Why do quarters have ridges, and what does it have to do with taxes (and inflation!)

In my class, the very first tax law I mention, on slide two of day one, is named “An Act for Granting to His Majesty Several Rates or Duties Upon Houses for Making Good the Deficiency of the Clipped Money”. It was passed in England in 1696. It is known as the window tax, and it was a tax based on the number of windows you had in your house. In class we focus on this window tax, and I rarely mention what the tax was to pay for, specifically, “making good the deficiency of the clipped money”.  What is that?

Academic Taxtivists

President Biden released a budget on Monday that called for such things as increasing the corporate tax rate and taxing the accruals on capital gains of folks with more than $100 million in assets (the taxiverse has yet to converge on a catchy name for this tax). I am seeing many academic tax folks of all stripes, economists, lawyers, etc., weighing in, expressing their love, or hate, of these plans. At this point, mostly love. This is all well and good—in my view, society is better off if people who have very informed opinions weigh in with their opinion (as opposed to uninformed people weighing in, which also frequently happens). However...

What’s in a (tax) name?

The destination based cash flow tax, or, as it was loving referred to among the large circle of economists who loved it, the DBCFT, was, at least in the minds of it supporters, an amazing tax. But, we don’t have one. One reason, I have heard talked about among tax people, is simply because the marketing of the tax was bad—starting with the name. DBCFT does not roll off the tongue. It does not conjure up favorable images of who will pay, or not pay, the tax. It’s too technical—not named so the every-person can understand it. What we name taxes matters.  I call this phenomena optical taxation, where we pick names for taxes that conjure up images that make the tax appealing (if we want to pass it), or, make it look bad (if we want to get rid of it). Why, why the discussion around tax names?

What to do when the government has too much money?

At the beginning of the pandemic, we thought state finances would be crushed. Then, as time progressed and we understood what the pandemic would do for sales taxes, that the federal government would be shoveling money to the states, etc., it became clear that many states would not struggle financially. And, indeed, some are mulling the possibility of cutting taxes to give back the extra money they have (and the problem that some federal aid seemed to preclude cutting taxes). I was reminded of this age old problem with what to do with government surpluses recently as I was reading the April 25, 1891 edition of Punch magazine, as one does, and saw this amazing poem, and, accompanying graphic:

Is Inflation a Tax?

Tax Notes, a key practitioner publication for tax professions, recently ran an article that was headlined “Is Inflation a Tax? Some Republicans Think So.” Is it only republicans that think inflation is a tax?

Do the Girls Scouts have to pay taxes on all that cookie cash?

If you are a for profit company, or an individual, generally any income you receive, from any source, is taxable. The presumption is that everything you do is taxable. But, if you are non-profit, which is to say, you meet to requirements set forth by section 501 of the Internal Revenue Code to qualify and not have to pay taxes, then, you generally don't have to pay taxes on cash you bring in. For example, if you are a local soup kitchen and are a qualifying non-profit, and someone donates some money to help you buy soup, you don't pay taxes on that donation. But, what about the Girl Scouts? They are a non profit. But, they don't hand out soup for free-they sell cookies, and as far as cookies go, they are not cheap. Do they sell of those cookies tax free?

What does Martin Luther King Day have to do with taxes?

Martin Luther King Jr. has a lot to do with taxes, as does any interesting and important topic, person, event, or anything else. My first realization of the connection to Martin Luther King and taxes first occurred to me when The King Center, a center which focuses on helping understand Martin Luther King Jr., opened its digital archives. These archives had thousands of documents related to Martin Luther King Jr–letters he wrote, letters he received, speeches he gave, etc. While these digital archives have sadly been closed down since, when they were open, if you typed “tax” into the search bar, you got many, many results.

How many billionaires are there, and how much are they worth?

There have been recent proposals to tax the wealth, and income, of the extremely wealthy, which for whatever reason we have started calling billionaires. Many of these proposals have as a key feature the assurance that not many people will pay these taxes, because, after all, there are not that many billionaires. These taxes also come with the assurance that they will provide a lot of revenue, because, after all, billionaires have a lot of money. So, how many billionaires are there, and, how much are they worth?

Response to Avi-Yonah’s CNN Piece Advocating for Book Income Taxation

Professor Reuven S. Avi-Yonah recently published an opinion in CNN Business.¹ Here, I respectfully respond to several claims in that article.

Claim: “Corporate America has perfected the art of dodging the taxes that everyone else pays.”

Response: Sixty-one percent of individual taxpayers paid no federal income taxes in 2020. Even in non-pandemic years, this value is often in excess of 50 percent.² There are more individual non-payers than corporate non-payers. Further, the loss from corporate tax evasion is much smaller than from individuals.

Bob Dole’s tax returns: Rest in Peace Senator Dole

Bob Dole, Old Soldier and Stalwart of the Senate, Dies at 98. I just read this headline. And, the first thing that came to mind is that I have, as far as I know, the only digital version of Bob Dole's tax returns in existence in the digital version of The Tax Museum. When I was a PhD student at the University of Michigan, somehow I ran across news stories of Bob Dole releasing his tax returns as part of his campaign for president. But, Senator Dole ran for president before the wide-spread adoption of the internet, and, as a result, I could not find these documents online. I wrote a letter to the Robert and Elizabeth Dole Archives and Special Collections, and asked if they could send me the returns. They very kindly sent me a large packet of photocopies of the returns.