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Monday, June 8, 2015

Crespi: The 'Tax Bomb' Facing Lawyers Who Enroll In Income-Based Student Loan Repayment Plans

IBRGregory Scott Crespi (SMU), Should We Defuse the "Tax Bomb" Facing Lawyers Who are Enrolled in Income-Based Student Loan Repayment Plans?:

Starting in the early-2030's each year thousands of mid-career lawyers who have previously incurred large student loan debts, and who unfortunately have been able to earn only relatively modest annual incomes in the 20 or 25 years following their law school graduation, will be subject to large cancellation of indebtedness-based federal and sometimes also state income tax obligations. These tax bills will often be in the neighborhood of $50,000 to $100,000 and in some instances even larger. Many of these lawyers will likely have failed to adequately provide for this large tax obligation and will find that it will impair or even devastate their retirement plans.

The phrase “tax bomb” is an apt one to describe this large tax obligation that will be imposed on income that is attributed to but not actually received by a relatively small group of taxpayers. It will result because a large portion of the student loan debts that have been incurred by many law school graduates will eventually be forgiven under one or another variant of the increasingly popular federal Income-Based Repayment Plan, and those forgiven debts will then be treated under the Internal Revenue Code as taxable income.

This article explains how this tax bomb was created and how the various statutes and regulations that define its scope and size have evolved over time, and how much but not all of its impact will be substantially reduced by the Department of Education’s proposed new Revised Pay as You Earn rules that will be in force as of December of 2015.

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June 8, 2015 in Legal Education, Scholarship, Tax | Permalink | Comments (14)

Sunday, June 7, 2015

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. [287 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  2. [206 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S. Treasury Department)
  3. [166 Downloads]  Reducing Inequality With A Retrospective Tax On Capital, by James Kwak (Connecticut)
  4. [144 Downloads]  Citizenship Taxation, by Ruth Mason (Virginia)
  5. [123 Downloads]  What Does Voluntary Tax Compliance Mean?: A Government Perspective, by J. T. Manhire (U.S. Treasury Department)

June 7, 2015 in Legal Education, Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, June 5, 2015

Stark Delivers Keynote Address Today On Tax Policy In The Super Zips At L.A. Bar Association

Stark (2014)Kirk Stark (UCLA) delivers the keynote address on Tax Policy in the Super Zips at the Los Angeles County Bar Association Dana Latham Award Luncheon today:

As the distribution of income and wealth has grown more skewed, households have increasingly sorted into income homogenous neighborhoods. The rise of income segregation entails increased fiscal segregation as well, as the operation of federal tax law becomes more differentiated across space. This paper concerns one dimension of the tax law’s disparate geographical impact—i.e., the operation of the federal income tax in the nation’s wealthiest communities, or “Super ZIPs.” Using IRS zip code level data for tax year 2012, the paper examines several key federal income tax characteristics for these zip codes (e.g., AGI, income composition, itemized deductions), comparing these figures to the same data for the nation as a whole as well as select neighboring zip codes on the opposite end of the income distribution. The resulting analysis reveals a stark perspective on income segregation in the United States through the lens of the federal tax system.

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June 5, 2015 in Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

10th Annual Junior Tax Scholars Workshop Concludes Today At Texas

Texas LogoPanel #5:  Administration

Andrew Blair-Stanek (Maryland), Tailoring Tax
Commentators:  Philip Hackney (LSU), Fadi Shaheen (Rutgers-Newark)

Philip Hackney (LSU), Tied Up in (K)Nots
Commentators:  Kim Brooks (Schulich), Christine Allie (Widener)

Jake Brooks (Georgetown), Quasi-Public Spending 
Commentators:  Leigh Osofsky (Miami), Micah Burch (Sydney)

Leigh Osofsky (Miami), Strategic Simplicity and the Tax Law 
Commentators:  Andrew Blair-Stanek (Maryland), Itai Grinberg (Georgetown)

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June 5, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

1st Annual Mid-Career Tax Professors Workshop Concludes Today At Ohio State

Ohio State LogoPanel #5

Miranda Perry Fleischer (San Diego), Making The Charitable Deduction More Charitable
Commentator:  Benjamin Leff (American)

Brian Galle (Georgetown), Pay It Forward? Law and the Problem of Restricted-Spending Philanthropy
Commentator:  Stephanie Hoffer (Ohio State)

Samuel Brunson (Loyola-Chicago), Tax & Religious Exceptions
Commentator:  Bobby Dexter (Chapman)

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June 5, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, June 4, 2015

Shaviro Applauds Tax Policy Community's Influence On Supreme Court's Decision In Comptroller v. Wynne

JotwellDaniel Shaviro (NYU), Discrimination Against Interstate Commerce Vs. Double Taxation (Jotwell) (reviewing Michael Knoll (Pennsylvania) & Ruth Mason (Virginia), What Is Tax Discrimination?, 121 Yale L.J. 1014 (2012); Ryan Lirette (Goodwin Procter, Boston) & Alan Viard (American Enterprise Institute), State Taxation of Interstate Commerce and Income Flows: The Economics of Neutrality (American Enterprise Institute 2014)):

For good reasons on balance, the best academic work in tax (and other) law has moved far away in recent decades from focusing primarily on which answers to particular questions are legally correct. Not only have scholars wanted to pursue larger game than just the current, inevitably flawed, state of the law, but it is often hard to say what “legal correctness” means. Writing about policy, rather than just about legal correctness, not only broadens the menu of possible topics, but permits one to devise clearer criteria for assessing the merits of competing arguments.

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June 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

Rosenzweig: Source As A Solution To Residence

Florida Tax ReviewAdam H. Rosenzweig (Washington University), Source as a Solution to Residence, 17 Fla. Tax Rev. ___ (2015):

The choice between source-based and residence-based taxation has defined the terms of the debate for the international tax regime since its inception in the early 1900's. The thesis of this Article is that the construct of source and residence as two competing and irreconcilable doctrines is largely incorrect as a legal matter. Rather, both source rules and residence rules can and should be thought of solely as instrumental tools to divide taxing authority in a globalized world with mobile capital. Under this approach, there is no reason why “source” rules as a doctrinal matter need to be used only for “source” taxation as an economic matter, or that “residence” rules as a doctrinal matter need be used for “residence” taxation as an economic matter. Instead, the source rules as a doctrinal matter can actually be used to solve the problems of the residence rules as a doctrinal matter. Put differently, source and residence as doctrinal rules can converge into a single concept in the modern global economy.

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June 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

10th Annual Junior Tax Scholars Workshop Kicks Off Today At Texas

Texas LogoPanel #1:  Compliance

Tessa Davis (South Carolina), Of Tax Evasion and Bad Citizens
Commentators:  Emily Satterthwaite (Toronto), Randle Pollard (Indiana)

Emily Satterthwaite (Toronto), Tax Compliance Learning
Commentators:  Susie Morse (Texas), Andy Grewal (Iowa)

Susan Morse (Texas), Tax Anti-Avoidance Law in Australia and the United States
Commentators:  Tessa Davis (South Carolina), Allen Madison (South Dakota)

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June 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

1st Annual Mid-Career Tax Professors Workshop Kicks Off Today At Ohio State

Ohio State LogoPanel #1

Rifat Azam (Radzyner), Responsible Corporate Tax
Commentator:  Samuel Brunson (Loyola-Chicago)

Adam Rosenzweig: (Washington University), Electing Arbitrage: Tax Elections, Tax Fictions and Cross-Border Tax Arbitrage
Commentator:  Rebecca Kysar (Brooklyn)

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June 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Bloom Receives Albany Law School's Annual Faculty Scholarship Award

BloomIra Mark Bloom, Justice David Josiah Brewer Distinguished Professor of Law, received Albany Law School's annual faculty scholarship award:

Professor Ira Bloom received the Faculty Award for Excellence in Scholarship for producing a body of work that that is seen as influential and required reading in his field for New York state and the country. Professor Bloom is the author of numerous law review articles, co-author of nine law school casebooks on tax and trusts and estates, and principal author of the two-volume treatise Drafting New York Wills and Related Documents.

June 4, 2015 in Legal Education, Scholarship, Tax, Tax Profs | Permalink | Comments (0)

Wednesday, June 3, 2015

Ventry Reviews Mehrotra's Making the Modern American Fiscal State

Book Cover 2Dennis J. Ventry Jr. (UC-Davis), Book Review, 46 J. Interdisc. Hist. 133 (Summer 2015) (reviewing Ajay K. Mehrotra (Director, American Bar Foundation), Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929 (Cambridge University Press, 2013)):

Mehrotra’s award-winning book is a tour de force. It chronicles a transformative period in the development of the American fiscal state during which the old order — characterized by indirect, hidden, mercilessly regressive, and partisan taxation — gave way to a direct, transparent, steeply progressive, and professionally administered tax regime.

Making the Modern American Fiscal State will appeal to historians across multiple disciplines with diverse research interests. Mehrotra’s diligent chronicling of “what actually happened in the past” aptly fulfills the historian’s mandate “to trace and explain change over time.” Moreover, Mehrotra identifies and informs all of the relevant schools of thought about state-building at the turn of the century, including the influence of national crises, the “corporate liberal” view that Progressive Era reforms were designed to deflect more radical change, “progressive” historical accounts of ineluctable advancement and “great men,” and “democratic-institutionalism” as advanced not just by historians but also political scientists, sociologists, and economists.

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June 3, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

University Of Texas Hosts Inaugural Texas Tax Faculty Workshop

Texas LogoThe University of Texas School of Law is hosting the inaugural Texas Tax Faculty Workshop today with these papers:

  • Bret Wells (Houston), The Foreign Tax Credit War
    Discussants:  Susie Morse (Texas), Bob Peroni (Texas)
  • Bryan Camp (Texas Tech), How the IRS Can Regulate Return Preparers Without New Law
    Discussants:  Dennis Drapkin (Jones Day, Dallas), John Dzienkowski (Texas)
  • Bob Peroni (Texas), Designing a U.S. Minimum Tax on Foreign Business Income (with Stephen Shay (Harvard) & Clifford Fleming (BYU))
    Discussant:  Bret Wells (Houston)
  • Susie Morse (Texas), Tax Anti-Avoidance Law in Australia and the United States (with Robert Deutsch (University of New South Wales))
    Discussants:  Stephen Black (Texas Tech), Calvin Johnson (Texas)

June 3, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Tuesday, June 2, 2015

Blank Presents The Timing Of Tax Transparency Today In Sweden

BlankJoshua D. Blank (NYU) presents The Timing of Tax Transparency in Gävle, Sweden today at a Conference on Secrecy and Transparency in Tax Administration”co-hosted by Gävle University College, Vienna University of Economics and Business and Örebro University:

Fairness in the administration of the tax law is a subject of intense focus in the United States. As myriad recent headlines reveal, the Internal Revenue Service has been accused of failing to enforce the tax law equitably in its review of gift and estate tax returns of millionaires, the international tax structures of multinational corporations and applications for tax-exempt status by political organizations, among others. 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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June 2, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Call for Tax Papers: Akron Law Review

AkronFrom Rich Lavoie:  The Akron Law Review is seeking tax articles for its annual tax issue (formerly the stand-alone Akron Tax Journal).  For more information or to submit an article, contact Jesse Moses.

June 2, 2015 in Scholarship, Tax | Permalink | Comments (0)

Johnson: Tax ‘Simplification’ As A Trojan Horse For Terrible Tax Policy

Calvin H. Johnson (Texas), When ‘Simplification’ Is a Trojan Horse for Great Harm, 147 Tax Notes 565 (May 4, 2015):

In this article, Johnson argues that simplification is sometimes used as a cover for terrible tax policy. A flat tax, for instance, will increase harm by shifting the burden of tax from Uncle Scrooge, who can bear tax on a dollar without much loss in value, to the Little Match Girl, who cannot. Flat tax does not accomplish substantial simplification. An add-on VAT is not a simplification, but another level of complication. So too, expensing of inventory, repeal of net operating loss carryover limitations, and repeal of straddle rules are not are not well illuminated by calling them simplification and are not justified by simplification.

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June 2, 2015 in Scholarship, Tax | Permalink | Comments (3)

Sunday, May 31, 2015

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2015 Law & Society Association Annual Meeting in Seattle:

  • Panel #14:  The Creation of Transnational Legal Orders in Tax: Actors, Processes and Their Implications
  • Panel #15:  Eclecticism in Tax Law

Panel #14:  The Creation of Transnational Legal Orders in Tax: Actors, Processes and Their Implications (Adam Rosenzweig (Washington University), Chair & Discussant)

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May 31, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

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 and new papers debuting on the list at #3, #4, and #5:

  1. [223 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  2. [181 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S Treasury Department)
  3. [143 Downloads]  Reducing Inequality With A Retrospective Tax On Capital, by James Kwak (Connecticut)
  4. [124 Downloads]  The Un-Precedented Tax Court, by Andy Grewal (Iowa)
  5. [113 Downloads]  Citizenship Taxation, by Ruth Mason (Virginia)

May 31, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 30, 2015

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2015 Law & Society Association Annual Meeting in Seattle:

  • Panel #10:  Social Issues and Taxation
  • Panel #11:  Using the Tax System to Address Social Problems
  • Panel #12:  The Tax System, Regulation, and the Environment
  • Panel #13:  Theory and Constitutionalism in Tax Law
  • International, Socio-legal Feminisms: Perspectives on Taxation Law

Today's paper presenters and topics are below the fold:

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May 30, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Friday, May 29, 2015

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

May 29, 2015 in Scholarship, Tax | Permalink | Comments (0)

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2015 Law & Society Association Annual Meeting in Seattle:

  • Panel #5:  Business and Entity Taxation
  • Panel #6:  Inequality, Distribution and the State
  • Panel #7:  Topics in the Theory and Practice of Tax Law
  • Panel #8:  Taxation, Development and Emerging Countries
  • Panel #9:  Problems Raised by Nonprofit Organizations
  • Author Meets Reader:  Confidence Games: Lawyers, Accountants and the Tax Shelter Industry

Today's paper presenters and topics are below the fold:

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May 29, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, May 28, 2015

The Role Of Taxes In Mitigating Income Inequality Across The U.S. States

Daniel H. Cooper (Federal Reserve Bank of Boston), Byron F. Lutz (Federal Reserve Board) & Michael G. Palumbo (Federal Reserve Board), The Role of Taxes in Mitigating Income Inequality Across the U.S. States:

Income inequality has risen dramatically in the United States since at least 1980. This paper examines the role that tax policies play in mitigating income inequality. The analysis primarily focuses on state taxes, but also explores federal taxes. Two empirical approaches are employed. First, cross-sectional estimates compare before-tax and after-tax inequality across the 50 states and the District of Columbia. Second, inequality estimates across time are calculated to assess the evolution of the effects of tax policies.

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May 28, 2015 in Scholarship, Tax | Permalink | Comments (1)

Today's Law, Society & Taxation Panels

L&SToday's Law, Society, and Taxation panels at the 2015 Law & Society Association Annual Meeting in Seattle:

  • Panel #1:  History and Fiscal Policy
  • Panel #2:  The Treasury, the IRS, and Problems of Tax Administration
  • Panel #3:  Courts and Tax Administration
  • Panel #4:  Problems in International and Interregional Taxation
  • Increasing Access to Justice Through Alternative Avenues

Today's paper presenters and topics are below the fold:

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May 28, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Wednesday, May 27, 2015

Papers From The 2014 IRS-TPC Research Conference: Advancing Tax Administration

TPC-IRSThe IRS has released the papers from the 2014 IRS-TPC Research Conference: Advancing Tax Administration (abstracts of papers here):

Session #1:  Taxpayer Compliance Costs and Tax Administration

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May 27, 2015 in Conferences, IRS News, Scholarship, Tax | Permalink | Comments (0)

LoPucki: Disciplinary Legal Empiricism

Following up on my previous post, Lynn M. LoPucki (UCLA), Disciplining Legal Scholarship, 95 Tul. L. Rev. ___ (2015):  Lynn M. LoPucki (UCLA), Disciplinary Legal Empiricism:

Disciplines tend to develop their own empirical methods. This article reports on a study of one hundred and twenty empirical legal studies published in the non-peer-review leading law reviews and in the peer-review Journal of Empirical Legal Studies ("JELS"). The study reveals four important categories of differences between disciplinary legal empiricism, defined as legal empiricism conducted by persons holding Ph.D. degrees (whether or not they also hold law degrees), and native legal empiricism, defined as legal empiricism conducted by persons holding only law degrees. First, the study found that Ph.D.s and J.D.-Ph.D.s collaborate more than J.D.s, but the collaboration is largely among the Ph.D. holders themselves. Second, JELS appeared to value methodological expertise over legal expertise. Only 15% of the JELS articles had no author holding a Ph.D., while 35% had no author holding a J.D. Third, the J.D.s were more likely to draw their data from published sources, while Ph.D.s and J.D.-Ph.D.s were more likely to draw their data from prior research, survey, or experiment. Lastly, the J.D.s were almost twice as likely to code their own data. These differences are important because law schools are rapidly hiring J.D.-Ph.D.s in an effort to increase the quantity and quality of legal empiricism. The study concludes that law school Ph.D. hiring is unlikely to achieve large increases in collaboration between Ph.D.s and J.D.s. It also concludes that the reduction in coding resulting from the hiring of more J.D.-Ph.D.s will escalate legal empiricism’s methodological sophistication while reducing its legal sophistication.

May 27, 2015 in Scholarship, Tax | Permalink | Comments (1)

Tuesday, May 26, 2015

Kwak: Reducing Inequality With A Retrospective Tax On Capital

James Kwak (Connecticut), Reducing Inequality with a Retrospective Tax on Capital, 24 Cornell J.L. & Pub. Pol'y ___ (2015):

Inequality in the developed world is high and growing: in the United States, 1% of the population now owns more than 40% of all wealth. In Capital in the Twenty-First Century, the economist Thomas Piketty argues that inequality is only likely to increase: invested capital tends to grow faster than the economy as a whole, causing wealth to concentrate in a small number of hands and eventually producing a society dominated by inherited fortunes. The solution he proposes, an annual wealth tax, has been reflexively dismissed even by supporters of his overall thesis, and presents a number of practical difficulties. However, a retrospective capital tax — which imposes a tax on the sale of an asset based on its (imputed) historical values — can reduce the rate of return on investments and thereby slow down the growth of wealth inequality. A retrospective capital tax mitigates or avoids the administrative and constitutional problems with a simple annual wealth tax and can reduce the rate of return on capital more effectively than a traditional income tax. This Article proposes a revenue-neutral implementation of a retrospective capital tax in the United States that would apply to only 5% of the population and replace most existing taxes on capital, including the estate tax and the corporate income tax. Despite conventional wisdom, there are reasons to believe that such a tax could be politically feasible even in the United States today.

May 26, 2015 in Scholarship, Tax | Permalink | Comments (2)

Monday, May 25, 2015

The Inseparability Of Legal Theory, Practice And The Humanities

Harold Anthony Lloyd (Wake Forest), Exercising Common Sense, Exorcising Langdell: The Inseparability of Legal Theory, Practice and the Humanities, 49 Wake Forest L. Rev. 1213 (2014):

Maintaining that theory without practice is empty and practice without theory is blind, this article explores the impossibility of meaningfully separating legal theory from practice and the implications of this impossibility for legal education. Recognizing that no meaningful distinction can be made between legal theory and practice, this article maintains that there can be no meaningful distinction between “doctrinal” and “non-doctrinal” or “practical skills” courses and faculty. Accordingly, it explores the resulting implications for law school curricula and for faculty hiring standards.

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May 25, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

Zelinsky: Tax And ERISA Implications Of The Illinois Private Sector Retirement Plan

Edward A. Zelinsky (Cardozo), Retirement in the Land of Lincoln: The Illinois Secure Choice Savings Program Act, 2016 U. Ill. L. Rev. ___ :

Illinois has now become the first state to complete legislative enactment of a state-mandated, state-operated retirement system for private employers. As it debated, the Illinois General Assembly had before it The California Secure Choice Retirement Savings Trust Act, adopted earlier by California’s legislature. The Illinois legislation, as enacted and signed by the governor, bears obvious similarities to the earlier-adopted California law. However, the Illinois statute also makes notable departures from the California legislation.

As a legal matter, the Illinois private sector retirement plan will pass muster under both the Internal Revenue Code (Code) and the Employee Retirement Income Security Act of 1974 (ERISA). The Illinois accounts will qualify as Roth IRAs under the Code. The Illinois program will not be an ERISA-regulated employee benefit plan but, rather, will be an IRA payroll deposit arrangement. Even if the Illinois arrangement is an ERISA-governed plan, Illinois employers and the state itself will have no ERISA liability.

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May 25, 2015 in Scholarship, Tax | Permalink | Comments (2)

Sunday, May 24, 2015

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 #2:

  1. [271 Downloads]  The Historical Origins of the Debt-Equity Distinction, by Camden Hutchison (Wisconsin)
  2. [223 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  3. [201 Downloads]  Scholarship Against Desire, by Shari Motro (Richmond)
  4. [170 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S Treasury Department)
  5. [127 Downloads]  Believing in Life After Loving: IRS Regulation of Tax Preparers, by Alex H Levy (NYU)

May 24, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, May 22, 2015

Weekly SSRN Tax Roundup

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May 22, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Weekly RoundupConor Clarke (J.D. 2015, Yale) & Edward Fox (J.D. 2015, Yale), Note, Perceptions of Tax Expenditures and Direct Spending: A Survey Experiment, 124 Yale L.J. 1252 (2015):

This paper presents the results of an original survey experiment on whether the public prefers “tax expenditures” to “direct outlays” — that is, whether members of the public are more likely to support government spending that takes the form of a tax credit rather than a check or cash. Using a survey that spans a wide variety of policy areas — and with important variations in wording and information — we show that the public strongly prefers tax expenditures even when the “economic substance” of the proposed policies is identical. We also show that the public views tax expenditures as less costly than equivalent direct outlays. These results support a longstanding but largely unstudied hypothesis that tax expenditures “hide” the costs of government spending, and have implications for why tax expenditures have continued to grow in size and complexity.

May 22, 2015 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Brennan & McDonald: Deconstructing the Taxation of Packaged Financial Strategies

Thomas Brennan (Harvard) & Robert McDonald (Northwestern), Deconstructing the Taxation of Packaged Financial Strategies:

Financial claims are often taxed according to the way in which they are nominally “packaged” rather than according to their economic characteristics. We deconstruct financial taxation by viewing any financial strategy as a dynamic portfolio of pure debt and pure equity. Given the taxation of these building blocks, there is a unique consistent equivalent tax treatment for any strategy, and this transparent tax is a benchmark against which burdens or subsidies due to packaging can be measured. We quantify tax effects in present value terms in the context of a partial equilibrium model. We apply our methodology to common hybrid securities, such as convertible bonds and reverse convertible bonds. We find tax-induced discrepancies of up to about up to about 6% of value (i.e., 20 basis points per year) for typical 30-year convertible bonds. With unfunded securities, such as puts and calls, the discrepancy becomes much larger in percentage terms. Because these unfunded positions are levered, however, investors do not buy as many of them, and the discrepancy in aggregate absolute terms is therefore likely not so much greater. In our framework, the discrepancy can be eliminated either by taxation based on an ongoing determination of building block equivalents or else by eliminating distinctions in taxation among the building blocks. In particular, this would require eliminating the tax distinction between debt and equity.

May 22, 2015 in Scholarship, Tax | Permalink | Comments (0)

Thursday, May 21, 2015

NYU Symposium: Tax And Corporate Social Responsibility

NYUSymposium, Tax and Corporate Social Responsibility, 11 N.Y.U. J.L. & Bus. 1-189 (2014):

Articles

Proceedings

Panel 1:  Should Corporations Pay Tax?,  11 N.Y.U. J.L. & Bus. 125 (2014)

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May 21, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Todres: Tax Shelters And Tax Malpractice

Jacob L. Todres (St. John's), Bad Tax Shelters -- Accountability or the Lack Thereof: Ten Years of Tax Malpractice, 66 Baylor L. Rev. 602 (2014):

In the 1990’s and early 2000’s the tax landscape in the United States was overrun by an epidemic of tax shelters that was unprecedented. The shelters were designed and sold by seemingly reputable large accounting and law firms. The same shelters were sold to many taxpayers. They became generic, off-the-shelf, products. However, the tax shelters had no business substance. The shelters were eventually found to be invalid by the courts. In light of the invalidity of the shelters, the large fees paid for the shelters and the large damages caused by participating in the invalid shelters, there were predictions that many malpractice suits against the sellers of the shelters would ensue.

For this article I attempted to determine whether the predicted wave of tax malpractice suits occurred and what impact, if any, resulted in the area of tax malpractice litigation.

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May 21, 2015 in Scholarship, Tax | Permalink | Comments (0)

Sugin: Strengthening Charity Law With Advance Rulings

Linda Sugin (Fordham), Strengthening Charity Law: Replacing Media Oversight with Advance Rulings for Nonprofit Fiduciaries, 89 Tul. L. Rev. ___ (2015):

This Article considers three urgent challenges facing the charitable community and its state regulators: too little fiduciary duty law for nonprofits, the rise of media enforcement of wrongdoing in charities, and an inherent tension in the state’s dual role as enforcer and protector of the nonprofit sector. It analyzes whether the scarcity of law is really a problem by comparing nonprofit organizations with business organizations and concludes that charities lack the self-enforcement mechanisms of businesses and therefore need more government guidance. It evaluates whether the media has made governmental supervision obsolete and expresses skepticism about the press displacing state oversight. The solution presented, an advance-ruling procedure for fiduciary duty questions, proposes that states shift their focus from better enforcement against wrongdoers ex post to better charity governance ex ante by devoting more attention and resources to assisting well-meaning charity directors in carrying out their fiduciary obligations.

May 21, 2015 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, May 20, 2015

Chorvat Presents Expectations And Expatriations: A Long-Run Event Study Today at Oxford

Chorvat (Elizabeth) (2015)Elizabeth Chorvat (Illinois) presents Expectations and Expatriations: A Long-Run Event Study at the Oxford University Centre for Business Taxation today as part of its Research Seminar Series:

This paper represents the first event study of corporate expatriations since Desai and Hines (2002), and is the first study to link corporate expatriation behavior to intangibles. Utilizing a bootstrap methodology, the paper demonstrates that corporate expatriations – whether naked inversions or redomiciliations in the context of business combinations – generate statistically and economically significant excess returns on the order of 225% above market returns in the years following the inversion. Moreover, notwithstanding the public nature of the inversion announcement, which should be a signal of extraordinary future profits, there has historically been no price response to the signal. Because the tax cost of the inversion transaction is based on market price, their inability to send a credible signal of future profits provides corporate managers the opportunity to reorganize outside the U.S. at a reduced tax cost, if they believe that the benefits to expatriation outweigh the cost.

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May 20, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Shaviro: Recent International Tax Policy Developments

Daniel Shaviro (NYU), The Crossroads Versus the Seesaw: Getting a 'Fix' on Recent International Tax Policy Developments:

FixingU.S. international tax policy is at a crossroads, say those who urge the United States to adopt what common parlance would call a territorial system. They argue that one of the two ways forward they identify – trying to fortify the current U.S. system – would lead to ever-costlier outlier status for our tax system, and ever-declining competitiveness for U.S. multinationals. They therefore urge U.S. policymakers to embrace what they identify as the other way forward: conforming to global norms by adopting a territorial system.

An alternative metaphor to that of the crossroads, more likely to appeal to proponents of addressing stateless income than to pro-territorialists, is that of the seesaw. Under this view, while policymakers in OECD countries may long have deliberately tolerated profit-shifting by multinationals – perhaps as an informal way of lowering effective tax rates for these often highly mobile taxpayers – at some point they became convinced that it had gone too far. Thus, proponents of restricting stateless income want to tip the balance somewhat (but not too far) back in the other direction. For example, they may want to ensure that each increment of a multinational’s global income will be subject to tax somewhere – but just once, rather than either zero times or twice, under what has been called the “single tax principle.”

In my 2014 book Fixing U.S. International Taxation, I tried to offer a better analytical framework for international tax policy than either of the above. The concepts that I hoped to sideline or even banish included not only the single tax principle, along with the “worldwide versus territorial” framework – which I disparaged as conflating multiple margins, even leaving aside countries’ hybridity in practice – but also normative reliance on the whole rancid “alphabet soup” of single-margin neutrality benchmarks such as capital export neutrality (CEN), capital import neutrality (CIN), and capital ownership neutrality (CON).

A number of important things have happened in international tax policy since Fixing went to press. For example:

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May 20, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Leff: Preventing Private Inurement In Tranched Social Enterprises

Benjamin M. Leff (American), Preventing Private Inurement in Tranched Social Enterprises, 41 Seton Hall L. Rev. 1 (2015):

Social Enterprises are organizations that are operated for the dual purpose of engaging in profit-making activity and furthering a social good. Because of their “hybrid” nature, social enterprises are perceived to be stymied by a legal system that is overly devoted to defining organizations as either businesses or nonprofits. Legal academics and legislatures have been hard at work trying to make room for social enterprises by experimenting with modifications the laws that constrain both businesses and nonprofits. One significant sector of this reform movement is devoted to making it easier for social enterprises to receive funding from both for-profit investors and charitable non-profits. They argue that social enterprises will not flourish until charitable non-profits are permitted make below-market investments in social enterprises for the purpose of subsidizing the return expected by for-profit investors. This combination of below-market charitable investments and market-rate for-profit investments is generally called a “tranched investment structure.” It is not impossible under current law, but reformers argue that it is unnecessarily difficult, primarily because of federal laws restricting nonprofit activities.

This article addresses the specific legal issues raised by a tranched investment structure. Previous scholarship (and legislative reform) has focused on specific rules that apply only to “private foundations,” a subcategory of § 501(c)(3) organizations, the general federal classification of charities. But, surprisingly, commentators have largely ignored the laws that apply to tranched investment structures involving any § 501(c)(3) organization. This article fills that gap.

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May 20, 2015 in Scholarship, Tax | Permalink | Comments (0)

Corporate Inversions Increase U.S. Tax Revenues

Rita Nevada (Northwestern) & Thomas Z. Lys (Northwestern), The Paradoxical Impact of Corporate Inversions on US Tax Revenue:

Do corporate inversions cost the US Treasury billions of dollars in tax revenue, justifying legislative responses and even strong-arming corporations from moving their tax domicile abroad? We show that corporate inversions not only do not appear to reduce, but, paradoxically, are even likely to increase tax collections by the US Treasury.

May 20, 2015 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, May 19, 2015

Mason Presents Citizenship Taxation Today At Oxford

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation, 88 S. Cal. L. Rev. ___ (2015), at the Oxford University Centre for Business Taxation today as part of its Research Seminar Series:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrants. 

Citizenship taxation was originally designed to punish “economic benedict Arnolds” who fled the United States during the Civil War to avoid Civil War taxes and the draft. In the modern era, migrating from the United States is not the disloyal act of a wealthy few. Our global economy and our increasingly interconnected world create professional and personal opportunities that Americans can only claim by moving abroad. Concerns about a few high-profile, rich tax defectors who can be sanctioned with targeted anti-abuse regimes should not drive tax policy governing seven million Americans who reside abroad.

May 19, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kwall & Wilbur: The Outer Limits of Realization

Florida Tax ReviewJeffrey L. Kwall (Loyola-Chicago) & Katie K. Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 17 Fla. Tax Rev. 47 (2015):

The Supreme Court’s 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation (“Oldco”) transferred its business to a new corporation (“Newco”) in a transaction where the Oldco shareholders surrendered all their stock for 50% of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100% to 50%. Because the Oldco shareholders surrendered control of the enterprise, the 50% interest they received in Newco was fundamentally different from the 100% interest they had owned in Oldco. Nevertheless, the Court held that the receipt of the Newco shares was not a taxable event (a “realization event”) to the Oldco shareholders. The Court reached this result by ignoring the dilution that occurred in the case.

In 1991, the Supreme Court resurrected the Weiss v. Stearn decision in the Cottage Savings case. There, the Court relied on Weiss v. Stearn to establish that the exchange of property triggers a realization event only if the property received is “materially different” from the property surrendered. Once again, the Court ignored the dilution that occurred in Weiss v. Stearn. As a result, Supreme Court jurisprudence sheds no light on the question of whether corporate dilution can trigger realization.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Rosenzweig: Defining A Country's 'Fair Share' Of Taxes

Adam H. Rosenzweig (Washington University), Defining a Country's 'Fair Share' of Taxes, 42 Fla. St. U. L. Rev. 373 (2015):

The international tax regime is facing a defining moment. As stories of multinational companies expatriating and shifting income around the world with seeming impunity continue to emerge, the question of how to divide the international tax base among the countries of the world increasingly draws attention from policy-makers and academics. To date, however, the debate has tended to devolve into one over the two traditional tools used to divide worldwide tax base — transfer pricing and formulary apportionment. This Article demonstrates that such focus is misplaced on the instruments of dividing the worldwide tax base rather than on first principles. Instead, this Article will adopt the first principle of maximizing the efficiency of the worldwide tax regime under two key, but realistic, assumptions: first, that the presence of multiple states in the world is efficient and, second, that there is a declining marginal utility to public goods. Under these assumptions, dividing worldwide tax base efficiently requires balancing the goals of maximizing the neutrality of tax laws and the provision of public goods across all countries.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Monday, May 18, 2015

Desai & Dharmapala: Interest Deductions in a Multijurisdictional World

Mihir A. Desai (Harvard) & Dhammika Dharmapala (Chicago), Interest Deductions in a Multijurisdictional World:

This paper proposes and evaluates alternative methods for addressing the tax treatment of interest expenses in a multijurisdictional setting. The differential deductibility of debt entailed by various current tax law provisions leads to potential distortions in the patterns of asset ownership across MNCs and various proposed solutions have significant limitations. We suggest alternative regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – to address the ownership distortions that we highlight along with other well-established problems of income-shifting through debt. These alternative regimes are extensions to a multinational setting of two general approaches to the neutral treatment of interest expenses – the CBIT (comprehensive business income tax) and ACC (allowance for corporate capital). While these regimes provide solutions to ownership distortions and to problems of “base erosion and profit shifting,” they have the potential disadvantage of restricting other policy parameters.

May 18, 2015 in Scholarship, Tax | Permalink | Comments (0)

Sunday, May 17, 2015

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. [250 Downloads]  The Historical Origins of the Debt-Equity Distinction, by Camden Hutchison (Wisconsin)
  2. [231 Downloads]  Using the 'Smart Return' to Reduce Tax Evasion, by Joseph Bankman (Stanford), Clifford Nass (Stanford) & Joel Slemrod (Michigan)
  3. [186 Downloads]  Scholarship Against Desire, by Shari Motro (Richmond)
  4. [162 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S Treasury Department)
  5. [118 Downloads]  Believing in Life After Loving: IRS Regulation of Tax Preparers, by Alex H Levy (NYU)

May 17, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 16, 2015

Tax Papers at Today's American Law & Economics Association Annual Meeting at Columbia

ALEATax papers at today's American Law & Economics Association Annual Meeting at Columbia:

Empirical Research in Taxation
Panel Chair:  Kyle Rozema (Cornell)

In addition, two Tax Profs are chairing other panels and presenting papers:

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May 16, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Friday, May 15, 2015

Tax Papers at Today's American Law & Economics Association Annual Meeting at Columbia

ALEATax panels at today's American Law & Economics Association Annual Meeting at Columbia:

Topics in Tax Policy Design I 
Panel Chair:  Yehonatan Givati (Hebrew University of Jerusalem)

Topics in Tax Policy Design II
Panel Chair: Zachary Liscow (Yale)

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May 15, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Roundup

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May 15, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Chilton & Posner Present An Empirical Study Of Political Bias In Legal Scholarship At Today's ALEA Annual Meeting at Columbia

Adam S. Chilton (Chicago) & Eric A. Posner (Chicago) present An Empirical Study of Political Bias in Legal Scholarship at the American Law & Economics Association Annual Meeting today at Columbia:

Law professors routinely accuse each other of making politically biased arguments in their scholarship. They have also helped produce a large empirical literature on judicial behavior that has found that judicial opinions sometimes reflect the ideological biases of the judges who join them. Yet no one has used statistical methods to test the parallel hypothesis that legal scholarship reflects the political biases of law professors. This paper provides the results of such a test. We find that, at a statistically significant level, law professors at elite law schools who make donations to Democratic political candidates write liberal scholarship, and law professors who make donations to Republican political candidates write conservative scholarship. These findings raise questions about standards of objectivity in legal scholarship.

Figure 3

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May 15, 2015 in Legal Education, Scholarship | Permalink | Comments (1)