In his race for the New York City mayoral seat, Andrew Cuomo broke out one of the most tired arguments in modern tax policy debate: If you raise taxes on the rich, they’ll all move to Florida or Texas.
But they don’t—at least not in any statistically meaningful way. The Tax Justice Network reported this past week that the much-feared UK “millionaire exodus” in response to tax hikes never materialized.
Studies have shown for years that the rich largely move for career purposes, personal reasons, or even climate. State and local tax rates are a lower priority. Higher earners may whine (and withhold campaign contributions), but they rarely walk.
Still, the narrative is useful for political cover. Politicians such as Cuomo can gesture toward “capital flight” to scare voters and protect the donor class while framing their position as commonsense governance.
New York has a housing crisis, a crumbling transit system, and a budget cyclically built around austerity. Taxing the rich isn’t class warfare; it’s sound policy when public goods are at risk. Despite worries about the supposed millionaire exodus, the real problem is the prospect of nurses, teachers, and transportation workers getting priced out of the city they serve.
If New York’s future really hinges on how much it coddles the ultrawealthy, perhaps the city has found its future mayor. But from a tax policy perspective, a mayor worth electing should advocate for the millions more people who actually make the city work.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined the Supreme Court’s recent tax-related decisions, the promotion of “sovereign tribal tax credits,” and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
GOP Tax Bill Will Hurt the Vulnerable and the Deficit: Jack Lew
Former Treasury Secretary Jack Lew says the US Senate must step up to the challenge of fixing the House budget reconciliation bill to avoid long-lasting fiscal and social damage.
Taxing Countries That Are Targeting US Companies Isn’t ‘Revenge’
Rep. Ron Estes (R-Kan.) argues that Section 899 of the House tax package is a reasonable tax policy that defends US tax sovereignty against detrimental foreign taxes.
Supreme Court’s Tax Levy Ruling Will Drive Up Litigation Costs
Chamberlain Hrdlicka’s Jasen Hanson says the Supreme Court’s 8-1 decision on a woman’s case over her tax levy could risk making enforcement challenges prohibitively expensive.
IRS Win at Supreme Court Allows Agency to Hinder Taxpayer Rights
Husch Blackwell’s Robert Romashko says the Supreme Court’s decision in Commissioner v. Zuch shows its unfamiliarity with day-to-day tax administration and makes collection due process cases risk-free for the IRS.
Supreme Court Tells States to Question Regulations—Not Religions
Stradley Ronon’s Mark Chopko says the US Supreme Court’s ruling on a state unemployment tax exemption could spur similar evaluations on the limits of legislative and regulatory language for religious organizations.
Canada’s Retaliatory Tariffs Against US Start Fight It Can’t Win
Millar Kreklewetz’s Robert Kreklewetz and David West say that Canada should pursue unilateral free trade with the US and bilateral free trade with other countries instead of imposing retaliatory tariffs.
Questionable Tribal Tax Credit Schemes Undermine Sovereignty
University of Montana law professor Pippa Browde says the promotion of nonexistent tribal tax credits is the latest example of American Indians’ unique status being exploited.
Voluntary Disclosure Is the Last Safe Door if IRS Is Weaponized
Attorney David Klasing says using the voluntary disclosure program can help those who have committed tax crimes become compliant and avoid criminal tax prosecution.
IRS Needs Billy Long to Bring Stability and Invest in Enforcement
Steve Ellis of Taxpayers for Common Sense says new IRS Commissioner Billy Long must improve leadership stability, protect and deploy modernization funds, and prioritize tax enforcement.
Italy’s Tax Authorities Target ‘Free’ Online Services for VAT
Recent tax audits in Italy have drawn attention to the VAT treatment of tech companies’ “free” digital services and whether user data is a form of non-monetary payment, CMS’ Stefano Giuliano and Marco Federici explain.
Lawyers Sitting Out Trump Fight Threaten Justice for Millions
With the rule of law under attack, lawyers must step up to defend the legal needs of everyday Americans, writes Kathleen Rubenstein, former executive director of the Skadden Foundation.
Columnist Corner
A new Texas law to combat property tax abuse in low-income housing deals is a positive step, but “its vague thresholds and potential enforcement gaps could still let developers game the system,” Andrew Leahey argues in his latest Technically Speaking column.
Using a wage-based affordability standard and requiring compliance audits before granting tax exemptions would better prevent potential manipulation of the law, Andrew says. Read More
News Roundup
Supreme Court Backs Tax Court Move to End Woman’s Levy Suit
The US Supreme Court 8-1 held Thursday that the US Tax Court properly dismissed a woman’s case over her tax levy after the IRS applied a tax refund from another year to the debt.
Ex-Rep. Billy Long Wins Senate Confirmation to Be IRS Chief
The Senate confirmed former Rep. Billy Long (R-Mo.) to serve as IRS commissioner, becoming the sixth leader to hold the job this year.
Taxpayer Data Sharing Tests Privacy Protections’ Reach
The IRS’s agreement to share data as part of the Trump administration’s crackdown on illegal immigration, coupled with novel litigation over a contractor’s leak, could push the bounds of a law banning disclosure of taxpayer information.
Treasury Warns 6,500 Telework Request Backlog Risks High Costs
The US Treasury Department faces potentially steep penalties over a backlog of remote work requests sparked by President Donald Trump’s return-to-office push, internal records show.
Tax Management International Journal
What Are Common Transfer Pricing Pitfalls in Cash Pooling?
Cash pooling is complex with a number of transfer pricing challenges, say KPMG practitioners.
How to Utilize Advance Pricing Agreements Under Dutch Law
In this fourth article of a multi-part series comparing US and Dutch transfer pricing methodologies, Patrick Beattie presents a primer on Dutch advance pricing agreements.
Career Moves
Former IRS Commissioner Danny Werfel is joining the strategic advisory board of alliant.
Patrick Reynaud joined Borden Ladner Gervais as a partner in its tax law group in Toronto.
David Baggaley was named head of tax at Clive Owen.
Lorna McGeorge joined Husch Blackwell as a partner in its financial services and capital markets industry group and as a member of its private wealth team.
If you’re changing jobs or being promoted, send your submission to TaxMoves@bloombergindustry.com for consideration.
To contact the editors responsible for this story:
Learn more about Bloomberg Tax or Log In to keep reading:
Learn About Bloomberg Tax
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.