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TaxBuzz Top 5 - IRS Collects $1 Billion From Wealthy Taxpayers, TN Voters Oppose Paying for New MLB Stadium & More

by
Rebekah Barton
on
7/12/2024
TaxBuzz Top 5 - IRS Collects $1 Billion From Wealthy Taxpayers, TN Voters Oppose Paying for New MLB Stadium & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. IRS Collects Record $1 Billion in Back Tax From Wealthy Taxpayers

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Credit: HABesen/GettyImages

The IRS announced it has collected $1 billion in back taxes from high-wealth individuals, specifically noting the impact of the Biden administration's 2022 climate, healthcare, and tax package commonly referred to as the Inflation Reduction Act. Per the AP, the tax collection effort focuses on individuals earning over $1 million annually with more than $250,000 in tax debt.

Treasury Secretary Janet Yellen stated, "President Biden’s Inflation Reduction Act is increasing tax fairness and ensuring that all wealthy taxpayers pay the taxes they owe." IRS Commissioner Danny Werfel noted the stark improvement in unpaid tax collections due to increased funding, significantly enhancing the agency's ability to pursue high-income earners.

Meanwhile, Eugene Steuerle from the Urban-Brookings Tax Policy Center commented, “If the IRS can show they’re having a positive impact, there would be more public support for this activity and the agency.”

Despite milestones like this one, the IRS faces potential budget cuts from congressional Republicans. The agency plans to further its initiatives, which include targeting improper deductions and enhancing audit processes, to ensure compliance and maintain public trust.

2. Project 2025 Could See Major Changes to the U.S. Tax System

Project 2025, a 900-page blueprint for the next Republican president, is gaining attention for its proposals to overhaul the federal government, including a major restructuring of the U.S. tax code. Despite GOP frontrunner Donald Trump's distancing from the plan, his campaign's "Agenda 47" shares similar themes. Project 2025 proposes a simplified tax system with two brackets, potentially increasing taxes for middle-class families while benefiting higher earners.

"The federal income tax system is progressive, and people who make more money pay a higher marginal tax rate than people who make less money," said Brendan Duke from the Center for American Progress in a CBS News report. Project 2025 aims to shift the tax burden from the wealthy to the middle class, proposing significant changes to the current system. This includes cutting corporate tax rates, reducing the capital gains tax, and eliminating green energy credits. The overhaul would require congressional approval, which could be challenging if either the House or Senate is controlled by the opposing party.

Trump's campaign has suggested other economic strategies, such as a 10% tariff on all imports, which he claims could replace federal income tax. However, experts argue that tariffs alone would not cover the over $2 trillion in income taxes collected annually. If reelected, Trump is expected to focus on extending the tax cuts from the 2017 Tax Cuts and Jobs Act, potentially funding these by repealing provisions of the Biden administration's Inflation Reduction Act and cutting social benefits. This plan has already been met with opposition from Democrats.

3. TN Voters Oppose Tax Dollars to Fund Potential MLB Stadium

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Credit: Malcolm MacGregor/Getty Images

Tennessee voters largely oppose the use of state tax dollars to fund a new Major League Baseball stadium in Nashville, according to a recent poll conducted by the Beacon Center, a libertarian think tank. Axios reports that the poll reveals that 58% of voters are against using state tax dollars for this purpose, with only 27% in favor. This opposition is consistent across political lines, with 60% of independents, 59% of Democrats, and 57% of Republicans expressing disapproval.

This sentiment is significant given Nashville's position as a prime candidate for MLB expansion. MLB leadership is considering expansion in the near future, and a group called Music City Baseball is doing everything they can to bring a team to Tennessee's capital.

Historically, pro sports stadiums in Tennessee, such as the Tennessee Titans' Nissan Stadium and FedExForum, have utilized state tax funding, making the political resistance noteworthy.

The Beacon Center's poll highlights broader opposition to publicly funded stadiums nationwide. For instance, Kansas City voters recently rejected a stadium tax for a new Royals baseball stadium, and Illinois politicians have voiced concerns about state funding for a new White Sox stadium​.

4. West Virginia Lowers Income Tax Rate By 4%

Governor Jim Justice of West Virginia announced a 4% reduction in personal income tax rates, effective January 1, 2025. This reduction was triggered by surpassing revenue targets set in House Bill 2526, signed into law in 2023. In an official press release, Justice shared the significance of this achievement, stating, “Nothing will drive population, opportunity, and economic growth in West Virginia like eliminating our personal income tax.”

Revenue Secretary Larry Pack added, “As the state succeeds, the people deserve to keep more of their money.”

With Fiscal Year 2024 revenue collections reaching $5.34 billion and an inflation-adjusted target of $5.24 billion, the excess amount triggered this latest rate reduction. Justice also requested the West Virginia Legislature consider an additional 5% personal income tax cut in an upcoming special session, along with a childcare tax credit and other funding matters.

To date, Governor Justice and the West Virginia Legislature have delivered over $1 billion in tax cuts to the people of West Virginia. “We’re creating a better environment for economic growth and opportunities across the state,” Pack said. More information is available on the West Virginia State Tax Department's website.​

5. Kenyan President Sacks Cabinet as Civil Unrest Continues

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Credit: narvikk/Getty Images

Kenya's President William Ruto has taken a bold step by dismissing all his ministers and the attorney-general in response to recent deadly protests sparked by controversy surrounding an unpopular tax bill. Per a BBC report, Ruto stated, "The move came after reflection, listening to Kenyans, and after holistic appraisal of my cabinet," emphasizing a need for broader consultation to set up a new, inclusive government. He assured that government operations would continue uninterrupted under senior civil servants while he consults "across different sectors and political formations and other Kenyans, both in public and private."

The dissolution of the cabinet, less than two years into Ruto's presidency, is highly unusual and follows allegations of corruption against some ministers. Ruto had defended these ministers previously, asserting, "There were no evidence to sack them," but public pressure persisted, demanding more accountability. His pledge to form a new government hints at potential collaboration with opposition parties, aiming for a cost-effective and broad-based administration.

Despite announcing austerity measures and dialogue initiatives, including a 150-member panel, Ruto faces ongoing criticism and planned protests, challenging the effectiveness of his reforms. As organizer Hanifa Farsafi stated, "The power lies with the people, always," reflecting the continued public scrutiny and unrest in Kenya's political landscape.

Which headline this week most interests you?

Feature Image Credit: Hisham Ibrahim/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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