Curated by Daniel Xu
Ongoing legislative developments in Maine may suggest a path forward for other states feeling the pinch of diminished revenue.
The Maine legislature is considering a tax on video streaming services for using the public utility infrastructure—in other words, taxing Netflix Inc. for sending content over the cable and phone lines. If enacted, the bill would let individual municipalities choose whether to implement the tax.
There is merit to the argument for taxing content providers whose use of public infrastructure is a foundation of their business. A tax-based model offers a more nuanced and equitable solution than a simple fee.
The tax theoretically could make a streaming giant indirectly contribute to the upkeep of a municipality’s public utilities in an amount that correlates with its usage (as determined by profitability). Despite consumer protections to prevent companies from shifting the tax burden, money is fungible—subscribers will bear at least part of the economic incidence of the tax.
A broader, multistate approach wherein other states follow Maine’s lead would help level the playing field, ensuring that no single state or municipality benefits from a cost-offset to the exclusion of others. It also would increase the likelihood that at least part of the cost would be paid out of streaming companies’ coffers rather than customers’ wallets.
State tax revenue issues have been well-documented. Tapping streaming providers to help maintain public utilities in states where they’re funded by tax revenue is a pragmatic and forward-thinking solution.
Here at Bloomberg Tax, we aim to amplify the interesting policy solutions and dissect innovative tax proposals. We strive to provide insightful analysis by industry experts that sheds light on how these new ideas can address longstanding questions.
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State Insights
A New York bill, if enacted, would allow developers to build more housing and facilitate job creation, Herrick’s Brett Gottlieb and Patrick O’Sullivan Jr. say.
Federal Insights
Conservation easements are in the IRS’s crosshairs following the recent conviction of a real estate developer. Those seeking green tax breaks must carefully avoid conflicts of interest and do thorough due diligence, Taft Law’s Sonya Jindal Tork says.
Ellen McElroy and Michael Resnick of Eversheds Sutherland explain steps businesses can take to review treatment of research and development expenditures.
Morgan Lewis’ Casey August, Jane Accomando, and Levi McAllister examine developments on carbon emission reduction and reporting that will shape how US companies approach sustainability goals in 2024 and beyond.
Michael D’Addio of Marcum says a pending tax bill’s provisions could reduce tax burdens for many businesses and families, but the IRS’s ability to facilitate the changes will determine the impact.
Tax pros must hold themselves to a tough ethical standard as tax laws grow more complex and enforcement becomes more intense, tax attorney Josie Harris-Walton says.
Fringe Professional Development’s Katie Aldrich provides concrete tips to law partners on how to elevate associate feedback.
Stout’s Jerry Schwartzman, Michael Krakovsky, and Adam Jorgensen review the necessary tax considerations for liability management transactions related to Chapter 11 bankruptcies.
Deloitte’s Amy Park explains how companies will be affected by new accounting rules governing crypto assets.
Tax firms and departments that prioritize culture and talent development will flourish as the profession changes, former Eli Lilly tax executive David Lewis says.
Global Insights
Crowe’s Emma Locken assesses strategic and practical challenges businesses face with implementation of the Pillar Two global minimum tax.
Columnist Corner
Nonprofit hospitals spend a fraction of their revenue on charity care, despite receiving extensive tax breaks, Andrew Leahey says in his Technically Speaking column. To improve accountability, Leahey calls for increased financial transparency requirements for nonprofit hospitals and the use of artificial intelligence to eliminate areas of fund misallocation.
Career Moves
Julia Duquette has joined Sikich as partner in the federal audit practice.
Rodrigo Gómez Ballina has been appointed the partner-in-charge of Jones Day’s Mexico City office.
Stephen Jones has joined Freeths as a partner in Birmingham, England.
Robert Dever has joined Pinsent Masons as a partner to lead the tax law practice in Dublin.
Nina Siewert will join Reed Smith as a tax partner in the global corporate group in Frankfurt.
Amanda Afton Martin has joined Kemp Klein as a shareholder who will be involved in the estate planning, real estate, probate and trust administration, business planning, and tax planning practice groups.
If you’re changing jobs or being promoted, 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 (login required).
- Senate Republicans say they still have reservations about the bipartisan tax deal, one day after the House passed the legislation by a large majority.
- President Joe Biden announced three new judicial nominees to the US Tax Court, which, if confirmed, would cut the number of unfilled vacancies on the court’s bench in half.
- Companies using an OECD tax compliance program assessed risks faster than with other legal tools that cut down on disputes between businesses and authorities, according to statistics released.
- What do a preschool, a recycling facility, a popular kombucha maker, and a famous hot sauce company have in common? They are all asking California tax authorities to relax penalties tied to the state’s elective pass-through entity tax.
Tax Journals
(Bloomberg Tax login required)
Tax Management International Journal
While Congress is reexamining the de minimis customs rules, US importers should prepare for potential changes and optimize their operations and compliance programs in conformity with the evolving landscape, KPMG’s Luis Abad, Donald Hok, and Noemi Campos Santana say.
MNEs deciding whether to migrate certain service-intensive functions to Mexico in order to qualify for the 0% VAT rate should perform a case-by-case analysis to determine where the place of “enjoyment” of the particular transaction occurs, KPMG’s Armando Lara Yaffar, Michel Sánchez O’Sullivan, Quyen Huynh, Tom Zollo, Douglas Poms say.
Our Team
We talk about tax a lot. But you would hear much more 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
Katharine Butler (Acquisitions Manager): “Anatomy of a Fall,” a French film that is part courtroom drama and part family dynamics. It’s good, but 2 1/2 hours is too long!
Reading
Melanie Cohen (Content Editor): Percival Everett’s “The Trees,” a murder mystery that takes place in current times at the site of Emmett Till’s murder.
Listening
Andrew Leahey (Columnist): Music by a band called the Offline. They make instrumental, pseudo-cinematic soundtrack music that’s a great background theme for anyone who wants to elevate what they’re doing to feel like they’re in a thriller.
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