Lowlights of Baucus Tax Reform Plan

Prospects for big tax reform legislation are considered pretty slim, but it can be a good idea to keep track of which tax reform ideas are being taken seriously in Congress, as they sometimes get rolled into other bills as offsetting revenue-raisers or for other reasons, and they may also be part of some future tax reform bill or grand budget compromise.

, Max Baucus, chairman of the Senate Finance Committee, released his tax reform plan. Among the elements that caught my eye:

  • “Banks must report the existence of bank accounts, including accounts on which no interest was earned, during the taxable year.” This helps to confirm a suspicion held by some of us in the war tax resistance community who have noticed that the IRS seems less likely to levy non-interest-bearing accounts, as though it only notices those accounts that it receives 1099-INT reports about.
  • “The State Department is authorized to revoke passports of individuals with seriously delinquent tax debts in excess of $50,000.” I’ve seen proposals like this floated before that haven’t gone anywhere, but the writing is on the wall: this is definitely a mainstream proposition in the hells of Congress.
  • The proposal would require more people to file electronically. For instance, if you have your income tax return done by a professional, that professional would be required to file your return electronically (you would no longer have the option of asking for a printout and filing the paper return). Software that prints paper returns would have to print the data using a machine-readable barcode in addition to the human-legible form. You could still file a paper return by filling it out long-hand in the old-school way (that’s what I do).
  • “The IRS is granted authority to use the Department of Health and Human Services’ National Directory of New Hires to verify employment data.” Not sure if this might have ramifications for resisters who switch jobs to avoid salary levies.
  • The proposal calls for reviewing and revamping the system of tax penalties, but has no details about how (instead it requests comments). Because some penalties aren’t indexed for inflation, usually review-and-revamp means “increase.”