Paul L. Caron
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Friday, November 15, 2019

Flanagan: Reframing Taxigration

Jacqueline Lainez Flanagan (University of the District of Columbia), Reframing Taxigration:

Tax compliance by undocumented immigrant workers could and should be the architectural centerpiece of immigration reform. Analyzing this premise using broad economic frameworks and examining corresponding mechanisms in U.S. tax and immigration systems, this article seeks to reframe “taxigration” to signify tax filing as a threshold condition to legalization.

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

Call For Papers: Indiana Symposium On Social Equality in the Sharing Economy

Call for Participation: 2020 Social Equality in the Sharing Economy Symposium:

Indiana (2017)The “sharing economy,” also known as the “gig” or “on-demand” economy, is transforming the way people work, eat, commute, and travel by seamlessly connecting suppliers and consumers via app-based technology platforms.  It provides flexible income earning opportunities for one side and convenience and low prices for the other. However, it also creates a dizzying array of policy problems for communities of all sizes—from tax evasion and pollution to price discrimination, worker precarity, and violent protests.  The Indiana Journal of Law and Social Equality (IJLSE), in collaboration with Indiana University’s Kelley School of Business and the Ostrom Workshop, is hosting a symposium on February 13th and 14th at the Maurer School of Law in Bloomington, Indiana to offer and debate solutions to these complex and fast-moving set of challenges.

Designed to stimulate interdisciplinary research and collaboration, as well as to amplify existing research, the Social Equality in the “Sharing Economy?” Symposium will consist of a series of keynotes, panel discussions, and paper presentations from a range of voices.

We invite original paper submissions from all relevant disciplines for the Symposium.

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November 15, 2019 in Conferences, Legal Education, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, November 14, 2019

Blank Presents Progressive Tax Procedure Today At San Diego

Joshua Blank (UC-Irvine) presents Progressive Tax Procedure (with Ari Glogower (Ohio State)) today at San Diego as part of its Tax Law Speaker Series:

6a00d8341c4eab53ef0240a4467a28200c-300wiDiscussions of progressive taxation in the United States—and of whether the rich pay enough in taxes—generally focus on the structure of the substantive tax law, such as the marginal rates, income brackets, deductions, and credits under the federal income tax. Despite recent reports of tax avoidance and noncompliance by high-income taxpayers, these discussions have not focused on the structure of the tax procedure rules, which govern the Internal Revenue Service’s administrative responsibilities and taxpayers’ compliance obligations.

This Article presents the case for a new system of “progressive tax procedure.” Currently, tax procedure rules—such as tax penalties and the statute of limitations—typically apply in a uniform manner to all taxpayers, irrespective of their income. Under progressive tax procedure, in contrast, these rules would vary depending on the taxpayer’s income. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies.

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November 14, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

McCoskey & Narotzki: Education Has Been 'Dumbed-Down' in Tax Reform

Melanie McCoskey (Akron) & Doron Narotzki (Akron), Education Has Been 'Dumbed-Down' in Tax Reform, 22 Fla. Tax Rev. ___ (2019):

Florida Tax Review (2019)With promises of “Make America Great Again” and tax reform for “middle-class” Americans, the current federal government administration has implied that the average American would become more prosperous under this tax system. It is no surprise that most middle-class Americans view a college education as a requirement for achieving a better life. However, under the TCJA, education has not fared well, and in reality, students from many low- and moderate-income families will face reduced scholarships from elite schools, thereby reducing diversity on these campuses. Other proposed changes to education in the original tax bill, which were later removed, are also addressed as they may hint to which direction this may go and face legislative changes in the future.

November 14, 2019 in Legal Ed News, Legal Education, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Morse: GILTI — The Cooperative Potential Of A Unilateral Minimum Tax

Susan C. Morse (Texas), GILTI: The Co-operative Potential of a Unilateral Minimum Tax, 2019 Brit. Tax Rev. 512:

Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), the US allowed US parented multinationals to delay indefinitely their payment of US corporate income tax on non-US income earned by non-US corporate subsidiaries (CFCs). The TCJA revoked this permission through the enactment of a unilateral, current minimum tax on the “global intangible low-taxed income” (GILTI) of CFCs. The post-TCJA US international tax law generally imposes current US tax on CFC income subject to reductions for foreign income taxes paid or accrued. This US regime supports the continued existence of a corporate income tax and presents an opportunity to co-ordinate the details of corporate income tax systems globally. Similarity among systems, for instance with respect to rate, timing and base, would further strengthen the corporate income tax and perhaps support innovations such as formulary apportionment.

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

Wednesday, November 13, 2019

Robinson Presents Negotiated Tax Havens Today At Penn

Leslie Robinson (Dartmouth) presents Negotiated Tax Havens (with Kevin Markle (Iowa)) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Robinson (2019)The intersection of state aid and international tax has acquired a high profile in Europe. In response, disclosure policies are being proposed. With no empirical evidence, these policies are predicated on rhetoric that pervasive practices by host country governments unfairly benefit foreign-owned companies. Using several novel data sources on tax relief granted in the EU, we find that both domestic- and foreign-owned companies benefit from tax concessions. Our evidence that tax avoidance is a joint production function of business and government suggests that any jurisdiction can operate as a tax haven for a company willing to negotiate. ...

Conclusion.  Overall, our results suggest that state aid offers tax benefits to both foreignowned and domestic-owned companies. Aid that is pre-approved appears more likely to benefit domestic-owned companies, perhaps because helping domesticowned companies is more likely to meet a broader EU objective than aiding foreign-owned companies. The recent trend towards enhanced disclosure of tax rulings as well as disclosure of aid granted at the level of the beneficiary are, in our view, necessary steps toward appropriate enforcement of state aid rules in the EU. However, because state aid does appear to benefit domestic-owned companies, the automatic exchange of tax rulings should cover all rulings, not just those issued to foreign-owned companies.

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November 13, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

ABA And UNLV Host Webinar Today On Economic, Gender And Racial Inequality In State & Local Tax Systems

The ABA and UNLV Law School host a webinar today (12:30 pm PST) on Economic, Gender and Racial Inequality in State and Local Tax Systems:

  • UNLV ABABridget Crawford (Pace)
  • Lisa Christensen Gee (Institute on Taxation & Economic Policy)
  • Francine Lipman (UNLV) (moderator)
  • Kirk Stark (UCLA)

Over the past four decades, wealth has increasingly concentrated among the highest-income households. These households are disproportionately White and male. In 2018, three White men held aggregate wealth greater than the aggregate wealth of one-half of Americans. The median White household has 41 times more wealth than the median Black household and 22 times more wealth than the median Latinx household. On average women earn less than men in all industries. The largest pay gaps are in management, in which men earned $88,000 on average in 2016, compared to $55,000 for women. At the intersection of race and gender the gaps are even more shocking. Women of color are disproportionately poor suffering poverty rates of 21.4% Black women, 18.7% Latinas, and 22.8% Native American women, as compared to 7% for White men The United States exhibits wider disparities of wealth than any other major developed nation.

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

Tuesday, November 12, 2019

LaPlante Presents The Effect Of Intellectual Property Boxes On Innovation And Effective Tax Rates Today At NYU

Stacie LaPlante (Wisconsin), The Effect of Intellectual Property Boxes on Innovative Activity & Effective Tax Rates (with Tobias Bornemann (Vienna University of Economics and Business) & Benjamin Osswald (Wisconsin)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

LaplanteWe investigate whether and to what extent the adoption of an intellectual property box increases innovative activity and the extent to which different types of firms benefit financially. We examine the adoption of the intellectual property box in Belgium because it allows us to cleanly identify the impact on innovative activity and effective tax rates. Our results indicate an overall increase in innovative activity as proxied by patent applications, grants, and highly-skilled employment, at the expense of patent quality. We also provide evidence that firms with patents on average enjoy 7.2% to 7.9% lower effective tax rates, with the greatest financial benefits accruing to multinational firms compared to domestic firms

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November 12, 2019 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

The Arm's Length Standard Is Not The Problem

Lorraine Eden (Texas A&M), The Arm's Length Standard Is Not the Problem, 48 Tax Mgmt. Int'l J. 10 (Oct. 11, 2019):

The historical approach to taxing intrafirm transactions of multinational enterprises — the arm’s-length standard (ALS) — has been criticized as unworkable, out of date and on death’s door. Criticisms of the ALS fall into two broad categories. First are concerns that MNEs have been deliberately engaging in abusive transfer pricing that is extensive, unfair and draining development. Second is that the transfer pricing rules are too difficult to implement for various reasons, of which the two most important reasons are the lack of arm’s-length comparables (e.g., for hard-to-value intangibles) and that MNE have synergies not available to unrelated parties. As a result, many academics and policy makers advocate getting rid of the ALS and shifting to global formulary apportionment (GFA). Even the OECD, long a supporter of the ALS and opponent of GFA, now includes fractional apportionment as a possible method for attributing income among countries under its Pillar 1 proposals for taxing the digital economy. My views are different. My preferred policy response to the income shifting problem is two-fold.

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

Monday, November 11, 2019

Hayashi Presents State And Local Taxation Of Foreign Investment In Real Property Today At Loyola-L.A.

Andrew Hayashi (Virginia) presents Bullion in the Sky: State and Local Taxation of Foreign Investment in Real Property at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto:

Hayashi (2019)The current protectionist moment is characterized not only by national restrictions on immigration and international trade. Cities have played their part, adopting direct restrictions and taxes on foreign ownership of real property and imposing taxes on second homes and vacant properties that indirectly burden foreign investment. Although these laws are new, they draw from a well of suspicion regarding foreign ownership that is very old. We provide economic and historical context for the current wave of local restrictions on foreign owners of real property and evaluate the legality of such restrictions under U.S. law. We then assess the policy merits of these laws within an economic framework that highlights the role that law can play in helping individuals manage the wide variety of economic risks that they face. We describe the circumstances under which local restrictions on foreign property ownership can help or hurt local residents.

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November 11, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: One Year At A Time

Tax Court Logo 2I do not teach much tax accounting in my basic tax class.  I do, however, teach the general rule in §441(a) that each tax year stands alone.  Last week’s case of Roger G. Maki and Lilane J. Gervais v. Commissioner, T.C. Summary Op. 2019-34 (Nov. 4, 2019) (Judge Gerber), illustrates that general rule.  In Maki, the taxpayers won a §162 deduction for Mr. Maki’s travel away from home.  What makes this case fun is that these are the same retired taxpayers I blogged about last year in “Where Is A Retiree’s Tax Home.”  In both cases they won the issue, albeit for a smaller amount than they had claimed.  The lesson here is that a win in the first case did not guarantee the win in the next.  Details below the fold.

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November 11, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Borden: Sec. 1031 Exchanges Within Qualified Opportunity Funds

Bradley T. Borden (Brooklyn), Wrapped Nonrecognition: Code Sec. 1031 Exchanges Within Qualified Opportunity Funds, 22 J. Passthrough Entities 37 (2019):

This article is about section 1031 exchanges wrapped in qualified opportunity funds (QOFs). QOFs are new, so they are in the process of buying property, but eventually some QOFs will think about selling their property. To qualify for the full benefit of the QOF regime, a QOF must hold property for at least 10 years. Prior to the end of that 10-year period, some QOF investors may get antsy and want to sell the QOF’s property. If they sell the property for gain, they will lose some or all of the QOF benefits. This article considers whether a QOF can sell property and use the proceeds to acquire like-kind replacement property and defer gain on that transaction under section 1031. If so, a QOF could sell its original property, defer gain on that sale, and remain eligible for the QOF exclusion. The article illustrates that although in concept wrapped nonrecognition is possible, it is not without its challenges.

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November 11, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sunday, November 10, 2019

Bloomberg Tax Podcast With Sam Brunson: When Religion Tangles With Tax Law

Btax

Bloomberg Tax Podcast: When Religion Tangles With Tax Law: Things to Consider:

In the U.S., religious practices have an unclear relationship to the tax code. Sam Brunson, a professor at Loyola University Chicago School of Law, has an idea to give some structure to the way policy makers deal with that relationship.

Congress historically writes religious accommodations into the tax code on a case-by-case basis: A group of people appears with a specific tax problem, and lawmakers decide whether to write a fix.

But what if there were a framework that would help them consider the problems consistently and fairly? Brunson proposes such a framework in his book, God and the IRS: Accommodating Religious Practice in United States Tax Law.

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November 10, 2019 in Book Club, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

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 #3. The #1 paper is #88 among 14,703 tax papers in all-time downloads:

  1. SSRN Logo (2018)[2,309 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
  2. [268 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
  3. [233 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
  4. [198 Downloads]  Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, by Ruth Mason (Virginia)
  5. [195 Downloads]  Digital Service Taxes and the Broader Shift From Determining the Source of Income to Taxing Location-Specific Rents, by Daniel Shaviro (NYU) (reviewed by Young Ran (Christine) Kim (Utah) here)

November 10, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 9, 2019

Is The Tax Cuts And Jobs Act GILTI Of Anti-Simplification?

Christine Davis (S.J.D. (Tax) 2020, Florida), Is the Tax Cuts and Jobs Act GILTI of Anti-Simplification?, 38 Va. Tax Rev. 315 (2019):

In December 2017, Congress enacted tax reform legislation, commonly referred to as the “Tax Cuts and Jobs Act” or “TCJA,” which fundamentally changed the United States’ international corporate taxation system. The TCJA was enacted quickly; the bill was signed into law less than 2 months after the House of Representatives introduced it. Since that time, tax professionals across the United States and around the world have worked overtime to try to understand the new tax laws. Now that the U.S. Treasury Department is releasing and requesting comments on proposed tax regulations, practitioners must have a thorough understanding of the TCJA. This paper attempts to reduce the complexity of the TCJA’s international tax provisions by examining global intangible low-taxed income (“GILTI”) and its interaction with other provisions that implement income taxation of cross border corporations.

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

Friday, November 8, 2019

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Listokin's Posner on Tax: The Independent Investor Test

This week, David Elkins (Netanya) reviews a new work by Yair Listokin (Yale), Posner on Tax: The Independent Investor Test, 86 U. Chi. L. Rev. 1159 (2019):

Elkins (2018)

Richard Posner is one of the most influential legal scholars of recent generations. He is perhaps best known as a leading figure in the school of Law and Economics. Complimenting his academic work, he served as a judge on the Seventh Circuit Court of Appeals for 36 years before retiring in 2017. In the field of taxation, one of his more memorable decisions was Exacto Springs Corp. v. Commissioner, 196 F3d 833 (7th Cir. 1999), which concerns the characterization of payments from closely held corporations to individuals who are both shareholders and employees: is the payment properly classified as a salary or as a distribution?

The question of how to characterize payments to shareholders arises whenever shareholders provide services or sell property to the corporation that they control. If a shareholder leases property to a corporation, is the payment that the parties describe as rent truly rent or is it only partly rent and partly a distribution? The issue of classification is particularly significant in the field of international taxation. For example, if a corporation operating in Country A pays what it describes as a royalty to a parent (or otherwise related) corporation in Country B, is the payment actually a deductible royalty or is it a nondeductible distribution? The answer to that question may determine whether Country A can collect tax from the economic activity in its territory.

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November 8, 2019 in David Elkins, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

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

Young Ran (Christine) Kim (Utah) presented The Digital Services Tax: A Crossborder Variation of Consumption Tax Debate at BYU yesterday as part of its Faculty Workshop Series:

KimAs highly digitalized business models, such as Google, Amazon, and Facebook, have been mainstreamed in the economy, the traditional profit allocation and nexus rules of taxation are further strained. Traditionally, profit is allocated to market countries when the business has physical presence there. However, highly digitalized business models can generate profits in market countries without physical presence. Thus, market countries, especially the EU, have started imposing a digital services tax (“DST”) on the gross revenue generated in jurisdictions with highly digital business models, which has ignited heated debate across the globe.

DST is criticized as “ring-fencing,” or segregating, certain digital business models, because it arguably imposes a disguised corporate income tax on the profits of only certain digital firms, which discriminates against American tech giants. However, while DST is politically driven, the criticism is largely based on practical concerns and focused on the imminent impact, such as who is the winner and loser in the short term, rather than considering DST theoretically. More importantly, there is little discussion of the consumption tax aspect of the DST. DST is a turnover tax, which is a subcategory of consumption tax levied on the gross revenue of a firm. However, strangely, there is little discussion of the theoretical value of DST as a consumption tax.

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November 8, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, November 7, 2019

Columbia Journal Of Tax Law Publishes New Issue

Columbia Journal of Tax Law Logo (2020)The Columbia Journal of Tax Law has published Vol. 10, No. 2:

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November 7, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Matching Tax With Economics In Subchapter K

Zhiyuan Zuo (Cleary Gottlieb, New York), A Gain Must Lie Where It Falls: Matching Tax with Economics in Subchapter K, 11 Colum. J. Tax L. ___ (2019):

Columbia Journal of Tax Law Logo (2020)Society suffers efficiency costs when tax and economics are mismatched. This principle is illustrated by the tax neutrality doctrines that are the cornerstone of the U.S. international tax system and by the BEPS’s efforts to combat arbitrary income shifting. While society has an interest in maximizing pre-tax income from all economic activities, self-interested taxpayers seek only to maximize their after-tax income. A good, non-arbitrary tax policy must thus incentivize taxpayers to maximize both their pre-tax and after-tax income. This note provides a novel efficiency analysis of the rules under Subchapter K and reveals the efficiency costs that arise when arbitrary tax liabilities sever the positive connection between pre-tax and after-tax income. It applies the insight gained from the efficiency analysis to the Treasury’s various flawed efforts under Subchapter K to match tax with economics, including the Substantial Economic Effect (SEE) safe harbor and doctrines under section 704(c). The Article then explores alternatives to the Treasury’s “one-size-fits-all” solution, focusing on a detailed analysis of the economic effect equivalence (EEE) test and so-called target allocations

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November 7, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Financial Transactions Tax: If Not Now, When?

Doron Narotzki (Akron), Financial Transactions Tax – If Not Now, When?, 165 Tax Notes 47 (Oct. 7, 2019):

In this article, Narotzki discusses the short history of the financial transaction tax in the United States and why now is the perfect time to adopt it.

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

Wednesday, November 6, 2019

Kysar Presents Unravelling The Tax Treaty Today At Pennsylvania

Rebecca Kysar (Fordham) presents Unravelling the Tax Treaty, 103 Minn. L. Rev. ___ (2019), at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Kysar (2018)Coordination among nations over the taxation of international transactions rests on a network of some 2,000 bilateral double tax treaties. The double tax treaty is, in many ways, the roots of the international system of taxation. That system, however, is in upheaval in the face of globalization, technological advances, taxpayer abuse, and shifting political tides. In the academic literature, however, scrutiny of tax treaties is largely confined to the albeit important question of whether tax treaties are beneficial for developing countries. Surprisingly little consideration has been paid to whether developed countries, like the United States, should continue to sign tax treaties with one another, and no formal revenue or economic analyses of the treaties has been undertaken by the United States government. In fact, little evidence or theory exists to support entrance into tax treaties by the United States, and examination of investment flows indicates the treaties may even lose U.S. revenues. Problematically, the treaties also thwart reforms of the antiquated and broken international tax system. The trajectory of the recent U.S. tax legislation illustrates this phenomenon.

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November 6, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Federal Taxation Of Cannabis

CannabisKat Allen (Wykowski Law, San Francisco), Federal Taxation of Cannabis, Parts I - III:

  • Part I: The Tax Law's War on Drugs, 164 Tax Notes 855 (Aug. 5, 2019): "In the first of a three-part series on the
    taxation of cannabis, Allen provides a framework for debate regarding the tax code’s treatment of illegal activities or payments.
  • Part II: Timing Is Everything, 164 Tax Notes 1041 (Aug. 12, 2019):  "In this second installment of a three-part series, Allen examines the code’s timing rules for state-regulated cannabis businesses."

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

Listokin: Posner on Tax — The Independent Investor Test

Yair Listokin (Yale), Posner on Tax: The Independent Investor Test, 86 U. Chi. L. Rev. 1159 (2019):

This paper, written in honor of Judge Richard Posner’s retirement from the federal judiciary, uses his opinion in Exacto Spring v. Commissioner [196 F.3d 833 (7th Cir. 1999)] as a lens into his tax law jurisprudence more generally. In Exacto Spring, Posner delivers a devastating rejection of the muddled multifactor test then in effect to distinguish reasonable salaries, which are deductible from corporate income, from disguised dividends, which aren’t. Posner replaces the multifactor test with the independent investor test, which focuses the judicial inquiry on the substance of the transaction. I critique Posner’s application of the independent investor test to the problem of salary disguised as dividends, showing that it yields perverse outcomes by treating equity as a fixed claim, rather than a residual claim. But I show that, when applied to dividends disguised as debt, the independent investor test offers great promise.

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

Call For Student Tax Papers: 2020 Chris Bergin Award for Excellence In Writing

Tax Notes 2

Christopher E. Bergin Award for Excellence in Writing:

The Christopher E. Bergin Award for Excellence in Writing recognizes superior student writing on unsettled questions in tax law or policy. It is named in honor of the late Christopher E. Bergin, former president and publisher of Tax Analysts and longtime editor of Tax Notes Federal. The award, given annually, epitomizes the qualities that Chris championed.

No one cared more than he did about clear, precise writing about taxation, and he instilled that passion in our whole staff.
Cara Griffith, Tax Analysts President and CEO

To learn more about Christopher E. Bergin, click here.

Eligibility: Must be enrolled in an accredited undergraduate or graduate program during the academic year.
Topic: Submissions should focus on an unsettled question in federal, state, or international tax law or policy.
Evaluation: Our editorial staff blindly evaluates entries on originality, readability, organization, reasoning, and overall quality of content.
Due Date: June 30, 2020

Click here for competition guidelines.

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November 6, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Tuesday, November 5, 2019

Fleurbaey Presents Optimal Income Taxation Theory And Principles Of Fairness Today At NYU

Marc Fleurbaey (Princeton) presents Optimal Income Taxation Theory and Principles of Fairness at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Marc_Fleurbaey2The achievements and limitations of the classical theory of optimal labor-income taxation based on social welfare functions are now well known. Even though utilitarianism still dominates public economics, recent interest has arisen for broadening the normative approach and making room for fairness principles such as desert or responsibility. Fairness principles sometimes provide immediate recommendations about the relative weights to assign to various income ranges, but in general require a careful choice of utility representations embodying the relevant interpersonal comparisons. The main message of this paper is that the traditional tool of welfare economics, the social welfare function framework, is flexible enough to incorporate many approaches, from egalitarianism to libertarianism.

November 5, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Glogower Presents Progressive Tax Procedure Today At UC-Hastings

Ari Glogower (Ohio State) presents Progressive Tax Procedure (with Joshua Blank (UC-Irvine)) at UC-Hastings today as part of its Tax Speakers Series hosted by Heather Field and Manoj Viswanathan:

Glogower (2019)Discussions of progressive taxation in the United States—and of whether the rich pay enough in taxes—generally focus on the structure of the substantive tax law, such as the marginal rates, income brackets, deductions, and credits under the federal income tax. Despite recent reports of tax avoidance and noncompliance by high-income taxpayers, these discussions have not focused on the structure of the tax procedure rules, which govern the Internal Revenue Service’s administrative responsibilities and taxpayers’ compliance obligations.

This Article presents the case for a new system of “progressive tax procedure.” Currently, tax procedure rules—such as tax penalties and the statute of limitations—typically apply in a uniform manner to all taxpayers, irrespective of their income. Under progressive tax procedure, in contrast, these rules would vary depending on the taxpayer’s income. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies.

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November 5, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Brunson: Taxing Student Athletes

Sam Brunson (Loyola-Chicago), Taxing Student Athletes: An Explainer:

NCAA LogoAbout a month ago, California Governor Newsom signed the Fair Pay to Play Act, which allowed California college athletes to be paid for the use of their image, name, and likeness. Other states, including Illinois, have proposed similar legislation. And today, the NCAA caved; though its concession is not entirely clear, it looks like the NCAA has paved the way to allow NCAA athletes to make money off of their image.

For some reason, this has provoked backlash by Senator Burr of North Carolina. On Twitter, he announced that he plans on introducing legislation that would tax college athletes who accepted payment for the use of their image, etc., on their scholarships.

The ensuing discussion following his tweet has evinced a lot of misunderstanding of what’s going on here, what the current tax treatment of scholarships is, and what “double taxation” means, among other things. So I thought I’d do a quick explainer: ...

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

2019 Christopher Bergin Award For Excellence In Tax Writing

Benjamin M. Satterthwaite (J.D. 2019, South Carolina; LL.M. (Tax) 2020, Florida), Nash Bargaining Theory and Intangible Property Transfer Pricing, 164 Tax Notes 2275 (Sept. 30, 2019):

Tax NotesThis article was the winning entry in Tax Analysts’ annual student writing contest and received the 2019 Christopher E. Bergin Award for Excellence in Writing. [Honorable Mention: Daniel Pessar (Harvard)]

In this article, Satterthwaite proposes a transfer pricing framework for unique intangibles that integrates the economic fundamentals of John Nash’s bargaining theory with the “realistic alternatives” language of amended sections 367(d) and 482.

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November 5, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Scholarship, Teaching | Permalink | Comments (0)

Monday, November 4, 2019

McCaffery Presents Thomas's Taxing Nudges Today At Loyola-L.A.

Kathleen Delaney Thomas (North Carolina) was scheduled to present Taxing Nudges at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto:

Thomas (2019)Governments are increasingly turning to behavioral economics to inform policy design in areas like health care, the environment, and financial decision-making. Research shows that small behavioral interventions, referred to as “nudges,” often produce significant responses at a low cost. The theory behind nudges is that, rather than mandating certain behaviors or providing costly economic subsidies, modest initiatives may “nudge” individuals to choose desirable outcomes by appealing to their behavioral preferences. For example, automatically enrolling workers into savings plans as a default rather than requiring them to actively sign up has dramatically increased enrollment in such plans. Similarly, allowing individuals to earn “wellness points” from attendance at a gym, redeemable at various retail establishments, may improve exercise habits.

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November 4, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Matray Presents Higher Dividend Taxes, No Problem! Evidence From Taxing Entrepreneurs In France Today At UC-Berkeley

Adrien Matray (Princeton) presents Higher Dividend Taxes, No Problem! Evidence From Taxing Entrepreneurs in France (with Charles Boissel (HEC Paris)) at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Matray 3We exploit a large increase in the dividend tax rate in France that affected three-quarter of firms to estimate the effect of dividend taxation on corporate policies. Using administrative data covering the universe of firms and employees, we find in a differences-in-differences setting that affected firms swiftly cut dividends, both at the extensive and intensive margin, with an implied elasticity of around -0.5. Part of the resulting cash retention is used to increase investment and employment, with a positive elasticity around +0.30. The rest is accumulated as liquidity and used to extend credit to customers. Newly-taxed entrepreneurs do not appear to engage in income shifting to evade tax increase.

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November 4, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Pittsburgh Symposium: The 1969 Tax Reform Act And Charities — Fifty Years Later

Pitt

The Pittsburgh Tax Review hosted a symposium last Friday on The 1969 Tax Reform Act and Charities: Fifty Years Later (video):

Panel #1: Investing for Charity 

  • Ray Madoff (Boston College), The Five Percent Fig Leaf
  • Dana Brakman Reiser (Brooklyn), Foundation Regulation in Our Age of Impact
  • Commenter:  Carolyn Duronio (Reed Smith, Pittsburgh)

Panel #2: Origins of Private Foundation Rules and their Meaning for Today 

  • Jim Fishman (Pace), Does the Origin of the 1969 Private Foundation Rules Suggest a Match for Current Regulatory Needs?
  • Khrista McCarden (Tulane), Private Operating Foundation Reform & J. Paul Getty
  • Commenter:  Penina Lieber (Dinsmore & Shohl, Pittsburgh)

Panel #3: Regulating Charitable Actors  

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November 4, 2019 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: No Jurisdiction Over Ambiguous NOD

Tax Court (2017)Jurisdiction is just a fancy word for “power.”  In a speech later published as The Path of The Law, the sainted Justice Holmes said: “in societies like ours the command of the public force is entrusted to the judges in certain cases, and the whole power of the state will be put forth, if necessary, to carry out their judgments and decrees.”  To Holmes, and others, courts are an instrumentality of government power.  The Tax Court is one such court.

In the tax arena, §6214 gives the Tax Court the power “to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency...”  And the whole force of the state---via the IRS---will be put forth, if necessary, to carry out its judgment regarding the correct amount of a deficiency.

Last week’s decision in U.S. Auto Sales, Inc. v. Commissioner, 153 T.C. No. 5 (Oct. 28, 2019), teaches a lesson in how the Tax Court takes a pragmatic approach to exercising its power to “redetermine...the deficiency.”  In that case, the IRS sent the taxpayer an erroneous NOD.  The error was in the taxpayer’s favor, to the tune of over $6 million.  The taxpayer filed a petition, ostensibly asking the Tax Court to wield it’s power to “redetermine...the deficiency.”  Un uh.  The IRS moved to dismiss the case for lack of jurisdiction because, it claimed, the erroneous NOD was also invalid.  Accordingly, there was no deficiency over which the Tax Court could exercise its power of review.

The Tax Court held that the NOD was invalid and so the Court could not exercise its power.  But the vote was 9-6, spread over five different written opinions.  My take-away is that what splits the majority and dissenting positions are different practical judgments about what parts of an NOD the Court should consider when deciding whether its jurisdiction has been properly invoked.  NOD's serve different purposes and different parts of an NOD package contribute to those different purposes. Details below the fold.

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November 4, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, November 3, 2019

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. SSRN Logo (2018)[2,114 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
  2. [259 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
  3. [229 Downloads]  Education Planning and the SECURE Act: Creating a Tax Law Paradox, by Ross Riskin (American College of Financial Services)
  4. [185 Downloads]  Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, by Ruth Mason (Virginia)
  5. [179 Downloads]  Digital Service Taxes and the Broader Shift From Determining the Source of Income to Taxing Location-Specific Rents, by Daniel Shaviro (NYU) (reviewed by Young Ran (Christine) Kim (Utah) here)

November 3, 2019 in Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 2, 2019

Johnson: Payback Of The 2017 Tax Act By Wealth

Calvin H. Johnson (Texas), Deficits by Tier: Payback of the 2017 Tax Act by Wealth, 164 Tax Notes 1893 (Sept. 16, 2019):

In his American Economic Association Presidential Address Olivier Blanchard argued that the deficits caused by the 2017 Tax Cut are welfare enhancing. Growth of the economy is greater than interest costs, both currently and usually and that indicates we are borrowing when we are relatively poor and will repay when richer.

But the 2017 Act gave a tax cut as incentives to capital shared pro rata to wealth, when capital was in glut. Pure capital did not have a positive net present value because risk-free interest rates were negative and now hovering around zero. Now we are told the borrowing must be repaid by cuts to Medicaid, social security and regressive sales tax.

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

Friday, November 1, 2019

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Glogower & Kamin's The Progressivity Ratchet

This week, Sloan Speck (Colorado) reviews a new work by Ari D. Glogower (Ohio State) & David Kamin (NYU), The Progressivity Ratchet, 104 Minn. L. Rev. ___ (2020):

Speck (2017)In The Progressivity Ratchet, Ari Glogower and David Kamin provide further reasons to dislike the headline business tax changes in the 2017 legislation commonly known as the Tax Cuts and Jobs Act, namely the “pass-through” deduction under § 199A and the general reduction in corporate tax rates to 21%. Glogower and Kamin argue that these poorly targeted tax preferences, coupled with private-sector tax gaming and political economy constraints, create the potential for what they term the “progressivity ratchet,” in which lawmakers cannot readily reverse revenue-losing tax preferences by raising nominal rates on high-earning taxpayers. To escape this predicament, Glogower and Kamin suggest restoring the relative penalty for operating in corporate solution, eliminating existing tax preferences, or better targeting those tax preferences that policymakers choose to keep.

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November 1, 2019 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Glogower Presents Progressive Tax Procedure Today At Boston College

Ari Glogower (Ohio State) presents Progressive Tax Procedure (with Joshua Blank (UC-Irvine)) at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

Glogower (2019)Discussions of progressive taxation in the United States—and of whether the rich pay enough in taxes—generally focus on the structure of the substantive tax law, such as the marginal rates, income brackets, deductions, and credits under the federal income tax. Despite recent reports of tax avoidance and noncompliance by high-income taxpayers, these discussions have not focused on the structure of the tax procedure rules, which govern the Internal Revenue Service’s administrative responsibilities and taxpayers’ compliance obligations.

This Article presents the case for a new system of “progressive tax procedure.” Currently, tax procedure rules—such as tax penalties and the statute of limitations—typically apply in a uniform manner to all taxpayers, irrespective of their income. Under progressive tax procedure, in contrast, these rules would vary depending on the taxpayer’s income. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies.

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November 1, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Glogower & Kamin: The Progressivity Ratchet

Ari D. Glogower (Ohio State) & David Kamin (NYU), The Progressivity Ratchet, 104 Minn. L. Rev. ___ (2020):

This Article evaluates the consequences of the 2017 tax legislation for the future of progressive tax reform. The 2017 tax legislation introduced significant preferences for business income, including a cut in the corporate rate and the new Section 199A deduction for “pass-through” income. Many commentators criticized the design of the pass-through deduction and the legislation’s generally regressive effects but tacitly accepted or applauded the corporate rate cut as a desirable response to international pressures. These changes also prompted renewed calls for progressive tax reforms, to increase the share of tax revenues raised from the wealthy. For one example, in early 2019, recently elected Representative Alexandria Ocasio-Cortez proposed a 70% top individual rate on taxpayers with the highest incomes.

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

Thursday, October 31, 2019

Taxing High Incomes: A Comparison Of 41 Countries

Tax Foundation, Taxing High Incomes: A Comparison of 41 Countries:

  • This report compares top effective marginal tax rates on labour income in 41 OECD and EU countries.
  • The top effective marginal tax rate is the total tax paid on the last dollar earned by a high-earning worker, taking social security contributions and consumption taxes into account in addition to income taxes. It is a measure of the degree of progressivity and redistribution in the tax system. As such, it is of great policy interest.
  • The highest marginal tax rate is found in Sweden, 76 percent, and the lowest in Bulgaria, 29 percent.
  • In general, the Nordic and the Western European countries have the highest effective tax rates.

Top Effective Marginal Tax Rates in 2019 and Their Composition
Tax Foundation

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October 31, 2019 in Scholarship, Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (4)

Zolt Presents Corporate Responsibility To Pay Taxes At Toronto

Eric M. Zolt (UCLA) presented Corporate Responsibility to Pay Taxes at Toronto yesterday as part of its James Hausman Tax Law and Policy Workshop Series:

Zolt (2020)We are trying something new. Instead of the traditional paper-presentation-and-Q&A format, we are using a case study to raise issues related to the obligations of corporations to pay taxes in countries where they operate.

The primary reading for the session is a Harvard Business School case study prepared by three INSEAD professors: Did Apple Pay Too Little Tax? Appealing the EU Ruling on Illegal State Aid. ...

In preparing for class discussion on the case study, we have asked the students to respond to the following questions:

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October 31, 2019 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, October 30, 2019

Grewal Presents The President’s Tax Returns Today At Pennsylvania

Andy Grewal (Iowa) presents The President’s Tax Returns, 27 Geo. Mason L. Rev. __ (2020), at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Grewal (2019)For around 40 years, U.S. Presidents and major-party Presidential candidates have publicly released their personal income tax returns. However, during the last election cycle, Republican candidate Donald Trump broke from this recent tradition and did not disclose them. This nondisclosure ultimately did not imperil his candidacy, and he became the 45th President of the United States.

But calls for the President’s tax returns continued. Many Democratic legislators believed that the President’s tax returns could contain important information related to his apparent conflicts of interest and his foreign connections. However, for two years, the Republican-controlled Senate and House of Representatives declined to pursue those returns.

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October 30, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Drumbl Presents Tax Credits For The Working Poor: A Call For Reform Today At San Diego

Michelle Lyon Drumbl (Washington & Lee) presents Tax Credits for the Working Poor: A Call for Reform (Cambridge University Press (2019)) at San Diego today as part of its Tax Law Speaker Series:

Tax CreditsThe United States introduced the earned income tax credit (EITC) in 1975. Today it is the most significant earnings-based refundable credit in the Internal Revenue Code. The United States is the oldest example of a country using its domestic revenue system to deliver and administer social welfare benefits to lower-income individuals or families, but this approach is no longer unique to the United States: a number of other countries, including New Zealand and Canada, have experimented with or incorporated analogous credits into their tax systems. These other countries imported the concept from the United States. Might the United States be able to improve upon the administration of its EITC by importing the experiences and lessons learned in other countries?

Tax Prof reviews:

From the unique lens of a tax justice warrior working on the frontlines fighting poverty, Michelle Lyon Drumbl details the troubled history of US refundable tax credits and compares similar international programs to reimagine relief for America's vulnerable working families. A must read for anyone engaged in critical rethinking of economic justice policies.
Francine J. Lipman - University of Nevada, Las Vegas

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October 30, 2019 in Book Club, Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (2)

Tuesday, October 29, 2019

Friedman Presents Income Segregation And Intergenerational Mobility Across Colleges In The U.S. Today At NYU

John N. Friedman (Brown) presents Income Segregation and Intergenerational Mobility Across Colleges in the United States (with Raj Chetty (Harvard), Emmanuel Saez (UC-Berkeley), Nicholas Turner (Federal Reserve Board) & Danny Yagan (UC-Berkeley)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

BrownWe construct publicly available statistics on parents’ incomes and students’ earnings outcomes for each college in the U.S. using de-identified data from tax records. These statistics reveal that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods where children grow up. Differences in post-college earnings between children from low- and high-income families are much smaller among students who attend the same college than across colleges. Colleges with the best earnings outcomes predominantly enroll students from high-income families, although a few mid-tier public colleges have both low parent income levels and high student earnings. Linking these income data to SAT and ACT scores, we analyze how changes in the college admissions process would affect segregation and intergenerational mobility.

Equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would increase the fraction of middle-class students at the most selective colleges substantially but leave the fraction of low-income students unchanged — suggesting that there is a “missing middle” at the most selective colleges. Income segregation across colleges would be fully eliminated by a “need-affirmative” policy that gives lower-income applicants a boost in test scores similar to that implicitly given to legacy students at elite private colleges. Assuming that differences in students’ earnings conditional on test scores and parent income reflect colleges’ causal effects — an assumption consistent with prior estimates — such a policy would reduce intergenerational income persistence among college students by one-third.

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October 29, 2019 in Colloquia, Legal Ed News, Tax, Tax Scholarship | Permalink | Comments (1)

Brooks Presents Built To Fail: Risk And Robustness In Policymaking At Boston University

John R. Brooks (Georgetown) presented Built to Fail: Risk and Robustness in Policymaking at Boston University yesterday as part of its Tax Policy Workshop Series hosted by David Walker:

Brooks (John)Policymaking is an exercise in decision-making under uncertainty‹legislators and other policymakers frequently must make a best guess about likely outcomes when deciding whether or not to engage in a particular policy, and any policy comes with some risk of failure. A number of theoretical and practical approaches to that exercise have developed over the years, attempting to give policymakers reasoned decision procedures for managing risk, yet we seem to again and again implement policies that result in catastrophic outcomes, such as the Iraq War, the regulatory choices that led to the financial crisis, the Chicago School approach to antitrust, and the tax reforms of the 1980s. This Article argues that large downside risks need to be taken more seriously by policymakers, and need to be more central to the scholarship on policy decision-making. In particular, this Article examines four theoretical approaches to decision-making under uncertainty‹cost-benefit analysis, incrementalism, the precautionary principle, and optimal search‹and argues that they can be reconciled by combining an experimentalist approach to relatively small risks with a special weight and high degree of caution for large downside risks.

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October 29, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Kades: The Charitable Continuum

Eric A. Kades (William & Mary), The Charitable Continuum:

There are powerful fairness and efficiency arguments for making charitable donations to soup kitchens 100% deductible. These arguments have no purchase for donations to fund opulent church organs, yet these too are 100% deductible under the current tax code. And this stark dichotomy is only the tip of iceberg. Looking at a wider sampling of charitable gifts reveals a charitable continuum. Based on sliding scales for efficiency, multiple theories of fairness, pluralism, and institutional competence, social welfare dictates that charitable deductions should in most cases be fractions between zero and one. Moreover, the Central Limit Theorem strongly suggest that combining this welter of largely independent criteria to the wide variety of charitable gifts results in a classic bell-shaped normal curve of optimal deductions, with a peak at some central value and quickly decaying to zero at the extremes of 0% and 100%. Given that those are the only two options under the current tax code, the current charitable deduction regime inevitably makes large errors in most cases. Actually calculating a precise optimal percentage for each type of charitable donation is of course impractical. This article suggests, however, that we can do much better than the systematically erroneous current charitable deduction.

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

Kim: Engineering Pass-Throughs In International Tax — The Case Of Private Equity Funds

Young Ran (Christine) Kim (Utah), Engineering Pass-Throughs in International Tax: The Case of Private Equity Funds, 56 San Diego L. Rev. 707 (2019):

Fund investment, or indirect investment, does not entail entity-level taxation domestically, so investors enjoy “tax neutrality” between direct and indirect investments made within a country. In contrast, when investments are made across borders, tax neutrality cannot be guaranteed because current international tax regimes are built upon bilateral tax treaties and lack pass-through tax rules for multinational fund investment schemes. This may put investors in a worse tax position than had they invested directly.

In response, investors have created many strategies to reduce tax liabilities internationally when investing indirectly. Sometimes those strategies enable investors to pay even less taxes than they would with a tax-neutral benchmark. Recognizing that systematic pass-through taxation more likely would achieve tax neutrality goals, the OECD, through its limited rule-making power, developed several proposals for pass-through treatment. Unfortunately, none of them have been effective, either because of too narrow implementation or because they supply bilateral solutions to a multilateral problem.

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

Aprill: A Tax Lesson For Election Law

Ellen P. Aprill (Loyola-L.A.), A Tax Lesson for Election Law, 164 Tax Notes 2259 (Sept. 30, 2019):

This short article analyzes the complicated role that tax law plays in regulating campaign finance, using a request from the Price for Congress Committee as a case study. The Price Committee asked the Federal Election Commission for an Advisory Opinion approving transfer of its remaining campaign funds to a section 501(c)(4) social welfare organization. The piece first describes applicable campaign finance law and the FEC proceedings that ended in a deadlock. It next considers the advantages of transferring remaining campaign funds to a section 501(c)(4) organizations instead of a section 501(c)(3) charity. It cautions, however, that a transfer to a section 501(c)(4) could result in adverse tax consequences to the former candidate under section 527. This analysis exposes uncertainties in both federal election and tax law.

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

Monday, October 28, 2019

Brunson Presents Paying For Gun Violence Today At Loyola-L.A.

Sam Brunson (Loyola-Chicago) presents Paying For Gun Violence, 104 Minn. L. Rev. ___ (2019), at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto  (reviewed by David Elkins (Netanya) here):


NewtestGun violence is an outsized problem in the United States. Between a culture that allows for relatively unconstrained firearm ownership and a constitutional provision that ensures that ownership will continue to be relatively unchecked, it has proven virtually impossible for politicians to address the problem of gun violence. And yet, gun violence costs the United States tens of billions of dollars or more annually. These tens of billions of dollars are negative externalities—costs that gun owners do not bear themselves, and thus that are imposed on the victims of violence and on taxpayers generally.

What can we do about these costs? One way to reduce them would be to pass meaningful laws, laws that would reduce the likelihood of gun violence. In light of both the culture and the Constitution of the United States, though, such legislation seems improbable. Lawmakers face significant limitations on their ability to regulate firearms directly. If they cannot prevent gun violence, though, they can at least cause gun owners to internalize the costs. Where direct regulation is difficult, they can turn instead to a Pigouvian tax.

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October 28, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (2)

Byrnes: Starbucks And Transfer Pricing

William Byrnes (Texas A&M), Boiling Starbucks’ Roasting Down to the Essence of its Residual:

Starbucks LogoThe crux of the legal issue is the EU Commission’s contention, required as the third condition for a finding of State aid, that the Netherlands-Starbucks APA conferred a selective advantage on Starbucks' Netherlands manufacturing subsidiary (SMBV, aka the “roasting operation”) that resulted in a lowering of SMBV’s tax liability in the Netherlands as compared with what SMBV would have paid under the Netherlands’ general corporate income tax system dealing with third parties. And the crux of the dispute that determines the legal issue outcome is whose choice of transfer pricing method (the Commission or The Netherlands/Starbucks) is the most reliable. However the most interesting aspect of the controversy is how to allocate the residual between SMBV and Starbucks intermediary IP management limited partnership? In a broader framework, not part of the analysis contemplated by the applicable 1995 OECD Transfer Pricing Guidelines, is how to allocate the residual among Starbucks’ global value chain. This paper, currently a working draft, will eventually address the last two issues.

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October 28, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Sunday, October 27, 2019

The French Economist Who Helped Invent Elizabeth Warren’s Wealth Tax

The New Yorker, The French Economist Who Helped Invent Elizabeth Warren’s Wealth Tax:

Gabriel Zucman and his colleagues are advocating a progressive wealth tax as a solution to global inequality, one that rethinks both evasion and the goals of taxation. ...

The Triump of InjusticeTo trace the progress of the wealth tax from a fringe academic idea to the center of the Democratic Presidential primary, it is helpful to begin a bit off-center. On September 15, 2008, the day that Lehman Brothers filed for bankruptcy, a twenty-one-year-old student of Thomas Piketty, Gabriel Zucman, started work as a trainee economic analyst in the offices of a Paris brokerage house called Exane. Zucman felt obviously underequipped for the task before him: to write memos to the brokerage house’s clients and traders helping to explain why the very durable and minutely engineered global financial system appeared to be on the verge of collapse. Poring over some of the data he was given, which concerned the international flows of investments, Zucman noticed some strange patterns. The amount of money that had been moving through a handful of very small economies (Luxembourg, the Cayman Islands, the tiny Channel Islands of Jersey and Guernsey) was staggering. “Hundreds of billions of dollars,” Zucman recalled recently, making the “B” in “billions” especially emphatic. Eventually, he would calculate that half of all foreign direct investment—half of the risk-seeking bets, placed from overseas in India, China, Brazil, and Silicon Valley, and of the safety-seeking investments, placed in the United States and Europe and stock indexes—was moving through offshore hubs like these.

Before the financial crisis, the rise of offshore tax havens hadn’t been ignored—one element of the Enron scandal of 2001, for instance, was the eight hundred and eighty-one overseas subsidiaries the company had created, which had helped it avoid paying federal taxes for three years—but those stories took place within a more confined and more frankly moral framework: it was a cat-and-mouse plot, about the mobility of wealth, and the fruitless efforts to pursue it. Zucman’s intuition was that these arrangements did not describe a moral or a legal drama but a macroeconomic one. That much wealth, poorly documented or regulated, might have helped to destabilize the global economy. It also seemed that, if economists were not attuned to the amount of wealth stored in offshore havens, they might also have missed the extent of global inequality, since it was billionaires who stored money in the Cayman Islands, not retirees. ...

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October 27, 2019 in Book Club, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

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 #3:

  1. SSRN Logo (2018)[1,992 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
  2. [445 Downloads]  An Introduction to Tax Careers for J.D.s, by Heather Field (UC-Hastings)
  3. [208 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
  4. [168 Downloads]  Digital Service Taxes and the Broader Shift From Determining the Source of Income to Taxing Location-Specific Rents, by Daniel Shaviro (NYU) (reviewed by Young Ran (Christine) Kim (Utah) here)
  5. [157 Downloads]  Education Planning and the SECURE Act: Creating a Tax Law Paradox, by Ross Riskin (American College of Financial Services)

October 27, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)