Paul L. Caron
Dean


Tuesday, July 7, 2020

AALS Call For Papers: New Voices In Taxation

AALS (2018)

Call For Papers: New Voices in Taxation Panel
AALS Section on Taxation/2021 Annual Meeting

The AALS Section on Taxation is pleased to announce the following Call for Papers. Selected papers will be presented at a works-in-progress session at the 2021 AALS Annual Meeting from January 5 through 9. While AALS has not made a decision about whether the conference will be held in person, selected presenters will have the opportunity to present remotely. This program will provide panelists the opportunity to present their work and receive feedback from senior colleagues in the field.

Eligibility: Scholars teaching at AALS member schools or non-member fee-paid schools with seven or fewer years of full-time teaching experience as of the submission deadline are eligible to submit papers. (Non-tenure track teaching fellowships count for this deadline.). For co-authored papers, all authors must satisfy the eligibility criteria. While we welcome submissions from previous panelists, we will give a preference to scholars whose work has not been selected for a previous new voices panel.

Due date: 5 p.m. PDT, Thursday, August 20, 2020.

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July 7, 2020 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, July 6, 2020

Black Families Pay Significantly Higher Property Taxes Than White Families

Washington Post, Black Families Pay Significantly Higher Property Taxes Than White Families, New Analysis Shows:

State by state, neighborhood by neighborhood, black families pay 13 percent more in property taxes each year than a white family would in the same situation, a massive new data analysis shows.

Black-owned homes are consistently assessed at higher values, relative to their actual sale price, than white homes, according to a new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-León of Indiana University.

Dorothy Brown, an Emory University law professor who researches systemic racism in tax policy and was not involved in this study, sees the same pervasive effect. “The structure of the property tax system operates to disadvantage black Americans,” she said. “That’s how structural racism is. It’s built into the system. The property tax system itself discriminates against black Americans.”

Troup Howard (Utah) & Carlos Avenancio-León (Indiana), The Assessment Gap: Racial Inequalities in Property Taxation:

We use panel data covering 118 million homes in the United States, merged with geolocation detail for 75,000 taxing entities, to document a nationwide “assessment gap” which leads local governments to place a disproportionate fiscal burden on racial and ethnic minorities. We show that holding jurisdictions and property tax rates fixed, black and Hispanic residents nonetheless face a 10–13% higher tax burden for the same bundle of public services.

Property Tax

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July 6, 2020 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink | Comments (14)

Lesson From The Tax Court: Being Too Smart Precludes Innocent Spouse Relief


LifeGrowing up, I was taught to value intelligence.  My dad even had a sign in his office like the one to the right: his read “life is hard, especially if you’re stupid.” 

Being smart surely brings many advantages in life, but we learn today why it serves as a disadvantage when seeking spousal relief under §6015.  Getting spousal relief is hard; it's harder if you are smart. 

In John E. Rogers and Frances L. Rogers v. Commissioner, T.C. Memo. 2020-91 (June 18, 2020) (Judge Goeke), the court denied spousal relief to Mrs. Rogers because it found her too smart to qualify.  It is a useful lesson as many of us prepare our own joint returns for 2019. 

Details below the fold.

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July 6, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, July 5, 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 at #4 and #5:

  1. SSRN Logo (2018)[312 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)
  2. [275 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  3. [168 Downloads]  Coronavirus, Telecommuting, and the 'Employer Convenience' Rule, by Edward Zelinsky (Cardozo) (reviewed by Young Ran (Christine) Kim (Utah) here)
  4. [142 Downloads]  Taxation Of The Digital Economy: Adapting A 21st-Century Tax System To A Twenty-First Century Economy, by Assaf Harpaz (S.J.D. 2020, Duke)
  5. [125 Downloads]  Are Two Employers Better than One? An Empirical Assessment of Multiple-Employer Retirement Plans, by Natalya Shnitser (Boston College)

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

Friday, July 3, 2020

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Rethinking Tax For The Digital Economy After COVID-19 By Magalhães & Christians

This week, Young Ran (Christine) Kim (Utah) reviews a new work by Tarcísio Diniz Magalhães (McGill) & Allison Christians (McGill), Rethinking Tax for the Digital Economy After COVID-19 (June 2020).

6a00d8341c4eab53ef022ad3a74c80200d-300wi (1)The coronavirus recession has brought many challenges, including economic and fiscal crisis. Still, there are winners during this difficult time. As the COVID-19 pandemic hit the United States in full scale leading to a nationwide lockdown starting in March, stock prices plummeted sharply for all but a handful of companies. Compare the year-to-date chart of the S&P 500 with that of Zoom, Netflix, and Amazon—companies that are thriving despite the pandemic. The exceptional performance of these companies is seemingly a “windfall” arising from the extreme restrictive measures governments had to impose on other sectors of the economy. As one possible solution for the fiscal crisis, prominent scholars, such as Reuven Avi-Yonah, Emmanuel Saez and Gabriel Zucman, as well as Melani Cammett and Evan Lieberman, have proposed to revive excess profits taxes. In Rethinking Tax for the Digital Economy After COVID-19, co-authors Tarcísio Diniz Magalhães and Allison Christians extend the excess profits tax proposal to the international domain and argue that the world needs to adopt a "Global Excess Profits Tax” (GEP Tax). Magalhães and Christians' paper was presented yesterday at the Indiana/Leeds Summer Tax Workshop Series (the Workshop), hosted by Leandra Lederman (Indiana – Maurer) and Leopoldo Parada (Leeds).

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July 3, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, July 2, 2020

Christians Presents Rethinking Tax for the Digital Economy After COVID-19 Today At The Indiana/Leeds Summer Zoom Tax Workshop Series

Allison_christians_2019Allison Christians (McGill) presents Rethinking Tax for the Digital Economy After COVID-19 (with Tarcisio Diniz Magalhaes (McGill)) today as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Before COVID-19 arrived, policymakers from around the world were busy working on the makings of a new global tax consensus to reflect structural changes in the world economy as a result of the rise of digitalization. COVID-19 disrupted this process by delivering a shock that resulted in major contractions for most firms even as it created enormous windfalls for others, prompting some to call for excess profits taxes, usually associated with wartime economies, as a corrective. Yet the contemporary context for excess profits taxes is fundamentally global today, in a way that excess profit taxation during the world war period was not. As such, to effectively address the fiscal crisis brought on by COVID-19, the world needs a “global excess profits tax”—a GEP tax. This article argues that the vocabulary, the technical tools, and the political determination that were being built for the digital economy can and should be adapted to formulate a GEP tax.

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July 2, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Avi-Yonah, Driessen, Fleming, Peroni & Shay: Why R&D Should Be Allocated To Subpart F And GILTI

Stephen E. Shay (Harvard), Reuven S. Avi-Yonah (Michigan), Patrick Driessen, J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas), Why R&D Should Be Allocated to Subpart F and GILTI, 167 Tax Notes Fed. 2081 (June 22, 2020):

In this article, the authors critically appraise the government’s proposal not to allocate research and development deductions to subpart F inclusions and global intangible low-taxed income for foreign tax credit limitation purposes. They say the proposal is an unprecedented interpretation of the statute unsupported by any relevant legislative history that would radically change an R&D allocation method in place since 1977. They argue that the justifications provided in the proposed regulations’ preamble do not stand up to scrutiny.

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July 2, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, July 1, 2020

The Irish Money Funnel

Irish Money Funnel:

Irish Money Funnel, produced by Spin Casino Ireland, takes a look at some of the world's biggest companies and shows how Ireland's low corporation tax rate could be the secret behind their success.

Below is a comparison of some of the biggest companies in tech, food and drink based on the percentage of total revenue which is raised in the UK and Ireland. Ireland is often used as a base by multinational companies due to its low corporation tax rate of 12.5%. Comparatively, the UK has a tax rate for companies of 19% and the US even higher at 21%.

Apple

July 1, 2020 in Scholarship, Tax, Tax News | Permalink | Comments (1)

Tuesday, June 30, 2020

Rethinking Privilege For Tax Professionals

Samuel Singer (University of Ottawa), Rethinking Privilege for Tax Professionals: A Tax Policy Perspective:

In Canada, information exchanged between an accountant and a client, while confidential under professional codes of conduct, is not privileged unless it falls within limited common law exceptions. Some countries have legislated to extend limited privilege to accountants, but Canada has not yet done so. This paper uses tax policy principles to critically evaluate the differential treatment of lawyer-client and accountant-client relationships under the rules of privilege in Canada. From a fairness perspective, the distinct treatment of taxpayer information based on the tax advisor consulted is inequitable. Differences in access to privilege create distortions in the tax advice market and increase complexity.The paper also identifies justifications for not extending privilege to accountants.

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June 30, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

Monday, June 29, 2020

Lesson From The Tax Court: Cheshire Cat Jurisdiction Over Passport Revocation Petitions

Tennel_CheshireCongress keeps expanding the Tax Court’s subject matter jurisdiction.  A recent expansion came in 2015 in the cutesy-cutesy named Fixing America’s Surface Transportation Act (FAST Act, get it?), 129 Stat. 1312.  There Congress created §7345 as a revenue offset.  That new section authorizes the IRS to periodically give lists of seriously delinquent taxpayers to the State Department, who is then supposed to deny their passport applications or even yank their passports.  Taxpayers upset at the IRS ratting them out to the State Department can seek judicial review either in the Tax Court or in a federal district court.

Section 7345 is simple in theory but complex in execution.  Last week’s case of Vivian Ruesch v. Commissioner, 154 T.C. No. 13 (June 25, 2020) (Judge Lauber) teaches that the Tax Court’s §7345 jurisdiction is like the Cheshire Cat: it can appear and disappear multiple times with respect to the same taxpayer and the same tax liabilities.  Details below the fold.

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June 29, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, June 28, 2020

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[335 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  2. [293 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)
  3. [268 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  4. [196 Downloads]  The Troubling Case of the Unlimited Pass-Through Deduction, by Clint Wallace (South Carolina)
  5. [156 Downloads]  Coronavirus, Telecommuting, and the 'Employer Convenience' Rule, by Edward Zelinsky (Cardozo) (reviewed by Young Ran (Christine) Kim (Utah) here)

June 28, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, June 26, 2020

Kleiman Reviews Hasen's Section 338 And The Step Transaction Doctrine

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by David Hasen (Florida), Section 338 and the Step Transaction Doctrine, 73 Tax Law. ___  (2020).

StevensonDavid Hasen’s recent article on Code § 338 – which governs taxable acquisitions – displays the kind of dizzyingly intricate logical reasoning that attracts many curious law students to tax law. Marshalling legislative history, Congressional intent, and administrative rulings, Hasen makes a compelling case for how § 338 should be applied, and also shows that current regulations under § 338(h)(10) exceed the statute’s boundaries. In doing so, the article offers the sort of elegant doctrinal analysis that lawyers and law students dream of, but rarely get to craft in practice.

Because the article discusses Code § 338, it must start with the Kimball-Diamond (K-D) case, which Hasen dutifully recounts. To refresh the reader’s memory, in K-D the taxpayer bought all the stock of Whaley and then liquidated the resulting subsidiary under a predetermined plan. Because K-D always intended to hold Whaley’s assets directly, the court applied the step-transaction doctrine to collapse the two steps together into one asset purchase. As a result, K-D took the lower cost basis in the assets.

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June 26, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink | Comments (0)

Thursday, June 25, 2020

Turksen Presents Human Factors In Tax Compliance And Tax Crimes Today At The Indiana/Leeds Summer Zoom Tax Workshop Series

DownloadUmut Turksen (Coventry) presents The Role of Human Factors in Tax Compliance and Countering Tax Crime today as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

The term ‘human factors’ covers extra-legal, social, psychological, institutional and organisational aspects affecting the behaviour of tax payers and the enforcement of tax laws, including the fight against tax crime by competent authorities. While legal analysis can proceed along abstract criteria, considering consistency, coherence, clarity of legal regulations, research on human factors has to look at empirical evidence of real-world behavior of citizens as tax payers. When investigating tax crimes, the problem is, that no reliable data exist about tax evasion, tax fraud or asset recovery from such crimes. Most research on tax payers’ behavior uses models of individuals as utility-maximising rational actor as developed in economic theory. Hypotheses derived from these models are then either tested in psychological experiments or used to interpret whatever evidence about tax compliance and tax evasion are available. Two principal approaches can be distinguished in research on tax evasion and compliance focusing on deterrence and motivation respectively.

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June 25, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Avi-Yonah Delivers Keynote Address On Taxation After The Pandemic Today At Copenhagen Virtual Workshop On Corporate Tax Practice And Inequality

Copenhagen Business School, Three Day Virtual Workshop on Corporate Tax Practice and Inequality:

ReuvenScholars from the variety of fields that tackle either corporate sustainability or corporate tax practices do not ‘naturally’ meet for conversations, yet there are links between the various fields that could benefit from further dedicated exploration. Meanwhile, given the intensive media coverage of corporate tax practices and wider societal interest in the topic, much interesting research is underway to explore the linkages and other aspects of corporate tax practice that is relevant for the business in society agenda.

With this background in mind, this workshop will gather together speakers (and workshop participants) who are already involved in, planning or have a keen interest in research on the linkages between corporate tax and sustainability issues. The workshop will include presentation of innovative proposals as well as space for more general conversations about potential future research streams, key concepts that could inform work at this intersection, and theoretical themes or methodological approaches that are relevant to this work. It is our hope that the engagement between researchers from a variety of disciplines and with a variety of perspectives will generate new insights and add value to ongoing research that will enter the literature in the years to come.

The public key note speech by Professor Reuven Avi-Yonah from University of Michigan will be on Taxation after the Pandemic and followed by a Q&A:

If there is one thing that is relatively clear about the Covid-19 pandemic, it is that governments will need new sources of revenue to offset its costs and build a better social safety net. All over the world, governments are borrowing and spending at a pace not seen since World War II, and at the same time revenues from both income and consumption taxes are falling because of pandemic related slowdowns in economic activity. The result is unprecedented levels of debt that even with low interest rates mean inevitable needs for more revenue down the road. Even a country that borrows in its own currency like the US or Japan cannot debt well in excess of GDP forever without risking either inflation (if it creates money to pay off the debt) or a sharp increase in borrowing costs that crowds out other government expenditures at a time when they are most needed to bolster the social safety net, which the pandemic revealed to be quite fragile in many countries including the US.

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June 25, 2020 in Conferences, Scholarship, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Dharmapala: Do Multinational Firms Use Tax Havens To The Detriment Of Other Countries?

Dhammika Dharmapala (Chicago), Do Multinational Firms Use Tax Havens to the Detriment of Other Countries?:

The use of tax havens by multinational corporations (MNCs) has attracted increasing attention and scrutiny in recent years. This paper provides an exposition of the academic literature on this topic. It begins with an overview of the basic facts regarding MNCs’ use of havens, which are consistent with the location of holding companies, intellectual property, and financial activities in havens. However, there is also evidence of significant frictions that limit MNCs’ use of havens. These limits can be attributed to non-tax frictions (such as the legal and business environment in different jurisdictions), to tax law provisions limiting profit shifting, and to the costs of tax planning. There is evidence consistent with the relevance of each of these channels.

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June 25, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, June 24, 2020

U.S. Parents, Non-U.S. Parents, And Global Firm Taxes

Eric Allen (USC) & Susan Morse (Texas), Does Parenting Matter? U.S. Parents, Non-U.S. Parents, and Global Firm Taxes, 4 J. L., Fin. & Accounting 239 (2019):

In this paper we examine whether, under pre-2018 tax law, a global firm reported a lower income tax expense simply because its publicly traded parent was incorporated outside the United States. Our study considers loss years as well as profit years and isolates the effect of the incorporation location of the parent by considering only U.S. and non-U.S. multi-national companies (MNCs) with a significant U.S. presence. We find that, in profit years, U.S. firms show an effective tax rate that is greater by 5 percentage points compared to non-U.S. firms. Conversely, in loss years, which make up approximately 30% of our sample, U.S. firms have better tax results, which can be expressed as an effective tax rate advantage of 4 percentage points among firms that do not record a valuation allowance. Our study demonstrates that the relative tax cost of organizing as a U.S. firm is smaller than some have suggested, and reinforces the importance of considering loss year results when evaluating tax policies. The results also suggest that the reduction in the U.S. corporate income tax rate under the 2017 Tax Cuts and Jobs Act, or TCJA, will provide smaller benefits to U.S.-parented corporations when loss years are also considered.

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June 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

The Effect Of The 2017 U.S. Tax Reform On U.S. Acquisitions Of Foreign Firms

Harald Amberger (Vienna University) & Leslie A. Robinson (Dartmouth), The Effect of the 2017 U.S. Tax Reform on U.S. Acquisitions of Foreign Firms:

The Tax Cuts and Jobs Act (TCJA) of 2017 is the most significant tax reform that the U.S. has experienced in decades, thereby changing incentives for many significant corporate investment decisions. We emphasize the key tax reform provisions altering incentives for outbound investment and examine changing patterns in outbound acquisitions of U.S. firms before and after the TCJA. We find a decreased probability that a foreign target is acquired by a U.S. firm after the TCJA, particularly those that hold IP or are located in low-tax or low-growth markets. We also find a decreased probability that a U.S. firm with untaxed foreign earnings closes a foreign M&A deal after the TCJA, but an increased probability if the firm had no significant foreign presence prior to the TCJA. Taken together our results suggest that the TCJA was largely effective in reducing tax distortions to outbound M&A activity.

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June 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

An Empirical Assessment Of The Effects Of Taxation On Growth

Marco Alfò (Università degli Studi La Sapienza), Lorenzo Carbonari & Giovanni Trovato (Università di Roma Tor Vergata), On the Effects of Taxation on Growth: An Empirical Assessment:

Growth models predict that taxation may have permanent effects on per capita real GDP growth. We look at, and test this prediction for 21 OECD countries, over the period 1965-2010. We employ a semi-parametric technique - namely, a Finite Mixture model - to estimate an augmented version of the Barro (1990) model, in order to consider both direct and indirect effects of taxation on capital share parameters. The estimation technique allows to deal with unobserved heterogeneity and to perform a cluster analysis. Our results support the idea that taxes are generally harmful for growth. The coefficient estimates indicate that a cut in the corporate income tax rate by 10 % raises the GDP growth rate by 0.9% while a cut in the personal income tax rate by 10% raises the GDP growth rate by 1%.

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June 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Tuesday, June 23, 2020

Shanske & Gamage: How To Interpret Public Law 86-272

Darien Shanske (UC-Davis) & David Gamage (Indiana), The Ordinary Diet of the Law: How to Interpret Public Law 86-272, 96 Tax Notes State 161 (Apr. 13, 2020):

This essay argues against expansive interpretations of Public Law 86-272 (the primary federal statute limiting state income taxation of out-of-state businesses). Specifically, this essay argues against interpretations of Public Law 86-272 that would broaden its coverage to protect business practices that differ from the practices that Congress specifically intended to protect at the time of the statute’s enactment.

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

Monday, June 22, 2020

Buchanan Reviews Haneman's Tax Incentives For Green Burial

Jotwell (Tax) (2016)Neil Buchanan (Florida), The Bereaved Should Not Be Preyed Upon: Can The Tax System Help? (reviewing Victoria Haneman (Creighton), Tax Incentives for Green Burial, 20 Nev. L.J. ___ (2020)):

Dealing with the death of a loved one is one of the most stressful and debilitating experiences in most people’s lives. As Victoria J. Haneman summarizes some key empirical insights:

After a major loss, such as the death of a spouse or child, a third of survivors will suffer detrimental physical or mental health issues. One-quarter of surviving spouses will suffer clinical depression or anxiety within the first year of loss. Grief is frequently accompanied by weight loss, anxiety, despair, hypnagogic hallucinations, temporarily impaired immune response, disorganization, and/or disorientation. (P. 41.)

Setting aside the emotional turmoil, how do Americans deal with the practical side of these inevitable events? Not well at all. ...

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

Lesson From The Tax Court: How Taxpayers Can Sometimes Benefit From IRS Errors

Tax Court (2017)Last week my son got a job at Auto Zone, a company that sells auto parts to the entire U.S.  The IRS administers a wickedly complex set of tax laws to same population.  Guess which one employs more people?  Auto Zone.  It has over 87,000 workers to sell you windshield wipers.  The IRS does its job using about 74,000 workers.  Oh, and while both organizations employ computer support, can you guess whose computers are the mother of all outdated legacy systems?  I am sure you can.

Overworked IRS employees and outdated computer systems commit errors.  Last week, two Tax Court cases teach us when taxpayers might benefit from IRS errors.  In Askar Moukhitdinov and Sana Abeuova v. Commissioner, T.C. Memo. 2020-86 (June 16, 2020) (Judge Colvin), a computer error did not invalidate a Notice of Deficiency (NOD) and the taxpayer thus could not get preassessment review.  But in Carl William Cosio v. Commissioner, T.C. Memo. 2020-90 (June 18, 2020) (Judge Vasquez), a human error gave the taxpayer another chance for prepayment review of a disputed IRS assessment.  Details below the fold.

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June 22, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, June 21, 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 a new #1 paper, a aper returning to the list at #4, and a new paper debuting on the list at #5:

  1. SSRN Logo (2018)[290 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  2. [273 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)
  3. [252 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  4. [184 Downloads]  The Troubling Case of the Unlimited Pass-Through Deduction, by Clint Wallace (South Carolina)
  5. [147 Downloads]  Coronavirus, Telecommuting, and the 'Employer Convenience' Rule, by Edward Zelinsky (Cardozo) (reviewed by Young Ran (Christine) Kim (Utah) here)

June 21, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, June 19, 2020

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews COVID-19 And The American Safety Net

This week, Mirit Eyal-Cohen (Alabama) reviews Andrew Hammond (Florida), Ariel Jurow Kleiman (San Diego) & Gabriel Scheffler (Miami), How the COVID-19 Pandemic Has and Should Reshape the American Safety Net (2020):

Mirit-Cohen (2018)

Amidst the online pandemic and the strain it is putting on the ability of Americans to meet basic needs, and our government’s capacity to assist them, this important and timely Essay aims to accomplish four goals:  a) identifying the ways in which the pandemic feeds on and exacerbates both racial and economic inequality in America, b) analyzing the government response, c) considering which changes should outlast the current crisis, and d) how government should design social welfare programs to better meet the needs of all Americans in the coming years.  

The authors begin by highlighting the two upshots of the pandemic, that is the epidemiological and the economic crises and their effects on low-income households and communities of color. The latter are at higher risk of contracting COVID-19 and of enduring worse health consequences because low-pay individuals are more likely to live in overcrowded housing conditions, to utilize public transportation, to work in occupations that require close-contact interactions, to be uninsured with limited access to health services, and to suffer from preexisting conditions like diabetes and COPD that puts them at higher risk of COVID-19 complications. Although data on racial disparities in this pandemic is limited, existing studies supports similar premises.

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June 19, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

International Tax Evasion And Human Rights

Elizabeth Donald (LL.M. (Tax) 2021, NYU), Note, Revenue Mobilization Accountability: Combating Harmful Tax Regimes With the Law of Human Rights, 50 Geo. J. Int'l L. 517 (2019):

International tax evasion has gained much consideration in recent years. Between Apple’s assertion that it was tax resident “nowhere,” and a whistleblower’s leak of Luxembourg’s secret tax rulings, the legal field has tried to remedy international tax schemes on all fronts. Recently, a number of human rights advocates and scholars have started to turn their attention to tax evasion. So the argument goes: if Luxembourg issues secret rulings to give corporations lower tax rates, it illegally takes revenue away from other countries that need the money to support their citizens. The issue with this argument is that most human rights treaties, and especially those relating to economic rights, do not have an extraterritorial application—Luxembourg cannot be held accountable for the effects of its actions abroad. For this reason, the line between international tax evasion and human rights is far too attenuated.

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June 19, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, June 18, 2020

Oei & Ring Present Economic And Financial Policy Responses To COVID-19 Today At The Indiana/Leeds Summer Zoom Tax Workshop Series

Shu-Yi Oei (Boston College) & Diane Ring (Boston College) present Regulating In Pandemic: Evaluating Economic And Financial Policy Responses To The Coronavirus Crisis today as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Oei ringIn March of 2020, the United States began to confront a fast-moving public health crisis. Over the next two and a half months, the COVID-19 pandemic killed more than one hundred thousand Americans and wrought unprecedented economic damage across the country. Some forty million U.S. workers filed for unemployment between mid-March, when the first stay-at-home orders were issued, and the end of May, by which point every U.S. state had begun to “reopen” in some capacity.

In responding to the economic aspects of the COVID-19 crisis, U.S. policymakers confronted three interrelated but potentially conflicting policy priorities: (1) providing social insurance and a social safety net to individuals and families in need; (2) managing systemic economic and financial risk; and (3) encouraging critical spatial behaviors to help contain COVID-19 transmission.

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June 18, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through June 1, 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)  191,246 Reuven Avi-Yonah (Michigan) 7,362
2 Dan Shaviro (NYU) 120,723 Lily Batchelder (NYU) 4,985
3 David Gamage (Indiana-Bloom.) 116,722 David Kamin (NYU) 4,851
4 Lily Batchelder (NYU) 116,660 Daniel Hemel (Chicago) 3,873
5 Daniel Hemel (Chicago) 116,321 Ruth Mason (Virginia) 3,044
6 Darien Shanske (UC-Davis) 110,035 Bridget Crawford (Pace) 2,828
7 David Kamin (NYU) 105,138 David Gamage (Indiana-Bloom.) 2,676
8 Cliff Fleming (BYU)    104,851 Diane Ring (Boston College) 2,520
9 Manoj Viswanathan (UC-Hastings) 102,023 Hugh Ault (Boston College) 2,435
10 Rebecca Kysar (Fordham) 100,855 Shu-Yi Oei (Boston College)  2,433
11 Ari Glogower (Ohio State) 99,638 Richard Ainsworth (BU) 2,381
12 Michael Simkovic (USC) 44,460 Dan Shaviro (NYU) 2,226
13 D. Dharmapala (Chicago) 38,979 D. Dharmapala (Chicago) 2,098
14 Paul Caron (Pepperdine) 36,860 Robert Sitkoff (Harvard) 1,941
15 Louis Kaplow (Harvard) 33,290 Darien Shanske (UC-Davis)  1,874
16 Richard Ainsworth (BU) 30,016 Brad Borden (Brooklyn) 1,865
17 Ed Kleinbard (USC) 26,781 Manoj Viswanathan (UC-Hastings) 1,778
18 Vic Fleischer (UC-Irvine) 26,149 Louis Kaplow (Harvard) 1,718
19 Jim Hines (Michigan) 25,156 Margaret Ryznar (Indiana-Indy)    1,591
20 Brad Borden (Brooklyn) 24,532 Ari Glogower (Ohio State) 1,475
21 Ted Seto (Loyola-L.A.) 24,316 Cliff Fleming (BYU) 1,461
22 Robert Sitkoff (Harvard) 24,226 Rebecca Kysar (Fordham) 1,459
23 Gladriel Shobe (BYU) 24,175 Michael Simkovic (USC) 1,426
24 Bridget Crawford (Pace) 23,780 Paul Caron (Pepperdine)   1,387
25 Richard Kaplan (Illinois) 23,749 Yariv Brauner (Florida)  1,329

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June 18, 2020 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink | Comments (0)

Doran: Deferred Compensation Unbound

Michael Doran (Virginia), Deferred Compensation Unbound:

This paper argues for enactment of accrual-based taxation of deferred compensation. Changes made by the Tax Cuts and Jobs Act of 2017 expanded the tax subsidy for deferred compensation, increasing an unjustifiable drain on federal revenues. Under accrual-based taxation, a corporate executive would include deferred compensation in gross income as soon as the deferred compensation vests. Accrual-based taxation better reflects economic income and removes the tax subsidy under current law.

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

Wednesday, June 17, 2020

Symposium: The Impact And Future Of The Tax Cuts And Jobs Act

Symposium, The Impact and Future of the Tax Cuts and Jobs Act, 45 Ohio N.U. L. Rev. 501-560 (2019):

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June 17, 2020 in Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

The Deficit Myth: Modern Monetary Theory And The Birth Of The People’s Economy

New York Times op-ed:  Learn To Love Trillion-Dollar Deficits, by Stephanie Kelton (Stony Brook; author, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy (2020)):

Deficit MythAs a proponent of what’s called Modern Monetary Theory and as a former chief economist for the Democrats on the Senate Budget Committee, intimately familiar with how public finance actually works, I am not worried about the recent multitrillion-dollar surge in spending.

But there was a time when it would have rattled me too.

I understand the deficit myth because in the early part of my career in economics I, too, bought into the conventional way of thinking. I was taught that the federal government should manage its finances in ways that resemble good old-fashioned household budgeting, that it should hold spending in line with revenues and avoid adding debt whenever possible. ...

It is true that the dollars in your pocket are, in a physical sense, just pieces of paper. It’s the state’s ability to make and enforce its tax laws that sustains a demand for them, which in turn makes those dollars valuable. It’s also how the British Empire and others before it were able to effectively rule: conquer, erase the legitimacy of a given people’s original currency, impose British currency on the colonized, then watch how the entire local economy begins to revolve around British currency, interests and power. Taxes exist for many reasons, but they exist mainly to give value to a state’s otherwise worthless tokens.

Coming to terms with this was jarring — a Copernican moment. By the time I developed this subject into my first published, peer-reviewed academic paper, I realized that my prior understanding of government finance had been wrong.

In 2020, Congress has been showing us — in practice if not in its rhetoric — exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not “have.” It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for.

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June 17, 2020 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Ryznar: Emergency Funds In The Wake Of The Coronavirus

Margaret Ryznar (Indiana-McKinney), Emergency Funds in the Wake of the Coronavirus, 96 State Tax Notes 65 (Apr. 6, 2020):

The CARES Act targeting the economic effects of the COVID-19 pandemic allows taxpayers to withdraw up to $100,000 from their retirement savings, such as section 401(k) plans, without the typical 10% penalty for early withdrawal. However, retirement accounts do not make for ideal emergency funds. This Article therefore advocates that future legislation should incentivize separate savings funds.

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June 17, 2020 in Coronavirus, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, June 16, 2020

Fox: Does Capital Bear The U.S. Corporate Tax After All?

Edward G. Fox (Michigan), Does Capital Bear the U.S. Corporate Tax After All? New Evidence from Corporate Tax Returns, 17 J. Empirical Legal Stud. 71 (2020):

This article uses U.S. corporate tax return data to assess how government revenue would have changed if, over the period 1957–2013, corporations had been subject to a hypothetical corporate cash flow tax—that is, a tax allowing for the immediate deduction of investments in long‐lived assets like equipment and structures—rather than the corporate tax regime actually in effect. Holding taxpayer behavior fixed, the data indicate actual corporate tax revenue over the most recent period (1995–2013) differed little from that under the hypothetical cash flow tax. This result has three important implications.

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

Organ: What The Revealed-Preferences Ranking Fails to Reveal

Jerome M. Organ (St. Thomas), What the Revealed-Preferences Ranking Fails to Reveal, 7 Belmont L. Rev. 114 (2019) (reviewing CJ Ryan (Roger Williams) & Brian L. Frye (Kentucky), The 2019 Revealed-Preferences Ranking of Law Schools, 7 Belmont L. Rev. 86 (2019)):

The Revealed-Preferences Ranking methodology developed by Professors Christopher J. Ryan, Jr. and Brian L. Frye purports to be an “objective ranking” because it identifies the claimed preferences of first-year law students by looking at and comparing the “quality” of the first-year students who chose to attend each law school based on the LSAT and UGPA indicators for the entering class at each law school. For The 2019 Revealed-Preferences Ranking of Law Schools, the authors incorporate the preferences of those who chose to transfer out from a given law school as a further indication of how the preferences of transfer students inform the “quality” of a given law school.

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June 16, 2020 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink | Comments (0)

Morse & Shay: In Altera Reply Brief, Taxpayer Doubles Down On Flawed Argument That The Government Changed Its Tune

Susan C. Morse (Texas) & Stephen E. Shay (Harvard), In Altera Reply Brief, Taxpayer Doubles Down on Flawed Argument that the Government Changed Its Tune:

AlteraThe Altera reply brief doubles down on an argument that the government brief has already persuasively dispatched: that Treasury gave the impression during the rulemaking process that comparability analysis—i.e., the analysis of comparable transactions between unrelated parties—was relevant to the determination of an arm’s length result under the transfer pricing regulation at issue, and that then the government changed its tune. ...

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June 16, 2020 in New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, June 15, 2020

Morse Presents Modern Custom in Tax At The Indiana/Leeds Summer Zoom Tax Workshop Series

Susan C. Morse (Texas) presented Modern Custom In Tax as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Sm55475-largeSometimes we think of custom as old news. But instead custom is alive and well. In nearly every area of modern life, including tax, it provides rules that people follow, unless and until positive law requires otherwise. Tax customs generally arise when private ordering responds to positive tax law. This happens in markets, in the programming of machines, and in compliance advisors’ practices. One example is the historic rule of thumb that valued startup company preferred and common stock using a 10:1 ratio. This custom supported low compensation income inclusions for company founders.

The fact that tax customs are the on-the-ground reality of tax law means that legal scholars and legal policymakers can and should assess these customs. This is a legal process question about institutional competence. When can tax custom competently make the rules that people follow? When, in contrast, should institutions of positive law intervene? 

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June 15, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: How To Pay A Deficiency And Still Get To Tax Court

Tax Court (2017)A basic lesson I teach students is that clients often have choices in where to obtain judicial review of a Notice of Deficiency (NOD).  The usual choices are (1) file a petition in Tax Court and get pre-payment review or (2) pay the proposed deficiency in full and follow the procedures to, eventually, sue for a refund in either federal district court or the U.S. Court of Federal Claims.  The downside of Tax Court is that interest keeps accruing so, if you lose, you lose more than if you had paid and gone the refund route. 

We find a more sophisticated lesson in Robert J. Peacock and Bonita B. Peacock v. Commissioner, T.C. Memo. 2020-63 (May 19, 2020) (Judge Vasquez).  There, at the end of the audit the taxpayers sent the IRS a check for more than the deficiency proposed in the later-issued NOD.  They even wrote “payment” in the memo line.  Yet they were allowed to contest that later-issued NOD in Tax Court.  How can that be?  The answer is below the fold.    

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June 15, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Saturday, June 13, 2020

The Wealth Tax: Apportionment, Federalism, And Constitutionality

Alex Zhang (J.D. 2021, Yale), The Wealth Tax: Apportionment, Federalism, and Constitutionality, 23 U. Pa. J. L. Soc. Change ___ (2020):

Proposals of wealth taxation — as a mechanism to combat economic inequality and raise revenue for welfare programs — have dominated recent political debate. Despite extensive academic commentary, questions surrounding the constitutionality of a wealth tax remain unresolved. Previous scholarly approaches have drawn a dichotomy between two key cases. Supporters of the wealth tax emphasize Hylton’s functional rule for identifying direct taxes, which must be apportioned under the Constitution, and reject Pollock, which invalidated the federal income tax on the grounds that it was a direct tax. Opponents of the wealth tax, in contrast, argue that Pollock, rather than Hylton, was correctly decided.

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June 13, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

Friday, June 12, 2020

Repetti Presents Equity And Efficiency In A Progressive Income Tax At The Indiana/Leeds Summer Zoom Tax Workshop Series

ProfileImage.img James R. Repetti (Boston College) presented The Appropriate Roles for Equity and Efficiency in a Progressive Income Tax yesterday as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Increased focus on economic efficiency in formulating tax policy, at the expense of achieving equity, has resulted in decreased rate progressivity in our individual income tax. This decrease has exacerbated inequality.

There are several explanations for the intense focus on efficiency and reduced emphasis on equity. Predictions of efficiency gains from low individual income tax rates appear more certain than equity gains from progressive tax rates. Efficiency gains seem measurable, while equity gains appear intangible and unquantifiable. In addition, distributive justice, which underlies and shapes tax equity, exists in many abstract forms, some of which may not require progressive tax rates.

This article argues, however, that the emphasis on efficiency is misplaced. Inequality imposes measurable costs on the health, social wellbeing and intergenerational mobility of our citizens, as well as on our democratic process, which are corroborated by significant empirical analysis.

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June 12, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

The Perception Of The Ethics Of Tax Evasion In The United Kingdom

Aidan Collymore (University of Portsmouth), The Perception of the Ethics of Tax Evasion in the United Kingdom:

This research’s focus was ‘The perception of the ethics of tax evasion in the United Kingdom’. Previous research had identified numerous factors that influence tax morale, including: Age; gender; education level; nationality; religion; trust in government; career/education; country’s economic situation as well as view on law abiding. Age and religion were not focussed on due to the population sampled. The study, conducted in the UK in 2019, had a population sample consisting mainly of University of Portsmouth students with 204 suitable responses. Participants completed a questionnaire based on Robert W. McGee’s 18-statement survey to improve comparability with previous studies. Factors found to affect tax morale were gender, student status and view on law abiding. Student status and view on law abiding had overall significant differences with gender significant on statements regarding human rights issues. The study also compared findings to that of studies conducted in the UK and other countries.

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June 12, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Thursday, June 11, 2020

Dagan: Re-Imagining Tax Justice In A Globalized World

Tsilly Dagan (Oxford), Re-Imagining Tax Justice in a Globalized World:

In this paper I explain why designing a country’s tax policy with the elasticity of taxpayers’ choices of residency in mind, although a rational welfare-maximizing move by the state as a whole, and possibly even for its immobile as well as mobile constituents, is a policy that may not be justified under a liberal-egalitarian social contract.

I discuss two polar views of the social contract: one endorsing the state with the coercive power to promote the joint interests of its constituents. The other views the coercive power of the state as a way to fulfill the collective will of its constituents as a society of equals in order to promote who they are as people.

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June 11, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Fogg: Can The Taxpayer Bill Of Rights Assist Your Clients?

T. Keith Fogg (Harvard), Can The Taxpayer Bill Of Rights Assist Your Clients?, 91 Temple L. Rev. 705 (2019):

The Taxpayer Bill of Rights (TBOR) passed by Congress in 2016 has started to draw attention from tax litigators and others seeking to use the provisions of the legislation to obtain results that they might not otherwise achieve. Facebook brought the first substantial litigation seeking to involve TBOR as a basis for relief Facebook’s effort to rely on TBOR failed. Several other cases now also seek relief based in whole or in part on TBOR. This Article examines several pending cases, each of which relies on TBOR for a different reason, in order to discuss situations in which TBOR may assist litigants in achieving the desired result or will likely provide no benefit. In addition to discussion of pending cases in which taxpayers have asserted TBOR as a basis for relief, this Article examines the effect that TBOR might have generally in determining the outcome of an examination or collection action.

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June 11, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tax Competition And The WTO

Martin Vallespinos (LL.M. (Tax) 2020, Michigan), Can the WTO Stop the Race to the Bottom? Tax Competition and the WTO, 40 Va. Tax Rev. ___ (2020):

In this article, I analyze the interaction between income tax competition and the multilateral trade regime. I argue that several forms of tax competition such as special tax zones (STZs), export tax incentives, participation exception, profit shifting toleration, and tax havens distort international trade and therefore should be policed by the WTO. I also argue that the international tax regime (ITR) will not be able to curtail these distortive effects anytime soon because of insurmountable collective action issues. The limitations of the ITR heighten the importance of a timely, thorough, and comprehensive response by the WTO, which has not been seen so far.

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June 11, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, June 10, 2020

Allen Presents The Information Content Of The Tax Return Online Today At Toronto

Eric Allen (USC) presents The Information Content Of The Tax Return (with Aydin Uysal (Senior Quantitative Portfolio Manager and Researcher, Charles Schwab)) online at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Allen Eric1-1

Turkey is the only jurisdiction in which firms with exchange traded securities are required to publicly disclose the income statement from their tax return. We show that the change in tax earnings incrementally predicts the subsequently released change in book earnings, and is positively related to abnormal returns on the tax return disclosure date. However, these results are weaker when the difference between prior-period book and tax earnings is higher. Furthermore, we show that the change in tax earnings is negatively related to abnormal returns on the book earnings announcement date, suggesting that investors overreact to the initial disclosure tax return information. Our study presents the most comprehensive test to date of the information content of the tax return, and suggests that while its disclosure provides useful information about firms’ performance, differences in the measurement systems prevent investors from fully impounding that information into prices.

June 10, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tax Policy And Cryptocurrency

Aaron Hsieh (LL.M. (Tax) 2019, NYU; Steptoe & Johnson, Washington, D.C.), Note. The Faceless Coin: Achieving a Modern Tax Policy in the Changing Landscape of Cryptocurrency, 2019 U. Ill. L. Rev. 1079 (2019):

As technology continues to evolve at breakneck speed, the tax treatment of virtual currency has reached an inflection point. Now, given its shifting dynamics, how should we classify and tax virtual currency? This Note argues that the primary differentiator amongst the many different forms of virtual currency lies in its ability to be sold or exchanged for real world goods and services. The Internal Revenue Service (“IRS”) currently treats all transactions involving virtual currency as a realization event, requiring taxpayers to calculate their tax consequences even in situations where there is no receipt of a real-life benefit. This Note suggests that the IRS should adopt the proposed Cryptocurrency Tax Fairness Act along with the more sensible three-part definition of virtual currency as introduced by the U.S. Government Accountability Office.

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June 10, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, June 9, 2020

Avi-Yonah: The Worst Tax Law Ever Enacted? The Revenue Act Of 1918 (Passed During A Global Pandemic)

Reuven S. Avi-Yonah (Michigan), The Worst Tax Law Ever Enacted?:

Some tax laws are worse than others. The 1986 tax reform act is generally considered one of the best. The 2017 Tax Cuts and Jobs Act is generally considered one of the worst, although I would say it is too early to tell what its long-term impact might be, and some of its worst features (like the section 199A deduction) might be repealed in the near future if the Democrats win in November.

Another example of a generally condemned tax law is the American Jobs Creation Act of 2004. This law was a must-pass piece of legislation because Congress needed to react to the sanctions imposed upon the US by the EU as the result of its victory in the ETI litigation at the WTO. The AJCA included such beauties as a temporary participation exemption that did not create any jobs, a significant increase in the potential for cross-crediting in the foreign tax credit, and a deeply flawed anti-inversion rule that immediately gave rise to a second wave of inversions.

But these bad features were not particularly lasting. The participation exemption only lasted one year, the cross-crediting provisions were significantly revised in 2017, and the anti-inversion provision became less relevant after 2017. Any damage that was done was temporary.

To get to a bad tax law whose effects were really long-lasting, one should go much farther back to the Revenue Act of 1918. ...

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June 9, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

The Tax Treatment Of Gender Affirmation Procedures

Lindsey Dennis (J.D. 2019, Georgetown), Recent Developments, "I Do Not Suffer From Gender Dysphoria. I Suffer From Bureaucratic Dysphoria": An Analysis of the Tax Treatment of Gender Affirmation Procedures Under the Medical Expense Deduction, 34 Berkeley J. Gender L. & Just. 215 (2019):

[T]his Article argues that medical expenses associated with transition should be deductible regardless of psychological diagnosis or normative ideals of sexed bodies. The reliance on diagnosis and subjective ideas of sexed bodies reinforces the pathologization of transgender people while also reinforcing and policing the gender binary. Part I lays out the current state of the law regarding medical expense deductions. Then, Part II explains the medical model of transgender identity, wherein transgender individuals are diagnosed with GID in order to access gender confirming medical care. Part III, using O’Donnabhain v. Commissioner as an example, details the tax court’s application of the medical expense deduction to gender confirmation procedures, as well as its treatment of transgender taxpayers. Part IV argues that the current application of the medical expense deduction to transgender taxpayers furthers the stereotype that transgender people are abnormal and suffer from a medical condition that must be corrected. Lastly, Part V questions the disparate treatment of transgender taxpayers, who are required to validate their gender identity in order to access the medical expense deduction, unlike cisgender taxpayers.

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June 9, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, June 8, 2020

One Quarter Of Working Poor Face Marginal Net Tax Rates Over 70%

David Altig (Federal Reserve Bank of Atlanta), Alan Auerbach (UC-Berkeley), Laurence Kotlikoff (Boston University), Elias Ilin (Federal Reserve Bank of Atlanta) & Victor Ye (Boston University), Marginal Net Taxation of Americans' Labor Supply:

The U.S. has a plethora of federal and state tax and benefit programs, each with its own work incentives and disincentives. This paper uses the Fiscal Analyzer (TFA) to assess how these policies, in unison, impact work incentives. TFA is a life-cycle, consumption-smoothing program that incorporates household borrowing constraints and all major federal and state fiscal policies. We use TFA in conjunction with the 2016 Federal Reserve Survey of Consumer Finances to calculate Americans’ remaining lifetime marginal net tax rates. Our findings are striking. One in four low-wage workers face marginal net tax rates above 70 percent, effectively locking them into poverty. Over half face remaining lifetime marginal net tax rates above 45 percent. The richest 1 percent also face a high median lifetime marginal tax rate – roughly 50 percent. Double taxation matters. The overall median lifetime marginal net tax rate is 43.2 percent compared with an overall current-year marginal net tax rate of 37.6 percent. We also find remarkable dispersion in both lifetime and current-year marginal net tax rates, particularly among the poor, and major differences in marginal and average net taxation across states, providing typical households a large incentive to relocate to another state.

Wall Street Journal editorial, Unrigging the Poverty Trap: What Do Struggling Workers Lose When They Make An Extra Buck?:

Critics of the welfare state sometimes call it a “poverty trap,” and here’s what that means in practice. “One in four low-wage workers,” according to a new study, “face lifetime marginal net tax rates above 70 percent, effectively locking them into poverty.” Incentives matter, and bad ones sap the motivation to climb the opportunity ladder. ... “The U.S. has a plethora of federal and state tax and benefit programs, each with its own work incentives and disincentives,” they write. These policies were “adopted with apparently no regard to their collective impact.” ...

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June 8, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Lesson From The Tax Court: Do The Right Thing

Tax Court (2017)The protests dominating events recently have reminded me of Spike Lee’s classic film “Do The Right Thing.”  It’s a movie that explores how individual decisions that seem “right” from viewpoints blindered by race and class create seemingly inescapable conflicts.  It makes you question your perspective about “the right thing.”

I offer two recent Tax Court as a cautionary lesson that I hope makes tax professionals question their perspective about the right thing to do in tax return preparation and advice.  It’s not about race or class.  It’s about being blindered by client needs and client relationships, both on the part of taxpayers and the IRS.  Both cases show taxpayers, tax professionals, and the IRS all not doing the right thing.  In Enrique Aguilar v. Commissioner, T.C. Summ. Op. 2020-16 (May 26, 2020) (Judge Gerber), the tax professional created a fictional Schedule C.  In Thomas M. McCarthy v. Commissioner, T.C. Memo. 2020-74 (June 3, 2020) (Judge Thornton), the tax professional improperly claimed mortgage deductions on Schedule A.  Details below the fold.

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June 8, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, June 7, 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 paper returning to the list at #5:

  1. SSRN Logo (2018)[946 Downloads]  The Transformation of International Tax, by Ruth Mason (Virginia)
  2. [376 Downloads]  Summary of the Tax Provisions of the CARES Act, by David Miller, Muhyung Lee, Kathleen Semanski & Sean Webb (Proskauer, New York)
  3. [269 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  4. [234 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  5. [171 Downloads]  The Troubling Case of the Unlimited Pass-Through Deduction, by Clint Wallace (South Carolina)

June 7, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 6, 2020

Using Tax Law To Stem Digital Manipulation Of Images Of Models' Appearance In Advertising

Caitlin McBride (Michigan State) et al., Digital Manipulation of Images of Models' Appearance in Advertising: Strategies For Action Through Law and Corporate Social Responsibility Incentives to Protect Public Health, 45 Am. J.L. & Med. 7 (2019):

FashionAbstract
CONTEXT
Widespread digital retouching of advertising imagery in the fashion, beauty, and other consumer industries promotes unrealistic beauty standards that have harmful effects on public health. In particular, exposure to misleading beauty imagery is linked with greater body dissatisfaction, worse mood, poorer self-esteem, and increased risk for disordered eating behaviors. Moreover, given the social, psychological, medical, and economic burden of eating disorders, there is an urgent need to address environmental risk factors and to scale up prevention efforts by increasing the regulation of digitally altered advertising imagery.

METHODS
This manuscript summarizes the health research literature linking digital retouching of advertising to increased risk of eating disorders, disordered weight and appearance control behaviors, and body dissatisfaction in consumers, followed by a review of global policy initiatives designed to regulate digital retouching to reduce health harms to consumers. Next, we turn to the US legal context, reporting on findings generated through legal research via Westlaw and LexisNexis, congressional records, federal agency websites, law review articles, and Supreme Court opinions, in addition to consulting legal experts on both tax law and the First Amendment, to evaluate the viability of various policy initiatives proposed to strengthen regulation on digital retouching in the United States.

FINDINGS
Influencing advertising practices via tax incentives combined with corporate social responsibility initiatives may be the most constitutionally feasible options for the US legal context to reduce the use of digitally alternated images of models' bodies in advertising.

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

Friday, June 5, 2020

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Gillis's Carbon Tax Shifts And Revenue-Neutrality

This week, Sloan Speck (Colorado) reviews a new work by Rory Gillis (Toronto), Carbon Tax Shifts and the Revenue-Neutrality Dilemma, 23 Fla. Tax Rev. 293 (2019).

Speck (2017)

In Carbon Tax Shifts and the Revenue-Neutrality Dilemma, Rory Gillis deconstructs the concept of revenue neutrality as applied to Pigouvian carbon taxes. These carbon taxes are, of course, price instruments, and their behavioral effects—the raison d’être of the taxing scheme—generally don’t depend on the specific use of any funds generated. But, as Gillis notes, the political viability of these carbon taxes often hinges on (typically vague) promises of “revenue neutrality,” which means (somewhat naïvely) that every dollar raised by a carbon tax will be offset by one dollar of tax cuts elsewhere. Gillis challenges this “standard definition” as “conceptually unclear,” then distinguishes two competing understandings of revenue neutrality.

In Gillis’s terms, “backwards-looking” revenue neutrality adheres to an enactment-year revenue baseline and effectively straightjackets future revenue increases. By contrast, “sideways-looking” revenue neutrality looks to a hypothetical—and frequently unknowable—current-year baseline calculated as if the carbon tax had never been promulgated. 

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June 5, 2020 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)