Japan has found an innovative and elegant approach to fostering regional economic development in rural areas—the Furusato Nozei, or “hometown tax.”
The hometown tax system allows taxpayers to redirect some of their income tax to a region of their choice in exchange for local goods or services from that region. The program was conceived to reduce the financial imbalance between urban and rural areas, especially in education.
The fluidity of determining one’s hometown has led to new online marketplaces and a cottage industry for rural areas that seek to have the best incentives for potential “donors.” The program has worked, at least nominally. It only started in 2008 and saw a record-setting total donation amount in 2022 with 965.4 billion yen (about $6.5 billion) contributed to all regions.
The system encourages local policymakers to attract out-of-town donations and convince residents to choose their current location as their hometown. It also directly connects taxes paid with services or goods received in the minds of taxpayers, which encourages compliance.
The tax world goes beyond business deductions and personal income tax filing deadlines—it encompasses aspects of public policy, political science, economics, sociology, and law. Japan’s hometown tax is one instance of myriad novel and experimental policies that leverage theories across multiple disciplines.
Here at Bloomberg Tax, we endeavor to bring you expert opinions that meticulously examine these policies, offering you a global perspective on tax strategies and developments.
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State Insights
As Massachusetts moves to cash in on the growth of streaming networks, state lawmakers should be aware of the string of legal victories Netflix and Hulu have had against similar measures, says Avalara’s Toby Bargar.
Federal Insights
Cherry Bekaert’s Deborah Walker looks at how 2023 regulatory changes in the retirement space have affected plan administration and how firms can minimize the need for audits.
Akin Gump Strauss Hauer & Feld’s Olivier De Moor reviews ways hedge fund sponsors and investors can respond to the IRS’s plans to intensify audits of high-income earners and complex partnership arrangements.
FORVIS’s Kristin Balding Gutting, ERC Provider’s Sunshine Chapman, and Akerman’s Joshua Hamlet offer their perspectives on the IRS’s announcement that it will pause processing new employee retention claims.
The IRS may limit—or even repeal—a tax provision that allows homeowners to exclude income from 14-day property rentals in response to a recent US Tax Court ruling, say Marcum’s Jo Anna Fellon and Loredana Scarlat.
Companies can improve shareholder value and bolster climate-friendly initiatives by using incentives in the new federal tax-and-climate law to invest in tax credits, say Benjamin Alderton and Adam DeZego of Moss Adams.
PwC’s Nolan Ogden details how tax professionals are embracing artificial intelligence and explains how and why tax practices should adopt a holistic and responsible approach to AI.
Global Insights
Alice Pearson of Mercer & Hole explains how exposure to UK tax may continue for British expatriates living in the US after UK residence has ceased, and what tax issues they should consider.
Columnist Corner
The average US home sale price has climbed 47.5% in the past couple of years, something felt acutely by prospective home buyers. In this week’s Technically Speaking, Andrew Leahey shares how artificial intelligence and other tools can improve the accuracy of property tax assessments and make home ownership more affordable.
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
Elizabeth Young has joined Holland & Knight as a partner in its tax credit syndication group in the Washington, D.C. office.
Julia Parrish has joined Barley Snyder in its York, Pa., office.
Marc Noël has joined Osler as a partner in the national tax practice in Ottawa, Canada.
Joe Urwitz has joined Crowell & Moring as a partner in the tax group.
Jason Faust has joined McDonald Hopkins as counsel in the tax and benefits practice group in Chicago.
Tim Cobb has joined Centri Business Consulting to lead the new tax advisory practice.
Silvia Chavez has been promoted to audit senior at Grau & Associates in Boca Raton, Fla.
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 may furlough some workers if the government shuts down later this month—a deviation from early conversations and last year’s contingency plan, according to the president of the union for IRS employees.
- New York and California Republicans are plotting a way forward while the House GOP tax package remains stalled over the state-and-local tax deduction cap.
- The threat of a massive tax is enough to push drugmakers such as Boehringer Ingelheim Pharmaceuticals, Inc. and Novartis AG to comply with the Biden administration’s landmark drug pricing law and negotiate with Medicare.
- The North Carolina General Assembly advanced a long-delayed budget that accelerates cuts to the state’s personal income tax and modifies the franchise tax.
Tax Journals
Tax Management International Journal
Notice 2023-55 provides helpful temporary relief from applying certain provisions of the foreign tax credit regulations, but many important questions remain, says Amanda Pedvin Varma of Steptoe & Johnson.
Tax Management Memorandum
An appellate court affirmed that the legal fees a maker of a new generic drug pays in defending against patent infringement claims arising from its application to the FDA don’t facilitate approval and need not be treated as a cost of obtaining an intangible asset, BDO’s James Atkinson reports.
*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
Andrew Leahey (Columnist): Season 1 of “The Amazing Race,” which aired in 2001. What I’ve found fascinating is how unrecognizable the haircuts and clothes of that era are to the modern eye.
Reading
Melanie Cohen (Content Editor): “Tastes Like War,” a memoir about a woman’s search for the roots of her mother’s schizophrenia—through food.
Listening
Rebecca Baker (Editor-at-Large): The entire “Cosmic Thing” album from the B52s. “Love Shack” is the most famous song, but the lyrics of “Dry Country,” the bass line of “Channel Z,” and the energy of the title track are worth repeat listening.
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