TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, September 22, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new work by Gladriel Shobe (BYU), Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, 71 Vand. L. Rev. ___ (forthcoming 2018).   

Glogower (2016)Gladriel Shobe’s new work describes the evolution of Tax Receivables Agreements (TRAs) in IPOs, and evaluates the policy implications of these increasingly common agreements.

A TRA is contract entered into in connection with an IPO whereby the new public company agrees to pay the pre-IPO owners for the value of tax assets held by the historic company, which can offset the company’s future taxable income.  The most common such assets are depreciable asset basis and net operating losses (NOLs).  Under a TRA, the public company pays the pre-IPO owners for the value of these tax assets over a period of years following the IPO as the value is realized.

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September 22, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Wednesday, September 20, 2017

Glogower Presents Progressive Taxation Of Income And Wealth Today At Northwestern

Glogower (2016)Ari Glogower (Ohio State) presents Progressive Taxation of Income and Wealth today at Northwestern as as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Rising economic inequality has led commentators to reassess the base for progressive taxation, and to argue that wealth should be taxed in addition to, or instead of, income. This Article claims that, if income and wealth should both be periodically taxed as factors in economic well-being, then taxing an integrated measure of both factors is preferable to taxing income and wealth under separate instruments. Separate income and wealth taxes cannot consistently compare taxpayers on the basis of their total economic well-being during the taxing period, and will favor or disfavor taxpayers depending whether their economic well-being results from income, wealth, or a combination thereof.

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September 20, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (3)

Batchelder: Opportunities And Risks In Individual Tax Reform

Lily Batchelder (NYU), Opportunities and Risks in Individual Tax Reform: Testimony Before the US Senate Committee on Finance:

This testimony before the US Senate Committee on Finance on individual tax reform makes five main points.

First, the current tax reform effort is occurring at a time when low- and middle-income families are facing deep financial challenges. Economic disparities are vast and have been widening for decades. The US also has one of the lowest levels of economic mobility relative to our competitors. Our debt as a share of GDP is projected to grow to unprecedented levels in coming decades, largely because of the retirement of the Baby Boom and increasing life expectancy. This growth in debt will be a drag on economic growth. For all these reasons, tax reform should increase revenues and enhance progressivity. Doing so would boost economic growth and make the tax code fairer at the same time. At a bare minimum, tax reform should maintain the current level of revenues and progressivity—and these both should be measured consistently and without resort to budget gimmicks like a “current policy” baseline.

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September 20, 2017 in Congressional News, Scholarship, Tax | Permalink | Comments (0)

Ryznar: A Practical Solution To The Marriage Penalty

Margaret Ryznar (Indiana-Indianapolis), A Practical Solution to the Marriage Penalty, 44 Pepp. L. Rev. 647 (2017):

In the federal income tax code, there is a marriage penalty resulting from tax brackets that do not double upon marriage. This marriage penalty persists despite universal condemnation of it, penalizing a significant portion of married women who work and many same-sex couples.

This Article proposes a novel way to deal with this marriage penalty by creating a filing status for dual-income couples that earn an amount within a particular percentage of each other. This filing status would be the same as the current married filing status, except it would double the rates of single filers by accommodating two incomes.

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September 20, 2017 in Scholarship, Tax | Permalink | Comments (0)

Perkins: The Threat of Law — Is Treasury Using Regulatory Blackmail Or Responding To Congressional Inaction?

Rachelle Holmes Perkins (George Mason), The Threat of Law: Regulatory Blackmail or an Answer to Congressional Inaction, 65 Kan. L. Rev. 621 (2017):

In light of the obstacles affected taxpayers are up against in the face of regulations of dubious authority, Treasury is able to wield what I term an effective “threat of law.” While certainly less binding than an actual legitimately exercised “force of law,” the effects (at least in the nearterm) can be identical. For example, with respect to the Inversion Notice, taxpayers could either comply with Treasury’s Inversion Notice or potentially face a myriad of negative consequences. When faced with these options, while some taxpayers rolled the proverbial dice and found ways to structure around the Inversion Notice, others declined to play this game of tax chicken with Treasury and called off their transactions.

In this Article, I will explore the contours of this so-called “threat of law” that Treasury can employ even in the absence of legitimate congressional authority to do so.

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September 20, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 19, 2017

Barry Presents Tax And The Boundaries Of The Firm Today At Columbia

Barry (2017)Jordan Barry (San Diego) presents Tax and the Boundaries of the Firm (with Victor Fleischer (San Diego)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

How does the income tax shape the boundaries of the firm? This Article goes back to foundational ground — Coase’s inquiry into the nature of the firm— to gain some traction on this elementary question. ...

Part II revisits the literature on Coase and the boundaries of the firm, setting the stage for a discussion of how transaction cost economics can inform tax policy. Part III explores some of the ways in which the income tax distorts the boundary of the firm. In doing so, it provides numerous examples of provisions that can grow or shrink firms at the margin or alter the relative size of their components. It also discusses how firms can respond to income tax law incentives without significantly changing their economic behavior by engaging in regulatory arbitrage.

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September 19, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Harrison: Spite And Tax Law

Jeffrey Harrison (Florida), Spite: Legal and Social Implications:

Spite is not a simple concept. The same actions may be motivated by a desire to harm others as a source of the actor’s satisfaction. They may also be a reaction to a personal sense of injustice. Finally, spite-like actions are consistent with simply righting a wrong. This Article makes the case that spite, in its worst from, is comparably to theft. It is a taking of someone’s sense of well-being without consent. It also claims that the purchase of positional goods is ultimately spite driven. It canvasses tort law, contracts, tax law, trademark, and criminal law in an effort to assess the reaction of the law to spite.

September 19, 2017 in Scholarship, Tax | Permalink | Comments (1)

Crawford & Spivack: Tampon Taxes, Discrimination and Human Rights

Bridget J. Crawford (Pace) & Carla Spivack (Oklahoma City), Tampon Taxes, Discrimination and Human Rights, 2017 Wis. L. Rev. 491:

In recent months, activists around the globe have harnessed the power of the Internet to raise awareness of the so-called “tampon tax,” an umbrella term to describe sales, VAT and similar “luxury” taxes imposed on menstrual hygiene products. In response to pressure from constituents, five U.S. states and Canada have repealed their tampon tax. Active campaigns are underway in Australia, the United Kingdom and several other countries. Where public pressure has not been an effective technique, those seeking to challenge the tampon tax in the United States have turned to litigation. In four U.S. states, class action lawsuits have been filed seeking repeal of the tax and a refund for back taxes paid, alleging equal protection violations. In the international context, human rights law provides a promising foundation for similar legal challenges to the tampon tax because human rights law takes a capacious approach to gender equality. In the European Court of Human Rights, for example, there are several tax cases that recognize gender-differentiated taxes as a form of impermissible discrimination. This Article explains how the tampon tax violates equal protection and human rights norms. The tax also shows how deeply embedded gender is in matters of tax policy. Full realization of gender equality will require revision of tax laws.

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September 19, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, September 18, 2017

Bankman Presents The Global Battle To Capture MNE Profits Today At Loyola-L.A.

Bankman (2017)Joseph Bankman (Stanford) presents Collecting the Rent: The Global Battle to Capture MNE Profits (with Mitchell Kane (NYU) & Alan Sykes (Stanford)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Multinational enterprises (MNEs) earn substantial rents in the current global economy. Governments have an interest in capturing some of these rents for their citizens or national treasuries, and regularly pursue policies to that end. Some rents are realized in the country in which the MNE is headquartered and domiciled. In theory, at least, that country (the "resident country") can collect these rents through its power to tax or regulate. Other rents are realized in nations outside that of the MNE's residence. Collection of these rents by nations in which the MNE operates, but does not reside, has proven more difficult.

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September 18, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Capacity Of Governments To Raise Taxes

OECD Econ. Dep't Working Paper No. 1407, The Capacity of Governments to Raise Taxes:

This paper investigates the factors that shape governments’ capacity to collect revenue. To do so, it analyses how tax revenue responds to tax rates using evidence from a panel of 34 OECD countries over 1978-2014. The estimations show that the response of revenue to rates weakens as rates become higher, confirming the existence of a hump-shaped relationship between tax revenue and rates for corporate income taxation and providing a new contribution by analysing value-added taxation. Importantly, the estimated responses of revenue to tax rates vary, in some cases very strongly from an economic perspective, depending on country-specific policies and framework conditions. In particular, the corporate income tax revenue-generating potential of hiking the effective rate shrinks much more quickly in more open economies than in more closed ones.

OECD

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September 18, 2017 in Gov't Reports, Scholarship, Tax | Permalink | Comments (0)

Hasen: Taxation And Innovation

David Hasen (Colorado), Taxation and Innovation: A Sectorial Approach, 2017 U. Ill. L. Rev. 1043:

A number of tax rules have been adopted or proposed to promote innovation. The primary justification for these rules is that they can be effective in reducing or eliminating chronic market failure in the innovation sector. This paper argues that special tax rules for innovation generally are inappropriate.

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September 18, 2017 in Scholarship, Tax | Permalink | Comments (0)

McIntyre & Simkovic: Are Law Degrees As Valuable To Minorities?

Frank McIntyre (Rutgers) & Michael Simkovic (USC), Are Law Degrees as Valuable to Minorities?, 52 Int'l Rev. L. & Econ. ___ (2017):

We estimate the increase in earnings from a law degree relative to a bachelor’s degree for graduates of different race/ethnic groups. Law earnings premiums are higher for whites than for minorities (excluding individuals raised outside the U.S.). The median annual law earnings premium is approximately $41,000 for whites, $34,000 for Asians, $33,000 for blacks, and $28,000 for Hispanics.

MS4

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September 18, 2017 in Legal Education, Scholarship | Permalink | Comments (3)

Hayashi: A Theory Of Facts And Circumstances

Andrew Hayashi (Virginia), A Theory of Facts and Circumstances, 69 Ala. L. Rev. ___ (2017):

The legal consequences of an action often depend on information that only the actor knows. This information is typically inferred from the observable “facts and circumstances” attending the actor’s conduct, which creates a seemingly unresolvable tension in legal design. On the one hand, these unstructured inquiries give free rein to the factfinder’s judgment about which facts justify an inference to the hidden information. On the other hand, specifying the facts that will be used to draw that inference would provide a roadmap for actors to strategically adjust their conduct to manipulate the factfinder’s conclusions. I argue that this tension can be resolved by applying insights from the economics literature on asymmetric information.

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September 18, 2017 in Scholarship, Tax | Permalink | Comments (0)

Sunday, September 17, 2017

The Top Five New Tax Papers

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #4 and #5:

  1. [588 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [327 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [218 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)
  4. [146 Downloads]  Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, by George Yin (Virginia)
  5. [142 Downloads]  Distributive Justice and Donative Intent, by Alexander A. Boni-Saenz (Chicago-Kent)

September 17, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 16, 2017

Should The United States Have A National Investment Authority?

On Tuesday, Boston College Law School welcomed Professor Saule Omarova (Cornell) as the first presenter in our inaugural Regulation and Markets Workshop Series. The paper (with Robert Hockett, also of Cornell) is entitled “Private Wealth and Public Goods: A Case for a National Investment Authority.” It’s available on SSRN.

In brief, the paper makes a two pronged contribution: First, a policy proposal for the creation of a National Investment Authority (NIA), a hybrid, public-private entity that directs private financial capital to fund long-term infrastructure and development projects; and second, a theoretical re-envisioning of what public goods are and how to provide them.

What is quite interesting from a tax and public finance perspective is that the NIA proposal aims to fill an institutional gap between the classic Treasury function and that of the central bank (the Fed). As Omarova and Hockett characterize it, the standard response to the public goods problem is to have Treasury, as the fiscal authority, collect tax payments (or borrow) and use the proceeds to finance public goods. However, they argue that political budget fights have rendered Treasury unable to advance large-scale and long-term public infrastructure investments. While the Fed has partially attempted to fill the gap and to encourage infrastructure investment using monetary policy tools, these tools are insufficient. As a result of the policy gap between the Treasury and Fed mandates, economic growth and development suffer.

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September 16, 2017 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

Friday, September 15, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (Arizona State) reviews a new working paper by Leslie Book (Villanova), David Williams (Intuit) and Krista Holub (Intuit), Insights from Behavior Economics Can Improve Administration of the EITC.  

Scharff (2017)The problems of our dysfunctional Congress are legion. This dysfunction not only affect Congress’ ability to get the basic work of government done, but it shrinks the space available to have rational conversations about improving public policy. We see this in the debate over the Earned Income Tax Credit (EITC). The EITC retains bipartisan support. Nevertheless, it regularly comes under criticism for the high error rates in the program.

At the high end, the IRS estimates the overclaim percentage at a high of 39.1%, but even the IRS’s low estimate of 28.5% represents about $14 billion a year.  Conservative commentators use these estimates to argue the program is riddled with fraudLiberals, on the other hand, stress that the complexity of the program’s eligibility requirements makes inadvertent mistakes likely and note that methodological problems may lead the IRS to overstate the improper payment rate.  

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September 15, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, September 14, 2017

When Sharia Law And The U.S. Tax Law Collide

Virginia La Torre Jeker, When Sharia and U.S. Tax Law Collide, 87 Tax Notes Int'l 787 (Aug. 21, 2017):

Sharia law impacts the US tax analysis of transactions arising in any Muslim-majority country or in any country when Muslim persons are involved in the transaction. Neither the US courts nor the Internal Revenue Service have provided guidance as to how the matter should be resolved when US tax and Sharia laws collide.

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September 14, 2017 in Scholarship, Tax | Permalink | Comments (2)

Wednesday, September 13, 2017

Herzig & Brunson: Let Prophets Be (Non) Profits

David Herzig (Valparaiso) & Samuel D. Brunson (Loyola-Chicago), Let Prophets Be (Non) Profits,  52 Wake Forest L. Rev. ___ (2017):

In this article, we take a step back and ask whether the Supreme Court’s application of the fundamental public policy rule as espoused in the Bob Jones case is the normatively correct position. In our analysis, we conclude that using fundamental public policy as a filter in granting tax exemption gets both tax and public policy wrong. Our conclusion is informed by the history of the role played by public charities espousing minority views. We believe that a legitimate space in society should exist and populated by nonprofits to both espouse popular and unpopular minority views. But it is also informed by tax policy: applying the fundamental public policy rule to qualification for tax exemption misunderstand how exemption fits into the corporate income tax.

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September 13, 2017 in Scholarship, Tax | Permalink | Comments (2)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through September 1, 2017) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

71,502

Reuven Avi-Yonah (Mich.)

12,589

2

Michael Simkovic (USC)

37,095

Lily Batchelder (NYU)

9108

3

Paul Caron (Pepperdine)

33,494

D. Dharmapala (Chicago)

3828

4

D. Dharmapala (Chicago)

31,694

Michael Simkovic (USC)

3519

5

Louis Kaplow (Harvard)

28,524

Richard Ainsworth (BU)

3307

6

Vic Fleischer (San Diego)

23,957

Michael Graetz (Columbia)

3086

7

Ed Kleinbard (USC)

23,528

David Gamage (Indiana)

2863

8

James Hines (Michigan)

23,124

Andy Grewal (Iowa)

2830

9

Richard Kaplan (Illinois)

22,216

David Weisbach (Chicago)

2572

10

Ted Seto (Loyola-L.A.)

22,199

Ed Kleinbard (USC)

2569

11

Richard Ainsworth (BU)

21,867

Daniel Shaviro (NYU)

2115

12

Katie Pratt (Loyola-L.A.)

20,482

Louis Kaplow (Harvard)

2089

13

David Weisbach (Chicago)

19,694

Darien Shanske (UC-Davis)

2018

14

Robert Sitkoff (Harvard)

19,183

William Byrnes (Texas A&M)

1816

15

Brad Borden (Brooklyn)

18,659

Steven Bank (UCLA)

1710

16

Carter Bishop (Suffolk)

18,312

Omri Marian (UC-Irvine)

1707

17

Chris Sanchirico (Penn)

17,996

Bridget Crawford (Pace)

1646

18

Francine Lipman (UNLV)

17,822

Jordan Barry (San Diego)

1625

19

Daniel Shaviro (NYU)

17,813

Jeffrey Kwall (Loyola-Chicago)

1580

20

Jen Kowal (Loyola-L.A.)

17,680

Paul Caron (Pepperdine)

1509

21

Bridget Crawford (Pace)

17,519

Stephen Shay (Harvard)

1502

22

Dennis Ventry (UC-Davis)

16,615

Cliff Fleming (BYU)

1455

23

David Walker (BU)

15,739

Brad Borden (Brooklyn)

1453

24

Steven Bank (UCLA)

15,512

Yariv Brauner (Florida)

1431

25

Gregg Polsky (Georgia)

14,227

Francine Lipman (UNLV)

1424

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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September 13, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Tuesday, September 12, 2017

How Perceived Influence Over Laws Affects Tax Evasion

Paul Mason (Baylor), Steven Utke (Connecticut) & Brian Williams (Indiana), Why Pay Our Fair Share? How Perceived Influence Over Laws Affects Tax Evasion:

We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects taxpayers’ tax evasion decisions. We argue that taxpayers are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process.

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September 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, September 11, 2017

Schmalbeck Presents Nonprofit Organizations And Political Campaigns At Northwestern

Schmalbeck (2016)Richard L. Schmalbeck (Duke) presented Nonprofit Organizations and Political Campaigns at Northwestern as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

This story involves three organizational forms, and two broad policy considerations. There are more than a score of different nonprofit organizational categories described in the IRC, but only three are relevant here: the organizations described in sections 501(c)(3), 501(c)(4), and 527. All are exempt from federal income taxes on any excess of revenue over expense that they might experience in any tax year. The first category (charitable organizations under section 501(c)(3)) allows use of deductible contributions to advance its programmatic ends, and also permits anonymous donations. The second (social welfare organizations under section 501(c)(4)) allows anonymous donations (but no deduction for contributions). The third (political organizations under section 527) is subject to rules that compel disclosure of the names of contributors and amounts of their contributions.

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September 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Brookings Symposium On Business Tax Reform

Sunday, September 10, 2017

The Top Five New Tax Papers

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper:

  1. [545 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [536 Downloads]  The Front Door Opens Wide for the Backdoor Roth IRA, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  3. [268 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  4. [253 Downloads]  BEPS and European Union Law, by Sjoerd Douma (Leiden)
  5. [187 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)

September 10, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, September 8, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Sloan Speck (Colorado) reviews a new work by Lee Anne Fennell and Richard McAdams (Chicago), Inverted Theories.

Speck (2017)Since the early 1960s, the interdisciplinary turn in legal scholarship has been marked by academic lawyers’ engagement with, and adoption of, theoretical work from economics, anthropology, and philosophy, among other fields. In an important new article, Lee Anne Fennell and Richard McAdams argue for a novel reconsideration of how certain of these theories are deployed by law professors. Specifically, Fennell and McAdams identify a category of theories in which a central (and typically normative) claim “takes center stage,” while implausible or stylized assumptions that qualify this claim are minimized. For this type of theory, the footnotes supersede the headline, but readers are just skimming the large print. Fennell and McAdams argue that we should “turn the spotlight” on these “untrue assumptions” by inverting these theories, putting the footnotes first and downsizing the headline. Doing so will lead to more fruitful inquiry, both in terms of the questions we ask and the answers we find.

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September 8, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Should Law Schools Shift Scholarship Money From Merit (LSAT & UGPA Medians) To Need?

Deborah Jones Merritt (Ohio State) & Andrew Merritt, Agreements to Improve Student Aid: An Antitrust Perspective, 67 J. Legal Educ. ___ (2017):

Law schools tie much of their scholarship money to LSAT scores and undergraduate grades. By awarding substantial discounts to students with above-median indicators, schools attempt to climb the U.S. News ranking ladder. This practice, as many educators recognize, reduces access to legal education for low-income and minority students. As a result, many schools would like to shift at least some of their scholarship funds to need-based awards. Schools, however, struggle to make that change unilaterally; they worry about losing ground in the rankings race.

Could law schools act collectively to reform their scholarship practices? Could the ABA reshape those practices by adopting an accreditation standard that limits the award of “merit” based aid?

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September 8, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

Kleinbard: The Right Tax At The Right Time

Florida Tax Review  (2015)Edward Kleinbard (USC), The Right Tax at the Right Time, 20 Fla. Tax Rev. ___ (2017):

The companion paper to this (Capital Taxation in an Age of Inequality, 90 S. Cal. L. Rev. 593 (2017)) argues that a moderate flat-rate (proportional) income tax on capital imposed and collected annually has attractive theoretical and political economy properties that can be harnessed in actual tax instrument design. This paper continues the analysis by specifying in detail how such a tax might be designed.

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September 8, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, September 7, 2017

Hemel Presents In Defense Of The State And Local Tax Deduction Today At Boston College

HemelDaniel Hemel (Chicago) presents Easy on the SALT: In Defense of the Deduction for State and Local Taxes at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu Yi Oei:

Congressional Republicans and Trump administration officials have said that they plan to repeal the deduction for nonbusiness state and local taxes (SALT) as part of a comprehensive tax reform package. This essay critically examines the major arguments for repealing the SALT deduction. Repealing the deduction and using the resulting revenues to reduce federal rates across the board would likely lead to greater tax-induced deadweight loss overall. Repealing the deduction also would distort decisions about the financing of education and health care, which together account for more than half of all state and local government spending. Repeal would further encourage a shift from nonbusiness to business taxes at the state and local level, and potentially would result in more borrowing by subnational governments in the short and medium term.

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September 7, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Tax Prof Panel On A U.S. Perspective On Tax Compliance And Tax Privacy At Cambridge

CambridgeWilliam Byrnes (Texas A&M), Michael Hatfield (University of Washington), Leandra Lederman (Indiana-Bloomington), and Adam Thimmesch (Nebraska) participated in a panel on Tax Compliance and Tax Privacy: A U.S. Perspective at the 35th Cambridge International Symposium on Economic Crime yesterday at the University of Cambridge:

This panel of US tax academics explored cutting edge issues in tax compliance, information reporting, and tax privacy. The topics include recent developments in the behavioral economics and psychology of tax compliance, and the rapidly evolving use of technology and big data in tax enforcement and its impact on the privacy of taxpayers

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September 7, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Insights From Behavioral Economics Can Improve Administration Of The EITC

Leslie Book (Villanova), David Williams (Intuit) & Krista Holub (Intuit), Insights from Behavioral Economics Can Improve Administration of the EITC:

The IRS is a non-traditional but key player in delivering social benefits to the nation’s working poor. In fact, it administers one of the nation’s largest anti-poverty programs: the earned income tax credit (EITC). The EITC is generally praised for its role in reducing poverty and incentivizing low-wage work. While the credit has bipartisan support, the IRS continues to face strong criticism over EITC compliance issues.

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September 7, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, September 6, 2017

Thomas: Taxing the Gig Economy

Kathleen DeLaney Thomas (North Carolina), Taxing the Gig Economy, 166 U. Pa. L. Rev. ___ (2017):

Due to advances in technology like mobile applications and online platforms, millions of American workers now earn income through “gig” work, which allows them the flexibility to set their own hours and choose which jobs to take. To the surprise of many gig workers, the tax law considers them to be “business owners,” which subjects them to onerous recordkeeping and filing requirements, along with the obligation to pay quarterly estimated taxes. This Article proposes two reforms that would drastically reduce compliance burdens for this new generation of business owners, while simultaneously enhancing the government’s ability to collect tax revenue.

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September 6, 2017 in Scholarship, Tax | Permalink | Comments (0)

What Law Students Say About Experiential Learning

David I. C. Thomson (Denver) & Stephen Daniels (American Bar Foundation), If You Build it, They Will Come: What Students Say About Experiential Learning:

In the Fall of 2013, soon after the reduction in applications that many law schools experienced in 2011-13, the University of Denver’s law school lead the way nationally in making a significant additional investment in experiential learning. Starting that fall, it provided the option for all incoming students to spend one entire year of law school in experiential learning courses and programs. While this commitment was being rolled out, the authors prepared a study of the impact of the program on enrollment and the educational experience of students. A three-year study — each year surveying 1Ls — also included follow up surveys of 2Ls and 3L/4Ls, with additional “look back” questions for the 3L/4L surveys. What we learned was that applicants chose Denver Law on several traditional factors (such as cost and location) but also strongly indicated that the experiential learning component was an important part of their decision. In the 3L/4L surveys, students reflected back on their law school education, and still ranked experiential learning as very important to them, while noting the importance of other practical concerns, such as employment outcomes for graduates.

Denver

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September 6, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

Macroeconomic And Distributional Effects Of U.S. Personal Income Tax Reforms

Macroeconomic and Distributional Effects of Personal Income Tax Reforms : A Heterogenous Agent Model Approach for the U.S (IMF Working Paper):

This paper assesses the macroeconomic and distributional impact of personal income tax (PIT) reforms in the U.S. drawing on a multi-sector heterogenous agents model in which consumers have non-homothetic preferences and sectors differ in terms of their relative labor and skill intensity. The model is calibrated to key characteristics of the US economy. We find that (i) PIT cuts stimulate growth but the supply side effects are never large enough to offset the revenue loss from lower marginal tax rates; (ii) PIT cuts do “trickle-down” the income distribution: tax cuts stimulate demand for non-tradable services which raise the wages and employment prospects of low-skilled workers even if the tax cut is not directly incident on them;

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September 6, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 5, 2017

Corporate Tax Reform Would Increase Employment By 6%-22% And Wages By 15%-28%

Andrew Hanson (Marquette) & Ike Brannon (Cato Institute), Corporate Income Taxes and Labor: An Investigation of Empirical Evidence:

With the highest top marginal corporate tax rate among OECD nations and the third-highest in the world at 35 percent, it is not surprising that policymakers have long evinced a desire to lower the U.S. federal corporate income tax rate. Reducing the corporate income tax rate has implications for a wide-range of outcomes — from federal revenues to foreign direct investment, but the effects of such a change on workers is less understood. This paper examines the empirical literature on the effect of corporate income taxes on labor, specifically on employment and worker incomes.

In general, empirical work with the most robust results and controlling for factors of influence outside of corporate income taxes generally have an elasticity of employment with respect to the corporate income tax rate of between -0.2 and -0.4, with a wage/income elasticity near -0.5. In the context of recent tax reform discussions that propose a rate reduction between 30% to 57%, that would imply employment gains between 6% to 22% and wage increases between 15% to 28%. 

September 5, 2017 in Scholarship, Tax | Permalink | Comments (2)

Sunday, September 3, 2017

The Top Five New Tax Papers

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

  1. [501 Downloads]  The Front Door Opens Wide for the Backdoor Roth IRA, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  2. [495 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  3. [238 Downloads]  BEPS and European Union Law, by Sjoerd Douma (Leiden)
  4. [226 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  5. [157 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)

September 3, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, September 1, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Orly Mazur (SMU) reviews a new work by Brian Galle (Georgetown), How to Save Unemployment Insurance, forthcoming in the Arizona State Law Journal.

Mazur (2017-2)With the Labor Day Holiday upon us, what a perfect time to celebrate American workers by considering how best to provide workers with a source of relief in the event of involuntary unemployment. Brian Galle’s compelling new work does exactly that by analyzing and suggesting potential reforms that can help to save our unemployment insurance (UI) program.

The UI program is a form of social insurance that provides temporary income support to workers that lose their jobs through taxes collected by state and federal governments from employers. Unfortunately, as the recent Great Recession showed us, “the U.S. system of financing its unemployment insurance program is seriously dysfunctional.” After explaining the cause of the UI program’s failings, Galle makes a persuasive case that for any UI reform proposal to be effective, three factors need to be taken into account. 

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September 1, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, August 31, 2017

McCluskey: Tax And The Ideology Of Unequal Economic Growth

Martha T. McCluskey (SUNY-Buffalo), Framing Middle-Class Insecurity: Tax and the Ideology of Unequal Economic Growth, 84 Fordham L. Rev. 2699 (2016):

Prevailing tax discourse rationalizes growing economic inequality. Using the example of state and local economic development “subsidy wars,” this article explores how conventional tax ideas present unequal sacrifice and risk as a public responsibility, driven by economic fact rather than unjust politics.

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August 31, 2017 in Scholarship, Tax | Permalink | Comments (1)

Aprill: Religious Organizations, Refuge For Undocumented Immigrants, And Tax Exemption

Ellen P. Aprill (Loyola-L.A.), Religious Organizations, Refuge for Undocumented Immigrants, and Tax Exemption:

The Trump Administration plans for aggressive enforcement of immigration laws have caused many houses of worship and other religious organizations to consider whether their beliefs call upon them to grant refuge or so-called sanctuary to undocumented immigrants. This brief essay considers whether these organizations would risk their tax-exempt status were they to do so. It reviews relevant judicial and IRS guidance.

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August 31, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, August 30, 2017

Robinson: The Folly Of Conflating The Power To Fine With The Power To Tax

Mildred Robinson (Virginia), The Folly of Conflating the Power to Fine with the Power to Tax, 62 Vill. L. Rev. ___ (2017):

As citizens, we expect the police “to protect and to serve.” So how does a police force become revenue collector instead of protector? On the local level, we “purchase” through taxes police and fire protection as well as a myriad of other services. This article, an expansion of remarks made during the October 2016 Shachoy Symposium — Exploring Police Accountability in America — at the Villanova University School of Law, examines how reliance on traffic fines for general budgetary purposes became a matter of general practice in Ferguson and many other towns and cities. It ultimately serves as a reminder that there are very sound economic and civic reasons to rely upon “taxes [as] the price we pay for a civilized society?”

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August 30, 2017 in Scholarship, Tax | Permalink | Comments (1)

Creating An Assessment-Centered Legal Education

Steven Friedland (Elon), Rescuing Pluto from the Cold: Creating an Assessment-Centered Legal Education:

This article uses principles of design theory and high-impact practices to explore how to move assessment from the outsider place it usually occupies in traditional legal education to an insider position.

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August 30, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

Tuesday, August 29, 2017

Areen: Legal Education Reconsidered

Judith C. Areen (Georgetown), 2016 James P. While Lecture on Legal Education: Legal Education Reconsidered, 50 Ind. L. Rev. 1087 (2017):

The title of my talk, “Legal Education Reconsidered,” is not meant to suggest that legal education needs to be reconsidered. On the contrary, I will explore why the many criticisms of legal education made over the past six years combined with a significant decline in the legal job market have led many people — including many college students and recent graduates — not only to reconsider legal education, but to draw the conclusion that it is no longer a worthwhile investment.

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August 29, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

Boundaries Of The Prediction Model In Tax Law's Substantial Authority

Bradley T. Borden (Brooklyn) & Sang Hee Lee (Ernst & Young), Boundaries of the Prediction Model in Tax Law's Substantial Authority, 71 Tax Law. ___ (2017):

Tax law imposes a 20-percent penalty on substantial understatements of income tax, but taxpayers avoid that penalty by showing “substantial authority” supports the reporting position that causes the understatement. The substantial-authority standard is meaningful to taxpayers making reporting decisions in the face of uncertainty and confronting IRS challenges to uncertain reporting positions. Over thirty years ago, Congress intentionally adopted substantial authority as a new concept with no precedential interpretation, granting courts broad discretion in determining whether substantial authority exists. Courts have provided little guidance about the concept since, and commentators have focused on narrow aspects of it, so the main source of its meaning exists in a few paragraphs of regulations. In the absence of clear, in-depth consideration of the concept, substantial authority appears to have developed a somewhat mythical public persona, and appears to be misperceived by many. This Article provides a framework for piecing together the legislative history and provisions in the regulations to create a structured analysis of the substantial-authority standard.

Figure 1

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August 29, 2017 in Scholarship, Tax | Permalink | Comments (0)

Elkins: The Case Against Income Taxation Of Multinational Enterprises

Virginia Tax Review (2016)David Elkins (Netanya Academic College, School of Law), The Case Against Income Taxation of Multinational Enterprises, 36 Va. Tax Rev. 143 (2017):

Probably the most uncontroversial thing that one can say about international taxation is that it is a mess. Sophisticated planning techniques, which seem beyond the power of taxing authorities to control, enable highly profitable multinational enterprises (MNEs) to pay little or no tax on their income. Efforts by transnational organizations to coordinate action in an attempt to rescue the international tax regime from collapse have hitherto proven ineffective. Some commentators have speculated that any attempt to impose tax on MNEs in a globalized economy is doomed to failure.

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August 29, 2017 in Scholarship, Tax | Permalink | Comments (0)

Saturday, August 26, 2017

The Non-Economic Functions Of Rebel Taxation: New Data From The Islamic State In Syria

ISIS FlagMara Revkin (Yale), The Non-Economic Functions of Rebel Taxation: New Data from the Islamic State in Syria:

Previous studies predict that rebel groups with access to exploitable resources will engage in looting rather than invest in building the complex bureaucracies that are necessary for taxation. This claim relies on an untested assumption that the sole purpose of rebel taxation is to collect revenue. I challenge this assumption with granular district-month data on seven types of tax policies from the 18 Syrian districts that have been governed by the Islamic State (IS) since 2013.

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August 26, 2017 in Scholarship, Tax | Permalink | Comments (1)

Friday, August 25, 2017

Lawyers Make Better CEOs Than MBAs

Harvard Business Review LogoHarvard Business Review:  Do Lawyers Make Better CEOs Than MBAs? (full article here), by M. Todd Henderson (Chicago):

We were interested in how lawyer CEOs might influence firm decision making more broadly — and whether they differ from CEOs without a law degree. I collaborated with Irena Hutton, Danling Jiang, and Matt Pierson to compare the behavior of CEOs with law degrees with those who earned a bachelor’s degree, MBA, or other degree. We looked at about 3,500 CEOs, about 9% of whom have law degrees. They were associated with nearly 2,400 publicly traded firms in the S&P 1500 from 1992 to 2012.

The most obvious impact a lawyer CEO might be expected to have is on the amount of litigation their company is involved in. We looked at over 70,000 lawsuits filed against our sample of firms in federal courts during those 10 years. We focused on nine common types of corporate litigation: antitrust, employment civil rights, contract, environmental, intellectual property, labor, personal injury, product liability, and securities.

The result was clear: Firms run by CEOs with legal expertise were associated with much less corporate litigation. Compared with the average company, lawyer-run firms experienced 16% to 74% less litigation, depending on the litigation type. Employment civil rights, antitrust, and securities lawsuits were reduced the most, while contract saw the smallest (but still significant) reduction with a lawyer CEO. The results were economically meaningful, since the reduction was several fewer suits per year in some cases. ...

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August 25, 2017 in Legal Education, Scholarship | Permalink | Comments (2)

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new draft article by Zachary Liscow (Yale), Is Efficiency Biased?.

Gamage (2017)Anyone interested in how the methodology of law and economics accounts for distributive justice should stop whatever else they might be doing so that they can immediately read Zach Liscow’s new draft article. Indeed, I wish that this article had been available when I started my legal academic career, as Liscow’s article clarifies several puzzles that had been confounding me for over a decade.

The essence of Liscow’s critique is that efficiency-oriented analysis in law and economics relies on allocating legal entitlements based on willingness to pay. However, wealthier individuals will often have a greater willingness to pay for many legal entitlements as compared to poorer individuals—as a direct result of the fact that the wealthier individuals have more money.  

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August 25, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (1)

Galle: How To Save Unemployment Insurance

Brian D. Galle (Georgetown), How to Save Unemployment Insurance,  48 Ariz. St. L.J. ___ (2017):

Unemployment insurance is almost universally recognized as one of a government’s best tools for fighting recessions, as well as an important source of relief for working-class families suffering temporary hardship. Unfortunately, as commentators and Congress have recognized, the U.S. system of financing its unemployment insurance program is seriously dysfunctional. Reform proposals, however, do not fully diagnose the causes of current failures. In particular, other commentators neglect the role of fiscal myopia in state officials’ failures to save for future UI needs. For instance, reformers mostly propose offering rewards or penalties that will take effect only far in the future. These incentives have only small effects on myopic officials.

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August 25, 2017 in Scholarship, Tax | Permalink | Comments (0)

Rozema: Tax Incidence In A Vertical Supply Chain — Evidence From Cigarette Wholesale Prices

Kyle Rozema (Chicago), Tax Incidence in a Vertical Supply Chain: Evidence from Cigarette Wholesale Prices:

I investigate how the burden of consumption taxes not borne by consumers is shared between upstream firms that produce a taxed good and downstream firms that sell the goods. First, I study a simple theoretical model of tax incidence in a vertical supply chain and show that the tax pass through rates to wholesale prices, consumer prices, and posted retail prices serve as a sufficient statistic for the split of the firm share of the tax burden. Second, I use novel data on monthly brand-level cigarette wholesale prices in six states to estimate the tax pass through rate to wholesale prices, and estimate the tax pass through rates to consumer and posted retail prices from Nielsen Homescan Data.

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August 25, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, August 24, 2017

U.S. Firms On Foreign (Tax) Holidays

Travis Chow (Singapore Management University), Jeffrey L. Hoopes (North Carolina) & Edward L. Maydew (North Carolina), U.S. Firms on Foreign (Tax) Holidays:

We undertake the first large-sample examination of foreign tax holiday participation among U.S. corporations. Tax holidays are temporary reductions of tax granted by governments, usually in conjunction with new business investment. We find that foreign tax holidays are economically important phenomena and participation in them has increased over time. The percentage of publicly-traded U.S. firms reporting participation in at least one foreign tax holiday increased more than five-fold since the beginning of our sample in 1995. We estimate that the average foreign tax holiday reduces the firm’s effective tax rate by 4.5 percentage points during the holiday period, which is over four times as large as the average effect of having a tax haven subsidiary. We find an unintended consequence of foreign governments granting tax holidays is that, over the long run, they increase the amount of U.S. tax on foreign income. Indeed, our estimates imply that participating in a foreign tax holiday roughly doubles the eventual U.S. tax on foreign income. Until now, research on foreign tax holiday participation has been hampered by a lack of data. We hope that our initial evidence encourages others to investigate these economically important phenomena.

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August 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

Park: Arbitrability And Tax

William W. Park (Boston University), Arbitrability and Tax:

Although arguments exist that fiscal disputes should remain beyond private adjudication, implicating as they do the sovereign prerogative of revenue raising, the practice proves very much to the contrary. Arbitration of tax-related disputes proves very much a reality despite doctrinal objections. The amenability of such disputes to arbitration remains highly fact-intensive, with no hard-and-fast rule prohibiting all tax arbitration per se, while some controversies stay out-of-bounds for arbitrators.

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August 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, August 23, 2017

Eyal-Cohen: Through The Lens of Innovation

Mirit Eyal-Cohen (Alabama), Through the Lens of Innovation, 43 Fla. St. U. L. Rev. 951 (2016):

The legal system constantly follows the footsteps of innovation and attempts to discourage its migration overseas. Yet, present legal rules that inform and explain entrepreneurial circumstances lack a core understanding of the concept of entrepreneurship. By its nature, law imposes order. It provides rules, remedies, and classifications that direct behavior in a consistent manner. Entrepreneurship turns on the contrary. It entails making creative judgments about the unknown. It involves adapting to disarray. It thrives on deviation as opposed to traditional causation. This Article argues that these differences matter. It demonstrates that current laws lock entrepreneurs into inefficient legal routes.

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August 23, 2017 in Scholarship, Tax | Permalink | Comments (0)