Oh Presents Wealth Tax Design: Lessons From Estate Tax Avoidance Online Today At UC-Irvine

Jason Oh (UCLA) presents Wealth Tax Design: Lessons from Estate Tax Avoidance (with Eric Zolt (UCLA)) online at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

Presidential candidates Elizabeth Warren and Bernie Sanders have both proposed ambitious new annual wealth taxes based on academic work by Emmanuel Saez and Gabriel Zucman. They project these proposals to raise trillions of dollars over the next ten years. Some critics challenge the Saez-Zucman approach to measuring wealth concentration. Other critics including Larry Summers and Natasha Sarin have used data from estate tax returns and the relatively small amount of revenue the estate tax raises to question the revenue projections of these proposals. This comparison can be useful only if one thinks carefully about specific estate tax strategies and how these strategies translate to an annual wealth tax. This article engages in that exercise. When one takes a closer look at estate tax avoidance and how it maps onto an annual wealth tax, a much more complex narrative emerges.

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Taxing The Poor Through Real Estate Transfers

David A. Simon (Kansas), Taxing the Poor Through Real Estate Transfers, 2020 U. Ill.  Rev. Online 29 (2020):

This Article collects data on real estate transfer taxes in Illinois. It shows that municipal transfer taxes are more likely to affect poor communities than affluent communities.

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Reck Presents Tax Evasion By The Wealthy: Measurement And Implications Online Today At Georgetown

Daniel Reck (London School of Economics) presents Tax Evasion by the Wealthy: Measurement and Implications (with John Guyton (IRS), Patrick Langetieg (IRS), Max Risch (Michigan) & Gabriel Zucman (UC-Berkeley)) online at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Brian Galle:

This paper combines random audit data with new data on offshore bank accounts to estimate the size and distribution of individual income tax evasion in the United States. Evasion through offshore financial institutions is highly concentrated at the very top of the income distribution. Random audits virtually never detect this form of evasion. Data from random audits alone suggests an increasing rate of tax evasion through the income distribution up to the 99th percentile, but a sharp drop-off in the rate of evasion with income within the top 1 percent. Accounting for evasion through offshore financial institutions partly reverses this drop-off in the rate of evasion at the top, leading us to revise upwards random-audit estimates of the tax gap for very-high-income earners by 4 to 6 percentage points.

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Universal Basic Income And The Value Of Work Beyond Incentives

Jonathan Grossberg (Robert Morris), Something for Nothing: Universal Basic Income and the Value of Work Beyond Incentives, 26 Wash. & Lee J. Civ. Rts. & Soc. Just. 1 (2019):

Proponents and opponents of a universal basic income all acknowledge that the most significant political challenge to its adoption in the United States is that a universal basic income would not have a work requirement attached. Often, this is characterized as a problem involving incentives—the availability of a universal basic income would cause many people to stop working (or significantly curtail the number of hours that they work) and simply live off the universal basic income. This Article makes three contributions to the literature related to a universal basic income: first, it provides a typology for understanding the many reasons for valuing work; second, it argues that the United States is unlikely to implement a universal basic income because a universal basic income does not account for several aspects of the value of work; and, third, it argues that advocates of a universal basic income should instead focus on the more modest goal of redefining the activities that constitute work and broadening the social safety net by expanding existing policies through the use of a broader definition of work.

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Lesson From The Tax Court: The Long And Short Of CDP

I call it Collection Delay Process for a reason.  Two recent cases are bookend lessons on the speed of CDP.  These two cases suggest that the fastest CDP resolution one can reasonably expect is 2 years, but one can push that to 7-8 years depending on the complexity of the case and persistence of the taxpayer. 

First, Do S. Wong v. Commissioner, T.C. Memo 2020-32 (March 5, 2020) (Judge Lauber) is one of the shorter CDP timelines I’ve seen, with a correspondingly short opinion of 12 pages.  There, the taxpayer was able to stop active collection for about 2 years.

Second, Ronald M. Goldberg v. Commissioner, T.C. Memo 2020-38 (April 2, 2020) (Judge Morrison) is one of the longer CDP timelines I’ve seen, with a correspondingly long opinion of 163 pages.  There, the taxpayer was able to stop active collection for 7.5 years.

What each of these taxpayers gained in delay, however, is somewhat offset by the simultaneous extension of the collection limitations period.  As a result Mr. Wong's 2013 liability and Mr. Goldberg's much older 2004 liability are both now likely collectible through 2029.  The IRS may continue with enforced collection for both but one taxpayer will owe more in penalties and interest because of the longer delay.  Next week we will consider a lesson that Goldberg teaches on interest (unless a more interesting lesson comes up).  Today, however, I just present these cases to illustrate what practitioners might expect in the CDP process.

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Lipman: State Tax Takeaways And Child Tax Credits

Francine J. Lipman (UNLV), State Tax Takeaways, in Holes in the Safety Net: Federalism and Poverty (Ezra Rosser (American) ed. Cambridge University Press 2020):

While the aggregate tax system is mildly progressive, state and local tax systems are notably regressive. The lowest 95 percent of all income earners pay on average a higher percent of their income in state and local taxes than their share of aggregate income. By comparison, the top 5 percent of all income earners pay a lower percent of their income in state and local taxes than their aggregate share of household income. As a result, the lowest quartile of income earners pays a higher effective tax rate than the highest 1 percent of all income earners. The ratio of effective state and local tax rates for lowest income to highest income taxpayers is as high as 7 times in Wyoming, Washington and Florida. None of these states has an income tax so they rely heavily on regressive consumption tax revenues. For state and local governments this is a no-win race to the bottom because as income becomes increasingly concentrated among the wealthy, consumption and state and local tax revenues decrease.

This chapter reviews the basic components of state and local tax systems focusing on their many regressive attributes and make suggestions on how states might improve them. American has fifty state tax laboratories plus the District of Columbia that offer a myriad of dynamic time-tested tax structures. Nearly every state currently taxes lower-income families at a higher effective tax rate than higher income families. On average, the lowest income families are paying state and local taxes at an effective rate that is twice as high as the rate that the top 1 percent of income households enjoy. “Identifying state tax trends serves a dual purpose: first, as a leading indicator providing a sense of what we can expect in the coming months and years, and second, as a set of case studies, placing ideas into greater circulation and allowing empirical consideration of what has and has not worked.” As state and local governments continue to confront tax reform in these resource challenging times this chapter serves as a guide for front line progressive tax innovations, justice, and equity for all.

Francine J. Lipman (UNLV) & James E. Williamson (San Diego State), Child Tax Credit Redux, 165 Tax Notes 1303 (Nov. 25, 2019):

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Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Mason's What The CJEU’s Hungarian Cases Mean For Digital Taxes

This week, Hayes Holderness (Richmond) reviews Ruth Mason (Virginia), What the CJEU’s Hungarian Cases Mean for Digital Taxes:

Long before the current crisis ramped up fiscal pressure on nations and states, governments have sought to tax the foreigner rather than those at home. Coordination between nations and states has sought to limit the ability of governments to engage in such protectionist or discriminatory taxation; the European Union’s protection of fundamental freedoms and the United States’ Commerce Clause (at least in its dormant capacity) serve as examples. As governments begin considering and adopting digital taxes, such as France’s Digital Services Tax, these coordinated efforts may prevent those governments from utilizing those taxes in protectionist ways by discriminating against out-of-state taxpayers. Indeed, France’s Digital Services Tax has been challenged for exactly that reason because the tax appears to target United States companies while failing to capture most French companies.

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Avi-Yonah Presents Tax Expenditures Online Today At British Columbia

Reuven S. Avi-Yonah (Michigan) and Nir Fishbien (S.J.D. 2020, Michigan) present Tax Expenditures and Horizontal Equity: A Lost Lesson from Stanley Surrey online at University of British Columbia Peter A. Allard School of Law as part of its Tax Law and Policy Workshop Speaker Series (poster) hosted by Wei Cui:

Tax expenditures are “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.’’ The concept of tax expenditures was coined by the first Assistant Secretary for Tax Policy, Stanley S. Surrey, in the late 1960s. The concept relies on the Haig-Simons definition of income (with certain adjustments) as the baseline, a deviation from which is considered a tax expenditure.

There are two basic problems with attempts to define tax expenditures against a Haig-Simons baseline. First, it is not clear why the Haig-Simons, and not other definitions of income, should be used as a baseline. Second, it is not clear why such deviations are normatively problematic. That, presumably, is why the literature now accepts the view we should just learn to live with the tax expenditures. Surrey would have disagreed, and this article represents an attempt to recapture his original view of tax expenditures and assess its present-day implications.

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Osofsky Presents Automated Legal Guidance Online Today At Duke

Leigh Osofsky (North Carolina) presents Automated Legal Guidance, 106 Cornell L. Rev. __ (2020) (with Joshua Blank (UC-Irvine)) online at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

Through online tools, virtual assistants and other technology, governments increasingly rely on artificial intelligence to help the public understand and apply the law. The Internal Revenue Service, for example, encourages taxpayers to seek answers regarding various tax credits and deductions through its online “Interactive Tax Assistant.” The U.S. Army directs individuals with questions about enlistment to its virtual guide, “Sgt. Star.” And the U.S. Citizenship and Immigration Services suggests that potential green card holders and citizens speak with its interactive chatbot, “Emma.” Through such automated legal guidance, the government seeks to provide advice to the public at a fraction of the cost of employing human beings to perform these same tasks.

This Article offers one of the first critiques of these new systems of artificial intelligence. It shows that automated legal guidance currently relies upon the concept of “simplexity,” whereby complex law is presented as though it is simple, without actually engaging in simplification of the underlying law. While this approach offers potential gains in terms of efficiency and ease of use, it also causes the government to present the law as simpler than it is, leading to less precise advice, and potentially inaccurate legal positions. 

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Avi-Yonah: Using The Corporate Tax Rather Than Antitrust To Curb The Power Of Big Tech

Reuven S. Avi-Yonah (Michigan), Antitrust and the Corporate Tax: A Missed Opportunity?:

Big Tech have clearly become for early 21st century America what Standard Oil, U.S. Steel, and the railroads were to early 20th century America: The embodiment of corporate power that enjoys a near monopoly on an important segment of economic activity. In response, Sen. Elizabeth Warren (D-MA) has proposed to treat the Big Tech as common carriers (forbidding them from selling their own goods and services on their platforms) and force them to dispose of their recent anti-competitive acquisitions. There may, however, be another way of reining in the power of the Big Techs that is less drastic than breaking them up, and may be a helpful complement to antitrust enforcement. This way derives from the other early 20th century innovation that was intended in 1909 to curb the power of the monopolies: The corporate tax.

The corporate tax can limit corporate power in three ways. First, even a low rate corporate tax requires corporations to provide the government with detailed information about their activities that is hard to obtain without a corporate tax (e.g., it forces them to calculate profits per taxing jurisdiction, which they may not otherwise do). Second, potentially the corporate tax, like any tax, involves the power to destroy if the rate is high enough. The knowledge that this could happen may limit the aggressiveness of corporate management (i.e., in the case of the Big Techs, their founders). Third and most important, the corporate tax can be used as a regulatory device, with the effective rate being raised or lowered either for specific desirable or undesirable activities (e.g., maintaining or compromising privacy) or in response to an overall corporate social responsibility score.

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Wealth Taxes And Capital Markets

John D. Stowe (Ohio University), Wealth Taxes and Capital Markets:

Wealth taxes have been adopted or considered as an adjunct to existing tax systems such as income taxes, property taxes, and consumption taxes. Discussions about a wealth tax are usually a mixture of political, social, and economic issues, with many of the published papers designed to serve an author’s agenda. The purpose of this note is to leave many of these issues behind and to focus on the effects of a wealth tax on capital markets.

Highlights

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Miller & Maine: Wealth Transfer Tax Planning After The Tax Cuts and Jobs Act

John A. Miller (Idaho) & Jeffrey A. Maine (Maine), Wealth Transfer Tax Planning after the Tax Cuts and Jobs Act, 2020 BYU L. Rev. ___:

On December 17, 2017, Congress passed the Tax Cuts and Jobs Act (TCJA). Among its many impacts, the TCJA increased the inflation adjusted estate tax basic exclusion amount to $10,000,000 on a temporary basis. This has dramatic implications for many existing and future estate plans, including a major crossover impact on income tax planning. In this article we explain the operation of the federal wealth transfer taxes (the estate tax, the gift tax and the generation skipping transfer tax) in the wake of the TCJA and of the newly issued regulations interpreting the TCJA changes. We also explain the basic tax planning techniques for wealth transmission. The overall design of this article is to bring the reader into the current wealth transfer tax planning picture while providing references to more detailed treatments of particular topics within this broad field.

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Satterthwaite Presents Tax Status As A Signal Online Today At Georgetown

Emily Satterthwaite (Toronto) presents Tax Status as a Signal online at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Brian Galle:

Can an entrepreneur’s choice of tax status act as a signal that conveys valuable private information about her firm in a real-world marketplace?There have been hints that this happens, but exactly how such signaling would work and whether it is normatively desirable has received little scholarly attention. Building on recent survey evidence that small-firm entrepreneurs may view voluntary value-added tax (“VAT”) registration as a way to secure reputational advantages, this paper applies the costly signaling model of Spence (1973) to propose a novel informational account of firms’tax status choices in the context of a VAT. It explores whether an entrepreneur’s choice to voluntarily VAT-register her small firm might function as a signal of the firm’s quality in much the same way that a job applicant’s investment in education can function as a signal of the applicant’s productivity.

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Polsky Presents Explaining Choice-Of-Entity Decisions By Silicon Valley Start-Ups Online Today At BYU

Gregg Polsky (Georgia) presents Explaining Choice-of-Entity Decisions by Silicon Valley Start-Ups online at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

Perhaps the most fundamental role of a business lawyer is to recommend the optimal entity choice for nascent business enterprises. Nevertheless, even in 2018, the choice-of-entity analysis remains highly muddled. Most business lawyers across the United States consistently recommend flow-through entities, such as limited liability companies and S corporations, to their clients. In contrast, a discrete group of highly sophisticated business lawyers, those who advise start-ups in Silicon Valley and other hotbeds of start-up activity, prefer C corporations.

Prior commentary has described and tried to explain this paradox without finding an adequate explanation. These commentators have noted a host of superficially plausible explanations, all of which they ultimately conclude are not wholly persuasive. The puzzle therefore remains.

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Lesson From The Tax Court: One Plus One Equals One

Author’s Note: Like so many others I am now working from home and climbing various learning curves, some steeper than others.  So please accept my apologies if today’s post contains more errors than normal.  Hopefully they will just be errors of the fingers and not of the brain.  

The case of Sean McNamee v. Commissioner, T.C. Memo. 2020-37 (Mar. 18, 2020) (Judge Lauber) teaches us that taxpayers have only one opportunity to challenge a tax liability in a Collection Due Process (CDP) hearing, even though the Tax Code provides for up to two CDP hearings for any given tax liability.  In today's case the IRS erroneously refused to let Mr. McNamee challenge a tax liability in his first CDP hearing.  He did not obtain Tax Court review of that decision.  Instead, he re-challenged the liability in a second, later, CDP hearing involving the same underlying liability.  Mistake.  The Court held that even though the IRS screwed up the first time, the taxpayer’s failure to obtain judicial review of the first hearing precluded him from challenging the underlying liability in the second.  The lesson here centers on a tricky quirk in the CDP rules.  Details below the fold.   

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Auerbach Presents U.S. Inequality And Fiscal Progressivity: An Intragenerational Accounting Online Today At British Columbia

Alan Auerbach (UC-Berkeley) presents U.S. Inequality And Fiscal Progressivity: An Intragenerational Accounting (with Laurence J. Kotlikoff (Boston University) & Darryl Koehler (Economic Security Planning)) online at University of British Columbia Peter A. Allard School of Law as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

This study measures inequality and fiscal progressivity. It differs from prior such analyses by measuring inequality based on remaining lifetime spending rather than particular resources, like wealth and current income, that only partially determine lifetime spending, and by considering inequality and progressivity within generations.

To estimate the distribution of remaining lifetime spending, we run the 2016 Federal Reserve Survey of Consumer Finances (after imputing missing data from other surveys) through The Fiscal Analyzer (TFA), a life-cycle consumption-smoothing program that incorporates remaining life-time resources, borrowing constraints and all major federal and state tax and transfer programs.

We find that inequality in wealth and income dramatically overstate inequality in remaining lifetime spending. For example, the richest 1 percent of forty year olds, where resources are measured as the sum of human plus non-human wealth, have 34.1 percent of the cohort’s total non-human wealth, but account for only 14.5 percent of the cohort’s total remaining lifetime spending. The poorest quintile of forty year olds own just 0.6 percent of the cohort’s wealth, but account for 7.3 percent of its remaining lifetime spending.

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De La Feria Presents The Impact Of Public Perceptions On VAT Rates Policy Online Today At Indiana

Rita de la Feria (University of Leeds) presents The Impact of Public Perceptions on VAT Rates Policy (with Michael Walpole (University of New South Wales)) online at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

The traditional view in VAT is that excluding certain products from its base decreases the natural regressivity of the tax. Whilst this traditionally view has been consistently put into question over the last thirty years by economic and legal evidence, public perceptions are still heavily influenced by it. Using the old European VAT system and the newer Australian VAT system as case studies we demonstrate how policy debates and changes as regards VAT rates have been heavily influenced by those public perceptions, against the evidence, and how industry groups, which would be set to lose out from specific policies, are able to use the information asymmetry subjacent to those perceptions to defend their interest in favour or against reform.

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Pepperdine Symposium: The Impact Of The 2017 Tax Act On Income And Wealth Inequality — Lessons For 2020 And Beyond

Due to the coronavirus, we had to cancel today's Pepperdine Law Review Symposium, The Impact of the 2017 Tax Act on Income and Wealth Inequality: Lessons For 2020 And Beyond. We are incredibly disappointed that we did not get to spend the day with these wonderful tax scholars and show off our beautiful law school, campus, and city. I feel especially bad for 3L Nicole Mitchell, the law review's symposium editor who conceived of the topic (after our Tax Policy class last Spring), selected and invited the speakers, and made all of the travel, hotel, and restaurant arrangements. However, we are delighted that many of the participants will be publishing their papers in the symposium issue of our law review.

Thomas Presents Taxing Nudges Online Today At Duke

Kathleen Delaney Thomas (North Carolina) presents Taxing Nudges at Duke yesterday as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

Governments are increasingly turning to behavioral economics to inform policy design in areas like health care, the environment, and financial decision-making. Research shows that small behavioral interventions, referred to as “nudges,” often produce significant responses at a low cost. The theory behind nudges is that, rather than mandating certain behaviors or providing costly economic subsidies, modest initiatives may “nudge” individuals to choose desirable outcomes by appealing to their behavioral preferences. For example, automatically enrolling workers into savings plans as a default rather than requiring them to actively sign up has dramatically increased enrollment in such plans. Similarly, allowing individuals to earn “wellness points” from attendance at a gym, redeemable at various retail establishments, may improve exercise habits.

A successful nudge should make a desired choice as simple and painless as possible. Yet one source of friction may counteract an otherwise well-designed nudge: taxation.

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Taxation Without Immunization: Exercising The Federal Taxing Power To Increase Childhood Vaccination Rates

Nicholas R. Consalvo (J.D. 2020, Florida), Note, Taxation Without Immunization: Exercising the Federal Taxing Power to Increase Childhood Vaccination Rates, 71 Fla. L. Rev. 1513 (2019):

This Note will discuss the need to exercise the taxing power of the federal government in an effort to restore immunization rates to their historically high levels. Recent spikes in unvaccinated children have resulted in global outbreaks of diseases that were near elimination. This Note’s solution to the growing anti-vaccination movement is the implementation of a federal tax plan targeted at parents who—without a valid medical exemption—refuse to vaccinate their children against specific classes of vaccine-preventable diseases. This federal tax plan could take the form of an income-based tax, or loss of child tax credits, enforced against parents based on the age and amount of time their child has remained unvaccinated.

Global efforts to increase vaccination rates and fight outbreaks have already resulted in similar fines and taxes as those advocated in this Note. Currently, the entire public is responsible for the burden of funding initiatives to treat and prevent outbreaks caused by parents who abuse nonmedical exemptions to evade existing vaccination mandates. That burden must shift and fall only upon the individuals who refuse to acknowledge that immunizing against vaccine-preventable diseases is a fundamental necessity for preserving public health.

Kamin Presents How Far To Go In Reforming Taxation Of Wealth? Online Today At UC-Irvine

David Kamin (NYU) presents How Far to Go in Reforming Taxation of Wealth? online at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

Reforming the taxation of wealth of individuals is now one of the leading issues among progressive policymakers. It is being prominently discussed on the presidential campaign trail and in the halls of Congress, as a way of addressing our failure to effectively tax some of the richest Americans. Most of these proposals involve significant changes, but some go much further than others and involve more dramatic reforms. The more fundamental reform options come in two basic varieties—annual wealth taxation and accrual income taxation, sometimes known as mark-to-market income taxation. By contrast, the more incremental reforms focus on more targeted changes to the current system with a focus on two key areas: step-up in basis at death and estate and gift taxation. A key question then is how far to go in reforming the taxation of wealth.

This paper presents a qualified case for pursuing the fundamental reform options at least eventually, either annual wealth taxation or accrual taxation.

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Brooks Presents Redesigning Education Finance: How Student Loans Outgrew the 'Debt' Paradigm Online Today At Georgetown

John Brooks (Georgetown) presents Redesigning Education Finance: How Student Loans Outgrew the "Debt" Paradigm, 109 Geo. L.J. ___ (2019) (with Adam J. Levitin (Georgetown)), online at Georgetown today as part of its Tax Law and Public Finance Workshop Series:

Federal student loans are fundamentally different from any other type of credit product: they do not require the full repayment of all principal and accrued interest. Instead, borrowers have the contractual right to satisfy their obligations by paying only a percentage of their income for a fixed period of time. In other words, debt forgiveness is contractually baked into the student loan product.

This and other unusual features of federal student loans reveal that the economic structure of student loans has evolved to resemble a federal grant program coupled with a progressive income-based tax on recipients, rather than a true debt product. The education finance system, however, still relies on the legal, financial, and institutional apparatus of “debt” that developed under the pre-2010 structure of the education finance system, which was based on private loans backed by federal government guarantees, rather than today’s direct federal lending program. These legal, financial, and institutional structures are a mismatch with the current program’s economic realities and policy goals.

This Article argues that nearly all of the problems in education finance, including high levels of default, abusive servicing, and even the very idea of a student debt crisis arise from the frictions between the legal and institutional apparatus of “debt” and the economic reality of subsidized finance and progressive, income-based repayment and debt forgiveness.

Accordingly, this Article argues for calling federal student loans what they really are—a tuition grant plus an income surtax on students.

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Avi-Yonah: BEPS And The TCJA

Reuven S. Avi-Yonah (Michigan), Constructive Dialogue: BEPS and the TCJA:

US international tax law is commonly conceived as developed in the US and influencing the development of other countries' international tax law. This paper will argue that in the case of the TCJA, the US legislation was heavily influenced by the OECD BEPS project, and that the continuing OECD work in Pillars I and II is likely to have a similar influence on the future development of US international tax law.

Bearer-Friend Presents In-Kind Taxpaying: Lessons And Risks Online Today At BYU

Jeremy Bearer-Friend (George Washington) presents In-Kind Taxpaying: Lessons and Risks online at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

This Article examines non-cash remittance of tax obligations (ie; paying taxes "in-kind"). It begins by defining in-kind taxpaying, describing the early roots of in-kind taxpaying, and documenting the broad variety of inkind taxpaying in the US. It then discusses the lessons and risks of in-kind taxpaying. In doing so, this Article makes three contributions. First, it improves our definition of taxpaying by identifying the wide variety of inkind remittances that already occur in our current tax system, offering a taxonomy for how to understand in-kind remittances within a modern economy that relies primarily on cash taxes. Second, it refutes the presumption that in-kind remittance of tax obligations is not viable, thus expanding the tax tools available to local, state, and federal governments and demonstrating how narrow presumptions about tax remittance have predetermined core tax policy choices. Third, it confronts the substantial dangers of in-kind taxpaying, using these risks to propose new principles for limiting the design and administration of in-kind taxpaying.

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Lesson From The Tax Court: Last Known Address Rules And The Rule Of Law

Celebrities are often hard to contact.  “Call my agent” is their standard line.  When do that on their tax returns, they should know that the last known address rules apply to celebrities the same as to regular folk.  That is the lesson in Duane Lee Chapman and Alice E. Smith, Deceased v. Commissioner, T.C. Memo. 2019-110 (Aug. 29, 2019) (Judge Ashford).  There, the taxpayers—famous from the TV reality show Dog the Bounty Hunter—put their agents’ address on their tax returns.  It cost them the opportunity to contest tax liabilities in Tax Court.

The case also shows us another meaning of the term Rule of Law.  That is why I am presenting this case today, as a follow-up on last week’s lesson.  Details below the fold. 

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The Top Five New Tax Papers

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

1. [332 Downloads]  A New Global Tax Deal for the Digital Age, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
2. [154 Downloads]  From Tax Policy to Social Insurance, by Edward Kleinbard (USC)
3. [149 Downloads]  Important Developments in Federal Income Taxation, by Edward Morse (Creighton)
4. [142 Downloads]  Wealth Tax Design: Lessons from Estate Tax Avoidance, by Jason Oh (UCLA) & Eric Zolt (UCLA)
5. [124 Downloads]  The OECD Unified Approach: Nexus, Scope, and Coexisting With DSTs, by Assaf Harpaz (S.J.D. 2020, Duke)

Book & Ames: The Morass Of The Anti-Injunction Act

Leslie Book (Villanova) & Marilyn Ames (IRS Office of Chief Counsel (retired)), The Morass of the Anti-Injunction Act: a Review of the Cases and Major Issues, 73 Tax Law. ___ (2020):

As Congress gives the Internal Revenue Service more tasks to perform beyond its function of assessing and collecting taxes, courts, practitioners, and academics are struggling to apply the Anti-Injunction Act (AIA) as the IRS promulgates procedures in the course of fulfilling new mandates. The AIA has its origins in the post-Civil War era when the federal government established new procedures ensuring the assessment and collection of taxes. It may seem odd an over 150-year old provision is fueling a growing number of contested and controversial disputes. Yet, the AIA has taken on renewed importance as courts consider challenges to tax regulations and guidance, fueled in part by the increasing importance of administrative law in issues of tax procedure and administration.

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Polsky Presents Taxing Buybacks At Duke

Gregg Polsky (Georgia) presented Taxing Buybacks (with Daniel Hemel (Chicago)) at Duke yesterday as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

A recent rise in the volume of corporate share repurchases has prompted calls for changes to the rules governing stock buybacks. These calls for reform are animated by concerns that buybacks enrich corporate executives at the expense of productive investment. This emerging anti-buyback movement includes presidential candidates as well as academics and Republicans as well as Democrats. The primary focus of buyback critics has been on securities law changes to deter repurchases, with only passing mention of potential tax law solutions.

This article critically examines the policy arguments against buybacks and arrives at a mixed verdict. On the one hand, claims that buybacks reduce corporate investment and inappropriately reward executives turn out to be poorly supported. On the other hand, the article identifies legitimate tax-related concerns about the rising buyback tide. Buybacks exacerbate two of the U.S. tax system’s most severe flaws. The first is the “Mark Zuckerberg problem”: the effective nontaxation of firm founders on what is essentially labor income. The second is what we call the “Panama Papers problem”: the use of U.S. capital markets by investors in offshore tax havens to generate tax-free returns.

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Hickman: Justice Gorsuch And Waiving Chevron

Kristin E. Hickman (Minnesota), Justice Gorsuch and Waiving Chevron:

The Supreme Court has denied certiorari in Guedes v. Bureau of Alcohol, Tobacco, Firearms & Explosives, also known as the bumpstocks case. The D.C. Circuit relied on Chevron deference in upholding the regulations banning bumpstocks. In a statement respecting the denial of certiorari, Justice Gorsuch objected to the D.C. Circuit’s reliance on Chevron deference.

One of Justice Gorsuch’s reasons for objecting to Chevron deference in Guedes is well known to Chevron observers. Specifically, the interpretation of the relevant statute contained in the regulation could lead to criminal penalties in the future. I wrote about this concern many years ago. Since then, Judge Jeffrey Sutton of the Sixth Circuit has written eloquently about this issue, first in Carter v. Welles-Bowen Realty, and subsequently in Esquivel-Quintana v. Lynch, arguing that the rule of lenity should take precedence over Chevron deference. The Supreme Court dodged that issue in Esquivel-Quintana by concluding that the statute in that case was otherwise clear. Oddly, although Justice Gorsuch in his Guedes statement cited Judge Sutton’s opinion in Esquivel-Quintana, Justice Gorsuch did not mention the rule of lenity by name. The Supreme Court’s statements regarding Chevron, civil cases, and the rule of lenity have been mixed over the years. In 2014, in a statement regarding the Supreme Court’s denial of certiorari in Whitman v. United States, Justice Scalia called upon the Court in future to consider whether courts “owe deference to an executive agency’s interpretation of a law that contemplates both criminal and administrative enforcement,” also citing Judge Sutton. Although Esquivel-Quintana did not yield such consideration, perhaps Justice Gorsuch’s statement in Guedes will prompt litigants to try again regarding the relationship between Chevron and lenity. ...

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Galle Presents Taxing (And Regulating) Mass Fundraising Online At BYU

Brian Galle (Georgetown) presented The Kindness of Strangers: Taxing (and Regulating) Mass Fundraising at BYU yesterday as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

This is another story about law and time. Once, the giving of gifts was an intimate act. A gift was a kiss or a handshake in another form: it built trust, cemented alliances, celebrated bonds of love and friendship. Today, money is Popped, it is Zelle’d; it is bundled by ActBlue or Gofundme. Transfers that are unearned by labor or mutual exchange now occur remotely between strangers, and at scales that were unimaginable a few decades ago. Law quite simply has not kept up. My focus here will be on the taxation of gifts, but my analysis will stretch from that humble subject to sweep in global inequality, campaign finance, and the legal architecture of crowdfunding.

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Avi-Yonah: Why Study Tax History?

Reuven S. Avi-Yonah (Michigan), Why Study Tax History? (reviewing Studies in the History of Tax Law, Vol. 9 (Peter Harris (Cambridge) &  Dominic de Cogan (Cambridge) eds. 2019)):

Since the beginning of this century, John Tiley organized an annual tax history conference at Cambridge, a tradition that was continued after his death under the leadership of Peter Harris. These are the papers from the ninth Cambridge Tax Law History Conference, held in July 2018. In the usual manner, the papers have been selected from an oversupply of proposals for their interest and relevance, and scrutinized and edited to the highest standard for inclusion in this prestigious series. The result is an outstanding book, with many high quality contributions to historical tax research.

The papers fall within five basic themes. Four papers focus on tax theory: Bentham; social contract and tax governance; Schumpeter's 'thunder of history'; and the resurgence of the benefits theory. Three involve the history of UK specific interpretational issues: management expenses; anti-avoidance jurisprudence; and identification of professionals. A further three concern specific forms of UK tax on road travel, land and capital gains. One paper considers the formation of HMRC and another explains aspects of nineteenth-century taxation by reference to Jane Austen characters. Four consider aspects of international taxation: development of EU corporate tax policy; history of Dutch tax planning; the important 1942 Canada–US tax treaty; and the 1928 League of Nations model tax treaties on tax evasion. Also included are papers on the effects of WWI on the New Zealand income tax and development of anti-tax avoidance rules in China.

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SSRN Tax Professor Rankings

SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through March 2, 2020) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

		All-Time		Recent
1	Reuven Avi-Yonah (Michigan)	188,632	Reuven Avi-Yonah (Michigan)	6,685
2	Dan Shaviro (NYU)	120,177	David Kamin (NYU)	5,140
3	David Gamage (Indiana-Bloom.)	116,200	Lily Batchelder (NYU)	5,062
4	Lily Batchelder (NYU)	115,955	Daniel Hemel (Chicago)	4,239
5	Daniel Hemel (Chicago)	115,111	Bridget Crawford (Pace)	3,242
6	Darien Shanske (UC-Davis)	109,563	David Gamage (Indiana-Bloom.)	3,122
7	David Kamin (NYU)	104,519	Dan Shaviro (NYU)	2,604
8	Cliff Fleming (BYU)	104,395	Darien Shanske (UC-Davis)	2,406
9	Manoj Viswanathan (UC-Hastings)	101,715	Manoj Viswanathan (UC-Hastings)	2,284
10	Rebecca Kysar (Fordham)	100,562	Richard Ainsworth (BU)	2,214
11	Ari Glogower (Ohio State)	99,333	Ari Glogower (Ohio State)	2,001
12	Michael Simkovic (USC)	44,042	D. Dharmapala (Chicago)	1,996
13	D. Dharmapala (Chicago)	38,290	Ruth Mason (Virginia)	1,996
14	Paul Caron (Pepperdine)	36,475	Robert Sitkoff (Harvard)	1,947
15	Louis Kaplow (Harvard)	32,829	Louis Kaplow (Harvard)	1,890
16	Richard Ainsworth (BU)	29,228	Rebecca Kysar (Fordham)	1,885
17	Ed Kleinbard (USC)	26,574	Brad Borden (Brooklyn)	1,847
18	Vic Fleischer (UC-Irvine)	25,980	Hugh Ault (Boston College)	1,793
19	Jim Hines (Michigan)	24,912	Yariv Brauner (Florida)	1,788
20	Gladriel Shobe (BYU)	24,117	Cliff Fleming (BYU)	1,757
21	Ted Seto (Loyola-L.A.)	24,100	Michael Simkovic (USC)	1,636
22	Brad Borden (Brooklyn)	24,070	Paul Caron (Pepperdine)	1,323
23	Robert Sitkoff (Harvard)	23,785	Margaret Ryznar (Indiana-Indy)	1,282
24	Richard Kaplan (Illinois)	23,652	Leandra Lederman (Indiana Bloom.)	1,207
25	Katie Pratt (Loyola-L.A.)	23,022	Kyle Rozema (Washington U.)	1,152

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Kysar Presents Interpreting By the Rules Online At Georgetown

Rebecca M. Kysar (Fordham) presented Interpreting By the Rules online at Georgetown yesterday as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Brian Galle:

A promising new school of statutory interpretation has emerged that tries to wed the work of Congress with that of the courts by tying interpretation to congressional process. The primary challenge to this process-based interpretive approach is the difficulty in reconstructing the legislative process. Scholars have proposed leveraging Congress’s procedural frameworks and rules as reliable heuristics to that end. This Article starts from that premise but will add wrinkles to it. The complications stem from the fact that each rule is adopted for distinct reasons and is applied differently across contexts. As investigation into these particularities proceeds, it becomes apparent that the complications are also rooted in something deeper—that Congress’s procedures are often hollow, even fraudulent. Congress, it turns out, breaks its own rules with impunity.

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Cauble: Time For A Tax Return Filing Fee

Emily Cauble (DePaul), Time for a Tax Return Filing Fee, 57 Harv. J. on Legis.  ___ (2020):

The IRS faces the monumental task of verifying, to the extent possible, the tax consequences reported on the hundreds of millions of tax returns filed each year. It does so with meager and shrinking resources. Some taxpayers burden the filing system more than others. At one extreme, a taxpayer who earns only income that is subject to third-party reporting and withholding and who claims the standard deduction adds very little to the IRS’s burden. At the other end of the extreme, a large business engaged in numerous complex transactions the tax treatment of which are not free from doubt demands significant resources if that taxpayer’s claimed tax outcomes are fully examined. In light of this landscape, this Article makes the novel proposal that Congress require payment of a tax return filing fee by some taxpayers. The amount of the fee would vary based on some of the factors that make each taxpayer more or less difficult to audit, with carveouts for difficult-to-audit items that are disproportionately claimed by lower-income individuals.

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Regulating In A Pandemic: Evaluating Economic And Financial Policy Responses To The Coronavirus Crisis

Hiba Hafiz, Shu-Yi Oei, Diane M. Ring & Natalya Shnitser (all of Boston College), Regulating in Pandemic: Evaluating Economic and Financial Policy Responses to the Coronavirus Crisis:

The United States is currently trying to manage a fast-moving public health crisis due to the coronavirus outbreak (COVID-19). The economic and financial ramifications of the outbreak are serious. This Working Paper discusses these ramifications and identifies three interrelated but potentially conflicting policy priorities at stake in managing the economic and financial fallout of the COVID-19 crisis: (1) providing social insurance to individuals and families in need; (2) managing systemic economic and financial risk; and (3) encouraging critical spatial behaviors to help contain COVID-19 transmission. The confluence of these three policy considerations and the potential conflicts among them make the outbreak a significant and unique regulatory challenge for policymakers, and one for which the consequences of getting it wrong are dire.

This Working Paper—which will be continually updated to reflect current developments—will analyze the major legislative and other policy initiatives that are being proposed and enacted to manage the economic and financial aspects of the COVID-19 crisis by examining these initiatives through the lens of these three policy priorities.

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Field: Tax Lawyers As Tax Insurance

Heather M. Field (UC-Hastings), Tax Lawyers as Tax Insurance, 60 Wm. & Mary L. Rev. 2111 (2019) (reviewed by Sloan Speck (Colorado) here):

Transactional tax lawyers, by rendering tax opinions, provide a version of insurance to clients. This insurance is clearly incomplete, but by providing a tax opinion, a lawyer conditionally agrees to indemnify the client for at least part of the potential loss the client incurs if the favorable tax treatment described in the opinion is successfully challenged. Although insurance is not the primary function of transactional tax lawyers, and although this Article does not argue that tax opinions should be regulated as insurance, indemnification — a key element of insurance — is an important part of the economic relationship between a client and a lawyer who provides a tax opinion. Surprisingly, this insurance-like function has been largely overlooked in the literature. Thus, by identifying and exploring the insurance-like aspect of the transactional tax lawyer’s role, this Article fills a gap in the literature and offers a new framework for understanding the value of tax lawyers.

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Homeownership Tax Subsidies And Structural Racism

Victoria J. Haneman (Creighton), Contemplating Homeownership Tax Subsidies and Structural Racism, 54 Wake Forest L. Rev. 363 (2019):

An insidious form of racism is facilitated by those who are heedless of structural inequities — or in this instance, the fact that legal structures have been developed to protect the experiences of those who are white, with an underlying obliviousness to the fact that persons of color may have a different experience. Almost 80% of the United States’ four centuries of existence has involved racialized slavery and extreme racial segregation. The subject of structural discrimination should be almost noncontroversial by this point: established social and political structures have been built upon a foundation of racial inequality, inherently conferring power and privilege to some, while perpetuating the marginalization of others. A system that treats equally those who are positioned unequally will only serve to exacerbate the pre-existing inequalities.

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McGovern, Brewer & Delaney: 2019 Federal Income Tax Developments

Bruce A. McGovern (South Texas), Cassady V. Brewer (Georgia State) & James M. Delaney (Wyoming), Recent Developments in Federal Income Taxation: The Year 2019, 73 Tax Law. ___ (2020):

This article summarizes and provides context to understand the most important developments in federal income taxation for the year 2019. The items discussed primarily consist of the following: (i) significant amendments to the Internal Revenue Code; (ii) important judicial decisions; and (iii) noteworthy administrative rulings and regulations promulgated by the Service and the Treasury Department. This article primarily focuses on subjects of broad general interest — tax accounting rules, determination of gross income, allowable deductions, treatment of capital gains and losses, corporate and partnership taxation, exempt organizations, and procedure and penalties.

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Lesson From The Tax Court: The Two Postmark Rule And The Rule Of Law

Taxpayer petitions must still be filed in hard copy.  So you still need to understand the §7502 mailbox rules and the case of Sara M. Thomas and David A. Thomas v. Commissioner, T.C. Memo. 2020-33 (Mar. 11, 2020) (Judge Vasquez) teaches us a useful lesson.  There, taxpayers mailed their petition on March 5, 2018, the last day of the 90 day period.  When received by the Tax Court the envelope had two postmarks, one from a private postage meter that read “March 5” and one from the USPS that read “March 6.”  Relying on the applicable regulation, the Court said it was the USPS postmark that counted and dismissed the case for being filed late.

At one level this case is a straightforward lesson about the mailbox rules.  But it also illustrates one meaning of the phrase “Rule of Law.”  You would not think Tax Court opinions would deal with legal philosophy.  But they sometimes so.  Details below the fold.

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Brunson: God Is My Roommate? Tax Exemptions For Parsonages

Samuel D. Brunson (Loyola-Chicago), God Is My Roommate? Tax Exemptions for Parsonages Yesterday, Today, and (if Constitutional) Tomorrow:

In 2019, the Seventh Circuit decided an Establishment Clause question that had been percolating through the courts for two decades [Gaylor v. Mnuchin]. It held that the parsonage allowance, which permits “ministers of the gospel” to receive an untaxed housing allowance, does not violate the Establishment Clause of the Constitution. It grounded its conclusion in part on the “historical significance” test the Supreme Court established in its Town of Greece v. Galloway decision.

In coming to that conclusion, the Seventh Circuit cited a 200-year unbroken history of property tax exemptions for religious property. According to the Seventh Circuit, that history demonstrated that both the Founders and subsequent generations of Americans recognized that there was no constitutional problem with exempting parsonages.

The court’s historical significance analysis was fundamentally flawed, however.

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The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list, with some shuffling of the order within the Top 5:

1. [327 Downloads]  A New Global Tax Deal for the Digital Age, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
2. [153 Downloads]  From Tax Policy to Social Insurance, by Edward Kleinbard (USC)
3. [141 Downloads]  Important Developments in Federal Income Taxation, by Edward Morse (Creighton)
4. [136 Downloads]  Wealth Tax Design: Lessons from Estate Tax Avoidance, by Jason Oh (UCLA) & Eric Zolt (UCLA)
5. [128 Downloads]  Reversing the Fortunes of Active Funds, by Adi Libson (Bar-Ilan) & Gideon Parchomovsky (Pennsylvania)

Shaviro: Literature And Inequality

Daniel Shaviro (NYU), Literature and Inequality: Nine Perspectives from the Napoleonic Era Through the First Gilded Age (Anthem Press 2020):

We are an intensely social species, and often a rivalrous one, prone to measuring ourselves in terms of others, and often directly against others. Accordingly, relative position matters to our sense of wellbeing, although excluded from standard economic models that look only at the utility derived from own consumption of commodities plus leisure. For example, people can have deep-seated psychological responses to inequality and social hierarchy, creating the potential for extreme wealth differences to invoked feelings of superiority and inferiority, or dominance and subordination, that may powerfully affect how we relate to each other.

The tools that one needs to understand how and why this matters include the sociological and the qualitative. I use the particular tool of in-depth studies of particular classic works of literature (from Jane Austen’s Pride and Prejudice through Theodore Dreiser’s The Financier and The Titan) that offer suggestive insights regarding the felt experiences around high-end inequality at different times and from different perspectives.

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Shakow's Taxing Bitcoin And Blockchains

This week, Young Ran (Christine) Kim (Utah) reviews a new work by David J. Shakow (Pennsylavania), Taxing Bitcoin and Blockchains—What the IRS Told Us (and Didn't), 166 Tax Notes Fed. 241 (Jan. 13, 2020).

The IRS has issued two new guidance on tax issues related to Bitcoin and other cryptocurrencies–Notice 2014-21 and Rev. Rul. 2019-24. However, by no means, has the guidance answered all questions surrounding the tax treatment of cryptocurrencies. David Shakow's new work, Taxing Bitcoin and Blockchains—What the IRS Told Us (and Didn't), offers an excellent roadmap for those who would like to understand the tax issues of cryptocurrencies along with the recent IRS guidance.

To offer basic knowledge of the blockchain structure, Shakow starts with comparing a "Proof of Work" (PoW) structure with a "Proof of Stake" (PoS) structure. These two structures are used to confirm transactions of cryptocurrencies. Bitcoin uses a PoW consensus process, recording transactions in a "block," which is verified by miners through their work. That work requires the use of substantial computer and electric power. 

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Knoll & Mason: The Dormant Foreign Commerce Clause After Wynne

Michael S. Knoll (Pennsylvania) & Ruth Mason (Virginia), The Dormant Foreign Commerce Clause After Wynne, 41 Va. Tax Rev. ___ (2020):

This Article surveys dormant foreign Commerce Clause doctrine to determine what limits it places on state taxation of international income, both income earned by foreigners in a U.S. state, and income earned by U.S. residents abroad. Among our conclusions is that, just as the dormant interstate Commerce Clause forbids states from discriminating against interstate commerce, the dormant foreign Commerce Clause forbids states from discriminating against international commerce. We also consider differences between the interstate and foreign commerce contexts, including differences in the nationality of affected taxpayers and differences in the impact of state taxes on federal international tax policy goals.

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Hayashi & Hynes: Protectionist Property Taxes

Andrew T. Hayashi (Virginia) & Richard M. Hynes (Virginia), Protectionist Property Taxes:

National restrictions on trade and immigration are the most salient illustrations of the current protectionist moment, but cities have played their part too, taxing foreign investors in local real estate and imposing second or vacant home taxes that indirectly burden foreign investment. Although these protectionist property taxes are new, they draw from an old well of suspicion about foreign ownership. We provide economic and historical context for the recent wave of protectionist property taxes and evaluate their legality under U.S. law. We conclude that taxes on second or vacant homes would likely survive constitutional challenge but facially protectionist property taxes probably would not. We then assess the policy merits of these taxes using an economic framework that highlights how law affects housing risk.

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Haneman: Tax Incentives For Green Burial

Victoria J. Haneman (Creighton), Tax Incentives for Green Burial:

Every living being is doomed to decay and die and decay some more. Death is inevitable, and the disposal of our dead is a fundamental global activity with the potential to have significant environmental impact. In the United States, the environmental toxicity of “traditional” modern burial is stark. A cosmeticized body is pumped with three gallons of embalming fluid (containing chemicals such as formaldehyde) that eventually leaches through metal and wood and into the ground. An estimated 5.3 million gallons of embalming chemicals are buried annually in what are essentially luxury landfill-slash-golf-courses, with landscaping and grass to maintain and mow, in coffins that are typically constructed of nonbiodegradable chipboard. And while cremation is a more environmentally friendly alternative, incineration cremation falls short of being labeled “green.” Fire-based cremation utilizes significant resources and energy, attributable to the substantial quantity of fossil fuel required to burn human remains at 1,562° F (850° C) to reduce a corpse to ash. Pollutants are generated in doing so, including an average of 250,000 tons per year of carbon emissions and an estimated 320 to 6,000 pounds of mercury (from incineration of dental fillings) per year.

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Blank & Osofsky: Automated Legal Guidance

Joshua D. Blank (UC-Irvine) & Leigh Osofsky (North Carolina), Automated Legal Guidance, 106 Cornell L. Rev. ___ (2021):

Through online tools, virtual assistants and other technology, governments increasingly rely on artificial intelligence to help the public understand and apply the law. The Internal Revenue Service, for example, encourages taxpayers to seek answers regarding various tax credits and deductions through its online “Interactive Tax Assistant.” The U.S. Army directs individuals with questions about enlistment to its virtual guide, “Sgt. Star.” And the U.S. Citizenship and Immigration Services suggests that potential green card holders and citizens speak with its interactive chatbot, “Emma.” Through such automated legal guidance, the government seeks to provide advice to the public at a fraction of the cost of employing human beings to perform these same tasks.

This Article offers one of the first critiques of these new systems of artificial intelligence.

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Kim Presents The Digital Services Tax: A Cross-Border Variation Of The Consumption Tax Debate? At UC-Irvine

Young Ran (Christine) Kim (Utah) presented Digital Services Tax: A Cross-border Variation of Consumption Tax Debate? at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

The rise of highly digitalized businesses, such as Google and Amazon, has strained the traditional income tax rules on nexus and profit allocation. Traditionally, profit is allocated to market countries where consumers are located only if the business has physical presence. However, in the digital economy, profits can be easily generated in market countries without a physical presence, resulting in tax revenue loss for market countries.

In response, market countries have started imposing a new tax, called the digital services tax (“DST”), on certain digital business models, which has ignited heated debate across the globe. Supporters defend the DST, designed as a turnover style consumption tax, as an effective measure to make up the foregone revenue in the digital economy because it is not bound by the traditional rules of income taxation. Opponents criticize DST as “ring-fencing” or segregating certain digital business models, discriminating against American tech giants, and arguably imposing a disguised income tax. The debate has been focused on the imminent impact, such as who is the immediate winner and loser, but the discussion lacks efforts to understand the fundamentals of DST, especially with regard to the consumption tax aspect.

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Ring Presents Falling Short In The Data Age Today At UCLA

Diane Ring (Boston College) presents Falling Short in the Data Age (with Shu-Yi Oei (Boston College)) at UCLA today as part of its Colloquium on Tax Policy and Public Finance hosted by Kirk Stark and Jason Oh:

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

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

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Fordham Symposium: The Future Of The New International Tax Regime

Symposium, The Future of the New International Tax Regime, 24 Fordham J. Corp. & Fin. L. 219-319 (2019):

• Rosanne Altshuler (Rutgers)
• Jeffrey Colon (Fordham)
• Fadi Shaheen (Rutgers)
• Steven Dean (NYU)
• Michael Graetz (Columbia)
• Rebecca Kysar (Fordham)
• Susan Morse (Texas)
• Daniel Shaviro (NYU)

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