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Thursday, July 24, 2014

Washington & Lee Hosts Tax Roundtable

W&LWashington & Lee Law School hosted a roundtable discussion of works-in-progress by tax professors from mid-Atlantic law schools on July 22-23:

  • Eric Chason (William & Mary), Taxing Losers
  • Michael Doran (Virginia), Tax Legislation in the Contemporary U.S. Congress
  • Michelle Drumbl (Washington & Lee), Enhancing Taxpayer Compliance with the EITC
  • Brant Hellwig (Washington & Lee), The Constitutional Nature of the United States Tax Court
  • Ruth Mason (Virginia), Taxing Citizenship
  • Gregg Polsky (North Carolina), Taxing Partnership Allocations Among Related Parties
  • Ethan Yale (Virginia), Antibasis  

July 24, 2014 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

Wednesday, June 25, 2014

Osgood Presents Reform of [the Tax Treatment of] Nonprofit Institutions Today at Washington University

OsgoodRussell K. Osgood (Washington University) presents Reform of [the Tax Treatment of] Nonprofit Institutions at Washington University today as part of its Faculty Workshop Series:

The paper: 1) reviews the growth in many dimensions of the nonprofit sector, 2) discusses the history from 1969 onward of the 1969 Act and the subsequent lack of statutory reform due to Congressional inaction and the reasons for it, and 3) makes six significant proposals, including imposition of 1% excise tax on the endowments of all nonprofits, redrafting and narrowing the definitions of allowable 501(c)(3) purposes and regulating more heavily changes in purposes, expanding the taxation of quasi business income by taxing all income “not closely” related to the exempt purpose(s), eliminating much of the private foundation regime but requiring private foundations to liquidate after ten years and disqualifying them for any violation of core fiduciary duties, and revising the 170 deduction rules by limiting the deductibility (to the higher of adjusted basis or 50% of fair market value) of appreciated property, reducing the estate and gift tax charitable deduction limit to 50% (vs. 100%) of the gifted property, and reducing the regular contribution limits for all property and all taxpayers to a uniform 25% of adjusted gross income with only a one year carry forward.

June 25, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Saturday, June 14, 2014

Brauner Presents Prospects of U.S. Corporate Tax Reform in Switzerland

BraunerYariv Brauner (Florida) presented Prospects of Corporate Tax Reform in the United States yesterday at the Université de Lausanne (Switzerland):

At the time that the international tax community focuses on the BEPS initiative, the US is distancing itself from the project that it's MNEs behavior triggered and to which it heavily contributed at first. Instead a large number of corporate tax reform proposals have been promoted over the last few years with what seems to be zero chance of being passed. The political climate stifles progress despite a surprising consensus among the parties over the tax policy that they would be able to implement under current conditions. In any event, any feasible tax reform is unlikely to affect the prospects of any likely Swiss corporate tax reform.

June 14, 2014 in Colloquia, Tax | Permalink | Comments (0)

Wednesday, May 28, 2014

Blank & Mason Present U.S. National Report on Exchange of Information Today at Annual Congress of European Association of Tax Law Professors

EATLP Logo (2013)Joshua D. Blank (NYU) & Ruth Mason (Virginia) present United States National Report on Exchange of Information at the 2014 Annual Congress of the European Association of Tax Law Professors today in Istanbul, Turkey:

The United States recently has taken an aggressive stance towards non-reporting of offshore income and attendant offshore tax evasion. This National Report discusses administrative and legal mechanisms, including the Foreign Account Tax Compliance Act (FATCA), available to the United States to secure offshore tax information. It also discusses the legal regimes under which the United States shares tax information with partner jurisdictions.

See also Joshua D. Blank (NYU) & Ruth Mason (Virginia), Exporting FATCA, 142 Tax Notes 1245 (Mar. 17, 2014).

Update #1:  Tracy Kaye (Seton Hall), Leandra Lederman (Indiana), and Stephen Mazza (Kansas) at the conference:

Photo 2

Update #2:  Joshua Blank (NYU), Tracy Kaye (Seton Hall), Ruth Mason (Virginia), Leandra Lederman (Indiana), Tsilly Dagan (Bar-Ilan), and Steven Mazza (Kansas) at the conference:

EATP

May 28, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, May 27, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at Bocconi University

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at Bocconi University today in Milan, Italy, hosted by Carlo Garbarino.

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy rules, should be made publicly accessible. Throughout this age-old debate, participants have speculated about how corporate managers and the IRS might behave differently if they knew that the public could observe corporations’ tax returns and how investors and the general public would respond if they had access to this information. There is, however, another, unexplored perspective: how could seeing other corporations’ tax returns affect how corporate managers engage in tax planning and tax return preparation for their own corporations?

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May 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Blank Presents In Defense of Individual Tax Privacy at the University of Milan

Blank Joshua D. Blank (NYU) presented In Defense of Individual Tax Privacy, 61 Emory L.J. 265 (2011), at the University of Milan’s Department of International, Legal, Historical and Politcal Studies yesterday in Milan, Italy, hosted by Giuseppe Marino:

The debate over whether tax privacy—a set of statutory rules that prohibits the federal government from publicly releasing any taxpayer’s tax return— promotes individual tax compliance is as old as the income tax itself. It dates back to the Civil War and resurfaces often, especially when the government seeks innovative ways to collect tax revenue more effectively. For over 150 years, the tax privacy debate has followed predictable patterns. Both sides have fixated on the question of how a taxpayer would comply with the tax system if he knew other taxpayers could see his personal tax return. Neither side, however, has addressed the converse question: How would seeing other taxpayers’ returns affect whether a taxpayer complies? This Article probes that unexplored question and, in doing so, offers a new defense of individual tax privacy: that tax privacy enables the government to influence individuals’ perceptions of its tax-enforcement capabilities by publicizing specific examples of its tax-enforcement strengths without exposing specific examples of its tax enforcement weaknesses. Because salient examples may implicate well-known cognitive biases, this strategic-publicity function of tax privacy can cause individuals to develop an inflated perception of the government’s ability to detect tax offenses, punish their perpetrators, and compel all but a few outliers to comply. Without the curtain of tax privacy, by contrast, individuals could see specific examples of the government’s tax-enforcement weaknesses that would contradict this perception. After considering this new defense of individual tax privacy in the context of deterrence and reciprocity models of taxpayer behavior, I argue that the strategic-publicity function of tax privacy likely encourages individuals to report their taxes properly and that it should be exploited to enhance voluntary compliance.

The commentators were Giuseppe Zizzo (Bocconi University) and Andrea Pedroli (Università della Svizzera italiana).

May 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, May 14, 2014

Blank Presents Collateral Compliance Today at Oxford

BlankJoshua D. Blank (NYU) presents Collateral Compliance, 162 U. Pa. L. Rev. 719 (2014), at the University of Oxford Faculty of Law today as part of its Centre for Business Taxation Research Seminar hosted by Judith Freedman:

As most of us are aware, the failure to comply with the tax law can lead to tax penalties, which almost always take the form of monetary sanctions. But tax noncompliance has other consequences as well. Collateral sanctions for tax noncompliance — which apply on top of traditional tax penalties and revoke or deny government-provided benefits — increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States.

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May 14, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, May 6, 2014

Kane Presents Transfer Pricing, Integration and Novel Intangibles Today at NYU

Kane (2014)Mitchell Kane (NYU) presents Transfer Pricing, Integration and Novel Intangibles: A Consensus Approach to the Arm's Length Standard at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

This paper will be organized as follows. In the first part I undertake two basic framing problems, one related to the continuous versus discontinuous nature of arm's length versus formulary methods and the second related to a proposed categorization of intangible value arising from integration of assets. In the second part I describe how the perceived inability of the arm's length standard to handle gains from integration through a comparable analysis could be expected to produce the temptation to introduce novel intangibles into the analysis. In the third part I develop what I refer to as a consensus approach to the arm's length standard. The version of consensus developed here is not the typical one, which suggests that one of the key reasons to embrace the arm's length standard is the existing international consensus regarding its status as the preferred means of income allocation across countries. Rather, the vision of consensus I here is one that should read Article 9 of the OECD Model Convention as stating a preferred methodology for reaching a consensus non-overlapping allocation of a portion of the profit earned by associated enterprises, namely that portion which could have been earned at arm's length. I then use that interpretation to argue affirmatively against the introduction of novel intangibles.

May 6, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 29, 2014

Gamage Presents A Framework for Analyzing the Optimal Choice of Tax Instruments Today at NYU

Gamage (2014)David Gamage (UC-Berkeley) presents A Framework for Analyzing the Optimal Choice of Tax Instruments, 68 Tax L. Rev. ___ (2014), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

What mix of policy instruments should governments employ to raise revenues or to promote distribution? The dominant answer to this question in the tax theory and public finance literatures is that (with limited exceptions) governments should rely exclusively on a progressive consumption tax. Thus, among other implications, the dominant view is that governments should not tax capital income or wealth, and that legal rules should not be designed to promote distribution.

In contrast, this Article argues that governments should make use of a number of tax and non-tax policy instruments to raise revenues and to promote distribution. Furthermore, this Article argues that governments may have much greater capacity to raise revenues and to promote distribution at lower efficiency costs than is generally recognized. Whereas the existing theoretical literature focuses on a small number of distortionary costs that result from taxation (in particular, on labor-to-leisure and saving-to-spending distortions), this Article analyzes the implications of taxpayers engaging in a diverse variety of tax-gaming responses. To the extent that taxpayers respond to different tax instruments through different forms of tax gaming, this Article demonstrates that governments can raise revenues and promote distribution more efficiently by employing a variety of different policy instruments.

Continue reading

April 29, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, April 28, 2014

Shaviro, Sullivan Speak on Tax Reform at NYU Today

NYU Banner

Book Discussison (12:30 - 1:50 p.m.):  Daniel Shaviro (NYU), Fixing U.S. International Taxation (Oxford University Press, 2014):

FixingInternational tax rules, which determine how countries tax cross-border investment, are increasingly important with the rise of globalization, but the modern U.S. rules, even more than those in most other countries, are widely recognized as dysfunctional. The existing debate over how to reform the U.S. tax rules is stuck in a sterile dialectic, in which ostensibly the only permissible choices are worldwide or residence-based taxation of U.S. companies with the allowance of foreign tax credits, versus outright exemption of the companies’ foreign source income. In Fixing U.S. International Taxation, Daniel N. Shaviro explains why neither of these solutions addresses the fundamental problem at hand, and he proposes a new reformulation of the existing framework from first principles. He shows that existing international tax policy frameworks are misguided insofar as they treat “double taxation” and “double non-taxation” as the key issues, conflate the distinct questions of what tax rate to impose on foreign source income and how to treat foreign taxes, and use simplistic single-bullet global welfare norms in lieu of a comprehensive analysis. Drawing on tools that are familiar from public economics and trade policy, but that have been under-utilized in the international tax realm, Shaviro offers a better analysis that not only reshapes our understanding of the underlying issues, but might point the way to substantially improving the prevailing rules, both in the U.S. and around the world.”

  • Daniel Shaviro (NYU)
  • Itai Grinberg (Georegtown)
  • Martin Sullivan (Tax Analysts)

Public Lecture (6:00 - 7:30 p.m.):  Martin Sullivan (Tax Analysts), Tax Reform 2017: Incremental or Fundamental?:

Sullivan (2014)Martin Sullivan is the chief economist of Tax Analysts (publisher of Tax Notes) and is a leading expert on federal tax reform. He is a contributing editor for Tax Analysts’ daily and weekly publications. Sullivan has written over 500 economic analyses for Tax Analysts and is the author of two books on tax reform, including the recent Corporate Tax Reform: Taxing Profits in the 21st Century. He is also a regular contributor to Tax Analysts’ blog and Forbes.com. He has testified before Congress on numerous occasions. Previously, Sullivan taught economics at Rutgers University and served as a staff economist at the U.S. Department of the Treasury and later at the congressional Joint Committee on Taxation. Sullivan graduated magna cum laude from Harvard College and received a PhD in economics from Northwestern University. 

April 28, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 24, 2014

Maynard Presents Reimagining Wealth Taxation as a Tool for Building Wealth at Washington University

MaynardGoldburn P. Maynard, Jr. (Washington University) presented Addressing Wealth Disparities: Reimagining Wealth Taxation as a Tool for Building Wealth, 92 Denv. U. L. Rev. ___ (2014), at Washington University yesterday as part of its Faculty Workshop Series:

In the past three decades, research has indicated that the building of assets can have a sustainable impact on well-being. Yet to the extent that the tax system has incorporated this insight, it has been done in a piecemeal, ad hoc fashion, disproportionately benefiting those with wealth and further reinforcing wealth inequality. This paper argues that while reducing wealth concentrations is im-portant, there should be an increased emphasis on how our tax system can build wealth or, put differently, level up. While the problem of wealth disparities may be too large for any one part of the federal policy toolkit to solve, I argue that the tax system can and should play a vital role.

April 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 23, 2014

Shackelford Presents The Impact of Foreign Withholding Taxes on REIT Investors and Managers Today at Pennsylvania

ShacklefordDouglas Shackelford (University of North Carolina, Kenan-Flagler Business School) presents The Impact of Foreign Withholding Taxes on REIT Investors and Managers at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael KnollChris Sanchirico, and Reed Shuldiner:

Exploiting a 2004 reduction in a unique capital gains withholding tax for foreign investors in U.S. REITs, this paper explores both the sensitivity of real estate investors to changes in their own taxes and the reaction of real estate managers to changes in their investors’ taxes. We find that both foreign investors and REIT managers responded to the tax change. This is consistent with taxes both restricting the flow of foreign capital into U.S. REITs and affecting the management of their real estate properties. To our knowledge, this is the first paper documenting that U.S. managers change their U.S. operations in response to the tax positions of foreign investors. This work should spur further study of the interplay between real estate and income taxes, the role of taxes on foreign portfolio investment, and the role of taxes on real managerial choices. It also should aid policymakers who are considering further relaxing the discriminatory tax treatment for foreign investors in U.S. real estate.

April 23, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Tuesday, April 22, 2014

Clausing Presents Lessons for International Tax Reform from Formulary Apportionment Today at NYU

ClausingKimberly Clausing (Reed College) presents Lessons for International Tax Reform from the U.S. State Experience under Formulary Apportionment at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

This work undertakes a comprehensive analysis of the US state experience under formulary apportionment of corporate income. While formulary apportionment eliminates the possibility of shifting income across states through accounting strategies that manipulate where income is booked, it may heighten the tax responsiveness of formula factors. The present analysis uses the substantial variation in corporate tax policy decisions of US states over the period 1986 to 2012 to understand the consequences of formulary apportionment better. It examines the effects of policy choices regarding tax rates, formula weights, and other parameters on economic activity, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity has not been particularly sensitive to US state corporate tax policy choices, especially in recent years. Still, tax policy choices have important effects on corporate tax revenues. These results suggest important lessons regarding possible international adoption of formulary apportionment.

April 22, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, April 21, 2014

Barry Presents PPL and the Arbitrary Foreign Income Tax Credit Today at Pepperdine

BarryJordan M. Barry (San Diego) presents PPL and the Arbitrary Foreign Income Tax Credit at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

Last year, the Supreme Court decided PPL v. Commissioner, ruling that the United Kingdom’s windfall tax qualifies for a U.S. foreign income tax credit. Even though the windfall tax only applies to a handful of taxpayers, economists and tax experts nationwide closely followed the PPL litigation: The foreign income tax credit a key provision of the U.S. tax code and a major component of U.S. economic policy. The rules surrounding the foreign income tax credit are quite intricate, and there is relatively little authoritative guidance to help taxpayers navigate them. And since the Supreme Court decides foreign income tax credit cases so rarely, the Court’s reasoning in PPL will likely influence courts’ thinking—and taxpayers’ pocketbooks—for many years to come.

Unfortunately, the Court’s decision in PPL does little to clarify the law and guide taxpayers. Instead, it reveals the fundamentally arbitrary nature of the foreign income tax credit.

The Court justifies its ruling as a triumph of substance over form. But the Court’s opinion itself demonstrates how two taxes can be the same in substance, yet be treated quite differently for purposes of the foreign income tax credit. The Court describes a specific hypothetical tax that would not be creditable—yet there are multiple taxes that are substantively identical to the Court’s hypothetical tax, but qualify for significant foreign income tax credits.

This Article explores these conceptual problems with the foreign income tax credit, as demonstrated by PPL, and suggests several ways in which Congress and the IRS might wish to ameliorate them.

Update: Post-presentation lunch:

Lunch

April 21, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 17, 2014

Gamage Presents A Framework for Analyzing the Optimal Choice of Tax Instruments Today at Indiana

Gamage (2014)David Gamage (UC-Berkeley) presents A Framework for Analyzing the Optimal Choice of Tax Instruments, 68 Tax L. Rev. ___ (2014), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

What mix of policy instruments should governments employ to raise revenues or to promote distribution? The dominant answer to this question in the tax theory and public finance literatures is that (with limited exceptions) governments should rely exclusively on a progressive consumption tax. Thus, among other implications, the dominant view is that governments should not tax capital income or wealth, and that legal rules should not be designed to promote distribution.

In contrast, this Article argues that governments should make use of a number of tax and non-tax policy instruments to raise revenues and to promote distribution. Furthermore, this Article argues that governments may have much greater capacity to raise revenues and to promote distribution at lower efficiency costs than is generally recognized. Whereas the existing theoretical literature focuses on a small number of distortionary costs that result from taxation (in particular, on labor-to-leisure and saving-to-spending distortions), this Article analyzes the implications of taxpayers engaging in a diverse variety of tax-gaming responses. To the extent that taxpayers respond to different tax instruments through different forms of tax gaming, this Article demonstrates that governments can raise revenues and promote distribution more efficiently by employing a variety of different policy instruments.

Continue reading

April 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fleischer Presents The Inferiority of Pigouvian Taxes Today at Washington

Fleischer Vic (2013)Victor Fleischer (San Diego) presents The Inferiority of Pigouvian Taxes at the University of Washington today as part of its Graduate Tax Program Colloquium Series:

Pigouvian (or "corrective") taxes have become the favored policy instrument to address activities that cause negative externalities. There is considerable academic support for Pigouvian taxes on a wide range of products and activities, including carbon, gasoline, fat, high fructose corn syrup, financial transactions, executive pay, excessive zoning, and SUVs. Economists of all political stripes are therefore mystified by our politicians’ collective inability to see the merits of using Pigouvian taxes more frequently to address serious social harms.

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April 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Solomon Presents Tax Policymaking in the United States Today at Temple

SolomonEric Solomon (Director of National Tax Practice, Ernst & Young, Washington, D.C.) presents The Process for Making Tax Policy in the United States: A System Full of Friction, 67 Tax Law. ___ (2014), at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu and Andrea Monroe:

The paper, first presented to the Canadian Tax Foundation Roundtable ..., acknowledges the roles of multiple participants in the formation of tax policy, including the Treasury, IRS, and courts, but focuses on the legislative process and describes both the roles of the various players in it. It emphasizes the operation of the checks and balances in the system and the ways in which they influence tax legislation and tax policy. The Colloquium will also include a discussion of the tax gap drawn from testimony presented to the Senate Finance Committee on April 18, 2007 by Eric Solomon and Henry Paulsen.

April 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mazur Presents Tax Policy and the Economy Today at Florida

Mazur 2Mark Mazur (Assistant Secretary for Tax Policy, U.S. Treasury Department) presents Tax Policy and the Economy at Florida today as the Fourth Annual Ellen Bellet Gelberg Tax Policy Lecture in the Graduate Tax Program.  Prior lectures:

April 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 16, 2014

Roin Presents Planning Past Pensions Today at Duke

RoinJulie Roin (Chicago) presents Planning Past Pensions at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Evidence of state and local government dysfunction surfaces in many areas. One is the operation of their employee pension plans. Free from the strictures of ERISA, some governments failed to fund their pension promises and with the imminent retirement of the baby boom generation, are facing what appear to be insurmountable pension debts. The state of Illinois is one of the worst-hit states, with grossly underfunded pension plans, a state constitutional prohibition on reducing pension benefits, and a sizeable non-pension related budget deficit. Recently passed pension “reforms” likely will be struck down by its courts. There are no easy solutions to its pension woes, but this article seeks to lay out a few steps that Illinois can take now, under current law, and suggests more long-term policy and legal changes that it should consider for the future. Ultimately, though, the same dysfunctions that led to the current crisis might make these suggestions impractical.

April 16, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Peroni Presents Formulary Apportionment in the U.S. at UNLV

PeroniRobert J. Peroni (Texas) presented Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig? (with J. Clifton Fleming (BYU) & Stephen E. Shay (Harvard)) at UNLV yesterday as part of its Faculty Enrichment Series:

[T]he authors argue that formulary apportionment and the current standard, arm's length transfer pricing, are just two shades of lipstick on the pig that is the US international tax system, with its twin features of deferral and cross-crediting. They conclude that formulary apportionment might be the less offensive shade, but in effect the whole discussion is a diversion from a broad reform that is sorely needed on the pig itself.

April 16, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 15, 2014

Rao Presents The Tax Policy Implications of State Facilitated Collusion in the Alcohol Market Today at NYU

RaoNirupama Rao (NYU) presents The Price of Liquor is Too Damn High: State Facilitated Collusion and the Implications for Taxes (with Christopher T. Conlon (Columbia) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

Alcohol markets are subject to both heavy regulation as well as excise taxes at the federal and state level. We examine the impact of particular state regulations on the structure of the alcohol market and the consequences for tax eciency. We show that post and hold and meet but not beat pricing regulations at the wholesale level facilitate non-competitive pricing by wholesalers. Wholesalers will tend to mark up premium brands relative to call or well products. The distortion of premium brands generally exceeds the distortions resulting from optimally set taxes, particularly when states attempt to address any negative externality of alcohol consumption. Regression results and tabulations indicate that that states featuring post and hold regulations consume 4% to 10% less alcohol than other states, that premium products comprise a smaller share of consumption and that wholesaler pricing is consistent with non-competitive behavior. We use new monthly data describing prices and quantity for hundreds of products to estimate alcoholic beverage demand and use these estimates to assess the impact of replacing these regulations with higher taxes. Our ndings suggest that the state of Connecticut could raise three to six times their current alcohol tax revenue by eliminating these regulations and increasing taxes such that total alcohol consumption was unchanged. In addition to redirecting surplus from wholesalers to the taxing authority, these alternative policies increase consumer surplus by reducing distortions in consumer product choices. The state can e ectively raise much more revenue and improve consumer welfare by replacing alcohol regulations with taxation

April 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kahng Presents The Taxation of Intellectual Capital Today at Washington

KahngLily Kahng (Seattle) presents The Taxation of Intellectual Capital, 66 Fla. L. Rev. ___ (2014), at The University of Washington today as part of its Graduate Tax Program Colloquium Series:

Intellectual capital — broadly defined to include nonphysical sources of value such as patents and copyrights, computer software, organizational processes and know-how — has a long history of being undervalued and excluded from measures of economic productivity and wealth. In recent years, however, intellectual capital has finally gained wide recognition as a central driver of economic productivity and growth. Scholars in fields such as knowledge management, financial accounting and national accounting have produced a wealth of research that significantly advances our conceptual understanding of intellectual capital and introduces new methodologies for identifying and measuring its economic value.

This Article is the first to analyze and assess the taxation of intellectual capital within this broader interdisciplinary landscape. Informed by the recent research and reform efforts in knowledge management, financial accounting and national accounting, the Article finds that the tax law, which allows most investments in intellectual capital to be deducted, is fundamentally flawed. This results in the loss of hundreds of billions of dollars in tax revenues, costly misallocations of resources and a grave deviation from the accurate measure of income. The Article argues that, consistent with the prevailing view in other fields, investments in intellectual capital ought to be capitalized under the tax law. Drawing upon the work of reform proponents in other fields as well as their critics, the Article considers whether and to what extent the advances in other disciplines can be adapted to the tax system. Based on this analysis, it proposes the tax law be reformed to require businesses to capitalize and amortize over five years a broad array of intellectual capital investments including research and development, advertising, worker training and strategic planning.

April 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 10, 2014

Blank Presents Reconsidering Corporate Tax Privacy at Harvard

BlankJoshua D. Blank (NYU) presented Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at Harvard yesterday as part of its Current Issues in Tax Law, Policy, and Practice Seminar hosted by Daniel Halperin and Stephen Shay:

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy rules, should be made publicly accessible. Throughout this age-old debate, participants have speculated about how corporate managers and the IRS might behave differently if they knew that the public could observe corporations’ tax returns and how investors and the general public would respond if they had access to this information. There is, however, another, unexplored perspective: how could seeing other corporations’ tax returns affect how corporate managers engage in tax planning and tax return preparation for their own corporations?

Continue reading

April 10, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 9, 2014

Rostain Presents Lawyers, Accountants, and the Tax Shelter Crisis Today at Duke

Tanina Rostain (Georgetown) presents Confidence Games: Lawyers, Accountants, and the Tax Shelter Crisis (MIT Press, 2014) (with Milton C. Regan, Jr. (Georgetown)) at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

ConfidenceFor ten boom-powered years at the turn of the twenty-first century, some of America’s most prominent law and accounting firms created and marketed products that enabled the very rich—including newly minted dot-com millionaires—to avoid paying their fair share of taxes by claiming benefits not recognized by law. These abusive domestic tax shelters bore such exotic names as BOSS, BLIPS, and COBRA and were developed by such prestigious firms as KPMG and Ernst & Young. They brought in hundreds of millions of dollars in fees from clients and bilked the U.S. Treasury of billions in revenues before the IRS and Justice Department stepped in with civil penalties and criminal prosecutions. In Confidence Games, Tanina Rostain and Milton Regan describe the rise and fall of the tax shelter industry during this period, offering a riveting account of the most serious episode of professional misconduct in the history of the American bar.

Rostain and Regan describe a beleaguered IRS preoccupied by attacks from antitax and antigovernment politicians; heightened competition for professional services; the relaxation of tax practitioner norms against aggressive advice; and the creation of complex financial instruments that made abusive shelters harder to detect. By 2004, the tax shelter boom was over, leaving failed firms, disgraced professionals, and prison sentences in its wake. Rostain and Regan’s cautionary tale remains highly relevant today, as lawyers and accountants continue to face intense competitive pressure and regulators still struggle to keep pace with accelerating financial risk and innovation.

April 9, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wells Presents Tax Base Erosion and Section 482 at Northwestern

WellsBret Wells (Houston) presented Tax Base Erosion: Reformation of Section 482's Arm’s Length Standard, 15 Fla. Tax Rev. ___ (2014), at Northwestern last week as part of its Tax Colloquium Series hosted by by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

The United States has repeatedly attempted to stop tax base erosion for almost the entire post-World War I era, and yet the same problems exist today. The need for fundamental tax reform is front-page material in the major newspapers with the US transfer pricing rules and US multinationals portrayed as public enemy #1. This year, the OECD issued a report entitled “Addressing Base Erosion and Profit Shifting” and last month it issued a “Action Plan” for how it plans to proceed to address base erosion and profit-shifting. In a competing fashion, several important developing countries have initiated their own pact to develop cooperative strategies on these issues outside of the framework of the OECD and UN. It is fair to say that a solution to the base erosion and profit-shifting practices of multinational corporations is the “holy grail” of international tax policy.

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April 9, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Harvey Presents FATCA and the Taxation of U.S. Citizens Living Abroad Today at Penn

HarveyJ. Richard "Dick" Harvey, Jr. (Villanova) presents Offshore Accounts: Insider's Summary of FATCA and Its Potential Future, 57 Vill. L. Rev. 472 (2012), and Worldwide Taxation of U.S. Citizens Living Abroad: Impact of FATCA and Two Proposals, 5 Geo. Mason J. Int'l Comm. L. ___ (2013), at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

When FATCA was unilaterally enacted in March 2010 it was far from clear whether it would ultimately be successful. The major issue was whether the US would need multilateral action in order for FATCA to be a success. Currently the US has signed 25 intergovernmental agreements with many more in the final stages of negotiation. When coupled with the OECD's recent issuance of a Common Reporting Standard, it appears that FATCA or some version is here to stay. However, there will be growing pains, and some of those pains could be significant.

April 9, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 8, 2014

Tahk Presents The Tax War on Poverty Today at NYU

TahkSusannah Camic Tahk (Wisconsin) presents The Tax War on Poverty at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

In recent years, the war on poverty has moved in large part into the tax code. Scholarship has started to note that the tax laws, which once exacerbated the problem of poverty, have become increasingly powerful tools that the federal government uses to fight against it. Yet questions remain about how this new tax war on poverty works, how it is different from the decades of non-tax anti-poverty policy and how it could improve. To answer these questions, this Article looks comprehensively at the provisions that make up the new tax war on poverty. First, this Article examines each major piece of the tax war on poverty. The Article looks at its mechanics of each, its political history and its effectiveness at addressing poverty. Second, this Article analyzes the tax war on poverty as a whole, identifying commonalities across its different provisions and highlighting its distinctive features. Third, this Article proposes ways that the tax war on poverty could be more effective. In particular, this Article examines how tax lawmakers and tax lawyers could approach this task. In so doing, this Article conceptualizes tax law as the new poverty law and proposes a growing role for public-interest tax lawyers.

April 8, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Monday, April 7, 2014

Fleischer Presents Innovation, Equity Compensation, and the New Inequality Today at Pepperdine

Fleischer Vic (2013)Victor Fleischer (San Diego) presents Sweat Equity: Innovation, Equity Compensation, and the New Inequality at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

How people get paid—not just how much—explains the rising income inequality in the United States. Company founders, corporate executives, real estate developers, venture capitalists, and private equity fund managers often get paid in “sweat equity.” In exchange for labor, they receive equity in a venture largely financed with other people’s money. Globalization, technological change, and other factors have created economic conditions such that when companies are successful, those with sweat equity can receive unprecedented increases in income and wealth, and these gains are increasingly concentrated among a select few. For the rest of us, wages have stagnated.

The culture of equity-based pay has proven highly successful as a solution to the fundamental problem of entrepreneurial economics: how to get people with financial capital to share it with those who have the talent, motivation, and ideas. From the oil fields of Texas to the garages of Silicon Valley and the trading desks and boardrooms of Wall Street, sweat equity aligns the incentives of managers and investors. It is the engine of American innovation and economic growth.

But sweat equity is also rocket fuel for economic inequality. Economic gains increasingly flow to a lucky and talented elite, the one percent of the one percent, leaving everyone else behind. Our tax code aggravates the inequality problem, leaving sweat equity lightly taxed while taxes on wages have increased dramatically. The common recommendation of the political left—raise taxes on the rich—misses the target by focusing on ordinary income rather than sweat equity.

Addressing the problem of inequality will require finding fair methods of redistribution that do not disrupt the complex economic, legal, institutional and cultural infrastructure that forms the foundation for American innovation and entrepreneurship. Possibilities include redesigning the capital gains tax, adopting a progressive consumption tax, redesigning the estate tax, and increasing incentives for charitable giving. We must achieve enough redistribution to ensure some social mobility and some equality of opportunity, but not so much that the next generation of founders finds the risk and reward of entrepreneurship unattractive.

Update:  Post-presentation lunch:

Photo

April 7, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Gamage Presents Should Risk Adjustment Become the Heart of Obamacare? Today at Harvard

Gamage (2014)David Gamage (UC-Berkeley) presents The Evolution of Health Care Reform: Should Risk Adjustment Become the Heart of Obamacare? at Harvard today as part of its Health Law Policy, Biotechnology, and Bioethics Workshop Series:

This Essay explores how the regulatory framework of Obamacare might evolve over the coming years. The Essay analyzes the ways in which Obamacare’s risk-adjustment-related provisions are becoming increasingly central. This Essay further ponders whether an expanded approach to risk adjustment might be a better model for guiding further reforms to Obamacare’s framework, especially in light of political constraints. In particular, this Essay explains how an expanded approach to risk adjustment might replace the tax penalty of the individual mandate.

April 7, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Olson Presents Tax Politics v. Tax Policy Today at Minnesota

OlsonPamela F. Olson (PricewaterhouseCoopers LLP) presents Politics versus Policy at Minnesota today as part of its Perspectives in Taxation Lecture Series:

In the tax area, good policy and political reality are often at odds with one another. Such certainly seems to be the case today. Can the conflict between politics and policy be reconciled? What are the implications of the conflict between politics and policy for the enactment of sound tax and budget policy?

April 7, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 3, 2014

Galle Presents How Do Nonprofit Firms Respond to Tax Policy? Today at San Diego

GalleBrian D. Galle (Boston College) presents How Do Nonprofit Firms Respond to Tax Policy? at San Diego today as part of its Tax Law Speaker Series:

We examine for the first time the elasticity of fundraising effort by nonprofit firms to changes in the tax-price of giving faced by their donors. Prior efforts to examine the effects of tax policy on charitable giving have focused on donor behavior, overlooking the possibility that fundraising efforts by firms may partially confound the observed effects. We employ data from a large panel of Form 990 tax returns filed by charitable organizations to study jointly the effect of tax changes on fundraising, donations, and other outcomes. Overall, we find an average elasticity of fundraising to the tax-price of giving of about -1.8, and an elasticity of charitable output to tax price of about -.73. We also find some evidence that charities facing lower subsidy rates substitute towards other sources of revenue. We argue that these results may imply that the charitable contribution deduction is effective for different reasons than prior research has suggested. For example, the negative elasticity of fundraising implies that a significant portion of each dollar in increased donations is used to pay for fundraising, not charity. The modest elasticity of real charitable output to tax price implies that tax subsidies may simply crowd out other revenue sources, such that the efficacy of the subsidy depends on the relative efficiency of these alternative sources.

April 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Olson Presents Lessons From the Tax Reform Act of 1986 Today at Temple

OlsonPamela F. Olson (PricewaterhouseCoopers LLP) presents And Then Cnut Told Reagan . . . Lessons from the Tax Reform Act of 1896, 38 Ohio N.U. L. Rev. 1 (2011) (Woodworth Memorial Lecture), at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu and Andrea Monroe:

The fiscal challenge ahead will require education and a willingness to look beyond the next election. None of this will be popular with voters, to be sure, but our nation's fiscal situation is such that partisan politics must be put aside for the sake of the greater good and of future generations. It's time to go out there with all we've got and win one for the Gipper!

April 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Bird-Pollan Presents Rawls, Equality of Opportunity, and Wealth Transfer Taxation Today at Indiana

Bird-PollanJennifer Bird-Pollan (Kentucky) presents Unseating Privilege: Rawls, Equality of Opportunity, and Wealth Transfer Taxation, 59 Wayne L. Rev. ___ (2014), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This Article is the second in a series that examines the estate tax from a particular philosophical position in order to demonstrate the relevance and importance of the wealth transfer taxes to that position. In this Article, I explore Rawlsian equality of opportunity, a philosophical position that is at the heart of much American thought. Equality of opportunity requires not only ensuring that sufficient opportunities are available to the least well-off members of society but also that opportunities are not available to other members merely because of their wealth or other arbitrary advantages. Therefore, an income tax alone, even one with high rates on the wealthy, would be insufficient to achieve these goals. While revenue raised via the income tax should be used to provide additional opportunities to low-income members of society, wealth transfer taxes provide the additional safeguard of preventing the heirs of wealthy individuals from inheriting wealth that would provide them with additional, unwarranted and unjust, opportunities. Given the importance of the wealth transfer taxes, this Article also examines the question of what form of tax is most consistent with Rawls’ position, ultimately determining that an inheritance or accessions tax best fits the role.

Update:  Post-colloquium get together:

Leandra 2

Margaret Ryznar (Indiana-Indianapolis), Leandra Lederman (Indiana-Bloomington), Stephanie McMahon (CIncinnati), and Jennifer Bird-Pollan (Kentucky)

April 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Wednesday, April 2, 2014

Grubert Presents Alternative International Tax Reform Proposals Today at Pennsylvania

GrubertHarry Grubert (Office of Tax Analysis, U.S. Treasury Department) presents Fixing the System: An Analysis of Alternative Proposals for the Reform of International Tax, 66 Nat'l Tax J. 671 (2013) (with Rosanne Altshuler (Rutgers)), at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

We evaluate proposals for U.S. international tax reform including dividend exemption, full current inclusion, dividend exemption with an effective tax rate test and active business exception, dividend exemption with a per-country or overall minimum tax, and repeal of check-the-box. As alternatives to active business tests, we consider minimum taxes that allow expensing for real investment abroad. We evaluate reforms along many dimensions including the lockout effect, income shifting, the choice of location, and complexity. Wefind a per-country minimum tax with expensing has many advantages with respect to these margins. The simpler overall minimum tax is a serious alternative.

April 2, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thomas Presents The Psychic Cost of Tax Evasion Today at Duke

ThomasKathleen Delaney Thomas (North Carolina) presents The Psychic Cost of Tax Evasion at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Tax evasion presents the government with a formidable task. We are losing hundreds of billions of dollars in tax revenue each year due to underreporting by individual taxpayers. According to deterrence theory, policymakers should be able to reduce evasion by making it more costly for taxpayers. This could be accomplished by raising the audit rate, increasing tax penalties, or some combination of both. However, budgetary limitations and political hurdles have made these strategies difficult for the government to employ.

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April 2, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Knoll Presents Tax Discrimination in the European Union and Beyond Today at Washington University

KnollMichael S. Knoll (Pennsylvania) presents Tax Discrimination in the European Union and Beyond (with Ruth Mason (Virginia)) at Washington University today as part of its International Tax Speakers Series hosted by Adam H. Rosenzweig:

The centerpiece of the 28-member European Union is the single market—a market free of internal barriers in which goods, capital, labor, and services move as easily between the member states as within them. The European Union’s highest judicial body, the Court of Justice of the European Union (CJEU), is charged with ensuring that the laws of the EU member states do not undercut the single market. The CJEU has interpreted various provisions contained in the foundational treaties of the European Union that create the single market to encompass a prohibition on tax discrimination. Over the last thirty years, the CJEU has concluded that numerous long-standing member state tax policies constitute prohibited tax discrimination. At the same time, the CJEU has failed to articulate a clear guiding principle in its tax discrimination cases. The combination of aggressive enforcement and the failure to provide clear guidance on the meaning of tax discrimination has attracted extensive critical commentary. Our goals in this essay and related work are to identify the guiding principle behind the CJEU’s interpretation of tax discrimination, to explain that principle in economic terms, to describe what strict adherence to that principle requires, to recommend to the CJEU how it should apply that principle in light of the legal and institutional constraints it faces, to apply our recommended approach to specific areas of the law, and to assess how closely the CJEU’s jurisprudence corresponds to our recommendations.

April 2, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Yin Delivers Lecture on Reforming (and Saving) the IRS by Respecting the Public’s Right to Know at Temple

YinGeorge K. Yin (Virginia) delivered the 2014 Fogel Lecture at Temple on Monday on Reforming (and Saving) the IRS by Respecting the Public’s Right to Know:

The current controversy involving possible political targeting by the IRS in administering the exempt organization (EO) tax laws is simply the latest in a long succession of similar allegations spanning at least five decades. This article proposes to address the problem through increased transparency of the IRS’s administrative actions involving EOs. Greater transparency responds directly to the public’s frustration in not being able to monitor the agency and gain confidence that the laws are being applied in an even-handed manner.

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April 2, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 1, 2014

Biggs Presents The Risk to State and Local Budgets Posed by Public Employee Pensions Today at NYU

BiggsAndrew Biggs (American Enterprise Institute) presents The Risk to State and Local Budgets Posed by Public Employee Pensions at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

State and local government employee pension plans fund guaranteed retirement benefit using portfolios of risky assets. Plan sponsors value stable contribution rates and attempt to mitigate volatility of contribution rates using policies including smoothing of investment returns and long amortization periods for unfunded liabilities. These policies, combined with the assumption that investment returns stabilize over the long term, seemingly allow plans to offer generous, guaranteed benefits to participants funded by low, stable contributions from employers. But in many cases, plan stakeholders take this conclusion as an article of faith rather than the result of quantitative analysis. I employ a simple model of financing for a mature pension to analyze how market risk and stabilization policies interact to affect annual required contribution. The model shows that stabilization policies can reduce volatility of employer contributions over the short term. But long-term fluctuations in investment earnings ultimately express themselves in contribution rates that may vary significantly from a deterministic calculation based upon the assumption of constant returns. A plan employing typical smoothing policies has a very low probability of becoming insolvent, so long as it makes required contributions at all times. However, plans could expect that, at least once over a 100-year period, required contributions would exceed ten times the baseline rate. If a plan economically unable or politically unwilling to make any and all contributions as required, then insolvency of the fund becomes a possibility.

April 1, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kahng Presents The Taxation of Intellectual Capital at Florida

KahngLily Kahng (Seattle) presented The Taxation of Intellectual Capital, 66 Fla. L. Rev. ___ (2014), at Florida on Friday as part of its Graduate Tax Colloquium Series:

Intellectual capital — broadly defined to include nonphysical sources of value such as patents and copyrights, computer software, organizational processes and know-how — has a long history of being undervalued and excluded from measures of economic productivity and wealth. In recent years, however, intellectual capital has finally gained wide recognition as a central driver of economic productivity and growth. Scholars in fields such as knowledge management, financial accounting and national accounting have produced a wealth of research that significantly advances our conceptual understanding of intellectual capital and introduces new methodologies for identifying and measuring its economic value.

This Article is the first to analyze and assess the taxation of intellectual capital within this broader interdisciplinary landscape. Informed by the recent research and reform efforts in knowledge management, financial accounting and national accounting, the Article finds that the tax law, which allows most investments in intellectual capital to be deducted, is fundamentally flawed. This results in the loss of hundreds of billions of dollars in tax revenues, costly misallocations of resources and a grave deviation from the accurate measure of income. The Article argues that, consistent with the prevailing view in other fields, investments in intellectual capital ought to be capitalized under the tax law. Drawing upon the work of reform proponents in other fields as well as their critics, the Article considers whether and to what extent the advances in other disciplines can be adapted to the tax system. Based on this analysis, it proposes the tax law be reformed to require businesses to capitalize and amortize over five years a broad array of intellectual capital investments including research and development, advertising, worker training and strategic planning.

April 1, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Saturday, March 29, 2014

Crane Presents When Is a Tax on Value (Not) a Tax on Income? at Washington University

CraneCharlotte Crane (Northwestern) presented When Is a Tax on Value (Not) a Tax on Income? An Exploration of the Puzzles in PPL v. Commissioner at Washington University yesterday as part of its International Tax Speakers Series hosted by Adam H. Rosenzweig:

This paper uses the issues raised by PPL v. United States (569 U.S. ___ (2013)) to explore whether an income tax can be distinguished from a wealth tax (or other tax on a single value) in a way that could be implemented, either for the purpose of defining those taxes for which the foreign tax credit was originally designed, or for the purpose of distinguishing income taxes from those tax instruments that remain beyond the reach of Congress even with the 16th amendment. It identifies two possible interrelated distinctions, that is, that an “income tax” must contain within its terms the criteria for ensuring that, should it be reimposed, proper allowance would be given for the initial imposition, and, if values are taxed without realization, later impositions must allow adjustment if those values will never be realized. (In simpler terms, unless a tax uses “basis” in a meaningful way, it is not an income tax.)

March 29, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, March 27, 2014

Brennan Presents Smooth Retirement Accounts at Boston College

BrennanThomas J. Brennan (Northwestern) presented Smooth Retirement Accounts at Boston College yesterday as part of its Tax Policy Workshop Series hosted by James Repetti and Diane Ring and funded by the Paulus Endowment for Tax Programs:

I introduce the concept of “smooth retirement accounts” (SRAs) to provide a method for taxing retirement savings evenly over time. I contrast this with the back-loaded taxation of traditional accounts, and I use lifetime utility maximization models to demonstrate that future non-linear and uncertain tax brackets can distort savings incentives and portfolio allocations for traditional account holders. I also contrast SRAs with the front-loaded taxation of Roth accounts, and I argue that SRAs would bring a reasonable portion of retirement account taxes into the current budget window without leading to the extreme result of Roth accounts that leave no tax receipts beyond the year of contribution. Because SRAs can eliminate investment and savings distortions for taxpayers, as well as help set government budgetary incentives correctly, I recommend that they be created by Congress as a replacement for the current choices of Roth and traditional accounts.

March 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, March 26, 2014

Soled Presents Basis, Pass-Through Entities, and Taxpayer Noncompliance Today at Duke

SoledJay A. Soled (Rutgers) presents Tax Basis Determinations, Pass-Through Entities, and Taxpayer Noncompliance (with James Alm (Tulane)) at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

In the United States, one of the most popular ways to conduct business is to use a pass-through entity such as a partnership, limited liability company, or S corporation. Investor taxpayers in such pass-through entities commonly hold their ownership interest for years or decades. Over this lengthy period of time, a taxpayer’s tax basis in the entity is subject to constant annual adjustments, which generally have no immediate tax consequences.

However, when the pass-through entity investment is later sold or liquidated, tax basis determinations are of critical importance, and these determinations enable taxpayers to calculate their concomitant gains or losses. At this pivotal juncture, accurately determining taxpayers’ tax bases in these investments is highly unlikely, and the IRS’s ability to detect taxpayers’ tax basis reporting inaccuracies is virtually nonexistent.

This analysis examines the phenomenon of taxpayers who do not know their tax basis in pass-through entity investments and the consequences associated with such ignorance. Also provided are projected revenue losses associated with taxpayers purposefully or inadvertently inflating the tax basis that they have in their pass-through entity investments.

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March 26, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Edgar Presents Corrective Taxation, Leverage, and Compensation in a Bloated Financial Sector Today at Toronto

EdgarTim Edgar (Osgoode Hall) presents Corrective Taxation, Leverage, and Compensation in a Bloated Financial Sector at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The financial crisis of 2007–2009 reinvigorated academic and policymaking interest in the design of prudential regulatory regimes governing the financial sector as a policy instrument intended to moderate financial instability. The crisis also motivated interest in the role of taxation as a complement to these regimes. Yet in practice, the use of tax instruments has been modest. This article considers three tax instruments that could serve this complementary role. Political economy considerations aside, it is suggested that the use of bank leverage taxes by policymakers as the tax instrument of choice is unsurprising. As recognized in the literature, however, a corrective taxation case can be made for an increase in the rate of such taxes as an instrument to eliminate the availability of cheap debt for systemically important institutions. Although returns to risk taking is a potentially robust tax base, the weak behavioral properties of this tax instrument have apparently diminished its appeal for policymakers, while a revenue-raising imperative that might otherwise motivate its adoption is muted considerably by the adoption of a bank leverage tax. Perhaps somewhat surprisingly, the tax literature does not consider the case for an excise tax on bonus and performance-based compensation as an instrument to alter the structure of compensation. This may be attributable, in part at least, to redundancy where regulatory regimes can be used to impose constraints with similar intended effects.

March 26, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, March 25, 2014

Weinzierl Presents Revisiting the Classical View of Benefit-Based Taxation Today at NYU

Ent496493Matthew C. Weinzierl (Harvard Business School) presents Revisiting the Classical View of Benefit-Based Taxation at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

This paper explores how the persistently popular "classical" logic of benefit based taxation, in which an individual's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory.  If Lindhal's methods are applied to that view of benefits, first-based optimal pollicy can be characterized analytically as depending on a few potentially estimable statistics, in particular the coefficient of complementarity between public goods and innate talent. Constrained optimal policy with a Pareto-efficient objective that strikes a balance -- controlled by a single parameter -- between principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods.  A wide range of optimal policy outcomes can result, including those consistent with existing policies.  To the extent that such on objective reflects the mixed normative reasoning behind prevailing policies, this model may offer a useful approach to positive optimal tax theory.

March 25, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, March 24, 2014

Lawsky Presents How Tax Models Work Today at Pepperdine

LawskySarah B. Lawsky (UC-Irvine) presents How Tax Models Work, 54 B.C. L. Rev. 1657 (2012), at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

Unlike many social and physical sciences, legal scholarship includes little or no discussion of what models mean, how they are connected to the real world of law and policy, or how they should, and should not, be used by legal scholars. This void exists notwithstanding legal scholarship’s increasing reliance on explicit modeling in fields such as law and economics. This Article uses the example of economic modeling in tax scholarship to investigate how legal scholarship uses models, and how models in legal scholarship work. The Article lays out a path between two extremes. At one extreme is scholarship that employs models without either reflection or self-consciousness to make real-world recommendations; at the other is scholarship that rejects models because their assumptions are too far from reality. This Article argues that neither approach is correct. Models are useful and important for legal scholarship, but not in the way that some critics and proponents seem to believe. Drawing from literature in the philosophy of science, this Article argues that we reason from economic models through a mix of deductive and ampliative logic, through leaps, creativity, and intuition. Models cannot provide certainty about what the law should be; rather, economic models are merely one kind of voice in an ongoing and necessarily inconclusive conversation. This Article concludes by drawing on this deeper understanding of models and modeling to propose ways that legal scholarship can and should use economic models.

See also Sarah B. Lawsky, Modeling Uncertainty in Tax Law, 65 Stanford L. Rev. 241 (2013).

Update: Post-presentation lunch:

Lawsky Lunch

March 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Thursday, March 20, 2014

Clausing Presents Lessons for International Tax Reform from Formulary Apportionment Today at UCLA

ClausingKim Clausing (Reed College) presents Lessons for International Tax Reform from the U.S. State Experience under Formulary Apportionment at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

This work undertakes a comprehensive analysis of the U.S. state experience under formulary apportionment of corporate income. While formulary apportionment eliminates the possibility of shifting income across states through accounting strategies that manipulate where income is booked, it may heighten the tax responsiveness of formula factors. The present analysis uses the substantial variation in corporate tax policy decisions of U.S. states over the period 1986 to 2012 to better understand the consequences of formulary apportionment. It examines the effects of policy choices regarding tax rates, formula weights, and other parameters on economic activity, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity is not particularly sensitive to U.S. state corporate tax policy choices, especially in recent years. Still, tax policy choices have important effects on corporate tax revenues. These results suggest important lessons regarding possible international adoption of formulary apportionment.

March 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mann Presents International Tax Reform and the Global Environment Today at San Diego

MannRoberta Mann (Oregon) presents International Tax Reform and the Global Environment at San Diego today as part of its Tax Law Speaker Series:

Nearly everyone agrees that the United States’ system of taxing multinational corporations is broken. While nominal U.S. corporate tax rates rank near the top among developed countries, the taxes actually paid by U.S. corporations are the lowest among those countries. Debates over corporate reform are intensifying.

The U.S. asserts its taxing authority over all the income earned by its citizens and residents. This type of taxing system is called a “worldwide” system. The foreign income of foreign corporations and residents is not taxed unless it is repatriated to the United States, for example, by means of a dividend paid to the U.S. corporate parent by a foreign subsidiary. U.S. corporations and residents are allowed to reduce their U.S. tax liability by foreign tax credits for taxes paid to foreign governments. By holding foreign income overseas, U.S. multinationals avoid U.S. tax.

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March 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Olson Presents Tax Penalties: Purpose, Design, and Administration Today at Temple

OlsonNina Olson (National Taxpayer Advocate) presents Tax Penalties: Purpose, Design, and Administration at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu and Andrea Monroe:

National Taxpayer Advocate Olson will discuss her 2013 Annual Report to Congress, which urges the IRS to adopt a comprehensive Taxpayer Bill of Rights – a step she said would increase trust in the agency and, more generally, strengthen its ability to serve taxpayers and collect tax.

The Advocate also expressed deep concern that the IRS is not adequately funded to serve taxpayers, pointing out that the IRS annually receives more than 100 million telephone calls from taxpayers and that, in fiscal year 2013, the IRS could only answer 61 percent of calls from taxpayers seeking to speak with an IRS customer service representative.

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March 20, 2014 in Colloquia, Tax | Permalink | Comments (0)

Wednesday, March 19, 2014

McMahon Presents Reforming Taxation of Privately Held Businesses Today at Duke

McMahon (Marty)Martin J. McMahon, Jr. (Florida) presents Reforming Taxation of Privately Held Businesses at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Recent proposals to reduce the corporate tax rate and to clean up the base by eliminating tax expenditures are appropriate, but none adequately address the differential treatment of incorporated and unincorporated businesses. Corporate tax reform that involves broadening the base and reducing the rates cannot thoughtfully be addressed without also reconsidering the taxation of unincorporated businesses, in light of the large and increasing percentage of business income realized by unincorporated businesses. Leaving business-related tax expenditures in place for unincorporated business while repealing them for corporations would increase both statutory complexity and planning complexity. Such a change would alter (in a manner that is difficult to describe precisely) the tax-induced distortions in the choice of business entity and most certainly continue the economic inefficiencies attributable to the current system.

My proposed solution would be to tax all businesses (including wholly owned corporations and limited liability companies, as well as unorganized sole proprietorships), at the entity level under a uniform rate schedule, regardless of the form of organization. This proposal emanates from decades long problems with the administration of Subchapter K, governing the taxation of partnerships, and the incoherence of having three separate regimes—Subchapter C, Subchapter K, and Subchapter S—apply to closely held businesses depending of the form of organization and available elections.

March 19, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Saturday, March 15, 2014

Burke Presents Woods: A Path Through the Penalty Maze at Northwestern

BurkeKaren C. Burke (Florida) presented Woods: A Path Through the Penalty Maze, 142 Tax Notes 829 (Feb. 24, 2014) (with Grayson M.P. McCouch (Florida)), at Northwestern on Thursday as part of its Tax Colloquium Series hosted by by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

The Supreme Court’s recent Woods decision answers two important questions concerning the applicability of penalties when a taxpayer reports artificial losses derived from an inflated basis in a sham partnership. One issue, which has generated a split among the circuits, is whether the 40 percent penalty can apply when the transaction lacks economic substance. The second issue is whether a court has jurisdiction in a partnership-level TEFRA proceeding2 to determine the applicability of penalties triggered by a partner’s misstatement of basis in a sham partnership. The Court has answered both questions in the affirmative, thereby overruling contrary decisions by the Fifth Circuit on the substantive issue and by the D.C. Circuit on the jurisdictional issue.

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March 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)