Ireland, the home of Apple and Google in Europe, is seeking a compromise on Biden’s plan for a 15% global minimum corporate tax rate, reports say

A woman wearing sunglasses exits Google's Dublin headquarters
A Google office in Dublin.

  • Ireland – home to Google, Apple, Microsoft – said it’s willing to “compromise” on corporate taxes.
  • G7 leaders agreed to a 15% global minimum corporate tax rate, which is higher than Ireland’s 12.5%.
  • Ireland’s finance minister on Friday told CNBC there’s a role for “legitimate tax competition.”
  • See more stories on Insider’s business page.

Ireland – European home to tech giants like Apple, Google, and Microsoft – said it was willing to “compromise” on global minimum tax rates.

Paschal Donohoe, Ireland’s finance minister, on Friday told CNBC that the country would “engage” in tax-rate negotiations “very intensely.”

“…and I do hope an agreement can be reached that does recognize the role of legitimate tax competition for smaller and medium-sized economies,” Donohoe said.

The Group of Seven wealthy nations this month agreed to a 15% global minimum corporate tax rate, higher than Ireland’s 12.5%. President Joe Biden’s administration pushed the agreement, saying it would be “a critical step towards ending the decades-long race to the bottom” on corporate tax rates.

Ireland has long attracted multinational corporations seeking a European outpost with favorable rates, sometimes at the frustration of its European neighbors. Apple in 2016 was targeted by the European Commission, which said the company needed to pay back taxes of about $15 billion. Apple appealed.

Big Tech this month mostly said it welcomed a uniform global rate.

“Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G7,” Nick Clegg, vice president for global affairs at Facebook, told Insider.

As the G7 tax agreement was announced, Donohoe said on Twitter that there were 139 countries that would eventually be involved in such a tax agreement. As such, it would have to work for small and large nations, he said. Developing and wealthy nations would all have to agree, he said.

“It is in everyone’s interest to achieve a sustainable, ambitious and equitable agreement on the international tax architecture,” he said at the time.

Read the original article on Business Insider

A bipartisan Senate group wants to fund an IRS crackdown on ‘tax cheats’ in nascent infrastructure proposal

Angus King
Sen. Angus King (I-ME).

  • Senators on both sides of the aisle agree that the IRS should be funded in new spending.
  • Sen. Angus King told Insider “there’s a lot of money we’re leaving on the table” and he understands “going after tax cheats” is part of a deal.
  • Sen. Rob Portman, a prominent GOP lawmaker, said a $40 billion investment would go a long way.
  • See more stories on Insider’s business page.

As bipartisan infrastructure talks plod on, funneling money to beef up IRS enforcement looks like it’ll be sticking around.

Sen. Angus King, an independent of Maine who caucuses with the Democrats, told Insider on Tuesday that deciding what pay-fors make it into the final package is difficult – but suggested that funding for IRS enforcement will remain.

“I understand going after tax cheats is part of it,” King said. “There’s a lot of money we’re leaving on the table right now.”

The bipartisan Senate group of 10 – evenly divided between Republicans and Democrats – is working on a $1 trillion package. Sen. Rob Portman of Ohio, a prominent lawmaker in the group, told reporters Tuesday that money to bulk up the IRS’s ability to enforce tax laws would be included in the nascent framework.

The IRS officially estimates the “tax gap” coming in at $441 billion a year. But Charles Rettig, the agency’s commissioner, told Congress in April that the number could actually be over $1 trillion.

This gap between taxes owed and taxes paid could only grow if left without intervention, according to the Treasury Department, which estimates that President Joe Biden’s proposed $80 billion investment in the IRS could bring in an additional $700 billion over 10 years. That would still leave hundreds of billions in taxes going uncollected each year, Insider’s Ayelet Sheffey reports.

The bipartisan approach to IRS enforcement might not go that high.

“We have a CBO estimate that, if you put about $40 billion into bringing back the IRS workforce … that could result in $110 billion – which nets out to $63 billion,” Portman said on Tuesday. “It’s a relatively modest increase in IRS spending compared to what the Democrats proposed under Biden’s plan.”

The number of agents devoted to working on sophisticated tax evasion enforcement has fallen by 35% over the last decade, according to Treasury and the IRS budget has fallen by 20%, while audits fell by 42% from 2010 to 2017. According to a White House fact sheet, the audit rate for those making over $1 million a year declined by 80% from 2011 to 2018.

Biden wants to ramp up enforcement on the wealthiest Americans. A recent study from IRS researchers and academics found the top 1% of Americans fail to report about a quarter of their income. Income underreporting is nearly twice as high for the top 0.1%, which could account for billions unreported.

The role of IRS enforcement is coming into greater relief following a bombshell ProPublica report, which revealed just how little in proportional taxes some American billionaires pay. The tax mechanisms that those billionaires utilize are actually completely legal, but they’ve kickstarted talks of tax reform among Democrats.

Following the ProPublica report, five former treasury secretaries published an op-ed in The New York Times saying that, “in the ways outlined by President Biden’s recent proposal,” more enforcement could be pursued.

The five former treasury secretaries – who served under both Democratic and Republican presidents – write: “But on this issue, all should agree, including members of Congress of both parties: Giving the I.R.S. the tools it needs to improve compliance will raise significant revenue and create a fairer, more efficient system of tax administration.”

Read the original article on Business Insider

Bitcoin anonymity is just a big myth – and using it to launder dirty money is stupid, a crypto ATM chief says

GettyImages 1312850757
  • A big misconception about bitcoin is that it’s anonymous and untraceable, CoinFlip’s Ben Weiss said.
  • Using bitcoin to launder money is one of the stupidest things to do, he said.
  • Bitcoin addresses have no name attached, but transactions can be linked to identities with some effort.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Many people think bitcoin transactions can be anonymous or untraceable, but they’re misunderstanding how the process works, Ben Weiss, CEO of crypto ATM operator CoinFlip, said at a webinar on digital assets this week.

“It’s not anonymous. It’s pseudo-anonymous. You can’t buy any large amount of bitcoin without KYC or ID or driver’s licenses,” he said, referring to “know your customer” and similar identification checks.

“Bitcoin is actually more transparent in many ways than typical things in the financial system,” he added.

The perception is that because the digital currency is often associated with illegal activity, then it must shield the identity of the user. But that is not true, Weiss said.

The bitcoin addresses may not have names registered to them, but in practice, they can be linked to real-world identities, he noted. That’s because every investor is required to log their personal information before they buy the cryptocurrency.

A recent incident, the recovery of much of the $4.4 million ransom paid by Colonial Pipeline to a Russia-linked hacker group, raised questions as to whether bitcoin is free from government control and manipulation.

What isn’t well-known is that relevant enforcement agencies can track down bitcoin purchases, if they are prepared to put in sufficient effort, Weiss said.

That’s why one of the most stupid things anyone could do would be to attempt to launder dirty money using bitcoin, Weiss said. The US government can track bitcoin transactions with the help of blockchain analysts and through serving seizure warrants authorized by district courts, he said.

“You’re really playing with fire if you tried to today,” he said, adding that bitcoin transactions are more traceable than cash.

Tax is one area where some people are still learning that they are out in the open when it comes to cryptocurrency transactions. Many US taxpayers may not realize that if they fail to report crypto assets when filing their annual returns, these may be discovered and there may be consequences. Transactions on the blockchain are not hidden, and the records are public.

To hunt out unreported crypto-related income, the US Internal Revenue Service has launched “Operation Hidden Treasure“. A dedicated team of IRS criminal investigation professionals is seeking out and targeting taxpayers who are not listing cryptocurrency transactions on their tax returns.

Read More: Morningstar lays out the 10 highest-conviction bets being made by US stock-pickers right now – and shares 4 Big Tech names that look cheap

Read the original article on Business Insider

The exodus of the ultra-rich to tax havens like Texas and Florida is accelerating – but people may still end up paying more tax than you’d expect

ron desantis florida vaccine 60 minutes
Republican Florida Gov. Ron DeSantis.

  • People have fled to low-tax states like Florida and Texas during the pandemic.
  • But they need to watch out for taxes they may still owe in the state they came from, a tax advisor said.
  • And states with no personal-income tax still have to generate revenues, so they tax other things.
  • See more stories on Insider’s business page.

People have been fleeing high-tax states like New York and California during the pandemic, leading to reports of an “exodus” to Florida and Texas – but people moving to avoid paying rates need to watch out for other surprise taxes, a tax advisor has said.

Though Florida and Texas have no personal-income tax, they still have to generate state revenue – so they hike up other types of tax, Alan Goldenberg, a tax principal at Anchin specializing in state and local tax, told Insider.

And even if you move to a low-tax state, you’ll still have to pay federal taxes, he added.

Read more: The 14 best neighborhoods in Austin, Texas, that young people, families, and one-percenters are moving to

Over the past decade, Florida’s population grew by 14.6% and Texas’ by 15.9%, according to US Census data. Both are around double the 7.4% rate of overall US population growth.

Meanwhile, California’s population grew by 6.1% and New York’s by just 4.2%.

And many of the super-wealthy are making the move to these low-tax states. Tax isn’t the sole reason why – but it is a “big part of the conversation,” Goldenberg said.

New York Gov. Andrew Cuomo plans to bump up personal-income tax for the wealthy to cover the state’s $15 billion deficit after its revenue fell during the pandemic. Combined with local taxes, New York City’s top earners would have to pay 14.7% income tax – which would be the highest rate in the US above California’s 13.3%.

People can make “significant tax savings” by relocating, Goldenberg said.

Florida’s CFO Jimmy Patronis told Fox Business that around 900 people a day are moving to the Sunshine state – and it’s mainly down to the “tax hell” in New York and New Jersey.

But Goldenberg warned that states with no personal-income tax still have to generate revenues, so they tax other things. These include sales, property, and tourism taxes.

Florida and Texas, for example, both have a 6% tax on stays in hotels – whereas California has none.

And Texas has high property taxes, too.

As well as considering these taxes, people have to watch out for whether they could still be charged in the state they moved from – known as their historic state.

“Just because you move out of the state doesn’t mean you may be totally done being taxed by that state,” Goldenberg said.

“There may still be some tax exposure,” he said, pointing out that people who own businesses in their historic state will still have to pay tax there.

Migration is leading to “significant revenue losses” for high-tax states, Goldenberg said. These states are increasingly chasing up people to check whether they have fully moved away, and are getting more aggressive in their approach, he said.

Because of this, people need to have a clear action plan and decide whether they want to keep, sell, or rent out the house in their historic state, Goldenberg said.

Read the original article on Business Insider

It’s perfectly legal for billionaires to pay so little in taxes. Democrats say they could finally change that after the bombshell ProPublica report.

Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.
Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.

  • A ProPublica report based on secret IRS files showed billionaires pay relatively little tax.
  • Inequality experts have been warning for years that the wealthy pay relatively low taxes.
  • The details added impetus to a push by Democrats to ramp up taxes on the country’s highest earners.
  • See more stories on Insider’s business page.

On Tuesday morning, ProPublica published a bombshell report showing how little America’s wealthiest pay in taxes, based on leaked documents from the Internal Revenue Service (IRS).

The report shows in detail how billionaires like Jeff Bezos and Warren Buffett have seen billions added to their net worth with little impact on their tax bill. It’s totally legal, and for many, not all that surprising.

“It’s not surprising at all, I think,” Chuck Collins, who works at the left-leaning Institute for Policy Studies, an organization dedicated to highlighting wealth inequality, told Insider.

Collins recently wrote a book on the ways the ultrawealthy hide their money and avoid taxation. In it, he uses the term “wealth defense industry” for the cottage industry that’s grown around helping the rich hold onto their money.

“It’s going to be very hard for ordinary people to decipher these tax transactions because they’re purposefully complex,” Collins said. “The wealth defense industry, their bread and butter is complexity, and opaqueness.”

Chuck Marr, the director of federal tax policy at the liberal-leaning Center on Budget and Progressive Priorities, said “we’ve been making this case for a long time.” He pointed to a paper from 2019 that outlines many findings similar to those in Tuesday’s report.

Still, it’s one thing to know something is likely happening, and another to see the details laid bare, and the figures involved. For example, ProPublica found that Warren Buffett paid 0.1% in “true tax rate,” which compares how much he paid each year in taxes to how much his wealth grew.

ProPublica’s report could draw widespread attention – and scrutiny – to certain intricacies of the tax code just as President Joe Biden moves to reform taxes to pay for his infrastructure proposals.

Already, Democratic lawmakers are seizing on the public report as a way to kickstart tax reform.

The report “should make it very hard for the Congress to not address it,” Marr said. “I think it really underscores, again, that very wealthy people do not pay tax on much of their income. And so this tax bill is a clear opening to address that.”

Jeff Bezos
Amazon CEO Jeff Bezos, the world’s wealthiest man.

America’s wealthiest make most of their money from assets, not income

As the 2019 CBPP paper lays out, a good amount of the income that the wealthiest bring in isn’t technically income – or at least it’s not taxed that way.

If you work a job where you receive wages in a paycheck, you’re probably familiar with the income tax, which taxes the money you get for going to work. Those wages would be income, and you’d be taxed under the income tax.

But, as both the CBPP and ProPublica note, the wealthiest Americans get most of their wealth from assets like stocks, and therefore pay taxes on capital gains.

As Marr and coauthors Samantha Jacoby and Kathleen Bryant write, capital-gains taxes are “effectively voluntary to a substantial extent: High-wealth filers may accumulate capital gains every year as their investments appreciate, but they don’t owe tax on those gains until – or unless – they ‘realize’ the gain, usually by selling the appreciated asset.”

So if you hold onto your stock assets, you’re not seeing that capital gains rate. Goldman Sachs estimated last month that the wealthiest Americans possessed between $1 trillion to $1.5 trillion in unrealized capital gains at that time. Some argue that those unrealized gains should be taxed, since the wealthiest could be sitting on valuable stocks, making money, and not paying taxes. Meanwhile, researchers at the right-leaning Tax Foundation argue that a progressive consumption tax would be a better way to tax the rich.

ProPublica reported that the ultrawealthy can also borrow hefty sums of money to pay off their bills as they sit on stocks and take in little income. “They’ll borrow money and they’ll use the stock as collateral,” Marr said. That means the wealthy are essentially using these loans as a form of income, but aren’t taxed as such.

As Marr, Jacoby, and Bryant write, “this is often a much cheaper strategy than selling stock and paying capital gains taxes, particularly when interest rates are low.”

Joe Biden
President Joe Biden.

The report could add flame to the fire for tax reform

Even before the ProPublica report, tax debate had been brewing. In particular, a provision called the “step-up basis” had been facing scrutiny.

Let’s say you’ve held onto stock for your whole life, and it’s only grown in value. If you die and leave it to someone else, the stock takes on the value at which the recipient gets it, meaning neither the original owner nor the inheritor are taxed on those gains.

For very wealthy people, Marr said, that “wipes out a lifetime of tax liability.”

Biden wants to do away with the step-up basis and he wants to tax capital gains for those making over $1 million at a rate equivalent to income.

“Broadly speaking, we know that there is more to be done to ensure that corporations, individuals who are at the highest income are paying more of their fair share,” White House Press Secretary Jen Psaki told The Washington Post in response to the ProPublica report. “Hence, it’s in the president’s proposals. His budget and part of how he’s proposing to pay for his ideas will go ahead.”

“The principle here is to equalize the treatment of ordinary income and capital gains, and that is a principle that’s neither new or particularly novel,” Brian Deese, the director of the National Economic Council, said in an April briefing. “In fact, the last president to enact a reform to equalize the treatment of ordinary income and capital gains was President Reagan, who did so while raising capital-gains taxes as part of the 1986 tax reform.”

The White House did not respond to Insider’s request for comment.

There’s been GOP resistance to further alterations to the tax code following their 2017 tax cut, especially any increase in rates. But the new reporting already ramped up the tax debate within Congress on Tuesday.

Sen. Bernie Sanders, who chairs the Senate Budget Committee, told reporters on Capitol Hill, “To the surprise of nobody I know, the rich and powerful aren’t paying their fair share, what else is new?” He urged lawmakers to approve Biden’s tax proposals.

“I do want people to understand the bottom line,” Sen. Ron Wyden, chair of the Senate Finance Committee, told reporters. “What ProPublica is revealing is, again, some of the country’s wealthiest taxpayers [that] profited handsomely during the pandemic are not paying their fair share.”

He said he’s in the process of crafting a proposal to change that. Asked by Insider about the timeline of its introduction, Wyden responded: “I’ll have it ready to go shortly.”

“Often solutions to this are portrayed as radical, but what’s radical is the current situation,” Marr said. “What’s radical is that wealthy people, a lot of their income never gets taxed. That’s radical.”

Read the original article on Business Insider

Big Tech and government officials have praised the ‘significant, unprecedented’ G7 deal to back a global corporate tax rate of at least 15%

G7 Ministers Meeting in London.JPG
Group of Seven finance ministers in London on Saturday.

  • Tech companies signaled approval of a “significant” deal to back a 15% global minimum corporate tax.
  • Treasury Secretary Janet Yellen said it was a “significant, unprecedented commitment.”
  • Facebook welcomed “the important progress made at the G7,” VP Nick Clegg told Insider.
  • See more stories on Insider’s business page.

As finance ministers from the Group of Seven countries agreed on Saturday to back a 15% global minimum corporate tax rate, the world’s biggest tech companies signaled approval.

“Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G7,” said Nick Clegg, vice president for global affairs at Facebook, in an emailed statement.

The agreement announced in London between the wealthy G7 nations marked a meaningful step toward closing often-used international tax loopholes, which have allowed the biggest companies in the world to sidestep taxes at home and aboard.

The official announcement via the UK government called the deal a “seismic agreement,” adding that it meant the “largest multinational tech giants will pay their fair share of tax in the countries in which they operate.” It did not name specific companies that would be affected.

Treasury Secretary Janet Yellen said the deal marked a “significant, unprecedented commitment.”

“That global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the US and around the world,” said Yellen, who is in London for the talks.

UK Chancellor Rishi Sunak said the deal was a “huge prize” for British taxpayers.

An Amazon spokesperson told Reuters: “We believe an OECD-led process that creates a multilateral solution will help bring stability to the international tax system. The agreement by the G7 marks a welcome step forward in the effort to achieve this goal.”

A Google spokesperson told Reuters: “We strongly support the work being done to update international tax rules. We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”

Clegg, of Facebook, added, “Today’s agreement is a significant first step towards certainty for businesses and strengthening public confidence in the global tax system. We want the international tax reform process to succeed and recognize this could mean Facebook paying more tax, and in different places.”

Ursula von der Leyen, president of the European Commission, said the bloc had been pushing for “modernisation & more international cooperation on business taxation.”

“This agreement is a big step towards fairness and a level-playing field,” she added.

Others were less enthusiastic. Oxfam, for example, said the G7 deal as “setting the bar so low that companies can just step over it,” according to Reuters.

“It’s absurd for the G7 to claim it is ‘overhauling a broken global tax system’ by setting up a global minimum corporate tax rate that is similar to the soft rates charged by tax havens like Ireland, Switzerland and Singapore,” the charity said.

Read the original article on Business Insider

Trump appointees have been left furious after being asked to ‘immediately’ pay thousands of dollars in deferred payroll taxes, which they thought would be forgiven

donald trump melania trump
Former President Donald Trump and former first lady Melania Trump.

  • Members of Trump’s admin were asked to pay the payroll tax Trump deferred, Politico reported.
  • Trump deferred some payroll tax in August 2020, sidestepping Congress in an emergency declaration.
  • “I just wish I had the option to opt-out,” a former administration staffer told Politico.
  • See more stories on Insider’s business page.

Some staffers from President Donald Trump’s administration have reportedly seen their tax bills spike as they’re being asked to pay payroll taxes deferred by the president.

Politico reported that members of Trump’s administration have reportedly been receiving letters asking them to pay Social Security taxes that were deferred, with at least one bill reaching $1,500.

“If the indebtedness is not paid in full within 30 calendar days, we intend to forward this debt to the Department of Treasury, Treasury Offset Program, for further collection,” said a copy of a letter sent May 18, 2021, by an accounting officer from the Office of Administration.

Trump set the policy on August 8, 2020, in a memo to Treasury Secretary Steven Mnuchin, directing Mnuchin to defer some payroll taxes to “put money directly in the pockets of American workers” who needed it most.

Trump sidestepped Congress to make the change because the pandemic was “of sufficient severity and magnitude to warrant an emergency declaration.”

As many as 1.3 million federal workers may have had some of their payroll taxes deferred under the measure, as Insider reported in September. Under the plan, earners paid less than $4,000 every two weeks wouldn’t have to pay the 6.2% tax out of their paychecks from September through the end of the year.

Now, the government’s looking for those deferred taxes, according to Politico. The report quoted several former administration staffers who called the bills “unacceptable.” One said: “It’s just a very unfortunate situation.”

The letter published by Politico included a “Voluntary Repayment Agreement” as an attachment, with an option to pay via credit or debit card.

One anonymous Trump appointee told the publication that the former president had a “good plan,” but, “I just wish I had the option to opt-out.”

Read the original article on Business Insider

Australian crypto investors must report profits or face penalties for tax evasion, government official says

crypto wallet
  • The Australian Tax Office has urged investors to report returns made on cryptocurrency, reported.
  • Crypto is classed as a taxable asset in Australia, which many investors are unaware of.
  • Despite anonymity being a key component of crypto, investments are tracked by authorities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Australian crypto investors must report their profits to the Australian Tax Office or risk penalties for tax evasion, assistant commissioner Tim Loh told Crypto is classed by the ATO as an asset, not a currency, and so is taxable – something many investors are unaware of, he said.

The ATO will contact around 400,000 people in 2021 to ask them to review their previous statements about cryptocurrency investments or to divulge the profits and losses they made on these, reported.

Crypto assets and investments are treated in the same way as shares under the capital gains tax framework, and Loh said he was “alarmed” about how few taxpayers knew this. Any time a cryptocurrency is traded for a fiat currency or another cryptocurrency, tax laws apply. The same is true if it is used to purchase, sell or swap non-fungible tokens.

Anonymity of ownership is a key component of cryptocurrency systems and has helped drive its popularity. But Australian authorities have been able to track crypto investments by comparing tax return details with data provided by crypto exchanges, banks and other financial institutions, Loh said, meaning the authorities know who has invested.

“There isn’t a game of hide and seek. We have got that information and all we are asking people to do is follow the rules.”, Loh told

The recent slump and volatility in cryptocurrency prices has been attributed, in part, to repeated warnings from government officials that they will get tougher on enforcement of crypto regulation, and to their hints that tighter regulation is coming.

As in Australia, US tax authorities require investors to report gains and losses on crypto, which the Internal Revenue Service likewise views as an asset. The Biden administration said earlier this week that it plans to crack down on crypto taxes and crypto-related tax evasion.

Read the original article on Business Insider

Expansions of the Child Tax Credit and Earned Income Tax Credit were an important move, but they are only temporary and leave out too many Americans in need

Biden signs American Rescue Plan
US President Joe Biden signs the American Rescue Plan on March 11, 2021, in the Oval Office of the White House in Washington, DC.

  • Expansions of the EITC and CTC were implemented as part of the American Rescue Plan Act.
  • As of now, these expansions are temporary and only apply to the current tax year.
  • Many needy Americans were ineligible or weren’t aware of actions they need to take to claim these credits.
  • Bobbi Dempsey is a freelance writer, economic justice fellow at Community Change, and reporting fellow at Economic Hardship Reporting Project.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

The American Rescue Plan Act signed by President Biden in March included a range of major actions and initiatives designed to provide immediate, significant economic relief to the many Americans struggling through financial hardships related to the pandemic.

Chief among those is a pair of tax credits that has been greatly enhanced and expanded: the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC).

These tax credit expansions should provide much-needed but temporary relief to needy Americans – but there were some critical flaws in the implementation and execution that may leave some eligible recipients shortchanged or left out completely, while other disadvantaged US families weren’t eligible at all.

The basics of the tax credit expansions

The Child Tax Credit actions make the credit fully refundable – meaning, if the tax credit is more than a household’s tax liability, they will get the excess back as a refund – while also increasing the amount families receive and getting rid of the work requirement. Eligible families will start seeing the impact of the CTC changes quickly, as advance payments will start reaching these families in monthly increments beginning in July and running through the end of the year.

The expansion of the Earned Income Tax Credit will especially help childless Americans, generally meaning people who do not have any children who could be claimed as dependents, who are living below or near the poverty line.

The act raises the maximum EITC for childless adults from around $530 to roughly $1,500. It also expands the age range of childless workers eligible for the tax credit.

Those who benefit from these credits urgently need this support, which will offer a bit of relief to help them keep their heads above water financially. While my household doesn’t currently include any dependent children, it does contain several adults who will benefit from the expanded EITC.

Some major pitfalls

These tax credit expansions were a good first step, but in their current form, they fall woefully short. For one, the expansions are temporary. As of now, the actions are only effective for the 2021 tax year. There is reason to hope that may change, though. In late March, dozens of Democratic senators sent a letter to President Biden urging him to make the changes to the CTC and EITC permanent.

Another issue is that eligible people who fail to file a tax return will miss out. People need to file their taxes in order to receive these credits. This is true even for those who otherwise normally would not need to submit a tax return because they have no tax liability.

This requirement is most likely to trip up adults without dependent children and with little taxable income because they might not be required to file a tax return and may be unaware that by failing to file they lose out on this refundable credit.

By contrast, taxpayers with dependent children are more likely to already be in the habit of regularly filing an annual tax return – even if they have minimal taxable income – in order to take advantage of credits and other tax breaks they would get routinely, during pre-pandemic times. But those parents who didn’t file a 2019 or 2020 return won’t receive any of the money from this credit until after filing their 2021 return next year – meaning they won’t get the advance payments this summer.

I’m not sure the government and organizations that serve low-income populations have done a sufficient job of educating people about these credits, how the process works, and why it’s important for them to file a tax return even if they normally wouldn’t.

I suspect that some people may assume that the government will simply send them a check or find some other way to get this money to them, similar to the process for distributing stimulus payments. Unfortunately, that is not the case. Tax credits are tied to tax returns and are disbursed through a process that is triggered by the filing of a tax return. Those who don’t file a tax return will simply miss out.

Also, a large number of immigrant or “mixed status” families are ineligible. Under current federal law, all household members listed on the tax return must have a Social Security number in order for the family to be eligible for the EITC. An Individual Taxpayer Identification Number – an identifying number used solely for tax purposes that is assigned to people who cannot obtain a Social Security number, such as non-citizens and undocumented immigrants – is not sufficient. If even one person on the tax return lacks a Social Security number, all members of the tax household are ineligible. This will impact many mixed status families.

A good first step, but a long way to go

These temporary expansions will definitely make a difference for these eligible families who are able to complete the steps necessary to receive them. But this is a limited, short-lived solution for a long-term problem. I’m hoping that seeing the positive impact on those who benefit from these expansions will motivate lawmakers to correct the shortfalls and inadequacies – and then make those improved actions permanent.

Read the original article on Business Insider

Politicians, union groups slam Elon Musk over tax after he tweets asking for sketch ideas for his SNL appearance

GettyImages 1229892852
Elon Musk, CEO of Tesla and SpaceX.

  • Elon Musk’s critics piled on after he tweeted asking for skit ideas for his SNL appearance on May 8.
  • Politicians, unions, and journalists on Twitter called on him to pay more tax, donate his wealth, and let staff unionize.
  • Musk’s ideas for his sketch included “Woke James Bond,” “Irony Man,” and “Baby Shark Tank.”
  • See more stories on Insider’s business page.

Politicians and unions criticized Tesla and SpaceX CEO Elon Musk after he tweeted asking for sketch ideas ahead of his debut as a host of Saturday Night Live on 8 May.

“Throwing out some skit ideas for SNL. What should I do?” Musk posted on Twitter on Saturday.

In response to his request for comedy advice, Twitter users, including politicians, union groups, and journalists, suggested he should pay higher taxes and donate some of his wealth.

Rep. Pramila Jayapal retweeted Musk’s post, saying “Pay your fair share of taxes.”

Meanwhile, progressive consumer rights advocacy group Public Citizen, also reshared the post, saying Musk should “do a skit where you donate the $126,000,000,000 you added to your wealth during the pandemic.”

Musk is the second-richest person in the world with an estimated net worth of $184 billion, according to Bloomberg’s Billionaire Index. His wealth more than quintupled during the COVID-19 pandemic – Insider reported in January that his net worth increased 545% from January 2020 to 2021. However, his wealth is primarily tied up in his companies.

Read more: Elon Musk’s optimism is his most polarizing trait. Leaders everywhere should take note.

Twitter users took the opportunity to ridicule him for his riches after he asked for sketch suggestions.

Author Marianne Williamson replied to Musk’s tweet, saying: “Announce that you’re giving away half your fortune to help eradicate deep poverty, fight climate change and promote world peace.”

American journalist Max Berger replied to Musk, saying he should “let your workers form a union.”

The Workers First Agenda retweeted Musk’s post, asking him to do a sketch on treating his staff with respect. “Then we will know you are acting,” the union added.

The Service Employees International Union also replied: “Let your workers form a union without trying to intimidate them,” and linked a New York Times article about Tesla firing an employee for organizing a union, which the National Labor Relations Board ruled illegal in March.

The tycoon also received suggestions from other Twitter users about how his sketch should revolve around him denying the coronavirus pandemic.

Since the start of the pandemic, Musk has spread misinformation about coronavirus case numbers, calling the panic around the deadly virus “dumb” on March 6.

Karl Bode, journalist at VICE, replied to Musk’s tweet with: “How about some hilarious Covid impact denialism.”

Musk’s own ideas for his sketch included “Woke James Bond” and “Irony Man” who “defeats villains using the power of irony.”

The billionaire also suggested “Baby Shark & Shark Tank merge to form Baby Shark Tank.”

NBC announced in late April that Musk would be hosting the May 8 episode of the long-running, late-night comedy show SNL. Donald Trump was invited to host the show in 2015, which brought the show’s highest ratings in years.

Read the original article on Business Insider