The most impactful tax element to arise from the debt limit deal is the reported $21 billion hit to the $80 billion capital infusion for the IRS. Republicans have hailed this as a win, and Democrats—including the White House—have mostly tried to downplay the significance of the cut.
This spin is problematic.
The US tax system relies on voluntary submission of income data, or withholding of taxes owed, and remission of payment. Tax morale is a precarious thing. The risk of audit is lower than most would guess, and the reward of tax evasion is immediate. The recipe for widespread compliance is part patriotism, part fear, part ethics, and a heavy dose of mores and norms.
A 2020 Pew Research Center poll found that 65% of Americans across the political spectrum viewed the IRS favorably. That number likely took a hit with partisan coverage of the initial $80 billion commitment made to the agency. Now, the party that championed investment in modernization is saying that $59 billion works as well as $80 billion. This may leave some wondering why the number can’t be smaller still, and why such a large slice of their tax revenue pie is going toward collecting taxes.
The readers of Bloomberg Tax aren’t left wondering. We’ve covered, at length, what initiatives the capital outlay is earmarked for—auditing and enforcement efforts targeting corporations and high-income individuals who aren’t paying what they owe.
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Employee stock ownership plans can provide many unique tax benefits for closely held companies, says CSG Partners’ Lawrence Kaplan.
As college graduates enter the working world, some basic tax knowledge about filling out W-4s, investing in 401(k)s, and repaying student loans will help them make the most of their money, says Jeff Wilson of the W2 Group.
Cryptocurrency users are steering themselves toward decentralized finance, but stakeholders must look at taxation and anti-money laundering challenges to ensure sustainability, says Accointing by Glassnode’s David Canedo.
Lisa De Simone of the McCombs School of Business shares how the US could benefit from enacting a true innovation box, a type of corporate tax incentive associated with countries’ economic growth.
Alfredo Collosa explains how the value-added tax digital toolkit is intended to help African governments with practical guidance on reforming taxation of e-commerce, which is growing rapidly in the region.
Dubai is making it easier than ever for large family businesses to sustain themselves over time, say Esquire Group’s Jimmy Sexton and Outer Temple’s David Russell.
Mike Linter of KPMG International explains that private companies may be major long-term sources of economic growth for a country, and tax policies should encourage and incentivize them.
Pillar Two’s global minimum tax raises serious concerns for large corporations that purchase movie-generated and other state income tax credits, while the corporate alternative minimum tax likely won’t impede them, says Gunster’s Alan Lederman.
Anna Nordén of Sovos explains that businesses operating in the EU should start preparing for major changes to their operating systems as a result of the European Commission’s VAT in the Digital Age initiative.
Andrew Leahey shares why the IRS needs to take caution against potential data leaks with its direct e-file tax return system, saying that taxpayers own their personal data and should be compensated by the IRS if it is mishandled.
Rebecca Schmutter has joined Windels Marx as a partner in the New York office.
Katy Pitch has joined Mintz as a partner in the Toronto office.
Rhys Pippard has joined Simmons Gainsford as a partner.
Thomas Giordano-Lascari has joined Greenberg Glusker as a partner in the private client services group in Los Angeles.
Timothy Burns and Wei Zhang have joined Mishcon de Reya as partners with the private client team in Hong Kong.
If you are changing jobs or being promoted, let us know. You can email your submission to [email protected] for consideration.
This week’s Spotlight is on Mike Prinzo, managing principal of tax at CliftonLarsonAllen and a member of its tax strategic leadership team in Denver. Prinzo has more than 22 years of experience as a business adviser and tax consultant to entrepreneurs.
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team.
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- A cut to the IRS in the debt-limit deal injects new uncertainty into the agency’s long-term overhaul plans, accelerating a fight over the agency’s future once it exhausts the remaining multiyear funds.
- Cannabis businesses operating in Minnesota and Illinois will be able to write off ordinary business expenses under legislation removing both states from federal tax rules prohibiting such tax benefits.
- US accounting rulemakers’ third attempt to force companies to reveal more details about their income taxes is just as controversial as the prior two efforts.
- The lead counsel in a high-profile challenge to the constitutionality of Maryland’s digital advertising tax said the levy has the shelf life of a “Hula Hoop” despite his client’s recent loss in front of the state Supreme Court.
On this episode of Talking Tax, Bloomberg Tax Insights editor-at-large Rebecca Baker sat down with Jared Dunkin, the vice president of tax and senior tax counsel at FTI Consulting, and Todd Davis, the executive vice president and senior tax counsel for Warner Bros. Discovery. Dunkin and Davis discuss how to handle the ambiguity of tax when corporate executives—their bosses—demand certainty, how to wage the war for talent, and how to set priorities for their tax teams, particularly when it comes to cross-border tax work.
Our Wish List
For June, we’d welcome thoughtful pieces on graduates, including what tax advisers are telling their clients who are just starting out in the workplace and tax-favored strategies related to paying for higher education. We’re also looking for tax pieces focused on travel and tourism. Specifically, we’d love to see how advisers and planners suggest taxpayers maximize tax benefits for vacation and rental homes.
If you have an interesting, never-published article for publication, you can contact our Insights team by email at [email protected].
We talk about tax a lot. But there’s much more that you might hear us talking about if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Katharine Butler (Acquisitions Manager): “Shanghai Express,” a 1932 film set on the train of that name, with Marlene Dietrich looking improbably beautiful. I’ve also been watching some Spanish language films, as I always hope this will miraculously enable me to learn Spanish.
Melanie Cohen (Content Editor): “The Postcard” by Anne Berest, a novel about the experiences of a Jewish family before, during, and after the Holocaust.
Rebecca Baker (Editor-at-Large): The music of my college years in Pittsburgh, now on Spotify, specifically two bands that never made it big—Brownie Mary and the Affordable Floors.
We also have a growing LinkedIn group where our authors, contributors, and readers can share tax-related stories and exchange ideas. We hope you’ll join the conversation!