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Tuesday, April 15, 2014

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?

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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.

Continue reading

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)

Thursday, March 13, 2014

Morse Presents The Development of Tax Anti-Avoidance Law in Australia and the United States Today at Indiana

Morse (2013)Susan C. Morse (Texas) presents The Development of Tax Anti-Avoidance Law in Australia and the United States (with Robert Deutsch (University of New South Wales)) at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman

The different approaches to the development of tax anti-abuse law in Australia and the United States share the same basic building blocks: administrative leadership, legislative change, and the development of judicial case law. For reasons including path dependence and the degree of difficulty of the path to enacting a legislative change favored by the administration, statutory change is favored in Australia relative to the United States. In the U.S., administrators faced with a tough tax avoidance problem favor a strategy that combines strong elements of litigation strategy and regulatory and other guidance, as well as proposals for statutory amendment. But the differences are differences of degree, since tax administrators in both countries use all of these elements and operate in a way that acknowledges all branches of government when seeking to develop and change applicable tax anti-abuse law. In addition, based on this case study evidence, the substantive differences in Australian and U.S. anti-abuse law cannot be directly traced to institutional choice issues.

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

Phillips Presents Endogenous Detection and Audit Intensity Today at UCLA

PhillipsMark Phillips (USC) presents Endogenous Detection and Audit Intensity in the Tax Evasion Game at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

In this paper I introduce an imperfect and endogenous detection technology into the sequential tax evasion game. During a tax agency's examination of a taxpayer, the fraction of evasion detected depends upon three factors: the taxpayer's true income; the taxpayer's unreported income; and the tax agency's exam-speci c resources (i.e. intensity of examination). I solve for an equilibrium in which the tax agency chooses both whom to audit and at what intensity subject to an enforcement budget constraint. In contrast to simpler games, the tax agency cannot infer any given taxpayer's true income, even after an audit occurs. Instead, the tax agency need know only two more limited but realistic pieces of information for a given taxpayer: the expected amount of detected (not true) evasion, and how that amount changes with marginal increases in audit intensity.

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

Wednesday, March 12, 2014

Dharmapala Presents Interest Deductions in a Multijurisdictional World Today at Toronto

DharmapalaDhammika Dharmapala (Illinois) presents Interest Deductions in a Multijurisdictional World (with Mihir A. Desai (Harvard)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop 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.

March 12, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, March 11, 2014

Sikes Presents Cross-Country Evidence on Capital Gains Taxes, Risk, and Expected Rates of Return Today at NYU

SikesStephanie Sikes (University of Pennsylvania, Wharton School) presents Cross-Country Evidence on the Relation between Capital Gains Taxes, Risk, and Expected Rates of Return (with Luzi Hail (University of Pennsylvania, Wharton School) & Clare Wang (Northwestern University, Kellogg School)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

This study empirically examines the prediction in Sikes and Verrecchia (2012) that the relation between capital gains tax rates and expected rates of return varies in the cross-section and over time with firm risk and market risk. Specifically, we test whether the general positive relation between expected returns and the capital gains tax rate becomes weaker or even reverses when (i) a firm’s systematic risk is high, (ii) the aggregate market risk premium is high, or (iii) the risk-free rate is low. Using an international panel from 25 countries over the 1990 to 2004 period, we find evidence supporting these predictions. The results are particularly pronounced in countries with substantive changes in tax rates, a tradition of low tax evasion, less integrated capital markets, and less institutional ownership as well as around substantive changes in the three risk proxies. We corroborate our findings in a single country setting, using the 1978, 1997, and 2003 changes to the capital gains tax rate in the United States as events. Our results underscore the importance of macroeconomic and firm-specific factors in the determination of the effect of capital gains taxes on expected returns and show that the valuation effects can sometimes be in the opposite direction of what is generally expected.

March 11, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, March 6, 2014

Shay Presents Formulary Apportionment in the U.S. Today at Temple

ShayStephen E. Shay (Harvard) presents Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig? (with J. Clifton Fleming (BYU) & Robert J. Peroni (Texas)) at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu & Andrea Monroe:

[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

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

Wednesday, March 5, 2014

Cain Presents Taxation of Same-Sex Couples After Windsor Today at Duke

CainPatricia Cain (Santa Clara) presents Taxation of Same-Sex Couples After United States v. Windsor: Did the IRS get it right in Revenue Ruling 2013-17? at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

The Windsor decision created a huge shift in tax treatment of same-sex spouses. But there are still many unresolved issues. Revenue Ruling 2013-17 is a step in the right direction as it resolves some of the issues that arose after Windsor, but there is still work to be done. As with sports, “it ain’t over until the fat lady sings.”

March 5, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Auten Presents New Perspectives on Income Mobility and Inequality Today at Penn

Penn 2014Gerald E. Auten (Office of Tax Analysis, U.S. Treasury Department) presents New Perspectives on Income Mobility and Inequality at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

This study examines several dimensions of income mobility and inequality — mobility of individuals through their peak earnings years, intergenerational mobility, and persistence in the top 1 percent. Its main fi ndings can be summarized as follows. Half of those age 35–40 in the bottom quintile of their cohort moved to higher quintiles 20 years later; over 60 percent moved up relative to the full population. About 70 percent of dependents from low-income households were themselves in higher quintiles 20 years later. Younger generations gradually replaced those that dominated the top percentile in 1987. The results show the importance of life cycle effects and the changing composition of top income groups.

Figure 1

March 5, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, March 4, 2014

Hines & Logue Present Delegating Tax Today at NYU

PixJames R. Hines, Jr. (Michigan) & Kyle D. Logue (Michigan) present Delegating Tax at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

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 commiting 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.

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

Monday, March 3, 2014

Galle Presents Nonprofit Executive Pay as an Agency Problem Today at Pepperdine

GalleBrian D. Galle (Boston College) presents Nonprofit Executive Pay as an Agency Problem: Evidence from U.S. Colleges and Universities (with David I. Walker (Boston University)) at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

We analyze the determinants of the compensation of private college and university presidents from 1999 through 2007. We find that the fraction of institutional revenue derived from current donations is negatively associated with compensation and that presidents of religiously-affiliated institutions receive lower levels of compensation. Looking at the determinants of contributions, we find a negative association between presidential pay and subsequent donations. We interpret these results as consistent with the hypotheses that donors to nonprofits are sensitive to executive pay and that stakeholder outrage plays a role in constraining that pay. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations. 

Brian D. Galle (Boston College) & David I. Walker (Boston University), Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach:

We evaluate the effect of highly salient disclosure of private college and university president compensation on subsequent donations using a quasi-experimental research design. Using a differences-in-discontinuities approach to compare institutions that are highlighted in the Chronicle of Higher Education’s annual "top 10" list of most highly-compensated presidents against similar others, we find that appearing on a top 10 list is associated with reduced average donations of approximately 4.5 million dollars in the first full fiscal year following disclosure, despite greater fundraising efforts at "top 10" schools. We also find some evidence that top 10 appearances slow the growth of compensation, while increasing fundraising and enrollment, in subsequent years. We interpret these results as consistent with the hypothesis that donors care about compensation and react negatively to high levels of pay, on average; but (absent highly-salient disclosures) are not fully informed about pay levels. Thus, while donors represent a potential source of monitoring and discipline with respect to executive pay in the nonprofit sector, significant agency problems remain. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations.

Salaries

Update:  Post-presentation lunch:

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

Friday, February 28, 2014

Caron Presents The Role of Faculty Scholarship at Faith-Based Law Schools Today at Regent

Caron 2012 PhotoPaul L. Caron (Pepperdine) presents Faculty Scholarship at Faith-Based Law Schools: Long Tails, Moneyball and Rankings in a Time of Crisis at Regent today:

I have written extensively on legal scholarship and teaching in a variety of contexts, particularly the impact of technology in transforming faculty roles in research and in the classroom.  In What Law Schools Can Learn From Billy Beane and the Oakland Athletics, 82 Tex. L. Rev. 1483 (2004), Rafael Gely and I argued that legal education must use technology to develop more sophisticated measures of law school success and faculty contributions to law school success.  In Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006), Bernie Black and I contended that SSRN downloads can play a role in measuring faculty scholarly performance along with the existing measures of reputations surveys, publication counts, and citation counts.  In The Long Tail of Legal Scholarship, 116 Yale L.J. Pocket Part 38 (2006), I showed that legal scholarship is shifting from a hit-driven model represented by citation counts to a niche-driven model represented by download counts.  In Are Scholars Better Bloggers? Bloggership: How Blogs Are Transforming Legal Scholarship, 84 Wash U. L. Rev. 1025 (2006), I argued that blogs illustrated the shift away from traditional scholarship and traditional methods of disseminating scholarly ideas.

Two things have changed since the publication of those articles.  First, legal education is confronted with an existential crisis,  In The Law School Crisis: What Would Jimmy McMillan Do?, 31 Pepperdine Law 14 (2012), I argued that the law school crisis results from the confluence of four factors:  skyrocketing costs and student loan debt, and plummeting job placement and enrollments.  Second, after over twenty years at the University of Cincinnati College of Law (a public, secular law school), this past fall I joined the tenured faculty at Pepperdine University School of Law (a private, Christian law school).

I argue that religious law schools are uniquely positioned to thrive in the midst of the law school crisis because our faith-fueled commitment to our students and to each other empowers us to better define the pathways to success for our schools, our students, and our faculties and equips us to make that journey together.

February 28, 2014 in Colloquia, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Thursday, February 27, 2014

Polsky Presents Private Equity Monitoring Fees Are Actually Disguised Dividends Today at UCLA

Polsky 2014Gregg D. Polsky (North Carolina) presents The Untold Story of Sun Capital: Private Equity Monitoring Fees Are Actually Disguised Dividends, 142 Tax Notes 556 (Feb. 3, 2014) (blogged here) at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

Polsky addresses the tax implications of monitoring fees paid to private equity firms and argues that they typically are improperly deducted by the portfolio companies that pay them.

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

Zelenak Presents Mitt Romney, the 47%, and the Future of the Mass Income Tax Today at Indiana

Zelenak (2014)Lawrence A. Zelenak (Duke) presents Mitt Romney, the 47 Percent, and the Future of the Mass Income Tax at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This essay puts Romney’s remarks in the context of their causes and consequences–first by describing the 2010 origins and subsequent development of the 47 percent critique in conservative circles, and then by describing the reactions to the remarks (of both opinion leaders and the public, and across the political spectrum). The essay also situates the 47 percent critique in the context of related conservative critiques of federal tax-and-transfer policies–in particular, criticism of the fact that about half the population receives direct government benefits in any given year, and studies concluding that 60 to 70 percent of Americans are “net takers” who receive more value from the government than they pay in taxes.6 Although the goals of the essay are primarily descriptive (of the several critiques and of the reactions to them) and predictive (of the unpromising political future of the critiques), the author’s own normative views may intrude from time to time.

February 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Viard Presents State Taxes, Trade Neutrality, and Nondiscrimination Today at Northwestern

ViardAlan D. Viard (American Enterprise Institute) presents Putting the Commerce Back in the Dormant Commerce Clause:  State Taxes, Trade Neutrality, and Nondiscrimination at Northwestern today 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 Dormant Commerce Clause jurisprudence has been intensely criticized as incoherent, with many questioning whether coherence is even possible. We explain that a coherent DCC jurisprudence arises if state taxes and subsidies are evaluated based on their relative treatment of interstate and intrastate trade. Under this “trade neutrality” standard, state taxes and subsides are invalid if they create an economic incentive to engage in intrastate trade rather than interstate trade. Economic analysis reveals that such an incentive arises when the combined tax on imports and exports exceeds the tax on intrastate transactions or when the subsidy to intrastate transactions exceeds the combined subsidy to imports and exports.

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February 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Blanchard Presents Individual Income Tax Reform: Back to the Base Today at Temple

BlanchardKimberly S. Blanchard (Weil, Gotshal & Manges, New York) presents Individual Income Tax Reform: Back to the Base, 138 Tax Notes 307 (Jan. 21, 2013), at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu & Andrea Monroe:

Nearly all the individual income tax reform proposals under discussion in Washington follow the approach of broadening the tax base by eliminating tax expenditures or imposing dollar caps on deductions. This report argues that these types of proposals are regressive and would increase taxes disproportionately on middle-income earners, who are already paying aggregate taxes much higher than is generally understood or acknowledged. It also argues that the proposals are distortive because they fail to account for the differences in the cost of living in different parts of the United States. A better approach would be to restore progressivity and transparency to the individual income tax by significantly expanding the exempted base of the tax and imposing steeply graduated rates over that exempted base. Arbitrary caps, thresholds, and phaseouts would be eliminated because they distort measurement of the tax base, exacerbate horizontal inequity, and mask true effective tax rates, making it difficult to compare tax burdens among similarly situated individual taxpayers.

February 27, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Wednesday, February 26, 2014

Shaviro Presents Fixing U.S. International Taxation Today at Duke

FixingDaniel N. Shaviro (NYU) presents Fixing U.S. International Taxation (Oxford University Press, 2014) at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Part 1, consisting of chapters 2 and 3, first reviews the basic U.S. international tax rules, and then addresses in greater detail the design challenges that they raise, along with their main incentive effects and planning implications. Part 1 could be skimmed or even skipped by readers who either are already well-versed in the operational details, or else do not wish to delve too deeply into the U.S. international tax system’s plumbing. However, it does (chapter 3 in particular) develop some points that are important to the subsequent analysis. Part 2 then shifts to a broader policy focus. To this end, chapter 4 addresses the global welfare perspective on U.S. international tax policy. Chapter 5 addresses the unilateral national welfare perspective. Finally, chapter 6 addresses the question of what practical steps might be taken to improve U.S. international tax policy.

February 26, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, February 25, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at NYU

SanchiricoChris William Sanchirico (Pennsylvania) presents As American as Apple Inc.: International Tax and Ownership Nationality at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

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.

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

Thursday, February 20, 2014

Osofsky Presents Beyond Worst-First Tax Enforcement Today at UCLA

Osofsky 4Leigh Osofsky (Miami) presents Beyond Worst-First Tax Enforcement at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

When enforcement resources are limited, how should the scarce enforcement resources be allocated to maximize compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, “worst-first” methods suffer some underappreciated weaknesses. While “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits in existing theory, I draw on work from across different disciplines to develop a new layer of analysis regarding the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call microdeterrence. After setting forth the theoretical case for microdeterrence, I examine how it might apply in the cash business tax sector, a setting that presents particular challenges for “worst-first” methods. I conclude that microdeterrence may increase compliance, meriting its application and empirical evaluation. More fundamentally, this Article underscores the importance of the allocation of scarce enforcement resources, some of the deficits in existing theory, and the potential benefits of integrating additional layers of analysis.

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

Fleming Presents Formulary Apportionment in the U.S. Today at San Diego

Fleming J. Clifton Fleming (BYU) presents Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig? (with Robert J. Peroni (Texas)) at San Diego today as part of its Tax Law Speaker 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.

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

Wednesday, February 19, 2014

Osofsky Presents Beyond Worst-First Tax Enforcement Today at Pepperdine

Osofsky 4Leigh Osofsky (Miami) presents Beyond Worst-First Tax Enforcement at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

When enforcement resources are limited, how should the scarce enforcement resources be allocated to maximize compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, “worst-first” methods suffer some underappreciated weaknesses. While “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits in existing theory, I draw on work from across different disciplines to develop a new layer of analysis regarding the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call microdeterrence. After setting forth the theoretical case for microdeterrence, I examine how it might apply in the cash business tax sector, a setting that presents particular challenges for “worst-first” methods. I conclude that microdeterrence may increase compliance, meriting its application and empirical evaluation. More fundamentally, this Article underscores the importance of the allocation of scarce enforcement resources, some of the deficits in existing theory, and the potential benefits of integrating additional layers of analysis.

Update:  Post-presentation lunch:

Photo

February 19, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Graetz Presents Technological Innovation, International Competition, and International Taxation Today at Penn

GraetzMichael J. Graetz (Columbia) presents Technological Innovation, International Competition, and the Challenges of International Income Taxation, 113 Colum. L. Rev. 347 (2013) (with Rachael Doud (J.D. 2012, Yale)) at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Because of the importance of technological innovation to economic growth, nations strive to stimulate and attract the research and development (“R&D”) that leads to that inn ovation and to make themselves hospitable environments for the holding of intellectual property (“IP”). Tax policies have taken center stage in their efforts to accomplish these goals and to capture a share of the income from technological innovations.

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

Lederman Presents (Un)Appealing Deference to the Tax Court Today at Duke

LedermanLeandra Lederman (Indiana-Bloomington) presents (Un)Appealing Deference to the Tax Court, 63 Duke L.J. ___ (2014), at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

The U.S. Tax Court hears the vast majority of litigated federal tax cases. It occupies an unusual place in the federal government in that it is a federal court located outside the judicial branch but whose decisions are appealable to the U.S. Courts of Appeals. This unusual situation coupled with its history as an independent agency in the executive branch can give rise to important questions, such as the standard of review that should apply to its decisions. In particular, should the Courts of Appeals treat Tax Court decisions the same as those of district courts in tax cases, or should they apply a more deferential standard analogous to review of an agency decision, as the Supreme Court held in 1943 in Dobson v. Commissioner?

Answering the standard of review question implicates issues of both law and policy. The article argues, contrary to some scholarship, that, as a doctrinal matter, no vestige of the Dobson rule remains and that Courts of Appeals must apply the same standard of judicial review they apply to district courts in non-jury cases. The article further argues that appellate review theory supports that result, as well. As the article explains, the Dobson rule was a largely instrumental one designed by Justice Jackson to reduce the volume of tax litigation. Although tax litigation has the unique characteristics of decentralization and the expertise of the Tax Court, the article demonstrates that those differences do not support departing from the policies supporting appellate review. Appellate courts therefore should not defer to the interpretations of the Tax Court any more than they do to those of the district courts.

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