TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, May 31, 2016

White:  Cost Sharing Agreements And The Arm's Length Standard

Florida Tax Review  (2015)Sienna Carly White (Jones Day, Cleveland), Cost Sharing Agreements & The Arm's Length Standard: A Matter of Statutory Interpretation?, 19 Fla. Tax Rev. ___ (2016):

The arm’s length standard has been the touchstone of international transfer pricing and Internal Revenue Code Section 482 for the better part of a century, but its relevance is under scrutiny. A growing consensus among the international community suggests the arm’s length standard is no longer adequate to accurately and fairly tax the multinational enterprises that make up the modern global economy. In this paper, I examine the implications of the Xilinx saga and conclude that both the Ninth Circuit and the IRS were incorrect: the arm’s length standard should function as a legal principle, with explicit exceptions, rather than as a legal rule.

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

Gerzog:  Toward A Reality-Based Estate Tax

Wendy Gerzog (Baltimore), Toward a Reality-Based Estate Tax, 57 B.C. L. Rev. ___ (2016):

Currently, the estate tax does not accurately value the property and transactions that it is meant to cover. Additionally, the marital and charitable deductions do not reflect actual associated transfers, instead skewing their benefits away from their purported beneficiaries. This Article proposes reforming the estate tax by eliminating these sources of unreality and distortion, and to make the current estate tax a reality-based tax.

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

Sunday, May 29, 2016

The Top 5 Tax Paper Downloads

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

  1. [429 Downloads]  The Panama Papers and Tax Morality, by Usman W. Chohan (University of New South Wales)
  2. [366 Downloads]  Google's 'Alphabet Soup' in Delaware, by Bret Bogenschneider (Vienna) & Ruth Heilmeier (Cologne)
  3. [293 Downloads]  New Prominence Of Tax Basis In Estate Planning, by Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers)
  4. [162 Downloads]  'Death Tax' Politics, by Michael J. Graetz (Columbia)
  5. [156 Downloads]  Supercharged IPOs, the Up-C, and Private Tax Benefits in Public Offerings, by Gladriel Shobe (BYU)

May 29, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 28, 2016

Study Shatters Myth That Millionaires Migrate To Low Tax States

Cristobal Young (Stanford), Charles Varner (Stanford), Ithai Z. Lurie (U.S. Treasury Department, Office of Tax Analysis) & Richard Prisinzano (U.S. Treasury Department, Office of Tax Analysis), Millionaire Migration and Taxation of the Elite: Evidence from Administrative Data, 81 Am. Sociological Rev. 421 (2016):

All StatesA growing number of U.S. states have adopted “millionaire taxes” on top income-earners. This increases the progressivity of state tax systems, but it raises concerns about tax flight: elites migrating from high-tax to low-tax states, draining state revenues, and undermining redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from places where they have been highly successful? This question is central to understanding the social consequences of progressive taxation. We draw on administrative tax returns for all million-dollar income-earners in the United States over 13 years, tracking the states from which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale panel data on top income-earners. We advance two core analyses: (1) state-tostate migration of millionaires over the long-term, and (2) a sharply-focused discontinuity analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.

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May 28, 2016 in Scholarship, Tax | Permalink | Comments (8)

Friday, May 27, 2016

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

Thursday, May 26, 2016

Blank Presents The Timing Of Tax Transparency Today In Sweden

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

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

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

Hemel Reviews Taxing The Rich: A History Of Fiscal Fairness In The United States And Europe

TaxingFollowing up on last week's postDaniel Hemel (Chicago), Taxation as Compensation (reviewing   Kenneth F. Scheve (Stanford) & David Stasavage (NYU), Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton University Press, 2016)):

According to Scheve and Stasavage . . . , “the story of taxing the rich has more to do with politics” than with fiscal constraints . . . . For Scheve and Stasavage, “politics” specifically means rhetoric: their answer to the “why” question focuses on the types of tax fairness arguments that advocates for redistribution have employed. Scheve and Stasavage direct their attention (and ours) to three particular tax fairness claims. The first is what they call the “equal treatment” argument: “the fairest system involves equal treatment for all” (p. 6). The second is what they describe as “the ability to pay doctrine”: each additional dollar of taxation represents less of a sacrifice for someone earning $10 million a year than for someone earning $10,000, and so a progressive tax system imposes a roughly equal burden on the rich as on the poor even while the rich pay much more in dollar terms. The third type of argument is “compensatory”: “taxing the rich more heavily than the rest serves to correct or compensate for some other inequality in government action” (p. 5). According to Scheve and Stasavage, the last type of argument is the only one that historically has justified highly progressive rate structures. ...

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

Wednesday, May 25, 2016

Graetz:  Essays On International Taxation

GraetzMichael J. Graetz (Columbia), Follow the Money: Essays on International Taxation (Yale May 2016) (free download (PDF, EPUB (iPad, Noble), MOBI (Kindle)), book (amazon)):

Publicity about tax avoidance techniques of multinational corporations and wealthy individuals has moved discussion of international income taxation from the backrooms of law and accounting firms to the front pages of news organizations around the world. In the words of a top Australian tax official, international tax law has now become a topic of barbeque conversations. Public anger has, in turn, brought previously arcane issues of international taxation onto the agenda of heads of government around the world.

Despite all the attention, however, issues of international income taxation are often not well understood. In this collection of essays, written over the past two decades, renowned tax expert Michael J. Graetz reveals how current international tax policy came into place nearly a century ago, critiques the inadequate principles still being used to make international tax policy, identifies and dissects the most prevalent tax avoidance techniques, and offers important suggestions for reform. This book is indispensable for anyone interested in international income taxation.

Praise for Follow the Money:

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May 25, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (2)

More On Canaries In The Law School Coal Mine

CanaryFollowing up on my previous posts on canaries in the law school coal mine:

Jeremy R. Paul (Dean, Northeastern), Saving the Canary, 66 Syracuse L. Rev. ___ (2016):

It’s hard not to admire Rick’s turn of phrase observing that law schools resemble the canary in the coal mine because downward pressure on tuition increases, with potentially harmful consequences, is hitting law schools just a few years ahead of when it will batter our partners around campus [Richard A. Matasar, The Canary in the Coal Mine: What the University Can Learn from Legal Education, 45 McGeorge L. Rev. 161 (2013)]. Yet faculty members throughout the country wonder why things seem suddenly out of control. ...

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May 25, 2016 in Legal Education, Scholarship | Permalink | Comments (0)

Bird-Pollan:  Why Tax Wealth Transfers? A Philosophical Analysis

Jennifer Bird-Pollan (Kentucky), Why Tax Wealth Transfers? A Philosophical Analysis, 57 B.C. L. Rev. ___ (2016):

The one-hundredth anniversary of the estate tax provides an ideal moment to reflect on the role of wealth transfer taxation in the larger scheme of the U.S. tax system. Wealth and income inequality are at historically high levels, and the responses to these issues are often reduced to a simplistic political dichotomy of “right” versus “left.” The multitude of views of the American people cannot be reduced to such simple generalities without losing important nuances. This Article identifies three general categories of political philosophical viewpoints that are commonly endorsed by both politicians and everyday Americans, and then examines the current estate tax from within the perspective of those positions.

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May 25, 2016 in Scholarship, Tax | Permalink | Comments (1)

2d Annual Mid-Career Tax Professors Workshop Concludes At UC-Davis

UC Davis Logo (2016)Panel #5:  Issues in Enforcement and Inter-Governmental Relations

David Gamage (UC-Berkeley), Tax Cannibalization and Fiscal Federalism in the United States, 110 Nw. U. L. Rev. ___ (2016)
Commentator: Adam Rosenzweig (Washington University)

Dennis Ventry (UC-Davis), Stitches for Snitches: Lawyers as Whistleblowers, 50 U.C. Davis L. Rev. ___ (2017)
Commentator: Will Foster (Arkansas)

Darien Shanske (UC-Davis), State Fiscal Constitutions and the Common Law of Public Finance
Commentator: Jake Brooks (Georgetown)

Panel #6:  Insurance and Employee Benefits

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May 25, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Tuesday, May 24, 2016

Morse:  Safe Harbors, Sure Shipwrecks

Safe HarborSusan C. Morse (Texas), Safe Harbors, Sure Shipwrecks, 49 U.C. Davis L. Rev. 1385 (2016):

In law, a safe harbor describes behavior that will not be penalized, and leaves other facts that fall outside the safe harbor to be judged case-by-case. A sure shipwreck, as I call it, is the mirror image. It describes behavior that violates the law as a matter of rule, and leaves other conduct to be judged by a standard. Prior literature analyzes rules and standards at length. But it has largely missed safe harbors and sure shipwrecks, even though these hybrids are everywhere in statutory, regulatory and case law.

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

Leff:  Tax Benefits Of Government-Owned Marijuana Stores

CannabisBenjamin M. Leff (American), Tax Benefits of Government-Owned Marijuana Stores, 50 U.C. Davis L. Rev. ___ (2016):

Over a year ago (March 7, 2015), a little store called the Cannabis Corner opened up in the small town of North Bonneville, Washington, about an hour by car from Portland, Oregon. The Cannabis Corner is the first marijuana store to be operated by a “public development authority,” an independent entity created by a state or local government. Public development authorities are generally exempt from federal income taxes under section 115 of the Internal Revenue Code. For a marijuana business, this exemption is especially valuable because section 280E of the Code currently prevents marijuana businesses from deducting many of the ordinary expenses other businesses regularly deduct, resulting in extremely high federal income taxes.

This Article is the first to address whether independent governmental affiliates that sell marijuana are exempt from federal income tax under section 115 of the Internal Revenue Code.

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

Duff:  Four Alternatives To The Estate And Gift

David G. Duff (British Columbia), Alternatives to the Gift and Estate Tax, 57 B.C. L. Rev. ___ (2016):

Following the near death experience of the federal gift and estate tax in 2010, the hundredth anniversary of the tax represents an ideal moment to reflect on the role of this tax and whether an alternative approach might be more desirable and sustainable. This Article examines four prominent alternatives to the current tax: an annual wealth tax, taxing unrealized gains at death, including gifts and inheritances in income, and a lifetime accessions tax that would apply to the cumulative value of gifts and inheritances received by individuals over their lifetimes.

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

Monday, May 23, 2016

Hayashi Reviews Marian's The State Administration Of International Tax Avoidance

Jotwell (Tax) (2016)Andrew Hayashi (Virginia), Putting a Face to International Tax Avoidance, JOTWELL (May 20, 2016) (reviewing Omri Marian (UC-Irvine), The State Administration of International Tax Avoidance, 7 Harv. Bus. L. Rev. ___ 2016)):

The world of international tax avoidance is a colorful one. There are the legal structures, with names like the “Double Irish Dutch Sandwich,” the exotic locales, like Bermuda and the Cayman Islands, and the identity crises presented by “hybrid” entities and financial instruments. But rarely does international tax avoidance have a human face and one could be forgiven for getting the impression that falling effective corporate tax rates are as inevitable as water flowing downhill. Corporations, acting in the interests of their shareholders, maximize their after-tax profits. States, acting in the best interests of their residents, set tax policies that are incongruous with the policies of other states. The “bad actors,” if there are any in this story, are corporate aggregates of one sort or another, multinational corporations and tax haven countries.

But the LuxLeaks scandal has given us one human face that stands out from the crowd of aggregates. This is the face of Marius Kohl or “Monsieur Ruling,” the former head of the Luxembourg agency, who gave rulings to taxpayers on the tax treatments of their proposed transactions. In The State Administration of International Tax Avoidance, Omri Marian does a wonderful job of explaining how this one bureaucrat acted to facilitate massive tax avoidance by engaging in “arbitrage manufacturing.” Marian argues that rogue individuals pose an ongoing threat to international tax cooperation. His paper clearly explains how arbitrage can be manufactured, documents how it was done in Luxembourg, and draws from the LuxLeaks episode an important lesson about the need to integrate micro reforms of tax administration into the macro project of international tax harmonization efforts. ...

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May 23, 2016 in Scholarship, Tax | Permalink | Comments (1)

Report:  The Tax Code Is Out Of Step With Today's On-Demand Platform Economy

KogodTax Policy Center, Kogod School of Business, American University,  Shortchanged: The Tax Compliance Challenges of Small Business Operators Driving the On-Demand Platform Economy

The last time Congress enacted substantial tax reform—in 1986—only 8.2% of American households owned personal computers. Today, more than 87% of American adults own a mobile phone and on-demand platforms like Uber, Etsy, Lyft, Airbnb, HomeAway, Amazon, and TaskRabbit have become household names by connecting businesses and consumers. Although millions of Americans are engaging in the on-demand platform economy every day as sellers and service providers, the tax compliance challenges this new frontier presents have gone relatively unnoticed. At the same time, these challenges will grow with this fastest growing segment of the labor economy— creating unnecessary and ongoing burdens for the small business operators who power the on-demand economy. 

This report, in keeping with the mission of the Kogod Tax Policy Center to conduct non-partisan research on tax issues specific to small businesses and entrepreneurs, identifies the tax compliance challenges the on-demand economy presents for its small business operators. Having spent more than a year investigating this growing problem, we report that:

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May 23, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

2d Annual Mid-Career Tax Professors Workshop Kicks Off Today At UC-Davis

UC Davis Logo (2016)Panel #1:  Tax Administration

Susie Morse (Texas), Regulating by Example
Commentator: Emily Cauble (DePaul)

Sarah Lawsky (Northwestern), Picturing the Code
Commentator: David Gamage (Berkeley)

Will Foster (Arkansas), Uncoupling Competence
Commentator: Dennis Ventry (UC-Davis)

Panel #2:  International

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May 23, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Simkovic Presents What Can We Learn from Credit Markets At ALI

ALI Logo (2015)American Law Institute 93rd Annual Meeting:

[On] the last day of the Annual Meeting ... Young Scholar Medal Recipient Michael Simkovic of Seton Hall University School of Law presented What Can We Learn from Credit Markets. He opened with a quote from, Oliver Wendell Holmes from his address entitled The Path of the Law: “For the rational study of the law, the blackletter man may be the man of the present, but the man of the future is the man of statistics and the master of economics”:

My research uses economic analysis to explore how laws affect financial markets and how courts and regulators can use financial information to make legal and policy decisions. ...

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May 23, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Sunday, May 22, 2016

Symposium:  Legal Education In A Time Of Change

UNLV Logo (2016)Symposium, Legal Education in a Time of Change: Challenges and Opportunities,  16 Nev. L.J. 143-274 (2015):

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May 22, 2016 in Conferences, Legal Education, Scholarship | Permalink | Comments (4)

The Top 5 Tax Paper Downloads

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 new papers debuting on the list at #4 and #5:

  1. [372 Downloads]  The Panama Papers and Tax Morality, by Usman W. Chohan (University of New South Wales)
  2. [327 Downloads]  Google's 'Alphabet Soup' in Delaware, by Bret Bogenschneider (Vienna) & Ruth Heilmeier (Cologne)
  3. [264 Downloads]  New Prominence Of Tax Basis In Estate Planning, by Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers)
  4. [161 Downloads]  How Income Taxes Should Change during Recessions, by Zachary D. Liscow (Yale) & William A. Woolston (Stanford)
  5. [151 Downloads]  The Missing Tax Benefit of Donor-Advised Funds, by John R. Brooks (Georgetown)

May 22, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 21, 2016

The 10 Most-Cited Tax Faculty

Brian Leiter (Chicago) has updated his ranking of the Ten Most-Cited Tax Faculty to now cover the 2010-2014 period (2009-2013 data here):

Rank

Tax Prof

Citations

Age

1

David Weisbach (Chicago)

420

53

2

Michael Graetz (Columbia)

410

72

3

Reuven Avi-Yonah (Michigan)

360

59

4

Daniel Shaviro (NYU)

350

59

5

Lawrence Zelenak (Duke)

310

58

6

Leandra Lederman (Indiana)

300

50

7

Edward Zelinsky (Cardozo)

280

66

8

Victor Fleischer (San Diego)

270

45

9

Edward McCaffery (USC)

260

58

10

Joseph Bankman (Stanford)

230

61

Leiter also lists four highly-cited scholars who work partly in tax:

Rank

Tax Prof

Citations

Age

1

Louis Kaplow (Harvard)

1150

60

2

Brian Galle (Georgetown)

380

44

3

Kristin Hickman (Minnesota)

360

46

4

Mark Gergen (UC-Berkeley)

280

60

In our article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83, 120-22 (2006), Bernie Black (Northwestern) and I examined the Top 25 tax faculty as measured by SSRN downloads, a practice I update monthly on TaxProf Blog.  Five of the most-cited tax faculty (Avi-Yonah, Fleischer, Kaplow, Shaviro, Weisbach) also are five of the most-downloaded tax faculty.

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May 21, 2016 in Legal Education, Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Friday, May 20, 2016

Weekly SSRN Tax Roundup

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

Weekly Student Tax Note Roundup

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May 20, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Fordham Symposium:  We Are What We Tax

Fordham Law ReviewSymposium, We Are What We Tax, 84 Fordham L. Rev. 2413-2753 (2016):

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May 20, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, May 19, 2016

LSAT Is Poor Predictor Of Law School Grades: 6 LSAT Points = 0.1 LGPA

LSAT (2015)Alexia Brunet Marks (Colorado) & Scott A. Moss (Colorado), What Predicts Law Student Success? A Longitudinal Study Correlating Law Student Applicant Data and Law School Outcomes, 13 J. Empirical Legal Stud. 205 (2016):

Despite the rise of "big data" empiricism, law school admission remains heavily impressionistic; admission decisions based on anecdotes about recent students, idiosyncratic preferences for certain majors or jobs, or mainly the Law School Admission Test (LSAT). Yet no predictors are well-validated; studies of the LSAT or other factors fail to control for college quality, major, work experience, etc. The lack of evidence of what actually predicts law school success is especially surprising after the 2010s downturn left schools competing for fewer applicants and left potential students less sure of law school as a path to future success. We aim to fill this gap with a two-school, 1400-student, 2005-2012 longitudinal study. After coding non-digitized applicant data, we used multivariate regression analysis to predict law school grades ("LGPA") from many variables: LSAT; college grades ("UGPA"), quality, and major; UGPA trajectory; employment duration and type (legal, scientific, military, teaching, etc.); college leadership; prior graduate degree; criminal or discipline record; and variable interactions (e.g., high-LSAT/low-UGPA or vice-versa).

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May 19, 2016 in Legal Education, Scholarship | Permalink | Comments (4)

Elkins:  The Merits Of Tax Competition In A Globalized Economy

David Elkins (Netanya), The Merits of Tax Competition in a Globalized Economy, 91 Ind. L.J. 905 (2016):

Since the turn of the current century, leading transnational organizations and academic scholarship have identified tax competition among countries as one of the scourges of the international tax regime. Both the EU and the OECD have warned that tax competition erodes the tax bases of Member States and impedes their ability to provide essential services. Commentators have argued that unrestrained competition is driving tax rates on mobile sources of income to (or close to) zero, a process that jeopardizes the very existence of the welfare state, exacerbates problems of global poverty, and deprives developing countries of funds that they desperately need in order to improve their physical infrastructure and human capital. Tax competition is also said to misallocate economic resources by driving investment to where the tax rate is lowest rather than to where the return on investment is highest.

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

Book:  Bureaucratic Oppression And The Tax System

ABA Tax LawyerLeslie Book (Villanova), Bureaucratic Oppression and the Tax System, 69 Tax Law. ___ (2016):

Observers of the Internal Revenue Service’s administration of the earned income tax credit (EITC) have leveled one main criticism, that the Service has been unable to reduce stubbornly high error rates. Congress has generally focused attention on this problem with many legislative initiatives, including unprecedented (for the tax system) penalties for improper claims, special due diligence rules for preparers submitting returns with EITC claims, and a lessening of pre-assessment right to judicial review of Service rejections of EITC claims.

In this Article I wish to shift attention to the Service’s poor service to EITC claimants. In particular, I wish to broaden the inquiry to reflect the insights of nontax scholars who have looked at the ways that administrative agencies interact with low-income individuals who rely on benefits that agencies administer.

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May 19, 2016 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Sugin:  Rhetoric And Reality In The Tax Law Of Charity

Linda Sugin (Fordham), Rhetoric and Reality in the Tax Law of Charity, 84 Fordham L. Rev. 2607 (2016):

The rhetoric of public purposes in charity law has created the mistaken impression that charity is public and fulfills public goals, when the reality is that charity is private and cannot be expected to solve the problems that governments can solve. The rhetoric arises from a combination of charity-law history and tax expenditure analysis. The reality follows the money and control of charitable organizations. On account of the mismatch of rhetoric and reality, the tax law of charity endorses an entitlement to pre-tax income and (ironically) creates a bias against taxation. This article reorients the project of defining public and private in the tax law by starting from a normative theory of government responsibility.

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

TPC Study Fuels New Congressional Push To Integrate Corporate And Shareholder Taxes

Wall Street Journal, Fewer Shareholders Pay U.S. Taxes on Dividends: New Study Is Bolstering Drive to Shift Tax Burden From Corporations to Investors:

WSJ 2A new study showing that a shrinking fraction of shareholders of U.S. corporations pay taxes on dividends is bolstering a drive to revamp the corporate tax system. [Steven Rosenthal & Lydia Austin, The Dwindling Taxable Share of U.S. Corporate Stock, 151 Tax Notes 923 (May 16, 2016)]

The specter of double taxation, which animates complaints about today’s U.S. corporate tax code, is receding, according to a new study from the Tax Policy Center. Tax-exempt and tax-preferred entities—such as 401(k) plans and other retirement accounts—own more than 75% of U.S. corporate stock, nearly opposite the prevailing pattern from 50 years ago, the study said.

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May 19, 2016 in Congressional News, Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

Knoll & Mason:  Is The Philadelphia Wage Tax Unconstitutional?

Michael S. Knoll (Pennsylvania) & Ruth Mason (Virginia), Is the Philadelphia Wage Tax Unconstitutional? And If It Is, What Can and Should the City Do?, 164 U. Pa. L. Rev. Online 163 (2016):

Philadelphia has a complex and antiquated tax system that has long been criticized for driving employers and jobs away from Philadelphia by making it expensive to conduct business in the City. The centerpiece of the Philadelphia tax system is the Philadelphia wage tax, which raised more than $1.6 billion in 2014. That tax has been challenged as unconstitutional in light of the Supreme Court’s 2015 decision in Wynne v. Comptroller of Maryland, which struck down a structurally similar Maryland tax.

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

Wednesday, May 18, 2016

Murphy Reviews Piketty's Capital In The Twenty-First Century

PikettyLiam Murphy (NYU), Why Does Inequality Matter?: Reflections on the Political Morality of Piketty's Capital in the Twenty-First Century, 68 Tax L. Rev. 613 (2015):

In the Conclusion to Capital in the Twenty-First Century, Thomas Piketty issues a call for a political and historical economics. Like Marx and the political economists before him, Piketty is interested in how markets work because he is interested in the rights and wrongs of institutional, especially legal, design. His is book is guided by a clear sense that economic inequality, especially inequality of wealth, raises serious prima facie problems of social justice. This essay is a critical investigation into the political morality underlying Capital in the Twenty-First Century that unravels and evaluates the different ways in which economic inequality may or may not matter.

For my take, see Thomas Piketty and Inequality: Legal Causes and Tax Solutions, 64 Emory L.J. Online 2073 (2015).  Other reviews of Capital in the Twenty-First Century:

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May 18, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (3)

Luke Reviews Kahng's Taxation Of Intellectual Capital

Charlene D. Luke (Florida), Illuminating the Dark Matter of Intellectual Capital, 66 Fla. L. Rev. F. 61 (2015):

Professor Lily Kahng’s article, The Taxation of Intellectual Capital, [66 Fla. L. Rev. 2229 (2014),] highlights the distortion contained in the current tax rules governing capitalization. Her article emphasizes that U.S tax law systematically fails to require capitalization for self-created, high-value intangible assets. Professor Kahng’s contribution is to situate the problem in a broader, interdisciplinary context and to use the knowledge gained from that context to suggest specific reforms. In the process, Professor Kahng explores the definitional boundaries of “intellectual capital” and considers potential objections to capitalization of the costs of intellectual capital. As a result, Professor Kahng’s article fosters a richer, contextualized conversation about a significant shortcoming of the tax system.

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

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 May 1, 2016) 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.)

56,012

Reuven Avi-Yonah (Mich.)

10,555

2

Michael Simkovic (S. Hall)

32,036

Michael Simkovic (S. Hall)

4479

3

Paul Caron (Pepperdine)

31,056

D. Dharmapala (Chicago)

3702

4

D. Dharmapala (Chicago)

26,620

Paul Caron (Pepperdine)

2461

5

Louis Kaplow (Harvard)

25,850

Richard Ainsworth (BU)

2366

6

Vic Fleischer (San Diego)

22,306

Jeff Kwall (Loyola-Chicago)

1892

7

James Hines (Michigan)

21,719

Nancy McLaughlin (Utah)

1850

8

Richard Kaplan (Illinois)

21,052

Louis Kaplow (Harvard)

1776

9

Ted Seto (Loyola-L.A.)

20,965

Omri Marian (UC-Irvine)

1759

10

Ed Kleinbard (USC)

19,768

Robert Sitkoff (Harvard)

1747

11

Katie Pratt (Loyola-L.A.)

18,807

Chris Hoyt (UMKC)

1688

12

Richard Ainsworth (BU)

17,814

Dan Shaviro (NYU)

1683

13

Carter Bishop (Suffolk)

16,933

David Weisbach (Chicago)

1670

14

Robert Sitkoff (Harvard)

16,913

Ed Kleinbard (USC)

1595

15

Brad Borden (Brooklyn)

16,799

Brad Borden (Brooklyn)

1575

16

David Weisbach (Chicago)

16,768

Jack Manhire (Texas A&M)

1554

17

Jen Kowal (Loyola-L.A.)

16,521

William Byrnes (Texas A&M)

1545

18

Chris Sanchirico (Penn)

16,385

Vic Fleischer (San Diego)

1482

19

Dennis Ventry (UC-Davis)

16,016

Katie Pratt (Loyola-L.A.)

1428

20

Francine Lipman (UNLV)

15,862

Richard Kaplan (Illinois)

1426

21

Bridget Crawford (Pace)

15,557

Yariv Brauner (Florida)

1387

22

David Walker (BU)

14,988

Steven Bank (UCLA)

1373

23

Dan Shaviro (NYU)

14,791

Chris Sanchirico (Penn)

1306

24

Steven Bank (UCLA)

13,314

Gregg Polsky (N. Carolina)

1273

25

Herwig Schlunk (Vanderbilt)

13,161

Francine Lipman (UNLV)

1246

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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May 18, 2016 in Legal Education, Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Are We Ready To Raise Taxes On The Rich? History Says No.

Taxing the RichWashington Post op-ed:  Are We Ready to Raise Taxes on the Rich? History Says No., by Kenneth F. Scheve (Stanford) & David Stasavage (NYU):

Economic inequality is high and rising. At the same time, many governments are struggling to balance budgets while maintaining spending for popular programs.

That’s prompted some presidential candidates to argue it’s time to raise taxes on the rich. Bernie Sanders is leading the charge and would create a new top income tax rate of 54.2 percent, up from the current 39.6 percent. Hillary Clinton would institute the so-called “Buffett rule” to require individuals with adjusted gross incomes of more than $1 million to pay an effective rate of at least 30 percent, and she’d add a new 4 percent surcharge on anyone who pulls in $5 million or more.

As White House aspirants, other politicians and voters debate whether it’s time to once again soak the rich to spread their wealth around, it’s helpful to consider what prompted past governments — ours and others — to raise their taxes.

We investigated tax debates and policies in 20 countries from 1800 to the present for our new book, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe [Princeton University Press, 2016] [blogged here]. Our research shows that it is changes in beliefs about fairness — and not economic inequality or the need for revenue alone — that have driven the major variations in taxes on high incomes and wealth over the past two centuries.

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May 18, 2016 in Book Club, Political News, Scholarship, Tax | Permalink | Comments (1)

Tuesday, May 17, 2016

Papers From The 2015 IRS-TPC Research Conference: Improving Tax Administration Through Research-Driven Efficiencies

TPCIRSThe IRS has released the papers from the 2015 IRS-TPC Research Conference: Improving Tax Administration Through Research-Driven Efficiencies:

2015 IRS Research Bulletin

Foreword

1. Innovative Methods for Improving Resource Allocation

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May 17, 2016 in IRS News, Scholarship, Tax | Permalink | Comments (0)

Gold:  Reducing The Cost Of Legal Education — We Either Hang Together Or Hang Separately

HangVictor James Gold (Former Dean, Loyola-L.A.), Reducing the Cost of Legal Education: The Profession Hangs Together or Hangs Separately, 66 Syracuse L. Rev. ___ (2016):

Is a legal education worth the cost? Until just a few years ago, there was little doubt that the answer was yes. The recession that began in 2007 changed everything. The job market for entry-level lawyers suddenly collapsed. With tuition high and job prospects low, many concluded that legal education was a bad investment. This essay documents the challenges confronting legal education and advises law schools to meet those challenges by reducing the cost of a JD degree. But forces within the legal profession itself make it unnecessarily difficult to follow this advice.

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May 17, 2016 in Legal Education, Scholarship | Permalink | Comments (5)

Elsevier Acquires SSRN

ESSRNPress Release, Elsevier Acquires the Social Science Research Network (SSRN), the Leading Social Science and Humanities Repository and Online Community:

Elsevier, a world-leading provider of scientific, technical and medical information products and services, announced today the acquisition of the Social Science Research Network (SSRN). Founded in 1994, SSRN is a Rochester, NY-based scholarly research preprint repository and online community. SSRN will be further developed alongside Mendeley, a London-based free reference manager and scholarly collaboration network owned by Elsevier.

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May 17, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

Monday, May 16, 2016

The Counterintuitive Costs And Benefits Of Clinical Legal Education

Wisconsin LogoFollowing up on my previous post, Wisconsin Law Review Debate: Does Experiential Learning Improve J.D. Employment Outcomes?Richard E. Redding (Vice Chancellor for Graduate Education and Professor of Law, Chapman), The Counterintuitive Costs and Benefits of Clinical Legal Education, 2016 Wis. L. Rev. Forward 55:

Professor Jason Yackee’s recent study, Does Experiential Learning Improve JD Employment Outcomes?, finding no relationship between a schools’ clinical offerings and student employment outcomes was greeted with skepticism by the clinical legal education (hereinafter “CLE”) community. If we may tentatively conclude from the study that clinical courses fail to give students any significant leg-up in the job market, then perhaps CLE entails some counterintuitive pedagogical costs and benefits that we ought to consider. Could it come at the expense of what is nowadays often touted as being precisely its goal, which is to equip students with practice-ready skills?

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May 16, 2016 in Legal Education, Scholarship | Permalink | Comments (0)

Graetz:  'Death Tax' Politics

BCACTEC 2Michael J. Graetz (Columbia), 'Death Tax' Politics, 57 B.C. L. Rev. ___ (2016):

In his Keynote Address 'Death Tax' Politics at the October 2, 2015 Boston College Law School and American College of Trust and Estate Counsel Symposium, The Centennial of the Estate and Gift Tax: Perspectives and Recommendations, Michael Graetz describes the fight over the repeal of the estate tax and its current diminished state. Graetz argues that the political battle over the repeal of the estate tax reflects a fundamental challenge to our nation’s progressive tax system.

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May 16, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Chorvat:  Corporate Equities As Lotteries—Skewness And The Tax Preference For Corporate Debt

Terrence R. Chorvat (George Mason), Corporate Equities as Lotteries: Skewness and the Tax Preference for Corporate Debt:

The tax preference for interest payments by corporations as compared to dividend payments is a long surviving feature of many tax systems. Many have argued that there is no reason for this preference and so it distorts the capital structure of corporations needlessly. This article argues that because the returns to equity are more positively skewed as compared to debt, individual investors will tend to value equity more than they would value it given only its mean and variance characteristics.

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

Sunday, May 15, 2016

Why Are There So Few Conservative/Libertarian Law Profs, Even Though They Are More Productive Scholars Than Liberal Law Profs?

James Cleith Phillips (Ph.D. Candidate, UC-Berkeley), Why are There So Few Conservatives and Libertarians in Legal Academia? An Empirical Exploration of Three Hypotheses, 39 Harv. J.L. & Pub. Pol'y 153 (2016):

There are few conservatives and libertarians in legal academia.

Graph 3

Why? Three explanations are usually provided: the Brainpower, Interest, and Greed Hypotheses. Alternatively, it could be because of Discrimination. This paper explores these possibilities by looking at citation and publication rates by law professors at the 16 highest-ranked law schools in the country. Using regression analysis, propensity score matching, propensity score reweighting, nearest neighbor matching, and coarsened exact matching, this paper finds that after taking into account traditional correlates of scholarly ability, conservative and libertarian law professors are cited more and publish more than their peers.

 

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May 15, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

The Top 5 Tax Paper Downloads

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. [863 Downloads]  Lexisnexis® Guide to FATCA Compliance: Chapter 1, by Willliam Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  2. [352 Downloads]  Ownership of the Means of Production, by E. Glen Weyl (Chicago) & Anthony Lee Zhang (Stanford)
  3. [319 Downloads]  The Panama Papers and Tax Morality, by Usman W. Chohan (University of New South Wales)
  4. [205 Downloads]  Google's 'Alphabet Soup' in Delaware, by Bret Bogenschneider (Vienna) & Ruth Heilmeier (Cologne)
  5. [157 Downloads]  New Prominence Of Tax Basis In Estate Planning, by Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers)

May 15, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 14, 2016

Lindgren:  The Most Under-Represented Groups In Law Teaching Are Whites, Christians, Republicans, Males

James Lindgren (Northwestern), Measuring Diversity: Law Faculties in 1997 and 2013, 39 Harv. J.L. & Pub. Pol'y 89 (2016):

This article is the first careful look at the demographic makeup of law faculties compared to the larger pools of lawyers and the general public. It examines which racial, gender, religious, and political groups were the most under- and overrepresented in 1997 and in 2013 compared to persons of similar ages in larger pools, including the U.S. full-time working population and the U.S. lawyer population.

The data show that in 1997 women and minorities were underrepresented compared to some populations, but Republicans and Christians were usually more underrepresented. For example, by the late 1990s, the proportion of the U.S. population that was neither Republican nor Christian was only 9%, but the majority of law professors (51%) was drawn from that small minority. Further, though women were strongly underrepresented compared to the full-time working population, all of that underrepresentation was among Republican women, who were—and are—almost missing from law teaching.

Table 13
Table 13B

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May 14, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

Hemel & Galle:  The President's Authority To Unilaterally Raise Taxes

Following up on Monday's post, Taxing Carried Interest As Ordinary Income Through Executive Action:

Daniel Hemel (Chicago), The President’s Power To Tax Doesn’t Stop at Carried Interest:

No one can predict with complete confidence whether a court would uphold as-yet-unwritten Treasury regulations addressing carried interest, but I agree with Morgenson (and with the tax experts she cites) that such regulations — if written carefully and finalized after notice and comment — quite likely would pass judicial muster. What Morgenson doesn’t mention, though, is that when it comes to tax reform measures that the Obama administration could implement on its own, carried interest is just the tip of the iceberg. President Obama might not be able to make much of a dent in income inequality without legislative action, but he could raise billions of dollars in revenue while addressing some of the most objectionable tax avoidance strategies employed by U.S. corporations and high-net-worth individuals.

In a forthcoming Cornell Law Review article, The President’s Power To Tax, I set out a list of tax reform measures that the Obama administration could accomplish without an act of Congress.

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May 14, 2016 in Scholarship, Tax | Permalink | Comments (2)

Harrison:  Law Professor Divas

DivaJeffrey Harrison (Florida), The Diva Tax: Insufferable Diva, BUT He Writes:

I mean he and she divas although I know that is technically incorrect but cut me some slack on this one.

I wrote about this general idea some time ago. The context was whether "character" should be consider a plus among law professors so that it off-sets a lack of productivity. The converse question is harder -- should a low character law professor be cut extra slack if he or she writes or at least is perceived as being productive. ...

Here, I think, would be the conventional thinking. If you do not write enough you will pay for character issues or being a pain in the ass. On the other hand, if you write enough, you pay no price. ... [I]n law school rankings, the bottom line, along with student qualifications and placement, there is image which is often based on writing. So, in a sense, law school administrators do not and should not care about divas unless it affects the writings of others.

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May 14, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

Friday, May 13, 2016

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

Thursday, May 12, 2016

Chodorow:  Bitcoin And The Definition Of Foreign Currency

Florida Tax Review  (2015)Adam Chodorow (Arizona State), Bitcoin and the Definition of Foreign Currency, 19 Fla. Tax Rev. ___ (2016):

The IRS recently dealt a blow to Bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property – and not foreign currency – for income tax purposes. As a result, those who use bitcoins to purchase goods or services must report gain or loss on each transaction if the bitcoins have changed value between the time they were acquired and spent. Treating Bitcoin as a foreign currency would have permitted individuals to take advantage of the personal use exemption, which could facilitate Bitcoin’s adoption, and required taxpayers to adopt a formulaic system for tracking the basis of commingled bitcoins. The IRS’s decision seems correct as a matter of positive law, but laws can always be changed.

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

Wednesday, May 11, 2016

Sunstein:  Using Increased Chevron Deference To Combat Growing 'Partyism' In America

Cass R. Sunstein (Harvard), Partyism, 2016 U. Chi. Legal F. ___:

“Partyism” is a form of hostility and prejudice that operates across political lines. For example, some Republicans have an immediate aversive reaction to Democrats, and some Democrats have the same aversive reaction to Republicans, so much so that they would discriminate against them in hiring or promotion decisions, or in imposing punishment. If elected officials suffer from partyism – perhaps because their constituents do – they will devalue proposals from the opposing party and refuse to enter into agreements with its members, even if their independent assessment, freed from partyism, would be favorably disposed toward those proposals or agreements. In the United States, partyism has been rapidly growing, and it is quite pronounced – in some ways, more so than racism. It also has a series of adverse effects on governance itself, above all by making it difficult to enact desirable legislation and thus disrupting the system of separation of powers. Under circumstances of severe partyism, relatively broad delegations of authority to the executive branch, and a suitably receptive approach to the Chevron principle, have considerable appeal as ways of allowing significant social problems to be addressed. This conclusion bears on both domestic issues and foreign affairs.

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May 11, 2016 in Scholarship, Tax | Permalink | Comments (2)