The IRS plans to end a major tax loophole for wealthy taxpayers that could raise more than $50 billion in revenue over the next decade, the U.S. Treasury Department says.
The guidance and ruling being announced Monday includes plans to essentially stop “partnership basis shifting” — a process by which a business or person can move assets among a series of related parties to avoid paying taxes.
Biden administration officials said after evaluating the practice that there are no economic grounds for these transactions, with Deputy Treasury Secretary Wally Adeyemo calling it “really just a shell game.” The officials said the additional IRS funding provided through the 2022 Inflation Reduction Act had enabled increased oversight and greater awareness of the practice.
“These tax shelters allow wealthy taxpayers to avoid paying what they owe,” IRS commissioner Danny Werfel said.
The officials said the additional IRS funding provided through the 2022 Inflation Reduction Act had enabled increased oversight and greater awareness of the practice.
Thank goodness for that!
And, yes, do it!
This is the way.
Indeed. Also, Republicans have already proposed dramatic cuts to the IRS, so we should be under no illusions about what will happen to this loophole and Direct File if Trump & Co. take control in November.
They have been gutted for a decade. It was a genius move to circumvent their complete failure by using the inflation reduction act.
Every dollar invested in the IRS give more than that in taxes from cheaters. Worth it
Yeah, it’s a whopping 600% in general and DOUBLE that for auditing the top 10%!
If you’re for the government being fiscally responsible (rather than pretending that macroeconomic systems are identical to household budgets) you want rule changes like the one mentioned in the headline as well as more funding for auditing and other enforcement of existing IRS rules.
… for rich people.
Because historically it’s been the middle class and poor that get audited, never the rich.
In fact the IRS could just drop every investigation into those and focus on the rich every time.
I’m down for also investigating the upper middle class. Some small business owners are scummy tax cheats whose entire success rests on stealing wages from their workers and taxes from the government. They need to be put out of business to open up market share for honest companies.
I once worked for a multimillionaire who got audited. He did have to sell a bunch of properties, cars and other toys, to pay taxes, interest, and fines, and got ten years in the pen. This was in the nineties, and he was well-liked, but I never* heard, nor heard of, anyone claim it was unfair, including those who benefited from his corruption, except one guy who bought and sold particular high-end products for him who was also audited, and avoided prison, but idk whether he had to pay delinquent taxes, penalties and interest or not.
The IRS processed 162 million tax returns in FY 2023. If they raise $50 billion, then that means $308 for every taxpayer in America, courtesy of the IRS.
Honest taxpayers rejoice. Tax cheats, go cry about it.
Really it has no impact on most of us. I have never used a partnership tax basis shift and almost certainly never would have. It is going to cost a bunch of obscenely wealthy jerks some money and cost the rest of us nothing. Win-win.
Really it has no impact on most of us
No NEGATIVE impact, you mean.
Taking money that would otherwise just be passed back and forth between billionaires and hectomillionaires hurts nobody.
Investing that money in any of the thousands of critically underfunded parts of the government (education, infrastructure including Internet, antipoverty programs, and public defenders being some of the most important ones) could be absolutely TRANSFORMATIVE, especially for those most in need and/or most abused by the current status quo.
i’m a big fan of “hectomillionaires” (the term, not the system that allows hectomillionaires to exist to the detriment of us all, of course)
What about decamillionaires and kilomillionaries? Gotta love metric system.
Kilomillionaire literally means 1000 millions, aka a billion (short system) or a milliard (long system).
Correct. Now let’s wait for american scared of metric.
I do think the long system makes more sense. That being said, I will not be using it.
—James Grime, mathematician, Numberphile
That $50 billion is over a 10 year period.
$30.80 a year is still $30.80, and that is literally money that requires no extra work or payment on the part of the honest taxpayer.
What say you, “no new taxes, just close loopholes” Republicans?
but they worked to hard to create those loopholes.
don’t you value honest work?
“We have been dead for 20 years.”
“There are so many other loopholes, we should focus on the ones poor people use”
Which republicans might those be? The only ones I hear about are “exploit the loopholes and cut taxes for the rich” kind.
That’s SOCIALISM!
-Fiscally Responsible Republicans who rely on Food Stamps.
Food Stamps.
deleted by creator
Kick ass, IRS. Between this, tye free filing program and the new automatic taxes, I’m ecstatic about cheering them on.
Easy to cheer them on when they’re talking other peoples money…
I’ve already given mine. Why should rich people give less than their proportional share?
That’s all Adam Carolla, baby.
He hates ‘fair share’ rhetoric, and boy does he go off about it.
I paid my share.
Fuck you, pay your taxes.
They take my money, and I’m fine with paying my fair share. Easy to cheer them on for going after the shits that don’t.
Easy to cheer them on when they’re forcing tax avoiders to pay taxes like the rest of the population.
Easy to cheer them on when they’re fixing loopholes constructed and exploited by the wealthy.
Easy to cheer them on when they’re streamlining a woefully archaic tax system.
They take my money too and I’m OK with it so if they get to take money from people who make 2000 times more money then me and don’t pay their share I will cheer it on.
They are using far more of the courts, currency, and infrastructure than we are. They are getting police protection of their property instead of having their pets murdered. They are getting massive government handouts that we are not.
They can start paying their fair share.
Its ok, they’re doing it to a group of people who also make their money from taking other peoples money. So, cheer away at the poetic justice.
Moron
Do it!
My dad be like the job creators need that money so it can trickle!
Is there a way for Republicans to block this? Because if so, they’ll block it.
Under Trump and Republicans, they were actively defunding the IRS and forcing them to reduce staff. Can’t audit a billionaire when theyre shorthanded.
Even though every dollar invested in the IRS is a multiplier.
They could refuse aid to Ukraine until the new rules are scrapped like they did last time
I wonder how many low income earners in America are getting riled about this right now.
The IRS always says they’re gonna target the wealthy, but most of their audits are lower income people because they’re easier targets.
Doesn’t help when repubs are always cutting funding to the IRS. Sigh.
Do your thing here IRS.
So rape the poor and ignore the rich? Yeah no thanks
I’ll believe it when it happens. And if it does, I won’t expect it to stand if the admin flips in November.
deleted by creator
Wealthy taxnonpayers
After watching Finding The Money, terms like “raise” and “revenue” applied to taxes seem deliberately misleading.
What words would you use in their place?
I’m not sure. I’m not a wordsmith or an economist. But I would expect it to be something that conveys a sense that the money is being decommissioned rather than mobilized, or annihilated rather than gathered.
But the sense of deactivation or destruction is usually a negative feeling, so I would want to find a word that puts a slight positive spin on it. This is a happy conclusion to the money’s journey. Its task is done and the inflationary pressure associated with its work is now relieved.
But I would expect it to be something that conveys a sense that the money is being decommissioned rather than mobilized, or annihilated rather than gathered.
We have those already in economics and government spending when money is actually being decommissioned or destroyed. Quantitative tightening is one. That is when currency is being removed from the economy raising the value of each dollar remaining in the economy. However neither that or any other destruction method of money is whats happening here. That you’re choosing to see the action of taxation and spending of tax revenue as negative is more of a reflection of your personal preferences or politics.
But the sense of deactivation or destruction is usually a negative feeling, so I would want to find a word that puts a slight positive spin on it. This is a happy conclusion to the money’s journey. Its task is done and the inflationary pressure associated with its work is now relieved.
You’re not telling the whole story with that, and even worse, leaving off the most beneficial part of spending of tax revenue. You’re missing the Multiplier Effect. The reason spending of tax dollars is a good thing besides the obvious benefits to society of working roads, fire departments, education, and food supply guarantees, etc, is that each $1 dollar of taxes spent get spent again and again by those that receive it. If $1 of tax revenue is spent on building a road, that $1 goes to pay salaries of workers that then pay for food, which the store and eventually the farmer receive a portion of to feed their families and expand their businesses, which goes into pay other workers. Also each time this $1 is spent it is taxed, so a portion of that revenue drives more spending on society.
The spending of a tax dollar is the beginning, not the end, of the benefit.
I, uh… think we got off on the wrong foot. I don’t see spending or taxation as a bad thing.
I mean, peep the @midwest.social, for a hint. And I did specifically say that I wouldn’t recommend any terms to replace “raise” and “revenue” that have a negative connotation, such as “deactivation” or “destruction”.
I’m also aware of the multiplier effect. The benefits of government spending are actually why I’m so interested in reframing the conversation about spending and taxation.
I will quibble with this:
The spending of a tax dollar is the beginning, not the end, of the benefit.
The spending is the beginning, yes – but not a tax dollar.
Governments don’t need to tax first, in order to spend second. It’s the opposite. That’s why “raise” and “revenue” are such terrible terms. Because they prime you to think that taxes are how we pay for things. We pay for things by just paying for them. The government spends dollars into existence. Taxation is just there to incentivize economic activity to chase those new dollars and keep a stable value.
If you view taxation as necessary to gather the funds to do something, you can have a bunch of resources just sitting around doing nothing and never be able to utilize them because you can’t gather the funds without destabilizing the economy. But if you can just spend the money into existence, you can go ahead and increase the utilization without taxing first and then adjust taxation as needed from there on out.
And it turns out, this is how money has always worked. Taxation has always been a cleanup step to keep the spending productive, not a prerequisite to enable the spending in the first place. The myth of tax as revenue is relatively new.
I, uh… think we got off on the wrong foot. I don’t see spending or taxation as a bad thing.
I came from your first post as you being anti-taxation (under any circumstance). While I don’t agree with that position (because I like a society that pools our resources for all of us to benefit), I do understand it. Your statement quoted here confuses me even more.
I mean, peep the @midwest.social, for a hint. And I did specifically say that I wouldn’t recommend any terms to replace “raise” and “revenue” that have a negative connotation, such as “deactivation” or “destruction”.
I took that as you want synonyms for “destruction” that don’t sound so negative. That sounded like whitewashing to me.
I will quibble with this:
The spending of a tax dollar is the beginning, not the end, of the benefit.
The spending is the beginning, yes – but not a tax dollar.
Governments don’t need to tax first, in order to spend second. It’s the opposite. That’s why “raise” and “revenue” are such terrible terms. Because they prime you to think that taxes are how we pay for things.
Those words don’t make me think how we start paying for things, but rather how we sustain paying for them.
We pay for things by just paying for them. The government spends dollars into existence.
To make this a truthful statement, you’ve got to skip 4 or 5 very important steps. Stable governments don’t spend dollars into existence to begin with. That ability is the product of a long set of other actions over decades before a government can do that. “Spending dollars into existance” is NOT Step One, as it appears you’re presenting it here. Its the product of strong national monetary policy, a stable government, and the issuing of governments bonds.
Taxation is just there to incentivize economic activity to chase those new dollars and keep a stable value.
The is a huge oversimplification. You’re handwaving away mountains of effort of government just ensuring that stable value.
If you view taxation as necessary to gather the funds to do something, you can have a bunch of resources just sitting around doing nothing and never be able to utilize them because you can’t gather the funds without destabilizing the economy. But if you can just spend the money into existence, you can go ahead and increase the utilization without taxing first and then adjust taxation as needed from there on out.
I don’t mean to be insulting, but this sounds like a very naive view. Yes, in the short term a stable government and perform deep deficit spending to accomplish important short term goals (national defense from being invaded, disaster relief, etc) and its the right choice irrespective of the consequences of that deficit spending because there is an immanent and existential threat to the nation. However, it is an extremely rare government that can deeply deficit spend without dire short term and long term consequences. “Adjusting taxation as needed” ignores all the realities that increasing taxes anywhere will cause economic reactions. Some of those reactions may be “worth it” but the government has to plan for that to happen and be willing to accept that consequence. Nothing in your post addresses any of that.
And it turns out, this is how money has always worked. Taxation has always been a cleanup step to keep the spending productive, not a prerequisite to enable the spending in the first place. The myth of tax as revenue is relatively new.
HUGE citation needed here. Prior to the use of fiat currency, there were hard limits on the amount of money in circulation. This alone was barrier on spending (and growth). Let me make it clear, the abandonment of the gold standard was good thing.
I’m gonna do the most annoying thing in the world here, and just tell you to go watch Finding The Money. I feel like that’s a dick move in 99% of circumstances, but I did explicitly start this thread with the notion that after watching that documentary… I felt like these were misleading terms. So if you wanna discuss whether they are misleading terms given that context, it might be useful to share that same context.
I’m down to talk more afterwards. You’ve been a good pen pal.
I think the problem here is that your point isnt nearly as profound as you think.
You just generally “feel” that some terms are too negative after watching a moving “documentary”?
Cool.
I really appreciate what the other poster had to say though, gave me a lot to look into.
Government spending does not require taxation if deficits are an option. In that sense, spending is decoupled from taxing and the multiplier effect is not dependent on tax revenues, so I’m not sure that addresses OPs statements.
Government spending does not require taxation if deficits are an option.
Unless the government has revenue from some other channel besides taxation (import tariffs or fees on government services like passports perhaps), deficit spending is rarely ever possible in perpetuity. So what other option are you referring to for long term support of a society without taxation?
In that sense, spending is decoupled from taxing and the multiplier effect is not dependent on tax revenues, so I’m not sure that addresses OPs statements.
You are defining an extremely narrow use case, which is possibly factual, but so far removed from any part of the discussion that I agree with you that your point doesn’t seem to address anything the OP is asking about. The Multiplier Effect is often referenced with deficit spending, but there’s no requirement I’m aware of that it ONLY requires to deficit spending.
deleted by creator
Do it. Dont let your dreams be dreams.
Could you also please allow those of us overseas to use silly things like retirement accounts without having it all be considered PFICs? I just wanna contribute to my current country’s equivalent of an ISA/401K type of thing.
It’s still not enough!
