A little Tax Court momentum

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Jun 03, 2024 View in browser
 
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By Bernie Becker

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PACK THAT COURT: Presidential administrations of both parties have made it a priority to fill vacancies up and down the judiciary in recent years.

Except, maybe, when it comes to the U.S. Tax Court.

As it stands, six of the Tax Court’s 19 seats are open, a vacancy rate of close to a third. But Washington’s periodic interest in staffing that part of the judiciary will rev up again this week, as the Senate Finance Committee considers three nominees on Tuesday for a 15-year term on the court.

At least for now, nothing suggests that there’s anything even slightly controversial about the three potential Tax Court judges who will testify on Tuesday. (Nothing new there, either: A dozen of the court's current judges were confirmed by the Senate by voice vote, about half of them during the contentious Trump administration, and a grand total of three Democrats voted against Judge Travis Greaves in 2020.)

One of the new nominees, Rose Jenkins, works in the IRS’s chief counsel’s office. Another, Adam Landy, is already a special trial judge on the Tax Court. And the third, Kashi Way, has been a veteran of the Joint Committee on Taxation for going on two decades.

President Joe Biden nominated another trio of candidates to fill out the Tax Court roster several weeks ago, but it’s too soon to know when the Finance Committee will hold a hearing on those candidates.

MORE ON THAT IN A BIT, but first — welcome to your latest edition of Weekly Tax. Question of the day: Is there a saying of “What happens in Platja d’Aro stays in Platja d’Aro?”

They weren’t going to take it, anymore: Today marks 68 years since the currently crunchy city of Santa Cruz, Calif., enacted a full and total ban on rock ‘n’ roll music, which officials said damaged both the health and morals of the local youth. (Spoiler alert: The ban is no longer in effect.)

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WHAT’S IT ALL MATTER? The Tax Court faces a number of complicated and sizable cases in a given year.

Just in 2023, the court ruled against both Coca-Cola and 3M in cases that left both companies with fatter tax bills.

Several weeks back, the D.C. Circuit reversed a Tax Court ruling — a rare event in and of itself — that would have made it far more difficult for the IRS to enforce certain penalties. Meanwhile, the court is facing no shortage of cases on hot-button issues like conservation easements and microcaptive insurance.

The Tax Court currently faces a backlog, largely because of the coronavirus disruption, as Tax Notes recently pointed out. Still, the court has been able to stay afloat at least in part because of the assistance of senior judges who have pitched in after they retired or saw their terms expire.

But one of the bigger questions hanging over the court is what will happen to its caseload now that the IRS is beefing up enforcement, following the influx of funding that Democrats gave the agency in their 2022 tax-and-climate law.

WHY DO THEY THINK THAT? There’s an interesting question hanging out there: Why has the Biden administration taken such a dim view of a global wealth tax?

After all, the president and his team (and some prominent congressional Democrats, for that matter) have had no qualms about pushing domestic taxes targeting the accumulated assets of the very well-to-do, at least in part because they see a political advantage in a tax-the-rich message.

At the same time, Treasury Secretary Janet Yellen has spent a good portion of her term in office first negotiating and then trying to sell a global tax deal affecting large multinational corporations.

So why wouldn’t the Biden administration be interested in essentially marrying those two ideas?

Taking a step back: Brazil is the current president of the Group of 20 major economies, and has decided to use that perch to push the idea of a wealth tax essentially inspired by the minimum tax on multinationals that is known as Pillar Two of the current global tax deal.

France, Germany and Spain are among the other countries to show an interest in that idea. But not Yellen, who said two weeks ago that the U.S. took issue with a plan that would redistribute the revenues gained from a global tax on the super-rich.

Those comments drew pushback from progressive groups in the U.S., like Patriotic Millionaires, who basically wondered why this wouldn’t be right up the Biden administration’s alley.

Patriotic Millionaires said they were heartened by Yellen’s later clarification on the topic, and noted that redistribution wasn’t part of the current proposal kicking around the G-20.

Still, even within that clarification, Yellen said that she was “not supportive of an international negotiation that would involve all countries agreeing” to a wealth tax.

Meanwhile, other tax experts argue that Pillar Two essentially redistributes revenues from American multinationals to other countries, and also are wondering why the administration’s taken such a different stance when it comes to the assets of wealthy individuals.

“Yellen’s statement contradicts the repeated emphasis that members of the Biden administration — including Yellen herself — have placed on the importance of multilateralism to achieve fairness and equity in international taxation, and on the benefits that encouraging other countries to impose higher taxes would have for the American people,” Mindy Herzfeld of the University of Florida law school wrote at Tax Notes.

 

JOIN US ON 6/12 FOR A TALK ON THE AIRLINE INDUSTRY: As air travel soars again, policymakers and airlines are grappling with a series of contemporary challenges to the industry's future. Join POLITICO on June 12 for a topical and timely conversation with government leaders and aviation stakeholders about the state of the airline industry. From what passengers want to what airlines need amid the high demand for air traffic, workers and technology solutions. What can Washington do to ensure passengers and providers are equipped to fly right? REGISTER HERE.

 
 
Around the World

Bloomberg: “South Korea’s FSS Warns of Outflows from Local Stocks on New Tax.”

Also Bloomberg: “Nigerian Panel Seeks to Slash Number of Taxes by About 87%.”

Reuters: “India cuts windfall tax on petroleum crude.”

 

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Around the Nation

Chicago Sun-Times: “Pritzker bets FanDuel, DraftKings won't leave Illinois over hefty sports wagering tax hike.”

New Jersey Monitor: “Task force releases report on Stay NJ tax credit program.”

Columbus Dispatch: “Ohio sales [tax] holiday getting bigger this summer.”

Also Worth Your Time

Pro Budget: “Congress is already bracing for a 2025 fiscal pileup.”

Associated Press: “With home prices up more than 50%, some states try to contain property taxes.

Wall Street Journal: “You Bought Gold at Costco. What Are the Taxes When You Sell It?”

 

JOIN US ON 6/13 FOR A TALK ON THE FUTURE OF HEALTH CARE: As Congress and the White House work to strengthen health care affordability and access, innovative technologies and treatments are increasingly important for patient health and lower costs. What barriers are appearing as new tech emerges? Is the Medicare payment process keeping up with new technologies and procedures? Join us on June 13 as POLITICO convenes a panel of lawmakers, officials and experts to discuss what policy solutions could expand access to innovative therapies and tech. REGISTER HERE.

 
 
On The Calendar

Soon enough.

Let Morning Tax know about your future events: taxcalendar@politicopro.com.

Did you know?

Vincent Vega, the character played by John Travolta in “Pulp Fiction,” wears a UC-Santa Cruz Banana Slugs T-shirt in the movie.

 

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