Week in Insights: Tax Allocation Knowledge Would Shape Priorities

Curated by Daniel Xu

Tax day is finally and mercifully behind us. But with many Americans crunching the numbers and cutting checks to the IRS, it seems like as good a time as any to look at some of the big-ticket items paid for with our 2023 tax dollars.

Each year, the National Priorities Project, a budget research organization, releases a report outlining where the average taxpayer’s tax liability was allocated. The report shows that this year, $1,748 of each’s person’s liability was put toward Pentagon contractors, $4,308 was allocated to Medicare and Medicaid, and $346 was spent on K-12 education.

These figures depict a nation that prioritizes expenditures on health care and defense and allocates comparatively modest amounts to education. The strategic choices steering the nation’s financial resources reflect some combination of the needs and values of US society.

While it is trite and simplistic to argue we simply should spend more on education, bringing tax expenditures into the public discourse might be a useful exercise. If more voters knew where their tax revenue was being spent in a real dollar sense, perhaps we would see a shift in priorities.

Imagine if every taxpayer were tasked with writing a separate check for each expenditure. Might we want to know more about the identity and directives of the Pentagon contractors? Would most of us favor devoting more money to education and looking at ways to reduce health-care costs? The way information is packaged can be as important as the information itself.

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A classroom in Nevitt Elementary School in Phoenix, on Oct. 26, 2022.

Photographer: Olivier Touron/AFP via Getty Images

State Insights

BW Arpeggio’s Bruce Wood reviews the sunset of the SALT cap, saying businesses should look to experienced estate tax appraisers.

Howard University’s Jean Wells says government, retail, businesses, and the unhoused could benefit from D.C.'s office property tax plan.

Federal Insights

McCombs Schools of Business’ Lillian Mills reviews government grant disclosures for businesses, saying accounting standards should make assistance transparent.

Hofstra’s Jack Castonguay examines the PCAOB’s plan for more oversight, saying private equity investment in accounting firms is at the center of the issue.

Mazars’ Craig Stern assesses commercial real estate challenges, noting the $929 billion deadline brings tax snags for borrowers and lenders.

Holland & Knight’s John Hoover questions US efforts to target corporate jet use, saying such travel supports job creation and related tax laws are already complex.

Stinson’s Krista Larson advocates for well-being discussions, saying law firms should fold wellness activities and awareness into other meetings.

Global Insights

Baker McKenzie’s Amanda Worcester Martin and Eric Torrey assess the IRS’s new advance pricing agreement report, saying that APA processes are improving despite potential headwinds.

Columnist Corner

Open-source software’s wide use in corporate and personal settings shows the benefits of attracting skilled developers to create and maintain it, Andrew Leahey writes in his Technically Speaking column.

Granting tax credits to open-source developers would increase software quality and oversight, Andrew says, adding that it would also recognize the social value “such projects and their contributors play in advancing technology, education, and access.”

Career Moves

Patricia McCarvill has joined Taylor Wessing as a tax partner in Dublin.

Matthew A. Mantle has joined Dentons’ tax practice as a shareholder in the Birmingham, Ala., office.

Courtney Tawresey has joined Polsinelli as a shareholder in the tax credit finance practice in the Dallas office.

Stephen Kerrigan has been appointed as a tax partner at UHY Hacker Young Manchester.

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).

• The IRS has provided a waiver for penalties for underpayments of the corporate alternative minimum tax, in guidance released the day penalties would have started accruing for many taxpayers after a 2023 penalty waiver ended.
• New York lawmakers agreed to the most sweeping changes in New York housing policy in years in a $237 billion budget deal, Gov. Kathy Hochul (D) said.
• Helping multinational companies comply with the 15% global minimum tax is a mammoth, all-hands-on-deck task that requires coordination within top accounting firms and can’t be accomplished by their tax departments alone.
• The Australian Tax Office failed to meet targets to conduct assurance reviews of major taxpayers’ use of transfer pricing, the national auditor office said.

The central business district skyline from the suburb of Balmain in Sydney, on March 11, 2024.

Photographer: Lisa Maree Williams/Bloomberg via Getty Images

Tax Journals

(Bloomberg Tax login required)

Tax Management International Journal

The Delhi Tribunal rejected application of the virtual service permanent establishment concept, Deloitte Haskins & Sells, India’s Vishal Palwe, Rukhshana Patwa, and Simran Joshi say.

Christos A. Theophilou of STI Taxand analyzes a Polish legal dispute over cross-border licensing and its transfer pricing implications amid evolving laws.

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