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5 Things to Consider in the Tax Gap Discussion

Increasing tax compliance is a major part of the Biden administration proposal to raise revenue for physical and social infrastructure. Reducing the tax gap—the difference between taxes owed and taxes paid—is a good way to raise revenue, but it doesn’t come without trade-offs, and it’s important to go about it in the right way. Point […]

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Considering Trade-offs to Improving Tax Collections

Recent Biden administration proposals rely heavily on revenue from better Internal Revenue Service (IRS) tax collections to fund spending initiatives. The American Families Plan uses several avenues to reduce the tax gap (or the difference between taxes paid and taxes owed), from increasing the IRS’s tax enforcement budget to improving information technology and expanding reporting […]

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Striking Right Balance for Cryptocurrency Reporting Requirements in Bipartisan Infrastructure Package

One of the proposals in Congress’ eclectic grab-bag of payfors in the bipartisan infrastructure package is an effort to curb tax evasion in cryptocurrency by imposing a series of reporting requirements on the industry. While it makes sense to ensure cryptocurrency transactions are treated similarly to other financial assets, the nature of these requirements as […]

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Return-Free Filing: A Better Fit for a Better Tax Code

Binyamin Applebaum of The New York Times recently authored an op-ed calling for the adoption of return-free filing. Under return-free filing, many taxpayers would receive an already-completed return that they could amend. It’s an appealing idea, but for it to deliver its promised benefits, the U.S. tax code would have to be much simpler. The […]

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Simplifying the Tax Code and Reducing the Tax Gap: What Can Be Achieved?

Table of Contents Key Findings The tax gap is the gap between what taxpayers owe the U.S. government, and what the government actually collects from taxpayers. Tax compliance efforts ensure that tax law applies evenly to all taxpayers. At the same time, we would like to avoid placing undue compliance burdens on taxpayers. Reducing the […]

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Census Data Shows Households Saved Economic Impact Payments

In 2020 and 2021, Congress enacted three rounds of economic impact payments (EIPs) for direct relief to households amidst the pandemic-induced downturn. Survey data from the U.S. Census Bureau indicates that households increasingly saved their EIPs or used them to pay down debt rather than spend them. While the data indicates that debt and saving became more common uses […]

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Unanswered Questions about Upcoming Advance Child Tax Credit Payments

Later this month more than 39 million households are set to receive advance payments of the Child Tax Credit (CTC) that was expanded in the March 2021 American Rescue Plan. Many households are uncertain about how the advance payments will affect their refunds or taxes owed when they file next year, and some questions about […]

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Exploring How Remote Work Could Impact the Way Countries Tax Individuals

The digitalization of the economy has changed how and where we work. Huddles at the boss’s desk have been replaced by morning video conferences, long nights at the office by incongruous hours flexed around extracurriculars, and dreary days in a metropolitan apartment by weeks in exotic (or at least comfortable) retreats. A question for policymakers […]

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What’s in Arizona’s Tax Reform Package?

After weeks of deliberations, Arizona Gov. Doug Ducey (R) this week signed into law a budget for fiscal year (FY) 2022 that reduces the state’s individual income tax rates and consolidates brackets, a plan that will help restore Arizona’s reputation as a low-tax alternative to California. The enacted law kept the basic framework of the […]

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How the Tax Code Handles Inflation (and How It Doesn’t)

A temporary gas shortage, caused by a hack attack, on much of the East Coast last month and fear of rising inflation have led some people to wonder if the 1970s are back. The Bureau of Economic Analysis report released last week did little to settle this fear, finding that the Personal Consumption Expenditures (PCE) […]