FeatureState Digital Services Taxes: A Bad Idea Under Any Theory (Tax Notes State, April 10, 2023) April 10, 2022

COST's Doug Lindholm and Karl Frieden highlight why states should not adopt digital services taxes.  In this comprehensive review, they critique the policy arguments made in favor of digital services taxes (DSTs) by a number of law and economics professors and explain why each one fails to provide a valid rationale for enacting a state DST. They review DST justifications based on an income tax “gap,” a severance tax, a regulatory tax, and an excess profits tax. However, they primarily focus on the consumption tax model that is emerging as the leading justification for enacting state DSTs. 

FeatureCOST Scorecard: The Best and Worst of State Sales Tax Systems (2022) December 28, 2022

The Council On State Taxation (COST) is pleased to release the second edition of its Scorecard on “The Best and Worst of State Sales Tax Systems.” Similar to other COST Scorecards, this Scorecard applies objective criteria to evaluate the states’ sales tax laws and rules that impact the fairness and efficiency of sales tax systems, for both sellers and purchasers.

Feature2022 State and Local Business Tax Burden Study December 1, 2022

The Council On State Taxation (COST) and the State Tax Research Institute (STRI) are pleased to announce the release of the nineteenth annual study of state and local business taxes. The report, prepared by Ernst & Young LLP, shows all state and local business taxes paid in each of the 50 states and the District of Columbia. 

Businesses paid more than $839 billion in state and local taxes in FY2020, an increase of 0.5% from FY2019. State business taxes decreased by 1.9%, and local business taxes grew by 3.1%. In FY2020, business tax revenue accounted for 44.3% of all state and local tax revenue. 

FeatureLynn Gandhi Awarded for Excellence in State Taxation by COST October 26, 2022

COST presented the 14^th Annual COST/Paul Frankel Excellence in State Taxation Award to Lynn Gandhi during COST's 53rd Annual Meeting in Orlando, Florida. This award is in recognition of her outstanding contributions to the state tax profession.

FeatureCOST Mentoring Program is LIVE! October 18, 2022

The COST Mentorship Program is designed for COST industry members to connect together for a one-on-one mentorship and reflects our commitment to promoting invaluable networking opportunities with other state tax professionals.  

FeatureLocally Administered Sales and Accommodations Taxes: Do They Comport With Wayfair? July 28, 2022

The Study effectively demonstrates that the burdens of complying with numerous disparate local tax regimes are extremely onerous, particularly in states that lack centralized collection and remittance of local taxes. The Study opens with a Foreword authored by well-known state and local tax experts Jeffrey A. Friedman and Nikki E. Dobay of Eversheds Sutherland LLP that evaluates and analyzes the legal framework and constitutional concerns surrounding state imposition of local taxes—particularly decentralized local taxes—after the Supreme Court’s 2018 decision in South Dakota v. Wayfair. 

FeatureResisting the Siren Song of Gross Receipts Taxes: From the Middle Ages to Maryland’s Tax on Digital Advertising July 21, 2022

In this study, Pomp traces the origins of gross receipts taxes (also known as “turnover taxes”) and their worldwide fall from grace by the twentieth century. He also analyzes the modest resurgence of gross receipts taxes at the state level in the United States, and why this mini-trend shares all the structural design defects that doomed their predecessors to near-extinction.

FeatureDown the Rabbit Hole: Sales Taxation of Digital Business Inputs July 18, 2022

In this article, Frieden, Nicely and Nair document for the first time that the sales taxation of business purchases of digital products (e.g. digital business inputs) is not just commonplace, but the overwhelming norm among states that tax software and digital products.  The taxation of digital business inputs undermines the optimal goal of states’ sales and use taxes to impose taxes on end-user consumption of products.  The authors recognize the interest of many states in expanding their sales tax bases to address digital products, but caution against base expansion that results in a pyramiding of sales tax on both business inputs and consumer sales.  

FeatureA Global Perspective on U.S. State Sales Tax Systems as a Revenue Source: Inefficient, Ineffective, and Obsolete November 30, 2021

The study provides an international perspective on U.S. state and local sales tax systems through a comparison to the primary general consumption taxes in the European Union (the Value-Added Tax (VAT)) and Canada (the Goods and Services Tax/Harmonized Sales Tax (GST/HST) and a few provincial sales taxes). In particular, the study evaluates the efficiency, efficacy, and historical development of general consumption taxes in each of these geographies based on the three key principles of an optimal consumption tax.

FeatureConvergence and Divergence of Global and U.S. Tax Policies August 30, 2021

In this article, COST’s Karl Frieden and EY’s Barbara Angus describe the unprecedented convergence of international, federal, and state tax policies represented by the OECD/G-20 pillar 1 and 2 proposals; the importance of approaching U.S. tax policy from the perspective of aggregate federal and state tax impacts; and the potential risk of divergence between U.S. and global income tax rules that could result in a competitive disadvantage for the United States.

FeatureTracking Chart: State and Local Disaster Relief Guidance May 4, 2023

COST is tracking state and local tax relief guidance in response to fires and other natural disasters.

FeatureEureka Not! California CIT Reform Is Ill-Conceived, Punitive, and Mistimed May 24, 2021

In this article, Frieden and Kenney examine the major provisions of Californiaʹs A.B. 71, proposed legislation that significantly expands the stateʹs taxation of foreign-source income.

FeatureState Adoption of European DSTs: Misguided and Unnecessary May 10, 2021

In this article, Frieden and Do explain why the adoption of state-level digital services taxes that mirror European DSTs represents a solution in search of a problem that generally does not exist at the state level: the absence of economic nexus and market sourcing principles to address the unique challenges of digital business models

FeatureTracking Chart: State and Local Government Filing Relief due to COVID-19 December 27, 2022

To help our members keep track of state and local government filing relief due to COVID-19, COST is compiling a state-by-state chart of guidance that has been issued on the matter. COST staff will update the chart on a regular basis as we see more guidance. If you have any additional information to share that is not on the chart, please contact Pat Reynolds or Priya Nair.