Curated by Daniel Xu
A treatise from the 1800s might provide a policy solution to rising wealth disparities and skyrocketing land values: the “simple tax.”
Political economist Henry George in 1879 proposed levying a tax solely on land values to counter economic inequality. The underlying fairness argument is that land, detached from any improvements to it, generates wealth due to communal efforts rather than only to the owner’s labors. This means a tax on the land’s value would redistribute collectively produced wealth.
Advocates consider it not only a remedy for issues related to land value, such as housing shortages and vacancies, but also as a single tax to replace all others. Cities such as Altoona, Pa., have tried implementing such a plan, albeit to limited success and eventual repeal.
While George’s simple tax may not solve all tax revenue problems, it does raise questions about current property tax policies. The highest effective property tax rate in the US in 2022 was 2.5% in Rochester, N.Y. Although this rate includes taxes on improvements, it’s likely far too low of a rate when viewed from the Georgian perspective—that property value exemplifies a communal creation of wealth for which society should be compensated.
At Bloomberg Tax, we’ll chase down and report on proposals as they happen—or in this case, 144 years after the fact, but better late than never. We’re committed to delivering expert analysis on all things tax from the 19th century to the 21st.
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State Insights
Philip Olsen of Davis Malm reviews recent tax developments in Massachusetts involving single sales factor apportionment, capital gains, tax abatement, and sports betting.
Scott Krinsky of Romer Debbas shares how real estate attorneys in New York can help clients use purchase consolidation, modification, and extension agreements as a tax strategy to help save money on mortgage costs.
Federal Insights
Rep. Rosa DeLauro (D-Conn.) and Adam Michel, tax policy studies director at the Cato Institute, argue for and against expanding the federal child tax credit.
The Supreme Court’s decision in the foreign tax earnings case Moore v. United States may have implications far beyond the question presented, say Donald B. Susswein and Ramon Camacho of RSM US.
A proposed negligence standard that would expand the liability of accountants for contributing to rule violations is unreasonable given the growing complexity of audits, say Kramer Levin’s Michael Dell, Daniel Ketani, and Samantha Alman.
Fostering open and honest dialogue, training managers well, and being open to hybrid work can create an inclusive environment that will allow companies to to grow and win in the marketplace, says Elena Richards of KPMG US.
Charles Schwab’s Hayden Adams shares how new IRS guidance will make money market fund tax preparation easier and will get rid of enforcement on wash sale rules.
The US should consider returning to a broader system of taxation, such as the 19th century’s general property tax, to address the country’s high levels of wealth inequality, say ITEP’s Eli Byerly-Duke and Carl Davis.
US corporate donors may lose a large tax incentive for donating food and other property to charity under the proposed corporate alternative minimum tax and the OECD’s global minimum tax plan, says Gunster’s Alan Lederman.
Global Insights
Alexandra Loran-Wisznievski and Clare Franklin of EY explain how chief financial officers, heads of tax, and other senior leaders can be involved in unleashing the full potential of the corporate tax function, and how technology will help.
Aiki Kuldkepp of Grant Thornton explains a recent decision by the Court of Justice of the EU on how the EU value-added tax principle of neutrality and principle of effectiveness apply in VAT reimbursement.
Columnist Corner
The IRS recently announced its Direct File pilot initiative will roll out in 13 states for the 2024 tax season. In this week’s Technically Speaking, Andrew Leahey writes that “instead of lobbying against the inevitable, the tax preparation industry should try to provide technology-driven enhancements to the free filing option,” with a focus on artificial intelligence and machine learning.
Career Moves
Scott M. Masaitis has joined Nutter as a partner with the tax department in New York.
Charles Goldberg Jr. has joined Baker Donelson as of counsel in the tax group in Nashville.
Mike Westbrook has joined UK law firm Ashfords as a partner with the trusts and estates team in Bristol, UK.
Dylan C. Harris has joined Whiteman Osterman & Hanna as a partner in Poughkeepsie, N.Y.
Jeffrey Golds has joined Miller Canfield as part of the corporate and transactions group in Chicago.
Michelle Skrobacz has joined PKF O’Connor Davies as a partner in the private client services group in Boston.
If you’re changing jobs or being promoted, let us know. You can email your submission to [email protected] for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team.
*Note: Your Bloomberg Tax login is required to access Tax News.
- Several states may choose to amend their corporate tax codes if PepsiCo Inc., the company behind Fritos, Cheetos, Cracker Jack, and other iconic snack foods, can persuade an Illinois judge the business operates as a foreign corporation.
- PwC is being sued in Australia by a financial firm that alleges it lost approximately AU$27 million ($17 million) because of accounting advice from the Big Four firm.
- The Treasury Department and IRS launched the IRS Energy Credits Online portal where auto dealers can register to receive clean vehicle tax credits from sales through a provision in the Inflation Reduction Act.
- House Republicans, led by newly installed Speaker Mike Johnson, passed a $14.3 billion Israel aid package tied to cuts in IRS funding, triggering a clash with Democrats over tax law enforcement that risks delaying US financial help.
PepsiCo products arranged in San Francisco, on June 16, 2023.
Photographer: David Paul Morris/Bloomberg via Getty Images
Tax Journals
Tax Management International Journal
Next year’s US elections or a Supreme Court decision in Moore v. United States may trigger unexpected Canadian tax consequences on certain Canadian subsidiaries of US multinational enterprises, says Nathan Boidman of Davies Ward Phillips & Vineberg.
The reverse hybrid partner status may trigger unexpected tax liabilities for both partners and partnerships, say William Jean-Baptiste of Chevalier Sciales and Eléonore Galleron of LexField.
Tax Management Memorandum
The SECURE 2.0 Act provides retirement plan sponsors an avenue to control the narrative in resolving any compliance issues under the Employee Plans Compliance Resolution System, say Grant Shuman and Anne Tyler Hall of Hall Benefits Law.
Decentralized autonomous organizations that have a nonprofit or charitable purpose and accordingly seek tax-exempt status must navigate a bizarre and incongruent tax regime, says Rustin Diehl of Allegis Law.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Our Wish List
Winter holidays are on the horizon, which means we’re entering peak shopping season. For November, we’d welcome thoughtful tax-related pieces focused on retail-related topics, such as the challenges of online or in-person sales in the post-Wayfair era. We’re also looking for pieces on sales tax audit and reporting challenges, as well as tax planning tips for companies with retail operations.
If you have an interesting, never-published article for publication, you can contact our Insights team by email at [email protected].
Our Team
We talk about tax a lot. But there’s much more that you might hear us talking about if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Watching
Andrew Leahey (Columnist): I’ve been watching Ken Burns’ new documentary, “The American Buffalo.” It’s a heartrending retelling of the fate of what was once the largest biomass in North America.
Reading
Melanie Cohen (Content Editor): Britney Spears’ new memoir, “The Woman in Me.”
Listening
Daniel Xu (Content Editor): I’ve given Ludwig van Beethoven’s “Symphony No. 7″ many plays this week. I listened to it for the first time ages ago, but I appreciate and enjoy it much more than I used to.
Stay Connected
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