Boise Presents The Impact of Earnings Inflation on State Property Taxes Today at Cincinnati

Craig M. Boise (Case Western) presents Hotels and Houses: Playing with Monopoly Money in the States today at Cincinnati.  Here is the abstract:

Several years after the rash of earnings inflation scandals that rocked Wall Street and resulted in massive earnings restatements by some publicly traded corporations and bankruptcy or dissolution of others, the fallout continues in an unlikely venue—state courts. Companies that inflated earnings generally reported the inflated earnings for federal income tax purposes and many sought refunds of the overpaid taxes when their earnings inflation was ultimately disclosed. But earnings inflation and the way in which it was accomplished also had somewhat surprising property tax ramifications that are being sorted out in state court refund actions that have significant implications for the funding of public education, public libraries, state and local parks and other state programs. This article describes how earnings inflation has affected state property tax reporting, discusses the deleterious effects it has on state finances, and proposes that states employ equitable principles in property tax refund cases to mitigate the damage.