Steady On toward Tax Reform

The Senate Finance Committee’s working groups on tax reform have narrowed their focus. Chair Orrin Hatch sounds like he’s given up on broad-based reform for now, but Tax Analysts reports (paywall) that the groups have focused on four areas where they still may make progress: Education, charity, and homeownership incentives, and tax administration. The group arrived at these topics following a broad review of the individual tax code.

A US congressman from California wants a tax credit for ride-sharers. The Hill reports that Democrat Eric Swalwell would expand commuter tax benefits to include credits to employees who use ride-sharing services like Uber and Lyft. “If we believe that commuters should have a tax benefit for not using a car or for reducing the number of cars on the road, I think we should also include new and innovative ways people are getting around.” Whether commuter tax subsidies change behavior, however, remains an open question.

Also in California, Governor Jerry Brown proposes a new earned income tax credit. He’s revised his budget plan to include the credit, which would reduce state revenues by $380 million annually and help 825,000 low-income working families. No one earning more than $13,870 a year would qualify. The average household would get  an extra $460 a year and the maximum credit for a family with three or more children would be $2,653.

Extreme tax planning by tech firms: The OECD’s tax man says not for long. Pascal Saint-Amans runs the Organization for Economic and Cooperative Development’s Center for Tax Policy. He expects an international agreement on new tax laws in time for the G20 summit in November. If implementation plans go according to schedule, technology companies such as Facebook, Apple and Google—who benefit from their aggressive tax planning in the United Kingdom, should be paying more tax to the UK Treasury by 2020.

Can the IRS fight cybercrime while it tries to become more web accessible? The agency is trying to win a tough double bet. It is redeploying its limited investigations staff to crack down on a new wave of tax fraud—cybercrime and identity theft—even as it tries to provide more web-based services to taxpayers. TPC’s Howard Gleckman thinks both efforts are worthwhile but warns that the more business the agency tries to do online, the greater cybersecurity risk it takes.

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