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 November 1, 2021) 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)	203,642	1	Reuven Avi-Yonah (Michigan)	8,180
2	Dan Shaviro (NYU)	123,837	2	Daniel Hemel (Chicago)	4,706
3	Lily Batchelder (NYU)	123,137	3	Lily Batchelder (NYU)	4,658
4	Daniel Hemel (Chicago)	122,232	4	David Kamin (NYU)	4,211
5	David Gamage (Indiana-Bloom.)	120,170	5	Bridget Crawford (Pace)	4,184
6	Darien Shanske (UC-Davis)	113,104	6	Kim Clausing (UCLA)	3,944
7	David Kamin (NYU)	110,865	7	D. Dharmapala (Chicago)	3,346
8	Cliff Fleming (BYU)	106,579	8	Ruth Mason (Virginia)	3,129
9	Manoj Viswanathan (UC-Hastings)	103,426	9	Richard Ainsworth (Boston Univ.)	2,682
10	Rebecca Kysar (Fordham)	102,517	10	David Gamage (Indiana-Bloom.)	2,632
11	Ari Glogower (Ohio State)	101,869	11	Zachary Liscow (Yale)	2,524
12	Michael Simkovic (USC)	46,038	12	Margaret Ryznar (Indiana-Indy)	2,390
13	D. Dharmapala (Chicago)	45,841	13	Darien Shanske (UC-Davis)	2,288
14	Paul Caron (Pepperdine)	38,834	14	Robert Sitkoff (Harvard)	2,264
15	Louis Kaplow (Harvard)	35,870	15	Dan Shaviro (NYU)	2,179
16	Richard Ainsworth (Boston Univ.)	33,587	16	Yariv Brauner (Florida)	2,152
17	Bridget Crawford (Pace)	29,420	17	Louis Kaplow (Harvard)	2,005
18	Ed Kleinbard (USC)	28,191	18	Hugh Ault (Boston College)	1,848
19	Vic Fleischer (UC-Irvine)	27,859	19	Ari Glogower (Ohio State)	1,772
20	Robert Sitkoff (Harvard)	27,335	20	Brad Borden (Brooklyn)	1,759
21	Brad Borden (Brooklyn)	27,066	21	Gregg Polsky (Georgia)	1,522
22	Jim Hines (Michigan)	26,180	22	Francine Lipman (UNLV)	1,481
23	Ted Seto (Loyola-L.A.)	25,257	22	Shu-Yi Oei (Boston College)	1,457
24	Ruth Mason (Virginia)	24,954	24	Michael Simkovic (USC)	1,416
25	Katie Pratt (Loyola-L.A.)	24,841	25	Vic Fleischer (UC-Irvine)	1,398

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Avi-Yonah: A Different Way to Tax Stock Buybacks

Reuven Avi-Yonah (Michigan), A Different Way to Tax Stock Buybacks, 173 Tax Notes Fed. 1107 (Nov. 22, 2021):

In this article, Avi-Yonah reviews the Build Back Better Act, which would impose a 1 percent excise tax on corporate stock buybacks. He argues that while the measure is an effective way to raise revenue from high-income taxpayers, it will not address the main tax problem with buybacks: the tax exemption for foreign shareholders, which Congress should reconsider.

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Salib: The Pigouvian Constitution

Peter N. Salib (Houston; Google Scholar), The Pigouvian Constitution, 88 U. Chi. L. Rev. 1081 (2021): 

How can lawmakers reduce the skyrocketing rate of gun deaths in the United States? How can they stymie the spread of viral fake news stories designed to undermine our elections? Certain constitutionally protected activities—like owning a gun or speaking online—can generate social harms. Yet when lawmakers enact regulations to reduce those harms, they are regularly struck down as unconstitutional. Indeed, the very laws designed to most aggressively reduce social harms—like total criminal bans—are the least likely to be upheld. As a result, regulators appear stuck with an unpleasant choice—regulate constitutionally or effectively, but not both.

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Lesson From The Tax Court: Who Is An IRS Employee's Immediate Supervisor For §6751 Penalty Approval?

Today’s lesson involves yet more litigation over IRS compliance with the penalty approval process required by the formerly toothless §6751(b)(1).  In Sand Investment Co., LLC, et al. v. Commissioner, 157 T.C. No. 11 (Nov. 23, 2021) (Judge Lauber), the Tax Court continues teaching us the scope and operation §6751(b), a series of lessons it started back in 2017 when its decision in Graev v. Commissioner, 149 T.C. 485 (2017), gave the statute sharp teeth.  Among other requirements, the statute says approval must come from an IRS employee's “immediate supervisor.”  In today’s case, the IRS employee who proposed a bunch of penalties had two supervisors but only one definitely signed timely.  Judge Lauber finds that function trumps form in identifying which of the two supervisors was the right one to approve the proposed penalties.  This is a short lesson, and also one that will may be rendered moot.  Legislation passed by the House and now before the Senate de-fangs §6751(b).  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 at #5:

1. [296 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center)
2. [210 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)
3. [194 Downloads]  Implementing an International Effective Minimum Tax in the EU, by Joachim Englisch (Münster) & Johannes Becker (Münster; Google Scholar)
4. [188 Downloads]  Colorblind Tax Enforcement, by Jeremy Bearer-Friend (George Washington; Google Scholar)
5. [169 Downloads]  Slicing the Shadow: A Proposal for Updating U.S. International Taxation, by Reuven Avi-Yonah (Michigan; Google Scholar)

Next Week’s Tax Workshops

Tuesday, November 30: Steven Dean (Brooklyn) & Dana Brakman Reiser (Brooklyn; Google Scholar) will present For-Profit Philanthropy as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Brian Galle.

Tuesday, November 30: Alan Auerbach (UC-Berkeley; Google Scholar) will present Tax Policy Design With Low Interest Rates as part of the NYU Tax Policy and Public Finance Colloquium. If you would like to attend, please contact Daniel Shaviro. 

Wednesday, December 1: Victor Fleischer (UC-Irvine; Google Scholar) will present Tax Policy - Legislative Updates on behalf of the UC-Irvine Graduate Tax Program. If you would like to attend, please contact taxpolicy@law.uci.edu. 

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Avi-Yonah Posts Three New International Tax Papers On SSRN

Reuven Avi-Yonah (Michigan; Google Scholar), Slicing the Shadow: A Proposal for Updating U.S. International Taxation:

This article advances a proposal for market-based formulary apportionment.

Gucci Gulch Redux: The Problems of Wyden Proposal:

This paper addresses the problems of Sen Wyden’s international tax reform proposal.

The New International Tax Regime:

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Rosenbloom & Shaheen: Toulouse — No Treaty-Based Credit?

H. David Rosenbloom (Caplin & Drysdale; NYU) & Fadi Shaheen (Rutgers; Google Scholar), Toulouse: No Treaty-Based Credit?, 104 Tax Notes Int'l 417 (Oct. 25, 2021):

This article maintains that the U.S. Tax Court’s decision in Toulouse [v. Commissioner, 157 T.C. No. 4 (2021)]— that U.S. tax treaties with France and Italy do not provide a treaty-based foreign tax credit against the net investment income tax — is mistaken.

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Kim: Taxing Teleworkers

Young Ran (Christine) Kim (Utah; Google Scholar), Taxing Teleworkers, 55 U.C. Davis L. Rev. __ (2021):

Since COVID-19 has forced many governments to restrict travel and impose quarantine requirements, telework has become a way of life. The shift towards teleworking is raising tax concerns for workers who work for employers located in another state than where they live. Most source states where these employers are located could not have taxed income of out-of-state teleworkers under the pre-pandemic tax rules. However, several source states have unilaterally extended their sourcing rule on these teleworkers, resulting in unwarranted risk of double taxation — once by the residence state and again by the source state. At this time, there is no uniform guideline by state or federal governments.

Recently, New Hampshire, supported by fourteen other states, asked the U.S. Supreme Court to exercise its original jurisdiction challenging Massachusetts’ telecommuting taxes of nonresident teleworkers. Tax commentators believed this case would be one of the most significant tax decisions in recent years, but the Supreme Court declined to hear it. New Jersey also opposes New York’s long-standing telecommuting taxes under the “convenience of the employer” rule. This Article examines the constitutional challenges of maintaining pre-pandemic work arrangements for tax purposes, arguing that a source state’s extraterritorial assertion to tax nonresident teleworkers’ income likely violates the Dormant Commerce and Due Process Clauses. Also, this Article finds the Supreme Court’s decision not to exercise original jurisdiction dissatisfying in light of the substantial increase in remote work.

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Lederman: Best Practices In Tax Rulings Transparency

Leandra Lederman (Indiana; Google Scholar), Best Practices in Tax Rulings Transparency:

Tax rulings reflect agreement by a tax administration to a particular tax treatment of a planned transaction. They provide certainty to taxpayers and the government, lowering costs on both sides. Such rulings are therefore used by many countries. Yet, secrecy that is followed by leaks and criticism is a recurring aspect of these rulings. Perhaps most well known in this regard is the 2014 LuxLeaks scandal. LuxLeaks revealed numerous tax rulings issued by the European country of Luxembourg containing what the press sometimes termed “sweetheart deals” between the Luxembourg tax authority and multinational companies. The United States has also experienced embarrassing revelations in the tax rulings context, such as during the period before it began disclosing anonymized versions of letter rulings.

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The Renewed Need For Guidance Addressing Partnership 754 Election Revocations

Dion S. Toledo (J.D. 2020, UC-Irvine), Note, The Renewed Need for Guidance Addressing Partnership 754 Election Revocations, 11 U.C. Irvine L. Rev. 999 (2020):

The section 754 election of the Internal Revenue Code allows partnerships to make basis adjustments to avoid potentials for double taxation that can arise following transfers of partnership interests and distributions of partnership property. Once made, a 754 election applies to all future tax years and is revocable only with the consent of the Internal Revenue Service (Service). One subsection of the Treasury Regulations addresses when the Service might approve or deny a partnership’s request to revoke a 754 election. Despite the process contemplated in this regulation, until recently, partnerships could default out of a 754 election without Service approval through a technical termination. The lack of recorded application of the regulation implies that partnerships have largely not needed to rely on—and the Service has not needed to apply—the 754 election revocation regulation.

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Call For Articles: The Tax Lawyer

The Tax Lawyer is currently accepting submissions for its 2022 Spring and Summer issues. Submit your work by early December to be considered for the Spring issue.

Why publish in The Tax Lawyer?

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Hemel & Weisbach: The Behavioral Elasticity Of Tax Revenue

Daniel Hemel (Chicago; Google Scholar) & David Weisbach (Chicago; Google Scholar), The Behavioral Elasticity of Tax Revenue, 13 J. Legal Analysis 381 (2021):

This article presents a measure of the efficiency consequences of changes to tax policies that inform a wide range of tax law debates. Building upon recent extensions to the “elasticity of taxable income” concept, we clarify the relationship among revenue effects, administrative costs, and compliance costs. The resulting measure—the behavioral elasticity of tax revenue (BETR)—captures the change in total resources resulting from marginal changes in tax rates, the tax base, or tax enforcement. We illustrate the BETR’s utility through a series of case studies.

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Hemel: Make The Expanded Child Tax Credit Permanent With This One Easy Trick

Daniel Hemel (Chicago; Google Scholar), Make the Expanded Child Tax Credit Permanent With This One Easy Trick:

Here's how Democrats can significantly reduce child poverty over the long term.

The Build Back Better Act—which passed the House by a 220-213 vote on Friday—makes important changes to the child tax credit. It extends the $3000-per-child credit ($3600 for children under age 6) through 2022. And it makes the credit fully refundable on a permanent basis. By one estimate, these changes will reduce child poverty by more than 40 percent within a single year.

Unfortunately, the $3000 credit (or $3600 for young children) won’t last long. In 2023, the credit amount will fall back to $2000 per child. And starting in 2026, due to a sunset provision in the Trump Tax Cuts and Jobs Act, the credit will fall to $1000 per child. Ideally, congressional Democrats would have agreed to make the entire child tax credit expansion permanent. They could have offset the cost by taxing unrealized gains at death, eliminating the passthrough-deduction giveaway, and raising the corporate income tax rate to somewhere in the mid- to high-20s. Alas, some Democrats decided that they would rather let millions of children languish in poverty than enact common-sense revenue-raising tax reforms.

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Lesson From The Tax Court: How To Mess Up Your Checkbook IRA

The idea that freedom means control over your own destiny s arguably the most defining characteristic of American culture.  It is most certainly the basis on which various companies promote “checkbook IRAs.”  If you Google that term you will find a gaggle of companies urging people to take full control of their retirement funds, to free themselves from restrictive IRA custodians. The companies promote structures that purport to allow taxpayers maximum freedom over their investment decisions.  Freedom equals control. 

In Andrew McNulty and Donna McNulty v. Commissioner, 157 T.C. No. 10 (Nov. 18, 2021)(Judge Goeke) we learn that too much control messes up a checkbook IRA.  There, Mr. and Ms. McNulty created a checkbook IRA, funded it with transfers from their other retirement accounts, and then used the money to buy gold coins which they stored in their home.  The Tax Court said that last bit—storing the physical coins in their home—was too much control and thus the receipt of the coins was a taxable distribution to them.  While the taxpayers crossed the line in this case, it may not be altogether clear where that line is.  How far can a taxpayer go before they mess up their checkbook IRA?  Let’s see what we can learn.  Details below the fold.

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Church Taxes And The Original Understanding Of The Establishment Clause

Mark Storslee (Penn State; Google Scholar), Church Taxes and the Original Understanding of the Establishment Clause, 169 U. Pa. L. Rev. 111 (2021):

Since the Supreme Court’s decision in Everson v. Board of Education, it has been widely assumed that the Establishment Clause forbids government from ‘aiding’ or subsidizing religious activity, especially religious schools. This Article suggests that this reading of the Establishment Clause rests on a misunderstanding of Founding-era history, especially the history surrounding church taxes. Contrary to popular belief, the decisive argument against those taxes was not an unqualified assertion that subsidizing religion was prohibited. Rather, the crucial argument was that church taxes were a coerced religious observance: a government-mandated sacrifice to God, a tithe.

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The Top Five New Tax Papers

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

1. [284 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center)
2. [209 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)
3. [188 Downloads]  Implementing an International Effective Minimum Tax in the EU, by Joachim Englisch (Münster) & Johannes Becker (Münster; Google Scholar)
4. [177 Downloads]  Colorblind Tax Enforcement, by Jeremy Bearer-Friend (George Washington; Google Scholar)
5. [165 Downloads]  Prepaid Death, by Victoria Haneman (Creighton; Google Scholar)

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Automated Government For Vulnerable Citizens — Intermediating Rights

This week, Sloan Speck (Colorado; Google Scholar) reviews a new paper by Sofia Ranchordás (University of Groningen) & Luisa Scarcella (University of Antwerp), Automated Government for Vulnerable Citizens: Intermediating Rights, 30 Wm. & Mary Bill Rts. J. ___ (2021).

In Automated Government for Vulnerable Citizens, Sofia Ranchordás and Luisa Scarcella survey the landscape of digital governmental services, concluding that, while these automated mechanisms may enhance convenience and efficiency for some, they inflict differential effects on vulnerable populations and often entrench existing disparities. Prominent in the authors’ analysis (and in governments’ digital transitions) is tax compliance: in particular, electronic return preparation and algorithmic enforcement. Ranchordás and Scarcella conclude by offering various prescriptions to ameliorate the digital revolution’s disproportionate harms and promote humanity—literal and metaphorical—in public administration.

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NTA 114th Annual Conference On Taxation

Highlights of this week's National Tax Association 114th Annual Conference on Taxation (full program here):

Wednesday:

• Reuven Avi-Yonah (Michigan) & Christine Kim (Utah), A New Framework for Digital Taxation
• Jordan Barry (USC) & Ariel Jurow Kleiman (Loyola-L.A.), Rationalizing the Arbitrary Foreign Tax Credit
• Wei Cui (British Columbia), The Corporate Income Tax As a Non-Tariff Barrier to Trade
• Wei Cui (British Columbia) & Mengying Wei (International Business & Economics), Registered Capital and Firm Entry
• Edward Fox (Michigan) & Zachary Liscow (Yale), A Mark-to-Market Tax on Businesses
• Edward Fox (Michigan) & Benjamin Pyle (Michigan), Reexamining the Non-Taxation of Credit Unions
• William Gale (Brookings Institution), Tax Policy with Low Interest Rates
• Brian Galle (Georgetown) & Yair Listokin (Yale), Making Money: Central Banks, Seigniorage, and Fiscal Policy
• Ari Glogower (Ohio State), Valuing Assets for Annual Income and Wealth Taxation: Lessons from Fair Value Accounting
• Diane Klein (Chapman), When the Tax Man Is Jim Crow: A Critical Tax Analysis of Earned Income Credit Audit Practices
• Daniel Schaffa (Richmond), Rethinking the Wage Deduction
• Theodore Seto (Loyola-L.A.), Justifying the Social Safety Net
• Daniel Shaviro (NYU), The Economics, Law, and Politics of Seeking Increased Taxation of Multinationals
• Nancy Shurtz (Oregon), Inter- and Intra-State Fiscal Inequity in the Era of Biden and Trump: Case Study of the Secession Plan of Eight Oregon Counties

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Lipman: State And Local Tax Takeaways Redux

Francine Lipman (UNLV; Google Scholar), State and Local Tax Takeaways Redux, 101 Tax Notes State 683 (2021):

On average, current household incomes are less equal after state and local taxes are imposed than before. Wealthy families pay a significantly lower percentage of their income in state and local taxes on average than low- and middle- income households. Regressive state and local taxes not only erase the progress of federal tax policies that redistribute income, but in some cases they reverse progressivity — causing the most vulnerable families to pay a higher percentage of their income in aggregate taxes than affluent households.

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Zelinsky: Expand The Taxation Of Educational And Other Charitable Endowments

Edward A. Zelinsky (Cardozo), Expand the Taxation of Educational and Other Charitable Endowments, 173 Tax Notes Fed. 799 (Nov. 8, 2021):

In this article, Zelinsky argues that section 4968, which imposes an annual tax on the investment income of some college and university endowments, should remain in the tax code as a revenue measure and a harbinger of a world in which all charitable endowments pay annual tax on their investment incomes.

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The Contractual And Tax Implications Of The Phantom Of The Opera

Charles Edward Andrew Lincoln IV (Groningen; Google Scholar), The Contractual and Tax Implications of The Phantom of the Opera, Vand. J. Ent. & Tech. Blog:

The substantive story of Gaston Leroux’s The Phantom of the Opera (Le Fantôme de l’Opéra) is largely about contract analysis and whether the managers and “the phantom” have had a “meeting of the minds”—consensus ad idem.

The question is whether the Phantom and the Managers reached a “meeting of the minds” or manifested mutual assent in their contractual remedies.

In short, the plot surrounds new managerial team—Armand Moncharmin and Firmin Richard—at the Palais Garnier have refused to abide by the former managerial team’s contract with the Phantom as successors in kind.

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Soled: Congress Should Codify The IRS’s Voluntary Disclosure Program

Jay A. Soled (Rutgers; Google Scholar), The IRS’s Voluntary Disclosure Program: Need for Codification, 37 Ga. St. U. L. Rev. 957 (2021):

For more than a century, the Internal Revenue Service (IRS) has had a voluntary disclosure program in place. Its purpose is to coax into tax compliance those wayward taxpayers who have committed criminal acts or have been remiss in fulfilling their civic tax-filing obligations. Historically, the voluntary disclosure program has had to strike a difficult balance between being attractive enough to entice tax scofflaws to participate and not being too attractive lest ordinary taxpayers feel that their compliance efforts were for naught.

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Avi-Yonah: The Case For Reviving The Corporate AMT

Reuven Avi-Yonah (Michigan), The Case for Reviving the Corporate AMT, 173 Tax Notes Fed. 795 (Nov. 8, 2021):

In this article, Avi-Yonah examines the bill introduced by Senate Finance Committee member Elizabeth Warren, D-Mass., to revive the corporate alternative minimum tax as a 15 percent tax on corporate book income, and he argues that it is a sensible way to address some problems of the corporate tax system.

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Boz Among The Radicals: Charles Dickens And Tax Reform

Stephen Utz (Connecticut), Boz Among the Radicals: Charles Dickens and Tax Reform, 2 British Tax Rev. 221 (2021):

Taxes on consumption items necessary for subsistence burdened the British middle and workings classes heavily throughout the early nineteenth century. The Weekly True Sun urged the Whig government to replace the window tax, not with a house tax, but with an income tax, and urged taxpayers to refuse to pay the window tax. Charles Dickens transcribed the seditious libel trial of the True Sun editors when he was very young and later remembered the Whig indecision on tax policy in a strongly negative editorial of his own. This article describes how Dickens played a prominent role in tax reform that followed.

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Back To The Future: Marriage And Divorce Under The 2017 Tax Act

Mark W. Cochran (St. Mary's), Back to the Future: Marriage and Divorce under the 2017 Tax Act, 51 St. Mary's L.J. 1 (2019):

The Tax Cuts and Jobs Act of 2017 (the 2017 Tax Act) significantly altered the federal tax consequences of marriage and divorce by mostly eliminating the so-called "marriage penalty" from the individual income tax rates and abolishing the deduction for alimony payments. These changes represent the latest congressional tinkering with issues that have persisted since the earliest days of the modem income tax, turning back the clock with regard to taxation for both married and divorced couples. For the first time, since the enactment of the Tax Reform Act of 1969, the rate brackets for married taxpayers filing joint returns are twice as wide as the brackets applicable to unmarried taxpayers. For the first time since 1942, alimony payments are not deductible by the payor and not includable in the recipient's gross income.6 The significance of these changes can best be appreciated by examining their historical context, and this article will undertake that examination

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Morriss: Forward Down The Road To Serfdom — International Tax Law As A Means Of Central Planning

Andrew P. Morriss (Texas A&M, George Mason), Forward Down the Road to Serfdom: International Tax Law as a Means of Central Planning:

Friedrich Hayek’s 1944 book, The Road to Serfdom, warned of the dangers to a free society from central planning. Efforts by the rich country clubs of the Organization for Economic Cooperation and Development (OECD) and European Union (EU) to impose new international tax rules through a variety of initiatives aimed at increasing their share of global tax revenues, are leading us further down the road Hayek warned against. These initiatives move us from a world in which the complicated tax issues raised by cross-border transactions and entities is resolved through a complex web of bilateral tax treaties to one in which tax administrations, following OECD- and EU-drafted rules will increasingly intervene in internal organizational decisions of businesses by making the tax consequences independent of the actual organization.

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Is Sunlight The Best Disinfectant? Reassessing BEPS Action 5’s Tax Ruling Transparency

Patrick Hasson (J.D. 2021, Penn), Comment, Is Sunlight the Best Disinfectant? Reassessing BEPS Action 5’s Tax Ruling Transparency, 169 U. Pa. L. Rev. 1545 (2021):

The OECD’s BEPS Project was a major attempt to harmonize tax principles across jurisdictions and prevent tax-motivated artificial profit shifting. One portion of the BEPS Project is Action 5’s tax ruling transparency framework. High-profile instances of tax avoidance, such as LuxLeaks and the Apple/Ireland state aid case, have only elucidated the extent to which tax authorities can use rulings to facilitate tax avoidance. However, it should not be expected that Action 5’s tax ruling transparency will materially curb the use of rulings to aid tax avoidance.

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Incentivizing Wills Through Tax

Margaret Ryznar (Indiana-McKinney), Incentivizing Wills Through Tax:

There have been recent calls to loosen will formalities in order to allow more people to execute wills, the importance of which has been highlighted by the COVID-19 pandemic. The reduction of necessary will formalities can be successful in expanding the use of wills, as can potential tax incentives for creation of wills, such as a tax credit. However, there are numerous advantages to using tax to initiate change, as considered in this Article.

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Lesson From The Tax Court: Not Every Decision Comes With An Opinion

Once a taxpayer petitions the Tax Court to contest a Notice of Deficiency (NOD), the Tax Court will issue a decision in the case.  The taxpayer has no option to nonsuit the case like plaintiffs can do in state courts or in federal district courts.  It’s what I call the Hotel California rule: the taxpayer might check out (e.g. by abandoning the case), but can never leave (the Court's decision will issue).  For details, see Lesson From The Tax Court: The Hotel California Rule, TaxProf Blog (Nov. 12, 2018).

Today we learn that even though the Tax Court will issue a decision, it may not issue an opinion.  More, we learn why that is so.  In Paul Puglisi & Ann Marie Puglisi, et. al., v. Commissioner (4796-20, 4799-20, 4826-20, 13487-20, 13488-20, 13489-20) (Nov. 5, 2021) (Judge Gustafson), the IRS conceded all of a proposed deficiency (except for a small part that the taxpayers had conceded).  It asked the Court to enter decisions in favor of the taxpayers.  The taxpayers objected!  They wanted more than a victory.  They wanted fries with that: an opinion to go with the decision.  Judge Gustafson decided to accept the IRS concession and enter a decision for the taxpayers without an accompanying opinion on the merits.  In a 17-page Order he teaches us that while the Tax Court has the discretion to issue an opinion even when the IRS concedes a case, it will do so only under extraordinary circumstances.  Details below the fold.

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The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #4 and #5:

1. [256 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center)
2. [251 Downloads]  Closing Gaps in the Estate and Gift Tax Base, by Daniel Hemel (Chicago; Google Scholar) & Robert Lord (Americans for Tax Fairness)
3. [198 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)
4. [175 Downloads]  Implementing an International Effective Minimum Tax in the EU, by Joachim Englisch (Münster) & Johannes Becker (Münster; Google Scholar)
5. [161 Downloads]  Colorblind Tax Enforcement, by Jeremy Bearer-Friend (George Washington; Google Scholar)

Abortion And Corporate Tax Avoidance

Kam C. Chan (Western Kentucky; Google Scholar), Jiaxin Wang (Zhongnan), Zhi Wang (Southwestern; Google Scholar) & Chao Yan (Zhongnan; Google Scholar), Is Reverence for Life Reverence for Rule? Abortion Rate and Corporate Tax Avoidance in China:

Despite the momentum of research on the impact of informal institutions on corporate behavior in recent years, few studies probe the effect of an “awe culture” on corporate behavior. Thus, this study explores the economic consequences of the awe culture. It proxies awe culture with regionally induced abortion rates and examines its influence on corporate tax avoidance in China. We document that higher induced abortion rates associate with a higher degree of corporate tax avoidance, confirming that “reverence for life is reverence for rules.”

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Pratt's Learning To Live Without Form 1040

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Katherine Pratt (Loyola-L.A.; Google Scholar), Learning to Live Without Form 1040, 75 Tax Law. __ (2022).

From its inception, our federal revenue system has been based on income rather than consumption. Over the year, there have been numerous failed academic and practical proposals to switch to a consumption tax base, mainly for the latter’s promise for greater simplicity and administrability. Accordingly, we came to accept the fact that our system is so deeply ingrained in the concept of income that the transformation to a consumption tax base (such as the VAT and GST prominent in other countries) has become purely theoretical at this point.

Nonetheless, this Article is not another academic exercise. Pratt points out that the switch to consumption tax is extremely relevant today (and even more than ever) in light of the growing inequity gap and erosion of anti-poverty programs. With the diminished share of corporate tax revenues and multinational tax transfers, fulfilment of the growing need for alternative sources of revenues lies with Federal consumption taxes. 

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Shaviro Presents Tax Law, Inequality, And Redistribution Today At Florida

Daniel N. Shaviro (NYU) presents Tax Law, Inequality, and Redistribution: Recent and Possible Future Developments virtually at Florida today as part of its Tax Policy Colloquium hosted by David Hasen:

The current age of inequality is also an age of extensive tax and related public economics scholarship about inequality. Three prominent aspects of recent research especially stand out. The first concerns empirical measurement of economic inequality, as it has changed over time. The second concerns different mechanisms for taxing the rich, such as through the taxation of income, wealth, consumption, or gratuitous transfers. The third concerns new uses of the tax system to address poverty.

Each of these research areas can, should, and undoubtedly will continue to develop. I will suggest, however, that two further sets of issues raised by inequality demand greater attention than they have heretofore received. The first is normative inquiry regarding why, when, how, and to what extent inequality matters, moving beyond the economic literature’s often predominant focus on declining marginal utility. The second is better connecting the analysis of purely economic inequality to that of its other dimensions, such as racial and ethnic inequality. In both areas, given tax law’s institutional focus, a key aim should be to offer policymakers potentially usable guidance, by suggesting what practical implications a particular normative view (and/or particular empirical findings) might have

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Brennan Presents The Tax Portfolio Today At Boston College

Tom Brennan (Harvard) presents The Tax Portfolio at Boston College today as part of its Tax Policy Collaborative hosted by Jim Repetti, Diane Ring, and Shu Yi Oei: 

This paper demonstrates that a linear tax on capital is equivalent to one that imposes an ex ante lump-sum payment on a taxpayer’s position with respect to a particular asset portfolio, referred to herein as the “tax portfolio,” and no tax on any portfolio orthogonal to it. Among the orthogonal portfolios, there may or may not be a portfolio with a non-zero (pre-tax) market price. If there is not such a portfolio, then the tax is equivalent to an ex ante wealth tax, and the result is the same as found by Kaplow (1994). If, however, there is an orthogonal portfolio with non-zero price, then the tax portfolio may be chosen to have zero market price, and there exists an “untaxed capital portfolio” that is effectively not subject to tax and that has non-zero market price. In this case, the tax burden is separated from the total amount of capital invested. A taxpayer has flexibility to allocate capital to the untaxed capital portfolio and thereby avoid any tax burden. Only an investment in the tax portfolio results in a tax burden, with a short position in the portfolio resulting in an effective tax subsidy.

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Shaviro: Bittker’s Pendulum And The Taxation of Multinationals

Daniel N. Shaviro (NYU), Bittker’s Pendulum and the Taxation of Multinationals, 173 Tax Notes Fed. 621 (Nov. 1, 2021):

In this report, Shaviro examines the recent calls for increased entity-level corporate income taxation of multinationals, on both a source and a residence basis, and he details historical parallels.

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The California Tax On Extreme Wealth

Brian D. Galle (Georgetown; Google Scholar), David Gamage (Indiana; Google Scholar), Emmanuel Saez (UC-Berkeley; Google Scholar) & Darien Shanske (UC-Davis; Google Scholar), The California Tax on Extreme Wealth (ACA 8 & AB 310): Revenue, Economic, and Constitutional Analysis:

This white paper report provides Revenue, Economic, and Constitutional Analysis of the proposed California Tax on Extreme Wealth (ACA 8 & AB 310) and also a Plain-English Summary Outline of its major provisions.

The California Tax on Extreme Wealth (ACA 8 & AB 310) imposes an annual tax of 1% on extreme wealth, defined as wealth in excess of $50 million per taxpayer. It also adds graduation with an extra .5% tax rate on wealth above $1 billion. We estimate that about 15,000 CA families (top .07% richest families) would be liable for the tax on extreme wealth and that the tax would raise about $22.3 billion/year (starting in 2023 based on end of year 2022 wealth).

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Pratt: Learning To Live Without Form 1040

Katherine Pratt (Loyola-L.A.), Learning to Live Without Form 1040, 75 Tax Law.__ (2022):

A prominent tax reform proposal made by Michael Graetz in 2008 would replace much of the federal income tax with a Value Added Tax (VAT), a new consumption tax. If enacted, low-income and middle-income Americans would file 120 million fewer federal income tax returns annually. The Plan would convert the mass income tax into a narrow “class” income tax on high-income Americans. Adoption of the Graetz Plan would promote economic growth and reduce the compliance and administrative costs of the federal tax system. Defenders of the mass income tax nonetheless oppose adoption of the Graetz Plan. This Article argues that the Graetz Plan, modified as proposed in this Article, could overcome two major impediments to adoption of the Plan: (1) the difficulty of reconciling the Graetz Plan and existing multipurpose refundable income tax credits administered by the Internal Revenue Service; and (2) the potential loss of beneficial functions that the mass income tax may serve.

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Call For Tax Papers: Oklahoma Law Review Tribute To Jon Forman

The Oklahoma Law Review is accepting tax-themed submissions for publication in our upcoming Spring 2022 issue. This issue will honor the late Professor Jonathan Forman, a beloved faculty member who taught tax courses at the University of Oklahoma College of Law from 1985 to 2021. Please submit manuscripts for consideration to Tina Cannon before January 7, 2022. Submissions should be a minimum of 5,000 words, and citations should follow The Bluebook: A Uniform System of Citation (21st ed. 2020).

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Zelinsky: The Case For Limiting The Estate And Gift Tax Charitable Deductions

Edward A. Zelinsky (Cardozo), The Case for Limiting the Estate and Gift Tax Charitable Deductions, 173 Tax Notes Fed. 667 (Nov. 1, 2021):

In this article, Zelinsky argues that all large estates should support the federal treasury and that Congress should limit the estate and gift tax charitable deductions to ensure that they pay some tax.

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Johnson: The Shelf Project — 82 Fair And Efficient Suggestions To Raise $3.5 Trillion

Calvin H. Johnson (Texas), The Shelf Project: 82 Fair and Efficient Suggestions to Raise $3.5 Trillion, 173 Tax Notes Fed. 63 (Oct. 4, 2021):

In this article, Johnson examines Shelf Project proposals that could raise $3.5 trillion in revenue over 10 years without increasing tax rates or the tax burden on lowor middle-income taxpayers while also improving the efficiency of the tax system. ...

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Michael: The Guardians Of The New Internal Revenue Code

Douglas C. Michael (Kentucky), The Guardians of the New Internal Revenue Code, 25 Fla. Tax Rev. ___ (2022):

The proliferation of electronic filing (e-filing) of income tax returns creates new problems and opportunities for the regulation of the tax return preparation industry. Now that e-filing is universal, the rules of the law are, for many taxpayers, the code of the tax software, not in the Internal Revenue Code. The natural consequences of universal e-filing are unremitting complexity in a tax code which is also used to deliver social benefits in the form of tax credits. This, combined with the political pariah status of the Internal Revenue Service (IRS), makes it imperative that the IRS work with the tax return preparers to ensure that their products are safe and accurate. More importantly, the existence of such an industry creates great opportunities for the IRS to leverage its relationship with this private sector group to improve the tax return filing experience for many taxpayers. The existing voluntary relationship between the IRS and the industry is likely no longer viable, but this article provides the blueprint for government-supervised self-regulation which can solve the problems with the new code.

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Wiedenbeck & Stein: The Executive Compensation Threat To Retirement

Peter J. Wiedenbeck (Washington University; Google Scholar) & Norman P. Stein (Drexel), The Executive Compensation Threat to Retirement:

In recent years a new phenomenon has appeared on the retirement savings landscape: the expansion into middle management ranks of a traditional tool of executive compensation, the so-called “top hat” pension plan. Top hat plans are unfunded deferred compensation programs for a “select group of management or highly compensated employees.” Properly structured, top hat plans amass retirement resources that are taxed to employee-participants only when distributed. From the participant’s viewpoint, that delayed inclusion appears comparable to the tax deferral accorded qualified retirement plan savings, yet top hat plans are exempt from all of the Code’s qualification conditions. They are likewise excused from virtually all of ERISA’s pension plan participant protections, including vesting, funding, and fiduciary responsibilities.

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Lesson From The Tax Court: A Hard Choice Is Still A Choice

I have a strict attendance policy in that a student is either either there or not.  I don't do excused absences.  Students get six absences with no penalty and with no questions asked.  Their seventh absence, however, results in a one-increment reduction of their final grade (B+ to B, e.g.), again with no questions asked.  Further absences lead to more severe consequences.

One year, a student who had missed six classes came to me and asked if I would excuse him for a seventh absence.  He was a key member of his University’s Cheer Squad and he would have to miss class in order to participate in their State finals competition.

I explained to him the concept of a hard choice: a situation where any decision carries some significant downside.  But the difficulty of the choice would not excuse the penalty.  I suggested that he consider what would be more important to him in 10 years: getting a lower grade in one law school course, or missing the chance to help his team win a State championship.  He decided to take the grade hit.  Good choice, IMHO.

In Pamela Cashaw v. Commissioner, T.C. Memo. 2021-123 (Oct. 27, 2021) (Judge Greaves), we learn that taxpayers cannot be excused from the §6672 Trust Fund Recovery Penalty just because they face hard choices on how to use their company’s limited cash, no matter how sympathetic we may be to their difficulties.  If they have funds to pay the taxes withheld from their employees’ paycheck, their choice to instead pay off more immediately threatening creditors opens them to personal liability for the unpaid trust fund taxes.  Details below the fold.

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Afield: Framing Tax Enforcement Against The Poor Through Catholic Social Teaching

W. Edward Afield (Georgia State), Framing Tax Enforcement Against the Poor Through Catholic Social Teaching:

What makes for just tax policy? As Professor Hamill observes in her Canopy Forum piece on the estate tax [Religiously Based Ethical Arguments Favoring Estate Taxes], tax policy “is ultimately a justice-based ethical issue” that naturally connects to the values underlying a citizen’s perception of justice. Law and religion scholars have been paying greater attention to tax policy, with primary focus on questions of front-end tax system design. This focus has been understandable, as these questions of design appear to connect most readily to religious values about how burdens and resources should be distributed in a society, and what is the obligation of the citizen to comply with laws that direct a portion of his or her property to the government. Thus, evaluation of tax policy through a religious lens has most frequently focused on the important questions of what an appropriate rate of taxation should be; whether a tax system should be progressive; the nature of the moral obligation of citizens to comply with secular tax laws; and how religious framing of this obligation could potentially improve tax compliance.

This initial work is incomplete, however. In addition to applying a religious lens to the front-end design questions, law and religion scholars need to spend more time wrestling with the back-end administration and enforcement questions. Administration and enforcement of the tax laws can have considerable impact over whether a system of taxation is just — as the public is perhaps beginning to learn through the recent debate regarding increasing the IRS’s enforcement budget. Focusing value-based tax policy arguments primarily on the legislative component at the expense of the administrative can, even if successful, result in the Pyrrhic victory of legislative justice gains that are subsequently undermined by administrative failures.

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Brunson: God Is My Roommate? Tax Exemptions For Parsonages Yesterday, Today, And (If Constitutional) Tomorrow

Samuel D. Brunson (Loyola Chicago; Google Scholar), God Is My Roommate? Tax Exemptions for Parsonages Yesterday, Today, and (if Constitutional) Tomorrow, 96 Ind. L.J. 521 (2021):

In 2019, the Seventh Circuit decided an Establishment Clause question that had been percolating through the courts for two decades. 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.

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The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #4:

1. [441 Downloads]  Mega-IRAs, Mega-401(k)s, and Other Mega-Retirement Accounts: Statement for the Record, by Daniel Hemel (Chicago; Google Scholar) & Steven Rosenthal (Tax Policy Center)
2. [292 Downloads]  Has Cross-Border Arbitrage Met Its Match?, by Ruth Mason (Virginia; Google Scholar) & Pascal Saint-Amans (OECD) (reviewed by Young Ran (Christine) Kim (Utah; Google Scholar) here)
3. [248 Downloads]  Closing Gaps in the Estate and Gift Tax Base, by Daniel Hemel (Chicago; Google Scholar) & Robert Lord (Americans for Tax Fairness)
4. [243 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center),
5. [194 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)

Pildes Presents Political Fragmentation In Democracies Of The West At Virginia

Rick Pildes (NYU) presented Political Fragmentation in Democracies of the West at Virginia yesterday as part of its Oxford-Virginia Legal Dialogs hosted by Tsilly Dagan and Ruth Mason:

The decline of effective government throughout most Western democracies poses one of the greatest challenges democracy currently confronts. A major reason for this decline is that democracies have become more politically fragmented. In the proportional-representation systems of Western Europe, power is now divided across many more political parties, including recent, insurgent ones. In the first-past-the-post system of the United States, the main parties are much more internally fragmented. Outside groups, and even individual actors, have far greater power to disrupt and undermine government efforts to forge policy than in the past.

This article expands and extends earlier work I have done on political fragmentation in the United States. It identifies the various forms political fragmentation has taken across the Western democracies in general. The article then explores the major economic and cultural forces driving fragmentation across democracies.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Hasen's Debt And Taxes

This week, David Elkins (Netanya, visiting NYU 2021-2022) reviews a new paper by David Hasen (Florida; Google Scholar), Debt and Taxes, 12 Columbia J. Tax L. 89 (2021).

As indicated by its whimsical title, David Hasen’s well-written paper considers the tax treatment of debt. Under the standard view, in exchange for the loan proceeds, the borrower commits to paying the lender interest and, eventually, repaying the loan proceeds. Because of the obligation to repay, the borrower does not report income on receipt of the loan proceeds. The idea is that income is accession to wealth, and wealth, in turn, is assets minus obligations. Increasing one’s assets (i.e., the cash received) and one’s liabilities by the same amount does not cause any change to one’s wealth. Similarly, for the lender, the cash is replaced by the borrower’s obligation. Thus, while the composition of the lender’s assets undergoes a transformation, the value of the assets remains the same and the lender cannot deduct the loan proceeds.

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Does Shaming Pay? Evaluating California's Top 500 Tax Delinquent Publication Program

Chad Angaretis (California Franchise Tax Board), Brian D. Galle (Georgetown; Google Scholar), Paul Organ (Michigan; Google Scholar) & Allen C. Prohofsky (California Franchise Tax Board), Does Shaming Pay? Evaluating California's Top 500 Tax Delinquent Publication Program:

Many U.S. states and countries around the world publicly disclose tax debtors to encourage compliance. Little is known about the effectiveness of these programs. Using administrative tax microdata from California’s “Top 500” disclosure program, we study whether notices of imminent publication affect payment and other compliance outcomes, as well as whether these notices affect subsequent reported earnings. We estimate the direct effect of the letter sent to the 500 highest-balance, publication-eligible taxpayers to be additional revenue of between $2.8 and $7.2 million annually, with no evidence of an impact on subsequent reported earnings. We also estimate an upper bound on the deadweight loss caused by publication of non-compliers, and conclude that the program generates positive net social welfare. Together, these results suggest that delinquent taxpayer disclosure can be an efficient tax enforcement tool, at least among the relatively high-income population we study.

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