Citing a reading crisis, the Danish government announced this month that it would abolish its value-added tax on books—a levy that had ranked among the highest in the world. The move would cost an estimated $51 million per year in lost tax revenue but should reduce the cost of books for consumers by 16% to 20%.
Denmark is just following a commonsense tradition. The UK and Norway have similarly exempted books from its VAT. Meanwhile, in the US, we continue to tax books as if reading were a discretionary luxury.
This would be defensible if US teenagers weren’t struggling with literacy at least as much as Danish teens. One-third of US eighth graders now score “below basic” in reading, according to the National Assessment Governing Board’s latest report card.
Yet in Mississippi, for example, a paperback purchase is taxed at the same 7% rate as a fast food order. And Mississippi isn’t alone. While some states have exemptions for textbooks, most states subject ordinary books to the ordinary sales tax rate.
The economic burden may seem small—paying 7% on a $10 paperback would only raise the price to $10.70. But it signals a lack of policy focus on literacy that has contributed to a measurable decline in US youth’s reading skills.
Exempting books from VAT or sales tax won’t resolve a literacy crisis overnight, but it does lower a barrier. It elevates books to a public good, not a private indulgence. And it opens space for further social investment such as library expansions, reading programs, author subsidies, and literacy campaigns.
We should view literacy as more than the sole responsibility of individual parents or teachers. Like roads, electricity, and clean water, access to reading should be universal, subsidized, and tax-free.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the tax implications of Taylor Swift’s engagement to Travis Kelce, the Trump tax law’s impact on New York City high-income taxpayers, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Taylor Swift Puts Her Fortune at Risk if She Forgoes a Prenup
Capri Capital Partners CEO Robert Mancuso says newly engaged celebrities Taylor Swift and Travis Kelce must consider an array of tax and legal issues as they merge their financial empires as a married couple.
India Hyatt Ruling Means MNEs Must Review Control Structures
AZB & Partners’ experts explain the business reality for multinationals in India following the recent Indian Supreme Court landmark ruling on permanent establishment.
NYC’s High-Income Taxpayers Get a Few Big Wins in Trump Tax Law
Berkowitz Pollack Brant’s Michael Brennan says the new tax-and-spending law offers high-net-worth individuals in New York City opportunities to plan ahead and maximize tax benefits.
Non-Dom Replacement Raises Prospects for Investors Coming to UK
Mercer & Hole’s Liz Cuthbertson says the UK’s Foreign Income and Gains program can provide new benefits for wealthy individuals relocating to the UK.
Tariffs Push Canada to Boost Tax Credits for R&D, Clean Energy
KPMG Canada experts say multinationals operating in Canada should tailor their tax and financial planning to enhanced tax incentive policies in several areas.
Real Estate Industry Has Tax Planning Opportunities in New Law
Anchin’s Suerische Villarosa and Mark Schneider say the recent tax-and-spending law contains provisions that real estate professionals should understand to optimize tax planning and compliance.
Columnist Corner
A proposed 225% property tax hike for a Utah town shows that small, routine property tax increases are “the fiscal equivalent to flossing or exercising—easy to skip, but ultimately painful when neglected for long,” Andrew Leahey writes in his latest Technically Speaking column.
Establishing bipartisan, independent bodies that set long-range schedules for property tax rates and assessments could help insulate tax adjustments from politics, Andrew says, adding that cities also could consider transitioning to a land value tax. Read More
News Roundup
Treasury Pushes Shopify-Inspired AI Policy After Trump Order
The Department of Treasury is requiring its information technology employees to practice “reflexive AI usage,” which will become part of their performance evaluations.
Top IRS Lawyer Pick Poised for Second Act at Besieged Tax Agency
Two decades ago, the IRS was locked in a battle with the biggest US accounting firms over a billion-dollar tax shelter industry. To help strike back, President George W. Bush brought in Donald Korb.
OECD’s ‘Side-by-Side’ Tax Deal for US Critiqued by 28 Countries
More than two dozen countries criticized a system that would exempt American multinational companies from key parts of the global minimum tax, saying it would risk undermining the tax’s effectiveness, put non-US companies at a disadvantage, and challenge their own tax sovereignty.
Trump Tariff Threats Put Countries With Digital Taxes in a Bind
Countries that have imposed digital taxes on tech giants such as Amazon.com Inc. and Meta Platforms Inc. are again under threat of retaliatory tariffs from President Donald Trump, forcing them to decide whether to resist or give in to his demands.
Tax Management Memorandum
Legislation May Make New York City’s HDFC Tax Benefits Permanent
Braverman Greenspun attorneys discuss New York state’s proposed legislation on HDFCs that would make permanent New York City’s DAMP real estate tax exemption.
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