Popular taxes are rare, but so are taxes that evoke bipartisan ire. Virginians have forged rare political unity in hating the car tax.
Both gubernatorial candidates—Republican Winsome Earle-Sears and Democrat Abigail Spanberger—vow to vanquish this tax burden. Still, while “Axe the Tax” is a fantastic campaign slogan, undoing the $2.5 to $3 billion annual local revenue stream will take more work than creating pithy one-liners.
Also, if you think paying a few hundred extra bucks for your Camry is absurd, consider how governments elsewhere (and elsewhen) have taxed their citizens.
In Ancient Rome, Emperor Vespasian taxed the collection of urine, because it apparently was valuable to leather tanning and laundering. In 18th-century Britain, a hat tax required a stamped proof of payment, and forgery could be punished by death. And then there’s the modern Denmark cow flatulence tax.
Today, Kansas gives a hot air balloon different tax treatment based on whether it’s tethered, and thus taxable amusement, or allowed to float free, and thus a tax-exempt mode of transportation.
Virginia’s car tax at worst is merely annoying. It doesn’t require sending tax collectors into public bathrooms with an Erlenmeyer flask, checking hats for counterfeit stamps, counting methane-emitting cows, or asking balloon riders if they’ll remain tethered to the Earth.
What it does have in common with those quirky taxes is that their respective societies saw fit to impose them and eventually grew dependent on their revenue. The money matters more than the method.
Eliminating such a tax isn’t just a matter of political will. It requires replacing a revenue stream with something equally stable and not unduly distortive. That’s governing—and it’s much harder to pull off than coining a slogan for a bumper sticker.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined consequences of mass federal layoffs; how businesses should approach changes to Sections 168, 179, and 174 of the tax code; and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Leaders Who Shrug Off Mass Federal Firings Ignore Danger: Werfel
Former IRS Commissioner Danny Werfel says leaders who respond to the Trump administration’s mass layoffs and agency dismantling with a shrug aren’t escaping a broken system—they’re helping to break it.
UAE Wealth Holders Can Use Family Foundations to Their Advantage
Esquire Group’s Jimmy Sexton shares how UAE asset owners can gain tax relief through foundations that can be treated as tax transparent.
Trump’s Next Task Is Turning ‘Beautiful Bill’ Into Economic Boon
Tax Foundation’s Daniel Bunn says President Donald Trump’s new tax law will offer national economic growth if the administration prioritizes investment, sorts out policy priorities, and works on the implementation details.
US Trends Offer Guide to UK Companies Granting Share Options
Attorneys from Bristows look at share option plans available in the UK and US and discuss what factors British businesses should consider when navigating between the two systems.
Pause Before Acting on Business-Friendly Changes in New Tax Law
Baker Tilly’s Jessica Jeane and James Creech say changes to Sections 168, 179, and 174 of the tax code offer potential benefits, but businesses and their advisers should review all requirements and wait for IRS guidance.
Japan’s Amount B Stance Aims to Meet Bare Minimum Requirements
Nishimura & Asahi’s Takato Masuda says Japan is observing the minimum requirements on Amount B and its enterprises have concerns on the approach key markets in Asia will take on the simplified and streamlined transfer pricing method.
Retailers Relying on Tariff Exemption Must Rethink Pricing Plans
CBIZ’s Mark Baran says businesses such as Shein and Temu, which rely on the duty-free treatment of cheap imported goods, should mitigate compliance risks and become more efficient before the exemption is permanently eliminated.
An AI-Powered Automated Tax Code Must Uphold Core Principles
Tax attorney Sofia Larrea says fairness, transparency, and efficiency are crucial to any automated tax system.
Columnist Corner
The IRS’s consent decree allowing churches to discuss politics without losing their tax exemption status “could enable bad actors to escape consequences while good-faith religious organizations operate in uncertainty,” Andrew Leahey writes in his latest Technically Speaking column.
Congress should overhaul the Johnson Amendment and create a new legal category for churches that opt for full political speech freedom, reduced tax benefits, and more accounting and disclosure obligations, Andrew says. Read More
News Roundup
Johnson Kicks Off Next Tax Bill Work, Seeking Fall Passage
Speaker Mike Johnson said in an interview with Bloomberg Government that he wants to pass a second tax-and-spending bill by “late fall.”
House GOP Pitches Slashing IRS Funding More than 20 Percent
House Republicans want to cut the IRS’s budget by about $2.8 billion, including billions from enforcement, the latest hit to the tax agency already in turmoil.
Falsifying a Tax Return Can Cost Your Citizenship Under Trump
The extraordinary step of stripping naturalized Americans of their citizenship used to be reserved for individuals who turned out to be war criminals, genocide perpetrators, threats to national security, violent felons or, during the Cold War, communists.
State Tax Rules Should Continue Under Loper Bright, Lawyers Say
State revenue agencies shouldn’t shy away from issuing regulations on controversial matters out of fear their efforts will be challenged under the Supreme Court ruling that gutted the Chevron deference doctrine, a senior state tax lawyer said.
Tax Management International Journal
How the OBBBA’s International Tax Rule Changes Impact MNEs
Baker McKenzie practitioners analyze the new international tax provisions enacted as part of the “One Big Beautiful Bill” reconciliation legislation.
Pillar Two Tax Push Down: What Is the Old and the New?
Nathan Boidman addresses the rules, in place or being considered, for Pillar Two for the push down of taxes paid by one corporation of a group to or for the benefit of another.
Repeal of the Repeal: CFC Downward Attribution Rules Are Revised
Baker McKenzie practitioners analyze the OBBBA’s restoration of §958(b)(4) that reversed the TCJA’s repeal thereof and reinstated the prohibition on downward attribution of stock ownership under the CFC rules.
MNEs Must Manage Compliance Risk Under the Updated GIR Template
Updates to the GIR template and GIR Administrative Guidance present significant compliance challenges for MNEs, say EY practitioners.
R&D After OBBBA: The Good, the Bad, and the Modeling
John Barlow, a partner in Baker McKenzie’s Washington DC office, examines how recent R&D changes in OBBBA are having material collateral impacts on CAMT and various international provisions.
Career Moves
Paul Hastings Scoops New York Tax Partner from Kirkland & Ellis
Sherry Xie joined Paul Hastings as a partner in its global tax practice in New York, the firm announced.
Baker McKenzie Luxembourg Appoints Two Tax Attorneys as Counsel
Baker McKenzie Luxembourg has announced two appointments in its tax practice group, promoting Antonio Merino to counsel and welcoming Chiara Bardini as a new team member.
Gunster Gains Benefits and Compensation, Private Wealth Expertise
Stephen McCloskey has joined the private wealth services practice at Gunster and will be of counsel, while Isabella Sirmon has joined the tax practice group as a member of the firm, Gunster announced Monday.
Katten Adds Loren Lembo as Transactional Tax Partner in New York
Katten announced Tuesday that Loren Lembo will join the firm in New York as a partner in its transactional tax planning practice.
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