Skip to main content

Waiting on Werfel

Presented by Intuit: Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.
Feb 27, 2023 View in browser
 
POLITICO's Weekly Tax newsletter logo

By Bernie Becker

Presented by

Intuit

CONFIRMATION GOES MARCHING ON: Senate Finance Chair Ron Wyden (D-Ore.) hasn’t said when he’ll hold a vote on Danny Werfel’s nomination to be IRS commissioner.

But people close to the committee certainly wouldn’t be surprised if the Finance cleared Werfel’s nomination as soon as this week.

Werfel widely is expected to be confirmed by the full Senate, and two Republicans have already said they’d vote for his nomination. But how many GOP senators he’ll get in all is still up in the air.

For his part, Wyden certainly made it clear before the Senate’s recess that he wanted to move quickly on the matter, and Democrats have every reason to press ahead without delay and get the IRS a Senate-confirmed commissioner in this key period for the agency.

The IRS did just blow past a deadline to get the Treasury Department an implementation plan for the $80 billion in funding that Democrats gave to the agency last summer. But just in general, Democrats are also going to want a long-term chief in place to steer the agency as it tries to use that money to better enforcement and taxpayer services, among other things.

Looking ahead: Late last week, Werfel returned written answers to a slew of questions that Senate tax writers weren’t able to get to during his confirmation hearing — some 75 pages in all.

Werfel’s answers weren’t always the most illuminating — he frequently said he’d make sure to take a deeper look at an issue if he’s confirmed.

But it can be interesting to see what kind of information senators from both parties are seeking. For instance, Sen. Mike Crapo of Idaho, the Finance panel’s top Republican, cast some doubt on a recent report that said that the IRS had answered close to 90 percent of calls this filing season.

Several Republicans also expressed a variety of concerns about the IRS’s handling of private taxpayer information, particularly given the lack of answers about how ProPublica obtained tax returns of the super-rich.

Meanwhile, multiple senators from both parties also lodged their concerns about a backlog of Employee Retention Tax Credit claims, while Wyden sought answers on the IRS’s efforts to sniff out wealthy tax cheats.

MORE ON THIS IN A BIT, but first thanks for coming back for more Weekly Tax. And, honestly: Let the human who hasn't gotten tangled up in a hammock throw the first stone.

Trying to keep it semi-upright: Today marks 59 years since the Italian government announced it was accepting input on how to keep the Leaning Tower of Pisa from falling down. (Still, it took another 35 years for work to actually begin on better securing the tower.)

We will definitely lean on you for more scoops.

Email: bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com.

You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax.

A message from Intuit, serving more than 100 million customers worldwide with TurboTax, QuickBooks, Credit Karma, and Mailchimp:

Intuit TurboTax Live Tax Experts are advocates for taxpayers. They're the skilled tax professionals here to give each taxpayer personal attention and professional service. Located across the country, our proven tax experts help Americans better understand their unique tax situations so they can maximize their refunds and file confidently. This week, we interviewed members of our TurboTax Live Tax Expert team to find out why they love what they do. Here's what they said.

 

LET’S THINK BIG PICTURE: Most tax people around D.C. believe the biggest debate over the next three years could end up being, essentially, whether to extend the individual tax cuts from the GOP tax law for everyone or just for those making under $400,000 a year.

And with good reason: In all, that debate covers trillions of dollars worth of tax relief. But on some level, it’s also a pretty narrow discussion, because any talk of more fundamentally revamping the U.S. tax system has become secondary since Republicans passed the Tax Cuts and Jobs Act in 2017.

Within that context, the conservative-leaning Tax Foundation has released a fully fleshed out tax overhaul based on the system in Estonia, which the group consistently has found to have the most competitive tax code in the industrialized world.

The plan would install flat taxes of 20 percent for individuals and the distributed profits of businesses, while scrapping a wide range of tax breaks — including the incentives for mortgage interest and charitable contributions.

The Tax Foundation’s revamped system would keep the Child Tax Credit, and the group says the new system would be roughly revenue-neutral, boost long-run economic growth by quite a bit and dramatically reduce the costs of complying with the tax code.

William McBride, the Tax Foundation’s vice president of federal tax policy, spoke to Weekly Tax about the plan. The interview has been edited for length and clarity.

Why release this now?

We’ve seen it ourselves — there’s not nearly the level of emergency in tax that there was in the last Congress, because there was real legislative potential there.

It’s also why we’re doing it now, because this is more abstract than the congressional process. This is not likely to be taken up in this Congress. But it’s a way to step outside the day-to-day congressional process, and look at the bigger picture, which includes what worked in other countries.

Why is Estonia a good template for the U.S.? It’s much smaller, for instance, and doesn’t have the same size of government to fund.

Estonian officials have been told that over the years that this doesn’t translate to bigger economies. And when they ask why not, they’ve never gotten a good answer.

There’s no good reason that this doesn’t scale to bigger countries. Estonia has more than a million taxpayers, plus big companies, small companies, all kinds of industries, gig workers. They’re dealing with all the same kinds of things.

They’ve got people looking for tax advantages, loopholes. They’ve found that this is a very copacetic system. Much less controversy, much less confusion. It’s a picture of relative peace in tax.

Is it realistic to think that Congress would get rid of so many major tax breaks?

That’s the hard part — the peas you have to eat.

With state and local tax deductions, there was a half measure in 2017. That’s why this stuff is challenging — it was challenging for us to put forward this vision, to create enough benefits to offset those costs.

The state and local tax deduction — if it fully goes away, it hurts states with higher income taxes. But the economy is growing at a much higher clip overall and that redounds to all the states. It’s all those benefits that we highlight in the paper.

What would you say to critics who’d say this plan doesn’t concern itself enough with tax fairness?

I absolutely agree with those who say that fairness should be a very important criteria, if not the most important one in a tax system.

The question is, how do you define fairness? Distributionally, we looked at it both in static and dynamically — after economic growth, it does show that the top 1 percent really score big with this tax plan, in part because rates come down to 20 percent.

But that’s not the only measure of fairness. Another indicator of fairness is how comprehensible and understandable are our tax laws for the people without the time or resources to deal with the complications in the tax system.

Couldn’t you get a lot of the benefits of this plan without going to a full flat tax? 

The reason that Estonia chose the single rate is because they chose simplicity first. And they wanted, related to that, to avoid gaming of the system — the relabeling of income to get the preferential rate, and to make it fully integrated between the business side and the individual side.

The basic issue is you open up Pandora’s box for tax planning opportunities, and then this cat-and-mouse game of administrators trying to close it down.

 

We’re spilling the tea (and drinking tons of it in our newsroom) in U.K. politics with our latest newsletter, London Playbook PM. Get to know all the movers and shakers in Westminster and never miss a beat of British politics with a free subscription. Don’t miss out, we’ve got some exciting moves coming. Sign up today.

 
 

Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.

Around the World

Reuters: "Debate grows among Lula's team over Brazil fuel tax policy."

Reuters, also: "With eye on deficit, Malaysia's Anwar tightens spending, taxes the rich."

Financial Times: "Wind farm developers demand UK tax breaks to offset rising costs."

 

Advertisement Image

 
Around the Nation

West Virginia Public Broadcasting: "Governor, Legislature Coming To Agreement On Tax Cuts."

Oregon Public Broadcasting: "Democratic lawmakers in Pacific Northwest steer pay-per-mile into slow lane to replace gas tax, eventually."

NJ.com: "More property tax relief, big N.J. public worker pension payment expected in new Murphy budget."

 

JOIN POLITICO ON 3/1 TO DISCUSS AMERICAN PRIVACY LAWS: Americans have fewer privacy rights than Europeans, and companies continue to face a minefield of competing state and foreign legislation. There is strong bipartisan support for a federal privacy bill, but it has yet to materialize. Join POLITICO on 3/1 to discuss what it will take to get a federal privacy law on the books, potential designs for how this type of legislation could protect consumers and innovators, and more. REGISTER HERE.

 
 
Also Worth Your Time

Insider: "Inflation has cut the value of Americans' tax refunds by nearly $27 billion."

New York Times: "They Went Viral and Made Money. Now They Owe Taxes."

Tax Notes: "Proposed Regs on Crypto Brokers Could Be Issued Soon."

Did you know?

The Capital Gate in Abu Dhabi holds the world record for "farthest manmade leaning building."

A message from Intuit, serving more than 100 million customers worldwide with TurboTax, QuickBooks, Credit Karma, and Mailchimp:

We asked Felecia, a TurboTax Live Tax Expert in Georgia with 39 years of tax experience: What do you enjoy most about working with TurboTax Live either as a team or your experience serving clients as an expert?

"I've always wanted to be an advocate for the taxpayer. At TurboTax, I'm allowed to do that. I'm allowed to listen, advocate, and, in the end—educate."

Felecia, who has a soft spot for helping those new to self-employment, goes on to add, "Everyone is a little scared about taxes. They are nervous about doing it wrong, of getting audited, of paying more than they need to. Everyone who calls in isn't just a client. They're a person. And they just want help getting it right. And that's one of the many reasons I love my job. Because I get to help."

Learn more about how TurboTax Live Tax Experts are helping taxpayers here.

 
 

Follow us on Twitter

Toby Eckert @tobyeckert

Bernie Becker @berniebecker3

Brian Faler @brian_faler

 

Follow us

Follow us on Facebook Follow us on Twitter Follow us on Instagram Listen on Apple Podcast
 

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings

This email was sent to rouf@idiot.cloudns.cc by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Please click here and follow the steps to unsubscribe.

Comments

Popular Posts

The costs of Healey's budget cuts

Lisa Kashinsky and Kelly Garrity's must-read rundown of what's up on Beacon Hill and beyond. Jan 09, 2024 View in browser   By Kelly Garrity and Lisa Kashinsky MAKING ENDS MEET — Gov. Maura Healey’s plan to slash $375 million from the state budget to help plug a $1 billion revenue hole came as something of a surprise after she initially said she had no plans to scale back spending. But some budget watchers say the move to control costs was inevitable — and that the governor...

📷 Zaib Khan added a new photo

  See the photo that he shared.           Facebook                 📷 Zaib Khan added a new photo. 16 October at 20:23   View Photo       Abdul Karim Jam likes this.             This message was sent to ludomallam@idiot.cloudns.cc . If you don't want to receive these emails from Facebook in the future, please unsubscribe . Facebook, Inc., Attention: Community Support, 1 Facebook Way, Menlo Park, CA 94025         To help keep your account secure, please don't forward this email. Learn more.      

U.S. Cyber Command and NSA partner to shield midterms from hackers / Global ransomware damages set to exceed $30B / India's newest airline could have leaked customer data

Plus: Microsoft Azure Virtual Machines have suffered an outage Inside.com Part of   Network August 30, 2022 Presented by The U.S. Cyber Command has partnered with the NSA to shield midterm elections from hackers. The two federal agencies made the announcement in a joint statement. More: The two agencies have  created a joint task force named the Election Security Group. Officials from the NSA and U.S. Cyber Command have stated that the group comprises the best team members that the two agencies have. ESG will receive and share information with other domestic and international authorities to ensure it achieves its goal of protecting the midterm elections from foreign threat actors. The task force will also help U.S. allies to protect their electoral campaigns from actors that want to undermine them. Zoom Out: CISA has collaborated ...

Q&A: Bergman on pushing the FDA on psychedelics

The ideas and innovators shaping health care Aug 08, 2024 View in browser   By Ruth Reader , Erin Schumaker , Daniel Payne , Toni Odejimi and Carmen Paun WASHINGTON WATCH Bergman | Francis Chung/POLITICO ...

8 Best Diabetes-Friendly Meal Delivery Services in 2024

Plus: Identifying and Treating Diabetes Joint Pain ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌     ­ ͏ ‌   ...

📷 MD Monir Ambulance added a new photo

        📷 MD Monir Ambulance added a new photo. 12 April at 17:59   View Photo               Facebook                 📷 MD Monir Ambulance added a new photo. 12 April at 17:59   View Photo               This message was sent to ludomallam@idiot.cloudns.cc . If you don't want to receive these emails from Facebook in the future, please unsubscribe . Facebook, Inc., Attention: Community Support, 1 Facebook Way, Menlo Park, CA 94025         To help keep your account secure, please don't forward this email. Learn more.      

Sabir Khan wants to be friends on Facebook

  1 mutual friend - Works at Facebook - Islamia University - Bahawalpur - 2,123 friends - 5 photos - 7 groups           Facebook             Sabir Khan wants to be friends with you on Facebook.   Sabir Khan Works at Facebook · Islamia University · Bahawalpur 1 mutual friend · 2,123 friends · 5 photos · 7 groups               Confirm request     See all requests             This message was sent to ludomallam@idiot.cloudns.cc . If you don't want to receive these emails from Facebook in the future, please unsubscribe . Facebook, Inc., Attention: Community Support, 1 Facebook Way, Menlo Park, CA 94025         To help keep your account secure, please don't forward this email. Learn more.      

Spectrum Equity closes $2B fund

Plus, Audacity launches $60M fund Inside.com Part of   Network July 28, 2022 Presented by Spectrum Equity, an investment company based in Boston, has closed its new fund valued at $2B . The fund will be officially named Spectrum Equity X, L.P. More: The firm received funds from previous investors as well as first-time outside investors. Spectrum focuses on backing internet-based companies that aim to disrupt a number of different verticals such as education, financial services, healthcare, and logistics.  Founded in 1993, the company manages $8B in assets, while its average equity investment is $25M-$150M. Audacity has launched a new $60M fund. The India-based VC firm will focus on media tech companies that are raising their Series A round. More: Besides media tech, the firm will also focus on SaaS, g...

A 2022 recap of platform updates and new tools

Startups that raised funding in 2022 Inside.com Part of   Network December 28, 2022 Presented by Android and Apple updates announced in 2022:  Google introduced a pilot program with Spotify to explore user choice billing.  Google released Android 13 (Go edition) with improvements to user experience and technical functionalities.  Android 13 for TV was made available to developers on ADT-3 and the Android TV emulator.  Google announced memory safety vulnerabilities in Android dropped after announcing support for Rust last year.  Google shared its plans to launch the beta version of Privacy Sandbox for Android early next year.  Apple announced changes to its pricing structure, offering developers 700 additional price points and pricing tools.  Apple allowed reader apps to provide in-app links to alternative payment methods. In Apr...

Changes to Google’s end user-facing Terms of Service

Changes to our end user-facing Terms of Service effective March 31, 2020. Hello Administrator, We're writing to let you know about changes in our end user-facing Terms of Service (Terms) that may affect users in your domain. These changes do not impact the terms that govern the agreement between Google and your organization. If you have disabled Google Additional Services for users in your domain, these changes will not impact them. What's Changing? We're improving our Terms and making them easier to understand. The changes will take effect on March 31, 2020, and they won't impact the way your end users use Google services. As the United Kingdom (UK) is leaving the European Union (EU), Google LLC will be the service provider for end users in your domain that are based in the UK. Google LLC will be responsible for all user information and data in Additional Services, and for complying with applicable privacy laws. For more detail...