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Wednesday, January 28, 2015

Slack Presents The Political Economy of Property Tax Reform Today at Toronto

Enid SlackEnid Slack (Toronto) presents The Political Economy of Property Tax Reform at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Property taxes are generally considered by economists to be good taxes, and many countries are being advised to increase and improve their property taxes. In practice, however, property tax reforms have often proved to be difficult to carry out successfully. This paper discusses why property taxes are particularly challenging to reform and suggests several ways in which efforts to reform this tax may become more successful in the future. After a brief introductory section on the ‘disconnect’ between the economics and the politics of property tax reform, Section 2 summarizes recent experiences in five OECD countries with property tax reform. Against this background, Section 3 sets out the key elements of a good property tax reform and Section 4 discusses several aspects of property tax reform that seem to have derailed or distorted reforms in practice. Unfortunately, some of the solutions countries have adopted to deal with such problems are themselves problematic, either because they do not really solve the problem or because they hamper rather than work towards the establishment of a good property tax. Fortunately, as Section 5 outlines, it is possible to devise strategies for property tax reform that incorporate more acceptable solutions to most problems. As Section 6 concludes, good property tax reform is not easy. But it can definitely be achieved if an appropriately designed reform package is properly introduced and implemented.

January 28, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, January 27, 2015

Kamin Presents Designing Legislation That Responds to Fiscal Uncertainty Today at NYU

Kamin (2015)David Kamin (NYU) presents In Good Times and Bad: Designing Legislation That Responds to Fiscal Uncertainty at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

Congress often moves slowly to change tax and spending laws when circumstances change, but there are ways to design legislation to anticipate and prevent the tendency towards “policy drift.”

Enactment of major pieces of legislation tends to be followed by periods of legislative stasis, even when economic conditions change. Policies during the Great Recession are an example of this. The Great Recession proved significantly deeper than forecasters had predicted, when the American Recovery And Reinvestment Act was enacted, but but as new information became available, Congress did little to alter the fiscal stimulus in response, other than to continue some expiring provisions.

There are ways to design legislation to anticipate and prevent the tendency towards “policy drift.” This paper identifies four mechanisms: delegation of legislative authority to administrative agencies, triggers that either automatically adjust policy for changed circumstances or try to force an issue onto Congress’s agenda, expirations of legislation that sunset laws on a predetermined date, and indexing to adjust policy in discrete increments in response to changes in conditions.

 
Responsive to Economic Conditions
Easy for Congress to Initiate
Reduces Uncertainty
Holds Congress Accountable
1. Delegation of legislative authority
2a. Automatic-adjustment triggers
2b. Alarm Bell Triggers
3. Expiration Dates for Legislation
4. Indexing
= Yes     = No     = Mixed    

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January 27, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, January 22, 2015

Knoll Presents Balancing State Sovereignty and Interstate Commerce Today at Northwestern

KnollMichael Knoll (Pennsylvania) presents Striking a Balance Between State Sovereignty and Interstate Commerce, 75 State Tax Notes ___ (2015) (with Ruth Mason (Virginia)), at Northwestern today as part of its Tax Colloquium Series hosted by Lawrence Zelenak:

This Article discusses Wynne v. Comptroller, a dormant Commerce Clause case against Maryland pending before the Supreme Court. We use economic analysis to rebut Maryland’s claim that its tax regime does not discriminate against interstate commerce. We also argue that the parties’ framing of the central issue in the case as whether the Constitution requires states to relieve double taxation draws focus away from the discrimination question, and therefore could undermine the Wynnes’ case and lead to unjustified narrowing of the dormant Commerce Clause. We also show how our approach to tax discrimination resolves many of the issues that seemed to trouble the Justices at oral argument.

January 22, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 21, 2015

Leviner Presents Tax Policy Making in Israel at Hebrew University Law School

Leviner (2015)Sagit Leviner (Ono) presented Comparative Evaluation of Tax Policy-Making in Israel: Exploring the Trajectories on Monday at the Hebrew University Law School Tax Colloquium:

This project explores the transformation of Israel’s tax policy over the years while placing it within Israel’s broader economic and social context and unique characteristics. To better evaluate the merit and trajectory of this transformation, the project positions the Israeli tax experience under a comparative lens. In other words, the project evaluates whether the Israeli experience brings Israel closer to, or further from, its counterparts in the developed world.

January 21, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, January 20, 2015

Madrian Presents The Roth 401(k): Does Front-Loading Taxation Increase Savings? Today at NYU

MadrianBrigitte Madrian (Harvard) presents Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introduction (with John Beshears (Harvard), James Choi (Yale) & David Laibson (Harvard)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

Can governments increase private savings by taxing savings up front instead of in retirement? Roth 401(k) contributions are not tax-deductible in the contribution year, but withdrawals in retirement are untaxed. The more common before-tax 401(k) contribution is tax-deductible in the contribution year, but both principal and investment earnings are taxed upon withdrawal. Using administrative data from eleven companies that added a Roth contribution option to their existing 401(k) plan between 2006 and 2010, we find no evidence that total 401(k) contribution rates differ between employees hired before versus after the Roth introduction, which means that the amount of retirement consumption being purchased by 401(k) contributions increases after the Roth introduction. A survey experiment suggests two behavioral factors play a role in the unresponsiveness of contribution rates to their tax treatment: (1) employee confusion about or neglect of the tax properties of Roth balances and (2) partition dependence.

January 20, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Freedman Presents Tax Avoidance and the Proposed Google Tax Today at Florida

FreedmanJudith Freedman (Oxford) presents Tax Avoidance and the Proposed U.K. Diverted Profits Tax (Google Tax) at Florida today as part of its Graduate Tax Program Colloquium Series hosted by Yariv Brauner:

This paper aims to inform the important debate on tax avoidance by exploring the language used and setting this in context. Tax avoidance is something that needs to be tackled with vigour and public confidence that the tax system treats people equitably is vital. Yet the actors concerned ‐ taxpayers, advisers and revenue authorities ‐ operate within a complex domestic and international tax environment. Many of the complexities and flaws in the system can only be tackled by radical structural changes, which will require fundamental policy thinking and change and international co‐operation. Oversimplifying the debate and searching for individual or corporate villains will not assist in remedying the underlying problems. Even if public naming and shaming influences a few taxpayers in the public eye to impose their own voluntary constraints, it will not necessarily affect the worst avoiders, and may even encourage some non‐compliance from those who feel that “everyone is at it”. Only understanding the flaws in the tax system and working on serious changes can give long‐term results.

Ana Paula Dourado (University of Lisbon) is the discussant.

January 20, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Marian Presents A Conceptual Framework for the Regulation of Cryptocurrencies Today at Tulane

MarianOmri Marian (Florida) presents A Conceptual Framework for the Regulation of Cryptocurrencies, 81 U. Chi. L. Rev. Dialogue ___ (2015), at Tulane today as part of its Regulation and Coordination Workshop Series hosted by Adam FeibelmanShu-Yi Oei, and Steve Sheffrin:

This Essay proposes a conceptual framework for the regulation of transactions involving cryptocurrencies. Cryptocurrencies offer tremendous opportunities for innovation and development, but at the same time are uniquely suited to facilitate illicit behavior. The suggested regulatory framework is intended to support (or, at the least, not impair) cryptocurrencies’ innovative potential. At the same time, the aim is to disrupt cryptocurrencies’ utility for criminal activities. To achieve such purposes, this Essay suggests a regulatory framework that imposes costs on the characteristics of cryptocurrencies that make them particularly useful for criminal behavior (in particular, anonymity), but does not impose costs on characteristics that are at the core of the generative potential (in particular, the decentralization of value-transfer processes). Using a basic utility model of criminal behavior as a benchmark, the Essay explains how regulatory instruments can be so designed. One such regulatory instrument is proposed as an example – an elective anonymity tax on cryptocurrency transactions in which at least one party is not anonymous. 

January 20, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 14, 2015

Chodorow Presents Pope Francis, the Bible, and Tax Policy Today at Pepperdine

ChodorowAdam Chodorow (Arizona State) presents Pope Francis, the Bible, and Tax Policy at Pepperdine today as part of our Tax Policy Colloquium Series:

  1. What does the Bible actually say, either directly about taxes and tax-like institutions or indirectly about principles that should guide policymakers, regarding an appropriate tax system?
  2. To what extent should the Bible or religious views guide votes or opinions on such secular policy matters?

Biblical Tax Systems and the Case for Progressive Taxation, 23 J.L. & Relig. 53 (2008):

With the political rise of the religious right, American policymakers have increasingly looked to religion for guidance on important policy issues, including questions of distributive justice and how best to allocate tax burdens. While many claim that Judeo-Christian values require progressivity, the examples of taxation found in the sacred texts apparently refute this claim. This article examines four examples of taxation found in the Bible and Talmud to determine whether it is appropriate to infer from them a Judeo-Christian principle of tax fairness that should apply in a modern, secular tax system. I find that, not only do these examples use different methods for allocating tax burdens, making it impossible to identify one principle, but, more important, each example bears the stamp of its religious purpose or historical circumstances, making it inappropriate to rely on these examples as evidence of a divinely-sanctioned principle of tax justice.

Adam's visit is sponsored by Pepeprdine's Diane and Guilford Glazer Institute for Jewish Studies.

Update:  Post-presentation lunch:

Adam

January 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, January 13, 2015

Pepperdine Tax Policy Workshop Series (Spring 2015)

Here is the schedule for my Spring 2015 Pepperdine Tax Policy Workshop Series:

  • Jan. 14    Adam Chodorow (Arizona State), Pope Francis, the Bible, and Tax Policy
  • Feb. 2     Michael Graetz (Columbia), The Tax Reform Road Not Taken -- Yet
  • Feb. 18   Ed Kleinbard (USC), We Are Better Than This: How Government Should Spend Our Money
  • Mar. 2    Shu-Yi Oei (Tulane), Human Equity? Regulating the New Income Share Agreements
  • Mar. 23  Gregg Polsky (North Carolina), Private Equity Tax Games
  • Apr. 6     Miranda Fleischer (San Diego), Libertarianism and the Charitable Tax Subsidies
  • Apr. 20   Heather Field (UC-Hastings), Aggressive Tax Planning and the Ethical Tax Lawyer

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

Pepperdine Tax Policy Workshop Series (Spring 2014)

Pepperdine 2015 (2)

January 13, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 7, 2015

Cauble Presents Taxing Publicly Traded Entities Today at Toronto

Cauble (2015)Emily Cauble (DePaul) presents Taxing Publicly Traded Entities at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Publicly traded entities are generally treated as corporations for U.S. tax purposes. Under various exceptions, however, publicly traded entities may obtain special treatment if they earn predominately certain specified types of qualifying income. This Article examines potential rationales for granting special tax treatment to certain publicly traded entities. As the analysis in this Article will show, many of the potential rationales are unconvincing. In addition, to the extent that some rationales may be persuasive, the current rules are not designed in a way that best comports with these potential justifications. Therefore, reform is needed.

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January 7, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, December 15, 2014

Elkins Presents The Achilles Heel of Corporate Taxation Today at Hebrew University

Elkins (2015)David Elkins (Netanya) presents The Achilles Heel of Corporate Taxation at Hebrew University of Jerusalem today as part of its Tax Colloquium Series:

A great deal of the complexity and inconsistency of the corporate tax structure can be traced to a 1921 decision in which the Supreme Court refused to bifurcate the amount paid for shares and to consider part of that amount as consideration for the right to participate in the distribution of already accumulated earnings. Although the government won that case, it turned out to be one of its most pyrrhic victories, as the consequent misallocation of basis created perhaps the most basic corporate tax shelter. Congress, instead of attacking the root of the problem by providing for bifurcation, chose to make it inconvenient for taxpayers to exploit what it viewed as an isolated glitch in the system (and in the process created a great deal of collateral damage). The Commissioner, with some degree of success, tends to look askance at corporations that engage in legitimate self-help by withdrawing profits before selling their shares. Bifurcation would contribute to the equity, efficiency, and simplicity of the corporate tax structure by equalizing the tax treatment of the various methods by which corporate shareholders realize their right to capital and earnings.

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

Wednesday, December 3, 2014

Gamage Presents Analyzing the Optimal Choice of Tax Instruments Today at Harvard

Gamage (2014)David Gamage (UC-Berkeley) presents Analyzing the Optimal Choice of Tax Instruments: The Case for Levying (all of) Labor-Income Taxes, Value-Added Taxes, Capital-Income Taxes, and Wealth Taxes, 68 Tax L. Rev. ___ (2014), at Harvard today as part of its Tax Law, Policy and Practice Workshop Series hosted by Daniel Halperin and Stephen Shay:

Economic analyses of taxation have largely focused on the problems of labor-to-leisure and saving-to-spending distortions. Based on these analyses, the prior literature has generally treated labor-income and consumption taxes as being essentially equivalent, and has also treated capital-income and wealth taxes as being essentially equivalent. Further, based on these analyses, the dominant view in the prior literature has been that neither capital income nor wealth should be taxed.

This Article expands on these prior analyses by incorporating a variety of tax-gaming responses and also administrative and compliance costs. By doing so, this Article argues that it is probably optimal for governments to levy some version of (all of) labor-income taxes, value-added taxes, capital-income taxes, and wealth taxes.

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

Tuesday, December 2, 2014

Weisbach Presents The Use of Neutralities in International Tax Policy Today at Columbia

WeisbachDavid Weisbach (Chicago) presents The Use of Neutralities in International Tax Policy at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

This paper analyzes the use of neutrality conditions, such as capital export neutrality, capital import neutrality, capital ownership neutrality, and market neutrality, in international tax policy. Neutralities are not appropriate tools for designing tax policy. They each identify a possible margin where taxation may distort business activities. Because these neutralities cannot be all satisfied simultaneously, however, they do not allow analysts to determine the appropriate trade-offs of these distortions, unlike deadweight loss measures used in other areas of tax policy. International tax policy should instead be tied directly to the reasons for taxing capital income, reasons which are derived from optimal tax or similar models.

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

Monday, December 1, 2014

Yagan Presents Capital Tax Reform and the Real Economy Today at UC-Berkeley

YaganDanny Yagan (UC-Berkeley) presents Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

Policymakers frequently propose to use capital tax reform to stimulate investment and increase labor earnings. This paper tests for such real impacts of the 2003 dividend tax cut -- one of the largest reforms ever to a U.S. capital tax rate -- using a quasi-experimental design and a large sample of U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment, with an upper bound elasticity with respect to one minus the top statutory tax rate of .08 and an upper bound effect size of .03 standard deviations. This null result is robust across specifications, samples, and investment measures. I similarly find no impact on employee compensation. The lack of detectable real effects contrasts with an immediate impact on financial payouts to shareholders. Economically, the findings challenge leading estimates of the cost-of-capital elasticity of investment, or undermine models in which dividend tax reforms affect the cost of capital. Either way, it may be di¢ cult for policymakers to implement an alternative dividend tax cut that has substantially larger near-term effects.

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

Tuesday, November 25, 2014

Alarie Presents Policy Preferences and Expertise in Canadian Tax Adjudication Today at Columbia

AlarieBenjamin Alarie (Toronto) presents Policy Preferences and Expertise in Canadian Tax Adjudication, 62 Canadian Tax J. ___ (2014) (with Andrew Green (Toronto)), at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Both taxpayers and governments struggle to stay on top of the various complex sources of tax law and to apply them in a myriad of different contexts. Given the potential for confusion and disagreement (not to mention the sometimes very large financial stakes involved) it would make sense to have a process for taxpayers to appeal government decisions to an expert body that can provide authoritative, reasoned and rational solutions to tax disputes. For this reason Canada, like the United States, has a specialized tax court dedicated to hearing appeals from decisions of the tax administration. Yet there is some evidence in both Canada and the US that judges in tax cases may be influenced by their own personal policy preferences or other factors extraneous to the “true” legal merits in deciding appeals from decisions of the tax administration. This paper examines in more detail appeals from tax assessments in Canada to understand the relative influence of judicial tax expertise and the policy preferences of judges on appeals to the Tax Court of Canada and the Federal Court of Appeal.

Our analysis reveals three main results: (1) policy preferences of judges matter, but not that much; (2) resources matter — a lot; and (3) there are dynamics relating to affirmation of appeals that are difficult to explain, although a desire to avoid the apprehension of bias is possible.

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

Friday, November 21, 2014

Hickman Presents Treasury's Retroactivity Today at Miami

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Miami today as part of its Legal Theory Workshop Series hosted by Leigh Osofsky:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

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

Wednesday, November 19, 2014

Raskolnikov Presents Rational Decisions Under Legal Uncertainty Today at Washington University

RaskolnikovAlex Raskolnikov (Columbia) presents Rational Decisions Under Legal Uncertainty at Washington University today as part of its Faculty Workshop Series:

Law is full of rules that are neither clear nor socially optimal. How do rational actors respond to these rules? What are the implications of these responses? These deceptively simple questions have no answers in law and economics. This paper offers a model of rational decisionmaking under legal uncertainty and explores its implications by combining formal economic analysis with a practical understanding of the market for legal advice. The model produces a number of intuitive, realistic results. It demonstrates why rational actors take uncertain positions even if these positions are highly likely to be detected. It suggests that most of these positions will have a better than a fifty-fifty chance of being sustained. And it allows us to investigate a popular but controversial view that greater legal certainty does not necessarily lead to greater compliance. The model’s analysis both refutes the obvious explanation for this view and offers an alternative one. When detection uncertainty is taken into account, the model confirms that the standard damages multiplier works when legal rules are ambiguous. At the same time, the model raises difficult questions about the meaning of compliance when rules are uncertain, the normative significance of various types of uncertainty, and the challenges of assessing private responses to legal uncertainty outside of the familiar confines of the optimal deterrence theory.

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

Hayashi Presents Phantom Income and the Simple Economics of Paying In Kind Today at Texas A&M

HayashiAndrew Hayashi (Virginia) presents Phantom Income and the Simple Economics of Paying In Kind at Texas A&M today as part of its Business Law Seminar:

Modern tax instruments impose cash taxes on non-cash bases. Property taxes, income taxes, gift taxes and estate taxes all must be paid in cash, even though income, gifts and estates only sometimes take the form of cash, and property never does. If it is costly to convert the tax base into cash, taxpayers may suffer from liquidity problems that require them to make painful adjustments to their savings or consumption. Although concern about taxpayer liquidity has shaped tax law and looms large in current debates about wealth taxation, tax accounting, and mark-to-market reforms, the economic factors that influence the welfare costs of cash tax collection have not been explored in a rigorous way. In this paper I present an economic analysis of the liquidity problem, identifying the factors that determine the welfare costs of cash tax collection. I apply this analysis to the property tax and to the taxation of income that accrues before it is received, sometimes called “phantom income.”

November 19, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Macnaughton Presents Income Splitting and Anti-Avoidance Legislation Today at Toronto

AlanAlan Macnaughton (Waterloo) presents Income Splitting and Anti-Avoidance Legislation: Evidence from the Canadian “Kiddie Tax” (with Andrew Bauer (Illinois)  & Anindya Sen (Waterloo)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

We examine whether “kiddie tax” legislation in Canada, effective as of 2000, deters income splitting between parents and minor children by taxing at the top marginal rate certain types of non-labour income received by children. OLS estimates based on cross-province and time-series data reveal that the share of dividend income reported by children aged 19 and under declines by 86% after the introduction of this anti-avoidance rule. The estimates also reveal that the share of capital gains (income not covered by the legislation) reported by minor children increases by 70% in the post-legislation period, suggesting that parents are switching to an alternative income splitting technique. However, the latter percentage effect is on a small base, and thus the decrease in dividend income is much larger than the increase in capital gains income. Hence, our analysis suggests that the “kiddie tax” is an effective method to deter income splitting.

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

Blank Presents Reconsidering Corporate Tax Privacy Today at Rutgers

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at Rutgers-Newark today as part of its Faculty Colloquium Series:

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 protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater tax transparency. Throughout this debate, participants have focused exclusively on the potential reactions of a corporation’s managers, shareholders and consumers to a corporation’s disclosure of its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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

Tuesday, November 18, 2014

Hanlon Presents Tax Rates and Corporate Decision Making Today at Columbia

HanlonMichelle Hanlon (MIT) presents Tax Rates and Corporate Decision Making (with John Graham (Duke), Terry Shevlin (UC-Irvine) & Nemit Shroff (MIT)) at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

We analyze survey responses from 500 corporate tax executives to better understand which tax rate firms use to incorporate taxes into their decision making. Prior research assumes that managers use the marginal tax rate (MTR) to evaluate incremental corporate decisions. However, we find that approximately 45% of tax executives surveyed state that their firms use some form of effective tax rate (ETR) as the tax rate input into capital structure, capital expenditure, and acquisition decisions, whereas less than 13% state that their firms use the MTR. We then examine the determinants and consequences of managers’ tax rate choice. We find that public firms and firms with greater analyst following are more likely to incorporate the GAAP ETR as the tax rate input into their decisions, whereas larger firms and firms with high R&D intensity are less likely to do so. Finally, we find that firms using GAAP ETRs as the tax rate input for investment decisions are less responsive to their growth opportunities and have lower acquisition announcement returns when the difference between the firm’s GAAP ETR and MTR is large. Further, we find that these firms adopt an aggressive (conservative) debt policy when the GAAP ETR is greater (less) than MTR. These results suggest that the use of GAAP ETRs instead of the theoretically suggested MTR as the tax rate input for decision making leads to inefficient corporate decisions.

November 18, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Repetti Presents The Role of Economic Efficiency in Formulating Tax Policy Today at Loyola-Chicago

Repetti (2014)James R. Repetti (Boston College) presents What is the Appropriate Role for Economic Efficiency in Formulating Tax Policy? at Loyola-Chicago today:

Traditionally, the great democracies of the western world assigned equal weight to distributive justice and economic efficiency in designing a tax system. In the past few decades, however, economic efficiency has dominated the debate about the best design of a tax system in politics and analysis by legal academics. For example, many advocate low tax rates on capital gains to reduce the efficiency effects of taxing capital income despite the fact that a capital gains preference reduces progressivity and significantly complicates our tax system. Similarly, discussions of progressive tax rates often focus on the adverse efficiency effects of high rates while ignoring benefits arising from a progressive rate structure’s reduced burden on lower income individuals. In addition, many have proposed replacing the income tax with a consumption tax in order to eliminate the tax burden on investment income even though a consumption tax, regardless of its design, would increase the tax burden for many lower income taxpayers.

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November 18, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, November 17, 2014

Cauble Presents Relying on the IRS Today at Chicago

Cauble (2014)Emily Cauble (DePaul) presents Relying on the IRS at Chicago today as part of its Legal Scholarship Workshop Series hosted by Lisa Bernstein:

The IRS issues different types of guidance to taxpayers, and the extent to which taxpayers can rely on IRS guidance depends on the form in which it was offered. For instance, taxpayers generally cannot rely on oral advice provided over the phone but can rely on more formal types of advice. The current state of the law harms unsophisticated taxpayers who disproportionately obtain informal advice -- the least reliable type of IRS guidance.

Existing literature lacks a thorough discussion of why, as a policy matter, we allow taxpayers to rely on some forms of IRS guidance more than others. This Article fills that gap by suggesting and critically evaluating potential justifications for this practice.

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

Dietsch Presents Catching Capital: The Ethics of Tax Competition Today at McGill

DietschPeter Dietsch (Université de Montréal) presents Catching Capital: The Ethics of Tax Competition (Oxford University Press) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

When individuals stash away their wealth in offshore bank accounts and multinational corporations shift their profits or their actual production to low-tax jurisdictions, this undermines the fiscal autonomy of political communities and contributes to rising inequalities in income and wealth. These practices are fuelled by tax competition, with countries strategically designing fiscal policy to attract capital from abroad.

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November 17, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Bird-Pollan Presents Utilitarianism and Wealth Transfer Taxation Today at Loyola-L.A.

Bird-PollanJennifer Bird-Pollan (Kentucky) presents Utilitarianism and Wealth Transfer Taxation at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

This Article is the third in a series examining the continued relevance and philosophical legitimacy of the United States wealth transfer tax system. The earlier two Articles used the frameworks of Nozickian libertarianism [Death, Taxes, and Property (Rights): Nozick, Libertarianism, and the Estate Tax, 66 Maine L. Rev. 1 (2013)] and Rawlsian equality of opportunity [Unseating Privilege: Rawls, Equality of Opportunity, and Wealth Transfer Taxation, 59 Wayne L. Rev. 713 (2014)], concluding that the taxation of wealth transfers is consistent with both theoretical approaches. This Article examines the utilitarianism of John Stuart Mill and his philosophical progeny, distinguishing the philosophical approach of utilitarianism from contemporary welfare economics. The Article first identifies the current state of wealth transfer taxation in the United States. Next, the Article explicates the fundamental elements of utilitarianism, starting with Jeremy Bentham’s hedonistic approach, identifying utility with pleasure, and then moving to Mill’s more sophisticated definition of utility, distinguishing between “higher” and “lower” pleasures. After exploring classical utilitarianism, the Article compares the philosophical theory to its more contemporary interpretation in the form of welfare economics. Finally, the Article concludes that heavily redistributive wealth transfer taxation is consistent with the ethical imperatives of classical utilitarianism.

Miranda Perry Fleischer (San Diego) is the commentator.

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

Kleinbard Presents We Are Better Than This: How Government Should Spend Our Money at Loyola Marymount

We Are Better Than This (2014)Edward Kleinbard (USC) presents We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014) at Loyola Marymount tomorrow as part of its Center for Accounting Ethics, Governance, and the Public Interest Speaker Series:

We Are Better Than This fundamentally reframes budget debates in the United States. Author Edward D. Kleinbard explains how the public's preoccupation with tax policy alone has obscured any understanding of government's ability to complement the private sector through investment and insurance programs that enhance the general welfare and prosperity of our society at large.

He argues that when we choose how government should spend and tax, we open a window into our "fiscal soul," because those choices are the means by which we express the values we cherish and the regard in which we hold our fellow citizens. Though these values are being diminished by short-sighted decisions to starve government, strategic government spending can directly make citizens happier, healthier, and even wealthier.

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November 17, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (5)

Tuesday, November 11, 2014

Steuerle Presents How to Restore Fiscal Freedom and Rescue Our Future Today at Columbia

DeadC. Eugene Steuerle (Urban Institute) presents Dead Men Ruling: How to Restore Fiscal Freedom and Rescue Our Future at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Eugene Steuerle argues that these seemingly separable economic and political problems are actually symptoms of a common disease, one unique to our time. Unless that disease and the history of how it spread over time is understood, Steuerle says, it is easy for politicians and voters alike to fall prey to believing in simple but ineffective nostrums, hoping that a cure lies merely in switching political parties or reducing the deficit or protecting and expanding our favorite program.

Despite the despairing claims of many, Steuerle points out that we no more live in an age of austerity than did Americans at the turn into the twentieth century with the demise of the frontier. Conditions are ripe to advance opportunity in ways never before possible, including doing for children and the young in this century what the twentieth did for senior citizens, yet without abandoning those earlier gains. Recognizing this extraordinary but checked potential is also the secret to breaking the political logjam that —as Steuerle points out —was created largely by now dead (or retired) men.

November 11, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, November 10, 2014

Logue Presents Delegating Tax Today at Loyola-L.A.

Logue 2Kyle D. Logue (Michigan) presents Delegating Tax (with James R. Hines, Jr. (Michigan)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Congress delegates extensive and growing lawmaking authority to federal administrative agencies in areas other than taxation, but tightly limits the scope of IRS and Treasury regulatory discretion in the tax area, specifically not permitting these agencies to select or adjust tax rates. This Article questions why tax policy does and should differ from other policy areas in this respect, noting some of the potential policy benefits of delegation. Greater delegation of tax lawmaking authority would permit policies to benefit from the expertise of administrative agencies, and afford timely adjustment to changing economic circumstances. Furthermore, delegation of the tax reform process to an independent commission or agency offers the prospect of Congress committing itself to rational reform and long-run budget sustainability in a way that is more apt to succeed than are piecemeal legislative efforts. The Article concludes with an analysis of the constitutionality of tax delegation, noting the applicability of recent Supreme Court interpretations that Congress has broad discretion to delegate rulemaking authority to federal agencies, and that tax policy is of a kind with other federal policies.

Jason Oh (UCLA) is the commentator.

November 10, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Dwenger Presents Improving Tax Collection by Public Shaming Today at UC-Berkeley

Dwenger 2Nadja Dwenger (Max Planck) presents Improving Tax Collection by Public Shaming: Evidence from Slovenia, at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

Do the public spotlight and social-image concerns provide an effective measure for facilitating tax compliance and tax collection? This question is at the heart of an ongoing debate in the tax compliance literature asking whether tax compliance decisions are co-determined by social incentives. If social incentives such as social-image concerns are at play in taxpayers’ tax compliance decisions it might be attractive for tax authorities to revert to an instrument which has been widely used in our societies in other contexts: public shaming.

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

O'Neill Presents Corporations, Conventionalism, Taxation, and Social Justice Today at McGill

OneilMartin O’Neill (York University) presents Corporations, Conventionalism, Taxation and Social Justice at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

A failure to take seriously the conventionality of corporations has led to an unimaginative view of corporate taxation as being structurally analogous to the taxation of individuals. There are, in fact, many disanalogies between the two: corporate profit should not be treated as analogous to individual income; low-profit corporations should not be treated advantageously by a tax system in the same way as it should treat low-income individuals; and, most significantly, corporations are not owed the same level of care and determinacy as individuals with regard to the tax rules that they face. Breaking the perceived link between individual taxation and corporate taxation makes room for a reassessment of the structure and purpose of corporate taxation.

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

Tuesday, November 4, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at Minnesota

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at Minnesota today as part of its Perspectives on Taxation Lecture Series hosted by Kristin Hickman:

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 protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater tax transparency. Throughout this debate, participants have focused exclusively on the potential reactions of a corporation’s managers, shareholders and consumers to a corporation’s disclosure of its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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November 4, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, November 3, 2014

Weinzierl Presents The Promise of Positive Optimal Taxation Today at Loyola-L.A.

WeinzierlMatthew Weinzierl (Harvard Business School) presents The Promise of Positive Optimal Taxation at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

A prominent assumption in modern optimal tax research is that the objective of taxation is Utilitarian. I present new survey evidence that most people reject this assumption’s implications for several prominent features of tax policy, instead preferring tax policies based at least in part on a classic alternative objective: the principle of Equal Sacri…fice. I generalize the standard model to accommodate this preference for a mixed objective, proposing a method by which to make disparate criteria commensurable while respecting Pareto efficiency. Then, I show that optimal policy in this generalized model, calibrated to the survey evidence and U.S. microdata, is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality, including the coexistence of substantial redistribution and limited tagging. Together, these fi…ndings demonstrate the potential of a positive theory of optimal taxation.

David Gamage (UC-Berkeley) is the commentator.

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

Moretti & Wilson Present Taxation, Migration, and Innovation: The Effect of Taxes on the Location of Star Scientists Today at UC-Berkeley

MorettiWilsonEnrico Moretti (UC-Berkeley, Department of Economics) & Daniel Wilson (Federal Reserve Bank of San Francisco) present Taxation, Migration, and Innovation: The Effect of Taxes on the Location of Star Scientists at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

This paper estimates tax-induced mobility of star scientists. Surprisingly there is  little research on tax-induced mobility of “economically valuable” individuals.

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

Wednesday, October 29, 2014

Mawani Presents Payout Policies of Canadian REITs Today at Toronto

MawaniAmin Mawani (York University) presents Payout Policies of Canadian REITs at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

This study examines whether Canadian REITs that distribute relatively more of the tax-favoured returns (i.e., return of capital) do so by offering lower pre-tax returns in an efficient securities market. In other words, do Canadian REITs that offer significant amounts of tax-favoured return of capital bear an implicit tax in the form of lower pre-tax return? The study also examines whether higher proportions of returns of capital are statistically associated with more volatile distributions, higher growth opportunities, lower agency costs, stronger trust governance and / or higher management ownership of trust units.

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

Tuesday, October 28, 2014

Kleinbard Presents We Are Better Than This: How Government Should Spend Our Money Today at Columbia

We Are Better Than This (2014)Edward Kleinbard (USC) presents We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014) at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

We Are Better Than This fundamentally reframes budget debates in the United States. Author Edward D. Kleinbard explains how the public's preoccupation with tax policy alone has obscured any understanding of government's ability to complement the private sector through investment and insurance programs that enhance the general welfare and prosperity of our society at large.

He argues that when we choose how government should spend and tax, we open a window into our "fiscal soul," because those choices are the means by which we express the values we cherish and the regard in which we hold our fellow citizens. Though these values are being diminished by short-sighted decisions to starve government, strategic government spending can directly make citizens happier, healthier, and even wealthier.

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

Monday, October 27, 2014

Turmel Presents The Reasons of Taxation: Efficiency, Freedom, Equality Today at McGill

TurmelPatrick Turmel (Laval University, Department of Philosophy) presents The Reasons of Taxation: Efficiency, Freedom, Equality (with David Robichaud (University of Ottawa, Department of Philosophy)) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

In Capital in the 21st Century, Thomas Piketty argues for a series of controversial policy recommendations, such as a substantial increase in tax rates on higher incomes and a global tax on capital whose explicit aim is to halt the current spiral of inequality. Piketty’s main argument for these recommendations is not moral, but economic. Indeed, higher tax rates on top revenues and a progressive global tax on capital have not much to do with social justice or equality per se. According to Piketty, they are mostly needed in order to correct the market and maximize efficiency. But Piketty also put forth democratic reasons in favour of fighting inequalities, since they not only threaten the market, but also the very foundations of political freedom. These two types of reasons – reasons of efficiency and reasons of freedom - certainly go a long way to justify fighting the current dynamics of inequality and thus resisting the return of the Belle Époque’s patrimonial capitalism. But they remain somehow weak, when looked at from the perspective of most theories of social justice. They certainly don’t have much normative force when it comes to justifying important redistribution of wealth, as social justice seems to call for. At the very least, they fall short of creating a complete argument. The aim of this paper is to contribute to filling this gap by showing that alongside reasons of efficiency and freedom, a third type of reasons should play a central role in our understanding and justification of taxation, namely: reasons of equality.

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

Crane Presents What Should Be the Criteria for Tax-base Design? Today at Loyola-L.A.

CraneCharlotte Crane (Northwestern) presents What Should Be the Criteria for Tax-base Design? at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The legal academic discussions about the choice of tax base have paid little attention to the interactive effects of tax base choices with political and social institutions. Some work has been done by sociologists, political scientists and economic historians that connects the choice of tax base to the cultures and institutions that chose them that demonstrates the importance of taxes to the possibility of stable political institutions. Very little thought is given to the effect of the choice of tax base on the institutions that will evolve in response to this choice. These byproducts of taxation can be as obvious as a new cadre of tax collectors loyal to the government (but likely to insist that the tax remain in place) or as subtle as a population that learns to keep its accounts under a uniform methods or that develops uniform modes of doing business so as to avoid complications in tax compliance. This paper will explore several episodes in the history of taxes in the United States in which those making the choice were keenly aware of the political institutions that would result not just from the provision of a stable revenue source, but from the tax base chosen to provide that revenue.

Edward McCaffery (USC) is the commentator.

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

Friday, October 24, 2014

Hoffer, Lederman & Walker Debate Tax Court Exceptionalism Today at Kentucky

HLWStephanie Hoffer (Ohio State), Leandra Lederman (Indiana), and Christopher Walker (Ohio State) debate Tax Court exceptionalism at Kentucky today as part of its Faculty Workshop Series (blogged here):

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

Talley Presents Corporate Inversions and the Unbundling of Regulatory Competition Today at Virginia

Talley 2Eric Talley (UC-Berkeley) presents Corporate Inversions and the Unbundling of Regulatory Competition at Virginia today as part of its Faculty Workshop Series:

A sizable number of US public companies have recently executed “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. When appropriately structured, inversions replace American with foreign tax treatment of extraterritorial earnings, often at far lower effective rates. Regulators and politicians have reacted with alarm to the “inversionitis” pandemic, with many championing radical tax reforms. This paper questions the prudence of such extreme reactions, both on practical and on conceptual grounds. Practically, I argue that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally (or with only modest tax reforms). Conceptually, I assess the inversion trend through the lens of regulatory competition theory, in which jurisdictions compete not only in tax policy, but also along other dimensions, such as the quality of their corporate law and governance rules. I argue that just as US companies have a strong aversion to high tax rates, they have a strong affinity for strong corporate governance rules, a traditional strength of American corporate law. This affinity has historically given the US enough market power to keep taxes high without chasing off incorporations, because US law specifically bundles tax residency and state corporate law into a conjoined regulatory package. To the extent this market power remains durable, radical tax overhauls would be unhelpful (and even counterproductive). A more blameworthy culprit for inversionitis, I argue, can be found in an unlikely source: Securities Law. Over the last fifteen years, financial regulators have progressively suffused US securities regulations with mandates relating to internal corporate governance matters – traditionally the domain of state law. Those federal mandates, in turn, have displaced and/or preempted state law as a primary source of governance regulation for US-traded issuers. And, because US securities law applies to all listed issuers (regardless of tax residence), this displacement has gradually “unbundled” domestic tax law from corporate governance, eroding the US’s market power in regulatory competition. The most effective elixir for this erosion, then, may also lie in securities regulation. I propose two alternative reform paths: either (a) domestic exchanges should charge listed foreign issuers for their consumption of federal corporate governance policies; or (b) federal law should cede corporate governance back to the states by rolling back many of the governance mandates promulgated over the last fifteen years.

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

Thursday, October 23, 2014

Hickman Presents Treasury's Retroactivity Today at UC-Irvine

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at UC-Irvine today as part of its Faculty Workshop Series:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

October 23, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, October 21, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at UNLV

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at UNLV today as part of its Faculty Enrichmant Series:

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 protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater tax transparency. Throughout this debate, participants have focused exclusively on the potential reactions of a corporation’s managers, shareholders and consumers to a corporation’s disclosure of its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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

Monday, October 20, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at Northwestern

SanchiricoChris Sanchirico (Pennsylvania) presents As American as Apple, Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014), at Northwestern today as part of its Law and Economics Workshop Series organized by Bernard Black:

The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside.

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

Heath Presents Taxation as Collective Consumption Today at McGill

HeathJoseph Heath (Toronto) presents Taxation as Collective Consumption? at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

Individuals express a surprisingly pervasive error that I refer to as the “government as consumer” fallacy. The picture underlying this fallacy is relatively straightforward. Government services, such as health care, education, national defense, and so on, “cost” us as a society. We are able to pay for them only because of all the wealth that we generate in the private sector, which we transfer to the government in the form of taxes. A government that taxes the economy too heavily stands accused of “killing the goose that lays the golden eggs” by disrupting the mechanism that generates the wealth that it itself relies upon in order to provides its services.

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

Dharmapala Presents Interest Deductions in a Multijurisdictional World Today at Loyola-L.A.

DharmapalaDhammika Dharmapala (Chicago) presents ​Interest Deductions in a Multijurisdictional World at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The tax treatment of interest expenses in a multijurisdictional setting raises numerous complexities. This paper catalogs these difficulties and highlights the particular problems associated with efforts to achieve ownership neutrality among multinational corporations (MNCs) when debt financing is available. We argue that the differential deductibility of debt entailed by various current tax law provisions leads in general to potential distortions in the patterns of asset ownership across MNCs, and that various proposed solutions have significant limitations. We suggest several alternative regimes to address both the ownership distortions that we highlight, as well as other well-established problems of income-shifting through debt. These alternative regimes are extensions to a multinational setting of two general approaches to the neutral treatment of interest expenses - the CBIT (comprehensive business income tax) and ACC (allowance for corporate capital). These regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – provide solutions to income-shifting and ownership distortions. However, they have the potential disadvantage of restricting other policy parameters.

Alexander Wu (UCLA) is the commentator.

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

Wednesday, October 15, 2014

Borden Presents REIT Stuff at Florida

BordenBradley T. Borden (Brooklyn) presented REIT Stuff at Florida as part of its Graduate Tax Program Colloquium Series:

Real estate investment trusts (REITs) have made headlines recently because they provide favorable tax treatment to corporations that primarily own real estate, which contrasts with the typical double-tax that generally applies to corporations. The media appears to be particularly concerned that existing corporations are spinning off their real estate holdings into REITs, eroding the corporate tax base. It is also concerned that the IRS has extended REIT classification to entities that hold property, such as telecommunications equipment, billboards, mortgages, oil and gas pipeline systems, timber, casinos, and data centers, which do not fit within the traditional definition of real estate. Such extension broadens the scope of favorable REIT tax treatment to property that was not held in real estate trusts when Congress enacted the REIT regime. Despite all of this attention, the effect of REIT spinoffs and the formation of REITs with non-traditional real estate assets may not have a very significant effect on federal tax revenues. This Article will closely examine the revenue effect of REIT spinoffs and the extension of REIT treatment to non-traditional real estate assets. Early work in this are suggests that the revenue effect appears to be nominal, and it is a result of dual, overlapping tax policies—favorable tax treatment of real estate and tax-exempt status for retirement plans. The analysis will set the stage for discussing potential action in this area by recounting the history of REITs and the important events that have directed the course of REIT legislation to its current status. The early analysis appears to suggest that lawmakers should either reconsider the preference for real estate and pensions or consider relaxing the law to provide more efficient ways for corporations to bifurcate real-estate income from operating income and more easily obtain the benefits available under current law.

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

Tuesday, October 14, 2014

Fleischer Presents Curb Your Enthusiasm for Pigouvian Taxes Today at Columbia

Fleischer Vic (2013)Victor Fleischer (San Diego) presents Curb Your Enthusiasm for Pigouvian Taxes at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Pigouvian (or "corrective") taxes have been proposed or enacted on dozens of products and activities that may be harmful in excess: carbon, gasoline, fat, sugar, guns, cigarettes, alcohol, traffic, zoning, executive pay, and financial transactions, among others. Academics of all political stripes are mystified by the public’s inability to see the merits of using Pigouvian taxes more frequently to address serious social harms.

This enthusiasm for Pigouvian taxes should be tempered. A Pigouvian tax is easy to design — as a uniform excise tax — if one assumes that each individual causes the same amount of harm with each incremental increase in activity on the margin. This assumption of uniform marginal social cost pairs well with the limited information and enforcement capacity of tax institutions. But when marginal social cost varies significantly, a Pigouvian tax will not lead to an optimal allocation of economic resources. Focusing on carbon emissions, where the assumption of uniform marginal social cost happens to be reasonable, obscures this common design flaw.

Broadly speaking, Pigouvian taxes should be employed only when (1) the harm is (or is properly analogized to) global pollution, and where the harm does not vary based on the source, or (2) the variation in marginal social cost is easily observed and categorized, as with traffic congestion charges.

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

Monday, October 13, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at Florida

SanchiricoChris Sanchirico (Pennsylvania) presents As American as Apple, Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014), at Florida today as part of its Graduate Tax Program Colloquium Series:

The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside.

October 13, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mayer Presents Taxing Politics Today at Loyola-L.A.

MayerLloyd Hitoshi Mayer (Notre Dame) presents Taxing Politics at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

This draft Article addresses two key questions relating to the interaction between federal tax law and political activity. First, is it advisable as a policy matter for Congress to use the tax law to regulate the flows of money in politics in furtherance of non-tax goals such as combatting corruption, promoting equality, and encouraging democratic participation? I answer this first question generally no, in significant part because the tax law and the IRS are poorly suited for this role and suffer significant collateral damage when their poor fit becomes evident, as the ongoing controversy over the IRS’ handling of exemption applications filed by Tea Party and other conservative groups reveals. Second, does tax law in its current form treat political activity properly based on longstanding tax policies relating to what constitutes income, what expenses should be deductible, what constitutes a taxable gift, and what characteristics organizations should have in order to qualify for tax exemption? I answer this second question generally yes, but identify several areas where the tax law needs to be changed to achieve greater consistency with such policies, including with respect to reducing the amount of political activity that is deemed permissible for most types of tax-exempt organizations.

Ellen Aprill (Loyola-L.A.) and Justin Levitt (Loyola-L.A.) are the commentators.

October 13, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, October 7, 2014

Shackelford Presents The Taxation of Foreign Investors in U.S. REITs Today at Columbia

ShackelfordDouglas Schackelford (North Carolina) presents Taxes, Investors, and Managers: Exploring the Taxation of Foreign Investors in U.S. REITs (with Margot Howard (North Carolina) & Katherine Pancak (Connecticut)) at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

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 decisions. It also should aid policymakers who are considering further relaxing the discriminatory tax treatment for foreign investors in U.S. real estate.

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

Monday, October 6, 2014

Norman Presents Corporate Tax and Beyond: Compliance Norms Today at McGill

Norman 2Wayne Norman (Duke University, Department of Philosophy) presents Corporate Tax and Beyond: Compliance Norms at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium hosted by Allison Christians and Daniel Weinstock:

Using the media's recent coverage of Apple's tax avoidance strategies as a case study, Professor Norman will discuss how we ought to understand and rationalize corporate social responsibility and self-regulation norms emerging around the taxation of multinationals, and whether these rationalizations are, or should be, different than the rationalization of corporate tax regulation.

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