One big tax deal helps another
NEW YORK, Sept 3 (Reuters Breakingviews) – A $7 billion potential tax settlement with U.S. hedge fund executives read more isn’t just reassuring for the millions of Americans who actually pay what’s due. It’s also a helpful advertisement for two proposed policies from President Joe Biden.
The deal between the Internal Revenue Service and executives at Renaissance Technologies comes seven years after Senator Carl Levin first raised the alarm. He argued that funds like Renaissance misleadingly treated some profit as long-term capital gains, rather than the short-term kind that are taxed at the higher regular income rate.
Biden already wanted to effectively wipe the distinction away . His sweeping proposal to reform the tax system would set the same, 39.6% rate for investments and income alike. For now his plan is stuck – even some Democrats prefer a long-term rate of 28%.
Separately, Biden talked of giving $80 billion to the tax authorities to conduct better audits read more . That, too, is problematic – Biden reckons it spells $700 billion of extra revenue over a decade, but the independent Congressional Budget Office says $200 billion. More wrangling is inevitable. But a chunky win for the IRS can only help the White House’s case. (By John Foley)
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Editing by Lauren Silva Laughlin and Marjorie Backman
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