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Lethal Weapon Five: The Tax Code: Seven And A Half Things To Know

01/25/2013 08:07 am ET | Updated Jan 29, 2013

Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, The Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:

Thing One: Tax Wars! You might think that the tax code is just a way to raise money and maybe encourage desirable behavior like buying houses or quitting smoking. But did you know that it's also a deadly weapon?

The news is filled this morning with stories about taxes being used to bludgeon enemies, intentionally or not. The New York Times points out that, in several red states, including What's-The-Matter-With-Kansas, governors are pushing to do away with income taxes and replace them with sales taxes. Such moves would erode public services and put a greater burden on lower-income families, while rewarding the rich who have money to save and invest. One advocate grumbles to the NYT that this would totally help state economies, if only people would stop worrying about such frivolities as "fairness."

Meanwhile, in the Senate, new Budget Committee Chairwoman Patty Murray (D-Wash.) yesterday announced she wanted changes in the tax code to cut in the other direction, squeezing deductions and other tax breaks for the wealthiest Americans as a way to raise more revenue, the Wall Street Journal writes. It's the latest in a flurry of feints and parries in the never-ending budget wars in Washington, where Republicans are gearing up for their next big tiresome skirmish, over fiscal-cliff spending cuts and the expiring budget, coming up in March.

And in the most brazen and also maybe encouraging potential use of the tax code as a weapon, House Ways and Means Committee Chairman Dave Camp (R-Mich.) is considering raising taxes on derivatives trades by big banks, while also offering tax breaks to struggling homeowners, report Ryan Grim and Zach Carter of The Huffington Post. This sounds like a pretty awesome idea all by itself, but wait, it gets better: The move is partially designed to punish the CEOs of the deeply annoying and disingenuous "Fix the Debt" campaign, a GOP operative tells Grim and Carter.

It's a Festivus miracle of bipartisanship! It turns out that people on the political left and right can hate the "Fix the Debt" people together, in perfect harmony. CNBC's deeply annoying and disingenuous "Rise Above" campaign was designed to help push the "Fix the Debt" campaign, which advocates slashing social benefits while hanging onto tax cuts for corporations. Ironically, "Fix the Debt" has helped people "rise above" their partisan differences to hate "Fix the Debt."

Paul Krugman suggests in an op-ed this morning that the primordial deficit scolds behind "Fix the Debt," the Pete Petersons of the world, who have for decades been trying to slash social benefits while hanging onto tax cuts for corporations and the wealthy, have lost the latest round of budget wars. Nothing symbolizes that more than a GOP tax bill aimed at hammering the "Fix the Debt" people. But nobody should get too comfortable. As Kevin Roose writes in New York magazine, those people are still out there, looking for their next chance to wield their own tax-code weapons of mass destruction.

Thing Two: New SEC Chair Sends Mixed Signal: Just about every headline on every story about President Obama's pick to lead the Securities and Exchange Commission, former U.S. prosecutor Mary Jo White, calls the pick a "signal" to Wall Street, helpfully adopting Obama's language. Unfortunately, the "signal" may be a little unclear. Obama wants it to be a signal that the government is going to crack down on Wall Street malfeasance, and White certainly has a long history of doing that during her decade as a federal prosecutor. But in the subsequent decade as a private-practice lawyer she also developed a long history of defending Wall Street banks and their ideology about the financial crisis. In one instance, she used her powerful revolving-door momentum to make a potential legal headache for Morgan Stanley's John Mack disappear, write the HuffPost's Ben Hallman and Eleazar David Melendez. What kind of signal does that send?

Meanwhile, White's lack of experience with financial markets and rule-making means the very hard work the SEC needs to do in implementing dozens of Dodd-Frank financial reforms could be delayed, writes Bloomberg.

Thing Three: Bruised Apple: Shares of Apple tumbled 12 percent yesterday, their worst one-day selloff in four years, after the former can't-miss company's quarterly earnings missed Wall Street forecasts. The drop wiped out $60 billion in Apple market valuation and brought it perilously close to losing its spot as the most-valuable company in America. That's probably coming soon, as Apple has lost its ability to convince customers to buy its pricier new iPhones, the WSJ writes. Tiny incremental changes aren't going to cut it any more. Adding to Apple's bad-news smorgasbord, labor audits have turned up under-age workers and other violations at some of its suppliers in Asia, Reuters writes.

Meanwhile, top rival Samsung had a better quarter, despite facing some of the same competitive headwinds Apple faces, the WSJ writes, and struggling Nokia's lousy quarter was a cautionary tale -- you can always fall from the top.

Thing Four: Another Win For Austerity: Conservative U.K. policy makers have been loud and proud advocates of the idea that what truly ails the global economy is too much debt, particularly government debt, and the only prescription is more and more belt-tightening. And how is that working out for the U.K.? Well, what do you know, it has resulted in surprisingly bad GDP, which turned negative again in the fourth quarter, raising the prospect of a rare "triple-dip" recession. Reuters writes that Prime Minister David Cameron is doggedly sticking to his austerity plan, despite the fact that the U.K. economy has lagged far behind "most other major economies."

Thing Five: Boeing To Be Stranded On Tarmac For A While: I wrote yesterday about how Boeing 787 flights were still held up while investigators tried to figure out what was causing their batteries to catch on fire, which is kind of sub-optimal when it happens midair, don't you think? It turns out that wait is going to be very, very long. National Transportation Safety Board Chairman Deborah Hersman said yesterday that investigators still had no clue what was going on with the batteries, calling it "a very serious air safety concern." One source told Reuters the delay could be "weeks, not days." Which is bad news for Boeing, which is still busily making its smoky 787s.

Thing Six: Libor Scandal Just Keeps On Giving: Hey, guess what, the Libor scandal is still rolling along in the background, jumping up to bite even banks that thought they had finally put the problem behind them. Emails produced in a British court case yesterday showed that top Barclays executives were aware that bank traders were manipulating the key short-term interest rate Libor much earlier than people suspected, the Financial Times writes. Separately, a former Deutsche Bank trader fired over rate-rigging accusations will give up $53 million in bonus money, Bloomberg writes.

Thing Seven: France vs. Twitter: French authorities are pressing Twitter to give up the names of users who tweeted anti-Semitic stuff, the NYT writes. Twitter is so far resisting, though it has agreed to take down the offending tweets. At the same time this is happening, European policy makers are calling for more digital privacy protections, while U.S. policy makers are resisting, the Washington Post writes.

Thing Seven And One Half: Long Talk: On this day in 1915, Alexander Graham Bell and Thomas Watson had a telephone conversation on a 3,400-mile wire stretched between New York and San Francisco, in the first-ever transcontinental phone call.

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Correction: An earlier version of this item mis-identified Sen. Patty Murray as a Republican.

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