Paul L. Caron
Dean


Thursday, February 6, 2020

Patriotic Philanthropy? Financing The State With Gifts To Government

Margaret H. Lemos (Duke) & Guy-Uriel Charles (Duke), Patriotic Philanthropy? Financing the State with Gifts to Government, 106 Cal. L. Rev. 1129 (2018):

This Article offers a positive and normative account of an important and growing trend: wealthy individuals are increasingly giving their money to the government to encourage the government to fund particular projects that these individuals want the government to pursue. Such gifts—dubbed “patriotic philanthropy” by one prominent donor—raise fundamental questions about the role that private money plays and ought to play in public policy-making.

Duke

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February 6, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Shaviro Reviews Clausing's The Progressive Case For Global Capital And Gale's Fiscal Therapy

Daniel Shaviro (NYU), Writing Books Versus Journal Articles (JOTWELL) (reviewing Kimberly Clausing (Reed College; moving to UCLA), Open: The Progressive Case for Free Trade, Immigration, and Global Capital (Harvard University Press 2019); and William G. Gale Brookings Institution), Fiscal Therapy: Curing America’s Debt Addiction and Investing in the Future (2019)):

Clausing GaleWhy write a book rather than journal articles? Insofar as we write for ourselves, it’s a function of the project. Some ideas for projects may best lend themselves to articles, but others may need to be book-length in terms of their scope. But we also write for other people, and one great thing about being an academic is that you have wide entrepreneurial choice regarding which audiences you wish to reach—be it in general, or project-by-project. There’s no right or wrong about it (well, maybe there are better and worse choices sometimes), any more than novels should all fit in a particular genre, or scientific research should restrict itself to a particular subject area or methodology. There’s also no right answer as between the aims of advancing knowledge, engaging in art for art’s sake, and attempting to improve the world—all of these enterprises have value, and of course they often overlap.

Two outstanding recent books by prominent tax economists—Kim Clausing and William Gale—show how attempting to improve the world can overlap with advancing the other goals noted above through clear, lucid, convincing explanation and analysis.

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February 6, 2020 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Oh & Zolt: Wealth Tax Design — Lessons From Estate Tax Avoidance

Jason Oh (UCLA) & Eric M. Zolt (UCLA), Wealth Tax Design: Lessons from Estate Tax Avoidance:

Presidential 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 the aggregate wealth of those subject to a wealth tax. 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 currently 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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February 6, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

Wednesday, February 5, 2020

Yuskavage Presents Professional Tax Preparers Reduce Tax Compliance Today At Georgetown

Alex Yuskavage (Office of Tax Analysis, U.S. Treasury Department) presents Seeking Professional Advice: The Effects of Tax Preparers on Compliance (with Jason DeBacker (South Carolina), Bradley Heim (Indiana) & Anh Tran (Indiana)) at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Brian Galle:

Georgetown (2016)Professional and legal advisors, such tax preparers and lawyers, are expected to help clients to better understand and comply with the law. We test this expectation in the context of tax compliance, using data from IRS random audits. We exploit the diffusions of tax preparation services within a ZIP code and workplace as plausibly exogenous instruments for the taxpayers’ decision to adopt the preparation service. Contrary to the expectation, we find that professional tax preparers reduce tax compliance.

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February 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Christians Presents Blueprint For A More Sustainable Global Tax System Today At UCLA

Allison Christians (McGill) presents Blueprint For a More Sustainable Global Tax System: A Proposal at UCLA today as part of its Colloquium on Tax Policy and Public Finance hosted by Kirk Stark and Jason Oh:

Christians (2019)The international tax system incentivizes unsustainable business practices because it ignores the private profits created by offloading social and environmental costs to the public. This paper proposes a corrective in the form a blueprint for reforming the way multinational business is taxed. The blueprint calls for applying living wage and life cycle analyses to the rules for establishing market prices for tax purposes (namely, transfer pricing and permanent establishment income attribution rules). A relatively complex but arguably more accurate method and a complementary but relatively simpler proxy method are proposed. The blueprint addresses the implications of each method in the context of the legal parameters for cross-border tax cooperation via treaty-based and domestic coordinating rules and processes. The paper concludes that the blueprint provides a viable a starting point to make the global tax system support sustainable business practices without running afoul of international standards and without necessarily driving down foreign investment.

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February 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Academic Feeder Judges

Howard Wasserman (Florida Int'l), Academic Feeder Judges:

This paper identifies “academic feeder judges”—the federal judges (especially from courts of appeals) for whom law professors clerked at the beginning of their careers and the judges who “produce” law professors from the ranks of their former clerks. The study is based on a summer 2019 review of publicly available biographies and c.v.’s of full-time faculty at ABA-accredited law schools, identifying more than 3000 “academic former clerks” and the judges for whom each clerked. From this, the paper identifies:

  • 101 lower federal judges with the most academic former clerks,
  • 52 federal trial judges,
  • 53 federal judges appointed since 1995,
  • top state-court judges, and
  • SCOTUS justices, current and past.

Circuit

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February 5, 2020 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (1)

Ring Presents Falling Short In The Data Age Today At Toronto

Diane Ring (Boston College) presents Falling Short in the Data Age (with Shu-Yi Oei (Boston College)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Ring (2017)Humans are imperfect and do not always comply with the law, but the reality is that we are sometimes permitted to fall short of law’s requirements without consequences. This informal space to fall short and not be held accountable—which may arise from a confluence of information imperfections, resource constraints, politics, or luck—exists in addition to formal legal provisions that allow flexibility and discretion (such as tiered penalties or equitable provisions allowing leniency under specified circumstances). Fall-short spaces often pass unnoticed, but are in fact quite significant in intermediating the relationship between humans and the law.

This Article examines how the increasing access to data and information will change the availability and shape of law’s fall-short spaces. We introduce a taxonomy of how leeway arises, outlining the reasons it exists and the different ways it is deployed. Applying this taxonomy, we show how increasingly ubiquitous data and information have caused and will continue to cause the availability of leeway to contract, and we highlight the risk that we will see disparate contraction for different populations.

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February 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Haslehner Presents Tax Competition: The Good, The Bad, And The Ugly Tomorrow At Indiana

Werner Haslehner (ATOZ Chair for European and International Taxation, University of Luxembourg) presents Tax Competition — the Good, the Bad, and the Ugly at Indiana tomorrow as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

HaslenherInternational tax competition is a key driver of domestic tax policy, regional harmonisation and global coordination efforts. There is broad political consensus that tax competition ought to be reined in, while it is equally frequently argued that countries need to “stay competitive”.

This apparent paradoxical stance of supporting and combatting tax competition is regularly resolved by adding the label “harmful” to describe censured tax measures. Yet this label is ill defined and ultimately inadequate to assess tax policy choices.

The paper analyses the positive and negative aspects of tax competition and proposes an alternative and more appropriate delineation of “good” and “bad” tax competition that is based on a consideration of the ethics of State action and more adequate to protect the “dignity of states”.

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February 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Monday, February 3, 2020

Gamage Presents The Case For Wealth Tax Or Mark-To-Market Reforms Today At BYU

David Gamage (Indiana) presents The Political-Instability Benefits of Deferral and the Case for Wealth Tax or Mark-to-Market Style Tax Reform (with John Brooks (Georgetown)) at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

Gamage (2019)The U.S. tax system does a very poor job of taxing the ultra-wealthy, a fact that is well known in the legal academic literature. This article argues that fixing this state of affairs requires ending deferral, by replacing the realization-based nature of the existing income tax with some approach for current-assessment such as a wealth tax or mark-to-market style tax reform. Most prior scholarship on tax reform has assumed that the ways in which the existing tax system are broken with respect to the ultra-wealthy can be fixed while retaining the realization-based nature of the tax system, through ending the financial benefits of deferral by recapturing these benefits upon realization on the back-end. However, this article argues that both theory and historical experience with tax administration demonstrate that these reforms are unlikely to succeed when confronted with expected future levels of political instability. Accounting for the implications of political instability, only current-assessment reforms like wealth tax or mark-to-market style tax reforms are likely to succeed at fixing the ways that the existing tax system is broken with respect to the ultra-wealthy.

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February 3, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: The Common Law Mailbox Rule Lives!

Tax Court (2017)The United States Postal Service (USPS) is a very large, complex organization, as detailed in this webpage.  It delivers some 146 billion pieces of mail a year.  It has a reputation for reliability.  The reputation is so strong that Congress actually made it the foundation of §7502’s statutory mailbox rule.  You know the rule: timely mailing is timely filing.

In Michael J. Seely and Nancy B. Seely v. Commissioner, T.C. Memo. 2020-6 (Jan.y 13, 2020) (Judge Vasquez) the Post Office apparently failed to put a postmark on an envelope containing the taxpayer's Tax Court petition.  The petition was received late but the Tax Court allowed the taxpayer the benefit of the timely-mailing rule, even though the statute requires a postmark and the regulations assume one.  This case shows us how the common law mailbox rule still lives and breathes in the statutory and regulatory gaps.  Details below the fold.

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February 3, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (2)

Sunday, February 2, 2020

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 as #4 and #5:

  1. SSRN Logo (2018)[737 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
  2. [241 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)
  3. [185 Downloads]  Why a Wealth Tax is Definitely Constitutional, by John Brooks (Georgetown) & David Gamage (Indiana)
  4. [129 Downloads]  Tax Wars: How to End the Conflict over Taxing Global Digital Commerce, by Arthur Cockfield (Queen's University)
  5. [129 Downloads]  Toward a 21st-Century International Tax Regime, by Reuven Avi-Yonah (Michigan) & Kimberly Clausing (Reed College; moving to UCLA)

February 2, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, January 31, 2020

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Hoffer's Tax Theory & Feral AI

This week, Michelle Layser (Illinois) reviews Stephanie Hoffer (Ohio State), Tax Theory & Feral AI, Public Law & Theory Working Paper Series No. 524 (Jan. 16, 2020)

Layser (2018)

The robot invasion is upon us. It started out innocently enough, with cute little robots sweeping pennies from the sidewalk. But then people started abandoning their robots in misguided acts of performance art and neglect. Some of the robots they abandoned were digital creatures who lurked at the corners of the internet, going feral and getting smarter. They learned how to write novels and poetry. People bought the prose and verse that the robots had created. And no one paid taxes.

Fortunately, this horror story is fiction (for now). Variations of this hypothetical were presented in a new working paper by Professor Stephanie Hoffer. Hoffer imagines a world in which unowned, digital AI robots are running loose on the internet, creating new value and engaging in real economic transactions. She then invites her readers to join her as she moves through a thought experiment that considers a variety of problems associated with taxing feral AI.

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January 31, 2020 in Michelle Layser, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Hemel: Indexing, Unchained

Daniel Hemel (Chicago), Indexing, Unchained, 83 Law & Contemp. Probs. ___ (2020):

Inflation indexing is an important and controversial issue in the design of tax systems and transfer programs. The choice of whether — and how — to adjust policy parameters for inflation carries significant political, distributional, and macroeconomic implications. In recent years, indexing has gained particular attention in three policy contexts: (1) whether to switch from an “unchained” to “chained” inflation index when calculating Social Security benefits; (2) whether to make a similar unchained-to-chained shift when setting federal income tax parameters such as bracket thresholds and deduction amounts; and (3) whether to index basis for inflation when calculating capital gains. Hundreds of billions of dollars ride on the resolution to these three questions.

Across all of these contexts, the debate over inflation indexing is generally framed in terms of “accuracy.” Advocates on one side argue that the use of a particular index would lead to more accurate cost-of-living adjustments or more accurate assessments of tax liability, while opponents of the change contest those claims. This Article — an invited contribution to a symposium issue on Law and Macroeconomics, based on remarks at a September 2019 conference at Georgetown University Law Center — argues that the emphasis on “accuracy” misses the mark in two respects.

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January 31, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, January 30, 2020

Dean Presents A Constitutional Moment For Cross-Border Taxation Today At Duke

Steven Dean (NYU) presents A Constitutional Moment for Cross-Border Taxation at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

Dean (2020)For nearly a century, the taxation of cross-border transactions proved remarkably stable. But in the wake of the financial crisis, the consensus underlying that stability has finally fractured. In the United States, the austerity that followed the great recession prompted calls for tax law changes at or beyond the limits of Congressional authority. The taxation of cross-border transactions finds itself at a similar crossroads, but with fewer signposts. Pivotal questions about the assumptions at the heart of the taxation of cross-border transactions have entered the public discourse. An unprecedented popular focus and extraordinary actions by governments and intergovernmental actors have signaled the start of a constitutional moment for cross-border taxation. A window of opportunity exists for revising the basic law governing cross-border taxation, but a conservative countermobilization works to preserve the status quo.

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January 30, 2020 in Colloquia, Scholarship, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, January 29, 2020

Kleiman Presents Tax Limits And The Future Of Local Democracy Today At UC-Irvine

Ariel Jurow Kleiman (San Diego) presents Tax Limits and the Future of Local Democracy, 133 Harv. L. Rev. ___ (2020), at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

Kleiman (2020)Property tax limits are state-level laws that place caps on local governments’ tax rates and revenue. These statutory limits, which put pressure on already strapped cities and counties in forty-six states, present an inexorable dilemma for local policymakers. On the one hand, they may cause cuts to vital services, bankruptcy, and reliance on regressive revenue sources. At the same time, however, tax limits may reflect genuine concerns about government profligacy and nonresponsiveness. While much research has focused on the first side of the dilemma—examining the laws’ fiscal consequences—this Article explores the second, probing how tax limits affect the distribution of political power between local voters and policymakers.

The Article makes three contributions. First, it argues that property tax limits have focused too strongly on a tax reduction goal to the exclusion of other potential objectives. Instead, tax limits can improve local public control and oversight of government fiscal decisions. Prioritizing public control would increase voter satisfaction and expand opportunities for taxpayer voice.

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January 29, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Hatfield: Professionally Responsible Artificial Intelligence — Tax Professionals As A Case Study

Michael Hatfield (University of Washington), Professionally Responsible Artificial Intelligence, 51 Ariz. St. L.J. 1057 (2019):

As artificial intelligence (AI) developers produce more applications for professional use, how will we determine when the use is professionally responsible? One way to answer the question is to determine whether the AI augments the professional’s intelligence or whether it is used as a substitute for it. To augment the professional’s intelligence would be to make it greater, that is, to increase and improve the professional’s expertise. But a professional who substitutes artificial intelligence for his or her own puts both the professional role and the client at risk. The problem is developing guidance that encourages professionals to use AI when it can reliably improve expertise but discourages substitution that undermines expertise.

This Article proposes a solution, using tax professionals as a case study. There are several reasons tax professionals provide a good case study, including that tax practice has a long history of computerization and that AI is already being developed for tax professionals. Tax professionals, including not only lawyers but certified public accountants, are directly regulated by the Internal Revenue Service (IRS), in addition to their regulation by professional bodies.

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January 29, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Burden Of Proof In Tax Cases: Valuation And Ranges

John A. Townsend (Townsend & Jones, Houston), Burden of Proof in Tax Cases: Valuation and Ranges — An Update, 73 Tax Law. ___ (2020):

I ABA Tax Lawyer (2019)n this article, I update a previous article, John A. Townsend, Burden of Proof in Tax Cases: Valuations and Ranges, 2001 TNT 187-37 (2001). I discuss the difficulty in many valuation cases of determining a finite valuation point by the required degree of persuasion (more likely than not in most civil cases). This point was made cogently in a frequently cited opinion of by the Delaware Court of Chancery (which I quote in the next paragraph):

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January 29, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, January 28, 2020

Hamilton Project Hosts Conference Today On Tackling The Tax Code: Efficient And Equitable Ways To Raise Revenue

The Hamilton Project hosts a conference today on Tackling the Tax Code: Efficient and Equitable Ways to Raise Revenue at the Brookings Institution (webcast here):

TacklingThe United States needs additional revenue sources for investments that support broadly shared growth, for fiscal balance, and for a more equitable tax code. As policymakers address these challenges, important questions about taxes arise—who pays them, what effects do they have on the economy, and how much revenue can they raise? Therefore, it is necessary to examine how our nation’s tax code can most effectively provide for a strong government that promotes not only growth, but also widespread economic well-being and reduced inequality.

Panel #1:  Efficient and Equitable Ways to Raise Revenue

  • Timothy  Geithner (President, Warburg Pincus)
  • Penny Pritzker (Founder and Chair, PSP Partners) (moderator)
  • Robert Rubin (Former U.S. Treasury Secretary)
  • Lawrence Summers (Harvard)

Panel #2:  From a Financial Transactions Tax to a VAX

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January 28, 2020 in Conferences, Scholarship, Tax Conferences, Tax Scholarship | Permalink | Comments (1)

Taxing Pain And Suffering

Adam Kern (J.D. 2019, NYU), Note, Taxing Pain and Suffering, 94 N.Y.U. L. Rev. 507  (2019):

Every year, billions of dollars are awarded as compensation for pain and suffering. A hard question—one that has vexed courts, legislators, and academics alike—is how we should tax them (if, indeed, we should tax them at all). In this Note, I articulate a new answer. If we take seriously the value of equality between injured people and uninjured people, we ought to tax compensatory damages for pain and suffering.

In Part I, I criticize an influential approach to the taxation of compensatory damages for pain and suffering. This approach appeals to various intuitive normative principles to justify exempting pain and suffering damages from tax. I argue that these principles are estranged from their normative foundations. Such principles are intuitive because they seem to embody an ideal of equality between injured people and uninjured people. But, as I show in Part I, equality does not always justify exempting pain and suffering damages from tax. Sometimes, a well-designed tax on pain and suffering damages serves equality better than an exemption does.

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January 28, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Spring 2020 Law Review Article Submission Guide

SubmissionsNancy Levit (UMKC) & Allen Rostron (UMKC) have updated their incredibly useful document, which contains two charts for the Spring 2020 submission season covering 203 law reviews.

The first chart (pp. 1-52) contains information gathered from the journals’ websites on:

  • Methods for submitting an article (such as by e-mail, ExpressO, regular mail, Scholastica, or Twitter)
  • Any special formatting requirements
  • How to request an expedited review
  • How to withdraw an article after it has been accepted for publication elsewhere

The second chart (pp. 53-59) contains the ranking of the law reviews and their schools under six measures:

  • U.S. News: Overall Rank
  • U.S. News: Peer Reputation Rating
  • U.S. News: Judge/Lawyer Reputation Rating
  • Washington & Lee Citation Ranking
  • Washington & Lee Impact Factor
  • Washington & Lee Combined Rating

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January 28, 2020 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (0)

Monday, January 27, 2020

Mazur Presents Taxing The Robots Today At BYU

Orly Mazur (SMU) presents Taxing the Robots, 46 Pepp. L. Rev. 277 (2019), at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

Mazur (2020)Robots and other artificial intelligence-based technologies are increasingly outperforming humans in jobs previously thought safe from automation. This has led to growing concerns about the future of jobs, wages, economic equality and government revenues. To address these issues, there have been multiple calls around the world to tax the robots. Although the concerns that have led to the recent robot tax proposals may be valid, this Article cautions against the use of a robot tax. It argues that a tax that singles out robots is the wrong tool to address these critical issues and warns of the unintended consequences of such a tax, including limiting innovation. Rather, advances in robotics and other forms of artificial intelligence merely exacerbate the issues already caused by a tax system that under-taxes capital income and over-taxes labor income.

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January 27, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Online Learning And The Future Of Legal Education

David I. C. Thomson (Denver), Online Learning and the Future of Legal Education, 70 Syracuse L. Rev. ___ (2019):

The debate about whether we should teach law online is over. Indeed, it has been over for some time, we just may not have noticed. Today the tools, disciplines, and practices of online learning pervade law school courses, whether nominally taught online or not. Whether through a site that offers quizzes on legal subjects, or through a full-featured learning management system which hosts links to myriad supplemental materials for the course, law professors are consistently using interactive and engaging online learning tools to enhance their courses. With new technology in all spheres we tend to think in binary terms. Yes or no. On or off. All or none. But history teaches us that is this is not how technology is adopted, and as a result, it is rarely the most productive way to think of it, and it does little to help us prepare for the new paradigm. This is because, quite simply, we live in a hybrid world, and have for at least two decades. We are somewhat late to the party, but the future of legal education will be even more hybrid of a learning experience than it already is. Thus, the question of whether we should or should not teach law online is no longer the interesting question (if it ever was). The interesting question, or questions, is which courses ought to be taught online and in what ways and to what degree should we deliver small or large parts of our courses online?

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January 27, 2020 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: §6672 Trust Fund Recovery Penalty Is Really A Penalty ... Sort Of

Tax Court (2017)Sometimes we get so used to norms of practice that we forget the legal text governing that practice.  Last week the Tax Court taught that text is still important.  In David J. Chadwick v. Commissioner, 154 T.C. No 5. (Jan. 21, 2020) (Judge Lauber), the Court held that the IRS must comply with §6751(b)’s supervisory approval requirements before assessing the §6672 Trust Fund Recovery Penalty.  That is because the text of §6751(b) says those requirements apply to any “penalty” and the text of §6672 permits the IRS to assess a “penalty.”

Some may laugh!  Some may snort “It’s so simple!”  But, truly I tell you, nothing is simple when you combine the Tax Code and lawyers.  While the lesson may seem simple, it’s more nuanced than you may realize.  And even though this is a reviewed opinion, it may be of surprisingly limited reach.  Details below the fold.

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January 27, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (3)

Sunday, January 26, 2020

An Empirical Investigation Of Legal Scholarship On Religion

James C. Phillips (Stanford), Is U.S. Legal Scholarship “Losing [Its] Religion” Or Just Playing Favorites?: An Empirical Investigation, 1998–2012, 2018 Pepp. L. Rev. 139 (2019):

The place of religion in America is changing. This paper seeks to understand that change in a narrow but influential context: legal scholarship. Focusing on the time period after the Supreme Court struck down RFRA as applied to the states and a flurry of state-level RFRA’s in the mid 2010’s, the study examines nearly 1300 law review articles to present a quantitative intellectual history. The study finds that religion is portrayed increasingly less positively over the period, based on a five-point positivity scale created for the study. The paper also finds that some faiths are portrayed more positively (Native American religions, Islam, Judaism, and other non-Christian faiths) than others (general Christianity, Catholicism, and other specific Christian faiths).

Cleff 1
Cleff 2

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January 26, 2020 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (1)

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, with some minor reshuffling within the Top 5:

  1. SSRN Logo (2018)[724 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
  2. [321 Downloads]  EU General Anti-(Tax) Avoidance Mechanisms: From GAAP to GAAR, by Rita de la Feria (University of Leeds)
  3. [222 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)
  4. [221 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
  5. [167 Downloads]  Why a Wealth Tax is Definitely Constitutional, by John Brooks (Georgetown) & David Gamage (Indiana)

January 26, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, January 24, 2020

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Chason's Cryptocurrency Hard Forks And Rev. Rul. 2019-24

This week, Young Ran (Christine) Kim (Utah) reviews a new work by Eric D. Chason (William & Mary), Cryptocurrency Hard Forks and Revenue Ruling 2019-24, 39 Va. Tax Rev. 277 (2019).

6a00d8341c4eab53ef022ad3a74c80200d-300wi (1)When the IRS issued Revenue Ruling 2019-24 (the "Ruling") on the tax treatment of hard forks and airdrops of cryptocurrencies, many people believed that the Ruling would offer guidance on the tax issues of both hard forks and airdrops that the community of cryptocurrency users generally understand. Is that so? Many commentators and investors in cryptocurrencies say no (see e.g., Mathew Beedham, The IRS' Latest Cryptocurrency Tax Guidance Shows It Still Doesn't Get It). Eric Chason's new work, Cryptocurrency Hard Forks and Revenue Ruling 2019-24, 39 Va. Tax Rev. 277 (2019), is soundly in line with such criticism.

As an introduction, the Ruling is understood as the IRS’s response to tax issues arising from the hard fork of the Bitcoin blockchain that resulted in the creation of Bitcoin Cash, a new cryptocurrency. The hard fork resulted in a windfall to owners of Bitcoin, who, at the time of the hard fork, received one unit of Bitcoin Cash for each unit of Bitcoin owned. This hard fork resulted in many unanswered tax issues relating to such newly created cryptocurrency.

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January 24, 2020 in Christine Kim, Scholarship, Tax, Tax Scholarship, Tax Workshops, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

10th Annual Tax Policy Lecture On Taxing Wealth Today At Florida

The University of Florida Law Graduate Tax Program hosts the 10th Annual Ellen Bellet Gelberg Tax Policy Lecture today on Taxing Wealth (webcast):

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January 24, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, January 23, 2020

Ring Presents Falling Short In The Data Age Today At Duke

Diane Ring (Boston College) presents Falling Short in the Data Age (with Shu-Yi Oei (Boston College)) at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

Ring (2017)Humans are imperfect and do not always comply with the law, but the reality is that we are sometimes permitted to fall short of law’s requirements without consequences. This informal space to fall short and not be held accountable—which may arise from a confluence of information imperfections, resource constraints, politics, or luck—exists in addition to formal legal provisions that allow flexibility and discretion (such as tiered penalties or equitable provisions allowing leniency under specified circumstances). Fall-short spaces often pass unnoticed, but are in fact quite significant in intermediating the relationship between humans and the law.

This Article examines how the increasing access to data and information will change the availability and shape of law’s fall-short spaces. We introduce a taxonomy of how leeway arises, outlining the reasons it exists and the different ways it is deployed. Applying this taxonomy, we show how increasingly ubiquitous data and information have caused and will continue to cause the availability of leeway to contract, and we highlight the risk that we will see disparate contraction for different populations.

Continue reading

January 23, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Peroni Presents Expanded Worldwide Versus Territorial Taxation After The TCJA Today At Northwestern

Robert Peroni (Texas) presents An Updated Look at Expanded Worldwide Versus Territorial Taxation After the TCJA (with J. Clifton Fleming (BYU) & Stephen Shay (Harvard)) at Northwestern today 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:

Peroni (2020)This paper is a spinoff from J. Clifton Fleming (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Expanded Worldwide Versus Territorial Taxation after the TCJA, 161 Tax Notes 1178 (Dec. 3, 2018): In the run up to enactment of the 2017 Tax Cuts and Jobs Act (TCJA) one of the principal U.S. tax policy issues was how foreign-source, active-business income of U.S. multinational enterprises (MNEs) should be taxed by the United States if the system of deferring U.S. tax on active income of a foreign subsidiary was ended. Should active foreign income be taxed under a territorial or exemption system—i.e. bear no residual U.S. tax—or should it be subjected to expanded worldwide taxation—i.e. current taxation at regular U.S. rates coupled with a credit for foreign income taxes paid or accrued, but limited to the U.S. tax on the foreign-source income as measured for U.S. tax purposes.

The opposing sides were not without common ground. Both agreed that the existing U.S. system for taxing the foreign-source, active-business income of U.S. MNEs needed to be changed because it generally did not impose U.S. tax until the active income of foreign subsidiaries was repatriated, either through dividends or by sale of subsidiary stock at a price reflecting accumulated foreign-source income. 

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January 23, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Layser Presents Designing Community-Oriented Place-Based Tax Incentives Today At Indiana

Michelle D. Layser (Illinois) presents When, Where, and How to Design Community-Oriented Place-Based Tax Incentives at Indiana today as part of its Tax Policy Colloquium Series hosted by David Gamage and Leandra Lederman:

Layser (2018)Place-based tax incentives are frequently used by federal, state, and local governments to encourage investment in low-income areas. The newest federal incentive, the Opportunity Zones tax law, has been criticized for lacking safeguards for low-income communities. However, Opportunity Zones are just the latest chapter in a long history of place-based tax incentives that lack any clear objective to benefit residents of targeted communities. Meanwhile, no standard exists to describe the ideal community-oriented place-based tax incentive. This Article provides that baseline by explaining when, where, and how to design community-oriented place-based tax incentives. It argues that place-based tax incentives should be designed to reduce the underlying, geographic causes of neighborhood inequality.

Accordingly, this Article presents a two-step approach to tax incentive design. The first step draws on geography, sociology, and communication theories to determine when place-based tax incentives can be used to reduce spatial inequities. Using Geospatial Information System (GIS) mapping methods, it demonstrates how lawmakers can use public data to determine where people are likely to experience spatial disadvantage. The second step draws on tax theory to show how place-based tax incentives can maximize programmatic benefits and achieve the desired distributive outcomes.

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January 23, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

International Tax Symposium In Honor Of Tim Edgar

Symposium, Re-Imagining Tax for the 21st Century: Inspired by the Scholarship of Tim Edgar (York University, Osgoode Hall Law School):

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January 23, 2020 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Infanti Delivers Lecture On Our Taxing Selves Today At Pittsburgh

Anthony Infanti delivers a lecture on Our Taxing Selves at Pittsburgh today :

Infanti (2020)In this inaugural lecture for the Christopher C. Walthour, Sr. Professorship of Law, I reflect on my two decades of work at the University of Pittsburgh School of Law in the fields of comparative tax law and critical tax theory. I connect my personal “outsider” story to these two fields, both of which themselves embrace “outsider” perspectives on the law, albeit in somewhat different senses of the word. In doing so, I draw on my most recent book, Our Selfish Tax Laws: Toward Tax Reform That Mirrors Our Better Selves (The MIT Press, 2018).

Our Selfish Tax Laws builds on my past comparative tax work by providing case studies that demonstrate the expressive function of tax law, showing how the choices made by different countries in constructing their tax laws send messages about what and whom they value that are woven into their cultural fabrics.

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January 23, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Wednesday, January 22, 2020

Hoffer: Tax Theory And Feral AI

Stephanie R. Hoffer (Ohio State), Tax Theory and Feral AI:

This essay is a sci-fi thought experiment about the significance of personhood in income taxation, meant to explore the validity of currently prevailing justifications for the tax. Assume that the year is 2050. Developers, human or otherwise, have created non-sentient artificial intelligences (AIs) capable of transacting in digital currency. Assume, perhaps improbably, that some of these AIs are “feral.” A nonsentient AI might be feral in the future because it was never the property of a human, because it was abandoned by a human, or because it “escaped” into the wild. Imagine that non-sentient feral AIs create new value in the economy by doing things like writing, designing, securities and currency trading, planning, and 3D printing. They monetize that new economic value as active participants in the economy who sell goods or services to consumers. Intuition suggests that the value newly created by these independent economic actors should be included in the tax base and, in particular, the income tax base. Under current law, it is not.

The federal income tax law, and the theories that underpin it, have yet to fully address the status of non-human earners. Scholarship on AI and taxation primarily has focused on the taxation of AI’s owners, on whether AI itself should be taxed despite being owned by someone else, or on the philosophical question of taxing sentient AI.

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January 22, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Brooks & Gamage: Why A Wealth Tax Is Definitely Constitutional

John R. Brooks (Georgetown) & David Gamage (Indiana), Why a Wealth Tax is Definitely Constitutional:

Wealth tax reform proposals are playing a major role in the 2020 presidential campaign. However, some opponents of these wealth tax reform proposals have claimed that a wealth tax would be unconstitutional. Other prominent critics have argued that wealth tax reforms are probably unconstitutional, so that, after review by the courts, the “likeliest outcome is that a wealth tax will raise exactly zero dollars.”

These claims are wrong. More precisely, these claims are wrong conditioned on wealth tax legislation being carefully drafted so as to ensure its constitutionality. As we will explain in this essay, properly drafted, wealth tax reform legislation is definitely constitutional and thus capable of raising substantial revenues to fund new spending programs.

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January 22, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

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 January 5, 2020) 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)  187,671 Reuven Avi-Yonah (Michigan) 7,341
2 Dan Shaviro (NYU) 119,866 David Kamin (NYU) 5,518
3 David Gamage (Indiana-Bloom.) 115,750 Lily Batchelder (NYU) 5,438
4 Lily Batchelder (NYU) 115,511 Daniel Hemel (Chicago) 4,860
5 Daniel Hemel (Chicago) 114,566 David Gamage (Indiana-Bloom.) 3,524
6 Darien Shanske (UC-Davis) 109,283 Dan Shaviro (NYU) 3,263
7 Cliff Fleming (BYU) 104,201 Bridget Crawford (Pace) 3,136
8 David Kamin (NYU) 104,115 Darien Shanske (UC-Davis)  2,978
9 Manoj Viswanathan (UC-Hastings) 101,471 Ari Glogower (Ohio State) 2,968
10 Rebecca Kysar (Fordham) 100,364 Manoj Viswanathan (UC-Hastings) 2,846
11 Ari Glogower (Ohio State) 99,126 Rebecca Kysar (Fordham)  2,454
12 Michael Simkovic (USC) 43,817 Cliff Fleming (BYU) 2,448
13 D. Dharmapala (Chicago) 38,004 Richard Ainsworth (BU) 2,418
14 Paul Caron (Pepperdine) 36,287 Brad Borden (Brooklyn) 2,397
15 Louis Kaplow (Harvard) 32,642 D. Dharmapala (Chicago) 2,091
16 Richard Ainsworth (BU) 28,873 Ruth Mason (Virginia) 2,034
17 Ed Kleinbard (USC) 26,310 Robert Sitkoff (Harvard) 1,996
18 Vic Fleischer (UC-Irvine) 25,879 Michael Simkovic (USC) 1,957
19 Jim Hines (Michigan) 24,837 Louis Kaplow (Harvard) 1,925
20 Gladriel Shobe (BYU) 24,098 Hugh Ault (Boston College) 1,811
21 Ted Seto (Loyola-L.A.) 23,921 Kyle Rozema (Washington U.) 1,790
22 Brad Borden (Brooklyn) 23,828 Yariv Brauner (Florida) 1,712
23 Richard Kaplan (Illinois) 23,585 Margaret Ryznar (Indiana-Indy) 1,440
24 Robert Sitkoff (Harvard) 23,524 Paul Caron (Pepperdine)   1,357
25 Katie Pratt (Loyola-L.A.) 22,849 Leandra Lederman (Indiana Bloom.) 1,214

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January 22, 2020 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink | Comments (0)

Using Tax Credits To Reverse The Fortunes Of Active Funds

Adi Libson (Bar-Ilan University) & Gideon Parchomovsky (University of Pennsylvania), Reversing the Fortunes of Active Funds:

Recent years have witnessed a considerable growth of passive fund at the expense of active funds. This trend picked in 2019, a year that saw passive funds surpass active funds in terms of assets under management. The continuous decline of active funds is a cause for concern. Active funds engage in monitoring of firms and partake of decision-making in companies in their portfolio. The cost of these activities are born exclusively by active funds; the benefits, by contrast, are spread over all shareholders, including passive funds that freeride on the efforts of active funds. The contraction of active funds threatens to set back the quality of corporate governance in U.S. firms.

This Essay proposes a way to reverse this trend. To preserve the benefits presented by active funds, we explore the possibility of employing tax mechanisms to help defray the extra-cost born by active funds. In particular, we establish a prima facie case for using tax credits to support active funds and enhance their market share. We discuss two types of tax credits: effort based tax credits and result-based tax credits.

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January 22, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (4)

Monday, January 20, 2020

Lesson From The Tax Court: Employee Cannot Deduct Expense That Could Have Been Reimbursed

Tax Court (2017)I teach my students this rule: “always take the reimbursement.”  Last week’s case of Daniel Alan Near and Denise Frances Mayhugh v. Commissioner, T.C. Memo. 2020-10 (Jan. 14, 2020) (Judge Kerrigan) reinforces the soundness of that rule.  There, the Tax Court held that Mr. Near’s travel expenses were not deductible because he did not take the reimbursement his employer offered for those expenses.  Details below the fold.

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January 20, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sunday, January 19, 2020

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 papers debuting on the list at #5:

  1. SSRN Logo (2018)[689 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
  2. [283 Downloads]  EU General Anti-(Tax) Avoidance Mechanisms: From GAAP to GAAR, by Rita de la Feria (University of Leeds)
  3. [194 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
  4. [185 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)
  5. [175 Downloads]  Why a Wealth Tax is Definitely Constitutional, by John Brooks (Georgetown) & David Gamage (Indiana)

January 19, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, January 18, 2020

Certified Professional Employer Organizations And Tax Liability Shifting: Assessing The First Two Years Of The IRS Certification Program

Katherine Sanford Goodner (Lewis Thomason, Knoxville, TN) & Ursula Ramsey (North Carolina, Cameron School of Business), Certified Professional Employer Organizations and Tax Liability Shifting: Assessing the First Two Years of the IRS Certification Program, 16 Berkeley Bus. L.J. 571 (2019):

The growing popularity of Professional Employer Organizations ("PEOs") over the past several decades has led to an increasing number of small businesses using third-party organizations to provide everything from payroll services to benefits management to human resource services. Recent data suggests that between 780 to 980 PEOs exist industry-wide and provide services for 156,000 to 180,000 clients. Even more staggering is the $136 billion to $156 billion in client payroll and PEO fees that make up the gross revenues of these PEOs. These PEOs, often referred to as "co-employers," are generally responsible for the remittance of the taxpayer's employment taxes as a part of the PEO's payroll services.

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January 18, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Friday, January 17, 2020

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Klein's Contemptuous Tax Reporting

This week, Mirit Eyal-Cohen (Alabama) reviews Israel Klein (Ariel University), Contemptuous Tax Reporting, 2019 Wis. L. Rev. ___ : 

Mirit-Cohen (2018)This interesting article is right down my alley, namely R&D tax incentives. Recently, legal scholars (including yours truly here and here) have questioned the justifications for the current R&D tax incentives regime and their effectiveness in inducing additional research expenditures. Every year, about 25 billion dollars of research incentives are claimed by companies. Likewise, the current R&D credit allows companies to reduce tax bills by an amount equal to 14 or 20 percent of their current year Qualified Research Expenditures. The article points out that this tax benefit combined with the U.S. self-assessment principle that encompasses only occasional ex-post audits create an incentive for managers to participate in contemptuous self-reporting, that is reporting their companies’ tax while intentionally miscategorized R&D expenditures. Moreover, the recent repeal of the corporate Alternative Minimum Tax (AMT) in the Tax Cuts and Job Act removed the limits on the extent to which taxpayers can utilize credits and deductions to lower their overall tax liability, thus created a bigger tax break for R&D while perpetuating the incentive to overstate R&D spending.

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January 17, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Thursday, January 16, 2020

Should The Tax System Be Used To Reduce Wealth Inequality In The United States?

Tax Policy Center, Should the Tax System Be Used to Reduce Wealth Inequality in the United States?:

Tax Polcy Center Logo (2017)Wealth is highly concentrated in the United States, with the top 0.1 percent of households holding an estimated 10 to 20 percent of all assets. Concerns about the effects of wealth inequality have spurred some presidential hopefuls to propose new taxes on wealth and unrealized capital gains and increases to the existing estate tax.

This policy debate raises broader issues about wealth inequality and how the tax code could reduce it. The causes, impacts on different groups, and effects of substantial wealth inequality are complex. Would higher taxes on the wealthy help fix the problems caused by wealth inequality?

Jason Furman, former chairman of the Council of Economic Advisers in the Obama administration, and panels of experts will consider the following questions:

  • What has been the impact of wealth inequality on different groups in the United States?
  • How does wealth concentration affect politics and public policy?
  • Would reducing after-tax wealth affect the political power of the wealthy and social and economic divisions across groups?
  • What are the pros and cons of using the tax system, instead of other government interventions, to reduce wealth inequality?

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January 16, 2020 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Conference Announcement And Call For Contributions: Taxation And Gender Equality

Announcement of Conference and Call for Contributions:
Taxation and Gender Equality Conference: Research Roundtable and Policy Program

As the Organizers and members of the Academic Advisory Committee we are pleased to issue this Announcement and Call for Contributions to an event that will be held on September 14 and 15, 2020, in Washington, DC, to explore the interaction between tax law and gender equality. The goal of the Conference, which is sponsored by the Tax Policy Center, the American Tax Policy Institute, the American Bar Foundation, and, subject to the final approval of their boards, the Tax Section of the American Bar Association and the American College of Tax Counsel, is to shine a spotlight on gender issues in taxation and to bring consideration of gender impacts into mainstream discussions surrounding the enactment and administration of tax laws. The intended scope of the Conference is broad, focusing not only on gender issues in U.S. tax law but also on gender issues in the tax laws of other countries; it will consider all taxes, whether income, consumption, transfer, wealth, or other national-level taxes, as well as subnational taxes.

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January 16, 2020 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Aprill: The Private Foundation Excise Tax On Self-Dealing

Ellen P. Aprill (Loyola-L.A.), The Private Foundation Excise Tax on Self-Dealing: Contours, Comparisons, and Character, 17 Pitt. Tax Rev. ___ (2020):

This paper considers section 4941, the private foundation excise tax on self-dealing, on the occasion of its fiftieth anniversary. Part I gives background on section 4941. Part II compares the rules of section 4941 to the parallel ones applicable to public charities, including the special rules for supporting organizations and donor advised funds. The fiftieth anniversary of the private foundation excises taxes is also an appropriate time to confront two foundational questions, and Part III does so. It first asks whether we can view the private foundation taxes in general and section 4941 in particular as constitutional exercises of Congress’s taxing power under the tests announced in National Federation of Independent Businesses v. Sibelius. Second, it considers whether we should characterize the section 4941 excise tax as a Pigouvian tax — a hot category among economists but less familiar to lawyers. It answers “maybe not” to the first and “yes but” to the second.

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January 16, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, January 15, 2020

Christians & Magalhaes: A New Global Tax Deal For The Digital Age

Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill), A New Global Tax Deal for the Digital Age:

The OECD is currently in the midst of a project intended to tackle the tax challenges arising from the digitalization of the economy. As laid out in Pillar 1 of its program of work released in May 2019, the goal seemed broadly to develop consensus on a new taxing right, to allow countries to tax multinationals even in the absence of traditional physical presence. Upon inspection, the plan seems to be about rebalancing taxing rights mostly among the relatively affluent OECD member states plus a few other key non-OECD states. Viewed from this perspective, the urgent effort to forge a new global tax deal for the digital age is destined to forestall a much-needed discussion on the broader distributive implications of the current global tax deal. This Article therefore critically examines the emerging tax bargain. Part I begins with a brief survey of some of the main factors that prompted the OECD to turn its attention to this topic. Part II considers the origins and development of nexus in the international tax regime, showing why this concept is amenable to broad expansion. Part III examines the range of reforms currently under consideration, arguing that the framing on digitalization misses a necessary connection to other pressing international policy programs that are also under development, most notably a global commitment to building institutions that support sustainable economic development.

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January 15, 2020 in Scholarship, Tax | Permalink | Comments (0)

Oei & Ring: The Importance Of Qualitative Research Approaches To Gig Economy Taxation

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), The Importance of Qualitative Research Approaches to Gig Economy Taxation:

As the United States tax system continues to grapple with how to tax workers in the gig economy, it confronts a number of questions about the nature and composition of the sector as well as the tax issues confronted by its participants. Many of these questions have proven difficult to answer due to a lack of adequate information. But the answers are important and will shape how tax and other areas of law (such as employment law, labor law, and antitrust) respond to the gig economy. Thus, the question of how to obtain the data and information necessary to formulate sound policies for gig work is vital.

This chapter discusses the limitations of quantitative empirical research on the gig economy and argues that incorporating more qualitative approaches will help generate a more comprehensive understanding of the tax policy issues involved.

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January 15, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

The Perils of Common Ownership: How Corporate Tax Avoidance Floods (Overwhelms) The IRS

Danielle Chaim (J.S.D. 2020, Columbia), The Perils of Common Ownership: Flooding Strategy:

The increased concentration of shares in the hands of large institutional investors has triggered a phenomenon which I term “flooding.” Under this phenomenon, institutional investors push their portfolio firms towards higher levels of noncompliance. Given limited enforcement capabilities, the simultaneous increase in the levels of noncompliance reduces the probability that such behavior will be detected and adequately penalized. Consequently, the presence of large, diversified shareholders destructs the inherent trade-off between compliance and enforcement. Misconduct becomes less risky and more rewarding, changing the way in which public firms approach legal risks.

This Article focuses on the applicability of flooding in the context of tax avoidance. Data suggests that the emerging ownership pattern in the United States increases levels of corporate tax avoidance. In this Article, I argue that this increase results in flooding, overwhelming the tax agency, now faced with new enforcement challenges.

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January 15, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Tuesday, January 14, 2020

Hickman & Thomson: The Chevronization of Auer

Kristin E. Hickman (Minnesota) & Mark R. Thomson (Administrative Conference of the United States), The Chevronization of Auer, 103 Minn. L. Rev. Headnotes 103 (2019):

The Supreme Court is poised in Kisor v. Wilkie to reconsider the standard of review known as Auer deference, whereby courts must defer to an agency’s reasonable interpretation of its own regulation. Auer’s defenders have long argued that the standard advances important practical goals, such as simplifying the judicial task and fostering consistency and predictability in the administrative process. During the last two decades, though, courts have engrafted an increasingly complex array of qualifications and exceptions onto Auer’s basic framework.

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January 14, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Walker: The Implausibility Of Compensation As An Anticompetitive Mechanism

David I. Walker (Boston University), Common Ownership and Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, 99 B.U. L. Rev. 2373 (2019):

Mutual funds, pension funds, and other institutional investors are a growing presence in U.S. equity markets, and these investors frequently hold large stakes in shares of competing companies. Because these common owners might prefer to maximize the values of their portfolios of companies rather than the value of individual companies in isolation, this new reality has led to a concern that companies in concentrated industries with high degrees of common ownership might compete less vigorously with each other than they otherwise would. But what mechanism would link common ownership with reduced competition? Some commentators argue that one of the most plausible mechanisms is executive pay design. The idea is that executive pay at companies in concentrated industries with high common ownership may be designed to dampen the incentives of the companies’ managers to compete aggressively with peer firms.

This Article challenges both the theoretical and empirical bases for this argument and contends that executive pay design is actually an implausible mechanism for linking common ownership with reduced competition.

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January 14, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Cato: Taxing Wealth And Capital Income

Chris Edwards (Cato Institute), Taxing Wealth and Capital Income:

Taxing the wealthy is a hot issue among Democratic candidates for president. Sen. Elizabeth Warren (D-MA) is proposing an annual wealth tax on the richest households, while other candidates are proposing higher taxes on incomes, estates, capital gains, and corporations.

Calls for tax increases are animated by claims about the fairness of income and wealth distributions in the economy. Warren wants to address “runaway wealth concentration,” while Sen. Bernie Sanders (I-VT) says that the wealthy are not “paying their fair share of taxes.”

The proposed tax increases run counter to the international trend of declining tax rates on capital income and wealth. The number of European countries with a Warren-style wealth tax has fallen from 12 in 1990 to just 3 today.

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January 14, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Scholarship As Fun

Thomas Schultz (King's College London), Scholarship as Fun:

This paper — which is part of a symposium for Pierre Schlag — argues that the pursuit of fun is possibly better than most of our usual pursuits in legal scholarship. This has three likely implications, which are reflected in the structure of the paper: a recognition of the coexistence of mutually exclusive legal realities entertaining dialectic relationships; the abandonment of oneness of the legal academy; and the need to situate ourselves within tangled socio-professional hierarchies.

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January 14, 2020 in Legal Ed Scholarship, Legal Education, Scholarship, Tax | Permalink | Comments (0)