Senator Hatch: The rich may pay more under tax reform but he won’t raise their rates. The Finance Committee Chairman said after yesterday’s hearing that while he would not raise rates on upper-income taxpayers, those folks might have to give up some favorite tax preferences in order to achieve revenue-neutral tax reform.Hatch said it was fair to ask those in the top half of the income distribution to pay more. In return, he wants Democrats to agree to cut spending.
Vermont’s Bernie Sanders says he knows how to replenish Social Security. The ranking Democrat on the Senate Budget committee (and possible Presidential hopeful) would lift the cap on the payroll tax. Now, the Social Security tax is capped at $118,500 in earnings. Sanders says that’s “patently unfair,” and he’s reintroduced his bill to tax income above $250,000: It would extend Social Security’s solvency until 2060.
Another Swiss bank is under investigation… again. This time, it’s Zurich-based UBS. Its fourth quarter report notes that in January, the US Attorney for the Eastern District of New York and the US Securities and Exchange Commission began investigating the sale of certain securities that might violate tax law: “We are cooperating with the authorities in these investigations.” UBS paid $780 million in 2009 to settle a US Department of Justice investigation of tax evasion.
Two senators want to stop firms from deducting those out-of-court settlements with the government. Settling often makes sense: It’s faster and cheaper for both parties than going to trial. Federal law prohibits a corporation from deducting any fine or penalty paid to the government. But the rest of a settlement is deductible. The tax write-off for a $100 million settlement agreement could be worth as much as $35 million for a corporation. Republican Senator Chuck Grassley of Iowa and Democrat Jack Reed of Rhode Island want to stop that by reviving their bill to “require the government and the settling party to reach pre-filing agreements on how the settlement payments should be treated for tax purposes.”
TIGTA won’t disclose its IRS correspondence. Citing personal privacy and interagency communication, the Treasury Inspector General for Tax Administration will not provide The Hill newspaper with access to 512 documents from 2013 relating to IRS targeting of political groups. TIGTA also said it won’t release documents if it interferes with law enforcement proceedings. The requested documents included emails from former IRS official Lois Lerner and Treasury Secretary Jack Lew.
On the Hill Today. The House Ways and Means Human Resources Subcommittee holds a hearing on how federal policy can address economic challenges facing low-income families. The Ways and Means Oversight Subcommittee will examine the IRS's use of civil asset forfeiture laws.
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