The tax gap is growing. American owed, but did not pay, an average of $441 billion annually between 2011-2013. After taking into account about $60 billion the IRS expects to collect eventually, the annual tax gap totals about $381 billion. Nearly all of it--$352 billion—was from under reporting and much of that was from pass-through business income. The overall compliance rate was 83.6 percent, about the same as in the years 2008 to 2010.
Senate passes a temporary funding bill to keep government open through November 21. The House had passed a similar bill. President Trump is expected to sign the bill before the September 30 shutdown deadline. But it may not be the only stop-gap bill this year.
The TCJA’s corporate tax cuts are not benefitting workers as promised. The Center for American Progress concludes the Trump Administration’s claim that the Tax Cuts and Jobs Act’s corporate tax cuts would increase average US household income by $4,000 isn’t holding up. “[T]wo years later, there is little indication that the tax cut is even beginning to trickle down in the ways its proponents claimed.”
Do groups that express hate deserve tax-exempt status? Should the IRS decide? TPC’s Bob Weinberger discusses last week’s House Ways & Means Oversight Subcommittee hearing entitled “How The Tax Code Subsidizes Hate.” Does it? Weinberger explains why the answers are so complicated. “Can the IRS end tax exemptions for organizations that spew hate without running afoul of the Constitution?,” His answer: “At best, imperfectly and with great difficulty.”
Capital spending thanks to pot, in Collinsville, Illinois. Starting January 1, the city will legalize marijuana and the city council has agreed to impose a 3 percent sales tax on the weed. The city plans to spend the projected $1.3 million in revenue on capital projects like streets and signage. Residents who don’t plan to buy marijuana (or pay the tax) are happy with the plan.
October 17 at TPC: Cryptocurrency and Tax Administration. TPC and H&R Block are cosponsoring the event. Cryptocurrencies like Bitcoin facilitate anonymous, decentralized, borderless transactions. The IRS would treat sales of the currency like other forms of property but these new technologies raise a long list of regulatory and enforcement issues. IRS chief counsel Michael Desmond and a panel of other experts will discuss federal and state issues. You can register here. The event will be webcast live here.
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