Infrastructure week in the House? Speaker Nancy Pelosi has announced that her caucus will introduce an infrastructure bill next week. To set the stage, Ways & Means Chairman Richard Neal announced a hearing entitled "Paving the Way for Funding and Financing Infrastructure Investments” on Wednesday, January 29.
Microsoft needs to turn over its tax records. A federal judge says Microsoft was likely trying to avoid or evade taxes by transferring billions of dollars in income to a small manufacturing facility it set up in Puerto Rico in 2005. The judge ordered the company to turn over relevant financial documents to the IRS. It alleges Microsoft structured the facility to shift $38 billion to the commonwealth, which taxed the firm at a zero rate.
Meanwhile, global tax chiefs collectively tackle international evasion. The IRS reports on a globally coordinated effort to stop offshore tax evasion. In 2018, the UK, US, Canada, Australia and the Netherlands formed a group called the J5 to fight international tax crime and money laundering. It now is conducting a series of investigations into an unnamed international financial institution located in Central America. “This is the first coordinated set of enforcement actions undertaken on a global scale by the J5 – the first of many,” said Don Fort, US chief of criminal investigations at the IRS.
Wealth inequality is a problem, but a wealth tax probably isn’t the solution. That, at least was the take-away from last week’s Tax Policy Center conference on inequality and taxes, according to TPC’s Howard Gleckman. Among other problems, while a wealth tax may succeed in reducing the wealth of the very rich, it may not reduce their political influence—a key goal of many of its backers.
With a few modest changes, federal, state, and local governments could do a better job partnership running effective government. TPC’s Tracy Gordon summarizes testimony she delivered to the House Budget Committee. She urged Congress to revise funding formulas to better respond to regional differences and economic shocks, and to adopt a more predictable federal budget process.
EITC participation rates are low, given how many are eligible. A new survey from tax prep company Jackson Hewitt finds that about 44 percent of taxpayers potentially eligible for the Earned Income Tax Credit were unaware of the credit. More than half of those potentially eligible believed they did not qualify or did not know if they qualified for the EITC. The EITC kept 8.9 million people out of poverty in 2018, according to the US Census Bureau.
Baltimore failed to collect taxes on 9 million shared rides. A 2015 Maryland law gave the city the power to tax the trips, but it did not. The inaction cost Baltimore about $2.1 million in annual revenue, says the city’s Department of Finance. Meanwhile, revenues from parking taxes, meters and city owned garages have fallen by 6 percent, or $4.1 million, over two years. Uber charged riders 25 cents per ride for the tax, but says it refunded the money.
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