June 7, 2012
Today's Law, Society & Taxation Panels
Panel #6: Courts, Taxes, Justice, and a Little Bit of Luck: This panel brings together an eclectic group of papers that variously discuss, among other things, the roles of courts in the enforcement and interpretation of tax laws, and the questions of wealth, just desserts, and luck in the design of tax policies.
- Lily Kahng (Seattle) (Chair/Discussant)
- Richard Lavoie (Akron), The Times They Are A-Changin’: Do the Occupy Wall Street Protests Show a Comprehensive Wealth Tax Is Now Possible in the United States?: It is often thought that a direct tax on individual wealth is a political non-starter in the United States. Not only is such a tax arguably unconstitutional, but as a psychological matter it goes against the American psyche. That is, each of us hold out hope that someday we might become rich too, so we will not support any tax perceived as a “soak the rich” ploy. But has wealth inequality in the United States now reached the breaking point? Is the OWS movement a harbinger that the political will might now exist to make a comprehensive wealth tax a reality? This article will examine the adoption of a comprehensive wealth tax from both a tax policy and political viability standpoint.
- Roberta F. Mann (Oregon), Smart Incentives for the Smart Grid: The United States and various other countries provide incentives for producing electricity from renewable sources. Intermittent renewable sources such as wind and solar pose logistical challenges to maintaining a consistent flow of electricity to users. Smart grid technology can overcome those logistical challenges and make renewable energy sources more acceptable. This paper will examine the incentives provided through the tax system for development and implementation of smart grid technology, assessing the progress of the United States and considering strategies for the future.
- Leonel C. Pessôa (Universidade Nove de Julho), Compliance Costs of Taxation and Small Business in Brazil: In the 2011 World Bank doing business ranking, Brazil is classified in the 126th position among the 183 economies analyzed. Paying taxes is one of the worst Brazilian indicators: it takes 2.600 hours a year to pay taxes, what makes the country be in the 150th position in respect to this point. Transaction costs make, for example, opening a company in Brazil a lot more complex than it is in most of the countries. These costs are in the most part, tax costs: compliance costs of taxation. This problem is assuming a so serious dimension that there is a tax reform proposal in Brazil that to face it, proposes that all of the existing taxes should be replaced by a single tax on financial transactions. The fundamental purpose of a tax like this would be to dramatically reduce the compliance costs of taxation. An OECD study shows that there are four main disadvantages of small businesses in relation to the larger. The first associated with purely economic factors, the second to administrative factors, the third linked to the financing of micro and small enterprises and the fourth related to legislation and regulation by the government, what includes taxes. The micro and small enterprises have low output, operate with relatively higher costs and do not make use of economies of scale. They do not have an adequate administrative organization and have more difficulty obtaining financing. However, in all these cases it is not the economic efficiency that justifies government intervention to protect them. Intervention to protect the micro and small businesses can also be justified because they create jobs. But, if economic efficiency is taken as a criterion, a clearer justification for the need of government intervention to protect the micro and small businesses are the disadvantages created for them due to the action of government itself. In Brazil, the tax rules that companies must follow are such that they arrive in some cases, to cripple the very existence of companies. On the other hand, studies show that the tax compliance costs are highly regressive: they are proportionally greater for the micro and small enterprises. This work deals with the relationship between compliance costs of taxation and competitiveness of micro and small enterprises. The paper presents case studies dealing with the compliance costs of taxation of micro and small enterprises in Brazil. The results show its inadequacy and disproportionality of these costs and that measures are necessary to correct the current situation.
- Richard Schmalbeck (Duke), The Role of Declaratory Judgments in Shaping the Concept of Charity: This paper reviews the nearly 200 cases decided by the Tax Court, the District Court for D.C., and the Court of Federal Claims since Congress added section 7428 to the Code in 1976, granting jurisdiction to those courts to hear disputes involving denial or revocation of recognition of exempt status by the IRS. Special attention is given to cases decided under the general concept of "charity."
Panel #7: Social Policy through the Tax Code: The tax code necessarily has an impact on society in ways going far beyond raising revenues for the government. The papers on this panel discuss how the tax code can and should be used to produce desirable effects on a number of social policies areas, including the health care system, environmental policies, and gay rights.
- Roberta F. Mann (Oregon) (Chair/Discussant)
- Patricia Cain (Santa Clara), Taxing Families: The Troubling Disconnect between State and Federal Law: Federal tax law has always been dependent on state laws defining family and property rights. Recent changes in state family laws, recognizing alternative forms of families, have created tension with federal tax law. For example, DOMA (the Defense of Marriage Act) prevents the federal government from treating same-sex couples as spouses for federal tax purposes. In addition, the federal law simply fails to recognize alternative family forms such as civil unions and domestic partnerships. Non-recognition of legal status does not result simply in denying tax benefits to same-sex couples. Non-recognition leads to absurd results and causes confusion for taxpayers who are trying to report their income accurately. As DOMA is being challenged in the courts, and as bills are introduced in Congress to repeal DOMA, numerous questions arise for the IRS. What can the IRS do now, even with DOMA in full force, to tax all couples fairly and accurately? How should substantive tax law change once DOMA falls? And, what transition problems should tax authorities be thinking about now?
- Susannah Camic (Wisconsin), Everything Is Tax: In marked contrast to major legislative reform packages in the 20th century, the health care reform bill of 2010 took the form of a tax bill. Although this bill is the first massive social and regulatory overhaul completed through the tax code, in the past fifteen years the U.S. Congress has substantially increased its use of tax law for non-revenue-raising purposes. This growing reliance on the tax code represents a structural transformation of how Congress has come to approach its lawmaking goals. This development departs significantly, however, from the ideas of tax scholars from earlier eras who frowned upon embedding programs in the tax code, but whose scholarship rests on assumptions that have by now become largely outdated. Moving beyond this earlier scholarship, this article analyzes the present structural transformation by observing and explaining the advantages that accrue from pursuing social and regulatory objectives in this new manner. In particular, this Article identifies a number of descriptive and normative advantages that tax-embedded policies offer in the current tax policy environment.
- David Herzig (Valparaiso), Disregarding DOMA: In two recent Massachusetts federal district court decisions, Section 3 of the Defense of Marriage Act (DOMA) denying federal and states rights to same-sex couples was held to be unconstitutional. Taking the cue from the decisions, the Department of Justice has issued a proclamation that the Department of Justice will no longer defend DOMA as it believes that the statute was correctly interpreted by the district court as being unconstitutional. Because of the need for executive branch inter-agency consistency, the practical impact of the pronouncement, since the Department of Justice represents the Internal Revenue Service (IRS) in cases before the federal courts, is that DOMA will not be applicable for the IRS. The normative conclusion that follows in this article is two fold. First, in order for even application of the Internal Revenue Code to taxpayers and employers, the IRS should issue a similar pronouncement that for the purposes of the tax code, the IRS will not enforce DOMA. If it is deemed undesirable for the IRS to take such a position, the article posits that the IRS should be recast as a quasi-independent agency similar to the Federal Reserve. Secondly, once the position is taken either through a pronouncement, binding court decision or the practical effect of the unitary theory of the executive, then the practical application of ignoring DOMA is examined with special attention paid to the ability of lesbian gay bisexual transgender and intersex (LGBTI) taxpayers to file joint tax returns.
- Lily Kahng (Seattle), Gender, Race, Wealth, and Tax: Women are less wealthy than men. This is true for women of all races, though it is particularly acute for single women of color. A recent study found that single black and Hispanic women have one penny of wealth for every dollar of wealth owned by their single male counterparts, and a small fraction of a penny for every dollar of wealth owned by white women. The observation that women are poorer than men is not new. The “feminization of poverty” has been studied extensively by feminist and poverty law scholars. Until recently, however, a more comprehensive picture of wealth inequalities between men and women has been obscured by the fact that most women spent most of their adult lives in marriage, and were assumed to share resources with their husbands. Today, for the first time in U.S. history, more than half of adult women in the U.S. are single, and on average, all women spend more than half their adult lives outside marriage. This demographic shift has revealed the disturbing findings described above—that women are less wealthy than men across the board, with women of color occupying the lowest rungs of the economic ladder. That race, along with gender, plays a role in wealth inequalities in the U.S. is, sadly, not surprising. Melvin Oliver and Thomas Shapiro describe the phenomenon of entrenched economic inequality between blacks and whites in the United States, which they call the “sedimentation of racial inequality.” The phrase powerfully evokes the image of today’s economic inequality as constructed from past layers of stunted opportunities and scarce resources—the result of discriminatory practices and policies stretching back in time over many generations. In keeping with Oliver & Shapiro’s thesis about the deep intransigence of this problem, the most recent data indicate that racial wealth inequalities not only persist, but are worsening. And as the number of single women has increased, it is now possible to discern, within each layer of racial inequality, an even more finely grained sedimentation: women are trapped at the bottom of each layer, with dire consequences for themselves and their dependents. This paper focuses on the myriad ways in which the tax system helps perpetuate our raced and gendered wealth inequalities. Some features of the tax system are directly linked to wealth accumulation, and disproportionately benefit those who are already in the top layers of the wealth hierarchy. Others deter women from the income production that can lead to wealth accumulation. More fundamentally, there are deep structural features of the tax system that operate to preserve and augment wealth inequalities. Some of these are so embedded in our system that they are assumed to be incontrovertible; others are so subtle that they escape detection or measurement. The patterns of wealth distribution in the U.S. are clearly undesirable, and the tax system must be critically evaluated and changed when it is found to perpetuate these patterns. But if we want our tax system to go beyond the goal of “do no harm,” and to help promote a more just and fair society, we must confront a difficult set of questions: What does a more just and fair society look like? Should women and people of color strive to climb up the economic ladder? Does that mean that others will be left to occupy the lower rungs? Is there a better alternative?
Panel #8: Democracy, Taxes, and Public Policy: The scholars on this panel will discuss various ways in which tax policies can be used to bring about political goals, as well as how political influences can and should affect the formation of tax laws.
- Terri Lynn Helge (Texas Wesleyan) (Chair/Discussant)
- Mark A Burton (University of Melbourne), Democratic Positivism and Tax Expenditure Management: A Wintry Antipodean Critique of Positivism's Limitations: In this presentation I want to draw several philosophical/tax policy threads together by exploring the tension between philosophical monism and pluralism in the context of ‘democratic’ tax expenditure management. A discussion of the weaknesses of several monist approaches to the concept of tax expenditures, and also to the management of tax expenditures, will (I hope) serve as the portal from which we can explore the challenges confronting tax expenditure management advocates (amongst whom I count myself). To focus this wide ranging paper, I will present a reflective critique of the philosophical monism developed by ‘democratic positivists’ such as Jeremy Waldron and Jeffrey Goldsworthy, who make the proceduralist claim that a thin concept of democratic accountability validates enacted law (and therefore enacted tax expenditures).
- Steven Dean (Brooklyn), Twilight Chains: Fiscal Arbitrage and Budget Accountability: The tax expenditure budget has long served as a commitment device, a bulwark against policymakers’ abuse of tax expenditures. Like the smoker promising to send a check to a politician she despises if she smokes again or a college student cutting the electrical cord on his television to help him study, for almost half a century Congress has published a shadow budget to publicize the costs of tax subsidies. Unfortunately, that tax expenditure budget has not prevented the use—or the abuse—of tax expenditures. This Article presents Congress and fiscal watchdogs with a flexible, comprehensive framework that complements the fragile fiscal chains that are the tax expenditure budget, allowing both policymakers and observers to be vigilant to the threat of tax expenditure abuse even if those abuses can not be eradicated.
- John A Miller (Idaho), Long Term Health Care Planning for the Elderly in the United States: This paper focuses on the long term care planning aspects and opportunities of the Federal/State Medicaid system in the United States. In old age the passage from life to death often involves a significant period of disability. The financial exposure for long term disability care can exceed $100,000 annually. Consequently, the costs of long term health care represent one of the biggest financial risks of old age. For most people a period of extended disability leads to impoverishment. This is why most people who live in nursing facilities for extended periods ultimately rely upon Medicaid to fund all or part of their costs of care. In this article we explain the structure of Medicaid and illustrate many of the planning issues and strategies that can come into play for the disabled older person and his or her family.
TrackBack URL for this entry:
Listed below are links to weblogs that reference Today's Law, Society & Taxation Panels:
"What can the IRS do now, even with DOMA in full force, to tax all couples fairly and accurately?" misses the point. We are no longer a nation of couples. The real question is: "What can the IRS do now to tax all individuals fairly and accurately?" and the answer is: reform the tax code to tax all persons as individuals, regardless of their social/marital status, whether they live as mates or as singles or as brother-sister, grandmother-grandson.
My question to the tax-profs here: What countries, if any, do not confer on couples, married or otherwise, a privileged tax status? Denmark?
Posted by: Jimbino | Jun 7, 2012 2:56:04 PM