Dorothy Brown: College Exacerbates The Racial Wealth Gap

Washington Post op-ed:  College Isn’t the Solution for the Racial Wealth Gap. It’s Part of the Problem, by Dorothy Brown (Emory):

Higher education is supposedly the ticket to a better future, and it usually translates to a larger salary regardless of race, according to a 2011 study from the Georgetown University Center on Education and the Workforce. But college does not pay off for Black students the way it does for White students. At virtually every step — from taking out loans to facing a racist job market to dealing with repayment plans — Black students and their families have disadvantages. As a result, the Black-White wealth gap widens.

Black college graduates have higher debt loads, on average, than White college graduates. Black debt rises over time, White debt diminishes. Upon graduation, the average Black graduate owes $23,400 vs. the White graduate’s $16,000, according to the Brookings Institution. Four years later, the gap triples. Even at the top end of the income spec­trum, Black students have higher student loans ($4,643, on average) than White students ($3,835), and Black parents take out larger loans to help pay for college ($3,303 vs. $1,903).

What accounts for that difference? First, it’s the schools students attend. Wealthier colleges, which can afford to award financial aid and scholarships, disproportionately admit White students: White students are almost five times as likely to go to a selective university than Black students, even when controlling for income. Meanwhile, a higher share (12 percent) of Black students attend for-profit colleges than very selective universities (9 percent), because online and part-time features allow them to work while getting their degrees. These schools usually do not award any financial aid and are in effect extremely expensive, given their low graduation rates

Another factor is the wealth disparity between Black and White families. Black college students are less likely than their White peers to receive tax-free gifts from their parents and grandparents. ...

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Dorothy Brown: ‘The System For Wealth Building Is Designed To Build White Wealth’

New York Magazine, Dorothy Brown: ‘The System for Wealth Building Is Designed to Build White Wealth’:

How often do you think about your taxes? Once a year, maybe, when it’s time to file, or when you got married, or when you bought a home? If you’re white, taxes are often an inconvenience at worst. The tax code may even benefit you when you get married and start filing a joint return. If you’re Black, says Emory University law professor Dorothy Brown, your story is likely different: The joint return is less likely to reward a marriage with a tax cut when two spouses of equal income work outside the home, something that’s more likely to be true of Black couples. That’s not an accident, she argues in her new book, The Whiteness of Wealth. Well-off, mostly white Americans litigated and lobbied their way into making sure the tax code protects their wealth. Black Americans, who typically lack family wealth, were left out and deliberately held back. They can’t catch up, and that’s the point. The system is working as designed for whom it was designed: white Americans.

In The Whiteness of Wealth, Brown brings the American tax code to life. Hands shape it and wield it like a shield in the defense of the most powerful among us. The tax code tells a story about American priorities. The news isn’t good, Brown writes, but there’s still time to change the future.

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NY Times: An Accidental Disclosure Exposes A $1 Billion IRS Tax Fight With Bristol Myers

New York Times, An Accidental Disclosure Exposes a $1 Billion Tax Fight With Bristol Myers:

The I.R.S. believes the American drugmaker used an abusive offshore scheme to avoid federal taxes.

Almost nine years ago, Bristol Myers Squibb filed paperwork in Ireland to create a new offshore subsidiary. By moving Bristol Myers’s profits through the subsidiary, the American drugmaker could substantially reduce its U.S. tax bill.

Years later, the Internal Revenue Service got wind of the arrangement, which it condemned as an “abusive” tax shelter. The move by Bristol Myers, the I.R.S. concluded, would cheat the United States out of about $1.4 billion in taxes.

That is a lot of money, even for a large company like Bristol Myers. But the dispute remained secret. The company, which denies wrongdoing, didn’t tell its investors that the U.S. government was claiming more than $1 billion in unpaid taxes. The I.R.S. didn’t make any public filings about it.

And then, ever so briefly last spring, the dispute became public. It was an accident, and almost no one noticed. The episode provided a fleeting glimpse into something that is common but rarely seen up close and that the Biden administration hopes to discourage: multinational companies, with the help of elite law and accounting firms and with only belated scrutiny from the I.R.S., dodging billions of dollars in taxes. 

Then, in an instant, all traces of the fight — and of Bristol Myers’s allegedly abusive arrangement — vanished from public view.

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Christians & Lederman: An Important Tax Tip & #WhyTakeTax?

Professors Leandra Lederman (Indiana-Maurer) and Allison Christians (McGill) released 2 new videos today on their Break Into Tax YouTube channel.

The first of today’s videos, One Weird Tip To Save a Bundle in Taxes, shares a breakthrough of universal interest. That video will likely be widely shared, so be among the first to see it!

The second Break Into Tax video, Why Take Tax? The Top Ten Reasons, counts down reasons why students should consider taking a tax class. It includes cameo appearances by many tax professors and other experts, sharing insights gained over many decades. Don’t miss the debut of the “Christians & Lederman Top 10 List”!

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Income Inequality In America Is Lower Than It Was 50 Years Ago

Wall Street Journal op-ed:  Incredible Shrinking Income Inequality, by Phil Gramm & John Early:

Its rise is an illusion created by the Census Bureau’s failure to account for taxes and welfare.

The refrain is all too familiar: Widening income inequality is a fatal flaw in capitalism and an “existential” threat to democracy. From 1967 to 2017, income inequality in the U.S. spiked 21.4%, and everyone from U.S. senators to the pope says it’s an urgent problem. Yet the data upon which claims about income inequality are based are profoundly flawed.

We have shown on these pages that Census Bureau income data fail to count two-thirds of all government transfer payments—including Medicare, Medicaid, food stamps and some 100 other government transfer payments—as income to the recipients. Furthermore, census data fail to count taxes paid as income lost to the taxpayer. When official government data are used to correct these deficiencies—when income is defined the way people actually define it—“income inequality” is reduced dramatically.

We can now show that if you count all government transfers (minus administrative costs) as income to the recipient household, reduce household income by taxes paid, and correct for two major discontinuities in the time-series data on income inequality that were caused solely by changes in Census Bureau data-collection methods, the claim that income inequality is growing on a secular basis collapses. Not only is income inequality in America not growing, it is lower today than it was 50 years ago. ...

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Conservatives Should Applaud — Not Fight — Efforts To Change Philanthropic Giving Rules

Following up on my previous post, The Left Wants A Philanthropy Of The Few:  Chronicle of Philanthropy op-ed:  Conservatives Should Applaud — Not Fight — Efforts to Change Philanthropic Giving Rules, by Craig Kennedy & William Schambra:

A new proposal to pull more money out of private foundations and donor-advised funds and hand it to charities drew the immediate ire of conservatives, inside and outside of philanthropy. Elise Westhoff, CEO of the conservative Philanthropy Roundtable, called the tax-code changes proposed by philanthropist John Arnold and Boston College law professor Ray Madoff a “solution in search of a problem” that “would stifle charitable giving when it is most needed.”

As veterans of conservative and centrist philanthropy, we believe that this opposition is wrong-headed and shortsighted. Rather than resist the modest changes to the tax code proposed by Arnold and Madoff, conservatives should see them as the first step toward retooling a philanthropic world that has become too politicized and self-interested. ...

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U.S. Tax Court's Tax Trailblazers: Sam Thompson

U.S. Tax Court's Diversity & Inclusion Series, Tax Trailblazers: Mentoring the Next Generation:

Please join the United States Tax Court for the second in a series of monthly programs celebrating diversity and inclusion in tax law. Moderated by Chief Judge Maurice B. Foley, March’s webinar will focus on Samuel C. Thompson, Jr., Director of the Center for the Study of Mergers and Acquisitions at Penn State Law. Today at 7:00-8:15 PM EST (register here).

Samuel C. Thompson, Jr. directs Penn State’s Center for the Study of Mergers and Acquisitions. He is also a Professor of Law and the Arthur Weiss Distinguished Faculty Scholar. He teaches mergers and acquisitions, focusing on corporate, securities, tax, accounting, and antitrust aspects of these very complex transactions. He also teaches several tax courses. Beginning with the Spring semester 2021, he is teaching a course entitled: The Lawyer’s Role in Helping Close the Minority-White Gap in Business Ownership.

Professor Thompson has served in two governmental tax policy positions, one in the U.S. Treasury’s Tax Legislative Counsel’s Office and one as the tax policy advisor, on behalf of the U.S. Treasury Department’s Tax Assistance Office, to the South African Ministry of Finance in Pretoria, South Africa. In that second role he assisted with the revision of South Africa’s income tax system.

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Tax Prof Diane Ring Named Interim Dean At Boston College

BC Law, Diane Ring Named Interim Dean:

Diane Ring, the Associate Dean of Faculty at BC Law, will step into the role of Interim Dean of Boston College Law School on July 1, upon the departure of Vincent Rougeau, who is leaving after ten years at the helm of the Law School to assume the presidency of the College of the Holy Cross.

“Diane has been a valued member of our community for over fifteen years, as well as a member of my associate dean leadership team for the past three years,” said Dean Rougeau. “She also served as Associate Dean for Academic Affairs from 2010-2012, and in that role she was invaluable to me in my own transition when I was hired as dean in 2011.”

Ring will work closely with BC Law’s senior leadership over the next few months to ensure a smooth transition. “She is talented and accomplished,” Rougeau continued, “and I know this school will be in extremely capable hands as the Provost proceeds with the search process for a permanent replacement.”

In addition to her academic administration skills, Ring is a respected leader and scholar in the field of international taxation, corporate taxation, and ethical issues in tax practice at BC Law. Her recent work addresses issues including information exchange, tax leaks, international tax relations, sharing economy and human equity transactions, and ethics in international tax.

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D.C. Circuit: Law Prof May Be Entitled To Attorney's Fees Due To Her 'Serious Scholarly Interest' After Beating IRS In FOIA Litigation

Kwoka v. IRS, No. 19-5310 (D.C. Cir. Mar. 9, 2021):

This case presents a recurring question in our court: under what circumstances is a prevailing plaintiff in a Freedom of Information Act (FOIA) case—here a law professor [Margaret Kwoka (Denver)] seeking information from the Internal Revenue Service—entitled to an award of attorney’s fees? The district court denied the professor’s request for fees. For the reasons set forth below, we vacate and remand for further proceedings consistent with this opinion. ...

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How Unfair Property Taxes Keep Black Families From Gaining Wealth

Bloomberg, How Unfair Property Taxes Keep Black Families From Gaining Wealth:

Local officials have overvalued the lowest-priced homes relative to the highest across the U.S., nationwide data show. From 2006 through 2016, inaccurate valuations gave the least expensive homes in St. Louis an effective tax rate almost four times higher than the most expensive. In Baltimore it was more than two times higher. In New York City it was three times higher.

These inequities are tucked deep inside America’s system for funding its local governments, tilting property taxes in favor of wealthy homeowners even before any exemptions or abatements. And they carry a jarring implication: The residential property tax, which raises more than $500 billion annually to pay for public schools, fire departments, and other local services, is, in effect, racist.

That conclusion carries far-reaching implications of its own—not only for municipalities’ day-to-day operations but also for roughly $331 billion in general-obligation bonds that cities, counties, and school districts have guaranteed with property tax revenue, according to data compiled by Bloomberg Businessweek.

The evidence of systematic unfairness is mounting. Since at least the 1970s, piecemeal studies from Chicago, Detroit, New Orleans, and New York have concluded that property tax systems favor those who are better off. A 2020 study from the University of Chicago brings unprecedented scope to the question, covering 2,600 U.S. counties. It found that more than 9 out of every 10 reflected the same pattern of unfairness. “It’s a textbook example of institutional racism,” says Christopher Berry, a professor at the university’s Harris School of Public Policy who led the research effort.

The problem is rooted in American history. One legacy of racial discrimination, including the practice of redlining (the refusal of banks to make loans in Black communities), is that Black people own a disproportionate share of lower-valued real estate. Census data show that the median home value in predominantly Black tracts is roughly half the value in majority White and Hispanic tracts. That historical disparity has been aggravated by a flawed tax system built on incomplete data and outdated methods for estimating the value of residential properties. “There isn’t anybody making explicitly racial decisions to produce these outcomes,” Berry says. “Nevertheless, they are racially disproportionate.”

Wide variations in policies and rates among the many thousands of U.S. jurisdictions that levy property taxes make it difficult to quantify the aggregate size of the imbalances. But Berry found in 2018 that in Chicago alone, unfair assessments shifted $2.2 billion in property tax payments from those who owned the highest-valued homes to those who owned the lowest-valued homes—over only five years.

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NY Times: Your Taxes 2021

• A Break for Working Families
• A Last-Minute Add to Stimulus Bill Could Restrict State Tax Cuts
• A Love Letter to My Accountant
• For Gig Workers and Business Owners, Taxes Are Even Trickier Now
• How the Pandemic Has Changed Your Taxes
• It May Be Time to Start Worrying About the Estate Tax
• Some Changes That May Affect Next Year’s Tax Return

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NY Times: The Tax Headaches Of Working Remotely

New York Times, The Tax Headaches of Working Remotely:

Last year, Ariele Doolittle, a tax lawyer, got a call from a client who lived and worked in New York but was considering working remotely from California temporarily after his offices were shuttered in the pandemic.

Not a good idea, Ms. Doolittle told him.

California, she said, would tax his income because he was physically working there. And New York would probably tax his earnings as well. Plus, when he filed his New York resident tax return, the state probably wouldn’t give him a credit for the taxes he paid to California.

He could be double taxed. “He ended up going to Florida,” she said, since that state doesn’t have a state income tax.

Such are the complex tax considerations for millions of people who have been telecommuting during the pandemic and working in a different state from their usual workplace.

Workers may have to file more than one state tax return, and in certain situations they could end up owing taxes in both states. The details depend on your home state and what state you worked in during 2020. ...

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Biden's COVID-19 Stimulus Bill Prohibits States From Cutting Taxes

Wall Street Journal editorial, Democrats to States: No New Tax Cuts:

Democrats in Congress aren’t satisfied with spending $1.9 trillion to help blue states and union friends. They’ve also launched a sneak attack against conservative states. Read their legislation’s lips: No new state tax cuts. ...

[H]ere’s the political gut punch. The bill explicitly bars states from cutting taxes. States “shall not use the funds,” the bill says, “to either directly or indirectly [our emphasis] offset a reduction in the net tax revenue” that results “from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.” ...

The language is so expansive that states could be limited from making any changes to their tax codes that reduce revenue even if they don’t use federal funds as direct offsets.

Eric Boehm, Federal COVID-19 Bailout Prohibits States From Cutting Taxes:

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Germany Seeks To Tax Income Of U.S. Soldiers Stationed There

Tax Connections, German Tax Authorities Reported To Be Imposing Tax On US Military Pay:

In an ongoing story, that is certain to be of interest to Americans abroad, Germany has begun treating certain US Military Personnel as tax residents of Germany. In other words, Germany is imposing tax (and apparently penalties) on the income earned by US military personnel stationed in Germany. The starting point is that US Forces in Germany (and other countries) are governed by the SOFA (“Status Of Forces Agreement”) agreement. Among other things, the SOFA agreement exempts US service personnel from being treated as tax residents of the country where they are serving. In simple terms: As long as the individual serviceman meets the conditions in the SOFA agreement, he/she would NOT be treated as a tax resident of Germany.

The provisions of the NATO SOFA are unremarkable. What is remarkable is that Germany appears to be the first country, to determine that certain US Military Personnel, are not entitled to use SOFA as a “shield” against being treated as a tax resident and therefore subject to taxation.

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The Billionaire Behind The Biggest U.S. Tax Fraud Case Ever Filed

Wall Street Journal, The Billionaire Behind the Biggest U.S. Tax Fraud Case Ever Filed:

Prosecutors accused Robert Brockman, a litigious, sometimes penny-pinching software entrepreneur, of hiding $2 billion from the Internal Revenue Service. ...

[In] the largest criminal case ever brought against a person accused of evading U.S. taxes, [f]ederal prosecutors in October charged Mr. Brockman with using a web of offshore entities to conceal about $2 billion in income from the Internal Revenue Service.

Mr. Brockman has pleaded not guilty to 39 criminal counts, including tax evasion, wire fraud, money laundering and evidence destruction. He and his attorneys didn’t respond to requests for comment.

Prosecutors allege the bulk of the tax evasion stemmed from profits Mr. Brockman made from investments with Vista Equity Partners, a private-equity firm he helped launch in 2000 and which now manages $73 billion in funds dedicated to software investments.

Vista founder Robert Smith, the wealthiest Black person in America, settled his own tax-evasion case with the government, which was made public on the day of Mr. Brockman’s indictment. Mr. Smith has agreed to testify against his former mentor, one of at least two Brockman confidants to turn on him. ...

The record-setting case pits Mr. Brockman, a billionaire with a reputation as a relentless litigant, against the immense resources of the federal government. Legal specialists say the government appears to have strong evidence, but federal prosecutors may face challenges trying the case because of the complexity of tax laws governing offshore trusts.

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WSJ: He Got $300,000 From Credit-Card Rewards. The IRS Said It Was Taxable Income.

Wall Street Journal, He Got $300,000 From Credit-Card Rewards. The IRS Said It Was Taxable Income.:

Konstantin Anikeev, an experimental physicist, assembled everything he needed for an inquiry far outside his field.

His materials included American Express cards, the government’s view that credit-card rewards aren’t income, and his own willingness to spend time buying gift cards and money orders. He pulled the concept from personal-finance websites: Exploit the difference between unlimited 5% rewards and lower fees on gift cards and money orders. ...

It (mostly) worked.

Mr. Anikeev’s financial-optimization plan in 2013 and 2014—including $6.4 million in credit-card charges—led to an Internal Revenue Service audit and a finding that he and his wife had more than $310,000 in income that should have been taxed.

Judge Robert Goeke’s decision last month largely affirmed longstanding Internal Revenue Service practice, which says credit-card rewards are usually nontaxable rebates [Anikeev v. Commissioner, T.C. Memo. 2021-23 (Feb. 23, 2021)]. In other words, buying a pair of shoes for $100 and getting a 5% reward is really a $95 purchase, not $5 of income. But the judge also offered the IRS avenues for tougher enforcement. ...

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College And Law Students Under Age 25 To Get 3 Stimulus Checks Totaling $3,200; Experts Advise Them To Invest In A Roth-IRA

Lynnley Browning (Financial Planning), College Students May Score 3 COVID Stimulus Checks. Here's How.:

The pandemic stimulus package that’s muscling towards the finish line contains a powerful financial boost that can jumpstart wealth-building for young adults.

Under the $1.9 trillion COVID relief bill passed by the House on Feb. 27, checks of up to $1,400 would flow to middle- and modest-income taxpayers. And unlike previous rounds of stimulus checks, the bill would also provide money for dependents aged 17 to 24.

That means millions of college students and other young adults are on track to get a nice chunk of change.

It gets even better: Some college students and other young adults may also be able to claim up to an additional $1,800 from the two prior stimulus programs. Among the eligible: those who graduated last year and are now in the workforce (or not) and filing their own tax returns, or those who turned 24 last year, can retroactively claim the two prior stimulus payments ($1,200 and $600) when they file their taxes this year. ...

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The IRS Paid $3 Billion In Interest To Taxpayers Because It Failed To Get Refunds Out On Time

Washington Post, The IRS Paid $3 Billion in Interest to Taxpayers Because It Failed to Get Refunds Out on Time:

The IRS penalizes taxpayers who don’t pay their tax bills on time, but the agency’s own delays are costing taxpayers billions of dollars as well.

The IRS paid $3.03 billion — yes that’s with a “b” — in interest on delayed refunds to taxpayers for fiscal 2020 because it didn’t get the payments to them in time, according to a report released by the Government Accountability Office this week [Actions Needed to Address Processing Delays and Risks to the 2021 Filing Season (GAO-21-251) (Mar. 1, 2021)]. That’s almost a 50 percent increase compared with the $2.06 billion paid in interest on refunds in fiscal 2019.

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Tax Profs: Senator Warren's Wealth Tax Is Constitutional

Following up on Tuesday's post, Warren Revives Wealth Tax, Citing Pandemic Inequalities:  Letter To Senator Elizabeth Warren (Feb. 25, 2021):

Dear Senator Warren,
Your proposed wealth tax reform would impose a federal tax of 2% on taxpayers’ accumulation of net assets in excess of $50 million, and a 3% tax on net assets in excess of $1 billion. The 3% tax would increase to 6% if legislation establishing universal healthcare is in effect.

Article I Section 8 of the Constitution allows Congress to implement your proposed wealth tax reform as an exercise of the congressional taxing power. Some have suggested that a federal wealth tax would be a “direct tax” subject to the “apportionment rule” in Article I Section 2, which provides that “direct Taxes shall be apportioned among the several States … according to their respective Numbers.” A tax on an individual’s net wealth, however, is not a direct tax, and need not be apportioned among the states according to their population.

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NY Times: Warren Revives Wealth Tax, Citing Pandemic Inequalities

New York Times, Warren Revives Wealth Tax, Citing Pandemic Inequalities:

A tax on the net worth of America’s wealthiest individuals remains popular with voters, but has yet to be embraced by President Biden.

Senator Elizabeth Warren, Democrat of Massachusetts, introduced legislation on Monday that would tax the net worth of the wealthiest people in America, a proposal aimed at persuading President Biden and other Democrats to fund sweeping new federal spending programs by taxing the richest Americans.

Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion. ..,

The latest version, which would begin to apply in 2023 to net worth as calculated in 2022, would raise $3 trillion, Mr. Saez and Mr. Zucman calculate. Other economists, including Natasha Sarin of the University of Pennsylvania and Lawrence H. Summers of Harvard, estimate the tax would raise significantly less.

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Tobin: The Tax Code Can Save The $15 Minimum Wage

TaxProf Blog op-ed:  The Tax Code Can Save the $15 Minimum Wage, by Donald Tobin (Dean, Maryland):

The Senate Parliamentarian has ruled that minimum wage legislation cannot be included in the President’s COVID relief package because it does not meet requirements under the Congressional Budget Act. While I think there is a strong argument that minimum wage legislation meets the Budget Act’s requirements, it is clear that Congress could pass the equivalent of a minimum wage through the tax code in a way that clearly satisfies the Budget Act.

The Congressional Budget Act created a procedure for reconciling the budget when it is not in balance.  This procedure, termed “reconciliation,” provides for an expedited procedure for approval of certain bills related to the budget.

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American Taxation Association Outstanding Paper Award

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

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

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The Corporate Tax Revolution Is Coming—Are We Ready?

Bloomberg, The Corporate Tax Revolution is Coming—Are We Ready?:

Creating a global solution for the taxation of the digital economy is right up there with finding an instant cure for climate change—seemingly impossible. Nonetheless, this has been a primary focus of the Organization for Economic Cooperation and Development (OECD) for a number of years and, with a mid-2021 deadline looming, negotiations are getting down to the wire.

The brainchild of the OECD’s efforts is a global-taxation overhaul, known as Pillar 1 and Pillar 2. These controversial proposals defy a system born in the 1920s, when determining a final destination for corporate profits was as easy as reading a business’s brick-and-mortar address. Businesses, of course, are no longer that simple—and neither is the global tax landscape, where the “digital economy” has quickly morphed into the economy itself.

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U.S. Tax Court's Tax Trailblazers: Loretta Collins Argrett

U.S. Tax Court's Diversity & Inclusion Series, Tax Trailblazers: Mentoring the Next Generation:

Please join the United States Tax Court in honoring Black History Month and kicking off the first in a series of monthly programs celebrating diversity and inclusion in tax law. Moderated by Chief Judge Maurice B. Foley, February’s webinar will focus on Loretta Collins Argrett and her path to—and success in—the field of tax law. Today at 7:00-8:15 PM EST (register here).

Loretta Collins Argrett graduated from Howard University with a B.S. degree in chemistry, with honors. Upon graduation, she received a Fellowship for summer study with the Swiss Federal Institute of Technology in Zurich, Switzerland whose Chief years later was awarded the Nobel prize in Chemistry. When she returned to the States, she worked for several years as a research chemist at local U.S. government institutions and became the co-author, with senior researchers, of a few scientific publications. Then, she decided she wanted to become a lawyer and, with the support of her husband, applied to Harvard Law School where she was accepted. At the time, she was 35 years old and the mother of two children (13 and10 years), who also moved with her to new schools in the Boston area. She graduated in 1976, and the family moved back to their home in Maryland. She has had a trailblazing series of firsts in her tax law career:

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America’s Future: Trillionaire Trust Babies?

Bob Lord (Institute for Policy Studies), America’s Future: Trillionaire Trust Babies?:

Back in 1982, with Reaganomics in its infancy, the first Forbes list of America’s ultra-wealthy had just 13 billionaires on top. The two richest of these billionaires, Daniel Ludwig and Gordon Getty, held personal fortunes estimated in the $2 billion range. The other 11 billionaires on that first annual Forbes list clustered together at the $1 billion level.

Multiply that 1982 billionaire breakdown by 100 and you’d have something awfully close to the present list.

The nine current wealthiest Americans today — all white men — each hold a net worth above or rapidly approaching the $100 billion mark. Two of these “hectobillionaires,” Jeff Bezos and Elon Musk, hold around $200 billion.

To what do we owe this awesome increase in billionaire fortune? ...

Over recent decades, Republicans have hollowed out our estate and gift tax laws. Their legislating has allowed tax avoidance planners to effortlessly pass billions from one generation to the next — and often to the next generation after that — without incurring tax liabilities.

One former Donald Trump economic adviser, Gary Cohn, infamously noted that “only morons pay estate tax.” We can condemn Cohn’s disparagement of wealthy Americans who choose not to engage in tax avoidance, but we can’t challenge his basic point: In the United States today, the estate tax has become essentially a voluntary levy. ...

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IRS Low Income Taxpayer Clinic Program Annual Report

IR-2021-41 (Feb. 19, 2021), Low Income Taxpayer Clinics Represented Over 20,000 Taxpayers Dealing With an IRS Tax Controversy; See the Latest Program Report and the 2021 LITC Grant Recipient List:

The Internal Revenue Service's Low Income Taxpayer Clinic (LITC) Program office today announced highlights from its 2020 annual report, featuring successful taxpayer outreach to thousands of taxpayers. The report describes how LITCs provide representation, education and advocacy for taxpayers who are low income or speak English as a second language (ESL). The program also announced its 2021 LITC grant recipient list. ...

During 2019, LITCs represented 20,259 taxpayers dealing with an IRS tax controversy. They helped taxpayers secure more than $6.8 million in tax refunds and reduced taxpayers' liabilities by more than $50 million. They also brought more than 4,100 taxpayers back into payment compliance.

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Hemel & Lord: Jeffrey Epstein’s Billionaire Tax Avoidance Assistance Business

Following up on my previous post, NY Times: College Dropout Jeffrey Epstein Earned Hundreds Of Millions As His Cut Of Billions Of Taxes Saved By Clients Using His Strategies — Typically GRATs:  Daniel Hemel (Chicago; Google Scholar) & Bob Lord (Institute for Policy Studies), Beyond Lucrative: Jeffrey Epstein’s Billionaire Tax Avoidance Assistance Business:

The sex-trafficking scandal surrounding the late Jeffrey Epstein already has tarnished the reputations of prominent politicians, businessmen, and the British royal family. Now it’s casting a dark shadow on an estate tax-avoidance strategy popular among Wall Street CEOs and tech entrepreneurs.

The strategy exploits a loophole that Congress unintentionally left open when it passed provisions related to grantor retained annuity trusts, or GRATs, in 1990. Use of these trusts already has cost the IRS—by one estimate—well over $100 billion in just the last two decades. A recent filing with the Securities and Exchange Commission by the private equity firm Apollo Global Management reveals that the firm’s longtime CEO, Leon Black, relied on Epstein’s assistance to extract more than $500 million of tax savings from GRATs.

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Supreme Court Again Rejects Trump’s Bid To Shield His Tax Returns From Manhattan Prosecutor

TRUMP, DONALD J. V. VANCE, CYRUS R., ET AL. (20A63), 592 U.S. ___ (Feb. 22, 2021):

The application for a stay presented to Justice Breyer and referred to the Court is denied.

• Bloomberg, The Supreme Court Puts Trump's Tax Returns in Play
• Bloomberg, Trump Rejected as Supreme Court Lets Prosecutor Get Taxes 
• National Law Journal, With Supreme Court Order in Hand, Manhattan DA Will Now Aim to Enforce Subpoena for Trump Financial Records
• New York Times, Here’s What’s Next in the Trump Taxes Investigation
• New York Times, Supreme Court Denies Trump’s Final Bid to Block Release of Financial Records
• New York Times, Trump’s Tax Returns Aren’t the Only Crucial Records Prosecutors Will Get
• SCOTUSblog, Justices Will Not Block New York Grand Jury Subpoena For Trump’s Records
• Wall Street Journal, Supreme Court Denies Trump Bid to Block Access to Financial Records
• Washington Post, Supreme Court Again Rejects Trump’s Bid to Shield Tax Returns, Other Financial Records From Manhattan Prosecutor

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

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

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

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

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

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

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

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

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

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NY Times: Law School, NYU Tax LLM, Baked Goods, Wedding. In That Order.

New York Times, Law School, Baked Goods, Wedding. In That Order.:

For Sarah Elizabeth Williams Gelfand and Scott David Schilson Jr. (wedding), the intense atmosphere and demanding coursework of the N.Y.U. masters of laws in taxation program — intended for lawyers who wish to deepen their knowledge in that particularly abstruse area of jurisprudence — weren’t impediments to falling in love. “It’s maybe not the most romantic place,” said Ms. Gelfand, 31, of the yearlong program. “But I realized I really liked spending time with Scott because he would make even this very dry subject matter really lighthearted and funny.”

Despite their heavy workload, being students afforded Ms. Gelfand and Mr. Schilson uncommon flexibility when they began dating during the winter of 2017. “We were able to compartmentalize the school stuff and then take advantage of a lot of the city,” said Mr. Schilson, 30. They spent much of their free time that spring sampling New York’s restaurants and bakeries. “I think we were like 50 percent study, 50 percent food,” he said.

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Christians And Lederman Start YouTube Series Break Into Tax (BiT)

Allison Christians (McGill) and Leandra Lederman (Indiana) have started a new YouTube series, Break Into Tax (BiT):

The idea behind BiT is that we’ll discuss and break down tax-related concepts, broadly defined. This includes issues that may be of interest to law students and others newer to tax or to particular issues. The topics we plan to cover include substantive tax law concepts, tax policy concerns, the study of taxation, and the pursuit of tax as a career. We also welcome suggestions for topics in the comments on our videos!

Introduction to Your Hosts & Break Into Tax (BiT):

Playlist:

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Drug Companies Seek Billion-Dollar Tax Deductions From Opioid Settlement

Washington Post, Drug Companies Seek Billion-Dollar Tax Deductions From Opioid Settlement:

Four companies that agreed to pay a combined $26 billion to settle claims about their roles in the opioid crisis plan to deduct some of those costs from their taxes and recoup around $1 billion apiece.

In recent months, as details of the blockbuster settlement were still being worked out, pharmaceutical giant Johnson & Johnson and the “big three” drug distributors — McKesson, AmerisourceBergen and Cardinal Health — all updated their financial projections to include large tax benefits stemming from the expected deal, a Washington Post analysis of regulatory filings found.

The Dublin, Ohio-based Cardinal Health said earlier this month it planned to collect a $974 million cash refund because it claimed its opioid-related legal costs as a “net operating loss carryback” — a tax provision Congress included in last year’s coronavirus bailout package as a way to help companies struggling during the pandemic.

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Reactions To Tax Prof Appointments To Biden's Treasury Department

Following up on Wednesday's posts:

• Kim Clausing (UCLA) Joins Treasury Department As Deputy Assistant Secretary For Tax Analysis, Office Of Tax Policy
• Itai Grinberg (Georgetown) Joins Treasury Department As Deputy Assistant Secretary For Multilateral Tax Office Of Tax Policy
• Rebecca Kysar (Fordham) Joins Treasury Department As Counselor To The Assistant Secretary, Office Of Tax Policy

Revolving Door Project, Biden's Newest Treasury Tax Appointees Delight and Disappoint:

Some mixed news for progressive tax enthusiasts: Joe Biden’s administration has chosen both a committed progressive tax advocate and a Republican career expert in corporate tax avoidance for its first two appointees to the Treasury’s Office of Tax Policy. We’re now in a strange situation where experts who testified on opposite sides of the 2017 Tax Cuts and Jobs Act will now serve shoulder-to-shoulder.

On Monday, Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy at UCLA Law, was sworn in as the Office’s Deputy Assistant Secretary for Tax Analysis.

Clausing’s appointment is an undeniable win for progressives. Clausing is a renowned expert in international corporate taxation and has long been a proponent of reforming tax laws to prevent base erosion — the practice in which businesses reduce the tax base by lowering their domestic corporate profits — and profit-shifting overseas. During the 2017 debates over tax reform, Clausing testified before Congress on the need for more progressive taxation and preserving corporate income tax rates above those on individual income. At Treasury, Clausing will undoubtedly continue to reliably support tax reforms to capture missed revenue due to corporate tax avoidance strategies. ...

In a more confounding move, the Biden Treasury Department also added Itai Grinberg to its ranks as Deputy Assistant Secretary for Multilateral Tax in the Office of Tax Policy. 

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Tax Policy In The Biden Administration

• Bloomberg, Elizabeth Warren to Join Senate Finance Panel Responsible for Tax Policy
• Center on Budget and Policy Priorities, States Should Decouple From New Federal Tax Break for PPP Loans
• Center for Economic and Policy Research, The GameStop Game and Financial Transactions Taxes
• Forbes, How Joe Biden’s Tax Plan Will Drive Up Utility Bills Nationwide
• Forbes, One Governor Hopes To Pile Onto Joe Biden’s Capital Gains Tax Hike With A State-Level Cash Grab

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The Number Of Americans Renouncing Their U.S. Citizenship Hit All-Time High In 2020, Up 237% From 2019

International Tax Blog, 2020 Sets New Record For Published Expatriates:

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2020.

The number of published expatriates for the fourth quarter was 660, bringing the total number of published expatriates in 2020 to 6,707. The number of expatriates for 2020 is a 237% increase from 2019.

Beller Delivers Griswold Lecture Virtually Today On Tax Lawyers As Teachers At ACTC

Herbert N. Beller (Professor of Practice, Northwestern; Of Counsel, Eversheds Sutherland, Chicago) delivers the Erwin N. Griswold Distinguished Lecture on Tax Lawyers as Teachers: A Precious Commodity virtually today at the annual meeting of the American College of Tax Counsel at 6:00 PM ET (free registration here).

Erwin N. Griswold Distinguished Lecture
The highlight of the Annual Meeting of Fellows is the Erwin N. Griswold Lecture, established by the College in 1993 in honor of the former Dean of the Harvard Law School and Solicitor General of the United States. The following distinguished individuals have delivered the Lecture:

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Rebecca Kysar (Fordham) Joins Treasury Department As Counselor To The Assistant Secretary, Office Of Tax Policy

Treasury Department Press Release:

Rebecca M. Kysar [Google Scholar] has been a Professor of Law at Fordham University since 2018, where her academic research focuses on tax policy, international tax, and the tax legislative and budget processes. Most recently, she served on the Biden-Harris Presidential Transition as an ad hoc advisor to the tax policy and Treasury agency review teams. Rebecca has testified before the U.S. Congress on international tax and tax regulatory matters. Prior to joining Fordham, Rebecca was on the faculty at Brooklyn Law School for nine years and served as the James S. Carpentier Visiting Professor of Law at Columbia Law School. Before entering academia, she worked as a tax associate at Cravath, Swaine, & Moore, where she advised on tax issues related to restructurings, mergers and acquisitions, and other complex transactions. She also clerked for the Honorable Richard J. Cardamone on the U.S Court of Appeals, Second Circuit.

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Itai Grinberg (Georgetown) Joins Treasury Department As Deputy Assistant Secretary For Multilateral Tax Office Of Tax Policy

Treasury Department Press Release:

Itai Grinberg is returning to the Treasury Department after spending ten years as a Professor of Law at Georgetown University. Since leaving the Treasury Department, his academic research has focused on international tax policy matters and the intersection of international tax law, international trade law, public international law, and international financial regulation. While in academia Grinberg also served as an outside international tax advisor to various multilateral institutions, including the Organisation for Economic Co-operation and Development (OECD), the Asian Development Bank, and the Inter-American Development Bank. Grinberg previously served at the Treasury Department in the Office of the International Tax Counsel in the Bush-Cheney and Obama-Biden Administrations. Prior to that, he practiced law in the tax group at Skadden, Arps, Slate, Meagher & Flom LLP. In 2005, Grinberg served as Counsel to the President's Advisory Panel on Federal Tax Reform, a bipartisan presidential advisory commission that proposed fundamental tax reforms for the United States.

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Kim Clausing (UCLA) Joins Treasury Department As Deputy Assistant Secretary For Tax Analysis, Office Of Tax Policy

Update: Treasury Department Press Release
UCLA Press Release, Clausing Joins Treasury Department as a Deputy Assistant Secretary:

UCLA School of Law Professor Kimberly Clausing [Google Scholar] has joined the Biden administration as a deputy assistant secretary at the treasury department.

Clausing will focus on tax analysis and policy, lead the Office of Tax Analysis and work to further tax policy development. Her efforts under the leadership of Janet Yellen — the first woman ever to serve as U.S. Secretary of the Treasury — are expected to include promoting recovery and relief during the pandemic, addressing climate change and working to address societal inequities.

The Eric M. Zolt Professor of Tax Law and Policy at UCLA Law, Clausing joined the law school in January and teaches U.S. International Taxation. Her research studies the taxation of multinational firms, examining how government decisions and corporate behavior interplay in an increasingly global world economy. She has published numerous articles in this area, and she wrote the book Open: The Progressive Case for Free Trade, Immigration, and Global Capital (Harvard University Press, 2019).

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NY Times: Why Does The Economy Do So Much Better Under Democratic Presidents?

New York Times Sunday Review:   The Economy Does Much Better Under Democrats. Why?, by David Leonhardt:

A president has only limited control over the economy. And yet there has been a stark pattern in the United States for nearly a century. The economy has grown significantly faster under Democratic presidents than Republican ones.

It’s true about almost any major indicator: gross domestic product, employment, incomes, productivity, even stock prices. It’s true if you examine only the precise period when a president is in office, or instead assume that a president’s policies affect the economy only after a lag and don’t start his economic clock until months after he takes office. The gap “holds almost regardless of how you define success,” two economics professors at Princeton, Alan Blinder and Mark Watson, write. They describe it as “startlingly large.”

Since 1933, the economy has grown at an annual average rate of 4.6 percent under Democratic presidents and 2.4 percent under Republicans, according to a Times analysis. 

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A One-Time Wealth Tax On The 'Obscenely Rich Digerati' Will Pay To Get America Back On Its Feet

New Yok Times op-ed:  Who Will Pay to Get America Back on Its Feet?, by Kara Swisher:

I was recently talking to a tech mogul whose wealth has soared during the pandemic. He asked me what we should do to solve the country’s financial problems, as he was getting wealthier by the second.

Deal with entrenched income inequity immediately, I told him. “You can make the hard choices to fix it, or …,” I said, pausing for dramatic effect, “you can armor-plate your Tesla.” He cringed.

Trolling the obscenely rich digerati is always satisfying. But this time the conversation got me thinking about one thing we can ask of tech leaders — and of all of those who have done so well in the last year — to help get us out of our economic mess and on the path to a more equitable future.

My proposal: an immediate, one-time “wealth tax” covering the last year.

It’s easy to denounce the idea of new taxes as the knee-jerk solution to economic woes, but we live in a damaged country, and someone eventually has to pay to fix it. So why not look to those who have profited the most during the pandemic?

Tech executives, of course, are among those who have gotten significantly richer during this time — not because of some new inventions but because their services filled many voids created by the dire circumstances. ...

A permanent wealth tax was raised last April in a Times Op-Ed essay by the Yale professor Daniel Markovits. It still sounds logical nine months into the pandemic. ...

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NY Times: College Dropout Jeffrey Epstein Earned Hundreds Of Millions As His Cut Of Billions Of Taxes Saved By Clients Using His Strategies — Typically GRATs

New York Times, What Jeffrey Epstein Did to Earn $158 Million From Leon Black:

He styled himself as a math whiz and “financial doctor” to the rich — even though he was a college dropout who had only a brief tenure at a traditional Wall Street firm. It was said his services were available only to billionaires, whose affairs he handled mostly from a tropical island hideaway.

So what did Jeffrey Epstein do to earn hundreds of millions of dollars from a handful of wealthy clients like the private equity billionaire Leon Black?

The answer: help rich people pay less in taxes.

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The Trump Tax Cuts: Promises Made, Promises Kept?

Bloomberg, The Trump Tax Cuts: Promises Made, Promises Kept?:

The White House and Republican lawmakers made big promises when they passed a sweeping tax law in President Donald Trump’s first year in office, predicting it would boost the economy and make the tax code simpler and fairer.

The Tax Cuts and Jobs Act of 2017, passed with only Republican votes, became the signature legislative achievement of the Trump administration. Tax rates for individuals and corporations were cut, new incentives were created, the standard deduction and estate tax exemption were increased, and the U.S. moved toward a territorial tax system.

Congressional Republicans have touted the law’s success, while Democrats have attacked it as a giveaway to the wealthy and corporations.

In the waning days of the Trump administration, Bloomberg Tax examined the law’s stated goals and explored which of its seven major promises came to fruition.

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Bloomberg: Five Fresh Faces In Tax

Bloomberg, They’ve Got Next: Five Fresh Faces to Know in Tax:

Welcome to our first 2021 installment of “They’ve Got Next.” It’s our latest round in a series that highlights the work of rising stars of the bar — young lawyers who are leading the way in variety of practice areas.

So far, we’ve looked at the work of young attorneys in labor & employment, intellectual property, and bankruptcy. In our fourth installment, we spotlight five young lawyers to know in the world of tax: 

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NY Times: With Higher Taxes Possible, Here’s What To Do Now

New York Times, With Higher Taxes Possible, Here’s What to Do Now:

President Biden has already made clear his tax priorities. His proposed $1.9 trillion pandemic relief bill would cut taxes for lower- and middle-income Americans, and he is expected to call for higher taxes on corporations and the rich.

How many of his plans become law remains to be seen. But he has given a signal that he is moving toward fulfilling his pledge of rolling back former President Donald J. Trump’s tax cuts. Mr. Biden’s campaign plan would increase taxes by more than $2 trillion over a decade, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.

“It’s more useful to think about what President Biden has proposed as a $3 trillion tax increase on corporations and high earners and a $1 trillion tax cut for everyone else,” said Howard Gleckman, a senior fellow at the Tax Policy Center. “My sense is it will be easier in the current political dynamic to get the tax cuts he talked about than the tax increases.”

Last week, I wrote about long-term tax-planning issues, focusing on how proposed changes to the estate tax could affect many more people [Biden May Eliminate Step-Up In Basis At Death, Hurting Jeff Bezos, Elon Musk, And Efforts To Close The Black Wealth Gap]. This week, I’m turning my attention to some of the short- and medium-term tax proposals that could affect people’s earnings and financial decisions.

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NY Times: Biden Wants To Raise Taxes, Yet Many Trump Tax Cuts Are Here To Stay

New York Times, Biden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to Stay:

Donald J. Trump has left the White House. But many of his signature tax cuts aren’t going anywhere.

Democrats have spent years promising to repeal the 2017 Tax Cuts and Jobs Act, which Republicans passed without a single Democratic vote and was estimated to cost nearly $2 trillion over a decade. President Biden said during a presidential debate in September that he was “going to eliminate the Trump tax cuts.”

Mr. Biden is now in the White House, and his party controls both chambers of Congress. Yet he and his aides are committing to only a partial rollback of the law, with their focus on provisions that help corporations and the very rich. It’s a position that Mr. Biden held throughout the campaign, and that he clarified in the September debate by promising to only partly repeal a corporate rate cut.

In some cases, including tax cuts that help lower- and middle-class Americans, they are looking to make Mr. Trump’s temporary tax cuts permanent.

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David Kamin (NYU), Other Law Profs Answer President Biden's Call To Public Service

Karen Sloan (Law.com), From Campus to DC: These Law Profs Are Answering Biden's Call:

The Biden administration is still in its infancy, but a number of law professors have already joined the new team in Washington, D.C., with more likely on the way. ... Here are some of the professors who have been appointed to posts within the Biden Administration: ...

David Kamin, New York University School of Law—Kamin is taking a public service leave from NYU’s law faculty to become deputy director of the National Economic Council in the White House. Kamin is an expert budget and tax policy and worked in the Obama administration before joining the law school in 2012.

Morgan Lewis Seeks To Cut Tax Ties With Trump

Daily Report, Morgan Lewis Seeking to Cut Ties With Trump:

While a growing number of law firms and businesses have cut ties with former President Donald Trump’s businesses in the wake of the Jan. 6 mob attack on the U.S. Capitol, the experience of other firms—most notably Morgan, Lewis & Bockius—suggests that attorney-client relationships cannot be undone with the snap of a finger.

A spokesperson for Morgan Lewis indicated Tuesday that it is working to wrap up its long-running tax work for the former president and his companies. ...

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