TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, December 2, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley, moving to Indiana) reviews a new article by Walter Hellerstein (Georgia), Taxing Remote Sales in the Digital Age: A Global Perspective, 65 American University Law Review 1195 (2016).

Gamage (2017)Walter Hellerstein’s new article represents comparative legal scholarship at its best.  Hellerstein’s article analyzes the OECD’s recently issued International VAT/GST Guidelines so as to discuss the lessons for the design and reform of U.S. state-level retail sales taxes.  In doing so, the article argues that U.S. retail sales taxes (RSTs) should tax remote sales and should do so based on the destination principle.  The article then analyzes how RSTs should be reformed so as to best accomplish these goals.

Hellerstein is persuasive in arguing that RSTs should tax remote sales. His article offers important guidance for how RSTs should ideally be reformed. But how can we get there in light of the politically and judicially imposed constraints that currently confront U.S. state governments? I would rank the most plausible paths to reform as follows:

Continue reading

December 2, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, November 25, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new article by Lily Batchelder (NYU), The “Silver Spoon” Tax: How to Strengthen Wealth Transfer Taxation, in Delivering Equitable Growth: Strategies for the Next Administration (Washington Center for Equitable Growth, Fall 2016).

Glogower (2016)Lily Batchelder’s new work examines the reform options for taxing wealth transfers. 

The argues that that wealth transfer taxes are an essential tool for mitigating economic inequality – as measured by both disparities of wealth, income and other measures of economic well-being, and by disparities of economic opportunity. Wealth transfer taxes are also relatively efficient, since taxpayers save for the purposes of enjoying wealth while they are alive (and the social benefits wealth affords) and for retirement needs, in addition to merely accumulating bequests for future generations. Batchelder argues that wealth transfer taxes may also efficiently counter the decreased work incentive among heirs. 

Continue reading

November 25, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, November 18, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by David Kamin (NYU), Getting Americans To Save: In Defense of (Reformed) Tax Incentives, Tax Law Review (forthcoming 2017).

HemelTax-preferred retirement accounts are hugely popular among participants but widely panned by academics who study saving behavior. The two principal criticisms are (1) that tax incentives such as 401(k)s and IRAs aren’t effective at encouraging individuals to save more, and (2) that these incentives amount to “upside-down” subsidies that deliver the largest benefits to wealthy Americans in the highest tax brackets. In an excellent new article, David Kamin carefully considers these criticisms and concludes that the case against tax-preferred retirement accounts is overstated. “[B]ased on the available evidence,” Kamin writes, “tax incentives probably should be used to help correct failures in people’s saving decisions—correcting the ‘internality’ that people impose on themselves because of their biases.”

Kamin begins by canvassing the empirical evidence suggesting that a substantial fraction of American workers are “under-saving” for retirement. He goes on to evaluate the evidence that tax incentives can encourage individuals to save more. On this point, research results vary widely, with some studies finding that tax incentives have little or no effect and others finding that tax incentives play an important role in boosting rates of saving.

Continue reading

November 18, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Friday, November 4, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new article by Hayes Holderness (Illinois), The Unexpected Role of Tax Salience in State Competition for Businesses, 84 U. Chi. L. Rev. (forthcoming 2017).  

Glogower (2016)Hayes Holderness’ article identifies and examines a new form of incentive used by states to attract business activity—the “customer-based incentive.”  Unlike traditional incentives, such as tax credits or abatements, customer-based incentives yield a tax benefit to the businesses customers, not to the business itself.   The article argues that customer-based incentives can be more effective than traditional incentives, by capitalizing on customers’ different behavioral responses to the forms of incentive.  

The article begins with a specific example of an indirect customer-based incentive: relieving a business of the obligation to collect sales tax from customers, in exchange for the business establishing a physical presence in the state.  For example, in 2012 negotiations with the State of New Jersey, Amazon.com, Inc. sought temporary relief from the obligation to collect sales tax, in exchange for building fulfillment centers in the state.  While nominally a concession made to the business, this incentive in fact benefits customers, by effectively foregoing the collection of sales tax altogether (in the case of those rare customers who do not voluntarily report and pay sales and use tax not collected at the point of sale.)

Continue reading

November 4, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 28, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (University of Chicago) reviews a new article by Stephen Shay (Harvard), J. Clifton Fleming (BYU), and Robert Peroni (Texas), R&D Tax Incentives: Growth Panacea or Budget Trojan Horse?, 69 Tax Law Review 419 (2016).

HemelFollowers of this blog likely know already that any article by the trio of Shay, Fleming, and Peroni will be well worth reading. And, no surprise, their latest installment very much fits that bill. Here, they present a forceful critique of the various R&D incentives embedded in the Internal Revenue Code, culminating in an ambitious proposal to repeal these incentives and use the resulting revenues to increase direct federal spending on basic research.

One significant contribution that Shay, Fleming, and Peroni make in this article (though far from the only) is to expand our view of R&D tax incentives beyond the section 41 credit for increasing research activities and the section 174 deduction for research and experimental expenditures. 

Continue reading

October 28, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 21, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley, moving to Indiana) reviews a new article by Gregg Polsky (Georgia) and Adam Rosenzweig (Wash U), The Up-C Revolution (Oct. 13, 2016):

Gamage (2017)When I was in law school, I was taught what was then the conventional wisdom about the U.S. Corporate Income Tax (the “CIT”)—that it was in the process of being eroded through sophisticated tax planning, with the expectation that it would soon shrink to irrelevance as source of federal revenue.  Yet, somewhat ironically, my law school years turned out to mark the (temporary?) end of that trend.  Although the CIT shrank dramatically as a source of federal government revenues during the period from the 1950s through the early 2000s, CIT revenues have since remained more or less constant as a percent of GDP from the early 2000s through today (albeit fluctuating with economic conditions).

Continue reading

October 21, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 14, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new paper by Louis Kaplow (Harvard), A Distribution-Neutral Perspective on Tax Expenditure Limitations, 31 Tax Policy and the Economy (Robert Moffitt, ed., forthcoming 2017).

Glogower (2016)Louis Kaplow’s new article extends his distribution-neutral framework for analyzing tax reforms, as developed in prior works, to the context of reforms limiting tax expenditures. Kaplow argues that this framework allows for more rigorous analysis of tax expenditure policy, and yields substantive insights challenging common assumptions about the benefits of limiting expenditures.

In the distribution-neutral framework, a reform is evaluated alongside an offsetting adjustment to the income tax schedule that washes out distributive effects in two steps: The schedule is first adjusted to leave taxpayers at same level of disposable income (Step 1), and then adjusted further to hold their utility constant (Step 2). In other words, if a reform increases utility by eliminating a consumption distortion, Step 2 will raise the tax rate to restore utility to the pre-reform level. 

Continue reading

October 14, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 7, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by Edward A. Zelinsky (Cardozo), The Political Process Argument for the Supreme Court to Overrule Quill, 82 Brook. L. Rev. (forthcoming 2017).

HemelIn Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the Supreme Court held that states cannot collect sales tax from out-of-state vendors who lack a “physical presence” within the state. While the constitutional justification for Quill’s holding was questionable from the outset, Quill’s future is suddenly in doubt as well. In a concurring opinion last year, Justice Kennedy called on the Court to reconsider Quill, and Alabama and South Dakota have both taken steps to generate a test case since then.

The pragmatic case for overruling Quill is clear. Quill drives a hole in state budgets: by one estimate, states lost more than $23 billion in sales tax revenue on transactions with out-of-state vendors in 2012 alone. Moreover, Quill puts vendors with a brick-and-mortar presence at a disadvantage vis-à-vis remote competitors, leading (arguably) to unfairness and (almost certainly) to inefficiency. Perhaps the best that can be said in Quill’s favor is that it’s up to Congress—not the courts—to fix this mess. Because Quill was decided under the dormant Commerce Clause, Congress has the power to overturn it via legislation. In a provocative new article, Edward Zelinsky considers whether Quill’s fate should be left to the political process.

Continue reading

October 7, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, September 30, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley) reviews a new paper on a topic of great concern to many law students:  Treasury Should Exclude Income from Discharge of Student Loans, by John R. Brooks (Georgetown), 152 Tax Notes 751 (Aug. 1, 2016).

Gamage (2016)As anyone who has taken the basic law school tax course should know, the doctrines surrounding discharge of indebtedness income are troubled and often incoherent.  I have found that law students are especially anxious about the possibility of having discharge of indebtedness income from the cancellation of student loans through the federal government’s Income-Based Repayment (IBR) and Pay as You Earn (PAYE) programs.  (Note to tax law professor readers: these topics make great vehicles for teaching discharge of indebtedness doctrines!)

Continue reading

September 30, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Friday, September 23, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new paper by Edward Kleinbard (USC), Capital Taxation in an Age of Inequality, the first installment of a two-part project proposing a new tax instrument, the Dual Business Enterprise Income Tax (BEIT).  Kleinbard’s current article explores the theory behind the Dual BEIT, while a subsequent follow up article will describe its technical operation.  

Glogower (2016)In brief, the Dual BEIT, which builds on Kleinbard’s prior proposals, operates as a single flat-rate tax on capital income, divided between an investor-level tax on normal returns, and a business-level tax on profits.  The investor-level tax is implemented through a tax on deemed normal returns to investments.  Businesses deduct a cost of capital allowance of the same normal return (regardless of whether the business is financed by debt or equity), resulting in a business-level tax on profits.

The article begins with a series of arguments justifying capital income taxation in general:  First, the classic optimal tax theory result that normal returns to saving should not be taxed has “no practical lessons to teach” in a world with inherited capital and gratuitous transfers.  Second, capital income taxation addresses increasing concerns with wealth and income concentration.  Third, taxing capital income taxes is necessary to raise revenue for public investment and social insurance programs.  Fourth, recent studies, including by the IMF and the OECD, suggest that reducing inequality may increase economic growth.

Continue reading

September 23, 2016 in Legal Education, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, September 16, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) discusses two articles recently posted to SSRN—one by Yair Listokin (Yale), the other by Thomas Brennan (Harvard) and Alvin Warren (Harvard)—which offer illuminating (and divergent) perspectives on the role of realization and deferral in a low interest rate environment.

HemelListokin’s contribution, How To Think About Income Tax When Interest Rates Are Zero, 151 Tax Notes 959 (May 16, 2016), begins with the observation that “[t]he significance of many of income tax law’s core concepts depends on the interest rate.” One example is the realization requirement: Listokin writes that “[w]ith interest rates at zero, the government is indifferent as to whether a taxpayer realizes income now or in the future—as long as the taxpayer’s tax rate is constant across years.” As a result, Listokin says, the tax curriculum and tax law scholarship should focus less on doctrines like the realization requirement that affect the timing of tax payments, and more on doctrines like stepped-up basis that affect the rate at which (and amount on which) tax is paid.

Continue reading

September 16, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, September 9, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley) reviews a new paper by Dave Owen (UC-Hastings), Water and Taxes, 50 UC Davis L. Rev. ___ (2016):

Gamage (2016)The article begins by reviewing the basics of both water law and tax law, to explain that there are currently only modest interactions.  Water rights are indeed taxed, especially by state and local property tax regimes.  Yet the article explains that the ways in which water rights are currently taxed do not serve to meaningfully address concerns about inadequate water conservation.  The article thus proposes more robustly taxing water rights as a means for achieving better water conservation.

Continue reading

September 9, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, September 2, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new paper by Daniel Hemel (Chicago) and Kyle Rozema (Northwestern), Inequality and the Mortgage Interest Deduction, forthcoming in the Tax Law Review:

Glogower (2016)Hemel and Rozema ask a question that we thought was well settled: What are the distributional consequences of repealing the mortgage interest deduction (“MID”)? Their conclusion (spoiler alert): It depends.

The article is important in two respects. First, it introduces a more sophisticated analysis of the distributional consequences from repealing (or limiting) the MID and other tax preferences. Through this exercise, the article also adds empirical perspective to the choices for measuring progressivity in tax reforms.

Building on David Kamin’s work on progressivity in tax reforms, the article begins with a result we’ll call the “Tax Burden Paradox”: Repealing a tax preference that provides a larger benefit to high-income taxpayers in dollar terms may in fact decrease those taxpayers’ share of society’s total tax burden.  Consider the article’s example of a two-household society, one rich with pretax income of $100, and one poor with pretax income of $50, and progressive rates that tax the first $50 of income at 20%, and additional income at 40%.  The rich and poor households pay $12 and $9, respectively, in mortgage interest. With the MID, the rich household pays $25.20 in taxes, or 75.4% of the society’s total $33.40 tax burden. If the MID is repealed, the rich household pays $30 in taxes, for a reduced 75% share of the society’s total $40 tax burden.

Continue reading

September 2, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, August 26, 2016

Weekly SSRN Tax Roundup 2.0

SSRN LogoNote from Paul Caron:  As I explained on August 1, due to my growing other commitments, I have taken steps to reduce the amount of time I devote to TaxProf Blog. Six weeks ago, I stopped doing the weekly tax, legal education, SSRN, and student tax note roundups. I previously announced that Scott Fruehwald of our sister Legal Skills Prof Blog has agreed to take over the weekly legal education roundup. Today, I am pleased to announce that David Gamage (UC-Berkeley), Ari Glogower (Ohio State), and Daniel Hemel (Chicago) have agreed to share responsibility for the weekly SSRN tax roundup:

In addition to a list of newly posted papers, we’ll also include a write-up about at least one of the week’s additions. A quick administrative note: The best way to make sure we see your paper is to use the JEL code K34 (Tax Law) when you upload to SSRN. (If your reaction is “what’s a JEL code?”, check out  Lea-Rachel Kosnik’s overview. And for a fascinating read on the tangled history of JEL codes, see Beatrice Cherrier’s article.)

If you would like to take over the weekly tax roundup as a service to the tax community, either alone or as part of a group of co-editors, please let me know.

This week, Daniel Hemel highlights a new paper by David Hasen (Colorado), Accretion-Based Progressive Wealth Taxation, which is forthcoming in the Florida Tax Review:

HemelDavid Hasen's excellent article emphasizes the distinction between an “excise tax,” which “applies to or is triggered by a transfer or other event,” and an “accretion tax,” which “appl[ies] to the ‘same’ item over time.” Examples of “excise taxes” include consumption taxes, realization-based income taxes, and estate and gift taxes. Examples of “accretion taxes” include real property taxes, mark-to-market income taxes, and periodic wealth taxes. Hasen argues that “a federal accretion-type, progressive wealth tax would appropriately supplement either an income tax or a consumption tax and would do so more effectively than our existing excise wealth tax regime, the federal estate and gift tax.” In the following post, I'll walk through (parts of) Hasen's argument and then explain why I'm not entirely persuaded that an accretion-type wealth tax is the way to go.

Continue reading

August 26, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, July 15, 2016

Weekly SSRN Tax Roundup

Friday, July 8, 2016

Weekly SSRN Tax Roundup

Friday, July 1, 2016

Weekly SSRN Tax Roundup

Continue reading

July 1, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, June 24, 2016

Weekly SSRN Tax Roundup

Continue reading

June 24, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, June 17, 2016

Weekly SSRN Tax Roundup

Friday, June 10, 2016

Weekly SSRN Tax Roundup

Continue reading

June 10, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, June 3, 2016

Weekly SSRN Tax Roundup

Continue reading

June 3, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, May 27, 2016

Weekly SSRN Tax Roundup

Friday, May 13, 2016

Weekly SSRN Tax Roundup

Friday, May 6, 2016

Weekly SSRN Tax Roundup

Continue reading

May 6, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, April 29, 2016

Weekly SSRN Tax Roundup

Continue reading

April 29, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, April 22, 2016

Weekly SSRN Tax Roundup

Friday, April 15, 2016

Weekly SSRN Tax Roundup

Continue reading

April 15, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, April 8, 2016

Weekly SSRN Tax Roundup

Friday, March 25, 2016

Weekly SSRN Tax Roundup

Friday, March 18, 2016

Weekly SSRN Tax Roundup

Continue reading

March 18, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, March 11, 2016

Weekly SSRN Tax Roundup

Continue reading

March 11, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, March 4, 2016

Weekly SSRN Tax Roundup

Friday, February 26, 2016

Weekly SSRN Tax Roundup

Continue reading

February 26, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, February 19, 2016

Weekly SSRN Tax Roundup

Friday, February 12, 2016

Weekly SSRN Tax Roundup

Friday, February 5, 2016

Weekly SSRN Tax Roundup

Continue reading

February 5, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, January 29, 2016

Weekly SSRN Tax Roundup

Continue reading

January 29, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, January 22, 2016

Weekly SSRN Tax Roundup

Friday, January 15, 2016

Weekly SSRN Tax Roundup

Friday, January 8, 2016

Weekly SSRN Tax Roundup

Continue reading

January 8, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Saturday, December 26, 2015

Weekly SSRN Tax Roundup

Friday, December 18, 2015

Weekly SSRN Tax Roundup

Friday, December 11, 2015

Weekly SSRN Tax Roundup

Continue reading

December 11, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, December 4, 2015

Weekly SSRN Tax Roundup

Continue reading

December 4, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Continue reading

December 4, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, November 13, 2015

Weekly SSRN Tax Roundup

Friday, November 6, 2015

Weekly SSRN Tax Roundup

Friday, October 30, 2015

Weekly SSRN Tax Roundup

Continue reading

October 30, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 23, 2015

Weekly SSRN Tax Roundup

Continue reading

October 23, 2015 in Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, October 16, 2015

Weekly SSRN Tax Roundup