Tax Policy In The Biden Administration

• Bloomberg, Harris to Expand Small Business Tax Relief to Boost Startups
• Bloomberg, Harris Pushes 28% Capital Gains Tax Rate on $1 Million Earners
• Bloomberg, Trump Vows 15% Corporate Tax
• Inequality.org, If We Want Better Care, We Need a Better Tax Code
• New York Times, Can Democrats Stop the ‘Tax Doom Loop’?
• New York Times, Harris, Proposing a Tax Break, Makes a Play for Small-Business Owners

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ABA Tax Section Accepting Nominations for 2025-2027 Public Service Fellowships

The ABA Tax Section is accepting applications for Christine A. Brunswick Public Service Fellowships for 2025-2027:

The application period for the 2025-2027 class of Christine A. Brunswick Public Service Fellows is now open. The deadline for applications is Friday, November 8, 2024.

The ABA Tax Section has operated this fellowship since 2008 with impressive impact on communities throughout the country. In addition to representing low-income taxpayers and completing a public service project, prior fellows have gone on to careers in public interest tax, clerkships, private tax practice, academia, and government and have held leadership positions throughout the Tax Section. The fellowship provides two years of funding to practice public interest tax law at a qualifying host organization and free travel, lodging, and registration to the main Tax Section meetings. To learn more about the opportunity and to access the application materials please see the ABA Tax Section website here.

The ABA Tax Section will be hosting two virtual information sessions regarding this fellowship and the application process:

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Tax Policy In The Biden Administration

• Bloomberg, Best Buy, Apple, Others Make Millions From California Tax Deals
• Bloomberg, Gen Z Needs a Tax Break
• Bloomberg, Google Gets Tax Break for California Journalism Deal
• Bloomberg, Opportunity Zones Face Skepticism Over Who Benefits the Most
• Cato Institute, Harris’s Tax on Unrealized Gains is Only the Tip of a $5 Trillion Tax Iceberg

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Penn Wharton Analysis Of Budget Implications Of Harris And Trump Taxing And Spending Plans

Penn Wharton Budget Model, 2024 Election Analyses:

PWBM analyzes policy proposals from both the Trump and Harris campaigns to estimate the budgetary, economic, and distributional effects.

The 2024 Harris Campaign Policy Proposals: Budgetary, Economic and Distributional Effects:

We estimate that the Harris Campaign tax and spending proposals would increase primary deficits by $1.2 trillion over the next 10 years on a conventional basis and by $2.0 trillion on a dynamic basis that includes a reduction in economic activity. Lower and middle-income households generally benefit from increased transfers and credits on a conventional basis, while higher-income households are worse off.

The 2024 Trump Campaign Policy Proposals: Budgetary, Economic and Distributional Effects:

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NY Times: What We Know About Kamala Harris’s $5 Trillion Tax Plan

New York Times, What We Know About Kamala Harris’s $5 Trillion Tax Plan So Far:

In a campaign otherwise light on policy specifics, Vice President Kamala Harris this week quietly rolled out her most detailed, far-ranging proposal yet: nearly $5 trillion in tax increases over a decade.

That’s how much more revenue the federal government would raise if it adopted a number of tax increases that President Biden proposed in the spring. Ms. Harris’s campaign said this week that she supported those tax hikes, which were thoroughly laid out in the most recent federal budget plan prepared by the Biden administration.

No one making less than $400,000 a year would see their taxes go up under the plan. Instead, Ms. Harris is seeking to significantly raise taxes on the wealthiest Americans and large corporations. Congress has previously rejected many of these tax ideas, even when Democrats controlled both chambers.

While tax policy is right now a subplot in a turbulent presidential campaign, it will be a primary policy issue in Washington next year. The next president will have to work with Congress to address the tax cuts Donald J. Trump signed into law in 2017. Many of those tax cuts expire after 2025, meaning millions of Americans will see their taxes go up if lawmakers don’t reach a deal next year.

Here’s an overview of what we now know — and still don’t know — about the Democratic nominee’s views on taxes.

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Tax Policy In The Biden Administration

• Bloomberg, IRS Conservation Easement Fumbles Mirrored in Covid Fraud Fight
• Bloomberg, UN Greenlights Work on Global Tax Treaty Amid Tensions With OECD
• Bloomberg Editorial, We Need to Talk About Taxes
• Kimberly Clausing (UCLA), The Climate Policy at Stake In This Election: The Tax Code
• Committee for a Responsible Federal Budget, The Kamala Harris Proposal to Raise the Corporate Tax Rate to 28%

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Why We Should Care That Tariffs Are Taxes

David Hebert (American Institute for Economic Research), Why We Should Care That Tariffs Are Taxes:

In a recent American Compass article, Michael Lind [Texas] asks “So What If Tariffs Are Taxes?” In doing so, he defends the position of so many on the left and right that tariffs are good economics, good policy, and essential to reverse the damage allegedly caused by zealously pursuing trade liberalization. Unfortunately, he gets both his history and economics wrong. Because of these errors, his policy recommendations are misguided and reflect an antiquated, pre-Adam Smith view of the world that promotes mercantilism, cronyism, and a “beggar thy neighbor” approach to international relations. These policies have been tried before, with the same result each time: the impoverishment of the nation and its people.

Lind’s call for “Sticks, Not Carrots” belies a subtle truth: he believes it is the federal government’s responsibility to make sure that Americans are well-off. This starkly contrasts the historical position of the American Right up until the 2010s, not to mention a core principle of the American Founding: our well-being is primarily our personal responsibility. ...

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Evan Gershkovich, Other Freed Hostages Hit With IRS Tax Penalties For Their Time As Russia's Hostages

Following up on my previous post, Americans Wrongfully Detained Around The World Face An Additional Challenge At Home: The IRS:  Informa, Wrongfully Detained Americans Welcomed Back with IRS Penalties:

The tax man waits for no one. Unable to file tax returns while wrongfully detained, hostages are often welcomed back to the homeland with a tax bill. Case in point, the three freed Americans who were held hostage in Russia are now facing Internal Revenue Service fines and fees assessed while they were in captivity.

Wall Street Journal reporter Evan Gershkovich, former marine Paul Whelan and Russian-American journalist Alsu Kurmasheva were freed as part of a complex prisoner swap on Aug. 1, 2024. Gershkovich was detained for nearly 1 1/2 years, Kurmasheva for almost 10 months and Whelan for over five years. Now that they’re home, they’ll need to get their affairs in order, including sorting out IRS penalties and accruing interest assessed on individuals who fail to file their tax returns. When it comes to issuing penalties, the IRS doesn’t discern unlawfully detained citizens from those unscrupulous individuals avoiding taxes, as there’s no pause or postpone option available while wrongfully detained.

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Tax Policy In The Biden Administration

• Bloomberg, Even Switzerland Is Discussing How to Tax the Super-Rich
• Bloomberg, FedEx, IRS Spar Over Loper Bright’s Effect on Tax Enforcement
• Bloomberg, Trump, Harris Duel for Voters With Budget-Busting Tax Proposals
• Bloomberg Editorial, Tax Cuts and Jobs Act Is Expiring and Public Finances Are in Trouble
• Conversable Economist, U.S. Tax Policy: The Coming Storm in 2025

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NY Times: Trump Promises Tax Cuts, Harris Tracks Biden's Tax Increases

New York Times, Trump’s Tax Plan Could Add to Debt Burden. Harris’s Plan Tracks Biden’s.:

The former president’s proposals to cut taxes would lose far more revenue than his plans to raise tariffs. The vice president has not released specifics.

Former President Donald J. Trump keeps adding new tax cuts to his list of campaign promises, and their projected costs keep piling up.

Independent analyses suggest Mr. Trump’s plans could add close to $4 trillion over the next decade to America’s already fast-growing national debt, even after factoring in additional revenues from new taxes he wants to impose on imports.

It is impossible to make a similarly precise estimate for Vice President Kamala Harris, Mr. Trump’s Democratic opponent this fall. She has not laid out any tax or spending plans, or other economic policy proposals, with enough detail to estimate whether they would add to deficits or reduce them.

But on Friday, after this article published online, Harris campaign officials said they would point to President Biden’s most recent budget proposal as an indicator of Ms. Harris’s future fiscal policy plans. That budget, released in March, calls for about $3 trillion in deficit reduction over the next decade, largely by raising taxes on corporations and high earners.

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Tax Policy In The Biden Administration

• Bloomberg, IRS Should’ve Put an Estate Tax on Inherited Retirement Accounts
• Bloomberg, Use These Math Shortcuts in Estate Planning
• Bloomberg, Using the Estate Tax Exemption to Transfer Stock Tax Free
• Common Dreams, Forget Wealth Tax. We Should Abolish Extreme Wealth Altogether
• Inequality.org, The Coming Tax-the-Rich Rumble in Rio

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NY Times: Lavish Spending At Leading LGBTQ Nonprofit May Have Violated IRS Tax Rules

New York Times, A Pattern Of Lavish Spending At A Leading L.G.B.T.Q. Nonprofit:

A light rain fell at the Zurich airport one Sunday morning in January 2023 as Sarah Kate Ellis made her way from a seat in Delta’s most exclusive cabin to a waiting Mercedes. It was there to chauffeur her to the Swiss Alps, where she and her colleagues would stay at the Tivoli Lodge, a seven-bedroom chalet that cost nearly half a million dollars to rent for the week.

Ms. Ellis, who was en route to the World Economic Forum in Davos, doesn’t run a Wall Street bank or a high-flying tech start-up. She is the chief executive of the nonprofit organization GLAAD, one of the country’s leading L.G.B.T.Q. advocacy groups.

The group, which has an annual budget of roughly $30 million, paid for Ms. Ellis’s trip, as well as a day of skiing, according to internal documents reviewed by The New York Times and interviews with current and former employees and others with knowledge of GLAAD’s operations.

The trip was part of a pattern of lavish spending at GLAAD, much of it by Ms. Ellis, that may have violated the organization’s own policies as well as Internal Revenue Service rules.

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IRS Celebrates National Whistleblower Day: $1.2 Billion Awards, $7 Billion Paid By Non-Compliant Taxpayers

IR-2024-199, IRS Whistleblower Office Celebrates National Whistleblower Day; Over $7 Billion in Collected Proceeds Thanks to Whistleblowers (July 29, 2024):

In anticipation of National Whistleblower Appreciation Day on July 30, the Internal Revenue Service Whistleblower Office today recognized the important role whistleblowers play in supporting the nation’s tax administration.

Since issuing its first award in 2007 through June 2024, the IRS has paid over $1.2 billion in awards based on the successful collection of $7 billion from non-compliant taxpayers. ...

In Fiscal Year 2023, the IRS paid awards totaling $88.8 million based on whistleblower information attributable to tax and other amounts collected of $338 million. In Fiscal Year 2023, the Whistleblower Office established 16,932 award claims, an increase of 44% compared to the average of the prior four years. ...

Actionable claims contain specific, timely and credible information. A whistleblower may qualify for an award when use of the whistleblower’s information results in proceeds collected. The awards paid to whistleblowers generally range between 15 and 30% of the proceeds collected and attributable to their information.

IRS Whistleblower Office, FY 2023 Annual Report:

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NY Times: How One Man Lost $740,000 To Scammers Targeting His Retirement Savings And Left Him With A $285,000 Tax Bill

New York Times, How One Man Lost $740,000 to Scammers Targeting His Retirement Savings:

For nearly three months, Barry Heitin, a 76-year-old retired lawyer, thought he was part of a government investigation that felt like something out of the movies. He was actually assisting criminals in stealing hundreds of thousands of dollars — of his own money.

Last fall, he spent just about every weekday doing the legwork and making withdrawals from his bank accounts as part of an intricate scam: He believed he was helping the feds safeguard his money and catch thieves who were after it.

“They kept telling me, ‘This is a big case and we are going to stop a whole ring of people,’” Mr. Heitin said. “It was like a rabbit hole. I was going down the hole with them.”

It cost him almost all of his retirement savings: roughly $740,000.

Americans spend a lot of energy saving for retirement and worrying about losing money to the gyrations of the stock market. But these days, sophisticated criminals — on dating sites, on social media, in messaging apps or using malicious software — present an ever-growing risk to people and their savings. ...

Compounding the pain, there can even be a hefty tax bill waiting for them after they’ve drained their retirement accounts. ... Withdrawals from tax-advantaged retirement accounts like traditional I.R.A.s are taxed as ordinary income, so to the government, it looks like Mr. Heitin lived large last year: He still owes nearly $285,000 in federal and state taxes.

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Tax Policy In The Biden Administration

• Reuven Avi-Yonah (Michigan) & Steven Rosenthal (Tax Policy Center), Congress Can Maintain IRS Rulemaking Authority
• Bloomberg, DraftKings to Implement a Customer Surcharge in High-Tax States
• Bloomberg, IRS Basis-Shifting Guidance Targeted for Challenge Post-Chevron
• Bloomberg, Senate Republicans Block $78 Billion Business, Child Tax Break Package
• Bloomberg, Undocumented Immigrants in US Pay Nearly $100 Billion in Taxes

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NY Times: Washington Prepares For The ‘Super Bowl Of Tax’

New York Times, Washington Prepares for the ‘Super Bowl of Tax’:

President Biden’s decision not to seek re-election is upending expectations about who will control Washington next year. But there is one thing lawmakers and lobbyists are certain of: A tax fight is coming.

Across the nation’s capital, preparations are quietly starting for what some are calling the “Super Bowl of tax.” On Capitol Hill, Republicans and Democrats are holding strategy and education sessions. Lobbyists are pressing their case to lawmakers and preparing multimillion-dollar publicity campaigns to defend tax breaks for corporations. Think tanks are churning out research assailing or lauding elements of the byzantine tax code.

On the line is the future of the Tax Cuts and Jobs Act, which a Republican Congress passed and former President Donald J. Trump signed into law in 2017.

To avoid blowing too large of a hole in the federal budget at the time, Republicans scheduled many of the tax cuts to expire after 2025. That deadline has created a rare opportunity to reshape federal tax policy next year, and lawmakers in each party intend to be ready to wield whatever power voters give them in November. ...

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Dean: The Law School Hiring Market Undervalues Women, Minorities

Diverse Education Op-Ed: The Law School Hiring Market Undervalues Women, Minorities, by Steven Dean (Boston University; Google Scholar):

The latest attack on efforts to support diversity comes in the form of a lawsuit targeting Northwestern University’s law school. The suit accuses the school’s faculty and administration of snubbing high-profile white male applicants. The 30-page complaint gets so many facts wrong that it is difficult to know where to begin.

Since the plaintiffs decided to make the “high-demand, low-supply field” of tax law an example, I’d like to acknowledge one undeniably true statement: there are very few minority tax law professors. That is particularly obvious at the sort of elite institutions the suit emphasizes. Neither Stanford nor the University of Chicago have any. Northwestern has one among its nine residential tax faculty.

Inevitably, the document pairs its lonely truth with an almost laughable falsehood, stating that tax law scholars who are female are “difficult or impossible to find.” There are, in fact, lots of women tax law professors. The complaint fails to mention that one of the targets of the lawsuit is a woman tax law professor. ...

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G20 Celebrates Historic International Tax Cooperation, Punts Proposed 2% Billionaire Tax

OECD, Statement by the Secretary-General on the Rio de Janeiro G20 Ministerial Declaration on International Tax Cooperation:

For the first time in its history G20 Members have agreed [to] a comprehensive stand-alone Tax Declaration, reflecting the transformational achievements of international tax cooperation to date, the importance of that cooperation and its commitment to continue to carry it forward.

I commend the Brazilian G20 Presidency on this remarkable achievement and G20 members for reaching consensus on this historic text in the spirit of inclusive and effective international tax cooperation.

It has been an opportunity to reflect on the significant progress already realised over more than a decade of multilateral discussions in the G20 and the Inclusive Framework on Base Erosion and Profit Shifting.

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Tax Policy In A Harris Administration

• Bloomberg, The Harris Tax Plan May Not Be Biden’s Tax Plan
• CNBC, Here’s Where Kamala Harris Could Stand on Tax Policy, Experts Say
• Morningstar, Three Big Questions on Kamala Harris's Tax Policies — and How Close They Are to Biden's
• National Review, Harris Just Promised to Extend the Trump Tax Cuts
• National Review, Kamala Harris’s Tax Plan Is a Testament to the GOP’s Success
• New York Times, A Harris Economy Could Prove More Progressive Than ‘Bidenomics’
• Politico, More of the Same? How Kamala Harris Views Tax Policy
• TaxVox, Kamala Harris And Her Tax Proposals: A Primer
• Tax Foundation, Where Does Kamala Harris Stand on Taxes?
• Tax Notes, Harris Tasked With Securing Biden’s Tax Policy Legacy

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Tax Policy In The Biden Administration

• Bloomberg, Congress’s Tax Scorekeeper Gets Spotlight After Chevron Ruling
• Bloomberg, IRS Telework Policy Draws Flak as Phone Calls Go Unanswered
• Bloomberg, Lowering Profits Seen as Tactic to Ease New US 15% Corporate Tax
• Bloomberg, OECD Says It’s ‘Near Full Consensus’ on Global Tax Treaty
• Forbes, 4 Ways Homeowners Benefit If The Trump Tax Plan Expires

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The Top Five Tax Lawyers Under 40 (2024)

Law360 Names 2024's Top Attorneys Under 40:

After carefully reviewing nearly 1,200 submissions, our team of editors arrived at a list of Rising Stars who hail from more than 70 law firms and span 34 practice areas. Winners were selected based on their career accomplishments in their respective disciplines.

Tax

Emily Au (age 28; L.P.C. 2018, BPP Law School), Quinn Emanuel (London)

Emily Au of Quinn Emanuel Urquhart & Sullivan LLP has been the lead attorney on several high-profile cases, including a key case across the U.K. construction industry in terms of HMRC's Value-Added Tax policy, earning her a spot among the tax law practitioners under age 40 honored by Law360 as Rising Stars.

The most interesting case she's working on:
Au is the lead attorney representing a provider of student accommodations, in what Quinn Emanuel has called the top case across the U.K. construction industry in terms of HMRC's Value-Added Tax policy.

The taxpayer is arguing with HMRC over the VAT applicable to the kinds of building safety remediation required in the wake of the fire at the Grenfell Tower in London in 2017.

"It's the most interesting case for me," Au said. "The rules in dispute carry huge social implications and political implications for the construction industry this decade. It's a critical issue for our client and for the construction industry this decade."

Her proudest moment as an attorney:
Au said her proudest moment came early in her career, when she and the team at Quinn Emanuel took on a case for a high-net-worth individual against HMRC.

Au was a more junior attorney at the time, but she "tried to get to grips with every document," she said. She ended up representing the client in court, despite being only a couple of years out of law school, she said.

"What made me proud was that I had taken the time to make sure that we were putting our best foot forward for the client, and I was given the opportunity to present their best case myself," Au said.

Dominic Foulkes (age 39; M.Sc. University of Oxford), Davis Polk (London) 

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Chicago Bears Block #1 Draft Pick Caleb Williams' Tax Savings Strategies In His Contract

SB Nation, Caleb Williams Asked Bears to Pay Him as an LLC:

Caleb Williams has finally signed his rookie contract with the Chicago Bears. What took so long? Williams’ representatives were reportedly making some unprecedented requests for his contract before he put his name on the dotted line.

Williams was still participating in rookie and team activities, but he hadn’t signed his four-year, $39 million deal with the Bears until earlier this week. According to Pro Football Talk, there were differences in the language of Williams’ contract, including one odd request I don’t think I’ve ever seen a player make.

In negotiating his rookie deal, Bears QB Caleb Williams explored creative tax strategies, from being paid as an LLC to having payments treated as a forgivable loan. https://t.co/hzrn5Gsr44

— ProFootballTalk (@ProFootballTalk) July 17, 2024

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NY Times: Trump’s Proposed Tax Cuts And Increased Tariffs Could Hurt Poorer Households

New York Times, Trump’s Proposed Tax Cuts and Increased Tariffs Could Hurt Poorer Households:

When former President Donald J. Trump met with House Republicans last month, he touched on a mix of policies core to his economic agenda: cutting income taxes while also significantly raising tariffs on foreign goods.

Mr. Trump told Republicans he would “love to raise tariffs” and cut income taxes on Americans, potentially to zero, said Representative Marjorie Taylor Greene, Republican of Georgia.

“Everyone was clapping in the room,” Ms. Greene said. “He said, ‘If you guys are going to go vote on something today, vote to lower taxes on Americans.’”

Tariffs and tax cuts were central to Mr. Trump’s economic thinking while he was in the White House. If he wins in November, he is promising a much more aggressive approach, including potentially a blanket 10 percent tariff on nearly all imports and a 60 percent tax on Chinese goods.

Mr. Trump and his supporters say that mixing tariffs with tax cuts will revitalize American businesses and manufacturing, boosting jobs and benefiting working-class Americans. And they see tariffs on foreign products as a lucrative source of revenue, one that could be used to offset a drop in tax receipts.

Some economists have a different view, saying that cutting taxes while raising tariffs could have harmful consequences by widening the gap between the rich and the poor. Companies often pass on the cost of tariffs to consumers in the form of higher prices. As a result, economists say, lower-income households would be hit hardest by tariffs since they spend a greater share of their income on goods. Income taxes tend to fall more heavily on wealthier Americans since many low-income workers do not make enough money to owe federal income taxes.

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Tax Policy In The Biden Administration

• Bloomberg, OECD Aims to Finish Global Minimum Tax Peer Review in Two Years
• Bloomberg, The Ripple Effect of Chevron Doctrine: Tax Fallout, Explained
• Bloomberg, Treasury Finalizes Rules to Block ‘Killer B’ Transactions
• Bloomberg, Trump’s Rise Poses Threat to Tax Break That Underpins Muni Bonds
• Bloomberg, Trump’s Tax-Free Tips Idea Attracts Even Once-Wary Democrats

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State Taxes Drive Away Star Athletes And Undermine Local Teams

Dan Mitchell, Greedy Politicians Drive Away Star Athletes and Undermine Local Teams:

The fundamental insight of supply-side economics is that people respond to incentives. So if the government imposes a high tax rate on income, people will try to avoid or evade the money grab.

Especially if they have any ability to control the timing, level, and composition of their income.

Star athletes are definitely in this group.

• Phil Mickelson
• Max Verstappen
• Usain Bolt
• LeBron James
• Bryce Harper
• Dwight Howard
• Shohei Ohtani
• Tyreek Hill

We can add Grant Williams to that list, as reported last year from Boston.

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Tax Policy In Project 2025: Presidential Transition Project

Martin Sullivan (Tax Analysts), Your Guide to Tax Policy in Project 2025, 184 Tax Notes Fed. 161 (July 8, 2024):

The title page reads, “Mandate for Leadership, the Conservative Promise — Project 2025, Presidential Transition Project.” What follows is 920 pages of sweeping changes for the “next conservative president” to put into effect or, if not sufficiently empowered, to recommend to Congress. From abortion to veterans affairs, the anthology of 30 chapters, each by a different author, is a prepackaged game plan for the next administration to hit the ground running with a conservative wish list.

Tax reform would take place in two stages. Stage 1 “intermediate” reform would retain the basic structure of the Tax Cuts and Jobs Act but dramatically adjust its moving parts. Stage 2 “fundamental reform” would abolish individual and corporate income taxes and replace them with a consumption tax. The plan calls for the IRS budget to be cut, and as with other executive agencies, more of its top personnel would be appointed by the president.

Led by the Heritage Foundation, more than 50 conservative organizations collaborated on the Project 2025 volume. After President Biden’s poor performance in the June 25 debate and the close ties between former President Trump and the Heritage Foundation, the bulky tome — originally published in April 2023 — can no longer be ignored by those seeking to prepare for the future. The tax policy and tax administration changes are found mostly in Chapter 22, “Department of Treasury.”

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Pulitzer Prize-Winning Tax Journalist And Best-Selling Author David Cay Johnston Joins University Faculty

Rochester Institute of Technology, David Cay Johnston, Pulitzer Prize Winner and Bestselling Author, Joins RIT Faculty as a Professor of Practice:

Rochester Institute of Technology welcomes David Cay Johnston, Pulitzer Prize-winning investigative reporter and bestselling author, as a new Professor of Practice. A world-renowned expert in his field, Johnston will use his wealth of knowledge and experience to teach courses on law and journalism in RIT’s College of Liberal Arts beginning in fall 2024.

Johnston's 13 years of reporting in The New York Times on taxes, executive compensation, and inequality had a profound impact. His work prompted two presidents to change their tax policies, Congress to pass numerous laws, a federal appeals court to reverse an opinion, and news organizations to change how they report on CEO pay. He was awarded a Pulitzer Prize in 2001 and was named a finalist three other times.

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Tax Policy In The Biden Administration

• Bloomberg, A Fine Art Collection Can Cover One’s Tax Bill
• Bloomberg, Millionaires Fork Over $1 Billion to the IRS in Past-Due Taxes
• Bloomberg, OECD Reports Global Corporate Tax Rates Still Stable at 21%
• Bloomberg, Warren, Senators Urge Yellen: Finish Corporate Minimum Tax Rules
• Common Dreams, Chip Firms Poised to Rake In Taxpayer Subsidies Spend Big on Stock Buybacks

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ABA Tax Section Interview With Tax Prof Anthony Infanti

Jeremiah Coder, People in Tax: Interview with Anthony Infanti, 43 ABA Tax Times 6 (Winter-Spring 2024): 

Editor’s Note: Anthony “Tony” Infanti is a professor of law at the University of Pittsburgh School of Law. Professor Infanti teaches a variety of tax courses at Pitt Law, including Federal Income Tax, Corporate Tax, and International Tax. He is a prolific author, with scholarly work focusing on comparative tax law, critical tax theory, and the intersections between these two fields of study. He received degrees from New York University (LL.M. Taxation), University of California Berkeley (J.D.), and Drew University (B.A.), and is an elected member of the American Law Institute, the American College of Tax Counsel, and the American Bar Foundation.

ATT: Professor Infanti, it’s great to be talking to you about your career. What got you interested in tax in the first place?

PI: Rather than following the more typical path of coming into law school with an interest in tax or developing an interest after taking a few tax courses, you might say that tax found me. Although tax was always on my list of courses to take, I never actually managed to work it into my schedule during law school. After law school and clerking, I began work in the corporate department at a law firm in New York.

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Kysar: Moore v. United States—The Stakes Of Constitutionalizing The Tax Law

TaxProf Blog Op-Ed: Moore v. United States—The Stakes of Constitutionalizing the Tax Law, by Rebecca Kysar (Fordham; Google Scholar): 

Since the ratification of the Sixteenth Amendment in 1913, the Court has generally left Congress to its own devices when it comes to tax law. [1] Indeed, a leading federal income tax casebook has observed that, in modern times, “the Constitution seems to stop where the Internal Revenue Code begins.” The Moore v. United States majority followed this general pattern of exercising restraint in the tax sphere by sidestepping the question presented—whether a gain must be realized to constitute income under the Sixteenth Amendment. Instead, the majority decided the case on a narrow rationale advocated by certain amici curiae (of which I am among) that the income targeted by the MRT was indeed realized at the entity level and that Congress could tax shareholders on their portion of that income.

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WSJ: Increased IRS Audit Rate Of Wealthy Taxpayers Reduced Efficiency By 93%

Wall Street Journal Editorial, The IRS Has a High-Earner Delusion:

Unlike bank robbers, IRS auditors tend to look where the money isn’t. That’s what happened after the agency started scrutinizing more tax returns from the wealthiest Americans. A new report says increased targeting of these taxpayers was hugely ineffective [The IRS Ceased Compliance With the $10 Million Taxpayer Treasury Directive in Favor of an Overall Focus on High-Income Taxpayer Noncompliance (2024-300-028) (June 20, 2024)].

The policy, launched in 2020 by former Treasury Secretary Steven Mnuchin, required the IRS to audit 8% of taxpayers each year who earned more than $10 million. To hit that quota, the agency started examining returns with fewer irregularities. The efficiency drop was steep, according to the Treasury Inspector General for Tax Administration, or Tigta, which recently reviewed the results.

The average dollars assessed per return above $10 million “was nearly six times more productive prior to the 2020 Treasury Directive,” meaning the average examination recovered six times as much in unpaid taxes. Or to put it in terms of IRS productivity, after the policy change the money that auditors assessed per hour from this income group dropped 93%. ...

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WSJ: The Blue-State Wealth Exodus Continues

Wall Street Journal Editorial, The Blue-State Wealth Exodus Continues:

The pandemic lockdowns accelerated flight from Democratic-run states with onerous taxes and a high cost of living. The latest data from the Internal Revenue Service shows that the exodus has continued after life got back to quasi-normal.

The IRS last week published its annual data on the migration of taxpayers and adjusted gross income (AGI) between states. California ranked, again, as the biggest income loser ($23.8 billion) in 2022, followed by New York ($14.2 billion), Illinois ($9.8 billion), New Jersey ($5.3 billion) and Massachusetts ($3.9 billion). The top gainers were Florida ($36 billion), Texas ($10.1 billion), South Carolina ($4.8 billion), Tennessee ($4.7 billion) and North Carolina ($4.6 billion).

Although higher interest rates and housing prices reduced mobility in 2022, the flight from progressive states far surpassed pre-pandemic levels. California lost nearly three times as much income in 2022 to other states as it did in 2019. New Jersey’s net income loss hit a record in 2022, largely owing to fewer New Yorkers moving across the Hudson River. ...

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Tax Policy In The Biden Administration

• Bloomberg, Canada Enacts Digital-Services Tax Amid U.S. Reprisal Threat
• Bloomberg, IRS Rulemaking Authority on Shaky Ground With Chevron Overturned
• Bloomberg, OECD Reports Progress, But No Deal Yet on Global Tax Treaty
• Bloomberg, Stuck Between US and OECD, Puerto Rico Seeks Path on Minimum Tax
• Cato Institute, The OECD Wants Higher Taxes on Everything

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Jon Endean Joins Brooklyn Tax Faculty

Brooklyn Law School has announced that Jon Endean will join its faculty in August as an Assistant Professor of Law: 

Jon Endean, an expert in tax law, is joining the faculty as Assistant Professor of Law, and will be teaching Federal Income Taxation, Corporate Taxation, and International Taxation. Previously, Endean served as a visiting assistant professor of tax law at the NYU School of Law and, before entering academia, Endean worked as a tax associate at Covington & Burling in New York.  

Endean’s scholarly research focuses on tax law, with a particular focus on unearthing its foundational principles, investigating its relationship to non-tax law, and understanding how these principles can help inform broader theoretical debates surrounding property rights, sovereignty and federalism, and the relationship between code-based and common law regimes. 

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Cravath On Tax: Daniel Hemel (NYU)

Daniel Hemel is the fifth Tax Prof to appear on Cravath's On Tax podcast series:

Daniel Hemel is a professor at the NYU School of Law. In this episode of On Tax, he and Cravath partner and host Len Teti talk about Daniel’s path to his current role in legal academia. They also discuss his current tax research interests and his observations on what the best law students do well.

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TIGTA: Occupancy Rate At Most IRS Buildings Is Less Than 50% (Washington, D.C. Is Lowest)

Treasury Inspector General for Tax Administration, The IRS Has Reduced Its Overall Space Footprint; However, a Significant Amount of Unneeded Office Space Still Remains (2024-100-027) (June 4, 2024):

Since FY 2018, the IRS has reduced its overall space footprint by approximately 2 million rentable square feet, from 24.3 million to 22.3 million, which represents a reduction of approximately 8 percent. However, additional efforts to address long-term space planning are needed to increase efficient space allocation and realization of its associated cost savings. Specifically, the IRS lacks a long-term space reduction plan that clearly specifies the space reductions it expects to achieve annually beyond FY 2026, and that sufficiently decreases its unneeded office space by maximizing the space savings associated with current practices in remote work, telework, and workstation sharing/hoteling.

In FY 2023, more than one-half of IRS buildings had a workstation occupancy rate of 50 percent or less. In addition, the IRS has not implemented workstation sharing/hoteling for approximately 61 percent of its employees on frequent telework.

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National Taxpayer Advocate Delivers Report To Congress: 500,000 Identity Theft Case Backlog Takes 2 Years To Resolve, IRS Answers 31% Of Taxpayer Phone Calls

IR-2024-173 (June 26, 2024), National Taxpayer Advocate Issues Mid-Year Report to Congress; Highlights Filing Season Challenges and Focuses on Strategic Priorities:

National Taxpayer Advocate Erin M. Collins today released her statutorily mandated mid-year report to Congress. The report says the tax-return filing season generally ran smoothly this year, but it identifies delays in issuing refunds to identity theft victims, misleading telephone measures that lead to poor resource allocation decisions, and delays in processing Employee Retention Credit claims as key taxpayer challenges. The report also emphasizes the importance of technology upgrades as the IRS seeks to modernize its operations in the coming years.

New York Times, Rampant Identity Theft Is Taxing the I.R.S.:

Rampant identity theft has overwhelmed the Internal Revenue Service, resulting in a backlog of 500,000 unresolved fraud cases, leaving taxpayers without refunds and credits that they are due, the agency’s watchdog wrote in a report to Congress on Wednesday.

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Tax Policy In The Biden Administration

• Bloomberg, IRS Finalizes Conservation Contribution Disallowance Rule Regs
• Bloomberg, OECD Progressing on Finishing Global Tax Treaty By End of June
• Center on Budget and Policy Priorities, Record Stock Buybacks Bolster Case for Raising Corporate Tax Rate
• Common Dreams, Bowman, Sanders Propose 95% Tax on Corporations Exploiting Inflation to Jack Up Prices
• Financial Times, Global Tax Truce Frays Over Fears of Senate Deadlock

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Zhang: Moore And The Judicial Role In Tax Law

TaxProf Blog Op-Ed:  Moore, and the Judicial Role in Tax Law, by Alex Zhang (Emory; Google Scholar):

Most tax scholars breathed a sigh of relief last Thursday.  The Supreme Court, in a 5-2-2 split, upheld the mandatory repatriation tax on narrow grounds.  Others have commented on the doctrinal implications of the case.  I will focus here on what Moore tells us about the judicial role in tax law.

When the Court granted certiorari in Moore last June, many voiced their fear of a bombshell decision that could upend key aspects of the income tax and progressive aspirations for a tax on wealth or unrealized gains.  Indeed, past judicial interventions in tax law have not been perceived as a success.  Long gone were the days when Stanley Surrey could count tax as the largest subject matter on the Supreme Court’s docket.  Two key cases in the Moore litigation itself—Pollock v. Farmers’ Loan and Trust Co. and Eisner v. Macomber—generated sharp criticism during their times.  The majority in Moore said that much as to Pollock, and acknowledged the “significant confusion and controversy” it sparked.  Justice Jackson, citing the Court’s own words, noted that Macomber invited no warmer reception.  (I continue to think that Eisner v. Macomber turns on the absence of economic income, not realization, and allows Congress to tax objects or transactions constitutive of an actual accretion to wealth.  I am happy to see both the majority and Justice Jackson give credence to this possible reading.)

History thus did not inspire confidence in Moore’s outcome.  A memorable quip by Michael Graetz summed up the mood before oral argument:

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Graetz: Moore v. United States—Winning The Battle But The War Goes On

TaxProf Blog Op-Ed:  Moore v. United States—Winning the Battle but the War Goes On, by Michael Graetz (Columbia) (Author, The Power to Destroy: How The Antitax Movement Hijacked America (2024)):

The lawsuit by the Moores over $14,729 of tax was never about the tax (labelled the mandatory repatriation tax or MRT) enacted in 2017 to help fund the transition from a worldwide system that deferred taxes on unrepatriated income of USMNC’s CFCs to an exemption system for their foreign earnings, coupled with a minimum tax (the GILTI provision.) It was a vehicle for antitax forces to create a constitutional barriers to income taxes on unrealized appreciation of large holdings of securities or other assets by multimillionaires and billionaires and the even more remote prospects of an annual wealth tax on the extraordinarily rich, like those advocated by Elizabeth Warren and Bernie Sanders.

It was a case the Supreme Court should never have taken, but the Court was convinced to grant certiorari because of the unnecessary insistence by the panel of the Ninth Circuit that realization of income is not a constitutional requirement and the urging of numerous antitax organizations to grant certiorari. The Competitive Enterprise Institute, on whose board Moore’s father had been a member, was the principal mover in this case, a libertarian organization devoted as they say to “free enterprise, capitalism, and deregulation,” a common phrase used among antitax organizations. Importantly, the taxpayer’s cert petition was supported by many other libertarian and antitax organizations including the CATO institute, the Manhattan institute, the Liberty Justice Center, the Pacific Research Institute, the Landmark Legal Foundation, Saving America’s Family Enterprises, the Atlantic Legal Foundation, and last but not least, Grover Norquist’s Americans for Tax Reform. The Chamber of Commerce, a particularly important player in the Supreme Court, also urged the Court to take the case.

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More Moore Commentary

• Reuven Avi-Yonah (Michigan), Limiting The Blast Radius: Can Congress Save The Code From Realization?
• Josh Blackman (South Texas), Thoughts on Moore v. United States
• Moore Money, More Problems
• NFIB PTSD
• The Sixteenth Amendment did not "Overrule" Pollock
• Bloomberg, Democrats’ Wealth Tax Dreams Look Dim After Supreme Court Ruling
• Bloomberg, Foreign Tax Ruling Takes Pains to Limit Scope to Pass-Throughs
• Bloomberg, High Court Would Be Skeptical of Wealth Tax, Moore Attorney Says
• Bloomberg, Proposed Wealth Taxation Threatens Jobs, Savings, and Privacy
• Bloomberg, Supreme Court Ruling Leaves Door Cracked for Future Wealth Tax
• Steven Calabresi (Northwestern),  Moore v. United States: Joe Biden Thinks He Can Tax Gains in the Value of Your House When You Have Not Yet Sold It
• Stephen Carter (Yale), Is a Wealth Tax an Income Tax? Here's Why That Matters.
• Erik Jensen (Case Western), Moore’s Unrealized Potential
• Law360, Supreme Court Leaves Lifeline For Billionaire Income Tax
• Mother Jones, Will Congress’ Power Over Tax Policy Survive This Supreme Court?
• Steven Rosenthal (Tax Policy Center, Congress Wins A Battle For Its Taxing Authority, But More Challenges Are On The Horizon
• Vox, The Supreme Court’s New Tax Decision Is Great News for Billionaires
• Wall Street Journal Editorial, A Supreme Court Mistake on Wealth Taxes

TaxProf Blog Op-Eds on Moore v. United States, No. 22–800 (June 20, 2024):

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IRS ‘Sincerely Apologizes To Ken Griffin And Thousands Of Other Taxpayers Whose Personal Information Was Leaked To The Press’

Following up on Tuesday's post, Hedge Fund Billionaire Ken Griffin And IRS Settle Lawsuit Over Tax Returns Leaked To ProPublica:

New York Times DealBook, The Taxman Apologizeth:

The Internal Revenue Service has offered a rare public apology for a data leak that revealed the tax return details of Ken Griffin, the billionaire investor, and thousands of other affluent taxpayers.

The statement appears to draw a line under a legal battle. Griffin, the Citadel founder, sued the government in 2022 to force the agency to acknowledge its mistakes and to improve data security. The sides settled, and the I.R.S. published its apology yesterday.

A recap: Charles Littlejohn, an I.R.S. contractor, obtained the tax details of Griffin and others, including Jeff Bezos and Elon Musk, and disclosed them to ProPublica, which published the findings in a series of articles. Littlejohn, who was also accused of leaking Donald Trump’s tax documents to The Times, was sentenced to five years in prison in January.

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U.S. Tax Court's Tax Trailblazers: Nina Olson

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

Please join the United States Tax Court as its Tax Trailblazers series continues with Nina E. Olson, today at 7:00 - 8:15 PM EST (register here). 

Nina E. Olson is the Executive Director of the Center for Taxpayer Rights, a nonprofit that works to advance taxpayer rights in the United States and internationally. Among other initiatives, the Center organizes and convenes the International Conference on Taxpayer Rights and operates the Low Income Taxpayer Clinic Support Center. From March 2001 to July 2019, Nina served as the National Taxpayer Advocate of the United States, an independent organization within the Internal Revenue Service with over 1,600 employees and 79 offices across the US, dedicated to assisting taxpayers resolve their problems with the IRS and making administrative and legislative recommendations to mitigate those problems systemically. She has submitted 39 annual reports to Congress, and testified before congressional committees over 60 times. Before serving as the National Taxpayer Advocate, Nina founded and directed The Community Tax Law Project, the first independent Low Income Taxpayer Clinic in the US. She also maintained a private legal practice, representing taxpayers in disputes with the IRS.

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Grewal: Moore Decides Less

TaxProf Blog Op-Ed:  Moore Decides Less, by Andy Grewal (Iowa; Google Scholar):

When the Supreme Court granted certiorari in Moore v. United States, 602 U.S. ___ (2024), it agreed to decide whether the Sixteenth Amendment allows Congress to tax unrealized sums. Alas, the Moore opinion directly resolved only relatively dull and straightforward questions. In doing so, however, the Court touched on some major issues that may affect Congress’s taxation authority in the future.

Moore involved a claim that Section 965(a) violated the Sixteenth Amendment. Section 965(a), dubbed the Mandatory Repatriation Tax or MRT, requires only a simplified explanation here. Basically, the MRT says that shareholders in foreign corporations must include those corporations’ accumulated earnings in their own incomes. The Moores argued that the MRT, by taxing them on income they never touched, violated realization principles. They further argued that the Sixteenth Amendment’s reference to “taxes on incomes” incorporated a realization requirement. So, the Moores argued, the MRT violated the Constitution.

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FedSoc Debate: Is A Wealth Tax Constitutional?

• Akhil Reed Amar (Yale)
• David Schizer (Columbia)
• Moderator: Corinne Snow (Vinson & Elkins, Washington, D.C.)

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Gabriel Zucman To G20: Coordinated Minimum Tax On World's 3,000 Billionaires Would Raise $250Billion/Year

Press Release, A Global Agreement on Taxing the Ultra-Rich Is Technically Feasible, New G20-Commissioned Report Says:

Countries worldwide should support the adoption of a coordinated, global minimum standard to tax the ultra-rich effectively. Under a baseline scenario, the 3,000 or so individuals with a total wealth exceeding $1 billion would be required to pay a minimum amount of tax, equal to 2% of their wealth every year, which would generate additional global tax revenues up to $250 billion. Extending the minimum tax to individuals with a net worth of over $100 million would add $100-$140 billion a year.

This is the main recommendation in a report ("A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals") presented on Tuesday, 25 June, by Professor Gabriel Zucman in an online press conference. The Brazilian presidency of the G20 commissioned the report to Zucman ahead of the G20 Finance Ministers meeting in Rio de Janeiro on July 25-26. 

Introducing this minimum standard, Zucman explained, would correct a structural failure of contemporary tax systems, in which the 0.0001% wealthiest individuals pay, on average, proportionally less taxes than other socio-economic groups.

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Tax Prof Lily Kahng Retires After 23 Years At Seattle

Seattle Law School, Celebrating Retiring and Departing Faculty Members:

[Lily] Kahng retired after spending 23 years at the law school. A nationally-recognized expert in tax law, she has taught courses on federal income taxation, corporate taxation, partnership taxation, and tax policy, among others. Her research interests include taxation of women and families, tax administration, comparative tax, and critical tax theory. She was drawn to tax law because of how pervasive it is in society, touching most every aspect of peoples’ lives.

“This law school has felt like my home. I have felt so welcomed and supported. I will definitely miss the students. I so appreciated all of the enthusiasm and energy and optimism that they bring. I really feel like it has been a joy and a privilege to teach them,” Kahng said.

She added that she is most proud of her students. “I feel like I’ve been able to open their eyes to this one area of law that most of them are scared of, intimidated by, or not particularly drawn to.”

Before joining Seattle University faculty in 2001, she was an associate professor at Cornell Law School and served as an attorney advisor in the Office of Tax Legislative Counsel in the U.S. Department of the Treasury. From 1991-93, she was an acting assistant professor at New York University Law School. She began her legal career in as an associate at the New York law firm of Simpson Thacher & Bartlett, and then was a vice president of mergers and acquisitions at the investment bank of Salomon Brothers, New York.

In retirement, she plans to stay in Seattle and pursue a variety of volunteer opportunities with area nonprofits.

Galle: What's Next For Wealth And Mark-To-Market Taxes After Moore?

TaxProf Blog Op-Ed:  What's Next For Wealth And Mark-To-Market Taxes After Moore?, by Brian D. Galle (Georgetown; Google Scholar):

The Moore case was always about wealth taxes. Now that the Supreme Court has handed down its decision, and seems to have studiously avoided making any (technically) definitive statements about whether wealth taxes fit into the constitutional scheme, what’s next for proponents of wealth and mark-to-market taxes?

First, let’s review. Moore holds that the government can define an individual’s income to include the untaxed profits of a business entity in which the individual holds an equity stake. Thus, whether or not the Constitution in effect demands realization, taxing the equity owner would meet that demand, assuming the business entity itself has realized income. That holding allowed the Court to take a pass on determining whether there is any constitutional realization requirement. And the Court repeated several times, in several different ways, that a realization requirement could be a constitutional obstacle to wealth or mark-to-market taxes, and it was not deciding those questions.

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Hedge Fund Billionaire Ken Griffin And IRS Settle Lawsuit Over Tax Returns Leaked To ProPublica

Bloomberg, Ken Griffin’s Data Leak Suit Against IRS Ends In Settlement:

The Internal Revenue Service agreed to settle a lawsuit brought by hedge fund manager Ken Griffin that accused the agency of failing to protect his confidential financial information from a contractor who stole his tax data and leaked it to ProPublica. ...

Griffin sued over a data breach that resulted in ProPublica’s revealing private data on some of the wealthiest US taxpayers. A former IRS contractor, Charles Littlejohn, pleaded guilty to stealing and leaking the tax returns of Griffin, former President Donald Trump, Elon Musk and other billionaires. He was sentenced on Jan. 29 to five years in prison.

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Brooks & Gamage: Moore v. United States—Initial Reactions

TaxProf Blog Op-Ed:  Moore v. United States—Initial Reactions, by  John R. Brooks (Fordham; Google Scholar) & David Gamage (Missouri-Columbia; Google Scholar):

In its decision in Moore v. United States on June 20, the Supreme Court upheld a broad government power to tax business entities, including corporations, on a pass-through basis. The taxpayers in Moore had challenged as unconstitutional the I.R.C. § 965 “mandatory repatriation tax,” a one-time shareholder-level tax on the accumulated, but undistributed, earnings of controlled foreign corporations. The taxpayers’ argument was that retained earnings of a corporation could not be considered the “income” of a corporation’s shareholders under the Sixteenth Amendment until that income was “realized” by the shareholders through a distribution to them. The Supreme Court originally granted certiorari on this question: whether “unrealized sums” could be income covered by the Sixteenth Amendment.

In its opinion, the Court declined to answer that question, however, because, the Court held, the income in question here was in fact realized—by the corporation. The real question therefore was whether that corporation’s income could be attributed to its shareholders. The Court held that it could be, saying essentially that there is no real constitutional distinction between partnerships and corporations on this issue—the income of any business entity can be attributed to its owners, without limitation. (The majority left some wiggle room on the question of whether an item of undistributed corporate income could be taxed both at the entity level and the owner level, though it was unclear whether that might be a Sixteenth Amendment issue or a Due Process issue.) Something like this result—a focus on attribution rather than realization—was widely predicted after oral argument, but we are somewhat surprised that the majority opinion didn’t take up the issue of realization at all.

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