In a new report, EPI’s Josh Bivens and Hunter Blair write that a financial transaction tax (FTT).
What this report finds: A well-designed financial transaction tax (FTT)—a small levy placed on the sale of stocks, bonds, derivatives, and other investments—would be an efficient and progressive way to generate tax revenues. Gross revenues from a well-designed FTT would likely range from $110 billion to $403 billion. And net revenues (including offsets from reduced income, payroll and capital gains taxes, and increased borrowing costs) would likely be substantially higher than some other recent estimates indicate. This is mainly because other estimates’ assumptions about the volume of financial transactions an FTT would crowd out are too high, and because an FTT is likely to redistribute rather than reduce overall incomes. Regardless of the level of revenues raised, an FTT would be a win-win for the U.S. economy. Higher revenues would result in more funds for social insurance programs and much-needed public investments. Lower revenues would be the result of the FTT crowding out financial transactions of little value to the U.S. economy. This would boost Americans’ incomes through lowering fees on financial services, such as the management of 401(k)s and other accounts.
Why this matters: As the U.S. economy continues to recover from the 2008 financial crisis and the ensuing Great Recession, an FTT would help ensure the financial sector compensates other sectors of the economy (particularly U.S. households) for the damage the sector inflicted. Through generating tax revenues, decreasing the fees Americans pay on their investments, and shrinking unproductive parts of the financial sector, an FTT would help Wall Street work for Main Street.
Making meaningful improvements to how the federal government uses the internet can take years, new laws, regulations, demonstration projects, testimony and dogged persistence by public interest advocates and reformers in the pursuit of change. Then, all at once, a dam breaks and a new resource blossoms into a commons online. June 15, 2016 was such a day, when the IRS has begun publishing electronic nonprofit tax returns online in a machine-readable format on Amazon Web Services.
“This is a huge victory for the IRS,” open government advocate Carl Malamud said in an email. “The service stepped up to the plate and has squarely faced the issue of privacy breaches in public nonprofit returns and are now releasing machine-processable XML data for those returns. This is a huge release: 1.4 million e-file returns dating back to 2011 available for free and a commitment to update the data store on a monthly basis.”
After a federal court ordered the IRS to disclose Form 990s as open data in 2015, however, the agency subsequently announced that it would begin working to release all of the data from electronically filed nonprofit tax returns available in a machine-readable format online by early 2016.
In the months since, the agency has worked diligently to ensure that the privacy issues Malamud had found in the millions of files the IRS disclosed to Public.Resource.org. As of June 2016, the public can now access Form 990 data on Amazon Web Services for free. Notably, the datasets are hosted in Amazon’s public cloud instead of IRS.gov, offloading demand to a private sector company that’s become a global leader in hosting apps, services and data.
It’s also worth noting that this release also fulfills an element of one of the commitments in the third U.S. National Action Plan for Open Government, modernizing administration of the Freedom of Information Act, to “Proactively Release Nonprofit Tax Filings.”
Tax filings for nonprofit organizations contain data that is legally required to be publicly released. Accessing the filings generally requires a request from the public, which can include a FOIA request, and results in more than 40 million pages provided in a non-machine-readable format. The Internal Revenue Service will launch a new process that will remove personally identifiable information before releasing the public information within electronically filed nonprofit tax filings. The electronically filed tax filings will be released as open, machine- readable data, allowing the public to review the finances and other information of more than 340,000 American nonprofit and charitable organizations.
“Nonprofit tax returns contain tremendous amounts of information about the activities of this important sector of our economy,” Noveck said via email. She continued:
With the raw data of nonprofit tax returns, it will become possible, for example, to see who is providing social services to whom and where and more easily spot the overlaps and gaps so that government and the social sector know where more investment is needed. It will become possible to build the tools to spot waste, fraud and abuse more easily than we can today. There’s rich and useful information, which can be visualized to help donors know more about where to give. When the sector itself has better business intelligence about its own activities, it can operate more effectively.
Many thanks to everyone who has collaborated to help bring the IRS further into the 21st century, not least the staff at the agency who we need to be trustworthy stewards of our private data. Protecting privacy when releasing open data is essential, and we commend the nation’s tax collector and regulator for its due diligence.
This is far from the first time Malamud’s determined efforts has led to a watershed in useful government data going online. Back in 1993, he used a grant from the National Science Foundation to obtain and publish Securities and Exchange Commission data online. In 1995, the SEC decided to publish the data itself. Two decades later, Malamud spent years buying, processing and publishing millions of nonprofit tax filings, converting scanned images and then making the bulk data available to the public.
“This is exactly analogous to the SEC and the EDGAR database,” Malamud said in an phone interview in 2013. “If you make the data available, you will get innovation.”
I expect that to be the case, given the track record of his predictions. For instance, journalists, auditors and congressional investigators will now be able to analyze the data to look for trends and patterns, finding and flagging issues. It’s also going to empower officials and watchdogs to track and reveal influence in the nonprofit world.
“This is useful information to track nonprofits,” Malamud said. “A state attorney general could just search for all executives that received loans from their employer.
More broadly, opening Form 990 data will not only improve how services like Guidestar and Charity Navigator work, but also provide the public with more equitable access and insight insight into how well their donations are being spent.
“My hope is that this will enable us to grow the nonprofit sector by enabling people to target their donations, to help the sector know better whom to serve and how, and, ultimately, to help the people who are the recipients of the good works of those in nonprofit organizations,” said Noveck.
Before you start believing the drivel Republicans are spreading about rising deficits, maybe you need to understand the difference between two terms that are frequently used in error: overall National Debt and the Federal Budget Deficit. Republicans are counting on 93% of the population apparently not understanding that there’s a difference between the two.
Let me start by explaining both terms from a family budget perspective. If you have a monthly income of $1000.oo, but you have bills and expenses of $1,200.00, you have a $200.00 “budget deficit” that most folks will have to carry on a credit card, hoping to pay it off during the upcoming month. If on the other hand, you continue having $200.00 deficits for months on end, the deficit remains at $200, but your household debt begins to rise on that credit card by $200.00 (plus interest) each month. So, in 12 months, the budget deficit is $200, but the household debt is $2400 (plus interest).
Well, the Federal Budget Deficit and the National Debt work the same way, but the Federal Budget Deficit is NOT rising as the Republicans would have you believe. It’s dropping dramatically. Yes, the National Debt is still rising because we still have a budgetary deficit, but the Federal Budget Deficits have dropped dramatically since the end of the 2009 fiscal year:
Now that you better understand the difference between the two terms, the next time your crazy wingnut friend tries to echo the Republican mantra that deficits are rising, please take the time to educate them. If all else fails, please tell them they deserve a lengthy time-out in some dank corner.
Statements by Secretary Lew and Secretary Burwell on preparing for the upcoming tax season
In preparation for the 2015 tax filing season, the U.S. Department of Health and Human Services and the Treasury Department are putting in place resources to provide tax filers with the information and resources they need to get their questions answered.
Millions of Americans who get their health insurance through work are benefiting from the Affordable Care Act, and millions of others have signed up for the Health Insurance Marketplaces and received financial assistance to lower their monthly premiums.
Starting this year, consumers will see some changes to their tax returns. While the vast majority of tax filers – over three quarters – will just need to check a box on their tax return indicating they had health coverage in 2014, people who have coverage through the Marketplaces, or decided not to enroll in coverage, should be aware of some additional steps that will be a part of the tax filing process starting this year.
Consumers will have questions about this new process and the Administration is committed to providing the information and tools tax filers need to understand the new requirements. In the coming weeks, the Administration will launch additional resources to help consumers prepare for tax filing season, including online tools to help individuals connect with local tax preparation services and determine if they are eligible for an exemption.
Treasury Secretary Jacob J. Lew and Health and Human Services Secretary Sylvia M. Burwell released the following statements today providing an overview of the consumer support and guidance their agencies will provide:
Treasury Secretary Jacob J. Lew:
“For the vast majority of Americans, tax filing under the Affordable Care Act will be as simple as checking a box to show they had health coverage all year. A fraction of taxpayers will take different steps, like claiming an exemption if they could not afford insurance or ensuring they received the correct amount of financial assistance. A smaller fraction of taxpayers will pay a fee if they made a choice to not obtain coverage they could afford. We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns.”
HHS Secretary Sylvia M. Burwell:
“Last year, millions of Americans purchased quality, affordable health coverage through the Marketplace, and the vast majority received tax credits that cut their monthly premiums. This benefit, which in many cases helped make the cost of health care less than the cost of a cell phone or cable bill, enabled these consumers to enjoy the benefits of coverage throughout the year. In the coming weeks, HHS will work with other agencies, tax preparers and community organizations to arm these consumers with the information they need to know as they prepare to file their taxes. We will also be providing helpful tools so that the millions of taxpayers who qualify for an exemption can receive one.”
While including health insurance information will become a routine step in filing taxes, this is the first time families will be asked to answer basic questions regarding their health insurance on their tax returns. Most consumers – over three quarters – just need to check a box to indicate they have coverage. Those with Marketplace coverage will receive a new form in the mail from the Marketplace – Form 1095-A – that they will use to reconcile their upfront financial assistance. While those who can afford to buy health insurance and choose not to will have to pay a fee, individuals who cannot afford coverage or meet other conditions can receive an exemption.
In the coming weeks, consumer-friendly tools and resources will be made available for those tax filers who have health coverage through the Marketplaces, those seeking an exemption, and those looking for information about the fee for those who could afford to purchase health coverage but chose not to. General resources can be found at www.IRS.gov/ACA or https://www.healthcare.gov/taxes/. A sampling of some of resources already available, include:
To reach consumers with the information they need to prepare for the upcoming tax season, the Administration will employ a variety outreach strategies. Outreach and consumer education efforts will include:
Direct outreach to Marketplace enrollees. Through email, phone, and text messages the Administration will reach out to people who got coverage through the Health Insurance Marketplace with personalized information that is most relevant to their tax status. We will focus on providing targeted messaging to consumers who benefited from an advanced premium tax credit last year to help them offset the cost of their Marketplace premiums.
Community-based outreach and in-person assistance. Working with community organizations on the ground, nonprofit organizations, Marketplace navigators and other in-person assisters, we will provide guidance and resources to consumers looking for answers.
Partnerships with top tax preparers. The Administration will continue to work with top tax preparers to provide consumers with the information they need to prepare for tax season.
Inversions — or tax maneuvers that reward U.S. corporations that declare themselves overseas residents to avoid paying taxes in America — have been in the news a lot lately, because more than 50 percent of these deals have happened in the past five years. And will cost ordinary Joe and Jill Americans nearly $20 billion over the next decade — critical dollars that could grow and expand our middle class.
Here’s the bottom line: When corporations invert and pay less in taxes, other working Americans have to pay more to help fund the services we all rely on. (Like maintaining the roads and bridges they use to bring their products to market, equipping our schools with the resources they need to educate/train a base of potential employees, and equipping our military to protect their ability to conduct business not just in the US, but across the globe — just to name a few.) Most working Americans don’t have access to fancy accounting tricks — and parasitic corporations shouldn’t be able to stuff their pockets by using such tricks at our expense.
But if that isn’t already beyond the pale, Corporations that have already inverted are getting $1 billion a year in federal contracts, according to Bloomberg News. Clearly, they’ll do everything they possibly can to be less American when it’s time to pay their taxes, but they’ll claim to be more American when it comes to scoring lucrative government-funded projects. And what they’re not paying? Well those funds end up picked from our pockets when we, as ordinary Americans, pay our taxes.
What the Treasury Dept has done is essentially the equivalent of sticking a finger in a leaking dyke. Congress needs to act to eliminate #Inversions and to hold Corporations accountable for pay their fair share. Currently, two bills have been introduced and are sitting in Committee: HR5278 in the House, and S2704 in the Senate. Each bill has been introduced by a Democrat and NO Republicans have signed on as sponsors. It is well past time that we insist they STOP rewarding parasitic corporations that choose to desert America. These companion bills titled, the No Federal Contracts for Corporate Deserters Act, would bar parasitic “inverted” corporations from getting U.S. government contracts once they change their corporate address to avoid U.S. taxes. The 113th Congress is coming to a close and we need to pressure Congress to pass a No Federal Contracts for Corporate Deserters Act BEFORE the closing gavel on the 113th Session.