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Unlike the rest of us, many high-income, influential people and organizations have close to a free hand when it comes to their taxes. Already underfunded and understaffed, the IRS seems incapable of stopping many aggressive or even abusive interpretations of the tax laws, often by hedge funds or

July 22, 2014Howard Gleckman

Individual Taxes: TaxVox

Abuse of financial products by hedge funds

Today, I testified before the U.S. Senate Permanent Subcommittee on Investigations (the “Subcommittee”) on the abuse of structured financial products by hedge funds, in particular by the Renaissance funds. This is what I told the Subcommittee: Almost a century ago, Congress reduced the tax rate for

July 22, 2014Steven M. Rosenthal

Individual Taxes: TaxVox

State Taxes and the April Surprise

In recent months, several governors have complained about the April, 2014, surprise in state tax revenues. They say they were shocked when personal income tax payments fell far below expectations. They shouldn’t have been. What happened? In part, in an effort to beat an upcoming increase in capital

July 22, 2014Norton Francis

: TaxVox

Baskets of Billions, Inversions and Revenues

Did banks help a hedge fund avoid $6.8 billion in US taxes? Yes, according to the Senate Homeland Security and Government Affairs panel’s Permanent Subcommittee on Investigations. Its report, released in advance of this morning’s hearing, argues that “basket option structures” were designed to

July 22, 2014Renu Zaretsky

: TaxVox

Summer Blockbuster? Congress’ Week Is Tax-Action Packed

Another big inversion deal heads to closing. Pharmaceutical giant AbbVie agreed to purchase UK drugmaker Shire , making it the largest US company so far to move its address overseas for lower taxes. The deal, now estimated to be worth about $55 billion, will likely close despite any US action to

July 21, 2014Renu Zaretsky

: TaxVox

A Ditch, an Add, and Maybe an End Run

Australia repeals its two-year-old carbon tax. It’s been a contentious issue for seven years. Australia is one of the biggest producers of carbon emissions per capita. Its government is committed to reducing emissions to 5 percent below year 2000 levels by 2020. A carbon tax might have been the

July 18, 2014Renu Zaretsky

Individual Taxes: TaxVox

The Great Tax Inversion Death Spiral

Congress and corporate America are in a dangerous and mutually destructive race: The more lawmakers threaten to ban the practice of inversions—where U.S. based multinationals merge with foreign firms to lower their tax bill-- the more firms race to complete the deals while they can. The more deals

July 17, 2014Howard Gleckman

: TaxVox

Tax Action: The Quick, the Clever, and the Familiar

Treasury calls for quick Congressional action, because Congress is known to be… quick. Secretary Jack Lew asked top congressional tax writers to act now to end corporate inversions, and make such legislation retroactive to May of this year, giving Congress time to reform the corporate tax system .

July 17, 2014Renu Zaretsky

Individual Taxes: TaxVox

Nothing New Under the Sun: The Sad History of the Tax Extenders.

Nice piece by Tax Notes reporter Lindsey McPherson describing the recent history of the tax extenders. Four take-aways: There is always last-minute drama over bringing them back, most are repeatedly extended, they are almost never paid for, and they are frequently rolled into a bigger bill. In 2004

July 16, 2014Howard Gleckman

Federal Budget and Economy: TaxVox

Six Takeaways from CBO’s New Long-Term Budget Outlook

The newest Congressional Budget Office long-term budget outlook , released today, is more evidence that the long-term federal budget problem may be forgotten, but it is not gone . Here are six takeaways. 1. The size of the budget deficit today isn’t a problem, and it’s not much of a problem for the

July 16, 2014William G. Gale

: TaxVox

Field of Tax Dreams: Budgets, Taxes, and Takeovers

If you cut it, will it do more? The IRS budget has been cut by $1 billion over the past four years, with a subsequent loss of 10,000 IRS jobs. Late Monday night, the House GOP by voice vote voted to cut $1.14 billion for the next fiscal year, or 13 percent below last year’s budget . The funding “

July 16, 2014Renu Zaretsky

State and Local Issues: TaxVox

What’s The Matter With Kansas And Its Tax Cuts? It Can’t Do Math

Kansas Governor Sam Brownback and his state legislature have embarked on a wonderful natural experiment. Once again we are testing the question: Can tax cuts pay for themselves? The answer-- yet again-- is a resounding no. We’ve tried this experiment time and again. And tax cut proponents such as

July 15, 2014Howard Gleckman

: TaxVox

Permanent Breaks, Pharma Moves, Credits and Grace

Expect the House to approve some permanent changes in the charitable deduction this week. They include contributions of food inventory , real property for conservation purposes , and IRA distributions for charitable purposes. The measure would also allow individuals' charitable contributions made

July 15, 2014Renu Zaretsky

: TaxVox

Compromises, Delays, Derivatives and Daze

A highway bill could soon head down Pennsylvania Avenue. The House Rules Committee plans to send to the floor the Ways & Means panel’s short-term highway funding bill today. After a floor vote sometime this week, it’s seen as the likely version to land on the President’s desk. In the Senate,

July 14, 2014Renu Zaretsky

Federal Budget and Economy