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Chuck Marr

13 Apr, 15 tweets, 5 min read

Stars are aligning to rebuild the IRS & address tax gap. Here’s our take on need for multi-year discretionary cap adjustment, & a multiyear mandatory funding stream to help pay for recovery legislation– to be combined with increased reporting requirements
bit.ly/3dSjLW4

The depleted state of the IRS is well-known. The time has come to do something about it. Enforcement funding has been cut sharply over the last decade:

The ranks of the most sophisticated auditors have been cut by 39 percent causing audits of very high-income people to plummet:

New research shows that the half-trillion $ tax gap is likely larger than estimated because of “random audits do not capture most tax evasion through offshore accounts and pass-through businesses”

bit.ly/3wLnYUp

In fact, IRS Commissioner Rettig said today that the tax gap “could approach and possibly exceed $1 trillion per year”
politi.co/3seBIDI

For a refresher on what this tax cheating looks like, here’s Paul Manafort’s indictment:
bit.ly/328dnVx

The Biden fiscal year 2022 proposal is a good first step as former IRS Commissioner Charles Rossotti highlights here:
bit.ly/2PXZxCw

Biden’s 2022 request includes a critical piece of an IRS rebuild: a $417 million discretionary allocation adjustment which the Administration describes as part of a “multiyear tax initiative that would increase tax compliance and increase revenue.”

The discretionary allocation adjustment needs to be paired with a multi-year mandatory funding stream for enforcement and computer modernization to be authorized by the tax committees.

There is a good model for this Appropriations & Ways and Means/Finance partnership: Health Care Fraud and Abuse Control (HCFAC) program to address Medicare and Medicaid fraud. It’s funded through base appropriations, a cap adjustment, and a mandatory funding stream.

It’s critically important that this dual tracked (discretionary/mandatory) IRS funding rebuild be combined with a revamped tax gap process with increased information reporting requirements.

Passthrough business income is the largest source of the tax gap:

This chart sums up the vital connection – or the lack thereof – between reporting requirements and tax compliance:

Two former IRS commissioners – and top-notch public servants – Charles Rossotti and Fred Goldberg explain here how rebuilt funding, updated technology, and increased reporting requirements fit together
bit.ly/3wUBCVo

@sethhanlon

If you are new to this our paper has links (e.g. more Rossotti, Sarin-Summers). Follow work of @sethhanlon & @dashching & excellent reporting from, among others, @jessedrucker, @paulkiel & @eisengerj, including this classic - which it's time to fix:
End
bit.ly/3skDoeY

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More from @ChuckCBPP

Chuck Marr

@ChuckCBPP

1 Apr

Conservative groups are likely going to pump out pieces that argue that the corporate tax rate increase is going to hurt the recovery & corporate lobbyists are going to pounce on these.
A few respectful requests for tax reporters and other debate participants to probe on these.

1.Where’s the evidence?

We just ran an experiment. The corporate tax rate was cut deeply. Where is the evidence it had any discernible economic benefit to go along with the scope and cost of the change? How do they explain this chart?:

For that matter, where is the evidence that U.S. multinationals had any problem competing before the 2017 tax cut? See after-tax profits as a share of GDP or how U.S. multinationals stacked up against peers before the tax cut. Where was the competitiveness problem?

Read 6 tweets

Chuck Marr

@ChuckCBPP

31 Mar

President Biden’s #AmericanJobsPlan will make the economy stronger & the tax code fairer by raising the corporate tax rate & limiting the ability of corporations to shift profits & investments overseas and using the revenue to finance a 21st century infrastructure.

Thread

Raising taxes on corporate profits by partially reversing the 2017 tax cuts won’t hurt the economy & the investments they finance will strengthen it and broaden opportunity. The costly 2017 law slashed the corporate tax rate to 21% w/little discernible effect on the economy.

@JasonFurman

Here’s the evidence: @JasonFurman told Ways & Means in Feb 2020: “GDP growth did not increase following the 2017 tax law”

bit.ly/3sFs5ib

Read 19 tweets

Chuck Marr

@ChuckCBPP

28 Feb

With the temporary provision moving, there is growing excitement to make the Child Tax Credit expansion permanent. Along with this push, a healthy debate has begun on design elements

Here I want to address one small part of this design discussion which relates to EITC take-up

One key question – of which much more deep digging is needed – is on what roles the IRS and SSA should play in administering a permanently expanded child tax credit/child allowance.

As part of this IRS/SSA discussion, I’ve seen the following thought train a few times: the EITC take-up rate is low, therefore, the SSA should administer the expanded Child Tax Credit. This strikes me as incomplete at best.

Read 10 tweets

Chuck Marr

@ChuckCBPP

27 Feb

Previously, I did a thread on a double standard around work, the Child Tax Credit, & the tax treatment of the inheritances of wealthy heirs

With House passage (!) & shift to the Senate, I wanted to focus on a double standard stemming from the Child Tax Credit’s creation in 1997

In 1997, the original child tax credit was intentionally designed to encourage – some – parents to work less: “some cultural conservatives promote the credit as a way to entice more mothers to stay at home with their children.” wapo.st/3aZz0N1

More: "Because of the tax burden on families, the woman is often compelled to go out and bring in a second paycheck," said Paul Hetrick, vice president of Focus on the Family. "This is a regrettable situation that our country will pay the price for in generations to come."

Read 18 tweets

Chuck Marr

@ChuckCBPP

13 Feb

I sense a few double standards present in the debate over Bidens’ historic Child Tax Credit proposal that would cut the child poverty rate by more than 40%.

My focus here is on a perhaps less obvious one but I think relevant: trust fund kids & the tax treatment of inheritances

Since the mid-1990s, as I’ll walk through, reducing the taxation of large inheritances has been a top, if not the top, tax policy priority of conservatives and Republicans.

In parallel, as I’ll also walk through, there has been a steady stream of research concluding that large inheritances reduce the work effort of wealthy heirs

Read 16 tweets

Chuck Marr

@ChuckCBPP

9 Feb

@crampell

Worried about the child tax credit debate & wishing men read more novels, I urged people to see it through the eyes of a single mom, with a toddler & a 7 yr-old, who works as a cashier

Feeling better now that @crampell and @annielowrey have added their powerful voices

@crampell

Here is this morning must-read from @crampell, including “if getting an extra $250 per month allows a single mom greater choice about whether to work the night shift or spend more time with her second-grader, that’s not obviously a bad thing”
wapo.st/3p4Dd5R

And she adds: “the poor should not be responsible for bankrolling programs for the poor. Other groups are better able to absorb the costs — particularly the wealthy.”

Read 5 tweets

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