California Should Change the Definition of “Capital Outlay” in Order to Create More Room Under the State Appropriations Limit.(The Legislature Can Do So By Majority Vote.)Proposition 13, passed in 1978, permanently cut California property taxes and made it more difficult to raise other taxes. Proposition 4, passed in 1979, placed a cap on the size of
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(Critical) Observations on the Ohio District Court Decision Enjoining the Rule Limiting the Use of…
(Critical) Observations on the Ohio District Court Decision Enjoining the Rule Limiting the Use of ARPA Relief Funds Provided to StatesThe decision goes to great lengths to reach an implausible result and does not seem fully aware of the nature and extent of existing federal-state entanglements as to budgeting.Ordinarily, the federal government provides funding to the…
GILTI and California: Show Me the Money Edition
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…
Elon Musk and California’s Income Tax
The tax lesson illustrated by the Elon Musk saga is not what you might think.By David Gamage and Darien ShanskeElon Musk has left California, or so he says.[1] And so cue the gnashing of teeth about California’s relatively high top personal income tax rates.The funny thing about this is that the real tax-related story about Musk’s…
Should States Have to Make a “Co-Pay” on Federal Relief?
Most of us these days are worried about the pandemic. If that weren’t enough fun, there’s also economic collapse, especially when — and the tip of the canoe is already edging out over the waterfall — states reach an imminent fiscal cliff. State layoffs, service cuts, and tax hikes contributed very substantially to the Great Recession. For that reason,…
Universities (and other big employers) are Cutting Retirement Benefits.
Universities (and other big employers) are Cutting Retirement Benefits. Tax Lawyers are Having Fits. What’s Going On?This week brought a new round of announcements from universities, even very wealthy ones, that they would be cutting faculty and staff pay. Readers already know my views about schools with giant endowments asking their employees to sacrifice. Putting…
States Should Borrow Rather than Make Brutal Cuts During a Recession and Pandemic
States Should Borrow Rather than Make Brutal Cuts During a Recession and PandemicBy Darien Shanske and David GamageIn a world in which the level of government best suited to act (the federal government) is dysfunctional, subnational governments need to take extraordinary measures. Lest anything that follows be misunderstood, we have already argued that it is the federal…
Conformity and State Income Taxes: Suggestions for a Post-COVID Era
By Michael A. Livingston(Posted by David Gamage on behalf of Michael A. Livingston)To guarantee adequate revenues in the post-COVID era, States need to utilize all possible tools at their disposal. In particular States may wish to evaluate their degree of conformity with Federal tax changes in order to achieve this purpose. Specifically, the…
Reforming State Corporate Income Taxes Can Yield the States Billions
This is a great time for the states to make changes that they should have made anyway.Continue reading on Whatever Source Derived »
If Not Now, When: Why Won’t Universities Spend Their Money?
These are tough times for higher education. Even name-brand institutions are announcing hiring freezes and salary cuts, among other austerity policies. This is perfectly understandable if your institution is a community college. Let’s assume the archetypical community college can’t borrow affordably, and it has no savings. It’s not going to sell off its classroom…