Deets On The Payroll Replacement Tax
Step 1: Raise the corporate tax rate to 30%
Step 1 proposes raising the corporate tax rate to 30% as a means to bolster federal revenue and address income disparities. The intended outcome is to increase the amount corporations contribute to government coffers, potentially funding public services, infrastructure, and social programs. While aiming to mitigate income inequality, this step could impact corporate profitability, potentially affecting business decisions regarding investments and job creation. The proposal may face opposition from corporations concerned about reduced competitiveness in the global market and potential effects on employment. Successful implementation would require careful economic analysis and negotiation to balance revenue generation with potential impacts on businesses and the economy.
Step 2: Federal takeover of human resources benefits
Step 2 involves a federal takeover of human resources benefits like healthcare, childcare, transportation, and retirement by auditing corporations to determine their spending on these benefits. The proposal suggests imposing an additional 10% tax based on the amount corporations spend on human resources, aiming to fund these benefits at a federal level. Additionally, the plan includes establishing a public bank under the United States Postal Service, the first step in the organization’s expansion and rebranding as “United States Public Services”. While striving for standardized benefits and potential cost reductions through centralization, this step may face resistance from businesses concerned about increased taxation, loss of autonomy in benefit management, and potential bureaucratic complexities. Crafting legislation for this step would necessitate detailed planning for each benefit area, financial analyses, and navigating potential opposition to ensure effective implementation.
Step 3: Taxation for automation
Step 3 proposes implementing a tax specifically aimed at companies using automation and artificial intelligence by imposing a tax rate equivalent to one employee's annual salary for every 10 employees replaced by these technologies, lasting for 10 years. The rationale is to discourage rapid job displacement and generate government revenue while balancing technological progress. While aiming to preserve jobs, this tax could be seen as a barrier to innovation and efficiency by businesses. Crafting legislation for this step would require a clear definition of automation triggering the tax, addressing concerns of hindering technological advancement, and assessing its impact on businesses and employment dynamics. Successful implementation would involve collaboration with technology experts and careful consideration of potential unintended consequences on innovation and workforce adaptation.
Step 4: Universal Basic Income
Step 4 suggests implementing a Universal Basic Income (UBI) starting at a minimum rate of $2500, adaptable to local living costs, with subsequent increases linked to GDP growth. The rationale behind this proposal is to provide a guaranteed income floor for all citizens, irrespective of employment status, aiming to alleviate poverty and adapt to changing workforce dynamics. This initiative could stimulate local economies, but concerns exist regarding potential impacts on workforce participation and the feasibility of funding such a program sustainably. Crafting legislation for this step would involve detailed economic analysis, pilots, and public engagement to determine funding sources, assess workforce dynamics, and build support for this substantial social policy change. Addressing concerns about work incentives and dependence on government aid would be pivotal in garnering public and political support.
Step 5: Recouping the payroll tax back to ~1973
Step 5 proposes tracing corporate records back to approximately 1973 to recoup payroll taxes from the rise of robotics in industry. The rationale is to retroactively collect payroll taxes from corporations that benefited from increased productivity due to automation. However, challenges include legal complexities surrounding retroactive taxation, limitations imposed by statutes of limitations, and the difficulty of obtaining accurate historical records. The proposal's success would depend on navigating legal barriers, establishing clear criteria for identifying liabilities, and communicating the fairness and necessity of such retroactive taxation to gain public and legislative support.
Step 6: Audit of offshore tax schemes
Step 6 suggests auditing documents like the Panama, Pandora, and Pentagon papers to recover funds from offshore tax evasion and illegal financial schemes. The goal is to identify individuals or entities involved in tax cheating and money laundering revealed in these documents and recoup funds owed to the government. However, this initiative may face legal and diplomatic challenges due to jurisdictional complexities and international cooperation requirements. Successfully recovering funds from offshore schemes would demand extensive investigations, legal expertise, and diplomatic efforts to navigate complexities, establish cooperation with other countries, and address legal barriers for prosecuting those involved.
Step 7: Raising the minimum global tax rate
Step 7 proposes collaborating with international partners to establish a minimum global tax rate of 50%. The goal is to prevent tax competition among nations and discourage tax havens by ensuring corporations pay a higher and more standardized tax rate globally. However, achieving consensus among diverse countries with varying economic interests and tax policies presents a significant challenge. Implementing such an agreement would demand extensive diplomatic negotiations, enforcement mechanisms to ensure compliance, and considerations for potential impacts on global economic dynamics. Successfully establishing a higher global tax rate would require navigating competing national interests and addressing concerns about economic competitiveness, making it crucial to build support and cooperation among participating nations.
Step 1: Raise the corporate tax rate to 30%
Rationale:
Revenue Generation: The primary aim is to increase federal revenue by raising the tax rate paid by corporations. This additional revenue could be allocated towards various governmental programs, infrastructure development, debt reduction, or other national priorities.
Addressing Income Inequality: Some proponents argue that increasing corporate taxes could contribute to addressing income inequality by ensuring that corporations, especially larger ones, contribute more to societal needs.
Potential Impacts:
Corporate Profitability: Corporations might experience reduced profitability due to higher tax liabilities. This might influence business decisions regarding investments, expansion, and employment.
Global Competitiveness: Concerns may arise about how a higher corporate tax rate could affect the competitiveness of American businesses in the global market. Some fear that it could drive corporations to relocate or find tax havens.
Job Creation: Opponents might argue that increased corporate taxes could potentially hinder job creation as companies might scale back on hiring or investment.
Government Revenue: Higher tax rates could bolster government revenue, potentially enabling increased spending on public services, infrastructure, or social welfare programs.
Challenges and Considerations:
Economic Impact Assessment: A comprehensive analysis of the potential economic impact, considering various industries and business sizes, would be necessary to anticipate effects accurately.
Corporate Behavior: Corporations might seek ways to mitigate the impact of increased taxes through various means, such as altering their corporate structure or relocating operations.
Political Acceptance: The proposal would likely face opposition from business lobbyists and lawmakers with close ties to corporate interests, necessitating political negotiation and compromise.
Global Dynamics: Given the interconnectedness of the global economy, raising corporate taxes might trigger international repercussions or even trade disputes.
Step 2: Federal takeover of human resources benefits
Rationale:
Centralization of Benefits: The goal is to standardize and ensure universal access to essential human resources benefits by placing them under federal oversight. This approach aims to address disparities in access to these services across different companies and regions.
Efficiency and Cost Control: By consolidating these benefits at a federal level, proponents argue that it could streamline administration, reduce redundancies, and potentially control costs.
Implementation and Key Components:
Audit and Assessment: The IRS would audit corporations' records, possibly using AI for efficiency, to evaluate the amount they spend on human resources benefits.
Taxation Based on HR Spending: Corporations would be taxed by an additional 10% of their HR spending to fund the federal provision of these benefits.
Establishment of Public Bank: Creating a public bank under the United States Postal Service (rebranded as the United States Public Services) could serve as a financing mechanism for these federalized benefits.
Potential Impacts:
Standardized Access: Universal access to crucial benefits could reduce disparities and ensure a basic level of support for all individuals, regardless of their employment situation.
Administrative Streamlining: Centralizing administration could potentially reduce administrative costs and complexities associated with different companies managing these benefits independently.
Corporate Opposition: Corporations might resist this federal takeover, citing concerns about increased taxation, loss of autonomy in employee benefits, and potential bureaucratic inefficiencies.
Economic Implications: The financial burden of additional taxation on corporations might affect their competitiveness, investments, and job creation.
Challenges and Considerations:
Complex Transition: The transition from corporate-managed benefits to a federally-run system would be complex and could face resistance from both businesses and individuals accustomed to their existing arrangements.
Funding Mechanisms: Determining sustainable funding mechanisms to support the federal provision of these benefits would be crucial to ensure their long-term viability.
Legal and Privacy Concerns: Auditing corporations for their HR spending might raise legal and privacy concerns, necessitating clear regulations and safeguards.
Step 3: Taxation for automation
Rationale:
Mitigating Job Displacement: The tax aims to discourage companies from replacing human workers with automation or artificial intelligence by imposing a financial penalty.
Revenue Generation: It could also serve as a revenue source for the government, potentially funding programs aimed at supporting displaced workers or incentivizing job creation.
Key Components and Mechanisms:
Tax Calculation: The tax would be calculated based on the number of employees replaced by automation or AI. For every 10 employees replaced, the company would be taxed at a rate equivalent to one of those employees' annual salaries.
Duration: The tax would apply for a revolving specified duration, potentially 10 years, to create a disincentive for rapid automation adoption. The program should be evaluated at minimum once a decade to determine - and manage - how evolving technology has impacted society.
Potential Impacts:
Job Preservation: Companies might think twice about extensive automation initiatives to avoid incurring additional taxes, potentially slowing down the pace of job displacement.
Revenue Generation: The tax could generate additional revenue for the government, contributing to public funds and potentially supporting programs focused on retraining or reskilling displaced workers.
Technological Innovation: Critics might argue that such a tax could stifle technological progress and hinder innovation if companies are discouraged from investing in automation.
Challenges and Considerations:
Defining Automation: Defining what constitutes automation or AI that warrants the tax and developing clear criteria for its assessment would be crucial to avoid ambiguity or loopholes.
Impact on Businesses: Companies might resist this tax, arguing that it impedes efficiency gains, technological advancement, and competitiveness.
Enforcement and Monitoring: Implementing and enforcing this tax would require robust monitoring mechanisms to accurately track and verify automation-related job displacements.
Step 4: Universal Basic Income
Rationale:
Addressing Economic Inequality: UBI aims to provide a guaranteed income floor to all citizens, irrespective of their employment status. This could help alleviate poverty and reduce economic disparities.
Adaptation to Changing Workforce Dynamics: With technological advancements potentially leading to job displacements, UBI serves as a safety net, ensuring financial stability for individuals amidst changing job markets.
Key Components and Mechanisms:
Minimum Income Guarantee: Instituting a baseline UBI of $2500 aims to provide financial support to individuals, with adjustments made based on regional variations in the cost of living.
Tying UBI to GDP: The proposal suggests linking UBI increases to GDP growth, ensuring that the basic income adjusts to economic expansion over time.
Potential Impacts:
Poverty Alleviation: UBI could effectively reduce poverty levels by providing a guaranteed income floor, enabling individuals to cover basic needs like food, shelter, and healthcare.
Economic Stimulus: Direct cash transfers through UBI could stimulate consumer spending, benefiting local economies and small businesses.
Labor Market Dynamics: Critics might argue that UBI could potentially disincentivize work or job-seeking, impacting workforce participation.
Challenges and Considerations:
Funding and Sustainability: Financing a nationwide UBI program would require significant financial resources. Determining sustainable funding sources without causing undue strain on the economy would be critical.
Workforce Participation: There's a debate regarding the potential impact of UBI on individuals' motivation to seek employment or engage in productive activities.
Social Acceptance and Policy Implementation: Convincing the public and policymakers about the viability and necessity of UBI might require extensive education and persuasion efforts.
Step 5: Recouping payroll tax back to ~1973
Rationale:
Addressing Historical Impacts of Automation: The proposal aims to retroactively recoup payroll taxes from the period coinciding with the emergence of robotics in industries, suggesting that corporations benefited from increased productivity without contributing adequate taxes.
Fairness and Equity: Advocates may argue that corporations should retroactively compensate for the societal impacts of automation, especially if it led to job displacements without adequate tax contributions.
Implementation and Mechanisms:
Historical Records Audit: The IRS would conduct extensive audits of corporate records, mergers, acquisitions, and other financial transactions dating back to the 1970s to calculate the amount owed in payroll taxes.
Recouping Taxes: The goal would be to recoup the payroll taxes that corporations might have underpaid or avoided due to the rise of automation during that period.
Potential Impacts:
Revenue Generation: If successful, this initiative could potentially generate significant revenue for the government by recouping previously uncollected payroll taxes.
Legal Challenges: Retroactive taxation might face legal challenges, including statutes of limitations and complexities associated with retrospective taxation.
Corporate Opposition: Corporations might strongly resist such retroactive taxation, arguing against the fairness and legality of imposing taxes based on historical events.
Challenges and Considerations:
Statutes of Limitations: Legal limitations on retroactive taxation might hinder the ability to collect taxes for events that occurred several decades ago.
Evidence and Documentation: Obtaining accurate and reliable records dating back to the 1970s might be challenging due to data storage, accuracy, and accessibility issues.
Legal and Political Implications: Expect legal challenges from corporations contesting the legality and fairness of retroactive taxation, potentially leading to prolonged legal battles and political debates.
Step 6: Audit of offshore tax schemes
Rationale:
Targeting Illicit Financial Activities: The proposal aims to uncover and recover funds associated with tax evasion, money laundering, and illegal financial activities revealed in documents like the Panama Papers, Pandora Papers, and Paradise Papers.
Revenue Recovery: Recouping funds from these schemes could potentially generate significant revenue for the government and hold individuals or entities accountable for tax evasion and illegal financial practices.
Implementation and Mechanisms:
Audit and Investigation: The IRS would conduct thorough investigations into the information disclosed in the Panama, Pandora, and Paradise Papers.
Recovering Funds: The goal would be to identify individuals or entities involved in tax evasion or illegal financial schemes and recover the funds owed to the government.
Potential Impacts:
Revenue Generation: Successful identification and recovery of funds from offshore tax evasion schemes could result in substantial revenue for the government.
Legal and Diplomatic Implications: Pursuing funds from offshore entities and individuals might involve legal complexities and diplomatic challenges with other countries where these schemes were operating.
Transparency and Accountability: Holding individuals or entities accountable for tax evasion could enhance transparency in financial dealings and deter future illegal activities.
Challenges and Considerations:
International Cooperation: Investigating and recovering funds from offshore schemes might require cooperation and coordination with other countries, which could pose diplomatic challenges.
Legal Limitations: Investigating and prosecuting individuals or entities involved in offshore schemes might face legal hurdles due to jurisdictional complexities and differences in international laws.
Resource Allocation: Conducting extensive audits and investigations into offshore tax evasion schemes would require significant resources and expertise from the IRS.
Step 7: Raising the minimum global tax rate
Rationale:
Harmonizing Global Taxation: The goal is to establish a minimum global tax rate of 50% in collaboration with other countries. This aims to prevent tax competition among nations and discourage tax havens, ensuring corporations pay a fair share of taxes regardless of their location.
Revenue Alignment: By setting a higher global tax rate, it aims to ensure that multinational corporations contribute more to the countries where they conduct business, potentially generating increased revenue for governments.
Key Components and Mechanisms:
International Collaboration: The proposal requires diplomatic efforts to negotiate and establish agreements with various countries to accept and implement a minimum tax rate of 50%.
Enforcement and Compliance: Ensuring compliance and enforcement mechanisms among participating nations would be crucial to prevent tax evasion and ensure adherence to the agreed-upon rate.
Potential Impacts:
Fair Taxation: Establishing a higher minimum tax rate globally could promote fairness in taxation by preventing corporations from exploiting loopholes or relocating to low-tax jurisdictions.
Revenue Increase: If successful, it could result in increased tax revenues for governments, particularly from large multinational corporations.
International Relations: Negotiating and implementing such agreements might foster collaboration and cooperation among countries, strengthening international relations in financial matters.
Challenges and Considerations:
International Cooperation: Convincing a diverse range of countries with varying economic interests to agree to a minimum tax rate might be challenging and require extensive negotiation.
Competing Interests: Nations with lower tax rates might resist such measures, fearing the potential impact on their competitiveness in attracting businesses.
Enforcement and Compliance: Ensuring compliance and preventing tax evasion in a global setting would require robust monitoring and enforcement mechanisms.
Frequently Asked Questions:
Won’t corporations just pass the taxes onto the consumer?
It is projected that corporations will only pass 0.17% of every 1.0% taxed to the consumer.
That slight increase in prices is easily offset by cheaper housing, affordable healthcare, and by having childcare expenses covered by the government.
“The coefficient on the change in after tax share is 0.174, indicating that each 10% change in after-tax share leads to a rise in taxable income of 1.74%. While significant, this is a considerably smaller response than is found for individual taxable income responsiveness to tax changes.”
How Elastic is the Corporate Income Tax Base - Jonathan Gruber, MIT and NBER Joshua Rauh, University of Chicago and NBER June 2005
"We find an elasticity of retail price to net of corporate tax rate of approximately 0.17. This means that a one percentage point increase in the corporate tax rate leads to a 0.17 percent increase in retail product prices."
Corporate Taxes and Retail Prices - UNC Tax Center March 2020
"We find an elasticity of retail price to the net of corporate tax rates of approximately 0.17. This means that a one percentage point increase in the corporate tax rate leads to a 0.17 percent increase in retail product prices."
Corporate Taxes and Retail Prices - CATO Institute July 22, 2020
The National Bureau of Economic Research paper found taxes imposed on producers do impact final retail sales prices and estimated that increasing the corporate tax rate one percentage point leads to a 0.17% increase in retail product prices.
What a corporate tax hike could mean for Americans - CBS News April 1, 2021
Won’t Universal Basic Income disincentivize people from working?
The opposite is true, actually. In multiple studies, UBI actually led to an increase in employment.
Alaska’s system set up an ideal experiment. Researchers from the University of Chicago and the University of Pennsylvania compared residents’ behavior before and after the dividend to decide what effect the payments had on workforce participation.
They found that full-time employment did not change at all, and the share of Alaskans who worked part-time jobs increased by 17%.
When you give Alaskans a universal basic income, they still keep working - QUARTZ February 13, 2018
The researchers found that the unconditional payments to residents had no real impact upon full-time employment levels (whether positive or negative), although they did find that part-time work increased by about 17%.
Does A Universal Basic Income Discourage Work? - Forbes March 5, 2018
A pair of independent researchers at the University of Tennessee and the University of Pennsylvania reviewed data from the first year of the study, which did not overlap with the pandemic. A second study looking at year two is scheduled to be released next year.
When the program started in February 2019, 28% of the people slated to get the free money had full-time jobs. One year later, 40% of those people had full-time jobs. A control group of people who did not get the money saw a 5 percentage point increase in full-time employment over that same time period, from 32% to 37%.
Employment rose among those in free money experiment, study shows - PBS NewsHour March 3, 2021
A study of 25 residents of Hudson, New York, who began receiving $500 per month in the fall of 2020 on behalf of research organization the Jain Family Institute, found similar results. Participants’ employment (both full and part-time) grew from 29% to 63%, and their physical and mental health improved as well.
19% of people think universal basic income would alleviate work frustration—here’s what experts say - CNBC July 15, 2022
Does Universal Basic Income actually improve lives?
Remarkably and demonstrably so:
The researchers said that the extra $500 per month was enough for people with part-time jobs to take time off so they could interview for full-time jobs that offered better pay. They also said the money could have helped people who weren’t working at all find jobs by allowing them to pay for transportation to interviews.
After a year of getting the money, 62% of the people were paying off debt compared to 52% before the study. Researchers also said most people moved from being likely to have mild mental health disorders to “likely mental wellness.”
Employment rose among those in free money experiment, study shows - PBS NewsHour March 3, 2021
The 2021 expanded CTC extended full refundability to families with little or no taxable income. Adults with young children between 0 and 5 years old received refundable credits of $3,600 per child, while those with children between 6 and 17 years old received credits of $3,000 per child. These benefit changes allowed for more of the lowest-income families—historically, those from non-Hispanic Black, Hispanic, and American Indian and Alaska Native communities (Hardy 2022)—to benefit from the program (Center on Poverty and Social Policy at Columbia University, 2021). The Census’s Supplemental Poverty Measure (SPM) showed that children from all racial and ethnic minority groups experienced relatively large reductions in poverty rates, but that SPM poverty rates fell most dramatically for Black and Hispanic children. Black child poverty rates fell by 17 percentage points between 2009 and 2021, while SPM child poverty rates fell from 30% to 8% among Hispanic children over the same period (Creamer et al. 2022).
The antipoverty effects of the expanded Child Tax Credit across states: Where were the historic reductions felt? - BROOKINGS March 1, 2023
Back in 2021, as the economy reeled from the pandemic, a one-year expansion of the child tax credit led to a historic 46 percent decline in the U.S. child poverty rate. It dropped from 9.7 percent to 5.2 percent.
New census data out today shows a dramatic reversal, with the rate of children in poverty skyrocketing to 12.4 percent in 2022. That's higher than pre-pandemic levels.
We are talking about the largest one-year jump on record for what's called the supplemental poverty rate. That includes the value of government benefits. Were you expecting this big of a spike? And what kind of hardships does this translate into for the five million more children now in this category?
Catherine Rampell:
I think most people who follow this issue were expecting some increase in the number of children who had fallen into poverty or maybe were pushed into poverty, depending on how you look at it.
But these numbers are astounding, I think, more than double the child poverty rate in 2022 that we saw in 2021, a result partly, of course, of the fact that cost of living has gone up. Some of the expenses that are taken into account in that measure, work expenses, medical expenses, et cetera, have gone up.
But, primarily, it is due to a policy choice that lawmakers made, which was to basically let a number of pandemic-era programs lapse, chiefly the child tax credit, as you mentioned, but some others as well.
Child poverty increases sharply following expiration of expanded tax credit - PBS NewsHour September 12, 2023
"Many participants reported that they have used the money to pay off debt, repair their car, secure housing, and enroll in a course," he said. "These are all paths that could eventually lead participants out of poverty and allow them to be less dependent on social support programs."
The guaranteed income also dramatically reduced visible homelessness. When the initiative began, some 6% of the people in the $1,000-a-month group said they were sleeping outside; the number fell to zero six months later. The group that received a large lump sum similarly reported a decline from 10% sleeping outdoors to 3%. Even those who received just $50 moved indoors, to a degree, with the outdoor-sleeping rate declining to 4% from 8%.
Where were people going? Many, actually, to their own place. In the group receiving $1,000 a month, 34% of participants said they resided in their own home or apartment, up from just 8% a half-year earlier. For all groups, the number who said they were sleeping in shelters was more than halved, and all reported increased feelings of safety in their current sleep location. Overall mental health also seemed to improve, though the group that received $50 reported slightly more stress and anxiety than before — and a little less hope.
Denver experimented with giving people $1,000 a month. It reduced homelessness and increased full-time employment, a study found. - INSIDER October 5, 2023
In Denver, more than 800 of the city's most vulnerable residents received monthly stipends of up to $1,000. So far the program has reduced homelessness, increased employment, and bolstered the mental-health outcomes of participants. A similar program in Stockton, California, had similar effects — the unemployment rate among the 125 participants was nearly halved. Researchers at the University of Pennsylvania studying the program concluded it could have "profound positive impacts on local public health."
Universal basic income is working — even in red states - INSIDER October 29, 2023
See:
Do Americans actually support raising the corporate tax rate?
More than half.
About six-in-ten adults now say that the feeling that some corporations don’t pay their fair share (61%) bothers them a lot, while a nearly identical share say this about some wealthy people not paying their fair share (60%), according to a Pew Research Center survey of 5,079 U.S. adults conducted from March 27 to April 2, 2023. These percentages are essentially unchanged since 2021.
More Americans favor raising than lowering tax rates on corporations, high household incomes - Pew Research Center September 27, 2017
As such, Americans think that corporations and upper-income Americans don’t “pay their fair share” because they can take advantage of more, and larger, “loopholes.”
Americans want the wealthy and corporations to pay more taxes, but are elected officials listening? | COMMENTARY - BROOKINGS March 14, 2019
The CNBC survey also showed that 58% of millionaires generally support raising taxes on corporations to fund infrastructure improvements, as floated in Biden’s other ambitious spending package, the American Jobs Plan.
Many wealthy households support higher taxes on the rich and corporate America, CNBC millionaire survey shows - CNBC June 9, 2021
About half of Americans (53%) now say the complexity of the federal tax system bothers them a lot, up from 47% who said this in 2021. About a third (32%) say the tax system’s complexity bothers them some, while 13% say it bothers them not much or not at all.
A majority of Americans (65%) say that tax rates on large businesses and corporations should be raised a lot (39%) or a little (26%). About two-in-ten (19%) say large businesses’ tax rates should be kept about the same, while 14% say their taxes should be lowered a little (8%) or a lot (6%).
Top tax frustrations for Americans: The feeling that some corporations, wealthy people don’t pay fair share - Pew Research Center April 7, 2023
Are retroactive taxes legal?
Yes.
Congress has been adopting retroactive tax increases for a very long time, essentially since the 1930s. The 1913 Revenue Act was the first one with an effective date before the date of the actual enactment. Generally, the increased tax rate is applied retroactively to the year in which it is enacted.
Retroactive Tax Increases and The Constitution - The Heritage Foundation May 16. 1998
The justices turned away appeals by Goodyear Tire and Rubber Co, IBM Corp, AT&T Inc's DirecTV, Monster Beverage Corp and others of a lower court's ruling in favor of the state. The companies argued that Michigan's retroactive change to its tax regime violated their rights to due process under the U.S. Constitution.
U.S. top court rejects challenge to state retroactive tax changes - Reuters May 22, 2017
The legislative power to pass retroactive legislation is a fact, yet not all states have empowered their legislators to do so. Several state constitutions, such as those of Georgia and Texas, flatly prohibit the legislature from enacting any law with retroactive application, including tax laws.
No Love For Retroactive Tax Legislation | Contributor - Forbes July 14, 2020
When it comes to tax policy, Congress has broad latitude to enact policy as it sees fit, within constitutional limitations, of course. And to that point, the constitutionality of retroactive income tax changes is well-settled. They are allowed.
Can Congress Really Increase Taxes Retroactively? | Contributor - Forbes June 11, 2021
See:
How would the payroll replacement tax impact the national debt?
Going from projections of Biden’s 28% corporate tax proposal, the payroll replacement tax could reduce the deficit by at least $3 trillion.
President Joe Biden released his budget on Thursday, vowing to cut $3 trillion from the federal deficit over the next decade, in part, by levying a 25% minimum tax on the wealthiest Americans.
Biden’s budget would also raise more revenue by increasing taxes on oil and gas companies, hiking the corporate tax rate to 28% from 21% imposed under former President Donald Trump but below the pre-2017 35% tax, and allow Medicare to negotiate drug prices.
Biden budget would cut deficit by $3 trillion over next decade with 25% minimum tax on richest Americans - CNBC March 9, 2023
In short, it took a series of large (and regressive) tax cuts over a series of decades in order to generate today’s fiscal gap. Absent these cuts, revenue was firmly on track to be high enough to keep the fiscal gap at near-zero. It hence seems reasonable to think that taxes alone could indeed close the fiscal gap without pushing U.S. tax rates out of any zone of plausibility.
Could tax increases alone close the long-run fiscal gap? - Economic Policy Institute September 5, 2023
A 28 percent corporate tax rate is midway between current law and the pre-TCJA rate and would reverse half of the permanent 14-percentage-point cut in place since 2018. Increasing the corporate tax rate would provide a progressive and efficient source of revenue, since much of the corporate tax base is “above-normal” returns (excess profits).
The coming fiscal cliff: A blueprint for tax reform in 2025 - BROOKINGS September 27, 2023
Is a global minimum corporate tax possible?
A global corporate minimum tax would be an international minimum tax regime applying a specific and uniform tax rate on the income of corporations in participating countries. Currently, 137 nations have agreed to a plan proposed by the Organisation for Economic Co-operation and Development (OECD) to impose a 15% global minimum tax on corporate income, measured by a company’s “book” profits. The tax would apply only to very large business corporations. Implementation is anticipated as early as 2024.
Global Corporate Minimum Tax: What it is, How it Works - Investopedia July 15, 2021
The agreement, finalized in 2021, has two pillars. The first includes a mechanism for allocating a share of large multinational corporations’ profits to the countries where their products and services are actually consumed, preventing those profits from being booked in tax haven countries.
The second pillar includes a 15% minimum tax rate on those profits across all countries in the agreement. The pillar also contains a mechanism meant to prevent participating countries from reducing their tax rates in order to attract companies to their shores. If a country does not tax corporate profits earned within its borders at 15%, other countries have the ability to “top up” their tax assessments of those companies in order to bring its total tax rate up to 15%.
US Failure to Implement Global Minimum Tax Could Be Costly - VOA News July 28, 2022
Still, although the implementation process has been rocky and delayed, the incentives and motivation to move forward do exist, and the global minimum corporate tax is likely to advance.
Delayed but not defeated: The road ahead for a global minimum corporate tax - Atlantic Council August 24, 2022
The document issued today includes guidance on the recognition of the United States' minimum tax (known as the Global Intangible Low-Taxed Income or "GILTI") under the GloBE Rules and on the design of Qualified Domestic Minimum Top-up Taxes. It also includes more general guidance on the scope, operation and transitional elements of the GloBE Rules to allow Inclusive Framework members that are in the process of implementing the rules to reflect this guidance in their domestic legislation in a co-ordinated manner. The guidance responds to stakeholder feedback on technical issues, such as the collection of top up tax in a jurisdiction in a period where the jurisdiction has no GloBE income, and the treatment of debt releases and certain tax credit equity structures.
International tax reform: OECD releases technical guidance for implementation of the global minimum tax - OECD February 2, 2023
The deal, which 130 countries signed on to in 2021, included a pledge to set corporate tax rates at no less than 15 percent, closing loopholes that let multinational companies move their operations to different nations in search of low tax rates.
Biden won a global tax rate. Now Americans wonder if it was a good deal. - The Washington Post July 5, 2023
Despite its criticisms of what has happened to the minimum tax, the EU Tax Observatory praised a separate effort to stop the wealthy from dodging taxes. In 2017, tax authorities around the world began exchanging taxpayer information from financial institutions to better enforce tax laws. The results, essentially ending bank secrecy, have been dramatic, the Tax Observatory found.
Until the “automatic information exchange,’’ was introduced, it said, virtually all wealth that the world’s rich held offshore went untaxed. Now, only 25% escapes taxes.
Deal to force multinational companies to pay a 15% minimum tax is marred by loopholes, watchdog says - AP News October 24, 2023
Won’t corporations still find loopholes?
A portion of the increased tax revenue will be invested in modernizing the IRS and equipping them with the tools to find loopholes and recommending ways to close them - at the legislative level. We can get a preview what a well funded and modernized IRS can do with their recent $80 billion funding infusion.
According to the Congressional Research Service, the Inflation Reduction Act provides $45.6 billion for tax enforcement, including hiring more agents; $25.3 billion for operating expenses, including upgrading the agency’s telecommunications and information technology; and $3.2 billion to improve taxpayer services, including pre-filing assistance. Notwithstanding assurances that increased enforcement efforts will be devoted to taxpayers earning more than $400,000 per year, the prospect of over $45 billion being dedicated to enhanced tax enforcement has given rise to fears – stoked by politicians and commentators – that the IRS will be hiring an army of 87,000 new agents who will be scouring tax returns and ruining the lives of average Americans.
The Reality Of Increased IRS Funding | Contributor - Forbes October 20, 2022
For the wealthiest and most sophisticated tax filers, a cash-strapped IRS has meant a tax evasion free-for-all. Currently, the tax gap, which is the amount in taxes that are owed but not paid, comes to nearly $7 trillion over a decade. Three fifths of the tax gap is due to underreporting of income by the top 10% of taxpayers, and more than a quarter comes from the top 1%.
But the IRS has been left without the resources to hire and support the kind of tax experts who can catch wealthy tax cheats. The lack of staff was highlighted recently when it was revealed that the audit of former president Donald Trump was staffed by exactly one revenue agent. But Trump wasn’t the only one whose taxes were going without thorough examination. Audits of millionaires have dropped 61% in less than a decade. For those making more than $5 million, the audit rate has dropped 87%.
Cutting IRS funding is a gift to America’s wealthiest tax evaders | COMMENTARY - BROOKINGS January 26, 2023
The plan also seeks to improve outdated technology. IRS tools will help taxpayers identify their mistakes before filing returns, and upgrades may help resolve filers’ errors more quickly.
“That’s a departure from the organization’s traditions,” said Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup. “It’s also a recognition of how badly things got out of whack during the pandemic.”
Further, the agency aims to eliminate its paper backlog within five years by moving to a “fully digital correspondence process,” Deputy Treasury Secretary Wally Adeyemo said during the call.
The IRS released its $80 billion funding plan. Here’s what it means for taxpayers - CNBC April 7, 2023
Research has shown that audits of wealthy taxpayers can pay rich dividends.
The cost of an audit tends to rise with the income of the taxpayer targeted, the paper found. But audits of wealthy taxpayers also deliver more tax revenue.
When auditors focus on the top 10% of American earners, the audit has the potential to deliver $12 in tax revenue for every $1 spent, according to a working paper published in June by the National Bureau of Economic Research.
Flush with new funding, the IRS zeroes in on the taxes of uber-wealthy Americans - USA Today November 9, 2023
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