When I worked on the staff of the Joint Committee on Taxation in the 1980s, a friend who came to the staff from private law practice described the private tax lawyer’s mission in a way I haven’t forgotten: Turning A into B. That is, taking things that should be taxed at a high rate because they belong in one category, and figuring out how to put them into another category – low taxed. Lawyers rather than accountants have the word-training to take on this kind of mission. She also called the mission “Turning This into That.”
(I’ve been looking recently at marijuana taxation, where the stakes are so low that lawyers can’t be bothered. In Oregon, Colorado, and several newly-legalizing states, users turn taxed recreational cannabis (Category A) into untaxed or lightly taxed medical cannabis (Category B) with little oversight or pushback).
The so-called Tax Reform bills working their way through Congress offer huge opportunities for turning A into B. Tax lawyers will make bundles of money.
Here are a couple of opportunities: Continue reading “Turning (Taxed) A into (Untaxed) B”
Senator Bill Armstrong (R-Colorado), not Senate Finance Committee Chair Bob Dole, was reportedly the originator of the 280E marijuana tax in 1982. That comes from an article I just ran across, Kitty Richards, An Expressive Theory of Tax (April 1, 2017). Cornell Journal of Law and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3066375.
I had thought that Bob Dole’s staff had come up with 280E for him, Continue reading “Origin of 280E”
My friend Tom Angell, who compiles marijuana news diligently and fairly, has a partially paywalled piece on the prospects of repeal or reform of the 280E marijuana tax.
He writes, “While rescinding the provision’s application to state-legal cannabis providers is a matter of basic fairness, it would also, on its face, amount to a large tax cut from current rates for those businesses. And that could be a roadblock to success, as Republicans are already struggling to find ways to pay for broader tax cuts they are proposing in the plan. “
I have a less-opposed view toward 280E, as Tom notes. But as for Congress cutting the 280E tax, I’d say the big problem is not the cost of 280E fix, but the slippery slope argument. If the 280E tax gets fixed with a meaningful revenue cost (https://newrevenue.org/2017/02/02/5119/), other taxpayers will insist on fixing other problems that Members are sympathetic to – like the marriage penalty. Then you get in a Christmas tree situation, https://en.wikipedia.org/wiki/Christmas_tree_bill, which could cause the whole tax cut project to stall. So I would expect any tax bill that advances to have a “no loosener” (no industry-specific revenue loser) rule. Having been a Joint Congressional Tax Committee staffer during the Tax Reform Act of 1986, when the idea was “Everyone suffers to get rate cuts,” rate cuts are the only tax cuts I can see surviving. But we’ll see. Continue reading “280E and Tax Reform”
President Trump says multinational corporations have stashed $4 trillion (instead of the commonly mentioned $2.7 trillion) offshore, untaxed. Here are three reasons — Politics, Practicality, and Politics — why all that income should be “deemed repatriated,” that is, taxed immediately.
Politics: The political case is here – the big beneficiaries of repatriation amnesty opposed Trump. Continue reading “Tax All Tax-Haven Income Now”
Here’s how the California 15-percent retail marijuana tax is supposed to work:
[UPDATE: The 90-day rule does not seem properly calibrated for outdoor growing, where an annual harvest presumably could get sold over 365 days — as consumer demand is presumably relatively steady all year. To allow the tax to apply to the actual retail price, retailers would need to buy from sellers on a kind of Just In Time basis — not accumulating inventory beyond what they will sell in 90 days.]
Once a cultivator, manufacturer or distributor sells to a retailer, a 90-day clock starts running. The tax amount due depends on which one of two “Cases” fits the facts. Continue reading “90-day rule for California’s 15-percent retail marijuana tax”
As the idea of a robot tax gains interest, Indonesia has a narrow pro-labor tax that is actually in effect.
Tobacco is a huge killer in Indonesia, and the government there struggles to tax it. But it’s also a huge employer, so taxing tobacco nudges against jobs.
So Indonesia taxes machine-rolled cigarettes more than it taxes hand-rolled ones. Continue reading “Indonesian robot tax”
Don’t read this whole post.
Instead, a corrected view of how California’s retail tax works is here (at https://newrevenue.org/2017/10/27/90-day-rule-for-californias-15-percent-retail-marijuana-tax/). So go there.
The superseded and incorrect material below, for the record, reflects my thrashing around before I understood what California was even trying. Why anyone would want to read about that thrashing, I can’t imaginge, but I don’t delete much. Nobody’s perfect. Continue reading “Arm’s length marijuana tax rule in California — superseded”