Avi-Yonah: Taxation And Born-Again Progressives Like Larry Summers

Reuven Avi-Yonah (Michigan), Taxation and Born-Again Progressives:

In the fall of 2009, I attended the Tax Executives Institute meeting, where the tax directors of the largest U.S. corporations discuss ways to reduce their companies’ tax burden. The attendees were busy complaining about President Obama’s budget for 2010, which included several items that would increase their taxes. Suddenly, Daniel Mitchell, the co-founder of the Center for Freedom and Prosperity (a nonprofit organization that advocates for flat taxes, and offshore tax havens) announced wonderful news: He had met with Larry Summers (then the director of President Obama’s National Economic Council) in the White House, and Summers promised him that the biggest international tax revenue raiser in the Obama budget would not happen. And indeed, that provision, which would have cost U.S. multinationals $86 billion over a decade, disappeared from the Obama administration budget for 2011.

Now, the same Larry Summers would like to portray himself as a progressive. According to published articles, he and his former Ph.D. student (and frequent co-author) Natasha Sarin are both advising Joe Biden’s presidential campaign. It’s worth taking a close look at Summers’s prescriptions on taxes today.

In a January paper he co-authored for the Hamilton Project with Sarin and their research assistant Joe Kupferberg, they offer a “pragmatic approach” for making the tax system more progressive and reject the proposals of Sens. Bernie Sanders and Elizabeth Warren. They claim that their approach can raise over $4 trillion in 2020-2029. But a closer look at their proposals shows that theirs is not a progressive approach at all, and that it is unlikely to generate the revenues they claim. ...

[G]iven the projected $3.7 trillion deficit for 2020, we are likely to need much more than $4 trillion over the next decade. And much of it must come from taxing the rich and large corporations, in order to reduce inequality. Instead of supporting truly progressive ideas of how to do this, Summers and Sarin launched a scathing attack on Sens. Warren’s and Sanders’s tax proposals, especially the wealth tax. They also sharply criticize a proposal advanced by Sen. Ron Wyden to tax capital assets on a mark-to-market basis.

In fact, none of the Summers-Sarin critiques of the wealth tax or of mark-to-market are convincing. ...

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Barry & Burke: Ten Notable Corporate Tax Articles of 2014-2015

Jordan M. Barry (San Diego) & Karen C. Burke (Florida), A Brief Review of Corporate Tax Articles 2014-2015,  151 Tax Notes 207 (Apr. 11, 2016):

1. Reuven Avi-Yonah (Michigan), Corporate Taxation and Corporate Social Responsibility, 11 N.Y.U. J.L. & Bus. 1 (2014) (review by Kathleen DeLaney Thomas (North Carolina))
2. Steven Bank (UCLA), Historical Perspective on the Corporate Interest Deduction,’ 18 Chapman L. Rev. 29 (2014)
3. Joshua Blank (NYU), Reconsidering Corporate Tax Privacy, 11 N.Y.U. J.L. & Bus. 31 (2014)
4. Christopher Borek (Analysis Group, Inc.), Angelo Frattarelli (U.S. Department of Justice) & Oliver Hart (Harvard), Tax Shelters or Efficient Tax Planning? A Theory of the Firm Perspective on the Economic Substance Doctrine, 57 J. L. & Econ. 975 (2014)
5. Victor Fleischer (San Diego) & Nancy Staudt (Dean, Washington University), The Supercharged IPO, 67 Vand. L. Rev. 307 (2014)
6. Dick Harvey (Villanova), Corporate Tax Aggressiveness — Recent History and Policy Options, 67 Nat’l Tax. J. 831 (2014)
7. Stephanie Hoffer (Ohio State) & Dale Oesterle (Ohio State), Tax-Free Reorganizations: The Evolution and Revolution of Triangular Mergers, 108 Nw. U. L. Rev.
   1083 (2014)
8. Jeffrey Kwall (Loyola-Chicago) & Katherine Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 17 Fla. Tax Rev. 47 (2015)
9. Martin McMahon (Florida) & Daniel Simmons (UC-Davis), When Subchapter S Meets Subchapter C, 67 Tax Law. 231 (2014)
10. Adam Rosenzweig, A Corporate Tax for the Next One Hundred Years: A Proposal for a Dynamic, Self-Adjusting Corporate Tax Rate, 108 Nw. U. L. Rev. 1029 (2014)

Notable Corporate Tax Articles in prior years:

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Tax Panel at Today's Israeli Law & Society Association Annual Conference

Tax panel at today's Israeli Law and Society Association Annual Conference on Communities & Borders in Israel and the Global World:

From Local to Global: Tax Policy & Society in the 21th Century:

• Rifat Azam (IDC Herzeliya Faculty of Law, Israel), Tax Jurisprudence: "True Tax" and Human Rights in Israel's Supreme Court Rulings
• Mirit Cohen Eyal (Pittsburg Law School, USA), Legal Mirrors of (Tax) Entrepreneurship
• Sagit Leviner (SUNY-Buffalo, USA; Ono Academic College, Israel), The Intricacies of Tax & Globalization

NTA 106th Annual Conference on Taxation

The National Tax Association 106th Annual Conference on Taxation kicks off today in Tampa. Today's Tax Prof speakers include:

Behavioral Incentives, Tax Compliance, and Choice of Policy Instruments:

• Jacob Goldin (Princeton) (Organizer and Moderator)
• Brian Galle (Boston College), Regulation from the Inside Out: Nudges and Price Instrument Theory for Internalities and Externalities
• David Gamage (UC-Berkeley), On Double-Distortion Arguments, Distribution Policy, and the Optimal Tax Mix
• Shu-Yi Oei (Tulane), In Defense of Tax Priority
• Leigh Osofsky (Miami), Beyond Worst-First Tax Enforcement
• Discussants:  Kirk Stark (UCLA), Joel Slemrod (Michigan)

Corporate Taxation and Tax History:

• Steven Bank (UCLA) (Organizer and Moderator)
• Steven Bank (UCLA), When We Taxed the Pyramids
• Mirit Eyal- Cohen (Pittsburgh), Comparative History of the Immediate Expensing Rule
• Sloan Speck (NYU), “Trafficking” in Loss Corporations: The Dynamics of Public-Private Corporate Tax Administration, 1954–1962
• Discussant:  Sheldon Pollack (Delaware)

Emprical Studies of the Nonprofit Sector:

• Brian Galle (Boston College) (Organizer and Moderator)
• James Andreoni (UC-San Diego), Abigail Payne (McMaster) & Sarah Smith (Bristol), Do Grants to Charities Crowd Out Other Income? Evidence from the UK
• Brian Galle (Boston College) & David Walker (Boston University), Tax, Command … Or Nudge? Evaluating the New Regulation
• Benjamin Marx (Illinois), Tax Avoidance and Compliance Cost Sensitivity of Donations: Evidence from Regulation of Charitable Foundations
• Discussants: Joseph Rosenberg (Tax Policy Center), Jon Bakija (Williams), Dhammika Dharmapala (Illinois)

Nineteenth and Twentieth Century Tax History:

• Joseph Thorndike (Tax Analysts) (Moderator and Discussant)
• Reuven Avi-Yonah (Michigan), Who Invented the Single Tax Principle? An Essay of the History of U.S. Treaty Policy
• Sheldon Pollack (Delaware), The First National Income Tax, 1861–1872
• Larry Zelenak (Duke), The Almost-Restatement of Income Tax of 1954: When Tax Giants Roamed the Earth

Pathways to Tax Reform:

• James Nunns (Tax Policy Center) (Organizer)
• William Gale (Brookings Institution) (Moderator)
• Leonard Burman (Tax Policy Center),  The Bipartisan Policy Center Tax Reform Plan
• Robert Carroll (Ernst & Young) & Alan Viard (American Enterprise Institute), Progressive Consumption Taxation: The X Tax Revisited
• Michael Graetz (Columbia), A VAT as the Linchpin For Fundamental Tax Reform
• Discussant:  Pam Olson (PricewaterhouseCoopers)

Top 5 Tax Paper Downloads

There 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.  The #1 paper is now #35 in all-time downloads among 9,621 tax papers:

1.  [2044 Downloads]   Law and Finance: The Case of Constructive Sales, by Thomas J. Brennan (Northwestern)
2.  [618 Downloads]  Financial Planning for the Non-Retiree, by Richard L. Kaplan (Illinois)
3.  [308 Downloads]  Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Stephen J. Small (Law Office of Stephen J. Small)
4.  [265 Downloads]  Creating Cayman as an Offshore Financial Center: Structure & Strategy Since 1960, by Tony A. Freyer (Alabama) & Andrew P. Morriss (Alabama)
5.  [220 Downloads]  Transparent Predictions, by Tal Zarsky (University of Haifa)

National Tax Journal Publishes New Issue

The National Tax Journal has published Vol. 66, No. 1 (Mar. 2013):

• Justin M. Ross & Wenli Yan, Fiscal Illusion From Property Reassessment? An Empirical Test of the Residual View, 66 Nat'l Tax J. 7 (2013)
• Samara Gunter, State Earned Income Tax Credits and Participation in Regular and Informal Work, 66 Nat'l Tax J. 33 (2013)
• Thiess Buettner & Georg Wamser, Internal Debt and Multinational Profit-Shifting: Empirical Evidence From Firm-Level Panel Data, 66 Nat'l Tax J. 63 (2013)
• John William Hatfield, Revenue Decentralization, the Local Income Tax Deduction, and the Provision of Public Goods, 66 Nat'l Tax J. 97 (2013)
• Phuong Nguyen-Hoang, Tax Limit Repeal and School Spending, 66 Nat'l Tax J. 117 (2013)
• Kimberly A. Clausing, Who Pays the Corporate Tax in a Global Economy?, 66 Nat'l Tax J. 151 (2013)
• Jennifer Gravelle, Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis, 66 Nat'l Tax J. 185 (2013)
• Li Liu & Rosanne Altshuler, Mesauring the Burden of the Corporate Income Tax Under Imperfect Competitions, 66 Nat'l Tax J.215 (2013)
• Julie Anne Cronin, Emily Y. Lin, Laura Power & Michael Cooper, Distributing the Corporate Income Tax: Revised U.S. Treasury Methodology, 66 Nat'l Tax J. 239 (2013)
• Matthew Weinzierl, Book Review: From Optimal Tax Theory to Tax Policy: Retrospective and Prospective Views, 66 Nat'l Tax J. 263 (2013)

Abreu & Greenstein: A Better Way to Understand the Definition of Income

Alice G. Abreu (Temple) & Richard K. Greenstein (Temple), It’s Not a Rule: A Better Way to Understand the Definition of Income, 13 Fla. Tax Rev. 101 (2012):

In a recent article Professor Douglas Kahn explores a particular dissonance between the positive and very broad definition of income that includes all realized accessions to wealth, and what the government can and does actually attempt to tax. [Exclusion from Income of Compensation for Services and Pooling of Labor Occurring in a Noncommercial Setting, 11 Fla. Tax Rev. 683 (2011).] He then offers two limiting principles, which he posits operate as exclusions and thus eradicate the gap. Specifically, Professor Kahn suggests that the dissonance vanishes if we understand that “the income tax operates only on commercial transactions” and, as a corollary, that “joint efforts should not be treated as exchanges of services but rather as a jointly conducted activity,” which does not produce income “[w]hen the common goal has no business connection.” Professor Kahn derives these principles by examining a series of provocative hypothetical problems and suggests that these principles explain why a number of items that would seem to come within the broad positive definition of income are not in fact subject to tax despite the absence of a statutory exclusion.

In Defining Income [11 Fla Tax Rev. 295 (2011)], an article we recently published, we argued that the desire for theoretical precision that prompts articles such as Professor Kahn’s has led to a long tradition of interpreting the definition of income as a rule. We proposed as an alternative that the definition of income be thought of as a standard — specifically, that questions about whether a particular accession to wealth constitutes income be answered by employing an all-things-considered inquiry based on the values relevant to federal income tax. Our claim was that treating income as a standard effectively addresses the puzzling gap between what the broad positive definition of income would seem to include and what is actually taxed.

The commercial/noncommercial distinction that shapes Professor Kahn’s proposed principles functions as a rule. In this Essay we propose a thought experiment: What if we were to think about the problems Professor Kahn poses from the perspective of income-as-standard? Doing so would allow us to explore the utility of such an approach concretely. We therefore consider the precise issues Professor Kahn discusses, but use an income-as-standard approach. Having contrasted the two approaches, we return to the conclusion we reached in Defining Income: standards have important virtues that make them superior to rules for resolving some fundamental questions in federal income tax law. Contemporary tax analysis often assumes that all tax formulations are rules; we believe we have shown that while many are, income is not.

Atax eJournal of Tax Research Publishes New Issue

Volume 10, Issue 3 (Nov. 2012) of the eJournal of Tax Research, published by Atax (Australian Taxation Studies Program), University of New South Wales, Sydney, Australia, and edited by Binh Tran-Nam & Michael Walpole, is available on its web site:

• John Hasseldine, Kevin Holland & Pernill van der Rijt, Companies and Taxes in the UK: Actors, Actions, Consequences and Responses (p.532)
• Evgeny Guglyuvatyy, Australia’s Carbon Policy – A Retreat from Core Principles (p.552)
• Jonathan Barrett & John Veal, Land Taxation: A New Zealand Perspective (p.573)
• Nicole Wilson-Rogers, Reforming the Western Australian State Tax Anti-Avoidance Strategy (p.589)
• Dale Boccabella, An Ordered Approach to the Tax Rules for Problem Solving in a First Australian Income Taxation Law Course Can Improve Student Performance (p.621)

WSJ: How Mitt Romney Can Win the Tax Debate

Wall Street Journal editorial:  Romney's Middle-Class Tax Sale: How the Republican Can Win the Debate He's Now Losing by Default:

In this peculiar election year, President Obama is pulling off the small miracle—no, make that the kind of thing that happens in Lourdes—of winning the tax debate. This should be impossible, and Mitt Romney has to turn that around if he wants to win. ...

The main cause of this role reversal is that Mr. Obama has driven a relentless tax message—albeit a wildly deceptive one: That Mr. Romney is a sleeper agent who wants to raise taxes on middle-class families by $2,000 to finance tax cuts for him and his fellow tycoons. ...

As a factual matter, the claim is as bogus as any in years because Mr. Romney has proposed no such thing. The claim hangs on an August 1 report by the liberal Tax Policy Center that even its authors have since admitted was merely "stylized." The outfit's gnomes concluded that Mr. Romney's actual reform proposal—cutting rates across the board by 20%, combined with closing loopholes at the higher end—was "mathematically impossible." They then imagined multiple details for a "Romney" tax plan that existed only in their own minds and that would raise taxes among the lower brackets by $86 billion. ...

Amid this barrage, Mr. Romney has also played dumb, as in silent. Only this week has Boston rolled out a response ad to Mr. Obama's middle-class tax hike TV buy, which ran unanswered for a month in a half-dozen swing states. ...

This is modest progress, but Mr. Romney's larger failing is that he hasn't even tried to sell his own proposals, much less their broader pro-growth, practical and moral foundations. ... A better argument would begin by explaining how lower rates and a more efficient tax code—simpler, stabler, more transparent—would increase economic growth that would raise incomes for everyone. ...

[E]ven if he increased tax rates on the rich to 100%, Mr. Obama would still have to find more revenue to pay for his spending ambitions. This means he's inescapably going to have to tee up the middle class for a tax wallop unlike anything in U.S. history. Mr. Romney should say that, having taken federal spending to a quarter of GDP, a second Obama Administration would make a European-style value-added tax, carbon tax or another money maker inevitable.

So far this year's tax debate features one candidate with no credible plan running against a fake plan that his allies made up and another candidate with an admirable plan that for some reason he doesn't want to talk about. Mr. Obama is winning by default, but that doesn't mean Mr. Romney can't execute one of those turnarounds he's famous for, if he tries.

Postlewaite: Raising Revenue Through Misguided Classification Reform

Philip F. Postlewaite (Northwestern), Raising Revenue Through Misguided Classification Reform, 136 Tax Notes 1177 (Sept. 3, 2012):

Spending cuts and tax increases are omnipresent topics in the national conversation. As the search for tax revenue intensifies, various proposals for modifying the code have surfaced. The Obama administration and others recently have suggested that large passthrough entities be taxed as C corporations. That proposal reflects a misplaced emphasis on revenue generation rather than sound tax policy principles. If adopted, it would undercut the steady movement by Congress, Treasury, and the IRS over the past 30 years toward business tax neutrality through a single tax regime for all business forms. Also, the proposal would result in planning efforts to avoid its application by maintaining business receipts below the threshold for classification as a large enterprise. Further, it is uncertain whether it would generate significant revenue, given that the trigger for the second level of tax — the distribution of earnings to the owners of the enterprise — often is discretionary. When combined with the necessary grandfathering rules, the revenue effect may not be material. The proposal should therefore be rejected because it does not promote the tax policy goals of economic efficiency, simplicity, equity, and business tax neutrality.

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Isenbergh: Cliff Schmiff

Joseph Isenbergh (Chicago), Cliff Schmiff:

Dread of the “fiscal cliff,” widely apparent in public discourse on tax and fiscal policy, rests largely on an illusion: that the contractionary effect of unwinding public debt can be substantially avoided if it is carried out more gradually. In fact, the possibility of fiscal drag inheres in all reduction of public debt. The question is whether it can be mitigated by stepping away from the fiscal cliff and following some other path to public solvency. While a less painful resolution of our fiscal situation may be possible in theory, the policies floated of late in public pronouncements across the ideological spectrum are more harmful over time than simply falling off the cliff.

Top 5 Tax Paper Downloads

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

1.  [1411 Downloads]  Death and Taxes and Zombies, by Adam Chodorow (Arizona State)

2.  [441 Downloads]  Corporate Shams, by Joshua D. Blank (NYU) & Nancy C. Staudt (USC)

3.  [177 Downloads]  New Life for the Death Tax, by Elizabeth Ruth Carter (LSU)

4.  [176 Downloads]  Making Voluntary Disclosures to the IRS, by John A. Townsend (Houston)

5.  [91 Downloads]  The Empire Strikes Out: The IRS & The Ambiguities of Tax Accounting, by Luke R. Hornblower (J.D. 2012, Loyola-L.A.)

Poll: Your Favorite Tax Blog

The Tax Lawyer's Blog is running an online poll on Your Favorite Tax Blog among ten listed tax blogs (including TaxProf Blog).

Thanksgiving Eve Poll

For faculty and students: was your class cancelled today to get a jump on the Thanksgiving holiday?
	Yes
	No
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ABA Survey on Impact of Recession on Legal Profession

Take this two-minute survey on how you think the recession will affect the legal profession. Results will be published in the January issue of the ABA Journal.

Opinion Polls & Market Research

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Tax Exam Poll

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Have You Filed Your Tax Return Yet? 59% Say "Yes"

Here are the results of Tuesday's poll question:  Have You Filed Your Tax Return Yet.  Out of 276 responses:

• 59% have already filed their federal tax returns
• Of those who have not yet filed, 68% plan to file by April 17; 32% plan to get (or have already gotten) an extension
• Of those who have already filed, electronic filing beats paper filing, 60% v. 40%
• Of those who plan to file by April 17, paper filing beats electronic filing, 62% v. 38%

Public Opinion on Taxes

The American Enterprise Institute has published a new a new AEI Public Opinion Study, Public Opinion on Taxes, by AEI senior fellow Karlyn Bowman. From the press release:

Using available polling data, Bowman examines how attitudes toward paying taxes have changed over the past half century and what those attitudes are today. Among the highlights:

• The personal property tax is a bigger headache for most people than the federal income tax.
• Today, Democrats lead Republicans as the party better able to handle taxes, a significant change from the past.
• Pluralities of Americans think their taxes will go up under a Democratic or Republican president.
• When asked how much of total income should go to taxes, people put the number at 10-25%.
• Americans don't like the estate tax.
• Ratings of the IRS are up.

Have You Filed Your Tax Return Yet?

Have You Filed Your Tax Return Yet?
	Yes -- On Paper
	Yes -- Electronically
	No -- I Plan to File on Paper by April 17
	No -- I Plan to File Electronically by April 17
	No -- I've Already Gotten an Extension
	No -- I Plan to Get an Extension by April 17
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Results of Year-End Tax Planning Poll

Here are the results from Friday's poll of the Top 10 Year-End Tax Planning Moves:

TaxProf Poll: What Year-End Tax Planning Moves Did You Make?

What year-end tax moves did you make in December?
	Gift to charity
	Prepaid 2007 property tax
	Sold stock to generate capital loss
	Contributed to retirement plan
	Prepaid January mortgage payment
	Made medical/child care expenditures to drain FSA
	Purchased computer/other business equipment
	Made energy efficient home improvement
	Contributed to child's college savings
	None
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