Research Director, Jeff Hoopes and Coauthor submit official statement to Senate Finance Committee

Monday March 29, 2021

Two weeks ago, the U.S. Senate Committee of Finance heard arguments for major tax policy changes. One of the main topics of discussion was whether to include financial accounting income in the tax base. Our Research Director, Jeff Hoopes, with Fabio B. Gaertner of the University of Wisconsin-Madison submitted a statement to the committee advocating against this change. Their argument was based on two key points: a) clear negative effects associated with taxing financial accounting income; and b) additional negative effects based on businesses’ incentives. The conclusion of their argument is succinctly summarized, “…including financial accounting income in the tax base will result in worse financial information for investors and less efficient tax collection…” Hoopes and Gaertner go on to describe more issues including: economic disadvantages for U.S.-based companies, politicization of accounting standards, and complex implementation. The two make a strong case against including financial accounting income in the tax base. We will continue to watch as our government deliberates over these major tax policy discussions.