21st Century Taxation

tag:blogger.com,1999:blog-21357881334269716142009-12-28T08:39:03.926-08:0021st Century TaxationThis blog by a tax professor is about tax reform and moving tax systems into the 21st century. It focuses on tax system weaknesses, critiques selected reform proposals, and offers new ideas, with an emphasis on federal, California and multistate matters. Additional information - articles, reports and links, can be found at the 21st Century Taxation website (see link below right). I welcome your comments.Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.eduBlogger156125tag:blogger.com,1999:blog-2135788133426971614.post-80083537261443064482009-12-28T07:30:00.000-08:002009-12-28T08:37:50.673-08:00Taxes and Health Care Bills - Considering Tax Policy

With the Senate passing health care legislation on December 24 and the House having done so on November 7, we now have 2 different health care bills that Congress will have to meld into a single bill. Each version has a variety of tax provisions. I'll note a few of them here with some analysis on how they stack up against principles of good tax policy.First, the list of tax provisions and their

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-89558512019152999012009-12-27T17:06:00.000-08:002009-12-28T07:30:06.203-08:00California State-Local Fiscal Relationship

This month, the Legislative Analyst's Office issued a report - Ten Events That Shaped California State-Local Fiscal Relations (12/15/09) for a hearing of the Senate and Assembly Select Committees on Improving State Government (Assembly page + Senate page). The 10 events:1910 Separation of Sources Act1930s New Deal1952 Proposition 181972 SB 901978 Proposition 131979 AB 81991 Realignment1992 and

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu1tag:blogger.com,1999:blog-2135788133426971614.post-57707000453752635982009-12-26T10:05:00.000-08:002009-12-26T11:04:54.108-08:00Tax Policy - Minimizing the Tax Gap

The "tax gap" is the difference between taxes owed and taxes collected. The amount not collected is due to both intentional and unintentional errors. Unintentional errors can be due to inadequate recordkeeping, posting errors and confusion over the law. Intentional errors include purposefully omitting income from one's return, and claiming deductions and credits one is not entitled

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-22213679179969203502009-12-24T11:51:00.000-08:002009-12-24T13:08:14.699-08:00Use Tax - New Attention, Old Ideas and How to Track

The use tax - despite news reports and a line on most state income tax returns for it, remains a mystery to most people. Ask anyone if they have paid their use tax and most will likely ask what a use tax is, a few will laugh as if it is not an important tax and a few will say that they have paid it. [More info on the use tax - here.]I was quoted in a recent LA Times article on the new California

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-4839151800801548722009-12-23T04:54:00.000-08:002009-12-23T05:34:32.384-08:00Australian Tax Reform

Australia’s Future Tax System Review Panel formed in May 2008 released its final report to the Federal Treasurer on 12/23/09 (ABC News). The report won't be made public until 2010.Per documents on the Panel's website, the review of the tax system was extensive and over 1,000 public comments were received. The Panel's website notes that its objective was to create"a tax-transfer structure that

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-58741179680824240482009-12-18T12:37:00.001-08:002009-12-18T12:56:48.463-08:00Bottled water tax proposed in Michigan

The Lt. Governor of Michigan has proposed a 10 cent per bottle tax on water to help fund education (Lt. Governor John Cherry press release of 12/14/09). Per Lt. Governor Cherry, it makes sense to tax one resource to fund another (Mlive.com 12/14/09). Is this a good idea? Based on principles of good tax policy and budgeting - no.Equity - why a tax on bottled water and not other bottles or other

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-19931116014061391492009-12-15T09:45:00.000-08:002009-12-15T10:18:12.923-08:00Corporate Tax Reform - options, prospects and issues

I've written frequently about the status of, need for and possibilities for reforming the corporate income tax. The 12/7/09 edition of Tax Notes has a wonderful, short article on this topic by Marty Sullivan - "A Hitchhiker's Guide to Corporate Tax Reform" (p. 1043) (also on Lexis-Nexis and excerpt here). The author notes four types of possible reforms:Broaden base and lower rate of existing

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-84599644694703239492009-12-14T22:49:00.000-08:002009-12-14T23:04:52.200-08:00Iowa to review tax credits

On November 19. 2009, Iowa Governor Culver called for state tax agencies overseeing tax credit programs to review them - all 30 of them (click here for press release). The directors of these agencies "will then serve on a panel to review the programs and submit a report to the Governor addressing oversight, accountability, transparency, public reporting, cost-benefit, and which programs should be

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-82850858134699116912009-12-12T12:45:00.000-08:002009-12-12T12:48:40.600-08:00Lowering Corporate Tax Rates

Despite a few years of various elected officials and business groups noting that the US corporate income tax rate is surpassed only by the rate in Japan, the rate remains unchanged.I've got a short article from the AICPA Corporate Taxation Insider on the background and prospects for lowering the rate. It includes a brief summary of a few proposals offered to lower the rate.What do you think

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu1tag:blogger.com,1999:blog-2135788133426971614.post-78545154209579468002009-12-10T18:57:00.001-08:002009-12-10T19:03:22.861-08:00Interesting Tax Reports of 2009

Every year, the federal governments issues lots of interesting reports. They are from the GAO, CBO, Joint Committee on Taxation, Treasury Inspector General For Tax Administration (TIGTA), National Taxpayer Advocate, and Congressional Research Service. It is far to much to read - but hopefully, Congress is reading them because many point out problems in the law and often have suggestions on how to

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-9730573890915662482009-12-08T08:46:00.000-08:002009-12-14T23:11:08.710-08:00Temporary or Permanent - Which Is Better?

The Joint Committee on Taxation notes that 73 provisions in the federal tax law expire at 12/31/09 (JCX-20-09). These include: Personal tax credits allowable against AMT Increased personal exemption amount for AMT Additional standard deduction for state and local real property taxes Above-the-line deduction for qualified tuition and related expenses (§222) Exclusion of unemployment compensation

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-81559514176870451952009-12-05T23:10:00.000-08:002009-12-07T15:46:12.649-08:00Sales and Use Tax Collection and the SSUTA

Perhaps we'll see Congress reintroduce the streamlined sales tax bill that would allow states that have simplified their sales tax to require remote (out-of-state) vendors to collect sales tax from customers in the state. The bill in the 110th Congress was H.R. 3396. The Multistate Tax Commission (MTC) has a draft of legislation on its website - here. This would be a significant benefit to states

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-89118779674834962192009-12-01T10:20:00.000-08:002009-12-01T11:37:55.063-08:00Obama Tax Task Force to Miss December 4 Deadline

President Obama's Tax Task Force was supposed to issue its report on Friday 12/4/09. Paul Volker, Chair of the task force has announced that the report will be delayed. He notes that they received over 500 comments and had to cut off submissions due to the 12/4 deadline. The comment page has been re-opened (see above link).This is not surprising. They did not have much time and had a lot to

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-87136097213614462272009-11-27T03:39:00.000-08:002009-11-27T03:59:02.061-08:00Missouri to Examine Tax Credits

A recent post noted a proposal in Oregon to add sunset dates to many tax breaks in order to bring some scrutiny to them which otherwise does not exist as it would if they were instead budget line items. Another post noted a proposal in Florida to review all of the sales tax exemptions and the exclusion for services.And a new one - there is a proposal in Missouri to examine all tax credits. In a

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-45413393229170264972009-11-25T14:13:00.000-08:002009-11-25T14:56:17.291-08:0021st Century Expectation for the IRS - Health Care Enforcer?

Some aspects of the complicated health care legislative proposals have been in the news in the past few months, but it seems that little attention has been paid to some of the tax provisions. Certainly, we should all be used to tax provisions designed to modify behavior. But what about the health care proposals that impose new duties on the IRS? Is this what we expect tax agencies to be doing now

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-23299373563325728312009-11-24T06:13:00.000-08:002009-11-24T06:33:14.061-08:00Costs of Reducing Greenhouse Gas Emissions

The CBO released an issue brief on 11/23 - The Costs of Reducing Greenhouse-Gas Emissions (also see the CBO Director's blog entry on this which has links to several other CBO reports on this topic). The report provides some guidance on the costs and the challenges of estimating them.The report states that market-based approaches, such as cap-and-trade allowances and taxes, are likely to be less

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-1034049160210132012009-11-21T10:17:00.000-08:002009-11-21T10:50:45.075-08:00Florida Idea for Modernizing its Sales Tax

All tax systems have exemptions, exclusions or special rules of some type. Often they are enacted because they seem important at the time. However, if enacted without an expiration date, they can easily remain forever even if no longer needed. For example, many systems have some type of tax break for seniors. Decades ago, many seniors were poor. However, that is not the case today so any system

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-21520309301002339042009-11-19T07:21:00.001-08:002009-11-19T07:49:38.495-08:00California's continuing budget shortfalls and appropriate tax changes

On November 18, 2009, the California Legislative Analyst's Office released a report - California's Fiscal Outlook: The 2010-11 Budget. The LAO projects an upcoming budget shortfall of about $21 billion.In addition to more spending cuts, it makes sense to also consider this the time to address unnecessary spending that is buried in the tax law. For example, why should California continue to allow

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-33715646127443765142009-11-16T15:45:00.000-08:002009-11-16T16:10:11.956-08:00Software and Income Tax Nexus

Companies that transfer software to customers that are not in the same state and the software company face issues as to whether income tax is owed in the state where customers are located. Nexus guidance of PL 86-272 only applies if the transaction involved the "sale" of "tangible personal property." Software transactions generally challenge both of these terms. That is,Software is typically "

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-57809271493604102302009-11-14T21:39:00.000-08:002009-11-24T06:13:03.408-08:00Need for Penalty Reform at Federal Level

There are about 130 civil penalties in the Internal Revenue Code. That seems like far too many to me. Too many penalties can cause them to not be as effective - people can't possibly know of them all - including Revenue Agents. This is an area that has been studied extensively over the past 12 years, but no actions have been taken.I've got a short article that notes the numerous studies on

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-38338010762135040552009-11-11T13:24:00.000-08:002009-11-15T11:00:40.367-08:00Tax Reform Reruns - What Will Change This Time?

On December 4, 2009, President Obama's tax reform group is to issue its report. It is not intended to include recommendations for major reform, but to address simplification, the tax gap and corporate "loopholes." Yet, it could easily be a starting point for larger scale reforms. Last year the Senate Finance Committee held hearings in anticipation of reform and Congressman Rangel introduced H.R.

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu1tag:blogger.com,1999:blog-2135788133426971614.post-6973257178430118832009-11-07T13:03:00.000-08:002009-11-07T13:04:47.044-08:00Health care reform and our tax law

Health Care Reform Needs to Reach the Buried TreasureMuch of the current health care debate is about how to provide coverage to everyone. Current reform proposals would cost about $100 billion annually and will drive up deficits for years. Meanwhile, buried in our tax system are billions of dollars of health care benefits that go to a select group. Why is there no reform plan with a smaller price

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-48534052158351474712009-11-04T20:45:00.000-08:002009-11-04T21:02:21.321-08:00Changing nature of work and technology

I've written about this a few times before* and hope to someday (soon) complete a more thorough analysis of economic, social, technological and environmental trends and how they illustrate where our tax laws are out of date and how we might change them to make the most of current technologies and ways of doing business.I saw a short video today released by the AICPA to recruit young people to

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu2tag:blogger.com,1999:blog-2135788133426971614.post-58738215646348251902009-10-29T19:15:00.000-07:002009-10-29T19:21:20.610-07:00More on the BNRT and its place in tax reform discussions

I haven't heard much discussion lately about the business net receipts tax (BNRT) proposal offered by the California Commission on the 21st Century Economy. I don't think that means it is over - perhaps there are some legislators and their staff taking a closer look. I think it is possible that other states might be taking a closer look. While I am doubtful that any state will enact such a tax

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0tag:blogger.com,1999:blog-2135788133426971614.post-35942800984639522782009-10-26T23:28:00.000-07:002009-10-26T23:40:32.296-07:00Michigan Again Considering Sales Tax on Services

In 2007, Michigan enacted law to apply its sales tax to selected services. However, the law was repealed on the day it went into effect. Legislators created an business tax to replace the expected revenues. For more information on that, see my 12/8/07 post.In October 2009, legislation was introduced to repeal the MBT surcharge and apply the sales tax to services. [HB 5527, HB 5528 and HB 5529]

Professor Nellenhttp://www.blogger.com/profile/03288632402197167948anellen@sjsu.edu0