The IRS wants to end another major tax loophole for the wealthy and raise $50 billion in the process
The IRS wants to end another major tax loophole for the wealthy and raise $50 billion in the process
The guidance and ruling being announced Monday includes plans to essentially stop “partnership basis shifting."
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.
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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.
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