TaxProf Blog

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

Thursday, October 19, 2017

Toder Presents Replacing Corporate Revenues With A Mark-to-Market Tax On Shareholder Income Today At San Francisco

Toder (2017)Eric Toder (Tax Policy Center) presents Replacing Corporate Revenues With a Mark to Market Tax on Shareholder Income (with Alan D. Viard) at San Francisco today as part of its Tax Policy Lecture Series:

We propose reducing the corporate tax rate to 15 percent and replacing the foregone revenue with a tax at ordinary income rates on the accrued, or mark-to-market, income of American shareholders of publicly traded corporations, accompanied by an imputation credit for U.S. corporate income taxes paid. The proposal would dramatically reduce the tax significance of the source of corporate profits and the residence of corporations, both of which can be easily manipulated. Lowering the corporate tax rate to 15 percent would encourage a flow of capital into the United States and reduce incentives to shift reported profits overseas and to engage in inversion transactions, while continuing to impose tax on foreigners who earn economic rents from investing in the United States.

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

McMahon: Pre-Enforcement Litigation Needed For Taxing Procedures

Stephanie Hunter McMahon (Cincinnati), Pre-Enforcement Litigation Needed for Taxing Procedures, 92 Wash. L. Rev. 1317 (2017):

Courts have opened tax guidance to procedural attack. Consequently, taxpayers who are found to owe tax may challenge the validity of the guidance implementing the tax if the procedure used by the Treasury Department in adopting the guidance failed to comply with the Administrative Procedure Act, in particular, with notice-and-comment. This increased willingness to consider tax guidance’s procedural defects offers little to most taxpayers unless they are also given a better means to raise procedural challenges. Under current law and in most circumstances, generally, taxpayers can bring a challenge only after they have been found to owe taxes in an audit and completed an internal IRS appeal process. This delay in the ability to challenge guidance reduces the likelihood taxpayers will challenge the procedure used to create a particular rule. Moreover, delayed litigation requires taxpayers to plan their affairs under the umbrella of guidance that might not survive a procedural challenge. To the extent procedural challenges are accepted in the tax context, this Article argues Congress should narrowly repeal its prior limitations on pre-enforcement litigation of those procedures.

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

Engler: Goodwill Hunting Gone Bad — Tax Law's Outmoded Treatment Of Goodwill

Goodwill HuntingMitchell L. Engler (Cardozo), Goodwill Hunting Gone Bad: Tax Law's Outmoded Treatment of Goodwill, 96 Neb. L. Rev. ___ (2017):

Goodwill reflects the positive consumer association with a business. Goodwill thus overlaps with trademarks and other related assets. This close association impedes the separation of goodwill value from such related assets. Difficulties thus arise when the tax law treats goodwill more (or less) favorably than related intangible assets.

For instance, the tax law previously denied any depreciation deductions for goodwill. Business buyers thus often allocated their costs away from goodwill and towards related assets like depreciable customer lists. The IRS responded with the initial “goodwill hunting” wave, challenging taxpayers’ low goodwill valuations. Congress addressed this litigious area in 1993 with new, matching depreciation rules for purchased goodwill and related intangible assets.

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

Real Property, Trust & Estate Law Journal Publishes New Issue

RPTE (2018)The Real Property, Trust and Estate Law Journal has published Vol. 52, No. 1 (Spring 2017):

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

Wednesday, October 18, 2017

Satterthwaite Presents Electing Into A Value-Added Tax Today At Northwestern

SatterthwaiteEmily Satterthwaite (Toronto) presents Electing into a Value-Added Tax: Evidence from Ontario Micro-Entrepreneurs at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Across countries, value-added tax (VAT) statutes typically recognize the disproportionate burden of VAT compliance for smaller firms by exempting “small suppliers” (defined as businesses with annual revenues less than a specified registration threshold) from the obligation to register for, collect, and remit VAT on their sales.  But most input-credit-style VATs also offer small suppliers a curious choice: they can elect into the VAT by voluntarily registering.  Because VAT paid on inputs is refundable for registered firms, small suppliers have stronger incentives to voluntarily register as they (1) purchase more of their inputs from registered firms (the “input channel”) or (2) sell more of their output to registered firms (the “customer channel”).  In theory, these “formality chain effects” can improve the efficiency of a VAT.  In practice, however, many VATs feature registration thresholds that are far lower in dollar terms than recommended by economists.  Where a registration threshold is very low, might microenterprises’ high VAT compliance costs weaken their incentives to voluntarily register, thereby undermining the policy rationale for offering the election?  This paper uses qualitative and quantitative research methods to explore the relevance of the formality chain effect theory in the context of a low registration threshold.

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

Halpern Presents Litigation In The U.S. Tax Court Today At Pennsylvania

Penn (2017)James S. Halpern (Judge, U.S. Tax Court) presents Litigation in the Tax Court at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

The Tax Court continues to serve a unique and important role in the Federal government’s tax collection process. The Court provides an impartial tribunal for the adjudication of tax disputes before assessment of the tax (and the government’s ability to invoke its powerful extrajudicial means of seizing property to satisfy tax debts). It also creates a body of precedents that interpret Federal tax law uniformly across the country. The Court’s fundamental role has not changed since …

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

Hickman & Kerska: Restoring The Lost Anti-Injunction Act

Kristin E. Hickman (Minnesota) & Gerald Kerska (J.D. 2017, Minnesota), Restoring the Lost Anti-Injunction Act, 103 Va. L. Rev. ___ (2017):

Should Treasury regulations and IRS guidance documents be eligible for pre-enforcement judicial review? The D.C. Circuit’s 2015 decision in Florida Bankers Association v. Treasury puts its interpretation of the Anti-Injunction Act at odds with both general administrative law norms in favor of pre-enforcement review of final agency action and also the Supreme Court’s interpretation of the nearly identical Tax Injunction Act. A 2017 federal district court decision in Chamber of Commerce v. Internal Revenue Service, appealable to the Fifth Circuit, interprets the Anti-Injunction Act differently and could lead to a circuit split regarding pre-enforcement judicial review of Treasury regulations and IRS guidance documents.

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

Pittsburgh Tax Review Publishes New Issue

Tuesday, October 17, 2017

Weisbach Discusses The Unified Framework For Fixing Our Broken Tax Code Today At Columbia

WeisbachDavid A. Weisbach (Chicago) discusses the Treasury Department's Unified Framework For Fixing Our Broken Tax Code at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk.  The discussion builds on David's article, A Guide to the GOP Tax Plan – The Way to a Better Way,  8 Colum. J. Tax L. 171 (2017):

The tax reform plan — A Better Way — put forward by the chairman of the House Ways and Means Committee Kevin Brady and the Speaker of the House, Paul Ryan would be the most substantial tax reform in the United States since the enactment of the income tax in 1913. At the corporate level, the reform would allow immediate expensing of investments, deny deductions for net interest expense, and eliminate the taxation of income from sales in foreign countries while taxing the full value of imports (together shifting the tax base to a destination basis). At the individual level, the system would tax capital income including interest, dividends, and capital gains at half the rate that wages and salaries are taxed. It would also repeal the estate and generation skipping taxes. These changes would go a long way toward shifting the tax system to taxing consumption rather than income.

This paper considers the implementation of the House GOP tax plan and addresses issues that will need to be resolved if the plan is to work as intended. The plan is based on, and builds off of, a long history of thinking about consumption taxes. To understand the basic choices made in the plan, it is helpful to understand this history and how consumption taxes work in general.

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

Sander & Steinbuch: Mismatch And Bar Passage: A School-Specific Analysis

Richard H. Sander (UCLA) & Robert Steinbuch (Arkansas-Little Rock), Mismatch and Bar Passage: A School-Specific Analysis:

Past research on law school mismatch has been hampered by the absence of school-specific data, thus requiring scholars to estimate individual levels of mismatch through various indirect techniques. In this paper, the authors use data on nearly four thousand students at three law schools to directly measure mismatch levels based on LSAT scores or an academic index. The analysis shows large and statistically significant effects of mismatch; when one controls for mismatch, racial effects lose statistical significance. The results highlight the importance of mismatch in explaining both racial bar passage gaps and individual outcomes on the bar. The results also illustrate the great importance of individual school-level data across a range of schools in studying mismatch.

Table 2

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

Shobe:  Supercharged IPOs And The Up-C

Gladriel Shobe (BYU), Supercharged IPOs and the Up-C, 88  U. Colo. L. Rev. 913 (2017):

The “supercharged IPO”, a new and increasingly popular financial transaction, has fundamentally changed the nature of IPOs for many companies. Traditionally, an IPO was a tax nonevent for the company and the owners, meaning it created no tax liability for either. Through creative and questionable tax planning, companies have found a way to do better than this by effectively generating a negative tax liability for the company and its owners. These transactions have received substantial attention from practicing lawyers, investment bankers, journalists, and even briefly caught the attention of Congress. Yet these transactions have attracted surprisingly little scrutiny from scholars, and the attention they have received has failed to consider the different types of supercharged IPOs, which is necessary for understanding why these transactions exist, why they have increased in popularity, and whether they are justified legally and normatively. This Article examines the costs and benefits of the different types of supercharged IPOs to show that some of these transactions have greater tax benefits than scholars have realized. It places a particular emphasis on the Up-C, a structure with the greatest tax benefits, which scholars have overlooked even though it is by far the most common, and increasingly popular, form of supercharged IPO. A closer examination of the Up-C, separate from other supercharged IPOs, reveals that this structure produces tax benefits that are not justified by the regulations that supposedly allow them.

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

Hickman: Altera Meets Chamber Of Commerce

Hickman (2017)TaxProf Blog op-ed:  Altera Meets Chamber of Commerce, by Kristin Hickman (Minnesota):

Last week, a Ninth Circuit panel heard oral arguments in the government’s appeal from Altera Corp. & Subs. v. Commissioner, 145 T.C. 91 (2015).  Frequent readers of this blog will recall that the appeal concerns the Tax Court’s decision to invalidate regulations under Section 482 regarding cost-sharing arrangements on grounds that the regulations were not the product of reasoned decisionmaking as required by the arbitrary and capricious standard of Administrative Procedure Act (APA) § 706(2)(A) and Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983).  For the most part, the oral argument considered the substantive reasonableness of the regulations in question as an interpretation of Section 482, although there was also some discussion of whether the IRS adequately explained its reasoning in the regulatory preamble.  Judge Kathleen O’Malley of the Federal Circuit, sitting by designation, asked a question that in turn raises an interesting issue, particularly in light of recent coverage of Chamber of Commerce v. IRS, in which a federal district court in Texas interpreted the Anti-Injunction Act (AIA), 26 U.S.C. § 7421(a), as allowing pre-enforcement judicial review of an APA procedural challenge against Treasury regulations addressing inversion transactions.

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October 17, 2017 in New Cases, Scholarship, Tax | Permalink | Comments (0)

Yu: Cross-Deductions In The Net Investment Income Tax Imposed On A Trust Or Estate With Separate Shares

Michael T. Yu (California-Western), Cross-Deductions in the Net Investment Income Tax Imposed on a Trust or Estate with Separate Shares, 14 Pitt. Tax. Rev. 77 (2016):

The Health Care and Education Reconciliation Act of 2010 imposed, through new Code § 1411, a tax of 3.8% on certain net investment income (NII) of certain individuals, estates, and trusts for taxable years beginning after December 31, 2012 (the Net Investment Income Tax, or NIIT). Final regulations under § 1411 were published on December 16, 2013, which are effective for taxable years beginning after December 31, 2013.2 Section 1411 and the regulations thereunder, despite imposing the NIIT on certain trusts and estates, contain no reference to § 663 or the regulations thereunder (the separate share rule). Neither § 663(c) nor the regulations thereunder have been amended to reflect new § 1411 or the regulations thereunder. Treasury Regulation § 1.1411-1(a) ostensibly incorporates § 663(c) (and all other Chapter 1 Code provisions that determine taxable income under § 63(a), sometimes referred to in this article as the regular income tax) into determining the NIIT, but I argue that the regulation uses imprecise language and should be amended along the lines of my proposed language.

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

Monday, October 16, 2017

Burman Presents A Tax Credit To Make Work Really Pay Today At Loyola-L.A

Burman (2016)Leonard Burman (Tax Policy Center) presents A Tax Credit to Make Work Really Pay at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Middle class wages have been stagnant for the past four decades, barely keeping up with inflation. This pattern is unlikely to change. The main factor depressing wages for low- and middle-skilled workers is technology. While technology once made workers more productive and boosted wages and employment, technology increasingly substitutes for workers. It is one reason why manufacturing employment in the U.S. has plummeted even as production of manufactured goods has soared. The failure of the market to broadly share the gains from economic growth calls for an intervention.

This paper proposes a universal wage tax credit of 100% of the first $10,000 of earnings financed by a broad-based dedicated value-added tax (VAT) of about 8 percent.

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

Thimmesch, Gamage & Shanske: The Case For Consumer-Based Use Tax Enforcement

Adam B. Thimmesch (Nebraska), David Gamage (Indiana) & Darien Shanske (UC-Davis), The Case for Consumer-Based Use Tax Enforcement, 85 State Tax Notes 1049 (Sept. 11, 2017):

This essay argues that state governments’ current focus on getting vendors to collect their sales and use taxes is insufficient, especially in regard to e-commerce transactions. If state governments want their use taxes to serve as effective and lawful backstops to their sales taxes — as state governments claim is their goal — then states must also focus on the consumer side of the use-tax equation.

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October 16, 2017 in Scholarship, Tax | Permalink | Comments (0)

Sunday, October 15, 2017

Brunson & Herzig: The Treasury Department Should Create Blacklist Of What Constitutes Prohibited Discrimination By Religious Organizations

Samuel D. Brunson (Loyola-Chicago) & David J. Herzig (Valparaiso), A Diachronic Approach to Bob Jones: Religious Tax Exemptions after Obergefell, 92 Ind. L.J. 1175 (2017):

In Bob Jones v. U.S., the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex individuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the recent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of the law.” Constitutional law scholars, such as Lawrence Tribe, are advocating that faith groups might lose their status, citing that this decision is the dawning of a new era of constitutional doctrine in which fundamental public policy will have a more broad application.

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October 15, 2017 in Scholarship, Tax | Permalink | Comments (0)

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 new papers debuting on the list at #3 and #5:

  1. [1,594 Downloads]  Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs,, by Gladriel Shobe (BYU)
  2. [406 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [244 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  4. [230 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  5. [208 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)

October 15, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, October 13, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Sloan Speck (Colorado) reviews a new work by Tsilly Dagan (Bar Ilan University), The Future of Corporate Residency.

Speck (2017)Grim. That, in a word, is Tsilly Dagan’s conclusion in her compelling paper, The Future of Corporate Residency. Although Dagan’s position may not surprise many, the route she takes reveals much about the current—and perhaps future—state of international taxation. Dagan begins at the beginning, tracing multinational corporations as legal constructs from the East India Company to the advent of general incorporation statutes in the second half of the nineteenth century. After a brief discussion of the rise and fall of benefits theories of taxation, Dagan exposits a revival in de facto benefits taxation, at least among multinational corporations. Two factors drive this revival: the “marketization” of corporate residence, in which jurisdictions compete for multinationals’ presence, and the “fragmentation” of the state-derived benefits of incorporation, in which multinationals divide their presence among multiple jurisdictions to create “mix-and-match” legal regimes. Dagan is skeptical that cooperation can overcome marketization and fragmentation. Furthermore, Dagan notes that cooperation may be undesirable, if it entails efficiency losses and disadvantages developing countries.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Camp: FDR And The Forgotten History Of The Earned Income Tax Credit

FDRBryan Camp (Texas Tech), Franklin Roosevelt and the Forgotten History of the Earned Income Tax Credit, 20 Green Bag 2d 337 (2017):

On his 1934 income tax return, Franklin Roosevelt claimed an "earned income credit" of $1,400. We usually think of the Earned Income Tax Credit (ETIC) as a subsidy for the poor. This article recovers the original history of the credit back when it was a subsidy for the rich, or at least wealthy taxpayers who earned their wealth through their labor. The purpose of this credit, which lasted up until WWII, was to offset the huge tax preference given to wealthy taxpayers whose income came from capital.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Michigan Hosts International Tax Law Conference Today On Perspectives On The Multilateral Instrument

Michigan Law Logo (2015)Michigan hosts an International Tax Law Conference today on  Perspectives on the Multilateral Instrument:

Join tax specialists and international law experts from universities, private practice, and global institutions as they explore the impact of the recently signed Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI, which has been signed by almost 70 jurisdictions, will modify many existing bilateral tax treaties by introducing anti-tax avoidance measures.

Pasquale Pistone (IBFD), Dispute Settlement under the MLI and the EU Arbitration Convention
Commentator: Kim Brooks (Dalhousie)

Richard Reinhold (Willkie Farr), Article 7 and Prevention of Treaty Abuse
Commentator: Reuven Avi‐Yonah

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October 13, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Kahng: Who Owns Human Capital?

Lily Kahng (Seattle), Who Owns Human Capital?, 94 Wash. U. L. Rev. 607 (2017):

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

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (1)

Camp: Equitable Principles And Jurisdictional Time Periods

Bryan Camp (Texas Tech), Equitable Principles and Jurisdictional Time Periods, Part 1, 156 Tax Notes 1397 (Sept. 11, 2017):

Like other federal courts, the Tax Court is very, very cautious about not overstepping its Congressionally-given bounds. However, the Tax Court also strives to allow taxpayers their day in Court. These two impulses — the caution to stay within the statutory grants of power and the drive to decide cases on the merits — sometimes collide. When that happens, the Tax Court struggles in applying the relevant limitation period and, as a result, sometimes lies or cheats. It sometimes lies by claiming that it may not apply equitable principles to the relevant limitation period. It sometimes cheats by accomplishing the same result by manipulating facts to bring a case within the relevant time period. It sometimes does both at the same time.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Effect Of Tax Subsidies To Fossil Fuel Companies On U.S. Crude Oil Production

Peter Erickson (Stockholm Environment Institute), Adrian Down (Stockholm Environment Institute), Michael Lazarus (Stockholm Environment Institute) & Doug Koplow (Earth Track), Effect of Subsidies to Fossil Fuel Companies on United States Crude Oil Production:

Countries in the G20 have committed to phase out ‘inefficient’ fossil fuel subsidies. However, there remains a limited understanding of how subsidy removal would affect fossil fuel investment returns and production, particularly for subsidies to producers. Here, we assess the impact of major federal and state subsidies on US crude oil producers. We find that, at recent oil prices of US$50 per barrel, tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing US oil production by 17 billion barrels over the next few decades. This oil, equivalent to 6 billion tonnes of CO2, could make up as much as 20% of US oil production through 2050 under a carbon budget aimed at limiting warming to 2 °C. Our findings show that removal of tax incentives and other fossil fuel support policies could both fulfil G20 commitments and yield climate benefits.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, October 12, 2017

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 36, No. 2 (Summer 2017):

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

Soled & Alm: W(h)ither The Tax Gap?

Jay A. Soled (Rutgers) & James Alm (Tulane), W(h)ither the Tax Gap?:, 92 Wash. L. Rev. 521 (2017):

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

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

McCormack: Postpartum Taxation And The Squeezed Out Mom

Shannon Weeks McCormack (University of Washington), Postpartum Taxation and the Squeezed Out Mom, 105 Geo. L.J. 1323 (2017):

Faced with too-short (or nonexistent) maternity leaves, inflexible work schedules, and the soaring costs of childcare in the United States, many new mothers temporarily leave the workforce to care for their young children. Although media attention has focused on the “opt-out” mom, many more mothers are squeezed out of the external workplace. But mothers that try to return to work may discover that it is difficult to do so, as employers have been shown to be less likely to hire mothers than others. A mother that does reenter may find that even short periods out of work cost (sometimes far) more than the income foregone during her intended time out and may result in a reduction in her overall earning potential, retirement, disability, and Medicare benefits. This may contribute to severe economic hardships among divorced mothers and their children, the underrepresentation of women in high-level leadership positions, and a wage gap between mothers and others, to name a few problems.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (4)

Doran: Uncapping Executive Pay

Michael Doran (Virginia), Uncapping Executive Pay, 90 S. Cal. L. Rev. 815 (2017) (reviewed here):

This article sets out the case for repealing the $1 million tax cap on executive pay. The cap is easily avoided and, when not avoided, widely ignored. Since enactment in 1993, the cap has had little effect in reducing executive pay or in linking pay to performance. Even worse, the cap increases corporate tax liabilities — liabilities that likely burden workers and investors. In effect, the cap punishes rank-and-file employees and shareholders for pay deals made by directors and executives. This article demonstrates why prominent reform proposals would be ineffective and counterproductive. It then devises a novel reform approach — a confiscatory tax on excessive executive pay — that would limit executive pay without burdening workers or investors.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (1)

Avi-Yonah: The Structural Problems Of The Tax Reform Framework

Trump Tax ReformReuven S. Avi-Yonah (Michigan), Slicing and Dicing: The Structural Problems of the Tax Reform Framework:

The Unified Framework for Fixing Our Broken Tax Code (the “Framework”) released by the “Big Six” group of Treasury, White House and Congressional leaders on September 27 has been the focus of a lot of commentary. Most of the comments have focused on the distributive aspects of the plan and on the proposed rate structure, as well as the impact on revenues and the federal deficit.

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

Wednesday, October 11, 2017

Marian Presents Is All Corporate Tax Planning Good For Shareholders? Today At Penn

Marian (2016)Omri Marian (UC-Irvine) presents Is All Corporate Tax Planning Good for Shareholders at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

Multiple commentators argue that corporate managers have an affirmative duty to engage in corporate tax planning. Underlying this argument is the assumption that reduced corporate tax liability enhances shareholder value. In this article, I explain that this common perception is frequently incorrect. Corporate tax reduction schemes may increase the overall tax burden on shareholders. I make the following descriptive arguments in this regard:

First, I show that in many cases, successful (and legal) corporate tax planning schemes are not Pareto-optimal to shareholders. Some classes of shareholders (generally, tax-exempt shareholders) may see a net benefit, while other shareholders (usually taxable shareholders) experience a net loss. Second, I show that in certain instances it is reasonable to expect that legal corporate tax planning schemes will be overall inefficient. Meaning, the losses to taxable shareholders may exceed the gains to tax-exempt shareholders. Lastly, I show that because of an underappreciated agency problem, shareholders approve inefficient corporate tax plans, even when information about the potential detriment is freely available.

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

Cockfield Presents What's International Tax Law Got To Do With It? Today At Toronto

Cockfield (2016)Arthur Cockfield (Queen's) presents What's International Tax Law Got to do With It? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The OECD and G20 Base Erosion and Profits (BEPS) project represents the greatest multilateral cooperative effort to date to inhibit aggressive international tax planning and offshore tax evasion. While accepting that cooperation is normally helpful, the Article explores some of the theoretical and practical limits to international tax cooperation along with the potential for unilateral tax reform to confront pressing challenges.

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

Stanford Symposium: Lawyers And Leadership

Stanford 2

Symposium, Raising the Bar: Lawyers and Leadership, 69 Stan. L. Rev. 1593-1853 (2017):

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

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 70, No. 4 (Summer 2017) (State and Local Tax Edition):

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October 11, 2017 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Johnson: A Conceptual Framework For Capital Gain

Florida Tax Review  (2015)Calvin H. Johnson (Texas), A Conceptual Framework for Capital Gain, 20 Fla. Tax Rev. 664 (2017):

Qualification for preferential tax rates on capital gain is “fuzzy at best and incoherent at worst.” The primary governing statute provides that sale or exchange of “property” yields capital gain, with only narrow exceptions. Under traditional understanding, however, capital gain does not include income, including rent, interest, compensation, and periodic business income, even though such income is received on the sale of something reasonably considered to be “property” in nontax contexts. A conceptual framework is needed that brings both courts and congressional rules into consistency and produces principled results; this Article presents such a framework.

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

Tuesday, October 10, 2017

Greene Presents Welfare Reform, Consumer Credit, And Inequality Today At Columbia

GreeneSara Sternberg Greene (Duke) presents The Bootstrap Trap: Welfare Reform, Consumer Credit, and Inequality, 67 Duke L. J. (2017) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

In the mid-1990s, Congress fundamentally altered the public safety net when it passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, otherwise known as welfare reform. Under the PRWORA, cash assistance was no longer an entitlement for income-qualifying families; instead, recipients faced work requirements and lifetime limits on receiving benefits. Bipartisan reformers sought to transform welfare from a program believed to trap poor mothers in a “culture of dependence” into a program that would promote a culture of “self-sufficiency” and “personal responsibility.” This shift in culture, it was argued, would ultimately lead to upward mobility. This Article shows how, ironically, over twenty years after welfare reform, the private safety net that many struggling families rely on — the credit system — disincentivizes the very self-sufficient behavior that welfare reformers had hoped to promote.

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October 10, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mason Presents Are Tax Rulings Selective? Today At Boston College

Mason (2016)Ruth Mason (Virginia) presents State Aid Special Report – Part 6: Are Tax Rulings Selective? at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu Yi Oei:

The scope of EU state-aid enforcement in the tax area is unpredictable.  Lawyers in Europe worry that tax policies as quotidian as participation exemption and as central as territoriality may constitute state aid.  This legal uncertainty arises in part because the Commission uses the state-aid rules to pursue a number of conflicting values, and it does not always specify clearly in each case what value it pursues. The goals of state-aid control ought to be more clearly articulated, and the Commission’s enforcement actions should be limited by those goals.  Such limitations could be self-imposed by the Commission, using clearer published guidance and more explicit reasoning in decisions, or such limitations could from the EU courts via judicial review of the Commission’s state-aid decisions.  

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October 10, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Monday, October 9, 2017

Liscow Presents Is Efficiency Biased? Today At Loyola-L.A.

Liscow (2017)Zachary Liscow (Yale) presents Is Efficiency Biased? at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

The most common underpinning of economic analysis of the law has long been the goal of efficiency (i.e., choosing policies that maximize people’s willingness to pay), as reflected in economic analysis of administrative rulemaking, judicial rules, and proposed legislation. Current thinking is divided on the question whether efficient policies are biased against the poor, which is remarkable given the question’s fundamental nature. Some say yes; others, no.

I show that both views are supportable and that the correct answer depends upon the political and economic context and upon the definition of neutrality.

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October 9, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Sunday, October 8, 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 #2 and #5:

  1. [717 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [493 Downloads]  Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs,, by Gladriel Shobe (BYU)
  3. [374 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  4. [264 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)
  5. [208 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard),

October 8, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, October 6, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Orly Mazur (SMU) reviews a new draft article by Karen Burke (Florida), Exploiting the Medicare Tax Loophole.

Mazur (2017-2)Employment taxes comprise an important source of federal tax revenue. Traditionally, only an individual’s earned income was subject to these taxes. However, with the introduction of Section 1411, the tax law now also subjects the unearned income of high-income individuals to a 3.8% Medicare tax (“Unearned Income Medicare Contribution”). Thus, the current law attempts to subject both the earned and unearned income of high earners to the Medicare tax. Unfortunately, not all high income taxpayers pay their fair share of this tax.

Karen Burke’s new work explains the various tax planning techniques that taxpayers currently use to avoid the 3.8% Medicare tax imposed on wages and net self-employment earnings and the 3.8% Medicare tax imposed by Section 1411 on unearned income. In particular, she illustrates how high-income owner-employees can avoid contributing to Medicare financing by providing services as an active limited partner of a state law limited partnership, by conducting business operations as an owner-employee of an S corporation, or by using tiers of entities to circumvent the employment tax rules. 

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October 6, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Fleming, Peroni & Shay: Incorporating A Minimum Tax In A Territorial System

J. Clifton Fleming Jr. (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Incorporating a Minimum Tax in a Territorial System, 157 Tax Notes 73 (Oct. 2, 2017):

In this report, Fleming, Peroni, and Shay analyze the effects of including a final, low-rate minimum tax on U.S. multinational corporations in a territorial system. They continue to prefer a real worldwide international tax system, but see a final, low-rate minimum tax as a second-best measure to reduce the revenue loss of a territorial system.

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

Thursday, October 5, 2017

Walker Presents The Practice And Tax Consequences Of Nonqualified Deferred Compensation At Penn

Walker (2016)David Walker (Boston University) presented The Practice and Tax Consequences of Nonqualified Deferred Compensation at Pennsylvania yesterday as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

Although nonqualified deferred compensation plans lack explicit tax preferences afforded qualified plans, it is well understood that nonqualified deferred compensation results in a joint tax advantage when employers earn a higher after-tax return on deferred sums than employees could achieve on their own. Several commentators have proposed tax reform aimed at leveling the playing field between cash and nonqualified deferred compensation, but reform is not easily achieved. This Article examines the stakes.

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October 5, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wednesday, October 4, 2017

Mason Presents Whose Arm's-Length Standard? Today At Northwestern

Mason (2016)Ruth Mason (Virginia) presents Tax Rulings as State Aid — Part 4: Whose Arm's-Length Standard?, 155 Tax Notes 947 (May 15, 2017), at Northwestern as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

In this fourth part in a series of reports on state aid, Mason focuses on the element of “advantage” in EU state aid law, and she criticizes the European Commission’s doctrinal approach to identifying advantages for state aid purposes. In particular, this article addresses the divergence between the EC’s and OECD’s conceptions of the arm’s-length principle. ...

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October 4, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Corporate Response To Government Attacks On Tax Shelters

Noel Brock (Eastern Michigan), Edward Schnee (Alabama) & Shane Stinson (Alabama), The Corporate Response to Government Attacks on Tax Shelters, 8 Int'l J. Fin. Res. (2017):

We examine the effectiveness of four federal government actions, all of which were designed to curb the proliferation of corporate tax shelters dating back to the 1990s, at eliciting measurable changes in characteristics commonly associated with tax shelter firms. Our results suggest that the government’s initial attacks on corporate tax shelters in the early 2000s elicited significant declines in book-tax differences, discretionary accruals, and the use of Big N audit firms, which contributed to gradual reductions in the estimated likelihood of tax sheltering for both multinational and purely domestic firms. Conversely, later attempts to discourage corporate tax shelters proved ineffective, likely due in part to the effectiveness of previous government attacks and a faltering economy.

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October 4, 2017 in Scholarship, Tax | Permalink | Comments (1)

Tuesday, October 3, 2017

Fullerton Presents Vertical And Horizontal Redistributions From A Carbon Tax And Rebate Today At Columbia

FullertonDon Fullerton (Illinois) presents Vertical and Horizontal Redistributions from a Carbon Tax and Rebate (with Julie-Anne Cronin (U.S. Treasury Department) & Steven Sexton (Duke)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Because electricity is a higher fraction of spending for those with low income, carbon taxes are believed to be regressive. Many argue, however, that their revenues can be used to offset the regressivity. We assess these claims by employing data on 322,000 families in the U.S. Treasury’s Distribution Model to study vertical redistributions between rich and poor, as well as horizontal redistributions among families with common incomes but heterogeneous energy intensity of consumption (different home heating and cooling demands).

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October 3, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Christians: Residence And Citizenship By Investment

Allison Christians (McGill), Buying in: Residence and Citizenship by Investment, 61 St. Louis U. L.J. ___ (2017):

States have complex and often conflicted attitudes toward migration and citizenship. These attitudes are not always directly expressed by lawmakers, but they may be reflected quite explicitly in tax regimes: for the world’s most prosperous individuals and their families, multiple states extend a warm welcome. Sometimes prospective migrants are offered fast track to physical residence which can lead to citizenship if the migrant desires it. Others are offered a mere commercial transaction, with citizenship granted to applicants with the right credentials and a willingness to pay. Migrants might seek to obtain residency or citizenship for personal, family, economic, or tax reasons, or some combination of them. For the granting country, the tax significance of obtaining new residents or citizens will vary depending on domestic policy goals. However, the consequences of residence and citizenship by investment programs could be severe for the international tax regime: the jurisdiction to tax and the allocation of taxing rights among countries are commonly based on residence and citizenship factors.

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October 3, 2017 in Scholarship, Tax | Permalink | Comments (0)

Sitkoff: The Rise Of Trust Decanting In The United States

Robert H. Sitkoff (Harvard), The Rise of Trust Decanting in the United States, 23 Trusts & Trustees ___ (2017):

In a trust decanting, a trustee who under the terms of a trust (the first trust) has a discretionary power over distribution uses that power to distribute the trust property to a new trust (the second trust) with updated provisions, leaving behind the sediment of the first trust’s stale provisions. This article canvasses the rise of trust decanting in American trust practice, taking notice of its common law origins, its contrast with traditional American doctrine on trust modification and termination, the proliferation of state trust decanting statutes, and several areas of doctrinal divergence across the states.

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October 3, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, October 2, 2017

Kleinbard Presents The Right Tax At The Right Time Today At Loyola-L.A.

Kleinbard (2015)Edward Kleinbard (USC) presents The Right Tax at the Right Time, 20 Fla. Tax Rev. ___ (2017), at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

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.

The  idea of the Dual Business Enterprise Income Tax, or Dual BEIT, is to offer business enterprises a neutral profits tax environment in which to operate, in which normal returns to capital are exempt from tax by means of an annual capital account allowance termed the Cost of Capital Allowance (COCA). In turn, investors in firms include in income each year the same COCA rate, applied to their tax basis in their investments. The result is a single tax on capital income (rents plus normal returns), where the tax on normal returns is imposed directly on the least mobile class of taxpayers. Labor income continues to be taxed at progressive tax rates.

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October 2, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Morse Reviews Lawsky's Formalizing The Code

Jotwell (Tax) (2016)Susan Morse (Texas), When the Life of the Law Is Logic (JOTWELL) (reviewing Sarah Lawsky (Northwestern), Formalizing the Code, 70 Tax L. Rev. 377 (2017):

In Formalizing the Code, Professor Sarah Lawsky offers a glimpse of what might be gained if law were written in formal logic language. It might be written by machine-language specialists attached to Congressional tax-writing committees. It could reduce unintentional ambiguity and complexity. Computers could understand it.

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October 2, 2017 in Scholarship, Tax | Permalink | Comments (0)

Sunday, October 1, 2017

Hackney: Subsidizing The Heavenly Chorus — Labor Unions And Tax Exemption

Philip Hackney (LSU), Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption, 91 St. John's L. Rev. ___ (2017):

Labor Unions are nonprofit organizations that provide laborers a voice before their employer and before governments. They are classic interest groups. United States federal tax policy exempts labor unions from the income tax, but effectively prohibits labor union members from deducting union dues from the individual income tax. Because these two policies directly impact the political voice of laborers, I consider primarily the value of political fairness in evaluating these tax policies rather than the typical tax critique of economic fairness or efficiency. I apply a model that presumes our democracy should aim for one person, one political voice. For the model, political voice means the ability of citizens to participate in setting and discussing the political agenda and to vote on any final decision. In a modern democratic state, citizens largely depend upon organized interest groups to fulfill this role of political voice. In the Article, I demonstrate that tax policy applicable to labor unions likely modestly harms political voice equality.

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October 1, 2017 in Scholarship, Tax | Permalink | Comments (0)

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. [687 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [359 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [252 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)
  4. [198 Downloads]  Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, by George Yin (Virginia)
  5. [139 Downloads]  Inverted Theories, by Lee Anne Fennell (Chicago) & Richard H. McAdams (Chicago)

October 1, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, September 29, 2017

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new draft article by Allison Christians (McGill Law), Buying in: Residence and Citizenship by Investment.

Gamage (2017)Want to buy yourself a citizenship?  According to Christians’s new draft article, doing so from Panama would cost you $5,000 USD, doing so from the United Kingdom would cost you $62,525 USD, and doing so from Singapore would cost you $1,794,000 USD.

Would this be worth the cost?  Christians discusses how some of these nations hope to attract wealthy citizens from other nations.  However, emigrating from the U.S. is harder to accomplish, at least from a tax perspective, due the U.S. practice of taxing its citizens on worldwide income.  Christians thus also discusses barriers to exit, again from a citizenship tax perspective. 

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September 29, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)