Paul L. Caron
Dean


Thursday, August 22, 2019

Kysar: Critiquing (And Repairing) The New International Tax Regime

Rebecca M. Kysar (Fordham), Critiquing (and Repairing) the New International Tax Regime, 128 Yale L.J. F. 339 (Oct. 25 2018):

In this Essay, I address three serious problems created — or left unaddressed — by the new U.S. international tax regime. First, the new international rules aimed at intangible income incentivize offshoring and do not sufficiently deter profit shifting. Second, the new patent box regime is unlikely to increase innovation, can be easily gamed, and will create difficulties for the United States at the World Trade Organization. Third, the new inbound regime has too generous of thresholds and can be readily circumvented. There are ways, however, to improve upon many of these shortcomings through modest and achievable legislative changes, eventually paving the way for more ambitious reform. These recommendations, which I explore in detail below, include moving to a per-country minimum tax, eliminating the patent box, and strengthening the new inbound regime.

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August 22, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, August 21, 2019

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part II)

TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part II), by Daniel Hemel (Chicago):

Hemel (2018)In Bullock v. IRS, a federal district court in Montana held that states have standing to challenge the IRS’s rollback of information reporting requirements and that those requirements can only be amended through notice and comment. As my last post explained, the immediate significance of the decision is that noncharitable tax-exempt entities—including but not limited to politically active section 501(c)(4) groups—will have to disclose their large-dollar donors to the IRS (though not to the public). But the potential implications are much broader than that. The decision in Bullock suggests a possible new path for states to exert influence over federal tax policy through administrative law litigation. This post explores that possibility.

Bullock is the latest in a series of cases that might be seen as auguring the end of “tax exceptionalism.” By “tax exceptionalism,” I refer to the long-held view that general principles of administrative law—such as Chevron deference for agency statutory interpretations and the notice-and-comment requirement for agency rules—do not apply in the tax domain. Paul Caron put forward an early and influential critique of that view in his unforgettably titled 1994 article “Tax Myopia, or Mamas Don’t Let Your Babies Grow Up to Be Tax Lawyers.” Kristin Hickman advanced the attack on tax exceptionalism in a series of significant articles starting in the mid-2000s. The effort to end tax exceptionalism scored a major victory in January 2011 when Chief Justice John Roberts, in the case of Mayo Foundation for Medical Education and Research v. United States, said that the court was “not inclined to carve out an approach to administrative review good for tax law only.” Declarations of the “death of tax exceptionalism” soon followed.

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August 21, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Tuesday, August 20, 2019

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part I)

Following up on my previous post, Federal Judge Overturns IRS Rule To Shield Political Donor Identities:  TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part I), by Daniel Hemel (Chicago):

Hemel (2018)The world of “dark money” became a bit less opaque at the end of last month when a federal district court in Montana struck down an IRS revenue procedure that had shielded section 501(c)(4) organizations from having to disclose large-dollar donors to tax authorities. The decision in the case—captioned Bullock v. IRS—is significant both because of its immediate implications for the oversight of section 501(c)(4) groups and other exempt organizations as well as its broader ramifications for judicial review of IRS actions. Tax law practitioners and professors—whether or not they focus on exempt organizations in their work, study, and teaching—should take note.

This is the first of two posts on Bullock v. IRS and its implications. Here, I’ll lay out the facts of the case and some thoughts on discrete legal issues that it raises. In the next post, I’ll try to situate Bullock within the wider debate over tax exceptionalism (and its alternative, which we might call “tax ordinaryism”). I’ll argue there that Bullock represents both a continuation of the trend toward tax ordinaryism and a novel twist.

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August 20, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Chaffee: Collaboration Theory And Corporate Tax Avoidance

Eric C. Chaffee (Toledo), Collaboration Theory and Corporate Tax Avoidance, 76 Wash. & Lee L. Rev. 93 (2019):

Tax revenue is the primary source of income for the government, yet corporations regularly engage in tax avoidance. Corporate managers and advisers commonly claim that the corporate form requires that they undertake this behavior because the nature of that form mandates it. Direct and indirect references are made to the classic case of Dodge v. Ford, as providing an edict that corporations must engage in unrelenting profit maximization that requires them to undertake aggressive tax avoidance.

As explored in my co-authored piece with Professor Karie Davis-Nozemack [Georgia Tech), Corporate Tax Avoidance and Honoring the Fiduciary Duties Owed to the Corporation and Its Stockholders [58 B.C. L. Rev. 1425 (2017)], the “Dodge Mandate,” as it may be termed, is far from absolute.

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August 20, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, August 19, 2019

The Effect Of Tax Avoidance On Capital Structure Choices

Yoojin Lee (California State University, Long Beach), Terry J. Shevlin (UC-Irvine) & Aruhn Venkat (UC-Irvine), The Effect of Tax Avoidance on Capital Structure Choices:

In this study, we examine whether tax avoidance affects firm-level external financing choices. We hypothesize that firms marginally choose equity over debt because tax avoidance generates incremental cash flows but is likely risky. Consequently, we predict that tax avoidance induces a relative price increase in debt relative to equity. Our results are consistent with tax avoidance inducing firms to choose equity over debt. Importantly, our theory and results are distinct from the effects of marginal tax rates on capital structure (e.g., Modigliani and Miller 1963) and we control for marginal tax rates in all specifications. From an identification standpoint, we use path analyses, a plausibly exogenous 9th Circuit decision and cross-sectional tests to support our main results.

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August 19, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sunday, August 18, 2019

The Taxation Of Religious Organizations In America

Grant M. Newman (J.D. 2019, Harvard), Note, The Taxation of Religious Organizations in America, 42 Harv. J.L. & Pub. Pol'y 681 (2019):

Christ taught his disciples to “[r]ender to Caesar the things that are Caesar’s, and to God the things that are God’s." The Supreme Court has, to an extent, rendered to God what is God’s by repeatedly acknowledging that it will not involve itself in the internal affairs of religious organizations. Nevertheless, the extent to which religious organizations remain vulnerable to involvement from other branches of government remains a pertinent question, especially with regards to the government’s power to tax.

This Note investigates the extent to which religious organizations are vulnerable to such involvement. A prime example of such involvement is Congress’ ability to use the Internal Revenue Code to the detriment of religious organizations. As it ensures that what is Caesar’s (i.e., taxes) is rendered to Caesar (i.e., the federal government), any policy of Congress and the Internal Revenue Service (I.R.S.) that thwarts the faithful from rendering to God what is God’s has the potential to impose a prohibitive burden on the operation of religious organizations. The potential to hinder the work of religious organizations through taxation is great. Indeed, “the power to tax involves the power to destroy.” Insofar as Congress retains the power to tax religious organizations, it likewise maintains the power to destroy.

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August 18, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)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. [530 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [400 Downloads]  Five Key Research Findings on Wealth Taxation for the Super Rich, by David Gamage (Indiana)
  3. [170 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  4. [128 Downloads]  The Substantive Canons of Tax Law, by Jonathan Choi (NYU)
  5. [105 Downloads]  Recent Developments in Federal Income Taxation: The Year 2018, by Bruce McGovern (South Texas) & Cassady Brewer (Georgia State)

August 18, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, August 17, 2019

Tax, Technology And Privacy: The Coming Collision

Andrew Leahey (Tax LL.M. 2019, NYU), Tax, Technology and Privacy: The Coming Collision:

In the last decade a dominant storyline in the realm of technology and the law has been the rise of Big Data and the various state responses, or lack thereof, to concerns stemming from the same. At first, technology companies pursued methods of monetizing accumulated data almost by default — massive stores of data were a byproduct of other business ventures. Like early wildcat oil drillers that struck natural gas, the stores of data was seen more as a hindrance than anything else. Over time, oil companies found a use for natural gas and Silicon Valley found a use for our stores of data. The next trove of data is going to be found in our tax information. Let us insure that this time, from the outset, our privacy is kept front of mind.

August 17, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, August 15, 2019

Grinberg: Reestablishing International Tax Order

Itai Grinberg (Georgetown), Stabilizing 'Pillar One': Corporate Profit Reallocation in an Uncertain Environment:

This paper is about how the world reestablishes international tax order.

The paper focuses on the OECD’s work on profit reallocation and asks whether this multilateral effort can be successful in stabilizing the international tax system. The analysis centers on the current leading concepts for reallocating profit among jurisdictions under what is known as “Pillar One” of the OECD work programme. To analyze whether any Pillar One concept can be turned into a stable multilateral regime, it is necessary to specify certain elements of what a proposal to reallocate profits might entail. Accordingly, this paper sets out two strawman proposals. One strawman uses a “market intangibles” concept that explicitly separates routine and residual returns. The other strawman may reach a similar result, but does not explicitly attempt to separate routine and residual returns. Instead, in current OECD parlance, it might be described as a “distribution-based” approach.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Avi-Yonah & Fishbien: Tax Expenditures And Horizontal Equity — A Lost Lesson From Stanley Surrey

Reuven S. Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2020, Michigan), Tax Expenditures and Horizontal Equity: A Lost Lesson from Stanley Surrey:

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 invented by the first Assistant Secretary for Tax Policy, Stanley S. Surrey, in the late 1960s, and was codified by the Congressional Budget Act of 1974, which requires that a list of tax expenditures be included in the US budget. The tax expenditure budget relies on the Haig Simons definition of income as the base, while acknowledging the fact that not all deviations from Haig Simons are treated as tax expenditures.

The basic problem with attempts to define tax expenditures against a Haig Simons baseline is that it is not clear why such deviations are normatively problematic. Put bluntly, who cares whether a specific tax provision is a deviation from some theoretical definition of income by two long dead economists? That, presumably, is why most of the literature now accepts the Weisbach and Nussim view that the debate between Surrey and Bittker was meaningless, and we should just learn to live with the tax expenditures.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Foreign Branch Income Issues In Transitioning From GILTI To FDII

Jeffery M. Kadet (University of Washington) & David Koontz, Transitioning From GILTI to FDII? Foreign Branch Income Issues, 164 Tax Notes 57 (July 1, 2019): 

In this article, Kadet and Koontz discuss certain issues that must be considered when a multinational analyzes whether it should transition certain operations conducted within a CFC (along with the associated income) into a domestic group member so as to achieve an FDII-qualifying structure. In doing so, there will likely be a need to move some key income-earning operations and functions to the United States to assure that the FDII foreign branch rule is not violated.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, August 14, 2019

Aprill: Revisiting Federal Tax Treatment Of States, Political Subdivisions, And Their Affiliates

Ellen P. Aprill (Loyola-L.A.), Revisiting Federal Tax Treatment of States, Political Subdivisions, and their Affiliates, 23 Fla. Tax Rev. ___ (2019):

Florida Tax Review (2018)Several provisions of the 2017 tax legislation, known as Tax Cuts and Jobs Act (TCJA), focused attention on federal taxation of states, their political subdivisions and their affiliates. Most prominently, TCJA limited the federal income tax deduction for state and local taxes to $10,000. States have sued and attempted work-arounds. Another provision, which imposes an excise tax of 21% on “excessive compensation” paid by certain entities not subject to income tax, inadvertently failed to subject to tax entities that are integral parts of states or political subdivisions or are themselves political subdivisions. Calls for a technical correction have so far gone unheeded.

More than twenty years ago, I wrote two articles about federal taxation of state governments, political subdivisions, and their affiliates. The Teacher’s Manual to a leading casebook on nonprofit organizations describes these two articles as “as much as anyone knows about this confusing patchwork and its ramifications.” The passage of time, changes in my own thinking and new developments call for my returning to this topic. I do so here. Moreover, far more than in my earlier work, I examine the applicable rules regarding charitable contribution deductions to these entities as well as discuss the special rules applicable to governmental charities and the category of charities that lessen the burdens of government.

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August 14, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN Logo (2018)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.  This ranking includes downloads from two 30- and 35-page papers by 12 tax professors on the new tax legislation that garnered a lot of media attention (including the New York Times and Washington Post) and generated a massive amount of downloads (the papers are the most downloaded tax papers of all-time by over 200%).  See Brian Leiter (Chicago), 11 Tax Profs Blow Up The SSRN Download Rankings. (For some reason, Mitchell Kane (NYU) — the twelfth academic co-author of the two papers — is not included in the SSRN download rankings (although the downloads are included on his individual author page)).  Here is the new list (through August 1, 2019) 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
Reuven Avi-Yonah (Michigan)  184,986 Reuven Avi-Yonah (Michigan) 12,878
Dan Shaviro (NYU) 118,783 Daniel Hemel (Chicago) 10,565
David Gamage (Indiana-Bl.) 114,647 David Gamage (Indiana-Bl.) 8,640
Daniel Hemel (Chicago) 113,015 Darien Shanske (UC-Davis)  8,555
Lily Batchelder (NYU) 111,898 Dan Shaviro (NYU) 8,305
Darien Shanske (UC-Davis) 108,497 Manoj Viswanathan (UC-Hastings) 7,627
Cliff Fleming (BYU) 103,607 Ari Glogower (Ohio State) 7,290
8 David Kamin (NYU) 100,506 David Kamin (NYU) 7,073
9 Manoj Viswanathan (UC-Hastings) 100,501 Lily Batchelder (NYU) 7,024
10  Rebecca Kysar (Fordham) 99,652 Cliff Fleming (BYU) 6,803
11  Ari Glogower (Ohio State) 98,391 Rebecca Kysar (Fordham)  6,735
12  Michael Simkovic (USC) 43,223 Richard Ainsworth (BU) 2,663
13  D. Dharmapala (Chicago) 37,181 Michael Simkovic (USC) 2,650
14  Paul Caron (Pepperdine) 35,672 Bridget Crawford (Pace) 2,591
15  Louis Kaplow (Harvard) 31,925 Brad Borden (Brooklyn) 2,495
16  Richard Ainsworth (BU) 27,900 Kyle Rozema (Chicago) 2,493
17  Ed Kleinbard (USC) 25,959 D. Dharmapala (Chicago) 2,335
18  Vic Fleischer (UC-Irvine) 25,557 Ruth Mason (Virginia) 2,221
19  Jim Hines (Michigan) 24,586 Robert Sitkoff (Harvard) 2,051
20  Gladriel Shobe (BYU) 24,043 Jacob Goldin (Stanford) 1,976
21  Ted Seto (Loyola-L.A.) 23,574 Louis Kaplow (Harvard) 1,856
22  Richard Kaplan (Illinois) 23,450 Hugh Ault (Boston College) 1,849
23  Brad Borden (Brooklyn) 23,022 Joe Bankman (Stanford) 1,716
24  Robert Sitkoff (Harvard) 22,713 Yariv Brauner (Florida) 1,635
25  Katie Pratt (Loyola-L.A.) 22,295 George Yin (Virginia) 1,558

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August 14, 2019 in Legal Education, Scholarship, Tax, Tax Prof Rankings, Tax Rankings, Tax Scholarship | Permalink | Comments (0)

A Global Financial Transaction Tax: Theory, Practice And Potential Revenues

Atanas Pekanov & Margit Schratzenstaller (Austrian Institute of Economic Research), A Global Financial Transaction Tax — Theory, Practice and Potential Revenues:

This study presents in detail the concept of a financial transaction tax (FTT) and the theoretical and empirical evidence in favour and against introducing it, the potential revenues, different implementation designs and its ability to correct various market failures. We analyse the benefits and challenges of introducing a tax on financial transactions, putting special focus on the introduction of such a tax on a world-wide scale. For a number of reasons, international cooperation is deemed a central prerequisite for an efficient FTT. The purpose of the tax is to raise substantial revenues and help dampen excessive financial market speculation and market volatility. An FTT would ensure that the financial sector contributes more substantially to government revenues. In its optimal form, the tax would be broad-based and there will be no financial instrument types exempted. In a second step, we analyse from a political economy perspective the prospects, the current status, and the lessons learnt from the European discussion on the implementation of an FTT. Finally, we calculate the revenue potential of a global FTT and report how much revenues would accrue to specific countries. We estimate that the tax, if imposed globally and taking into account still evasion, relocation and lock-in effects, can bring significant revenues — between 237.9 and 418.8 billion $ annually.

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August 14, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, August 13, 2019

Smith: Exploiting The Charitable Contribution Deduction's Hypersalienc

Eric Smith (Weber State), Exploiting the Charitable Contribution Deduction's Hypersalience, 2019 Utah L. Rev. ___:

Hypersalience describes the cognitive error that occurs when taxpayers are highly aware of a tax provision generally, but fail to correctly perceive its associated limitations. The charitable contribution deduction provides a strong example of hypersalience as taxpayers have general awareness that tax benefit follows charitable giving, but often fail to understand the deduction’s limits—most notably the standard deduction’s preclusion to any direct tax benefit for charitable giving. As cognitive error drives inaccurate perception of the tax law, the question arises: what, if anything, should the government do to correct taxpayer understanding?

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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Should We Tax Soda? An Overview Of Theory And Evidence

Hunt Allcott (NYU), Benjamin Lockwood (Wharton) & Dmitry Taubinsky (UC-Berkeley), Should We Tax Soda? An Overview of Theory and Evidence, 33 J. Econ. Persp. 202 (2019):

Taxes on sugar-sweetened beverages (SSBs) are growing in popularity and have generated an active public debate. Are they a good idea? If so, how high should they be? Are such taxes regressive? Americans and some others around the world consume a remarkable amount of SSBs, and the evidence suggests that this generates significant health costs. Building on recent work by Allcott, Lockwood, and Taubinsky (2018) and others, we review the basic economic principles for an optimal sin tax on SSBs. The optimal tax depends on (1) externalities: uninternalized costs to the health system from SSB consumption; (2) internalities: costs consumers impose on themselves by overconsuming sweetened beverages due to poor nutrition knowledge or lack of self-control; and (3) regressivity: how much the financial burden and the internality benefits from the tax fall on the poor. We then summarize the empirical evidence on the key parameters that determine how large the tax should be, which suggests that SSB taxes can be welfare enhancing. We end with seven concrete suggestions for policymakers considering an SSB tax. First, tax grams of sugar, not ounces of soda. Second, focus on counteracting externalities and internalities, not on minimizing SSB consumption. Third, design soda taxes to reduce consumption among people generating the largest externalities and internalities. Fourth, make taxes consistent across geographic boundaries. Fifth, use caution when pre-allocating tax revenues. Sixth, when judging regressivity, consider internality benefits, not just who pays the taxes. Finally, our read of the evidence is that taxing soda is probably a good idea.

Soda

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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Dharmapala & Khanna: Stock Market Reactions To India's 2016 Demonetization: Implications For Tax Evasion, Corruption, And Financial Constraints

Dhammika Dharmapala (Chicago) & Vikramaditya Khanna (Michigan), Stock Market Reactions to India's 2016 Demonetization: Implications for Tax Evasion, Corruption, and Financial Constraints, 16 J. Empirical Legal Stud. 281 (2019):

On November 8, 2016, the Indian government made a surprise announcement that certain currency notes (representing 86% of the currency then in circulation) would no longer be legal tender (although they could be deposited in banks over a limited period). The stated reason for this sudden “demonetization” was to combat tax evasion and corruption associated with “unaccounted-for” cash. We compute abnormal returns for different subsamples of firms — defined by industry, ownership structure, and other characteristics — on the Indian stock market around this event. There is little evidence that sectors thought to be associated with greater tax evasion or corruption experienced significantly different returns. However, we find substantial positive returns for banks and for state owned enterprises (SOEs).

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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, August 12, 2019

Burke: Exploiting The Medicare Loophole

Karen C. Burke (Florida), Exploiting The Medicare Loophole, 21 Fla. Tax Rev. 570 (2018):

Florida Tax Review (2018)Section 1411 imposes a 3.8 percent surtax on investment income of high earners that mirrors Medicare taxes on earned income. The enactment of the net investment income tax highlights gaps in the employment tax rules for passthrough entities — particularly limited partnerships, S corporations, and limited liability companies. This article considers how businesses can be structured to allow active high-income owner-employees of passthrough entities to avoid all three of the 3.8 percent Medicare taxes (SECA, FICA and section 1411). Part I considers the anachronistic limited partner exception to the SECA tax and the well-known S corporation loophole under the FICA tax, as well as the failure of section 1411 to reach active business income that avoids these employment taxes. Part II considers the recent Renkemeyer case, which has reignited the employment tax debate and threatens to upend structures used in investment and real estate funds to shelter management fees from all of the 3.8 percent taxes.

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August 12, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

AALS Tax Section Call For Papers Due Aug. 15: New Voices In Tax Law & Policy

AALS (2018)The AALS Section on Taxation has issued a Call for Papers to be presented at a works-in-progress session at the 2020 AALS Annual Meeting in Washington, D.C. The works-in-progress session is tentatively scheduled for Friday, January 3, 2020. This program will provide speakers the opportunity to present their work and receive feedback from commentators in the field.

Eligibility: Scholars teaching at AALS member schools or non-member fee-paid schools with seven or fewer years of full-time teaching experience as of the submission deadline are eligible to submit papers. For co-authored papers, all authors must satisfy the eligibility criteria.

Due date: 5 p.m. PDT, Thursday, August 15, 2019.

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August 12, 2019 in Conferences, Legal Education, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: Know The Difference Between IRAs And 401(k)s

Tax Court (2017)Every year I lecture on the time value of money.  Part of the lecture compares a normal taxed savings account funded with after-tax dollars to a tax-free retirement account funded with pre-tax dollars.  At the end of my assumed 40-year investment period the difference astonishes the students and drives home my main point about the time value of money.

The effectiveness of my point does not depend on which type of tax-deferred retirement account is being used.  I figure most of my students will make use of a traditional IRA, or Roth, or spousal, or will be able to make use of a 401(k) plan or a 408(k) SEP plan.  It does not matter which type of plan they use: the power of tax deferral works in all of them.

But the type of retirement plan can make a huge difference to the treatment of early withdrawals.  That is the lesson from last week’s case of Lily Hilda Soltani-Amadi and Bahman Justin Amadi v. Commissioner, T.C. Summary Opinion 2019-19 (Aug. 8, 2019) (Judge Armen).  The taxpayers there had made an early withdrawal from their 401(k) plan to help buy their first home.  The distribution would have been penalty-free had it come from an IRA.  But it came from a 401(k) and so, while permitted, it carried with it the §72(t) 10% penalty.  Details below the fold.

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August 12, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (4)

Sunday, August 11, 2019

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #2 and #5:

  1. [527 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [374 Downloads]  Five Key Research Findings on Wealth Taxation for the Super Rich, by David Gamage (Indiana)
  3. [158 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  4. [122 Downloads]  Back to Basics: Rethinking Normative Principles in International Tax, by Shay Shimon Moyal (S.J.D. 2020, Michigan)
  5. [122 Downloads]  The Substantive Canons of Tax Law, by Jonathan Choi (NYU)

August 11, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, August 9, 2019

Todd: Phantom Income And Domestic Support Obligations

Timothy M. Todd (Liberty), Phantom Income and Domestic Support Obligations, 67 Buff. L. Rev. 365 (2019):

The tax code is designed to raise government revenue. Domestic support obligations (DSOs) — namely, child support and spousal support — are designed to ameliorate the financial burdens that arise upon divorce. To determine the amount of domestic support obligations, statutes often refer to commonly used taxation concepts, such as “income.”

Courts determining domestic support obligations have been confronted with the question of how to treat “phantom income” — that is, amounts that are includible as gross income under the federal tax code but that have not resulted in any actual current cash receipt. Individuals obligated to make domestic support payments have argued that phantom income should not be included when calculating or modifying such obligations because the individual’s ability to pay has not materially changed. This Article analyzes the intersection of federal tax law and domestic support obligations concerning phantom income.

This Article considers several solutions — judicial and legislative — to address the phantom income issue in the domestic support context.

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August 9, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, August 8, 2019

Wallace: Tax Policy And Our Democracy

Clint Wallace (South Carolina), Tax Policy and Our Democracy, 118 Mich. L. Rev. ___ (2019) (reviewing Camille Walsh (Washington), Racial Taxation: Schools, Segregation, and Taxpayer Citizenship, 1869–1973 (University of North Carolina Press 2018), and Anthony C. Infanti (Pittsburgh), Our Selfish Tax Laws: Toward Tax Reform That Mirrors Our Better Selves (MIT Press 2018)):

Racial SelfishTwo new books explore the many ways in which U.S. tax policies and tax systems have promoted social injustices and continue to do so. In Racial Taxation, Camille Walsh provides a vivid depiction of the under-scrutinized fiscal history of elementary through secondary education in the United States, from the post-Reconstruction era until San Antonio Independent School District v. Rodriguez. In Our Selfish Tax Laws, Anthony Infanti details how existing U.S. Federal tax policies manifest problematic power structures that exclude and disadvantage many if not most taxpayers. Together, these books dissect a variety of flawed tax structures and reveal that tax discrimination grounded in race, gender, heteronormativity, differences in physical ability, and, pervasively, power dynamics, are not a malignant tumor on an otherwise healthy body, but rather are a systemic, pathological affliction on the entire U.S. fiscal state. This essay reviews Walsh’s and Infanti’s work, and builds on the authors’ rich historical and analytical contributions to ask: how can tax policy be reformed so that, rather than betraying and undermining the foundations of American democracy, it works to strengthen democratic institutions and their connection with members of a democratic society?

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August 8, 2019 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Fiscal Democracy In The States: How Much Spending Is On Autopilot?

Tracy Gordon, Megan Randall, C. Eugene Steuerle, Aravind Boddupalli (Tax Policy Center), Fiscal Democracy in the States: How Much Spending is on Autopilot?:

Governors, lawmakers, and journalists often decry constitutional and statutory formulas, federal grant requirements, and court rulings they think excessively limit state budget decisions.

Some observers estimate as much as 70 percent of state spending is “on autopilot,” meaning these constraints are in place before proposals or negotiations begin.

But measuring predetermined state budget commitments is far from straightforward. The federal government explicitly defines “tax expenditures” and “mandatory spending” and reinforces these concepts through the annual budget process. In contrast, few states rigorously and transparently assess the long-term cost of tax breaks and spending programs that are either fixed in size or will grow automatically without policy changes.

In this report, we perform a first-of-its-kind analysis of how much spending was restricted or partially restricted in CaliforniaFloridaIllinoisNew YorkTexas, and Virginia from 2000 to 2015.

Key findings

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August 8, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Walker: Employer Losses And Deferred Compensation

David I. Walker (Boston University), Employer Losses and Deferred Compensation:

Most large public companies offer their executives the opportunity to defer the receipt and taxation of their salary or other current compensation until retirement or some other future date, and equity compensation, which also entails deferral of pay and taxation, constitutes a large fraction of the typical executive pay package. Conventional wisdom holds that employer net operating losses (NOLs) improve the joint economics of deferred and equity compensation (henceforth together "deferred compensation") for the parties. However, empirical studies provide little evidence of an association between employer NOLs and deferred compensation use. This paper focuses on two potential explanations for this apparent disconnect. First, this paper shows that the relationship between employer NOLs and the attractiveness of deferred compensation is more complex and less predictable than is generally recognized, that a large NOL position does not necessarily produce a larger driving force for use of deferred compensation, and that in some cases employer NOLs can actually result in poorer deferred compensation economics. As a result, some employers and executives may rationally choose to ignore employer NOLs when making compensation decisions. Second, even if companies are sensitive to the existence of employer NOLs when making compensation decisions, it is not clear that research methods currently in use would detect the sensitivity.

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August 8, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, August 7, 2019

Gamage: Five Key Research Findings On Wealth Taxation For The Super Rich

David Gamage (Indiana), Five Key Research Findings on Wealth Taxation for the Super Rich:

This essay summarizes five key findings from the author’s in-progress research evaluating the potential of wealth tax reform proposals for taxing the super rich. These five key findings are as follows:

  1. The existing U.S. tax system does a very poor job of meaningfully taxing the super rich.
  2. There are only two approaches for reform that could plausibly succeed in making it so that the U.S. tax system would meaningfully tax the super rich: wealth taxation and mark-to-market taxation (sometimes known as “accrual” taxation).
  3. Piecemeal reforms to the existing tax system that some have argued for as “progressive alternatives” to wealth tax reforms should be thought of as complements to wealth taxation rather than as competitors.
  4. Much of the public criticism of wealth tax reform proposals ignores recent legal scholarship on valuation methodologies and other implementation design options, to the extent that this criticism mostly only applies to outdated, “straw man” versions of how a modern wealth tax might be implemented.
  5. Concerns about the Supreme Court striking down wealth tax reforms as unconstitutional can be addressed by including fallback options in the wealth tax legislation.

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August 7, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Haneman: Intergenerational Equity, Student Loan Debt, And Taxing Rich Dead People

Victoria J. Haneman (Creighton), Intergenerational Equity, Student Loan Debt, and Taxing Rich Dead People:

Once upon a time, there was a generation of indentured servants called Millennials. They were beautiful and mysterious and clever and feckless, in the way that all young people can sometimes be. The Millennials had dreams of future careers in which they were near-mystical, all-powerful protectors of the planet, brunching on avocado toast, driving in electric cars, and eradicating golf courses from the earth. Droves of Millennials applied to universities, believing that a diploma was a barrier for entry to advance the careers of which they dreamt. Most were confronted with a conundrum: borrow to subsidize the dream career, with decades of (potentially unaffordable) payments when they were finally employed. The Generation Who Stole the World, commonly referred to as the Baby Boomers, had decided that unlimited access to debt was the most economically sound approach by which to offer equal opportunity in higher education — and the delectable irony of this tale is that the availability of debt caused (or at the very least, accompanied) the skyrocketing of costs. A vicious cycle resulted in an entire generation of educated Millennials having mortgaged their futures, and visibly sagging under the weight of the chains of their debt.

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August 7, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Tuesday, August 6, 2019

Cui: The Superiority Of The Digital Service Tax Over Significant Digital Presence Proposals

Wei Cui (University of British Columbia), The Superiority of the Digital Service Tax over Significant Digital Presence Proposals:

Responding to calls for reallocating taxing rights over multinationals’ profits to reflect the place of user value creation, the OECD recently announced a Program of Work to implement international tax reform. I use the European Commission’s 2018 proposal to introduce the “significant digital presence” concept into income tax treaties as an example of the type of approach the OECD favors, and argue that it is inferior to recently proposed digital services taxes (DSTs). DSTs directly address the question of where profits should be allocated and taxed, while SDP proposals subordinate this vital question to superfluous treaty conventions. Global tax coordination deserves better focal points.

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August 6, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, August 5, 2019

Morse Reviews Fleischer & Hemel's The Architecture Of A Basic Income

Jotwell (Tax) (2016)Susan Morse (Texas), The Policy Maker’s Guide to a Universal Basic Income (JOTWELL) (reviewing Miranda Perry Fleischer (San Diego) & Daniel J. Hemel (Chicago), The Architecture of a Basic Income, 86 U. Chi. L. Rev. __  (2019) (reviewed by David Elkins (Netanya) here)):

Miranda Fleischer and Daniel Hemel have written a terrific article, The Architecture of a Basic Income, about a universal basic income, or UBI. They offer concrete policy advice grounded in philosophical priors. They successfully separate questions about fundamental policy design from questions about political packaging. Their paper should become a go-to resource for the increasing swell of interest in UBI policy. ...

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August 5, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: Appeals Is Still Part Of The IRS, Really!

Tax Court (2017)I find it useful to think of tax administration as comprising two overarching functions: (1) determining tax liabilities and (2) collecting tax liabilities.  The IRS Office of Appeals (“Appeals”) supports both functions by mediating disputes between taxpayers and either the IRS exam function or collection function.  In Aldo Fonticiella v. Commissioner, T.C. Memo. 2019-74 (June 13, 2019), Judge Gerber teaches us that even though Appeals has a different (and wider) set of powers that often allow it to settle disputes without litigation, it still functions as an integral part of the IRS, no matter how many times Congress puts “Independent” in its title.

Taxpayers unhappy with Appeals look for creative ways to avoid its decisions.  In 2011, one such taxpayer argued that all Appeals work product violated the U.S. Constitution.  His theory was that Appeals Officers were “Officers of The United States” within the meaning of the U.S. Constitution.  That meant they had to be appointed by the President with the consent of the Senate.  Because they were not, they could not wield any power over taxpayers.  That made all their work illegal and without effect.  In Tucker v. Commissioner both the Tax Court (135 T.C. 114, 2010) and the D.C. Circuit (676 F.3d 1129, 2012) rejected the argument.  Not a single judge agreed with the taxpayer.

Creativity begets creativity.  In Fonticiella, Judge Gerber considers and rejects a companion argument, that Appeals is a “de facto independent agency” whose very existence is an affront to the U.S. Constitution.  While that is a loser argument today, it may become a winner eventually as Congress keeps trying to transform Appeals into a mini-me Tax Court.  The recently enacted Taxpayer First Act, P.L. 116-25, moves in that direction, although not far enough, IMHO, to affect the rationale for Judge Gerber’s decision.  You can read more about it below the fold.

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August 5, 2019 in Bryan Camp, IRS News, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, August 4, 2019

The Top Five New Tax Papers

SSRN Logo (2018)This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [517 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [249 Downloads]  A Tax Professor's Guide to Formative Assessment, by Heather Field (UC-Hastings)
  3. [221 Downloads]  Where Is the Opportunity in Opportunity Zones? Early Indicators of the Opportunity Zone Program’s Impact on Commercial Property Prices, by Alan Sage (MIT), Mike Langen (Maastricht University) & Alex Van de Minne (MIT)
  4. [150 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  5. [122 Downloads]  Back to Basics: Rethinking Normative Principles in International Tax, by Shay Shimon Moyal (S.J.D. 2020, Michigan)

August 4, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, August 2, 2019

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Kysar's Unraveling The Tax Treaty

This week, David Elkins (Netanya) reviews Rebecca M. Kysar (Fordham), Unraveling the Tax Treaty, 103 Minn. L. Rev. __ (2019).

Elkins (2018)Tax treaties are a ubiquitous feature in the landscape of international taxation, with several thousand bilateral instruments operating to regulate the taxing power of their signatories. However, in recent years, scholars have begun to challenge the century-old principles underlying the tax treaty. Some of these challenges concern the capacity of an institution formed in the aftermath of the First World War to handle our digital and much more globalized economy. Other challenges concern the role of the tax treaty in protecting the interests of wealthier countries.

The bulk of Professor Rebecca Kysar’s essay is dedicated to a critical examination of the tax treaty, as currently constituted. Tax treaties have been justified as tools for preventing double taxation, combatting tax evasion, inhibiting double non-taxation, encouraging foreign direct investment, respecting comity, providing certainty and predictability, institutionalizing non-discrimination, and binding governments to follow good tax policy even when confronted with the demands of political expediency. Professor Kysar addresses each of these issues in turn. 

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August 2, 2019 in David Elkins, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Tax Panels Today At SEALS

Tax panels today at the 2019 SEALS Annual Conference in Boca Raton, Florida:

SEALs Logo (2013)Tax Law Workshop: Tax Law and Practice — A Critical Review
This panel considers both the realities of tax practice and tax practitioners in the 21st Century, as well as necessary updates to the tax law in a variety of areas. In particular, panelists in this group consider the future of the uncovering and punishing of tax evasion, standards of professionalism for tax practitioners, the role of blockchain technology in tax evasion (particularly in the international context), philanthropy and the tax law, and the role of the states in creating and enforcing tax laws.

  • Jennifer Bird-Pollan (Kentucky) (moderator)
  • William Byrnes (Texas A&M)
  • Alyssa DiRusso (Samford)
  • David Hasen (Florida)
  • Young Ran (Christine) Kim (Utah)
  • Stephanie McMahon (Cincinnati)
  • Andrew Swain (Indiana)
  • Richard Winchester (Seton Hall)

Tax Law Workshop: Tax Policy Reforms in the 21st Century

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August 2, 2019 in Conferences, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Thursday, August 1, 2019

Trump’s Lasting Tax Policy Legacy Is Lowered Tax Morale

Andrew Leahey (Tax LL.M. 2019, NYU), Trump Tax Games: Lowered Tax Morale as Trump’s Lasting Tax Policy Legacy:

The Trump administration’s most permanent change to tax policy will not come in the form of executive action or signature legislation, but will stem from the way in which Trump himself has undermined tax compliance and lauded tax evasion — both in words and by example. These effects are not easily mitigated, as unlike tax rates there is no political or legislative mechanism through which social norms can be effectively changed.

August 1, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

More On The 50 Most-Cited Tax Articles of All Time

Following up on my previous post on Jonathan H. Choi (NYU), The 50 Most-Cited Tax Articles of All Time, 36 Yale J. on Reg.: Notice & Comment (May 11, 2019):

47 authors (40 men, 7 women) wrote the 50 most-cited tax articles, 8 (7 men, 1 woman) more than once:

Author Frequency
Boris Bittker  4
David Weisbach  4
Joseph Bankman  3
Stanley Surrey  3
Reuven Avi-Yonah  2
Michael Graetz  2
Marjorie Kornhauser  2
Edward Zelinsky  2
Bruce Ackerman  1
Anne Alstott  1
William Andrews  1
Lily Batchelder  1
Walter Blum  1
Paul Caron  1
Marvin Chirelstein  1
Dan Coenen  1
Richard Doernberg  1
Peter Enrich  1
Victor Fleischer  1
Pamela Gann  1
Mark Gergen  1
Fred Goldberg 1
Thomas Griffith 1
Erwin Griswold  1
Daniel Halperin  1
David Hariton 1
Walter Hellerstein  1
Kristin Hickman  1
Harry Kalven 1
Louis Kaplow  1
Mark Kelman   1
Leandra Lederman  1
Fred McChesney  1
Beverly Moran  1
R.A. Musgrave  1
Jacob Nussim  1
Michael O’Hear  1
Peter Orszag 1
Randolph Paul 1
William Plumb 1
Eric Posner  1
David Schizer  1
Steven Shavell  1
Dan Shaviro  1
David Slawson  1
Joseph Sneed  1
William Whitford  1

The authors are from 22 law schools, 12 law schools are represented more than once:

School Frequency
Harvard 9
Chicago 7
Yale 6
Stanford 5
Columbia 4
Cardozo 2
Emory 2
Georgia 2
Michigan 2
NYU 2
Tulane 2
USC 2
Duke 1
Indiana 1
Marquette 1
Minnesota 1
Northeastern 1
Pepperdine 1
UC-Berkeley 1
UC-Irvine 1
Vanderbilt 1
Wisconsin 1

The 50 most-cited tax articles were published in 21 law reviews (12 law reviews published 2 or more of the articles):

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August 1, 2019 in Legal Education, Pepperdine Tax, Tax, Tax Prof Rankings, Tax Rankings, Tax Scholarship | Permalink | Comments (1)

Today's Tax Panel At SEALS

Tax panel today at the 2019 SEALS Annual Conference in Boca Raton, Florida:

SEALs Logo (2013)Tax Law at the Crossroads
The ever-changing social and political landscape makes it necessary to constantly revisit the tax law and determine whether the current status of the law matches the needs and goals of the society it serves. The Tax Cuts and Jobs Act is the most recent example of a massive overhaul in the tax system but even that significant reform effort left many issues unaddressed. The papers on this panel consider a variety of tax law concerns related to families, businesses, and international transactions. Both federal- and state-level tax matters are addressed.

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August 1, 2019 in Conferences, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Wednesday, July 31, 2019

Johnson: The Estate Tax Gap

Calvin H. Johnson (Texas), The Estate Tax Gap, 163 Tax Notes 1479 (June 3, 2019):

The Internal Revenue Code provides that all property transferred by reason of death shall be included in the gross estate whether the property is real or personal, tangible or intangible and wherever located. The IRS Statistics of Income, however, indicates that estate and gift tax reaches only 25% of the IRS would expect to collect if wealth transferred at death were included in full in the gross estate. The paper uses calculations based on the Saez and Zucman statistics of wealth, and defends those statistics as the best for estate tax purposes. The rest or 75% of value is lost to undervaluation of the property transferred. The articles suggests some simple steps to combat undervaluation, including ignoring temporary restrictions the decedent has added to the property to suppress its supposed value, and delaying the valuation date until the decedent’s retained interest have expired. But the talent of the estate planning bar is such that we should not expect full and fair valuation of property transferred by reason of death.

See also Paul L. Caron (Dean, Pepperdine) & James R. Repetti (Boston College), The Estate Tax Non-Gap: Why Repeal a 'Voluntary' Tax?, 20 Stan. L. & Pol'y Rev. 153 (2009)

July 31, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

The UNC TCJA Effects Tracker

Jeff Hoopes (Research Director, UNC Tax Center), The TCJA Effects Tracker:

UNC Tax CenterWhat Do We Know About the Effects of the Tax Cuts and Jobs Act?
On December 22, 2017, the U.S. tax code was dramatically changed when what is commonly referred to as the Tax Cuts and Jobs Act (TCJA) was signed into law. As tax scholars, we have a keen interest in knowing how the TCJA will change the world. On this page, we are posting empirical academic studies that focus on specific provisions of this monumental tax reform.

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July 31, 2019 in Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, July 30, 2019

Borden: Measuring Partners’ Capital Interests And Profits Interests

Bradley T. Borden (Brooklyn), Partnership-Related Relatedness: Measuring Partners’ Capital Interests and Profits Interests:

Section 707(b)(1) provides that two partnerships are related if the same persons own more than 50% of the partnership’s capital interests or profits interests. Even though numerous sections of the Internal Revenue Code rely upon that definition of partnership relatedness, the law does not provide meaningful guidance for measuring capital and profits interests. Measuring such interests in partnerships with distribution-dependent equity structures is particularly challenging because rights to profits can vary from tier-to-tier in distribution waterfalls. Focusing on measuring profits interests in partnerships, this article presents five methods for measuring such interests: (1) the max-out approach, (2) the capital-only liquidation approach, (3) the capital-plus liquidation approach, (4) the current-profits approach, and (5) the projected-profits approach. With no guidance in this area favoring any approach, observers may conclude that any of the approaches could be used to measure profits interests.

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July 30, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Do Corporate Taxes Affect Executive Compensation?

Tobias Bornemann (Vienna University), Martin Jacob (WHU - Otto Beisheim School of Management) & Mariana Sailer (Vienna University), Do Corporate Taxes Affect Executive Compensation?:

The limitation of executive compensation has been a matter of public and policy debate for at least 20 years. We examine a first-time regulatory action where the deductibility of the total value of executive compensation is limited and unavoidable. We find that, rather than reduce remuneration, companies reduce precautionary savings, thereby increasing risk. This suggests that firms pass on the burden of increased taxes to shareholders. Our results shed light on the effects of reforms similar to the U.S. Tax Cuts and Jobs Act of 2017 and contribute to prior findings that argue for proactive regulation to limit executive compensation.

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July 30, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, July 29, 2019

Brooks Reviews Feminist Judgments: Rewritten Tax Opinions

Kim Brooks (Dalhousie), Will Feminist Judges Really Make a Difference? (JOTWELL) (reviewing Bridget J. Crawford (Pace) & Anthony C. Infanti (Pittsburgh), Feminist Judgments: Rewritten Tax Opinions (Cambridge University Press 2017)):

Feminist JudgmentsFeminist judgments projects originate in Canada. ... The first volume of American re-writes focused on decisions of the US Supreme Court. Surprising only to people who do not teach tax, the next volume of American re-writes takes up tax opinions. Released on December 28, 2017, as an invitation to continue holiday festivities, a volume edited by Bridget Crawford and Anthony Infanti serves up a veritable buffet of delights. Eleven rewritten American tax opinions comprise the volume. Six are rewritten Supreme Court decisions, one if a rewritten federal circuit court opinion, and four are rewritten Tax Court opinions.

The end result is spectacular. I want to draw attention to two features in this short review. These features are not tied, given this more general audience, to the tax context of the decisions. That’s worth underlining: this is a volume that is worth reading for scholars in any area of law with an interest in feminist legal theory and practice and how feminists approach legal and factual questions.

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July 29, 2019 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

China's 2018 Individual Income Tax Reform: A Global Perspective

Yue Dai (Oxford), China's 2018 Individual Income Tax Reform: A Global Perspective, 94 Tax Notes Int'l 849 (May 27, 2019):

This article analyzes China’s 2018 individual income tax reforms, discussing how the changes fit with China’s unique tax culture. It also compares China’s evolving tax system with the tax systems in the United States and the United Kingdom, considering how their experiences can help guide China’s reforms and, more broadly, how China’s tax system fits into the global tax environment.

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July 29, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: How A New Work Location Becomes A Tax Home

Tax Court (2017)The Bureau of Labor Statistics says here that almost half of U.S. families headed by a married couple were two-earner households in 2018.  Having a two-earner household has many advantages over a one-earner household, the most obvious one being more income.  Today’s lesson, however, is a cautionary one.  Two rules about tax homes may lessen the take-home earnings of the second income: the rule about married couples and the rule about temporary employment.

In Hector Baca and Magdalena Baca v. Commissioner, T.C. Memo. 2019-78 (June 26) (Judge Holmes), the couple lived in El Paso where both had worked.  In 2011 Mr. Baca got a new job in Midland, a city some 300 miles away.  But it was an on-call job, where any one job call could be his last.  At issue for tax years 2012 and 2013 was whether he could deduct his travel costs between El Paso and Midland.  Judge Holmes said no.  The fact that Ms. Baca's job remained in El Paso did not affect the location of Mr. Baca's tax home.  Married taxpayers can have two tax homes and Mr. Baca's was Midland.  Thus Mr. Baca's costs of Midland travel and lodging could not be deducted from the money he made there.  That reduced the advantage of this married couple's second income.  Details below the fold.

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July 29, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Today's Tax Panel At SEALS

Tax panel today at the 2019 SEALS Annual Conference in Boca Raton, Florida:

SEALs Logo (2013)New Tax Scholars Workshop
This workshop gives New Scholars the opportunity to present a work-in-progress in a welcoming and supportive environment and to receive feedback on their presentation from more senior scholars in their fields. New Scholars are also assigned a mentor. The program is open to junior faculty at member schools. New Scholars are nominated to participate in the New Scholars Workshop by the deans of their respective law schools.

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July 29, 2019 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sunday, July 28, 2019

The Top Five New Tax Papers

SSRN Logo (2018)This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [497 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [237 Downloads]  A Tax Professor's Guide to Formative Assessment, by Heather Field (UC-Hastings)
  3. [204 Downloads]  Where Is the Opportunity in Opportunity Zones? Early Indicators of the Opportunity Zone Program’s Impact on Commercial Property Prices, by Alan Sage (MIT), Mike Langen (Maastricht University) & Alex Van de Minne (MIT)
  4. [143 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  5. [117 Downloads]  Back to Basics: Rethinking Normative Principles in International Tax, by Shay Shimon Moyal (S.J.D. 2020, Michigan)

July 28, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, July 26, 2019

Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Crawford's Magical Thinking And Trusts

This week, Hayes Holderness (Richmond) reviews Bridget J. Crawford (Pace), Magical Thinking and Trusts, 50 Seton Hall L. Rev. ___ (2019).

Holderness (2017)

Wealth inequality is a major concern in today’s United States. As wealth concentrates among the super-wealthy, lawmakers, academics, and commentators have proposed ways to diffuse that wealth, often through tax reform. Wealth remains concentrated in part through the use of legal rules and entities, perhaps in ways that lead to unintended results. Here there be trusts. Trusts—particularly family trusts—have long been a major tool of wealth conservation and potential tax avoidance. So when the Supreme Court heard this year’s Kaestner case questioning North Carolina’s authority to tax the income of a family trust, many hoped that the Justices would help dismantle the tax avoidance tool by blessing the state’s taxing authority.

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July 26, 2019 in Hayes Holderness, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (2)

Kysar: Dynamic Legislation

Rebecca M. Kysar (Fordham), Dynamic Legislation, 167 U. Pa. L. Rev. 809 (2018):

To overcome congressional gridlock, lawmakers have developed devices that, under certain conditions, provide easier paths to policy change. Procedural mechanisms may eliminate the threat of filibuster and other barriers to legislating. Laws may prompt Congress to act through sunset dates, penalties like sequestration, or other undesirable policy outcomes. Alternatively, the legislative product itself may spontaneously update without further action by Congress, a category I label “dynamic legislation.” For instance, during consideration of recent tax legislation, lawmakers proposed that certain tax cuts be automatically ratcheted down if the bill failed to generate sufficient economic growth and that delayed tax increases not go into effect if revenue hurdles were met.

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July 26, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Trump Was Right: Endowment Tax On Wealth Accumulation At Elite Colleges Will Curb Inequality

Mae C. Quinn (Florida), Wealth Accumulation at Elite Colleges, Endowment Taxation, and the Unlikely Story of How Donald Trump Got One Thing Right, 54 Wake Forest L. Rev. 451 (2019):

President Donald Trump has declared war on immigrants, diversity, and those who dare to dissent. Rooted in resentments about who people are, where they were born, and what they believe, these executive-led assaults are dangerous developments in the modern era. However, in the course of Trump's many retrograde tirades, he has somehow managed to get one thing right—too many elite private colleges in the United States, considered nonprofit entities, have amassed way too much wealth.

This Article recounts this unlikely story, including how the Trump Administration's 2017 endowment tax could work to advance diversity. The new endowment tax penalizes private colleges for stockpiling assets. In response, potentially impacted universities have argued they are victims of an unfair conservative conspiracy intended to target liberal ideology. But the data demonstrates that this is not true. And concerns about rich colleges hoarding their resources have come from both the right and the left.

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July 26, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Thursday, July 25, 2019

The Taxation Of Undocumented Immigrants

Nneka Obiokoye (Holland & Hart, Denver), Taxation of Undocumented Immigrants: The Uneasy Connection Between Regulating the Undocumented Immigrant and Fostering Illegal Activity, 2 J. Bus. Entrepreneurship & L. 359 (2018):

The volume of illegal immigration to the United States has been a raging issue in recent years, posing a significant issue for debates during the 2016 presidential election and an important policy concern for the Trump administration. Indeed, this issue was arguably the strongest point of contention among the 2016 presidential candidates and may have largely influenced the results of that election. While the recent increase in terrorist activity accounts for some of the controversy, a large part of the problem is that the average American believes that undocumented immigrants have a parasitical effect on the economy. In other words, they believe that immigrants take away from socio-economic infrastructure—such as welfare, health care, and education benefits—without contributing to society. Factual evidence tends to suggest otherwise, as statistics show that undocumented immigrants do, in fact, contribute a significant amount of federal and state revenue in taxes.

This article seeks to correct some of the negative perceptions held by the general public pertaining to undocumented immigrants, by drawing attention to four major points.

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July 25, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Financial Innovation, Tax Law, And The Making Of The Contemporary Art Market

Michael W. Maizels (Harvard metaLAB) & William E. Foster (Arkansas), The Gallerist’s Gambit: Financial Innovation, Tax Law, and the Making of the Contemporary Art Market, 42 Colum. J.L. & Arts 479 (2019):

This essay presents an account of an important moment in the emergence of the market for Pop art that was facilitated in part by a distinctly accommodating legal environment. Although Abstract Expressionism is commonly credited with causing American art’s ascendance onto the world stage immediately after World War II, its international acclaim belied a precarious institutional and financial infrastructure for living American painters. It was only with the following generation of Pop and Minimalist artists that the United States developed a self-sustaining market for the work of contemporary American artists. A significant but largely overlooked factor in that continued success was the ability of art dealers to take advantage of the unique legal and regulatory environment of the 1960s. This essay focuses on the efforts of an enterprising art gallerist, Leo Castelli, to aggressively promote his stable of Pop artists through the development of several financial structures, including some designed to leverage the relatively generous income tax deductions and anemic enforcement regime of the time. In doing so, Castelli not only seeded the ground for the international ascendance of American visual art, but also engineered financial arrangements that fostered the development of a lucrative and resilient art market that endures to this day.

With the aim to provide insights into both the legal-political and the art historical registers, this essay describes a tax law framework that provides a key piece missing from the art historical puzzle. While historians have treated the explosion of the market for American contemporary art as a natural consequence of postwar American economic ascendance, insufficient attention has been paid to how this economic energy was channeled into the art market in the first place. Stated differently, Americans were newly flush with cash, but why did they start buying art with it?

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July 25, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)