Paul L. Caron
Dean


Wednesday, December 11, 2019

Blouin & Robinson: How Much Profit Of Multinational Enterprises Is Really In Tax Havens?

Jennifer Blouin (Penn) & Leslie A. Robinson (Dartmouth), Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?:

Putting an end to the base erosion and profit shifting (BEPS) activity of multinational enterprises (MNEs) is on the national agenda of nearly every country in the world. While many influential papers suggest that the scope and magnitude of the BEPS problem is quite large, we show that these magnitudes are likely overstated due to the accounting treatment of indirectly-owned foreign affiliates in the BEA’s U.S. international economic accounts data. We explain how this accounting treatment leads to double counting of foreign income and to misallocations to the incorrect jurisdiction. We demonstrate an appropriate correction, and show that the correction significantly reduces the magnitude of the BEPS estimates.

Tax Havens

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December 11, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Slemrod: Tax Compliance And Enforcement

Joel Slemrod (Michigan), Tax Compliance and Enforcement, 57 J. Econ. Lit. 904 (2019):

This paper reviews recent economic research in tax compliance and enforcement. After briefly laying out the economics of tax evasion, it focuses on recent empirical contributions. It first discusses what methodologies and data have facilitated these contributions, and then presents critical summaries of what has been learned. It discusses a promising new development—the analysis of randomized controlled trials mostly delivered via letters from the tax authority—and then reviews recent research using various methods about the impact of the principal enforcement tax policy instruments: audits, information reporting, and remittance regimes. I also explore several understudied issues worthy of more research attention. The paper closes by outlining a normative framework based on the behavioral response elasticities now being credibly estimated that allow one to assess whether a given enforcement intervention is worth doing.

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December 11, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, December 10, 2019

The Tax Lawyer Publishes New Issue

The Tax Lawyer has published Vol. 73, No. 1 (Fall 2019):

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December 10, 2019 in ABA Tax Section, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

2019 Tannenwald Tax Writing Competition Winners

Tannenwald (2016)The Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship has announced the winners of the  2019 tax writing competition:

First Prize ($5,000):
Christine Davis (Florida), More Anti-Simplification: PTI and GILTI After the Tax Cuts and Jobs Act
Faculty Sponsor:  Mindy Herzfeld

Second Prize ($2,000):
Alexandra Ferrera (NYU), Incentivizing the Care of Adult Family Members Through a Two-Part Tax Credit
Faculty Sponsor:  Lily Batchelder

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December 10, 2019 in ABA Tax Section, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  This ranking includes downloads from two 30- and 35-page papers by 12 tax professors on the 2017 tax legislation that garnered a lot of media attention (including the New York Times and Washington Post) and generated a massive amount of downloads (the papers are the most downloaded tax papers of all-time by over 200%).  See Brian Leiter (Chicago), 11 Tax Profs Blow Up The SSRN Download Rankings. (For some reason, Mitchell Kane (NYU) — the twelfth academic co-author of the two papers — is not included in the SSRN download rankings (although the downloads are included on his individual author page)).  Here is the new list (through December 1, 2019) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

    All-Time   Recent
1 Reuven Avi-Yonah (Michigan)  187,160 Reuven Avi-Yonah (Michigan) 8,109
2 Dan Shaviro (NYU) 119,716 David Kamin (NYU) 5,766
3 David Gamage (Indiana-Bloom.) 115,552 Lily Batchelder (NYU) 5,753
4 Lily Batchelder (NYU) 114,993 Daniel Hemel (Chicago) 5,600
5 Daniel Hemel (Chicago) 114,323 David Gamage (Indiana-Bloom.) 4,260
6 Darien Shanske (UC-Davis) 109,145 Dan Shaviro (NYU) 4,084
7 Cliff Fleming (BYU) 104,102 Darien Shanske (UC-Davis)  3,784
8 David Kamin (NYU) 103,554 Ari Glogower (Ohio State) 3,632
9 Manoj Viswanathan (UC-Hastings) 101,342 Manoj Viswanathan (UC-Hastings) 3,544
10 Rebecca Kysar (Fordham) 100,266 Cliff Fleming (BYU) 3,186
11 Ari Glogower (Ohio State) 98,966 Rebecca Kysar (Fordham)  3,180
12 Michael Simkovic (USC) 43,708 Bridget Crawford (Pace) 3,056
13 D. Dharmapala (Chicago) 37,884 Richard Ainsworth (BU) 2,472
14 Paul Caron (Pepperdine) 36,173 Brad Borden (Brooklyn) 2,399
15 Louis Kaplow (Harvard) 32,498 D. Dharmapala (Chicago) 2,167
16 Richard Ainsworth (BU) 28,689 Michael Simkovic (USC) 2,103
17 Ed Kleinbard (USC) 26,261 Ruth Mason (Virginia) 1,998
18 Vic Fleischer (UC-Irvine) 25,827 Robert Sitkoff (Harvard) 1,941
19 Jim Hines (Michigan) 24,786 Louis Kaplow (Harvard) 1,936
20 Gladriel Shobe (BYU) 24,093 Kyle Rozema (Chicago) 1,868
21 Ted Seto (Loyola-L.A.) 23,853 Hugh Ault (Boston College) 1,847
22 Richard Kaplan (Illinois) 23,556 Yariv Brauner (Florida) 1,675
23 Brad Borden (Brooklyn) 23,693 Margaret Ryznar (Indiana-Indy) 1,316
24 Robert Sitkoff (Harvard) 23,365 Paul Caron (Pepperdine)   1,304
25 Katie Pratt (Loyola-L.A.) 22,751 George Yin (Virginia) 1,233

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December 10, 2019 in Scholarship, Tax, Tax Prof Rankings, Tax Rankings, Tax Scholarship | Permalink | Comments (0)

Monday, December 9, 2019

Blank And Osofsky Present Automated Legal Guidance Today At Boston University

Joshua Blank (UC-Irvine) and Leigh Osofsky (North Carolina) present Automated Legal Guidance at Boston University today as part of its Tax Policy Colloquium hosted by David Walker:

Blank OsofskyThe use of artificial intelligence as an aid to law enforcement has received significant attention from legal scholars.  For instance, the introduction of machine learning to identify likely crime hot spots has caused scholars to consider questions such as how to apply Fourth Amendment standards, how to prevent racial discrimination and how to preserve transparency and accountability.  On the other hand, scholars have not addressed the government’s increasing use of artificial intelligence for another purpose—providing guidance to the public regarding legal entitlements and obligations.  For example, the Internal Revenue Service encourages taxpayers to seek answers regarding various tax credits and deductions not from human IRS representatives, but rather from its online “Interactive Tax Assistant.”  Likewise, the U.S. Army directs individuals with questions about enlistment to its virtual guide, “Sgt. Star,” and the U.S. Citizenship and Immigration Services suggests that potential green card holders and citizens speak with its interactive chatbot, “Emma.”

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December 9, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Oh Presents Wealth Tax Design: Lessons From Estate Tax Avoidance At San Diego

Jason Oh (UCLA) presented Wealth Tax Design: Lessons from Estate Tax Avoidance (with Eric Zolt (UCLA)) last Thursday at San Diego as part of its Tax Law Speaker Series hosted by Jordan Barry and Miranda Perry Fleischer:

OhPresidential candidates Elizabeth Warren and Bernie Sanders have both proposed ambitious new annual wealth taxes based on academic work by Emmanuel Saez and Gabriel Zucman. They project these proposals to raise trillions of dollars over the next ten years. Some critics challenge the Saez-Zucman approach to measuring wealth concentration. Other critics including Larry Summers and Natasha Sarin have used data from estate tax returns and the relatively small amount of revenue the estate tax raises to question the revenue projections of these proposals. This comparison can be useful only if one thinks carefully about specific estate tax strategies and how these strategies translate to an annual wealth tax. This article engages in that exercise. When one takes a closer look at estate tax avoidance and how it maps onto an annual wealth tax, a much more complex narrative emerges.

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December 9, 2019 in Colloquia, Scholarship, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: Taxpayers Behaving Badly (2019)

Santa ClausThis will be my last post until January.  I will be spending my days (except for Christmas Day) grading exams.  Grades are due Friday January 3rd so I hope to have my next post done for January 6th. 

For the second year, my last blog of the year is a roundup of the cases I read during 2019 where something in the facts made me just shake my head (SMH in texting parlance).  I present them to you now, in chronological order, and I invite you to consider which of the following cases may be examples of just an empty head and which are examples of something worse. [Lesson From The Tax Court: Taxpayers Behaving Badly (2018)]

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December 9, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure | Permalink | Comments (1)

Saturday, December 7, 2019

Measuring The 1%: Economists Are Rethinking The Numbers On Inequality

The Economist, Measuring the 1%: Economists Are Rethinking the Numbers on Inequality:

Economist Logo (2015)An academic disagreement has big real-world implications

Over a decade before thousands of protesters gathered in Zuccotti Park in New York in 2011, a little-known researcher in France sat down to write about income inequality in a new way. “The focus of our study consists in comparing the evolution of the incomes of the top 10%, the top 1%, the top 0.5%, and so on,” Thomas Piketty wrote in a paper in 1998. With his long-term co-author, Emmanuel Saez, Mr Piketty pioneered the use of tax data over survey data, thereby doing a better job of capturing the incomes of the richest. He revealed that “the 1%” had made out like bandits at the expense of “the 99%”. His research gave Occupy Wall Street its vocabulary.

What followed was an explosion of research into the causes and consequences of a surge in inequality across the rich world. In “Capital in the Twenty-First Century”, a bestseller first published in 2013, Mr Piketty argued that under capitalism rising inequality was the normal state of affairs.

Mr Piketty’s research, and more like it, became part of the political discourse in America and much of the West. Two leading candidates for the Democratic nomination for the American presidency, Elizabeth Warren and Bernie Sanders, have proposed taxes on wealth to tackle inequality—pledges cheered on by Mr Saez and Mr Piketty’s other co-author, Gabriel Zucman. In a new book, “Capital and Ideology” (currently available only in French) Mr Piketty calls for a 90% tax on wealth, such is the scale of the inequality crisis. ...

Yet just as ideas about inequality have completed their march from the academy to the frontlines of politics, researchers have begun to look again. And some are wondering whether inequality has in fact risen as much as claimed—or, by some measures, at all.

It is fiendishly complicated to calculate how much people earn in a year or the value of the assets under their control, and thus a country’s level of income or wealth inequality. Some people fail to complete government surveys; others undercount income on their tax returns. And defining what counts as “income” is surprisingly difficult, as is valuing assets such as unquoted shares or artwork. Legions of academics, not to mention government officials and researchers in think-tanks, are devoted to unpicking these problems.

The conventional wisdom to have emerged from these efforts revolves around four main points. First, over a period of four to five decades the incomes of the top 1% have soared. Second, the incomes of middle-earners have stagnated. Third, wages have barely risen even though productivity has done so, meaning that an increasing share of gdp has gone to investors in the form of interest, dividends and capital gains, rather than to labour in the form of wages. Fourth, the rich have reinvested the fruits of their success, such that inequality of wealth (ie, the stock of assets less liabilities such as mortgage debt) has risen, too.

Each argument has always had its doubters. But they have grown in number as a series of new papers have called the existing estimates of inequality into question.

Start with top incomes. ... [A] recent working paper by Gerald Auten and David Splinter, economists at the Treasury and Congress’s Joint Committee on Taxation, respectively, reaches a striking new conclusion [Income Inequality in the United States: Using Tax Data to Measure Long-term Trends (presentation here)]. It finds that, after adjusting for taxes and transfers, the income share of America’s top 1% has barely changed since the 1960s (see chart 1) [more here].

Economist

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December 7, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (4)

Friday, December 6, 2019

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Sutherland's Cryptocurrency Economics And The Taxation Of Block Rewards

This week, Young Ran (Christine) Kim (Utah) reviews a new work by Abraham Sutherland (Virginia), Cryptocurrency Economics and the Taxation of Block Rewards, Part 1 in 165 Tax Notes 749 (Nov. 4, 2019), Part 2 in 165 Tax Notes 953 (Nov. 11, 2019).

6a00d8341c4eab53ef022ad3a74c80200d-300wi (1)Blockchain, which is the technology behind cryptocurrency, is gradually achieving mainstream adoption. On October 28, 2019, the Securities and Exchange Commission authorized a blockchain startup's pilot project where blockchain will be used to settle trades in stock such as GE and AT&T. This project may challenge the securities trading system for clearing and settlement that has been monopolized by the U.S. Central Depository Agency (DTCC). However, the tax community still has a long way to go in the realm of cryptocurrency, not to mention the underlying blockchain technology, because there are many unresolved issues related to the tax consequences of cryptocurrency. IRS Notice 2014-21 provides that cryptocurrency is not currency—rather, it would be taxed as intangible property and should be included in gross income when received. Recently, IRS Rev. Rul. 2019-24 and FAQ on virtual currency transactions clarify the tax treatment of hard forks and airdrops. To be specific, the splitting of a cryptocurrency under a "hard fork" does not create taxable income if no new cryptocurrency is received, but taxable income is generated by "airdrops" that deliver new cryptocurrency. Nonetheless, the IRS has again punted other long-awaited issues, such as the valuation of cryptocurrency and the foreign reporting requirement.

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December 6, 2019 in Christine Kim, Scholarship, Tax, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Capital Gains Taxation And Investment Dynamics

Sungki Hong (Federal Reserve Bank of St. Louis) & Terry S. Moon (University of British Columbia), Capital Gains Taxation and Investment Dynamics:

This paper quantifies the long-run effects of reducing capital gains taxes on aggregate investment. We develop a dynamic general equilibrium model with heterogeneous firms, which face discrete capital gains tax rates based on their firm size. We calibrate our model by targeting relevant micro moments as well as the difference-in-differences estimate of the capital elasticity based on the institutional setting and a policy reform in Korea. We find that the firm-size reform that reduced the capital gains tax rates from 24 percent to 10 percent for the affected firms increased aggregate investment by 2.6 percent and 1.7 percent in the short-run and in the steady state, respectively. Additionally, in a counterfactual analysis where we set the uniformly low tax rate of 10 percent, the aggregate investment rose by 6.8 percent in the long-run.

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December 6, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (5)

Thursday, December 5, 2019

Satterthwaite: Gender Belongs At The Center Of Tax Policy Debates About Inequality

Emily Satterthwaite (Toronto), A Do-Over For The Tax Unit (JOTWELL) (reviewing Margherita Borella (University of Torino), Mariacristina De Nardi (University College London) & Fang Yang (Louisiana State University), Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?):

Jotwell (2020)There has been a surge in empirical literature examining gendered patterns of behavior and outcomes across numerous economic contexts, especially choices within and across families. Relatively little of it has focused explicitly on how the basic structure of our tax laws interacts with and influences such choices. Encouragingly, a recent working paper by Margherita BorellaMariacristina De Nardi, and Fang Yang does exactly that.

Borella, De Nardi, and Yang (BD&Y) study two key policies within the U.S. tax-transfer system: joint income tax filing for married couples and access to Social Security benefits for spouses. The joint income tax filing rule means that a married secondary earner will owe income tax at the marginal rate established by “stacking” her income on her spouse’s income, which generally is a higher rate than would apply if the secondary earner was single. Social Security benefits also increase to account for an earner’s spouse, but do not increase to account for an earner’s unmarried partner.

Both of these policies are gender-neutral on face; however, the background conditions under which they operate are not. ...

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December 5, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

Brooks: The Ethical Tax Judge

Kim Brooks (Dalhousie University, Schulich School of Law), The Ethical Tax Judge, in Ethics and Taxation (Robert van Brederode ed., Springer 2020):

Ethics TaxThis chapter advances the claim that judges have an ethical obligation of competence that requires them to enhance their knowledge about language (in the context of statutory interpretation) and income tax law design and policy. It articulates some of the foundational understandings that support that competence and provides a simple hierarchy of approaches to interpreting income tax law. It concludes by contending that greater competence is not only more ethical but also advances other important societal goals fulfilled by the imposition of income tax systems. ...

Ultimately, judges should seek to interpret income tax legislation in a fashion that respects our interdisciplinary understanding of how words are used to express ideas and supports the effective functioning of income tax legislation.

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December 5, 2019 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Herzfeld: US Tax Reform And EU ATAD: Can GILTI + BEAT = GLOBE?

Mindy Herzfeld (Florida), Debate on the US Tax Reform and the EU ATAD: Can GILTI + BEAT = GLOBE?, 49 Intertax 504 (2019):

The OECD is moving forward with consideration of a minimum tax as part of its solution to taxation of the digital economy. Part of a template for such a minimum tax may be the version enacted by the United States in 2017 as an expansion of its Controlled Foreign Corporation (CFC) regime, known as Global Intangible Low Taxed Income (GILTI). But the OECD version will undoubtedly be different from the US iteration. It’s likely that it would also include some aspects of a minimum tax being proposed by other OECD members such as Germany and France, namely a tax on outbound payments, in addition to a CFC-type regime. The United States also enacted an outbound minimum tax in 2017, known as Base Erosion Anti-Abuse Tax (BEAT). The two-part minimum tax being pursued by the OECD — a minimum tax based on a CFC regime plus an outbound minimum tax that’s a variation on the BEAT — has been referred to as GLOBE (global anti erosion) (See S. Soong Johnston, Germany, France Explore GLOBE Proposal to Tax Digital Economy, 92 Tax Notes Int’l 782 (2018)).

This article summarizes the two features of the US 2017 tax reform (known as the Tax Cuts & Jobs Act (TCJA) ... that may be incorporated into a global minimum tax, namely GILTI and BEAT, from the perspective of how such provisions might be adapted to work in a global setting.

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December 5, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Shanske & Gamage: States Should Conform To GILTI, Part 3

Darien Shanske (UC-Davis) & David Gamage (Indiana), States Should Conform to GILTI, Part 3: Elevator Pitch and Q&A, 94 State Tax Notes 121 (Oct. 14, 2019):

This essay argues that the states should conform to the post-2017 federal tax law's provision for Global Intangible Low-Taxed Income (or “GILTI”). This essay is directed at state legislators and their staffs and presents the argument as succinctly as possible. Our argument can be summarized in three sentences. First, states should conform to GILTI because there is significant evidence that profit shifting is substantially eroding their corporate tax bases. Second, GILTI is a tool for identifying shifted profits. Third, there are many legally and analytically sound ways to apportion GILTI income to a state. We also — briefly — counter the standard objections to state conformity with GILTI.

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December 5, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, December 4, 2019

Schizer Presents Getting More Out Of Nonprofit Subsidies: Measuring Success And Better Disclosure Today At Penn

David M. Schizer (Columbia) presents Getting More out of Nonprofit Subsidies: Challenges in Measuring Success and the Need for Better Disclosure at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Schizer (2016)The U.S. nonprofit sector spends $2.54 trillion each year, and benefits from billions of dollars in tax subsidies. If this sector was a country, it would have the eighth largest economy in the world — behind Britain and France, and ahead of Brazil, Italy, Canada, and Russia. How can we encourage nonprofits to allocate resources more efficiently, so they pursue socially valuable missions with impactful and cost-effective programs? To answer these questions, this Article makes two contributions to the literature.

First, this Article breaks new ground in explaining why efficient resource allocation is harder at nonprofits. To account for this inefficiency, the literature invokes their inability to distribute profits; if no one can keep these profits, no one is motivated to maximize them. In contrast, this Article argues that inefficiencies can arise at nonprofits not only because charities cannot distribute profits but, more fundamentally, because they are not trying to earn profits to begin with. So instead of measuring success with profitability, which is fairly straightforward, nonprofits have to use proxies for social return that are hard to measure or unreliable (or both). This difficulty in tracking progress is familiar, but it has an important implication for governance that is new to the literature: when success is hard to measure, inefficient practices are less visible, and thus are harder to stop.

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December 4, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Glogower & Kamin: Sheltering Income Through a Corporation

Ari D. Glogower (Ohio State) & David Kamin (NYU), Sheltering Income Through a Corporation, 164 Tax Notes 507 (July 22, 2019):

In this article, Glogower and Kamin respond to Michael S. Knoll’s recent argument that the Tax Cuts and Jobs Act creates “very close to a level playing field” between passthrough and corporate entities, and they explain why some high-income owners may achieve tax savings by using corporations.

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December 4, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Johnson: Counterpoint: A Sur-Rebuttal To Professor Jensen On The Constitutionality Of An Unapportioned Wealth Tax

Calvin H. Johnson (Texas), Counterpoint: A Sur-Rebuttal to Professor Jensen on the Constitutionality of an Unapportioned Wealth Tax, 39 ABA Tax Times 1 (Nov. 2019):

The Constitution requires that direct taxes must be apportioned among the states by population. Under Hylton v. United States (1796), if apportionment is not reasonable, the tax is not direct and apportionment is not required. If the tax base per capita is equal among the states, then apportionment by population yields uniform rates across the states, which is a just rule.

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December 4, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, December 3, 2019

Lockwood Presents The Optimal Taxation Of Lotteries Today At UC-Berkeley

Benjamin B. Lockwood (Wharton) presents The Optimal Taxation of Lotteries (with Hunt Allcott (NYU) & Dmitry Taubinsky (UC-Berkeley)) at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Lockwood 2Publicly-administered lotteries in the U.S. collect more than $70 billion annually in revenues, and are alternatively viewed as either a regressive tax on consumers who misunderstand their low expected value, or as a sensible way to raise revenue for public goods while generating consumer surplus. We study optimal lottery policy as a question of optimal taxation, in which lotteries are a taxed good whose consumers may be subject to behavioral biases. We derive a new sufficient statistics formula for the optimal regulation of product attributes, which guides our empirical analysis. We then estimate key statistics using historical lottery sales, prize data, and a large new nationally representative survey. Our findings suggest demand is highly responsive to ticket price and the expected value of top prizes, but not to the expected value of smaller prizes. We also estimate the share of lottery consumption that can be attributed to behavioral biases.

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December 3, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Blank Presents Progressive Tax Procedure Today At NYU

Joshua Blank (UC-Irvine) presents Progressive Tax Procedure (with Ari Glogower (Ohio State)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

6a00d8341c4eab53ef0240a4467a28200c-300wiAbusive tax avoidance and tax evasion by high-income and wealthy taxpayers pose unique threats to the tax system. These strategies undermine the tax system’s progressive features and distort its distributional burdens. Responses to this challenge generally fall within two categories: calls to increase IRS enforcement and proposals to target the specific strategies that enable tax avoidance and evasion by these taxpayers. For example, taxpayers who engage in certain tax shelter transactions or hold assets abroad face additional compliance obligations and potential tax penalties.

This Article presents the case for “progressive tax procedure” — means-based adjustments to the tax procedure rules as they apply to high-income and wealthy taxpayers. In contrast to the activity-based responses in current law, progressive tax procedure would tailor rules to the characteristics of the actors rather than their activities. Instead of focusing exclusively on specific potentially abusive activities, such as “reportable transactions,” progressive tax procedure would adjust tax procedure rules based on the taxpayer’s income or net assets. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies than other taxpayers.

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December 3, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Schön: Abuse Of Law In European Taxation

Wolfgang Schön (Max Planck), The Concept of Abuse of Law in European Taxation: A Methodological and Constitutional Perspective:

In two recent cases “T Danmark” and “N Luxembourg 1” the European Court of Justice delivered landmark judgments on the impact of the concept of “abuse of law” in the area of taxation. In these judgments the Court promoted the recurrent notion that “European law cannot be relied up-on for abusive or fraudulent ends” to the rank of a “general principle” of European law in matters of direct taxation. This has a profound effect on the legal framework for taxpayers and tax authorities as such a “general principle” has the power to override both secondary EU law and national tax legislation. According to the Court, it has to be applied irrespective of conflicting provisions in EU tax directives and without any explicit basis under domestic tax law.

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December 3, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, December 2, 2019

Osofsky: Constructing Doctrines For Modern Tax Legislative Realities

Leigh Osofsky (North Carolina), Constructing Doctrines For Modern Legislative Realities (JOTWELL) (reviewing Jesse M. Cross (South Carolina), The Staffer's Error Doctrine, 56 Harv. J. on Legis. 83 (2019)):

Jotwell (2020)In recent years, legal scholars have begun to focus in earnest on the realities of the legislative process. Just to name a few topics, this research has included studies about congressional drafting and canonsagency involvement in legislative draftinghow legislative drafting has changed over timehow statutory drafters make discrete drafting decisions, and much more. Understanding these realities is essential to how we use, and make meaning of, the statutes that pervade our legal system.

Jesse Cross’s recently published article, The Staffer’s Error Doctrine, is an important contribution to this body of work. In this article, Cross provides a deep account of how Congress has come to rely upon what Cross calls a “staffer delegation model.” Cross explains that Congress has not always relied so extensively on congressional staff to draft legislation. Rather, Congress previously used a mix of committees and delegation to agencies. Cross argues that concern over executive power, along with expanded internal bureaucracy, has prompted Congress instead to increasingly turn to an army of congressional staffers to draft legislation. As Cross explores, members of Congress have acknowledged that this turn to staffers gives staffers not only clerical tasks, but also significant power to make policy through legislation. And, as Cross persuasively argues, this is a systematic byproduct of a Constitution that creates generalist legislators, notwithstanding a world that increasingly requires subject-matter experts to create good law. ...

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December 2, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Lesson From The Tax Court: How The Court Reviews Whistleblower Office Decisions

Tax Court (2017)Everyone, myself included, tends to refer to “the” IRS as if it is a sentient being.  We all know, however, that there is no such being.  Rather, the IRS is composed of many employees grouped together in different offices that perform different functions with various degrees of elan or despair.  It is the connections and coordination between these offices that make up “the” IRS.

Normally that distinction in not important.  But proved critical in last week’s case of Richard E. Lacey v. Commissioner, 153 T.C. No. 8 (Nov. 25, 2019).  There the Tax Court was asked whether it had jurisdiction to review the refusal of the IRS Whistleblower Office (WBO) to send whistleblower information to the Exam function.  The majority said yes.  The language of §7623(b)(4) gives the Tax Court jurisdiction to review any work product produced by the WBO.  Four Judges disagreed.  In their view, the statute does not permit review of decisions on whether or not to open exams in the first place, and that is true regardless of whether such decision is made by the WBO or by the relevant Exam function.  To the dissent, Tax Court review power turns on the functional nature of the work product and not the formality of the issuing office.   To the dissent, the IRS is the IRS.  To the majority, the IRS is sometimes discrete offices.

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December 2, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, December 1, 2019

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. SSRN Logo (2018) [336 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
  2. [296 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
  3. [213 Downloads]  Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, by Ruth Mason (Virginia)
  4. [186 Downloads]  2018 Developments in Connecticut Estate and Probate Law, by Jeffrey Cooper (Quinnipiac) & John Ivimey (Reid and Riege, Hartford)
  5. [149 Downloads]  An Empirical Study of Statutory Interpretation in Tax Law, by Jonathan Choi (NYU)

December 1, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, November 29, 2019

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Education Has Been 'Dumbed Down' In Tax Reform

This week, Michelle Layser (Illinois) reviews Melanie McCoskey (Akron) and Doron Narotzki (Akron), Education Has Been “Dumbed Down” in Tax Reform, 22 Fla. Tax Rev. (2019)

Layser (2018)

This Thanksgiving, when my cousin raised the subject of gigantic college endowments, my mind went straight to tax (as it does). Coincidentally, I had just read an essay by Professors Melanie McCoskey and Doron Narotzki about recent tax law changes affecting higher education. So, about those college endowments.

The Tax Cuts and Jobs Act introduced a new excise tax on private colleges with large endowments (I.R.C. § 4968). The tax, which applies to colleges with endowments of at least half a million dollars per student, equals 1.4% of their net investment income. Relatively few colleges are hit by the tax, and the authors include a list of the 25 that were. There aren’t many shockers on the list, but some may be surprised to learn which schools are not listed. The bottom line: to get hit by this tax, a school’s endowment not only needs to be gigantic, but it needs to be really gigantic.

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November 29, 2019 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink | Comments (1)

Wednesday, November 27, 2019

Maynard Presents Converting Student Loans (And Other Aid Programs) To Cash Grants Today At Toronto

Goldburn P. Maynard Jr. (Louisville) presents Hold on to Your Student Loan . . . I’ll Take the Cash Instead at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Maynard (2019)The federal government has finally admitted what some knew and others suspected: the federal student loan program is veering into hot mess territory. At the end of January, the U.S. Department of Education’s (DOE) Office of Inspector General released its final audit report (OIG Report) regarding the cost of income-driven repayment (IDR) plans and loan forgiveness programs. The report gave a stark assessment: “Decision makers and others may not be aware of the growth in the participation in these IDR plans and loan forgiveness programs and the resulting additional costs. They also may not be aware of the risk that, for future loan cohorts, the Federal government and taxpayers may lend more money overall than is repaid from borrowers.“ Although federal student aid programs have been blessed by legislators and presidents and reauthorized over several decades the intricacies of their impact have been little known by those in Congress.

The OIG Report confirmed what scholars had warned about in previous years: the costs of the IDR and loan forgiveness programs had been vastly underestimated. Even more troubling is the fact that their benefits disproportionately accrue to borrowers with high incomes who attend expensive institutions. The intent of this federal program was both honorable and well-meaning, as most subsidies are, but the result should not be a surprise. Every policymaker worth her salt knows that government programs are subject to the law of unintended consequences. First developed by Robert K. Merton, the law of unintended consequences states that unanticipated or unintended effects invariably result from human action, most often government action in the form of legislation and regulation.

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November 27, 2019 in Colloquia, Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Miller, Webb & Koh: The Democratic Tax Proposals

David S. Miller, Sean Webb & Bowon Koh (Proskauer, New York), The Democratic Tax Proposals

Miller

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November 27, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, November 26, 2019

Paul Presents A Re-Examination Of The ‘Helen of Troy’ Regulations Today At NYU

Deborah L. Paul (Wachtell, Lipton, Rosen, and Katz, New York) presents Has Helen’s Ship Sailed? A Re-Examination of the ‘Helen of Troy’ Regulations at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Paul 4On January 5, 1994, Helen of Troy Corporation announced a special meeting of shareholders to vote upon an exchange agreement pursuant to which Helen of Troy Corporation would be acquired by Helen of Troy Limited. Helen of Troy Corporation was incorporated in Texas, while Helen of Troy Limited was organized in Bermuda. The Bermuda company was, in the words of the proxy, “formed to facilitate the change of domicile” of the Texas company.1 Three months later, on April 18, 1994, the Internal Revenue Service released Notice 94-462 causing shareholder gain to be recognized under Section 367(a) in outbound stock-for-stock transactions along the lines that Helen of Troy contemplated. The Internal Revenue Service (“IRS”) perceived a threat to the corporate tax base, stating that it had become “concerned that widely-held U.S. companies with foreign subsidiaries recently have undertaken restructurings for tax-motivated purposes.

The release of Notice 94-46 was a pivotal moment. Prior to that time, Section 367(a) had not expressly been used to protect against erosion of the domestic corporate tax base. By the same token, since that time, a host of protections against erosion of the domestic corporate tax base via corporate expatriations have been enacted or promulgated. The time is ripe to reexamine the role of Section 367(a) in protecting against corporate base erosion. ...

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November 26, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Devereux & de la Feria: Designing And Implementing A Destination-Based Corporate Tax

Michael P. Devereux (Oxford) & Rita de la Feria (University of Leeds), Designing and Implementing a Destination-Based Corporate Tax:

The current international tax system based upon the principles of source and residence is no longer suited to a globalised world economy, and the fundamentals of the international tax system need to be re-examined. An R+F based cash-flow tax based on the principle of destination has been proposed as a suitable alternative to taxing corporations in an international setting. The aim of this paper is to discuss the legal and practical issues which would arise in the implementation of such a tax, namely how a destination-based tax could be effectively designed and implemented. For this purpose we draw on experiences with designing VAT systems worldwide. It is proposed that the destination principle should be implemented through use of the customers’ location as the main legal proxy.

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November 26, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Forman: Fully Funded Pensions

Jonathan Barry Forman (Oklahoma), Fully Funded Pensions, 103 Marquette L. Rev. __ (2020):

At retirement, workers want to have enough income to support themselves throughout their retirement years. In that regard, financial planners often suggest that retiring workers should aim to replace 70 to 80 percent of their annual preretirement earnings. Social Security benefits typically replace around 35 percent of the typical worker’s preretirement earnings, and the purpose of this Article is to show how pensions could and should be designed to replace, say, 40 percent of the typical worker’s preretirement earnings throughout her retirement years. In particular, because so many public and private pension plans are underfunded, this Article is focuses on how to fully fund those pensions.

At the outset, Part II provides an overview of Social Security, pensions, annuities, and other lifetime income mechanisms. In particular, Part II explains how Social Security works, how traditional pensions work, and how newer 401(k) plans and individual retirement accounts (IRAs) work.

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November 26, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, November 25, 2019

Moon Presents Capital Gains Taxes And Real Corporate Investment Today At UC-Berkeley

Terry S. Moon (British Columbia) presents Capital Gains Taxes and Real Corporate Investment at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

MoonThis paper assesses the effects of capital gains taxes on investment by exploiting a unique institutional setting in Korea, where the capital gains tax rates vary by firm size. I use a difference-in-differences design that compares the outcomes of firms whose tax rates were reduced, due to an unanticipated reform in 2014, to the outcomes of unaffected firms. I find that firms whose capital gains tax rates dropped from 24 percent to 10 percent increased investment by 48 log points, with the implied medium-run elasticity of 2.6 with respect to the net of tax rate, and increased newly issued equity by 5 cents per dollar of lagged revenue. The effects of the tax cut were larger for firms that appeared more cash-constrained, suggesting that these firms faced a higher marginal cost of investment, and for firms that appeared to have more agency conflicts. Taken together, these findings are consistent with a class of the “traditionalview” models predicting that lower capital taxes spur equity-financed investment by increasing the marginal returns on investment.

November 25, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: The Scope And Standard Of Review In CDP Cases

Tax Court (2017)Many Tax Court cases teach lessons about Collection Due Process (CDP).  The case of Norman Hinerfeld v. Commissioner, T.C. Memo. 2019-47 (May 2, 2019) (Judge Halpern), teaches a nice lesson about how the Tax Court reviews IRS CDP decisions.  It illustrates the difference between the concepts of “scope” of review and “standard” of review.  And it introduces readers to the wacky world of tax administrative law which, must to the consternation of those academics who like their law neat and tidy, is anything but neat and tidy.  More below the fold.

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November 25, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (3)

Call for Papers: Michigan Junior Scholars’ Conference

Michigan Law School has issued a Call for Papers for its 6th Annual Junior Scholars' Conference:

Michigan Law Logo (2015)The University of Michigan Law School invites junior scholars to attend the 6th Annual Junior Scholars Conference, which will be held on April 17-18, 2020, in Ann Arbor, Michigan. The conference provides junior scholars with a platform to present and discuss their work with peers, and to receive detailed feedback from senior members of the Michigan Law faculty. The Conference aims to promote fruitful collaboration between participants and to encourage their integration into a community of legal scholars. The Junior Scholars Conference is intended for academics in both law and related disciplines. Applications from graduate students, SJD/PhD candidates, postdoctoral researchers, lecturers, teaching fellows, and assistant professors (pre-tenure) who have not held an academic position for more than four years, are welcomed.

Applications are due by January 3, 2020.

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November 25, 2019 in Conferences, Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (0)

Sunday, November 24, 2019

The Top Five New Tax Papers

There is a quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

  1. SSRN Logo (2018) [308 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
  2. [289 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
  3. [210 Downloads]  Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, by Ruth Mason (Virginia)
  4. [180 Downloads]  2018 Developments in Connecticut Estate and Probate Law, by Jeffrey Cooper (Quinnipiac) & John Ivimey (Reid and Riege, Hartford)
  5. [180 Downloads]  An Empirical Study of Statutory Interpretation in Tax Law, by Jonathan Choi (NYU)

November 24, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, November 22, 2019

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Morse's GILTI: The Co-Operative Potential Of A Unilateral Minimum Tax

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by Susan Morse (Texas), GILTI: The Co-operative Potential of a Unilateral Minimum Tax, 2019 Brit. Tax Rev. 512.

StevensonCooperative is not a term often applied to the Tax Cuts and Jobs Act (TCJA).  And yet, as Susan Morse explains in her recent article on “global intangible low-taxed income” (GILTI), the Act does have some cooperative potential.  This potential arises from the new immediate tax on GILTI income—a subset of foreign income—earned by U.S.-parented multi-national corporations (MNCs).  The presence of a mandatory tax removes incentives for countries to race to the bottom with ever-lowering tax rates, to the extent that they do so to attract U.S. MNCs.  Moreover, by providing a foreign tax credit for 80% of foreign taxes paid, the law gives the “right of first refusal” to foreign jurisdictions.  In a sense, the GILTI regime carves out a protected space for foreign countries to tax U.S.-parented MNCs, effectively creating a global tax floor of 13.125% (increasing to 16.4% in 2025).

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November 22, 2019 in Ariel Stevenson, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

NTA 112th Annual Conference On Taxation

National Tax Association (2016)Highlights of today's National Tax Association 112th Annual Conference on Taxation in Tampa (full program here):

Keynote: The Triumph of Injustice: Lessons for Distributional Tax Analysis
Emmanuel Saez (UC-Berkeley)

Plenary in Honor of Louis Kaplow (Harvard), 2019 Holland Award Recipient
Chair: Alvin Warren (Harvard)

  • Alan Auerbach (UC-Berkeley)
  • James Hines (Michigan)
  • Stefanie Stantcheva (Harvard)
  • David Weisbach (Chicago)

Empirical Studies of Wealth Taxes
Chair: Emmanuel Saez (UC-Berkeley)

Alternatives to Wealth Taxation

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November 22, 2019 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Burke Presents The Factitious Allure Of Passthrough Parity At Northwestern

Karen C. Burke (Florida) presented The Factitious Allure of Passthrough Parity at Northwestern on Wednesday as part of its Advanced Topics in Taxation Colloquium Series hosted by Herbert Beller, David Cameron, Charlotte Crane, Sarah Lawsky, Ajay Mehrotra, Philip Postlewaite, and Jeffrey Sheffield:

Burke (2019)In 2017, Congress enacted § 199A, purportedly to maintain tax parity for corporate and noncorporate businesses. Despite concerns about mass conversions to the corporate form, upon closer examination § 199A appears largely to preserve the passthrough advantage, while raising issues concerning the relative tax efficiency of different passthrough types. Other factors, such as the use of partnerships to achieve an asset basis step-up with a single-level tax on sale of a business, are also likely to influence the choice of entity. Moreover, the 2017 Act encourages both corporate and noncorporate owner-managers to mischaracterize labor income as business income, thereby minimizing total income and employment tax exposure.

November 22, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (2)

Thursday, November 21, 2019

De La Feria Presents Tax Fraud And Selective Law Enforcement At Toronto

Rita De La Feria (University of Leeds School of Law) presented Tax Fraud and Selective Law Enforcement at Toronto yesterday as part of its James Hausman Tax Law and Policy Workshop Series:

De-la-FeriaThis article presents a new conceptual framework for research into tax fraud. Informed by research approaches from across tax law, public economics, criminology, criminal justice, and regulatory theory, its proposed analytical framework assesses the effectiveness, and the legitimacy, of current approaches to combating tax fraud. The last decade has witnessed significant intensification of antitax fraud policy within Europe, with an upsurge in both legislative and administrative measures that purportedly target tax fraud. Using VAT as a case study, it is argued that these measures display a fundamental misunderstanding of the phenomenon of tax fraud, and in particular of the various costs it carries, by concentrating upon combating the revenue costs of fraud, rather than the fraud itself. Whilst measures deployed to combat revenue costs, and those deployed to combat the tax fraud, will often coincide, this will not always be the case. In those cases where they do not coincide prevalence is consistently given to enforcement measures addressing revenue costs, rather than combatting the fraud itself, even where the effect is to aggravate other costs of tax fraud, such as distortions to competition, or tax inequity, or to create an incentive to future non-compliance.

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November 21, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Why Do People Tolerate Income Inequality?

Lucia Macchia (City, University of London), Anke C. Plagnol (City, University of London) & Nattavudh Powdthavee (Warwick Business School), Why Do People Tolerate Income Inequality?:

Harvard Business Review LogoAcross societies, the richest 1% now hold a larger percentage of national income than ever before. What’s puzzling is that the latest research on attitudes toward inequality suggests that citizens in more unequal countries are less concerned about income inequality than those in more egalitarian countries. If income inequality is overwhelmingly bad for most people in a society, why do they – especially those who live in the most unequal of places – still put up with it?

According to the latest work by Harvard sociologist Jonathan J. B. Mijs, this income inequality puzzle can be explained in part by evidence showing that people’s belief in meritocracy (i.e., that income differences stem from differences in effort, not in luck) often goes hand in hand with the level of income inequality in a society. It seems that people in the most unequal societies, irrespective of whether they are from the working class, the lower middle class, or the upper middle class, are more likely to believe that the rich are rich because they worked hard for their income, while the poor are poor because of a lack of trying.

Our latest research, however, offers an additional explanation for the income inequality puzzle. We find that people put up with high levels of inequality for two reasons:

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November 21, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (5)

Journal Of Legal Education Publishes New Issue

Journal of Legal Education (2018)The Journal of Legal Education has published Vol. 68, No. 2 (Winter 2019):

From The Editors

  • Camille A. Nelson (American) & Anthony E. Varona (American), From the Editors, 68 J. Legal Educ. 191 (2019)

Articles

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November 21, 2019 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (0)

Thomas: The Modern Case For Withholding

Kathleen DeLaney Thomas (North Carolina), The Modern Case for Withholding, 53 UC Davis L. Rev. 81 (2019):

Who is responsible for paying taxes to the government? Currently, the answer depends on one’s employment status. Employees enjoy the luxury of not having to think about tax remittance during the year because their employers withhold taxes from their paychecks. Non-employees, on the other hand, face a much more onerous system. They must keep track of and budget for taxes during the year, make quarterly remittances to the IRS, and may face penalties for failing to do so. Although this regime has been in place for many decades, there are several reasons why reform may be in order.

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November 21, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, November 20, 2019

Kim Presents The Digital Services Tax: A Cross-Border Variation Of The Consumption Tax Debate? At Vienna

Young Ran (Christine) Kim (Utah) presented The Digital Services Tax: A Crossborder Variation of Consumption Tax Debate at the University of Vienna yesterday as part of its Faculty Workshop Series hosted by Sabine Kirchmayr-Schliesselberger (University of Vienna) and Neil Buchanan (Florida):

KimAs highly digitalized business models, such as Google, Amazon, and Facebook, have been mainstreamed in the economy, the traditional profit allocation and nexus rules of taxation are further strained. Traditionally, profit is allocated to market countries when the business has physical presence there. However, highly digitalized business models can generate profits in market countries without physical presence. Thus, market countries, especially the EU, have started imposing a digital services tax (“DST”) on the gross revenue generated in jurisdictions with highly digital business models, which has ignited heated debate across the globe.

DST is criticized as “ring-fencing,” or segregating, certain digital business models, because it arguably imposes a disguised corporate income tax on the profits of only certain digital firms, which discriminates against American tech giants. However, while DST is politically driven, the criticism is largely based on practical concerns and focused on the imminent impact, such as who is the winner and loser in the short term, rather than considering DST theoretically. More importantly, there is little discussion of the consumption tax aspect of the DST. DST is a turnover tax, which is a subcategory of consumption tax levied on the gross revenue of a firm. However, strangely, there is little discussion of the theoretical value of DST as a consumption tax.

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November 20, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tax Progressivity And Top Incomes: Evidence From Tax Reforms

Enrico Rubolino (University of Essex) & Daniel Waldenstrom (Paris School of Economics), Tax Progressivity and Top Incomes: Evidence from Tax Reforms:

We study the link between tax progressivity and top income shares. Using variation from large-scale Western tax reforms in the 1980s and 1990s and synthetic control method esti- mation, our results suggest that reductions in tax progressivity had large and lasting positive impacts on top income shares. The effects are largest within the top percentile while being almost zero in the lower half of the top decile, and they seem mainly related to cuts in top marginal tax rates. The results are robust to different model specifications, placebo tests in time and space and controlling for other simultaneous institutional reforms. Searching for mechanisms, we observe that the share of capital income of total income in the top income percentile increased after the reforms, which indicates that tax avoidance behavior related to the management of capital incomes could lie behind some of the observed effects.

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November 20, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Crawford: SSRN And The (Arbitrary) Determination Of 'Scholarly' Merit

Bridget J. Crawford (Pace), SSRN and the (Arbitrary) Determination of 'Scholarly' Merit, 22 Green Bag 2d 201 (2019):

SSRN Logo (2018)This article, published in the Green Bag, investigates and critiques SSRN’s (lack of clear) criteria for classification of material as a “scholarly paper” or “other paper.” In the former category appear to be “scholarly research papers,” bibliographies, briefs filed before some courts, some (but not all) teaching materials, and some (but not all) articles published in the Green Bag, for example. In the latter category are data tables, summary book reviews, opinion pieces, advocacy and satirical papers. “Other papers” are internet-searchable but are not displayed on the author’s SSRN page. Downloads of “other papers” are not included for purposes of SSRN’s various rankings.

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November 20, 2019 in Legal Ed Rankings, Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Rankings, Tax Scholarship | Permalink | Comments (1)

Tuesday, November 19, 2019

Bankman Presents Mr. Smith Gets An Education: Why It Is So Hard To Get Easy Tax Filing Today At NYU

Joseph Bankman (Stanford) presents Mr. Smith Gets an Education: Why it is so Hard to get Easy Tax Filing at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

I Bankman (2016)magine that one day, you get a note in the mail from Visa saying that starting next month, Visa will no longer be sending itemized bills (or indeed, any bills at all) to its cardholders. Instead, it will be the responsibility of every Visa cardholder to keep a record of all purchases, and refunds charged or credited to their account during the month, along with late payments and late fees, interest accruing on unpaid balances, and then tote it all up at the end of the month to figure out how much they owe Visa. If cardholders inadvertently omit some charges and pay Visa too little, you’re informed, Visa will assess interest and penalties on the underpayment.

Why on earth would Visa do such a thing?, you wonder. After all, Visa already has all that information in its computers, which can automatically calculate from that information the net amount you owe. Why should individual cardholders duplicate that effort, at considerable annoyance and expense to themselves, and with the dead certainty of errors?

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November 19, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Li Presents Arbitration Of International Tax Disputes At Boston College

Jinyan Li (Osgoode Hall) presented Arbitration of International Tax Disputes: A Rich Countries’ Game Ill-fit for Belt & Road Countries (with Nathan Jin Bao (Gowling WLG, Toronto), Sean Shanghua Hu & Wayne Wei Hu)) at Boston College yesterday  as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

Jinyan-LI_NEWSROOMTax arbitration is considered by many to be an effective way of resolving tax disputes under tax treaties by pressuring the competent authorities to reach an agreement in a timely manner. Since its first adoption in the 1989 Germany-United States Tax Treaty, arbitration has been included in over 200 bilateral tax treaties, Article 25 of the OECD Model and United Nations Model (Alternative B) and Part VI of the Multilateral Instrument (MLI). Developing countries have generally resisted using arbitration out of sovereignty and other concerns. In this paper, the authors argue that arbitration, especially the “last best offer” or “baseball” style arbitration is a game for the rich countries. Drawing on existing literature and preliminary empirical research on tax disputes between Belt and Road Countries (about 130 countries participating in the China-led Belt and Road Initiative, purportedly representing over one half of the world population and 1/3 of global GDP), the authors explain that baseball arbitration is ill-fit for these countries for several reasons.

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November 19, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Sarin & Summers: Shrinking the Tax Gap — Approaches And Revenue Potential

Natasha Sarin (Penn) & Lawrence H. Summers (Harvard), Shrinking the Tax Gap: Approaches and Revenue Potential:

Between 2020 and 2029, the IRS will fail to collect nearly $7.5 trillion of taxes it is due. It is not possible to calculate with precision how much of this “tax gap” could be collected. This paper offers a naïve approach. The analysis suggests that with feasible changes in policy, the IRS could aspire to shrink the tax gap by around 15 percent in the next decade—generating over $1 trillion in additional revenue by performing more audits (especially of high-income earners), increasing information reporting requirements, and investing in information technology. These investments will increase efficiency and are likely to be very progressive.

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November 19, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Monday, November 18, 2019

Rubolino Presents Can Local Governments Implement A Progressive Income Tax? Today At UC-Berkeley

Enrico Rubolino (University of Essex) presents Can Local Governments Implement a Progressive Income Tax? at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

EnricoThis paper studies the effects of local income taxation on taxable income and within-country migration, using data from tax returns and all transfers of fiscal residence since the early 2000s in Italy. Over this period of tax decentralization, regions and municipalities have been granted greater power to set different tax rates across income brackets. Municipalities switching from a flat to a progressive income tax schedule experience a drop in their tax base, mostly due to a reduction in the income share held by the top percentile. This effect translates into a net-of-local tax taxable income (population stock) elasticity of 0.83 (0.74). Moving the fiscal residence from high- to low-tax places is the main driver of this response: a 1 percent increase in the net-of-tax differential within a province-pair raises outmigration by 1.6 percent. Despite the threat of repelling wealthy residents, these estimates imply that the benefit of additional revenues from adopting a progressive income tax significantly exceeds the cost of foregone income tax revenue due to tax-induced mobility.

November 18, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Blank Presents Progressive Tax Procedure Today At Loyola-L.A.

Joshua Blank (UC-Irvine) presents Progressive Tax Procedure (with Ari Glogower (Ohio State)) today at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto:

6a00d8341c4eab53ef0240a4467a28200c-300wiAbusive tax avoidance and tax evasion by high-income and wealthy taxpayers pose unique threats to the tax system. These strategies undermine the tax system’s progressive features and distort its distributional burdens. Responses to this challenge generally fall within two categories: calls to increase IRS enforcement and proposals to target the specific strategies that enable tax avoidance and evasion by these taxpayers. For example, taxpayers who engage in certain tax shelter transactions or hold assets abroad face additional compliance obligations and potential tax penalties.

This Article presents the case for “progressive tax procedure” — means-based adjustments to the tax procedure rules as they apply to high-income and wealthy taxpayers. In contrast to the activity-based responses in current law, progressive tax procedure would tailor rules to the characteristics of the actors rather than their activities. Instead of focusing exclusively on specific potentially abusive activities, such as “reportable transactions,” progressive tax procedure would adjust tax procedure rules based on the taxpayer’s income or net assets. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies than other taxpayers.

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November 18, 2019 in Colloquia, Scholarship, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: Whistleblowers Don't Get To Work The Case

Tax Court (2017)You can't bring a Qui Tam action against a tax cheat.  You can blow the whistle, but it's not the same.

Qui Tam actions are lawsuits brought by private parties on behalf of the federal government against those who have defrauded the government.  Congress has long allowed such actions.  The current rules are found in 31 U.S.C. §3730.  That statute permits private parties to enforce the provisions of the immediately preceding statute, 31 U.S.C. §3729, known as the False Claims Act.

The False Claims Act, however, explicitly excludes actions against tax cheats from its scope.  See §3729(d).  That means private parties cannot bring Qui Tam actions to enforce the tax laws.  Instead, to help the IRS enforce the tax laws, Congress has created a whistleblower program, codified in §7623.  It permits individuals who report wrong-doing to the IRS to “receive as an award at least 15 percent but not more than 30 percent of the proceeds collected...”  In FY18, the Whistleblower Office's Report To Congress said that the program resulted in collection of over $1.44 billion, at a cost (of awards) of $312 million (about a 21% award rate). 

The recent case of Vincent J. Aprunzzese v. Commissioner, T.C. Memo. 2019-141 (Oct. 21, 2019)(Judge Vasquez) teaches the difference between a Qui Tam action and whistleblowing.  There, the whistleblower argued that he was due a larger award because the IRS could have collected much more based on the information he gave.  The Tax Court rejected the argument.  The case also shows why allowing Qui Tam actions for tax would not be a good idea: you don’t want private parties working the audits.  Details below the fold.

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November 18, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)