“Tax cheats beware. The machines are watching.” The Wall Street Journal reports (paywall) that the IRS is increasingly using artificial intelligence — machine learning and data analytics — to find tax evaders, respond to taxpayer questions, and become more efficient. Tax law remains full of gray areas that are difficult for AI to resolve without human help, however. Machines aren’t taking over, yet.
The IRS released its report on Low-Income Taxpayer Clinics. During 2018, LITCs represented 19,513 taxpayers who had disputes with the IRS. They helped taxpayers secure more than $4.7 million in refunds and reduced taxpayer liabilities by nearly $124 million. They also brought more than 4,200 taxpayers back into payment compliance. Robots do not work in LITCs, yet.
The cost of the Democratic presidential candidates’ health plans. The Committee for a Responsible Federal Budget has updated its estimates of the fiscal effects, net of tax increases and other offsets, of the various versions of Medicare for All. It projected high, low, and central estimates for each plan. The central estimates were: Joe Biden’s health plan would add $800 billion to the deficit over 10 years, Pete Buttigieg’s would reduce deficits by $450 billion, Bernie Sanders’s would increases deficits by $13 trillion, and Elizabeth Warren would add $6 trillion to the debt.
Wisconsin Democratic Governor Tony Evers vetoes a big tax cut. Wisconsin lawmakers sent a $250 million income tax cut to the Governor’s desk, but to no avail. Evers wants a compromise on increased public school funding and property tax relief. The state’s Republican-led legislature may try to override Evers’ veto in May.
Will Alabama end its sales tax on food? Republican State Sen. Andrew Jones wants to repeal the state’s 4 percent grocery tax. It currently funds $500 million of the state’s $7 billion education budget. Jones plans to offset the revenue loss by capping individual income tax deductions at $6,000 for singles or $12,000 for a married couple.
In Portland, Oregon: Regional government puts an income tax hike on the May ballot. The regional Metro Council, approved a ballot measure to raise income taxes by one-percentage point on high income households and businesses. Individual filers would owe the tax on earnings that exceed $125,000 annually, joint filers would owe on income over $200,000. Businesses with at least $5 million in revenue would pay a 1 percent tax on their net income. Metro estimates that the tax, which would take effect in 2021, would raise $250 million annually to support mental health services, rental assistance and addiction services.
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- © Urban Institute, Brookings Institution, and individual authors, 2020.