ReportWire

Tag: taxation

  • Report: Mass. taxpayers to get big tax cut in 2026

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    BOSTON — Massachusetts taxpayers will receive a big break next year under President Donald Trump’s recently enacted spending package, according to a new report.

    The Tax Foundation, a nonpartisan Washington-based think tank, estimates that Bay Staters will see their taxes cut by an average of $5,139 in 2026 under Trump’s so-called One Big Beautiful Bill – the third-largest reduction in the nation following Wyoming and Washington state.


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    By Christian M. Wade | Statehouse Reporter

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  • Auditor: No tax rebates issued this year

    Auditor: No tax rebates issued this year

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    It’s official: Massachusetts’ taxpayers won’t be getting a break this year from a decades-old tax rebate law, the state’s fiscal watchdog says.

    State Auditor Diana DiZoglio said a review by her office has determined that the net state tax revenues of more than $39 billion in fiscal 2023 were below the allowable amount of $44.4 billion, “resulting in no excess state tax revenues.”

    The auditor’s report is based on data from the state Department of Revenue, which also concluded that taxpayers won’t be getting any extra refunds this year.

    In 2022, the state returned $3 billion to more than 3.6 million taxpayers under the voter-approved Chapter 62F law, which requires Massachusetts to refund money when tax revenues grow by more than wages and salaries.

    But lawmakers approved changes to the law as part of a $1 billion tax relief package, signed by Gov. Maura Healey in October, that exempted collections from the new “millionaires tax” – which sets a 4% surtax on incomes above $1 million – from the calculation.

    In the previous year, the state collected nearly $2.2 billion from the tax, according to the report.

    Last year, DiZoglio’s office determined that the net state tax revenues of nearly $37 billion in fiscal 2023 were below the allowable amount of $41.4 billion, which was also below the threshold to trigger the rebate law.

    The Chapter 62F law was overwhelmingly approved by voters in 1986. Besides 2022, the rebate law had only been triggered once since it was approved – in fiscal 1987 – when the state’s actual revenues exceeded allowable revenues by nearly $30 million.

    As part of the tax relief plan, lawmakers also tweaked the Chapter 62F law to require that any future rebates be paid out “equally” among taxpayers, and married taxpayers who file a joint return with the federal government must also file a joint state return.

    That change was prompted by concerns raised by liberal groups that “loopholes” in state law would allow wealthy households to skirt the “millionaires tax”.

    Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.

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    By Christian M. Wade | Statehouse Reporter

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  • Former owner of popular sandwich shop pleads guilty to tax fraud

    Former owner of popular sandwich shop pleads guilty to tax fraud

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    SALEM — The former owner of Red’s Sandwich Shop in Salem has pleaded guilty to tax fraud after failing to pay more than $1.5 million in state meals taxes and causing employment tax losses of more than $400,000, according to the U.S. Attorney’s Office.

    John Drivas, 66, who lives in Hampton, New Hampshire, pleaded guilty in federal court on Sept. 6 to five counts of failure to collect and pay employment taxes owed to the IRS and four counts of wire fraud for state meals taxes he collected from restaurant customers but failed to pay over to the Massachusetts Department of Revenue.

    The offenses took place over a six-year period between January 2016 and October 2022 at Red’s Sandwich Shop and two other restaurants owned and operated by Drivas — Red’s Kitchen and Tavern in Peabody and Red’s Seabrook in Seabrook, New Hampshire.

    Drivas was the sole shareholder of the Salem restaurant until he sold it to an employee in September 2022. He was the 100% owner of the Peabody restaurant with his wife, and the 52% owner of the Seabrook restaurant with his children.

    U.S. District Judge Julia Kobick scheduled sentencing for Dec. 5. The charge of failure to pay taxes carries a maximum potential sentence of five years in prison and a fine of $250,000 or twice the gross gain or loss and restitution. Each wire fraud charge is punishable by up to 20 years in prison.

    According to the U.S. Attorney’s Office, Drivas collected more than $1.5 million in state meals taxes paid by restaurant customers that he failed to pay over to the state as required by law. In Massachusetts, all owners and operators of restaurants and bars are required to collect 6.25% sales taxes on meals. Salem and Peabody also require restaurants and bar to collect an additional 0.75% local option meals excise tax.

    Although Drivas collected the taxes from customers, he intentionally withheld $1,596,775 of those taxes from monthly reports and payments owed to the state Department of Revenue.

    Drivas also paid wages to numerous employees of the restaurants partly by payroll checks and partly in cash. He did not report the cash wages to the IRS or pay employment taxes on them, causing employment tax losses of $439,341. Federal tax law requires employers to withhold from any employee wages an amount for income taxes and other amounts for Social Security and Medicare taxes.

    Drivas’ guilty plea was announced by the U.S. Attorney’s Office, Internal Revenue Service Criminal Investigation Boston Field Office, and the Insurance Fraud Bureau of Massachusetts.

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    By News Staff

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  • Report: Mass. taxpayer exodus continues

    Report: Mass. taxpayer exodus continues

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    BOSTON — Massachusetts lost more than $3.8 billion in state-adjusted gross income between 2021 and 2022 as residents fled to New Hampshire, Florida and other low-tax states, according to new Internal Revenue Service data.

    The IRS data, based on income tax returns, shows the Bay State lost a net of more than 45,000 residents in the 2021 and 2022 calendar years – taking with them more than $3.9 billion in taxable income. That’s the fifth highest rate of domestic outmigration in the nation following New York, Illinois, New Jersey and California.

    New Hampshire and Florida were the biggest beneficiaries of Massachusetts’ transplants, the IRS data shows. More than 18,189 people moved from New York to Florida, taking $1.4 billion. An additional 23,596 Bay Staters moved to Florida, bringing more than $2.8 billion in income with them, according to the IRS.

    The Pioneer Institute, a Boston-based think tank, says the data shows the largest cohort to flee Massachusetts were 26- to 35 year-olds, with 9,500 more tax filers leaving than coming into Massachusetts in 2022, more than five times the number a decade earlier.

    “This loss of young talent hinders the state’s future innovation and economic growth, which will compound over decades,” said Mary Connaughton, Pioneer’s director of government transparency. “The cost of housing is a leading factor and the recent housing bill is not enough to address this critical challenge.”

    “We need more innovative solutions at the local level to adequately boost the state’s housing supply,” she added.

    The report is the latest in the series that highlights how Massachusetts’ population is shrinking despite a continuing influx of new arrivals, many through immigration.

    Still, the state’s outmigration appears to be slowing, with about 18,000 fewer residents leaving the state in 2023 than in 2022 – a 31% drop, according to the latest census data, released in May.

    Experts say the outmigration has less to do with politics than it does with a lack of housing, prevailing wages and access to employment.

    But federal data shows the population decline has major implications for the states, revenue and tax collections. The state has seen its revenue benchmarks from tax collections fall short over the past year.

    Massachusetts lost an estimated $4.3 billion in state-adjusted gross income in 2020-21 tax year as residents fled to other low-tax states, according to the latest IRS figures.

    On Beacon Hill, state leaders have approved proposals to cut taxes and reduce the state’s high cost of living as part of a broader effort to stop outward migration and make the state more attractive to new families and businesses.

    Gov. Maura Healey, a first-term Democrat, has expressed concerns about the exodus of residents and businesses in the wake of the COVID-19 pandemic.

    Healey has pointed to a lack of housing as a primary reason people are leaving the state, making the case for expanding stock and making homes more affordable. She acknowledged the impact of the housing crunch on outmigration at an event in Lowell, where she and other officials announced $27 million in tax credits for new housing developments in Salem, Lawrence and Haverhill and other “Gateway” cities.

    “I love New Hampshire, but I want people to stay here in Massachusetts,” Healey said in remarks Tuesday. “I don’t want them going north of the border.”

    But critics point to the state’s high tax burden, including the voter-approved “millionaires tax” that set a new 4% surtax for people with incomes above $1 million a year. They say despite a tax reform package signed by Healey last year, the state needs to do more to ease the burden on residents and businesses.

    Others say concerns about outmigration are overblown and point out that people leave the state for new jobs, college and other reasons other than consternation over high taxes, the cost of living or the lack of affordable homes.

    A 2023 report by the left-leaning policy group Massachusetts Budget and Policy Center says IRS data from 2020 to 2021 shows that Massachusetts has a lower rate of outmigration among high-income households earning $200,000 or more a year than that of low- and middle-income households.

    The report’s authors say that data suggests state tax levels have had “little impact” on the decisions of high-income households.

    Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.

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    By Christian M. Wade | Statehouse Reporter

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  • Small businesses are paying 100%+ of profits to Uncle Sam after tax-law change

    Small businesses are paying 100%+ of profits to Uncle Sam after tax-law change

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    Small businesses in sectors like software and manufacturing are panicking over the expiration of a critical tax deduction that they say could lead to mass layoffs and business closures, unless Congress acts quickly to amend the law.

    “This is a life-and-death scenario for small software companies,” Michelle Hansen, co-founder of the geocoding company Geocodio, told MarketWatch.

    The tax change that Hansen and other software executives are taking issue with was signed into law by President Trump in 2017, as part of a larger tax overhaul that slashed the top corporate tax rate from 35% to 21%.

    But in order to satisfy Senate budget rules and pass the law with only Republican votes, the bill could not increase the budget deficit over a 10-year window.

    So lawmakers included a provision that, beginning in 2022, drastically reduced how much research-and-development spending a business could deduct from their annual revenue to determine taxable income.

    The change penalizes certain industries like software and information technology — where engineer salaries are often classified as R&D expenses — as well as manufacturing and pharmaceuticals
    IHE.

    IntervalZero CEO Jeff Hibbard, whose Massachusetts-based company designs and sells software for installation on precision machines like semiconductor manufacturers, told MarketWatch that he has had to tap into company savings for the past several years in order to avoid laying off engineers.

    He said that his firm brings in about $9 million in revenue annually with expenses of $8 million — but 60% of those expenses come in the form of engineer salaries, which can only be deducted from taxable income over a five-year period because the IRS treats it as R&D.

    He said that after taxes consumed all his profits in 2022, he had to pay an additional $800,000 to Uncle Sam, and an additional $600,000 for the 2023 tax year.

    “We’ve had to do a hiring freeze and postpone projects” in a cutthroat industry where technology progresses rapidly, Hibbard said. “We’ve been in existence for 15 years. For the first 14, we always hired additional people. Now we have a hiring and salary freeze.”

    The House of Representatives voted last week 357-70 to restore full expensing for R&D as part of a $79 billion tax package that boosted the child tax credit and extended other business tax breaks.

    The bill now heads to the Senate, which already has its hands full debating immigration and national-security issues, and analysts say election-year politics could thwart its passage in 2024.

    Henrietta Treyz, director of economic-policy research at Veda Partners, gave just a 10% chance of the bill passing the Senate in a recent note to clients.

    “This year’s effort to pass a tax package has been more robust than the effort we saw in 2022 and 2023,” she wrote. Treyz added, however, that “the competing need to pass border reform and Ukraine/Israel aid, and general dysfunction in Washington keep us pessimistic that we’ll see a bipartisan economic-stimulus package come out of Congress this year.”

     On top of Republicans not wanting to give President Joe Biden a victory that would provide tax relief for businesses and families, Senate Republicans could decide to drag their feet on the bill in the hope that they’ll retake the chamber next year and can play a bigger role in the process, according to Owen Tedford, policy analyst at Beacon Policy Advisors.

    “The critical member to watch is Senator Mike Crapo [of Idaho], the top Republican on the Senate Finance Committee,” Tedford wrote. “Crapo has not outright opposed the bill but has raised policy concerns and has expressed a desire to have a chance to amend it.” 

    Political considerations may be dictating the bill’s fate in Washington — but some business owners fear they don’t have the wherewithal to wait until next year for the problem to be fixed.

    Benjamin Bengfort, co-founder and CEO of Iowa-based software firm Rotational Labs, told MarketWatch that he had to lay off workers last year after his 2022 tax bill rose by 438%.

    He noted that even demand for his products has taken a hit because of the change in the law, because his services can count as an R&D expense for his customers, too.

    “So it is [between] a rock and a hard place for us, no matter how you look at it,” Bengfort said. “This is an existential threat for software engineering companies.”

    Andrew Keshner contributed.

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  • Mark Zuckerberg could pay millions to the IRS on Meta dividends. He still might be getting ‘a major break’.

    Mark Zuckerberg could pay millions to the IRS on Meta dividends. He still might be getting ‘a major break’.

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    Mark Zuckerberg delighted Meta shareholders and Wall Street this week with news of the social media giant’s first-ever dividend.

    The IRS may also be happy, now that it’s staring at millions in taxes on the Meta stock dividends bound for Zuckerberg’s portfolio.

    Zuckerberg, the CEO of Meta Platforms Inc.
    META,
    +20.32%
    ,
    is poised to make $700 million in dividends yearly. He owns nearly 350 million shares, according to FactSet, and the company will start paying a quarterly dividend of 50 cents a share.

    That would yield nearly $167 million in federal taxes yearly, after a qualified-dividend tax of 20% and another 3.8% tax on the investment returns of rich households, two accounting experts said.

    California income taxes of 13.3% on the dividends could cost Zuckerberg another $93.1 million, said Andrew Belnap, an accounting professor at the University of Texas at Austin’s McCombs School of Business.

    All in, that’s a combined $259.7 million in federal and state taxes annually on the Meta dividends, Belnap estimated.

    For context, U.S. taxpayers reported over $285 billion in qualified-dividend income to the IRS though mid-November 2023, according to agency statistics. Nearly 30 million tax returns reported qualified dividends through that time.

    Meta said it plans a quarterly cash dividend going forward, with the first such payment in March.

    Meta shares soared 20.5% on Friday, ending with a record-high close of $474.99. The Dow Jones Industrial Average
    DJIA,
    S&P 500
    SPX
    and Nasdaq Composite
    COMP
    all closed higher Friday.

    ‘Zuck is getting a major break’

    Meta announced the dividend payment in its earnings results Thursday, on the same week that Americans began filing their income taxes.

    A look at Zuckerberg’s dividends and their tax implications offer a peek at the debate about the varying ways wages and wealth are taxed.

    “Zuck is getting a major break,” said Andrew Schmidt, an accounting professor at North Carolina State University’s Poole School of Management who also crunched the numbers for MarketWatch.

    Approximately $167 million “seems like a high tax bill,” he said. But if Zuckerberg received the $700 million as a straight salary, Schmidt estimated he’d be looking at a roughly $259 million tax bill on the wages after they were taxed at the top marginal rate of 37%.

    Federal income tax brackets run from 10% to 37%.

    Meanwhile, the IRS taxes qualified dividends and capital gains at 0%, 15% and 20%, depending on income and household status. The net investment income tax adds another 3.8% for individuals making at least $200,000 or married couples worth $250,000.

    For federal and state taxes on the Meta dividends, Zuckerberg would face a combined rate of 37.1%, Belnap noted. “His tax rate on this is actually fairly high,” he said.

    The gap in tax rates on income derived from wages and investments “has been a big criticism with U.S. tax policy,” Schmidt said, especially as lawmakers look for ways to come up with more tax revenue.

    Regular retail investors enjoy the same preferential rates on capital gains and dividends as the top 1% of taxpayers, Schmidt added. The issue is that those dividends and stock profits are a smaller part of their income while salaries, taxed at higher rates, are a bigger proportion.

    Belnap noted that California’s state tax rules don’t provide special treatment to dividends.

    Read also: Where Trump, Biden and Haley stand on capital gains, the child tax credit and other key tax questions

    Zuckerberg received a $1 base salary in 2022, a figure that hasn’t changed in several years. He is now worth $142 billion, according to the Bloomberg Billionaires Index, making him the fifth-richest person in the world.

    Meta did not immediately respond to a request for comment.

    Taxes on the Meta dividends will not be something Zuckerberg, or any Meta shareholders big or small, need to deal with until next year’s tax season, Belnap and Schmidt observed.

    But as taxpayers amass their 1099-DIV forms on dividend income, IRS figures show that it’s mostly upper-echelon taxpayers reaping the rewards on the preferential rates for qualified dividends.

    Households worth at least $1 million accounted for 40% of the approximate $285.3 billion in qualified dividends reported through mid-November, according to agency figures.

    For less affluent investors, “it’s usually a nice supplement, but I’d say very few people are living off dividends,” Belnap said.

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  • Crypto industry bats for lower taxation and a standardised regulatory framework 

    Crypto industry bats for lower taxation and a standardised regulatory framework 

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    The Indian cryptocurrency industry, ahead of the Union budget 2024, is expecting the government to reconsider the current taxation structure on the virtual digital asset (VDA) class, establish a self-regulatory body for the crypto and block chain sectors, and create sandboxes to help start-ups in the sector thrive.

    The crypto exchanges in India have been losing trading volumes on the platform since the introduction of taxation as crypto users moved to offshore exchanges. However, the finance ministry’s recent move to send show cause notices to offshore exchanges and block URLs subsequently has bought respite for domestic exchanges.

    Ashish Singhal, co-founder and Group CEO of PeepalCo, notes that crypto platform CoinSwitch urges the government to reduce the Tax Deducted at Source (TDS) on VDAs from 1 to 0.01 per cent, allow offsetting and carrying forward losses from the sale of VDAs, and treat income from VDAs on par with other capital assets. “Reducing the tax arbitrage that exists today will also help stem the flight of capital, consumers, investments, and talent, as well as dent the gray economy for VDAs,” he said.

    Further, industry body Bharat Web3 Association (BWA) urges the government to also reexamine the flat rate of 30 per cent applicable to income from the transfer of VDAs, specifically including foreign exchanges in the scope of TDS under Section 194S.

    The industry also seeks a standardised regulatory framework. Sumit Gupta, CEO of CoinDCX, said, “Contemplating the establishment of a robust self-regulatory body for crypto and blockchain sector participants could be a game-changer. Implementing a standardised regulatory framework for the crypto and blockchain sectors, the government would not only provide clarity but also unlock a multitude of opportunities and use cases at a global scale, empowering India Inc. to lead on the world stage.”

    In a bid to foster start-ups in the sector, Shivam Thakral, CEO of BuyUcoin, notes, “Imagine India as a fertile field; crypto and blockchain are the seeds waiting to sprout. We need tax incentives and sandboxes to nurture these seeds into thriving start-ups. Sandbox initiatives need protection to foster experimentation.” This will create a new generation of jobs, propel India into the global DeFi and blockchain space, and unlock economic growth, he opines.

    Further, Nischal Shetty, co-founder of Shardeum, also notes that the industry would also like the ministry to dedicate funds for indigenous blockchain projects, exemplifying real-world utility and innovation.

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  • CoinDCX's Year-End Report Unveils Maturing Investor Base in India

    CoinDCX's Year-End Report Unveils Maturing Investor Base in India

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    Despite India’s controversial crypto policy and lack of clarity in several aspects, the country emerges as the top market.

    According to a new report by crypto exchange CoinDCX, 28 Indian entities became ‘FIU-Registered Reporting Entity.’ India emerged as a global crypto adoption leader, reflecting sustained interest and robust demand for digital assets.

    India Defies Crypto Skepticism

    CoinDCX’s year-end report for 2023 shared with CryptoPotato revealed that 60% of the user base is concentrated in just 10 cities.

    Contrary to expectations, Tier-2 cities like Lucknow and Patna emerged as surprising leaders in crypto adoption. Jaipur, Indore, Bhubaneswar, and Ludhiana, breaking into the top 15, challenged the notion of major urban centers monopolizing the financial investment space.

    One of the most striking trends is the maturation of Indian crypto investors. The average age rose from 25 in 2022 to 30 in 2023, attracting seasoned investors beyond the traditionally young demographic. According to the exchange, this shift indicates a growing understanding and acceptance of cryptocurrencies as legitimate investments.

    Notably, Tier-2 and Tier-3 cities are driving female participation, with 65% of women crypto users hailing from these areas. While male investors still outnumber females 7:1, the increasing involvement of women from smaller towns showcases a broader acceptance and adoption of cryptocurrencies.

    Delhi and Lucknow emerged as leaders in fostering female crypto investors, emphasizing regional variations in gender participation. These findings challenge stereotypes and highlight the diverse landscape of cryptocurrency adoption across India.

    Moreover, November 2023 marked a historic moment, witnessing India’s highest crypto trading volume. Bitcoin’s surge to $36,000, coupled with the potential approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission, fueled this remarkable uptick.

    A specific highlight was November 9th, which was recognized as the record day for crypto trading volume in 2023. The significance of this day further solidifies November’s dominance in the Indian crypto landscape, reflecting the dynamic nature of cryptocurrency markets and the evolving trends among investors.

    “In 2023, the industry demonstrated remarkable resilience, providing us with more reasons for optimism than ever before. Despite challenges such as the 1% TDS and high taxation, the industry stood for transparency, with 28 entities in India becoming ‘FIU-Registered Reporting Entity.’ The year saw India emerge as a global leader in crypto adoption, showcasing strong demand and enduring interest in digital assets.”

    India Tops Chainalysis’ Global Crypto Adoption Index

    In what was seen as a crucial uplift for the Indian crypto ecosystem, Finance Minister Nirmala Sitharaman confirmed ongoing discussions within the G20 member nations to formulate an extensive global framework for cryptocurrencies during India’s presidency at the G20 Summit this year.

    Chainalysis’ 2023 Global Crypto Adoption Index, unveiled in September, highlights India’s leading position in grassroots crypto adoption, positioning the country at the forefront of global trends in the crypto space.

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  • IRS Intensifies Efforts to Combat Crypto-related Tax Evasion

    IRS Intensifies Efforts to Combat Crypto-related Tax Evasion

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    According to a report from the Internal Revenue Service (IRS) criminal investigations division, tax evasion has emerged as a significant area of focus in crypto investigations. More than half of all probes conducted in the last fiscal year were related to tax matters.

    This news coincides with the IRS actively seeking input from stakeholders on its upcoming framework centered around cryptocurrencies.

    Crypto Tax Crimes Surged

    The report indicates that three years ago, more than 90% of active cryptocurrency investigations primarily focused on money laundering. However, tax-related issues accounted for approximately half of the digital asset investigations in the previous fiscal year, which began October 1, 2022, and ended September 30, 2023.

    Therefore, the IRS is intensifying its efforts to combat cryptocurrency tax fraud. The agency’s Criminal Investigation Unit reported an increase in the number of investigations into digital asset reporting in its annual report.

    In the paper, the unit mentioned that they initiated at least 2,676 cases in the 2023 fiscal year. They identified over $37 billion in transactions associated with financial and tax crimes.

    The investigations primarily centered around undisclosed holdings of cryptocurrencies, unreported capital gains from cryptocurrency transactions, income generated from mining activities, and even concealment of cryptocurrency holdings.

    According to Jim Lee, the head of the Crime Investigation Unit at the IRS, the growing adoption of digital assets has led to a concurrent rise in tax-related investigations, which is anticipated to continue. Deliberate evasion of payment obligations is one of the main offenses under scrutiny, with taxpayers purposefully concealing ownership of cryptocurrencies to safeguard their assets.

    IRS’s Crypto Mission

    The Internal Revenue Service (IRS) initiated its mission to address crypto markets in 2015, commencing investigations into crypto-related crimes. According to reports, the IRS has successfully seized over $10 billion in crypto assets since its initial actions.

    In 2019, the IRS introduced a new mandate for U.S. taxpayers, requiring them to report all digital asset transactions to mitigate instances of tax evasion.

    The agency is diligently formulating new regulations, specifically targeting brokers and intermediaries involved in the crypto business. The IRS actively seeks input from various stakeholders regarding proposed cryptocurrency tax reporting measures until January 25, 2024.

    These forthcoming regulations will be incorporated into the American Families Plan Act of 2023, necessitating crypto exchanges and brokers to report crypto transactions surpassing $10,000 to the IRS and taxpayers. Additionally, this framework mandates that crypto businesses maintain knowledge of their customers and retain thorough transaction records.

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  • Swiss City Lugano Now Accepts Bitcoin and Tether for Municipal Taxes

    Swiss City Lugano Now Accepts Bitcoin and Tether for Municipal Taxes

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    On December 5, 2023, Lugano, a Swiss City, announced the incorporation of the cryptocurrencies Bitcoin (BTC) and Tether (USDT) for tax and other municipal fee payments.

    This makes part of Lugano’s collaborative plans with Tether, Plan B, fashioned to revitalize the City’s financial system using Bitcoin tech.

    Lugano Dives into the World of Crypto

    Before the latest developments, Lugano only allowed crypto payments to be made directly on the City’s official online portal. However, the release extends the possibility to every invoice, regardless of the nature or amount.

    According to the statement, Lugano citizens and companies can now pay their expenses by scanning the invoice QR code and leveraging their favorite mobile wallets. The two assets accepted based on the statement are Bitcoin (BTC) and Tether (USDT), behemoths in their respective asset classes.

    The statement by Bitcoin Suisse notes that the latest update is part of Lugano’s Plan B, a collaboration with Tether, to integrate BTC into daily life.

    This release also points out the role of Bitcoin Suisse in Lugano’s Plan B. Bitcoin Suisse will handle the technical part of the payment solution to offer a convenient option for accepting payments with BTC and USDT.

    The Chief Product Officer at Bitcoin Suisse, Armin Schmid, expresses his delight in backing Lugano in its mission to accelerate the use of Blockchain tech. He said:

    “It is great to see that more and more Swiss municipalities are offering payments in cryptocurrencies as an option available to both citizens and companies, complementing traditional payment methods such as post-office counters and e-banking platforms.”

    Bitcoin Suisse stresses its pleasure in providing technical infrastructure for crypto payments. Moreover, it boasts of providing crypto payments to other Swiss Cantons, municipalities, and cities.

    Switzerland Going All-In with Crypto

    Lugano is not the first Swiss City to take this path. As early as 2021, Zug City had already begun accepting Bitcoin and Ethereum for tax settlements. The Canton of Zug and the municipality of Zermatt have already implemented the system.

    Switzerland has been ahead of the curve in adopting crypto assets for some time.

    Last month, one of the largest Swiss cantonal banks, St. Galler Kantonalbank, announced the official dawn of Bitcoin and Ethereum trading and custody services for several clients.

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  • The Surprise Bill Coming to Those Who Underpay Their Taxes

    The Surprise Bill Coming to Those Who Underpay Their Taxes

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    Failing to keep up with tax payments now could lead to an expensive surprise come next spring. 

    As of Oct. 1, the Internal Revenue Service is charging 8% interest on estimated tax underpayments, up from 3% two years ago. The increase is one of the many effects of rising interest rates

    Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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  • Brazilian Lawmakers Approve 15% Tax for Cryptocurrencies on Offshore Exchanges

    Brazilian Lawmakers Approve 15% Tax for Cryptocurrencies on Offshore Exchanges

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    The Brazil Senate has approved new rules that will mandate locals to pay up to 15% tax on income generated from cryptocurrencies on offshore exchanges.

    According to a live recording from the Federal Senate, the new rule applies to crypto users with assets worth more than R$6,000 ($1,200) on all offshore exchanges.

    Brazilian Crypto Users to Pay 15% Tax

    The proposed bill has gained approval from the Chamber of Deputies and the Senate’s Economic Affairs Committee. It is on its way to being greenlighted by President Luiz Inácio Lula da Silva. The president’s approval is expected to come quickly as his administration initiated the proposal.

    The new bill classifies crypto assets and wallets on offshore platforms as financial investments and will subject them to the latest tax rules in accordance with the regulations of the Special Secretariat of the Federal Revenue of Brazil.

    In addition to cryptocurrencies, the bill also affects exclusive funds – investment funds with a single shareholder – and offshore applications, which are abroad companies that invest in the local financial market.

    The rule will become effective from January 1, 2024. Income on assets accessed before December 31, 2023, will be taxed at 8%, while funds earned before January will be taxed when accessed.

    Brazil to Raise $4B By 2024

    Brazil’s central bank has found that Brazilians have roughly R$200 billion (more than $40.7 billion) in offshore assets, the majority of which are investment funds and stakes in companies. With the new tax rules coming into effect, the government looks to raise R$20.3 billion ($4.1 billion) in 2024 and R$54 billion ($11 billion) by 2026.

    Notably, some members of the Senate opposed the bill. Senator Rogério Marinho said the proposed tax rule proved that the government used outdated techniques and created taxes to hide its inefficiency in managing the economy.

    Although several deputies have proposed changes to the bill, the alterations are yet to be implemented.

    The latest development comes less than six months after the president empowered the central bank to supervise the local crypto sector alongside the Comissão de Valores Mobiliários – Brazil’s Securities and Exchange Commission, which oversees coins classified as securities.

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  • Congress returns to face big to-do list: Israel and Ukraine aid, possible border or tax deals, and more

    Congress returns to face big to-do list: Israel and Ukraine aid, possible border or tax deals, and more

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    Both the House and Senate are due to get back to work this week after their Thanksgiving break, and lawmakers have a lot on their plates.

    A divided Washington put off the threat of a partial government shutdown until mid-January by enacting a short-term spending bill in mid-November, but the measure didn’t address President Joe Biden’s $106 billion funding request that includes wartime aid for Israel and Ukraine.

    So…

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  • Would you lend your mom your fortune? Estate planning with a twist.

    Would you lend your mom your fortune? Estate planning with a twist.

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    When it comes to estate planning and family giving, the funds tend to run downstream to the younger generations. But one strategy — called upstream giving — could assist older generations during their lifetime and lessen taxes for the family overall.

    This complicated strategy isn’t for the faint of heart. There’s a lot to consider, and a lot of steps need to happen in perfect order for it to work as intended.

    “While…

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  • How a second set of Trump tax cuts could jack up the national debt

    How a second set of Trump tax cuts could jack up the national debt

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    If Donald Trump were to be elected president in 2024, what would it mean for U.S. tax policy and the national debt?

    There are growing expectations that he could deliver another round of big tax cuts, with the reductions coming right as those enacted in 2017’s Tax Cut and Jobs Act are due to expire in 2025.

    “If Republicans hold their House…

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  • Crypto Taxation Misses the Mark: India Loses $420 Million in Potential Revenue Due to 1% TDS

    Crypto Taxation Misses the Mark: India Loses $420 Million in Potential Revenue Due to 1% TDS

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    The Indian government has lost $420 million in what could have been a substantial revenue stream as a result of its taxation, forcing traders to move their transactions outside the country.

    Experts are now suggesting that the Indian government should take a more relaxed approach to its controversial stance on crypto taxation.

    According to a recent study by Delhi-based think tank Esya Centre, the highly debated crypto policy in India, involving a 1% transaction tax deducted at the source (TDS), should be reduced to 0.01%. This adjustment is recommended to align with the government’s objectives of increasing revenue and enhancing transparency.

    Taxing Times for Indian Crypto Traders

    The TDS – which is considered a form of income tax – has led to approximately five million crypto traders shifting their transactions offshore. The study estimates that since its introduction in July 2022, this tax has resulted in a potential revenue loss of $420 million for the government.

    Contrary to its intended purpose of taxing profitable transactions, the findings in the “Impact Assessment of Tax Deducted at Source on the Indian Virtual Digital Asset Market” indicate a significant shortfall in achieving this goal.

    This study builds on the Esya Centre’s previous report, revealing that Indians redirected over $3.8 billion in trading volume from local to international crypto exchanges following the announcement of the controversial rules.

    After the implementation of TDS, millions of Indian users transitioned to offshore platforms, and within a month, a single offshore platform noted over 450,000 new user registrations. Subsequently, the think tank observed a surge in web traffic, active users, and downloads from Indians on offshore platforms post-July 2022, accompanied by a decline in Indian VDA exchanges during the same period.

    An in-depth analysis of average weekly user figures, downloads, and web traffic further validated the thesis. Notably, the TDS provision, initiated on July 1, 2022, and the absence of any government relief from this tax framework as of February 1, 2023, had the most significant impact on investors, thereby highlighting users’ strong inclination for relief from the 1% TDS.

    “Based on INR P2P data collected from leading offshore exchanges, we estimate that over INR 3,50,000 crore was traded by Indians on offshore platforms since the 1% TDS was introduced in July 2023 – the figure amounts to over 90% of total VDAs traded by Indians.”

    This essentially means that only 0.2% of trading (by value) on offshore VDA exchanges, on which TDS should be deducted, is indeed TDS compliant. Esya, however, confirmed that its estimate does not include private transactions or larger over-the-counter (OTC) trades.

    In addition to lowering the TDS to 0.01%, the organization also recommended that India should provide clarity regarding the scope of TDS on offshore platforms. The act of registering with the Financial Intelligence Unit–India (FIU-IND) could serve as an ‘official’ makeshift license to distinguish between ‘Onshore’ and ‘Offshore’ platforms.

    Additionally, the recommendation includes empowering a government entity to blacklist and obstruct offshore Virtual Asset Service Providers (VASPs) and specific VDAs associated with non-compliant platforms.

    Calls Escalate to Ease Crypto Tax Rules

    It is important to note that the recommendation aligns with the increasing chorus from various players in the crypto space within the country, urging a reduction in the tax burden on crypto transactions.

    Amidst the crypto drawdown, Indian crypto exchanges resorted to trimming expenses, renegotiating partnerships, postponing employee salary increases, implementing layoffs, exploring alternative revenue streams, and undergoing rebranding initiatives. These measures aim to prolong their financial viability until they secure additional funding.

    While the current resurgence in the crypto market is increasing trading volumes in other regions, domestic trading platforms find themselves in a state of uncertainty. India has confirmed active discussions on a much-needed regulatory framework, and the taxation talk appears to be a deferred topic.

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  • U.S. construction spending rises for the ninth month in a row in September

    U.S. construction spending rises for the ninth month in a row in September

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    Construction spending rose in September, as companies and the government continued to ramp up projects across the U.S.

    Spending on construction projects rose 0.4% in September to nearly $2 trillion, the Commerce Department reported Wednesday. 

    The…

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  • House speaker election: Jim Jordan racks up endorsements before vote at noon Tuesday

    House speaker election: Jim Jordan racks up endorsements before vote at noon Tuesday

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    Rep. Jim Jordan made progress Monday in his push to become the next speaker of the House of Representatives, winning endorsements from some fellow Republicans who just last week had refused to back him.

    The narrowly divided chamber of Congress is expected to vote around noon Eastern Tuesday to select a speaker, with the move coming after former Speaker Kevin McCarthy was ousted two weeks ago and after No. 2 House Republican Steve Scalise ended his bid for the post last week.

    GOP Rep. Ann Wagner of Missouri, who previously said a Jordan speakership was a non-starter for her, switched her stance on Monday. She said in a post on X that her colleague from Ohio “has allayed my concerns about keeping the government open with conservative funding, the need for strong border security, our need for consistent international support in times of war and unrest … as well as the need for stronger protections against the scourge of human trafficking and child exploitation.”

    Similarly, GOP Rep. Mike Rogers of Alabama, who chairs the House Armed Services Committee, announced in a post on X that he was backing Jordan after saying last week that there was nothing that Jordan could do to win his support. Rogers pointed to an accord on an annual Pentagon bill, the National Defense Authorization Act, saying he and Jordan had “agreed on the need for Congress to pass a strong NDAA, appropriations to fund our government’s vital functions, and other important legislation like the Farm Bill.”

    Republican Rep. Vern Buchanan of Florida offered his support for Jordan as well on Monday, though he noted that he’s “deeply frustrated by the way this process has played out.” Another endorsement came from GOP Rep. Ken Calvert of California, who chairs the House Appropriations Committee’s defense subpanel.

    Jordan — who has been endorsed by former President Donald Trumpsent a letter to his colleagues in which he called for coming together after a chaotic two weeks, saying: “It is time we unite to get back to work on behalf of the American people.” The congressman, a co-founder of the hardline House Freedom Caucus and chairman of the House Judiciary Committee, also told CNN that he was confident about Tuesday’s vote, saying: “I feel good about it.”

    Analysts have been warning that the process of finding a replacement for McCarthy is preventing the House from addressing crucial matters, such as avoiding a government shutdown next month and supporting Israel in its war against Hamas.

    House Republicans made Jordan their nominee for speaker on Friday, but he drew just 124 votes while 81 lawmakers backed another candidate for speaker, GOP Rep. Austin Scott of Georgia. In another round of voting on Friday, Jordan still had 55 colleagues voting against him, but he now appears to be flipping some of them to his side.

    One betting market, Smarkets, was giving Jordan a 33% chance of becoming speaker. 

    Spending cuts and shutdown coming?

    Having Jordan as speaker could mean a 1% cut in defense
    ITA
    and non-defense spending, noted Philip Wallach, senior fellow at the American Enterprise Institute, a conservative think tank. That’s because this year’s debt-limit deal includes a provision that calls for such reductions if there aren’t bipartisan agreements on a dozen funding bills before Jan. 1 and instead a reliance on short-term measures known as continuing resolutions, or CRs.

    “It is now clear,” Wallach said during an AEI event on Monday, that Jordan’s “plan is to have us live off continuing resolutions and implement this 1% cut.”

    “That’s a concrete thing where he could say, ‘Well, we’re moving in the right direction. We’ve taken a hard stand,’” the AEI expert added.

    The CEO of one financial advisory firm also sees standoffs in the future.

    “We expect the next U.S. speaker will be less inclined to make deals than McCarthy; in many ways it makes more sense for them, politically, not to be a deal-maker in the current environment,” said deVere Group’s Nigel Green in a statement.

    “We believe that a U.S. government shutdown is now more likely with a new speaker of the House, and this has the potential to create a domino effect in global financial markets
    SPX.

    BTIG analysts Isaac Boltansky and Isabel Bandoroff said the speaker drama suggests that next year’s election will also be full of twists and turns.

    “We have followed every twist and turn of the speakership race, and there is only one takeaway we can share with absolute certainty: This confirms that the 2024 election cycle will be exhausting, volatile, and just downright weird from beginning to end,” they wrote in a note.

    U.S. stocks
    DJIA

    COMP
    closed higher Monday, as investors looked ahead to earnings season and unwound the flight-to-safety trades seen last week on fears the Israel-Hamas war could escalate into a wider conflict.

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  • Why Treasurys could give the U.S. stock market a green light for a year-end rally

    Why Treasurys could give the U.S. stock market a green light for a year-end rally

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    The volatility in the world’s biggest bond market in recent weeks has been too much for U.S. stocks to handle as investors come to terms with the likelihood that interest rates will remain high deep into 2024 until underlying inflationary pressures ease. 

    The U.S. Treasury market, the bedrock of the global financial system, has been hammered by repeated selling since late September, sending the yields on the 10-year and 30-year Treasurys to levels last seen when the economy was moving toward the financial crisis in 200, before yields fell again in the past week.

    Back in September a bond market selloff was fueled by a hawkish outlook from the Federal Reserve, along with mounting concern about the U.S. fiscal deficit and federal debt amid the potential for a government shutdown if a budget for the 2024 fiscal year is not settled by mid-November.

    Earlier this week though, increased uncertainty about the conflict in the Middle East propelled demand for safer assets and caused longer-term bond prices to jump and their yields to fall.

    Then, on Thursday, a Treasury bond auction which saw a pullback in demand despite notably higher yields, sent longer-term rates higher again while investors were already digesting inflation data that showed consumer prices remained elevated in September. The U.S. stocks fell and booked their worst day in five sessions on Thursday. 

    Investors are now wondering what it will take for interest rates and bond yields to fall in the months ahead and whether a retreat in yields could eventually push stocks higher to rally into the year-end. 

    Tim Hayes, chief global investment strategist at Ned Davis Research, said “excessive pessimism” in the bond market is setting up for a relief rally both in stock and bond prices as “there’s not as much inflationary pressures as the market has been pricing in,” he told MarketWatch in a phone interview on Thursday.

    Hayes said his team found the bond sentiment data has started to reflect a “decisive reversal” away from too much pessimism in the Treasury market which could send bond yields lower and boost equities given the inverse correlations between the S&P 500
    SPX
    and the 10-year Treasury note yield
    BX:TMUBMUSD10Y.
     

    See: Here is what needs to happen for the S&P 500 to hold on to this year’s gains

    Meanwhile, some analysts said disinflation may not be enough for the Federal Reserve to drop its “higher-for-longer” interest rate narrative which was primarily responsible for the big spike in yields since September. 

    The economy needs a slowdown in the consumer sector for some relaxation in the Fed’s “higher-for-longer” narrative and to maybe push policymakers to adopt a more flexible outlook for its long-term guidance, said Thierry Wizman, global FX and interest rates strategist at Macquarie. 

    “Of course, the Fed right now is certainly not saying anything that’s remotely suggestive of ‘high-for-long’ being taken away or being removed or negated, so I don’t expect yields to fall a lot unless we start to get reasons to believe the Fed is going to remove that narrative based on the economic data,” Wizman told MarketWatch via phone. 

    However, Wizman said he is confident that the U.S. consumption data will weaken over the next few months when major consumer-product and -service companies start to provide guidance for the fourth quarter, and when U.S. consumers, which have been trapped in a web of conflicting signals on the health of the economy, open their wallet for the holiday shopping season. 

    “This will produce some weakness on the consumer side of the market and there’s no doubt the slowdown will be more pronounced than most people expect in the economy, [but] that will be the positive scenario for bonds,” said Marco Pirondini, head of U.S. equities at Amundi U.S., in an interview with MarketWatch. 

    However, that also means investors should not be “too anxious to buy dips in the stock market” because it would be very unusual if the stock market doesn’t see “multiple compression” with Treasury yields at 16-year highs, Wizman said. “Stocks would still look too rich even if the Fed drops the ‘higher-for-longer’ narrative in the first quarter of 2024.”

    See: Fed skips rate hike for now, but doesn’t rule out another increase this year

    The “higher-for-longer” mantra is an idea Fed officials have tried to get the market to absorb in recent months, with Fed Chair Powell hardening his rhetoric at the September FOMC meeting, pointing potentially to more rate hikes or, more importantly, interest rates that stay higher for longer.

    Fed officials saw interest rates coming down to 5.1% in 2024, higher than June’s outlook for rates to finish next year at 4.6%, according to the latest Summary of Economic Projections at the September policy meeting.

    See: Stock-market moves show bond traders are still in charge as yields renew rise

    However, Wizman characterized the “higher-than-longer” narrative as a “publicity stunt,” as he thought Fed officials simply wanted to signal to the market that they were frustrated that financial conditions hadn’t measurably tightened enough in 2023, so they utilized the narrative to get rising Treasury yields to do some of the “heavy lifting.” 

    “… Fed officials are not really serious about ‘higher-for-longer’ – they just did it to drive long-term yields higher for now,” he added. 

    If a slowdown in the consumer sector of the economy and ongoing disinflation are powerful enough to sap Fed’s rate expectations, Treasury yields could continue to decline without having to have a calamity or big recession in the U.S. economy to drive investors back to the safe-haven assets like Treasurys, strategists said.  

    See: U.S. stock-market seasonality suggests a potential rally in the fourth quarter. Why this time might be different.

    Meanwhile, stock-market seasonality may also help lift sentiment. Historically, the fourth quarter has been the best quarter for the U.S. stock market, with the large-cap S&P 500 index up nearly 80% of the time dating back to 1950 and gaining more than 4% on average. 

    The S&P 500 has risen 0.9% so far in the fourth quarter, while the Dow Jones Industrial Average
    DJIA
    is up 0.5% and the Nasdaq Composite
    COMP
    has advanced 1.4% in October, according to FactSet data.

    “So you have this situation where sentiment got stretched and now sentiment is reversing with more confidence that bond yields have reached their peak, so equities can rally moving into the end of the year, and that should start to become increasingly evident,” said Hayes.

    The yield on the 10-year Treasury note dropped 8.2 basis points to 4.628% on Friday, while the yield on the 30-year Treasury 
    BX:TMUBMUSD30Y
    declined by 9.2 basis points to 4.777%. The 30-year yield fell 16.4 basis points this week, its largest weekly drop since the period that ended March 10, according to Dow Jones Market Data.

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  • Risk of government shutdown soars as House Republicans leave town in disarray amid hard-right revolt

    Risk of government shutdown soars as House Republicans leave town in disarray amid hard-right revolt

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    WASHINGTON — With House Speaker Kevin McCarthy’s latest funding plan in ruins and lawmakers leaving town for the weekend, there’s no endgame in sight as hard-right Republicans push closer to a federal government shutdown.

    The White House will tell federal agencies on Friday to prepare for a shutdown, according to an official with the Office of Management and Budget who insisted on anonymity to discuss the upcoming instructions.

    That’s a standard seven days out from a federal disruption.

    ‘This is a whole new concept of individuals who just want to burn the whole place down.’


    — Kevin McCarthy on his intraparty Republican critics

    McCarthy, the Republican speaker whose narrow majority and intraparty detractors meant it took 15 votes in January before he secured the gavel, has repeatedly tried to appease his hard-right flank by agreeing to the steep spending cuts they are demanding to keep government open. But, cheered on by Donald Trump, the former Republican president who is the current frontrunner for the party’s 2024 presidential nomination, the right wingers are flexing their outsize influence.

    In a crushing defeat for McCarthy on Thursday, a handful of Republican hardliners blocked a typically popular defense bill from advancing — the second time this week it was set back, an unheard-of loss for a House speaker.

    Even a stopgap bill to keep government funding past the Sept. 30 deadline, called a continuing resolution, or CR, is a nonstarter for some on the right flank who have essentially seized control of the House.

    Read on: How a partial government shutdown would affect you

    “This is a whole new concept of individuals who just want to burn the whole place down,” McCarthy said after Thursday’s vote, acknowledging he was frustrated. “It doesn’t work.”

    The open revolt was further evidence that McCarthy’s strategy of repeatedly giving in to the conservatives — in evidence as early as January when McCarthy is believed to have made undisclosed concessions to secure holdout GOP votes for his long-desired speakership — is seemingly only emboldening them, allowing them to run roughshod over their own House majority. Their far-right bills have almost no chances in the Senate.

    See: Gaetz threatens to oust McCarthy from House speaker post

    Trump urged the hardliners to hold the line against the higher funding levels McCarthy had agreed to with President Joe Biden earlier this year and to end the federal criminal indictments against him.

    “This is also the last chance to defund these political prosecutions against me and other Patriots,” Trump wrote on social media.

    “They failed on the debt limit, but they must not fail now. Use the power of the purse and defend the Country!” the former president wrote.

    The White House and Democrats, along with some Republicans, warn that a shutdown would be devastating for people who rely on their government for everyday services and would undermine America’s standing in the world.

    Rep. Jamie Raskin, a Maryland Democrat, observed Friday on the MSNBC program “Morning Joe” that investigations into, and prosecutions of, Trump are funded by continuing, indefinite appropriations and thus would be unaffected by a federal government shutdown.

    Also see: Government shutdown: Analysts warn of ‘perhaps a long one lasting into the winter’

    Raskin went on to voice a hope that Republicans ultimately would honor the government-funding agreement McCarthy struck in May with the Biden White House — but conceded Democrats are aware operating in a bipartisan fashion could cost McCarthy the speakership.

    “We need the extreme MAGA Republicans to get their act together,” said House Democratic leader Hakeem Jeffries of New York, referring to Trump’s “Make America Great Again” slogan.

    “End the civil war,” Jeffries urged the Republicans. “Get your act together.”

    But one of Trump’s top allies, Rep. Matt Gaetz, a Florida Republican, who is leading the hard-right flank in the current skirmish, said the House Republicans now have almost no choices left but to spend the time it takes to pass each of the 12 spending bills needed to fund the government — typically a laborious process — even if it means going into a shutdown.

    Or they can join with Democrats to pass a CR, putting McCarthy at risk.

    What Gaetz said he, and several others, would not do is vote for a continuing resolution that fails to slash spending. “I’m giving a eulogy for the CR right now,” Gaetz told reporters after a late afternoon meeting Thursday at the Capitol.

    “I represent Florida’s First Congressional District, where, during the shutdown, tens of thousands of people will go without a paycheck, and so I know the impact of a shutdown,” Gaetz said. “So it may get worse before it gets better, and I have little to offer but blood, sweat, toil and tears, but that may be what it takes.”

    A government closure is increasingly likely as time runs out for Congress to act.

    McCarthy’s bid to move ahead with a traditionally popular defense funding bill as a first step toward keeping the government running was shattered, on a vote of 216-212. Five Republicans refused to vote with the increasingly endangered speaker. A sixth Republican voted no on procedural grounds so the bill could be reconsidered.

    Moving forward with the defense bill was supposed to be a way for McCarthy to build goodwill among the GOP House majority as he tries to pass a temporary measure just to keep government running for another month. It, too, had catered to other hard-right priorities, such as slashing spending by 8% from many services and earmarking further funds for security at the U.S.-Mexico border.

    Many on the right flank opposed the deal McCarthy struck with Biden this year over the spending levels and are trying to dismantle it now. They want to see progress on the individual appropriations bills that would fund the various federal departments at the lower levels these lawmakers are demanding.

    From the archives (May 2023): How Joe Biden and Kevin McCarthy got to yes on their debt-ceiling compromise

    The morning test vote on Thursday shattered a McCarthy strategy that had emerged just the night before. Republicans had appeared on track, in a tight roll call, to advancing the measure. Then the Democrats who had not yet voted began rushing into the chamber.

    New York Rep. Alexandria Ocasio-Cortez and fellow Democrats yelled out to hold open the vote. She was a “no.” A few others came in behind her and tipped the tally toward defeat.

    The Democrats oppose the military bill on many fronts, including Republican provisions that would gut diversity programs at the Pentagon.

    As passage appeared doomed, attention turned to the five Republican holdouts to switch their votes.

    GOP leaders spent more than an hour on the floor trying to recruit one of them, Rep. Dan Bishop of North Carolina, to vote “yes.”

    “Every time there’s the slightest relief of the pressure, the movement goes away from completing the work,” Bishop said.

    When asked what it would take to gain his vote, Bishop said, “I think a schedule of appropriations bills over Kevin McCarthy signature would be meaningful to you, to me.”

    Others were dug in, including some who had supported advancing the defense bill just two days ago when it first failed.

    Rep. Marjorie Taylor Greene, a Georgia Republican and a clamorous opponent of more aid for Ukraine in its defense against the unprovoked Russian invasion, said she voted against the defense bill this time because her party’s leadership refused to separate out war money.

    Her stand came as Ukraine’s president, Volodymyr Zelensky, was at the Capitol during a high-profile visit to Washington.

    McCarthy had pledged to keep House lawmakers in session this weekend for as long as it took to finish their work. But they were sent home and told they could be called back on ample notice.

    Many Republicans were starting to speak up more forcefully against their hard-right colleagues.

    Mike Lawler, who represents a swing district in New York carried handily by Joe Biden in 2020, said he would not “be party to a shutdown.”

    “There needs to be a realization that you’re not going to get everything you want,” he said. “Just throwing a temper tantrum and stomping your feet — frankly, not only is it wrong — it’s just pathetic.”

    Lawler had said in an interview with CNN earlier in the week that barreling toward a shutdown was not Republican conservatism but “stupidity.”

    MarketWatch contributed.

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