Substantial Authority: MMT and Tax Policy

Saturday, December 21, 2013

MMT and Tax Policy

I just posted on my other blog about my increasing interest in Modern Monetary Theory (MMT).

As I said there, I'm still trying to get my head around all of this. I'm particularly interested in what the theory has to say about tax policy. I'll be posting some thoughts on this in the coming days.

In the meantime, ideas are welcome.

No comments:

Post a Comment

Substantial Authority

Substantial Authority has a special meaning to tax practitioners. When somebody takes a questionable position on his tax return, the strength of that position depends on how well the authority - statutes, regulations, cases and ruling - supports the position. If your tax advisor says you have "substantial authority" for your position, it means the chances of success if the IRS should challenge your position are less than 50%, but you're not being negligent in taking the position.

In other words, if you have substantial authority for your position, you're probably going to lose, but you won't be penalized if you do, so what the hell?

Substantial Authority is a green light to play the audit lottery with no adverse consequences. Bless Congress for thinking it up....