INTERVIEW #1 - DAVID BRUNORI

As I mentioned in yesterday's post and my site, I have started interviewing state tax professionals across the country and will be posting them on this blog to help each of us build connections and get to know each other better.

My first guest is David Brunori. David is currently a Partner with Quarles & Brady LLP in Washington D.C. He has been a research professor of public policy and public administration at The George Washington University for 18 years, and is currently teaching today as well. You may know him as the prolific teacher and writer on state tax policy from when he worked at Tax Analysts for 14+ years.

His practice focuses on all aspects of state and local taxation, state and local government and regulatory affairs, as well as exempt organizations. He has a particular interest in state tax policy, a subject that he has taught for years and written about extensively.

Without further ado, here are his answers to the 14 questions:

1.  Birthplace: Scranton, Pennsylvania

2.  Education: BA, MA, The George Washington University; JD University of Pittsburgh School of Law

3.  Career: Very varied! I have been a lawyer, writer, teacher, consultant, and business manager. I have worked for the government, a non profit, and in the private sector.

4.  Best Career Move: Joining Quarles & Brady LLP. I also made a good move starting to teach many years ago. But the truth is I have made good choices over my career. It has been quite a ride.

5.  Career Goals: Honestly, I look for interesting things to do and get paid for. Helping people, solving problems, having some positive impact on the planet -- are all good goals. But ultimately, I am looking for meaningful work -- work that allows me to make a difference.

6.  Best advice ever received: I had a boss many, many years ago who advised his folks to "always do right."  Life is one big decision tree.  We should try to do right as we face those decisions whether they are big or small. So I try to do right by my clients, readers, students, family, and friends.  Second best advice -- and related -- was from a partner at a big law firm when I was a very young lawyer. She said try to live a life without regret. She was talking about professional regrets, but that is darn good advice in general.     

7.  Most difficult situation faced on the job: I have dealt with many, as I am old. Most difficult situation was working for someone I did not respect. It was often hard to get out of bed to go to work. But that was a long time ago.

8.  Career tip for students:   Think hard about what you want to do. Then think again. Don't settle. Pursue your passion, particularly when you are starting out -- you may not be able to when you are older.

9.  Role models:  Easy. Personally, it is my dad and my father in law.  They were menschen, which, for the gentiles among us, means men. They were honest, hard working, responsible, loving, and genuinely good guys. They treated people with respect. I am not half the man they were. But when I think of "doing right" I immediately think of them. Professionally, I have had the honor and privilege to work with many leading men and women in the law and public finance fields.  Many have had a positive influence on my career.

10.  Family: excellent wife, three grown children (two girls, one boy), soon to be son-in-law, two dogs, two cats, and a beta fish that apparently will never die.

11.  Pastimes: I like baseball, bourbon, deep sea fishing, watching certain TV shows, college basketball, drinking beer, college football,  and serving on several non profit boards (not necessarily in that order). I should add, in case she is reading, that I like to spend time with my wife.   

12.  Most memorable book: I suspect that for most people, the answer is David Brunori's books on state and local tax policy. But for me, it was Robert Caro's biographies of LBJ. 

13.  Favorite restaurant:  Dolce Vita in Fairfax, Virginia. Try the veal.

14.  Ideal vacation: My ideal vacation? I am now thinking about the Croatian coast. Seriously, look it up.

If anyone finds this interesting, you may contact David at: https://www.linkedin.com/in/david-brunori-b65a5026/

I hope you enjoyed meeting David. I also hope you will consider answering the 14 questions and sending them to strahle@leveragesalt.com to be published on the blog.

Thank you.

How States May React to Federal Tax Reform

I hope you had a great Christmas, and are looking forward to 2018.

Last week, the President signed tax reform (H.R. 1) into law making the most dramatic overhaul to our federal tax code since 1986. I normally focus on state taxes, but I have been analyzing the federal tax reform changes for specific clients and doing some ghost-writing. 

Here I want to provide you with some predictions as to how the states may respond to some of the main business federal tax changes.

1. New federal tax law allows 100% expensing of short-lived capital investments, such as machinery and equipment (for 5 years) - applies to qualified property placed in service after 9/27/17 and before 2023. States will most likely NOT conform to this provision and require businesses to add-back the federal deduction.
2. New federal tax law raises Section 179 small business expensing cap to $1 million with a phaseout starting at $2.5 million. States will most likely NOT conform to this provision and require businesses to add-back the federal deduction.
3. New federal tax law eliminates net operating loss (NOL) carrybacks while providing indefinite net operating loss carryforwards, limited to 80 percent of taxable income. Most states don't use the federal NOL and compute their own state NOL, and thus, will most likely not conform to this change. However, there are a handful of states that use the federal NOL and do not compute a separate state NOL. These states will have to make a decision as to whether to conform to the federal changes. I think these states will most likely conform. (For more info on state NOLs, see my previous post)
4. Under the new federal tax law, research expenses are required to be amortized and the domestic production deduction (Sec. 199) was repealed. States will most likely conform to these changes.
5. The new federal tax law creates a new 20% deduction for pass-through entities. The calculation for this new deduction is extremely complex and has several limitations. States that are impacted negatively (i.e., obtain less tax revenue) by this deduction will most likely NOT conform. (Here is a link to an article by the Tax Foundation - Pass-Through Deduction Won’t Flow Through to Most States)

Those are the top 5 business tax changes (other than the tax rate changes and tax changes for foreign income) that I believe the states will address specifically. 

Have a Happy New Year and remember - you can't keep doing the same things and expect a different result! Change can be good. Start now.

Why do you keep going after things you don't care about?

Why do we keep going after things we don’t care about? Why do we naturally lean toward conformity and towards checking the boxes or doing what everyone else is doing? Why is it so hard to be truly innovative? To truly follow what you desire deep down to do?

I want to save the world. I want to make life better and business better. I want to make it easier for small and large businesses operating in multiple states within the U.S. I want to make federal tax and state tax law more effective in accomplishing its objectives while being less burdensome on businesses. I want to make the state tax profession something that is fun and valuable. Something that makes a state tax professional jump out of bed with enthusiasm. Something that will make the state tax professional work all night long if necessary. Not because they have to, but because they want to. They must do it; because they are solving problems so important. So valuable. So appreciated; that they must and want to do it.

I want to work with others that are fun to work with – meaning; they are hard workers. They value initiative. Value treating people with respect. Value giving people responsibility and authority to get things done. I don’t want to waste time. I don’t want to spend my time doing tasks and going to events that are simply busy work or a waste of resources. I don’t need golf events. I don’t need happy hours. I don’t need fancy offices (although I like them). I don’t need game rooms or sleep rooms. I need to work and solve problems and then spend time with my family. I don’t need egos. I don’t need competition. I need productive collaboration and knowledge sharing. I don’t need dress codes or rules that don’t matter. I need technology tools and colleagues focused on getting things done, not checking boxes or meeting number goals. I want to get paid for getting work done, not putting in hours. I don’t need an award. I don’t need networking events. I need one-on-one relationship building opportunities.

Do you agree? What do you want to do? What must you do? What will you do?

Can We Have A Real Conversation?

I have been working as a solo state tax consultant, researcher & writer for the past 4 years (I have 20+ years of experience in total). This solo life is a lot of work. It takes commitment and self-discipline to work when no one is telling you to. It takes more hours than you thought. It takes making the time to 'get' the work and 'do' the work. It is constant. You don't get paid if you don't work. I have been very successful (making more money than I did when I worked for someone else), yet I fantasize about re-joining a firm. I also fantasize about creating something totally different than what currently exists in the world of state tax. I want to make state taxes exciting. Fun even. I want to create passive income. I want to create freedom for other state tax pros. I want state tax to be less burdensome for start-ups and middle-market companies. These (smaller) companies need state taxes to get out of the way so they can truly prosper. Fortune 500 companies have teams of tax pros and large firms begging to help them. They also have the means to get that expertise. I hate the ego and competition in larger firms. I hate feeling like a number. Can we change this?

YOU NEED THIS TO AVOID THIS. YOU NEED THIS TO RESOLVE THIS. YOU NEED THIS JUST IN CASE OF THIS. YOU NEED THIS TO STOP THIS. YOU NEED THIS WHEN THIS HAPPENS.

Simplicity. Straight-forward. Clarity. Certainty. Essential. Valuable. - these are words that describe what we need as business (and tax professionals). Everybody is trying to sell you something based on fear (or pleasure), but mostly fear. Such as "You need this to avoid this. You need this to resolve this. You need this just in case of this. You need this to stop this. You need this when this happens. You need Us. You need our product. You need me. I am the best. I am the best fit for your situation."

How do you know if you really need 'this'? How do you find the right solution? The right consultant? The right firm? The right resource at the right time? How do you become the right resource? How do you sell yourself as the right resource at the right time? What are you and why do I need you?

Keep it simple. Sell your unique story and skills. Sell you. Better yet, make the client's goals your goals. Make the client your story. Make the client the hero. Be a facilitator of growth, of solutions, of success. Happy Monday! Peace.

Are You Attending the Paul J. Hartman SALT Forum in Nashville? Are You Prepared for the Robots?

I don't always learn something from CPE, but I always learn something when I talk to others at a CPE event. If you will be attending the Paul J. Hartman State and Local Tax Forum in Nashville, TN on November 6, 7 & 8, please let me know. It might be beneficial for us to talk. We can talk career, technical, practical, technology, etc. Regardless of what we talk about, it is always good to talk to fellow colleagues to get a better handle on the pulse of state taxation. Agreed? Comment on this post or send me a message and we can schedule a meet-up. If I get a big number, we can always reserve a restaurant or meeting room to have real discussions, not rehash what we already know. For example, what will be the real impact of technology on our profession? (robotics, artificial intelligence, blockchain, etc.). Everybody talks about these things like it is a good thing. It will move people from doing routine tasks and free people up to be real advisors. My question, what if everyone in a corporate tax department doesn't want to be an advisor? What if they like doing the routine tasks? Skill sets, interests, strengths need to be addressed. We need to be proactive in developing our skills to always be relevant. What do you think? What are you doing in regards to the technology wave?

Technology advancements are not about the corporation. They are about people. Real people doing real jobs. Supporting families. Supporting growth. Providing real value to the economy and public. What will technology do to our profession? Is it really a good thing? Are you embracing it or putting your head in the sand?