TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, September 19, 2016

Alstott Presents A New Deal For Old Age: Toward A Progressive Retirement Today At Loyola-L.A.

AAAnne Alstott (Yale) presents A New Deal for Old Age: Toward a Progressive Retirement at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

A growing chorus of policy analysts is calling for an increase in the Social Security retirement age. Even staunch defenders of Social Security have begun to concede that the retirement age of 66 is too low, in light of the increasing longevity, improving health, and expanding work options of older Americans. Still, some progressives worry that the only way to protect disadvantaged workers is to leave the early and full retirement ages as they are. The result is a debate that pits intergenerational fairness against intragenerational fairness: either we shortchange the young (by paying unneeded benefits to the old) or else we shortchange the disadvantaged (by raising the retirement age to levels that are unrealistic for low-earners).

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September 19, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Friday, September 16, 2016

Polsky Presents Elite Tax Professionals And The Sordid Management Fee Waiver Saga Today at Florida

Polsky (2015)Gregg Polsky (Georgia) presents Elite Tax Professionals Behaving Badly: The Sad and Sordid Management Fee Waiver Saga at Florida today as part of its Tax Policy Colloquium Series hosted by Yariv Brauner:

For at least the past 15 years, many private equity fund managers have used a technique—known as a management fee waiver—to try to claim their salaries as capital gains. Recently, the Treasury and IRS explained that, at least in the government’s view, the vast majority of fee waivers do not actually provide the claimed tax result. Reports of recent audit activity relating to fee waivers suggest that the fee waiver saga may finally be coming to an end, but not before billions of dollars of tax revenues have been permanently lost.

While much has been written on the substantive legal issues surrounding fee waivers, there has been no discussion of the prominent role that leading tax professionals have played in drafting, justifying, and defending fee waivers. This article discusses this sad and sordid aspect of the fee waiver saga. It is not a pretty picture.

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September 16, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, September 15, 2016

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? Today At Boston College

Ledderman (2016)Leandra Lederman (Indiana) presents To What Extent Does Enforcement Crowd Out Voluntary Tax Compliance? at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti and Diane Ring:

Governments commonly use deterrence methods, such as audits and the imposition of penalties, to foster compliance with tax laws. Although this approach is consistent with economic modeling of tax compliance, some scholars caution that deterrence may backfire, “crowding out” intrinsic motivations to pay taxes and thus reducing compliance. This article analyzes the evidence to date to determine the extent of such an effect. Field studies suggest that deterrence tools, such as audits, generally are highly effective at increasing tax collections but that crowding out may occur in some contexts, with respect to certain subgroups of taxpayers. The article argues that more field studies on compliant taxpayers are needed but that the existing evidence suggests that tax collectors should be careful with the explicit and implicit messages they give taxpayers, so as not to undermine the generally positive effects on compliance of enforcement of the tax laws.

Update:  Shu-Yi Oei blogs the workshop here.

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September 15, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Monday, September 12, 2016

Book Presents Taxpayer Rights, Social Psychology And The EITC Today At Loyola-L.A.

BookLes Book (Villanova) presents Thinking About Taxpayer Rights and Social Psychology to Improve Administration of the EITC at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

The IRS is a reluctant but key player in delivering social benefits to the nation’s working poor. The earned income tax credit (EITC) is generally praised for its role in reducing poverty and incentivizing low-wage work. While the EITC has generally received bipartisan support, the IRS faces strong criticism over EITC compliance issues. Opponents focus on headline-generating reports of improper payments and a characterization of errors as likely due to fraud. Advocates look to the intersection of legal complexity and the characteristics of recipients as the main driver of error and the relatively low share of the tax gap that is attributable to refundable credits in general and the EITC in particular.

The current compliance challenge presents an opportunity to think about the compliance problem differently than before.

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September 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, September 7, 2016

Hackney Presents Labor Unions And Tax Exemption Today At Northwestern

HackneyPhilip Hackney (LSU) presents Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Labor interests are historically politically weak in our US democracy. They face classic collective action problems. Laborers are great in number, do not have strong political skills, and are unlikely to recoup the cost of participating in labor union activity. Without assistance, we should expect labor interests to engage in limited and sporadic organized political efforts. This presents big problems for a modern democratic state that depends upon organized interests to represent the interests of its citizens. This Article examines the impact of our federal income tax system on labor interests in the context of the provision of tax exemption to labor unions and the deduction of labor union dues.

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September 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, August 24, 2016

Hemel And Maynard Push Boundaries Of Equity In Ohio State Tax Workshops

HMStephanie Hoffer (Ohio State), Hemel and Maynard Push Boundaries of Equity in Recent Workshops:

As part of its summer workshop series, Ohio State’s Moritz College of Law invites junior scholars to present works-in-progress.  This summer, we had the pleasure of hosting both Daniel Hemel, an assistant professor at the University of Chicago Law School and Goldburn Maynard, an assistant professor at the University of Louisville Brandeis School of Law.  Both junior tax scholars are challenging the ways in which tax policy makers think about equity in the context of distributive justice.

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August 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, July 14, 2016

Journal of Tax Administration Hosts Workshop Today On U.S. And U.K. Trends In Tax Exceptionalism And Tax Litigation

JOTAThe Journal of Tax Administration hosts a workshop today on Trends in Tax Exceptionalism and Tax Litigation (program):

In the United States, the Supreme Court's 2011 decision in the Mayo Foundation case has fundamentally changed tax litigation and tax administration. Previously, tax administration functioned with a mindset of "tax exceptionalism" from the administrative statutory requirements, legal doctrines, and norms that applied to other federal government agencies. The legal veracity of tax exceptionalism had not been tested; it was an unchallenged assumption, but one that persisted for some decades. In Mayo Foundation, the Supreme Court expressly rejected tax exceptionalism from general administrative law requirements, doctrines, and norms absent "good reason" — which is generally thought to mean unless the Internal Revenue Code provides an express exception.

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July 14, 2016 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, June 2, 2016

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? At Oxford And Vienna

Ledderman (2016)Leandra Lederman (Indiana-Bloomnington) presented Does Enforcement Crowd Out Voluntary Tax Compliance? at Oxford University's Saïd Business School and Vienna University of Economics and Business:

Governments commonly use deterrence methods, such as audits and the imposition of penalties, to foster compliance with tax laws. Although this approach is consistent with economic modeling of tax compliance, some scholars caution that deterrence may backfire, “crowding out” intrinsic motivations to pay taxes and thus reducing compliance. This article analyzes the evidence to date to determine the extent of such an effect. Field studies suggest that deterrence tools, such as audits, generally are highly effective at increasing tax collections but that crowding out may occur in some contexts, with respect to certain subgroups of taxpayers.

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June 2, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, May 26, 2016

Blank Presents The Timing Of Tax Transparency Today In Sweden

Blank (2016)Joshua Blank (NYU) presents The Timing of Tax Transparency, 90 S. Cal. L. Rev. ___ (2017), at the Stockholm Centre for Commercial Law at Stockholm University in Sweden today at an event hosted by Teresa Simon-Almendal, Peter Melz and Roger Persson-Osterman (all of Stockholm University):

Fairness in the administration of the tax law is the subject of intense debate in the United States. As recent headlines reveal, the Internal Revenue Service has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, the international tax structures of multinational corporations, and the estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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May 26, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, May 3, 2016

Prasad Presents Neoliberalism And The 1981 Reagan Tax Cuts Today At NYU

PrasadMonica Prasad (Northwestern) presents The Popular Origins of Neoliberalism in the Reagan Tax Cut of 1981, 24 J. Pol'y Hist. 351 (2012), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

The debt when Reagan entered office was just over $900 billion, not historically high in constant dollars or as a percent of GDP, but by the time Reagan left office it had almost tripled in nominal terms, and in percent of GDP it had gone from 33.4 percent to 51.9 percent. At the end of his term, the debt stood at $2.6 trillion, with a substantial portion of it contributed by Reagan's own policies: a mountain over 160 miles high in loose or tight bricks.

The irony is that the policy that accelerated the growth of that debt was the very policy Reagan was promoting in that first address, the Economic Recovery Tax Act of 1981 (ERTA). This tax cut remains the largest tax cut in American history. Of course, spending increases were also necessary to the creation of the new mountain of debt, but spending has increased many times over the course of the century. What was historically new was the policy of not raising taxes to match those spending increases.

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May 3, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Friday, April 29, 2016

Marian Presents The State Administration Of International Tax Avoidance Today At City University London

Marian (2016)Omri Marian (UC-Irvine) presents The State Administration of International Tax Avoidance, 7 Harv. Bus. L. Rev. ___ (2016), at a Discussion Workshop on Corruption and the Role of Tax Havens at City University London:

This Article documents a process in which a national tax administration in one jurisdiction, is consciously and systematically assisting taxpayers to avoid taxes in other jurisdictions. The aiding tax administration collects a small amount tax from the aided taxpayers. Such tax is functionally structured as a fee paid for government-provided tax avoidance services. Such behavior can be easily copied (and probably is copied) by other tax administrations. The implications are profound. On the normative front, the findings should fundamentally change our understanding of the concept of international tax competition. Tax competition is generally understood to be the adoption of low tax rates in order to attract investments into the jurisdiction. Instead, this Article identifies an intentional “bagger thy neighbor” behavior, aimed at attracting revenue generated by successful investments in other jurisdictions, without attracting actual investments. The result is a distorted competitive environment, in which revenue is denied from jurisdictions the infrastructure and workforce of which support economically productive activity. On the practical front, the findings suggest that internationally coordinated efforts to combat tax avoidance are misaimed. Current efforts are largely aimed at curtailing aggressive taxpayer behavior. Instead, the Article proposes that the focus of such efforts should be curtailing certain rogue practices adopted by national tax administrations.

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April 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 26, 2016

Zelenak Presents Tax-Free Basis Step-Up At Death And The Charitable Deduction Of Unrealized Appreciation Today At Georgetown

Zelenak (2016)Lawrence Zelenak (Duke) presents The Tax-Free Basis Step-Up at Death, the Charitable Deduction of Unrealized Appreciation, and the Persistence of Error at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

This article recounts, as a study in the remarkable persistence of early error even when the error is promptly recognized and addressed, the legislative and administrative histories of the taxfree basis step-up at death and the charitable deduction for unrealized appreciation. Part I describes the early development of the basis rules for property transferred by gift or bequest, and Part II covers the early history of the charitable deduction for appreciated property. Parts III and IV are concerned with less ancient events. Part III recounts the short unhappy life of the 1976 carryover basis reform, and Part IV does the same for the 1986 AMT reform. Part V briefly concludes.

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April 26, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (3)

Gravelle Presents Policy Options To Address Corporate Profit Shifting: Carrots Or Sticks? Today At NYU

GravelleJane Gravelle (Congressional Research Service) presents Policy Options to Address Corporate Profit Shifting: Carrots or Sticks? at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

Issues surrounding the U.S. tax treatment of foreign source income, focused in large part in the past on real investment, may, to some degree, have given way to concern about tax minimization strategies that allow firms to shift profits into low and no tax countries. Firms can benefit from profit shifting because, although the United States has a worldwide income tax system with a credit for foreign taxes paid, income earned by U.S. multinationals’ foreign subsidiaries is not subject to tax until it is repatriated, that is, paid to the parent firm as a dividend. (Current law requires some income easily subject to abuse, called Subpart F income, to be taxed currently). In addition, firms can shield repatriated profits from low tax countries from U.S. tax if they have excess foreign tax credits from operations in high tax countries. Profit shifting is largely a problem of lost revenue rather than inefficient location of investment, although widespread manipulation of the tax rules to avoid taxes also may undermine voluntary compliance with the tax system by others.

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April 26, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, April 25, 2016

Kahng Presents Who Owns Human Capital? Today At Pepperdine

Kahng (2017)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2017), at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

Update:  Post-presentation lunch:

Lunch

April 25, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 20, 2016

Doran Presents The Puzzle Of Non-Qualified Retirement Pay Today At Penn

Doran (2015)Michael Doran (Virginia) presents The Puzzle of Non-Qualified Retirement Pay: Optimal Contracting, Managerial Power, and Taxes at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

Pay arrangements for managers of public corporations typically include substantial amounts of compensation deferred through non-qualified retirement plans. As a departure from the familiar baseline of current payment for current services, this presents a longstanding puzzle. The corporate-governance literature offers two explanations for the practice. The “optimal-contracting account” argues that non-qualified retirement pay represents “inside debt” that aligns the interests of managers with the interests of the corporation’s unsecured general creditors. The “managerial-power account” argues that non-qualified retirement pay represents “stealth compensation” that facilitates managers’ extraction of rents from corporate assets. In this paper, I set out a different explanation based on tax considerations.

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April 20, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 19, 2016

Goldin Presents Rethinking The Taxation Of Single Parents Today At Georgetown

GoldinJacob Goldin (Stanford) presents Beyond Head of Household: Rethinking the Taxation of Single Parents (with Zachary Liscow (Yale)) at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Under current law, unmarried taxpayers with children can take advantage of the head of household filing status (HHFS) to reduce their federal income taxes. We argue that the design of the filing status is largely obsolete, geared toward alleviating a “marriage penalty” in the tax code that is much less important than when the filing status was first established. At the same time, the growth in the fraction of Americans raising children outside of traditional two-parent households has dramatically raised the cost of the filing status to the fisc.

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April 19, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Alm Presents Whither The Tax Gap? Today At NYU

AlmJames Alm (Tulane) presents Whither the Tax Gap? (with Jay Soled (Rutgers)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

For decades, policy makers and politicians have railed against the “tax gap,” or the difference between what taxpayers are legally obligated to pay in taxes and what they actually pay in taxes. To close the gap, Congress has instituted numerous reforms, with varying degrees of success. Notwithstanding these efforts, the tax gap has largely remained intact, and, if anything, its size has gradually grown over the last several decades.

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April 19, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, April 18, 2016

Blair-Stanek Presents Two Tax Papers Today At Oxford

Blair-Stanek (2016)Andrew Blair-Stanek (Maryland) presents Intellectual Property Law Solutions to Tax Avoidance, 62 UCLA L. Rev. 2 (2015), and Just Compensation for Intellectual Property, 58 Ariz. L. Rev. ___ (2016), at Oxford University today as part of a multidisciplinary workshop on the Technical and Practical Feasibility for a Data Levy:

Multinational corporations avoid taxes on a massive scale by transferring their intangible property -- including data and copyrighted data-derivatives -- to tax havens for artificially low prices. Tax agencies have failed to stop this avoidance, which takes advantage of international tax law norms enshrined in thousands of bilateral tax treaties. These two articles propose an alternative approach: fight this tax avoidance by focusing instead on the law governing the intangible property itself.

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April 18, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 14, 2016

Duncan Presents Tax Incidence In The Presence Of Tax Evasion Today At Indiana

DuncanDenvil Duncan (Indiana-Bloomington) presents Tax Incidence in the Presence of Tax Evasion (with Philipp Doerrenberg (ZEW Mannheim and Institute for the Study of Labor (IZA), Germany) at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This paper studies the economic incidence of sales taxes in the presence of tax evasion opportunities. We design a laboratory experiment in which buyers and sellers trade a fictitious good in double auction markets. A per-unit tax is imposed on sellers, and sellers in the treatment group are provided the opportunity to evade the tax whereas sellers in the control group are not. We find that the market equilibrium price in the treatment group is lower than in the control group. This difference is economically and statistically significant, and implies that sellers with access to evasion shift a smaller share of the statutory tax burden onto buyers relative to sellers without tax evasion opportunities.

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April 14, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Doran Presents The Puzzle Of Non-Qualified Retirement Pay Today At Colorado

Doran (2015)Michael Doran (Virginia) presents The Puzzle of Non-Qualified Retirement Pay: Optimal Contracting, Managerial Power, and Taxes at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

Pay arrangements for managers of public corporations typically include substantial amounts of compensation deferred through non-qualified retirement plans. As a departure from the familiar baseline of current payment for current services, this presents a longstanding puzzle. The corporate-governance literature offers two explanations for the practice. The “optimal-contracting account” argues that non-qualified retirement pay represents “inside debt” that aligns the interests of managers with the interests of the corporation’s unsecured general creditors. The “managerial-power account” argues that non-qualified retirement pay represents “stealth compensation” that facilitates managers’ extraction of rents from corporate assets. In this paper, I set out a different explanation based on tax considerations.

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April 14, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 13, 2016

Gentry Presents Capital Gains Taxation And Entrepreneurship Today At Penn

Penn (2016)William Gentry (Williams College) presents Capital Gains Taxation and Entrepreneurship at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

The taxation of capital gains is a perennial issue in tax policy. One critical aspect for understanding the overall effects of capital gains taxation is how these taxes affect entrepreneurs. While many analyses focus on the disincentive effects created by capital gains taxes for investors in large corporations, these disincentives may be even more important for entrepreneurs. This paper discusses several mechanisms through which capital gains taxes can affect entrepreneurs’ decisions. First, capital gains taxes may create an additional level of taxation on successful entrepreneurs. Second, asymmetric taxation of capital gains and losses (in which gains are taxed more heavily than losses) may be an especially important issue for entrepreneurs; the asymmetries in the tax system may discourage entrepreneurs from taking risk. Third, much like the commonly-referenced lock-in effect of capital gains taxes on investments in stock, entrepreneurs may become locked into closely-held businesses; this lock-in effect may distort whether firms are owned by the most efficient manager for the firm. Fourth, capital gains taxes can affect the cost of capital for entrepreneurs.

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April 13, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 12, 2016

Shay Presents R&D Tax Incentives: Growth Panacea Or Budget Trojan Horse? Today At Georgetown

Shay (2014)Stephen E. Shay (Harvard) presents Essay on R&D Tax Incentives: Growth Panacea or Budget Trojan Horse? (with J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas)) at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Research and development (R&D) activity has long held a privileged place in the U.S. income tax system and in policy debates. The premises for R&D tax incentives, however, are grounded in theory regarding a market failure for investment in R&D that does not align well with the target of U.S. R&D tax incentives. Moreover, factors contributing to innovation are now understood to include, in addition to R&D, other “knowledge-based capital” (KBC) investment in training and other human capital development, developing organizational processes, computer software, and architectural and engineering designs. The combination of existing R&D tax incentives, income shifting, and deferral of foreign income from U.S. tax, with intellectual property protection for successful R&D, result a poorly designed mix of overlapping benefits only loosely related to fostering innovation. Proposed “innovation box” tax incentives would add to the incoherence of the existing incentives.

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April 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kahng Presents Who Owns Human Capital? Today At NYU

Kahng (2017)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2016), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

April 12, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, April 11, 2016

Oh Presents How The Rich Drive Progressive Marginal Tax Rates Today At Pepperdine

OhJason S. Oh (UCLA) presents How the Rich Drive Progressive Marginal Tax Rates at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

Why do income tax systems consistently feature progressive marginal rates? The existing literature tells a political story focusing on the preferences of the poor and middle class – high rates at the top of the rate schedule can fund greater redistribution. This Article argues that progressive marginal rates can alternatively be explained by focusing on the preferences of the middle class and the rich regarding the bottom of the rate schedule. Specifically, these groups benefit from inframarginal rate cuts at low levels of income. This alternative explanation of marginal rate progressivity is attractive because it focuses on the rich, a group which intuition and research suggest wields disproportionate political power.

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April 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fleischer Presents Alpha: Labor Is The New Capital Today At UC-Irvine

Fleischer (2016)Victor Fleischer (San Diego) presents Alpha: Labor is the New Capital at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

What taxpayers report as capital gains income is often a form of labor income in disguise. This is especially true at the very top of the income distribution, where a large and rising share of national income is derived from partnership allocations of carried interest, the sale of founders’ stock, and the sale of investment services partnership interests. Rich people sometimes say they are lightly taxed because they have investment income. This is not always true. Often, they are lightly taxed because corporate executives, founders of technology companies, and investment fund managers earn income that measures the value of their labor by reference to the value of a capital asset, thus transforming labor income into capital gains. This kind of income—what I call alpha income—accounts for the lion’s share of the recent rise of income inequality in the United States.

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April 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, April 7, 2016

Kahng Presents Who Owns Human Capital? Today At Indiana

Kahng (2016)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2016), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

Continue reading

April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Blank Presents The Timing Of Tax Transparency Today At Duke

Blank (2016)Joshua Blank (NYU) presents The Timing of Tax Transparency, 90 S. Cal. L. Rev. ___ (2017), at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Fairness in the administration of the tax law is the subject of intense debate in the United States. As recent headlines reveal, the Internal Revenue Service has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, the international tax structures of multinational corporations, and the estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

Continue reading

April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? At Tulane

Ledderman (2016)Leandra Lederman (Indiana-Bloomnington) presented Does Enforcement Crowd Out Voluntary Tax Compliance? at Tulane as part of its Regulation and Coordination Workshop Series:

Governments commonly use deterrence methods, such as audits and the imposition of penalties, to foster compliance with tax laws. Although this approach is consistent with economic modeling of tax compliance, some scholars caution that deterrence may backfire, “crowding out” intrinsic motivations to pay taxes and thus reducing compliance. This article analyzes the evidence to date to determine the extent of such an effect. Field studies suggest that deterrence tools, such as audits, generally are highly effective at increasing tax collections but that crowding out may occur in some contexts, with respect to certain subgroups of taxpayers.

Continue reading

April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Prisinzano & Yagan Present Business In The U.S.: Who Owns It And How Much Do They Pay? At NYU

NYU Law (2016)Richard Prisinzano (U.S. Treasury Department, Office of Tax Analysis) & Danny Yagan (UC-Berkeley) presented Business in the United States: Who Owns It and How Much Do They Pay? at NYU as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

"Pass-through" businesses like partnerships and S-corporations now generate over half of U.S. business income and account for much of the post-1980 rise in the top-1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass-through business income is 19%--much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been approximately $100 billion higher.

Dan Shaviro (NYU):

This is an important contribution, or rather the first of what are likely to be a series of important contributions, that attempt to increase our knowledge by making use of U.S. federal tax return information about businesses in the U.S. that are taxed as pass-throughs (i.e., partnerships or S corporations). In particular, it seeks to link information from partnership-level Form 1065 returns to that from partner-level Schedule K-1 returns, thereby presenting a comprehensive picture of who reports partnership income and how much U.S. federal income tax is paid on such income. In a more rational world, this would have been done years ago, and doing it would be easier than it actually is. I'll focus here just on partnerships, although there is also some information in the paper in re. S corporations.

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April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Stark Presents Regional Taxation And Regional Tax Base Sharing In State Tax Reform Today At Colorado

Stark (2014)Kirk Stark (UCLA) presents Regional Taxation and Regional Tax Base Sharing in State Tax Reform at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

This article describes and evaluates a specific subset of state tax reforms—i.e., those involving regional approaches to funding subnational public goods. Reforms examined include those where policymakers devise new multijurisdictional fiscal arrangements to address regional objectives that conventional local governments, by virtue of their more limited geographic scope, are unlikely to tackle. As used in this article, the term “region” refers to a geographic area (1) constituting less than the entire jurisdiction of a state, and (2) encompassing more than one local government jurisdiction. A “regional tax” is therefore any tax (fee, assessment, etc....) limited in its application to a geographic area so defined. A closely related policy is “regional tax base sharing”—i.e., the imposition of a tax on a base that is shared among several local jurisdictions, with the proceeds distributed among those localities.

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April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 6, 2016

Burman Presents An Analysis Of The Ted Cruz And Bernie Sanders Tax Plans Today At Georgetown

Burman (2016)Len Burman (Tax Policy Center) presents An Analysis of the Ted Cruz and Bernie Sanders Tax Plans at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Presidential candidate Ted Cruz’s tax proposal would (1) repeal the corporate income tax, payroll taxes for Social Security and Medicare, and estate and gift taxes; (2) collapse the seven individual income tax rates to a single 10 percent rate, increase the standard deduction, and eliminate most other deductions and credits; and (3) introduce a new 16 percent broad-based consumption tax. The plan would cut taxes at most income levels, although the highest-income households would benefit the most and the poor the least. Federal tax revenues would decline by $8.6 trillion (3.6 percent of gross domestic product) over a decade.

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April 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Prisinzano Presents Business In The U.S.: Who Owns It And How Much Do They Pay? Today At Penn

Penn (2016)Richard Prisinzano (U.S. Treasury Department, Office of Tax Analysis) presents Business in the United States: Who Owns It and How Much Do They Pay? at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

"Pass-through" businesses like partnerships and S-corporations now generate over half of U.S. business income and account for much of the post-1980 rise in the top-1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass-through business income is 19%--much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been approximately $100 billion higher.

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April 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Faulhaber Presents Designing R&D Credits And Patent Boxes In The Age Of BEPS At Northwestern

FaulhaberLily Faulhaber (Georgetown) presented Tax Incentives for Innovation: Designing R&D Credits and Patent Boxes in the Age of BEPS at Northwestern yesterday as part of its Advanced Topics in Taxation  Workshop Series hosted by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

For decades, governments have turned to their tax codes to support research and development and innovation. In recent years, countries have added yet another tool to their repertoire of tax incentives for R&D: innovation boxes, sometimes referred to as patent boxes or IP boxes, which provide benefits to income from intellectual property. In response to the increasing number of innovation boxes, the forty-four OECD and G-20 member countries involved in the recent BEPS Project developed a requirement known as the nexus approach that places limits on the design of these tax incentives.

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April 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lipman Presents The Individual Tax Penalty And The Affordable Care Act Today At UNLV

LipmanFrancine Lipman (UNLV) presents Irresponsibly Taxing Irresponsibility: The Individual Tax Penalty and the Affordable Care Act, 23 Geo. J. on Poverty L. & Pol'y ___ (2016) (with James Owens (J.D. 2015, UNLV)) at the Western Decision Sciences Institute Annual Meeting today at UNLV:

This article first details and then revises the newly implemented penalty tax (the Shared Responsibility Payment or the “SRP”) under the Affordable Care Act. The SRP was designed by Congress to ensure that every American obtains minimum essential healthcare coverage so that comprehensive and affordable health care coverage can be achieved for all qualifying Americans. While the penalty tax was deemed constitutional by the United States Supreme Court, it is extremely complicated and has challenged many Americans especially lower-income individuals.

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April 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Friday, April 1, 2016

Blank Presents The Timing Of Tax Transparency Today At Virginia

Blank (2016)Joshua Blank (NYU) presents The Timing of Tax Transparency, 90 S. Cal. L. Rev. ___ (2017), at Virginia today as part of its Faculty Workshop Series:

Fairness in the administration of the tax law is the subject of intense debate in the United States. As recent headlines reveal, the Internal Revenue Service has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, the international tax structures of multinational corporations, and the estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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April 1, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Drumbl Presents Poverty, Tax, And Noncompliance Today In Australia

DrumblMichelle Drumbl (Washington & Lee) presents Beyond Polemics: Poverty, Tax, and Noncompliance today at the 12th International Conference on Tax Administration (program) hosted by the University of New South Wales in Sydney, Australia:

The earned income tax credit (EITC) is the most significant earnings-based refundable credit in the U.S. tax system. Designed as an anti-poverty program, it is a social benefit administered by the Internal Revenue Service. The EITC reaches more than 27 million households annually. Studies show it has a positive impact upon the children whose families receive it. Despite its many positives, however, the EITC is a program that for years has been plagued by taxpayer noncompliance: the estimated rate of improper payments on EITC claims has ranged between 20 and 30%, totaling billions of dollars annually. Though it is believed that the majority of EITC noncompliance may be unintentional, public reports of misconduct and fraud add fuel to the political rhetoric about a revenue system in which nearly half of Americans pay no federal income tax.

This article unpacks the rhetoric. It describes why the term “improper payments” is not synonymous with fraud. It places EITC noncompliance within the broader context of the U.S. “tax gap” and examines what intentional EITC noncompliance has in common with sole proprietor noncompliance. It explores motivations for intentional EITC noncompliance and also examines the role of inadvertent error in the overclaim rate. It describes the ways in which self-prepared returns present wholly different challenges than those completed by paid preparers.

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April 1, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Thursday, March 31, 2016

Goldin Presents Rethinking The Taxation Of Single Parents Today At Duke

GoldinJacob Goldin (Stanford) presents Beyond Head of Household: Rethinking the Taxation of Single Parents (with Zachary Liscow (Yale)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Under current law, unmarried taxpayers with children can take advantage of the head of household filing status (HHFS) to reduce their federal income taxes. We argue that the design of the filing status is largely obsolete, geared toward alleviating a “marriage penalty” in the tax code that is much less important than when the filing status was first established. At the same time, the growth in the fraction of Americans raising children outside of traditional two-parent households has dramatically raised the cost of the filing status to the fisc.

In this article, we highlight two features of the design of HHFS that undermine its goal of providing support to single parent households.

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March 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Bank Presents Executive Pay: What Worked? Today At UCLA

Bank (2016)Steven Bank (UCLA) presents Executive Pay: What Worked? (with Brian R. Cheffins (Cambridge) & Harwell Wells (Temple)) at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Eric Zolt: :

CEO pay is a controversial issue in America but there was a time, often overlooked today, when chief executives were not paid nearly as much as they are now. From 1940 to the mid-1970s executive pay was modest by today’s standards even though U.S. business was generally thriving. What worked to keep executive pay in check? Economist Thomas Piketty and others credit high marginal income tax rates, leading to calls for a return to a similar tax regime. This paper casts doubt on the impact tax had and also shows that neither the configuration of boards nor shareholder activism played a significant role in constraining executive pay.

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March 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Raskolnikov Presents From Deterrence to Compliance: Legal Uncertainty Reexamined Today At Colorado

Raskolnikov (2015)Alex Raskolnikov (Columbia) presents From Deterrence to Compliance: Legal Uncertainty Reexamined at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

Law is imperfect. It is full of standards that are neither clear nor socially optimal. How do rational actors respond to these standards? How should we evaluate these responses? What happens when legal advisors tackle legal uncertainty? These questions have few answers in law and economics. This article investigates a model of rational decisionmaking under uncertain law from the perspective of legal compliance rather than optimal deterrence. It does so by combining economic analysis with a practical understanding of the market for legal advice. Some of the results are unsurprising from both theoretical and practical perspectives; others are unexpected.

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March 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

O'Brien Presents The Relationship Between Taxation And Investment Agreements Today At British Columbia

O'BrienMartha O'Brien (University of Victoria, Faculty of Law) presents The Relationship Between Taxation and Investment Agreements at the University of British Columbia today as part of its Tax Law and Policy Workshop Series:

Canada has entered into numerous bilateral investment Treaties (BITs), and is in the process of ratifying both the Comprehensive Economic and Trade Agreement (CETA) with the European Union and its 28 member states, and the Trans-Pacific Partnership, with 11 other Pacific rim nations including Canada’s NAFTA partners. These international trade and investment agreements (IIAs) contain significant commitments to investors of national treatment, most-favoured nation treatment and fair and equitable treatment by the host state; they prohibit expropriation of investments and provide for investor-state dispute settlement (ISDS) through arbitration. The implications of such commitments for the tax systems of the parties to these agreements means that issues of direct taxation are almost entirely carved-out of the investment agreement and are resolved under the relevant double taxation treaty or domestic tax law.

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March 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, March 30, 2016

Bradley Presents Two Patent Box Papers Today At Penn

DrexelSebastien Bradley (Drexel) presents two patent box papers (with Estelle Dauchy (New Economic School) & Leslie Robinson (Dartmouth)) at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series:

Cross-Country Evidence on the Preliminary Effects of Patent Box Regimes on Patent Activity and Ownership:

This paper evaluates the initial impacts of patent box regimes in light of their primary stated objectives: stimulating domestic innovation and retaining mobile patent income to limit base erosion. Despite their lack of nexus requirements, we find that patent box regimes yield a 3 percent increase in new patent applications for every percentage point reduction in the tax rate on patent income. We find no significant impact of these regimes on deterring outward cross-border attribution of patent ownership, or on attracting ownership of foreign inventions. Increased patenting activity hence appears focused on inventions involving co-located (domestic) patent owners and inventors.

The Impact of Patent Box Regimes on the M&A Market:

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March 30, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hayashi Presents The Effects Of Refund Anticipation Loans On Tax Filing And Compliance Today At Toronto

HayashiAndrew Hayashi (Virginia) presents The Effects of Refund Anticipation Loans on Tax Filing and Compliance at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The IRS has an uneasy relationship with the use of paid tax return preparers by low-income taxpayers. Preparers may improve filing and take-up of benefits like the earned income tax credit (EITC), but many preparers also profit from financial products sold in connection with tax preparation that have been viewed as exploitative. Can we have a market for low-income tax preparation without such products, and should we? I estimate the effects of regulation curtailing the market for refund anticipation loans (RALs) on a variety of outcomes, including demand for paid tax preparation, EITC take-up, and demand for other financial products, to explore the source of RAL demand and the relationship between RALs and tax compliance.

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March 30, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, March 29, 2016

Stewart Presents Transnational Tax Law: Fiction Or Reality, Future Or Now? Today At NYU

StewartMiranda Stewart (Australian National University) presents Transnational Tax Law: Fiction or Reality, Future or Now? at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

There is an increasing contemporary literature on transnational law. In the tax law context, there is a substantial literature on international tax law. Recently, Genschel and Rixen (2015) have analysed what they term a “transnational legal order” of international tax. Yet tax law has historically been seen as a bastion and expression of national sovereignty, funding public goods in the nation state and legitimated by legislative authority. What does it mean to identify a transnational legal order for taxation? Does transnational tax law really exist? If so, what is its authority and legitimacy? Who are its subjects and its agents? How is it enacted, interpreted and enforced in national or international spheres and how is it embedded in practice?

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Faulhaber Presents The Long Reach Of European Union Law: Patent Boxes And The Limits Of International Cooperation Today At Georgetown

Faulhaber (2016)Lily Faulhaber (Georgetown) presents The Long Reach of European Union Law: Patent Boxes and the Limits of International Cooperation at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

From 2013 to 2015, the forty-four member countries of the Organisation for Economic Co-operation and Development (OECD) and the G-20 worked together on the Base Erosion and Profit Shifting (BEPS) Project, which was focused on curbing corporate tax avoidance. This article argues that the outcomes from that project show that European Union law is no longer just a concern of EU Member States. Instead, EU law and the jurisprudence of the European Court of Justice (ECJ) place constraints on non-EU countries by creating downward pressure on international standards.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Rosenbloom Presents The Implications Of BEPS For A Rational United States Today At Case Western

RosenbloomH. David Rosenbloom (James S. Eustice Visiting Professor of Practice and Taxation and Director, International Tax Program, NYU; Partner, Caplin & Drysdale, Washington, D.C.) delivers the Norman A. Sugarman Memorial Lecture on The BEPS Project of the OECD: Implications for a Rational United States at Case Western today:

The project of the Organization for Economic Co-Operation and Development on "Base Erosion and Profit Shifting" has launched a revolution in the field of international taxation. This lecture begins with the genesis of that project, proceeds to its core themes and recommendations, and identifies its foreseeable impacts. It concludes with an examination of both how the United States is likely to be affected and how, as a (perhaps counter-factually) rational country, it might appropriately respond.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei Presents The Tax Lives Of Uber Drivers Today At Southwestern

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) at Southwestern today as part of its Faculty Speaker Series:

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

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March 29, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, March 28, 2016

Oei Presents The Tax Lives Of Uber Drivers Today At Pepperdine, UC-Irvine

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) today at Pepperdine (as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine) and UC-Irvine (as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian):

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

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March 28, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Thursday, March 24, 2016

Polsky Presents The Up-C Tax Revolution Today At Duke

Polsky (2015)Gregg Polsky (North Carolina) presents The Up-C Revolution (with Adam Rosenzweig (Washington University)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Over the past few years, a revolutionary new tax structure, known as the Up-C, has been increasingly utilized, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the original owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange rights that allow them to swap their LLC interests for equivalent-value shares of the C corporation. In addition, the original owners often receive the benefit of tax receivables agreements (TRAs), which provide that the owners will receive a specified percentage (usually 85 percent) of the tax benefits to the C corporation resulting from future exchanges. In combination, these features seem to provide a near-nirvana of tax efficiency. It is therefore unsurprising that the use of Up-Cs is growing at an exponential rate.

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March 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Cauble Presents Reforming The Non-Disavowal Doctrine Today At Indiana

Cauble (2016)Emily Cauble (DePaul) presents Reforming the Non-Disavowal Doctrine, 36 Va. Tax Rev. ___  (2016), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

One well established feature of tax law is that, oftentimes, substance prevails over form. In other words, the substance of a transaction will determine the transaction’s tax consequences. For instance, tax consequences will not depend solely on the label that a taxpayer assigns to a given transaction. Instead, the IRS can examine the transaction’s economic features to more accurately characterize it for tax purposes.

Also deeply entrenched in tax law is the notion that, frequently, the IRS experiences more success than taxpayers when invoking the notion that substance prevails over form. In other words, when substance matters, the IRS can freely assert that a transaction should be taxed based on its true substance rather than the form selected by the taxpayer. A taxpayer, by contrast, is less likely to succeed when making the same assertion. The resistance to taxpayers’ attempts to invoke the substance-over-form doctrine is known as the "Non-Disavowal Doctrine."

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March 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, March 23, 2016

Shuldiner Presents The Deferral Effects Of Passing Through Foreign Subsidiaries’ Passive Income Today At Penn

ShuldinerReed Shuldiner (Pennsylvania) presents The Deferral Effects of Passing Through Foreign Subsidiaries’ Passive Income (with Chris Sanchirico (Pennsylvania)) at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series:

The immediate U.S. taxation of foreign subsidiaries’ passive, but not active income is a scenario of increasing practical importance. This paper builds on Alvin Warren’s recent analysis of this partially deferral-tempering case [Income of Foreign Subsidiaries: A Review of the Basic Analytics, 145 Tax Notes 321 (2014)]. It clarifies some of the legal and economic mechanics behind Warren’s formula. It also makes several points de novo. It highlights the conceptual relationship between passive-income pass-through and delayed realization of accrued gains. It points out that delayed realization inside the subsidiary effectively deactivates passive-income pass-through. And it describes when it does and does not matter that the parent takes interim distributions from the subsidiary, as when it uses such distributions to pay its interim pass-through tax liability.

March 23, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)