Domestic Taxes

Domestic Taxes

Baucus expands witness list for bank tax hearing

Two additional witnesses will appear at Tuesday's bank tax hearing hosted by Senate Finance Chairman Max Baucus (D-Mont.). 

James Chessen, chief economist at the American Bank Association, and Patrick Baird, Chairman of AEGON USA, will now join Treasury Secretary Timothy Geithner, Financial Services Roundtable CEO Steven Bartlett and John Sorensen, president and CEO of the Iowa Bankers Association, at the witness table. 


Grassley blasts schools for misusing tax status to improve ROI

Sen. Chuck Grassley (R-Iowa) on Friday highlighted findings by the Congressional Budget Office to criticize schools that use their tax-exempt status to amass greater returns on investments instead of helping families better afford higher education. 

"This report raises questions for parents, students and taxpayers about universities' issuing bonds and going into debt when they have money in the bank," Grassley said in prepared remarks, adding, "Does the expense of debt service take away money from student aid or academic service?

The CBO study looked at colleges that use tax arbitrage, a strategy where lower tax-exempt bonds finance the purchase of investments that garner higher yields. The study found that several schools employed the strategy.


Survey deems expiring homebuyer tax credit a success

A survey by The Tax Institute at H&R Block found that the expiring homebuyer tax credit played a key role in helping to turn the housing market around. 

"Undoubtedly the tax credit is working," said National Association of Home Builders chairman Bob Jones in prepared remarks. "Builders are seeing a growing optimism among consumers." 


Budget shortfalls force consideration of a VAT, accounting firm finds

A new study by the accounting firm KPMG predicts the economic downturn will force governments to move quickly in implementing an indirect tax like the Value-Added-Tax (VAT) to make up for budget shortfalls.  

"The slow economy and falling direct-tax rates are causing many governments worldwide to tighten their existing indirect-tax regimes or introduce new ones," said Frank Sangster, a KPMG principal, in prepared remarks. 

"Here in the United States, we're seeing VAT discussed more as a potential means to raise revenue and help reduce the federal deficit," he added.


IRS misdirects audit resources, study finds

IRS audits of larger companies have dropped sharply over the past few years and are now at an all time low, according to a report by Transactional Records Access Clearinghouse (TRAC), a legislative and regulatory watchdog. 

Since 2005, the IRS has cut examination hours of corporations with at least $250 million in assets by a third. Audits for this segment have declined by 22 percent over the same time period, meaning 3 out of 4 of these firms were not audited by the IRS in a given year. Twenty years ago, 2 out of 3 of these companies would have been examined by the IRS.  

"The decline in audits of large corporations is surprising because (1) the highest levels of misreported tax dollars per auditor hour are found among the biggest business organizations and (2) since FY 2005 Congress has provided the IRS with the funds it needs to hire an increasing number of revenue agents to handle these very complex returns," TRAC stated in release. 


Volcker: Current tax code 'exhausted'; VAT or carbon tax may be needed

Paul Volcker, the former Federal Reserve chairman and part-time White House advisor, said new taxes such as a value-added tax or carbon tax might be needed because changes to the current tax system won't solve the country's debt problem.

Volcker said Wednesday that lawmakers looking to cut deficits to sustainable levels should first try finding a solution through spending cuts.

"If we can't, we ought to think about taxes," he said. "I think we've exhausted the present tax system. The payroll tax is quite high, the corporate income tax is quite high, personal income tax is up and down a little bit."


Geithner to appear before Senate panel on bank tax

Treasury Secretary Timothy Geithner will testify on Tuesday before the Senate Finance Committee to discuss the creation of a bank tax. 

President Obama recently proposed a tax on financial institutions that take extraordinary risks to recoup losses from the Troubled Asset Relief Program (TARP). But Congress has had trouble implementing the proposal.

Geithner will walk through Obama's proposal with the committee and explore ways on how the levy can be implemented and how each option might affect the financial industry. 


Rep. Levin could do a multi-year tax extender bill

Ways and Means Chairman Sandy Levin (D-Mich.) on Wednesday said his committee might extend at least some of the expiring tax provisions for more than a single year.

"I wouldn't want to say that there will be nothing in here [the bill] that relates to beyond a year," he told reporters.  

Levin plans to speak with Senate Finance Chairman Max Baucus (D-Mont.) and Democratic leaders about the extender bill either this week or next.