcy Judge Steven Rhodes that gave Detroit access to about $11 million in monthly tax revenue that the bond insurance company had tried to block. Detroit, which entered those agreements to hedge interest-rate risk on pension debt, agreed in a settlement earlier this year to pay $85 million to the swap providers.
Categories: Tax news

Judge sentences self-employed couple to prison - Grand Rapids Business Journal (subscription)

Google IRS Federal Income Tax - Wed, 2014-07-30 07:20

Judge sentences self-employed couple to prison
Grand Rapids Business Journal (subscription)
Hale was sentenced to 12 months and one day in prison, followed by two years of supervised release for tax evasion. She was also ordered to pay $277,391.31 in restitution to the Internal Revenue Service. Hale failed to file timely federal income tax ...

Categories: Tax news

The Common Sense of Dynamic Scoring

Tax Foundation - Wed, 2014-07-30 06:00

When considering a lower tax rate we can make one of two assumptions. We can assume that changes to taxes rate will not change behavior, or we can assume that changes to tax rates do change behavior.

We know that taxes do alter behavior. In Washington, DC, we see it on a small scale every day when people decline a plastic bag at the grocery store because of the 5 cent bag tax. When we see people make such a decision over 5 cents, we know that major tax changes can have large impacts on costs and behavior all over the economy.

Dynamic scoring pays attention to how a tax change increases or decreases the price of two key goods, capital and labor. The price of capital and labor are used to estimate how individuals and businesses change their behavior; and in turn, how changes in behavior effect the economy as a whole.

This isn’t how Congress’s tax scoring committees currently function. When Congress’s tax scoring committees estimate the revenue cost of a tax bill, they often make the first assumption—that taxes do not affect behavior in a meaningful way. This is called static scoring.

Static scoring follows the simple rule; if you lower taxes by $1, you also lower revenue by $1.

Instead of making tax policy an exercise in budget arithmetic, dynamic scoring requires policymakers to consider the quality of the tax change—how does this tax change affect people’s incentives to work or invest?

Modeling tax policy’s dynamic effects on the economy allows policymakers to ask the question: is the tax policy pro-growth?

Good tax policy is not always about indiscriminately lowering rates. Congress is currently considering the biennial “tax extenders package” which will reauthorize a long list of tax expenditures. A small portion of these expenditures are actually good tax policy because they help treat consumption and investment similarly. Under a static tax model Congress may be tempted to cut these beneficial expenditures, because their model assumes they will get a dollar for dollar increase in revenue.

The problem is, that many of these tax expenditures are deliberate offsets to what would otherwise be taxed two, three and four times. A dynamic tax model shows which expenditures are true loopholes, and which are beneficial. Trading beneficial expenditures for lower rates could slow growth and actually decrease revenue.

Another benefit of dynamic scoring is the ability to account for increases in tax revenue gained from a growing economy. Simply cutting the corporate rate will unleash economic growth that will in turn increase revenue collection. A more accurate forecast of future revenue collection could allow more of the beneficial expenditures to remain in the code. Dynamic scoring allows policy makers to more accurately assess the total impact of changes to the tax code on both revenue and the economy.

Currently, Congress doesn’t pay much attention if a tax change will be pro-growth or not. Most legislators are primarily concerned with the revenue effects projected by their tax scoring committees. This is not a productive metric when the scoring is done on a static basis. The question legislators should ask is: what is my bill going to do for job creation and wages? Dynamic scoring can answer that question.

Categories: Tax news

29 Members of Congress Ask California to Boost Film Tax Credits

Tax Foundation - Tue, 2014-07-29 11:30

29 Democratic members of Congress from California today urged California to make its film tax credit more generous. A bill to do so, AB 1839, has passed the state Assembly and is pending in the Senate.

California has seen billions of dollars of film and television productions flow out of Hollywood to Canada, New York, Louisiana, Georgia, and other places, due to these governments providing some $1.5 billion annually in refundable and transferable tax credits (direct subsidies in all but name).

The bill would loosen current requirements to access the present $100 million per year tax credit program, and raise the current cap. Although everyone says a cap will be in the final legislation, it’s not in the current form and no one seems willing to commit to a number. I’ve heard $400 million floated around – a lot of tax money to commit to subsidizing film production for a state with many important needs.

Three thoughts:

In return for hundreds of millions of dollars of tax subsidies, the film industry promises to… what, exactly? The bill has very little in the way of commitments to keep productions in the state. Is it too much to ask that a film studio that accepts taxpayer subsidies intended to keep productions in California actually promise that, say, 50% of all production activity by that studio be in California? (There is a real danger that the studios will take California’s sweetened deal and leverage it with New York and Louisiana and so forth to demand more subsidies from them.) Or have an average of so many thousand jobs in the state? Other tax credit programs require recipients to meet specified job and production numbers or else they don’t get the tax subsidy. Why should this be different? To lure back productions that have proven to be disloyal to California, more is needed than giving them more money and hoping for the best. The 29 members of Congress who signed this letter speak only of how California should spend more, and are silent on what they can do. Other states are disrupting interstate commerce since productions are just moving from one state to another without any net national increase. Just as Congress has used its power to stop states from taxing interstate travel into oblivion, Congress has the power to stop other states from doing this. Have the letter's authors - Adam Schiff, Judy Chu, Karen Bass, Julia Brownley, Tony Cárdenas, Lois Capps, Anna Eshoo, Sam Farr, John Garamendi, Janice Hahn, Mike Honda, Jared Huffman, Barbara Lee, Zoe Lofgren, Alan Lowenthal, Doris Matsui, George Miller, Jerry McNerney, Grace Napolitano, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Brad Sherman, Eric Swalwell, Mark Takano, Mike Thompson, Juan Vargas, Maxine Waters and Henry Waxman - proposed a bill to stop states from offering film tax credits that disrupt the interstate market without helping the national economy as a whole? Held a hearing? Discussed solutions aside from throwing more money at the problem? The studios obviously like the monetary race to the bottom since it lines their pockets, and California's options are limited, but Congress can come up with an actual solution that solves the real underlying problem. The letter misleads the reader on research findings. It cites just two studies – one by the Los Angeles Economic Development Corporation and the other by the Headway Institute – for the argument that “for every dollar allocated to the film tax credit, the state and local governments saw a net positive impact in their tax revenues.” They don’t mention that the Los Angeles EDC study was funded by the Motion Picture Association of America (MPAA) and that its finding (every $1 of film tax credits leads to $20 of new economic activity) is unbelievably high and wildly out of line with every independent study on the subject. As for the Headway Institute, that does not exist – the authors likely meant the Headway Project, a self-described progressive group that seems to have only ever produced this one study calling for more film credits. The study itself, by UCLA researchers, actually found the Los Angeles EDC study overstated benefits and that more research is needed.

As I noted to Bloomberg BNA earlier this month, it’s tough to say no to Hollywood. They want the state to write a blank check to them, and it’s hard to really blame them. I hope the legislators will keep in mind that this needs to be a good deal for all Californians, not just those working for the film industry.

Categories: Tax news

Just Released: New Book on Iowa's Tax System and Economy

Tax Foundation - Tue, 2014-07-29 10:30

This morning, we released a new chart book that illustrates why tax reform should be on the minds of Iowan policymakers and taxpayers during the upcoming gubernatorial election in November. Iowa Illustrated: A Visual Guide to Taxes & the Economy provides reporters, legislators, and taxpayers with an in-depth look at the make-up of Iowa’s tax code and its growing economy.

By offering a broader perspective of Iowa’s taxes and illustrating some of the lesser-known aspects of Iowa’s business environment, this guide provides the necessary facts for having an honest debate about how to improve the structure of The Hawkeye State’s tax system.

Here are just a few examples of the more than 30 key findings:

Iowa relies on federal funding for one-third of its budget Iowa’s sales tax rate has tripled since its creation Iowa’s business taxes rank poorly nationally, and are uncompetitive regionally Iowa has had a net loss of 63,287 people over the last 20 years Effective tax rates in Iowa vary widely across different industries

Check out the full report, here.

Categories: Tax news

Kentucky Considers Tax Rebate for Creationist Theme Park

Tax Foundation - Tue, 2014-07-29 09:00

News outlets in my home state of Kentucky report that a Creationist-themed amusement park, “Ark Encounter,” is seeking approval for tax incentives. We wrote on this several years ago when the sponsoring organization, Answers in Genesis (AiG), first applied for tax incentives. Now, AiG is proposing to build the project in smaller stages, instead of all at once, and thus has reduced their incentive request from $43 million to $18.25 million in sales tax rebates.

Kentucky has an extensive set of tax incentives offered to many different industries, with incentives sometimes worth more than 50 percent of a total investment, as I’ve reported previously. The Bluegrass state offers these deals in no small part due to its otherwise high and burdensome state and local taxes, especially income taxes.

Tax incentives create economic distortions, which can lead to inefficient business investments and distortions between sectors based on political preferences. This causes economic losses as state subsidies induce investment and employment decisions based on political concerns rather than profitability.

But the Ark Encounter tax incentives reveal another fundamental concern with tax incentives: they put the government in the awkward position of financing speech that many voters may not support. Whether it’s film tax incentives to movies and political TV shows or sales tax rebates for religious businesses, tax incentives interject public resources into private concerns. No matter a person’s religious beliefs, Answers in Genesis presumably has a right to use its own money to build a theme park, and enjoy equal treatment under the law. But when equal treatment means access to special incentives, tax incentives can have unintended effects.

The solution to this problem isn’t simply to selectively deny tax breaks to some firms based on political or religious preferences, creating a problem of even more explicit political favoritism. Rather, the demand for generous tax incentives reveals problematic elements of state taxes. If policymakers in Kentucky want to promote economic growth, broad-based tax reform is more effective than narrow handouts, and helps reduce thorny political questions like those surrounding Ark Encounter.

Read more on Kentucky here.

Read more on tax incentives here.

Follow Lyman on Twitter.

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