Topic: Tax Compliance

The IRS Could Improve EITC Compliance by Regulating Tax Preparers

By :: November 2nd, 2015

Tax preparers play a critical role helping low income working families collect benefits from the Earned Income Tax Credit. Almost 60 percent of families claiming the EITC in 2010 and 2011 did so with the help of a paid preparer. Unfortunately, preparers can make costly mistakes—errors the taxpayer is ultimately responsible for resolving. The IRS […]

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One Avenue to Bipartisan Tax Reform: Simplification and Improved Tax Administration

By :: April 8th, 2015

There are many ways to restructure the tax code. Elected officials often fail to detect opportunity when they adhere in a path-dependent way to one past model of success, such the 1986 tax reform.  An alternative approach where even the acclaimed 1986 effort made at best modest progress would focus on making tax code simpler […]

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Will Immigrants Get A Tax Windfall From Refundable Credits?

By :: December 12th, 2014

In the end-of-the-year congressional scramble, lawmakers scuttled an effort to permanently extend a number of tax breaks—largely because many feared it would open the door to widespread use of refundable tax credits by undocumented immigrants covered by President Obama’s recent executive order.  But is their concern justified? Three sets of rules related to residency and […]

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Have We Created a Two-Tiered Tax System—One for the Powerful and One for the Rest of Us?

By :: July 22nd, 2014

Unlike the rest of us, many high-income, influential people and organizations have close to a free hand when it comes to their taxes. Already underfunded and understaffed, the IRS seems incapable of stopping many aggressive or even abusive interpretations of the tax laws, often by hedge funds or politically-motivated tax-exempt organizations. Over the past few […]

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Abuse of financial products by hedge funds

By :: July 22nd, 2014

Today, I testified before the U.S. Senate Permanent Subcommittee on Investigations (the “Subcommittee”) on the abuse of structured financial products by hedge funds, in particular by the Renaissance funds. This is what I told the Subcommittee: Almost a century ago, Congress reduced the tax rate for long-term capital gains. Then, long-term meant holding assets for […]

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Are Some Americans Paying Federal Income Tax They Don’t Owe?

By :: September 3rd, 2013

Headline got your attention? No, it isn’t a come-on for a new tax avoidance scheme. Rather, it reflects an interesting but little known problem with the federal income tax system: People who have tax withheld from their paychecks but, for some reason, don’t file returns. For many, ignoring their 1040 means they are paying tax they […]

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Do Low-Income Taxpayers Cheat?

By :: July 18th, 2013

My blog last Tuesday on overblown concerns about people falsely claiming subsides under the Affordable Care Act’s insurance exchanges generated a lot of response. Much focused on my assertion that the income tax system operates remarkably well as a largely voluntary program. Their retort: I naively misjudged the willingness of low-income people to cheat. In […]

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How Not to Fix the IRS

By :: July 11th, 2013

House Republicans have decided to make the IRS their summer piñata. Its leadership says it will bring a series of anti-IRS proposals to the floor later this month. And an appropriations subcommittee’s spending bill would slash the agency’s budget by $3 billion, 24 percent below levels Congress approved in March. If the plan is to […]

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Chairman Camp Agrees: Too Many Choices Burden our Tax System

By :: January 28th, 2013

Last week’s draft plan by House Ways & Means Committee Chair Dave Camp (R-MI) to reform the taxation of financial products includes two key changes that would simplify rules, reduce manipulation, minimize compliance burdens, and improve tax administration. The first would require investors to use the “mark-to-market” method of accounting for all derivatives, other than […]

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Can Behavioral Science Improve Tax Compliance?

By :: July 9th, 2012

In Sunday’s New York Times, Richard Thaler laments that “as a general rule, the United States government is run by lawyers who occasionally take advice from economists.” That makes for better policy than a tyranny of lawyers alone. But it certainly isn’t enough. Policy is ultimately about changing the way people behave. And to do […]

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