TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, March 17, 2017

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new draft article by John R. Brooks (Georgetown), The Definitions of Income, 71 Tax L. Rev. __ (forthcoming).

Gamage (2017)The question of “what is income” is often the starting point for law school tax courses. This question has also been the subject of a number of great debates in tax legal scholarship over the past century. Assessing some of these debates, Brooks argues that “income is not a pure, external concept, but actually a constructed concept that necessarily embodies policy, and therefore political, goals.” As Brooks explains, this conclusion echoes and builds on the arguments of prior giants of tax legal scholarship—especially Boris Bittker.

Brooks’s article makes valuable contributions in summarizing and assessing the intellectual history of debates over the “what is income” question.

Continue reading

March 17, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Hemel & Herzig:  The GOP Health Care Plan’s Fatal Flaw

New York Times op-ed:  The G.O.P. Health Care Plan’s Fatal Flaw, by Daniel Hemel (Chicago) & David Herzig (Valparaiso):

[N]early seven years after his death, Senator Byrd may ensure that the Affordable Care Act, also known as Obamacare, lives another day. One of Byrd’s many legislative accomplishments over a half-century in the Senate was the eponymous “Byrd rule,” which governs the process of budget reconciliation. Republicans on Capitol Hill are trying to use the reconciliation process to repeal and replace the Affordable Care Act. The Byrd rule stands in their way.

Continue reading

March 17, 2017 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1408: Why Won't The Media Cover It?

IRS Logo 2

The Hill op-ed: Why Won't the Media Cover IRS Scandals?, by Jenny Beth Martin (President & Co-Founder, Tea Party Patriots):

Sometimes the most insidious attack on our individual liberty arises not from the government’s wholesale trampling on those rights, but instead from a widespread chilling effect, in which individuals “self-police” or regulate their behavior out of fear of the government’s retaliation.

The years-long IRS scandal surrounding its abuse of power when it engaged in a systematic targeting of conservatives is a powerful example of the government’s ability to initiate a chilling effect on free speech.

It has been nearly four years since the IRS admitted in May of 2013 to singling out and targeting conservative groups, especially tea party groups, for additional scrutiny, onerous paperwork, and even audits. The IRS’s abusive targeting, which lasted for years, was entirely motivated by political animus and caused untold — incalculable, even — devastation to conservatives and to conservative groups. ...

After meeting with, and speaking with, hundreds of local tea party organization members in 2013, I was convinced of three key points: 1) the IRS’s targeting scandal had had a profound impact on organizations’ abilities to attract new members, fundraise, and engage on important policy battles; 2) the chilling effect of the federal government’s actions was real, devastating, and impossible to calculate; and 3) the American public needed to know the full extent of the targeting scandal so we could ensure it would never happen again.

When news of the targeting became public, the media was completely disinterested. And, now, four years later, it seems, not much has changed with the media’s interest levels.

Just this past week, the IRS revealed that it had found nearly 7,000 documents potentially related to the targeting of tea party groups. Yes, the agency that has stone-walled Congress for four years, lost computers and hard drives and tens of thousands of emails, just discovered 6,924 documents in response to an ongoing Freedom of Information Act (FOIA) request from Judicial Watch.

Mainstream media outlets have barely reported on this latest revelation at all. And why should they? It’s only the latest chapter in a tome the media has made clear it has no intention of sharing with the American public. ...

Two hallmarks of a free society are that individuals do not have to live in fear that their political views or activities will cause them to be subjected to abuse by the federal taxing agency, and that the press holds government accountable when it becomes abusive to its citizens. It seems, in both areas, we have a lot more work to do.

Continue reading

March 17, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Thursday, March 16, 2017

Tax Prof Wedding: Tessa Davis

WeddingContinuing a joyous TaxProf tradition (see individual wedding links below):  Tax Prof Tessa Davis (South Carolina) and Jon Huggett were married on March 11:

We held the wedding at a beautiful old home by a pond just outside of Columbia, South Carolina. As my position at South Carolina was what brought us here from New Orleans (where we met) it was really meaningful to get married in our new home city. A number of Jon's friends from New Orleans stood up with him, as did his brother. My side consisted of five bridesmaids and two bridesmen, all friends from childhood or college. The day, though a bit chillier than expected, was perfect. We had about 100 guests made up of family and friends from the many places we've lived. The ceremony was wonderfully true to us and officiated beautifully by my brother (a law prof at UC-Irvine). There was a even a Code head joke! We couldn't have hoped for a better celebration!

Continue reading

March 16, 2017 in Legal Education, Tax, Tax Prof Weddings, Tax Profs | Permalink | Comments (0)

Joint Tax Committee:  Overview Of The Federal Tax System

Joint Committee on Taxation, Overview Of The Federal Tax System As In Effect For 2017 (JCX-17-17) (March 15, 2017):

This document ... provides a summary of the present-law Federal tax system as in effect for 2017. The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a “regular” income tax and an alternative minimum tax);  (2) payroll taxes on wages (and corresponding taxes on self-employment income) to finance certain social insurance programs; (3) estate, gift, and generation-skipping taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements.

Continue reading

March 16, 2017 in Congressional News, Tax | Permalink | Comments (0)

Kleinbard:  Trump's Reckless Spending And Tax Cuts

CNN op-ed:  Trump's Reckless Spending and Tax Cuts, by Edward D. Kleinbard (USC):

President Trump's budget outline combines a surge in military spending with massive tax cuts, purportedly in the name of stimulating our stagnant economy. This strategy follows closely the fiscal agenda of Ronald Reagan — modern history's most fiscally irresponsible President.

Continue reading

March 16, 2017 in Tax | Permalink | Comments (0)

Making Tax Evasion Great: The $100 Billion Giveaway

Democracy Logo (2018)Democracy: A Journal of Ideas: Making Tax Evasion Great: The $100 Billion Giveaway, by Robert Gordon & David Kamin (NYU):

The President may talk about “law and order,” but apparently he excludes tax law.

President Trump’s Office of Management and Budget has proposed a 14.1 percent cut in funding for the Internal Revenue Service. If made permanent, we conservatively estimate that this cut will cost the Treasury $60 billion, just from direct revenue loss due to reduced enforcement (and netting out the reduced spending on IRS enforcement). This new cut follows a more than 20 percent real reduction in resources for IRS enforcement since 2010. Undoing that reduction could save the federal government an additional $30 to $40 billion. All together, the President’s failing to restore these previous cuts and then cutting even more allows handouts to tax evaders costing the Treasury about $100 billion over ten years.

Continue reading

March 16, 2017 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1407: NY Post Editorial, Fire The IRS Chief Already, Mr. President

IRS Logo 2

New York Post Editorial, Fire the IRS Chief Already, Mr. President:

Why is IRS Commissioner John Koskinen still in office? A growing number of Capitol Hill Republicans want to know — and they have good reason to be troubled.

When he took over in 2013, Koskinen was supposed to “fix” the IRS — and in particular get to the bottom of the scandal in which the agency deliberately held up approvals for 75 conservative and Tea Party groups that had applied for legitimate tax exemptions.

Instead, what Congress and the public got from him was obstruction, open defiance and a refusal to discipline anyone at the agency. Indeed, he seemed most concerned with running interference to shield the Obama administration from any embarrassment.

Nor was he alone: The Obama Justice Department refused to bring criminal charges against anyone at the IRS. To date, no one has been held accountable for what even liberal legal icon Laurence Tribe has called “inexcusable abuse.” ...

It’s clear there’ll be no IRS reforms while Koskinen is in office. He’s the No. 1 candidate in Washington for President Trump’s signature line: “You’re fired.”

Continue reading

March 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, March 15, 2017

Smart Presents Why The Dividend Tax Credit? Today At Toronto

Smart 2Michael Smart (Toronto) presents Why the Dividend Tax Credit? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

In this paper, I discuss the tax treatment of personal dividend income in Canada. Incorporating the changing parameters of the dividend gross-up-and-credit system since 1972, including provincial credits, I estimate the effective tax rate on eligible and ordinary dividend income of taxable investors, and compare it to that applying to other income sources. The effective tax rate on dividend income has decreased substantially and, since the 2006 enhancement of the dividend tax credit, dividend taxes in Canada have been fully integrated or overintegrated for taxable investors. Based on a new methodology, I estimate the fiscal cost of the system to federal and provincial governments. The cost of the DTC has increased markedly since the 2006 reform and is large. About 70 per cent of the tax benefit accrues to taxpayers in the top 10 per cent of the income distribution and, for shareholders in this group, the impact on overall progressivity of the tax system is substantial.

Continue reading

March 15, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

IRS Strips Tax-Exempt Status From Richard Spencer's White Nationalist Nonprofit

NPI 3Following up on my previous post, Alt-Right Group Has Not Filed Form 990s Due To IRS Error, Allowing Group's Finances To Escape Scrutiny:  Los Angeles Times, IRS Strips Tax-Exempt Status from Richard Spencer's White Nationalist Nonprofit:

The nonprofit run by one of America’s most prominent white nationalists, Richard Spencer, has lost its tax-exempt status for failing to file tax returns with the federal government, according to Internal Revenue Service records.

An inquiry by The Times also raised questions about whether Spencer had properly filed paperwork allowing the National Policy Institute to raise funds in Virginia, its primary place of business, and whether Spencer, a Donald Trump supporter, had flouted federal rules that forbid nonprofits from supporting or opposing political candidates.

Continue reading

March 15, 2017 in IRS News, Tax | Permalink | Comments (2)

How Federal Tax Law Rewards Segregation

Michelle D. Layser (Georgetown), How Federal Tax Law Rewards Segregation, 93 Ind. L.J. ___ (2018):

Residual, de facto segregation is among the most enduring barriers to equal opportunity in America. Nearly five decades after the Fair Housing Act of 1968, Blacks and Latinos still tend to live in neighborhoods where the majority of residents are people of color. Such racial segregation is often accompanied by economic segregation. Meanwhile, sociologists, housing law scholars, and poverty law experts have stressed the importance of residential location to the impact of poverty and the potential for upward economic mobility. But an unlikely source of federal housing law—the tax code—may interfere with efforts to promote more integrated communities.

Continue reading

March 15, 2017 in Scholarship, Tax | Permalink | Comments (1)

2018 U.S. News Tax Rankings

2018 U.S. News LawHere are the new 2018 U.S. News Tax Rankings, along with last year's rankings:

2018

Rank

 Tax

Program

2017

Rank

1

NYU

1

2

Georgetown

2

3

Florida

3

4

Northwestern

4

5

Virginia.

6

6

Loyola-L.A.

5

7

UCLA

9

8

Boston University

8

8

Harvard

7

10

Columbia

9

11

San Diego

12

12

Miami

12

12

Texas

15

14

Michigan

9

15

USC

12

16

Duke

18

16

Pennsylvania

18

18

Yale

20

19

Chicago

22

20

Boston College

17

20

Villanova

24

20

U. Washington

16

23

Indiana

20

23

Stanford

24

25

Denver

n/r

26

Washington U.

n/r

The biggest upward moves:

  • +4:  Villanova (#20)
  • +3   Texas (#12), Chicago (#19)
  • +2:  UCLA (#7), Duke (#16), Pennsylvania (#16), Yale (#18)
  • Denver (#25) and U. Washington (#26) were unranked last year

The biggest downward moves:

  • -5:  Michigan (#14)
  • -4:  U. Washington (#20)
  • -3:  USC (#12), Boston College (#20), Indiana (#23)
  • Florida State (#23 last year) is unranked this year

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

Continue reading

March 15, 2017 in Law School Rankings, Legal Education, Tax | Permalink | Comments (1)

Donald Trump's 2005 Tax Return (Form 1040)

Trump 2005 Tax Return (Clip)

Trump

Adam Chodorow (Arizona State), The Sliver of Trump’s Tax Return That MSNBC Obtained Tells Us Almost Nothing About His Finances. Demand More.:

On Tuesday evening, MSNBC began to tout what seemed to be a major scoop: It had a Trump tax return. The investigative journalist David Cay Johnston had received documents in the mail, and Rachel Maddow would tell all at the appointed hour. A previous leak during the campaign, to the New York Times, suggested that Trump had taken a $1 billion tax loss in the 1990s under circumstances that suggested aggressive tax planning at the best and flat-out cheating at the worst. However, we didn’t have the full returns to figure out what had actually happened.

Continue reading

March 15, 2017 in Tax | Permalink | Comments (17)

Florida Law School Rankings War Intensifies: UF Marches Toward Top 35, FSU Says It Is Best Law School In State And Aims For Top 4 National Public Law School (With Michigan, UC-Berkeley & Virginia)

UFFSUFollowing up on last year's post, Laura Rosenbury Stakes Her Deanship On Raising Florida's Ranking To #35; Amidst Claims Of Sexism, Her Regime Comes Under Fire, With The Graduate Tax Program Its Flashpoint:  Florida Dean Laura Rosenbury is already halfway toward her goal of being a Top 35 law school with a 7-point improvement in its U.S. News ranking, to #41.

University of Florida Press Release, UF Law Jumps Seven Spots in U.S. News Rankings:

The University of Florida Levin College of Law climbed seven spots in the latest U.S. News & World Report rankings of the nation’s best law schools, placing at No. 41 overall. This rise is the largest year-to-year increase in over 20 years and is the second largest improvement of any law school ranked in the top 50. The Graduate Tax Program held its spot as the No. 1 program among public law schools and No. 3 overall. ...

Continue reading

March 15, 2017 in Law School Rankings, Legal Education, Tax | Permalink | Comments (4)

Tuesday, March 14, 2017

Kamin Presents Getting Americans To Save: In Defense Of (Reformed) Tax Incentives Today At Tulane

KaminDavid Kamin (NYU) presents Getting Americans to Save: In Defense of (Reformed) Tax Incentives, 70 Tax L. Rev. ___ (2017), at Tulane today as part of its Workshop on Regulation and Coordination Series:

According to the most recent literature, one of the primary systems for getting Americans to save more — a system of tax-preferred retirement accounts — is fundamentally broken and should be abandoned. This system of 401(k)s, Individual Retirement Accounts (IRAs), and other tax-preferred accounts cost the government about $80 billion per year, and influential new research by Raj Chetty, John Friedman, and co-authors — among others — suggests that tax incentives like these are unable to substantially increase private saving. However, this case against tax incentives is overstated.

Continue reading

March 14, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Gamage & Shanske:  Tax Cannibalization And Fiscal Federalism

David Gamage (Indiana) & Darien Shanske (UC-Davis), Tax Cannibalization and Fiscal Federalism in the United States, 111 Nw. U. L. Rev. 295 (2017):

The current structure of U.S. federal tax law incentivizes state governments to adopt tax policies that inflict costs on the federal government, at the expense of national welfare. We label this the “tax cannibalization problem.”

Continue reading

March 14, 2017 in Scholarship, Tax | Permalink | Comments (0)

Brooks:  The Definitions Of Income

John R. Brooks (Georgetown), The Definitions of Income, 71 Tax L. Rev. ___ (2017):

What is income? It’s a seemingly simple question that’s surprisingly hard to answer. Income is the basis for assigning tax burdens, for distributing transfers, and for broader normative issues of inequality and justice. Yet we lack a shared conception of income, and a pure, rigorous definition of income is impossible. In this Article I review the intellectual history of the income concept among tax and fiscal theorists to show the difficulty of the problem, and also to show that some important debates about what’s proper under an income tax can be explained instead as arguments over competing income definitions that necessarily incorporate policy choices. These insights are applied to more modern questions, like the role of tax expenditure analysis and optimal income tax theory. I also perform — for the first time in the literature — a close examination and comparison of 12 different income definitions used by the federal government for different purposes. This examination illustrates that there is wide range of income concepts actively in use, but that the measure of income for tax purposes has a prominent and growing role.

Continue reading

March 14, 2017 in Scholarship, Tax | Permalink | Comments (0)

Public Company Proximity To IRS Office Increases Audit Risk And Tax Avoidance

JournalThomas R. Kubicka (Kansas), G. Brandon Lockhart (Clemson), Lillian F. Mills (Texas & John R. Robinson (Texas A&M), IRS and Corporate Taxpayer Effects of Geographic Proximity, 60 J. Accounting & Econ. ___ (2017):

We investigate whether geographic proximity between corporate headquarters and IRS regional offices affects corporate tax avoidance and the likelihood and productivity of IRS examinations. Using geographic distance to represent information asymmetry, we find that corporations avoid more tax when located closer to the IRS unless they are close to an IRS industry specialist. This finding is consistent with taxpayers believing proximity provides them with an information advantage over the IRS.

Continue reading

March 14, 2017 in Scholarship, Tax | Permalink | Comments (1)

Monday, March 13, 2017

Shanske Presents Equitable Apportionment And The State Corporate Income Tax Today At UC-Irvine

Shanske (2017)Darien Shanske (UC-Davis) presents em>Equitable Apportionment and the State Corporate Income Tax: Past, Present and Possible Future at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

What a tough break for formulary apportionment. We are at a moment when there is apparently a real interest in reforming the federal corporate income tax in a way that, at least in theory, would broaden the base of the tax and encourage exporters. Shifting to the use of formulary apportionment with a single sales factor (SSF) could theoretically achieve these goals and there is at least one well-developed reform proposal to that end on the table. Moreover, over 40 states impose a corporate income tax and they have used formulas for a very long time, and so there is a track record and case law to work with. But this is not — yet — formulary apportionment’s moment.

This is the moment for the Destination-Based Cash Flow Tax (DBCFT), which relies on border tax adjustments (BTAs).

Continue reading

March 13, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tax Partners Earn Second Largest Paychecks At BigLaw Firms

American Lawyer, Partner Compensation By the Numbers:

The findings below come from the most recent partner compensation survey from Major, Lindsey & Africa and ALM Intelligence; Am Law 200 annual financial reports; and ALM Intelligence consulting reports.

Partner Pay

 

Continue reading

March 13, 2017 in Tax | Permalink | Comments (0)

Tax Is A Feminist Issue

Economist Logo (2015)The Economist, Tax Is a Feminist Issue: Why National Budgets Need to Take Gender Into Account:

Designing fiscal policies to support gender equality is good for growth.

Like many rich-country governments, Britain’s prides itself on pursuing policies that promote sexual equality. However, it fails to live up to its word, argues the Women’s Budget Group, a feminist think-tank that has been scrutinising Britain’s economic policy since 1989. A report in 2016 from the House of Commons Library, an impartial research service, suggests that in 2010-15 women bore the cost of 85% of savings to the Treasury worth £23bn ($29bn) from austerity measures, specifically cuts in welfare benefits and in direct taxes. Because women earn less, rely more on benefits, and are much more likely than men to be single parents, the cuts affected them disproportionately.

Continue reading

March 13, 2017 in Tax | Permalink | Comments (3)

Second International Conference On Taxpayer Rights Kicks Off Today In Vienna

The IRS Scandal, Day 1404: Attorney General Sessions Weighs Appointing Special Counsel To Investigate Obama's Justice Department Scandals

IRS Logo 2

Hugh Hewitt, Attorney General Jeff Sessions:

Hugh Hewitt:  Now let me switch to the Department itself, Mr. Attorney General. It had a bad eight years. I’m a proud veteran of the Department of Justice, as you are. But the IRS case, the Fast and Furious case, Secretary Clinton’s server, the Department of Justice came under great criticism. How about an outside counsel, not connected to politics, to review the DOJ’s actions in those matters with authority to bring charges if underlying crimes are uncovered in the course of the investigation, and just generally to look at how the Department of Justice operated in the highly-politicized Holder-Lynch years?

Jeff Sessions:  Well, I’m going to do everything I possibly can to restore the independence and professionalism of the Department of Justice. So we would have to consider whether or not some outside special counsel is needed. Generally, a good review of that internally is the first step before any such decision is made.

Hugh Hewitt:  Will you be looking at the IRS investigation specifically, because that left many of us thinking that the Department of Justice had laid down for a terrible abuse of political power?

Jeff Sessions:  It does. That circumstance raised a lot of questions in my mind, and when I was in the Senate. So it is a matter of real concern to me.

Continue reading

March 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 12, 2017

The Top 5 Tax Paper Downloads

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

  1. [1,526 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  2. [450 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)
  3. [407 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  4. [325 Downloads]  Predicting Stock Market Prices with Physical Laws, by Jack Manhire (Texas A&M)
  5. [234 Downloads]  Important Developments in Federal Income Taxation, by Edward A. Morse (Creighton)

March 12, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1403: Should Koskinen Remain, Resign, Or Be Fired?

Saturday, March 11, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Mehrotra Posts Tax Papers On SSRN

SSRN LogoAjay K. Mehrotra (American Bar Foundation; Northwestern) has posted three tax papers on SSRN:

  • A Bridge Between: Law and the New Intellectual Histories of Capitalism, 64 Buff. L. Rev. 1 (2016):  "The American historical profession has in recent years witnessed a significant revival of two subfields that were once thought to be nearly dead. Both intellectual history and what is often referred to today as the history of capitalism are flourishing. In some cases, the two fields have converged. What role has law and legal history played in this revival and convergence? How have formal and informal laws, legal institutions, and legal actors and processes informed our conceptual understanding of the origins and development of modern American capitalism? This essay explores these historiographical and programmatic questions as part of a symposium directed at “Opportunities for Law’s Intellectual History.” This brief essay explores the role of law and legal history as a bridge between the two revived subfields. It does so in three parts. Part I briefly chronicles the recent revival of the two subfields. Part II explores why law, in its broadest sense, may be particularly well suited to help integrate the convergence between intellectual history and the new histories of capitalism. Why, that is, law has been and may continue to be a bridge between the two subfields. Part III uses the history of American tax law and policy as one example to show how law is vital to our understanding of the new intellectual histories of capitalism. The essay concludes with a modest set of observations on where the new literature on law and the intellectual histories of capitalism may be headed."

Continue reading

March 11, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1402: IRS Locates 7,000 Documents Related To Tea Party Targeting

IRS Logo 2Washington Free Beacon, Two Years Later, IRS Locates 6,924 Documents Related to Tea Party Targeting; Agency Will Not Commit to a Timeframe to Make the Documents Public:

The Internal Revenue Service has located 6,924 documents potentially related to the targeting of Tea Party conservatives, two years after the group Judicial Watch filed a Freedom of Information Act lawsuit for them.

The watchdog group intended to find records regarding how the IRS selected individuals and organizations for audits that were requesting nonprofit tax status.

The agency will not say when it will make the documents available to the public.

Continue reading

March 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, March 10, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses how the House GPO Affordable Care Act replacement plan complicates 2016 tax filing.

KristanMandate no more? House Republicans released their Obamacare replacement plan yesterday. While the policy implications of the proposal are obviously interesting, this time of year my first question is, “does this affect the current tax season?”

Yes, big league.

The proposal would repeal both the individual mandate and employer mandate retroactive to the beginning of 2016. As we are in the middle of the filing season for 2016 returns, that’s a big deal.

Taxpayers and preparers had a filing season dilemma even before the House GOP announced their plan yesterday. After President Trump issued an executive order telling agencies to be forgiving on ACA enforcement, the IRS changed its plans to allow individuals to file returns without answering health coverage questions — making it possible to file returns ignoring the penalty for lacking ACA-compliant health coverage.

Continue reading

March 10, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new article by J. Clifton Fleming, Jr. (BYU), Robert J. Peroni (Texas) and Stephen E. Shay (Harvard), Defending Worldwide Taxation With a Shareholder-Based Definition of Corporate Residence 2016 BYU L. Rev. 1681 (2017).

Glogower (2016)Fleming, Peroni, and Shay’s new work proposes a shareholder-based test for determining corporate residence.  Under this test, a foreign corporation would be treated as a U.S. tax resident for a taxable year if 50% or more of its shares were beneficially owned by U.S. residents at the end of the preceding year.  The corporation will be treated as presumptively satisfying this test if its shares are traded on a U.S. market or are marketed to U.S. investors.  The presumption can be rebutted by either the corporation or the IRS, with evidence that the U.S. beneficial ownership of the shares is in fact below the 50% threshold.  Finally, corporations organized under U.S. law would remain domestic residents, as under current law, regardless of the shareholder composition.

Continue reading

March 10, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance By Fortune 500 Companies, 2008 To 2015

New York Times, Profitable Companies, No Taxes: Here’s How They Did It:

Complaining that the United States has one of the world’s highest corporate tax levels, President Trump and congressional Republicans have repeatedly vowed to shrink it.

Yet if the level is so high, why have so many companies’ income tax bills added up to zero?

That’s what a new analysis of 258 profitable Fortune 500 companies that earned more than $3.8 trillion in profits showed [The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance by Fortune 500 Companies, 2008 to 2015].

18 CorpsAlthough the top corporate rate is 35 percent, hardly any company actually pays that. The report, by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, found that 100 of them — nearly 40 percent — paid no taxes in at least one year between 2008 and 2015. Eighteen, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates. The institute used the companies’ own regulatory filings to compute their tax rates. ...

How does a billion-dollar company pay no taxes?

Companies take advantage of an array of tax loopholes and aggressive strategies that enable them to legally avoid paying what they owe. The institute’s report cites these examples:

Continue reading

March 10, 2017 in Tax, Think Tank Reports | Permalink | Comments (6)

Low Income Taxpayer Clinic Annual Report

The IRS yesterday released (IR-2017-56) Program Report and 2017 Publication 4134, Low Income Taxpayer Clinic List:

LITC

LITC Program Report
The Internal Revenue Service’s Low Income Taxpayer Clinic (LITC) Program Office has issued its annual program report, which details how LITCs have provided representation, education, and advocacy for taxpayers who are low income or speak English as a second language (ESL).

During 2015, LITCs represented 18,751 taxpayers in disputes with the IRS and provided consultation or advice to an additional 18,810 taxpayers. LITCs helped taxpayers secure more than $4.3 million in tax refunds and eliminate more than $64 million in tax liabilities, penalties, and interest.

Continue reading

March 10, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, March 9, 2017

Shay Presents 'A Better Way' Business Tax Reform Today At Duke

Shay (2014)Stephen E. Shay (Harvard) presents “A Better Way” Business Tax Reform: From Theory to Practical Complications (with J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

This article critically reviews the House GOP proposal to replace the income tax on corporate and individual business income with a hybrid consumption tax in the form of a subtraction method VAT. The proposal would constitute a radical change to the U.S. federal, state and local tax system, which would, as discussed below, (a) be highly regressive and worsen inequality; (b) be vulnerable to attack under international trade law by U.S. trading competitors (with unprecedented potential penalties), (c) be less advantageous for small and medium businesses than for large businesses, and (d) open substantial opportunities for avoidance.

Continue reading

March 9, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Lipman Presents (Anti)Poverty Measures Exposed Today At UC-Davis

Lipman (2017)Francine J. Lipman (UNLV) presents (Anti)Poverty Measures Exposed at UC-Davis today as part of its Faculty Intellectual Enrichment Series:

Few economic indicators have the salience and far-reaching financial impact than the poverty rate, yet policymakers, researchers, and advocates struggle to understand its mechanics. This Article will build a bridge from in depth personal portraits of families living in poverty to the resource allocations that failed them by exposing the mechanics underlying the Census Bureau's official (OPM) and supplemental poverty measures (SPM). Too often when we address the problem of poverty the focus is on the plight of the poor, and not on ineffective antipoverty programs. The purpose of poverty measures should be to measure and expose the effectiveness or failure of antipoverty programs.

Continue reading

March 9, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fleischer:  Subsidizing Charity Liberally

Miranda Perry Fleischer (San Diego), Subsidizing Charity Liberally:

Our Constitution enshrines two bedrock principles of Western liberal democracies: limited government and equal opportunity. This Chapter explores the extent to which the charitable tax subsidies reflect these principles, as expressed in the two theories of distributive justice respectively associated with them, libertarianism and resource egalitarianism. This analysis shows that the subsidies’ current structure is much broader than necessary to reflect libertarian ideals, even under the more permissive classical liberal theories.

Continue reading

March 9, 2017 in Scholarship, Tax | Permalink | Comments (0)

CBO:  International Comparisons Of Corporate Income Tax Rates

Congressional Budget Office, International Comparisons of Corporate Income Tax Rates:

In the United States, the top federal statutory corporate income tax rate (the rate set by law that applies to the highest corporate income tax bracket) has been 35 percent since 1993. Most corporate income is taxed at that rate. With state taxes added in, the top statutory rate is even higher; on average, that combined rate was 39.1 percent in 2012, among the highest in the world.

The statutory corporate tax rate is one of many features of the tax system that influence corporate behavior. Companies are likely also to consider other provisions of the tax system—including tax preferences, surtaxes, and noncorporate taxes— that affect the amount of taxes they owe. Among the alternative measures of tax rates that account for some of those provisions are the average and effective marginal corporate tax rates.

CBO1

Continue reading

March 9, 2017 in Congressional News, Tax | Permalink | Comments (0)

Repetti:  Taft v. Bowers — The Foundation For Non-Recognition Provisions In The Income Tax

James R. Repetti (Boston College), Taft v. Bowers: The Foundation for Non-Recognition Provisions in the Income Tax, 42 ACTEC L.J. 23 (2016):

Taft v. Bowers is a Supreme Court decision that is rarely studied in law schools or discussed by scholars. Yet, it is a case of vast significance. In the Taft decision, the Supreme Court confirmed that Congress may create non-recognition exceptions to the income tax that merely defer the recognition of income, rather than permanently exclude it.

Continue reading

March 9, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, March 8, 2017

Meet The 'Blog Emperor,' Pepperdine Law's New Dean

Pepperdine Law School (2016)The Recorder, Meet the 'Blog Emperor,' Pepperdine Law's New Dean:

Pepperdine University School of Law has chosen its next dean, and the name will sound familiar to anyone who keeps up with the legal blogosphere.

Paul Caron, founder of the popular TaxProf Blog and the Law Professor Blog, will take the reins of the Malibu law school on June 1. Caron has been on the Pepperdine faculty since 2013 and currently serves as the associate dean for research and faculty development. The tax law expert taught at the University of Cincinnati College of Law for 23 years before moving to Pepperdine.

Caron replaces former dean and Judge Deanell Tacha of the U.S. Court of Appeals for the Tenth Circuit, who [is retiring June 1].

We caught up with Caron to discuss his goals for the law school, Pepperdine's recent dip in the U.S. News & World Report rankings, and what will become of his blog. His answers have been edited for length and clarity.

Continue reading

March 8, 2017 in Legal Education, Tax | Permalink | Comments (0)

Reuven Avi-Yonah Cancels Lateral Move To UC-Irvine, Stays At Michigan

Michigan Law Logo (2015)Following up on my previous post, Reuven Avi-Yonah Leaves Michigan For UC-Irvine (Sept. 1, 2016):

Brian Leiter reports (and I have independently confirmed) that Reuven Avi-Yonah has changed his mind and has decided to remain at Michigan and will not be making a lateral move to UC-Irvine.

March 8, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (4)

Fleming, Peroni & Shay:  Defending Worldwide Taxation

Clifton Fleming Jr. (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Defending Worldwide Taxation with a ShareholderBased Definition of Corporate Residence, 2016 BYU L. Rev. 1681:

This Article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The Article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows:

Continue reading

March 8, 2017 in Scholarship, Tax | Permalink | Comments (0)

NY Times:  Dartmouth Prof Accuses Caterpillar Of Tax Fraud In Report Commissioned By Federal Investigators

RobinsonFollowing up on Saturday's post, U.S. Agents Raid Caterpillar Over Offshore Tax Practices:  New York Times, Caterpillar Is Accused in Report to Federal Investigators of Tax Fraud:

For years, federal investigators have been scrutinizing Caterpillar’s overseas tax affairs with no resolution to the examinations of the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries.

Now, a report commissioned by the government and reviewed by The New York Times accuses the heavy-equipment maker of carrying out tax and accounting fraud. It is extremely rare to accuse a big multinational company of tax fraud, which could result in high penalties.

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” wrote Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

Continue reading

March 8, 2017 in Tax | Permalink | Comments (3)

Horwitz:  Some Suggestions For Dean Emperor Caron And The Buzzworthy New Regime At Pepperdine

Paul Horwitz (Alabama), Some Suggestions for Dean Emperor Caron and the Buzzworthy New Regime at Pepperdine:

As Brian Leiter enthusiastically announces, tax-law-blogger and blog-impresario Paul Caron, nicknamed in Frank Herbert fashion "Blog Emperor Caron," is about to become "Dean Emperor Caron" at Pepperdine Law School. Before taking a puckish turn with this post, let me say that of course I add my congratulations. I have found Paul lovely to talk with in person and via the occasional email and such. Among his many posts at TaxProf Blog over the years, a great number of them have evidenced his warm and caring relationship with his students and his abiding concern for them. I don't doubt he'll bring that same sensibility to his job as dean. Best wishes, Paul! 

Continue reading

March 8, 2017 in Legal Education, Tax | Permalink | Comments (0)

Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax

Robert W. Wood (Forbes), Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax:

California doesn't like Trump, but sure does like tax increases. At around the same time as President Trump was being elected, California was increasing state income taxes again. The state's high 13.3% California tax are only temporary though, just through 2030! Of course, that was back in November. It must be time for another tax hike. The latest is a move by the Golden State to tax estates, even if the feds do not.

If the federal estate tax law is repealed by President Trump and Congress, estates in California will still pay. A bill was introduced by state Sen. Scott Wiener (D-San Francisco), asking voters to keep the estate tax after all. The proposal would have to go to voters. ...

Continue reading

March 8, 2017 in Tax | Permalink | Comments (2)

Tuesday, March 7, 2017

The Future Of TaxProf Blog

Pepperdine Law School (2016)ABA Journal, Popular Blogger and Scholar Tapped as Pepperdine Law Dean; He Plans to Keep Blogging:

Paul L. Caron, a professor at Pepperdine School of Law, has been selected as its new dean. The tax law scholar also blogs at TaxProf Blog, and owns and publishes the Law Professor Blogs Network.

Besides tax matters, the Tax Prof Blog also has many posts on various challenges in legal education. In 2016, National Jurist named Caron the third most influential person in legal education.

Caron has not shied away from posting about controversial topics in legal education, including bar passage rates in California and elsewhere. When asked if he plans to continue blogging as dean, Caron said yes.

Continue reading

March 7, 2017 in About This Blog, Legal Education, Tax | Permalink | Comments (14)

Fleischer Presents Tax Reform: The State of Play Today At Georgetown

Fleischer (2016)Victor Fleischer (San Diego; Co-Chief Tax Counsel, Senate Finance Committee Democrats) presents Tax Reform: The State of Play at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg.  Vic's talk will discuss several aspects of the House Republicans' tax reform blueprint, A Better Way for Tax Reform:

Continue reading

March 7, 2017 in Colloquia, Tax | Permalink | Comments (0)

New York:  A Tax Haven For Art Collectors?

NYFollowing up on my previous posts (links below):  Wall Street Journal, A New Tax-Free Way to Store Art:

New York could become the latest tax haven for art collectors.

A pair of art shippers who for years watched collectors buy works in the city—only to store them tax-free in warehouses in Delaware or Switzerland—have won the right to turn a former parking lot in Harlem into a foreign-trade zone.

The shippers, Tom Sapienza and Kevin Lay, plan to open a 110,000-square-foot facility, called Arcis, that can store as much as $2.5 billion worth of art duty-free. Collectors will be able to buy art in New York, or anywhere in the world, and store it in Arcis’s four-story warehouse indefinitely without having to pay local or state taxes—although taxes will be due once the art leaves the site. Moving new purchases into storage can give collectors and dealers time to save up to pay the taxes later rather than right away—or time to resell the work while it’s in storage and thereby pass on the sales tax to someone else. Collectors can also choose to ship their work internationally and avoid paying local taxes altogether.

Continue reading

March 7, 2017 in Tax | Permalink | Comments (0)

Seto:  Does The Income Tax Cause Parents To Spend Too Much Time With Their Children?

Theodore Seto (Loyola-L.A.), Does the Income Tax Cause Parents to Spend Too Much Time with Their Children?: Rethinking Mirrlees:

In 1971, James Mirrlees published An Exploration in the Theory of Optimum Income Taxation, one of the most influential tax papers ever written. Unpacked, Mirrlees’ claim can be restated as follows: Assume that our undistorted decisions about how to allocate our time between paid and unpaid activities are welfare-maximizing. If so, any distortion of those decisions by the tax system is welfare-reducing. Unless the supply of labor is inelastic or income effects predominate, taxing income from labor will cause taxpayers to spend less time engaged in paid activities and more time in unpaid activities than would be welfare-maximizing. Because of the declining marginal utility of money, redistribution from high-income to low-income individuals is generally welfare-enhancing. Nevertheless, at some point the welfare losses from taxing labor income to effect redistribution outweigh the welfare gains produced by redistribution. This, in turn, (1) limits the overall amount of welfare-enhancing redistribution we can effect by taxing income from labor and (2) requires flat or declining marginal tax rates on such income.

Continue reading

March 7, 2017 in Scholarship, Tax | Permalink | Comments (2)