President Biden would increase the IRS enforcement budget by $80 billion. The White House wants to fund more agents and new tools and technology for tax collections. It projects the IRS could raise as much as $700 billion in additional tax revenue over ten years by cracking down on tax avoidance by wealthy filers. The Wall Street Journal reports (paywall) that Biden will also propose more information reporting from businesses.
In the meantime, are IRS security measures too good for its own good? TPC’s Howard Gleckman has uncovered a problem: IRS online security is preventing millions of people from filing electronically and slowing refunds. Its systems for identifying taxpayers by matching last year’s Adjusted Gross Income and verifying current cell phone numbers frequently fail and prevent people from e-filing. The AGI glitch has prevented 3.4 million people from e-filing this year. The result: more paperwork for an agency still trying to process 1.7 million tax returns from 2019.
House Ways & Means Chair Neal has his own package of benefits for parents. Ahead of President Biden’s American Family Plan, Neal proposed the Building an Economy for Families Act. It includes universal paid family leave for up to 12 weeks at about two-thirds a worker’s wage, a new refundable tax credit for some child care workers, and it would make permanent the more generous Child Tax Credit and Earned Income Tax Credit provisions of the American Rescue Plan.
Pandemic-induced tax flight? CNBC reports on the prospect of wealthier individuals relocating to lower-tax states. In many cases, those with means are no longer required to work in an office, or their children attend school remotely. And federal tax increases may be on the horizon for those earning more than $400,000 a year. The Wall Street Journal also reports (paywall) on the migration habits of Americans in the pandemic, finding that cities including New York, Chicago, San Francisco and Boston saw 71 percent more residents move out in 2020 than in 2019.
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