TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, January 20, 2016

Chodorow & Hackney:  Post-Graduate Legal Training — The Case For Tax-Exempt Programs

ASUAdam Chodorow (Arizona State) & Philip Hackney (LSU), Post-Graduate Legal Training: The Case for Tax-Exempt Programs, 65 J. Legal Educ. ___ (2016):

The challenging job market for recent law school graduates has highlighted a fact well known to those familiar with legal education: A significant gap exists between what students learn in law school and what they need to be practice-ready lawyers. Legal employers historically assumed the task of providing real-world training, but they have become much less willing to do so. At the same time, a large numbers of Americans — and not just those living at or below the poverty line — are simply unable to afford lawyers. In this Article, we argue that post-graduate legal training, similar to post-graduate medical training, is a good way to address these market failures and reduce the gap in both skills and legal services.

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January 20, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Tax Shelters Or Efficient Tax Planning? A Theory Of The Firm Perspective On The Economic Substance Doctrine

T. Christopher Borek (Analysis Group, Inc.) & Angelo Frattarelli (U.S. Department of Justice) & Oliver Hart (Harvard University, Department of Economics), Tax Shelters or Efficient Tax Planning? A Theory of the Firm Perspective on the Economic Substance Doctrine, 57 J.L. & Econ. 975 (2014):

Courts have articulated a number of legal tests to distinguish corporate transactions that have a legitimate business or economic purpose from those carried out largely, if not solely, for favorable tax treatment. We outline an approach to analyzing the economic substance of corporate transactions based on the property rights theory of the firm, and describe its application in two recent tax cases.

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

The Ten Most Downloaded Tax Papers In 2015

  1. SSRN Logo[4620 Downloads]  Some Reflections on the OECD and the Sources of International Tax Principles (2013), by Hugh Ault (Boston College)
  2. [2858 Downloads]  Are We Heading Towards a Corporate Tax System Fit for the 21st Century? (2014), by Michael Devereux (Oxford) & John Vella (Oxford)
  3. [2500 Downloads]  Measuring Income Tax Evasion using Bank Credit: Evidence from Greece (2015), by Nikolaos Artavanis (UMass), Adair Morse (UC-Berkeley) & Margarita Tsoutsoura (Chicago)
  4. [1427 Downloads]  iTax: Apple's International Tax Structure and the Double Non-Taxation Issue (2014), by Antony Ting (Sydney)
  5. [1405 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature (2014), by Dhammika Dharmapala (Chicago)
  6. [1329 Downloads]  Top Marginal Effective Tax Rates by State and by Source of Income, 2012 Tax Law vs. 2013 Tax Law (As Enacted in ATRA) (2013), by Gerald Prante (Lynchburg) & Austin John (Lynchburg)
  7. [1189 Downloads]  Taxing Multinationals in Europe (2012), by Wolfgang Schoen (Max Planck)
  8. [1028 Downloads]  The Nature and Practice of Capital Tax Competition (2015), by Kimberly Clausing (Reed)
  9. [903 Downloads]  Double Tax Treaties: An Introduction (2007), by Reuven Avi-Yonah (Michigan)
  10. [831 Downloads]  David Foster Wallace on Tax Policy: How to Be an Adult, and Other Mysteries of the Universe (2015), by Arthur Cockfield (Queen's)

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

Tuesday, January 19, 2016

Talley Presents Corporate Inversions And The Unbundling Of Regulatory Competition Today At NYU

Talley (2016)Eric L. Talley (Columbia) presents Corporate Inversions and the Unbundling of Regulatory Competition, 101 Va. L. Rev. 1649 (2015), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

A sizable number of US public companies have recently executed “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. When appropriately structured, inversions replace American with foreign tax treatment of extraterritorial earnings, often at far lower effective rates. Regulators and politicians have reacted with alarm to the “inversionitis” pandemic, with many championing radical tax reforms. This paper questions the prudence of such extreme reactions, both on practical and on conceptual grounds. Practically, I argue that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally (or with only modest tax reforms). Conceptually, I assess the inversion trend through the lens of regulatory competition theory, in which jurisdictions compete not only in tax policy, but also along other dimensions, such as the quality of their corporate law and governance rules.

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

Hemel Reviews The Hidden Wealth Of Nations

WealthDaniel Hemel (Chicago), What’s the Matter with Luxembourg? (reviewing Gabriel Zucman (UC-Berkeley), Hidden Wealth of Nations: The Scourge of Tax Havens (University of Chicago Press, 2015)):

The Grand Duchy of Luxembourg is rarely the subject of international attention, much less the target of international opprobrium. With fewer than 600,000 inhabitants, it is less populous than the City of Milwaukee. With an area of under 1,000 square miles, it is smaller than the State of Rhode Island. Conquered twice by Germany and thrice by France, it is much more accustomed to the role of victim than villain. In the words of one New York Times writer, “Luxembourg is about as cuddly as countries come.”

But in the view of economist Gabriel Zucman, Luxembourg is the enfant terrible of the European Union. “If we wish to prevent the Irish and Cypriot catastrophes from happening again,” Zucman writes near the end of his new book, “it is essential that Luxembourg go backward” (p. 91). Back to where is not clear, but what is clear is that Zucman wants Luxembourg to change its ways. And if the tiny state refuses to cooperate, Zucman says, Luxembourg should be excluded from the EU and blockaded by its neighbors.

Why does Zucman place so much blame on little Luxembourg? The answer has to do with a statistical quirk—an inconsistency in international economic data. As Zucman notes, Luxembourg’s official statistics show that shares of mutual funds domiciled in the Grand Duchy are worth $3.5 trillion. But when Zucman looks at official data from other countries on their international investment positions, he can account for only $2 trillion of Luxembourgish mutual fund shares recorded as assets. To whom does the remaining $1.5 trillion belong? We don’t know. “This,” says Zucman, “is a big problem” (p. 38).

The big problem has a name: tax evasion. And thanks to Zucman, we can now have a better sense of just how big a problem it is. In 2014, according to Zucman, liabilities on national balance sheets exceeded assets by $6.1 trillion. In other words, $6.1 trillion of the world’s wealth has gone missing. Zucman hypothesizes that this missing $6.1 trillion has been stashed in offshore bank accounts, hiding out of tax authorities’ sight. And while we can’t be sure that’s the case, Zucman persuasively argues that the $6.1 trillion figure is “a reasonable estimate of the amount of offshore portfolios owned by households all over the world” (p. 39). ...

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January 19, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Sunday, January 17, 2016

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. [319 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [266 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy McLaughlin (Utah)
  3. [162 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  4. [125 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)
  5. [111 Downloads]  Inversions and Competitiveness: Reflections in the Wake of Pfizer/Allergan, by Reuven Avi-Yonah (Michigan) & Omri Marian (UC-Irvine)

January 17, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, January 15, 2016

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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January 15, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Kerr:  Law Faculty Productivity At Different Career Stages

Orin Kerr (George Washington), Law Faculty Productivity at Different Career Stages:

My friend and co-blogger Jonathan Adler recently flagged a new article on faculty productivity and citation rates, and I wanted to draw attention to some interesting information found inside it. The author, James Phillips, collected data on publication and citation rates for faculty at different stages of their careers. Although Phillips presents the data divided into different ideological groups, I contacted him and asked him to combine the numbers to include all professors.

He generously agreed, and he sent me this graph:

Kerr

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January 15, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

Smith:  D.C. Circuit In Florida Bankers Misapplies Anti-Injunction Act

Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.), D.C. Circuit in Florida Bankers Misapplies Anti-Injunction Act, 149 Tax Notes 1493 (Dec. 21, 2015):

In this article, Smith explains why a divided panel of the D.C. Circuit was incorrect in holding that the Anti-Injunction Act (AIA) bars a challenge to the IRS regulations at issue in Florida Bankers. He argues that the majority’s decision is at odds with the Supreme Court’s narrow interpretation of the analogous Tax Injunction Act in Direct Marketing.

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January 15, 2016 in Scholarship, Tax | Permalink | Comments (0)

Thursday, January 14, 2016

Hickman Presents Treasury's Retroactivity Today At Duke

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code

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

Hutchison:  The Historical Origins Of The Debt-Equity Distinction

Florida Tax ReviewCamden Hutchison (Wisconsin), The Historical Origins of the Debt-Equity Distinction, 18 Fla. Tax Rev. 95 (2015):

The U.S. tax code favors corporate debt over corporate equity, a distinction long criticized by economists, legal scholars, and other tax commentators as both theoretically and practically unsound. For decades, academics and policymakers from a variety of disciplinary and political backgrounds have argued that this so-called “debt-equity distinction” distorts corporate financing decisions, encourages excess borrowing, and invites troublesome tax-avoidance behavior. Surprisingly, despite widespread critical attention, the origins of this policy remain a mystery. Primarily focused on its contemporary significance, scholars have disregarded the distinction’s past.

This article uses historical evidence to trace the debt-equity distinction’s origins, development, and continuing evolution.

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January 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

Manhire:  The Most (And Least) Representative Law Schools For Gender, Race, and Ethnicity

Jack Manhire (Texas A&M), The Most (and Least) Representative Law Schools for Gender, Race, and Ethnicity:

To what extent do U.S. law school demographics concerning gender, race, and ethnicity reflect the same demographics of their applicant populations? This is a preview (highlighting law school rankings) of a forthcoming paper that attempts to answer the question by developing a measurement of demographic representation with a single index. It derives this measure for law school and baseline populations with various demographic dimensions (the boring technical stuff in Appendix A, page 16). It then ranks law schools against various demographic baselines, including the U.S. population as a whole and the state populations in which each school operates (the more exciting “does-my-school-rank-higher-than-your-school” stuff in Appendix B, page 21). The results let individual law schools know how close their student populations are to their overall target populations with respect to gender, race, and ethnicity.

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January 14, 2016 in Legal Education, Scholarship | Permalink | Comments (0)

Wednesday, January 13, 2016

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

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

There are few conservatives and libertarians in legal academia.

Graph 3

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

Graph 6

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January 13, 2016 in Legal Education, Scholarship | Permalink | Comments (11)

Tait:  The Secret Economy Of Charitable Giving

Allison Anna Tait (Richmond), The Secret Economy of Charitable Giving, 95 B.U. L. Rev. 1663 (2015):

Charitable giving is big business. In 2009, the Internal Revenue Service reported close to 100,000 private foundations, almost double the number from fifteen years earlier. Some of these charitable trusts, like the Gates Foundation, are multi-billion dollar enterprises. Trust instruments and other governing documents set forth the terms that control these gifts. Because charitable trusts can exist in perpetuity, however, changing circumstances sometimes render the terms difficult to fulfill. Courts can apply cy pres, a doctrine that allows for the modification of gift restrictions, but in the past courts have tended to apply cy pres narrowly and privilege donor intent above all other considerations. Recent reforms, however, have moved courts toward a more flexible application of the doctrine. In this Article, I analyze certain high-profile cases that have driven these reforms—including the presumption of general charitable intent, the recognition of “wasteful” as a criterion, and the deployment of deviation—and explain how these reforms represent positive change. Moreover, I provide a theoretical grounding to account for the correctness of these reforms.

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January 13, 2016 in Scholarship, Tax | Permalink | Comments (0)

Johnson & Sheffrin:  Rethinking The Sales Tax Food Exclusion With SNAP Benefits

Anna Johnson (Tulane) & Steven M. Sheffrin (Tulane), Rethinking the Sales Tax Food Exclusion With SNAP Benefits, 79 State Tax Notes 149 (Jan. 11, 2016):

Most states either totally or partially exclude food at home from the general sales tax. This exclusion generates a debate between tax policy analysts with their emphasis on broad base, low-rate tax systems against the advocates for the poor who argue that the exemption for food is necessary on distributional grounds. States that do tax food at home are often singled out as having particularly regressive and punitive tax systems. What is missing from this debate is a serious discussion of the consequences of non-taxability of benefits under the Supplemental Nutritional Assistance Program (food stamps). We present evidence that the SNAP program effectively reaches the vast majority of the poor thus making the taxability of food at home much less important for individuals in lower income tiers.

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January 13, 2016 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, January 12, 2016

Ari David Glogower, NYU VAP, To Join Ohio State Tax Faculty

GlogowerAri David Glogower, Acting Assistant Professor of Tax Law at NYU, will join the Ohio State tenure-track tax faculty in August 2016:

Before joining the NYU School of Law faculty, Ari Glogower worked as a tax associate in the New York office of Debevoise & Plimpton, LLP, where he advised on mergers, acquisitions, separations, private equity and joint ventures. Ari also has expertise with the Foreign Account Tax Compliance Act (FATCA) and related taxpayer compliance programs.

Ari received an LL.M. in taxation from NYU School of Law, a J.D. (magna cum laude) from NYU School of Law, and a B.A. (with honors) from Yale University. During law school, Ari was an editor for the Tax Law Review and the NYU Environmental Law Journal. Before law school, Ari taught mathematics in Jackson, Mississippi and founded a tutoring business.

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January 12, 2016 in Legal Education, Scholarship, Tax, Tax Prof Moves | Permalink | Comments (1)

Miller:  A Comprehensive Mark-to-Market Tax For The Top 0.1%

David S. Miller (Cadwalader, New York), A Comprehensive Mark-to-Market Tax for the 0.1% Wealthiest and Highest-Earning Taxpayers:

This essay proposes a comprehensive mark-to-market tax for the 0.1% wealthiest and highest-earning taxpayers. Publicly-traded securities would be subject to an annual mark-to-market tax. Nontraded assets would be subject to a “deemed mark-to-market” tax: They would not be subject to tax until sale or other disposition (including gift, donation, or death), but at that time, the taxpayer would be taxed at an amount that would leave the taxpayer with the value he or she would have had if the asset appreciated constantly over its holding period, had been subject annually to a mark-to-market tax, and the taxpayer had sold a portion of the asset each year to pay the tax. Taxpayers would be permitted to annually mark their nontraded assets to market, and deposit an amount of tax based on that valuation. This deposit would accrue at the after-tax yield of the asset for purposes of a credit against the tax due upon a sale. Thus, a taxpayer that reports gain and deposits tax each year based on the ultimate annual yield of an asset would not owe any additional tax with respect to that asset at maturity. Losses would remain on a realization basis, but losses would be deemed to have accrued over the taxpayer’s holding period based on the asset’s yield, could be used to offset deemed gain, and could be carried forward indefinitely.

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January 12, 2016 in Scholarship, Tax | Permalink | Comments (1)

Tales Of Tax Reform

TalesJ. Roger Mentz (former Assistant Secretary of the Treasury (Tax Policy)), Tales of Tax Reform (2015):

Politicians of all stripes are calling for tax reform. It sounds great: lower the tax rates, get rid of all of the “special interest” provisions, make our tax law simple, fair and an engine for economic growth. Some pundits even suggest that tax reform is “low-hanging fruit” that can easily be accomplished. But is this so? How would we know whether it will be that easy and straightforward? One way of learning about what a legislative tax reform process would entail is to explore what happened in 1986, when fundamental tax reform was enacted by Congress and signed into law by President Reagan. This book investigates how this legislative success was accomplished, and what lessons can be learned for those government officials who seek to enact tax reform today. This book is written by J. Roger Mentz, the Treasury Department Assistant Secretary for Tax Policy from December 1985 through July 1987. Mr. Mentz was the point person for the Reagan Administration on tax reform, which was the number one legislative priority for President Reagan in his second Administration. These “tales” or stories describe what really happened in the tax reform legislative process and what elements would need to come together for a successful reformation of the Internal Revenue Code today.

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January 12, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (3)

Monday, January 11, 2016

ACTEC Issues Request For Proposals For $20k Grant To Host T&E Symposium

ACTECThe Legal Education Committee of the American College of Trust and Estate Counsel (ACTEC) requests proposals for a $20,000 grant to host an academic symposium on trust and estate law during the 2017-18 academic year:

The ACTEC Foundation Symposium is intended to be the premier academic symposium on trust and estate law in the United States. The goals of the symposium are to stimulate development of scholarly work in trust and estate law, bridge the gap between the academic community and practitioners, provide opportunities for junior academics to present papers and interact with more senior academics, provide an opportunity for trust and estate professors to interact with each other, involve academics from other disciplines in discussions of trust and estate topics, and strengthen ACTEC’s image as the leading organization for trust and estate lawyers, both practitioners and academics.

The grant associated with this RFP is contingent on approval by the ACTEC Foundation.

RFPs are due by Monday, May 2, 2016, and will be considered by the Symposium Subcommittee of the ACTEC Legal Education Committee at ACTEC’s Summer Meeting in Boston, Massachusetts, in June 2016. Please submit RFPs (RFP content and guidelines are set forth below) to:

Nancy A. McLaughlin
Professor of Law, University of Utah SJ Quinney College of Law
Co-Chair, ACTEC Legal Education Committee
nancy.mclaughlin@law.utah.edu

Electronic submissions are fine (subject line of email should read “ACTEC Symposium RFP”).

I. RFP Content

The RFP should provide the following information.

A. Theme. The theme of the symposium should be related to trust and estate law, defined to include any topic related to the gratuitous transfer of property (e.g., probate law, trust law, elder law, transfer tax law). A broad theme permits a wide range of papers and is more likely to be successful. Past themes have included Trust Law in the 21st Century (Cardozo 2005); Inheritance Law in the 21st Century (UCLA 2008); Philanthropy Law in the 21st Century (Chicago-Kent 2009); The Uniform Probate Code: Remaking of American Succession Law (Michigan 2011); and The Role of Federal Law in Private Wealth Transfer (Vanderbilt 2014). The theme of the most recent symposium, which took place at Boston College Law School in October 2015, was The Centennial of the Estate Tax: Perspectives and Recommendations (articles will be published in the Boston College Law Review May 2016 symposium edition).

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January 11, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Symposium On Law School Survival

January 11, 2016 in Conferences, Legal Education, Scholarship | Permalink | Comments (0)

Sunday, January 10, 2016

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 #3:

  1. [293 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [173 Downloads]  The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond, by Kimberly A. Clausing (Reed College)
  3. [169 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy A. McLaughlin (Utah)
  4. [153 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  5. [104 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)

January 10, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, January 8, 2016

Weekly SSRN Tax Roundup

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January 8, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

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January 8, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Thursday, January 7, 2016

Roiphe:  Tilting At Stratification — Against A Divide In Legal Education

Rebecca Roiphe (New York Law School), Tilting at Stratification: Against a Divide in Legal Education:

Critics suggest we divide law schools into an elite tier whose graduates serve global business clients and a lower tier, which would prepare lawyers for simple disputes. This idea is not new. A similar proposal emerged in the early twentieth century. This article draws on the historical debate to argue that this simplistic approach cannot solve the myriad problems facing the legal profession and legal education. Supporters of separate tiers of law school rely on a caricature of the early history to argue that the Bar is acting in a protectionist way to ensure its own monopoly and keep newcomers out of the profession. A closer analysis of the debate in the 1920s demonstrates that those in favor of two separate educational tracks were similarly motivated by status and elitism. They hoped to relegate the bottom tier of the profession to a permanent lower caste.

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January 7, 2016 in Legal Education, Scholarship | Permalink | Comments (3)

Can Taxes Encourage Better Corporate Behavior?

AtlanticThe Atlantic, Can Taxes Encourage Better Corporate Behavior?:

Researchers say that regulations aren’t the only option the government has for discouraging companies from taking on too much risk.

Listen to any recent presidential debate, and you’ll hear candidates emphatically backing plans that alternately promise to lower or raise the share that corporations turn over to the government each year in taxes. The argument on one side is that hiking corporate income taxes will harm businesses and their workers, hampering hiring, innovation, and growth. On the other side, proponents of tax increases argue that large, rich corporations should pay their fair share, especially as average Americans struggle to make ends meet and many companies manage to lower their actual tax rates by exploiting loopholes in the tax code.

But corporate tax rates aren’t just policy points or a means of forcing firms to contribute to the larger public pot—they’re also a way, according to a new paper, for the government to stoke or curb companies’ appetite for risk-taking. ...

Regulation is often thought of as the most obvious tool in the quest to find the optimal amount of corporate risk-taking. ... As a new National Bureau of Economic Research paper documents, tweaking taxes can also play a role in determining the degree of risk companies are willing to take on [Sharing Risk with the Government: On the Causal Effects of Taxes on Corporate Risk-Taking]. The paper’s authors, Alexander Ljungqvist of New York University, Liandong Zhang of City University of Hong Kong, and Luo Zuo of Cornell, took a look at the impact that fluctuations in state taxes had on a company’s earnings, using increased earnings volatility as a signal of having taken on more risk.

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January 7, 2016 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 6, 2016

Eyal-Cohen Presents The Hidden Price Of Regulation Today At Toronto

Eyal-Cohen-MiritMirit Eyal-Cohen (Alabama) presents The Hidden Price of Regulation at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Rules and regulations inflict costs on regulated parties differently. This Article is the first to explore this discriminatory effect. It reveals that entities that lack economies of scale, scope, and age are disadvantaged. To address this discriminatory effect, governments enact various size-based exclusionary rules. The article reveals, however, that these regulatory exclusions do not solve the problem. Rather, they create more harm. These exemptions often exacerbate the impact of the very regulation whose cost they seek to reduce. The Article makes the following additional three contributions to the current literature. First, it demonstrates that the relationship between size and regulatory effects is non-exclusive and also extends to scope and age. Second, it illustrates some overlooked effects of regulations on certain entities and the latent externalities imposed on their unregulated affiliates. Lastly, it provides policymakers with mechanisms to alleviate regulatory burdens.

January 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kaplan: Reflections On Medicare's 50th Anniversary

Richard L. Kaplan (Illinois), Reflections on Medicare at 50: Breaking the Chains of Path Dependency for a New Era, 23 Elder L.J. ___ (2015):

On the occasion of Medicare’s 50th anniversary, this Article examines the evolution of this essential program from its enactment in 1965 through implementation of the Affordable Care Act. Persons who are, or soon will be, newly enrolled in Medicare may be especially interested in the first part of this Article, which addresses the coverages, exclusions, and costs of Medicare’s constituent parts and concludes (on pp. 20-21) with seven critical questions that every new beneficiary must consider before enrolling.

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January 6, 2016 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, January 5, 2016

NYU Tax Law Review Symposium:  Thomas Piketty's Capital In The Twenty-First Century

PikettySymposium on Thomas Piketty's Capital in the Twenty-First Century, 68 Tax L. Rev. 443-647 (2015):

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January 5, 2016 in Book Club, Conferences, Scholarship, Tax | Permalink | Comments (0)

Sunday, January 3, 2016

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. [278 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [204 Downloads]  The State Administration Of International Tax Avoidance, by Omri Y. Marian (UC-Irvine)
  3. [160 Downloads]  The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond, by Kimberly A. Clausing (Reed College)
  4. [143 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  5. [66 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)

January 3, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Wednesday, December 30, 2015

McLaughlin:  Conservation Easements And The Valuation Conundrum

Florida Tax ReviewNancy A. McLaughlin (Utah), Conservation Easements and the Valuation Conundrum, 19 Fla. Tax Rev. ___ (2016):

For more than fifty years, taxpayers have been able to claim a federal charitable income tax deduction under Internal Revenue Code § 170(h) for the donation of a conservation easement or a façade easement. For just as long, the deduction has been subject to abuse, including valuation abuse. Dismayed by the expenditure of significant judicial and administrative resources to combat abuse in the easement donation context, the Treasury Department recently proposed reforms, including reforms to address valuation abuse. The reforms were proposed in somewhat of an analytical vacuum, however, because there has been no comprehensive analysis of the easement valuation case law. This article fills that void.

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

Tuesday, December 29, 2015

Hellwig: The Constitutional Nature Of The U.S. Tax Court

Tax Court Logo 2Following up on Friday's post, Tax Extenders Bill Puts Tax Court In Constitutional Limbo:  see the discussion of the legislative history of the provision in Brant J. Hellwig (Dean, Washington & Lee), The Constitutional Nature of the United States Tax Court, 35 Va. Tax Rev. ___, ___ (2015) (blogged here):

Partially in response to the decision of the D.C. Circuit Court of Appeals in Kuretski, the Senate Finance Committee has cleared proposed legislation addressing a variety of procedural matters relating to the Tax Court. The final item of the proposed legislation provides for an amendment to the Tax Court’s chartering statute that is captioned as a “clarification relating to the United States Tax Court.” The proposed amendment would add a sentence at the end of section 7441 providing that “The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”

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

Sunday, December 27, 2015

The Top 5 Tax Paper Downloads

Saturday, December 26, 2015

Weekly SSRN Tax Roundup

Wednesday, December 23, 2015

Lederman:  On The PATH To A More Judicial Tax Court

Ledderman (2016)Following up on Friday's post, Tax Extenders Bill Puts Tax Court In Constitutional Limbo:  TaxProf Blog op-ed:  On the PATH to a More Judicial Tax Court, by Leandra Lederman (Indiana-Bloomington):

The recently enacted Protecting Americans from Tax Hikes (PATH) Act of 2015 includes a subtitle containing several sections addressing the U.S. Tax Court. This post focuses primarily on Congress’s “clarification” of what the Tax Court is not, but it also briefly addresses some changes the new law makes to Tax Court administration.

Since 1969, when Congress enacted Internal Revenue Code (Code) section 7441, making the Tax Court an Article I court, the Tax Court has faced issues resulting from its lack of a clear place in the federal government structure. The clarifying amendment in the PATH Act adds a third sentence at the end of section 7441 (highlighted in bold below), which makes the provision read as follows:

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December 23, 2015 in Congressional News, New Cases, Scholarship, Tax | Permalink | Comments (0)

Monday, December 21, 2015

How Bob Dole Got America Addicted To Marijuana Taxes

Marijuana (2015)Brookings Institution:  How Bob Dole Got America Addicted to Marijuana Taxes, by Pat Oglesby:

As states legalize marijuana, more marijuana businesses are opening across the country. An obscure 1982 brainchild of Bob Dole’s Senate Finance Committee, section 280E of the federal tax code, is hitting state-legal marijuana sellers in the pocketbook—right now. 280E, which says taxpayers cannot deduct costs of selling federally illegal drugs, is not just helping fund the federal government. It’s also hampering marijuana advertising and marketing—to the satisfaction of nervous parents, and to the consternation of profit-seeking marijuana promoters.

280E was more a political statement than a model of tax policy, and it can’t eliminate marijuana advertising. But it does discourage that advertising, so it may be one of the most useful marijuana tax laws we can imagine. And while some anti-advertising proposals run afoul of the commercial free speech doctrine, 280E is constitutional. So 280E may help slow down Big Marijuana. If so, an anti-advertising tax rule like 280E might come in handy if the public ever musters the strength to take on Big Alcohol and Big Tobacco.

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

Avi-Yonah & Marian:  Inversions And Competitiveness — Reflections In The Wake Of Pfizer/Allergan

Reuven S. Avi-Yonah (Michigan) & Omri Y. Marian (UC-Irvine), Inversions and Competitiveness: Reflections in the Wake of Pfizer/Allergan:

The recent announcement that Pfizer Inc. has reached a merger agreement with Allergan PLC , with the combined entity being tax-resident in Ireland, is a good occasion to reconsider U.S. policy options in regard to inversions. We consider an “inversion” any transaction in which a U.S. corporation becomes foreign for tax purposes without a meaningful change to its underlying business or management activities.

This short article explains what we believe to be the true motives of inversion transactions, as well as potential policy reposes, in light of the Pfizer inversion. Part I explains what is unique about the Pfizer inversion, so as to make it a case study worthy of special consideration. We use the Pfizer deal to reject the argument that inversions are driven by “competitiveness” considerations.

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December 21, 2015 in Scholarship, Tax | Permalink | Comments (1)

Sunday, December 20, 2015

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 #4 and #5:

  1. [230 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [182 Downloads]  The State Administration Of International Tax Avoidance, by Omri Y. Marian (UC-Irvine)
  3. [135 Downloads]  The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond, by Kimberly A. Clausing (Reed College)
  4. [113 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  5. [105 Downloads]  Revisiting the Taxation of Fringe Benefits, by Jay A. Soled (Rutgers) & Kathleen DeLaney Thomas (North Carolina)

December 20, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, December 18, 2015

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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December 18, 2015 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Thursday, December 17, 2015

Hackney: Why Section 501(c)(6) Trade Associations Are Undeserving Of Tax Exemption

Philip Hackney (LSU), Taxing the Unheavenly Chorus: Why Section 501(c)(6) Trade Associations Are Undeserving of Tax Exemption, 92 Denv. U. L. Rev. 265 (2015):

Our federal, state, and local governments provide a subsidy that enhances the political voice of business interests. This article discusses the federal subsidy for business interests provided through the Internal Revenue Code (“Code”) and argues why we should end that subsidy. Under the same section that provides exemption from income tax for charitable organizations, the Code also exempts nonprofit organizations classified as “business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues.” Theory supporting tax exemption states that we should subsidize nonprofit organizations that provide goods or services that are undersupplied by the market. A charitable organization that assists the poor is a classic example of a service undersupplied by the market. Business interest group services, however, are found in abundance.

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December 17, 2015 in Scholarship, Tax | Permalink | Comments (1)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through December 1, 2015) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Michigan)

51,061

Reuven Avi-Yonah (Michigan)

8464

2

Paul Caron (Pepperdine)

29,956

Michael Simkovic (Seton Hall)

4599

3

Michael Simkovic (Seton Hall)

29,764

D. Dharmapala (Chicago)

3828

4

Louis Kaplow (Harvard)

25,115

Paul Caron (Pepperdine)

2771

5

D. Dharmapala (Chicago)

25,064

Gregg Polsky (N. Carolina)

2240

6

Vic Fleischer (San Diego)

21,661

Richard Ainsworth (BU)

2097

7

James Hines (Michigan)

21,274

Ed Kleinbard (USC)

2076

8

Ted Seto (Loyola-L.A.)

20,413

Louis Kaplow (Harvard)

1849

9

Richard Kaplan (Illinois)

20,072

Jeff Kwall (Loyola-Chicago)

1828

10

Ed Kleinbard (USC)

19,067

Robert Sitkoff (Harvard)

1791

11

Katie Pratt (Loyola-L.A.)

18,125

Dan Shaviro (NYU)

1719

12

Richard Ainsworth (BU)

16,691

Katie Pratt (Loyola-L.A.)

1504

13

Carter Bishop (Suffolk)

16,456

Brad Borden (Brooklyn)

1478

14

Robert Sitkoff (Harvard)

16,131

Chris Hoyt (UMKC)

1446

15

Jen Kowal (Loyola-L.A.)

16,032

Jack Manhire (Texas A&M)

1397

16

Chris Sanchirico (Penn)

15,883

Chris Sanchirico (Penn)

1332

17

Dennis Ventry (UC-Davis)

15,837

Vic Fleischer (San Diego)

1328

18

Brad Borden (Brooklyn)

15,718

Omri Marian (UC-Irvine)

1318

19

David Weisbach (Chicago)

15,640

Nancy McLaughlin (Utah)

1239

20

Francine Lipman (UNLV)

15,379

Jen Kowal (Loyola-L.A.)

1231

21

Bridget Crawford (Pace)

14,903

Ruth Mason (Virginia)

1184

22

David Walker (BU)

14,658

Francine Lipman (UNLV)

1173

23

Dan Shaviro (NYU)

14,167

Dick Harvey (Villanova)

1141

24

Herwig Schlunk (Vanderbilt)

12,969

Jordan Barry (San Diego)

1136

25

Steven Bank (UCLA)

12,532

James Hines (Michigan)

1097

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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December 17, 2015 in Legal Education, Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Wednesday, December 16, 2015

Hickman:  Exploring The 'How' of Tax Legislation—Reviewing Doran, Kysar On The Tax Legislative Process

JotwellKristin Hickman (Minnesota), Exploring the 'How' of Tax Legislation (Jotwell), reviewing:

Much of tax scholarship—past and present—focuses on the “what” of taxation: the substantive content of the tax laws, and what that content is or ought to be. As Leigh Osofsky recently observed in a delightful series of posts on PrawfsBlawg (see here, here, here, here, and here), a growing trend in tax scholarship considers tax administration, which one might describe as the “how” of taxation, or at least part of it. A separate, but related, strain of tax scholarship concerns the “how” of taxation from a different perspective, that of the tax legislative process. Two recent articles published last year offer interesting insights into this aspect of taxation: Michael Doran’s Tax Legislation in the Contemporary U.S. Congress, and Rebecca Kysar’s The ‘Shell Bill’ Game: Avoidance and the Origination Clause.

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

'Socially Responsible' Firms Pay Less Taxes

CFO, Socially Responsible Companies Pay Lower Taxes:

A new study debunks the common notion that companies with high CSR ratings do not practice aggressive tax avoidance.

To many students of corporate social responsibility, or CSR, Pfizer’s recent decision to move its headquarters to Ireland may have been perplexing.

According to an MSCI index that rates companies’ citizenship, Pfizer scores high in CSR, a status commonly thought to be at odds with aggressive tax avoidance. Yet Pfizer now plans to move from its longstanding base in the United States across the ocean for that very purpose.

But is Pfizer an exceptional case? Some new research suggests that it’s not. In the words of a study scheduled to be in the January issue of the American Accounting Association journal The Accounting Review [Do Socially Responsible Firms Pay More Taxes?], companies’ CSR ratings are “negatively related to five-year cash effective tax rates, and these results are driven by firms with high CSR.”

In other words, a higher rating in corporate social responsibility — which takes in such matters as community commitment, diversity, employee relations, environmental stewardship, and product safety and quality — is associated with lower taxes paid. More specifically, in a large sample of U.S. firms in which the effective tax rate averaged 26%, those ranked in the top fifth in CSR paid an average of 1.7 percentage points below what the remainder paid. In short, that’s about 6% less, after controlling for other differences that have been found to affect tax rates.

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

Tuesday, December 15, 2015

Burke Reviews Kahng's Taxation of Intellectual Capital

Karen C. Burke (Florida), Comments on Taxation of Intellectual Capital: Better than Consumption-Tax Treatment?, 66 Fla. L. Rev. F. 47 (2015):

In The Taxation of Intellectual Capital, [66 Fla. L. Rev. 2229 (2014),] Professor Lily Kahng argues that U.S. tax law is fundamentally flawed because it allows businesses to “expense” investments in self-created intangibles. The article draws on research in related areas (knowledge management, financial accounting, and national accounting) that seeks to identify and measure “intellectual capital,” “a central driver of economic productivity and growth.” Within the framework of a normative income tax, Professor Kahng argues that businesses should be required to capitalize and amortize investments in a broad array of intangibles, including research and development, advertising, and employee-training expenses. 

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December 15, 2015 in Scholarship, Tax | Permalink | Comments (1)

Alstott:  Taxation In Six Concepts

AnneAnne L. Alstott (Yale), Taxation in Six Concepts: A Student's Guide (Wolters Kluwer 2015):

Tax doctrines rest on a handful of concepts -- just six, in fact. Armed with six concepts, you can decipher the law. In the United States, more so than in any other developed country, the tax law hosts many of the government s most important social and economic policies. Health care, housing, financial markets, education,and poverty, for example, involve tax. In short, tax turns out to host many interesting and pressing public policy problems.

This book introduces the six concepts and uses them to unpack leading cases and real-world transactions. The six are valuation, net income, realization, tax deferral, substance over form and income-shifting. The cases discussed involve one (or two) of the six concepts discussed. This book also looks beyond the classroom. At every step, real-world transactions are included to show how tax planning harks back to the six concepts.

Of course, tax law, like all law, is full of ambiguity and contradiction. Sometimes there is no single right answer. Courts reach conflicting decisions and use inconsistent reasoning. But the six concepts explain the conflicts within the law that give rise to ambiguity and uncertainty.

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December 15, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (2)

Lobel:  The IRS Is In Crisis And The Tax Community Needs To Help

Martin Lobel (Lobel Novins & Lamont, Washington, D.C.; Chair, Tax Analysts' Board of Directors), The IRS Is in Crisis and the Tax Community Needs to Help, 149 Tax Notes 1407 (Dec. 14, 2015):

We are on the edge of a precipice. Unless those who know the importance of the IRS take action, we are on the verge of losing the respect and, indeed, fear of the IRS that makes it such an effective revenue raiser. And, without sufficient revenue, we don't have a government that can meet our essential needs.

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December 15, 2015 in IRS News, Scholarship, Tax | Permalink | Comments (5)

Monday, December 14, 2015

Taite:  Crummey Delivers Another Knockout Punch To The IRS

Phyllis C. Taite (Florida A&M), Crummey Delivers Another Knockout Punch to the IRS, 149 Tax Notes 839 (Nov. 9, 2015):

In this article, Taite discusses Mikel v. Commissioner, [T.C. Memo. 2015-64 (Apr. 6, 2015),] in which the Tax Court addressed whether the donors qualified for the annual exclusion for gifts made to a trust with an in terrorem provision and a mandatory arbitration clause.

December 14, 2015 in Scholarship, Tax | Permalink | Comments (0)

Forman & Mann:  Making The IRS Work

Florida Tax ReviewJonathan Barry Forman (Oklahoma) & Roberta F. Mann (Oregon), Making the Internal Revenue Service Work, 17 Fla. Tax Rev. 725 (2015):

This is an Article about how to redesign the federal tax system so that the Internal Revenue Service (IRS) can administer it more effectively given that Congress is only willing to let the IRS have around 82,000 employees and a $12 billion budget. As the IRS Oversight Board and the National Taxpayer Advocate frequently emphasize, the United States underinvests in the IRS, and that underinvesting means that taxpayer services are suffering and that tax enforcement has been significantly weakened.

With budget deficits for “as far as the eye can see” and the recent IRS troubles with tax-exempt political organizations, the prospects for increased funding for the IRS are remote. In this Article, we consider a variety of approaches that would make it easier for the IRS to raise and collect revenue, and we offer a number of recommendations for legislative and administrative changes. For example, we recommend simplifying the tax system, enhancing third-party reporting, and streamlining the tax-filing and dispute-resolution procedures.

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December 14, 2015 in Scholarship, Tax | Permalink | Comments (1)

Puckett:  Structural Tax Exceptionalism

James M. Puckett (Penn State), Structural Tax Exceptionalism, 50 Ga. L. Rev. ___ (2015):

This Article argues that it is misleading to declare the death of tax exceptionalism and that structural tax exceptionalism may have important benefits. Part II provides a brief historical overview of the rise of federal agency administration of statutes and especially tax laws. The history trends to detract from anti-tax and anti-agency rhetoric that counsel disempowering the Treasury Department and other administrative agencies from comprehensively enforcing laws and making policy in their relevant domains.

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December 14, 2015 in Scholarship, Tax | Permalink | Comments (0)