TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, March 23, 2018

Tax Policy In The Trump Administration

Marian: Is All Corporate Tax Planning Good For Shareholders?

Omri Y. Marian (UC-Irvine), Is All Corporate Tax Planning Good for Shareholders?, 52 U.C. Davis L. Rev. ___ (2018):

Does corporate tax planning benefit shareholders? The prevalent assumption is that it does, because lower corporate tax burden translates to enhanced shareholder value. In this article, I explain why this common perception is sometimes incorrect in practice. In many cases, successful (and legal) corporate tax planning schemes are not Pareto-optimal: some shareholders may see a net benefit, while others experience a net loss. Moreover, in certain instances it is reasonable to expect that legal corporate tax planning will be Kaldor-Hicks inefficient. Meaning, the financial losses incurred by some shareholders exceed the gains to others.

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March 23, 2018 in Scholarship, Tax | Permalink | Comments (0)

Thursday, March 22, 2018

Satterthwaite Presents Electing Into A Value-Added Tax Today At Indiana

SatterthwaiteEmily Satterthwaite (Toronto) presents Electing into a Value-Added Tax: Evidence from Ontario Micro-Entrepreneurs at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Across countries, value-added tax (VAT) statutes typically recognize the disproportionate burden of VAT compliance for smaller firms by exempting “small suppliers” (defined as businesses with annual revenues less than a specified registration threshold) from the obligation to register for, collect, and remit VAT on their sales.  But most input-credit-style VATs also offer small suppliers a curious choice: they can elect into the VAT by voluntarily registering.  Because VAT paid on inputs is refundable for registered firms, small suppliers have stronger incentives to voluntarily register as they (1) purchase more of their inputs from registered firms (the “input channel”) or (2) sell more of their output to registered firms (the “customer channel”).  In theory, these “formality chain effects” can improve the efficiency of a VAT.  In practice, however, many VATs feature registration thresholds that are far lower in dollar terms than recommended by economists.  Where a registration threshold is very low, might microenterprises’ high VAT compliance costs weaken their incentives to voluntarily register, thereby undermining the policy rationale for offering the election?  This paper uses qualitative and quantitative research methods to explore the relevance of the formality chain effect theory in the context of a low registration threshold.

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March 22, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Morse: Government-To-Robot Enforcement

Susan C. Morse (Texas), Government-to-Robot Enforcement, 2018 U. Ill. L. Rev. ___:

Automated legal systems occupy a central place in the administration of most regulatory regimes. Examples include TurboTax, wage and hour software, and self-driving cars. These systems produce results which invite examination and adjudication on a centralized, ex post basis. This is revolutionary. It means that the content of law, which technically applies to individual regulated parties, is determined centrally by interactions between the government and firms that make automated legal systems. I call this trend government-to-robot enforcement.

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March 22, 2018 in Scholarship, Tax | Permalink | Comments (0)

Brunson Named Georgia Reithal Professor Of Law At Loyola-Chicago

BrunsonSam Brunson (Loyola-Chicago) has been named Georgia Reithal Professor of Law. His recent publications include:

  • A Diachronic Approach to Bob Jones University: Religious Tax Exemptions after Obergefell, __ Ind. L.J. __ (forthcoming)(with David J. Herzig)
  • Taxing Utopia, 47 Seton Hall L. Rev. __ (forthcoming) [draft]
  • Dear IRS, It Is Time to Enforce the Campaigning Prohibition. Even Against Churches, 87 U. Colo. L. Rev. 143 (2016) [article]
  • Tax Exemption, Public Policy, and Discriminatory Fraternities, 35 Va. Tax Rev. 116 (2015) (with David J. Herzig) [draft]
  • The Taxation of RICs: Replicating Portfolio Investment or Eliminating Double Taxation? 20 Stan. J.L. Bus. & Fin. 222 (2015) [draft]

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March 22, 2018 in Colloquia, Tax | Permalink | Comments (0)

Johnson: Marinello – Curbing Abusive Exercise Of Prosecutorial Discretion In Tax Crimes Cases

Johnson (Steve)TaxProf Blog op-ed:  Marinello – Curbing Abusive Exercise of Prosecutorial Discretion in Tax Crimes Cases, by Steve R. Johnson (Florida State):

On Wednesday, March 21, by a vote of seven to two, the U.S. Supreme Court decided Marinello v. United States, No. 16-1144.  Marinello is an important tax crimes decision.  It also is instructive at many points with respect to statutory interpretation, an enterprise fundamental to all areas of tax, civil as well as criminal.

But the core of the case transcends the particular statute at issue and the respective merits of various canons of statutory interpretation.  The questions at the base of Marinello are as fundamental as one can get: the proper relationship between the people and their government and the proper relationships among the three branches of government.  In my view, the Marinello dissent had the better of the technical argument as to statutory construction but missed much of the larger picture.  The Marinello majority had a better sense of the whole and moved the needle in the right direction, but it produced an ill defined “rule” through dubious reasoning.  So, two — not three — cheers for the Marinello decision.

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March 22, 2018 in New Cases, Tax | Permalink | Comments (0)

NY Times: Think Cryptocurrency Is Confusing? Try Paying Taxes On It

New York Times, Think Cryptocurrency Is Confusing? Try Paying Taxes on It:

The room was full of stressed-out cryptocurrency traders. And for once, they weren’t nervous about the price of Bitcoin, or the roller coaster swings of the virtual currency markets.

No, the subject of this gloomy affair was taxes. Specifically, how — and whether — to pay them.

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March 22, 2018 in Tax | Permalink | Comments (0)

Wednesday, March 21, 2018

Pittsburgh Tax Review Publishes New Issue

Pittsburgh Tax Review (2017)The Pittsburgh Tax Review has published Vol. 15, No. 1 (2017):

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March 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Stewart: Redistribution Between Rich And Poor Countries

Miranda Stewart (Australian National University), Redistribution Between Rich and Poor Countries:

The topic of redistribution between rich and poor countries opens a can of worms. This paper first inquires into what we mean by some of these words and second, considers the role of taxation in redistribution. It briefly considers the various modes of redistribution to address poverty and inequality, including the role of taxation, within a country before turning to consider modes of redistribution between rich and poor countries. The paper then turns to consider whether we are asking the right question. Should the question, really, be about redistribution between rich and poor people? In an increasingly global and digital era, how might we reconsider the role of taxation in achieving this?

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March 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration

Richard Ainsworth (Boston University) & Brendan Magauran, Taxing & Zapping Marijuana: Blockchain Compliance in the Trump Administration:

On January 4, 2018, the Trump Administration through Attorney General Sessions rescinded an Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases under the federal Controlled Substances Act, as well as under the Bank Secrecy Act. Federal law is at odds with state law in the majority of states on the legalization and subsequent state taxation of marijuana. Twenty-eight states and the District of Columbia have at least partially legalized marijuana. Eight of these states have legalized both medicinal and recreational use. With limited exceptions, legalized sales of marijuana are taxed.

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March 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

2019 U.S. News Tax Rankings

U.S. News 2019Here are the new 2019 U.S. News Tax Rankings, along with last year's ranking:

2019 Rank Tax Program 2018 Rank
1 NYU 1
2 Georgetown 2
3 Florida 3
4 Northwestern 4
5 Virginia 5
6 Harvard 8
7 Boston University 8
8 Loyola-L.A. 6
9 UCLA 7
10 Michigan 14
11 Texas 12
12 Columbia 10
13 Boston College 20
14 USC 15
15 Yale 18
16 San Diego 11
17 Indiana (Maurer) 23
17 Univ. of Washington 20
19 Duke 16
19 Stanford 23
19 Chicago 19
19 Penn 16
23 Miami 12
24 Villanova 20
25 Alabama n/r
25 UC-Berkeley n/r
25 Denver 25

Here are the biggest upward moves:

  • +7:  Boston College (#13)
  • +6:  Indiana (#17)
  • +4:  Michigan (#10), Stanford (#19)
  • +3:  Yale (#15), U. Washington (#17)
  • +2:  Harvard
  • Alabama (#25) and UC-Berkeley (#25) were unranked last year

Here are the biggest downward moves:

  • -11:  Miami (#14)
  • -5:  San Diego (#16)
  • -4:  Villanova (#24)
  • -3:  Penn (#19), Duke (#19)
  • -2:  Loyola-L.A. (#8), UCLA (#9), Columbia (#12)
  • Washington University (#26 last year) is unranked this year

Here are the rankings of the graduate tax programs, along with last year's rankings.

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March 21, 2018 in Law School Rankings, Legal Education, Tax | Permalink | Comments (1)

NY Times: A Curveball From The New Tax Law — It Makes Baseball Trades Harder

New York Times, A Curveball From the New Tax Law: It Makes Baseball Trades Harder:

As President Trump congratulated the World Series champion Houston Astros at a White House ceremony last week, he also heaped praise on himself and congressional Republicans for passing a sweeping tax cut last year. He hailed Representative Kevin Brady of Texas, the House’s chief tax writer and an Astros superfan, as “the king of those tax cuts.”

What he did not mention is that the new tax law Mr. Brady helped draft, and which Mr. Trump signed, levies a large new tax on the Astros, and similar franchises across professional sports.

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March 21, 2018 in Tax | Permalink | Comments (0)

The Marital Wealth Gap

Erez Aloni (British Columbia), The Marital Wealth Gap, 93 Wash. L. Rev. ___ (2018):

Married couples are wealthier than people in all other family structures. The top 10% of wealth holders are, in great proportion, married. Even among the wealthiest households, married couples hold significantly more wealth than others. The Article identifies this phenomenon as the “Marital Wealth Gap,” and critiques the role of diverse legal mechanisms in creating and maintaining it. Marriage also contributes to the concentration of wealth because marriage patterns are increasingly assortative: wealth marries wealth. The law entrenches or even exacerbates these class-based marriage patterns by erecting structural barriers that hinder people from meeting across economic strata.

Table 1

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March 21, 2018 in Scholarship, Tax | Permalink | Comments (2)

Tuesday, March 20, 2018

De Simone Presents Repatriation Taxes And Foreign Cash Holdings: The Impact Of Anticipated Tax Reform Today At NYU

De Simone (2018)Lisa De Simone (Stanford) presents Repatriation Taxes and Foreign Cash Holdings: The Impact of Anticipated Tax Reform (with Joseph Piotroski (Stanford) & Rimmy Tomy (Chicago)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

We examine whether anticipation of a repatriation tax reduction affects the amount of cash U.S. multinational corporations (MNCs) hold overseas. We find that U.S. MNCs most likely to benefit from a repatriation tax reduction accumulated significant cash holdings once Congress proposed legislation, at the expense of reduced shareholder payouts, relative to firms unlikely to benefit. This behavior was accompanied by complementary activities designed to maximize expected tax benefits. We contribute to the literature on how firms respond to taxinduced incentives, provide a new explanation for U.S. MNC cash holding growth, and raise questions about the consequences of U.S. tax reform.

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March 20, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Goldin Presents Complexity And Take-Up Of The Earned Income Tax Credit Today At Georgetown

Goldin (2017)Jacob Goldin (Stanford) presents Tax Benefit Complexity and Take-Up of the Earned Income Tax Credit at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by Lilian Faulhaber and Itai Grinberg:

Tax benefits like the Earned Income Tax Credit (EITC) represent an important source of income to their recipients, but millions of those who are eligible to claim tax benefits fail to do so. One possible explanation is that the rules governing most tax benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact in thinking about this issue is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. Because APMs eliminate most of the barriers to claiming tax benefits for which one is eligible, I ague that efforts to increase benefit take-up should focus on inducing benefit-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of a benefit (of the type widely employed by governments and nonprofits) are less likely to be successful, except to the extent they themselves induce an increase in tax filing.

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March 20, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mann Presents I Robot: U Tax? Today In Australia

Mann (2018)Roberta Mann (Oregon) presents I Robot: U Tax? today at Australian National University:

In a 2017 interview, Microsoft founder Bill Gates recommended taxing robots to slow the pace of automation. Funds raised could be used to retrain and financially support displaced workers. Up to 47 per cent of US jobs are at risk by advancements in artificial intelligence. Low-wage workers currently hold a majority of those at-risk jobs. Increased automation is likely to exacerbate income inequality.

While employment changes due to automation are not new, advances in artificial intelligence threaten many more jobs much more quickly than historic automation did. When considering how to tax job replacing robots, we should think about the broader purpose of a tax system. Taxes raise revenue, but for whom?

The informal title of the most recent tax bill gives a clue: The Tax Cuts and Jobs Act (TCJA).

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March 20, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Newman Responds To Drennan's Conspicuous Philanthropy

Joel S. Newman (Wake Forest), Conspicuous Philanthropy: A Response, Am. U. L. F. 1 (2018):

In his Article [Conspicuous Philanthropy: Reconciling Contract and Tax Laws, 66 Am. U. L. Rev. 1323 (2017)], Professor Drennan notes that naming rights often have significant value. Therefore, he reasons that, when charitable contributions are made, the value of such naming rights should be subtracted from the amount of the contribution. Only the excess should be a tax-deductible contribution, and the burden should be on the donor to show that such an excess exists. To make this proposal work, there must be a way to determine (1) which categories of naming rights might be significant benefits; and (2) how such benefits can be valued.

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March 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

CBO: The Distribution Of Household Income, 2014

CBOCongressional Budget Office, The Distribution of Household Income, 2014:

In 2014, household income was unevenly distributed: Households at the top of the income distribution received significantly more income than households at the bottom of the distribution. According to the Congressional Budget Office’s estimates:

  • Average income among households in the lowest quintile (or fifth) of the income distribution was about $19,000 (see Summary Figure 1).
  • Average income among households in the highest quintile was about $281,000.

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March 20, 2018 in Congressional News, Gov't Reports, Tax | Permalink | Comments (0)

Monday, March 19, 2018

Hemel Presents The Death And Life Of The State And Local Tax Deduction Today At BYU

HemelDaniel Hemel (Chicago) presents The Death and Life of the State and Local Tax Deduction at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

The December 2017 U.S. tax law imposed stringent limits on the deduction for state and local taxes (SALT). But the new law does not necessarily spell SALT’s demise. Several states are poised to enact statutes that could restore the SALT deduction for some of their residents and extend it to others who never claimed the deduction before. Ironically, the effort to kill the SALT deduction as part of the December 2017 tax law may have the unintended consequence of spurring states to enact reforms that effectively expand the deduction’s scope.

This essay takes stock of SALT’s history and offers a tentative forecast as to its future.  It casts the recent rollback of SALT as the culmination of a seven-decade trend of successive SALT limitations, which even before 2017 had put the SALT deduction effectively out of reach for more than two-thirds of the taxpaying public.

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March 19, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Hemel: The Living Anti-Injunction Act

Daniel Hemel (Chicago), The Living Anti-Injunction Act, 104 Va. L. Rev. Online 74 (2018):

For decades, individuals and entities wishing to contest their federal tax liabilities have had a choice among three paths. First, they could file a prepayment petition in the U.S. Tax Court. Second, they could pay the tax and then sue for a refund in their local federal district court. Third, they could pay the tax and then file for a refund in the U.S. Court of Federal Claims. What they could not do is seek an injunction preventing the Internal Revenue Service from assessing or collecting the tax in question. Standing in their way would be the Anti-Injunction Act (AIA), which provides (in relevant part) that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” But all that is now in doubt. In 2017, a federal district court in Texas held that the AIA did not bar the U.S. Chamber of Commerce from bringing a pre-enforcement challenge to an Obama administration regulation that specified the circumstances under which domestic companies that seek to move their legal domicile overseas will be subject to a targeted tax on inversion gain. As far as judicial decisions on matters of tax procedure go, this one was a bombshell, with commentators noting that the holding breaks from decades of judicial precedent and opens the door to more challenges to IRS rules. The IRS is now contesting the district court’s ruling in a closely watched appeal to the Fifth Circuit.

In a though-provoking and comprehensive article [Restoring the Lost Anti-Injunction Act, 103 Va. L. Rev. 1683 (2017)], Kristin Hickman and Gerald Kerska argue that the district court’s holding in the Chamber of Commerce case is largely consistent with the “lost” history of the AIA.

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March 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Lesson From The Tax Court: The Turbo-Tax Defense

Turbo TaxDespite the adage “ignorance of the law is no excuse,” the Tax Court issued an opinion last week suggesting that sometimes ignorance of the tax law can indeed be an excuse, at least to escape the §6662 accuracy-related penalties.   In Karl F. Simonsen and Christina M. Simonsen v. Commissioner, 150 T.C. No. 8 (Mar. 14, 2018), the Tax Court held that a California couple who messed up the tax treatment of a short sale of their former residence were not liable for accuracy-related penalties. Judge Mark “I’m No Caligula” Holmes wrote for the Court. The actual basis for the holding was that the IRS “failed to meet [its] burden of production on the accuracy-related penalty” because it did not introduce any evidence of compliance per the Tax Court’s newly discovered reading of §6751(b)(1). Our colleagues over at Procedurally Taxing have been following the §6751 issue for some time. If you are interested, here’s a good post by Professor T. Keith Fogg to start you out.

But immediately after throwing out the penalty for the IRS’s failure to produce the required evidence, Judge Holmes wrote four pages of dicta about how even if the IRS had met its burden, the taxpayers here acted with “reasonable cause and in good faith” within the meaning of the exculpatory language of §6664(c)(1). Why did he spend so much time doing this? Because he wanted the world to know that “we will not penalize taxpayers for mistakes of law in a complicated subject area that lacks clear guidance.” And one of the factors that went into the “good faith” conclusion was that Mrs. Simonsen not only consistently used TurboTax for over 11 years to prepare the couple’s returns, but had to upgrade to “a CD-ROM version of TurboTax instead of the usual online version because she needed a special properly report the...income.” That caused my colleague Gregg Polsky to email me with this query: “So this case means that taxpayers that follow Turbo Tax to a completely illogical result are immune from penalties?”

Well, maybe...but then again remember this is just dicta. And while the Tax Court is correct that tax is a “complicated subject area” I do not think it was correct in finding that the taxpayers here had no “clear guidance.” But reasonable minds may disagree.

Along with the penalty lesson, this case teaches a nice lesson on the tax treatment of a short sale of property encumbered with a non-recourse loan.  I’ll run through that first because it may help us understand why the Tax Court here was willing to let ignorance of the law be a defense to accuracy-related penalties.

Details below the fold.

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March 19, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (8)

Morse: Seeking Comparables In Patent And Tax

Susan C. Morse (Texas), Seeking Comparables in Patent and Tax, 37 Rev. Litig Brief ___ (2018):

In their Article, Tax Solutions to Patent Damages, Jennifer Blouin and Melissa Wasserman argue that tax transfer prices can provide data to help calculate patent litigation damages. But tax transfer prices are imperfect for reasons of theory, doctrine, taxpayer and government incentives, and enforcement constraints. A court that relies on tax transfer prices to help set patent damage awards takes on the herculean task of analyzing many subtle contextual factors in two intricate regulatory systems, patent and tax.

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March 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 18, 2018

Cockfield: Taxing Global Digital Commerce In A Post-BEPS World

Arthur J. Cockfield (Queen's University), Taxing Global Digital Commerce in a Post-BEPS World:

This chapter evaluates the recent OECD Base Erosion and Profit Shifting (BEPS) initiative directed at global digital income, and concludes that tax planning will not be inhibited by any significant extent.

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March 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [1059 Downloads]  Federal Income Tax Treatment of Charitable Contributions Entitling Donor to a State Tax Credit, by Joseph Bankman (Stanford), David Gamage (Indiana), Jacob Goldin (Stanford) & Daniel Hemel (Chicago) et al.
  2. [738 Downloads]  Is New Code Section 199A Really Going to Turn Us All into Independent Contractors?, by Shu-Yi Oei (Boston College) & Diane Ring (Boston College)
  3. [402 Downloads]  Choice-of-Entity Decisions Under the New Tax Act, by Bradley Borden (Brooklyn)
  4. [265 Downloads]  The Elephant Always Forgets: U.S. Tax Reform and the WTO, by Reuven Avi-Yonah (Michigan) & Martin Vallespinos (S.J.D. 2018, Michigan)
  5. [260 Downloads]  Beat It: Tax Reform and Tax Treaties, by Reuven Avi-Yonah (Michigan)

March 18, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (1)

Saturday, March 17, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Fair Shot:  Rethinking Inequality And How We Earn

Fair ShotNew York Times Book Review, Chris Hughes Made Millions at Facebook. Now He Has a Plan to End Poverty. (reviewing Fair Shot: Rethinking Inequality and How We Earn (2018)):

Chris Hughes, as he will be the first to tell you, has too much money. As he relates in his new book, “Fair Shot,” he co-founded Facebook, asked his roommate Mark Zuckerberg for 10 percent of the company, received 2 percent instead and became dynastically wealthy as a result.

Hughes is acutely aware of how unfair this is. “Most Americans cannot find $400 in the case of an emergency,” he writes, “yet I was able to make half a billion dollars for three years of work.” He’s also aware that the flip side of people like himself having too much money is that tens of millions of Americans have too little. Over 40 million Americans live below the poverty line, including one in five children under the age of 6.

There is a simple solution to the problem of people having too little money: giving them some. As Hughes efficiently and compellingly recounts, the proven and far-reaching effects of cash grants include more work; higher incomes; better performance in school and college; less tobacco and alcohol use; and fewer hospitalizations, illnesses and untimely deaths. In short, grants strengthen and empower the poor, making them much more economically and socially productive.

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March 17, 2018 in Book Club, Tax | Permalink | Comments (2)

Spotlight On The AALS Tax Section

AALS (2019)AALS News, Spotlight on Sections: Taxation:

The AALS Section on Taxation promotes the communication of ideas, interests, and activities among members and makes recommendations on matters of interest in the teaching and improvement of the law relating to taxation. AALS News caught up with Larry Zelenak (now Immediate Past Chair) and Shu-Yi Oei (Chair) onsite at the 2018 Annual Meeting in San Diego.

How do your section members interact and collaborate outside of the AALS Annual Meeting?

LZ: The National Tax Association’s annual conference has become almost like a second annual meeting for us in terms of having a place to meet other tax law professors. Most of us are not economists, but there’s a lot you can learn as a consumer of tax and economic research without having to be one yourself. Historically, there has been a tendency for tax law professors to be doubly siloed: within law schools but also within tax. Maybe that’s why we’re such a tight group among ourselves. We haven’t traditionally talked a lot to accountants or economists. We are becoming much less siloed in both respects.

Other than that: a lot of email. We mostly use the tax prof listserv rather than our AALS Section listserv, because it was already running before the AALS one existed.

SO: The listserv and the tax prof blog are generally how tax law professors get together outside of the meeting. There’s also the Law and Society Conference, which has a number of tax panels.

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March 17, 2018 in Legal Education, Tax | Permalink | Comments (0)

Friday, March 16, 2018

Lawsky Presents A Logic For Statutes And Formalizing The Code Today At Florida

Lawsky (2017)Sarah Lawsky (Northwestern) presents A Logic for Statutes, 21 Fla. Tax Rev. ___ (2018), Formalizing the Code, 70 Tax L. Rev. 377 (2017), at Florida today as part of its Graduate Tax Speaker Series:

A Logic for Statutes:

Case-based reasoning is, without question, a puzzle. When students are taught to “think like lawyers” in their first year of law school, they are taught case-based common-law reasoning. Books on legal reasoning are devoted almost entirely to the topic. How do courts reason from one case to the next? Is case-based reasoning reasoning from analogy? How should case-based reasoning be modeled? How can it be justified?

In contrast, rule-based legal reasoning (as exemplified in much statutory reasoning) is taken as simple in legal scholarship. Statutory interpretation — how to determine the meaning of words in a statute, the relevance of the lawmakers’ intent, and so forth — is much discussed, but there is little treatment of the structure of statutory reasoning once the meaning of the words is established. Once the meaning of terms is established, statutory reasoning is considered, roughly speaking, to be deductive reasoning.

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March 16, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup: Scharff Reviews Satterthwaite's Smallness And The VAT

This week, Erin Scharff (Arizona State) reviews a new article by Emily Ann Satterthwaite (Toronto), On the Threshold: Smallness and the Value-Added Tax, 9 Colum. J. Tax L. ___ (2018):

Scharff (2017)Emily Satterthwaite’s latest article explores the ways tax law should reflect the needs (and especially the relatively high-compliance costs) of small businesses. Her focus is on Value-Added Taxes (VATs) and, in particular, on the VAT exemption threshold.  

Though there is widespread expert agreement that VATs should exempt small firms, there is significant variation in the VAT thresholds, particularly among developing countries. Further, exemption thresholds are often set much lower than what VAT experts have recommended for optimal efficiency. Satterthwaite’s article argues that this expert recommendation not only advances efficiency goals, but would also improve distributional equity.

Satterthwaite does yeomen’s work in making her argument accessible, particularly to U.S. readers who might be less familiar with the way VATs operate, and the first part of her article is an excellent and highly accessible introduction to VATs and its relative advantages over cascading turnover taxes and retail sales taxes. 

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March 16, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Corporate Tax Avoidance And Honoring The Fiduciary Duties Owed To Corporation And Its Stockholders

Eric C. Chaffee (Toledo) & Karie Davis-Nozemack (Georgia Tech), Corporate Tax Avoidance and Honoring the Fiduciary Duties Owed to Corporation and Its Stockholders, 58 B.C. L. Rev. 1425 (2017):

Corporate tax avoidance is a pressing issue of both national and international concern. In recent years, the tax strategies of Apple, Facebook, Pfizer, Starbucks, and numerous other corporations have reminded the public that firms regularly undertake highly aggressive tax strategies to minimize their corporate taxes. Corporations often claim that they are legally required to engage in these aggressive strategies. But this article proves that claim is utterly and completely incorrect when based upon the fiduciary duties owed to the corporation and its stockholders.

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March 16, 2018 in Scholarship, Tax | Permalink | Comments (0)

Galle: Kill Quill, Keep The Dormant Commerce Clause — History's Lessons On Congressional Control Of State Taxation

Brian D. Galle (Georgetown), Kill Quill, Keep the Dormant Commerce Clause: History's Lessons on Congressional Control of State Taxation, 70 Stan. L. Rev. Online 158 (2018):

The world of internet commerce was shaken to its foundations in January this year, when the Supreme Court agreed to reconsider its landmark holding in Quill Corp. v. N. Dakota. For more than twenty-five years, Quill has barred states from imposing tax-collection obligations on retailers lacking “physical presence” in the taxing state. As a practical matter, this has meant that internet retailers with no employees or facilities in a state can sell into the state without collecting the sales taxes that local retailers must. In this Essay, I’ll argue that original historical evidence I’ve collected suggests that the political economy premises on which Quill rests are fundamentally mistaken. But I believe that same evidence should lead the Court to keep in place the larger body of “Dormant Commerce Clause” jurisprudence from which Quill first sprung.

March 16, 2018 in Scholarship, Tax | Permalink | Comments (0)

Thursday, March 15, 2018

Glogower Presents Taxing Inequality Today At UCLA

Glogower (2016)Ari Glogower (Ohio State) presents Taxing Inequality on Friday as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Kirk Stark:

Economic inequality in the United States is now approaching historic levels last seen in the years leading up to the Great Depression. Scholars have long argued that the federal income tax alone cannot curtail rising inequality and that we should look beyond the income tax to a wealth tax. Taxing wealth also faces two central and resilient objections in the literature: A wealth tax penalizes savings and overlaps with a tax on capital income.

This Article moves beyond this stalemate to redefine the role of wealth in a progressive tax system. The argument proceeds in three main parts. The Article first interrogates the justifications in the literature for a wealth tax and introduces a new justification grounded in the relative economic power theory which explains how inequality generates social and political harm. This theory formalizes the problem of inequality and has specific implications for the way that economic inequality should be measured and constrained. In particular, this theory implies that economic inequality should be measured by differences in economic spending power during the taxing period.

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March 15, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Aprill: The GOP's New Tax Law Encourages Campaign Donor Secrecy

The Hill op-ed:  GOP's New Tax Law Encourages Campaign Donor Secrecy, by Ellen P. Aprill (Loyola-L.A.):

The National Rifle Association is now deeply embroiled in two current political storms. This first, of course, in light of the Parkland shooting, involves its influence in blocking gun control legislation. The second involves the role it might have played in permitting Russian money to influence the presidential election, an issue that indictments released by Special Counsel Mueller also heightens .

According to reports in January, the FBI is investigating whether money from a Russian banker with Kremlin ties channeled funds through the NRA to President Trump’s campaign. At the beginning of this month, Sen. Ron Wyden (D-Ore.) asked the NRA and the Treasury Department for documents related to these possible ties. If this accusation proves to be the case, the donation would violate the prohibition in our campaign finance laws on the use of foreign money to support a candidate.

We know only that there is a reported investigation, not the validity of the claim. We do know, however, that recent changes to our tax laws may well increase the possibility of such illegal behavior regarding foreign influence in our elections.

The NRA is exempt from income tax as a section 501(c)(4) social welfare organization. These entities can lobby without limit and, of particular importance, can engage in campaign intervention – supporting or opposing candidates for public office – so long as such activity is not their primary activity. Permitted campaign intervention activity includes not only donations to campaigns and PACs, but also urging the organization’s members to support or oppose candidates.

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March 15, 2018 in Tax | Permalink | Comments (0)

Rossi: Carbon Taxation By Regulation

Jim Rossi (Vanderbilt), Carbon Taxation by Regulation, 102 Minn. L. Rev. 277 (2017):

This Article argues that, even though a carbon tax remains politically elusive, “carbon taxation by regulation” has begun to flourish as a way of financing carbon reduction. For more than a century, energy rate setting has been used to promote public good and redistributive goals, akin to general financial taxation. Various non-tax subsidies in customer energy rates have enormous untapped potential for promoting low-carbon sources of energy, while also balancing broader economic and social welfare goals.

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March 15, 2018 in Scholarship, Tax | Permalink | Comments (0)

Cauble: Tax Law's Loss Obsession

Emily Cauble (DePaul), Tax Law's Loss Obsession, 2018 Utah L. Rev. ___ :

This Article will address tax law’s inconsistent treatment of gains and losses – focusing in particular on certain instances in which a taxpayer is prevented from shifting a built-in loss to another taxpayer but would be allowed to shift a built-in gain to another taxpayer. The article will explore whether any legitimate justification can explain the inconsistency.

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March 15, 2018 in Scholarship, Tax | Permalink | Comments (0)

Christians: Tax And The Immigrant Investor

Allison Christians (McGill), Jumping the Line or Out of the Net? Tax and the Immigrant Investor, 88 Tax Notes Int'l 357 (Oct. 23, 2017):

Many countries seek to attract wealthy individuals — their capital, if not actually themselves — with programs that confer residence or citizenship in exchange for specified investments in local property or business ventures. Some programs simply facilitate jumping the immigration line, while other facilitate jumping out of the tax net in one country to land in another potentially more favorable.

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March 15, 2018 in Scholarship, Tax | Permalink | Comments (0)

Kleinbard: Perversion Of The Tax Policymaking Process

Wednesday, March 14, 2018

Crawford Presents Tax Talk And Reproductive Technology Today At Toronto

Crawford (2018)Bridget Crawford (Pace) presents Tax Talk and Reproductive Technology at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

What do the busiest fertility clinics in the United States communicate to their clients about the tax consequences of so-called human egg “donation”? As in Canada, the purchase of human ova is illegal in the United States. Nevertheless, it is an open and common practice for an egg providers, aided by a fertility clinic, to contract with intended parents for substantial remuneration. How do egg providers understand their remuneration vis-a-vis the tax system? How does that understanding square with existing tax laws in the U.S. and Canada? Through a content analysis of publicly-available websites and internet message boards, this paper examines the tax information that U.S. fertility clinics and doctors make available to patients, as well as the information that compensated egg providers share with each other. The paper demonstrates that correct and reliable tax information is in short supply, and there is a need for clear administrative or judicial guidance.

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March 14, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Global IFA Writing Competitions

IFA Logo (2015)Following up on my previous post, 2018 IFA International Tax Student Writing CompetitionGlobal IFA Writing Competitions (2018):

  • IFA President YIN Scientific Award
  • Mitchell B. Carroll Prize
  • Maurice Lauré Prize

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March 14, 2018 in Tax, Teaching | Permalink | Comments (0)

Wallace: Congressional Control Of Tax Rulemaking

Tax Law ReviewClint Wallace (South Carolina), Congressional Control of Tax Rulemaking, 71 Tax L. Rev. ___ (2018):

The notice and comment process is often touted as a mechanism for establishing political accountability, and providing a check on agency decision-making. Based on a survey of three years of recently proposed tax regulations, this Article shows that many notice-and-comment processes for tax regulations have been ineffective for these purposes. Fully one-third of the time, no one participated. The few participants there are have been heavily weighted towards private interests, which commented on approximately two-thirds of all proposed regulations from 2013 through 2015. In contrast, public interest groups commented on less than 24% of proposed regulations. If the notice and comment process almost always fails to meet the ideal of robust and diverse participation, who is accountable for tax regulations?

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March 14, 2018 in Scholarship, Tax | Permalink | Comments (0)

Mason: EU State Aid

Ruth Mason (Virgina), EU State Aid:

March 14, 2018 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, March 13, 2018

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 37, No. 1 (Fall 2017):

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March 13, 2018 in Scholarship, Tax | Permalink | Comments (0)

Satterthwaite: Smallness And The Value-Added Tax

Columbia Journal of Tax Law LogoEmily Satterthwaite (Toronto), On the Threshold: Smallness and the Value-Added Tax, 9 Colum. J. Tax L. ___ (2018):

Three-quarters of the world’s population live in a country in which a value-added tax (VAT) is collected on sales of goods and services. The registration threshold determines which businesses — typically as measured by their annual revenues — remain exempt from the obligation to register for and collect VAT on their sales. Among VAT economists, there is broad consensus that setting thresholds higher rather than lower (such that more rather than fewer businesses are exempt) increases the economic efficiency of a VAT. Despite these high stakes and the longstanding expert consensus in favor of high thresholds, real-world thresholds vary widely and skew low, even within OECD and European countries. This article leverages the insights of the economic model to address an issue that lies outside of it but is central to lawyers and policymakers: distributional equity.

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March 13, 2018 in Scholarship, Tax | Permalink | Comments (0)

Zelenak: Congress, Treasury, And The Design Of The Early Modern Income Tax

LZelenakawrence Zelenak (Duke), Figuring Out the Tax: Congress, Treasury, and the Design of the Early Modern Income Tax (Cambridge University Press 2018):

Figuring Out the Tax recounts the forgotten early development of the federal income tax in the US, resulting from the interplay between Congress and the Treasury Department in the decades following the enactment of the tax in 1913. It covers a wide range of topics including the income tax treatments of marriage, capital losses, charitable contributions and homeownership, as well as the rise, demise and resurrection of income tax withholding. Lawrence Zelenak deftly illustrates how the income tax achieved its current form through a range of stories which are new to tax history scholarship and involve some remarkable personalities and surprising plot twists. Although of particular interest to tax academics and professionals, this book will also serve as a useful introduction to the development of income tax for undergraduate students and law students.

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March 13, 2018 in Book Club, Scholarship, Tax | Permalink | Comments (0)

The Use Of Big Data Analytics By The IRS

IRS Big DataKimberly Houser (Washington State), The Use of Big Data Analytics by the IRS: What Tax Practitioners Need to Know:

With the budget reductions and losses in staff over the past several years, the IRS has been forced to do more with less. In turn, the IRS has turned to big data analytics make up for its loss of personal and the impact of the budget reductions. In 2011, the IRS created the Office of Compliance Analytics in order to create analytics programs that could identify potential refund fraud, detect taxpayer identity theft, and become more efficient in handling noncompliance issues. The IRS uses a wide range of analytic methods to mine public and commercial data including social media sites such as Twitter, Facebook, and Instagram. The data collected from this mining is combined with IRS’s own proprietary information and analyzed using pattern recognition algorithms, which help to identify potential noncompliant taxpayers.

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March 13, 2018 in IRS News, Tax | Permalink | Comments (0)

Monday, March 12, 2018

Thomas Presents Taxing The Gig Economy Today At UC-Irvine

Thomas (2017)Kathleen Delaney Thomas (North Carolina) presents Taxing the Gig Economy,  166 U. Pa. L. Rev. ___ (2017), at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

Due to advances in technology like mobile applications and online platforms, millions of American workers now earn income through “gig” work, which allows them the flexibility to set their own hours and choose which jobs to take. To the surprise of many gig workers, the tax law considers them to be “business owners,” which subjects them to onerous recordkeeping and filing requirements, along with the obligation to pay quarterly estimated taxes. This Article proposes two reforms that would drastically reduce compliance burdens for this new generation of business owners, while simultaneously enhancing the government’s ability to collect tax revenue.

First, Congress should create a “non-employee withholding” regime that would allow online platform companies such as Uber to withhold taxes for their workers without being classified as employers. Second, the Article proposes a “standard business deduction” for gig workers, which would eliminate the need to track and report business expenses.

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March 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Christians Presents Taxing Income Where Value Is Created Today At BYU

Christians (2018)Allison Christians (McGill) presents Taxing Income Where Value Is Created, 21 Fla. Tax Rev. ___ (2018) (with Laurens van Apeldoorn (Leiden)) at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

Subscribing to the core idea that income should be taxed where value is created, the international community has devised a set of tax base protecting rules to counter a world in which highly profitable multinational companies like Apple, Google, and Amazon pay very little in taxation. But these rules rely on assumptions about value that tend to allocate most revenues from international trade and commerce to rich countries while, whether intentionally or not, depriving poorer countries of their proper share. This article argues that a rigorous examination of what we mean by value would prompt changes in this allocation.

To demonstrate with a concrete example, the article examines wages paid to workers in low income countries and reveals a clear and well-documented gap between market price and fair market value resulting from labor exploitation.

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March 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NY Times: Tax Law’s Errors Upset Companies As Congressional Leaders Feud

New York Times p. 1:  Tax Law’s Errors Upset Employers As Leaders Feud, by Jim Tankersley & Alan Rappeport:

The legislative blitz that rocketed the $1.5 trillion tax cut through Congress in less than two months created a host of errors and ambiguities in the law that businesses big and small are just now discovering and scrambling to address.

Companies and trade groups are pushing the Treasury Department and Congress to fix the law’s consequences, some intended and some not, including provisions that disadvantage certain farmers, hurt restaurateurs and retailers and could balloon the tax bills of large multinational corporations.

While Treasury can clear up uncertainty about some of the murky provisions, actual errors and unintended language can be solved only legislatively — at a time when Democrats seem disinclined to lend votes to shoring up a law they had no hand in passing and are actively trying to dismantle.

On Thursday, the U.S. Chamber of Commerce sent the Treasury Department 15 pages of detailed requests for clarification on how the law affects multinational corporations, mutual fund investors and mom-and-pop pass-through entities.

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March 12, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)