Taxation

In the coming months, parents will receive hundreds of dollars as the Internal Revenue Service begins paying out the Advance Child Tax Credit, providing financial support to families and combating child poverty. Yet one significant group will be left out: parents of undocumented and certain non-citizen children.

Back of the envelope calculations indicate significant revenue can be raised if California conforms to GILTI.

The California Legislature is considering a bill (AB 71) that would subject 50% of a category of income derived from federal tax law, known as Global Intangible Low-Taxed Income (GILTI), to California’s corporate income tax. In short, GILTI represents an attempt by the federal government to estimate, by formula, how much income — really earned in the US — has been shifted to low-tax jurisdictions to avoid US tax.

California’s tax system is upside down at the top: Millionaires pay higher rates than billionaires. California’s wealthiest residents — who have partaken in a $4-trillion increase in billionaire wealth in the last year — contribute next to nothing to state coffers. Meanwhile, many less fortunate Californians are suffering.

Help may be coming at long last from the federal government, but California local governments are likely to face fiscal challenges as a result of the pandemic and recession for a long time. After all, many of those local governments faced major issues before the current crisis.

A year into the COVID-19 crisis, the gap between corporate profits and economic security for the average American is wider than ever. Since March 2020, 45 out of 50 of America’s largest companies have made a profit and in some cases the profit has been quite substantial. 

COVID-19 has been catastrophic for public transit. Plunging fare and tax revenues are forcing drastic cuts. San Francisco’s transit agency could lay off more than one in five workers.

The new tax bill, “Tax Reform 2.0,” is here, and it makes permanent the $10,000 cap on the state and local tax deduction (SALT) created by the Tax Cut and Jobs Act (TCJA) in December 2017.

The United States used to tax multinational corporations (MNCs) on the basis of their worldwide income, except that most foreign source income would only be taxed when actually repatriated to the United States. This structure naturally created considerable incentive to strip income out of the United States and then not to repatriate it.

Some first impressions, including pondering how this decision intersects with NCAA v. Murphy

In the end, not a single justice would stand up for the rule of Quill, which rule was that a state can only impose a use tax collection obligation on a vendor if it has a physical presence in the state. All the justices agreed that it was the wrong rule, even apparently, when first imposed in 1967. So then why was this a 5–4 decision?

In Wayfair, the Supreme Court overturned the bright-line physical presence rule imposed by Quill. A state can now require an out-of-state vendor to collect the use tax even if that vendor does not have a physical presence within the state. The underlying standard governing when states can impose a use tax collection obligation remains the same: there must be a “substantial nexus.” But what constitutes a substantial nexus? The Court does not give any general guidance, but does make it clear that this standard was satisfied in this case.