TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Sunday, October 11, 2015

NY Times: Computer Scientists Wield Artificial Intelligence To Battle Tax Evasion

New York Times:  Computer Scientists Wield Artificial Intelligence to Battle Tax Evasion, by Lynnley Browning:

When federal authorities want to ferret out abusive tax shelters, they send an army of forensic accountants, auditors and lawyers to burrow into suspicious tax returns.

Analyzing mountains of filings and tracing money flows through far-flung subsidiaries is notoriously difficult; even if the IRS manages to unravel a major scheme, it typically does so only years after its emergence, by which point a fresh dodge has often already replaced it.

But what if that needle-in-a-haystack quest could be done routinely, and quickly, by a computer? Could the federal tax laws — 74,608 pages of legal gray areas and welters of credits, deductions and exemptions — be accurately rendered in an algorithm?

New academic research [Tax Non-Compliance Detection Using Co-Evolution of Tax Evasion Risk and Audit Likelihood] seeks to use artificial intelligence to combat tax evasion by corporate entities, from publicly traded multinationals to private partnerships. The goal is to give the IRS a better way to investigate sophisticated tax shelters that strip tens of billions of dollars from federal coffers each year.

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October 11, 2015 in Scholarship, Tax | Permalink | Comments (2)

The Top 5 Tax Paper Downloads

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

  1. [314 Downloads]  An Introduction to Conservation Easements in the United States: A Simple Concept and a Complicated Mosaic of Law, by Federico Cheever (Denver) & Nancy A. McLaughlin (Utah)
  2. [268 Downloads]  2014 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  3. [219 Downloads]  The One Hundredth Anniversary of the Federal Estate Tax: It's Time to Renew Our Vows, by Paul L. Caron (Pepperdine)
  4. [194 Downloads]  Breaking BEPS: The New International Tax Diplomacy, by Itai Grinberg (Georgetown)
  5. [158 Downloads]  Are We Trapped By Our Capital Gains?, by Reuven Avi-Yonah (Michigan) & Dima Zelik (Michigan)

October 11, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, October 9, 2015

Weekly SSRN Tax Roundup

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October 9, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

University Of Washington Hosts 2015 Tax Symposium

UW 3The University of Washington hosts the  2015 Tax Law Program Symposium today:

Panel #1

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October 9, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Manhire: A Government Perspective On Voluntary Tax Compliance

J. T. Manhire (Texas A&M), What Does Voluntary Tax Compliance Mean?: A Government Perspective, 164 U. Pa. L. Rev. Online 11 (2015):

One of the IRS’s principle goals is to maximize voluntary compliance. Yet, there is often a great deal of confusion and consternation when taxpayers discover that the IRS refers to the annual filing and payment ritual as “voluntary;” especially since most taxpayers do not believe they have a choice when it comes to filing and paying their taxes. What does voluntary compliance mean? Does it mean taxpayers can volunteer to file returns and pay taxes, much as one might volunteer to make a charitable donation? Does it mean taxpayers don’t have to comply with the tax laws if they don’t feel like it? How can it be a federal crime to not file or pay taxes if compliance is voluntary? This essay offers a government perspective as to why the IRS uses this sometimes perplexing term. After investigating (and dismissing) a possible literal defense, the essay surveys the IRS’s history to see why voluntary compliance is such a critical part of the U.S. tax system. The essay then recommends changing the term from voluntary to cooperative compliance to retain the government’s meaning while lessening taxpayer confusion.

October 9, 2015 in Scholarship, Tax | Permalink | Comments (0)

Thursday, October 8, 2015

Kahng Reviews Johnson's Organizational Capital

JotwellLily Kahng (Seattle), Can the Smart Market Solve the Problem of Undertaxed Intangibles (Jotwell) (reviewing Calvin H. Johnson (Texas), Organizational Capital: The Most Important Unsettling Issue in Tax, 148 Tax Notes 667 (2015)):

In his article, Organizational Capital: The Most Important Unsettling Issue in Tax, Professor Calvin Johnson argues that the undertaxation of intangibles is “the most important, most damaging issue in tax policy” and proposes a radical solution to remedy the problem: a new tax based on the trading value of public companies. ...

Johnson proposes a more radical solution to the problem of undertaxed intangibles: a new tax based on the trading value of public companies. He argues that his proposal would both avoid the practical problems of a cost recovery approach to intangibles taxation and capture the value of all intangibles including organizational capital. His proposal would essentially tax intangibles on a mark-to-market basis.

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October 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

Michigan Symposium On Taxation And Citizenship

MichiganMcGill and Michigan are hosting a symposium tomorrow at Michigan on Taxation and Citizenship:

Panel #1:

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October 8, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Wednesday, October 7, 2015

Hickman & Thomson: Judicial Review Of Post-Promulgation Notice And Comment

Kristin E. Hickman (Minnesota) & Mark Thomson (J.D. 2012, Minnesota), Open Minds and Harmless Errors: Judicial Review of Post-Promulgation Notice and Comment, 101 Cornell L. Rev. ___ (2016):

In 2012, the Government Accountability Office surprised many administrative law specialists by reporting that fully 35% of major rules and 44% of nonmajor rules issued by federal government agencies lacked pre-promulgation notice and opportunity for public comment. For at least most of the major rules, however, the issuing agencies accepted comments from the public after issuing the rule, and in most of those cases, the agencies followed up with new final rules, responding to comments and often making changes in response thereto. Post-promulgation notice and comment do not precisely comply with the Administrative Procedure Act, yet are arguably close enough that some courts have felt compelled to uphold them. Challenges to rules adopted in this manner have created a jurisprudential mess, as courts struggle to balance their duty to enforce the requirements of the Administrative Procedure Act with the practical realities of the modern administrative state. The sheer extent of the practice demonstrates the need for a more consistent judicial response. This Article explores the different approaches courts have taken to judicial review of post-promulgation notice and comment.

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October 7, 2015 in Scholarship, Tax | Permalink | Comments (0)

Who Benefits From State Corporate Tax Cuts? Firm Owners (40%), Workers (35%), Landowners (25%)

ICTJuan Carlos Suárez Serrato (Stanford) & Owen Zidar (Chicago), Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms:

This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively.

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October 7, 2015 in Scholarship, Tax | Permalink | Comments (0)

Roberts: A Structural Examination Of Energy Tax Subsidies

Tracey M. Roberts (UC-Hastings), Picking Winners and Losers: A Structural Examination of Tax Subsidies to the Energy Industry:

The shibboleth that “government should not be picking winners and losers” has dominated the public discourse over renewable energy subsidies. This way of framing the debate ignores the nation’s long history of support for fossil fuels and obscures the economic theory behind the subsidies. This article contributes to the discussion in four ways.

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October 7, 2015 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, October 6, 2015

Stantcheva Presents Taxation And The International Mobility Of Inventors Today At Columbia

SSStefanie Stantcheva (Harvard) presents Taxation and the International Mobility of Inventors (with Ufuk Akcigit (Chicago) & Salomé Baslandze (Pennsylvania)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

This paper studies the effect of top tax rates on inventors' mobility since 1977. We put special emphasis on "superstar" inventors, those with the most and most valuable patents. We use panel data on inventors from the United States and European Patent Offices to track inventors' locations over time and combine it with international effective top tax rate data. We construct a detailed set of proxies for inventors' counterfactual incomes in each possible destination country including, among others, measures of patent quality and technological fit with each potential destination. We find that superstar top 1% inventors are significantly affected by top tax rates when deciding where to locate.

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October 6, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Avi-Yonah: Too Big to Tax? Will The IRS Enforce The Arm's Length Standard Against Vanguard?

VanguardFollowing up on my previous post, Avi-Yonah: Vanguard Owes $35 Billion In Back Taxes:  Reuven S. Avi-Yonah (Michigan), Too Big to Tax? Vanguard and the Arm’s Length Standard, 149 Tax Notes 105 (Oct. 5, 2015):

In this article, Avi-Yonah asserts that the Vanguard Group has been allowed to dominate the mutual fund industry and avoid billions of dollars in corporate taxes by providing at-cost services to commonly controlled funds, in violation of the arm’s-length standard. He argues that the IRS could successfully challenge Vanguard’s transfer pricing but warns that the tax liability would ultimately be borne by the millions of Vanguard fund investors.

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October 6, 2015 in Scholarship, Tax | Permalink | Comments (3)

The Effect Of State Taxes On The Geographical Location Of Top Earners: Evidence From Star Scientists

Enrico Moretti (UC-Berkeley) & Daniel Wilson (Federal Reserve Bank of San Francisco), The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists:

Using data on the universe of U.S. patents filed between 1976 and 2010, we quantify how sensitive is migration by star scientist to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists’ migration patterns.

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October 6, 2015 in Scholarship, Tax | Permalink | Comments (0)

Scheuer & Werning: The Taxation Of Superstars

Florian Scheuer (Stanford) & Iván Werning (MIT), The Taxation of Superstars:

How are optimal taxes affected by the presence of superstar phenomena at the top of the earnings distribution? To answer this question, we extend the Mirrlees model to incorporate an assignment problem in the labor market that generates superstar effects. Perhaps surprisingly, rather than providing a rationale for higher taxes, we show that superstar effects provides a force for lower marginal taxes, conditional on the observed distribution of earnings.

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October 6, 2015 in Scholarship, Tax | Permalink | Comments (0)

Monday, October 5, 2015

Dean Presents Social Enterprise And The Law Today At McGill

Dean (2015)Steven Dean (Brooklyn) presents Social Enterprise and the Law (Oxford University Press, 2016) (with Dana Brakman Reiser (Brooklyn)) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series:

Social Enterprise and the Law explores how public and private law could be deployed to allow double bottom line ventures (those devoted simultaneously to profits for owners and promoting a social mission) to realize their potential. The book responds not just to the rise of the social enterprise phenomenon generally, but specifically to the emergence of an array of state law organizational forms designed to house social enterprises. As many Volkswagen owners have become all too aware, promises of social good from for-profit ventures can prove hollow. The hybrid organizational forms states have crafted heartily embrace the concept of blending the profit motive and social good but do surprisingly little to protect investors and entrepreneurs from finding themselves in the same position as the Volkswagen owners that “tried to buy a green, high-performance car and ended up being unwitting participants in a conspiracy to pollute the earth.” Ron Lieber, How VW Might Repay Aggrieved Diesel Owners, NY Times, Sept. 26, 2015, at B1 (quoting Ed Mierzwinski of U.S. PIRG).

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

Coelho Presents Responses To Financial Transaction Taxes In France And Italy Today At UC-Berkeley

Coehlo 2Maria Coelho (UC-Berkeley) presents Dodging Robin Hood: Responses to France and Italy's Financial Transaction Taxes at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar:

This paper looks at the effect of the introduction of financial transaction taxes in equity markets in France and Italy in 2012 and 2013, respectively, on asset returns, trading volume and market volatility. Using two natural experiments in an event study and difference-in-differences design, I identify bounds on elasticity estimates for three categories of avoidance channels: real substitution away from taxed assets, retiming (anticipation of transaction realizations and portfolio lock-in), and tax arbitrage (cross-platform and financial instrument shifting).

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

Homonoff Presents Behavioral Economics And Sin Tax Policy Design Today At Loyola-L.A.

HomonoffTatiana Homonoff (Cornell) presents Behavioral Economics and Sin Tax Policy Design at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Recent evidence suggests consumers pay less attention to commodity taxes levied at the register than to taxes included in a good’s posted price. This suggests that policymakers should consider a largely overlooked feature of the tax — the tax’s salience — when designing the optimal tax policy. For example, if this attention gap is larger for high-income consumers than for low-income consumers, policymakers can manipulate a tax’s regressivity by altering the fraction of the tax imposed at the register. Using variation in cigarette tax rates, we find that all consumers respond to taxes that appear in cigarettes’ posted price, while only low-income consumers respond to taxes levied at the register. This suggests that a revenue-neutral shift toward register taxes would lessen the tax’s regressivity.

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

Reiser & Dean: SE(c)(3) — A Catalyst For Social Enterprise Crowdfunding

Dana Brakman Reiser (Brooklyn) & Steven Dean (Brooklyn), SE(c)(3): A Catalyst for Social Enterprise Crowdfunding, 90 Ind. L.J. 1090 (2015):

The emerging consensus among scholars rejects the notion of tax breaks for social enterprises, concluding that such prizes will attract strategic claimants, ultimately doing more harm than good. The SE(c)(3) regime proposed by this Article offers entrepreneurs and investors committed to combining financial returns and social good with a means of broadcasting that shared resolve.

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

Sunday, October 4, 2015

The Top 5 Tax Paper Downloads

Saturday, October 3, 2015

Tax Presentations At Midwestern Law & Economics Association Annual Meeting

KansasTax presentations at yesterday's Midwestern Law & Economics Association Annual Meeting at Kansas:

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

Friday, October 2, 2015

Weekly SSRN Tax Roundup

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October 2, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Boston College/ACTEC Symposium Today On The Centennial Of The Estate Tax: Perspectives And Recommendations

BCACTECThe Boston College Law Review and The American College of Trust and Estate Counsel are hosting a symposium today on The Centennial of the Estate Tax: Perspectives and Recommendations:

Keynote AddressMichael Graetz (Columbia), Death Taxes and Politics

Panel #1:  Is It Desirable to Tax the Gratuitous Transfer of Wealth During Life or at Death?

Panel #2:  Could Alternatives Other Than an Estate and Gift Tax Better Address Problems Associated with Wealth Concentration?

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

Thursday, October 1, 2015

Thomas: User-Friendly Taxpaying

Kathleen DeLaney Thomas (North Carolina), User-Friendly Taxpaying:

This Article argues that policymakers could encourage better tax compliance by simplifying the process of paying taxes. Not only are the tax laws themselves confusing, but our interactions with the tax system can also be incredibly tedious and burdensome. Thus, even when taxpayers understand the relevant legal rules, complying with one’s tax obligations may still entail hours of entering information on returns, sifting through pages of instructions, or keeping records of numerous expenses. In addition to imposing enormous efficiency costs, these procedural burdens deter voluntary participation in the tax system. In light of the time and mental effort required, many taxpayers may decide that fully complying with their tax obligations is simply too much work. This tendency to avoid mental effort is supported by numerous behavioral studies. For example, research has shown that when individuals are mentally fatigued by burdensome tasks, they tend to cheat more, behave more passively, and have a harder time exercising self-control.

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October 1, 2015 in Scholarship, Tax | Permalink | Comments (2)

Chason: Taxing Losers

Florida Tax ReviewEric D. Chason (William & Mary), Taxing Losers, 18 Fla. Tax Rev. ___ (2016):

The U.S. tax system (like most in the world) benefits capital gains in two ways. Investors can defer paying tax until they “realize” any gain (typically by sale) rather than when the gain simply occurs via rising prices. And, individual investors pay a lower, preferred rate on their long-term capital gains as compared to their other ordinary income (like compensation or business profits).

Investors face a burden, though, with respect to their capital losses. Rather than allowing for unlimited capital loss deductions, the Internal Revenue Code largely forces investors to match their capital losses against their capital gains. Limits on capital losses could be justified in several ways. The most prominent justification holds that should not be able to “cherry pick” loss elements out of an overall winning portfolio. This Article seeks to clarify the nature of the cherry-picking argument. It drops “cherry picking” in favor of the somewhat more descriptive “loss harvesting” used in wealth management literature. We will imagine a world in which Congress does not force taxpayers to match losses against gains. In this world, taxpayers could harvest isolated losses whenever they arise and enjoy the benefits of loss deductions — even if the taxpayer has an overall winning portfolio. Using insights from option theory, we can estimate the cost of aggressive loss harvesting.

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October 1, 2015 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, September 30, 2015

Zucman: Hidden Wealth Of Nations — The Scourge Of Tax Havens

Zucman CoverGabriel Zucman (UC-Berkeley), Hidden Wealth of Nations: The Scourge of Tax Havens (University of Chicago Press, Sept. 22, 2015):

We are well aware of the rise of the 1% as the rapid growth of economic inequality has put the majority of the world’s wealth in the pockets of fewer and fewer. One much-discussed solution to this imbalance is to significantly increase the rate at which we tax the wealthy. But with an enormous amount of the world’s wealth hidden in tax havens—in countries like Switzerland, Luxembourg, and the Cayman Islands—this wealth cannot be fully accounted for and taxed fairly. No one, from economists to bankers to politicians, has been able to quantify exactly how much of the world’s assets are currently hidden—until now. Gabriel Zucman is the first economist to offer reliable insight into the actual extent of the world’s money held in tax havens. And it’s staggering.

In The Hidden Wealth of Nations, Zucman offers an inventive and sophisticated approach to quantifying how big the problem is, how tax havens work and are organized, and how we can begin to approach a solution. His research reveals that tax havens are a quickly growing danger to the world economy. In the past five years, the amount of wealth in tax havens has increased over 25%—there has never been as much money held offshore as there is today. This hidden wealth accounts for at least $7.6 trillion, equivalent to 8% of the global financial assets of households.

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September 30, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Feld: The Political Economy Of Tax Indexing For Inflation

Alan Feld (Boston University), Silent Tax Changes: The Political Economy of Indexing for Inflation:

The federal income tax adjusts many but not all of its dollar components automatically to account for inflation. In this article I analyze the benefits and burdens this process confers on some taxpayers and the political logic behind them. I discuss the choice of the proper index for making the adjustments, as well as the effects of the failure to adjust specific dollar amounts. I conclude that some adjustments have become overly generous, while unadjusted provisions suffer slow repeal, sometimes intentionally. Indexation thus can have the effect of tax legislation by stealth.

September 30, 2015 in Scholarship, Tax | Permalink | Comments (1)

Motro: How To Write A Law Article That Reads Like A Good Story

Journal of Legal Education (2014)Shari Motro (Richmond), The Three-Act Argument: How to Write a Law Article That Reads Like a Good Story, 64 J. Legal Educ. 707 (2015):

Why do many law articles — my own included — leave readers cold? One reason may be that they lack fundamental elements that make up a good story. They lack tension. They lack narrative arc. Over my years teaching seminars and exchanging drafts with colleagues, I’ve developed a recipe inspired by dramatic plot that helps me organize ideas into a form that better engages the reader. I’ve also found it to be conducive to a richer, more generative, more joyful writing process. I hope it does the same for you!

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September 30, 2015 in Legal Education, Scholarship | Permalink | Comments (1)

Men Cite Their Own Work More Than Women

Inside Higher Ed, Men Who Admire Their Own Work:

Numerous studies have found that men are more likely to think highly of themselves and their talents than are women when they evaluate themselves.

A new study finds that these patterns extend to self-citation, in which scholars cite their own past work in new studies.  Some scholars frown on the practice, while others note that there may be circumstances where such citations are necessary. But whether one has permissive or skeptical attitudes about self-citation, shouldn't the patterns be the same for men and women?

The study -- released Monday at the annual meeting of the American Sociological Association -- found that 31 percent of men engage in self-citation, compared to only 21 percent of women.  [Molly King (Stanford), Shelley Correll (Stanford), Jennifer Jacquet (NYU), Carl Bergstrom (Washington) & Jevin West (Washington), Men Set Their Own Cites High: Gender and Self-Citation Across Fields and Over Time]


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September 30, 2015 in Legal Education, Scholarship | Permalink | Comments (1)

Graetz: Can A 20th Century Business Income Tax Serve A 21st Century Economy?

Michael J. Graetz (Columbia),  Can a 20th Century Business Income Tax Regime Serve a 21st Century Economy?, 30 Australian Tax Forum 551 (2015):

This article is the text of the Parsons Lecture given by Michael Graetz at the University of Sydney Law School in April 2015. In it the author reviews the contemporary challenges involved in making international tax policy. These challenges include the tensions of international tax competition whilst balancing both sound economic theory, and politics. The author explains how the 20th Century international tax system that we have is poorly equipped to cope with the 21st Century’s technologically impelled, integrated global economy.

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

Tuesday, September 29, 2015

Sanchirico Presents Tax Inertia And Business Tax Reform Today At Columbia

SanchiricoChris William Sanchirico (Pennsylvania) presents  Tax Inertia: A General Framework with Specific Application to Business Tax Reform at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

A surprising degree of bipartisan consensus has lately formed in the United States around two propositions of business tax reform: that something should be done about the “lockout” of US multinationals’ foreign earnings; and that the corporate income tax rate should be reduced. This paper questions whether these two propositions are really consistent.

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

Monday, September 28, 2015

Tazhitdinovaat Presents The Effect Of Firm Incentives On Labor Supply Responses To Taxes Today At UC-Berkeley

TazhitdinovaatAlisa Tazhitdinovaat (UC-Berkeley) presents Adjust Me if I Can't. The Effect of Firm Incentives on Labor Supply Responses to Taxes at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar:

Using administrative data, I show evidence of strong behavioral responses -- in the form of sharp bunching -- to a threshold that generates large discontinuous changes both in the marginal tax rates and in the total income and payroll tax liability of individuals in Germany. To calculate elasticities of earnings with respect to net-of-tax rate I extend the bunching method to frameworks with large kinks and notches. Sharp bunching translates into elasticity estimates that are an order of magnitude larger than has been previously estimated using the bunching approach. Elasticity point estimates range from 0.20 to 0.37 for women and from 0.09 to 0.25 for men, depending on the year. To explain the magnitude of the observed response, I focus on firm incentives. I show theoretically that in the presence of search costs, the magnitude of labor supply responses to taxes depends not only on the magnitude of tax changes, but also on the statutory incidence of taxes, the elasticity of substitution between the individuals working under different tax regimes and on the incidence of job search burden.

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September 28, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra & Thorndike Present New Deal Legislation & 20th Century Progressive Taxation Today at Loyola-L.A.

TMAjay Mehrotra (Indiana) & Joseph Thorndike (Tax Analysts) present New Deal Legislation and the Long 20th Century of Progressive Taxation at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Fiscal policy plays only a minor role in the concept of a New Deal “order” as developed by Steve Fraser and Gary Gerstle. But their essay collection grows out of a broader historiography that minimizes the substantive importance of New Deal taxation, treating the issue as a vehicle for symbolic politics rather than substantive reform. In fact, taxes were a crucial element of the New Deal order — and one of its most powerful and durable legacies.

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September 28, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Altshuler Presents Lessons The U.S. Can Learn From Other Countries’ Territorial Systems Today at McGill

AltshulerRosanne Altshuler (Rutgers) presents Lessons the United States Can Learn from Other Countries’ Territorial Systems for Taxing Income of Multinational Corporations (with Stephen Shay (Harvard) & Eric Toder (Urban Institute)) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series:

The United States has a worldwide system that taxes the dividends its resident multinational corporations receive from their foreign affiliates, while most other countries have territorial systems that exempt these dividends. This report examines the experience of four countries – two with long-standing territorial systems and two that have recently eliminated taxation of repatriated dividends.

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September 28, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Sunday, September 27, 2015

The Top 5 Tax Paper Downloads

Friday, September 25, 2015

Weekly SSRN Tax Roundup

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September 25, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Thursday, September 24, 2015

Bird & Zolt: Taxation And Inequality In Canada And The United States

Richard M. Bird (Toronto) & Eric M. Zolt (UCLA), Taxation and Inequality in Canada and the United States: Two Stories or One?, 52 Osgoode Hall L.J. 401 (2015):

Canada and the United States have both experienced a substantial increase in income inequality over the last several decades. In this article, we examine the complex interaction of income inequality with tax and transfer systems in Canada and the United States. We begin by comparing the data on taxation and expenditure to understand the similarities and differences between the two countries. We then consider how changes to tax and transfer policies have affected the levels of inequality in both countries. The article concludes by offering some policy recommendations that each country may consider to address the increasing levels of inequality.

September 24, 2015 in Scholarship, Tax | Permalink | Comments (1)

Wednesday, September 23, 2015

Fleischer: Taxing Carried Interest As Ordinary Income Through Executive Action

Victor Fleischer (San Diego), Two and Twenty Revisited: Taxing Carried Interest as Ordinary Income Through Executive Action Instead:

The Treasury Department should issue regulations treating the allocation and distribution of partnership profits in private equity funds — carried interest — as payments for services. My suggested “tax arbitrage” approach uses the presence of tax-exempt limited partners in the investment fund as a proxy for arrangements that inappropriately exploit the difference in tax rates among partners to reduce overall tax liability. The end result of treating carried interest as a payment for services achieves a result similar to the policy recommendation of Two and Twenty: Taxing Partnership Profits in Private Equity Funds, 83 NYU L. Rev. 1 (2008), but it would do so through executive action and without the need for new legislation.

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September 23, 2015 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 22, 2015

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 68, No. 4 (Summer 2015) (State and Local Tax Edition):

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September 22, 2015 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Buchanan Reviews Schmalbeck's Ending The Sweetheart Deal Between Big-Time College Sports And The Tax System

Neil H. Buchanan (George Washington), Using the Tax Code to Help Universities Put Big-Time College Sports in (Some) Perspective (Jotwell), reviewing Richard Schmalbeck (Duke), Ending the Sweetheart Deal between Big-Time College Sports and the Tax System:

Richard Schmalbeck ... describes two tax provisions—universities not having to pay the Unrelated Business Income Tax” (UBIT) on their sports-related profits, and a provision allowing a partial deduction for barely disguised added charges for admission to games—that are “egregiously bad,” and he concludes that “these defects amount to an implicit tax subsidy of college sports that is neither healthy nor in any way justified.” Because of space limitations, I will focus here only on the first provision. Suffice it to say that Professor Schmalbeck’s arguments regarding the second provision are as strong as those for the first, which is to say very strong indeed. ...

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September 22, 2015 in Scholarship, Tax | Permalink | Comments (1)

Monday, September 21, 2015

Galle Presents Regulating Internalities Today At Loyola-L.A.

Galle (2016)Brian Galle (Georgetown) presents Regulating Internalities at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

An extensive existing literature examines the optimal design of tools for correcting externalities. This Article is among the first to extend that literature to the field of internalities, or harms that individuals do to themselves. I show that several pieces of conventional wisdom in the externality literature likely do not hold in the internality context. For example, moral hazard concerns lead prior commentators to overwhelmingly favor sticks over carrots. Yet moral hazard is likely not a concern for internalities, implying that other factors that have traditionally gotten little attention, such as income effects, may be important. I also show that internality regulation can in some contexts be a highly efficient source of revenue—again unlike the externality context, there may be a “double dividend” for internality-correcting taxes. And, finally, I address some standard concerns with the project of regulating internalities generally.

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

Schmalbeck Presents Ending The Sweetheart Deal Between Big-Time College Sports And The Tax System Today At BC

SchmalbeckRichard Schmalbeck (Duke) presents Ending the Sweetheart Deal between Big-Time College Sports and the Tax System at Boston College today as part of its Tax Policy Workshop Series hosted by James Repetti and Diane Ring:

This paper was prepared for a recent conference of the National Center for Philanthropy and Law, of the NYU Law School. The overall topic was “Tax Issues Affecting Colleges and Universities,” and I was asked to address specifically those issues relating to athletics. This paper considers two specific issues that have in common that they involve college ”revenue” sports, and are plagued by egregiously bad tax rules.

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

Sunday, September 20, 2015

The Top 5 Tax Paper Downloads

Friday, September 18, 2015

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

McMahon: Should Divorce Be More Taxing?

Stephanie Hunter McMahon (Cincinnati), Should Divorce Be More Taxing? Structuring Tax Reduction to Reduce Inequality, 3 Ind. J. L. & Soc. Equal. 75 (2015):

Current law makes divorce a time for minimizing some couples’ taxes. The group who benefit from the reduction are unlikely to be those in greatest financial need following divorce. Existing divorce-related taxation focuses on shifting the tax burden between spouses, the implicit and explicit elections that enable this shifting, and the classification of who should be entitled to this tax reduction. This article argues that Congress should focus tax reduction on those with minimal resources following divorce to ensure an equitable distribution of the nation’s tax burden.

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September 18, 2015 in Scholarship, Tax | Permalink | Comments (3)

Thursday, September 17, 2015

A Defense Of Horizontal Equity

Florida Tax ReviewIra Lindsay (Dartmouth), Tax Fairness by Convention: A Defense of Horizontal Equity, 18 Fla. Tax Rev. ___ (2016):

Horizontal equity is the principle that people who earn equal income should owe equal tax. It has gotten a bad name. Although horizontal equity remains a textbook criterion of tax fairness, scholarly literature is largely hostile. Scholars ranging from the legal theorist Louis Kaplow to philosophers Thomas Nagel and Liam Murphy question its conceptual coherence and normative significance. The crux of the case against horizontal equity is that it seems irrational to worry about the relationship between pre-tax income and tax obligations rather than determining tax policy in light of what our best theory of distributive justice tells us is the best post-tax outcome. I argue that horizontal equity is best understood as a compromise principle for people who disagree about deeper principles of distributive justice.

The debate over horizontal equity reflects two distinct ways of thinking about fairness. One approach starts with principles that specify a just distribution of income, resources or utility and uses these principles to derive appropriate tax laws. A second approach analyzes fairness norms as stable and mutually advantageous compromises between people who have conflicting interests and differing moral commitments. Proponents and opponents of redistributive taxation can agree that at any given level of redistribution they will each be better off if taxes are horizontally equitable. Horizontally equitable taxation can thus prevent rent-seeking and ideological conflict over tax policy from generating a wasteful patchwork of narrow taxes and tax subsidies. Observing horizontal equity may be unimportant when people agree on ideal principles of justice and the relevant empirical facts. But under more usual conditions of deep moral and empirical disagreement over tax policy, treating pre-tax income as a normative baseline can prevent conflict over distributive questions from leading to wasteful and inequitable tax policy. 

September 17, 2015 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, September 16, 2015

Milligan Presents A Reset For The Child Tax Benefit System Today At Toronto

MilliganKevin Milligan (British Columbia) presents A Reset for the Child Tax Benefit System at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

There is a logical foundation for differential treatment of families with children under our tax system. However, trying to make good on this principle of special tax treatment for children has resulted in overwhelming complexity. For example, a family in British Columbia in 2012 had to assess its eligibility for ten separate child-focused tax measures. These benefits cross paths, conflict and confuse. The way forward, I suggest, is to rationalize the cornucopia of credits into one delivery method (I propose a refundable tax credit), to remove overlap by consolidating existing measures into fewer programs, and finally to impose a seriously simplified structure on the whole system.

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September 16, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Rosen Presents Artificial Intelligence And Predicting Tax Evasion Today at Cornell

RosenJacob Rosen (MIT) presents Tax Noncompliance Detection Using Co-Evolution of Tax Evasion Risk and Audit Likelihood at Cornell at 4:00 p.m. EST (live stream here) as part of its Joint Department of Information Science Colloquium Series:

We detect tax law abuse by simulating the co-evolution of tax evasion schemes and their discovery through audits. Tax evasion accounts for billions of dollars of lost income each year. When the IRS pursues a tax evasion scheme and changes the tax law or audit procedures, the tax evasion schemes evolve and change into undetectable forms. The arms race between tax evasion schemes and tax authorities presents a serious compliance challenge. Tax evasion schemes are sequences of transactions where each transaction is individually compliant. However, when all transactions are combined they have no other purpose than to evade tax and are thus non-compliant.

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

Tuesday, September 15, 2015

Posner: Divergent Paths — The Academy And The Judiciary

PosnerRichard A. Posner (Judge, U.S. Court of Appeals for the Seventh Circuit; Senior Lecturer in Law, University of Chicago Law School), Divergent Paths: The Academy and the Judiciary (forthcoming Harvard University Press, 2016):

Judges and legal scholars talk past one another, if they have any conversation at all. Academics couch their criticisms of judicial decisions in theoretical terms, which leads many judges―at the risk of intellectual stagnation―to dismiss most academic discourse as opaque and divorced from reality. In Divergent Paths, Richard Posner turns his attention to this widening gap within the legal profession, reflecting on its causes and consequences and asking what can be done to close or at least narrow it.

The shortcomings of academic legal analysis are real, but they cannot disguise the fact that the modern judiciary has several serious deficiencies that academic research and teaching could help to solve or alleviate. In U.S. federal courts, which is the focus of Posner’s analysis of the judicial path, judges confront ever more difficult cases, many involving complex and arcane scientific and technological distinctions, yet continue to be wedded to legal traditions sometimes centuries old. Posner asks how legal education can be made less theory-driven and more compatible with the present and future demands of judging and lawyering.

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September 15, 2015 in Book Club, Legal Education, Scholarship | Permalink | Comments (3)