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Outlook
The top 1% of Americans ranked by income fail to pay as much as $163B in owed taxes per year, according to Natasha Sarin, deputy assistant secretary for economic policy at the U.S. Treasury. The study drives a point home that has surfaced several times this year. Just last week, executives at hedge fund Renaissance Technologies agreed to pay approximately $7B in back taxes and penalties in one of the largest settlements with the IRS, while ProPublica leaked some of the ways the wealthiest Americans avoid taxes back in June.
'We are the 99%': "Today's tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe," continues Sarin. "Today, the 'tax gap' - the difference between taxes that are owed and collected - totals around $600B annually and will mean approximately $7T of lost tax revenue over the next decade. The sheer magnitude of lost revenue is striking: it is equal to 3% of GDP, or all the income taxes paid by the lowest earning 90% of taxpayers."
Tax numbers are in the spotlight as the White House proposes investing $80B into the IRS over the next 10 years. The funds would be earmarked for more enforcement staff and would overhaul technology systems. The Biden administration is also calling for "using information that financial institutions already possess, so the IRS can deploy these additional resources to audit more sophisticated tax evaders."
Outlook: Democrats hope that collecting more unpaid taxes will help fund a $3.5T spending package they are in the process of drafting by bringing in $700B over 10 years. Others say not so fast. The bipartisan Congressional Budget Office estimates new revenue from the proposal would total around $200B over the decade, while many Republicans are hesitant about granting more power or privacy rights to the IRS. (7 comments)
'We are the 99%': "Today's tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe," continues Sarin. "Today, the 'tax gap' - the difference between taxes that are owed and collected - totals around $600B annually and will mean approximately $7T of lost tax revenue over the next decade. The sheer magnitude of lost revenue is striking: it is equal to 3% of GDP, or all the income taxes paid by the lowest earning 90% of taxpayers."
Tax numbers are in the spotlight as the White House proposes investing $80B into the IRS over the next 10 years. The funds would be earmarked for more enforcement staff and would overhaul technology systems. The Biden administration is also calling for "using information that financial institutions already possess, so the IRS can deploy these additional resources to audit more sophisticated tax evaders."
Outlook: Democrats hope that collecting more unpaid taxes will help fund a $3.5T spending package they are in the process of drafting by bringing in $700B over 10 years. Others say not so fast. The bipartisan Congressional Budget Office estimates new revenue from the proposal would total around $200B over the decade, while many Republicans are hesitant about granting more power or privacy rights to the IRS. (7 comments)
Today's Markets
In Asia, Japan +1.3%. Hong Kong +1.9%. China +0.3%. India closed.
In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.5%. S&P +0.4%. Nasdaq +0.4%. Crude +1.8% at $69.39. Gold -0.1% at $1798.20. Bitcoin -0.5% at $46087.
Ten-year Treasury Yield +3 bps to 1.33%
In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +0.3%.
Futures at 6:20, Dow +0.5%. S&P +0.4%. Nasdaq +0.4%. Crude +1.8% at $69.39. Gold -0.1% at $1798.20. Bitcoin -0.5% at $46087.
Ten-year Treasury Yield +3 bps to 1.33%
Today's Economic Calendar
What else is happening...
FDA postpones decision if Juul (NYSE:MO) can stay on the market.
Labor shortage: Amazon (NASDAQ:AMZN) offers free college tuition to lure workers.
ECB preps for reducing asset purchases under emergency program.
Fed presidents to sell all stocks amid pressure over trading activity.
DoorDash (NYSE:DASH), Uber Eats (NYSE:UBER) sue NYC over commission caps.
Years of losses... Ford (NYSE:F) plans to stop manufacturing in India.
Tesla's (NASDAQ:TSLA) Elon Musk warns of challenging Q3 production numbers.
Bumble (NASDAQ:BMBL) prices 18M-share secondary offering at $54.
COVID surge... Microsoft (NASDAQ:MSFT) return to U.S. offices delayed indefinitely.
Apple (NASDAQ:AAPL) reportedly names new head of self-driving car efforts.
Labor shortage: Amazon (NASDAQ:AMZN) offers free college tuition to lure workers.
ECB preps for reducing asset purchases under emergency program.
Fed presidents to sell all stocks amid pressure over trading activity.
DoorDash (NYSE:DASH), Uber Eats (NYSE:UBER) sue NYC over commission caps.
Years of losses... Ford (NYSE:F) plans to stop manufacturing in India.
Tesla's (NASDAQ:TSLA) Elon Musk warns of challenging Q3 production numbers.
Bumble (NASDAQ:BMBL) prices 18M-share secondary offering at $54.
COVID surge... Microsoft (NASDAQ:MSFT) return to U.S. offices delayed indefinitely.
Apple (NASDAQ:AAPL) reportedly names new head of self-driving car efforts.


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