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Friday, March 21, 2014

Weekly Student Tax Note Roundup

Hasen: The Dividend Reinvestment Deduction

David Hasen (Santa Clara), The Dividend Reinvestment Deduction: A Modest Proposal to Reform the Taxation of Business Income:

This invited essay, scheduled to appear in the 2014 symposium issue of the Chapman Law Review, proposes enactment of a deduction to individuals for distributions received on stock in regular, or "C," corporations when the distributions are reinvested prior to the return date for the year of distribution. The proposal extends as well to gains recognized on the sale or exchange of stock in C corporations. Mechanics of the deduction and likely efficiency gains and other behavioral effects are discussed.

March 21, 2014 in Scholarship, Tax | Permalink | Comments (1)

Galle: Social Enterprise: Who Needs It?

Brian D. Galle (Boston College), Social Enterprise: Who Needs It?, 54 B.C. L. Rev. 2025 (2013):

State statutes authorizing firms to pursue mixtures of profitable and socially-beneficial goals have proliferated in the past five years. In this invited response essay, I argue that for one large class of charitable goals the so-called “social enterprise” firm is often privately wasteful. While the hybrid form is a bit more sensible for firms that combine profit with simple, easily monitored social benefits, existing laws fail to protect stakeholders against opportunistic conversion of the firm to pure profit-seeking. Given these failings, I suggest that social enterprise’s legislative popularity can best be traced to a race to the bottom among states competing to siphon away federal tax dollars for local businesses. Not all hybrid forms inevitably are failures, however. For example, the convertible debt instruments proposed by Dana Brakman Reiser and Steven Dean -- the inspiration for this response -- offer a promising route forward for “cold glow” firms wishing to promise to clean up some easily-measured but harmful business practices.

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

Thursday, March 20, 2014

Clausing Presents Lessons for International Tax Reform from Formulary Apportionment Today at UCLA

ClausingKim Clausing (Reed College) presents Lessons for International Tax Reform from the U.S. State Experience under Formulary Apportionment at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

This work undertakes a comprehensive analysis of the U.S. state experience under formulary apportionment of corporate income. While formulary apportionment eliminates the possibility of shifting income across states through accounting strategies that manipulate where income is booked, it may heighten the tax responsiveness of formula factors. The present analysis uses the substantial variation in corporate tax policy decisions of U.S. states over the period 1986 to 2012 to better understand the consequences of formulary apportionment. It examines the effects of policy choices regarding tax rates, formula weights, and other parameters on economic activity, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity is not particularly sensitive to U.S. state corporate tax policy choices, especially in recent years. Still, tax policy choices have important effects on corporate tax revenues. These results suggest important lessons regarding possible international adoption of formulary apportionment.

March 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mann Presents International Tax Reform and the Global Environment Today at San Diego

MannRoberta Mann (Oregon) presents International Tax Reform and the Global Environment at San Diego today as part of its Tax Law Speaker Series:

Nearly everyone agrees that the United States’ system of taxing multinational corporations is broken. While nominal U.S. corporate tax rates rank near the top among developed countries, the taxes actually paid by U.S. corporations are the lowest among those countries. Debates over corporate reform are intensifying.

The U.S. asserts its taxing authority over all the income earned by its citizens and residents. This type of taxing system is called a “worldwide” system. The foreign income of foreign corporations and residents is not taxed unless it is repatriated to the United States, for example, by means of a dividend paid to the U.S. corporate parent by a foreign subsidiary. U.S. corporations and residents are allowed to reduce their U.S. tax liability by foreign tax credits for taxes paid to foreign governments. By holding foreign income overseas, U.S. multinationals avoid U.S. tax.

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March 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Utah Symposium on Perpetual Conservation Easements

The Utah Law Review has published a symposium on Perpetual Conservation Easements, 2013 Utah L. Rev. 687-881:

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

Missouri Symposium on Promoting Sustainable Energy Through Tax Policy

Mo 1Promoting Sustainable Energy Through Tax Policy, 20 J. Envtl. & Sustainability L. 1-103 (2013):

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

Wednesday, March 19, 2014

McMahon Presents Reforming Taxation of Privately Held Businesses Today at Duke

McMahon (Marty)Martin J. McMahon, Jr. (Florida) presents Reforming Taxation of Privately Held Businesses at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Recent proposals to reduce the corporate tax rate and to clean up the base by eliminating tax expenditures are appropriate, but none adequately address the differential treatment of incorporated and unincorporated businesses. Corporate tax reform that involves broadening the base and reducing the rates cannot thoughtfully be addressed without also reconsidering the taxation of unincorporated businesses, in light of the large and increasing percentage of business income realized by unincorporated businesses. Leaving business-related tax expenditures in place for unincorporated business while repealing them for corporations would increase both statutory complexity and planning complexity. Such a change would alter (in a manner that is difficult to describe precisely) the tax-induced distortions in the choice of business entity and most certainly continue the economic inefficiencies attributable to the current system.

My proposed solution would be to tax all businesses (including wholly owned corporations and limited liability companies, as well as unorganized sole proprietorships), at the entity level under a uniform rate schedule, regardless of the form of organization. This proposal emanates from decades long problems with the administration of Subchapter K, governing the taxation of partnerships, and the incoherence of having three separate regimes—Subchapter C, Subchapter K, and Subchapter S—apply to closely held businesses depending of the form of organization and available elections.

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

Tuesday, March 18, 2014

Hickman: Administering the Tax System We Have

Kristin E. Hickman (Minnesota), Administering the Tax System We Have, 64 Duke L.J. ___ (2014):

Traditional perceptions of tax exceptionalism from administrative law doctrines and requirements have been predicated at least in part on the importance of the tax code’s revenue raising function. Yet, Congress increasingly relies on the IRS to administer government programs that have little to do with raising revenue and much more to do with distributing government benefits to the economically disadvantaged, subsidizing approved activities, and regulating outright certain economic sectors like nonprofits, pensions, and now health care. As the attentions of the Treasury Department and Internal Revenue Service shift away from raising revenue and toward these other matters, the revenue-based justification for tax exceptionalism from general administrative law norms fades. To demonstrate the shift, the Article incorporates empirical analysis of Treasury and IRS regulatory activity over time.

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

Monday, March 17, 2014

IDC Herzliya Hosts Symposium Today on A New Era in Taxation in Honor of Nancy Staudt

StaudtIDC Herzliya, Radzyner School of Law (Israel) hosts a symposium today on A New Era in Taxation in honor of Nancy Staudt (Vice Dean for Faculty and Academic Affairs, Edward G. Lewis Chair in Law and Public Policy, and Academic Director, The Schwarzenegger Institute, USC), organized by Rifat Azam and Ruth Zafran:

Keynote Address:  Nancy Staudt (USC), Corporate Shams around the World

Panel #1:  Tax Base Erosion and Profit Shifting

  • Dr. Rifat Azam (IDC Herzliya), Panel Chair
  • Tsilly Dagan (Bar-Ilan), Tax Policy in an Era of Globalization
  • Tamir Shanan (College of Management Academic Studies), Replacing the Transfer Pricing Regime with Formulary Apportionment Approach in the International Settings
  • Rifat Azam (IDC Herzliya), New Stage in the Multinationals v. The International Tax Regime Game: Some Thoughts on the OECD Action Plan on Base Erosion and Profit Shifting

Panel #2:  Current Issues in Tax Policy

  • Adam Shinar (IDC Herzliya), Panel Chair
  • Yoram Margalioth (Tel-Aviv), Why (and how) Income Tax should be Imposed at the Household Level?
  • Sagit Leviner (Ono), Comparative Evaluation of Tax Policy-Making in Israel: Exploring the Trajectories Where are we coming from and What Lays Ahead
  • Jacob Nussim (Bar-Ilan), The Tax Treatment of Losses

Comments & Closing Remarks:  Nancy Staudt (USC)

March 17, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Sunday, March 16, 2014

Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with three new papers debuting on the list at #3, #4, and #5:

  1. [399 Downloads]  The Economics of Tax Law, by Daniel Shaviro (NYU)
  2. [267 Downloads]  2012 Developments in Connecticut Estate and Probate Law by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid & Riege, Hartford))
  3. [217 Downloads]  As American as Apple Inc.: International Tax and Ownership Nationality, by Chris William Sanchirico (Pennsylvania)
  4. [147 Downloads]  Big (Gay) Love: Has the IRS Legalized Polygamy?, by Anthony C. Infanti (Pittsburgh)
  5. [145 Downloads]  Deferral and Exemption of the Income of Foreign Subsidiaries: A Review of the Basic Analytics, by Alvin C. Warren (Harvard)

March 16, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, March 15, 2014

Burke Presents Woods: A Path Through the Penalty Maze at Northwestern

BurkeKaren C. Burke (Florida) presented Woods: A Path Through the Penalty Maze, 142 Tax Notes 829 (Feb. 24, 2014) (with Grayson M.P. McCouch (Florida)), at Northwestern on Thursday as part of its Tax Colloquium Series hosted by by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

The Supreme Court’s recent Woods decision answers two important questions concerning the applicability of penalties when a taxpayer reports artificial losses derived from an inflated basis in a sham partnership. One issue, which has generated a split among the circuits, is whether the 40 percent penalty can apply when the transaction lacks economic substance. The second issue is whether a court has jurisdiction in a partnership-level TEFRA proceeding2 to determine the applicability of penalties triggered by a partner’s misstatement of basis in a sham partnership. The Court has answered both questions in the affirmative, thereby overruling contrary decisions by the Fifth Circuit on the substantive issue and by the D.C. Circuit on the jurisdictional issue.

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March 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Friday, March 14, 2014

Weekly SSRN Tax Roundup

March 14, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Chapman Hosts Symposium Today on Business Tax Reform

Chapman Logo (2013)The Chapman Law Review hosts a symposium today on Business Tax Reform: Emerging Issues in the Taxation of U.S. Entities:

Panel I:  Specific Tax Issues Affecting the Business World: The Policies and Reasons Behind Certain Laws
Moderator: Bobby Dexter (Chapman)

Panel II:  Pass-Through Entity Reform: Is a Major Overhaul Necessary?
Moderator: Bahar A. Schippel (Snell & Wilmer)

Keynote Speaker:  Edward D. Kleinbard (USC)

Panel III:  How Federal Business Tax Reform Affects State and Local Tax
Moderator:  Michael Lang (Chapman)

Panel IV:  Corporate Tax Reform: How to Tax Multinational Corporations
Moderator:  Douglas A. Schaaf (Paul Hastings)

March 14, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, March 13, 2014

Morse Presents The Development of Tax Anti-Avoidance Law in Australia and the United States Today at Indiana

Morse (2013)Susan C. Morse (Texas) presents The Development of Tax Anti-Avoidance Law in Australia and the United States (with Robert Deutsch (University of New South Wales)) at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman

The different approaches to the development of tax anti-abuse law in Australia and the United States share the same basic building blocks: administrative leadership, legislative change, and the development of judicial case law. For reasons including path dependence and the degree of difficulty of the path to enacting a legislative change favored by the administration, statutory change is favored in Australia relative to the United States. In the U.S., administrators faced with a tough tax avoidance problem favor a strategy that combines strong elements of litigation strategy and regulatory and other guidance, as well as proposals for statutory amendment. But the differences are differences of degree, since tax administrators in both countries use all of these elements and operate in a way that acknowledges all branches of government when seeking to develop and change applicable tax anti-abuse law. In addition, based on this case study evidence, the substantive differences in Australian and U.S. anti-abuse law cannot be directly traced to institutional choice issues.

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

Phillips Presents Endogenous Detection and Audit Intensity Today at UCLA

PhillipsMark Phillips (USC) presents Endogenous Detection and Audit Intensity in the Tax Evasion Game at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh, Kirk Stark, and Alexander Wu:

In this paper I introduce an imperfect and endogenous detection technology into the sequential tax evasion game. During a tax agency's examination of a taxpayer, the fraction of evasion detected depends upon three factors: the taxpayer's true income; the taxpayer's unreported income; and the tax agency's exam-speci c resources (i.e. intensity of examination). I solve for an equilibrium in which the tax agency chooses both whom to audit and at what intensity subject to an enforcement budget constraint. In contrast to simpler games, the tax agency cannot infer any given taxpayer's true income, even after an audit occurs. Instead, the tax agency need know only two more limited but realistic pieces of information for a given taxpayer: the expected amount of detected (not true) evasion, and how that amount changes with marginal increases in audit intensity.

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

Wednesday, March 12, 2014

Dharmapala Presents Interest Deductions in a Multijurisdictional World Today at Toronto

DharmapalaDhammika Dharmapala (Illinois) presents Interest Deductions in a Multijurisdictional World (with Mihir A. Desai (Harvard)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The tax treatment of interest expenses in a multijurisdictional setting raises numerous complexities. This paper catalogs these difficulties and highlights the particular problems associated with efforts to achieve ownership neutrality among multinational corporations (MNCs) when debt financing is available. We argue that the differential deductibility of debt entailed by various current tax law provisions leads in general to potential distortions in the patterns of asset ownership across MNCs, and that various proposed solutions have significant limitations. We suggest several alternative regimes to address both the ownership distortions that we highlight, as well as 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). These regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – provide solutions to income-shifting and ownership distortions. However, they have the potential disadvantage of restricting other policy parameters.

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

Managing Income Tax Compliance through Self-Assessment

IMFAndrew Okello (IMF), Managing Income Tax Compliance through Self-Assessment:

Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Experience shows that voluntary compliance is best achieved through a system of self-assessment. Many tax administrations have introduced self-assessment principles in the income tax law but the legal authority is not being consistently applied. They continue to rely heavily on “desk” auditing a majority of tax returns, while risk management practices remain largely underdeveloped and/or underutilized. There is also plenty of opportunity in many countries to enhance the design and delivery of client-focused taxpayer service programs, and better engage with the private sector and other stakeholders.

(Hat Tip: Bruce Bartlett.)

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

Tuesday, March 11, 2014

Sikes Presents Cross-Country Evidence on Capital Gains Taxes, Risk, and Expected Rates of Return Today at NYU

SikesStephanie Sikes (University of Pennsylvania, Wharton School) presents Cross-Country Evidence on the Relation between Capital Gains Taxes, Risk, and Expected Rates of Return (with Luzi Hail (University of Pennsylvania, Wharton School) & Clare Wang (Northwestern University, Kellogg School)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

This study empirically examines the prediction in Sikes and Verrecchia (2012) that the relation between capital gains tax rates and expected rates of return varies in the cross-section and over time with firm risk and market risk. Specifically, we test whether the general positive relation between expected returns and the capital gains tax rate becomes weaker or even reverses when (i) a firm’s systematic risk is high, (ii) the aggregate market risk premium is high, or (iii) the risk-free rate is low. Using an international panel from 25 countries over the 1990 to 2004 period, we find evidence supporting these predictions. The results are particularly pronounced in countries with substantive changes in tax rates, a tradition of low tax evasion, less integrated capital markets, and less institutional ownership as well as around substantive changes in the three risk proxies. We corroborate our findings in a single country setting, using the 1978, 1997, and 2003 changes to the capital gains tax rate in the United States as events. Our results underscore the importance of macroeconomic and firm-specific factors in the determination of the effect of capital gains taxes on expected returns and show that the valuation effects can sometimes be in the opposite direction of what is generally expected.

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

Brooks Reviews Global Economic Governance and the Politics of International Tax Cooperation

CoverKimberley Brooks (Dean, Dalhousie University, Schulich School of Law), After the Financial Crisis (reviewing Richard Eccleston (University of Tasmania), The Dynamics of Global Economic Governance: The Financial Crisis, the OECD and the Politics of International Tax Cooperation (2012)):

[The book] is a welcome addition to the literature on the regulatory responses to international tax evasion, authored in the light of the global financial crisis.  Richard Eccleston, a political scientist in Tasmania, shifts the typical legal scholar’s lens from the legal frameworks that facilitate tax evasion to a careful and insightful exploration or the role of political actors in facilitating tax cooperation in response to that evasion.  The work is supported by interviews with more than 40 national tax officials, business and NGO representatives, OECD and UN staff.

Global Economic Governance is written for tax junkies.  It is shot through with detail, carefully crafted, and densely written.  For those with a mild interest in the area, the chapter to spend time on is the first one, and most specifically the section that details the strategies used in international tax evasion: private banking, mass-marketed tax schemes, opaque corporate structures, shell entities, trusts, rules that obscure real ownership, methods of disguising real corporate ownership, and exempt entities.  This reads like the stuff of a good (or perhaps average) Tom Cruise movie: nevertheless, it is daily fare for those who seek to avoid tax liability around the world.

March 11, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Is the Internal Revenue Code So Complicated That It Is Unconstitutionally Vague?

David E. Vance (Rutgers-Camden), Is the Federal Income Tax Code Unconstitutionally Vague?, 5 Mustang J. L. & Legal Stud. 47 (2013):

Taxes are the price of living in a civilized society and no one disputes the right of the federal government to tax income. However, the federal tax code may have become so complicated that it is unconstitutionally vague. A law is unconstitutionally vague when a person of ordinary intelligence cannot determine what is required of him or her. There is a presumption that laws are constitutional and that presumption can only be rebutted by clear and convincing evidence. However, there is a broad and deep body of clear and convincing evidence that the tax code is so complex that it is unconstitutionally vague. The contribution of this article is to create a record of tax code complexity that can be used as the basis for judicial action.

March 11, 2014 in Scholarship, Tax | Permalink | Comments (3)

Ordower: A Grand Unified Global Income Tax

Florida Tax ReviewHenry Ordower (Saint Louis), Utopian Visions Toward a Grand Unified Global Income Tax,14 Fla. Tax Rev. 361 (2013):

Over the past several decades, many countries that historically relied on progressive taxes on income, wealth, and decedents’ estates for much governmental revenue have shifted to less progressive and regressive taxes on labor and consumption. Reasons for the shift are many but include international tax competition as world economies have become increasing global. This paper assumes that progressive taxes remain the best and fairest choice for providing governmental revenue, so that a fundamental change in the scope of the progressive income tax is essential to protect progressivity.

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

Avi-Yonah: Reflections on the Tax Reform Act of 2014

Tax ReformReuven S. Avi-Yonah (Michigan), The Devil in the Details: Reflections on the Tax Reform Act of 2014:

The Discussion Draft of the “Tax Reform Act of 2014” (TRA14) released by US House Committee on Ways and Means Chairman Dave Camp (R-MI) on February 26, 2014 represents a major effort for fundamental and far reaching reform of US tax law. Unfortunately, while many parts of the proposal seem quite sensible as an effort to bring back the “spirit of 1986”, the international tax reform proposals are deeply flawed and based on obsolete assumptions on the world facing US multinationals in 2014.

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

Law Students Sue Their Law Schools for Deceptive Employment Reporting Practices

Ogechi Achuko (J.D. 2013, Virginia), Note, The Blame Game: Law Students Sue Their Law Schools for Deceptive Employment Reporting Practices, 20 Va. J. Soc. Pol'y & L. 517 (2013):

Since the Great Recession, the legal job market has markedly declined leaving many recent law school graduates without employment and frustrated. In response, a number of graduates are blaming their law schools for providing misleading employment statistics that they claim to have detrimentally relied upon in their decision to attend law school. This Note focuses on the recent wave of class action lawsuits against several American law schools for their alleged use of deceptive employment reporting practices based on legal theories such as fraud, negligent misrepresentation, and state consumer protection law violations. This Note analyzes the viability of these legal claims and the various defenses raised by the law school defendants. In conclusion, the Note discusses how these class action lawsuits along with pressure from the media and the government have increased law school transparency and accountability.

March 11, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Monday, March 10, 2014

Kahn & Polsky: The End of Cash and the Income Tax

Jeffrey H. Kahn (Florida State) & Gregg D. Polsky (North Carolina), The End of Cash, the Income Tax, and the Next 100 Years, 41 Fla. St. U. L. Rev. 159 (2013):

The income tax is technologically very similar to the way it was in its early years, and technological developments have been at the margins of the income tax and have not affected its core elements. Still, technological improvements have made third-party reporting and withholding more efficient, which has allowed these mechanisms to become more pervasively used. Technology has also made it easier for taxpayers to substantiate their activities. These changes have facilitated the evolution of the income tax from its original class tax to the mass tax it is today.

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March 10, 2014 in Scholarship, Tax | Permalink | Comments (1)

Lavoie: Is a Wealth Tax Now Possible in America?

Richard Lavoie (Akron), Dreaming the Impossible Dream: Is a Wealth Tax Now Possible in America?:

It is often thought that a direct tax on individual wealth is a political non-starter in the United States. Not only is such a tax arguably unconstitutional, but as a psychological matter it goes against the American psyche. That is, each of us hold out hope that someday we might become rich too, so we will not support any tax perceived as a “soak the rich” ploy. But has wealth inequality in the United States now reached the breaking point? Might recent public attention to the issue of economic inequality indicate that it might be possible to make a wealth tax a reality? This article will examine the utility and political viability of adopting a wealth tax in the United States.

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

Call for Student Papers: Tax Notes, State Tax Notes, and Tax Notes International

Tax Analysys Logo (2013)Call For Entries: Tax Analysts’ Inaugural Student Paper Competition:

Tax Analysts’ Tax Notes, State Tax Notes, and Tax Notes International magazines are now accepting submissions for the inaugural student paper competition. Winning contestants will have their papers published in a well-established and reputable magazine.

Students must be enrolled in a law, economics, or tax postgraduate program. Papers should be between five and 25 pages long and focus on an unsettled question of tax law or tax policy. Submissions will be judged on argument, content, grammar, and overall quality and should include a cover letter providing information about the author and a short abstract about the paper.

Each magazine will choose at least one, but no more than five, high-quality papers for publication. Papers must not have been published elsewhere.

Submissions should be sent to [email protected] by May 31 and will be published in the summer of 2014.

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

Dodge: The Fair Income Tax

Joseph M. Dodge (Florida State), The Fair Income Tax:

This article argues that the classic “accretion” Haig-Simons formulation of personal income, namely, an individual’s consumption plus net increases in wealth for the taxable year, not only was not actually advocated by Simons himself, but also is (in part) contrary to fundamental political values and raises unnecessary practical problems. Contrary to what is commonly supposed, consumption is best seen not an independent category of income, but only a deduction-disallowance principle. Likewise, the “accretion” notion of “changes in wealth” - requiring the annual valuation of asset values - is (mostly) impractical, psychologically unacceptable, and contrary to political values. The realization principle -- embraced by Simons -- is not only convenient but considered to be fundamentally fair.

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

The Tax Implications of Spring Break

Tax Analysys Logo (2013)Billy Hamilton, Where the Bucks Are: The Fiscal Realities of Spring Break, 71 State Tax Notes 587 (Mar. 10, 2014):

Hamilton describes the annual pilgrimage college students make to sunnier climes during spring break. Hamilton says there’s more to the ritual than sun and beer, and that it’s both a boon and a bane for those cities frequented by students. He outlines the costs and tax implications for the local governments of spring break destinations.


March 10, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (1)

Sunday, March 9, 2014

Top 5 Tax Paper Downloads

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

  1. [367 Downloads]  The Economics of Tax Law, by Daniel Shaviro (NYU)
  2. [297 Downloads]  Important Developments in Federal Income Taxation, by Edward A. Morse (Creighton)
  3. [286 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature, by Dhammika Dharmapala (Illinos)
  4. [261 Downloads]  ,2012 Developments in Connecticut Estate and Probate Law by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid & Riege, Hartford))
  5. [234 Downloads]  Understanding Income Tax Deferral, by Daniel I. Halperin (Harvard) & Alvin C. Warren (Harvard)

March 9, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, March 8, 2014

McMahon, Shepard & Simmons: 2013 Federal Income Tax Developments

Florida Tax ReviewMartin J. McMahon, Jr. (Florida), Ira B. Shepard (Houston) & Daniel L. Simmons (UC-Davis), Recent Developments in Federal Income Taxation: The Year 2013, 15 Fla. Tax Rev. 233 (2014) (212 pages):

This recent developments outline discusses, and provides context to understand the significance of, the most important judicial decisions and administrative rulings and regulations promulgated by the Internal Revenue Service and Treasury Department during 2013 – and sometimes a little farther back in time if we find the item particularly humorous or outrageous. Most Treasury Regulations, however, are so complex that they cannot be discussed in detail and, anyway, only a devout masochist would read them all the way through; just the basic topic and fundamental principles are highlighted – unless one of us decides to go nuts and spend several pages writing one up. This is the reason that the outline is getting to be as long as it is. Amendments to the Internal Revenue Code generally are not discussed except to the extent that (1) they are of major significance, (2) they have led to administrative rulings and regulations, (3) they have affected previously issued rulings and regulations otherwise covered by the outline, or (4) they provide Dan and Marty the opportunity to mock our elected representatives; again, sometimes at least one of us goes nuts and writes up the most trivial of legislative changes. The outline focuses primarily on topics of broad general interest (to us, at least) – income tax accounting rules, determination of gross income, allowable deductions, treatment of capital gains and losses, corporate and partnership taxation, exempt organizations, and procedure and penalties. It deals summarily with qualified pension and profit sharing plans, and generally does not deal with international taxation or specialized industries, such as banking, insurance, and financial services.

March 8, 2014 in Scholarship, Tax | Permalink | Comments (0)

World Tax Journal Publishes New Issue

WTJThe World Tax Journal has published Vol. 6, No. 1 (2014):

  • Pasquale Pistone, Coordinating the Action of Regional and Global Players during the Shift from Bilateralism to Multilateralism in International Tax Law:  "The editor introduces this issue of the World Tax Journal with a contribution that welcomes the BEPS project as a significant step in the transition from bilateralism to multilateralism in international taxation. The broad-based consensus and participation in setting the BEPS standards make such project an enhanced form of multilateralism if compared with that which allowed the Global Forum on Fiscal Transparency to implement the standards developed by a more limited number of countries. The contribution of the editor also addresses how global multilateralism relates with regional multilateralism in some areas of the world, such as the European Union, calling for a stronger cooperation among the institutional players within a coordinated framework for the exercise of taxing powers in cross-border situations that could give rise to global international tax law."
  • Yariv Brauner, BEPS: An Interim Evaluation:  "The article evaluates the OECD BEPS Action Plan and recent progress in light of the key insights of the BEPS: (i) progress can be achieved solely through cooperation, and the existing competition based, unilateral action dominated paradigm is destined to fail; (ii) a comprehensive, holistic approach rather than ad hoc fix-ups is needed for a chance of success; and (iii) some innovations differing from the tradition that is the base for the current regime may be required in order to tackle the evolving new challenges that the regime faces. The article points to the promising aspects of the plan and to the areas where progress seem wanting. It further provides observations on certain steps that the OECD can and should take to increase the chances of success of the BEPS project."
  • Chloe Burnett, Intra-Group Debt at the Crossroads: Stand-Alone versus Worldwide Approach:  "Cross-border intra-group debt represents a significant proportion of total global monetary flows. Responding to tax base erosion from related party interest deductions, countries have introduced domestic rules against “interest stripping” but the heterogeneity of these rules leads to double taxation and double non-taxation. The OECD’s 2013 Base Erosion and Profit Shifting (BEPS) Action Plan endorsed by the G20 identifies debt deductions as “Action Item 4”, for reform by the end of 2015. This article surveys the existing approaches, from “stand-alone” to “worldwide ratio” rules. The author concludes that the worldwide approach is preferable, and recommends that more countries adopt such a rule, limiting the local leverage ratio to the third-party leverage ratio of the worldwide group. Such a rule is principled, given the fungibility and other unique features of finance, can draw upon existing rules in three countries and achieves the BEPS project aim of eliminating a large capacity for profit shifting."
  • Marcel G.H. Schaper, A Computational Legal Analysis of Acte Clair Rules of EU Law in the Field of Direct Taxes:  "What rules of EU law in the field of direct taxes are clear and can be applied at the national level without additional interpretative guidance of the Court of Justice of the European Union (CJEU)? This article applies computational methods, and network science in particular, to analyse which rules of EU law in the field of direct taxes may be considered “clear”. The aim of this article is to find units of information which have replicated through repeated application in the CJEU’s rulings and are thus dominant in this functional field of EU law. All 185 rulings handed down by the CJEU in the field of direct taxes in the period between 1983 and 2012 are analysed. The product of this research is reported in the Annex in which the most important settled and well-established rules of EU law in the field of direct taxes are organized in a legally relevant manner."

March 8, 2014 in Scholarship, Tax | Permalink | Comments (0)

Friday, March 7, 2014

Weekly SSRN Tax Roundup

March 7, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Georgetown Symposium on Tamanaha's Failing Law Schools

FailingSymposium, Brian Z. Tamanaha's Failing Law Schools, 26 Geo. J. Legal Ethics 341-442; 521-539 (2013):

March 7, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Thursday, March 6, 2014

Shay Presents Formulary Apportionment in the U.S. Today at Temple

ShayStephen E. Shay (Harvard) presents Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig? (with J. Clifton Fleming (BYU) & Robert J. Peroni (Texas)) at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu & Andrea Monroe:

[T]he authors argue that formulary apportionment and the current standard, arm's length transfer pricing, are just two shades of lipstick on the pig that is the US international tax system, with its twin features of deferral and cross-crediting. They conclude that formulary apportionment might be the less offensive shade, but in effect the whole discussion is a diversion from a broad reform that is sorely needed on the pig itself

March 6, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Journal of Legal Tax Research Publishes New Issue

CoverThe American Tax Association Journal of Legal Tax Research has published Vol. 11, No. 2 (Dec. 2013):

  • Michelle Bertolini & Pamela Weaver, Mandatory Arbitration within Tax Treaties: A Need for a Coherent International Standard, 11 J. Legal Tax Research 1 (2013):  "As businesses expand operations globally, the threat of double taxation on income earned becomes a significant concern. The current Mutual Agreement Procedures (MAP) within the tax treaties frequently fail to provide equitable relief, exposing taxpayers to uncertain outcomes, and cause compliance considerations under Accounting Standards Codification (ASC) 740, Income Taxes. In July 2008, the Organisation for Economic Co-operation and Development (OECD) Model Tax Treaty began including a mandatory arbitration provision for taxpayers failing to reach agreement under MAP. The U.S. Model, while beginning to shift toward including mandatory arbitration in some of the later treaties, still relies on the voluntary MAP proceedings for resolution of disagreements, because any party can elect out of arbitration. Data provided by the U.S. Treasury indicated that a wide range of taxpayer income covered by the U.S. treaties failed to receive partial or full relief from double taxation. The U.S. should consider adopting the OECD Model Tax Treaty’s mandatory arbitration provisions for all tax treaties, to remove the uncertainty of double taxation and promote international trade."
  • Jonathan M. Farrar, Maureen E. Donnelly & Sonia B. Dhaliwal, Procedural Aspects of Tax Fairness: A Content Analysis of Canadian Tax Jurisprudence, 11 J. Legal Tax Research 21 (2013): "We undertake a directed content analysis of Canadian tax jurisprudence to analyze procedural, interpersonal, and informational fairness, and their respective criteria, in the tax context. To facilitate our analysis, we apply Colquitt’s (2001) theoretical framework of fairness. Consistent with this framework, we find 198 cases that contain procedural fairness, 34 cases that contain interpersonal fairness, and 37 cases that contain informational fairness. Furthermore, we identify seven criteria of procedural tax fairness (accuracy, bias, consistency, compatibility, correctibility, representativeness, voice), three criteria of interpersonal tax fairness (respect, propriety, timeliness), and four criteria of informational tax fairness (justification, truthfulness, full disclosure, taxpayer technical competence). Implications for taxpayers, tax authorities, and tax researchers are discussed."
  • John Gamino, “Widely Perceived as Grossly Unfair”: The Unfulfilled Promise of Interest Abatement, 11 J. Legal Tax Research 38 (2013): "This paper explores Internal Revenue Code (IRC) section 6404(e)(1). Enacted in 1986 and amended in 1996, this section authorizes the Internal Revenue Service (IRS) to abate assessed interest on tax deficiencies and underpayments to the extent attributable to prescribed categories of procedural error or delay committed by the IRS in the course of audits and other routine processes. A companion provision, section 6404(h), enacted in 1996, grants the Tax Court jurisdiction to review IRS abatement determinations for abuse of discretion. This paper analyzes the statutory language, legislative history, Treasury regulations, and other administrative materials, as well as post-1996 Tax Court opinions, toward identifying problematic factors that to date have frustrated the stated congressional intent. Recommendations for clarifying statutory amendments are noted."
  • Mark Jackson & Sonja Pippin, “Temporary” Tax Provisions and Uncertainty: Evidence from a Survey of Professional Tax Preparers, 11 J. Legal Tax Research 53 (2013)
  • Linda J. Campbell, Pamela C. Smith & J. Michael Hostetler, Traversing the Regulatory Maze of Charity Care: The Institutional Method and IRC §501(r), 11 J. Legal Tax Research 68 (2013): "The search for a concise definition of charity care continues to elude both practitioners and healthcare administrators. U.S. legislators recently took action by creating the new Internal Revenue Code (IRC) §501(r), mandating hospitals document and justify their tax-exempt status. The new provisions still do not provide a succinct definition of charity care, but may provide an opportunity to establish a quantifiable baseline of the normal level of charity care for hospitals. This paper looks to the history of charity care in the U.S., recent regulatory challenges, the theory of legal realism, and the institutional method to develop an approach to provide clear guidance on acceptable levels of charity care."
  • William A. Raabe, Cherie J. Hennig & John O. Everett, Deferral and Repatriation: A Proposal to Encourage Repatriation of Offshore Income, 11 J. Legal Tax Research 86 (2013):  "The need for U.S. tax laws to encourage and reward repatriation of offshore income is stronger than ever. We propose an approach that will penalize retaining earnings overseas, while rewarding entities that undertake a repatriation policy. The reward structure requires an accountable use of the repatriated funds for designated investments that further the economic needs goals of the U.S. Under our proposal, an interest charge would be assessed on unrepatriated offshore profits and would be reduced as various remission targets are met. The dividends-received deduction on repatriated earnings would increase as various remission and usage targets are met. A clawback provision would require the taxpayer to repay tax benefits received if there is a subsequent failure to meet the usage targets. The potential difficulties of operationalizing our proposal are identified and considered. A combination of the strategies developed in this proposal, perhaps in concert with features of other proposals, would encourage participating corporations to modify their cash management plans in ways that would provide a sustainable boost for the U.S. economy while also increasing tax revenues."

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

Willis: Taxes and Religion -- The Hobby Lobby Contraceptive Cases

Hobby-lobbySteven J. Willis (Florida), Corporations, Taxes, and Religion: The Hobby Lobby and Conestoga Contraceptive Cases, 65 S.C. L. Rev. 1 (2013):

Beginning in 2013, the federal government mandates that general business corporations include contraceptive and early abortion coverage in employee health plans. Internal Revenue Code Section 4980D imposes a substantial excise tax on health plans violating the mandate. Indeed, for one company – Hobby Lobby – the expected annual tax is nearly one-half billion dollars. Dozens of “for profit” businesses have challenged the mandate on free exercise grounds, asserting claims under the First Amendment as well as under the Religious Freedom Restoration Act.

So far, courts have been reluctant to hold corporations have religious rights of their own; as a result, standing of a corporation to assert the religious beliefs and rights of owners has become the primary issue in the twenty-six separate cases moving through the courts. Courts are split on whether to grant standing; however, a large majority has used a variation of relational or associational standing to grant preliminary injunctions against enforcement of the tax.

This article discusses the relationship of morality and religion to general business corporations. It concludes that over the past few decades, movements for social justice and corporate social responsibility have intertwined business corporations and moral issues, blurring the line between religion and commerce. It also concludes that courts should permit associational standing for closely-held corporations – particularly those electing S status for tax purposes -- if the owners have unanimous (or near-unanimous) beliefs.

March 6, 2014 in Scholarship, Tax | Permalink | Comments (3)

Wednesday, March 5, 2014

Cain Presents Taxation of Same-Sex Couples After Windsor Today at Duke

CainPatricia Cain (Santa Clara) presents Taxation of Same-Sex Couples After United States v. Windsor: Did the IRS get it right in Revenue Ruling 2013-17? at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

The Windsor decision created a huge shift in tax treatment of same-sex spouses. But there are still many unresolved issues. Revenue Ruling 2013-17 is a step in the right direction as it resolves some of the issues that arose after Windsor, but there is still work to be done. As with sports, “it ain’t over until the fat lady sings.”

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

Auten Presents New Perspectives on Income Mobility and Inequality Today at Penn

Penn 2014Gerald E. Auten (Office of Tax Analysis, U.S. Treasury Department) presents New Perspectives on Income Mobility and Inequality at Pennsylvania today as part of its Center for Tax Law & Policy Seminar Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

This study examines several dimensions of income mobility and inequality — mobility of individuals through their peak earnings years, intergenerational mobility, and persistence in the top 1 percent. Its main fi ndings can be summarized as follows. Half of those age 35–40 in the bottom quintile of their cohort moved to higher quintiles 20 years later; over 60 percent moved up relative to the full population. About 70 percent of dependents from low-income households were themselves in higher quintiles 20 years later. Younger generations gradually replaced those that dominated the top percentile in 1987. The results show the importance of life cycle effects and the changing composition of top income groups.

Figure 1

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

Rethinking the Temporary Taxation Debate

Frank Fagan (Erasmus University Rotterdam), The Fiscal Cliff as Reelection Strategy: Rethinking the Temporary Taxation Debate, 116 W. Va. L. Rev. ___ (2014):

Recent scholarship [Rebecca Kysar, Lasting Legislation, 159 U. Pa. L. Rev. 1007 (2011); Frank Fagan & Michael Faure, The Role of Lawmakers, Lobbyists, and Interest Groups in the Normative Evaluation of Timing Rules, 160 U. Pa. L. Rev. PENNumbra 61 (2011)] contends that temporary tax provisions are socially costly because they increase rent-seeking activity and create uncertain investment environments. This Article challenges that view, and shows that, while temporary tax provisions may increase rent-seeking activity, such activity is not always socially costly; and while temporary tax provisions may create uncertain investment environments, such environments are not always unfavorable for private investors. The real problem with temporary tax provisions, simply put, is that legislators use them to win reelection and externalize a number of costs in the process.

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

AALS Call for Papers: Bringing Accounting, Finance, and Tax Into the Business Law Curriculum

AALSThe AALS Section on Agency, Partnerships LLCs, and Unincorporated Associations has issued a call for papers for the 2015 AALS Annual Meeting in Washington, D.C.:  Bringing Numbers into Basic and Advanced Business Associations Courses: How and Why to Teach Accounting, Finance, and Tax:

Business planners and transactional lawyers know just how much the “number-crunching” disciplines overlap with business law. Even when the law does not require unincorporated business associations and closely held corporations to adopt generally accepted accounting principles, lawyers frequently deal with tax implications in choice of entity, the allocation of ownership interests, and the myriad other planning and dispute resolution circumstances in which accounting comes into play. In practice, unincorporated business association law (as contrasted with corporate law) has tended to be the domain of lawyers with tax and accounting orientation. Yet many law professors still struggle with the reality that their students (and sometimes the professors themselves) are not “numerate” enough to make these important connections. While recognizing the importance of numeracy, the basic course cannot in itself be devoted wholly to primers in accounting, tax, and finance.

The Executive Committee will devote the 2015 annual Section meeting in Washington to the critically important, but much-neglected, topic of effectively incorporating accounting, tax, and finance into courses in the law of business associations. In addition to featuring several invited speakers, we seek speakers (and papers) to address this subject. Within the broad topic, we seek papers dealing with any aspect of incorporating accounting, tax, and finance into the pedagogy of basic or advanced business law courses.

Any full-time faculty member of an AALS member school who has written an unpublished paper, is working on a paper, or who is interested in writing a paper in this area is invited to submit a 1 or 2-page proposal by May 1, 2014 (preferably by April 15, 2014). The Executive Committee will review all submissions and select two papers by May 15, 2014. A very polished draft must be submitted by November 1, 2014. The Executive Committee is exploring publication possibilities, but no commitment on that has been made. All submissions and inquiries should be directed to Jeff Lipshaw.

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

Tuesday, March 4, 2014

Hines & Logue Present Delegating Tax Today at NYU

PixJames R. Hines, Jr. (Michigan) & Kyle D. Logue (Michigan) present Delegating Tax at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Auerbach:

Congress delegates extensive and growing lawmaking authority to federal administrative agencies in areas other than taxation, but tightly limits the scope of IRS and Treasury regulatory discretion in the tax area, specifically not permitting these agencies to select or adjust tax rates. This Article questions why tax policy does and should differ from other policy areas in this respect, noting some of the potential policy benefits of delegation. Greater delegation of tax lawmaking authority would permit policies to benefit from the expertise of administrative agencies, and afford timely adjustment to changing economic circumstances. Furthermore, delegation of the tax reform process to an independent commission or agency offers the prospect of Congress commiting itself to rational reform and long-run budget sustainability in a way that is more apt to succeed than are piecemeal legislative efforts. The Article concludes with an analysis of the constitutionality of tax delegation, noting the applicability of recent Supreme Court interpretations that Congress has broad discretion to delegate rulemaking authority to federal agencies, and that tax policy is of a kind with other federal policies.

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

ACTEC Issues Call for Proposals for $20,000 Grant to Host T&E Symposium

ACTECThe Legal Education Committee of the American College of Trust and Estate Counsel requests proposals for a $20,000 grant to host a symposium on trust and estate law during academic year 2015-2016:

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, to bridge the gap between the academic community and practitioners, to provide opportunities for junior academics to present papers and interact with more senior academics, to provide an opportunity for trust and estate professors to interact with each other, to involve academics from other disciplines in discussions of trust and estate topics, and to strengthen ACTEC’s image as the leading organization for trust and estate lawyers, both practitioners and academics.

Please submit your proposal by April 15, 2014 to Susan Gary or Nancy McLaughlin.

March 4, 2014 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Disinherit the IRS

Disinherit the IRS:

DisinheritDisinherit the IRS is a well-written, easy-to-read and comprehensive estate planning and wealth protection guide that was originally published in 2001. It evolved in response to requests from fellow Americans who feared the fruits of their life's work was under assault by a growing litigious society and tax hungry government. This updated 2014 edition will help you understand current estate tax laws and how they impact the most popular estate planning tools, including trusts and life insurance. You will also gain insight into lawful wealth protection strategies used by real families as well as vital information on how to leave your assets to heirs and favorite causes and not the IRS. Family wealth protection expert and author of Disinherit the IRS, E. Michael Kilbourn recruited estate planning attorney Brad A. Galbraith for the 2014 edition as an extra guarantee that every chapter reflects the most sound advice based on today's laws. In this book, you will discover how to: remove assets from your taxable estate without losing control of them or the income they generate, make a profit by donating to charity, effectively exempt your entire estate from state taxes, avoid capital gains taxes on the sale of your appreciated property and eliminate state taxes on your assets at your death. In essence, you will learn how to leave what you have to whom you want, when you want and in the way you want while minimizing possible court costs, attorney fees and estate taxes.

March 4, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Monday, March 3, 2014

Galle Presents Nonprofit Executive Pay as an Agency Problem Today at Pepperdine

GalleBrian D. Galle (Boston College) presents Nonprofit Executive Pay as an Agency Problem: Evidence from U.S. Colleges and Universities (with David I. Walker (Boston University)) at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

We analyze the determinants of the compensation of private college and university presidents from 1999 through 2007. We find that the fraction of institutional revenue derived from current donations is negatively associated with compensation and that presidents of religiously-affiliated institutions receive lower levels of compensation. Looking at the determinants of contributions, we find a negative association between presidential pay and subsequent donations. We interpret these results as consistent with the hypotheses that donors to nonprofits are sensitive to executive pay and that stakeholder outrage plays a role in constraining that pay. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations. 

Brian D. Galle (Boston College) & David I. Walker (Boston University), Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach:

We evaluate the effect of highly salient disclosure of private college and university president compensation on subsequent donations using a quasi-experimental research design. Using a differences-in-discontinuities approach to compare institutions that are highlighted in the Chronicle of Higher Education’s annual "top 10" list of most highly-compensated presidents against similar others, we find that appearing on a top 10 list is associated with reduced average donations of approximately 4.5 million dollars in the first full fiscal year following disclosure, despite greater fundraising efforts at "top 10" schools. We also find some evidence that top 10 appearances slow the growth of compensation, while increasing fundraising and enrollment, in subsequent years. We interpret these results as consistent with the hypothesis that donors care about compensation and react negatively to high levels of pay, on average; but (absent highly-salient disclosures) are not fully informed about pay levels. Thus, while donors represent a potential source of monitoring and discipline with respect to executive pay in the nonprofit sector, significant agency problems remain. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations.


Update:  Post-presentation lunch:



March 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Warren: Deferral and Exemption of the Income of Foreign Subsidiaries

Alvin C. Warren (Harvard), Deferral and Exemption of the Income of Foreign Subsidiaries: A Review of the Basic Analytics:

Current proposals to replace the U.S. foreign tax credit with an exemption for the income of foreign subsidiaries of U.S. companies make timely a review of the basic analytics of taxation under the two systems. This brief note reviews the key relationships, highlighting some that are not always fully appreciated in policy discussions.

March 3, 2014 in Scholarship, Tax | Permalink | Comments (0)

Galle & Tobin: Comments on the Proposed § 501(c)(4) Regulations

Brian D. Galle (Boston College) & Donald B. Tobin (Ohio State), Comments on Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities:

The Notice is a good first step. It creates bright-line standards that are easy to apply and that will eliminate much of the gray area regarding permissible political activity. Clearer lines will reduce the discretion on the part of the IRS. By decreasing the IRS’s discretion, the regulation will reduce the opportunity for the IRS to be used as a political tool in an Administration’s tool box.

However, the Notice does not go far enough. Congress has established a regulatory regime that has as its central purpose the disclosure of any significant campaign contributions by individuals or firms. In recent years many organizations have exploited the confidentiality rules of § 501(c)(4) to evade that regime, to the detriment not only of U.S. political discourse but also the non-profit sector. The Final Rule should ensure that groups with significant partisan political activity cannot obtain exemption under § 501(c)(4), or indeed under any parallel provision of § 501.

We believe, however, that groups carrying out "substantial" electioneering activities should generally be eligible for exemption under § 527, and that the IRS should make that clear in the Final Rule. The main consequence of any ruling denying § 501(c)(4) status based on the political activity of the organization, therefore, would simply be to require the disclosure of an organization’s donors, and to ensure that the organization’s political expenditures are disclosed contemporaneously with the election they seek to influence.

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March 3, 2014 in IRS News, IRS Scandal, Scholarship, Tax | Permalink | Comments (2)

Sunday, March 2, 2014

Top 5 Tax Paper Downloads

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

  1. [330 Downloads]  The Economics of Tax Law, by Daniel Shaviro (NYU)
  2. [287 Downloads]  Important Developments in Federal Income Taxation, by Edward A. Morse (Creighton)
  3. [268 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature, by Dhammika Dharmapala (Illinos)
  4. [237 Downloads]  ,2012 Developments in Connecticut Estate and Probate Law by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid & Riege, Hartford))
  5. [221 Downloads]  Understanding Income Tax Deferral, by Daniel I. Halperin (Harvard) & Alvin C. Warren (Harvard)

March 2, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)