Cracking Down on Tax Loopholes Could Yield Billions
The Treasury Department unveiled a new initiative aimed at eliminating intricate financial maneuvers that allow high-dollar business partnerships, such as hedge funds and real estate investors, to sidestep taxation. This strategy, known as basis shifting, involves transferring assets among entities without any real economic activity taking place, solely to minimize tax obligations. Deputy Treasury Secretary Wally Adeyemo emphasized that these transactions contribute nothing to the US economy. The termination of such practices could potentially boost tax revenues from partnerships by an estimated $5 billion annually over the next decade. However, Robert Kovacev, a lawyer with Miller & Chevalier, counters that businesses involved are not engaging in illegal activities and anticipates legal challenges against this new rule.
Tax-Free Tips: A Double-Edged Sword?
Howard Gleckman from the Tax Policy Center explored a proposal introduced by former President Donald Trump, suggesting the exemption of tips from federal taxes. While initially appealing, exempting tipped income from taxes may actually provide limited advantages to tipped workers and could trigger a host of complications.
Broad Tariffs: A Costly Proposal
Another concept from Trump’s playbook involves imposing a 10 percent tariff on all imports. Bloomberg has delved into this topic, citing studies from the Center for American Progress and the Peterson Institute for International Economics. Their findings indicate that such a tariff could burden the average middle-income household with additional annual costs ranging between $1500 and $1700.
Vermont Property Taxes on the Rise
In Vermont, the state legislature has successfully overridden Governor Phil Scott’s veto, enacting a law to enhance public school funding, which will result in an average property tax increase of 13.8 percent. This legislation ties into a $180 million surge in school spending, driven not only by rising inflation but also by the need to address health care costs, student mental health services, and deteriorating infrastructure, according to VTDigger.
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