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 #4 and a new paper debuting on the list at #5:

1. [590 Downloads]  Why Data Giants Don't Pay Enough Tax, by Tarcísio Diniz Magalhães (Antwerp; Google Scholar) & Allison Christians (McGill; Google Scholar)
2. [390 Downloads]  GILTI and the GloBE, by Heydon Wardell-Burrus (Oxford)
3. [229 Downloads]  Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill, by Richard Hasen (UCLA; Google Scholar)
4. [194 Downloads]  Subjective Costs of Tax Compliance, by Jonathan Choi (Minnesota; Google Scholar) & Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar)
5. [150 Downloads]  Bounded Extraterritoriality, by Ruth Mason (Virginia; Google Scholar) & Michael Knoll (Penn) 

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Repetti’s International Tax Policy’s Harm to Manufacturing and National Interests

This week, David Elkins (Netanya, visiting NYU 2021-2023; Google Scholar) reviews a new paper by James R. Repetti (Boston College; Google Scholar), International Tax Policy's Harm to Manufacturing and National Interests, 2023 Wis. L. Rev. __ :

The discourse in the field of international tax avoidance has always contained an underlying tension. On the one hand, politicians, the popular press, and member of the academic community often lament that international tax avoidance can involve little more than shuffling papers, that the change in structure is not reflective of any change in actual economic activity. Prototypical examples include corporate inversions, the placing of intellectual property in tax havens, and routing royalties and interest through strings of related entities. Sensitive to such objections, Congress or the Treasury may impose restrictions that deny beneficial tax treatment to maneuvers that lack economic substance. The problem is that corporations may respond by moving their real economic activity abroad, and the same pundits who condemn the form-over-substance of certain types of tax avoidance will now decry the substance, namely loss of American jobs and other harm to the domestic economy.

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Next Week’s Tax Workshops

Tuesday, April 18: Katherine Lim (U.S. Department of Agriculture, Economic Research Service; Google Scholar) will present How Do Business Owners Respond to a Tax Cut? Examining the 199A Deduction for Pass-through Firms (with Lucas Goodman (U.S. Treasury Department, Office of Tax Analysis), Bruce Sacerdote (Dartmouth; Google Scholar) & Andrew Whitten (U.S. Treasury Department, Office of Tax Analysis; Google Scholar)) as part of the Columbia Davis Polk & Wardwell Tax Policy Colloquium. If you would like to attend, please contact David Schizer. 

Tuesday, April 18: Bradley Hardy (Georgetown; Google Scholar) will present Stalled Progress? Five Decades of Black-White and Rural-Urban Income Gaps as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli.

Thursday, April 20: Steven Dean (Brooklyn) will present Surrey's Silence: Subpart F and the Swiss Subsidiary Tax that Never Was, 87 Law & Contemp. Probs. __ (2024), as part of the OMG Transatlantic Tax Talks. No registration is required for this event.

Friday, April 21: Deanna Newton (Pepperdine) will present Closing the Opportunity Gap as part of the Boston College Tax Policy Collaborative. If you would like to attend, please contact James Repetti.

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Florida Hosts 13th Annual Tax Policy Symposium Today

Florida hosts the 13th Annual Ellen Bellet Gelberg Tax Policy Symposium today (Zoom link here):

Keynote #1 (9:30 AM ET): Diane Lim (Virginia), Bridging the Divide

• William Gale (Brookings Institution; Google Scholar) (moderator)
• Leonard Burman (Syracuse) 
• Bradley Hardy (Georgetown; Google Scholar)
• Elaine Maag (Urban Institute; Google Scholar) 
• Amy Matsui (National Women's Law Center) 

Keynote #2 (12:10 PM ET): William Gale (Brookings Institution; Google Scholar), Racial Disparities in the Income Tax Treatment of Marriage (with Janet Holtzblatt, Swati Joshi & Nora Cahill (Tax Policy Center):

Although it is generally blind with respect to race, the tax code can create racial disparities when factors that affect tax liability are correlated with race. In this working paper, we provide new evidence on racial differences in marriage penalties and bonuses in the income tax, using data from the Survey of Consumer Finances. Our results support Brown’s (2021) hypothesis that, controlling for income, penalties are more frequent and larger for Black couples than white couples. We link these results to racial differences in income, relative spousal earnings, and the presence of dependents, and examine two policy reforms.

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Hayashi Presents Tax Law Reinforcement And Redistributive Politics Today At Duke

Andrew Hayashi (Virginia; Google Scholar) presents Tax Law Reinforcement and Redistributive Politics (with Yehonatan Givati (Hebrew University)) at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

The Inflation Reduction Act signed by President Biden on August 16, 2022, allocated $80 billion in additional funding for the IRS. While Democrats unanimously supported the bill, not a single Republican voted in favor of it. And the first legislation advanced by the new Republican majority this year was to repeal this increase in IRS funding. Given the state of IRS enforcement and funding, increasing the resources devoted to tax enforcement seems like an obvious imperative without a clear partisan valence. One might think that political and ideological battles would be fought over what the tax law is, not whether the IRS has the resources to enforce it. But IRS funding has become a major political point of contention. Why is tax law enforcement such a partisan issue?

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Shay: Trade Enforcement Tools And International Taxation—A Digital Services Tax Case Study

Stephen E. Shay (Boston College; Google Scholar), Trade Enforcement Tools and International Taxation: A Digital Services Tax Case Study: 

The US Section 301 trade actions against DSTs were strikingly effective in the short term. Section 301, however, is ill suited as a process for challenging taxes of other countries and lacks legitimacy. The sovereign power to tax is very broad and there is insufficient international agreement on taxation norms applicable to the full range of taxes to form a basis for unilateral action against a tax such as the DST. The Section 301 DST cases did not employ an objective standard and encourage skepticism that trade fora without tax policy experience or expertise are equipped to deal satisfactorily with novel tax instruments.

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Taite: The Impact Of Tax Code Bias On The Racial Wealth Gap

Phyllis C. Taite (Oklahoma City), Inequality by Unnatural Selection: The Impact of Tax Code Bias on the Racial Wealth Gap, 110 Ky. L.J. 639 (2022): 

One of the underlying principles of social Darwinism is the belief that people are inherently strong or weak and those strengths and weaknesses determine their fate in life through the process of natural selection. Wealthy taxpayers support the ideals of social Darwinism because it maintains the class divide and strengthens the racial divide through oppressive acts, particularly toward Black people. Others likely support the principles based on their perceptions that everyone would start at the same position and competitors would face similar obstacles. Based on the belief that the strongest will, and should survive, it is easy to promote the ideals of social Darwinism because fair competition should yield a just outcome. Even when two people are planted in the same location, their backgrounds will likely determine their respective readiness for competition. America has a history of deeply rooted racial oppression that built the foundation for one community and destroyed the foundation of others. It is inherently unfair to place obstacles in the path of one group, and not the other, and expect the same level of performance.

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Kim Presents Taxing The Metaverse At Michigan State

Young Ran (Christine) Kim (Cardozo; Google Scholar) presented Taxing the Metaverse, 116 Geo. L.J. __ (2023), at Michigan State on Monday as part of its Faculty Programs & Workshops:

The buzz surrounding the Metaverse has been growing steadily for the past couple of years, but the tax implications of this novel ecosystem remain fuzzy to most tax scholars. Such uncertainty is concerning, given the potential and momentum of this emerging technology. Although the Metaverse evolved from online video games focused only on user consumption, it now allows users to produce income and accumulate wealth entirely within the Metaverse. Current law seems to defer taxation of such until a realization or cash-out event. This paper challenges this approach.

This paper offers novel arguments justifying Metaverse taxation. Because economic activity within the Metaverse satisfies the Haig-Simons and Glenshaw Glass definitions of income, its exclusion will create a tax haven. Tax policy can also play an essential role in regulating the virtual economy. 

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Gondwe Presents The Life-Saving Potential Of Direct Public Financial Assistance To Survivors Of Intimate Partner Violence Today At UC-San Francisco

Nyamagaga Gondwe (Wisconsin; Google Scholar) presents Emergency Exit: The Life-Saving Potential of Direct Public Financial Assistance to Survivors of Intimate Partner Violence at UC-San Francisco today as part of its Tax Policy Colloquium hosted by Manoj Viswanathan: 

Intimate partner violence (IPV) is viewed primarily as a class of criminal behavior in federal policy. But the criminal justice system operates through a model of individual accountability, which means that solutions to IPV in American communities focus on education (proactive) and incarceration (reactive) as interventions.

However, public health studies on IPV suggest that the kinds of physical violence that result in arrest should not be seen as the central issue in addressing IPV. Instead, those studies suggest that physical violence should be thought of as a tool for one partner in a relationship to exert coercive power and control over the other partner. Put another way, physical violence is just one of multiple tools an abuser will use to control their partner. Other tools include emotional abuse, psychological abuse, and economic abuse.

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GILTI And The GloBE

Heydon Wardell-Burrus (Oxford), GILTI and the GloBE:

This paper considers the treatment of the GILTI regime under the GloBE Rules. First, it argues that the GILTI regime (in its current form) is most likely to be treated as a CFC Tax. It then sets out two detailed methodologies for properly allocating taxes under GILTI to individual CFCs in accordance with the GloBE Rules and Commentary. Under the ‘deferential approach’ the GloBE Rules would allocate all additional tax arising from the GILTI regime (including taxes arising from the 20% ‘haircut’ of foreign taxes and the foreign tax credit limitation rules). Under the ‘assertive approach’, the cross-jurisdictional allocation would be limited to where the GILTI regime was asserting ‘secondary taxing rights’.

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Avi-Yonah, Kim & Sam: A New Framework For Digital Taxation

Reuven Avi-Yonah (Michigan; Google Scholar), Christine Kim (Cardozo; Google Scholar) & Karen Sam (Michigan), A New Framework for Digital Taxation, 63 Harv. Int'l L.J. 279 (2022) (reviewed by Blaine Saito (Northeastern; Google Scholar) here):

The international tax regime has wide implications for business, trade, and the international political economy. Under current law, multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence there. Digital companies, like Google and Amazon, can operate entirely online, thereby avoiding market country taxes. Multinationals can also exploit existing tax rules by shifting their profits to low-tax jurisdictions, thereby avoiding taxes in the residence country where their headquarters are located.

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Lesson From The Tax Court: It Takes More Than Putting In The Hours To Avoid §469 Restrictions

Tax Day approaches.  I know many folks are putting in the hours on preparing tax returns this week ... or else putting in the minutes filing Form 4868.  But we all know—especially when unhappy clients come to us to fix a return messed up by some whack-a-doodle preparer—just putting in hours in filing tax returns does not make one a tax professional.

In Robert L. Drocella and Pamela M. Drocella v. Commissioner, T.C. Summ. Op. 2023-12 (Apr. 3, 2023), Judge Leyden teaches us, and our clients, that simply putting in the hours working on one’s rentals does not make one a real estate professional for §469 purposes.  There the hard-working taxpayers were not allowed to escape §469’s prohibition on taking passive activity losses against active income even though they together put in over 1,500 hours in working their six rental properties.  We learn today there are two other tests to being a real estate professional and these taxpayers failed one of them:  they were unable to show the Court the how the hours they worked their rentals related to the hours they spent earning wages.  Details below the fold.

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Does America Soak The Affluent?

Wall Street Journal Editorial, How America Soaks the Affluent:

The Internal Revenue Service recently released its income and tax statistics for 2020, and they show the top 1% of earners paid 42.3% of the country’s income taxes. That’s a two-decade high in the share of taxes the 1% pay.

That same 1% reported earnings of 22.2% of adjusted gross income (AGI) on their tax returns, which means the share of taxes paid by the top 1% as a group is roughly double their share of income. Whatever else you say about the current tax code, there’s no denying that it is steeply progressive.

The nearby bar chart is based on a Tax Foundation analysis of the IRS data for 2020. Note that the top 5% of earners reported 38.1% of total AGI but paid 62.7% of all income taxes. The bottom 50% of earners reported 10.2% of AGI but paid 2.3% of all income taxes.

Martin A. Sullivan (Tax Analysts), Are the Superrich More Burdened And Paying the Highest Rates?, 178 Tax Notes Fed. 1631 (Mar. 13, 2023):

The 27,000 Americans with more than $10 million of income have lower average federal income tax rates than the 580,000 Americans with income between $1 million and $10 million. And though the share of federal income tax revenue from taxpayers with income in the top percentile rose from 33.2 percent in 2001 to 42.3 percent in 2020, that doesn’t mean the affluent are more oppressed or less well off. That’s because over the two decades spanning 2001 through 2020, their share of total before-tax income has risen, and their average effective income tax rate has declined.

Those observations, and others discussed below, add important context to — and counter the thrust of — assertions by the editorial board of The Wall Street Journal. First, about the income tax code, the board noted: “There is no denying that it is steeply progressive.” And second, it said, “The trend over the past two decades is that the income tax burden has been shifting even more to the highest earners” (How America Soaks the Affluent, The Wall Street Journal, Mar. 3, 2023).

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The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #2:

1. [590 Downloads]  Why Data Giants Don't Pay Enough Tax, by Tarcísio Diniz Magalhães (Antwerp; Google Scholar) & Allison Christians (McGill; Google Scholar)
2. [339 Downloads]  GILTI and the GloBE, by Heydon Wardell-Burrus (Oxford)
3. [228 Downloads]  The Rise of the Robotic Tax Analyst, by Benjamin Alarie (Toronto; Google Scholar; CEO, Blue J Legal)
4. [224 Downloads]  21st Century Churches and Federal Tax Law, by Ellen Aprill (Loyola-L.A.; Google Scholar) & Lloyd Hitoshi Mayer (Notre Dame; Google Scholar)
5. [201 Downloads]  Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill, by Richard Hasen (UCLA; Google Scholar)

Weekly SSRN Tax Article Review And Roundup: Speck Reviews U.S. International Tax Policy And Corporate America By Hanna & Wilson

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Christopher H. Hanna (SMU) & Cody A. Wilson (Gibson, Dunn & Crutcher, LLP), U.S. International Tax Policy and Corporate America, 48 J. Corp. L. 261 (2023).

Over the last decade, conversations about corporate tax reform in the United States have reflected a broad range of competing visions for cross-border business taxation. In U.S. International Tax Policy and Corporate America, Christopher Hanna and Cody Wilson argue that the Tax Cuts and Jobs Act in 2017 and the Inflation Reduction Act in 2022—each significant legislative changes to U.S. international taxation—may foreshadow a third major shift. Hanna and Wilson speculate that this next step could yield “a worldwide no-deferral system at a low corporate tax rate.” Potentially more surprising: this new regime could garner support from “Corporate America,” which Hanna and Wilson define as U.S.-based publicly traded corporations.

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Next Week’s Tax Workshops

Tuesday, April 11: Nyamagaga Gondwe (Wisconsin; Google Scholar) will present Emergency Exit: The Life-Saving Potential of Direct Public Financial Assistance to Survivors of Intimate Partner Violence as part of the UC-San Francisco Tax Policy Colloquium. If you would like to attend, please contact Manoj Viswanathan.

Tuesday, April 11: Sarah Reber (Brookings Institute; Google Scholar) will present Funding High-Poverty School Districts: Federal Policy Tools and the Limits of Incentives as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli.

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Protecting The Guild Or Protecting The Public? Bar Exams And The Diploma Privilege

Milan Markovic (Texas A&M; Google Scholar), Protecting the Guild or Protecting the Public? Bar Exams and the Diploma Privilege, 35 Geo. J. Legal Ethics 163 (2022):

The bar examination has long loomed over legal education. Although many states formerly admitted law school graduates into legal practice via the diploma privilege, Wisconsin is the only state that recognizes the privilege today. The bar exam is so central to the attorney admissions process that all but a handful of jurisdictions required it amidst a pandemic that turned bar exam administration into a life-or-death matter.

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Shaviro Presents 'Moralist' Versus 'Scientist': Stanley Surrey And The Public Intellectual Practice Of Tax Policy Today At Duke

Daniel Shaviro (NYU; Google Scholar) presents 'Moralist' Versus 'Scientist': Stanley Surrey and the Public Intellectual Practice of Tax Policy at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak: 

Nearly forty years after his untimely death, Stanley Surrey, the renowned Harvard law professor (and Treasury official), remains perhaps the most important and influential tax law scholar in American history. The recent publication of his highly illuminating memoirs offers a convenient occasion for reassessing his work.

In offering such a reassessment, this essay takes its title from William F. Buckley’s 1974 observation that, while Surrey claimed to analyze tax policy issues with “scientific detachment,” in fact he was a tax “moralist,” whose policy recommendations were “based on a highly articulated set of personal value principles.” 

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Brauner Presents Taxation Of Information And The Data Revolution Today At Florida

Yariv Brauner (Florida; Google Scholar) presents Taxation of Information and the Data Revolution at Florida today as part of a celebration of his academic contribution and appointment to the Hugh Culverhouse Eminent Scholar Chair in Taxation hosted by Charlene Luke:

One cannot escape the data revolution; it is all around us. Advancements in information collection, collation, and analysis are fundamentally altering our world. They are transforming the economy, society, and even ourselves. These dramatic, fast-paced changes place demands on the law and even challenge the role of law in society, resulting in a thriving academic debate. Tax scholarship has yet to join this discourse. This article begins to fill the void, explaining the impediment and exploring realistic policy options.

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Zelenak Presents Designing A Billionaires' Tax Today At Northwestern

Lawrence Zelenak (Duke; Google Scholar) presents two papers on Income Taxation of the Unrealized Gains of the Ultrarich: The 1920s, Stanley Surrey’s Era, and Today at Northwestern today as part of its Advanced Topics in Taxation Colloquium hosted by Gregg Polsky:

1924, 2021: Taxes of the Ultrarich, and Mark-to-Market Reforms, 172 Tax Notes Fed. 583 (July 26, 2021):

In this article, Zelenak tells the story of Treasury’s disclosures of the income tax payments of plutocrats almost a century ago, which mirror the recent ProPublica revelations of the income tax payments of the 25 richest Americans, and he explores why those earlier disclosures — unlike the recent ones — didn’t spark interest in mark-to-market taxation of the ultrarich.

Stanley Surrey and Taxing Unrealized Appreciation, 87 Law & Contemp. Probs. __ (2024): 

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Hayashi Presents Tax Law Reinforcement And Redistributive Politics Today At Toronto

Andrew Hayashi (Virginia; Google Scholar) presents Tax Law Reinforcement and Redistributive Politics (with Yehonatan Givati (Hebrew University)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series hosted by Benjamin Alarie:

The Inflation Reduction Act signed by President Biden on August 16, 2022, allocated $80 billion in additional funding for the IRS. While Democrats unanimously supported the bill, not a single Republican voted in favor of it. And the first legislation advanced by the new Republican majority this year was to repeal this increase in IRS funding. Given the state of IRS enforcement and funding, increasing the resources devoted to tax enforcement seems like an obvious imperative without a clear partisan valence. One might think that political and ideological battles would be fought over what the tax law is, not whether the IRS has the resources to enforce it. But IRS funding has become a major political point of contention. Why is tax law enforcement such a partisan issue?

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Dean: Surrey's Silence—Subpart F And The Swiss Subsidiary Tax That Never Was

Steven Dean (Brooklyn), Surrey's Silence: Subpart F and the Swiss Subsidiary Tax that Never Was, 87 Law & Contemp. Probs. __ (2024):

Was Stanley Surrey racist? Was he a coward for not speaking as plainly about the Swiss tax haven problem in public as the Surrey Papers reveal his team did in private? In the broad sweep of history Surrey’s silence may have mattered a great deal or it may have mattered very little. The quiet aspect of the Liberia problem that it highlights undoubtedly does. Exploiting the public’s misunderstanding of the term tax haven as Surrey quickly learned to do has become second nature to scholars and policymakers alike. 

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Güçeri Presents Tax Policy, Investment And Profit-Shifting Today At Columbia

İrem Güçeri (Oxford; Google Scholar) presents Tax Policy, Investment and Profit-Shifting (with Katarzyna Bilicka (Utah State; Google Scholar) & Michael Devereux (Oxford; Google Scholar)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium hosted by David Schizer. 

Multinational firms (MNEs) often pay no tax in high-tax countries because they shift a large fraction of their taxable income to tax havens. We build a model of tax policy and investment that incorporates unobserved heterogeneity in MNEs’ profit-shifting capability and different costs of setting up a tax minimization network. The model matches the distribution of taxable profit and investment in detailed UK tax returns data. We use the model to quantify the policy tradeoff between raising tax revenue by combating tax avoidance (via, for example, a Global Minimum Tax) and attracting investment. The results solve a longstanding puzzle in the existing profit-shifting literature: our model reconciles the differences between previous micro- and macro-level estimates of profit-shifting elasticities by accounting for extensive margin decisions (to report positive or no taxable profit in a jurisdiction). We test the model’s predictions using a reform in Italy that limited the profit-shifting activities of Italian MNEs as a quasi-natural experiment.

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Lin Presents Who’s On (The 1040) First? Determinants And Consequences Of Spouses’ Name Order On Joint Returns Today At Georgetown

Emily Lin (Office of Tax Analysis, U.S. Treasury Department) presents Who’s On (the 1040) First? Determinants and Consequences of Spouses’ Name Order on Joint Returns (with Joel Slemrod (Michigan; Google Scholar), Evelyn Smith (Michigan) & Alexander Yuskavage (Office of Tax Analysis, U.S. Treasury Department)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

Married couples filing a joint return put the male name first 88.1% of the time in tax year 2020, down from 97.3% in 1996. The man’s name is more likely to go first the larger is the fraction of the couple’s allocable income that goes to him, and the older is the couple. Based on state averages, putting the man’s name first is strongly associated with conservative religious attitudes, religiosity, and a survey-based measure of sexist attitudes. Risk-taking and tax noncompliance are both associated with the man’s name going first.

Conclusion
Married couples filing a joint return in the US must choose one of the spouse’s names to be listed first on the tax return. The wording that accompanies the Form 1040 and its instructions implies, but in no way requires or even suggests, that the name of the person doing the couple’s taxes should be listed first. The fact that this decision has absolutely no effect on tax liability might lead one to believe that the name order decision is made causally and, perhaps, randomly. 

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Alm, Soled & Thomas: Revising Form 1040 For The 21st Century

James Alm (Tulane; Google Scholar), Jay A. Soled (Rutgers; Google Scholar) & Kathleen DeLaney Thomas (North Carolina; Google Scholar), Revising Form 1040 for the 21st Century, 178 Tax Notes Fed. 1713 (Mar. 13, 2023):

In this article, the authors argue that Form 1040 should be updated to reflect modern technology and social science research by strategically and prominently adding new questions, which would result in improved information for the IRS and greater taxpayer honesty and could yield billions of dollars of additional revenue without raising tax rates.

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Canadian Tax Journal Publishes Special Issue Dedicated To Richard Bird (University Of Toronto)

Following up on my previous post, Death Of Richard Bird (University Of Toronto):  the Canadian Tax Journal has published a special issue in Richard's honor, 70 Canadian Tax J. (SS) 1-354 (2022):

• Heather Evans (Executive Director & CEO, Canadian Tax Foundation), Foreword, 70 Canadian Tax J. (SS) 1 (2022)
• François Vaillancourt (Université de Montréal; Google Scholar) & Robert D. Ebel (Georgia State), The Size, Growth, and Composition of Government: Analysis and Evidence for Canada and the United States, 70 Canadian Tax J. (SS) 5 (2022)
• James Alm (Tulane; Google Scholar), Devising Administrative Policies for Improving Tax Compliance, 70 Canadian Tax J. (SS) 5 (2022)
• Roy Bahl (Georgia State) & Jorge Martinez-Vazquez (Georgia State; Google Scholar), Perspectives in Fiscal Decentralization: Challenges and the Unfinished Agenda, 70 Canadian Tax J. (SS) 69 (2022)
• Almos T. Tassonyi (Calgary), Financing Local Government and Development in Canada in the Aftermath of a Global Pandemic: Continuity and Change, 70 Canadian Tax J. (SS) 97 (2022)
• Enid Slack (Toronto), Property Taxes in the Real World, 70 Canadian Tax J. (SS) 133 (2022)
• Sijbren Cnossen (CPB Netherlands Bureau for Economic Policy Analysis), Excise Taxation To Preserve Health and To Protect the Environment: A Review, 70 Canadian Tax J. (SS) 159 (2022)

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Lesson From The Tax Court: Attend Carefully To Your Entity Baskets

Easter approaches.  On that day our church grounds will be overrun with children scampering to collect eggs into the various baskets, bags, and other containers they bring (or we give them if they need).  They do not have to worry about what kind of container they use to collect their eggs.  The candy will taste just as sweet.

You can think of business entities as being like Easter baskets.  They are containers taxpayers use to collect their income.  But unlike the happy children, taxpayers must take care in their choice of container.  That choice can affect the amount of income collected.  And it can leave a sour taste when the basket chosen is not the proper form.  In today’s Lesson, we learn how a taxpayer’s choice of business containers affects their ability to take deductions, and even affects their ability to litigate in Tax Court.

In Greatest Common Factor v. Commissioner, T.C. Memo. 2023-39 (Mar. 23, 2023) (Judge Kerrigan), the individual taxpayer chose to collect income through a C corporation and that choice affected the deductibility of the individual’s home office expenses.  In Techtron Holding, Inc. v. Commissioner, T.C. Memo 2023-29 (Mar. 9, 2023) (Judge Vasquez), the individual taxpayers collected income through ever-changing, multiple baskets of various kinds of business entities.  When the IRS audited and found deficiencies in one of the entities, the Tax Court decided it had no jurisdiction over that entity’s petition because the entity no longer existed at the time the petition was filed.  Details below the fold.

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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 reshuffling of the order within the Top 5:

1. [537 Downloads]  Why Data Giants Don't Pay Enough Tax, by Tarcísio Diniz Magalhães (Antwerp; Google Scholar) & Allison Christians (McGill; Google Scholar)
2. [219 Downloads]  The Rise of the Robotic Tax Analyst, by Benjamin Alarie (Toronto; Google Scholar; CEO, Blue J Legal)
3. [216 Downloads]  21st Century Churches and Federal Tax Law, by Ellen Aprill (Loyola-L.A.; Google Scholar) & Lloyd Hitoshi Mayer (Notre Dame; Google Scholar)
4. [201 Downloads]  Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill, by Richard Hasen (UCLA; Google Scholar)
5. [179 Downloads]  Subjective Costs of Tax Compliance, by Jonathan Choi (Minnesota; Google Scholar) & Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar)

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Revisiting The Tax Treatment Of Alimony By Davis, Soled & Soled

This week, Michelle Layser (San Diego) reviews Tessa R. Davis (South Carolina; Google Scholar), Amy H. Soled (Rutgers) & Jay A. Soled (Rutgers; Google Scholar), Revisiting the Tax Treatment of Alimony, 72 Kansas L. Rev. __ (2023):

Like many tax professors, I teach my students that the tax laws that exist today reflect choices about what, when, and who to tax. In many cases, lawmakers have options, and the best approach is not always obvious. The tax treatment of alimony is a case in point. When it comes to support payments made by a divorced person to a former spouse, Congress has three options: tax the recipient, tax the payer, or tax them both. For many years, the law allowed alimony payers to deduct the payments, and it required recipients to include alimony in their income. The Tax Cuts and Jobs Act changed the tax treatment of alimony by disallowing the deduction for alimony payers and allowing recipients to exclude the payments from income. But did the change reflect good policy?

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Next Week’s Tax Workshops

Tuesday, April 4: İrem Güçeri (Oxford; Google Scholar) will present Tax Policy, Investment and Profit-Shifting (with Katarzyna Bilicka (Utah State; Google Scholar) & Michael Devereux (Oxford; Google Scholar)) as part of the Columbia Davis Polk & Wardwell Tax Policy Colloquium. If you would like to attend, please contact David Schizer. 

Tuesday, April 4: Emily Lin (Office of Tax Analysis, U.S. Treasury Department) will present Who’s On (the 1040) First? Determinants and Consequences of Spouses’ Name Order on Joint Returns (with Joel Slemrod (Michigan; Google Scholar), Evelyn Smith (Michigan) & Alexander Yuskavage (Office of Tax Analysis, U.S. Treasury Department)) as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli.

Wednesday, April 5: Lawrence Zelenak (Duke; Google Scholar) will present two papers on Income Taxation of the Unrealized Gains of the Ultrarich: The 1920s, Stanley Surrey’s Era, and Today as part of the Northwestern Advanced Topics in Taxation Colloquium. If you would like to attend, please contact Gregg Polsky.

• 1924, 2021: Taxes of the Ultrarich, and Mark-to-Market Reforms, 172 Tax Notes Fed. 583 (July 26, 2021)
• Stanley Surrey and Taxing Unrealized Appreciation, 87 Law & Contemp. Probs. __ (2024)

Wednesday, April 5: Andrew Hayashi (Virginia; Google Scholar) will present Tax Law Reinforcement and Redistributive Politics (with Yehonatan Givati (Hebrew University)) as part of the Toronto James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Benjamin Alarie. 

Thursday, April 6: Daniel Shaviro (NYU; Google Scholar) will present 'Moralist' Versus 'Scientist': Stanley Surrey and the Public Intellectual Practice of Tax Policy as part of the Duke Tax Policy Seminar. If you would like to attend, please contact Lawrence Zelenak. 

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Lederman Presents The Rise And Fall (?) Of Luxembourg As A Tax Rulings Haven Today At Duke

Leandra Lederman (Indiana-Maurer; Google Scholar) presents The Rise And Fall (?) Of Luxembourg As A Tax Rulings Haven at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

In November 2014, the International Consortium of Investigative Journalists (ICIJ) broke the “LuxLeaks” scandal, revealing hundreds of billions of dollars of secret deals given by the tiny country of Luxembourg to large multinational enterprises such as Amazon, Apple, and Verizon. These sweetheart deals, in the form of Luxembourg tax rulings, allowed many name-brand companies to dodge huge amounts of tax that would otherwise be due to the U.S. or other countries. The international LuxLeaks scandal was headline news because it revealed that large multinationals had essentially bought tax breaks without the knowledge of the countries that would have collected the taxes dodged.

The tax rulings that Luxembourg used to grant these tax breaks were lengthy and complex. It is surprising that a small tax administration was able to produce thousands of these rulings in a few years. This Article is the first to explore the history of where Luxembourg’s informal tax-rulings process came from and the elements that allowed it to be so prolific. 

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COVID And Bar Admissions

Steven R. Smith (Cal-Western), COVID and Bar Admissions, 75 Ark. L. Rev. 527 (2022):

The COVID-19 pandemic, killings of George Floyd and others, and civil unrest created dislocation, hardship, and uncertainty. For millions of people, it included deaths in family, unemployment, and serious mental and physical illness. Graduates of professional schools preparing to take licensing examinations faced unexpected obstacles in meeting licensing standards for their chosen professions. It quickly became apparent, for example, that the usual licensing examination arrangements were problematic. 

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Harpaz Posts Two Tax Papers On SSRN

Assaf Harpaz (Drexel; Google Scholar) & C. Eugene Steuerle (Urban Institute; Google Scholar), Stanley Surrey's Lasting Influence, 86 Law & Contemp. Probs. __ (2023):

Stanley Surrey is perhaps best known for his promotion of the concept of tax expenditures - the characterization of various tax preferences as substitutes for direct expenditures. That emphasis understates his lasting influence on the tax policy process. An equally important and lasting achievement was establishing and promoting the integrity and professionalism of the Treasury’s Office of Tax Policy (OTP), while garnering support of much of the wider tax policy community for basing tax policy on the principles of fairness, simplicity, and efficiency.

In this article, we focus mainly on historical developments in the concept and use of tax expenditures both in the United States and abroad. We provide special attention to the significant role played by tax expenditures in the movement that led to the Tax Reform Act of 1986, which is the type of effort that Surrey championed. We relate tax expenditures to other base-defining measures such as economic income, consumption, and ability to pay in both development of that Act and within the continuing tax policy debate.

Assaf Harpaz (Drexel; Google Scholar), Tax Policy and COVID-19: An Argument for Targeted Crisis Relief, 31 Cornell J.L. & Pub. Pol'y 235 (2021):

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SSRN Tax Professor Rankings

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 March 1, 2023) 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)	218,431	1	Reuven Avi-Yonah (Michigan)	11,852
2	Daniel Hemel (NYU)	129,035	2	Kristin Hickman (Minnesota)	8,079
3	Dan Shaviro (NYU)	126,106	3	Daniel Hemel (NYU)	4,564
4	Lily Batchelder (NYU)	125,963	4	Bridget Crawford (Pace)	4,079
5	David Gamage (Indiana-Bloom.)	123,647	5	Darien Shanske (UC-Davis)	3,166
6	Darien Shanske (UC-Davis)	116,770	6	Robert Sitkoff (Harvard)	3,066
7	David Kamin (NYU)	113,262	7	Ruth Mason (Virginia)	2,975
8	Cliff Fleming (BYU)	107,764	8	D. Dharmapala (Chicago)	2,909
9	Manoj Viswanathan (UC-Hastings)	104,396	9	Margaret Ryznar (Indiana-Indy)	2,833
10	Ari Glogower (Northwestern)	103,618	10	Louis Kaplow (Harvard)	2,829
11	Rebecca Kysar (Fordham)	103,505	11	David Gamage (Indiana-Bloom.)	2,764
12	D. Dharmapala (Chicago)	49,640	12	Richard Ainsworth (Boston Univ.)	2,740
13	Michael Simkovic (USC)	47,374	13	Kyle Rozema (Washington University)	2,601
14	Paul Caron (Pepperdine)	40,691	14	Zachary Liscow (Yale)	2,528
15	Louis Kaplow (Harvard)	39,348	15	Kim Clausing (UCLA)	2,276
16	Richard Ainsworth (Boston Univ.)	37,134	16	Brad Borden (Brooklyn)	2,190
17	Bridget Crawford (Pace)	35,207	17	Young Ran (Christine) Kim (Cardozo)	2,173
18	Robert Sitkoff (Harvard)	31,330	18	Lily Batchelder (NYU)	2,012
19	Brad Borden (Brooklyn)	29,829	19	Dan Shaviro (NYU)	1,931
20	Vic Fleischer (UC-Irvine)	29,541	20	Richard Kaplan (Illinois)	1,814
21	Ed Kleinbard (USC)	29,214	21	Victoria Haneman (Creighton)	1,787
22	Ruth Mason (Virginia)	28,822	22	David Kamin (NYU)	1,665
23	Jim Hines (Michigan)	27,626	23	Brian Galle (Georgetown)	1,651
24	Richard Kaplan (Illinois)	26,803	24	Chris Sanchirico (Penn)	1,611
25	Katie Pratt (Loyola-L.A.)	26,075	25	Edward McCaffery (USC)	1,487

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Duff Presents Abusive Tax Avoidance And The General-Anti Avoidance Rule Today At Toronto

David Duff (UBC) presents Abusive Tax Avoidance and the Future of the General-Anti Avoidance Rule at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series hosted by Benjamin Alarie:

Canada enacted a statutory general-anti avoidance rule (GAAR) in 1988 in order to limit the scope of the traditional Duke of Westminster principle that taxpayers are entitled to rely on tax-motivated legal arrangements to avoid tax laws that might otherwise apply. After over 30 years of experience with the GAAR and more than 20 years of GAAR jurisprudence, the federal government released a Consultation Paper in August 2022, considering various amendments to “modernize” and “strengthen” the GAAR. This presentation is based on Professor Duff’s response to the GAAR Consultation, as well as a more conceptual article on the rationale for and appropriate design of general anti-avoidance rules that was published in 2020. 

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Call For Papers: Tax Research Network Conference At Cambridge

Call for Papers:

The conference will be held at the University of Cambridge from 5-7 September 2023 and will run as an in-person conference with some virtual provision for those who are unable to travel to Cambridge. As usual, the first two days will be research focused, while the Tax Education Day will run on the 7th September. Further details of the conference are at TRN Conference 2023 – Cambridge. Both research and teaching focused papers are welcomed in this call for papers.

There will be concurrent sessions over the conference to accommodate the papers submitted. The virtual sessions will be conducted via Microsoft Teams with links to be provided prior to the conference.

The conference will offer a limited number of fee scholarships and travel bursaries for PhD students and Early Career Research/Teaching colleagues. We will also hope to have limited funding for supporting childcare costs. Further details will be available once registration opens.

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Sarkar Presents Internal Revenue’s External Borders Today At Georgetown

Shayak Sarkar (UC-Davis; Google Scholar) presents Internal Revenue’s External Borders at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli:

The mandate of tax agencies seems clear: to secure revenue for the government and ensure taxpayer compliance. Yet for decades, tax agencies have regularly facilitated immigration enforcement. While scholars and the public have paid significant attention to the use of state and local police for immigration enforcement, this conscription of the taxman as a foot soldier has largely been overlooked.

This paper aims to correct that oversight. Building on the emerging critiques of the tax system’s role in perpetuating racial inequities, I first describe tax-agency participation in immigration raids, holding the dry mechanics of the agency procedures against stark examples of IRS complicity in mid-raid civil rights violations. I then address several reasons to be concerned about tax-agency involvement in immigration enforcement before considering existing constraints on that involvement. My review of those constraints begins with a reminder of the tax-law origins of immigration raids’ constitutional exceptionalism, before assessing the residual constraints on agency participation: taxpayer privacy, regulatory suppression, and civil rights torts.

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DePaul Law Review Symposium Call for Papers: Succession

The DePaul Law Review has issued a call for papers for its Spring 2024 symposium: 

The DePaul Law Review will devote the third issue of its 73rd volume (slated for publication in Spring 2024) to a Symposium addressing the Emmy-winning scripted drama Succession from a legal and pedagogical point of view. The aim of this special issue is to collect in one place the insights of a variety of faculty members with different legal subject-matter expertise, as a resource for all who are interested in the use of this award-winning work for the teaching, practice, and study of law. The DePaul Law Review has already secured the participation of a number of distinguished scholars.

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Does the Tax System Favor Superstar Firms?

John Gallemore (North Carolina; Google Scholar) & Edward L. Maydew (North Carolina; Google Scholar), Does the Tax System Favor Superstar Firms?:

Influential recent research finds that economic activity is increasingly concentrated in large, highly profitable "superstar firms." The causes and consequences of the rise of superstar firms are the subjects of intense debate among academics, policymakers, and others. Acting on concerns that superstar firms have tax advantages relative to other firms, policymakers are increasingly designing and enacting additional taxes that target superstar firms. We examine the validity of the underlying assumption that the tax system favors superstar firms, using both forward-looking and backward-looking measures of firms’ tax burdens.

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Cauble: Taxpayers' Tax Election Regrets

Emily Cauble (Wisconsin; Google Scholar), Taxpayers' Tax Election Regrets, 77 Tax Law. ___ (2023):

In a variety of contexts, taxpayers can file tax elections that dictate their tax treatment. After filing or not filing a given tax election, a taxpayer might later feel regret. Perhaps the taxpayer lacks adequate information about the election's existence or tax effects at the time the taxpayer makes (or fails to make) the election. Later, the taxpayer acquires additional tax law information revealing that an alternative election would have produced more favorable tax results. Alternatively, the taxpayer may make an election because it will produce favorable tax consequences if the taxpayer's transactions or behavior play out the way the taxpayer predicts. When the taxpayer's predictions prove to be inaccurate, the taxpayer wishes she had made a different election. A taxpayer who learns that an earlier election was, in retrospect, ill-advised might attempt to benefit from her newly acquired knowledge by retroactively filing a new election. Tax law's limitations on the use of hindsight determine whether the taxpayer will succeed.

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Teo Presents The United Nations In Global Tax Coordination Today At British Columbia

Nikki J. Teo (University of Sydney) presents A False Start in International Tax Coordination: The Ghost of the UN’s Past today at Allard School of Law, University of British Columbia hosted by Wei Cui (email here to attend virtually over Zoom at 6:30 PM ET): 

This talk unveils the missing history of the UN’s first attempt at international tax coordination through its Fiscal Commission (1946–1954). It dispels the prevailing myths surrounding the work of that body and reveals the heated struggles by developing countries and the UN Secretariat to negotiate and formulate more equitable international tax principles for application between developed and developing countries. This vital saga sheds light on the role of politics in shaping the international tax regime and offers insights into pressing debates about inclusiveness and multilateralism in international tax norm-setting.

The United Nations in Global Tax Coordination: Hidden History and Politics (Cambridge University Press March 2023):

The United Nations in Global Tax Coordination fills the decade-long knowledge gap in international tax history concerning the UN Fiscal Commission, which functioned as the overarching fiscal authority during the early post-World War II economic order. With insights from political economy and international relations scholarship, this critical archival examination chronicles the tenacious activism by post-colonial developing countries to preserve source taxation rights, and by the UN Secretariat in championing the development of equitable tax rules. Such activism would ultimately lead developed countries to oust the UN as a forum for international tax norm setting.

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Weisbach: Constrained Income Redistribution And Inequality: Legal Rules Compared To Taxes And Transfers

David A. Weisbach (Chicago; Google Scholar), Constrained Income Redistribution and Inequality: Legal Rules Compared to Taxes and Transfers:

A widely accepted result, associated with Louis Kaplow and Steve Shavell, is that it is more costly to use legal rules to redistribute income than to use the tax and transfer system (the income-tax only result). An assumption behind this result is that if a legal rule is changed to eliminate its income-redistributive effects, the tax and transfer system can be adjusted to counteract the effects of those changes on the distribution of income. A number of commentators have questioned this assumption, suggesting that political constraints may limit the ability of the tax and transfer system to adjust to changes in legal rules. They conclude that legal rules should sometimes, or always, be designed to redistribute income.

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Lesson From The Tax Court: The Whistleblower Who Blew Too Hard

Section 7623(b)(1) says that the IRS must reward whistleblowers when the information they provide causes the IRS to start “any administrative or judicial action” to collect unreported or unpaid taxes.  In such cases, whistleblowers can get an award of up to 30% of the proceeds actually collected from such actions.  Id.  So what happens if the whistleblower's information does not lead to an administrative or judicial action against the particular taxpayer fingered by the whistleblower, but instead prompts the IRS to create a general administrative program to target taxpayers like the one fingered by the whistleblower?

That was the claim in Thomas Shands v. Commissioner, 160 T.C. No. 5 (Mar. 8, 2023) (Judge Greaves).  There, the whistleblower claimed entitlement to 30% of some $1 billion collected from the IRS’s second Offshore Voluntary Disclosure Initiative (OVDI) in 2011.  His theory was that his blowing the whistle on one particularly influential tax evader prompted both the creation of the second OVDI and a rush by taxpayers to voluntarily disclose under the program.

The Tax Court ruled that Mr. Shands’ claim was overblown (pun totally intended).  Both the statute and implementing regulations make it clear that the relevant “administrative or judicial action” is one against particular identified taxpayers.  The creation of a general administrative program such as OVDI was not the kind of action that triggered a mandatory award.  Therefore, under the newly restricted reading of its authority to review whistleblower petitions, the Tax Court held that it lacked jurisdiction to review whether his information really did or did not contribute to OVDI.  The IRS simply had not started a requisite administrative or judicial action.  Details below the fold.

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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 and new papers debuting on the list at #4 and #5:

1. [478 Downloads]  Why Data Giants Don't Pay Enough Tax, by Tarcísio Diniz Magalhães (Antwerp; Google Scholar) & Allison Christians (McGill; Google Scholar)
2. [206 Downloads]  21st Century Churches and Federal Tax Law, by Ellen Aprill (Loyola-L.A.; Google Scholar) & Lloyd Hitoshi Mayer (Notre Dame; Google Scholar)
3. [203 Downloads]  The Rise of the Robotic Tax Analyst, by Benjamin Alarie (Toronto; Google Scholar; CEO, Blue J Legal)
4. [170 Downloads]  Nonprofit Law as the Tool to Kill What Remains of Campaign Finance Law: Reluctant Lessons from Ellen Aprill, by Richard Hasen (UCLA; Google Scholar)
5. [168 Downloads]  Subjective Costs of Tax Compliance, by Jonathan Choi (Minnesota; Google Scholar) & Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar)

Loyola-L.A. Hosts Festschrift, Symposium, And Celebration To Honor Ellen Aprill

Loyola-L.A. hosted a festschrift, live symposium, and celebration to honor Ellen Aprill (Loyola-L.A.; Google Scholar) yesterday:

Lloyd Hitoshi Mayer (Notre Dame; Google Scholar), Nonprofits, Taxes, and Speech, 56 Loy. L.A. L. Rev. __ (2023):

Federal tax law is of two minds when it comes to speech by nonprofits. The tax benefits provided to nonprofits are justified in significant part because they provide nonprofits great discretion in choosing the specific ends and means to pursue, thereby promoting diversity and pluralism. But current law withholds some of these tax benefits if a nonprofit engages in certain types of political speech. Legislators have also repeatedly, if unsuccessfully, sought to expand these political speech restrictions in various ways. And some commentators have proposed denying tax benefits to groups engaged in other types of disfavored speech, including hate speech and fake news. These latter proposals have recently become more prominent as additional facts come to light about the role of nonprofits in supporting white supremacy and in disseminating misleading information about COVID-19 treatments.

This Article explores the existing and proposed limitations on speech by tax-exempt nonprofits given the constitutional restrictions on such limitations and the policy justifications for existing nonprofit tax benefits. It explains why the existing limits on political campaign intervention and lobbying by charities are both justified given the subsidy provided to charities and their supporters under existing federal tax law and constitutional given existing and longstanding case law. It further concludes that any expansion of these limits on charities to cover other types of speech, including hate speech and fake news, would be inconsistent with the existing broad definitions of the purposes that charities can pursue as well as, in some circumstances, constitutionally suspect. It also concludes that limits on speech by non-charitable tax-exempt nonprofits, including the existing limit on political campaign intervention for some of these nonprofits, is both unwise as a policy matter and, in some circumstances, constitutionally suspect given the lack of a subsidy for such speech by these nonprofits.

• Commentator: Eugene Volokh (UCLA; Google Scholar)

Roger Paul Colinvaux (Catholic University),  Strings Are Attached: Placing a Spotlight on the Hidden Subsidy for Gift Restrictions, 56 Loy. L.A. L. Rev. __ (2023):

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Multibillion-Dollar Tax Questions By Alm, Soled & DeLaney

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by James Alm (Tulane; Google Scholar), Jay A. Soled (Rutgers; Google Scholar) & Kathleen DeLaney Thomas (North Carolina; Google Scholar), Multibillion-Dollar Tax Questions, 84 Ohio St. L.J. __ (2023).

The tax gap is an enduring problem. We should raise quite a bit more revenue than is collected by the IRS. Efforts to address the tax gap usually focus on greater audits and enforcement as well as new reporting requirements. But these measures are facing increasing political pressure. One need only look to the vilification of the increase in IRS funding, something for which tax policy experts have long advocated, to see this problem. Given these constraints, what then can we do? James Alm, Jay A. Soled, and Kathleen DeLaney Thomas in their piece, Multibillion Dollar Tax Questions, 84 Ohio St. L.J. __ (2023), say that compliance may be improved by asking the right questions in the right way.

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Next Week’s Tax Workshops

Tuesday, March 28: Thomas J. Brennan (Harvard) will present Protean Capital Income Taxes (with Robert L. McDonald (Northwestern-Kellogg; Google Scholar)) as part of the Columbia Davis Polk & Wardwell Tax Policy Colloquium. If you would like to attend, please contact David Schizer. 

Tuesday, March 28: Shayak Sarkar (UC-Davis; Google Scholar) will present Internal Revenue’s External Borders as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli.

Wednesday March 29: David Duff (Toronto) will present a paper as part of the Toronto James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Benjamin Alarie. 

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Pistone Presents The Implications Of Pillar II (Globe) For Developing Countries Today At Boston College

Pasquale Pistone (Visiting Professor, NYU; Academic Chairman, IBFD (The Netherlands); Professor of Tax Law, University of Salerno (Italy); Jean Monnet ad Personam Chair in European Tax Law & Policy, WU Vienna (Austria); Google Scholar) presents The Implications of Pillar II (Globe) for Developing Countries at Boston College today as part of its Tax Policy Workshops hosted by Jim Repetti: 

The desirable global tax governance goal of preventing the race to the bottom should not justify the bias that the Pillar II version of GloBE might in some cases to produce in favour of domestic over foreign investment. By neutralizing tax incentives in cross-border, but not in domestic situations, the GloBE top-up tax (IIR) puts developing countries, which mostly rely on foreign capital, at a systematic disadvantage when their tax incentives reduce corporation taxes below the global corporate minimum rate. This hidden collateral effect of GloBE might undermine the right of such countries to remain the masters of their international tax policy decisions and pursue their economic development without external interferences. For such reason, it might be questioned from the perspective of fairness and legitimacy. 

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Stark Presents Retrofitting Prop 13 Through The Personal Income Tax Today At Duke

Kirk J. Stark (UCLA) presents Retrofitting Prop 13 Through the Personal Income Tax at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

Under constitutional limitations on California’s local property tax introduced via Proposition 13 in June 1978, homeowners are generally taxed not on the fair market value of their homes but rather the property’s historic cost. As home prices rise over time, this “acquisition value” feature has two predictable effects: (1) it results in significant property tax disparities, favoring longtime homeowners relative to more recent purchasers, and (2) it discourages homeowners from moving because of the increased property tax burdens associated with purchasing a new home. Less widely recognized is the offsetting effect of a longstanding feature of California’s income tax: the deduction for local property taxes. By directing a larger subsidy to those with higher property taxes, this provision favors recent homebuyers facing market-value property taxes relative to longtime owners with constitutionally limited assessed valuations. It also mitigates to some degree Prop 13’s lock-in effect by reducing the effective property tax rate for those who purchase new homes.

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Mayer: Nonprofits, Taxes, And Speech

Lloyd Hitoshi Mayer (Notre Dame; Google Scholar), Nonprofits, Taxes, and Speech, 56 Loy. L.A. L. Rev. __ (2023):

Federal tax law is of two minds when it comes to speech by nonprofits. The tax benefits provided to nonprofits are justified in significant part because they provide nonprofits great discretion in choosing the specific ends and means to pursue, thereby promoting diversity and pluralism. But current law withholds some of these tax benefits if a nonprofit engages in certain types of political speech. Legislators have also repeatedly, if unsuccessfully, sought to expand these political speech restrictions in various ways. And some commentators have proposed denying tax benefits to groups engaged in other types of disfavored speech, including hate speech and fake news. These latter proposals have recently become more prominent as additional facts come to light about the role of nonprofits in supporting white supremacy and in disseminating misleading information about COVID-19 treatments.

This Article explores the existing and proposed limitations on speech by tax-exempt nonprofits given the constitutional restrictions on such limitations and the policy justifications for existing nonprofit tax benefits.

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