Friday, September 14, 2018
This week, Ariel Jurow Kleiman (San Diego) reviews a new work by David J. Shakow (Penn), The Tao of The DAO: Taxing an Entity that Lives on a Blockchain, 160 Tax Notes 929 (Aug. 13, 2018).
Much as governments have struggled for centuries to harness income flows transcending national borders, today governments face the novel challenge of taxing income flows that transcend the boundaries of the tangible world. Specifically, blockchain technology has enabled cyberspace-based financial arrangements that trigger seemingly endless tax and regulatory quandaries. (See, e.g., here and here.) David Shakow tackles one such quandary in his recent Tax Notes article, considering the tax treatment of income earned through a blockchain entity known as a decentralized autonomous organization (DAO).
Shakow’s article begins with a mercifully clear explanation of the formation, structure, and eventual demise of a specific DAO, called “The DAO.” Formed in 2016 on the Ethereum blockchain platform, The DAO collected $150 million to invest in startup enterprises. Under The DAO’s terms, anonymous investors would vote on which enterprises to invest in and would share in the profits. All transactions occurred without the need for human involvement via the operation of “smart contracts” recorded in the Ethereum blockchain. Human interveners were only necessary to confirm the identities of startup companies that submitted proposals for investment by The DAO.
September 14, 2018 in Ariel Stevenson, Scholarship, Tax, Weekly SSRN Roundup | Permalink
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Friday, August 10, 2018
This week, Ariel Jurow Kleiman (San Diego) reviews a new essay by Reid K. Weisbord (Rutgers), Postmortem Austerity and Entitlement Reform, 71 Stan. L. Rev. Online 132 (2018).
As readers know well, Social Security and Medicare are on a path to eventual insolvency, and entitlement reform is inevitable. For the most part, reform proposals tend to exist within the familiar bounds of tax hikes or benefit cuts. In his new essay on the topic, Reid K. Weisbord offers a bold reform proposal that includes elements of both, but is somehow not exactly either.
Weisbord starts by dismissing the possibility of a broad-based tax increase to fund entitlements. A tax increase is unlikely in the near future, he argues, because history has witnessed a long-term trend of steadily declining tax rates in the United States. In addition, he notes, U.S. citizens are tax averse, often failing to recognize the connection between tax payments and valued public services. Under such conditions, cutting benefits may be politically more palatable than raising taxes. However, cutting benefits harms individuals who relied on Social Security and Medicare in planning for old age. To solve this dilemma, Weisbord proposes a novel policy of “postmortem austerity.”
August 10, 2018 in Ariel Stevenson, Scholarship, Tax, Weekly SSRN Roundup | Permalink
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Friday, June 1, 2018
This week, Ariel Jurow Stevenson (NYU; moving to San Diego) reviews a new work by John R. Brooks (Georgetown), The Case for More Debt: Expanding College Affordability by Expanding Income-Driven Repayment, 2018 Utah L. Rev. ___:
Commentators routinely excoriate student debt for a litany of social ills, such as worsening financial instability and inequality and causing debtors to delay important activities such as marriage, having children, and saving for retirement. Given such damning accusations, constructing a humane, pro-student argument for expanding student debt may seem a daunting task. However, John Brooks artfully manages to do just that in his recent essay, The Case for More Debt. In it he provides a winning argument that more debt, not less, would improve education outcomes and offer needed support to low- and middle-income students.
Brooks focuses on federally-financed student loans that are eligible for income-driven repayment (IDR) programs. To lay the foundation for his argument, he deftly summarizes the various IDR program structures—each with its own acronym and set of complex lending terms. Although each program is slightly different, they share several essential features, including that 1) the borrower need only repay a fixed percentage of discretionary income, and 2) after a certain number of years the unpaid portion is fully forgiven. Taken together, Brooks reasons, these attributes of IDR transform such borrowing from true debt into something more akin to a tax.
June 1, 2018 in Ariel Stevenson, Scholarship, Tax, Weekly SSRN Roundup | Permalink
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