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Thursday, Could 4, 2023
Mazur & Thimmesch: Cooperative Federalism And The Digital Tax Deadlock
Orly Mazur (SMU; Google Scholar) & Adam B. Thimmesch (Nebraska; Google Scholar), Cooperative Federalism and the Digital Tax Deadlock, 51 Fla. St. U. L. Rev. __ (2023):
The digital financial system is altering quicker than the legislation can reply and has challenged authorized methods worldwide. Within the tax area, the digital financial system has undermined conventional tax methods in ways in which have created vital tax compliance and enforcement challenges, substantial tax income losses, and unwarranted distortions available in the market between digital and conventional transactions. These issues are nicely acknowledged each within the authorized literature and within the public sphere. Sadly, the authorized reforms which can be wanted on this area have been slowed by a mix of technical, conceptual, and political impediments. This Article focuses on the digital tax panorama on the U.S. subnational stage to reveal how these elements are stopping significant authorized reform and why a novel method to tax reform could also be profitable in breaking the present deadlock.
The problem of reform is especially problematic within the tax context as a result of reform ideally consists of multijurisdictional uniformity on basic features like tax bases, the characterization of digital revenue, and sourcing guidelines. Authorized reform is sophisticated sufficient on a unilateral foundation. Asking for uniformity in these reforms throughout jurisdictions can appear all however unimaginable. To answer these points, many students apply a fiscal federalism lens to guage whether or not reform duty is best assigned to the U.S. federal authorities relatively than to the states themselves. Nevertheless, this Article disagrees that the digital tax deadlock can be mounted via state or federal efforts alone. As an alternative, we argue that the circumstances on this space of the legislation are proper for policymakers to discover a cooperative federalism framework. A cooperative federalism construction represents a middle-ground answer the place Congress might use its assets to incentivize interstate uniformity however go away the substantive tax rulemaking to the states. This focused kind of federal intervention would higher harness the strengths of each the federal and state governments, protect state tax sovereignty, and overcome most of the shortcomings of previous digital tax reform efforts.
https://taxprof.typepad.com/taxprof_blog/2023/05/cooperative-federalism-and-the-digital-tax-impasse.html
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