Obama announces plan to close tax loopholes

WASHINGTON – President Barack Obama vowed to "detect and pursue" American tax evaders Monday as he announced a plan to close tax loopholes and clamp down on overseas shelters.
The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home. He also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.
"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama said.
The president, who hammered on this issue during his long campaign for the White House, said at a White House event that his plan would generate $210 billion in new taxes over 10 years and "make it easier" for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in a federal deficit expected to swell to $1.2 trillion in 2010.
Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
The current law, Obama said, "says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
He said the government also is hiring nearly 800 new IRS agents to enforce the U.S. tax code.
Congress is expected to resist significant portions of Obama's plan.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — President Barack Obama proposed Monday to close U.S. tax loopholes for companies and individuals with operations or bank accounts overseas.
The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home. He also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.
"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama said.
Obama said that his plan would generate $210 billion in new taxes over 10 years and "make it easier" for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in the federal deficit, expected to be $1.2 trillion in 2010.
Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
The current law, Obama said, "says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "
He said the government also is hiring nearly 800 new tax agents "to detect and pursue American tax evaders abroad."
Congress may resist significant portions of Obama's plan.

Swine flu cases pass 100 in US, vaccine pursued

WASHINGTON – U.S. authorities are pledging to eventually produce enough swine flu vaccine for everyone but the shots couldn't begin until fall at the earliest.
Worries about the spread of the virus mounted Thursday as the nation's swine flu caseload passed 100, and nearly 300 schools closed in communities across the country. Federal officials had to spend much of the day reassuring the public it's still safe to fly and ride public transportation after Vice President Joe Biden said he wouldn't recommend it to his family.
"There's not an increased risk there," Dr. Richard Besser, acting director of the Centers for Disease Control and Prevention, said Friday. "If you have the flu or flu-like symptoms, you shouldn't be getting on an airplane or you shouldn't be getting in the subway, but for the general population that's quite fine to do," he said.
Clinics and hospital emergency rooms in New York, California and some other states are seeing a surge in patients with coughs and sneezes that might have been ignored before the outbreak.
Scientists were racing to prepare the key ingredient to make a vaccine against the never-before-seen flu strain — if it's ultimately needed. But it will take several months before the first pilot lots begin required human testing to ensure the vaccine is safe and effective. If all goes well, broader production could start in the fall.
"We think 600 million doses is achievable in a six-month time frame" from that fall start, Health and Human Services Assistant Secretary Craig Vanderwagen told lawmakers.
"I don't want anybody to have false expectations. The science is challenging here," Vanderwagen told reporters. "Production can be done, robust production capacity is there. It's a question of can we get the science worked on the specifics of this vaccine."
Until a vaccine is ready, the government has stockpiled anti-viral medications that can ease flu symptoms or help prevent infection. The medicines are proving effective.
Reassurances from top health officials didn't stop the questions from coming.
An estimated 12,000 people logged onto a Webcast where the government's top emergency officials sought to cut confusion by answering questions straight from the public: Can a factory worker handling parts from Mexico catch the virus? No. Can pets get it? No.
And is washing hands or using those alcohol-based hand gels best? Washing well enough is the real issue, Besser said. He keeps hand gel in his pocket for between-washings but also suggested that people sing "Happy Birthday" as they wash their hands to make sure they've washed long enough to get rid of germs.
Although it is safe to fly, anyone with flu-like symptoms shouldn't be traveling anywhere, unless they need to seek medical care.
The swine flu outbreak penetrated over a dozen states and even touched the White House, which disclosed that an aide to Energy Secretary Steven Chu apparently got sick helping arrange President Barack Obama's recent trip to Mexico but that the aide did not fly on Air Force One and never posed a risk to the president.
The Washington Post identified the aide as Marc Griswold, a former Secret Service agent who was doing advance work for Chu. It said that Griswold has complained about the infection placing his family in an awkward position with family and neighbors.
"We're not the Typhoid Mary family, for goodness sake," he said. "We've been told that we're not contagious. We're already past the seven-day mark for that."
So far U.S. cases are mostly fairly mild with one death, a Mexican toddler who visited Texas with his family — unlike in Mexico where more than 160 suspected deaths have been reported. Most of the U.S. cases so far haven't needed a doctor's care, officials said.
Still, the U.S. is taking extraordinary precautions — including shipping millions of doses of anti-flu drugs to states in case they're needed. The World Health Organization is warning of an imminent pandemic because scientists cannot predict what a brand-new virus might do. A key concern is whether this spring outbreak will surge again in the fall.
The CDC confirmed 109 cases Thursday, and state officials confirm 22 more. Cases now are confirmed in New York, Texas, California, South Carolina, Kansas, Massachusetts, Indiana, Ohio, Arizona, Michigan, Nevada, New Jersey, Delaware, Maine, Colorado, Georgia and Minnesota.
Besser appeared Friday morning on ABC's "Good Morning America" and NBC's "Today" show.
___
On the Net:
Health and Human Services Department swine flu site: http://us.rd.yahoo.com/dailynews/ap/ap_on_go_ca_st_pe/storytext/us_med_swine_flu_us/31858194/SIG=10s2di03h/*http://www.pandemicflu.gov

Source: Liberal-leaning Justice Souter to retire

WASHINGTON – Justice David Souter is planning to retire after nearly two decades on the Supreme Court, but his departure is unlikely to change its conservative-liberal split.
President Barack Obama's first pick for the high court is likely to be a liberal-leaning nominee, much like Souter.
The White House has been told that Souter will retire in June, when the court finishes its work for the summer, a source familiar with his plans said Thursday night. The retirement is likely to take effect only once a successor is confirmed.
The source spoke to The Associated Press on condition of anonymity because he was not authorized to speak for Souter.
Souter had no comment Thursday night, a Supreme Court spokeswoman said.
The vacancy could lead to another woman on the bench to join Justice Ruth Bader Ginsburg, currently the court's only female justice.
At 69, Souter is much younger than either Ginsburg, 76, or Justice John Paul Stevens, 89, the other two liberal justices whose names have been mentioned as possible retirees. Yet those justices have given no indication they intend to retire soon and Ginsburg said she plans to serve into her 80s, despite her recent surgery for pancreatic cancer.
Souter, a regular jogger, is thought to be in excellent health.
Interest groups immediately began gearing up.
"We're looking for President Obama to choose an eminently qualified candidate who is committed to the core constitutional values, who is committed to justice for all and not just a few," said Nan Aron, president of the liberal Alliance for Justice.
Some of the names that have been circulating include recently confirmed Solicitor General Elena Kagan; U.S. Appeals Court Judges Sonya Sotomayor, Kim McLane Wardlaw, Sandra Lea Lynch and Diane Pamela Wood; and Leah Ward Sears, chief justice of the Georgia Supreme Court. Men who have been mentioned as potential nominees include Massachusetts Gov. Deval Patrick, Harvard Law professor Cass Sunstein and U.S. District Judge Ruben Castillo of Chicago.
The Obama White House began from almost its first days in office preparing for the possibility of a retirement by thinking about and vetting potential high court nominees. Those efforts only accelerated with Ginsburg's cancer surgery.
The timing may have been unexpected, but Souter has long yearned for a life outside Washington.
He has never made any secret of his dislike for the capital, once telling acquaintances he had "the world's best job in the world's worst city." When the court finishes its work for the summer, he quickly departs for his beloved New Hampshire.
He has been on the court since 1990, when he was an obscure federal appeals court judge until President George H.W. Bush tapped him for the Supreme Court.
Bush White House aide John Sununu, the former conservative governor of New Hampshire, hailed his choice as a "home run." And early in his time in Washington, Souter was called a moderate conservative.
But he soon joined in a ruling reaffirming woman's right to an abortion, a decision from 1992 that remains still perhaps his most noted work on the court.
Souter became a reliable liberal vote on the court and was one of the four dissenters in the 2000 decision in Bush v. Gore that sealed the presidential election for George W. Bush.
Yet as Souter biographer Tinsley Yarbrough noted, "he doesn't take extreme positions." Indeed, in June, Souter sided with Exxon Mobil Corp. and broke with his liberal colleagues in slashing the punitive damages the company owed Alaskan victims of the Exxon Valdez oil spill.
Souter is the court's 105th justice, only its sixth bachelor. He works seven days a week through most of the court's October-to-July terms, a pace that he says leaves time for little else. He told an audience this year that he undergoes "an annual intellectual lobotomy" each fall.
Souter earned his bachelor's and law degrees from Harvard sandwiched around a stay at Oxford University as a Rhodes scholar.
He became New Hampshire's attorney general in 1976 and a state court judge two years later. By 1990, he was on the federal appeals court in Boston for only a few months when Bush picked him to replace Justice William Brennan on the Supreme Court.
National Public Radio first reported Souter's plans Thursday night.
___
Associated Press writer Jesse J. Holland contributed to this report.

US stock futures edge up before manufacturing data

Wall Street set for modest gain as investors await reading on manufacturing activity

NEW YORK (AP) -- Stocks are set to begin May with a modest gain ahead of a key reading on U.S. manufacturing.
Wall Street, coming off its best month in nine years, has been growing more optimistic the economy is near a turnaround. Investors expect the Institute for Supply Management's manufacturing index will support that belief -- economists predict the April index will show a contraction, but the smallest one since last October.
Before the market's opening, Dow Jones industrial average futures are up 28, or 0.3 percent, at 8,154. Standard & Poor's 500 index futures are up 2.90, or 0.3 percent, at 872.90. Nasdaq 100 index futures are up 5.50, or 0.4 percent, at 1,399.00.
The S&P 500 index, a broad measure of the market, rose 9.4 percent in April. That was its biggest monthly increase since March 2000.
News on Thursday that Chrysler will be going through bankruptcy reorganization put just a small dent in Wall Street's rally, which began in early March. The Dow, still up 24.8 percent from its 12-year low on March 9, dipped 0.2 percent on the last day of the month.
The first day of May will bring not only the ISM's manufacturing index, but also data on factory orders, consumer sentiment and vehicle sales figures.
Investors will be focusing on earnings reports as well. Late Thursday, two insurers -- The Hartford Financial Services Group Inc. and MetLife Inc. -- posted losses for the first quarter. But computer security software maker McAfee Inc. said its first-quarter profit jumped 77 percent.
U.S. government bond prices slipped. The dollar was mostly lower against other major currencies. Gold prices also declined.
Light, sweet crude fell 26 cents to $50.86 a barrel in electronic trading on the New York Mercantile Exchange.
In overseas trading, Japan's Nikkei stock average rose 1.7 percent. By midday in Europe, Britain's FTSE 100 rose 0.1 percent. Germany's DAX and France's CAC-40 were closed for a holiday.

INSIDE WASHINGTON: Taxpayers to get rude surprise

INSIDE WASHINGTON: Millions of couples, retirees may have to repay some of Obama tax credit

WASHINGTON (AP) -- Millions of Americans enjoying their small windfall from President Barack Obama's "Making Work Pay" tax credit are in for an unpleasant surprise next spring.
The government is going to want some of that money back.
The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.
But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.
At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.
The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.
"They need to get the Goodyear blimp out there on this," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
For many, the new tax tables will simply mean smaller-than-expected tax refunds next year, IRS spokesman Terry Lemons said. The average refund was nearly $2,700 this year.
But taxpayers who calculate their withholding so they get only small refunds could face an unwelcome tax bill next April, said Jackie Perlman, an analyst with the Tax Institute at H&R Block.
"They are going to get a surprise," she said.
Perlman's advice: check your federal withholding to make sure sufficient taxes are being taken out of your pay. If you are married and both spouses work, you might consider having taxes withheld at the higher rate for single filers. If you have multiple jobs, you might consider having extra taxes withheld by one of your employers. You can make that request with a Form W-4.
The IRS has a calculator on its Web site to help taxpayers figure withholding. So do many private tax preparers.
Obama has touted the tax credit as one of the big achievements of his first 100 days in office, boasting that 95 percent of working families will qualify in 2009 and 2010.
The credit pays workers 6.2 percent of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more $95,000 and couples making more than $190,000 are ineligible.
The tax credit was designed to help boost the economy by getting more money to consumers in their regular paychecks. Employers were required to start using the new withholding tables by April 1.
The tables, however, don't take into account several common categories of taxpayers, experts said.
For example:
--A single worker with two jobs making $20,000 a year at each job will get a $400 boost in take-home pay at each of them, for a total of $800. That worker, however, is eligible for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time -- either through a smaller refund or a payment to the IRS.
The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.
-- A married couple with a combined income of $50,000 is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost -- for a total of $1,200.
There were 33 million married couples in 2008 in which both spouses worked. That's 55 percent of all married couples, according to the Census Bureau.
-- A single college student with a part-time job making $10,000 would get a $400 boost in pay. However, if that student is claimed as a dependent on a parent's tax return, she doesn't qualify for the credit and would have to repay it when she files next year.
Some retirees face even bigger headaches.
The Social Security Administration is sending out $250 payments to more than 50 million retirees in May as part of the economic stimulus package. The payments will go to people who receive Social Security, Supplemental Security Income, railroad retirement benefits or veteran's disability benefits.
The payments are meant to provide a boost for people who don't qualify for the tax credit. However, they will go to retirees even if they have earned income and receive the credit. Those retirees will have the $250 payment deducted from their tax credit -- but not until they file their tax returns next year, long after the money may have been spent.
Retirees who have federal income taxes withheld from pension benefits also are getting an income boost as a result of the new withholding tables. However, pension benefits are not earned income, so they don't qualify for the tax credit. That money will have to paid back next year when tax returns are filed.
More than 20 million retirees and survivors receive payments from defined benefit pension plans, according to the Employee Benefit Research Institute. However, it is unclear how many have federal taxes withheld from their payments.
The American Federation of State, County and Municipal Employees union raised concerns about the effect of the tax credit on pension payments in a letter to Treasury Secretary Timothy Geithner in March.
Geithner responded that Treasury and IRS understood the concerns and were "exploring ways to mitigate that effect."
Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee, said Geithner has yet to respond to concerns raised by committee members.
"So far we've got the, 'If we don't address this maybe it will go away' approach," Camp said.
IRS withholding calculator:

Police say man, 72, tied to L.A. serial killings

LOS ANGELES – Larry Manchester discovered the body on Feb. 18, 1976.
The woman, a 67-year-old retired school administrator, was dead inside her red-and-black '65 Chevy Chevelle, two blocks from her west Los Angeles apartment.
The young homicide detective popped open the trunk and saw Elizabeth McKeown lying on her side. She was naked from the chest down. She'd been beaten, raped and strangled three days earlier.
Despite his efforts and a $25,000 reward, Manchester and his colleagues could not solve the killing. For 33 years and long after he retired, Manchester, now 64, berated himself. He would clip newspaper stories about similar murders in hopes of spotting a clue.
On Thursday, the Los Angeles Police Department announced it had solved McKeown's case. The suspect, they said, was likely responsible for the murders of as many as 30 women, dating to the mid-1950s, which would make him the most prolific killer in city history.
"I was crying," Manchester said of his reaction when he learned John Floyd Thomas Jr., 72, had been arrested. "It was remarkable that they caught him."
Thomas, an insurance claims adjuster, so far is charged with two killings after cold-case detectives matched his DNA to the McKeown murder and to the 1972 strangling of Ethel Sokoloff, 68, who was sexually assaulted.
The LAPD also has partial DNA matches to two other killings, and he is a suspect in three killings in Inglewood. The Los Angeles County Sheriff's Department is looking at him in at least two other cases.
"We believe that Thomas is likely connected to many more sexually motivated murders," Deputy Chief Charlie Beck said.
Thomas was being held on $1 million bond. He could not be reached for comment, and the public defender's office said he had yet to be assigned an attorney.
Because the killings occurred before the 1977 reinstatement of the death penalty, prosecutors are seeking life in prison without parole. If Thomas is charged in later cases, they may seek death.
In Los Angeles in the mid-1970s, a man police dubbed "The Westside Rapist" entered the homes of elderly women who lived alone, raped them and choked them until they passed out or died. Beck said police believe Thomas is the rapist and may be involved in scores of unsolved rapes.
The attacks stopped in 1978 — the year Thomas went back to prison for the rape of a Pasadena woman.
He may also be involved in killings beyond Los Angeles. A decade later and 40 miles to the east, at least one elderly women in Claremont was found raped and killed. The Times reported Thomas was being investigated for the death of five elderly women in that city, but sheriff's spokesman Steve Whitmore said only one case was being looked at there.
Thomas is black. The victims in all 30 cases under review were older white women, mostly of lower incomes and often widows living alone. All were sexually assaulted and most were strangled.
Police said Thomas likely targeted the women because of their vulnerability and because they all lived alone. Cold-case detective Richard Bengston said serial killers frequently select victims of a different ethnicity.
Thomas had been twice convicted of sexual assault, and as a registered sex offender, he was required to check in annually with police.
During one visit in October, officers took a saliva swab to collect his DNA, which is a requirement for all sex offenders. Police weren't sure why he had not given a sample sooner.
Police Chief William Bratton and other officials credited Proposition 69, a voter-approved initiative that requires convicted felons and certain arrestees to submit DNA samples that are stored in a statewide database.
DNA and fingerprinting are the most important tools at a cold-case detective's disposal, Bengston said. When the killings were first investigated, there was no central computer system to quickly flag possible connections between crimes, and detectives relied on teletypewriter printouts and monthly meetings to exchange information.
Thomas was arrested at his South Los Angeles apartment on March 31, authorities said. Soon after, he resigned from his job with the State Compensation Insurance Fund in Glendale.
Born in Los Angeles, Thomas was 12 when his mother died. He was raised by an aunt and godmother and joined the Air Force in 1956. He was considered sloppy and late and was dishonorably discharged, according to the Los Angeles Times, which first reported the story.
In 1957, he was convicted of burglary and attempted rape in Los Angeles and sentenced to six years in prison. After his release, parole violations sent him back behind bars until 1966.
The allegations about Thomas stunned a friend, Earl Ofari Hutchinson, prominent host of the Los Angeles Urban Policy Roundtable and a commentator and author of books on the black experience in America.
"Shocked, shocked, shocked," said Hutchinson, who had known Thomas since about 1989. "He was very engaging, very involved, seemed very informed."
He said Thomas is married and has children.
Los Angeles police are still investigating at least a dozen other murders connected to an unidentified serial killer who has been dubbed the "Grim Sleeper."
___
Associated Press writers John Antczak and Robert Jablon contributed to this story.

US military says 3 American troops killed in Iraq

BAGHDAD – Three U.S. troops have been killed in fighting west of Baghdad, the military said Friday, making April the deadliest month for American forces in Iraq since September.

At least 18 U.S. soldiers died in April, a sharp increase from March's total of nine — the lowest since the war began in March 2003.

The deaths come as a series of deadly bombings in recent weeks has raised concerns that insurgents are stepping up their efforts to re-ignite sectarian bloodshed and derail security gains that have brought overall violence to its lowest levels in recent years.

Most of the violence has targeted Iraqis since the Americans have begun pulling back from inner-city outposts and letting Iraqis take the lead in security operations. But attacks have continued against U.S. forces.

Two people were arrested following an anti-tank grenade attack against U.S. forces Wednesday in a mainly Sunni neighborhood in northwestern Baghdad, the military said.

The two U.S. Marines and one sailor were killed Thursday while conducting combat operations in Anbar province, according to a statement. Anbar is a former insurgent stronghold that has been relatively calm since Sunni tribal leaders turned against al-Qaida in Iraq.

April has been the deadliest month since September, when 25 American forces died.

The U.S. military reported 17 Americans killed in February and 16 in January.

April also saw the most troops killed in combat so far this year, as opposed to other causes. Thirteen of last month's 18 deaths were in combat compared with four among the nine in March.

In all, at least 4,281 members of the U.S. military have died in the Iraq war since it began in March 2003, according to an Associated Press count.

The military statement did not provide further details about the nature of the fighting in Anbar. It also did not identify the troops, pending notification of relatives.

Civilian deaths in Iraq in April were also higher than previous months following a series of bombings that killed more than 200 people.

At least 355 Iraqi civilians and Iraqi security forces were killed in violence in April, according to a monthly death toll issued by various Iraqi government ministries.

That compares with an Associated Press tally of at least 365 Iraqis killed — in addition to 80 Iranian pilgrims — in violence in April. In March, 335 people were killed in violence in Iraq; 283 in February and 242 in January, according to the AP figures.

President Barack Obama, who has ordered U.S. combat operations to withdraw from Iraq by the end of August 2010, called the recent attacks a "legitimate cause of concern" but stressed the violence remained low compared to previous years.

"You haven't seen the kinds of huge spikes that you were seeing for a time. The political system is holding and functioning in Iraq," he said Wednesday in Washington.