Avi-Yonah Posts Seven Tax Papers On SSRN

Reuven S. Avi-Yonah (Michigan; Google Scholar) has posted seven tax papers on SSRN:

Can Investment Treaties Defeat Pillar 2?, 114 Tax Notes Int'l 877 (May 6, 2024):

This paper casts doubt on whether bilateral investment treaties offer investors a viable shield from pillar 2’s qualified domestic minimum top-up tax. In their excellent recent Tax Notes International article, “Using Investment Treaties to Prevent Pillar 2’s Revocation of Promised Tax Incentives,” Javier Rubinstein, Lauren Friedman, and Tamsin Parzen make an interesting new argument about the interaction between bilateral investment treaties (BITs) and pillar 2.1 They argue that an investor benefiting from an existing BIT can rely on it to prevent the imposition of a qualified domestic minimum top-up tax (QDMTT) even without resorting to treaty arbitration. This argument is problematic, however, because it does not fully address the likely reaction of other countries that are not party to the BIT.

The Case for a Carbon Tax Revisited: 

The leading candidate for addressing global climate change is some form of market-based cap-and-trade system. The popularity of a cap-and-trade system may reflect the fact that cap-and-trade offers something for everyone. For environmentalists, cap-and-trade promises a declining cap on the carbon dioxide emissions that are the principal cause of global warming. For industry groups, cap-and-trade offers the possibility of a new market in carbon allowances and therefore the potential for significant income for companies who can inexpensively reduce their carbon dioxide emissions. For economists, cap-and-trade allows the market to consider externalities as it determines the price of carbon. For politicians, cap-and-trade offers the opportunity to take action to combat global warming without implementation of a complex regulatory permitting scheme or imposition of a tax on fossil fuels. The popular and intellectual appeal of a cap-and-trade system, however, obscures a number of practical considerations that, at a minimum, counsel against cap-and-trade as the leading edge of domestic efforts to combat climate change. 

The Deemed Dividend Problem Revisited:

Since 1962, the United States has taxed some of the foreign source income earned overseas by foreign subsidiaries of US-based multinationals. However, as a technical matter, the US does not tax these subsidiaries (controlled foreign corporations, or CFCs) directly. 2 Instead, under IRC section 951(a), the "United States shareholder" of a CFC is taxed on the CFC's "Subpart F income" as if it were a dividend distributed to it on the last day of the CFC's taxable year. Such a deemed dividend carries with it indirect foreign tax credits (IRC sec. 960) and the related earnings and profits of the CFC are not taxed again upon actual distribution (IRC sec. 959). This approach was retained for the global intangible low-taxed income (GILTI) tax adopted in 2017, which taxes currently income of CFCs above a 10% return on tangible assets. This deemed dividend approach was adopted in 1962 because it was successfully used previously for foreign personal holding companies (IRC sec. 551, enacted in 1937 and repealed in 2004) and because of doubts about the ability of the United States as a jurisdictional matter to tax directly non-residents on foreign source income. However, these doubts have since been resolved, and the IRS now believes it has the authority to tax foreign corporations controlled by US residents directly on foreign source income. Moreover, the deemed dividend approach has led to significant complexity and given rise to tax planning opportunities. Thus, this column argues that the deemed dividend approach in Subpart F and GILTI is obsolete and should be abandoned in favor of direct taxation of CFCs on whatever Congress determines is the appropriate scope of Subpart F income.

International Tax and International Law Revisited: 

Is international tax law part of public international law? To an international lawyer, the question posed above probably seems ridiculous. Of course, international tax law is part of international law, just like tax treaties are treaties. But to an international tax lawyer, the question probably seems less obvious, because most international tax lawyers do not think of themselves primarily as international lawyers (public or private), but rather as tax lawyers who happen to deal with cross-border transactions. And indeed, once we delve into the details, it becomes clear that, in some ways, international tax law is different from "regular" international law. For example, international tax lawyers talk about residence and source jurisdiction, not nationality and territoriality as we shall see, the different names also carry different content. The following are some examples of these similarities and differences.

Political Biases and Taxation Revisited: 

The literature on behavioral public finance has tended to focus on the biases of taxpayers.  However, politicians and government agents are human as well and can be expected to show the same biases to which the public are all subject. Few works have studied empirically the heuristics applied by political elites, such as members of cabinet, party leaders, or members of Congress, and they rarely focused on the field of public finance This column highlights several case studies from US international taxation in which such biases arguably appear, in the hope that increased awareness may help prevent a recurrence.

Taxpayer Rights After a Decade Revisited:

This year marks the tenth anniversary of the Taxpayer Bill of Rights (TBOR). Until 2014, there was no single pronouncement of US taxpayers' rights. At various points, Congress enacted pieces of legislation labeled "Taxpayer Bill of Rights". The original TBOR in 1988, TBOR II in 1996, and TBOR III in 1998, "created substantive changes in the tax laws, such as adding procedures for the IRS to follow, giving taxpayers greater access to the Tax Court, giving taxpayers the right to sue under certain circumstances, creating the Taxpayer Advocate Service, etc." Nina Olson, the National Taxpayer Advocate from 2001 until 2019, was a major proponent of a TBOR in the form of "a concise and explicit list of taxpayer rights and obligations"The IRS adopted the idea administratively in 2014 6. Congress then codified the same TBOR rights in Internal Revenue Code (IRC) Section 7803(a)(3).

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