Obama wants to tax the rich. It's a plan abroad, too.
The State of the Union: Tax reform depends on where you are sitting.听In his听State of the Union Address last night, President Obama called on Congress to address wealth inequality through the tax code, largely by听听and imposing a bank tax to fund听. Senate Finance Committee chair听听to 鈥渃lass warfare鈥� but hopes his panel听 can vote on its own version of听 reform this year. TPC鈥檚听听the Obama and Hatch speeches reflect how wide the chasm is between the parties on fundamental reform issues. This morning,听听will focus on business tax reform in a Brookings Institution webcast.
Back to Russia, with Love.听Some of the country鈥檚 richest are repatriating off-shore earnings. The usual rate on foreign earnings is 13 percent, but if the government concludes these assets are held in shell corporations controlled from Russia (which many reportedly are), the rate goes up to 20 percent. Russian entrepreneurs hold as much as $1 trillion offshore. The听听finds that Russia鈥檚 20 richest people each controlled a share of their wealth through overseas holding companies $181 billion of assets. President Putin needs the tax revenue: The country鈥檚 ruble is sagging in the wake of plunging oil prices and US and European sanctions.
A British mansion tax: Perhaps too crude an instrument.听Senior Labour party member Peter Mandelson argues as much,听听Ed Miliband鈥檚 plan to levy a tax on properties worth more than two million pounds. Miliband wants the tax to pay for a new National Health Service Fund. But Mandelson would rather see a progressive structure that sets rates based on home values. 鈥淚t will be more effective and efficient in the longer term than simply clobbering people鈥︹�� Lord Grantham would surely approve.
In Brazil, higher taxes on fuel, imports, loans, and makeup.听The taxes will take effect next month and the government expects they鈥檒l听听by more than $7.5 billion annually. Brazil鈥檚 President Dilma Rousseff also vetoed a tax cut that would have cost the government about $2.6 billion. In her first four-year term, Brazil鈥檚 budget deficit grew, economic growth slowed, and inflation ticked up quickly. New finance minister Joaquim Levy says Brazil is 鈥渕aking changes step by step so it can reach, with as little sacrifice as possible, what鈥檚 needed to resume the path to growth.鈥�
And back at home, tax filing season might be smoother with a better letter audit program.TPC鈥檚 Howard听听this recommendation from Taxpayer Advocate鈥檚 Nina Olson would improve the agency鈥檚 standing with taxpayers and save the agency money. Mailed correspondence from the IRS to a taxpayer is the most common way the agency resolves disputes with taxpayers. But the process often relies on multiple IRS examiners who have to keep track of paper records and notes from previous calls. That means more frustrated taxpayers and higher IRS cost. Howard concludes, 鈥淎ssigning one examiner to see a case to conclusion is only common sense.鈥� But when it comes to Congress and the IRS: Common sense is rare.
Interested in subscribing to听, the Urban-Brookings听听summary of the day鈥檚 tax news?听. If you鈥檇 like to tell us about a new research paper or have any comments about our new feature, write us at dailydeduction@taxpolicycenter.org.
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