A bill crafted by Senator Chuck Grassley masquerades as a tax cut but in reality is a tax hike. The Telephone Excise Tax Act, approved by Grassley’s Finance Committee, would actually be an $8.8 billion tax increase according to a report released by the Joint Committee on Taxation.
As if that wasn’t troubling enough, the bill contains a provision referred to as the “economic substance doctrine.” That would empower the Internal Revenue Service to determine the motivations behind individuals’ financial decisions. In an effort to close tax loopholes, the bill would allow IRS officials to review tax-related transactions and draw conclusions as to the reasoning behind those transactions.
So the next time you deduct your home mortgage interest, you may be subject to the whims of a bureaucrat in the IRS. Were your motivations pure? Or where you just trying to avoid paying more in taxes?
Conservatives on the hill are incensed by this intrusive tactic that basically allows bureaucrats to become mind readers. Besides, is it not perfectly legitimate for people and companies to do their best to avoid paying more in taxes than they are legally obligated to?
Lawmakers ought to be simplifying the tax system, not making it even more complex.
Grassley’s bill could receive floor time after the Senate returns from its August recess.