TIGTA: IRS should prioritize audits on high-income taxpayers. The Treasury Inspector General for Tax Administration reports that taxpayers with adjusted gross incomes exceeding $1.5 million paid an average of only 39 percent of back taxes and owe over $2 billion. The IRS insists that represents only the first year after cases are assigned to collections. Senate Finance Committee Chair Ron Wyden said, “the IRS could make significant progress in cracking down on tax cheats by focusing on those who make the most money and owe the most in unpaid tax.”
As for how the IRS could collect $1.4 trillion in unpaid taxes… The IRS estimates that Americans report less than half of all income that isn’t disclosed by third-party reporting such as W-2s. That amounts to billions of dollars in business profits, rents, and royalties that the government doesn’t know about. The New York Times editorial board endorses former IRS commissioner Charles Rosotti’s proposal to require banks to produce an annual statement of their clients’ business income, much like the existing Form 1099. The IRS could require such forms from people with taxable income above a high threshold, likely increasing their tax payments.
Rettig: No need to amend returns to get unemployment tax break. IRS Commissioner Charles Rettig told a congressional subcommittee last week that people who already filed their 2020 tax returns should not have to file an amended return to receive a tax break on unemployment benefits they got last year. The pandemic relief bill Congress passed earlier this month exempted the first $10,200 in jobless benefits received last year from federal income tax but many people already have filed their 2020 returns and paid tax on their full benefits. Rettig said the agency can sort it out and send refunds without additional work from tax filers.
TPC’s Matheson: President Biden should align his global tax proposal with the OECD. President Biden’s plan for taxing multinational corporations would raise the US corporate income tax rate to 28 percent and replace the current global intangible low-tax income (GILTI) tax with a stronger minimum tax on foreign earnings. While Biden’s proposals could raise $50 billion annually according to TPC estimates, they also could spur a return to corporate inversions, where foreign firms acquire US-based corporations. TPC’s Thornton Matheson argues that Biden could avoid this problem by aligning his plan with the OECD’s Base Erosion and Profit Shifting (BEPS) Pillar 2 proposal for worldwide minimum corporate income taxation.
Summers: ARP is the “least responsible” US macroeconomic policy in 40 years. Larry Summers, former Obama economic adviser and former Treasury Secretary under President Clinton, didn’t mince words on Bloomberg Television. He said the American Rescue Plan creates a one-in-three chance that inflation will accelerate over the next several years. He warned that by hitting the monetary brakes to stop inflation, the Federal Reserve could destabilize markets and slow the economy to a near-recession.
Sen. Mitt Romney: “Interested” in passing a carbon tax. The Utah Republican told The Washington Examiner that the Climate Leadership Council’s proposal for a carbon tax starting at $40 per ton was enticing. “It may create incentives for the private sector to develop new technologies that will be adopted globally,” That, Romney said, is “the only way we are going to reduce global emissions..” He also suggested that climate change policies supported by most congressional Republicans will be insufficient to drive down global emissions.
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