Puerto Rico debt

In the news …

The Supreme Court has struck down a Puerto Rican law that would have allowed the U.S. territory’s public utilities to restructure their debt. The 5-2 ruling leaves management of the island’s fiscal crisis to Congress.

US Budget Deficit

The Congressional Budget Office estimates the U.S. government will run a budget deficit of $1.1 trillion in fiscal 2012, or 7.3% of gross domestic product.

UK Tax Policy

British Treasury chief George Osborne on Wednesday confirmed the government will accelerate a cut in the corporate tax rate in April, while dropping the top, marginal personal tax rate of 50% to 45% in April 2013.

Obama 2013 Budget Proposal

With momentum shifting back in favor of an Obama re-election, we revisit and move the proposed dividend tax policy to the forefront.

In late February, the Wall Street Journal wrote …

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today’s 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.

US Fed

WASHINGTON (MarketWatch) — The Federal Reserve is considering a new kind of bond-buying program that would simultaneously try to limit inflation, according to a report in the Wall Street Journal. The Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.

MLPs and Tax Policy

Joint Committee on Taxation (JCT) report appears to indicate lost tax revenue from MLPs is now estimated to be less than estimated a year ago.