Paul L. Caron
Dean





Wednesday, March 3, 2021

Tax Prof Presentations At Today's Florida Tax Institute

Tax Prof presentations at the two-day Florida Tax Institute:

Cassady V. Brewer (Georgia State) & Bruce A. McGovern (South Texas), Recent Developments in Federal Income Taxation:

This session will review the most significant statutory enactments, judicial decisions, IRS rulings, and Treasury regulations promulgated during the last twelve months that affect general domestic income taxation, corporate taxation, partnership taxation, and tax procedure.

Samuel A. Donaldson (Georgia State), Transfer Tax Update:

Stay up to date with this informative and entertaining recap of the important cases, rulings, regulations, and legislation from the past 12 months related to federal income, estate, and gift taxes.

Charlene Luke (Florida), Proposed Partnership Regulation Projects: Where Do They Stand? How Should They Be Handled?:

This presentation will provide an overview of the current state of U.S. Treasury partnership regulation projects and consider potential future approaches in light of a new tax administration.

Nancy A. McLaughlin (Utah), Trying Times: Conservation Easements and Federal Tax Law (207 pages):

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March 3, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Crespi: Teaching A Class On Income And Wealth Inequality

Gregory S. Crespi (SMU), Teaching a Class on Income and Wealth Inequality:

I am offering a course on “Income and Wealth Inequality” for the first time during this spring, 2021 semester at the Dedman School of Law at Southern Methodist University, and the course is going well. I am here discussing my choice of materials and providing my course syllabus and my weekly reading assignment list for use by anyone else who is considering offering such a course at the college or graduate or law school level.

March 3, 2021 in Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

Johnson: Taxing Meals And Civic Virtue

Calvin H. Johnson (Texas), Return to Civic Virtue: Tax Meals, 170 Tax Notes Fed. 1105 (Aug. 15, 2021):

Tax Notes Federal (2020)Excluding meals from taxation, when other forms of compensation are taxed, inevitably causes a loss of value — a waste — that economists call deadweight loss. The exclusion for meals causes a shift from cash to meals, until in equilibrium, the loss of value from the meals is just short of the tax avoided. In equilibrium, the loss is a tax-caused destruction of resources — not physically, but by value. The recent Consolidated Appropriations Act decreased the tax on meals by allowing a 100 percent deduction for some business meals, repealing the prior law’s 50 percent deduction, which is the wrong direction to go. The end of the limited deduction was instigated by former President Trump himself and was a high priority for the Trump Treasury in its negotiations with Congress over the appropriations bill. Trump personally takes advantage of tax-exempt meals and has interests in restaurants selling meals. Thus, the change in law was narcissistic and a betrayal of civic virtue.

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March 3, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, March 2, 2021

Cauble Presents Questions The IRS Will Not Answer Virtually Today At Florida State

Emily Cauble (DePaul) presents Questions the IRS Will Not Answer virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

CaubleWhen a taxpayer plans to undertake a transaction and its tax consequences are unclear, the taxpayer can request a letter ruling from the IRS. The IRS issues numerous letter rulings each year. In 2020, for instance, the IRS issued 777 letter rulings. The IRS refrains from issuing letter rulings on certain topics. At the beginning of each year, the IRS publishes an updated list of the topics on which it will not rule. Many of the topics on which it will not rule arise in areas of tax law governed by standards where the tax outcome depends heavily on each transaction’s specific facts. This pattern is consistent with the IRS’s stated position that it ordinarily does not rule in certain areas because of the factual nature of the matter involved.

This Article suggests that a policy against ruling on fact-specific topics sacrifices an opportunity to rule on many of the very topics for which a letter ruling could be particularly useful. Because the fact-specific nature of a topic makes it ill-suited for generally applicable guidance, such a topic is a particularly good candidate for a letter ruling.

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March 2, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Cockfield: International Tax Transparency

Arthur J. Cockfield (Queen's University Faculty of Law), International Tax Transparency:

An imbalance exists between tax authorities and taxpayers when it comes to the latter’s financial information. Taxpayers have the information they need to calculate their tax liabilities and file their returns. Tax authorities, on the other hand, tend to have little beyond what is in the tax return. Thus it can be hard for tax authorities to detect non-compliance. The solution? Pass laws to force the taxpayer (or a third party) to provide more and better information to tax authorities. In other words, increase tax transparency.

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March 2, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lazerow: Income Tax Planning For Visual Artists, Their Dealers, Investors, And Collectors

Herbert I. Lazerow (San Diego), Income Tax Planning for Visual Artists, Their Dealers, Investors, and Collectors, 170 Tax Notes Fed. 923 (Feb. 8, 2021):

Tax Notes Federal (2020)The tax issues of visual artists, art dealers, art investors, and art collectors all revolve around the same type of property: artwork. Be it a painting, drawing, print, sculpture, photograph, fabric, or glass art, that property raises tax issues for which advance planning can be useful. Some tax problems are shared by artists, dealers, investors, and collectors alike, such as the necessity to prove a profit motive in order to deduct expenses. However, those four categories of taxpayers face different tax results for the same activity in some cases, such as when artwork is sold or donated. This report explores those similarities and differences and suggests steps advisers can take to maximize tax benefits for their clients. It occasionally questions whether the similarities and differences — or the rules applied by the IRS — make sense.

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March 2, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, March 1, 2021

Liscow: Redistribution For Realists

Zachary D. Liscow (Yale; Google Scholar), Redistribution for Realists:

Inequality is a defining issue of our time. Nevertheless, the longstanding economic orthodoxy for addressing inequality is that we should redistribute solely through tax and transfer policies because those are the most efficient means for doing so.

While the orthodoxy holds in theory, it fails in practice because of the public’s psychology about redistribution. New evidence shows that individuals silo their policy views: many are reluctant to redistribute through taxes and transfers but are willing to do so in other policy domains, like provision of necessities such as transportation, food, and housing. The orthodoxy thus restricts redistribution efforts to a policy domain where the public resists redistribution while neglecting the many policy domains where the public embraces redistributive policies. The current orthodoxy may be more efficient, but it is also a prescription for widespread inequality.

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March 1, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Cotropia: Law’s Ability To Further The 'Menstrual Movement'

Christopher Anthony Cotropia (Richmond; Google Scholar), Law’s Ability to Further the 'Menstrual Movement', 41 Colum. J. Gender & L. __ (2021):

The current menstrual movement calls for overcoming the cultural stigma associated with menstruation and achieving “menstrual equity” and “period poverty”. The movement seeks to increase awareness of menstruation by rectifying and removing discrimination against those who menstruate and providing greater access to menstrual hygiene products (“MHPs”), particularly for the homeless and those with lower incomes. To achieve these goals, the movement is advocating for the elimination of the “tampon tax” and requiring schools provide MHPs to students for free. There are also lawsuits challenging the constitutionality of the tampon tax. Advocates view these legal changes as instrumental in furthering the goals of equity and access to MHPs underlying the movement. This essay discussions whether these legal changes achieve the movement’s goals and also explores their expressive effects.

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March 1, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: No Second Bite In CDP For Rejected OIC

Tax Court (2020)One overarching theme of my Tax Procedure course is that tax collection is a process, not an event.  Many events occur during the time between assessment of a liability and the collection of that liability, and it is easy to fixate on them in isolation, forgetting their place in the process.  One important event can be a Collection Due Process hearing and subsequent appeal to Tax Court.  Since I started writing these posts (back in September 2017) we’ve learned a lot of lessons from the Tax Court about the shape and scope of CDP.  In Craig L. Galloway v. Commissioner, T.C. Memo. 2021-24 (Feb. 24, 2021) (Judge Urda), we learn that what a taxpayer can do in a CDP hearing may be limited by earlier events in the collection process.  Details below the fold.

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March 1, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, February 28, 2021

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. The #1 paper is #303 among 15,769 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,229 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [466 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  3. [462 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  4. [364 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois; Google Scholar)
  5. [240 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)

February 28, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, February 26, 2021

Weekly SSRN Tax Article Review And Roundup: Kim Reviews The IRS's Decisive Transfer Pricing Victory In Coca Cola By Avi-Yonah & Mazzoni

This week, Young Ran (Christine) Kim (Utah; Google Scholar) reviews a new work by Reuven Avi-Yonah (Michigan; Google Scholar) & Gianluca Mazzoni (Michigan SJD), Coca Cola: A Decisive IRS Transfer Pricing Victory, at Last, 169 Tax Notes Fed. 1739 (2020).

Kim

Coca-Cola has offshore manufacturing facilities that produce beverage concentrate in low tax countries, such as Brazil, Ireland, and Egypt. Because the beverage concentrate is a Coca-Cola product, though it is not a final product, the US Parent co. licenses its intangibles, such as trademarks and secret formulas, and the manufacturing facilities pay royalties and dividends. But the role of offshore manufacturing facilities stops there. The final products are made by third party entities, called “Bottlers,” and the marketing activities of the Coca-Cola brand and the final products are conducted by another foreign subsidiary (ServCos). Given such a limited role of offshore manufacturing facilities, called "Supply Points," what portion of profits under the transfer pricing rules should be allocated to those Supply Points compared to the US Parent co.? Probably not much.

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February 26, 2021 in Christine Kim, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax

Dialogs

Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax:

In an environment of increasing academic specialization, Oxford-Virginia Legal Dialogs seeks to build bridges across academic disciplines by introducing a new kind of workshop. For each session, a tax scholar will select a non-tax, but legal, work that is prominent in its own field and explain how the work is relevant to the study of taxation. The author of the work will then respond before we open the session to questions and discussion by workshop attendees.

All sessions will take place on Zoom, unless otherwise indicated, and the work to be discussed will be distributed on this page in advance of the session.

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February 26, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Dean Presents Ten Truths About Tax Havens Virtually Today At British Columbia

Steven Dean (Brooklyn) presents Ten Truths About Tax Havens: Inclusion and the 'Liberia Problem' (with Attiya Waris (University of Nairobi; Google Scholar)) virtually at Allard School of Law, University of British Columbia today as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

Dean_Steven_Portrait_002There has been a decades-long effort to repair an increasingly fragile international tax system. One reason it has foundered has been what we identify as the ‘Liberia problem’. In 2000, the powerful Organisation for Economic Cooperation and Development identified Liberia—but not Switzerland—as a tax haven and targeted it for sanctions.  It did not go well. During the two decades since, everything has changed yet seemingly from this lens of inclusion nothing has changed at all. Awkwardly similar “blacklists” still target ‘Black’ and ‘Brown’ jurisdictions despite the fact that experts mean something quite different when they speak of the harms caused by secrecy jurisdictions. We think differently in important respects, but we share a conviction that a more inclusive and more level playing field in the international tax arena would benefit all states.

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February 26, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

American Taxation Association Outstanding Paper Award

Doron Narotzki (Akron; Google Scholar) & Melanie McCoskey (Akron; Google Scholar) received the Best Paper Award at last week's 33rd Annual American Taxation Association Midyear Meeting for their article, Code Section 304: The Gift That Keeps on Giving, 17 ATA J. Legal Tax Res. 25 (2019):

One central focus of the TCJA was to encourage U.S. international firms to "bring back earnings to the U.S." In an attempt to achieve this goal, the legislation enacted Section 245A, which provides a 100% DRD to U.S. corporations for certain foreign-sourced distributions. Section 304 requires the reclassification of stock sales between affiliated corporations as dividends. However, for many years, Code Section 304 was not fulfilling the original "anti-avoidance" tax policy that was behind its legislation, as is explained in this paper. Currently, the TCJA has created an opportunity to utilize Section 304 and Section 245A via a much more powerful tax planning tool. By utilizing the rules related to redemptions by related corporations under the (purportedly) anti-abuse provisions of Section 304 combined with the new 100% DRD of Section 245A, extracting earnings from affiliated foreign corporations tax-free has never been easier. This paper will discuss these two Code Sections and the micro-policy behind them.

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February 26, 2021 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink

Thursday, February 25, 2021

Bearer-Friend Presents Tax Without Cash Virtually Today At Duke

Jeremy Bearer-Friend (George Washington) presents Tax Without Cash virtually at Duke today as part of its Tax Policy Workshop Series:

Bearer Friend (2021)This Article documents and evaluates tax obligations paid without cash, referred to as “in-kind tax paying.” Such forms of tax paying include paying federal income taxes by remitting a used, flatbed truck to the IRS, paying local property taxes by working a few hours a month answering phones at city hall, and paying state excise taxes by conveying a proportion of all seashells farmed within a state to that state. These are not just hypotheticals, but forms of in-kind tax paying that occur in the United States throughout periods when many taxes are also paid in cash. Nevertheless, despite its long history and prevalence, in-kind tax paying has been underexplored as a viable, and potentially appealing, form of tax remittance.

By providing an original taxonomy of in-kind tax paying within a cash economy, this Article makes three contributions. First, it improves our definition of tax paying by identifying the wide variety of in-kind remittances that occur in our current tax system. Second, it refutes the tacit presumption that in-kind remittance of tax obligations is not viable, thus expanding the tax tools available to local, state, and federal governments and demonstrating how narrow presumptions about tax remittance have predetermined core tax policy choices. Third, it confronts the substantial dangers of in-kind tax paying, using these risks to propose new principles for limiting the design and administration of in-kind tax paying.

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February 25, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Book: Tax Administration And Racial Justice

Leslie Book (Villanova), Tax Administration and Racial Justice: The Illegal Denial Of Tax Based Pandemic Relief To The Nation's Incarcerated, 72 S.C. L. Rev. ___ (2021) (Symposium on Taxation, Finance, And Racial (in)Justice):

In the midst of a devastating pandemic that would sicken millions, kill hundreds of thousands, and cause widespread financial distress, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CARES provided for the IRS to deliver up to $1,200 for adults and $500 for dependent children. It was ostensibly structured as a refundable credit to be claimed on a 2020 tax return, but with a twist. The statute authorized the IRS to pay it in advance, even to those who did not have a tax return filing obligation, and to do so as “rapidly as possible.” While there were some problems, the IRS generally did remarkably well, and within six months it had delivered about 160 million payments totaling over $270 billion.

This Essay addresses one of those exceptional problems: it involves the IRS’s unexplained change in position on the eligibility of those incarcerated in our nation’s federal, state, and local prisons and jails.

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February 25, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

2020 IFA International Tax Student Writing Award; Call For Entrants In 2021 Competition

The winner of the International Fiscal Association's 2020 International Tax Student Writing Competition is Shay Moyal (S.J.D. 2020, Michigan; Davis Polk & Wardwell, New York), Don’t Stop the Beat, 166 Tax Notes Fed. 721 (Feb. 3, 2020).
Faculty Sponsor: Reuven Avi-Yonah

IFA Logo (2015)The recent addition to the Internal Revenue Code, the Base Erosion Anti-Abuse Tax (BEAT), is a subject of concern for many tax scholars and practitioners. This new provision joins a large family of measures that have been adopted worldwide and in the U.S.; however, unlike the other new International Tax provisions from the 2017 reform, the BEAT has neither a predecessor in prior laws nor in former proposals. To start, the phrase “Base Erosion” itself lacks clarity. Furthermore, the relatively short amount of time lawmakers took to enact the addition and the lack of any stated objectives require an inquiry into the objectives and original intent of this complex section of the code. This paper seeks to illuminate the original intent of the BEAT and the expansive language of its provisions by examining multiple factors such as its structure, legislative history, other International Tax principles, and the BEAT’s similarities to recent international tax trends – like Pillar II of the OECD BEPS or the Digital Services Minimum Taxes around the globe.

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February 25, 2021 in Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

Wednesday, February 24, 2021

Haslehner Presents International Tax Arbitration After BEPS Virtually Today At Boston College

Werner Haslehner (NYU; Google Scholar) presents International Tax Arbitration after BEPS (with Mike Kobetsky (Melbourne)) virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

W Haslehner_portraitAs international taxation rules become ever more complex – illustrated by the number of acronyms and jargon that have become so familiar to the ‘initiated’ in recent years (BEPS, MLI, PPT, LOB, Pillar One, Amount A, BEAT, GILTI, GLOBE, DST, anyone?) – calls for an internationalized system of dispute resolution have also become increasingly loud. Both the OECD and the EU are making a serious effort to provide taxpayers with access to effective remedies via tax arbitration. Yet acceptance of this mode of dispute resolution appears limited: only 30 States have adopted the relevant provision of the Multilateral Instrument for the modification of bilateral tax treaties – a number that still tends to overestimate the actual impact in practice! Meanwhile, the EU has adopted harmonized legislation giving a right to taxpayers to have cross-border disputes resolved by arbitration.

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February 24, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Galle Presents Making Money: Central Banks, Seigniorage, And The Fiscal System Virtually Today At Toronto

Brian Galle (Georgetown; Google Scholar) presents Making Money: Central Banks, Seigniorage, and the Fiscal System (with Yair Listokin (Yale; Google Scholar)) virtually at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Bdg9-200x300 (1)Conventional economic wisdom holds that governments cannot pay their bills by printing money. Running the printing press---or, at modern central banks, tapping a few keys to create electronic funds---causes inflation, and inflation can destroy economies. Yet as it turns out, since 2008 developed countries throughout the world have in effect printed trillions of dollars worth of new money without any real hint of inflation. In the United States, for example, this “seigniorage” (an Old French term for the power to mint coins) has produced revenue equivalent to 1⁄3 of all individual income taxes over the last decade.

The power of central banks to create revenue at this scale should transform how we think about the fiscal state, our system of taxing and spending. Yet because this phenomenon is new, runs contrary to decades of theory, and is not yet fully understood, no scholarship yet grapples with how governments should use seigniorage. Most nations’ basic architecture for revenue and spending decisions assume that taxes are the primary source of revenue. 

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February 24, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Targeted Taxes: Localities Take Aim At Large Employers To Solve Homelessness And Transportation Challenges

Andrew D. Appleby (Stetson), Targeted Taxes: Localities Take Aim at Large Employers to Solve Homelessness and Transportation Challenges, 98 Or. L. Rev. 477 (2020):

Many localities are facing unprecedented challenges — such as a dramatic rise in homelessness and insufficient transportation infrastructure — that have reached crisis levels. These localities are in a precarious position. If they do not solve these problems quickly, or if they impose overbearing and poorly designed taxes, there will be dire economic and social repercussions.

In response to these challenges, several localities recently enacted or proposed taxes targeted directly at large businesses, with revenues allocated explicitly for a designated purpose. Localities are gravitating toward targeted taxes for several reasons. Some assert that the success of large employers within the locality contributed to, or even directly created, these challenges. Perhaps most importantly, targeted tax laws serve a clear expressive function. Depending on the locality’s primary objective, targeted taxes may be problematic and counterproductive.

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February 24, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tuesday, February 23, 2021

Sarkar: Capital Controls As Migrant Controls

Shayak Sarkar (UC-Davis), Capital Controls as Migrant Controls, 109 Cal. L. Rev. ___ (2020):

The disparate treatment of capital and labor reflects one of globalization’s central asymmetries: the law often allows financial capital, but not people, to move freely across borders. Yet scholars have largely neglected the intersection of these two regimes, the legal restrictions on migrants’ capital, particularly when the migrants themselves are deemed illegal. These restrictions on migrants’ capital abound even while migratory capital generally faces few such restrictions. As such, capital controls may operate as migrant controls.

This Article canvasses established and emerging examples of capital controls as migrant controls and the pressing legal questions these controls raise. Capital is guarded when remittances are taxed, particularly when the taxation is explicitly conditioned on immigration status. Capital is expelled when capital receipts, such as Social Security benefits, are made contingent on departure and non-residency. And capital is marginalized when financial laws require particular identity and immigration documents on penalty of exclusion from key financial services.

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February 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Christians: Tax Justice As Social License — The Fair Tax Mark

Allison Christians (McGill; Google Scholar), Tax Justice as Social License: The Fair Tax Mark:

Fair TaxTax justice advocates have spent the past decade building public consciousness about the tax planning practices of financial elites and large multinational corporations. They approached the project from a series of angles, from grassroots name-and-shame campaigns to documentary filmmaking to political lobbying. An early focus on transparency in the resources sector led to broader campaigns across industries and across countries, with multiple platforms around transparency and accountability. Inspired by the growing consumer response to these campaigns, a group of tax justice advocates created a “fair trade”-style branding and marketing strategy, called the Fair Tax Mark. The primary objective is to directly influence firm and consumer behaviors in the UK, but the standard has broader potential influence as an emergent quasi-legal regime.

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February 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, February 22, 2021

Lesson From The Tax Court: The Fearsome Scope Of Evil §280E

When Congress creates a tax benefit, it often qualifies that benefit.  Many time Congress does that in the very provision granting the benefit.  For example, the exclusion for employee fringe benefits in §132 contains many qualifiers, such as a non-discrimination requirement for several of the benefits. Other times, however, Congress writes a completely different statute to qualify a benefit.  You find many of these statutes gathered in Chapter 1 (“Normal Taxes), Subchapter B (“Computation of Taxable Income”), Part IX (“Items Not Deductible”), starting with §261.  Just when a taxpayer gets all happy by being allowed a deduction by some statute, one of these swoops in to deny or qualify the deduction.  So I call these the “evil 200’s.”

PotBusinessPictureSection 280E creates a draconian qualification for businesses engaged in the trafficking of substances that are illegal under federal law.  Because marijuana is still illegal under federal law, that has caused no end of tax headaches for businesses that are perfectly legal under state law.  Those businesses keep attacking the scope of §280E, with decidedly mixed results.

In San Jose Wellness v. Commissioner, 156 T.C. No. 4 (Feb. 17, 2021) (Judge Toro) the Tax Court interpreted §280E broadly to prohibit deductions for depreciation and for charitable contributions.  While one might read the opinion as saying that §280E prohibits deductions for all expenditures made by a marijuana business, regardless of that expenditure’s relationship to the operation of the business, I do not think it actually goes that far.  At least I hope not.  Details below the fold.

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February 22, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Sunday, February 21, 2021

New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires

Wall Street Journal, Some Democratic Lawmakers Push for Wealth Tax on New York Billionaires:

New York state lawmakers are considering an unprecedented form of wealth tax as they search for revenues to plug a budget hole exacerbated by the coronavirus pandemic.

A growing coalition of unions, progressive advocacy groups and Democratic officials has endorsed a slate of six revenue bills, including a so-called mark-to-market tax on billionaires, which would require them to pay capital-gains taxes each year as their assets appreciate, even if they don’t sell.

The tax menu also includes increases to income and capital-gains taxes as well as a proposed tax on financial transactions. Gov. Andrew Cuomo, a Democrat, proposed a $1.5 billion income tax hike as part of his $193 billion budget plan, but hasn’t embraced a mark-to-market tax.

Opponents said the tax is unworkable and could drive away wealthy people who already pay a large share of state taxes. They also said the proposal might violate a provision of the state constitution, which prohibits ad valorem or excise taxes on intangible personal property, including securities. ...

David Gamage, a professor at Indiana University law school who helped draft Ms. Ramos’ bill, said the proposal was constitutional in New York because it taxed changes in the value of assets, not simply the value of assets themselves. He said the valuations were possible because the number of affected taxpayers was likely below 200.

“It’s only in recent years that governments around the world have started to realize that our existing tax rules aren’t working as applied to the superrich, so that reforms are needed,” he said.

David Gamage (Indiana), Emmanuel Saez (UC-Berkeley) & Darien Shanske (UC-Davis), The NY Billionaire Mark-to-Market Tax Act: Revenue, Economic, and Constitutional Analysis:

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February 21, 2021 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink

The Top Five New Tax Papers

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:

  1. SSRN Logo (2018) [1,207 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [457 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  3. [435 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  4. [350 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois; Google Scholar)
  5. [240 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)

February 21, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, February 20, 2021

Colella: Procedural Due Process, The Full Payment Rule And Assessable Tax Penalties

Frank G. Colella (Pace), Time to Prune the Flora—Procedural Due Process, the Full Payment Rule and Assessable Penalties: Larson v. United States, 11 Wm. & Mary Bus. L. Rev. 127 (2019):

In Larson v. United States, the Second Circuit Court of Appeals rejected the opportunity to limit the scope of the Flora “full payment” rule when its strict application in the instant case foreclosed judicial review of the underlying tax controversy. As a result, the decision rubberstamped the IRS’s imposition of assessable penalties without any meaningful judicial review of those actions.

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February 20, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Friday, February 19, 2021

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Executive Compensation After 162(m)'s Repeal By Galle, Lund & Polsky

This week, Mirit Eyal-Cohen (Alabama) reviews Brian D. Galle (Georgetown), Andrew Lund (Villanova) & Gregg D. Polsky (Georgia), Does Tax Matter? Evidence on Executive Compensation after 162(M)'s Repeal, 26 Stan. J. L., Bus. & Fin. ___ (2020). 

Mirit-Cohen (2018)

Changes in legislation provide interesting opportunities for natural experiments. Tax law is one of those fields where legislative changes occur on an annual basis and students quickly become aware of their inability to save money on used statutory supplements. This paper explores said opportunity to observe the effect of variations in tax law on the much-contested topic of senior executive compensation.

Since 1993, the deductibility of senior management salaries in public companies has been limited under section 162(m) for payments above $1 million. Section 162(m) was enacted with rising scrutiny on executive pay during the 1990s. At the same time, then section 162(m) contained an exception that allowed deductibility above the $1 million threshold to the extent the compensation was performance-based. This exception encouraged firms, once the $1 million cap was reached, to pay compensation based on performance via shares, stock options, and bonuses. This performance sensitivity in executive pay was viewed as shareholders-friendly as it was based on objective performance goals, approved by an independent compensation committee of the board, and encouraged managers to take more risk to achieve better financial outcomes. 

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February 19, 2021 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

South Carolina Hosts Virtual Symposium Today On Taxation, Finance, And Racial (in)Justice

The South Carolina Law Review hosts a virtual symposium today on Taxation, Finance, and Racial (in)Justice (agenda):

SC SymposiumKeynote Speaker: Dorothy A. Brown (Emory)
Professor Brown will discuss the recent change outside of the legal academy when it comes to linking race and tax policy. She will also address the disconnect between the legal academy, federal government, and the public at large while suggesting ways in which the profession can expose and eliminate racial inequality in the application of modern federal tax laws.

Speaker: Danielle Holley-Walker (Dean, Howard)
Dean Holley-Walker will discuss the importance of having diverse lawyers in all areas of the legal profession, including tax law. She will also address how law schools and the profession can create pipelines for minority lawyers into tax law.

Panel#1: Property Tax's Lasting Control on Racial Inequities
This panel will concentrate on how local control over property tax assessment and distribution of property tax revenues contributes to racial segregation of housing markets as well as racial inequities in housing, schools, and public services. Additionally, the panel will discuss methods for the profession to address these inequalities through alternative assessment approaches.

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February 19, 2021 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Kentucky Hosts Virtual Panel Today On Tax And Tech

There is a panel on Taxation and Tech at 11:15 am–12:45 pm ET today at the Inframarginalism and Internet virtual conference at Kentucky: 

Kentucky Law (2021)Taxation is an underexplored remedy for Big Tech and tech is an underexplored remedy for tax. Consider first concerns about Big Tech. Many tech firms barter with their customers, supplying services to customers in exchange for their data—or attention—instead of their cash. That has stymied antitrust, which has traditionally viewed monopoly power as the power profitably to increase a cash price. But tax knows barter, and can more clearly see the bartering of personal data for services as a regulable transaction. What is more, taxation would seem to address more directly than antitrust the root of concerns regarding Big Tech—concerns that Big Tech’s ability to extract rents contributes to inequality of wealth—while at the same avoiding the cost and inefficiencies associated with antitrust remedies like breakup. Or does it? And what do the first civilizations, which arose to govern networks in a barter economy, have to teach us about the answer to this question? On the other side of the ledger, tech is swiftly making possible modes of taxation that were once merely theoretical abstractions. It is a small step from a world in which private firms know everything about you and use that information to impose private taxes on your every purchase to a world in which the government knows enough about your every purchase to replace (or supplement) the income tax system with a personalized consumption tax system. But should we do it?

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February 19, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Stark Presents Distributive Justice In International Tax Law Virtually Today At Florida

Johanna Stark (Max Planck Institute; Google Scholar) presents Distributive Justice in International Tax Law virtually at Florida today as part of its Tax Colloquium Series:

S200_johanna.starkRecent times have seen growing calls for considerations of justice to be given a greater role in international tax law. The main driver of these calls are distributive concerns, although agreement is still missing as to what this means in terms of both principle and practice. This paper asks whether it is the task of international tax law at all to implement principles of distributive justice beyond the national context and gives an overview of how the “global justice debate” in contemporary moral and political philosophy bears on this question. With regard to the more specific question of whether some states are, as a matter of distributive justice in particular, under a duty to agree to a redistribution of taxing rights to other states, the paper argues that it is crucial to differentiate between the collective level inhabited by states and international institutions on one hand, and individuals on the other. 

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February 19, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, February 18, 2021

Brown Presents Tax Incentives And Sub-Saharan Africa Virtually Today At Duke

Karen Brown (George Washington) presents Tax Incentives and Sub-Saharan Africa virtually at Duke today as part of its Tax Policy Workshop Series:

KarenBrown-03FINALThe economic viability of the poor economies of the developing world, particularly Sub-Saharan Africa, continues to be a secondary focus of the high-income countries of the developed world as they move forward with projects to ensure international cooperation to combat tax avoidance and to harmonize the standards for evaluating the substantive integrity of national regimes. The 2013 Base Erosion Profit Shifting (“BEPS”) project of the G-20, coordinated and managed by the Organisation for Economic Cooperation and Development (“OECD”), has achieved an overhaul of tax standards, but that process did not place a sufficient emphasis on the particular concerns of the developing world. The OECD expressed concern and took action to include input from these nations, but this was near the end of the process of consensus formation.

By providing an opportunity for consultation, but only after the paradigms, dictates, and core principles were adopted in final reports issued in 2015, the developed world undermined meaningful input from Africa regarding the foundational principles of international tax reform.

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February 18, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Parada Presents Full Taxation: The Single-Tax Emperor’s New Clothes Virtually Today At Indiana

Leopoldo Parada (Leeds; Google Scholar) presents Full Taxation: The Single-Tax Emperor’s New Clothes virtually at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Os6kwiVtIt has recently been argued in the international tax literature that the OECD Base Erosion and Profit Shifting project (BEPS) reflects and effectuates full taxation, namely an international norm that would suggest that all of a company’s income should be taxed in places where it has real business activities, representing a modern approach to the single-taxation paradigm. This article builds upon the concept of full taxation and argues that although rhetorically attractive, the concept is still conceptually inconsistent, particularly because it is incapable of providing any hints as regards where and who should finally be taxed. Moreover, it adopts an overinclusive and instrumental approach, the purpose of which appears to be only to legitimatise the use of coordinated provisions whose rationale attend exclusively to avoid the complete absence of taxation in cross-border transactions. 

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February 18, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Glogower, Gamage & Richards: Why A Federal Wealth Tax Is Constitutional

Ari Glogower (Ohio State; Google Scholar), David Gamage (Indiana; Google Scholar) & Kitty Richards (Roosevelt Institute), Why a Federal Wealth Tax is Constitutional:

A federal wealth tax can help level the playing field of our unequal society and promote shared economic prosperity. When wealth taxes have been proposed in national campaigns of recent years, they generated strong public support and broadened the conversation over the future of progressive tax policies. However, critics of wealth taxation argue that a wealth tax could be struck down by the Supreme Court because of constitutional provisions that delineate Congress’s power to tax. Namely, critics undermine federal wealth tax proposals by relying on the “apportionment rule,” which requires certain taxes to be apportioned among the states according to their populations.

Ari Glogower, David Gamage, and Kitty Richards contend that the apportionment rule, a vestigial relic of the founders’ compromise on slavery, does not interfere with Congress’s ability to legislate a tax on an individual’s net wealth.

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February 18, 2021 in Scholarship, Tax, Tax Scholarship, Think Tank Reports | Permalink

The Earned Income Tax Credit: Targeting The Poor But Crowding Out Wealth

Maren Froemel (Bank of England) & Charles Gottlieb (University of St. Gallen; Google Scholar), The Earned Income Tax Credit: Targeting the Poor but Crowding out Wealth:

This paper quantifies the individual, aggregate and welfare effects of the Earned Income Tax Credit (EITC) in the United States. In particular, we analyse the labour supply and saving responses to changes in tax credit generosity and their implications for prices and welfare. Our results show that the EITC is a subsidy on labour income and a tax on savings. An increase in EITC generosity raises labour force participation, reduces savings for many and provides insurance to working poor households. The EITC reduces earnings inequality but increases the skill premium and wealth inequality. A 10% increase in tax credit generosity increases welfare by 0.31% and benefits the majority of the population.

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February 18, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, February 17, 2021

Reuven Avi-Yonah's New Tax Papers

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.  Here is the new list (through February 1, 2021) 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)  197,322 Reuven Avi-Yonah (Michigan) 7,965
2 Dan Shaviro (NYU) 122,147 D. Dharmapala (Chicago) 5,252
3 Lily Batchelder (NYU) 119,581 Ruth Mason (Virginia) 4,876
4 Daniel Hemel (Chicago) 118,393 Lily Batchelder (NYU) 3,851
5 David Gamage (Indiana-Bloom.) 118,044 Bridget Crawford (Pace) 3,790
6 Darien Shanske (UC-Davis) 111,288 Daniel Hemel (Chicago) 3,545
7 David Kamin (NYU) 107,638 Diane Ring (Boston College) 3,497
8 Cliff Fleming (BYU)    105,642 Shu-Yi Oei (Boston College)  3,355
9 Manoj Viswanathan (UC-Hastings) 102,580 David Kamin (NYU) 3,327
10 Rebecca Kysar (Fordham) 101,563 Kim Clausing (UCLA)     3,146
11 Ari Glogower (Ohio State) 100,389 Hugh Ault (Boston College) 2,948
12 Michael Simkovic (USC) 45,201 Margaret Ryznar (Indiana-Indy)   2,584
13 D. Dharmapala (Chicago) 43,384 Richard Ainsworth (Boston Univ.) 2,489
14 Paul Caron (Pepperdine) 37,902 Dan Shaviro (NYU) 2,122
15 Louis Kaplow (Harvard) 34,404 David Gamage (Indiana-Bloom.) 2,016
16 Richard Ainsworth (Boston Univ.) 31,519 Robert Sitkoff (Harvard) 2,016
17 Ed Kleinbard (USC) 27,429 Darien Shanske (UC-Davis)  1,880
18 Vic Fleischer (UC-Irvine) 26,667 Brad Borden (Brooklyn) 1,796
19 Bridget Crawford (Pace) 26,387 Yariv Brauner (Florida) 1,679
20 Brad Borden (Brooklyn) 25,736 Louis Kaplow (Harvard) 1,673
21 Robert Sitkoff (Harvard) 25,672 Paul Caron (Pepperdine)   1,530
22 Jim Hines (Michigan) 25,619 Cliff Fleming (BYU) 1,349
23 Ted Seto (Loyola-L.A.) 24,762 Michael Simkovic (USC) 1,261
24 Gladriel Shobe (BYU) 24,265 Katie Pratt (Loyola-L.A.) 1,260
25 Richard Kaplan (Illinois) 24,250 Ari Glogower (Ohio State) 1,164

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February 17, 2021 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink

Tuesday, February 16, 2021

Osofsky Reviews Wallace's The Troubling Case Of The Unlimited Pass-Through Deduction

Jotwell (Tax) (2016)Leigh Osofsky (North Carolina; Google Scholar), Troubling Legislation (JOTWELL) (reviewing Clint Wallace (South Carolina), The Troubling Case of the Unlimited Pass-Through Deduction: Section 2304 of the CARES Act, 88 Univ. of Chi. L. Rev. Online  (2020)):

Clint Wallace’s short essay, The Troubling Case of the Unlimited Pass-Through Deduction: Section 2304 of the CARES Act, is well worth a read for tax scholars, non-tax scholars, and non-scholars alike. The essay addresses what may be thought of by some as one of the “esoteric” provisions of the CARES Act. The upshot is that, by using the very esoteric nature of the provision as cover, Congress slipped costly, regressive, unjustifiable legislation into the CARES Act, which was sold to the public as progressive, emergency relief from the COVID-19 disaster.

The essay is important for a number of reasons. First, it educates readers about how the CARES Act resurrects an unlimited pass-through deduction for high-income taxpayers. Second, by doing so, it helps readers understand how the CARES Act was actually regressive in important ways. Third, it more broadly cautions readers about some of the unseemly aspects of legislation, in which legislators benefit favored groups in ways that the public is unlikely to understand. Finally, by writing this short essay, Wallace models how scholars have a duty to shine a light on these aspects of the legislative process.

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February 16, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Conservation Easements And Development Rights: Law And Policy

Nancy A. McLaughlin (Utah; Google Scholar) & Ann Taylor Schwing, Conservation Easements and Development Rights: Law and Policy, 169 Tax Notes Fed. 531 (Oct. 26, 2020):

Tax Notes Federal (2020)This article examines the requirements in Internal Revenue Code § 170(h) that limit a taxpayer’s ability to grant the donee of a deductible easement the discretion to approve development on the subject property post-donation.

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February 16, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Zelinsky: A Response To The Initiative To Accelerate Charitable Giving

Edward A. Zelinsky (Cardozo), A Response to the Initiative to Accelerate Charitable Giving, 170 Tax Notes Fed. 755 (Feb. 1, 2021):

IACGThe Initiative to Accelerate Charitable Giving describes itself as “a broad coalition dedicated to promoting common-sense, nonpartisan charitable giving reforms.”

Among its proposals, the initiative would tighten and expand the provisions of the IRC relative to private foundations and donor-advised funds. The initiative performs an important public service by highlighting a topic the Biden administration and the 117th Congress should address and by advancing important proposals.

In this article I respond to the initiative, agreeing with much (but not all) of its perspective and arguing that the rules applied to private foundations should also govern donor-advised funds.

Considerations of fairness and efficiency counsel that similar persons and entities should be taxed and regulated similarly. Donor-advised funds are functional substitutes for private foundations and should be treated equivalently by the law. Consequently, the code’s minimum distribution requirement and its excise tax on net investment incomes, now applicable just to private foundations, should apply to donor-advised funds as well.

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February 16, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, February 15, 2021

Rethinking How We Score Capital Gains Tax Reform

Natasha Sarin (Penn; Google Scholar), Lawrence H. Summers (Harvard), Owen Zidar (Princeton; Google Scholar), & Eric Zwick (Chicago; Google Scholar), Rethinking How We Score Capital Gains Tax Reform:

We argue the revenue potential from increasing tax rates on capital gains may be substantially greater than previously understood. First, many prior studies focus primarily on short-run taxpayer responses, and so miss revenue from gains that are deferred when rates change. Second, the composition of capital gains has shifted in recent years, such that the share of gains that are highly elastic to the tax rate has likely declined. Third, focusing on capital gains tax collection may understate fiscal spillovers from decreasing the preferential tax treatment for capital gains. Fourth, additional base-broadening reforms, like eliminating stepped-up basis and making charitable giving a realization event, will decrease the elasticity of the tax base to rate changes. Overall, we do not think the prevailing assumption of many in the scorekeeping community—that raising rates to top ordinary income levels would raise little revenue—is warranted. A crude calculation illustrates that raising capital gains rates to ordinary income levels could raise $1 trillion more revenue over a decade than other estimates suggest.

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February 15, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: The §104(a)(2) Causality Rule

Tax Court (2020)Two years ago on Valentine’s Day I was rear-ended.  The accident was, literally, a pain in the neck but the injury was relatively minor.  The insurance company fixed my car and also sent me a $2,800 settlement check.  Section 104(a)(2) permits me to exclude all of that $2,800 because of what I call the causality rule: taxpayers can exclude from income any amounts received “on account of” a personal physical injury.

We learn a good lesson about the causality rule in Timothy Stassi and Cindi Stassi v. Commissioner, T.C. Summ. Op. 2021-5 (Feb. 7, 2021) (Judge Kerrigan).  There, Ms. Stassi had sued her former employer.  They settled.  Part of the settlement check was to compensate her for having suffered through an unpleasant work environment, which (generously interpreted) caused a painful outbreak of shingles.  Both the IRS and the Tax Court said the payments were not “on account of” her physical injuries within the meaning of §104(a)(2).  Thus, Ms. Stassi could not exclude any part of the settlement check.

In this post I also want to draw readers’ attention to certain language in Judge Kerrigan’s opinion.  Yes, it is just a summary opinion and so carries no precedential weight, but if the opinion truly reflects Judge Kerrigan’s view of how the §104(a)(2) exclusion works, then it may signal a change in the law. Detail below the fold. 

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February 15, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Sunday, February 14, 2021

The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #1 and #3:

  1. SSRN Logo (2018) [1,101 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [441 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  3. [385 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  4. [309 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois)
  5. [235 Downloads]  5 Lessons on Profit Shifting From U.S. Country-by-Country Data, by Kimberly Clausing (UCLA; Google Scholar)

February 14, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, February 12, 2021

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Ozai's Inter-Nation Equity Revisited

This week, David Elkins (Netanya) reviews a new article by Ivan Ozai (McGill; Google Scholar), Inter-Nation Equity Revisited, 12 Colum. J. Tax L. 58 (2020):

Elkins (2018)

In 1963, Peggy Brewer Richman introduced the concept of inter-nation equity as a cornerstone for normative analysis of international taxation. In 1972, she (now Peggy Musgrave) and her husband Richard Musgrave fleshed out the idea. Their argument was that the international tax base should be allocated in such a way as to recognize the entitlement of countries to tax the income arising in their territories and to allow for some degree of international redistribution.

Since that time, the literature has transformed the term “inter-nation equity” into a catch-all term devoid of any substantive meaning. It is often used simply to denote the vague concept of fairness. Commentators have employed it in ways that denote different and sometimes even contradictory conceptions of the idea. In this week’s article, Ivan Ozai examines the original meaning of the term as envisioned by the Musgraves and proposes a number of measures that might be adopted to promote those ideas.

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February 12, 2021 in David Elkins, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Choi Presents Beyond Purposivism In Tax Law Virtually Today At Florida

Jonathan Choi (Minnesota; Google Scholar) presents Beyond Purposivism in Tax Law virtually at Florida as part of its Tax Colloquium Series:

Unnamed (6)The existence of tax shelters is one of the most important and persistent problems in tax law. And the traditional solution has been purposivism: if tax benefits are only granted when consistent with statutory purpose, then abusive tax shelters should theoretically be impossible. But this solution is incomplete. Although tax shelters claim benefits that exceed statutory purpose, so do many generally accepted tax strategies, like check-the-box elections and UPREITs. Purpose alone cannot separate abusive tax shelters from ordinary tax planning.

This Article therefore argues that we must go beyond purposivism in tax law, complementing purposivist techniques with either structuralism, pragmatism, or formalism. Structuralists find cohesive general purposes in the structure of the tax code; pragmatists apply normative judgments when statutory purposes run out; and formalists apply rules, like canons of construction, that provide determinate answers even when statutory purpose is ambiguous.

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February 12, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, February 11, 2021

Morse Presents The Quasi-Global GILTI Tax Virtually Today At Duke

Susan Morse (Texas; Google Scholar) presents The Quasi-Global GILTI Tax virtually at Duke today as part of its Tax Policy Workshop Series:

Sm55475-largeIt has become more difficult to frame the taxation of global corporate profit as a matter of national tax policy. For decades, the consensus starting point gave the corporate income tax national boundaries. Now, it seems more comfortable to think of some elements of the corporate income tax as global or at least quasi-global taxes – sources of public revenues levied on a world-wide basis.

Perhaps the U.S. minimum tax on global intangible low-taxed income, or GILTI approaches the  global tax description. The tax on GILTI, enacted in 2017, describes a tax base measured by the income of controlled foreign corporations or CFCs, such as corporate subsidiaries of U.S.-parented multinationals. This tax base roughly equals non-subpart F CFC income in excess of a 10% exempt return on tangible assets. GILTI is included in U.S. shareholders’ tax base subject to the allowance of a 50 percent deduction, which means that GILTI is taxed at a lower U.S. rate. The tax on GILTI is reduced (but not below zero) by a foreign tax credit equal to 80 percent of foreign taxes paid or accrued on the same income, where foreign taxes are calculated in the aggregate and not on a per-country basis.

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February 11, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Scheuer & Slemrod: Taxing Our Wealth

Florian Scheuer (Zurich; Google Scholar) & Joel Slemrod (Michigan; Google Scholar), Taxing Our Wealth, 35 J. Econ. Perspectives 207 (2021):

In recent years, many European countries decided that a wealth tax did not belong in their armory of tax instruments. Although the United States has never had such a tax, perceptions of unacceptably high income and wealth inequality have recently galvanized support for one, and two prominent US senators have produced detailed proposals. These proposals differ quite substantially from the experience of their European counterparts. Thus, the evidence about the consequences of wealth taxation in Europe is in any event of limited usefulness. On one hand, the broader base along with promised expanded enforcement will limit the revenue leakage and distortion from avoidance and evasion, while exacerbating real behavioral responses. On the other hand, the higher top rates and targeting of the superrich will concentrate the revenue pressure on those taxpayers with the best means and strongest incentives to avoid the tax. Hence, when evaluating these US wealth tax proposals, one can at best hold one’s breath and extrapolate broadly from the European wealth tax experience and the US experience with similar taxes, and gain insight from optimal tax reasoning about whether to tax capital via an annual wealth tax.

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February 11, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

The TCJA Perpetuates The Tax Code's Gender Bias

Anne Bryson Bauer (Pittsburgh), We Can Do It? How the Tax Cuts and Jobs Act Perpetuates Implicit Gender Bias in the Code, 43 Harv. J. L. & Gender 1 (2020):

In December of 2017 Congress passed sweeping tax “reform” legislation known as the Tax Cuts and Jobs Act. This article highlights three aspects of the legislation that reflect implicit bias in the Code and facilitate the marginalization of women as a result of tax policy that fails to consider underlying demographic data with respect to the equitable distribution of tax expenditures. Specifically, this article analyzes the elimination of the alimony inclusion/deduction regime under §§ 71 and 215 of the Code, the disallowance of a deduction for legal fees associated with the settlement of sexual harassment and abuse claims that include nondisclosure agreements under § 162(q), and specific provisions designed to promote small businesses that exclude the vast majority of businesses owned by women.

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February 11, 2021 in Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

Báez & Brauner: Taxing The Digital Economy Post-BEPS

Andrés Báez (Universidad Carlos III de Madrid; Google Scholar) & Yariv Brauner (Florida; Google Scholar), Taxing the Digital Economy Post BEPS ... Seriously, 58 Colum. J. Transnat'l L. 121 (2019):

For years the advent of the digital economy has left countries stumped in their attempt to tax income earned by foreign firms without physical presence within their jurisdiction. International organizations and their member countries have failed in their attempts to tweak the rules of the international tax regime and address these challenges presented by the digital economy. This article argues that such conservative approach could not work, and fundamental reform is inevitable. The article proposes a withholding tax solution, explaining its merits and demonstrating its superiority over alternative reforms proposed to date.

February 11, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, February 10, 2021

Galle, Lund & Polsky: Does Tax Matter? Executive Compensation After § 162(m)'s Repeal

Brian D. Galle (Georgetown; Google Scholar), Andrew Lund (Villanova) & Gregg D. Polsky (Georgia; Google Scholar), Does Tax Matter? Evidence on Executive Compensation after 162(m)'s Repeal, 26 Stan. J. L., Bus. & Fin. ___ (2020):

As part of the most sweeping federal tax reform in a generation, the Tax Cuts and Jobs Act (“TCJA”) radically altered the tax treatment of compensation paid to senior executives of public companies. Prior to the TCJA, payment of such compensation in excess of one million dollars was non-deductible except to the extent the compensation was performance-based. The TCJA eliminated the exception so that all senior executive compensation above one million dollars is now non-deductible regardless of whether it is performance-based or not.

This reform provides a natural experiment to study the role of tax law in influencing managerial pay decisions, an issue that has been debated for decades by scholars and policymakers. Did the elimination of the performance-based pay exception influence senior executive compensation decisions?

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February 10, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Hasen: Debt And Taxes

David Hasen (Florida; Google Scholar), Debt and Taxes:

The federal income tax conceptualizes the standard loan transaction as an exchange of cash for promises to pay interest and to repay the amount borrowed by the term. This formulation is subtly wrong in ways that have led to a weaker foundation for existing tax rules than they merit. Conceptualizing loans instead as closely akin to leases places most of the tax rules for debt on sounder footing because it clarifies that the consideration paid for the use of the loan proceeds is interest. If interest is the cost of the use of money, then simple borrowing is a fully-paid-for transaction, full basis credit in the loan proceeds for the period for which interest is paid is appropriate, and cancellation of debt is a straightforward accession to wealth in the period in which it occurs. These conclusions hold whether the interest is deductible or not and are consistent with current law, which has come under fire from some quarters.

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February 10, 2021 in Scholarship, Tax, Tax Scholarship | Permalink