Paul L. Caron
Dean





Friday, April 9, 2021

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Measuring And Valuing Wealth For Federal Wealth Tax Reform

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews David Gamage (Indiana; Google Scholar), Ari Glogower (Ohio State; Google Scholar) and Kitty Richards (Independent), How to Measure and Value Wealth for a Federal Wealth Tax Reform, Roosevelt Inst. Issue Brief (2021):   

Mirit-Cohen (2018)

One of the most debated topic in the last decade is wealth inequality and the unequal distribution of assets among individuals in the U.S.. Wealth distribution becomes even more skewed when race and ethnicity are involved with (not surprisingly) a staggering racial wealth gap.

Recent proposals to reduce the wealth gap (such as those proposed by Senators Warren and Sanders) encountered the hurdle that fails to succeed any tax reform—overcoming valuation issues.  Our current income tax system is cash realization–based and thus mostly takes a deferral-based approach to valuation of wealth accumulation, which makes valuation of wealth rather challenging. If we truly want to make a progress on narrowing the income inequality gap and tax income and wealth of the highest income taxpayers in our society, we have to find efficient ways to overcome assessment difficulties, namely how to measure and value taxpayers’ wealth. This report—published under the auspices of the Roosevelt Institute, a think tank of experts on the American economy—is a practical attempt by Gamage, Glogower, and Richards to do just that.  

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April 9, 2021 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Monday, April 12: Anne Alstott (Yale) will deliver the annual Richard Crawford Pugh Lecture on Tax Law & Policy at San Diego on Child Care Reform After the Pandemic: Towards a Public Option. If you would like to attend, please contact San Diego Law Events.

Thursday, April 15: Allison Christians (McGill; Google Scholar) will present The Case for a Sustainable Excess Profits Tax (with Tarcisio Diniz Magalhaes (Antwerp)) virtually at Indiana as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Leandra Lederman.

Thursday, April 15: Daniel Hemel (Chicago; Google Scholar) will present Law and the New Dynamic Public Finance virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Friday, April 16: Ronald J. Gilson (Columbia; Google Scholar) will present Value Creation by Business Lawyers: Legal Skills and Asset Pricing (with Michael S. Knoll (Penn) commentating) virtually at the Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax Series. If you would like to attend, please contact Tsilly Dagan or Ruth Mason.

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April 9, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Gender Equality, Taxation, And The COVID-19 Recovery

Yvette Lind (Copenhagen Business School; Google Scholar) & Åsa Gunnarsson (University of Umea), Gender Equality, Taxation, and the COVID-19 Recovery: A Study of Sweden and Denmark, 101 Tax Notes Int'l 581 (Feb. 1, 2021):

Tax Notes Int'lThe impact of COVID-19 is at the moment undeniably extensive as the world faces the most severe recession in nearly a century. Economic emergency programs, the design and implementation of COVID-19 tax policies and subsequent state aid actions have been launched in many countries to mitigate the impact of the pandemic. Women have, in comparison to men, also reduced their hours of work to care for, and home school, children. Aggregating already existing problems associated to both the loss of paid work hours and to the gender-segregated allocation of unpaid hours for household work and caring. The sudden closure of childcare programs and schools in many countries has had a crucial impact for women whose labour force participation depends on these institutions. The possibility of several waves of the virus that could trigger additional childcare closures make it extremely likely that married women (in general when considering the current norm of heterosexual couples) in particular may be slower to re-enter the work force in the hope of protecting the (single-breadwinner) family income.

The ambition with this paper is to tackle the complexity of both new and old societal challenges for the realization of gender equality obligations through tax provisions and tax policies at the national level.

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April 9, 2021 in Legal Education, Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Thursday, April 8, 2021

AI For Tax Analogies And Code Renumbering

Andrew Blair-Stanek (Maryland; Google Scholar) & Benjamin Van Durme (Johns Hopkins; Google Scholar), AI for Tax Analogies and Code Renumbering, 170 Tax Notes Fed. 1997 (Mar. 29, 2021):

Tax Notes Federal (2020)Blair-Stanek and Van Durme present an artificial intelligence tool that can complete analogies in tax law and provide evidence-based guidance on how Congress can renumber IRC sections in future tax reform efforts.

Conclusion
We have described two limited applications of AI in tax law, but we and other researchers are pursuing many others. New models with millions of mathematical neurons approximating the neurons in the human brain promise much more power than the model we used here. Moreover, all AI models rely on data; having more data and higher-quality data is always better. The full Tax Analysts Federal Research Library, just released under an agreement between Tax Analysts and Deloitte Tax LLP, contains extensive, very high-quality tax law text. This combination of more powerful models with more and better data is reason for optimism that AI will result in many more tools to aid tax practitioners and policymakers.

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April 8, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Dorothy Brown: ‘The System For Wealth Building Is Designed To Build White Wealth’

New York Magazine, Dorothy Brown: ‘The System for Wealth Building Is Designed to Build White Wealth’:

Whiteness of WealthHow often do you think about your taxes? Once a year, maybe, when it’s time to file, or when you got married, or when you bought a home? If you’re white, taxes are often an inconvenience at worst. The tax code may even benefit you when you get married and start filing a joint return. If you’re Black, says Emory University law professor Dorothy Brown, your story is likely different: The joint return is less likely to reward a marriage with a tax cut when two spouses of equal income work outside the home, something that’s more likely to be true of Black couples. That’s not an accident, she argues in her new book, The Whiteness of Wealth. Well-off, mostly white Americans litigated and lobbied their way into making sure the tax code protects their wealth. Black Americans, who typically lack family wealth, were left out and deliberately held back. They can’t catch up, and that’s the point. The system is working as designed for whom it was designed: white Americans.

In The Whiteness of Wealth, Brown brings the American tax code to life. Hands shape it and wield it like a shield in the defense of the most powerful among us. The tax code tells a story about American priorities. The news isn’t good, Brown writes, but there’s still time to change the future.

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April 8, 2021 in Book Club, Legal Education, Scholarship, Tax, Tax News, Tax Scholarship | Permalink

Wednesday, April 7, 2021

Hemel Presents Regulation And Redistribution With Lives In The Balance Virtually Today At Toronto

Daniel Hemel (Chicago; Google Scholar) presents Regulation and Redistribution with Lives in the Balance, 88 U. Chi. L. Rev. ___ (2021), virtually at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Hemel_danielA central question in law and economics is whether non-tax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion dollar impacts on the US economy and profound effects on millions of Americans’ lives. In the past, agency cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: On his first day in office, President Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into cost-benefit analysis, thus bringing renewed relevance to a long-running law-and-economics debate.

This article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis.

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April 7, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Shay Presents Applying Section 265 To Address An Opaque Foreign Income Subsidy Virtually Today At Boston College

Stephen Shay (Boston College; Google Scholar) presents Applying Section 265 to Address an Opaque Foreign Income Subsidy virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

ProfileImage.img (2)This article considers whether gross income offset by deductions whose sole object is to exempt foreign income from U.S. tax (exemptive deductions), is a class of income wholly exempt from taxes for purposes of the deduction disallowance rule of Section 265(a)(1). The better analysis of the statute and regulation is that deductions (other than an exemptive deduction) allocable to income offset by an exemptive deduction are subject to disallowance under existing Code Section 265(a)(1). Allowing a U.S. shareholder deductions for expenses allocable to foreign income offset by an exemptive deduction would be an opaque subsidy for foreign investment. If permitted, the subsidy would advantage multinational over domestic businesses, shareholders over workers, and high income and foreign investors over other taxpayers.

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April 7, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Appleby: Subnational Digital Services Taxation

Andrew D. Appleby (Stetson), Subnational Digital Services Taxation, 81 Md. L. Rev. ___ (2021):

Existing tax regimes fail to tax digital services appropriately. Digital services based on extracting and monetizing user data—most notably digital advertising—are particularly problematic because tax regimes do not adequately account for the enormous value derived from user data.

Internationally, taxing jurisdictions have recognized these failures and commenced a controversial push toward new digital services taxes or DSTs. Subnational taxing jurisdictions in the United States face the same issues and are searching for solutions.

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April 7, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Shanske: Agglomeration And State Personal Income Taxes

Darien Shanske (UC-Davis), Agglomeration and State Personal Income Taxes: Time to Apportion (With Critical Commentary on New Hampshire’s Complaint Against Massachusetts), 48 Fordham Urb. L.J. ___ (2021):

The Supreme Court is currently considering granting certiorari in New Hampshire v. Massachusetts. At issue is the State of New Hampshire’s (and its amici’s) claim that Massachusetts’s insistence on applying its income tax to residents of New Hampshire, who once commuted to work in Massachusetts but now work for the same businesses remotely in New Hampshire because of the COVID-19 pandemic, violates the Due Process Clause and dormant Commerce Clause. The claim is simple and seductive: if these New Hampshire residents barely leave their own homes, much less their state, how can it accord with due process for Massachusetts to tax them?

In this short colloquium essay, I make the following points about the merits of this case. (I think the case should be dismissed on procedural grounds, but believe the merits are important and will eventually be reached on a similar fact pattern.)

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April 7, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tuesday, April 6, 2021

Hickman Presents OIRA Review Of Tax Regulatory Actions Virtually Today At Florida State

Kristin Hickman (Minnesota; Google Scholar) presents An Overlooked Dimension to OIRA Review of Tax Regulatory Actions virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

Kristin-hickman-webIn April 2018, the Treasury Department and the Office of Information and Regulatory Affairs (OIRA) signed a Memorandum of Agreement reversing an exemption and providing for the first time that significant tax regulatory actions would be subject to OIRA review under Executive Order 12866.  The transition to the Biden administration has raised questions whether the Memorandum of Agreement should be reversed and most tax rules and regulations again exempted from OIRA review.  Critiques of OIRA review in the tax context generally focus on disagreements over whether the benefit-cost analysis required by Executive Order 12866 is useful or should rely on different methodological assumptions.  This essay emphasizes instead the symbiotic relationship between OIRA review, benefit-cost analysis, and compliance with Administrative Procedure Act procedure and process requirements.  

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April 6, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Buchanan Presents Social Security Is Fair to All Generations Virtually Today At Duke

Neil Buchanan (Florida; Google Scholar) presents Social Security is Fair to All Generations: Demystifying the Trust Fund, Solvency, and the Promise to Younger Americans virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

Buchanan_Neil_500x500The Social Security system has come under attack for having illegitimately transferred wealth from younger generations to the Baby Boom generation. This attack is unfounded, because it fails to understand how the system was altered in order to force the Baby Boomers to finance their own benefits in retirement. Any challenges that Social Security now faces are not caused by the pay-as-you-go structure of the system but by Baby Boomers’ other policy errors, especially the emergence of extreme economic inequality since 1980. 

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April 6, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Foster & Lawson: Executive Tax Discretion

William E. Foster (Arkansas; Google Scholar) & Andrew Lawson (Arkansas; Google Scholar), Executive Tax Discretion, 73 Ala. L. Rev. ___ (2021):

Increasingly, Congress allows the president to determine tax consequences with the stroke of a pen. For example, if the president declares a major disaster under the Stafford Act, affected taxpayers are allowed a deduction for net personal casualty losses. This Article surveys instances of executive tax discretion scattered throughout the code, with a focus on disaster declarations.

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April 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Should My Lawyer Do My Taxes? Income Tax Preparation, Accounting Services, And The Scope Of The Attorney-Client Privilege

Nicholas Evan Hakun (Temple & Georgetown), Should My Lawyer Do My Taxes? Income Tax Preparation, Accounting Services, and the Scope of the Attorney-Client Privilege, 72 Tax Law. 639 (2019): 

This Comment seeks to explore the contours of the attorney-client privilege and its intersection with the tax laws. The courts conflict and do not provide a clear answer. Congress's attempts to legislate a solution fall short. This leaves the taxpayer at the whim of the IRS or other prosecuting authority.

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April 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, April 5, 2021

Kim: Blockchain Initiatives For Tax Administration

Young Ran (Christine) Kim (Utah; Google Scholar), Blockchain Initiatives for Tax Administration, 69 UCLA L. Rev. ___ (2021):

A thriving body of literature discusses various legal issues related to blockchain, but often it mixes the discussion about blockchain with cryptocurrency. However, blockchain is not the same as cryptocurrency. Defined as a decentralized, immutable, peer-to-leer ledger technology, blockchain is a newly emerging data management system. The private sector—including the financial industry and supply chains—and the public sector—property records, public health, voting, and compliance, have all begun to utilize blockchain. Since more data is processed remotely, and thus digitally, the evolution of blockchain is gaining stronger momentum.

While scholarship on blockchain is growing, none of the scholarship has considered the impact of blockchain on the tax sector. This Article extends the study of blockchain to tax administration, evaluates the feasibility of incorporating blockchain within existing tax administrations, and provides policymakers with criteria to consider and some recommended designs for blockchain.

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April 5, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Kim: Digital Services Tax — A Cross-Border Variation Of The Consumption Tax Debate

Young Ran (Christine) Kim (Utah; Google Scholar), Digital Services Tax: A Cross-Border Variation of the Consumption Tax Debate, 72 Ala. L. Rev. 131 (2020):

The rise of highly digitalized businesses, such as Google and Amazon, has strained the traditional income tax rules on nexus and profit allocation. Traditionally, profit is allocated to market countries where consumers are located only if the business has physical presence. However, in the digital economy, profits can be easily generated in market countries without a physical presence, resulting in tax revenue loss for market countries. In response, market countries have started imposing a new tax, called the digital services tax (“DST”), on certain digital business models, which has ignited heated debate across the globe. Supporters defend the DST, designed as a turnover style consumption tax, as an effective measure to make up the foregone revenue in the digital economy because it is not bound by the traditional rules of income taxation. Opponents criticize DST as “ring-fencing” or segregating certain digital business models, discriminating against American tech giants, and arguably imposing a disguised income tax. The debate has been focused on the imminent impact, such as who is the immediate winner and loser, but the discussion lacks efforts to understand the fundamentals of DST, especially with regard to the consumption tax aspect.

This Article is the first academic paper that highlights DST as a consumption tax and provides normative implications for policy makers deliberating a DST.

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April 5, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: Passport Revocation Act Differs From Codification

Camp (2017)Justice John Marshall is typically credited as creating the idea that the judicial branch has the power to declare Acts of Congress unconstitutional.  See Marbury v. Madison, 5 U.S. 137 (1803).  But courts exercise that power cautiously, refusing to confront allegations of unconstitutionality if they can plausibly dodge the issue. See generally, Gunnar P. Seaquist, The Constitutional Avoidance Canon of Statutory Construction, The Advocate 25 (Summer 2015).

Robert Rowen v. Commissioner, 156 T.C. No. 8 (Mar. 30, 2021) (Judge Toro), shows us the caution of the Tax Court.  There, the taxpayer invited the Court to declare the passport revocation process, created by Congress in the FAST Act of 2015, unconstitutional.  The Court unanimously dodged the invitation, based on the taxpayer’s failure to distinguish between an Act of Congress and the codification of an Act.  The Tax Court viewed the only part of the FAST Act at issue to be the part codified in the Internal Revenue Code in §7345.  It held that since §7345 does not, on its own, trigger any deprivation of property or liberty, this was not the proper case for the Court to rule on the constitutionality of the entire passport revocation process.  I invite readers to form their own conclusions about the plausibility of the Court’s dodge.  Details below the fold.

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April 5, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Drumbl: #Audited — Social Media And Tax Enforcement

Michelle Lyon Drumbl (Interim Dean, Washington & Lee), #Audited: Social Media and Tax Enforcement, 100 Or. L. Rev. ___ (2021):

AuditedWith limited resources and a diminished budget, it is not surprising that the Internal Revenue Service would seek new tools to maximize its enforcement efficiency. Automation and technology provide new opportunities for the IRS, and in turn, present new concerns for taxpayers. In December 2018, the IRS signaled its interest in a tool to access publicly available social media profiles of individuals in order to “expedite IRS case resolution for existing compliance cases.” This has important implications for taxpayer privacy.

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April 5, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Sunday, April 4, 2021

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #244 among 15,878 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,382 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [541 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [325 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)
  4. [299 Downloads]  A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development, by Stacy Leeds (Arizona State; Google Scholar) & Lonnie Beard (Arkansas)
  5. [237 Downloads]  Coca-Cola: A Decisive IRS Transfer Pricing Victory, At Last, by Reuven Avi-Yonah (Michigan; Google Scholar) & Gianluca Mazzoni (S.J.D. (International Tax) 2020, Michigan)

April 4, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, April 2, 2021

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Lucas's The Pain of Paying Taxes

This week, David Elkins (Netanya) reviews a new article by Gary Lucas, Jr. (Texas A&M; Google Scholar), The Pain of Paying Taxes, 56 Richmond L. Rev. __ (2021) (forthcoming):

Elkins (2018)

The financing of government spending (and in particular the financing of transfer payments) by taxation has been analogized in the literature to the carrying of water in a leaky bucket. In many cases, the amount received by the beneficiaries of the spending program will be less than the cost imposed upon the taxpayers. Under standard economic modeling, the sources of the leak include compliance costs, administrative costs, and the substitution effect (which occurs when taxpayers alter their behavior in order to avoid the tax or to minimize their tax liability). In a fascinating article, Professor Lucas argues that the leak may be larger than we thought. Leaving aside Oliver Wendell Holmes’ famous declaration that he does not mind paying taxes because taxes are the cost of a civilized society, people do not like to pay taxes. The psychological pain associated with paying taxes reduces social welfare and can also exaggerate the substitution effect.

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April 2, 2021 in David Elkins, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Tuesday, April 6: Kristin Hickman (Minnesota; Google Scholar) will present An Overlooked Dimension to OIRA Review of Tax Regulatory Actions virtually at Florida State as part of its Tax Workshop Speaker Series. If you would like to attend, please contact Jeffrey Kahn.

Tuesday, April 6: Neil Buchanan (Florida; Google Scholar) will present Social Security is Fair to All Generations: Demystifying the Trust Fund, Solvency, and the Promise to Younger Americans virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Wednesday, April 7: Daniel Hemel (Chicago; Google Scholar) will present Regulation and Redistribution with Lives in the Balance virtually at Toronto as part of its James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Angeliki Zacharakis.

Wednesday, April 7: Stephen Shay (Boston College; Google Scholar) will present Applying Section 265 to Address an Opaque Foreign Income Subsidy virtually at Boston College as part of its Tax Policy Workshop Series. If you would like to attend, please contact Jim Repetti.

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April 2, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, April 1, 2021

Galle & Shay Present Admin Law And The Crisis Of Tax Administration Virtually Today At Indiana

Brian Galle (Georgetown; Google Scholar) & Stephen Shay (Boston College; Google Scholar) present Admin Law and the Crisis of Tax Administration virtually at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Galle shayEven as the modern IRS is struggling to do its job,  guardrails around adopting tax rules have been evolving to make IRS action slower, costlier, more sclerotic. As administrative law scholars have long recognized, procedural rules favor the status quo over new rules. In the case of the IRS, they favor existing rules over updated or revised rules and non-enforcement over enforcement.  For most tax administration, we argue, this bias is more dramatic, and more damaging, than in regulatory areas where the public has some recourse when an agency is silent. These effects are sometimes called a bias in favor of “inaction.” 

When translated to tax, the law’s bias towards inaction becomes a tilt against revenue and against the poor.

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April 1, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Texas Dean Hosts Virtual Discussion Today On Rebellion, Rascals, And Revenue: Tax Follies And Wisdom Through The Ages

Joel Slemrod and Michael Keen with Interim Dean Mills on Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages Thursday April 1, 2021 at 4 PM CST (Zoom link):

Michael Keen (IMF) & Joel Slemrod (Michigan; Google Scholar), Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages (Princeton University Press 2021):

RascalsAn engaging and enlightening account of taxation told through lively, dramatic, and sometimes ludicrous stories drawn from around the world and across the ages.

Governments have always struggled to tax in ways that are effective and tolerably fair. Sometimes they fail grotesquely, as when, in 1898, the British ignited a rebellion in Sierra Leone by imposing a tax on huts—and, in repressing it, ended up burning the very huts they intended to tax. Sometimes they succeed astonishingly, as when, in eighteenth-century Britain, a cut in the tax on tea massively increased revenue. In this entertaining book, two leading authorities on taxation, Michael Keen and Joel Slemrod, provide a fascinating and informative tour through these and many other episodes in tax history, both preposterous and dramatic—from the plundering described by Herodotus and an Incan tax payable in lice to the (misremembered) Boston Tea Party and the scandals of the Panama Papers. Along the way, readers meet a colorful cast of tax rascals, and even a few tax heroes.

While it is hard to fathom the inspiration behind such taxes as one on ships that tended to make them sink, Keen and Slemrod show that yesterday’s tax systems have more in common with ours than we may think. Georgian England’s window tax now seems quaint, but was an ingenious way of judging wealth unobtrusively. And Tsar Peter the Great’s tax on beards aimed to induce the nobility to shave, much like today’s carbon taxes aim to slow global warming.

Rebellion, Rascals, and Revenue is a surprising and one-of-a-kind account of how history illuminates the perennial challenges and timeless principles of taxation—and how the past holds clues to solving the tax problems of today.

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April 1, 2021 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, March 31, 2021

National Tax Association 114th Annual Conference Call for Papers: Improving The Safety Net

NTA

114th Annual National Tax Association Conference Call for Papers: Improving the Safety Net:

November 18-20, 2021
Detroit Marriott at the Renaissance Center
Detroit, Michigan

We are planning to hold the 114th Annual Conference in person should health guidelines permit.  The NTA staff will continually monitor the health and government mandates and will abide by their recommendations regarding in-person events.

The 114th Annual Conference on Taxation will cover a broad range of topics in tax policy and public finance. We welcome submissions from the fields of accounting, economics, law, and public policy, as well as research from other fields that bears on these topics.

Motivated by the important role of public assistance programs during the COVID-19 pandemic and by the discussions of policy reform occurring during the early days of the Biden administration, the theme of this year’s conference is “Improving the U.S. Safety Net.” Keynote speakers and plenary panels will be oriented towards analysis of U.S. safety-net policies. We especially encourage submissions in line with this topic.

This year’s conference also includes a new submission category, Inequality and Disparities, for papers that investigate disparities by characteristics such as race or gender as well as the effects of tax or non-tax policies that are intended to alleviate them. We particularly encourage submissions to this topic area as well.

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March 31, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Tuesday, March 30, 2021

Grewal Presents Allocating Deductions To Tax-Exempt Income Virtually Today At Florida State

Andy Grewal (Iowa) presents Tax 202: Properly Allocating Deductions to Tax-Exempt Income virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn: 

2020_Grewal_Andy_Faculty (3)Through the CARES Act, Congress established a generous Paycheck Protection Program. Under that program, recipients would get loans which could easily qualify for tax-free forgiveness. As an added bonus, taxpayers would enjoy tax deductions when they spent the amounts they borrowed.

Or so it seemed. After the IRS issued a notice denying deductions PPP expenses, Secretary Treasury Steven Mnuchin personally reviewed the matter and decided that the IRS’s position followed from “Tax 101.” Congress eventually stepped in and offered a narrow statutory clarification: PPP expenses would be deductible.

Unfortunately, Congress did not go far enough. The IRS, with the blessing of some courts, has long used an aggressive interpretation of Section 265(a) to improperly allocate deductions to tax-exempt income, and thereby deny them.

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March 30, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Sullivan: Measuring Disparate Racial Tax Outcomes Before And After The TCJA

Martin Sullivan (Tax Analysts), Measuring Disparate Racial Tax Outcomes Before and After the TCJA, 170 Tax Notes Fed. 1666 (Mar. 15, 2021):

Our preliminary analysis of 2017 and 2018 tax return data indicates that, on average, effective tax rates were lower for ZIP codes where most of the population identified as white than for ZIP codes with more racial diversity.

Sullivan 1

Also, the analysis indicates that after passage of the Tax Cuts and Jobs Act, larger percentage point reductions are seen in ZIP codes with predominantly white populations.

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March 30, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, March 29, 2021

Mann Presents Targeting Plastics Pollution With Taxes Virtually Today At Boston College

Roberta Mann (Oregon) presents Targeting Plastics Pollution with Taxes virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

MannPlastic pollution is a matter of increasing global concern.  In 2015, a report by McKinsey & Company stated that “the amount of unmanaged plastic waste entering the ocean has reached crisis levels.” Assuming a constant level of fish stocks, the weight of plastic pollution in the ocean in 2050 is projected to exceed the weight of the fish. The concern reaches all levels of government from the local to the national.  Solutions include plastic bag bans, taxes or fees on single-use plastics, incentives for reusable bags, and incentives for recycling.  Recycling has become a particular issue since early 2018, when China announced it would stop accepting imported plastic waste. Plastics pollution creates significant environmental externalities, such as harm to natural systems, greenhouse gas emissions from production and after-use incineration, and human health impacts from endocrine disrupters released when plastics degrade. Environmental taxation should be an efficient solution to the plastics pollution problem, if properly designed. 

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March 29, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Field Presents Itemization After The TCJA: How State Election Uniformity Laws Undermined Tax Simplification Virtually Today At Florida

Heather Field (UC-Hastings; Google Scholar) presents Itemization After the TCJA: How State Election Uniformity Laws Undermined the Goal of Simplifying the Individual Income Tax virtually at Florida today as part of its Tax Colloquium Series hosted by Charlene Luke:

FieldAlmost 30 million fewer federal income tax returns with itemized deductions were filed for the 2018 tax year than were filed for 2017.  On the surface, that suggests that the TCJA’s itemization-related changes—specifically, the increase to the standard deduction and limits on itemized deductions—simplified the individual income tax system.  A closer look at the data, however, tells a more complex story.  Specifically, this Article uses federal and state individual income tax filing data from the 2017 and 2018 tax years to demonstrate that the TCJA’s impact on itemization rates varied from state to state depending, among other things, on whether the state obligated its taxpayers to make the same tax election (i.e., to itemize or take the standard deduction) for state purposes as the taxpayer made for federal purposes. 

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March 29, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Lesson From The Tax Court: Failing Business No Reason To Stop Collection In CDP Hearing

Collection Due Process (CDP) is designed to protect taxpayers from abusive collection actions by the IRS.  American Limousines, Inc. v. Commissioner, T.C. Memo. 2121-36 (Mar. 25, 2021) (Judge Halpern), teaches that CDP does not require the IRS to stop trying to collect from a business just because the business was failing.  There the taxpayer owed over $1.1 million in employment taxes.  The Office of Appeals rejected both the taxpayer’s installment payment offer of $2,000 per month, and its alternative proposal to be placed in CNC.  The taxpayer said that the Office of Appeals should have put it into CNC to allow its business to improve.  The Tax Court upheld the Appeals determination, finding that Appeals satisfactorily balanced the need for collection against the difficulties enforced collection would create for the taxpayer.  Details below the fold.

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March 29, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, March 28, 2021

The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5. The #1 paper is #250 among 15,852 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,358 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [534 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [324 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)
  4. [288 Downloads]  A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development, by Stacy Leeds (Arizona State; Google Scholar) & Lonnie Beard (Arkansas)
  5. [227 Downloads]  Coca-Cola: A Decisive IRS Transfer Pricing Victory, At Last, by Reuven Avi-Yonah (Michigan; Google Scholar) & Gianluca Mazzoni (S.J.D. (International Tax) 2020, Michigan)

March 28, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, March 27, 2021

2021 Boston College-Tulane Tax Roundtable

The 2021 Boston College-Tulane Tax Roundtable took place virtually yesterday:

BC Tulane (2021)Brian Galle (Georgetown) & Stephen Shay (Boston College), Administrative Law and the Crisis of Tax Administration
Discussant: Reuven Avi-Yonah (Michigan)

Susie Morse (Texas), Emergency Money: Lessons from the Paycheck Protection Program
Discussant: Andrew Hayashi (Virginia)

Shu-Yi Oei (Boston College) Who Joins BEPS? Understanding the Proliferation of International Tax Consensus
Discussant: Steve Shay (Boston College)

Steve Sheffrin (Tulane) & Koray Caglayan (American Institutes for Research), Giver and Taker States over the Business Cycle
Discussant: David Walker (Boston University)

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March 27, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Friday, March 26, 2021

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Cauble's Questions The IRS Will Not Answer

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Emily Cauble (DePaul), Questions the IRS Will Not Answer, 97 Ind. L.J. ___ (2021).

Speck (2017)

In Questions the IRS Will Not Answer, Emily Cauble provides an important analysis and critique of the Internal Revenue Service’s “no-rule” areas—topics on which the IRS will not, or ordinarily will not, issue private letter rulings. Cauble focuses on fact-intensive issues that fall into this prohibited space. Her motivating examples involve the classification of gifts under the Duberstein standard, the boundary between nondeductible personal outlays and deductible medical expenses under § 213, and intent-oriented aspects of the related party antiabuse rule for like-kind exchanges under § 1031(f). Fundamentally, however, Cauble’s approach is normative: she searches for, then evaluates, potential rationales for administrative reticence in giving private guidance in situations where the facts are likely determinative.

Cauble presents—then largely rejects—eight reasons that might justify an administrative refusal to rule on fact-sensitive issues.

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March 26, 2021 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Monday, March 29: Roberta Mann (Oregon) will present Targeting Plastics Pollution with Taxes virtually at Boston College as part of its Tax Policy Workshop Series. If you would like to attend, please contact Jim Repetti.

Monday, March 29: Heather Field (UC-Hastings; Google Scholar) will present Itemization After The TCJA: How State Election Uniformity Laws Undermined Tax Simplification virtually at Florida as part of its Tax Colloquium Series. If you would like to attend, please contact Charlene Luke.

Tuesday, March 30: Andy Grewal (Iowa) will present Tax 202: Properly Allocating Deductions to Tax-Exempt Income virtually at Florida State as part of its Tax Workshop Speaker Series. If you would like to attend, please contact Jeffrey Kahn.

Thursday, April 1: Brian Galle (Georgetown; Google Scholar) & Stephen Shay (Boston College; Google Scholar) will present Admin Law and the Crisis of Tax Administration virtually at Indiana as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Leandra Lederman.

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March 26, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Hickman Presents OIRA Review Of Tax Regulatory Activities  Virtually Today At Duke

Kristin Hickman (Minnesota; Google Scholar) presents OIRA Review of Tax Regulatory Activities virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

Kristin-hickman-webIn April 2018, the Treasury Department and the Office of Information and Regulatory Affairs (OIRA) signed a Memorandum of Agreement reversing an exemption and providing for the first time that significant tax regulatory actions would be subject to OIRA review under Executive Order 12866. The transition to the Biden administration has raised questions whether the Memorandum of Agreement should be reversed and most tax rules and regulations again exempted from OIRA review. Critiques of OIRA review in the tax context generally focus on disagreements over whether the benefit-cost analysis required by Executive Order 12866 is useful or should rely on different methodological assumptions. This essay emphasizes instead the symbiotic relationship between OIRA review, benefit-cost analysis, and compliance with Administrative Procedure Act procedure and process requirements. 

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March 26, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Li Presents Creating A Global Tax Regime With The OECD Pillar One Blueprint  Virtually Today At British Columbia

Jinyan Li (Osgoode Hall) presents Legal Challenges in Creating a Global Tax Regime with OECD Pillar One Blueprint virtually at British Columbia today as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

6a00d8341c4eab53ef026bdec1f1d4200c-300wi (2)Like the Internet connecting the computers of the world, a global tax regime created with the OECD Pillar One Blueprint seeks to integrate and standardize national corporate taxes in respect of automated digital services and consumer facing businesses of large corporations. In this article, the author considers the various legal challenges of creating such a regime.

Conclusion
The Pillar One Blueprint offers tremendous insights on the political aspirations and technical innovations of those involved. In this article, the author seeks to contribute to the debates about Pillar One by highlighting some general legal challenges that are animated from underlying political, fiscal and economic concerns at a national level. Since Pillar One requires a legal basis for implementation because the Inclusive Framework has no legal authority to address tax base creation or allocation matters, legal obstacles at national levels will likely determine the fate of reaching a global consensus.

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March 26, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, March 25, 2021

Ordower: New York’s Proposed Mark-To-Market Tax Decouples From Federal Tax

Following up on my previous post, New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires:  Henry Ordower (Saint Louis), New York’s Proposed Mark-to-Market Tax Decouples From Federal Tax, 170 Tax Notes Fed. 1243 (Feb. 22, 2021):

Tax Notes Federal (2020)In this article, Ordower examines proposed legislation in New York that would tax the unrealized gain and other deferred income of billionaires in the state, and the complexities that the legislation’s enactment is likely to generate. ...

This article addresses the structure of state income taxes and credits for taxes paid by residents to other states and the confusion that nonuniform decoupling generates across state borders. Separation from federal rules may help to stanch the loss of state revenue from federal tax amendments and enhance state tax revenue — especially revenue that the state otherwise might never capture but to which it may have a claim.

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March 25, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Avi-Yonah: The Taxpayer Bill Of Rights — Reflections On A Toddler

Reuven S. Avi-Yonah (Michigan), The US Taxpayer Bill of Rights: Reflections on a Toddler:

In the US the Taxpayer Bill of Rights (TBOR) is only seven years old, and moreover no successful challenge to the IRS under it has been brought so far. The following first describes the existing case law under the US TBOR. The main conclusion is that the US TBOR is a toddler with uncertain prospects.

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March 25, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

The Nuanced Impact Of The State And Local Tax Deduction Cap On Pass-Through Business

Jeffrey H. Kahn (Florida State), Miles A. Romney (Florida State) & John Treu (West Virginia), Too Much SALT? The Nuanced Impact of the State and Local Tax Deduction Cap on Pass-Through Business Taxpayers, 25 Fla. Tax Rev. __ (2021):

Florida Tax Review (2019)Perhaps the most controversial provision of the Tax Cuts and Jobs Act of 2017 is the state and local tax deduction limitation (or SALT cap), particularly with respect to how the cap impacts pass-through entities in high-tax states. This particular provision of the tax law has been criticized by opponents as deliberately punitive to small businesses in blue states, while proponents maintain that eliminating the SALT cap would primarily benefit high income taxpayers. Politicians from blue states have called for the repeal of the SALT cap and some states have enacted various work-arounds with questionable prospects of success. Still, many taxpayers will not benefit from a SALT deduction irrespective of the SALT cap, particularly taxpayers that either take the standard deduction or are subject to the alternative minimum tax (AMT). We examine the developing law around the SALT cap and provide descriptive empirical evidence of its disparate impact on closely held business taxpayers.

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March 25, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, March 24, 2021

Tahk Presents Spillover Tax Precedent Virtually At Cornell

Susannah Camic Tahk (Wisconsin; Google Scholar) presented Spillover Tax Precedent virtually last Friday at Cornell as part of its Faculty Workshop Series:

SusannahtahkWe know that pro se litigants often lose. However, we know almost nothing about the circumstances in which they win. One such circumstance, this Article finds, is when they can take advantage of favorable precedent. This Article calls those favorable precedents for pro se litigants “spillover precedents.” Spillover precedents are cases with redistributive downward ripple effects that subsequently benefit pro se litigants. This Article is the first to examine the potential redistributive effects of precedent. To focus the inquiry, the Article carried out an empirical study of Tax Court cases from 2015-2019 in which pro se litigants won. This analysis revealed the major role of spillover precedent. The Article details how pro se taxpayers use spillover precedent, describing major examples and identifying patterns in them. 

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March 24, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Cauble: Questions The IRS Will Not Answer

Emily Cauble (DePaul), Questions the IRS Will Not Answer, 97 Ind. L.J. ___ (2021):

When a taxpayer plans to undertake a transaction and its tax consequences are unclear, the taxpayer can request a letter ruling from the IRS. The IRS issues numerous letter rulings each year. In 2020, for instance, the IRS issued 777 letter rulings. The IRS refrains from issuing letter rulings on certain topics. At the beginning of each year, the IRS publishes an updated list of the topics on which it will not rule. Many of the topics on which it will not rule arise in areas of tax law governed by standards where the tax outcome depends heavily on each transaction’s specific facts. This pattern is consistent with the IRS’s stated position that it ordinarily does not rule in certain areas because of the factual nature of the matter involved.

This Article suggests that a policy against ruling on fact-specific topics sacrifices an opportunity to rule on many of the very topics for which a letter ruling could be particularly useful. Because the fact-specific nature of a topic makes it ill-suited for generally applicable guidance, such a topic is a particularly good candidate for a letter ruling.

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March 24, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

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.  Here is the new list (through March 1, 2021) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

    All-Time   Recent
1 Reuven Avi-Yonah (Michigan)  198,030 Reuven Avi-Yonah (Michigan) 8,214
2 Dan Shaviro (NYU) 122,383 D. Dharmapala (Chicago) 5,369
3 Lily Batchelder (NYU) 119,893 Ruth Mason (Virginia) 4,944
4 Daniel Hemel (Chicago) 118,706 Lily Batchelder (NYU) 3,942
5 David Gamage (Indiana-Bloom.) 118,354 Bridget Crawford (Pace) 3,895
6 Darien Shanske (UC-Davis) 111,563 Diane Ring (Boston College) 3,574
7 David Kamin (NYU) 107,922 Daniel Hemel (Chicago) 3,571
8 Cliff Fleming (BYU)    105,744 Shu-Yi Oei (Boston College)  3,441
9 Manoj Viswanathan (UC-Hastings) 102,664 Kim Clausing (UCLA)     3,412
10 Rebecca Kysar (Fordham) 101,711 David Kamin (NYU) 3,407
11 Ari Glogower (Ohio State) 100,526 Hugh Ault (Boston College) 2,994
12 Michael Simkovic (USC) 45,080 Margaret Ryznar (Indiana-Indy)   2,943
13 D. Dharmapala (Chicago) 43,658 Richard Ainsworth (Boston Univ.) 2,601
14 Paul Caron (Pepperdine) 38,032 Dan Shaviro (NYU) 2,208
15 Louis Kaplow (Harvard) 34,660 David Gamage (Indiana-Bloom.) 2,155
16 Richard Ainsworth (Boston Univ.) 31,828 Robert Sitkoff (Harvard) 2,144
17 Ed Kleinbard (USC) 27,521 Darien Shanske (UC-Davis)  2,001
18 Bridget Crawford (Pace) 26,783 Brad Borden (Brooklyn) 1,841
19 Vic Fleischer (UC-Irvine) 26,782 Louis Kaplow (Harvard) 1,831
20 Robert Sitkoff (Harvard) 25,931 Yariv Brauner (Florida) 1,699
21 Brad Borden (Brooklyn) 25,909 Paul Caron (Pepperdine)   1,557
22 Jim Hines (Michigan) 25,698 Cliff Fleming (BYU) 1,350
23 Ted Seto (Loyola-L.A.) 24,917 Katie Pratt (Loyola-L.A.) 1,273
24 Richard Kaplan (Illinois) 24,353 Michael Simkovic (USC) 1,232
25 Gladriel Shobe (BYU) 24,290 Ari Glogower (Ohio State) 1,194

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March 24, 2021 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink

Tuesday, March 23, 2021

Kim Presents Taxing Teleworkers Virtually Today At Florida State

Young Ran (Christine) Kim (Utah; Google Scholar) presents Taxing Teleworkers virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn: 

Image (1)Since COVID-19 has forced many governments to restrict travel and impose quarantine requirements, telework has become a way of life. The shift towards teleworking is raising tax concerns for workers who work for employers located in another state than where they live. Most source states where these employers are located could not have taxed income of out-of-state teleworkers under the pre-pandemic tax rules. However, several source states have unilaterally and virtually extended their source taxation nexus on these teleworkers, resulting in unwarranted double taxation—once by the residence state and again by the source state. At this time, there is no uniform guideline by state or federal governments.

Recently, New Hampshire asked the U.S. Supreme Court to exercise its original jurisdiction challenging Massachusetts’ telecommuting taxes of nonresident teleworkers. Tax scholars believe this case will be one of the most significant tax decisions in recent years. New Jersey also opposes New York’s long-standing telecommuting taxes under the “convenience of the employer” rule. This Article examines the constitutional challenges of maintaining pre-pandemic work arrangements for tax purposes, arguing that a source state’s extraterritorial assertion to tax nonresident teleworkers’ income likely violates the Dormant Commerce and Due Process Clauses.

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March 23, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Brown: How The U.S. Tax Code Privileges White Families

The Atlantic:  How the U.S. Tax Code Privileges White Families, by Dorothy Brown (Emory; Author, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — And How We Can Fix It (2021)):

Whiteness of WealthTax policies have preserved the racial inequality that has long defined America.

Soon after I got my master’s degree in tax law from NYU in 1984, I started preparing my parents’ tax returns. They filed jointly, and what always stuck out to me was how comparable their incomes were. My mother worked as a nurse at an assisted-living facility, and my father was a plumber with the New York City Housing Authority. Some years, my father’s overtime would put him on top by a few hundred dollars; other years, my mother outearned him.

What I saw every year was what researchers call the “marriage penalty”: My parents, like many other married Black couples trying to pay for a mortgage, save for their children’s future, and afford health care, were paying higher taxes under the joint return than they would have had they remained single and filed separately. What I sensed then—and what 25 years of academic research have revealed to me in greater detail since—was that changes to the U.S. tax code typically benefit white taxpayers, while putting Black taxpayers at a further disadvantage, even when Black and white Americans have made the same life choices. Subsidies for homeownership benefit white homeowners more than Black homeowners. Tax breaks for workers benefit white workers more than Black workers. And tax reform has always been a fight over which white Americans get tax cuts, with Black Americans paying the price, as I document in my book, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — And How We Can Fix It (2021).

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March 23, 2021 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Tax Law Review Publishes New Issue

The Tax Law Review has published a new issue (Vol. 73, No. 1 (Fall 2019)):

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March 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tax Evasion At The Top Of The Income Distribution: Theory And Evidence

John Guyton (IRS), Patrick Langetieg (IRS), Daniel Reck (London School of Economics), Max Risch (Carnegie Mellon) & Gabriel Zucman (UC-Berkeley), Tax Evasion at the Top of the Income Distribution: Theory and Evidence:

This paper studies tax evasion at the top of the U.S. income distribution using IRS micro-data from (i) random audits, (ii) targeted enforcement activities, and (iii) operational audits. Drawing on this unique combination of data, we demonstrate empirically that random audits underestimate tax evasion at the top of the income distribution. Specifically, random audits do not capture most tax evasion through offshore accounts and pass-through businesses, both of which are quantitatively important at the top. We provide a theoretical explanation for this phenomenon, and we construct new estimates of the size and distribution of tax noncompliance in the United States. In our model, individuals can adopt a technology that would better conceal evasion at some fixed cost. Risk preferences and relatively high audit rates at the top drive the adoption of such sophisticated evasion technologies by high-income individuals. Consequently, random audits, which do not detect most sophisticated evasion, underestimate top tax evasion. After correcting for this bias, we find that unreported income as a fraction of true income rises from 7% in the bottom 50% to more than 20% in the top 1%, of which 6 percentage points correspond to undetected sophisticated evasion. Accounting for tax evasion increases the top 1% fiscal income share significantly.

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March 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, March 22, 2021

Zolt: A U.S. Perspective On Cross-Border Philanthropy

Eric M. Zolt (UCLA), Cross-Border Philanthropy: A U.S. Perspective:

Americans lead the world in supporting charitable activities (both in the U.S. and abroad). For foreign charitable activities, two key questions arise:

  1. Should tax benefits support charitable activities outside the U.S.?
  2. Should the U.S. tax system treat contributions to foreign charities differently from contributions to domestic charities?

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March 22, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: S Corp Payments To Sole Shareholder Were Wages

I think of corporations as a type of vessel that sails the seas of commerce.  Like real ships, corporations are commanded by officers.  All crew, including officers, are compensated for their services.  At the end of the commercial voyage, however, an end marked either by time or transaction, profits earned are distributed to the owners of the ship.  When the officers are also the owners it becomes difficult to distinguish payments that represent wages for their services in commanding the ship from payments that represent distribution of profits.  Yet for both employment and income tax reasons, such distinction must be made.

In Lateesa Ward and Ward & Ward Company v. Commissioner, T.C. Memo. 2021-32 (Mar. 15, 2021) (Judge Holmes), we learn why payments from the taxpayer’s S corporation to the taxpayer were wages and not distributions of profit.  The case teaches a basic employment tax lesson for S Corps and a basic income tax lesson for sole shareholders.  Details below the fold.

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March 22, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (6)

Sunday, March 21, 2021

Lord: Religious Legitimacy

Phil Lord (McGill; Google Scholar), Religious Legitimacy, 90 UMKC L. Rev. ___ (2021):

This article seeks to demonstrate both the importance of expertise and scholarship in framing a religion’s claim of legitimacy in law, and how expertise can be harnessed by a religious group to gain this legitimacy. From a broad overview of the consequences of religious status, the article analyses the tests used to attribute the status, to show the crucial role that they afford to experts and scholarship. It then argues that new religious movements, and Scientology, are ideal case studies to illustrate the importance of scholars and scholarship. Scientology is indeed the only major religion to have emerged in the twentieth century and is unique in that it has, over this period, gained, lost, re-gained, and grappled with ongoing challenges to its status in law. The article then illustrates these issues with an analysis of two key periods from Scientology’s history: its ultimately successful fight to gain tax-exempt status in the United States in the 1980s, and its response to modern-day challenges to its tax-exempt status.

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March 21, 2021 in Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5. The #1 paper is #267 among 15,819 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,318 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [521 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [507 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  4. [324 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)
  5. [266 Downloads]  A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development, by Stacy Leeds (Arizona State; Google Scholar) & Lonnie Beard (Arkansas)

March 21, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, March 19, 2021

Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Saito's Tax Coordination

This week, Hayes Holderness (Richmond) reviews Blaine G. Saito (Northeastern), Tax Coordination, 38 Ga. St. U. L. Rev. ___ (2022):

Holderness (2017)The idea of tax expenditures—those provisions of the tax law not in line with the normative base—has intuitive appeal. Of course the tax law is imperfect, but if we pinpoint the offending provisions, we can approach a more perfect code. Now where did we put that normative baseline? Harsh and compelling critiques of the tax expenditure concept essentially accuse it of masking personal preferences regarding the desirability of tax provisions, yet the concept apparently cannot be so easily killed off.

Though I may be stretching the article too far in this claim, Blaine Saito’s forthcoming article, Tax Coordination, offers an alternative way to think about tax expenditures. They are those provisions of the tax law with effects on social policy. Further, they are those provisions of the tax law that could benefit from interagency coordination. The thrust of Saito’s argument is that the Internal Revenue Service and Treasury should be encouraged to play nicer with others, but in this argument lies a lesson about tax expenditures: they are those provisions of the tax law that the tax authorities are not well-suited to administer alone.

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March 19, 2021 in Hayes Holderness, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Tuesday, March 23: Young Ran (Christine) Kim (Utah; Google Scholar) will present Taxing Teleworkers virtually at Florida State as part of its Tax Workshop Speaker Series. If you would like to attend, please contact Jeffrey Kahn.

Thursday, March 25: Kristin Hickman (Minnesota; Google Scholar) will present OIRA Review of Tax Regulatory Activities virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Friday, March 26: Jinyan Li (Osgoode) will present Legal Challenges in Creating a Global Tax Regime with OECD Pillar One Blueprint virtually at British Columbia as part of its Tax Law and Policy Workshop Speaker Series. If you would like to attend, please contact  Wei Cui.

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March 19, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink