TaxProf Blog

Ault: The OECD and Sources of International Tax Law

Hugh J. Ault (Boston College), Some Reflections on the OECD and the Sources of International Tax, 70 Tax Notes Int'l 1195 (June 17, 2013):

This article is the revised text of a lecture held on May 2, 2013, at the Max Planck Institute.

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Yin: Joint Tax Committee Should Investigate the IRS

George K. Yin (Virginia), Former Chief of Staff Thinks JCT Should Investigate the IRS, 139 Tax Notes 1443 (June 107 2013):

House Ways and Means Committee Chair Dave Camp, R-Mich., has reportedly rejected use of a joint committee to investigate the IRS because such a committee would not be authorized to access confidential tax return information. Yet Camp already heads a joint committee (the Joint Committee on Taxation), which has that specific authority under sections 6103(f) and 8023. Moreover, the JCT was created for the express purpose of investigating the tax agency's administration of the tax laws, following a lengthy Senate investigation of corruption charges against the agency and possible favoritism towards companies associated with then-Secretary of the Treasury Andrew Mellon. Congress wanted a permanent organization to conduct future tax investigations, oversee the agency, and make sure it was administering the law in the manner Congress intended. Camp should make use of this valuable resource to streamline Congress's efforts and prevent the integrity of its investigation from being undermined by political squabbling.  

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Johnston: IRS Management Culture Must Be Fixed

David Cay Johnston (Syracuse), IRS Management Culture Must Be Fixed, 139 Tax Notes 1323 (June 10, 2013):

Serious problems in IRS management culture will only worsen as Congress focuses on trivia and ignores the problems created by conflicts in mission, law, and a lack of funds to do the work, especially training.

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Bergin: The IRS Is in Big Trouble

Christopher E. Bergin (President and Publisher, Tax Analysts), The IRS Is in Big Trouble, 139 Tax Notes 951 (May 20, 2013):

Bergin discusses the catastrophic ramifications of the IRS’s recent apology for mishandling the applications of conservative exempt organizations and how things might be worse for the agency now than they were after the 1998 restructuring act.

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Olson: Loving and Tax Return Preparation

Nina E. Olson (National Taxpayer Advocate), More Than a 'Mere' Preparer: Loving and Return Preparation, 139 Tax Notes 767 (May 13, 2013):

Each year, tens of millions of taxpayers hire paid practitioners to prepare their Form 1040-series returns because of the overwhelming complexity of the tax code and the amount of money at stake. That has led to significant concerns about incompetent and unscrupulous preparers and their negative impact on taxpayers and compliance. The IRS and Treasury had developed and substantially implemented standards governing preparers when, in Loving v. IRS, a U.S. district court found that Treasury lacked the authority to issue the regulations. The government has appealed the case to the D.C. Circuit. The NTA believes that the district court’s decision in Loving is based in part on an outdated understanding of return preparation and filing. This report makes the case for preparer regulation generally, explains where the district court erred, and illustrates how problems in today’s tax system are directly analogous to the problem Congress sought to address in its original grant of regulatory authority to Treasury. 

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Maule: IRS-Prepared Tax Returns: A Theory That Doesn't Work in Practice

James Edward Maule (Villanova),  IRS-Prepared Tax Returns: A Theory That Doesn't Work in Practice, 139 Tax Notes 684 (May 6, 2013):

Making taxpayers' lives easier is a matter of simplifying the tax law, not enabling the complexities by turning tax preparation over to the IRS. Fooling around with the nation's primary source of revenue in this manner is unwise, unwarranted, and dangerous.

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Bergin: Real Transparency, Anyone?

Christopher E. Bergin (President and Publisher, Tax Analysts), Real Transparency, Anyone?, 139 Tax Notes 571 (Apr. 29, 2013):

In a recent op-ed, House Ways and Means Committee Chair Dave Camp, R-Mich., and Senate Finance Committee Chair Max Baucus, D-Mont., said they were dedicated to working on legislation to reform the tax system in "an open and transparent fashion." Taking them at their word, Bergin urges the taxwriters to do just that.

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Tax Analysts Hosts Conference Today on State Taxes and the Cloud

Tax Analysts hosts a roundtable discussion on State Taxes and the Cloud at the National Press Club in Washington, D.C. today at 9:00 - 11:00 a.m. EST:

Please join us for a roundtable discussion in which we will consider how states are approaching the challenge of taxing cloud computing technologies, and what they should think about in doing so.

• Christopher E. Bergin (President and Publisher, Tax Analysts) (moderator)
• Cara Griffith (Legal Editor, State Tax Notes)
• Kelley Miller (Reed Smith)
• Mark Nebergall (President, Software Finance and Tax Executives Council)
• Dylan Waits (Managing Senior Policy Counsel, Washington Department of Revenue)

Morse: Why FATCA Intergovernmental Agreements Bind the U.S. Government

Susan Morse (UC-Hastings), Why FATCA Intergovernmental Agreements Bind the U.S. Government, 70 Tax Notes Int'l 245 (Apr. 15, 2013):

Susan Morse argues that U.S. bilateral intergovernmental agreements have binding legal force.

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Johnston: The Tax Police Budget Shrinks

David Cay Johnston (Syracuse),  The Tax Police Budget Shrinks, 139 Tax Notes 211 (Apr. 8, 2013):

With the cuts under the budget sequestration, the IRS budget is down sharply from 2002 and is much too small to ensure the revenue collection necessary to sustain our democracy. 

IRS Budget Change Per Capita (in 2012 dollars)

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Sullivan: U.S. Contract Manufacturing and Dave Camp's Option C

Martin A. Sullivan (Tax Analysts), U.S. Contract Manufacturing and Dave Camp's Option C, 139 Tax Notes 10 (Apr. 1, 2013):

Martin A. Sullivan discusses how a recent proposal by Paul Oosterhuis could help the international tax reform discussion draft released by House Ways and Means Committee Chair Dave Camp, R-Mich.

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Johnston: Leaving a Big Nickel on the Table

David Cay Johnston (Syracuse), Leaving a Big Nickel on the Table, 138 Tax Notes 1495 (Mar. 25, 2013):

David Cay Johnston writes that according to the Congressional Budget Office, the U.S. economy is growing at less than 95 percent of its potential, and he argues that the country is losing much more tax revenue as a result.

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Smith: PPL -- How to Determine Whether a Foreign Tax is Creditable

Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.), PPL: How to Determine Whether a Foreign Tax is Creditable, 138 Tax Notes 1351 (Mar. 18, 2013):

PPL Corp. v. Commissioner presents the question whether the creditability of a foreign tax must be determined by applying the requirements of the § 901 regulations to the foreign statute’s formula for the tax or by applying those requirements to an algebraically equivalent reformulation of the statutory formula. The decision will likely turn on whether the Supreme Court agrees with PPL that tax law’s general substance-over-form principle authorizes reliance on an algebraic reformulation to determine whether a foreign tax is creditable for U.S. tax purposes.  

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A Potential Game Changer in E-Commerce Taxation

Andrew J. Haile (Elon), David Gamage (UC-Berkeley) & Darien Shanske (UC-Hastings, moving to UC-Davis), A Potential Game Changer in E-Commerce Taxation, 67 State Tax Notes 747 (Mar. 11, 2013):

In this essay, we evaluate recent legislative proposals for Congress to authorize state taxation of e-commerce. We argue that these proposals contain a potential game-changing innovation—the requirement that states provide remote sellers with “adequate software” for calculating use tax due within the state. Properly implemented, we explain how this innovation could force states to internalize the compliance costs of levying tax collection obligations on remote sellers, thereby incentivizing the states to simplify their sales and use tax statutes and resolving concerns about states overburdening interstate commerce.

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Sullivan: Dave Camp's Quiet Tax Revolution

Martin A. Sullivan (Tax Analysts),  Dave Camp's Quiet Revolution, 138 Tax Notes 1294 (Mar. 18, 2013):

Martin A. Sullivan analyzes and applauds the latest discussion draft from House Ways and Means Committee Chair Dave Camp, R-Mich.

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Tax Profs Remember Christine Brunswick

Tax Notes has reprinted our tribute in Tax Professors Remember Christine Ann Brunswick, 138 Tax Notes 1267 (Mar. 11, 2013):

Paul L. Caron ... shares the tributes posted by tax professors remembering Christine Ann Brunswick, former director of the American Bar Association Section of Taxation, who died last month:

• Alice Abreu (Temple)
• Ellen Aprill (Loyola-L.A.)
• Paul Caron (Cincinnati & Pepperdine)
• Cynthia Lepow (Loyola-New Orleans)
• Francine Lipman (UNLV)
• Roberta Mann (Oregon)
• Deborah Schenk (NYU)

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2003-2012 Tax Journal Rankings: NYU #1, Tax Notes #2

Here are the Washington & Lee tax law review combined rankings of the five major tax journals:

• Florida Tax Review ("Florida")
• Tax Law Review ("NYU")
• Tax Lawyer ("ABA")
• Tax Notes
• Virginia Tax Review ("Virginia")

The rankings are based on the annual combined rankings in 2003-2012 among these five journals:by:

• Impact Factor (citations/number of articles published)
• Citations in Law Reviews
• Citations in Cases (federal and state courts)
• Currency (how rapidly articles are cited)

Rank	Journal	2012	2011	2010	2009	2008	2007	2006	2005	2004	2003
1.1	NYU	2	1	1	1	1	1	1	1	1	1
2.9	Tax Notes	4	3	3	2	2	2	5	3	2	3
3.0	Florida	3	4	4	4	3	3	2	2	3	2
3.1	Virginia	1	2	2	3	4	4	3	4	4	4
4.9	ABA	5	5	5	5	5	5	4	5	5	5

As I have previously noted, Tax Notes fares poorly in the Impact Factor category (citations/number of articles published) because W&L apparently counts as "articles" all of the advance sheet material in Tax Notes.

Tax Notes is #1 by a wide margin in the number of citations in law reviews, with more than double the citations of its nearest competitor:

Rank	Journal	2012	2011	2010	2009	2008	2007	2006	2005	2004	2003
1.0	Tax Notes	1	1	1	1	1	1	1	1	1	1
2.9	ABA	4	3	4	4	3	3	2	2	2	2
3.0	NYU	3	4	3	3	2	2	3	4	3	3
3.1	Virginia	2	2	2	2	4	4	4	3	4	4
5.0	Florida	5	5	5	5	5	5	5	5	5	5

Johnston: Income Inequality: 1 Inch to 5 Miles

David Cay Johnston (Syracuse), Income Inequality: 1 Inch to 5 Miles, 138 Tax Notes 1007 (Feb. 25, 2013):

The average increase in real income reported by the bottom 90% of earners in 2011, compared with 1996, if measured at one inch, would extend almost five miles for the top 1% of the top 1%.

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Tax Analysts Hosts Conference Today on The Federal Income Tax: Has It Run its Course?

Tax Analysts hosts a roundtable discussion on The Federal Income Tax: Has It Run its Course? at the National Press Club in Washington, D.C. today at 9:00 - 11:00 a.m. EST:

Please join us for a roundtable discussion on whether the federal income tax, which celebrates its 100th birthday this year, can retain its role as a prime federal revenue source.

• Christopher E. Bergin (President and Publisher, Tax Analysts) (moderator)
• Jared Bernstein (Senior Fellow, Center on Budget and Policy Priorities)
• Robert Goulder (Editor in Chief of International Publications, Tax Analysts)
• Michael J. Graetz (Professor of Tax Law, Columbia Law School)
• Joseph J. Thorndike (Director of the Tax History Project, Tax Analysts)

Sullivan: Can States Swap Sales Taxes for Income Taxes?

Martin A. Sullivan (Tax Analysts), Can States Swap Sales Taxes for Income Taxes?, 138 Tax Notes 789 (Feb. 19, 2013):

Among the 44 states with significant income tax revenue, only a few could repeal their income taxes, replace the lost revenue with sales taxes, and keep sales tax rates below 8% with their current sales tax base (or, for those without sales taxes, with a tax base equal in breadth to the average of other states). They are New Hampshire, Alaska, Montana, Hawaii, and Florida. Two more states, New Mexico and Alabama, might also be able to repeal their income taxes and keep sales tax rates below 8% if they aggressively expanded their sales tax base. In general, states where a tax swap is most likely have relatively low income tax collections and relatively low sales tax rates.

If states already had broad-based consumption taxes in place, a widespread phaseout of state income taxes might be a real possibility. Concerns about regressivity could be addressed with a sales tax rebate to low-income households. But as long as states rely on sales taxes that exclude most services and include business inputs, the difficulties in most states will be insurmountable and the desirability questionable.

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Johnston: Bermuda Robs Sacramento and Albany -- Who Knew?

David Cay Johnston, Bermuda Robs Sacramento and Albany -- Who Knew?, 67 State Tax Notes 423 (Feb. 11, 2013):

Johnston writes about a report released by the U.S. Public Interest Research Group Education Fund that examines the revenue that is lost by each state to offshore tax havens.

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Johnston: Law and Order: Tax Squad

David Cay Johnston, Law and Order: Tax Squad, 138 Tax Notes 759 (Feb. 11, 2013):

Johnston discusses why it is a bad idea to cut dollars from tax enforcement, and he is skeptical that declining numbers of criminal tax prosecutions are the result of increased voluntary compliance.

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More on the Pepperdine/Tax Analysts Symposium: Tax Advice for the Second Obama Administration

William Hoffman, Globalization Poses New Challenges for Tax Reform, 2013 TNT 15-9 (Jan. 23, 2013):

The effects of globalization and international competition on the U.S. economy and the government's fiscal condition will require any tax reform effort made in the coming months to be much different from past efforts, panelists said January 18 during a conference cosponsored by Pepperdine University and Tax Analysts.

"There is no pot of gold from which to finance tax reform," Columbia Law School professor Michael Graetz said at the Malibu, Calif., conference, titled Tax Advice for the Second Obama Administration. Drafters of the 1986 reforms helped finance lower individual tax rates by repealing tax benefits for plants and equipment, limiting tax shelters, and equalizing rates for capital gains and income, Graetz said. That won't be possible this time. "Given internationalization of economic activity and increased competition from abroad, repeating the 1986 act's reliance on increased taxation of corporate income is not, in my view, possible," Graetz said. "Given the size of the national debt and projected increases in that debt for the near and long-term future, it seems essential for tax reform to be capable of producing additional revenues going forward." ...

Tax professors and professionals presented research and offered their take on business and international tax matters, estate and gift taxes, income and wealth inequality, and the balance between fairness and growth during a one-day symposium organized by Pepperdine University law professor Paul Caron, author of TaxProf blog, and Tax Analysts. Most participants agreed that if there is any big reform coming, high- and middle-income earners will likely see their taxes rise -- although the former will have more opportunities than the latter to escape the burden. ...

"The 800-pound gorilla in the room is wealth," said Edward McCaffery of the University of Southern California Gould School of Law. [Distracted from Distraction by Distraction: Reimagining Estate Tax Reform ] "I think we have to go after wealth. I don't think any major tax reform in America has gone after wealth. What we're doing is shoring up the income tax as a wage tax, or maybe making it more progressive, but we're not getting at wealth at all. And I think we have to do something." ...

Several speakers took aim at the $5 million estate tax exemption and the section 1014 rule regarding stepped-up basis on death. "The $5 million exemption for estate and gift [taxes], and especially for generation-skipping transfer taxes, makes no sense at all," said Grayson M.P. McCouch of the University of San Diego School of Law. [Who Killed the Rule Against Perpetuities?] "By opening a $5 million exemption, coupled with unlimited basis stepped up at death, we have basically just opened up a huge giveaway to not even the middle class but to more than 99% of decedents to just escape the basic income tax . . . and we've pulled away what used to be a substantial countervailing tax that offset the benefit of that step. And that, I think, is hard to defend." One possible reform would be to prospectively curtail the $5 million exemption, at least for long-term trusts, McCouch said.

McCaffery called for repeal of the stepped-up basis rule. In 2010, he said, taxpayers had the option of either no estate tax and a carryover basis or a $5-million-per-person exemption and a stepped-up basis. "The overwhelming majority of decedents chose the latter," he said. "Stepped-up basis is very big, very important, [and] it's always been linked to the estate tax."

Joseph J. Thorndike, director of Tax Analysts' Tax History Project and a contributing editor of Tax Notes, said the estate tax might be "irrelevant" for revenue and progressivity purposes (as Caron argued in a paper coauthored with James Repetti of Boston College [Occupy the Tax Code: Using the Estate Tax to Reduce Inequality]), but it's likely not yet dead politically. The estate tax addresses wealth inequality indirectly, while "efforts to address inequality head on -- as in 'these people are just too damn rich and other people are too damn poor' -- are historically not successful in the United States," he said. 

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Pepperdine/Tax Analysts Symposium Wrap-Up: Tax Advice for the Second Obama Administration

Thanks to everyone who participated in Friday's Pepperdine/Tax Analysts Symposium on Tax Advice for the Second Obama Administration. By any measure, it was spectacular success. We smashed attendance records, as Pepperdine had to open two overflow rooms to handle the crowds. Over 600 people have watched the video of the event:

Each and every one of our tax academics, practitioners, journalists, and authors did a first-rate job:

• Keynote Address:  Michael Graetz (Columbia)
• Papers:  Reuven Avi-Yonah (Michigan), Steve Bank (UCLA), Dorothy Brown (Emory), Karen Burke (San Diego/Florida), Paul Caron (Cincinnati/Pepperdine), Allison Christians (McGill), Francine Lipman (UNLV), Ed McCaffery (USC), Grayson McCouch (San Diego/Florida), Susan Morse (UC-Hastings), Jim Repetti (Boston College), Kirk Stark (UCLA), Marty Sullivan (Tax Analysts), Eric Zolt (UCLA)
• Commentators:  Bruce Bartlett (former Deputy Assistant Treasury Secretary for Economic Policy), Bob Goulder (Tax Analysts), David Miller (Cadwalader), Michael Schler (Cravath), Joe Thorndike (Tax Analysts)
• Moderators:  Tom Bost (Pepperdine), David Brunori (Tax Analysts), Paul Caron (Cincinnati/Pepperdine), Khrista Johnson (Pepperdine)
• Luncheon and Closing Addresses:  David Cay Johnston (author and journalist)

The papers will be published in the Pepperdine Law Review (Volume 40, Issue 5 (May 2013)), and I will of course post the links on TaxProf Blog as soon as they are available. In the meantime, seven of the papers are available in draft form on SSRN.

My special thanks to Deanell Tacha (Dean of Pepperdine Law School) and Chris Bergin (President of Tax Analysts) who agreed to co-sponsor the symposium. As Dean Tacha pointed out at Friday's dinner, the challenges facing legal education demand that we find creative ways to partner with other organizations. I believe that this symposium is a wonderful example of the benefits possible with such partnerships.

This is the third symposium I have organized, and I have participated in many others. I join the many speakers who began their remarks by praising the Pepperdine Law Review students for pulling off the best-run symposium that any of us have ever attended.  Many, many students provided tireless and cheerful service, but I want to give particular shout-outs to Editor in Chief Margot Parmenter and Symposium Editor Michael Wood.

It goes without saying that the gorgeous Pepperdine campus and Malibu weather provided a wonderful setting, but I knew it would be the people of this special law school who would make this a truly memorable experience for our guests. My lasting memory from the symposium will be the two "after-parties" my wife and I hosted at our home, where these leading lights of the tax world shared food, drink, conversation, and true community -- an unfortunately all too rare event in our hectic lives.

Johnston: The Fiscal Cliff Tax Deal Makes Deficit Worse

David Cay Johnston, Deficits, Schmeficits, 138 Tax Notes 237 (Jan. 14, 2013)

Johnston argues that the fiscal cliff compromise will make it harder to solve the United States’ long-term deficit and debt problems.

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2012 Tax Person of the Year: Tax Policy Center

Person of the Year: Tax Policy Center, 138 Tax Notes 7 (Jan. 7, 2013):

The Urban-Brookings Tax Policy Center is the 2012 Tax Notes Person of the Year, for the indelible mark it made on the presidential campaign; nine other contenders for the title round out the feature.

• Tanara Ashford (Deputy Assistant Attorney General, Tax Division, Justice Department)
• Erskine Bowles (Co-chair, National Commission on Fiscal Responsibility and Reform)
• Bryan T. Camp (Professor, Texas Tech University School of Law)
• Elizabeth A. Copeland (Partner, Strasburger Price Oppenheimer Blend)
• Manal Corwin (Assistant Secretary of the Treasury for International Tax Affairs)
• Scott D. Michel (President, Caplin & Drysdale)
• John G. Roberts Jr. (Chief Justice of the United States)
• Mitt Romney (Republican Party Nominee for President)
• Dean A. Zerbe (Zerbe, Fingeret, Frank & Jadav)

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Sullivan: Double Disappointment With the Fiscal Cliff Deal

Martin A. Sullivan (Tax Analysts),  Double Disappointment With the Deal, Doc 2013-46 (Jan. 3, 2013):

Martin A. Sullivan discusses the downsides of the fiscal cliff compromise.

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2012 Year in Review: State & Local Taxes

Shonda Humphrey (Tax Analysts), A Year in Review of State and Local Tax Legal Developments, 66 State Tax Notes 991 (Dec. 24, 2012):

Well, 2012 is winding down, and what a year it was. ... In the state and local tax area, there were some noteworthy legal developments.

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Bartlett: U.S. Taxes and Government Benefits in an International Context

Bruce Bartlett, U.S. Taxes and Government Benefits in an International Context, 137 Tax Notes 1429 (Dec. 24, 2012):

Bruce Bartlett reviews new international data on taxes and healthcare spending as a share of GDP in OECD countries and suggests that Americans' antipathy to taxes may be a function of the modest benefits they receive from government in contrast to those in high-tax countries.

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Sullivan: Why the SALT Deduction Is Always Under Attack

Martin A. Sullivan (Tax Analysts), Why the SALT Deduction Is Always Under Attack, 137 Tax Notes 1267 (Dec. 17, 2012):

Martin A. Sullivan argues that policymakers shouldn't be so quick to curtail or eliminate the deduction for state and local taxes.

[T]he history of the 1986 act can still teach us about the next tax reform effort. Among the most relevant lessons is that among the big three itemized deductions—the mortgage interest deduction, the deductions for charitable contributions, and the deduction for state and local taxes — the last is by far the one Congress is most likely to cut. As shown in Figure 1, the deduction cost the government $62 billion in 2010, and a lot of that revenue is from upper-income households. That is an attractive pile of cash, especially if the mortgage interest and charitable deductions are off the table.

Figure 1. Distribution of Tax Benefits From the Deduction for State and Local Taxes in 2010 (from a total of $62.4 billion)

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Sullivan: Deduction Caps Can Raise Marginal Rates, Cut Economic Growth

Martin A. Sullivan (Tax Analysts), Deduction Caps Can Raise Marginal Rates, Cut Economic Growth, 137 Tax Notes 939 (Nov. 26, 2012):

Long-run job creation through tax cutting is a two-step process. The first step is to lower marginal tax rates. Then those lower marginal rates increase taxpayers’ willingness to invest and seek employment. Most of the unending argument about the effect of taxes on job creation centers on step two — that is, the responsiveness of saving and labor supply to changes in marginal tax rates.

Despite all the effort, there is still enough uncertainty about the empirical research that both proand antitax partisans can cite plausible estimates to support their views. This article sidesteps the highly politicized component of the debate about the economic effects of taxes and instead focuses on step one, the oft-neglected arithmetic of the effects of tax reform on marginal rates.

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Johnson: Tax Reform and the Presidential Election

Calvin H. Johnson (Texas), Tax Reform and the Presidential Election, 137 Tax Notes 676 (Nov. 5, 2012):

Johnson describes the tax plan of Republican presidential nominee Mitt Romney as aggressively promising tax cuts for the richest taxpayers. Although Romney promises no increase in the deficit or tax increases for middle-income earners, it is impossible for him to keep all three promises. Johnson argues that the wealthy will need to share in the closing of the deficit because that is where the money is. Wealth is distributed unevenly in this country: One-third is held by the top 1%, and 58% is held by the richest 5%. Taking a needed dollar from the rich does less harm to the sum of human happiness than taking it from the poor.

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Sullivan: The Employer Healthcare Exclusion's Role in Tax Reform

Martin A. Sullivan (Tax Analysts), The Employer Healthcare Exclusion's Role in Tax Reform, 137 Tax Notes 462 (Oct. 29, 2012):

Martin A. Sullivan discusses how the exclusion for employer-provided health insurance might be affected by proposals for tax reform.

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Sullivan: How Much Deficit Reduction for a Grand Bargain?

Martin A. Sullivan (Tax Analysts), How Much Deficit Reduction for a Grand Bargain?, 137 Tax Notes 339 (Oct. 22, 2012):

Martin A. Sullivan writes about $3.4 trillion of deficit reduction that will be needed over the next 10 years to put the federal budget on a sustainable course.

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Tax Analysts Hosts Conference Today on Taxes and the Poor

Tax Analysts hosts a roundtable discussion today on Taxes and the Poor at the National Press Club in Washington, D.C. today at 9:00 - 11:00 a.m. EST:

• Christopher E. Bergin (President and Publisher, Tax Analysts)
• David Brunori (Executive Vice President, Tax Analysts)
• Scott A. Hodge (President, Tax Foundation)
• Chuck Marr (Director of Federal Tax Policy, Center on Budget and Policy Priorities)
• C. Eugene Steuerle (Institute Fellow, Urban Institute)

Sullivan: The Hypocrisy of Tax Reform

Martin A. Sullivan (Tax Analysts), The Hypocrisy of Tax Reform, 137 Tax Notes 119 (Oct. 8, 2012):

Martin A. Sullivan argues that despite their saying that tax reform is needed, lawmakers often let politics muck up the tax code.

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Christians: Measuring a Fair Share

Allison Christians (McGill), Measuring a Fair Share, 68 Tax Notes Int'l 95 (Oct. 1, 2012):

Allison Christians discusses the difficult policy considerations that go into defining what constitutes an individual's fair share when it comes to paying taxes.

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Jackel: Tax Aggressiveness and Tax Meekness

Monte A. Jackel (Monte A. Jackel Federal Tax Advisory Services, Washington, D.C.), The Aggressive and the Meek, 137 Tax Notes 1365 (Sept. 18, 2012):

In this now-monthly column on current tax policy and issues, Jackel examines the state of the tax practice in taking either aggressive or conservative positions on a tax matter. He also discusses the conundrum facing those who comment on government-proposed guidance and are forced to choose between client interests and sound tax policy.

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Solomon: Corporate Inversions: A Symptom of Larger Tax System Problems

Eric Solomon (Ernst & Young, Washington, D.C.), Corporate Inversions: A Symptom of Larger Tax System Problems 67 Tax Notes Int'l 1203 (Sept. 23, 2012):

The enactment of § 7874 in 2004 substantially curtailed inversion activity by U.S. corporations. Nevertheless, some U.S. corporations have inverted and other corporations have considered inverting, although recent temporary regulations have made avoiding the application of § 7874 more difficult. This article examines why U.S. corporations engage in inversions and continue to consider them. Inversion activity is a symptom of problems in the U.S. international tax system that need to be addressed.

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Johnson: The 'No Surplusage' Canon in State and Local Tax Cases

Steve R. Johnson (Florida State), The 'No Surplusage' Canon in State and Local Tax Cases, 65 State Tax Notes 793 (Sept. 17, 2012):

Previous installments of this column have examined numerous canons or conventions of statutory interpretation in their application to state and local tax controversies. This installment considers another canon: the precept that courts should prefer interpretations that render no part of a statute superfluous. ... The first part below describes the canon generally. The second part identifies the reasons advanced for the precept, the objections lodged against it, and the limitations on it. The third part gives examples of the canon in state and local tax cases, both cases in which its assertion was successful and cases in which its use failed.

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Sullivan: President Romney's Tax Reform

Martin A. Sullivan (Tax Analysts), President Romney's Tax Reform, 136 Tax Notes 1365 (Sept. 18, 2012):

In economic analysis, Martin A. Sullivan discusses the options available to Mitt Romney if the Republican presidential nominee is determined to propose revenue-neutral tax reform.

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Sullivan: The Effects of Interest Allocation Rules in a Territorial System

Martin A. Sullivan (Tax Analysts), The Effects of Interest Allocation Rules in a Territorial System, 136 Tax Notes 1098 (Sept. 4, 2012):

In economic analysis, Martin A. Sullivan discusses why interest allocations rules are important if the United States moves to a territorial tax system.

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Cummings: Reorganization Business Purpose

Jasper L. Cummings, Jr. (Alston & Bird, Durham, NC), Reorganization Business Purpose, 136 Tax Notes 1069 (Aug. 27, 2012):

In this article, Cummings explains how corporate taxpayers can avoid having to conjure up a business purpose for an acquisitive reorganization, other than the acquisition.

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State Taxation of Cloud Computing

Timothy P. Noonan (Hodgson Russ, Buffalo), Nuts-and-Bolts Answers on Cloud Computing, 65 State Tax Notes 527 (Aug. 20, 2012):

In Noonan's Notes on Tax Practice, Timothy P. Noonan of Hodgson Russ LLP, Buffalo and New York City, discusses various states' guidance on taxation of cloud computing.

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Willens: IRS Moves to Curtail Tax-Free Repatriation of Foreign Earnings

Robert Willens (Robert Willens LLC, New York), IRS Moves to Curtail Tax-Free Repatriation of Foreign Earnings, 136 Tax Notes 847 (Aug. 20, 2012):

The IRS continues to police schemes that are designed to enable U.S. shareholders of foreign corporations to extract undistributed earnings without U.S. tax consequences. The latest strategy was implemented through an outbound all-cash "D" reorganization in which the transferred property consisted primarily of intangible assets. As was the case with the strategy's predecessor, the "Killer B" transaction, the IRS eliminated the viability of the technique [Notice 2012-39].

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Soled & Crawford: Gift Taxes, Valuation, and the Need for Quarterly Information Returns

Jay A. Soled (Rutgers Business School) & Bridget J. Crawford (Pace), Gift Taxes, Valuation, and the Need for Quarterly Information Returns, 136 Tax Notes 843 (Aug. 13, 2012):

Gifts of tangible personal property and closely held business interests typically are made without a paper trail. Because gift tax returns aren’t due until April 15 of the calendar year following the transfer, a noncompliant taxpayer can game the system by taking a wait-and-see approach. For example, if a taxpayer makes a gift of a valuable gold ring on January 1 and by December 31 the value of gold declines to an all-time low, the taxpayer might choose to report the gift as being made on a later date. Similarly, if a taxpayer makes a gift of privately held stock to a grantor retained annuity trust on January 1 and the value of that stock declines to an all-time low by December 31, the taxpayer might claim that the gift was never made.

Soled and Crawford propose reviving a quarterly gift tax return filing system applicable to all taxpayers whose aggregate taxable gifts equal or exceed $100,000 during a calendar quarter. That system would increase both compliance and revenue. 

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A Comparison of Tax Benefits for New and High-Tech Companies in the U.S. and China

Yinan Zhang (J.D. 2013, Cincinnati), A Comparison of Tax Benefits for New and High-Tech Companies in the U.S. and China, 67 Tax Notes Int'l 655 (Aug. 13, 2012):

The presence of U.S. companies in China is no longer a secret. While China still serves as the "world's factory," a continued expansion of research and development activities in China draws more attention from the rest of the world. By the end of 2009, more than 400 Fortune 500 companies have conducted R&D activities in China. Many reasons account for this trend -- for example, the relatively cheaper R&D investment environment, including cheaper human resources, and China's foreign exchange control policies, which make it hard for international companies to withdraw capital from China.

This article analyzes this trend from a tax perspective. Section I focuses on R&D tax benefits in the U.S. and explains how they work. Section II discusses the benefits provided in China and compares a company's R&D treatment in China with its treatment in the U.S. This article also tries to predict the future of this tax benefit in China, as Chinese tax law underwent a significant change in 2008 and some implementing rules have not yet been promulgated. The conclusions will be summarized in the last section, with some practical suggestions for U.S. companies conducting R&D activities in China.

This article is written primarily for U.S. companies with divisions or subsidiaries in China3; therefore, it introduces the rules in both countries briefly and focuses more on a comparison of the benefits of locating research activities in either of the two countries. The ultimate purpose of this article is to help companies analyze whether to have R&D activities in China.

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Singapore Tax Incentives for Wealthy Individuals

Linda L. Ng, Steve Towers & Li Mei Liew (all of Deloitte & Touche), Singapore: Home for Billionaires and Superstars, 67 Tax Notes Int'l 557 (Aug. 5, 2012):

Linda L. Ng, Li Mei Liew, and Steve Towers look at the tax incentives Singapore offers to wealthy individuals.

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Should Taxpayer Privacy Be Violated to Encourage Tax Policy Discussion?

Cara Griffith (Tax Analysts), Should Taxpayer Privacy Be Violated to Encourage Tax Policy Discussion?, 65 State Tax Notes 403 (Aug. 6, 2012):

In Practice Notes, State Tax Notes legal editor Cara Griffith examines a California bill that would require the state to publish a list of the largest 1,500 corporate taxpayers, including the taxpayer's name, tax liability, and apportionment information.

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Sullivan: Treat Corporate Interest Deductions Like Any Tax Expenditure

Martin A. Sullivan (Tax Analysts), Treat Corporate Interest Deductions Like Any Tax Expenditure, 136 Tax Notes 631 (Aug. 6, 2012):

Martin A. Sullivan discusses why corporate interest deductions should be scaled back if the corporate tax rate is lowered.

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