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 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)
$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.
There is 0% chance this change would actually result in $50 billion more in tax revenue, lol.
This is political theater in an election year.
After watching Finding The Money, terms like “raise” and “revenue” applied to taxes seem deliberately misleading.
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.
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.
I’ll believe it when it happens. And if it does, I won’t expect it to stand if the admin flips in November.
