Paul L. Caron

Thursday, March 25, 2021

Ordower: New York’s Proposed Mark-To-Market Tax Decouples From Federal Tax

Following up on my previous post, New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires:  Henry Ordower (Saint Louis), New York’s Proposed Mark-to-Market Tax Decouples From Federal Tax, 170 Tax Notes Fed. 1243 (Feb. 22, 2021):

Tax Notes Federal (2020)In this article, Ordower examines proposed legislation in New York that would tax the unrealized gain and other deferred income of billionaires in the state, and the complexities that the legislation’s enactment is likely to generate. ...

This article addresses the structure of state income taxes and credits for taxes paid by residents to other states and the confusion that nonuniform decoupling generates across state borders. Separation from federal rules may help to stanch the loss of state revenue from federal tax amendments and enhance state tax revenue — especially revenue that the state otherwise might never capture but to which it may have a claim.

This article focuses on proposed legislation in New York state that would tax the unrealized gain and other deferred income of New York’s billionaires and the complexities that that legislation’s enactment would likely generate. It will consider responses from other jurisdictions to ameliorate the discontinuity that the New York legislation will cause as states seek to increase their income tax revenue and capture a larger share of the income tax base without running afoul of constitutional limitations on states’ taxing power, especially equal protection and the right to travel.

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