U.S. consumer spending fell in April for the first time in almost a year and already low inflation declined further, undercutting arguments for a tapering of the Federal Reserve's bond-buying stimulus.
Despite the energy-driven pullback in consumer spending last month, the economy is not slowing abruptly. Consumer sentiment approached a six-year high in May and factory activity in the Midwest regained speed this month, other data showed on Friday.
While this suggests the economy is squeezing out of a soft patch hit early in the second quarter, the strength might not be sufficient for the U.S. central bank to start scaling back the $85 billion in bonds it is buying each month. - Read more at Reuters
PAY THE HIGHEST RATES, GET THE MOST TAX BREAKS Just ten of the more than 200 tax breaks tucked into the sprawling U.S. tax code will cost federal coffers $12 trillion over the next decade. According to a new report by the Congressional budget Office released Wednesday, the top 20 percent of households will enjoy more than half of the combined benefits, and within that top 20 percent, the benefits skew disproportionately to the highest earners. The top 1 percent – individuals earning at least $327,000 or families earning $654,000 -- get 17 percent of the breaks' value. - Read more at CNN
CHECK THE BOX” LOOPHOLE SAVES CORPORATIONS BILLIONS The 'check the box' loophole allows U.S. companies to choose how to classify their subsidiaries for tax purposes and costs the United States about $10 billion each year. The loophole has “been a reflection of Washington's "revolving door" culture of policy-making and lobbying. Some of the bureaucrats who helped to write the rule went on to work for corporations that used it to lower their tax bills, Reuters' Kevin Drawbaugh and Andy Sullivan write. Among them is William Morris who served as Treasury's associate international tax counsel when the rule was imposed. Morris joined General Electric in 2000 and is now director of the company's global tax policy. GE’s tax burden, like many other big multinationals, is well below the official U.S. corporate rate of 35 percent in part by taking advantage of the "check the box” loophole. - Read more at Reuters
OBAMA: FEDERAL EXECS SHOULD NOT EARN MORE THAN ME The president next week will ask Congress to limit the annual salaries of federal contractor executives to $400,000. Currently, the government is required to pay the increasing amounts of executive compensation—which is expected to rise to $950,000 from $763,000 for each of the top five executives of each contractor. - Read more at The Hill
LAWMAKERS CONTINUE PROBING IRS House investigators from the Ways and Means and Oversight committees interviewed two Internal Revenue Service staffers from the Cincinnati office this week seeking more information about how and why the targeting of conservative groups began. The interviews come ahead of two new investigative hearings scheduled for next week. A congressional source told The Hill that four interviews in all would be held over the next two weeks. That will likely include John Shafer, a screening group manager, Gary Muthert, a screener in the tax-exempt division, Liz Hofacre, a former case coordinator from April to October 2010, and Joseph Herr, a former advocacy group manager. - Read more at The Hill
NEXT WEEK’S IRS HEARINGS Two committee hearings are scheduled next week to continue probing the Internal Revenue Service about targeting conservative groups applying for tax-exempt status.
House Committee on Appropriations- oversight hearing on Monday, June 3, at 3 p.m.
See the hearing advisory here
House Ways and Means Committee – Tuesday, June 4 at 10 a.m.
See the hearing advisory here
