TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

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Tuesday, June 24, 2014

Hoffer & Walker: Kuretski, the Tax Court, and the Administrative Procedure Act

HWResponding to Sunday’s op-ed by Patrick Smith and Monday's op-ed by Kristin Hickman on Friday’s D.C. Circuit opinion in Kuretski v. Commissioner, No. 13-1090 (D.C. Cir. June 20, 2014):  TaxProf Blog op-ed:  Kuretski, the Tax Court, and the Administrative Procedure Act, by Stephanie Hoffer (Ohio State) & Christopher J. Walker (Ohio State):

Friday’s decision in Kuretski v. Commissioner is perhaps the first major opinion penned by Judge Sri Srinivasan—a recent Obama appointee considered by many to be on the short list for the Supreme Court.  In a well-written opinion, the D.C. Circuit rejects a constitutional challenge to the President’s removal power of judges on the United States Tax Court.  To reach this conclusion, the court has to grapple with the Tax Court’s puzzling position in the modern administrative state, concluding that the Tax Court is not an Article III (judicial branch) court but a court established under Article I (legislative branch) that actually exercises Article II (executive branch) powers.  Or as Judge Srinivasan writes (at 20) for the court:

We have explained that Tax Court judges do not exercise the ‘judicial power of the United States’ pursuant to Article III.  We have also explained that Congress’s establishment of the Tax Court as an Article I legislative court did not transfer the Tax Court to the Legislative Branch.  It follows that the Tax Court exercises its authority as part of the Executive Branch.

No doubt many tax and administrative law professors will weigh in on the constitutional issues (early coverage here, here, and here).  Here, however, we focus on Kuretski’s impact on the relationship between the Tax Court and the Administrative Procedure Act (“APA”).  Patrick Smith, for instance, worries that Kuretski could open the door for the argument that “APA judicial review provisions simply do not apply in Tax Court proceedings.”  But we agree with the contrary position reached by Kristin Hickman (Minnesota) and write separately to show our math for this conclusion. 

At the outset, it is important to underscore that Smith’s worry is already a reality.  As we explain in a forthcoming paper, The Death of Tax Court Exceptionalism, 99 Minn. L. Rev. ___ (2014), the Tax Court has declared that “[t]he APA has never governed proceedings in the Court (or in the Board of Tax Appeals).”  In other words, the Tax Court refuses to apply the APA’s default standard (abuse of discretion) and scope (administrative record) of review.  Instead, it considers the default in both contexts to be de novo, and only departs from de novo review when it determines that the Internal Revenue Code suggests more deferential review.

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June 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Kuretskis' Counsel Responds to Smith and Hickman Op-eds on Treating the Tax Court as Part of the Executive Branch

SamahonResponding to Sunday’s op-ed by Patrick Smith and Monday's op-ed by Kristin Hickman on Friday’s D.C. Circuit opinion in Kuretski v. Commissioner, No. 13-1090 (D.C. Cir. June 20, 2014):  TaxProf Blog op-ed:  Kuretskis' Counsel Responds to Smith and Hickman Op-eds on Treating the Tax Court as Part of the Executive Branch, by Tuan Samahon (Villanova; Counsel for Peter and Kathleen Kuretski):

I am one of the professors who serve as counsel for the taxpayers, the Kuretskis.  I wanted to comment on the op-eds by Patrick Smith and Kristin Hickman on the possible consequences of the D.C. Circuit’s opinion from last Friday.

First, Patrick Smith expresses concern that the Tax Court may not be able to conduct Administrative Procedure Act court review of the IRS if the Tax Court, now according to the Kuretski opinion, exercises executive power.  Professor Hickman is skeptical of this effect of the opinion. She notes that congressional statutory definitions may not always jibe with constitutional ones. 

Neither of their op-eds, though, included the following passage from the opinion showing what the panel thought about potential collateral consequences on other laws.  Judge Srinivasan wrote:

And while we have no need to reach the issue here, Congress, in establishing those entities [i.e., the Article I Tax Court and the Article I Court of Appeals for the Armed Forces] as a “court” rather than an “agency,” perhaps also exempted them from statutes that apply solely to executive “agencies.” Cf. Megibow v. Clerk of the U.S. Tax Court, No. 04- 3321, 2004 U.S. Dist. LEXIS 17698, at *13-22 (S.D.N.Y. Aug. 31, 2004) (Tax Court is a “court of the United States” and not an “agency” under the Administrative Procedure Act, 5 U.S.C. § 551(1)), aff’d, 432 F.3d 387 (2d Cir. 2005) (per curiam).  [slip op. at 26]

This dictum seems to lean toward Professor Hickman’s view.

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June 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Monday, June 23, 2014

University of Oxford Hosts Conference Today on Tax Competition and BEPS

OxfordThe Oxford University Centre for Business Taxation hosts a conference today on Tax Competition and BEPS.  United States Tax Profs presenting papers include:

  • Alan Auerbach (UC-Berkeley), Fundamental Issues in the Allocation of Profit
  • Dhammika Dharmapala (Illinois), What is the Scale of Base Erosion and Profit Shifting?: "The issue of tax-motivated income shifting within multinational firms – or “base erosion and profit shifting” (BEPS) – has attracted increasing global attention in recent years. This paper provides a survey of the empirical literature on this topic. Its emphasis is on reviewing and elucidating what is known about the magnitude of BEPS. It begins by outlining a simple conceptual framework that helps to clarify aspects of governments’ responses to the BEPS phenomenon and the potential role of the initiative on BEPS currently being undertaken by the OECD. The paper then discusses different empirical approaches to identifying income-shifting, describes existing data sources, and summarizes the findings of the empirical literature. A major theme that emerges from this survey is that in the more recent empirical literature, which uses new and richer sources of data, the estimated magnitude of BEPS is typically much smaller than that found in earlier studies. The paper seeks to provide a framework within which to conceptualize this magnitude and its implications for policy. It concludes by highlighting the importance of existing legal and economic frictions as constraints on BEPS, and by discussing possible ways in which future research might model these frictions more precisely."
  • Michael Graetz (Columbia), Prospects for Successful Multilateral Agreements 

June 23, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Sunday, June 22, 2014

Using Altmetrics to Measure the Impact of Faculty Scholarship

AltmetricsI am heading back to San Diego after three great days at the 24th Annual Conference for Law School Computing at Harvard Law School.  In my talk on Friday, I argued that "blogs and social media can play a meaningful role in developing a faculty member's scholarly 'brand' and that current primitive methods for ranking faculty scholarship -- reputation, publications, citations, and downloads -- need to be augmented by more sophisticated faculty performance analytics in the coming 'big data' revolution."  In a presentation yesterday,  Katie Brown (Charlotte) explored some of those alternative metrics in Are The Scientists on to Something With Altmetrics? New Tools for Assessing and Tracking Scholarly Impact:

As scientific authors and researchers vie for tenure and funding they are including altmetrics to their CV's and tenure packets. Why the inclusion? They feel these alternative metrics disclose the full impact their work has with their colleagues, students and the public. Altmetrics, a term first coined in a tweet, involves "the creation and study of new metrics based on the Social Web for analyzing and informing scholarship". Often, altmetrics are providing tangible evidence of what is read, discussed, saved and recommended, as well as cited, in a particular area. They are also diverse in product, platform and audience. Products include articles, datasets, software, blogs, videos, and more. Some platforms are institutional repositories and online communities where the audience is going to be beyond the academy and include practitioners, clinicians and the general public. Scientists in growing number are providing this data to demonstrate their value in the profession and I believe these metrics will allow law librarians to do the same thing. Many law librarians are already online participating in scholarly conversations through blogs, SSRN, comments and Tweets. Why not track it so you can show others the valuable digital footprint you left behind? Additionally, altmetrics instruction may also be a valuable service that we can provide to our primary users.

Katie's PowerPoint slides are available here, and the video of her talk will be posted here by the end of the month.  In the meantime, check out these presentations on altmetrics (click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate):

 

June 22, 2014 in Legal Education, Scholarship | Permalink | Comments (2)

Smith: Reflections on Kuretski's Holding That the Tax Court Is Part of the Executive Branch

SmithTaxProf Blog op-ed: Reflections on Kuretski v. Commissioner, by Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.):

In Kuretski v. Commissioner, No. 13-1090 (D.C. Cir. June 20, 2014), a unanimous panel of the D.C. Circuit rejected a challenge to a Tax Court decision that was based on the argument that the power given to the President by section 7443(f) of the Internal Revenue to remove Tax Court judges for “inefficiency, neglect of duty, or malfeasance in office” is a constitutionally impermissible infringement on the judicial power exercised by the Tax Court.  The D.C. Circuit held that this removal power does not violate the constitutional separation of powers between the executive branch and the judiciary because, in the D.C. Circuit’s view, the Tax Court is part of the executive branch.

This holding undoubtedly has many significant consequences beyond the specific issue in the case.  One very worrisome potential implication is the effect this holding could have on the application of the judicial review provisions of the Administrative Procedure Act when the Tax Court in deficiency proceedings is considering a challenge by a taxpayer to the validity of IRS action such as the issuance of regulations.  The APA judicial review provisions (5 U.S.C. §§ 701 to 706) apply when a court reviews agency action. 

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June 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

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 on SSRN, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [243 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  2. [221 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  3. [192 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)
  4. [171 Downloads]  Sales Suppression as a Service (SSaaS) & the Apple Store Solution, by Richard Ainsworth (Boston University)
  5. [128 Downloads]  The Relationship between China's Tax Treaties and Indirect Transfer Antiavoidance Rules, by Qiguang Hardy Zhou (Baker & McKenzie, Shanghai City, China)

June 22, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 21, 2014

Johnson: Reflections on United States v. Clarke

Johnson (Steve)TaxProf Blog op-ed:  Reflections on United States v. Clarke, by Steve R. Johnson (Florida State):

On June 19, the Supreme Court decided United States v. Clarke, 2014 WL 2765284, vacating & remanding  517 Fed. Appx. 689 (11th Cir. 2013).  Clarke involves the ability of a party challenging an IRS summons to obtain an evidentiary hearing to probe whether the IRS issued the summons in bad faith.  Unique among the circuits, the 11th Circuit’s position was that even a bare allegation of bad faith was sufficient to entitle the taxpayer or other target to a hearing at whether it could question IRS officials about their motives.  In an opinion authored by Justice Kagan, the Supreme Court rejected that view, holding instead that the taxpayer/target is entitled to a hearing only “when he points to specific facts or circumstances plausibly raising an inference of bad faith.”  *2.

The outcome of the case isn’t a surprise.  A unanimous Court needed only a short opinion (operatively only four pages) to dispose of the view of the outlier circuit.  But if powerhouse college football and basketball programs sometimes schedule “breather” games against East Podunk State, perhaps the Supreme Court too is allowed occasionally to pencil in an easy one.

To say that the result of Clarke is unsurprising, however, does not imply that the decision is bereft of significance.  I offer eight thoughts below.

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June 21, 2014 in Scholarship, Tax | Permalink | Comments (0)

Friday, June 20, 2014

Weekly Student Tax Note Roundup

June 20, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

McGill Symposium: Tax Justice and Human Rights

McGillThe three-day Tax Justice & Human Rights Symposium at McGill concludes today with these papers as part of its Research Collaboration Symposium Part II:

Panel #6:  Reducing Inequality: Tax Avoidance and Capital Flight

  • Ofer Sitbon (PhD Candidate, College of Law & Business, Tel Aviv), Moderator
  • James Henry (Tax Justice Network), Kleptocracy and Human Rights
  • Stephen Cohen (Professor, Georgetown University), Does Swiss Bank Secrecy Violate International Human Rights?
  • Brigitte Alepin (Partner, Agora Fiscalité), The Foundation
  • Steven Dean (Professor, Brooklyn Law School), A Tax Regime to Catalyze Social Enterprise Crowdfunding
  • Lee Sheppard (Journalist, Tax Analysts) and John Christensen (Director, Tax Justice Network), Discussants

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June 20, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Caron Presents Law Professor Blogs Network 2.0: One Year Later Today at Harvard

I am presenting The Law Professor Blogs Network 2.0: One Year Later at Harvard Law School today as part of the 24th Annual Conference for Law School Computing:

LPBN LogoThe Law Professor Blogs Network is the nation's only network of legal blogs edited primarily by law professors. The network owns and operates over fifty legal blogs, edited by leading scholars and teachers who are committed to providing the web destination for law professors, practitioners, government and nonprofit lawyers, legal information professionals, and students in their respective fields. Since the launch of TaxProf Blog on April 15, 2004, the network’s influence has continued to grow. At last year's CALI Conference, I unveiled a major re-design of the network, intended to provide the premier legal blogging platform to our editors. The re-design was intended to (1) optimize each blog for viewing across a variety of platforms (desktop, laptop, tablet, and smart phone); (2) better integrate social media; (3) provide more robust analytics with richer and more accurate readership data; and (4) strengthen our partnership with Wolters Kluwer Law & Business/Aspen Publishers and provide additional avenues for monetization. This presentation will explore the progress that the network has made toward these goals over the past year and explain planned future innovations.  In addition, I will argue that blogs and social media can play a meaningful role in developing a faculty member's scholarly "brand" and that current primitive methods for ranking faculty scholarship -- reputation, publications, citations, and downloads -- need to be augmented by more sophisticated faculty performance analytics in the coming "big data" revolution. 

Update:  Enjoying a post-presentation dinner in Harvard Square with Jim Smith (Georgia), Jennifer Martin (St. Thomas), Jeff Lipshaw (Suffolk), and Mark Heffner (Roger Williams):

Photo

June 20, 2014 in Conferences, Legal Education, Scholarship | Permalink | Comments (0)

Thursday, June 19, 2014

Florida State Symposium: One-Hundred Years of the Federal Income Tax

Florida State logoSymposium, One-Hundred Years of the Federal Income Tax, 41 Fla. St. U. L. Rev. 1-289 (2013):

June 19, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Rosenzweig: An Antigua Gambling Model for the International Tax Regime

Adam Rosenzweig (Washington University), An Antigua Gambling Model for the International Tax Regime, 44 Wash. U. J.L. & Pol'y 79 (2014):

The international tax world is facing a defining moment. While there is little agreement on anything within the field, there appears to be a growing consensus that the modern international tax regime — the so-called flawed miracle emerging from World War II — is irrevocably broken. As the countries of the world confront the challenges facing the international tax regime in the next century, new models for an institutional framework for international tax become increasingly crucial to its success. While significant progress has been made in developing underlying norms to serve as the basis for a modern international tax regime, less focus has been paid to building the institutions and structures necessary to implement these norms. To this end, this Essay proposes looking to the recent experience of the WTO in the Antigua Gambling case as a model for a new institutional framework for the new international tax regime. The Essay then proposes three potential ways to do so: (1) the creditable gross-withholding tax method, (2) the extraterritorial excise tax method, and (3) the WTO cross-retaliation method.

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June 19, 2014 in Scholarship, Tax | Permalink | Comments (0)

George & Yoon: The Labor Market for New Law Professors

Tracey E. George (Vanderbilt) & Albert Yoon (Toronto), The Labor Market for New Law Professors, 11 J. Empirical Legal Stud. 1 (2014) (more here):

Law school professors control the production of lawyers and influence the evolution of law. Understanding who is hired as a tenure-track law professor is of clear importance to debates about the state of legal education in the United States. But while opinions abound on the law school hiring process, little is empirically known about what explains success in the market for law professors. Using a unique and extensive data set of survey responses from candidates in the 2007-2008 legal academic labor market, we examine the factors that influence which candidates are interviewed and ultimately hired by law schools. We find that law schools appear open to non-traditional candidates in the early phases of the hiring process but when it comes to the ultimate decision — hiring — they focus on candidates who look like current law professors.

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June 19, 2014 in Legal Education, Scholarship | Permalink | Comments (1)

McGill Symposium: Tax Justice and Human Rights

McGillThe three-day Tax Justice & Human Rights Symposium at McGill continues today with these papers as part of its Research Collaboration Symposium Part I:

Panel #1:  Setting the Stage

  • William Stephenson (Editor in Chief, McGill Law Journal), Moderator
  • Kim Brooks (Dean, Schulich School of Law, Dalhousie University), Why Justice Matters for Tax Policy
  • Ignacio Saiz (Executive Director, Center for Economic and Social Rights), The Evolving Norms and Standards of Human Rights
  • Allison Christians (Professor, McGill Faculty of Law), Who Has Rights, What Rights, and Against Whom?

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June 19, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Wednesday, June 18, 2014

The Effect of CEO Narcissism on Corporate Tax Policies

Kari Joseph Olsen (University of Southern California, Marshall School of Business) & James Stekelberg (University of Arizona, Eller College of Management), CEO Narcissism and Corporate Tax Policies:

NarcissismWe examine the effect of CEO narcissism on corporate tax policies. Narcissism is a multifaceted personality trait associated with a propensity to cheat and engage in questionable behavior. Narcissists feel that they are above the law and are aggressive in pursuing what they believe is theirs. Narcissists also take more risks than do others and possess heightened sensitivities to the rewards of risk taking. Consistent with these predictions regarding the behavioral tendencies of narcissistic individuals, we document a positive association between CEO narcissism and various measures of corporate tax avoidance and tax risk. Our study contributes to the literature by documenting a setting in which the individual personality characteristics of the CEO can impact firm-level tax policies.

June 18, 2014 in Scholarship, Tax | Permalink | Comments (1)

22 Notable Corporate Tax Articles of 2013

Tax Analysys Logo (2013)Jordan M. Barry (San Diego), Karen C. Burke (Florida) & Monica Gianni (Florida), A Brief Review of Corporate Tax Articles of 2013, 143 Tax Notes 1314 (June 16, 2014):

June 18, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

McGill Symposium: Tax Justice and Human Rights

McGillThe three-day Tax Justice & Human Rights Symposium at McGill kicks off today with these papers by emerging scholars:

Panel A:  Samuel Singer (Associate, Stikeman Elliott), Moderator

Leyla Ates (PhD Candidate, University of Wisconsin and Inonu University, Turkey), Developing Countries and Globalization of Tax Law Making: Turkish Tax Law Reforms on Fighting Tax Evasion
Steven Dean (Professor, Brooklyn Law School), Discussant

Montano Cabezas (LLM Candidate, Georgetown University Law Center), Giving Credit Where it is Due: Rethinking the Corporate Tax Paradigm
Kim Brooks (Dean, Schulich School of Law, Dalhousie University), Discussant 

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June 18, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 17, 2014

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 67, No. 3 (Spring 2014):

June 17, 2014 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Shaviro: Capital Levies: A Solution for the Sovereign Debt Problem?

Tax Analysys Logo (2013)Daniel Shaviro (NYU), Capital Levies: A Solution for the Sovereign Debt Problem?, 74 Tax Notes Int'l 1027 (June 16, 2014):

The following speech was delivered as the University of Luxembourg's "Distinguished Lecture" on May 15, 2014.

June 17, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Lipshaw: 'Retire and Teach' Amidst the Great Law School Retrenchment

Jeffrey M. Lipshaw (Suffolk), "Retire and Teach" Six Years On, 41 N. Ky. L. Rev. 67 (2014):

RetirementThis is a follow up to a 2007 essay I wrote about what it might take for a well-seasoned practitioner to join a law school faculty as a tenure track professor. Having now wended my way up (or down) that track for six years plus, my intended audience this time includes the original one, those seasoned veterans of the law practice trenches who may think but should never utter out loud the words “I would like to retire and teach,” but now also my colleagues in academia who are facing what looks to be the greatest reshuffling of the system in our generation. Much of what I said in the earlier essay still holds. This essay, however, includes (a) a more nuanced look at the strange hybrid creature that is the scholarly output of academic lawyers; (b) a more respectful appreciation of what it takes to become a good teacher, with some notes about what worked for me, and (c) an attempt to reconcile the interests in scholarship and the interest in teaching after the “Great Retrenchment” of the legal profession and legal education, with some brief thoughts about the opportunities that may bring for the aging but not ossifying academic aspirant.

June 17, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Law School Kills Brain Cells

Debra S. Austin (Denver), Killing Them Softly: Neuroscience Reveals How Brain Cells Die from Law School Stress and How Neural Self-Hacking Can Optimize Cognitive Performance, 59 Loy. L. Rev. 791 (2013):

BrainLaw is a cognitive profession and the legendary stressors in legal education and the practice of law can take a tremendous toll on cognitive capacity. Lawyers suffer from depression at triple the rate of non-lawyers. This article provides a groundbreaking synthesis on the neuroscience of achieving optimal cognitive fitness for all law students, law professors, and lawyers.

A number of innovative companies have instituted programs designed to enhance the bottom line. Research shows that perks such as onsite gyms, stress management classes, and mindfulness training produce vibrant workplaces and thriving employees. Forward-looking law schools have created wellness programs designed to relieve law student stress and improve well-being. This article explains the neurobiological reasons these programs enhance employee performance and improve student achievement.

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June 17, 2014 in Legal Education, Scholarship | Permalink | Comments (1)

Monday, June 16, 2014

Reviews of Ajay Mehrotra's Law, Politics, and the Rise of Progressive Taxation

Sunday, June 15, 2014

Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads on SSRN is the same as last week's list:

  1. [326 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [321 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven Avi-Yonah (Michigan)
  3. [227 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  4. [208 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  5. [181 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)

June 15, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, June 13, 2014

Weekly SSRN Tax Roundup

June 13, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Student Tax Note Roundup

June 13, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Thursday, June 12, 2014

Crawford Reviews McCouch's Who Killed the Rule Against Perpetuities?

JotwellBridget Crawford (Pace), A Lawyer With a Candlestick in the Conservatory: The Perpetuities Whodunit (Jotwell), reviewing Grayson M.P. McCouch (Florida), Who Killed the Rule Against Perpetuities?, 40 Pepp. L. Rev. 1291 (2013) (Symposium on Tax Reform in a Time of Crisis):

For readers who are interested in the relationship between and among tax law, legal reform and professional culture and change, this article provides much food for thought. Many states that have repealed the rule against perpetuities have also abolished income taxation of trusts and their beneficiaries. For that reason, even states with a booming trust business may not receive any direct tax revenue from it. But the ancillary effects of increased trust business—more jobs created in that state—should not be underestimated. It may be that some lawyers and bankers have benefited handsomely from perpetuities reform, but so has that same reform given rise to a new cadre of supporting professionals who pay taxes and spend their paychecks in those states. McCouch’s article undoubtedly will serve as the inspiration for additional scholarship in this area.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Professionals' Contribution to the Legislative Process

Adam S. Hofri-Winogradow (Hebrew University of Jerusalem, Faculty of Law), Professionals' Contribution to the Legislative Process: Between Self, Client, and the Public, 39 Law & Soc. Inquiry 96 (2014):

How may professionals be made to contribute to legislative processes so that their expertise redounds to the public interest, despite the legislative product being likely to have a negative impact on their clients' wealth? Drawing on a case study of the legislative process that gave birth to Israel's recent (2002–2008) trusts taxation regime, based on five years of participant observation among the trust professional community, I find that to obtain the benefit of private-sector professionals' expertise under such circumstances, government should have legislation drafted in a dispassionate, exclusive environment of experts rather than in the political arena; it should build professionals' trust in government by adopting an explicitly collegial approach; it should focus reform efforts on elements of the existing law so clearly inequitable as to make a refusal to contribute difficult to justify; and take care that the new regime creates a compliance practice lucrative enough to compensate for any loss to professionals consequent on its enactment. Once professionals' interests are suitably safeguarded, their loyalty to clients appears surprisingly brittle and government can successfully combine with them in the public interest.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Gerzog: The Façade Easement Charitable Deduction

Wendy C. Gerzog (Baltimore), Alms to the Rich: The Façade Easement Deduction:

This article presents the case for repeal of the façade easement deduction. Proponents of this benefit argue that the deduction encourages historic preservation by reimbursing property owners for relinquishing their right to alter the façade of their property in a way inconsistent with that conservation goal; however, this article shows that there are many reasons to urge its repeal: the revenue loss, the small number of beneficiaries, the financial demographics of that group of beneficiaries; the dubious industries that are supported by the deduction; and the continual marked overvaluation and abuse despite Congressional, court, and administrative review and expense.

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June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, June 11, 2014

Marian Presents Designing a Regulatory System for the Bitcoin Era Today in Albuquerque

MarianOmri Marian (Florida) presents Designing a Regulatory System for the Bitcoin Era at the annual meeting of the National Association of Consumer Credit Administrators (NACCA) today in Albuquerque:

Abstract: Bitcoin is now touted as revolutionary as the Internet in the early 1990s. The potential of Bitcoin and other cryptocurrencies is hardly limited to being a medium of exchange. At its core, Bitcoin is a protocol that allows for the verification of transactions without the need for a trusted third party. As such, Bitcoin holds great positive potential. However, Bitcoin is also uniquely suited to facilitate harmful behaviors. Traditional regulatory models rely heavily on intermediaries that are optimally positioned to identify and disrupt misconduct, but Bitcoin has the potential to eliminate intermediaries without eliminating the underlying conduct. How can policymakers address the challenges that Bitcoin presents to traditional regulatory models, without hindering Bitcoin’s generative potential? This is the question the Article seeks to answer. The Article advances two main arguments: First, intermediary-based regulation will persist to a significant extent even in a Bitcoin-dominated environment. Many intermediaries are market-created, not government-created constructs. Such intermediaries can be regulated under traditional intermediary-liability models. Second, where intermediaries are eliminated, the article proposes a different theoretical model of regulatory framework – “passive crowd participation”. Under a passive crowd participation model, actors who use Bitcoin for legitimate purposes are incentivized to act in a manner that makes the Bitcoin ecosystem less attractive for illicit users. I use tax evasion to explain how such model might work in practice. I propose a model of “surrogate presumptive collection” tax, by which merchants accepting bitcoins collect gross tax that serves as a proxy for the consumer’s income tax liability. The surrogate tax is waived if the consumer identifies itself to the merchant or to a trusted bitcoin clearing service.

June 11, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Shanske: State-Level Carbon Taxes and the Dormant Commerce Clause

Darien Shanske (UC-Davis), State-Level Carbon Taxes and the Dormant Commerce Clause: Can Formulary Apportionment Save the World?, 19 Chapman L. Rev. ___ (2015):

This short Article, a contribution to a symposium, outlines some possible design responses to the primary legal issue raised by the implementation of a state-level carbon tax. There are at least two reasons for states to consider a carbon tax. First, somewhat prosaically, the Environmental Protection Agency just released draft rules requiring states to reduce carbon emissions; these rules appear to permit states to achieve at least some of the required reduction through carbon taxes. Second, and more importantly, economists offer strong arguments for preferring carbon taxes as a method of greenhouse gas mitigation. Accordingly, even before the new EPA rules were proposed, a carbon tax was already being considered in some U.S. states, such as Oregon, and a carbon tax is in place in one Canadian province, British Columbia.

The primary legal issue with a state-level tax in the United States is the following: a carbon tax imposed in only one state will presumably make goods and services produced in that state more expensive. The direct response would be to impose a complementary carbon tax on imports. Yet it would appear that the dormant Commerce Clause, and particularly the Supreme Court’s narrow interpretation of the complementary tax doctrine, bars the way to such border adjustments. This Article argues that appearances might be deceiving and that border adjustments might be possible. Alternatively, this Article argues that formulary apportionment could take the place of border adjustments. 

June 11, 2014 in Scholarship, Tax | Permalink | Comments (1)

The Gift Tax Treatment of Donations to Social Welfare Organizations

Matthew A. Melone (Lehigh), Gift Taxes on Donations to Social Welfare Organizations: De-politicizing Social Welfare Organizations or Politicizing the IRS?, 12 DePaul Bus. & Com. L.J. 51 (2013):

Part III of this Article provides an analysis of the gift tax in general and its application to contributions to section 501(c)(4) organizations. Despite the dearth of case law on this issue, it appears that taxing contributions to these organizations has ample statutory support, and the current regulations interpreting the statute should survive the deferential standard of review to which they are subject. Moreover, enforcement of the tax against donors to section 501(c)(4) organizations does not do violence to the First Amendment. However, notwithstanding the legal justification for enforcement of the tax, Part IV argues that the enforcement of the tax is unwarranted from a policy standpoint. Enforcement of the gift tax with respect to contributions to section 501(c)(4) organizations will not reduce politically motivated giving because such giving will be diverted to vehicles to which donations are exempt from the gift tax. Moreover, large corporations, for all practical purposes, will be unaffected by the gift tax thereby raising the possibility that section 501(c)(4) organizations will remain a significant political force but one dominated by corporate donors. Perhaps the most salient objection to enforcement of the tax is the risk that the public comes to perceive enforcement of the tax as selective and politically motivated. The IRS recently has taken actions that, to its critics, were politically motivated, and, for the most part, taxpayers are powerless to challenge such actions. A tax system already suffering from a lack of public respect can do without accusations of political meddling.

June 11, 2014 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 10, 2014

Zelenak: The Taxation of Frequent Flyer Benefits in the U.S., Canada, and Australia

Lawrence Zelenak (Duke), Up in the Air Over Taxing Frequent Flyer Benefits: The American, Canadian, and Australian Experiences:

Since frequent flyer programs first appeared in the early 1980s, the agencies charged with the administration of their nations' income tax laws have struggled with the question of whether -- and if so, how -- to tax employees who earn frequent flyer points (or "miles") on employer-paid business trips, and who eventually redeem those points for personal travel rewards (or other personal consumption services or goods). This article describes and evaluates the ways in which three agencies -- the Internal Revenue Service (IRS) in the United States, the Canada Revenue Agency (CRA) and the Australian Taxation Office (ATO) -- have responded to the tax administration challenge presented by frequent flyer programs. The rather disheartening end of the story (in all three countries) is that no significant amount of tax is being collected on frequent flyer benefits, even though the benefits are clearly taxable in theory (at least in the United States and Canada), and that respect for the rule of law (on the part of both taxpayers and the agencies themselves) has been eroded. The article analyzes what features of frequent flyer programs are responsible for the tax agencies' difficulties, and explains that taxing benefits involves serious problems of timing, valuation, enforcement, and public acceptance. Finally, the article considers how, in light of those problems, an agency (or legislature) could go about designing an effective system for taxing frequent flyer benefits. The task is not easy, but it is also not impossible.

June 10, 2014 in Scholarship, Tax | Permalink | Comments (3)

Lucas: How Opportunity Cost Neglect Undermines Democracy

Gary Lucas, Jr. (Texas A&M), Out of Sight, Out of Mind: How Opportunity Cost Neglect Undermines Democracy, 9 N.Y.U. J.L. & Liberty ___ (2014):

Every government program has an opportunity cost, which consists of the private and public goods that society must forgo to make the program possible. In evaluating government programs, rational voters would take opportunity costs into account. Unfortunately, opportunity costs are usually implicit, and psychologists have shown that decision makers tend to irrationally ignore implicit information while giving too much weight to explicit information. This Article presents evidence that the bias against implicit information causes voters to neglect the opportunity costs of government programs. The Article also explains for the first time the implications of opportunity cost neglect for democracy.

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June 10, 2014 in Scholarship, Tax | Permalink | Comments (0)

Monday, June 9, 2014

Thimmesch: The Tax Hangover -- Trailing Nexus

Adam B. Thimmesch (Nebraska), The Tax Hangover: Trailing Nexus, 33 Va Tax Rev. 497 (2014):

Discussions regarding the scope of state taxing power over nonresident persons have generally focused on one issue — the conditions under which a state can tax such a person without violating the Dormant Commerce Clause. That issue has resulted in significant debate regarding whether physical or economic presences are required to create state power. Unfortunately, however, the discussion has ignored an equally important question — when state power, once it is created, terminates. Notwithstanding the lack of academic or judicial analysis of this issue, many states currently apply “trailing nexus” policies that extend their authority past the cessation of taxpayers’ nexus-creating activities. That concept challenges traditional views of the nexus requirement and seems to directly conflict with the Court’s physical-presence rule. This article analyzes the permissibility and scope of trailing nexus under both physical-presence and economic-nexus paradigms and finds that a disaggregated view of the nexus requirement supports its validity. The article also critiques state’s current trailing-nexus formulations and proposes an economic-latency approach that better comports with the Court’s Dormant Commerce Clause jurisprudence.

June 9, 2014 in Scholarship, Tax | Permalink | Comments (0)

Sunday, June 8, 2014

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 on SSRN, with a new paper debuting on the list at #5:

  1. [317 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [303 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven Avi-Yonah (Michigan)
  3. [207 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  4. [198 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  5. [158 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)

June 8, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 7, 2014

9th Annual Junior Tax Scholars Workshop Concludes Today at American

American Logo (2014)Panel #6:  Administration and Procedure

Andrew Blair-Stanek (Maryland), Injunctions in Tax
Commentators:  Jake Brooks (Georgetown), Andy Grewal (Iowa)

Emily Cauble (DePaul), Relying on the IRS
Commentators:  David Herzig (Valparaiso), David Kamin (NYU)

Andy Grewal (Iowa), The Un-Precedented Tax Court
Commentators:  Itai Grinberg (Georgetown), Tracey Roberts (Seattle)

Leigh Osofsky (Miami), Announcing Tax Enforcement Priorities
Commentators:  Micah Burch (Sydney), Erin Scharff (NYU)

Susie Morse (Texas), A Theory of Safe Harbor Rules
Commentators:  Emily Cauble (DePaul), Khrista Johnson (Pepperdine)

Panel #7:  Business

Mirit Eyal-Cohen (Alabama), Urban Mavericks
Commentators:  Rebecca Morrow (Wake Forest), Erin Scharff (NYU)

Emily Satterthwaite (Toronto), Entity Choices of New Firms: Preliminary Findings
Commentators:  Andrew Hayashi (Virginia), Leigh Osofsky (Miami)

Panel #8:  Charity

Phil Hackney (LSU), Taxing the Unheavenly Chorus: Why Section 501(c)(6) Trade Associations are Thoroughly Undeserving of Tax-Exemption
Commentators:  Michah Burch (Sydney), Tessa Davis (Tulane)

Khrista Johnson (Pepperdine), The Charitable Deduction Games III: Building a More Efficient Charitable Market
Commentators:  Mirit Eyal-Cohen (Pittsburgh), Ben Leff (American)

Panel #9:  Power to Tax

Tracey Roberts (Seattle), Beyond Cost: A Qualitative Examination of Tax Subsidies for the Energy Industry
Commentators:  Phil Hackney (LSU), Omri Marian (Florida)

Erin Scharff (NYU), Powerful Cities, Efficient Revenues: Limits on Municipal Taxing Authority and What to Do About Them
Commentators:  David Gamage (UC-Berkeley), Randle Pollard (Indiana, Kelley School of Business)

Prior Junior Tax Scholars Workshops:

June 7, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The Use of Offshore Tax Havens by Fortune 500 Companies

New York Times:  The Islands Treasured by Offshore Tax Avoiders, by Floyd Norris:

NYTDid you know that United States companies earned $129 billion in 2010 in three small groups of islands?

That is what they told the IRS they earned in Bermuda, the Cayman Islands and the British Virgin Islands. ...

Assuming you believe those figures, the productivity of workers in those countries is amazing. On average, United States companies had profits of $873,611 per person living in those islands.

By contrast, those same companies reported earning $12.6 billion in China, a country with 1.36 billion people. On a per capita basis, that comes to a little more than $9 a person.

Of course, those numbers are nonsense. The United States income tax laws allow companies to claim they earned profits in countries where they actually had few, if any, operations, but where taxes are extremely low.

A report this week by two groups upset about the low effective income tax rate for corporations, the U.S. Public Interest Research Group Education Fund and Citizens for Tax Justice, said that 372 of the companies in the Fortune 500 — generally the 500 United States companies with the highest revenues — reported a total of 7,827 subsidiaries in countries that the groups view as tax havens [Offshore Shell Games 2014:The Use of Offshore Tax Havens by Fortune 500 Companies].

(Hat Tip: Mike Talbert.)

June 7, 2014 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (1)

Friday, June 6, 2014

AALS Midyear Meeting on Sexual Orientation and Gender Identity Issues: Estate Taxes, Income Taxes, and the IRS

AALSAALS Midyear Meeting on Sexual Orientation and Gender Identity Issues today in Washington, D.C.:

Estate Taxes, Income Taxes, and the IRS:

June 6, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Roundup

June 6, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

June 6, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

9th Annual Junior Tax Scholars Workshop Kicks Off Today at American

American Logo (2014)Panel #1:  Financial Innovation

Randle Pollard (Indiana, Kelley School of Business), Feeling Insecure – A State View of Whether Investors in Municipal General Obligation Bonds Have a Mere Promise to Pay or a Binding Obligation
Commentators:  Phil Hackney (LSU), Susan Morse (Texas)

Omri Marian (Florida), Designing a Regulatory System for Bitcoin Era
Commentators:  Andrew Blair-Stanek (Maryland), Jason Oh (UCLA)

Ben Leff (American), Income-Based Repayment Swap
Commentators:  Emily Cauble (DePaul), David Kamin (NYU)

Panel #2:  Uncertainty and Time

Jake Brooks (Georgetown), The Case for Incrementalism in Tax Reform
Commentators: Andy Grewal (Iowa), Leigh Osofsky (Miami)

David Kamin (NYU), Fiscal Policy in an Uncertain World
Commentators:  Andrew Blair-Stanek (Maryland), David Gamage (UC-Berkeley)

Rebecca Morrow (Wake Forest), Keep them Guessing: A Defense of Impermanent, Automatically-Expiring and Short-Term Tax Policies
Commentators:  Mirit Eyal-Cohen (Alabama), Itai Grinberg (Georgetown)

Jason Oh (UCLA), Estimating Uncertainty and the Politics of Tax Law
Commentators: Andrew Hayashi (Virginia), Tracey Roberts (Seattle)

Panel #3:  Optimal Tax

Andrew Hayashi (Virginia), Cash Taxes and Consumption Commitments
Commentators:  Susan Morse (Texas), Jason Oh (UCLA)

David Gamage (UC-Berkeley), Optimal Tax II
Commentators: Jake Brooks (NYU), Emily Satterthwaite (Toronto)

Panel #4:  International Tax

Micah Burch (Sydney), Extranational Income
Commentators:  Omri Marian (Florida), Rebecca Morrow (Wake Forest)

Itai Grinberg (Georgetown), Putting International Tax in Its International Economic Law Context
Commentators: David Herzig (Valparaiso), Emily Satterthwaite (Toronto)

Panel #5:  Marriage and Family

Tessa Davis (Tulane), Taxing Modern Families: Mapping the Families of Tax
Commentators: Ben Leff (American), Randle Pollard (Indiana, Kelley School of Business)

David Herzig (Valparaiso), Marriage Pluralism: Taxing Marriage After Windsor
Commentators: Tessa Davis (Tulane), Khrista Johnson (Pepperdine)

Prior Junior Tax Scholars Workshops:

June 6, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, June 5, 2014

Blair-Stanek: Intellectual Property Law Solutions to Tax Avoidance

Andrew Blair-Stanek (Maryland), Intellectual Property Law Solutions to Tax Avoidance, 62 UCLA L. Rev. __ (2015):

Multinational corporations use intellectual property (IP) to avoid taxes on a massive scale, by transferring their IP offshore for artificially low prices. Economists estimate that this abuse costs the U.S. Treasury as much as $90 billion each year. Yet tax policymakers and scholars have been unable to devise feasible tax-law solutions to this problem. This Article introduces an entirely new solution: change IP law rather than tax law. Multinationals’ tax-avoidance strategies rely on undervaluing their IP. This Article proposes extending existing IP law so that these low valuations make it harder for multinationals subsequently to litigate or to license the IP. For example, transferring a patent for a low price to a tax-haven subsidiary should make it harder for the multinational to demonstrate the patent’s validity, a competitor’s infringement, or entitlement to any injunctions. The low transfer price should also weigh toward lower patent damages and potentially even a finding of patent misuse. Extending IP law in such ways would deter multinationals from using IP to avoid taxes. Both case law and IP’s theoretical justifications support this approach, which also has the counterintuitive benefit of encouraging the flourishing of creative professionals such as inventors and authors.

June 5, 2014 in Scholarship, Tax | Permalink | Comments (0)

Morriss: Law, Economics, and Religion

Andrew P. Morriss (Dean, Texas A&M), On the Usefulness of a Flat Economics to the World of Faith, 11 Econ. J. Watch 194 (2014):

DollarIs economics unduly flat? Perhaps, sometimes. But part of the power of economics comes from the parsimony of its approach to human nature. If and when we search for more complex approaches, we will need to understand the tradeoffs involved in choosing between that power and simplicity and the alternatives. Rather than deepening our economics with faith, it may be that we are better off using a relatively flat economics to enrich religious understandings.

(Hat Tip: Greg McNeal.)

June 5, 2014 in Scholarship, Tax | Permalink | Comments (0)

Galle: How Do Nonprofit Firms Respond to Tax Policy?

Brian D. Galle (Boston College), How Do Nonprofit Firms Respond to Tax Policy?:

We investigate the effects of variations in the value of the charitable contribution deduction on nonprofit firm behavior, including exploring for the first time the effects of the tax-price of giving on fundraising and returns to fundraising. We find that a one-percent increase in tax subsidies drives a 1.7-percent increase in fundraising, and decreases average returns to fundraising by two percent. We also find that tax subsidies deliver less than a dollar of value, net of fundraising, for each dollar foregone by the government, and that program-related expenditures are largely unresponsive to subsidies, at least in the short run. We argue that these results may imply that the charitable contribution deduction is less effective than prior research has suggested. For example, we argue our results are consistent with the hypothesis that subsidies trigger a destructive arms’ race for donor funds. The modest elasticity of real charitable output to tax price implies that tax subsidies may simply crowd out other revenue sources, such that the efficacy of the subsidy depends on the relative efficiency of these alternative sources.

June 5, 2014 in Scholarship, Tax | Permalink | Comments (0)

Standing in the Shadow of Tax Exceptionalism

Lynn D. Lu (CUNY), Standing in the Shadow of Tax Exceptionalism: Expanding Access To Judicial Review of Federal Agency Rules, 66 Admin. L. Rev. 73 (2014):

As the U.S. Supreme Court recently confirmed, regulation of behavior through the tax code is "nothing new." Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2596 (2012). From the individual mandate’s "shared responsibility payment" to the income-tax deduction for charitable donations, tax provisions raise or lower the cost of particular conduct. In doing so, tax rules, like all administrative rules, reflect normative values and protect important public interests. Yet the need for swift and certain collection of revenue has historically excused tax regulation from general administrative law principles that promote government accountability in the implementation of federal mandates.

This Article explores one critical instance in which tax exceptionalism swallowed the rule of government accountability to insulate much federal agency rulemaking from judicial oversight in all administrative arenas: constitutional standing doctrine. Under current standing doctrine, a wide range of regulatory stakeholders lacks access to federal court review of agency rules that adversely affect their concrete interests. Where such stakeholders are members of historically or politically marginalized populations, the lack of access to judicial review exacerbates process defects that limit their participation in rulemaking decisions. The result is an imbalance in regulatory influence between entities subject to the burdens of regulation and those who stand to benefit from the enforcement of regulatory mandates.

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June 5, 2014 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, June 4, 2014

Fahey: The Movement to Destroy the Income Tax and the IRS

Diane L. Fahey (New York Law School), The Movement to Destroy the Income Tax and the IRS: Who Is Doing It and How They Are Succeeding, 15 Fla. Tax Rev. 157 (2014):

Florida Tax ReviewThe passage of the Sixteenth Amendment to the United States Constitution in 1913 enabled the federal government to enact an income tax. Until 1941, only a small number of Americans paid the income tax; however, when the United States entered World War II, the income tax was expanded so that most citizens paid something. After the war ended, the federal income tax remained in place as a mass tax. Further, as the tax was expanded it became a major source of revenue for the federal government during and after World War II, thereby enabling the federal government to grow in size and power.

However, from the time the income tax was enacted, there has been a movement to undermine the income tax by financial elites who not only stand to benefit enormously but who are philosophically offended at both the idea of being subject to an income tax and an expanded and powerful federal government. The wealthy who were dismayed by the federal government’s increasingly prominent role in the lives of ordinary Americans recognized that reducing the federal government’s access to funds would reduce its influence and power. This movement has used a several-pronged approach: (1) attack the legitimacy of the federal government itself, and (2) attack the income tax and attack the manner in which the tax is collected.

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June 4, 2014 in Scholarship, Tax | Permalink | Comments (3)

Warren: Credit v. Deduction of Foreign Taxes of a Multinational Corporation

Alvin C. Warren (Harvard), The Relationship between a Credit and a Deduction for the Foreign Taxes of a Multinational Corporation:

A credit for foreign taxes paid by a multinational company is usually described as fundamentally different from a deduction for foreign taxes. The credit has been criticized for eliminating the taxpayer's incentive to reduce foreign taxes, whereas a deduction is said to maintain that incentive. On the other hand, the credit is traditionally defended as a method of eliminating double taxation of cross-border income, whereas the deduction is often criticized for producing multiple levels of taxation (and is therefore not an acceptable method of dealing with double taxation under the standard international tax treaties). The argument of this note is that a credit and a deduction for foreign taxes paid by a multinational company are not as different as the foregoing assertions would suggest. Indeed, credits and deductions can be interchangeable, with the distinction only a matter of labels or nominal tax rates.

June 4, 2014 in Scholarship, Tax | Permalink | Comments (0)

McGeorge Symposium: The State and Future of Legal Education

McGeorgeSymposium, The State and Future of Legal Education, 45 McGeorge L. Rev. 1-160 (2013):

June 4, 2014 in Legal Education, Scholarship | Permalink | Comments (3)

Sullivan: How Will Japan Pay for a Lower Corporate Rate?

Tax Analysys Logo (2013)Martin A. Sullivan (Tax Analysts), How Will Japan Pay for a Lower Corporate Rate?, 74 Tax Notes Int'l 788 (June 2, 2014):

Japanese Prime Minister Shinzo Abe's second term began in December 2012. In the first 12 months, prices on the previously moribund stock market soared 63 percent. In the following six months, they have dropped by 10 percent. ... The rise and fall are largely explained by Abenomics.

TNIThe prime minister's radical break from Japan's previous economic policies has three components, referred to as the three arrows. The first arrow is an enormous expansion of the money supply by the Bank of Japan. The second arrow is a big boost in government spending. By all accounts, both of these measures have been successful in providing short-term stimulus to the economy. ...

But Japan's miraculous made-in-Tokyo recovery is now stalled by a lack of progress on the third arrow of Abe's program: promised but unspecified structural, supply-side reforms like reduced regulation of the labor market, reductions in trade barriers and other protections of favored industries, and a reduction in the corporate tax rate, currently the second highest in the world after the United States. The government's fiscal and economic blueprint, due later this month, is expected to offer proposals on these issues. ...

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June 4, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (1)

Tuesday, June 3, 2014

Graetz: The Tax Reform Road Not Taken -- Yet

Michael J. Graetz (Columbia), The Tax Reform Road Not Taken -- Yet, 67 Nat'l Tax J. 419 (2014):

National Tax Journal Logo (2013)The United States has traveled a unique tax policy path, avoiding value added taxes (VATs), which have now been adopted by every OECD country and 160 countries worldwide. Moreover, many U.S. consumption tax advocates have insisted on direct personalized taxes that are unlike taxes used anywhere in the world. This article details a tax reform plan that uses revenues from a VAT to substantially reduce and reform our nation’s tax system. The plan would (1) enact a destination-based VAT; (2) use the revenue produced by this VAT to finance an income tax exemption of $100,000 of family income and to lower income tax rates on income above that amount; (3) lower the corporate income tax rate to 15 percent; and (4) protect low and-moderate-income workers from a tax increase through payroll tax credits and expanded refundable child tax credits. This revenue and distributionally neutral plan would stimulate economic growth, free more than 150 million Americans from having to file income tax returns, solve the difficult problems of international income taxation, and remove the temptation for Congress to use tax benefits as if they are solutions to the nation’s pressing social and economic problems.

June 3, 2014 in Scholarship, Tax | Permalink | Comments (1)