TaxProf Blog

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

Tuesday, July 25, 2017

WSJ: Mortgage Interest Tax Break Has ‘No Effect’ on Homeownership, Study Finds

Wall Street Journal, Mortgage Interest Tax Break Has ‘No Effect’ on Homeownership, Study Finds:

The mortgage interest deduction, a sacred cow in the U.S. tax code, does nothing to promote homeownership, according to an academic paper released Monday [Jonathan Gruber (MIT), Amalie Jensen (University of Copenhagen) & Henrik Kleven (Princeton), Do People Respond to the Mortgage Interest Deduction? Quasi-Experimental Evidence From Denmark], a finding that undermines one of the core justifications for the tax break.

Letting taxpayers deduct mortgage interest encourages them to buy bigger homes and more expensive homes — but it doesn’t change that fundamental decision about whether to buy in the first place.

“Over multiple time periods, and considering multiple empirical strategies, we find no effect of the tax policy change on whether households own or rent,” wrote the authors, Jonathan Gruber of the Massachusetts Institute of Technology, Henrik Kleven of Princeton University and Amalie Jensen of the University of Copenhagen.

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

Sunday, July 23, 2017

McIntyre & Simkovic:  Timing Law School

Frank McIntyre (Rutgers) & Michael Simkovic (USC), Timing Law School, 14 J. Empirical Legal Stud. 258 (2017):

We investigate whether economic conditions at labor market entry predict long-term differences in law graduate earnings. We find that unemployment levels at graduation continue to predict law earnings premiums within 4 years after graduation for earners at the high end and middle of the distribution. However, the relation fades as law graduates gain experience and the difference in lifetime earnings is moderate. This suggests that earnings figures from After the JD II and III — which track law graduates who passed the bar exam in 2000 — are likely generalizable to other law cohorts because these studies are outside the window when graduation conditions predict differences in subsequent earnings.

Figure 2

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July 23, 2017 in Legal Education, Scholarship | Permalink | Comments (4)

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 paper debuting on the list at #5:

  1. [585 Downloads]  Family Limited Partnerships and Section 2036: Not Such a Good Fit, by Mitchell Gans (Hofstra) & Jonathan Blattmachr (Milbank, New York)
  2. [341 Downloads]  The Front Door Opens Wide for the Backdoor Roth IRA, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  3. [297 Downloads]  The Rise and Fall of the Destination-Based Cash Flow Tax: What Was That All About?, by Daniel Shaviro (NYU)
  4. [207 Downloads]  The Case Against BEPS: Lessons for Coordination, by Mindy Herzfeld (Florida)
  5. [162 Downloads]  Targeting Corporate Inversions — Are We Doing the Right Thing?, by Doron Narotzki (Akron)

July 23, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, July 22, 2017

Do Taxes Affect Marriage? Lessons From History

Edward G. Fox (NYU), Do Taxes Affect Marriage? Lessons from History:

This Article investigates the effect of taxes on marriage formation using a natural experiment generated by the income tax’s halting movement from individual taxation of married couples to joint taxation. The 1948 Revenue Act was the first to explicitly adopt joint taxation. Under the Act, married couples were taxed like two individuals, except each was assigned half of the couple’s joint income. This income splitting blunted the progressivity of the tax code, usually reducing the couple’s taxes. The 1948 Act, however, only affected common law states. Married couples in community property states in practice already enjoyed joint taxation with income splitting under Poe v. Seaborn (1930). The 1948 Act thus presents an unusually good opportunity to study the impact of taxes on marriage because it offers substantial exogenous state-by-state variation in tax incentives to marry.

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July 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

Friday, July 21, 2017

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new draft article by Regina Herzlinger (Harvard Business School) and Barak D. Richman (Duke Law), Evaluating Changes to the Income Tax Code to Create Consumer-Driven Health Insurance Competition.

Gamage (2017)The intersections between taxation and health policy have become increasingly important to political debates in Washington. A gorilla in the room for most of these discussions is the tax exclusion for employer provided health insurance. This exclusion has been widely criticized. Yet reformers have had little success in attempting to limit this exclusion.

In their new draft article, Herzlinger and Richman (hereinafter “HR”) model how reforming the exclusion for employer provided health insurance might affect employee pay and health care costs. HR argue for making changes to the tax laws surrounding the exclusion so that employees could choose to what extent they want to take advantage of the exclusion or instead receive increased take home pay (which would be taxable). HR estimate that giving workers this option would increase after-tax incomes by $46-48 billion annually, while reducing income inequality and “likely” controlling health care costs.

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July 21, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, July 20, 2017

Schizer:  Border Adjustments And The Conservation Of Tax Planning

David M. Schizer (Columbia), Border Adjustments and the Conservation of Tax Planning, 155 Tax Notes  1451 (June 5, 2017):

In this article, Schizer argues that U.S. corporate and shareholder taxes need to be reformed, and the corporate rate should be much lower. In reforming this dysfunctional regime, according to Schizer, Congress should keep both of these taxes as a form of built-in redundancy; if one tax is avoided, the other can still be collected.

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

Ventry:  Lawyers As Whistleblowers

Dennis J. Ventry, Jr. (UC-Davis), Stiches for Snitches: Lawyers as Whistleblowers, 50 U.C. Davis L. Rev. 1455 (2017):

This Article challenges the prevailing wisdom that ethics rules forbid lawyers from blowing the whistle on a client’s illegal conduct. While a lawyer is not free to disclose confidential information in every jurisdiction for every legal violation, the ethics rules in all jurisdictions permit disclosure of confidential information pertaining to a client’s illegal activities under certain conditions. Proving the lie of the prevailing wisdom, this Article examines a high profile case in the state of New York that ruled a lawyer whistleblower violated the state’s ethics rules by revealing confidential information to stop his employer-client from engaging in a tax fraud of epic proportions. The Article argues that the court undertook a deficient analysis of New York ethics rules pertaining to permissive disclosure of confidential client information. Even if the whistleblower had violated his ethical obligations, the New York False Claims Act (the statute under which he brought his action) expressly protects disclosure of confidential employer information made in furtherance of the statute. In addition to New York’s statutory shield, federal courts across the country have developed a public policy exception safeguarding whistleblowers for disclosing confidential information that detects and exposes an employer’s illegal conduct.

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

Wednesday, July 19, 2017

Liscow & Woolston:  How Income Taxes Should Change During Recessions

Zachary D. Liscow (Yale) & William A. Woolston (Stanford), How Income Taxes Should Change During Recessions, 70 Tax L. Rev. ___ (2017):

This paper offers recommendations for how the design of labor income taxes should change during recessions, based on a simple model of a recessionary economy in which jobs are rationed and some employees value working more than others do. The paper draws two counter-intuitive conclusions for maximizing social welfare.

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

Davis:  The Tax-Immigration Nexus

Tessa R. Davis (South Carolina), The Tax-Immigration Nexus, 94 Denv. L. Rev. 195 (2017):

Tax and immigration law have a shared interest in defining community. In order to implement a tax, we must know who belongs to the taxable community. At the same time, immigration law must define and administer the requirements for membership in the national community. Despite the differing objectives of tax and immigration law — raising revenue and deciding who may enter, remain, and become a citizen in the United States — each of these regimes uses a concept of citizenship to define their respective communities.

Starting from this common thread of the relevance of citizenship to both immigration and tax law, this Article draws upon social theory on citizenship to explore the many links between these seemingly disparate areas of law. Examination of these connections — what this Article calls the tax-immigration nexus — reveals that both areas of law draw upon the other to define citizenship. The interplay of tax and immigration citizenship yields important insights for tax law and policy.

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

Monday, July 17, 2017

Brooks Reviews Christians' BEPS And The New International Tax Order

Jotwell (Tax) (2016)Kim Brooks (Schulich School of Law), What’s Up: BEPS and the New International Tax Order (JOTWELL) (reviewing Allison Christians (McGill), BEPS and the New International Tax Order, 2017 BYU L. Rev. ___ (2017):

It’s easy to underestimate the value of a good “what’s up” article. If you’ve been doing that, then you should take a look at BEPS and the New International Tax Order for a reminder of their value.

“What’s up” articles are the salve of the academy. They take a rapidly changing field of inquiry or policy space or legal doctrine and they encapsulate the state of play in a way that brings out and makes assessable the highlights.

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July 17, 2017 in Scholarship, Tax | Permalink | Comments (0)

Conflicts Of Interest, Disclosure, And The Moonlighting Law Prof

MoonlightingFollowing up on my previous post, WSJ: Paying Law Professors — Inside Google’s Academic Influence Campaign:  Jeffrey L. Harrison (Florida) & Amy R. Mashburn (Florida), Moonlighting Sonate: Conflicts, Disclosure, and the Scholar/Consultant:

Although the impact of conflicting interests is of constant concern to those in legal education and other fields, a recent scholarly article [Robin Feldman (UC-Hastings), Mark Lemley (Stanford), Jonathan Masur (Chicago) & Arti Rai (Duke), Open Letter on Ethical Norms in Intellectual Property Scholarship, 29 Harv. J.L. & Tech. 339 (2016)] and an extensive analysis in the New York Times [Think Tank Scholar or Corporate Consultant? It Depends on the Day] suggest the problem is more pressing than ever. In the context of legal scholarship the problem arises when a professor is, in effect, employed by two entities.

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July 17, 2017 in Legal Education, Scholarship | Permalink | Comments (0)

Sunday, July 16, 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 new papers debuting on the list at #3 and #5:

  1. [552 Downloads]  Family Limited Partnerships and Section 2036: Not Such a Good Fit, by Mitchell Gans (Hofstra) & Jonathan G. Blattmachr (Milbank, New York)
  2. [276 Downloads]  The Rise and Fall of the Destination-Based Cash Flow Tax: What Was That All About?, by Daniel Shaviro (NYU)
  3. [244 Downloads]  The Front Door Opens Wide for the Backdoor Roth IRA, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  4. [191 Downloads]  The Case against BEPS: Lessons for Coordination, by Mindy Herzfeld (Florida)
  5. [138 Downloads]  Taxation, Competitiveness, and Inversions: A Response to Kleinbard, by Michael Knoll (Pennsylvania)

July 16, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, July 14, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new work by Itai Grinberg (Georgetown), The New International Tax Diplomacy, 104 Geo. L.J. 1137 (2016).

Glogower (2016)Itai Grinberg’s fascinating and important new work addresses the thorny question of how best to coordinate and implement international tax norms.

International tax avoidance by multinationals has generated public attention across the globe, and ushered in a new era of cross-border coordination in the area of international tax law, most prominently through the OECD’s Base Erosion and Profit Shifting (BEPS) project.  Grinberg’s new work identifies, and evaluates, the BEPS project’s increasing reliance on the institutional and procedural frameworks used for coordinating international financial law, and considers the consequences of this approach for the overall success of the BEPS project.

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July 14, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Wednesday, July 12, 2017

Colinvaux:  Donor Advised Funds — Charitable Spending Vehicles For 21st Century Philanthropy

Roger Colinvaux (Catholic), Donor Advised Funds: Charitable Spending Vehicles for 21st Century Philanthropy, 92 Wash. L. Rev. 39 (2017):

The donor advised fund (DAF) is changing longstanding giving norms in United States philanthropy. DAF contributions now account for around 8.4% of giving by individuals in the U.S. Over half of those contributions go to national DAF sponsors that have relationships with large commercial investment firms like Fidelity, Vanguard, and Schwab. This Article seeks to advance the understanding of the donor advised fund and to address two of the main policy questions: whether to require a mandatory distribution of funds by DAFs and their sponsoring organizations and how to respond to the increased use of DAFs for noncash charitable contributions.

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

Netanya Hosts 4th International Roundtable Today On Taxation And Tax Policy

Tuesday, July 11, 2017

Oh:  Will Tax Reform Be Stable?

Jason S. Oh (UCLA), Will Tax Reform Be Stable?, 165 U. Pa. L. Rev. 1159 (2017) (review by Leigh Osofsky (Miami) here):

Stability is essential to any reform’s success, yet it is hardly guaranteed. This is particularly true in tax policy, where Congress persistently tinkers. This Article offers a novel approach to studying the stability of reform proposals in taxation. Any reform proposal can be decomposed into its constituent policies. I show that politically extreme policies are more likely to be reversed than are moderate ones. This basic intuition allows one to decompose any tax reform proposal into stable and unstable pieces.

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

Cotropia & Rozema:  Who Benefits From Repealing Tampon Taxes?

Christopher Anthony Cotropia (Richmond) & Kyle Rozema (Chicago), Who Would Benefit from Repealing Tampon Taxes? Empirical Evidence from New Jersey:

Many state and local governments exclude some medical products from the sales tax base, including some that are primarily used by men such as hair growth products. However, tampons and other menstrual hygiene products are subject to sales taxes in most states. A recent social movement advocates for the repeal of these “tampon taxes” on the grounds that tampon taxes (a) create an unequal tax burden between men and women because only menstruating women must pay a tax on products that men do not use, and (b) decrease the affordability of these necessary products, particularly for lower income women. To date, however, no empirical research has documented the extent that repealing tampon taxes would benefit women by lowering consumer prices, and how any tax benefit is distributed among women of different socio-economic backgrounds. It is possible that eliminating tampon taxes would lead to an increase in before-tax retail prices such that consumer prices for the products do not decrease by the full size of the repealed tax. This would imply that consumers and producers share the benefit of the tax repeal.

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July 11, 2017 in Scholarship, Tax | Permalink | Comments (1)

Monday, July 10, 2017

Call for Papers: University of North Carolina Tax Symposium

North Carolina Tax SymposiumThe University of North Carolina Kenan-Flagler School of Business has issued a call for papers for its Twenty-First Annual Tax Symposium to be held April 21-22, 2018. The symposium "is designed to bring together leading tax scholars from economics, accounting, finance, law, political science, and related fields." The deadline for the call for papers is December 15, 2017:

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July 10, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Sunday, July 9, 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 paper debuting on the list at #5:

  1. [431 Downloads]  Family Limited Partnerships and Section 2036: Not Such a Good Fit, by Mitchell Gans (Hofstra) & Jonathan G. Blattmachr (Milbank, New York)
  2. [258 Downloads]  The Rise and Fall of the Destination-Based Cash Flow Tax: What Was That All About?, by Daniel Shaviro (NYU)
  3. [194 Downloads]  A Taxonomy for Tax Loopholes, by Heather Field (UC-Hastings)
  4. [152 Downloads]  Why Don't White Supremacists Pay Taxes?, by Eric Franklin Amarante (UNLV)
  5. [145 Downloads]  The Case against BEPS: Lessons for Coordination, by Mindy Herzfeld (Florida)

July 9, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The Sermon On The Mountain Of Cash: Using Tax Law To Curtail The Prosperity Gospel And Prevent Opportunists From 'Preying' On Vulnerable Parishioners

Jacob M. Bass, The Sermon on the Mountain of Cash: How to Curtail the Prosperity Scheme and Prevent Opportunists from “Preying” on Vulnerable Parishioners, 37 B.C.J.L. & Soc. Just. 147 (2017):

Many televangelists in the United States preach the “prosperity gospel,” a doctrine which teaches that a religiously faithful person who continually donates money to church ministries can expect God to grant material improvements to their finances, health, and relationships. Americans who participate in prosperity gospel churches often donate thousands of dollars to these churches, despite their difficulty financing such large donations and the lack of the promised material improvement to their lives. Televangelists who preach the prosperity gospel secretly use these donations to finance their extravagant lifestyles, instead of using the funds to support the faithful masses who continue to donate. The U.S. Constitution’s Free Exercise Clause makes it difficult to regulate this religiously-based scheme.

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July 9, 2017 in Scholarship, Tax | Permalink | Comments (2)

Friday, July 7, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (Arizona State) reviews a recently posted article by Manoj Viswanathan (Hastings), The Hidden Costs of Cliff Effects in the Internal Revenue Code.  

Scharff (2017)Early on in my federal income tax class, I usually spend a bit of time with my students on the idea of the marginal tax rate.   The point I stress to them is that even as you earn more money and your tax rate goes up, you still take home more money working an additional hour than not working that hour.  I sometimes get the sense many of my students hadn’t understood that prior to my class.  

Of course, there’s a caveat to this simple marginal tax story:  the high marginal rates that result from cliff effects, particularly those in tax and spending programs aimed at addressing low-income Americans.  While I usually talk about these cliff effects when discussing the Earned Income Tax Credit, Manjoj Viswanathan’s recent work reminds me that these income-based cliff effects are pervasive in the Code.

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July 7, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, July 6, 2017

Manhire Presents The Action Principle In Market Mechanics Today At University Of Warsaw

Manhire (2017)Tax Prof Jack Manhire (Texas A&M) presents his theory of market mechanics to physicists, economists, and mathematicians today at the 13th Econophysics Colloquium at the University of Warsaw:

This paper explores the possibility that asset prices, especially those traded in large volume on public exchanges, might comply with specific physical laws of motion and probability. The paper first examines the basic dynamics of price displacements in financial markets and finds one can model this dynamic as a harmonic oscillator at local “slices” of elapsed time via a homogeneous coordinate system. Based on this finding, the paper theorizes that price displacements are constrained, meaning they have extreme values beyond which they cannot go for defined periods.

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July 6, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (1)

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 June 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.)

69,648

Reuven Avi-Yonah (Mich.)

12,832

2

Michael Simkovic (USC)

36,521

Lily Batchelder (NYU)

9116

3

Paul Caron (Pepperdine)

33,215

Michael Simkovic (USC)

4082

4

D. Dharmapala (Chicago)

30,984

D. Dharmapala (Chicago)

4063

5

Louis Kaplow (Harvard)

28,232

Michael Graetz (Columbia)

3343

6

Vic Fleischer (San Diego)

23,802

Richard Ainsworth (BU)

3040

7

James Hines (Michigan)

22,930

Ed Kleinbard (USC)

2834

8

Ed Kleinbard (USC)

22,677

David Weisbach (Chicago)

2521

9

Richard Kaplan (Illinois)

22,126

Dan Shaviro (NYU)

2433

10

Ted Seto (Loyola-L.A.)

22,033

David Gamage (Indiana)

2404

11

Richard Ainsworth (BU)

21,058

Louis Kaplow (Harvard)

2226

12

Katie Pratt (Loyola-L.A.)

20,284

William Byrnes (Texas A&M)

2065

13

David Weisbach (Chicago)

19,398

Robert Sitkoff (Harvard)

1943

14

Robert Sitkoff (Harvard)

18,988

Paul Caron (Pepperdine)

1818

15

Brad Borden (Brooklyn)

18,342

Jeff Kwall (Loyola-Chicago)

1694

16

Carter Bishop (Suffolk)

18,148

Darien Shanske (UC-Davis)

1691

17

Francine Lipman (UNLV)

17,733

Omri Marian (UC-Irvine)

1648

18

Chris Sanchirico (Penn)

17,610

Francine Lipman (UNLV)

1600

19

Jen Kowal (Loyola-L.A.)

17,525

Jordan Barry (San Diego)

1599

20

Dan Shaviro (NYU)

17,320

Brian Galle (Georgetown)

1535

21

Bridget Crawford (Pace)

17,202

Bridget Crawford (Pace)

1529

22

Dennis Ventry (UC-Davis)

16,539

Steven Bank (UCLA)

1466

23

David Walker (BU)

15,674

Brad Borden (Brooklyn)

1403

24

Steven Bank (UCLA)

14,834

Vic Fleischer (San Diego)

1392

25

Gregg Polsky (Georgia)

13,972

Christopher Hoyt (UMKC)

1388

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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July 6, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Sunday, July 2, 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 paper debuting on the list at #1:

  1. [279 Downloads]  Family Limited Partnerships and Section 2036: Not Such a Good Fit, by Mitchell Gans (Hofstra) & Jonathan G. Blattmachr (Milbank, New York)
  2. [237 Downloads]  The Rise and Fall of the Destination-Based Cash Flow Tax: What Was That All About?, by Daniel Shaviro (NYU)
  3. [223 Downloads]  Can New York Publish President Trump's State Tax Returns?, by Daniel Hemel (Chicago)
  4. [184 Downloads]  A Taxonomy for Tax Loopholes, by Heather Field (UC-Hastings)
  5. [147 Downloads]  Why Don't White Supremacists Pay Taxes?, by Eric Franklin Amarante (UNLV)

July 2, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, June 30, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new paper by Edward Fox (NYU Center for Law, Economics, and Organization), Do Taxes Affect Marriage? Lessons from History.

HemelOne of my favorite teaching exercises in my Introductory Income Taxation class is to go through the New York Times wedding announcements from late December and early January, and to have students identify couples that got married on the “wrong” side of the New Year divide. Some single-earner couples that presumably receive a marriage bonus—e.g., an engineer marrying a grad student—nonetheless wed in early January, though they likely would have been better off accelerating their nuptials to December. Other couples that probably face a marriage penalty—e.g., two associates at the same law firm—wed in late December, though they likely would have been better off waiting a few more weeks. I ask my students, “What were these couples thinking?” The answer that I get is: “They were probably thinking about love and not about tax.”

For those of us who love thinking about tax, this is all somewhat of a puzzle. Do people really make such momentous life decisions without considering the tax implications? Ed Fox seeks to answer that question in a creative new paper. His main finding is that, at least historically, tax incentives have had a quantitatively and statistically significant effect on marriage patterns. While anecdotes from the Times might lead us to believe that couples make marriage choices without considering the tax consequences, Fox’s study suggests that tax incentives do indeed affect the decisions of some couples to say “I do.”

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June 30, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (1)

Thursday, June 29, 2017

Gans & Blattmachr:  Family Limited Partnerships And Section 2036

Mitchell Gans (Hofstra) & Jonathan G. Blattmachr (Milbank, New York), Family Limited Partnerships and Section 2036: Not Such a Good Fit, 42 ACTEC J. ___ (2017):

The IRS has struggled to close down abusive family limited partnerships. At first unreceptive to IRS arguments, the courts eventually embraced section 2036 as an estate-tax tool for attacking such partnerships. Because the section was not designed to apply to partnerships, difficulties have arisen as the courts have struggled with the fit. In its most recent encounter, the Tax Court in Powell grappled with a fit-related issue that implicates the Supreme Court’s landmark decision in Byrum.

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

Knoll & Mason:  Economic Foundation Of The Dormant Commerce Clause

Michael S. Knoll (Pennsylvania) & Ruth Mason (Virginia), Economic Foundation of the Dormant Commerce Clause, 103 Va. L. Rev. 309 (2016):

Last Term, a sharply divided Supreme Court decided a landmark dormant Commerce Clause case, Comptroller of the Treasury of Maryland v. Wynne. Wynne represents the Court’s first clear acknowledgement of the economic underpinnings of one of its main doctrinal tools for resolving tax discrimination cases, the internal consistency test. In deciding Wynne, the Court relied on economic analysis we provided. This Essay explains that analysis, why the majority accepted it, why the dissenters’ objections to the majority’s reasoning miss their mark, and what Wynne means for state taxation.

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

Wednesday, June 28, 2017

Zelenak:  The Income Tax And Human Body Materials

Lawrence Zelenak (Duke), The Body in Question: The Income Tax and Human Body Materials, 80 Law & Contemp. Probs. 37 (2017):

Part II of this article provides an overview — accompanied by more than a little authorial commentary— of the development (such as it has been) of the income taxation of transactions in human body materials, from the 1950s to the present. Part III situates the property-versus-services issue with respect to the taxation of body materials in the broader context of the differing income tax treatments of income from property and income from services. After explaining why the tax characterization of body materials resists easy resolution, it concludes that the well-established treatment of taxpayer-created assets as property strongly suggests that body materials should also be treated as property. Part IV explores the questions of capital asset status, holding period, and basis that govern the amount and the character of the gain recognized by a taxpayer on the sale of body materials, on the assumption that the materials are classified as property. Part V considers a miscellany of other issues relating to the income taxation of body materials. Finally, Part VI discusses the possible application of other federal taxes — the gift, estate, and self-employment taxes — to transactions in body materials. Part VII briefly concludes.

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June 28, 2017 in Scholarship, Tax | Permalink | Comments (0)

Mayer:  Creating A Tax Space For Social Enterprise

Lloyd Hitoshi Mayer (Notre Dame), Creating a Tax Space for Social Enterprise, in The Cambridge Handbook of Social Enterprise Law (Cambridge University Press 2017) (J. Yockey & B. Means eds.):

While still relatively few in number compared to traditional nonprofit and for-profit organizations, the rise of social enterprises represents a possible disruption of not only existing models of doing business but also areas of law that in many respects have seen little fundamental change for decades. One such area is domestic tax law, where social enterprises currently find themselves subject to the rules of for-profit activities and entities. Here, both scholars and policymakers are beginning to ask whether it is either necessary or desirable to modify existing tax provisions to better accommodate social enterprise: that is, whether to create a distinct tax space for social enterprise.

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June 28, 2017 in Scholarship, Tax | Permalink | Comments (0)

Oxford 11th Annual Academic Tax Symposium

OxfordThe 11th Annual Academic Tax Symposium concludes today at the Oxford University Centre for Business Taxation.  Daniel Shaviro (NYU) is the chair of today's session, which includes a number of interesting papers, including:

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June 28, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 27, 2017

Oxford 11th Annual Academic Tax Symposium

OxfordThe 11th Annual Academic Tax Symposium continues today at the Oxford University Centre for Business Taxation with these presentations by U.S. Tax Profs:

Rosanne Altshuler (Rutgers), Shifting the Burden of Taxation from the Corporate to the Personal Level and Getting the Corporate Tax Rate Down to 15 Percent, 69 Nat'l Tax J. 643 (2016) (with Harry Grubert, U.S. Treasury Department)
Discussant:  Edward Kleinbard (USC)

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June 27, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Desai:  The Wisdom of Finance — Discovering Humanity In The World of Risk And Return

HarvardMihir A. Desai  (Harvard), The Wisdom of Finance: Discovering Humanity in the World of Risk and Return (2017):

This book is not about the latest study that will help you make money in the stock market or that will nudge you into saving more.

And it’s not about the optimal allocation of your retirement assets.

This book is about humanizing finance by bridging the divide between finance and literature, history, philosophy, music, movies, and religion.

This book is about how the philosopher Charles Sanders Peirce and the poet Wallace Stevens are insightful guides to the ideas of risk and insurance, and how Lizzie Bennet of Pride and Prejudice and Violet Effingham of Phineas Finn are masterful risk managers. This book looks to the parable of the talents and John Milton for insight on value creation and valuation; to the financing of dowries in Renaissance Florence and the movie Working Girl for insight on mergers; to the epic downfall of the richest man in the American colonies and to the Greek tragedies for insight on bankruptcy and financial distress; and to Jeff Koons’s career and Mr. Stevens of Remains of the Day for insight on the power and peril of leverage.

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June 27, 2017 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Raskolnikov:  Probabilistic Compliance

Alex Raskolnikov (Columbia), Probabilistic Compliance, 34 Yale J. Reg. 491 (2017):

Uncertain legal standards are pervasive but understudied. The key theoretical result showing an ambiguous relationship between legal uncertainty and optimal deterrence remains largely undeveloped, and no alternative conceptual approaches to the economic analysis of legal uncertainty have emerged. This Article offers such an alternative by shifting from the well-established and familiar optimal deterrence theory to the new and unfamiliar probabilistic compliance framework. This shift brings the analysis closer to the world of legal practice and yields new theoretical insights. Most importantly, lower uncertainty tends to lead to more compliant positions and greater private gains. In contrast, the market for legal advice tends to reduce compliance over time — a trend that a regulator may counter either by clarifying the law or by reiterating the law’s continuing ambiguity. If detection is uncertain, the probabilistic compliance framework reveals why, contrary to the prevailing view, the standard damages multiplier should be used to counter detection uncertainty but not legal uncertainty.

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June 27, 2017 in Scholarship, Tax | Permalink | Comments (2)

Monday, June 26, 2017

Oxford 11th Annual Academic Tax Symposium

OxfordThe 11th Annual Academic Tax Symposium kicks off today at the Oxford University Centre for Business Taxation with these presentations by U.S. Tax Profs:

John Brooks (Georgetown), The Definitions of Income, 71 Tax L. Rev. ___ (2017)
Discussant:  Ted Seto (Loyola-L.A.)

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June 26, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Rosenzweig Reviews Rozema's Supply Side Incidence Of Consumption Taxes

Jotwell (Tax) (2016)Adam Rosenzweig (Washington University), How Pigouvian Taxes Work on Sellers, and Why We Should Care (JOTWELL) (reviewing Kyle Rozema (Northwestern), Supply Side Incidence of Consumption Taxes (2017)):

Empirical testing of the tax laws, and in particular testing the incidence of the tax laws, may sound boring. But virtually any modern public policy goal that could be implemented through tax policy ultimately turns precisely on this question. For example: Should the United States adopt a tax on sugary drinks? Is a high cigarette tax effective in preventing smoking deaths? Would a carbon tax help to reduce global warming? Ultimately, the answers to these questions turns on who, in fact, ends up bearing the burden of these taxes.

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June 26, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 70, No. 3 (Spring 2017):

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June 26, 2017 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Sunday, June 25, 2017

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list, with some reshuffling of the orders of the papers within the Top 5:

  1. [223 Downloads]  Can New York Publish President Trump's State Tax Returns?, by Daniel Hemel (Chicago)
  2. [204 Downloads]  The Rise and Fall of the Destination-Based Cash Flow Tax: What Was That All About?, by Daniel Shaviro (NYU)
  3. [180 Downloads]  A Taxonomy for Tax Loopholes, by Heather Field (UC-Hastings)
  4. [140 Downloads]  Shareholder Wealth Effects of Border Adjustment Taxation, by Fabio B. Gaertner (Wisconsin), Jeffrey L. Hoopes (North Carolina) & Edward L. Maydew (North Carolina)
  5. [139 Downloads]  Why Don't White Supremacists Pay Taxes?, by Eric Franklin Amarante (UNLV)

June 25, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, June 23, 2017

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new article by Ari Glogower (Ohio State), Taxing Capital Appreciation, Tax Law Review, Vol. 70, No. 1, 2016.

Gamage (2017)Income and wealth inequality have been rising as issues of national concern.  One would think that these concerns should motivate tax reform proposals designed to address income and wealth inequality.  However, many leading tax law experts believe that the current structure of the U.S. income tax cannot support much higher tax rates at the high end.  As Avi-Yonah and Zelik have persuasively explained, the reason is that we are “trapped” by our realization and capital gains rules.

The realization rule—that gains are not taxed until realized by sale or similar transaction—has long been understood as the “Achilles heel” of the income tax.  The higher the tax rate on capital gains, the more that wealthy taxpayers are incentivized to delay realization of gains, and accelerate realization of losses, while borrowing to the extent that money is needed to fund consumption. Because of these sorts of realization games, economists estimate that the revenue maximizing tax rate on capital gains is probably in the range of between 28% and 32%.  Hiking the capital gains tax rate above this range would thus be expected to decrease revenues.

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June 23, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Today's Law, Society & Taxation Panel

L&SToday's Law, Society, and Taxation panel at the 2017 Law & Society Association Annual Meeting in Mexico City (program here):

Tax Administration and Tax Compliance (David Elkins (Netanya), Chair/Discussant)

  • Richard Beck (New York Law School), Foreign Information Reporting Initiatives
  • Andy Grewal (Iowa), Some Reservations About Treasury's Reserved Powers
  • Ausher Kofsky (Western New England), Congress Should Empower the U.S. Tax Court with Concurrent Jurisdiction Over the Trust Fund Recovery Penalty of 26 U.S.C. § 6672
  • Shu-Yi Oei (Tulane), The Law of the Leak

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

Thursday, June 22, 2017

Morse Reviews Johnson's Seminole Rock in Tax Cases

Jotwell (Tax) (2016)Susan Morse (Texas), The Tax Court: “Insubordinate” or “Prescient” on Auer/Seminole Rock Deference? (JOTWELL) (reviewing Steve Johnson (Florida State), Seminole Rock in Tax Cases, Yale J. Reg. Notice & Comment (2016)):

Auer/Seminole Rock or “ASR” deference is a hot topic right now in administrative law. ASR gives agencies deference when agencies interpret their own regulations, such as in litigation briefs or in guidance. If you want to know how ASR deference works in the tax context, and in particular in the Tax Court, read Steve Johnson’s work. This includes his 2013 article and his entry in the Yale Journal of Regulation’s recent online symposium on ASR deference. ...

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June 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2017 Law & Society Association Annual Meeting in Mexico City (program here):

Economic Justice and Taxation of Wealth (Lisa Philipps (Osgoode Hall), Chair/Discussant)

  • Jennifer Bird-Pollan (Kentucky), Comparative Wealth Transfer Taxation
  • Neil Buchanan (George Washington), Economic Justice and Taxation
  • Montano Cabezas (Georgetown), Migration and Taxation in the Public Imagination
  • Ari Glogower (Ohio State), Progressive Taxation of Income and Wealth

International Aspects of Taxation (Heather Field (UC-Hastings, Chair/Discussant)

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June 22, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Shanske:  Interpreting State Fiscal Constitutions

Darien Shanske (UC-Davis), Interpreting State Fiscal Constitutions: A Modest Proposal, 69 Rutgers L. Rev. ___ (2017):

The fiscal constitutions of many states limit the ability of governments to raise taxes. These same constitutions typically do not impose similar limits on the ability of governments to impose a fee, say a building permit fee. But what if a locality chose to levy a gigantic building permit fee and used the proceeds to fund general services? Such a fee would – and should – be considered a “hidden tax” and thus subject to the same limitations as ordinary taxes.

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June 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, June 21, 2017

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2017 Law & Society Association Annual Meeting in Mexico City (program here):

Critical Tax Theory (Jennifer Bird-Pollan (Kentucky), Chair/Discussant)

  • Leo Martinez (UC-Hastings), U.S. Taxation and Latinos
  • Kerry Ryan (Saint Louis), Hitting Pause on Expanding the Childless Worker EITC
  • Camille Walsh (University of Washington), Taxpayers, Schools, and Race in the Early 20th Century: Separate and Double Taxation

Law & Society Tax Scholarship, Illustrative Examples (Neil Buchanan (George Washington), Chair/Discussant)

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June 21, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Marian Reviews Blank's The Timing Of Tax Transparency

Jotwell (Tax) (2016)Omri Marian (UC-Irvine), Is Tax Transparency A Panacea For Popular Discontent With the Tax Ssytem? (JOTWELL) (reviewing  Joshua D. Blank (NYU), The Timing of Tax Transparency, 90 S. Cal. L. Rev. 449 (2017)):

Tax transparency is all the rage these days. The brouhaha around the disclosure (or, in one instance, the non-disclosure) of presidential candidates’ tax returns during the 2016 presidential campaign brought the matter of tax transparency to the front and center of public discourse in the United States. Around the world, recent revelations that multinational corporations dramatically reduced their tax bills by securing secretive rulings from tax authorities, and that billionaires are able to use intricate offshore shell structures to evade taxation, are causing major popular uproar and a demand for increased transparency on tax matters. The demand is heard by intergovernmental as well as national bodies. For example, the Organisation for Economic Co-operation and Development (OECD) recently adopted country-by-country reporting standards, which would require multinational corporations to disclose to tax authorities their activities and tax payments in each country in which they operate. Remarkably, some countries have announced they are considering making the reports public. Another example is Luxembourg, which—responding to international criticism—recently announced it will start publishing redacted versions of advance tax agreements with taxpayers. This represents a dramatic shift in Luxembourg’s usual secretive tax stance.

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June 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

Journal of Tax Administration Publishes New Issue

JATAThe Journal of Tax Administration has published a new issue (Vol. 3, No. 1 (2017)):

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June 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 20, 2017

Hatfield:  Cybersecurity And Tax Reform

Michael Hatfield (University of Washington), Cybersecurity and Tax Reform, 93 Ind. L.J. ___ (2017):

The IRS collects information on more Americans and handles more money than any other agency. The cybersecurity risks are high. This Article takes seriously both the challenges and the agency's limitations in solving those problems through technological advances. This Article describes the cybersecurity problem as a legal problem for Congress to address rather than merely a digital problem for IRS technicians. By legislation, Congress defines what information is tax relevant, and then the IRS digitally collects, stores, and process the information. Over the years, without any regard for information security, Congress has designed a tax system that requires the IRS to collect more information than it can now protect. But there is ample flexibility for Congress to reform tax law to decrease the information held by the IRS and increase the likelihood the IRS can defend it. This Article explores specific ways in which the tax laws and its administration could be changed to simplify the information needs of the IRS, making its information system both a less appealing and a more defensible cyberattack target. In short, if the tax law were simpler in specific ways, the information technology needs at the IRS would be simpler, and adequate cybersecurity for it would be easier.

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

Thomas Reviews Hayashi's The Tax Effects Of Refund Anticipation Loans

Jotwell (Tax) (2016)Kathleen DeLaney Thomas (North Carolina), Are Tax-Time Financial Products Good for the Poor? (JOTWELL) (reviewing  Andrew Hayashi (Virginia), The Effects of Refund Anticipation Loans On the Use of Paid Preparers and EITC Take-up (2016)):

The conventional wisdom about refund anticipation loans, at least among many academics, is that they are predatory lending products that benefit big businesses at the expense of the poor. Andrew Hayashi turns this notion on its head in his insightful paper, The Effects of Refund Anticipation Loans on the Use of Paid Preparers and EITC Take-up. 

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

Pareja:  The Problem With Using Advanceable, Income-Based Tax Credits To Subsidize Health Insurance

Affordable Care ActMary Leto Pareja (New Mexico), Inviting Everyone to the ACA (Risk) Pool Party: The Problem with Using Advanceable, Income-Based Tax Credits to Subsidize Health Insurance, 20 Fla. Tax Rev. 551 (2017):

The year 2014 marked the first opportunity for American taxpayers to receive subsidized health insurance through the Affordable Care Act’s (“ACA”) new Premium Tax Credit (“PTC”). About 4.8 million people enrolled in an ACA plan in 2014 were eligible, and nearly 97% of these claimants were approved for advance payments of the PTC.

The year 2015 marked the first tax return where taxpayers received the unpleasant surprise that they must repay excess credits due to reconciliation. Advance PTC estimates turned out to be highly inaccurate, with only 8% of claimants receiving accurate advance payments. A majority, 51%, had to repay some or all of the advance payments.

These figures reveal systemic problems in the PTC’s design. While the PTC’s function is to entice the uninsured to purchase insurance (and dive into insurance risk pools), reconciliation lurks as a financial danger for those who make the plunge. A shark is swimming in the pool.

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

Monday, June 19, 2017

Herzfeld:  The Case Against BEPS

BEPS (2017)Mindy Herzfeld (Florida), The Case Against BEPS : Lessons for Coordination:

In 2013 the OECD, at the behest of the G20, embarked upon an ambitious project of coordinating and harmonizing countries’ international tax rules under the guise of curtailing multinational companies’ cross-border tax planning, generally referred to as base erosion and profit shifting, or BEPS. The project was finalized with great fanfare in October 2015. But the proclamations of success masked real underlying differences between participant countries. I argue that the project suffered from a number of flaws that that largely precluded effective coordination, as a result of which the project’s recommendations largely gloss over key differences in participants’ goals and commitments while doing nothing to solve the systemic problems it was seeking to address. For example, while a key stated goal of the project was to align the taxation of profits with value creation, there was no attempt made to define the location of value creation, nor to address the fact that this principle is fundamentally at odds with the arm’s length principle that serves as the backbone of transfer pricing rules.

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

Hayashi Reviews Batchelder's Accounting For Behavioral Considerations In Business Tax Reform

Jotwell (Tax) (2016)Andrew Hayashi (Virginia), Do Taxes Motivate Corporate Managers? (JOTWELL) (reviewing Lily Batchelder (NYU), Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing (2017)):

Tax scholarship is interdisciplinary. To evaluate tax policy it helps to know at least a little about economics, a little about philosophy, something about budget processes, and a lot about the dizzying creativity of the marketplace in exploiting loopholes and facilitating tax-advantaged transactions. In her recent article Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, Lily Batchelder shows us that we must add financial accounting and firm (and corporate managers’) behavioral considerations to the mix.

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