April 30, 2013
Abreu & Greenstein: A Better Way to Understand the Definition of Income
Alice G. Abreu (Temple) & Richard K. Greenstein (Temple), It’s Not a Rule: A Better Way to Understand the Definition of Income, 13 Fla. Tax Rev. 101 (2012):
In a recent article Professor Douglas Kahn explores a particular dissonance between the positive and very broad definition of income that includes all realized accessions to wealth, and what the government can and does actually attempt to tax. [Exclusion from Income of Compensation for Services and Pooling of Labor Occurring in a Noncommercial Setting, 11 Fla. Tax Rev. 683 (2011).] He then offers two limiting principles, which he posits operate as exclusions and thus eradicate the gap. Specifically, Professor Kahn suggests that the dissonance vanishes if we understand that “the income tax operates only on commercial transactions” and, as a corollary, that “joint efforts should not be treated as exchanges of services but rather as a jointly conducted activity,” which does not produce income “[w]hen the common goal has no business connection.” Professor Kahn derives these principles by examining a series of provocative hypothetical problems and suggests that these principles explain why a number of items that would seem to come within the broad positive definition of income are not in fact subject to tax despite the absence of a statutory exclusion.
In Defining Income [11 Fla Tax Rev. 295 (2011)], an article we recently published, we argued that the desire for theoretical precision that prompts articles such as Professor Kahn’s has led to a long tradition of interpreting the definition of income as a rule. We proposed as an alternative that the definition of income be thought of as a standard — specifically, that questions about whether a particular accession to wealth constitutes income be answered by employing an all-things-considered inquiry based on the values relevant to federal income tax. Our claim was that treating income as a standard effectively addresses the puzzling gap between what the broad positive definition of income would seem to include and what is actually taxed.
The commercial/noncommercial distinction that shapes Professor Kahn’s proposed principles functions as a rule. In this Essay we propose a thought experiment: What if we were to think about the problems Professor Kahn poses from the perspective of income-as-standard? Doing so would allow us to explore the utility of such an approach concretely. We therefore consider the precise issues Professor Kahn discusses, but use an income-as-standard approach. Having contrasted the two approaches, we return to the conclusion we reached in Defining Income: standards have important virtues that make them superior to rules for resolving some fundamental questions in federal income tax law. Contemporary tax analysis often assumes that all tax formulations are rules; we believe we have shown that while many are, income is not.
December 5, 2012
Atax eJournal of Tax Research Publishes New Issue
Volume 10, Issue 3 (Nov. 2012) of the eJournal of Tax Research, published by Atax (Australian Taxation Studies Program), University of New South Wales, Sydney, Australia, and edited by Binh Tran-Nam & Michael Walpole, is available on its web site:
- John Hasseldine, Kevin Holland & Pernill van der Rijt, Companies and Taxes in the UK: Actors, Actions, Consequences and Responses (p.532)
- Evgeny Guglyuvatyy, Australia’s Carbon Policy – A Retreat from Core Principles (p.552)
- Jonathan Barrett & John Veal, Land Taxation: A New Zealand Perspective (p.573)
- Nicole Wilson-Rogers, Reforming the Western Australian State Tax Anti-Avoidance Strategy (p.589)
- Dale Boccabella, An Ordered Approach to the Tax Rules for Problem Solving in a First Australian Income Taxation Law Course Can Improve Student Performance (p.621)
October 3, 2012
WSJ: How Mitt Romney Can Win the Tax Debate
Wall Street Journal editorial: Romney's Middle-Class Tax Sale: How the Republican Can Win the Debate He's Now Losing by Default:
In this peculiar election year, President Obama is pulling off the small miracle—no, make that the kind of thing that happens in Lourdes—of winning the tax debate. This should be impossible, and Mitt Romney has to turn that around if he wants to win. ...
The main cause of this role reversal is that Mr. Obama has driven a relentless tax message—albeit a wildly deceptive one: That Mr. Romney is a sleeper agent who wants to raise taxes on middle-class families by $2,000 to finance tax cuts for him and his fellow tycoons. ...
As a factual matter, the claim is as bogus as any in years because Mr. Romney has proposed no such thing. The claim hangs on an August 1 report by the liberal Tax Policy Center that even its authors have since admitted was merely "stylized." The outfit's gnomes concluded that Mr. Romney's actual reform proposal—cutting rates across the board by 20%, combined with closing loopholes at the higher end—was "mathematically impossible." They then imagined multiple details for a "Romney" tax plan that existed only in their own minds and that would raise taxes among the lower brackets by $86 billion. ...
Amid this barrage, Mr. Romney has also played dumb, as in silent. Only this week has Boston rolled out a response ad to Mr. Obama's middle-class tax hike TV buy, which ran unanswered for a month in a half-dozen swing states. ...
This is modest progress, but Mr. Romney's larger failing is that he hasn't even tried to sell his own proposals, much less their broader pro-growth, practical and moral foundations. ... A better argument would begin by explaining how lower rates and a more efficient tax code—simpler, stabler, more transparent—would increase economic growth that would raise incomes for everyone. ...
[E]ven if he increased tax rates on the rich to 100%, Mr. Obama would still have to find more revenue to pay for his spending ambitions. This means he's inescapably going to have to tee up the middle class for a tax wallop unlike anything in U.S. history. Mr. Romney should say that, having taken federal spending to a quarter of GDP, a second Obama Administration would make a European-style value-added tax, carbon tax or another money maker inevitable.
So far this year's tax debate features one candidate with no credible plan running against a fake plan that his allies made up and another candidate with an admirable plan that for some reason he doesn't want to talk about. Mr. Obama is winning by default, but that doesn't mean Mr. Romney can't execute one of those turnarounds he's famous for, if he tries.
September 26, 2012
Postlewaite: Raising Revenue Through Misguided Classification Reform
Philip F. Postlewaite (Northwestern), Raising Revenue Through Misguided Classification Reform, 136 Tax Notes 1177 (Sept. 3, 2012):
Spending cuts and tax increases are omnipresent topics in the national conversation. As the search for tax revenue intensifies, various proposals for modifying the code have surfaced. The Obama administration and others recently have suggested that large passthrough entities be taxed as C corporations. That proposal reflects a misplaced emphasis on revenue generation rather than sound tax policy principles. If adopted, it would undercut the steady movement by Congress, Treasury, and the IRS over the past 30 years toward business tax neutrality through a single tax regime for all business forms. Also, the proposal would result in planning efforts to avoid its application by maintaining business receipts below the threshold for classification as a large enterprise. Further, it is uncertain whether it would generate significant revenue, given that the trigger for the second level of tax — the distribution of earnings to the owners of the enterprise — often is discretionary. When combined with the necessary grandfathering rules, the revenue effect may not be material. The proposal should therefore be rejected because it does not promote the tax policy goals of economic efficiency, simplicity, equity, and business tax neutrality.
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August 21, 2012
Isenbergh: Cliff Schmiff
Dread of the “fiscal cliff,” widely apparent in public discourse on tax and fiscal policy, rests largely on an illusion: that the contractionary effect of unwinding public debt can be substantially avoided if it is carried out more gradually. In fact, the possibility of fiscal drag inheres in all reduction of public debt. The question is whether it can be mitigated by stepping away from the fiscal cliff and following some other path to public solvency. While a less painful resolution of our fiscal situation may be possible in theory, the policies floated of late in public pronouncements across the ideological spectrum are more harmful over time than simply falling off the cliff.
June 24, 2012
Top 5 Tax Paper Downloads
There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with two new papers debuting on the list at #4 and #5:
3. [177 Downloads] New Life for the Death Tax, by Elizabeth Ruth Carter (LSU)
4. [176 Downloads] Making Voluntary Disclosures to the IRS, by John A. Townsend (Houston)
5. [91 Downloads] The Empire Strikes Out: The IRS & The Ambiguities of Tax Accounting, by Luke R. Hornblower (J.D. 2012, Loyola-L.A.)
December 9, 2009
Poll: Your Favorite Tax BlogThe Tax Lawyer's Blog is running an online poll on Your Favorite Tax Blog among ten listed tax blogs (including TaxProf Blog).
November 25, 2009
Thanksgiving Eve Poll
November 18, 2008
ABA Survey on Impact of Recession on Legal Profession
Take this two-minute survey on how you think the recession will affect the legal profession. Results will be published in the January issue of the ABA Journal.
April 24, 2008
January 17, 2008
TaxProf Blog Reader Poll
December 17, 2007
Tax Exam Poll
April 12, 2007
Have You Filed Your Tax Return Yet? 59% Say "Yes"
Here are the results of Tuesday's poll question: Have You Filed Your Tax Return Yet. Out of 276 responses:
- 59% have already filed their federal tax returns
- Of those who have not yet filed, 68% plan to file by April 17; 32% plan to get (or have already gotten) an extension
- Of those who have already filed, electronic filing beats paper filing, 60% v. 40%
- Of those who plan to file by April 17, paper filing beats electronic filing, 62% v. 38%
Public Opinion on Taxes
Using available polling data, Bowman examines how attitudes toward paying taxes have changed over the past half century and what those attitudes are today. Among the highlights:
- The personal property tax is a bigger headache for most people than the federal income tax.
- Today, Democrats lead Republicans as the party better able to handle taxes, a significant change from the past.
- Pluralities of Americans think their taxes will go up under a Democratic or Republican president.
- When asked how much of total income should go to taxes, people put the number at 10-25%.
- Americans don't like the estate tax.
- Ratings of the IRS are up.
April 10, 2007
Have You Filed Your Tax Return Yet?
January 1, 2007
Results of Year-End Tax Planning Poll
Here are the results from Friday's poll of the Top 10 Year-End Tax Planning Moves: