The IRS goes after the “worst of the worst.” Bloomberg reports that the IRS will now classify the use of “basket options”—a strategy mastered by hedge fund Renaissance Technologies—as a “listed transaction.” The IRS flags these deals as  tax shelters. TPC’s Steve Rosenthal explained, “They’re really sort of the worst of the worst that the IRS trips across.” Basket options allow for the conversion of short-term capital gains and ordinary income into lighter-taxed long-term gains. The Senate Finance Committee’s tax reform working groups finally report. After six months and two extensions, the five groups reached little consensus. Four of the task forces made no specific recommendations. The co-chairs of the infrastructure group proposed taxing unrepatriated profits of US multinationals to finance the highway trust fund in the short term, and a vehicle mileage tax to pay for roads over the long-term. But the task force members didn’t go along. TPC’s Howard Gleckman says the main takeaway from six months of work is, “Tax reform is hard.” “When the tax rate’s low, and the income flows… Who you gonna’ call?” Tax Inspectors Without Borders, that’s who. The United Nations and the Organization for Cooperation and Economic Cooperation and Development will establish the team next week. It will help low-tax developing countries manage their revenues. Local tax agencies need to be able to ensure multinational corporations pay what they owe. Nations in Africa, for example, lose over $50 billion a year. You can learn more about budgeting with dynamic scoring at the state level. The Center for State and Local Finance and the Fiscal Research Center at Georgia State University recently completed two research projects  that find that states have discontinued almost all dynamic scoring efforts. CSLF director Carolyn Boudreaux explains in a Governing op-ed, “..The size of a dynamic effect… is typically miniscule relative to the overall size of a state's budget…[and] the actual dynamic estimates are too imprecise and too uncertain to be built into a state's budget in any meaningful way.” In the United Kingdom, some tax changes are on the horizon. UK finance minister George Osborne announced his summer budget. He plans to cut the country’s welfare system, and will cut the corporation tax gradually from 20 percent 18 percent by 2020. He also pledged to tackle tax evasion, ease the tax burden on workers, and raise the level at which middle-income earners start to pay 40 percent income tax. How would you spend revenue from a carbon tax? TPC’s Donald Marron offered his take in response to Maryland Democratic Congressman John Delaney’s query. The tax proposed by Delaney could bring in $1 trillion in its first ten years, but that revenue would need to be “recycled” in order to abide by a “No Climate Tax” pledge signed by many Republican members of Congress. Looking forward, Marron says “We have an opportunity to learn from other governments… British Columbia, for example, paired its carbon tax with reductions in corporate and personal tax rates, a low-income tax credit, and a rebate for rural taxpayers, and the United Kingdom used carbon revenues to reduce payroll taxes.” Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at [email protected].