Tax and Spend Tuesday, a roundup of news, views and policy proposals affecting your paycheck and pocketbook!
Change we don’t need: It’s not the first time we’ve noticed that some recent immigrants to Georgia are refugees from high-tax, high-regulation states who start off happy but inexplicably start working to turn our well-run state into the mess they left. In his recent column, Thomas Gallatin discusses the continuing exodus of businesses from California. Two of the destination states are Texas and Georgia, and Gallatin warns: “The problem for Texas and Georgia – to name just two of the aforementioned refuges for California businesses – is that the states should welcome the new arrivals but beware the leftist policies the companies and their employees bring with them. ‘Hollywood of the South,’ for example, sounds great … until the Peach State turns blue. Silicon Valley in Austin may be a boon … until deep-blue Austin flips the Lone Star State.”
Stay home, get taxed: More people than ever are working from home as the pandemic drags on, and now some companies are arguing for a tax on remote workers. Corporations such as Deutsche Bank suggest a tax of 5% or more on employee income for each day they work from home. New Hampshire, Gov. Chris Sununu, meanwhile, is suing Massachusetts in the U.S. Supreme Court for what he called a direct attack on the “New Hampshire Advantage,” by taxing the income of New Hampshire residents who no longer commute to Massachusetts for work due to the coronavirus pandemic. An income tax increase is a pay cut for workers and a boon for big government. It’s especially alarming as many of the remote workers says they’d like to continue working from home at least part of the time, even when the pandemic is over. In an article in Tax Buzz, Jon Osborn writes that “analysts believe the fee levied would help to make up for some of the economic activity lost by those no longer needing to commute to an office. This includes transportation costs, dry cleaning, and meal purchases that would be no longer necessary for those who can work from home.” Now it’s a fee?
Self-employed? Self-employed taxpayers can deduct contributions made to their own retirement accounts on their individual tax return under certain circumstances, but some may claim unallowable or fraudulent deductions. A report from the Treasury Inspector General for Tax Administration finds the IRS has made strides in its ability to detect taxpayers who deducted such contributions but had no evidence they were self-employed. But the Inspector General argues the IRS could do more: For Tax Year 2017, the Inspector General identified 193,985 tax returns with about $1.41 billion more in deductions than the amounts reported on Forms 5498, which is where Individual Retirement Accounts contributions are reported.
E-filing scam: The IRS is warning e-filers about a new identity theft scheme aimed at holders of Electronic Filing Identification Numbers from fraudsters posing as IRS contractors. Fraudsters allege they are verifying or checking on the originators’ EFIN acceptance letter. The scammers may then ask to be emailed a copy of the EFIN acceptance letter and provide a phone number to call for questions. Source: Accounting Today
Notable Quote
“The Fed’s scope and power is greater than ever before. The CARES Act effectively enlarged Section 13 (3) of the Federal Reserve Act, which was intended to allow the Fed to engage in emergency lending to provide ‘liquidity to the financial system’ but ‘not to aid a failing financial company.’ By engaging in credit allocation and fiscal policy, the Fed risks becoming more politicized and less independent as Congress looks to it as a way to bypass the democratic process and dodge its constitutional duty to make the difficult choices about spending and taxing.” – James A. Dorn
Tax and Spend Tuesday is compiled by Benita M. Dodd, vice president of the Georgia Public Policy Foundation.