Finance

While Democrats and Republicans slug it out on the campaign trail, there's one issue of deep concern to accountants that all of the 2008 presidential candidates agree on: the need for reform of the federal tax system.That is where the consensus ends, however. None of the contenders agree on what changes are needed in the Tax Code, or even what constitutes reform. Adding to the confusion, at least some of the candidates have tailored their tax reform positions to their audience -- favoring one course of action while on the campaign trail, but voting the opposite way in Congress.

In a deal that lawmakers and the White House hope will help jumpstart a wheezing economy, leaders on both sides of the aisle agreed on a $150 billion economic stimulus plan that would hand most taxpayers rebate checks of between $600 and $1,200.

The Congressional Budget Office has issued a report on the deductibility of state and local income taxes, looking at the benefits and drawbacks of the system.

Senator Jack Reed, D-R.I., has written letters to the heads of the Financial Accounting Standards Board and the International Accounting Standards Board asking how to improve the transparency of the types of assets linked to subprime mortgages.

The House Committee on Small Business held a hearing on business activity taxes and their impact on small businesses.

With Democrats running both Houses of Congress, the normally Republican-leaning political fundraisers for the accounting profession are starting to tilt to the left.A new Accounting Today analysis of campaign contributions to congressional candidates by the industry's political action committee fundraising groups confirmed a distinct shift toward Democrats amid the 2008 primary election season.

Unreported income from the cash economy and late-year Tax Code changes are the focus of the first of this year's two reports to Congress by National Taxpayer Advocate Nina E. Olson.In her report, Olson proposed a comprehensive strategy to address tax noncompliance in the cash economy, which accounts for the largest portion of the tax gap. The report identifies the lack of progress in addressing cash economy noncompliance as a most serious problem.

President Bush said he would sign into law the economic stimulus package passed by Congress.

A survey of leading corporate tax executives predicts that taxes will not be a major issue in Congress in 2008, apart from the one-year alternative minimum tax patch and the one-year extenders package.

The Senate and the House have passed an economic stimulus package that adds tax rebates for 20 million senior citizens and 250,000 disabled veterans to a package passed by the House last week.

The White House has issued its budget for the coming year, and as usual it is already drawing complaints.

GAO Comptroller General David Walker, who has spent the last three years on a "Fiscal Wake-Up Tour," again reiterated his agency's warning that the country is on an "imprudent and unsustainable fiscal path," while stressing the need for bi-partisan cooperation and the courage to make tough choices for the longer term. Walker, who has traveled to some 25 states on his tour, said simulations by the GAO and the Congressional Budget Office show that despite a three-year decline in the budget deficit, the U.S. faces "large and growing structural deficits driven primarily by rising health care costs and known demographic trends." The auditor general pointed out that the first wave of Baby Boomers has already filed for early Social Security retirement benefits -- and will be eligible for Medicare in just three years. Walker said rapidly rising health care costs are not simply a federal budget problem, but rather the No. 1 challenge to the U.S. and that the problem calls "for us as a nation to fundamentally rethink how we define, deliver, and finance health care in both the public and the private sectors." Walker said "While Congress and the administration are focused on the need for a short-term fiscal stimulus, our long-term challenge increases the importance of careful design of any stimulus package. It should be timely, targeted and temporary, while at the same time creating a capable and credible commission to make recommendations to the next Congress and the next president for action on our longer-range and looming fiscal imbalance."

Congress can't seem to agree on what to do about an economic stimulus package, which could mire the effort to produce an effective package in time to do some good.

A prominent Senate Democrat said that he would add rebates for senior citizens who depend on Social Security to the economic stimulus package, along with an extension of unemployment benefits.

The House voted by a 385 to 35 margin to pass the economic stimulus package agreed to by President Bush and House leaders.

Congressional leaders have struck a $150 billion deal on an economic stimulus plan that would give most taxpayers rebate checks of $600 to $1,200.

President Bush encouraged Congress to pass the economic stimulus package he agreed to with House leaders without adding extra provisions.

Michael Oxley, the former chairman of the House Financial Services Committee who co-sponsored the Sarbanes-Oxley Act of 2002, has joined the International Advisory Council of APCO Worldwide, a consultancy that specializes in corporate communications.

The Senate Finance Committee held hearings to discuss an economic stimulus package and hear testimony from the Congressional Budget Office about the available options.

The stimulus package that President Bush and Congress are hammering out could be enough to jumpstart the economy, but don't count on it.