Lily Batchelder @lilybatch.bsky.social · 23/06/2026Expensing provides large businesses with large net subsidies for debt-financed investments, and puts an even heavier thumb on the scale in favor of capital investments over hiring workers. There are better ways to accelerate economic growth and ensure it is widely shared. 17/17 110
Lily Batchelder @lilybatch.bsky.social · 23/06/2026There are likely far more cost-effective ways to stimulate U.S. investment than expensing. I estimate that, under reasonable assumptions, one could save almost $1.3 trillion & maintain the same functional incentives for US investment thru different tax policies. 16/17 papers.ssrn.com/sol3/papers....papers.ssrn.comWhen Money's Time Isn't Always Valued: Accounting for Behavioral Considerations in Business Tax Reform<div> One of the fundamental questions in business taxation is whether to allow firms to immediately expense investments or require economic cost recovery, whe 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026Economic models supporting a cash-flow tax also assume the goal is to maximize global investment, not investment in the US. 15/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026This is because economic models supporting the efficiency of a cash-flow tax assume CEOs, investors, and analysts of large businesses incorporate taxes into their business decisions in ways that don’t align with real world behavior or information. 14/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026Third, the evidence that a cash-flow tax would increase US investment more than comparably costly alternatives is pretty mixed. 13/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026Second, a cash-flow tax could undermine multilateral cooperation on limiting profit shifting. If it did, there would be more profit shifting to low-tax countries, and lower tax rates on the largest multinationals when they should be increasing instead. 12/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026First, it is highly unlikely that Congress will have the political will to bar businesses from deducting all interest costs. Repealing expensing would be a heavy lift politically, but not nearly the magnitude of disallowing all interest deductions. 11/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026(4) Some think the best path forward is to disallow all business interest deductions and further expand expensing to all assets, such as more buildings and land. This is a business cash-flow tax. But proponents tend to ignore 3 key issues. 10/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026Tax policy wonks as diverse as Paul Ryan, Kevin Brady, Auerbach, Furman, Holtz-Eakin, and the George W. Bush Tax Reform Panel all agree allowing businesses to expense assets and also claim interest deductions is a horrible idea. Even Pres. Trump agreed in his 1st term! 9/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026The nonpartisan CRS estimates that under the tax law passed last year, the effective tax rate on debt-financed corporate investment in equipment is now negative 21% and, on intangible assets like AI models, it is negative 59%. 8/17 110
Lily Batchelder @lilybatch.bsky.social · 23/06/2026(3) Expensing should never be coupled with interest deductibility, as it is under current law. This results in *negative* rates on the income produced by the asset. The (wealthy) owners of capital receive a net subsidy from the government! 7/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026The net result is the combined corporate- and individual-level taxes on normal corporate profits are much lower on capital investments than investments in labor under permanent expensing. Here is a simplified example. 6/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026When such capital income is taxed, much lower rates apply due to lower rates for capital gains and dividends, the ability to defer paying tax, and the exemption from payroll tax, to name a few preferences. 5/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026But when businesses can immediately expense capital investments, the profits from capital investments are barely taxed at the individual level. Capital owners pay income tax on <30% of corporate income. 4/17 110
Lily Batchelder @lilybatch.bsky.social · 23/06/2026(2) Expensing further tilts the federal tax system away from investments in workers and towards investments in capital. While businesses can deduct wages, wages are immediately taxed at the individual level when workers pay income and payroll tax on their wages and salaries. 3/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026(1) Expensing an asset is like allowing businesses to pay *no* tax on all the so-called normal profits that asset produces. Normal capital income is heavily concentrated at the top. 2/17 100
Lily Batchelder @lilybatch.bsky.social · 23/06/2026My new piece in Democracy on why Congress should repeal expensing and move back toward economic depreciation for large businesses, as was the law for most of the income tax’s history. Could raise ~$2 trillion over 10 years. Here’s 4 reasons why: 1/17 democracyjournal.org/magazine/81/...democracyjournal.orgExpensing—Not Worth the ExpenseLast year’s giant tax bill established something unprecedented in the history of the income tax, which sounds dryly technical and thus unobjectionable. It’s called permanent “expensing,” and it allows... 131
Reposted by Lily BatchelderChye-Ching Huang @dashching.bsky.social · 19/12/2025Has Mitt Romney been reading the @taxlawcenter.org Tealbook of options to broaden the tax base? www.nytimes.com/2025/12/19/o...nytimes.comOpinion | Mitt Romney: Tax the Rich, Like Me 1145
Reposted by Lily BatchelderChye-Ching Huang @dashching.bsky.social · 24/06/2025THREAD: GOP Senators say they're trying to scale back the SALT cap relief in the House bill. But could the approach to SALT in the Senate bill actually end up *more* generous & costly overall than the House bill? Do Senators – or does anyone – even know, despite the intense political focus on SALT? 292
Lily Batchelder @lilybatch.bsky.social · 24/06/2025JCT tables follow. (Prior chart was for 2027 and calculated from JCT tables.) 2/ 100
Lily Batchelder @lilybatch.bsky.social · 24/06/2025New JCT distributional estimates of proposed tax changes by the Senate Finance Committee. Compared to current law, the bill heavily skews benefits to the wealthy as a share of after-tax income. 1/ 230
Reposted by Lily BatchelderThe Tax Law Center at NYU Law @taxlawcenter.org · 03/06/2025Full recording of our discussion on risks to taxpayer privacy from DOGE & related efforts featuring Daniel Werfel, Lily Batchelder, Brandon DeBot, Elizabeth Laird, and David Padrino nyu.zoom.us/rec/share/IF... 032
Lily Batchelder @lilybatch.bsky.social · 03/06/2025Looking forward to this discussion starting at 1:30 with Danny Werfel and cybersecurity, IT modernization, and tax policy experts! 110
Lily Batchelder @lilybatch.bsky.social · 31/05/2025On June 3, I'm moderating a panel for the @taxlawcenter.org on the privacy risks of unprecedented access / sharing of taxpayer data across government. We'll hear from Former IRS Commissioner Daniel Werfel plus Brandon DeBot, Elizabeth Laird & David Padrino. Please join! nyu.zoom.us/webinar/regi...nyu.zoom.usRegister for Webinar: Understanding Risks to Taxpayer PrivacyPlease join the Tax Law Center for a virtual discussion of the legal, privacy, and cybersecurity risks of unprecedented efforts to access, use, and share taxpayer data across government for purposes f... 061
Reposted by Lily BatchelderBrendan Duke @brendanvduke.bsky.social · 14/05/2025New @centeronbudget.bsky.social analysis of the draft GOP tax plan released yesterday: Unsurprisingly, it provides enormous tax cuts for the wealthy—including an average annual $65k cut for the top 1%—while doing little for low- and moderate-income families in 2027 (and even less by 2029). 29599249
Lily Batchelder @lilybatch.bsky.social · 02/05/2025For more details on the law, see this Tax Law Center post. Overwhelming bipartisan majorities in Congress have enacted laws making it a crime for the President and his staff to request an audit or investigation of a particular taxpayer. 3/3 taxlawcenter.org/blog/irs-sta...taxlawcenter.orgIRS Staff Must Reject and Report Attempts at Political Interference in Tax InvestigationsRecent reporting suggests that the President and other Administration officials may have attempted to initiate or interfere with IRS investigations for political reasons. Overwhelming bipartisan major... 124144
Lily Batchelder @lilybatch.bsky.social · 02/05/2025If the President can announce that he is revoking the tax-exempt status of a charity, we have crossed a rubicon that has no clear end. What will stop him or any President from weaponizing the IRS to intimidate any political opponent or group he dislikes into silence? 2/3 847187
Lily Batchelder @lilybatch.bsky.social · 02/05/2025The President just effectively signed a statement that he is committing a crime, violating a criminal statute enacted with overwhelming bipartisan majorities (it passed 96-2 in the Senate). Here is the law and his post. 1/3 732145713
Lily Batchelder @lilybatch.bsky.social · 22/04/2025Harvard may not be at the top of most people’s list of favorite charitable causes, but if the President’s and WH's unlawful interference in IRS actions regarding specific TPs and charities isn’t stopped, it means he or any president can come for your church or community group.washingtonpost.comHarvard sues the Trump administration in escalating confrontationLawsuit argues that government actions, including freezing $2.2 billion in federal funding, violated the First Amendment and didn’t follow legal procedures. 1157
Lily Batchelder @lilybatch.bsky.social · 20/04/2025This violate the law (which was passed by a vote of 96-2 in the Senate in 1998) that makes it a crime for the President and his political advisors to directly or indirectly interfere in IRS audits or investigations. 11/11 medium.com/@taxlawcente...medium.comUnderstanding the Tax System’s Protections Against Political Interference in the Tax CodeBy: The Tax Law Center 092
Lily Batchelder @lilybatch.bsky.social · 20/04/2025Now R lawmakers are silent when the President – the most political actor of all! – is pressuring the IRS to revoke the tax exempt status of nonprofits he doesn’t like. 10/ 153
Lily Batchelder @lilybatch.bsky.social · 20/04/2025One of the recommendations from the bipartisan Senate Finance Committee report was that *anyone* with influence over whether and how tax exempts are reviewed and audited should be precluded from participating in political work, even when off-duty. 9/ 141
Lily Batchelder @lilybatch.bsky.social · 20/04/2025The IRS was defunded for a decade to a large extent in response. 8/ www.cbpp.org/charts/budge...cbpp.orgBudget Cuts Have Reduced Enforcement Staff by 31 Percent Since 2010 | Center on Budget and Policy Priorities 131
Lily Batchelder @lilybatch.bsky.social · 20/04/2025Despite the fact that it is not crazy (except as a political matter) to select applications for tax exempt status for review about whether they intend to abide by lobbying limits if their name includes terms associated with electioneering, 7/ 130
Lily Batchelder @lilybatch.bsky.social · 20/04/2025Despite the fact that these weren’t even audits but rather keywords were used in triaging applications for tax-exempt status, 6/ 120
Lily Batchelder @lilybatch.bsky.social · 20/04/2025Despite the fact that there was no evidence of interference by political appointees (let alone the WH or President!), despite the fact that the IRS voluntarily disclosed this information without prompting, 5/ 130
Lily Batchelder @lilybatch.bsky.social · 20/04/2025The (R-appointed) Inspector General for Tax Administration and the bipartisan Senate Finance Committee report found that the IRS had also used liberal-coded keywords like “progressive” and “Occupy” to identify tax exempts for audit. 4/ www.tigta.gov/sites/defaul...tigta.gov 130
Lily Batchelder @lilybatch.bsky.social · 20/04/2025Rs and Ds on a *bipartisan* basis launched a multiyear investigation into the matter. 3/ www.finance.senate.gov/release/fina...finance.senate.govFinance Committee Releases Bipartisan IRS Report | The United States Senate Committee on FinanceFinance Committee Releases Bipartisan IRS Report 140
Lily Batchelder @lilybatch.bsky.social · 20/04/2025In 2013, a nonpartisan career IRS official publicly shared that the IRS had selected some tax exempts for review about whether they were violating lobbying limits based on keywords like “Tea Party.” A firestorm ensued. 2/ 150
Lily Batchelder @lilybatch.bsky.social · 20/04/2025The silence from Republican lawmakers re: Trump’s suggestions that IRS audit specific tax exempt orgs is deafening. Here’s a short history of how Rs and Ds responded to prior IRS reviews of tax exempts when *no* political appointees, let alone the President, were interfering. 1/politico.comTrump eyes targeting more tax-exempt groups while denouncing HarvardPresident Donald Trump defended his administration's moves to strip Harvard of its tax-exempt status and suggested more organizations could be in the IRS's crosshairs. 32916
Lily Batchelder @lilybatch.bsky.social · 17/04/2025Sharing this letter with my colleagues on the @nyulaw faculty. We have very different views on what the law is and should be, but share deep concern about this Administration’s attacks on the independence of academic institutions, lawyers, and judges. drive.google.com/file/d/1yysJ...drive.google.comNYU LAW FACULTY LETTER_041725.pdf 031
Lily Batchelder @lilybatch.bsky.social · 17/04/2025Even if the President had made no such suggestion and the IRS was, with no political influence, auditing a TE organization, it would be extremely rare for them to revoke an organization’s tax exempt status, and would only occur after years of back-and-forth. 011
Lily Batchelder @lilybatch.bsky.social · 17/04/2025In responses to attempted abuses in the Nixon admin, overwhelming bipartisan majorities enacted laws making it a crime for the President or any political appointee in the WH to directly or indirectly interfere in IRS audits or investigations of taxpayers. The President has done just this. 2/3medium.comUnderstanding the Tax System’s Protections Against Political Interference in the Tax CodeBy: The Tax Law Center 142