Carbon taxes are intended to internalize externalities by making the polluters pay to clean up their mess and then redistributing the proceeds to society through goods or services. But this connection often isn’t clear to taxpayers when carbon tax revenue is tossed into coffers with all other revenue.
The process is much clearer in Austria. The country took a major step to foster a greener economy last year by introducing the Klimabonus. This initiative is funded by the revenue from a new carbon tax and channeled directly to residents through annual payments. Everyone who lives in Austria for at least six months out of the year can receive the payment, regardless of citizenship status.
The Klimabonus creates a direct link between taxation and environmentally friendly practices. Its attempt to penalize polluters and compensate those affected by environmental damage embodies an equitable approach to tackling climate change.
Tax policymakers around the world should be paying attention. Connecting carbon taxes with direct payments to taxpayers may prove a powerful tool in making environmental tax policies not just politically acceptable, but also a political necessity.
As always, here at Bloomberg Tax, we’ll bring you experts who report on new policies such as the Klimabonus and weigh in on what works and what doesn’t.
The Exchange—It’s where great ideas intersect.
—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
State Insights
The Kentucky Department of Revenue’s failure to act on a legislative directive to bring back a decennial tax amnesty program raises serious questions, say Frost Brown’s Mark F. Sommer and Elizabeth M. Ethington.
Federal Insights
The IRS’s planned changes to categorizing and reporting partnership liabilities are more consequential than they appear because of how they would affect several tax rules, says Marcum’s Michael D’Addio.
Morris, Manning & Martin’s Matthew Flower, Matthew Peurach, and Lili Martin-Mashburn review steps small businesses can take to ease compliance with the Corporate Transparency Act’s information disclosure requirements starting in 2024.
The US government should consider alternatives to its plan for regulating crypto transactions, which as proposed could put small exchanges at risk of collapse and stymie crypto innovation, says CryptoTaxAudit’s David Canedo.
A proposal that would force crypto brokers to disclose details of their clients’ transactions fails to address the cross-border nature of many digital assets, says Quillon Law’s Nicola McKinney.
McDermott Will & Emery’s Allison Wilkerson and Christian Nemeth discuss how a recent IRS notice may cause some confusion over enforcement of employee stock ownership plans.
Global Insights
A 43-page unsigned letter sent to the IRS lays out likely legal opposition to a proposed regulation that would require taxpayers to disclose transactions in Maltese retirement plans, says attorney Andrew Gradman.
Giuliana Polacco and Annarita De Carne of Bird & Bird explain the new circular issued by the Italian Revenue Agency with the aim of addressing some challenges created when work takes place across international boundaries.
Steffen Strande and Poul Erik Lytken of Accura Law Firm discuss the progress of Pillar Two implementation in Denmark and the potential effects for companies that will be covered under the new legislation.
Columnist Corner
The IRS will soon release the application portal for its low-income communities bonus credit initiative. In this week’s Technically Speaking, Andrew Leahey writes that the program could be improved by streamlining the application process and engaging with community leaders.
Save the Date
Professionals—even risk-averse ones—can use chatbots such as ChatGPT to make their jobs easier. To see how you can start using generative AI today, join the Bloomberg Tax and Bloomberg Law Insights & Commentary teams on Sept. 28 from noon to 1 p.m. ET for the latest installment of our free virtual Lunch & Learn series.
SMB Law Group’s Eric Pacifici and Kevin Henderson will explain how AI can boost efficiency while steering clear of privacy, confidentiality, security, and intellectual property minefields.
Career Moves
Dwight Jones has been named chief financial officer of Hunton Andrews Kurth.
Kevin Brown has joined Brown Rudnick as a partner in the tax group in the New York office.
Vishal Sharma has been appointed managing director of A&M Tax, an affiliate of Alvarez & Marsal, in the UAE.
Scott H. Novak has joined Scarinci Hollenbeck as partner in the Little Falls, N.J., office.
Jiten Shah has been named chief financial officer and a member of the executive leadership team of RSM US.
If you are changing jobs or being promoted, let us know. You can email your submission to TaxMoves@bloombergindustry.com 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.
- The IRS and a conservation easement donor reached an agreement to settle after a battle over the approval of a $15.2 million penalty, according to a US Tax Court filing.
- Nicole Malliotakis, a Trump-endorsed Republican and among the lawmakers seeking to hike a $10,000 cap on deductions for state and local taxes, has irked some colleagues by voting against a measure pushed by Democrats, to raise the limit to $60,000.
- Legislation providing treaty-like benefits between the US and Taiwan sailed through a Senate committee, as Washington seeks to woo Taipei’s producers of high-tech products to US shores without angering China.
- The IRS will immediately stop processing new claims for the pandemic-era employee retention tax credit at least through the end of the year in an effort to combat fraud.
Tax Journals
Tax Management International Journal
Family offices and trusts have a small window of time available to begin evaluating their structures in an evolving international tax landscape, says Shay Menuchin of KPMG Private Enterprise.
Taxpayers should expect an increased likelihood of the IRS’ s application of Section 6662 penalties in the transfer pricing context as the IRS messaging on the penalties has significantly changed, say Steven C. Wrappe and Nina M. Nelson of Grant Thornton.
Given the increasing reliance on cloud computing services, domestic law guidance on the character of cloud computing services revenue would enhance international trade, say Gary Sprague, Erik Christenson, and Steven Smith of Baker McKenzie.
Tax Management Memorandum
IRS and case law authority point to several ways to increase an investment trust’s corpus without jeopardizing its tax classification as a trust, with or without creation of a new trust, depending on the fact pattern, say Marshall Feiring and Joseph Benavides of Dentons.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Tax Pro Week
Every tax professional wishes they could make one change in the tax world—a revision to the federal tax code, a state tax deduction, clear agency guidance—the list goes on. We’re collecting a series of short essays highlighting practitioners’ thoughts about, and solutions to, some of the most challenging rules for tax practitioners.
For this series, submissions should be no more than 300 words. We’ll publish five responses on The Exchange, one per day, from Oct. 23–27 during what we call Tax Pro Week. The deadline for submissions is Sept. 29, 2023.
Our Wish List
The NFL season has started, and the NBA’s opening game isn’t far off. For October, we’re calling for article submissions on tax aspects of sports, gaming, and betting. We’d especially welcome analysis on gambling rules and athlete salaries.
If you have an interesting, never-published article for publication, you can contact our Insights team by email at TaxInsights@bloombergindustry.com.
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
Rebecca Baker (Editor-at-Large): Stand-up comic Akaash Singh. He popped up in my Instagram feed and I laughed so much that I subscribed to his YouTube channel and signed up to get alerts if he performs in Washington, D.C.
Reading
Melanie Cohen (Content Editor): “Elsewhere” by Alexis Schaitkin, an Atwood-esque dystopian novel centering on female disappearance.
Listening
Andrew Leahey (Columnist): I’ve been on a late ‘90s/early ‘00s rock kick lately. My latest is the Menzingers, a band out of Pennsylvania whose album “Hello Exile” has some great tracks. Start with “Anna” and “America (You’re Freaking Me Out)” to get a sense of whether their sound is for you.
Stay Connected
Get our newsletter delivered to your inbox each week by heading over to The Exchange and clicking the green “Free Newsletter Signup” box at the top. Follow Bloomberg Tax on X, Facebook, Instagram, LinkedIn, and Threads—and check out Bloomberg Law on TikTok. We also have a growing LinkedIn group where our authors, contributors, and readers can share tax-related stories and exchange ideas.
Learn more about Bloomberg Tax or Log In to keep reading:
See Breaking News in Context
From research to software to news, find what you need to stay ahead.
Already a subscriber?
Log in to keep reading or access research tools and resources.