As anyone who’s tried to sleep early on a summer night can sense, fireworks have exploded in popularity in the last few years. Consumer fireworks revenue nearly doubled from 2019 to 2020 and increased 130% from 2019 to 2022.
Alabama, Alaska, Georgia, Indiana, Michigan, Pennsylvania, Texas, and West Virginia either have a separate statewide excise tax on fireworks sales or allow individual localities to impose their own. It’s easy to be cynical and see the taxes as money grabs, but fireworks are an excellent teaching example of using tax policy to internalize an externality.
For instance, I may enjoy setting off Roman candles, bottle rockets, and those ones that spin around and make everyone on the patio jump to keep their ankles from getting singed. But for my neighbors, they’re a nuisance.
Using fireworks is an activity that an excise tax captures and compensates society for what otherwise would be an uncompensated imposition, or externality. My fireworks make a whistling and crackling ruckus, but I compensate the people around me through contributions to the public fisc.
So the next time you’re preparing to turn your beach barbecue into the National Mall fireworks show in Washington, remember that even if you’re not thinking about the tax implications of everyday life, we at Bloomberg Tax are. Our insightful analysis and commentary is helpful all year long—no snaps, crackles, or pops about it.
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State Insights
Wisconsin’s repeal of its business personal property tax will ease financial burdens and tax compliance, but practitioners should watch for potential sales or income tax increases in the future, says Luke Lucas of Berkowitz Pollack Brant.
AB FinWright’s Rachel Wright, Abraham Finberg, and Simon Menkes share how cannabis businesses in New York City can prepare for the likely passage of a bill allowing for more tax benefits in line with the state.
Federal Insights
Holland & Knight attorneys James Dawson, Chad Vanderhoef, and Alexander Olama discuss the fallout of the US Supreme Court’s refusal to hear arguments in a case that sought to define the standard for willfulness or recklessness in financial reporting.
Absolving tax regulatory actions from OIRA review is a blow for public transparency and a setback for those who seek federal accountability, says University of Minnesota Law School Professor Kristin E. Hickman.
Global Insights
Aiki Kuldkepp of Grant Thornton explains the EU reform proposals and what steps importers and traders would need to take to prepare for the proposed measures.
Osler’s Peter Macdonald, Amanda Heale, and Kaitlin Gray review proposed changes to Canada’s transfer pricing rules, noting that a lack of clarity raises questions about their potential impact.
Simon Akozu and Zoe Barnes of MinterEllisonRuddWatts explain recent developments in taxation of high-net-worth taxpayers in New Zealand and the key implications for New Zealand trusts.
US companies operating in Chile will see tax rate reductions and other benefits when a tax treaty recently ratified by the US Senate enters into force, says Anne Gordon of the National Foreign Trade Council.
Tom Kwon, Steve Minhoo Kim, and Tae Hwan Kim of Lee & Ko look at South Korea’s recently enacted Pillar Two rules and discuss some significant implications for foreign multinational enterprises operating there.
Commentary
An OECD regulation that allows for new taxation of multinational companies will uniquely harm US businesses, and the Biden administration is doing nothing to stop it, say Reps. Randy Feenstra (R-Iowa) and Ron Estes (R-Kan.).
Tax Journals
In a Tax Management International Journal analysis, Nathan Boidman and Peter Glicklich of Davies Ward Phillips & Vineberg discuss H.R. 3665, proposed legislation introduced on May 25 in the House of Representatives. If adopted, it could impose retaliatory taxes (and possible future trade and other sanctions) on citizens and companies from countries that adopt the OECD-sponsored Pillars One and Two.
Individuals who claim abandonment or worthlessness losses for cryptocurrencies and other digital assets typically will not be able to deduct those losses, Libin Zhang of Fried Frank reiterates.
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Columnist Corner
New Jersey has announced a 50% property tax reduction for homeowners age 65 and older. Andrew Leahey writes that such targeted property tax relief creates a tax policy sliding puzzle and benefits senior citizens at the expense of families with children through zoning restrictions.
Career Moves
Sam Guthrie has joined Akin Gump Strauss Hauer & Feld as a tax partner in the Washington office.
Melissa Muskat has joined Aird & Berlis as a partner and member of the municipal and land use planning group.
Davis Polk & Wardwell has named Dominic Foulkes as a partner with the tax practice in London.
Olivier Dal Farra has been promoted to partner in the tax practice group at Baker McKenzie Luxembourg.
Spotlight
This week’s Spotlight is on Tiffany Watson, the CEO of All Aboard Financial, a virtual accounting and financial consulting firm based in Tampa, Fla. Watson works with a wide range of clients, including small businesses, corporations, and high-net-worth individuals, and has appeared on local news programs as a tax expert.
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.
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- Tax and accounting firms are increasingly embracing generative artificial intelligence for some of their operations, but regulatory and ethical hurdles are slowing adoption.
- Puerto Rico’s ambitions to accelerate new construction and investment in designated low-income communities with local opportunity zone incentives are still lagging more than five years after a federal program was put in place for such projects.
- The map depicting US state strategies for taxing multinational companies has changed dramatically in the last six weeks, suggesting that states are divided on the best tax approach for businesses that move profits through offshore subsidiaries.
- Brazil’s lower house approved a proposal to overhaul the country’s labyrinthine tax rules, a goal that has eluded lawmakers in South America’s largest nation for decades.
Our Wish List
With 46 states starting their fiscal year on July 1, we’re looking for Insights that focus on what tax professionals should know about the most recent changes in state and local taxes. We’d also like pieces about the shifting landscape for state digital taxes.
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): “Wild Oats,” a 2016 movie with Shirley MacLaine and Jessica Lange as retirees who come into a surprise $5 million and go on a once-in-a-lifetime vacation. Silly and a bit predictable, but very entertaining.
Reading
Melanie Cohen (Content Editor): “Sea Change” by Gina Chung, about a woman who works at an aquarium in California who’s working to heal after facing loss and heartbreak.
Listening
Andrew Leahey (Columnist): My summer playlist is in full swing and has been anchored for two years straight by Easy Life’s album “Life’s a Beach.”
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