When you close your eyes and picture a tax haven, what pops into your mind? Blue waters meeting shimmering sand in a tropical oasis? Most likely. What about the Cliffs of Moher in Ireland; a bustling Singaporean nightlife; or acres of tulips of the Netherlands? Our recent research (Murphy and Vernon, forthcoming) demonstrates these are the picturesque visions…
Private equity has purchased accounting firms at a remarkable pace.[1] For some observers, that is just the latest example of financial capital flowing into a fragmented industry. For others, it raises a deeper question: should the ownership of certain professional service firms be treated differently from the ownership of traditional businesses? That question is especially important in accounting….
The U.S. Congress frequently changes the federal tax code, and those changes have direct consequences for state income taxes. The vast majority of states essentially tell taxpayers: “Start with the taxable income you calculated for the federal government, make a few of our specific adjustments, and pay taxes to us based on that final number.” The practice of…
New accounting rules require publicly traded companies to provide more detailed tax disclosures, including rate reconciliations that explain why effective tax rates differ from the U.S. statutory rate of 21%. However, this reconciliation format was designed for the U.S. worldwide tax system and hasn’t been updated for the post-2017 territorial system, where foreign earnings are largely exempt from U.S. tax. This analysis examines how the outdated benchmark creates interpretive challenges and may lead to misunderstandings about what tax disclosures actually reveal.
Influential academic research prior to the 2017 Tax Cuts and Jobs Act estimated that U.S. multinationals earned 50-60% of foreign profits in tax havens, costing the government $100 billion annually in lost revenue. But after correcting for double counting and misattribution errors in how foreign profits were measured, this estimate dropped to just $10 billion. This analysis examines how fundamental accounting errors led to a tenfold overestimate and why policymakers must carefully scrutinize the methodologies behind international tax revenue projections, including current OECD proposals.
California’s proposed 2026 Billionaire Tax Act would impose a one-time 5% tax on residents with net worth exceeding $1 billion, using accounting measures to value assets. But valuing wealth presents significant challenges: many private firms don’t maintain GAAP-compliant financial statements, accounting rules treat tangible and intangible assets differently, and illiquid assets like unique real estate and artwork lack objective market prices. This analysis examines the biases, inequities, and distorted incentives that arise from basing wealth taxes on accounting measures.
Can billionaires simply switch their state residency and avoid the tax? Most press accounts, as well as the Hoover study, treat the residency question as one that answers itself via self-certified acts: a billionaire announces a new home state, purchases property there, or moves a business entity, and the desired legal outcome automatically materializes. This framing radically oversimplifies the complex inquiry required to determine whether an individual has ceased to be a California resident as a matter of law.
Cryptocurrency has promised financial innovation in the form of a decentralized payment network. However, that innovation has created regulatory challenges and debates. This note focuses on one long-running debate, the taxation of staking rewards.
When people think about billionaire wealth, they picture mansions, yachts, and private jets. But those assets make up only a tiny fraction of billionaire wealth. According to Altrata’s Billionaire Census, about 66% of billionaire wealth is tied up in business equity, while only about 3% is in real estate and luxury assets. And nearly half of that business equity is in private companies, not publicly traded firms.
A proposal to replace the modern individual income tax system with tariffs raises fundamental concerns. The economic burden of tariffs falls disproportionately on lower-income households, and tariffs do not raise sufficient or stable revenues that can serve as a plausible substitute for the individual income tax.