It’s generally accepted that a progressive tax is fairer than a regressive tax, but sales and use tax regressivity persists. A common explanation for this points to administration—something like, “We don’t want to make every convenience store transaction require consumers to prove their income for the year.”
That kind of thinking is a textbook example of availability bias: We can’t readily imagine a different system, so we assume it can’t exist.
But Finland’s traffic safety record might expand one’s conception of what’s possible.
The country has about one-third the traffic fatalities per capita of those in the US. Good road planning and a focus on alternative modes of transportation contribute to this disparity, but a progressive speeding ticket program may be the most important factor.
Finland runs a “day fine” system that divides a driver’s daily income by two and applies a progressive rate to the fine, leading to whopper speeding tickets such as a former corporate director’s $103,000 payout for a 25 km/h violation. No drivers can simply “price in” the cost of being ticketed. The punishment is progressively applied so that it deters everyone on the road.
If Finland can inject progressivity into the control of traffic scofflaws, calculating daily income in real time, surely we can ease the burden of sales tax on lower-income households through a simple identification system.
Progressivity in sales and use tax is possible, and it’s coming at some point. When it does, you’ll be well informed every step of the way by the experts here at Bloomberg Tax. Who knows? It might even be pitched here first.
The Exchange—It’s where great ideas intersect.
—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
State Insights
A bill that would tax Harvard University and other Massachusetts colleges is the latest legal salvo against schools with admissions policies favoring children of alumni and donors, says attorney Matthew A. Morris.
Ballard Spahr’s Christopher A. Jones summarizes recent tax developments in Pennsylvania, including administrative guidance for applying the state’s corporate net income tax and Philadelphia’s business income and receipts tax.
With “Barbie” dominating the box office and popular culture at the moment, tax attorney Lauren Suarez looks at the Barbie lifestyle in California, which would carry a hefty sales and property tax bill if it were real.
Liz Cha and Jeremy Gove of Eversheds Sutherland summarize recent tax developments in New York, including ones involving fiber-optic broadband and the treatment of buy-sell arrangements for petroleum products.
OECD Guidance Insights
The latest OECD guidance on Amount B, which covers baseline marketing and distribution activities, is intended to make transfer pricing rules simpler. Thomas Bettge, Jessie Coleman, and Alistair Pepper of KPMG discuss whether it hits the mark.
The US Treasury Department negotiators need to secure better international protections for American companies before agreeing to the OECD’s global tax deal, says Alan Cole of the Tax Foundation.
Global Insights
Members of the Gulf Cooperation Council are introducing a range of tax measures as they diversify from oil and gas revenue. Marco De Leo of BonelliErede looks at regional developments and how these may affect foreign investors in future.
Alice Pearson of Mercer & Hole highlights some key tax areas a UK national needs to consider when moving to the US and recommends anyone in that position to leave enough time to identify tax-saving opportunities.
Phelippe Toledo Pires de Oliveira of the Office of the Attorney General for the National Treasury in Brazil explains the new concepts and procedures introduced in the transfer pricing law.
Columnist Corner
The boundary between advocacy and direct political involvement by 501(c)(3) organizations has blurred over the years. In this week’s Technically Speaking, Andrew Leahey writes that the IRS must consistently enforce 501(c)(3) limits to prevent tax-exempt groups from influencing politics at taxpayers’ expense.
Career Moves
Stephanie L. Pfaff has joined Higgs Fletcher & Mack as a partner in the tax law practice group.
James W. DeCleene and Sean A. Smestad have been promoted to partner at Michael Best in the corporate practice in Milwaukee and Chicago, respectively.
Robert Browning has joined Quarles & Brady as a partner in the business law practice group.
Nicholas J. Anderson has joined Nixon Peabody as partner with the community development finance practice in Washington.
David Padrino has been named the chief transformation and strategy officer at the IRS.
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.
- IRS revenue officers no longer will make unannounced visits to taxpayers about unpaid taxes and unfiled tax returns, ending a decadeslong practice.
- California’s beer industry is asking lawmakers to restart the release of brewer taxpayer data it received improperly for decades, but if the wine industry’s experience is any indication, most individual brewers will want to turn off the tap.
- Global rulemakers voted unanimously to make radical changes to income statement accounting, 20 years after updates were first suggested.
- As more households replace cable television for streaming media, Massachusetts lawmakers are backing a bill that would create a franchise fee for the likes of Netflix Inc. and Hulu LLC by recognizing digital infrastructure as public rights-of-way, requiring payments from the streamers.
Tax Journals
Certain best practices and ethical standards from the certified public accountant profession could greatly benefit life insurance policy issuers and policy holders alike, say life insurance advisers Barry Flagg, Dave Buckwald, and Brad Sprong.
*Note: Your Bloomberg Tax login is required to access Tax Journal articles.
Our Wish List
Back-to-school season is starting. For August, we’d welcome submissions on sales tax holidays and educational credits. We’re also seeking articles that discuss tax considerations of college tuition payments.
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): The “Barbie” movie. I can’t recommend it highly enough.
Reading
Andrew Leahey (Columnist): I recently added the “WPA Guide to Pennsylvania” to my collection, and I’ve been reading about towns and counties I didn’t even know existed. All the Federal Writers Project state guide books from the 1930s are fantastic.
Listening
Daniel Xu (Content Editor): This week, I revisited “Monoliths & Dimensions” by Sunn O))). I’m not the biggest drone/ambient music fan, but this album has such an interesting atmosphere.
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