Department of Accountancy faculty Ryan Baxter, Mark Cowan and Joshua Cutler presented their paper “Strategic Surrogates or Sad Sinners: U.S. Taxation of Bartering in Digital Services” at the Ethical Leadership and Legal Strategies for Post-2020 Organizations virtual conference. The paper has since been accepted for publication in the American Business Law Journal.
The pandemic created soaring profits for large tech companies, while at the same time hurting the revenues of many state governments. This accelerated the desire of state governments to enact new taxes on tech companies, but existing tax proposals suffer from many problems.
“Our paper proposes a novel surrogate tax, where tech companies would pay a tax on the value of their digital barter transactions with users,” said Cutler. “We argue that the surrogate tax is a pragmatic compromise that makes sense for both governments and tech companies.”