Posted: February 16th, 2022
According to the United States Department of the Treasury, tax expenditures include revenue losses ascribed to provisions of federal tax laws, which enable a special exemption, exclusion, or deduction from gross income or which give a deferral of tax liability, special credit, or a preferential tax rate (von Haldenwang et al., 2021). Such exemptions are frequently regarded as options to other policy tools, including regulatory or spending programs. From the Joint Committee on Taxation, the current tax expenditures associated with interest on student loans for 2021 is $ 2400, but one’s income eligibility restricts it. According to estimations by tertiary education experts, the rates of interest on federal student loans are projected to rise by roughly 1% (JCT, 2021). However, despite the accrual, the interest rates prevail low by historical standards.
The concept of tax expenditure is vitally crucial to not only policymakers but also the public. This concept helps comprehend the size of government, the utilization of government resources, and the tax and economic plan outcomes following the explicit or implicit choices made in designing the legislation (JCT, 2021). This analysis is also imperative in promoting policy goals.
On 23rd September 2021, a Queens business owner, Rocco Manzione, pleaded guilty to tax fraud, causing more than $1.5 million tax loss to the Internal Revenue Service (Department of Justice, 2021). As per the court details, from 2014 through 2017, Manzione held back federal job taxes from his workers’ wages but failed to timely file his organization’s employment tax returns and to pay the necessary taxes to the IRS. Additionally, Manzione evaded his income taxes by failing to file income tax returns from 2015 to 2017, even though he generated nearly $2 million in income during that time. Manzione has been sentenced to a 5-year penalty in prison for employment tax fraud and each count of tax evasion. I agree with the court’s decision since tax evasion is a severe type of crime and also a felony. Besides, deliberately committing tax fraud is a federal offense under the IRS tax code (Guyton et al., 2020).
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