The fight for fairness


Peter DeFazio, the congressman from Eugene, is a true-blue progressive, unlike some others we might name,  like Ron Wyden (R-NY) or Kurt Schrader (NRA-Dayton). DeFazio has introduced a couple of tax bills lately that make a lot of sense.

The first calls for a financial transactions tax:

The Wall Street Tax Act would tax the sale of stocks, bonds, and derivatives at 0.1 percent (10 basis points), and would raise an estimated $777 billion over a decade. A stock trade of $1,000 would incur a tax of just one dollar. The tax would apply to the fair market value of equities and bonds, and the payment flows under derivatives contracts. Initial public offerings and short-term debt (with a maturity of less than 100 days) would be exempted.

For Pete's sake, we tax gasoline, phone bills, airline tickets... heck, many states even tax sales of underwear. We can have a 0.1 percent sales tax on stock trades. The world will not end. If you're selling $10,000 worth of stock, you can pay $10. It's not even worth arguing about. Congress should just do it.

DeFazio's other new bill would increase funding for the IRS, basically on the condition that the IRS audit more rich people. The IRS has seen its funding slashed by the Republicans to the point that the wealthy can get away with murder on their tax returns. That needs to stop.

The IRS Enhancement and Tax Gap Reduction Act, will help the IRS shrink the “tax gap”—the difference between tax liabilities owed to the Internal Revenue Service and the liabilities that are actually collected. According to the Office of the Taxpayer Advocate, the tax gap averaged roughly $381 billion annually between 2011 and 2013. Estimates put the current annual tax gap at more than $600 billion, and, barring changes, the federal government will lose an estimated $7.5 trillion over the course of the coming decade. The majority of this gap comes from underpayment from the top 1 percent. Meanwhile, the average U.S. household is paying more than $3,000 annually to subsidize taxpayers who aren’t paying all that they owe.

Rep. DeFazio’s bill would mandate minimum audit levels for high-income individuals as well as high gross-income corporations. In addition, the bill would significantly increase IRS funding levels over the next decade to ensure the agency has the funding it needs to ramp up enforcement, hire and retain additional staff, modernize dated IT infrastructure essential to collecting vital reporting information, and increase taxpayer support services. 

For roughly half of the population, there's no way to cheat on taxes – the government gets reports from third parties on every relevant item on the taxpayer's return. But for the high-rollers, there's all sorts of room for foul play. Audits are the only way to ensure compliance, and the IRS budget has been starved to the point where there aren't enough audits.

So good for DeFazio for puttig these bills in play. I wouldn't be surprised if they sailed through the House, and then got gummed up in the Senate, where Wyden's nominally in charge of the tax system now. The Senate is the 1 percent's best friend.


Comments

  1. Apparently I need to pay more attention to DeFazio. These are great ideas.

    ReplyDelete

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