Week in Insights: Poland ‘Zero Tax for Families’ Is Good Branding

Poland’s president just signed off on a potential plan to eliminate income taxes for parents who have at least two children and earn up to roughly 33,000 euros ($38,000) per year. That’s a flashy headline, but once you strip away the branding, it looks a lot like something most developed tax systems already do—just with better political framing.

The US, for instance, has long used a mix of standard deductions, exemptions for dependents, and child tax credits to reduce or eliminate income tax liability for low- and middle-income families. The order of operations differs and the structure varies, but the goal is the same: Put more after-tax income in the pockets of people raising kids.

Poland’s plan is less policy innovation and more a repackaging job.

That strategy may end up working, to be fair. The “zero tax” framing is much simpler, emotionally resonant, and politically efficient than announcing adjustments at the margins that might get to the same place but use a lot more words to do so.

That isn’t to say the policy is pointless; it just isn’t a radical departure from conventional tax design. And it shows that when tax policy isn’t taught in civics class or widely understood, politicians can dress up the ordinary as revolutionary. In the haze of fiscal jargon, “zero tax for families” cuts through in a way that “expanded deductions and credits” never will—even if the latter’s impact on after-tax income may be greater.

—Andrew Leahey

A man plays with his children in a park in Warsaw.

Photographer: Wojtek Radwanski/AFP via Getty Images

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined IRS furloughs, health-care subsidies, and more.

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Insights

US Following Pillar Two Would Undermine Congress’ Rightful Power

The US should defeat the global minimum tax framework known as Pillar Two, because accepting the global tax code would transfer Congress’ power over taxation to other countries.

California’s Film Incentives Boost Will Help the State Catch Up

California’s expanded film incentives program likely will encourage more productions to remain in the state, but producers should prepare strategies to maximize credit eligibility.

Congress Must Trim Health-Care Subsidies and Consider Reforms

US lawmakers should cap health-care subsidies’ growth and institute reforms that might finally “bend the cost curve” in health care downward.

IRS Needs More Consistent Approach to Tax Preparer User Fees

The IRS’s approach to user fees—especially those targeting tax professionals—is incoherent, impenetrable, and indefensible.

IRS Furloughs Present a Strategic Opportunity for Businesses

Businesses that use the IRS furloughs to refine their structures, verify documentation, and tighten strategy will come out of the government shutdown stronger than before.

IRS Settlement Indicates Continuation of M&A Carveout Fights

Taxpayers with cost-sharing arrangements must accept the lingering uncertainty and anticipate that the IRS will continue to scrutinize platform contribution transaction payments when folding in acquisitions to existing cost-sharing arrangements.

EU Court Clarifies VAT Rules for App Stores in Landmark Case

The Court of Justice of the European Union has clarified the value-added tax treatment of digital platforms and online marketplaces.

Columnist Corner

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

Both major party candidates in New Jersey’s gubernatorial race have flawed tax policy focuses, Andrew Leahey says in his latest Technically Speaking column, arguing that Jack Ciattarelli (R)’s proposed tax cuts are reckless while Mikie Sherrill (D)’s municipal service-sharing plan lacks urgency.

Expanding the state’s earned income tax credit and child credit program should be the top priority, as “these tools don’t grab headlines, but they do the heavy lifting of making life more livable,” Andrew writes. Read More

News Roundup

Oracle’s Court Win Foils Australia’s Hope for Royalty Tax Ruling

Australia tax officials were frustrated this week in their desire for a domestic court decision on whether Oracle Australia’s transactions with an affiliate contained embedded royalties subject to withholding tax.

Restaurants, Hotels Spar Over Limits of Trump’s Tips Tax Break

Business groups and other stakeholders are at odds over how the IRS’s proposed rules on the GOP tax law’s new tax break for tips treats automatic gratuities.

Countries Still Split on Minimum Tax Talks, OECD Chair Says

Countries are still divided on a number of issues as they renegotiate the global minimum tax agreement, according to Tim Power, chair of the Committee on Fiscal Affairs at the OECD.

Treasury Urged to Finish Clean Fuel Credit Rules by Lawmakers

The Treasury Department should take swift action to finalize clean fuel production rules to address unresolved pieces of July’s GOP tax law for the biofuels industry, a bipartisan group of House lawmakers said in a letter.

Tax Management International Journal

India Proposes to Transform PE and Profit Attribution Rules

India’s proposed reforms to permanent establishment and profit attribution rules will provide certainty to foreign companies doing business in India.

Tax Management Memorandum

Supreme Court Decision Modifies ERISA Litigation Landscape

The alternative safeguards identified in the Supreme Court’s Cunningham v. Cornell decision are discussed for avoiding costly time-intensive discovery for ultimately meritless ERISA claims.

What to Watch for in the Wake of the Tax Division’s Demise

The plan for restructuring DOJ’s Tax Division may further degrade tax compliance.

Career Moves

Miller Thomson Brings Back Galambos as Tax Partner in Montreal

John Israel Galambos joined Miller Thomson as a partner in its tax group in Montreal, the firm announced Monday.