Paul L. Caron
Dean



Monday, October 5, 2020

Saito Presents Tax Coordination Virtually Today At Boston College

Blaine Saito (Northeastern) presents Tax Coordination virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

SaitoThe United States implements a great deal of its social policy through the income tax laws. The Code is rife with tax expenditures for education, housing, community economic development, retirement savings, and health care to name a few. Many tax scholars have questioned consistently the use of the Code to implement these policies, calling instead for the elimination of these tax expenditures. Furthermore, as an agency the IRS and Treasury lack the expertise to manage these social policy tax expenditures effectively. Yet, given American politics and the institutional structure of the federal government, that is unlikely to happen.

This piece suggests that agency coordination between the IRS and other federal agencies, called tax coordination, would improve administration, management, and potential outcomes of these social policy tax expenditures. Drawing on the well-established literature in administrative law and public administration regarding agency coordination, it shows the benefit of tax coordination. 

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October 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Jurow Kleiman Presents Impoverishment By Taxation Virtually Today At Oregon

Ariel Jurow Kleiman (San Diego) presents Impoverishment by Taxation virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

Kleiman (2021)Tax law’s standard redistributive criteria of progressivity, inequality-reduction, and poverty-reduction tell a certain story: the tax system improves on market outcomes by transferring income from rich to poor. While widely accepted as a matter of theory, this characterization rings hollow in practice. Millions of low-income taxpayers across the United States are made poor or poorer by state and federal taxes. In truth, while the U.S. fiscal system may be broadly equalizing and poverty reducing, for many poor households, it is impoverishing.

This Article offers a new way to measure taxation of the poor in the United States, presenting a concept called fiscal impoverishment. Fiscal impoverishment means that certain individuals are made poor or poorer after taxes and transfers are taken into account. Distinct from the aggregate and anonymous measures by which we typically assess our tax and transfer system, fiscal impoverishment is dynamic and individualized. It highlights the state’s relationship to specific households and foregrounds the economic responsibilities of the state vis-à-vis poor taxpayers.

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October 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Dean Presents A Constitutional Moment For Cross-Border Taxation Virtually Today In California

Steven Dean (NYU) presents A Constitutional Moment in Cross-Border Taxation virtually today as part of the San Diego-Davis-Hastings Tax Law Speaker Series:

Dean (2020)Influential states and organizations guard a material constitution—identified here as the Classification and Assignment Constitution—that in turn shields multinationals from cross-border taxation. The rise of global digital giants against a backdrop of crisis has drawn disputes over the limits of its core algorithm into the light. This article shows why and how resisting reforms such as expanding the roles of marginalized states in that constitutional order threatens its long-term stability. ...

The Classification and Assignment Constitution has shaped cross-border policymaking for a century. Two global crises in quick succession have created both an opportunity and an urgent need to remake that material constitution, altering its substantive rules by transforming the processes that shape them. In tax, just as in trade and investment law, critics find “not a borderless market without states but a doubled world kept safe from mass demands for social justice and redistributive equality by the guardians of the economic constitution.” In order to rewrite the protective algorithm at the core of the Classification and Assignment Constitution to provide all states—and developing states in particular—with access to the revenues they desperately need, a more inclusive cast of constitutional actors must be empowered.

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October 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

De La Feria Presents The Impact Of Public Perceptions On Consumption Tax Rates Virtually Today At Loyola-L.A.

Rita de la Feria (Leeds) presents The Impact of Public Perceptions on Consumption Tax Rates (with Michael Walpole (University of New South Wales)) virtually today at Loyola-L.A. as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Rita de la FeriaThe traditional view as regards general consumption taxes is that excluding certain products from the base decreases their natural regressivity. Whilst this view has been consistently put into question over the last forty years, public perceptions are still heavily influenced by it. Drawing insights from the legislative history of the old European VAT system and the newer Australian VAT system, the paper demonstrates how policy debates and changes in VAT rates have been heavily influenced by those public perceptions – against the evidence — and how special interest groups, which would be set to lose out from broad base VATs, are able to use the information asymmetry subjacent to those perceptions to defend their interest in favour of base narrowing or against base broadening reforms. The paper presents a novel analytical framework — informed by tax law, political economy, political science, behavioural science, and regulatory theory — of the likely factors behind the prevalence of those public perceptions, and demonstrates how, in the absence of external pressures, they result in increased use of reduced rates over time, and the consequent narrowing of the tax base. It concludes by presenting a new pathway to shifting public perceptions, and overcoming the political resistance to a broad consumption tax base.

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October 5, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Lesson From The Tax Court: Why Vacation Home Losses Are Difficult To Deduct

Tax Court (2020)Tax shelters come in many forms.  Some shelters are activities that have no genuine economic purpose; they exist simply to generate tax benefits.  Some micro-captive insurance arrangements are a great example, as you can learn from this wonderful brief by former tax officials filed recently in a Supreme Court case (I blogged about the case here).  Other shelters are activities that allow taxpayers to deduct otherwise non-deductible personal expenses.

Today’s case involves that second kind of tax shelter.  Taxpayers who own vacation properties can generate deductions for maintenance, utilities, and depreciation by renting out the properties even while also using the properties for personal pleasure.  Thus, the rental activity can help ameliorate the personal costs of ownership by turning otherwise personal costs into rental costs.  And if the rental costs exceed the rental income, why then taxpayers have a loss and many taxpayers will try to use that loss to shelter non-rental income.

In Ronald J. Lucero and Mary L. Lucero v. Commissioner, T.C. Memo. 2020-136 (Sept. 29, 2020) Judge Pugh teaches a great lesson about the limits of using beach houses as tax shelters.  The taxpayers owned a beach house in Sea Ranch, California and rented it out.  They had net losses.  The Court did not allow them to deduct those losses to shelter non-rental income, even though their personal use was only about one week each year.  It’s a nice lesson on how the restrictions on deductions in §280A and §469 work.  Details below the fold.

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October 5, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, October 4, 2020

Leff: Fixing The Johnson Amendment Without Totally Destroying It

Benjamin M. Leff (American), Fixing the Johnson Amendment Without Totally Destroying It:

The so-called Johnson Amendment is that portion of Section 501(c)(3) of the Internal Revenue Code that prohibits charities from "intervening" in electoral campaigns. Intervention has long been understood to include both contributing charitable funds to campaign coffers and communicating the charity's views about candidates' qualifications for office. The breadth of the Johnson Amendment potentially brings two important values into conflict: the government's interest in preventing tax-deductible contributions to be used for electoral purposes (called "non-subvention") and the speech rights or interests of charities.

For many years, the IRS has taken the position that the Johnson Amendment's prohibition on electoral communications includes the content of a religious leader's speech in an official religious service — a minister may not express support or opposition to a candidate from the pulpit. For at least as many years, some commentators and legislators have found this application of the Johnson Amendment especially problematic, since it implicates directly the freedom of houses of worship speech and religious exercise. These Johnson Amendment critics sought to provide some carve-out from the Johnson Amendment's general application to permit speech that includes ministers' pulpit speech without creating a massive loophole for the Johnson Amendment's general prohibition on campaign intervention. Other commentators have long argued that a limited carve-out for certain types of speech is not possible — that permitting any communication of the organization's views, even in pulpit speech, would provide a massive loophole in the overall treatment of campaign contributions and expenditures.

This Article reviews the leading proposals to fix the Johnson Amendment, and finds them all lacking.

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October 4, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

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:

  1. SSRN Logo (2018)[522 Downloads]  Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals, by Kimberly Clausing (UCLA), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley),
  2. [234 Downloads]  Economic Reality in EU VAT, by Ad van Doesum (Maastricht) & Frank Nellen (Maastricht)
  3. [233 Downloads]  The Rise of Cooperative Surplus Taxation, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
  4. [232 Downloads]  Good Tax Governance: International Corporate Tax Planning and Corporate Social Responsibility – Does One Exclude the Other?, by Ave-Geidi Jallai (Tilburg)
  5. [155 Downloads]  Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones, by Alina Arefeva (Wisconsin), Morris Davis (Rutgers), Andra Ghent (North Carolina) & Minseon Park (Wisconsin)

October 4, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Thursday, October 1, 2020

Taxing Cryptocurrency In The Midst Of The COVID-19 Pandemic

Richard Ainsworth (NYU) & Xiuyuan (Tony) Hu (LL.M. (Tax) 2013, NYU), A Proposal for Taxing Cryptocurrency In the Midst of the COVID-19 Pandemic, 98 Tax Notes Int'l 921 (May 25, 2020):

Tax Notes Int'lIn this article, the authors present the case for a globally effective remedial tax on cryptocurrency transactions that could help fund multinational relief efforts, such as providing aid to jurisdictions affected by the COVID-19 virus and countries fighting the opioid crisis.

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October 1, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Herzfeld: Taxing Corporations On Financial Statement Earnings

Mindy Herzfeld (Florida), Taxing Corporations on Financial Statement Earnings: Current Proposals, Long-Standing Concerns:

Book-tax differences have existed for as long as the corporate income tax. And for almost as long, there have been regular efforts to introduce greater conformity between the two. Over the past four decades, proposals to substitute (in whole or in part) a tax base that relies on profit as reported in financial statements for the legislatively enacted corporate tax base have been regularly introduced. These proposals are generally based on the assumption that taxing book income provides a simpler, fairer and more efficient way to tax corporate income. The proposals also assume that taxing book income permits less opportunity for corporate tax avoidance.

Such efforts for parity between book and tax income — also referred to as book-tax conformity — have regularly failed to gain traction. Nonetheless, the idea is again rearing its head both in the international and domestic spheres. In the international arena, two proposals introduced by the OECD for taxing the digitalized economy relied to a greater or lesser extent on a tax base computed from multinationals’ consolidated financial accounts economy. Domestically, at least three leading Democratic presidential candidates for the 2020 election proposed a minimum tax on corporate profits as computed from financial statements, including former Vice President Joe Biden.

The resurgence of interest in the use of financial statement profits as an alternative tax base prompts a reexamination of the history of similar prior proposals, the critiques levied against them, and the reasons for their lack of success. Careful consideration of the problems highlighted by those who have earlier delved into the subject is due, in order to determine whether its possible to address concerns previously raised before moving forward with a plan to tax multinationals based on financial statement profits. Or reconsideration of these concerns may make clear that the detriments outweigh the perceived benefits of these proposals.

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October 1, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Mayer: Charitable Crowdfunding

Lloyd Hitoshi Mayer (Notre Dame), Charitable Crowdfunding:

CrowdfundingCharitable crowdfunding is a global and rapidly growing new method for raising money to benefit charities and individuals in need. While mass fundraising has existed for more than a hundred years, crowdfunding is distinguishable from those earlier efforts because of its low cost, speed of implementation, and broad reach. Reflecting these advantages, it now accounts annually for billions of dollars raised from tens of millions of donors through hundreds of Internet platforms such as Charidy, Facebook, GoFundMe, and GlobalGiving. Although most charitable crowdfunding campaigns raise only modest amounts, every year several efforts attract tens of millions of dollars in donations. However, charitable crowdfunding also has its downsides. Donors may misunderstand how the beneficiaries will use the funds raised or a campaign that unexpectedly goes viral may overwhelm a small charity or greatly exceed an individual’s needs. There have also been instances of outright fraud, as well as concerns raised about money laundering and terrorist financing.

Existing laws relating to charitable solicitations and charities more generally have either uncertain or limited application to charitable crowdfunding. Broader fraud and money laundering laws may apply to the worst abuses, but these usually criminal statutes are rarely invoked. The challenge faced by government regulators is therefore whether and how to modify existing laws to address the downsides of this new activity without unduly inhibiting the generosity that charitable crowdfunding encourages. This challenge is made more difficult by the lack of information regarding the positive effects as well as the downsides of crowdfunding. Finally, existing scholarship relating to charitable crowdfunding focuses on either the motivations of donors or tax implications instead of addressing this regulatory problem, even as some governments are beginning to develop proposals to address this activity.

This Article fills this gap by reviewing the existing, incomplete information regarding charitable crowdfunding and theories for regulating in the face of uncertainty to develop recommendations for addressing this new and growing phenomenon.

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October 1, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Infanti: Hegemonic Marriage — The Collision Of 'Transformative' Same-Sex Marriage With Reactionary Tax Law

Anthony C. Infanti (Pittsburgh), Hegemonic Marriage: The Collision of 'Transformative' Same-Sex Marriage with Reactionary Tax Law, 74 Tax Law. ___ (2021):

ABA Tax Lawyer (2019)Before there was a culture war in the United States over same-sex marriage, there was a battle between opponents and proponents of same-sex marriage within the LGBTQ+ community. Some within the LGBTQ+ community opposed same-sex marriage because of the long patriarchal history of marriage and the more consequential need to bridge the economic and privilege gap between the married and the unmarried. On the other hand, LGBTQ+ proponents of same-sex marriage saw marriage as a civil rights issue because of the central importance of marriage in American society. They sensed a profound wrong in the denial of the benefits of marriage to same-sex couples when those couples carried on lives no different from their heterosexual counterparts, save for the legal recognition of their relationships as a “marriage.” Proponents also lauded the transformative potential of same-sex marriage, contending that it could upset the patriarchal nature of marriage and help to refashion marriage into something new and better. Opponents, of course, feared the hegemony of heterosexual marriage in the United States and argued that same-sex marriage would not transform American society at all.

This essay looks back at that debate through the lens of the federal tax definition of “marriage” before and after the U.S. Supreme Court’s decisions in United States v. Windsor and Obergefell v. Hodges.

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October 1, 2020 in ABA Tax Section, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, September 30, 2020

Choi Presents How Does Chevron Shape Agency Rulemaking? Virtually Today At Oregon

Jonathan Choi (Minnesota) presents How Does Chevron Shape Agency Rulemaking? An Empirical Study, 38 Yale J. on Reg. __ (2021), virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

Choi-jonathanA huge literature contemplates the theoretical relationship between judicial deference and agency rulemaking. But surprisingly little empirical work has studied the actual effect of deference on how agencies draft regulations. As a result, some of the most important questions surrounding deference—whether it encourages agencies to focus on policy analysis instead of legal analysis, its relationship to procedures like notice and comment—have so far been dominated by conjecture and anecdote.

Because Chevron applied simultaneously across agencies, it has been difficult to separate its specific causal effect from other contemporaneous events, like the rise of cost-benefit analysis and the new textualism. This Article contends with this problem by exploiting a unique event in administrative law: the Supreme Court’s 2011 decision in Mayo, which required that courts apply Chevron deference to interpretative tax regulations. By altering the deference regime applicable to one specific category of regulation, Mayo created a natural experiment with a treatment group (interpretative tax regulations) and a control group (all other regulations).

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September 30, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

The State And Local Tax Deduction And Fiscal Federalism

Alex Zhang (J.D. 2021, Yale), The State and Local Tax Deduction and Fiscal Federalism, 168 Tax Notes Fed. 2175 (Sept. 21, 2020) (Winner, 2020 Christopher E. Bergin Award for Excellence in Tax Writing):

Tax Notes FederalIn this article, Zhang argues that the Tax Cuts and Jobs Act’s limit on the state and local tax deduction undermined the deduction’s effectiveness, thus underscoring the inherent defects and obstacles in advancing federalism with a tax measure.

Conclusion
In addition to impairing the SALT deduction’s effectiveness in mitigating the balance of federal payments, the TCJA limit illustrates at least two inherent shortcomings in using the SALT deduction to effectuate federalism.

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September 30, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Shay: Turning To The Government (For PPP Money) In Time Of Need

Stephen E. Shay (Boston College), Turning to the Government (for PPP Money) in Time of Need, 168 Tax Notes Fed. 841 (Aug. 3, 2020):

Tax Notes FederalThis article examines the financial relationship between Americans for Tax Reform (ATR) and Paycheck Protection Program (PPP) borrower Americans for Tax Reform Foundation (ATRF). ATRF is an apparently insolvent “zombie” foundation heavily indebted to ATR. ATR indirectly benefits from the ATRF PPP loan through the support for ATR employees who simultaneously are ATRF employees, though ATR was itself ineligible for a PPP loan under the CARES Act.

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September 30, 2020 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink | Comments (0)

Tuesday, September 29, 2020

Lederman Presents Best Practices In Tax Rulings Transparency Virtually Today At NYU

Leandra Lederman (Indiana-Bloom.) presents Of Risks and Remedies: Best Practices in Tax Rulings Transparency virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Lederman-leandraThe phrase “international scandal” hardly brings to mind tax rulings. It is not just that tax rulings may seem arcane, they are also a legitimate tax administration tool. Advance tax rulings provide certainty to taxpayers and the tax administration on the tax treatment of a planned transaction, lowering costs on both sides. Advance tax rulings are therefore openly used by many countries, including the United States and numerous European countries. Yet, secrecy that is followed by criticism and often by revelations that may embarrass a country’s leaders is a recurring aspect of these rulings. The United States has experienced this, and keeps Advance Pricing Agreements (APAs) confidential, while publishing letter rulings in anonymized form.

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September 29, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Aprill & Brunson: The University, Ideology, And Tax Exemption

Ellen P. Aprill (Loyola-L.A.) & Samuel D. Brunson (Loyola-Chicago), The University, Ideology, and Tax Exemption, 168 Tax Notes Fed. 1037 (Aug. 10, 2020):

Tax Notes FederalIn this article, Brunson and Aprill argue that the tax law and other considerations undermine President Trump’s position that academic institutions can lose their tax-exempt status as a consequence of indoctrinating their students with liberal values.

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September 29, 2020 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink | Comments (1)

The Supreme Court’s 2019 Term In Tax

Jasper L. Cummings, Jr. (Alston & Bird, Raleigh, NC), The Supreme Court’s 2019 Term in Tax, 168 Tax Notes Fed. 2175 (Sept. 21, 2020):

Tax Notes FederalIn this ninth annual review of Supreme Court opinions involving tax matters, Cummings notes that the Court has mostly abandoned standard legal decisions to focus on political themes, which he identifies in several decisions. ...

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September 29, 2020 in New Cases, Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink | Comments (0)

Kopczuk & Zwick: Business Incomes At The Top

Wojciech Kopczuk (Columbia) & Eric Zwick (Chicago), Business Incomes at the Top:

Business income constitutes a large and increasing share of income and wealth at the top of the distribution. We discuss how tax policy treats and shapes how businesses are organized and how they distribute economic gains to owners, with the focus on closely-held and pass-through firms. These considerations influence whether and how labor and capital income is observed in economic data and feed into research controversies regarding the measurement of inequality and the progressivity of the tax code. We discuss the importance of these issues in the US, and highlight that limited evidence from other countries suggests that they are likely to be important elsewhere.

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September 29, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, September 28, 2020

Sarin & Summers: Understanding The Revenue Potential Of Tax Compliance Investment

Natasha Sarin (Pennsylvania) & Lawrence H. Summers (Harvard), Understanding the Revenue Potential of Tax Compliance Investment:

In a July 2020 report, the Congressional Budget Office estimated that modest investments in the IRS would generate somewhere between $60 and $100 billion in additional revenue over a decade. This is qualitatively correct. But quantitatively, the revenue potential is much more significant than the CBO report suggests. We highlight five reasons for the CBO’s underestimation: 1) the scale of the investment in the IRS contemplated is modest and far short of sufficient even to return the IRS budget to 2011 levels; 2) the CBO contemplates a limited range of interventions, excluding entirely progress on information reporting and technological advancements; 3) the estimates assume rapidly diminishing returns to marginal increases in investment; 4) the estimates leave out the effect of increased enforcement on taxpayer decision-making; and 5) the use of the 10-year window means that the long-run benefits of increased enforcement are excluded.

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September 28, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Lipman: Pro Bono Matters On the Basis of Sex

Francine J. Lipman (UNLV), Pro Bono Matters On the Basis of Sex, 164 Tax Notes Fed. 1037 (Aug. 12, 2019):

On-the-basis-of-sexThe movie On the Basis of Sex begins on the testosterone-dominated stairs of Harvard Law School, to the booming blare of “Ten Thousand Men of Harvard,” the still-popular Harvard fight song. Framed by the equal partnership that is Kiki and Marty Ginsburgs’ true-love story, the movie chronicles now Supreme Court Justice Ruth Bader Ginsburg’s methodical path to overturning laws that discriminated on the basis of sex. Central to the movie is a pro bono tax case. This essay describes the tax case and why pro bono mattered so very much to the taxpayer, Charles E. Moritz, a 63 year-old bachelor living in Denver with his mother, Mrs. B.E. Moritz. Mrs. Moritz was 89 and in poor health, suffering from arthritis, loss of hearing, lapses of memory, and other senior ailments. Mr, Moritz cared for his mother by paying for care in his home. He filed his tax return claiming a tax benefit that was statutorily not allowed for unmarried men. Mr. Moritz went to the U.S. Tax Court and lost. Marty Ginsburg, a renowned tax attorney, read the decision and handed the written transcript over to his wife, Ruth Bader Ginsburg. Ginsburg sought to represent Mr. Moritz on his appeals a pro bono basis. Pro bono tax mattered deeply to Charles and his mother and, in turn, it jump-started a successful litigation strategy that in time lead to the U.S. Supreme Court finding that discrimination on the basis of sex was unconstitutional.

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September 28, 2020 in Legal Ed News, Legal Education, Tax, Tax Scholarship | Permalink | Comments (1)

Lesson From The Tax Court: State Law Matters

Tax Court (2020)My wife has spent her COVID time organizing efforts to celebrate Earth Day next April in our fair city of Lubbock, Texas.  Her efforts are paying off.  She and her colleagues are now to the point where they need to operate through a tax-exempt entity.  Well-meaning friends tell her “oh, it’s easy, just go fill out some forms and submit them to the IRS.”  Those friends think that forming a nonprofit entity is a one-step process, done at the federal level.  They do not realize that it is a two-step process: one must first form the entity under state law and then ask for tax-exemption from the IRS.  Today we learn that the choice of entity formation will affect the federal tax treatment of that entity.

In Clinton Deckard v. Commissioner, 155 T.C. No. 8 (Sept. 17, 2020) (Judge Thornton), the effect of state law was to preclude the taxpayer from electing S Corporation status.  There Mr. Deckard formed a nonprofit corporation under Kentucky law but soon started operating it for profit.  After a couple of years of losses, he tried to elect S Corporation status for the entity so he could pass through and deduct those losses.  Judge Thornton held he was bound to the corporate form he had created under Kentucky law.  State law matters.  Details below the fold. 

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September 28, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (2)

Sunday, September 27, 2020

The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and two new papers debuting on the list at #3 and #4:

  1. SSRN Logo (2018)[493 Downloads]  Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals, by Kimberly Clausing (UCLA), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley),
  2. [230 Downloads]  Economic Reality in EU VAT, by Ad van Doesum (Maastricht) & Frank Nellen (Maastricht)
  3. [216 Downloads]  The Rise of Cooperative Surplus Taxation, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
  4. [183 Downloads]  Good Tax Governance: International Corporate Tax Planning and Corporate Social Responsibility – Does One Exclude the Other?, by Ave-Geidi Jallai (Tilburg)
  5. [145 Downloads]  Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones, by Alina Arefeva (Wisconsin), Morris Davis (Rutgers), Andra Ghent (North Carolina) & Minseon Park (Wisconsin)

September 27, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 26, 2020

Tax Consequences On The Sale Of Encumbered Property: Recourse v. Nonrecourse Debt

Kenneth Weil, Recourse and Nonrecourse Debt: What Are the Federal Income Tax Consequences When the Character of Debt Changes, 74 Tax Law. ___ (2020):

ABA Tax Lawyer (2019)When encumbered property is sold, the taxation of that sale is different if the sale involves recourse debt as opposed to non-recourse debt. This difference raises an intriguing question: when debt changes from recourse debt to non-recourse debt or vice versa, which rules will control? Examples of when debt changes from recourse to non-recourse or vice versa include bankruptcy discharges, foreclosures in a state with anti-deficiency statutes, some short sales in deficiency states, and the operation of Bankruptcy Code section 1111(b).

The Cottage Savings regulations, Regulation section 1.1001-3, have specific provisions designed to answer the question what happens when debt changes from recourse to non-recourse or vice versa.

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September 26, 2020 in ABA Tax Section, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Friday, September 25, 2020

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Duff's General Anti-Avoidance Rules Revisited

This week, David Elkins (Netanya) reviews a recently posted work by David G. Duff (British Columbia), General Anti-Avoidance Rules Revisited, 68 Can. Tax. J. 579 (2020):

Elkins (2018)

It is no secret that tax legislation is extraordinary complex. Part of the reason is the subject matter itself. Economic reality and legal doctrines do not necessarily coincide, and when they do not then taxpayers frequently can exploit the mismatch to achieve beneficial tax results. One of the swords that administrators wield to combat this phenomenon is the general anti-avoidance rule (GAAR). The question of the limits to which taxpayers may go to lower their tax liability was originally – at least in common law countries – a product of judicial doctrine. Today many countries have codified the rule or at least certain key elements of it (the closest the United States has to a statutory GAAR is IRC §7701(o), which clarifies the judicial economic substance doctrine). However, whether codified or not, GAARs by their nature are problematic. They call upon the courts to ignore the express words of the statute to prevent tax avoidance. However, one would have to be extraordinarily naïve to believe that taxpayers do not routinely structure their affairs in response to tax rules. Thus the question of when it is legitimate to invoke a GAAR is not a simple one.

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September 25, 2020 in David Elkins, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Symposium On Ruth Mason's The Transformation Of International Tax

Symposium, Ruth Mason's The Transformation Of International Tax, 114 Am. J. Int'l L. 353 (2020):

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September 25, 2020 in Conferences, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, September 24, 2020

Brunson: Using A Pigouvian Tax To Reduce Gun Violence

Sam Brunson (Loyola-Chicago), Paying For Gun Violence, 104 Minn. L. Rev. 605 (2019) (reviewed by David Elkins (Netanya) here):

Gun 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.

In this Article, I propose a Pigouvian tax on firearms.

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September 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (15)

Zelenak: Examining The Internal Revenue Code For Disparate Racial Impacts

Lawrence Zelenak (Duke), Examining the Internal Revenue Code for Disparate Racial Impacts, 168 Tax Notes Fed. 1807 (Sept. 7, 2020):

Tax Notes FederalIn this article, Zelenak considers how a legislature committed to racial justice should respond to a convincing statistical demonstration that a particular provision of the Internal Revenue Code has disparate racial impacts. He says there are several steps between a demonstration that a provision (for example, the charitable deduction) disproportionately benefits white taxpayers in nominal terms, and the conclusion that it should be repealed or reformed to eliminate the disparate impact. He argues it is necessary (1) to establish a normative baseline from which the current provision departs, (2) to determine the race-based distribution of the ultimate benefits and burdens of the provision (as contrasted with the provision’s nominal impacts), and (3) to determine that a focus on the provision (rather than a broader or narrower focus) is at an appropriate level of analytical granularity. He concludes that the most important use of evidence of disparate racial impacts of tax provisions will almost certainly be as an argument for repealing or reforming a provision that constitutes bad tax policy even apart from its racial effects.

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September 24, 2020 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink | Comments (1)

Wednesday, September 23, 2020

Bearer-Friend Presents Should The IRS Know Your Race? The Challenge Of Colorblind Tax Data Virtually Today At UC-Irvine

Jeremy Bearer-Friend (George Washington) presents Should the IRS Know Your Race? The Challenge of Colorblind Tax Data, 73 Tax L. Rev. (2019), virtually at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

Bearer Friend (2021)This Article draws from original archival sources to document a century of colorblindness in federal tax data. It traces the omission of race and ethnicity from IRS statistical publications since 1913, Joint Committee on Taxation publications since 1926, and Treasury Office of Tax Analysis publications since 1974. It shows how these omissions are exceptional relative to other areas of public policy where federal data on race and ethnicity are readily available, such as student achievement or healthcare exchange enrollments. It then evaluates the merits of colorblind tax data and argues that tax data should include race and ethnicity in order to meet goals of transparency, democracy, and equality. Colorblind tax data obscure racial inequality and prevent its remedy. Colorblind tax data also undermine the democratic accountability of tax policy. In fairness to the status quo practice of colorblindness by federal tax data institutions, this Article also considers whether the possible justifications for colorblind tax data should override principles of equality and transparency. It argues they should not.

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September 23, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (2)

Buchanan Presents Confessions Of A Recovering Economist Virtually Today At Oregon

Neil Buchanan (Florida) presents Confessions of a Recovering Economist virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

6a00d8341c4eab53ef0263e966931d200b-300wiTax law scholars, and legal scholars in general, have over the past few decades shown increasing deference to what is sometimes called "the economic approach to law." Interdisciplinary approaches to law are to be welcomed, of course, but the economic approach has crowded out other approaches, because far too many legal scholars (and economists) presume that economic analyses are correct, rigorous, and most importantly, objective. Whether or not those analyses are correct can only be determined on a case-by-case basis, while their supposed rigor confuses "doing a lot of math" with being precise in a meaningful way. Most importantly, however, these approaches are not and can never be objective. 

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September 23, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through September 1, 2020) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

    All-Time   Recent
1 Reuven Avi-Yonah (Michigan)  193,145 Reuven Avi-Yonah (Michigan) 7,710
2 Dan Shaviro (NYU) 121,322 Lily Batchelder (NYU) 5,852
3 Lily Batchelder (NYU) 117,881 David Kamin (NYU) 5,449
4 David Gamage (Indiana-Bloom.) 117,213 D. Dharmapala (Chicago) 4,390
5 Daniel Hemel (Chicago) 117,026 Ruth Mason (Virginia) 4,029
6 Darien Shanske (UC-Davis) 110,510 Daniel Hemel (Chicago) 3,826
7 David Kamin (NYU) 106,112 Bridget Crawford (Pace) 3,279
8 Cliff Fleming (BYU)    105,156 Diane Ring (Boston College) 3,029
9 Manoj Viswanathan (Hastings) 102,222 Shu-Yi Oei (Boston College)  2,934
10 Rebecca Kysar (Fordham) 101,100 Hugh Ault (Boston College) 2,753
11 Ari Glogower (Ohio State) 99,925 Richard Ainsworth (BU) 2,431
12 Michael Simkovic (USC) 44,685 Dan Shaviro (NYU) 2,380
13 D. Dharmapala (Chicago) 41,770 David Gamage (Indiana-Bloom.) 2,308
14 Paul Caron (Pepperdine) 37,327 Margaret Ryznar (Indiana-Indy)    2,205
15 Louis Kaplow (Harvard) 33,605 Darien Shanske (UC-Davis)  1,877
16 Richard Ainsworth (BU) 30,545 Brad Borden (Brooklyn) 1,833
17 Ed Kleinbard (USC) 27,098 Robert Sitkoff (Harvard) 1,785
18 Vic Fleischer (UC-Irvine) 26,324 Louis Kaplow (Harvard) 1,565
19 Jim Hines (Michigan) 25,261 Manoj Viswanathan (Hastings) 1,545
20 Brad Borden (Brooklyn) 25,016 Paul Caron (Pepperdine)   1,500
21 Bridget Crawford (Pace) 24,785 Cliff Fleming (BYU) 1,438
22 Robert Sitkoff (Harvard) 24,684 Ari Glogower (Ohio State) 1,407
23 Ted Seto (Loyola-L.A.) 24,496 Katie Pratt (Loyola-L.A.) 1,343
24 Gladriel Shobe (BYU) 24,206 Michael Simkovic (USC) 1,315
25 Richard Kaplan (Illinois) 23,805 Rebecca Kysar (Fordham) 1,223

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September 23, 2020 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink | Comments (0)

Pittsburgh Tax Review Publishes New Issue

Pittsburgh Tax Review (2017)The Pittsburgh Tax Review has published Vol. 17, No. 1 (2020):

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September 23, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Raskolnikov: Distributional Arguments, In Reverse

Alex Raskolnikov (Columbia), Distributional Arguments, In Reverse, 105 Minn. L. Rev. ___ (2020):

What should the government do about the distribution of resources and outcomes in the society? Two arguments have shaped academic debates about this question for several decades. The first argument states that economic regulation should focus on efficiency alone, leaving distributional considerations for the tax-and-transfer system. The second argument objects to government assistance for people unintentionally harmed by legal reforms. Taken together, the two arguments impose major restrictions on the range of possible distributional policies.

This Article contends that a growing body of research in the economics of trade, immigration, industrial organization, labor, and environmental regulation reveals that the core assumptions underlying the two distributional arguments do not hold. Moreover, once these assumptions are changed to reflect reality, the analytical machinery underlying the arguments goes in reverse: The conclusions become not merely indeterminate but opposite of those originally advanced.

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September 23, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, September 22, 2020

Kleven Presents The EITC And The Extensive Margin Virtually Today At NYU

Henrik Kleven (Princeton) presents The EITC and the Extensive Margin: A Reappraisal virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Kleven_henrik2This paper reconsiders the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin. I investigate every EITC reform at the state and federal level since the inception of the policy in 1975. Based on event studies comparing single women with and without children, or comparing single mothers with different numbers of children, I show that the only EITC reform associated with clear employment increases is the expansion enacted in 1993. The employment increases in the mid-late nineties are very large, but they are influenced by the confounding effects of welfare reform and a booming macroeconomy. Based on different approaches that exploit variation in these confounders across household type, space and time, I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile. I highlight the presence of informational frictions, widely documented in the literature, as a natural explanation for the absence of extensive margin responses.

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September 22, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Polsky Presents Taxing Buybacks Virtually Today At UC-Hastings

Gregg Polsky (Georgia) presents Taxing Buybacks (with Daniel Hemel (Chicago)) virtually at UC-Hastings today as part of its Tax Speakers Series hosted by Heather Field and Manoj Viswanathan:

PolskyHead_0-2-262x300A recent rise in the volume of corporate share repurchases has prompted calls for changes to the rules governing stock buybacks. These calls for reform are animated by concerns that buybacks enrich corporate executives at the expense of productive investment. This emerging anti-buyback movement includes presidential candidates as well as academics and Republicans as well as Democrats. The primary focus of buyback critics has been on securities law changes to deter repurchases, with only passing mention of potential tax law solutions.

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

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September 22, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Pittsburgh Tax Review Publishes New Issue

Pittsburgh Tax Review (2017)The Pittsburgh Tax Review has published Vol. 17, No. 1 (2019):

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September 22, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, September 21, 2020

Gravelle Presents Sharing the Wealth: How To Tax The Rich Virtually Today At Loyola-L.A.

Jane G. Gravelle (Congressional Research Service) presents Sharing the Wealth: How to Tax the Rich virtually today at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

GravelleThis paper considers methods for taxing income of the affluent. Much of this income is unrealized capital gains that escapes tax. Conventional individual income taxes changes cannot capture this income and corporate taxes cannot target the wealthy. Other options are estate and gift taxes, taxation of gains on an accrual basis, and a wealth tax. Accrual taxation of capital gains most closely captures untaxed income, can be targeted to the wealthy, and appears to be feasible. If wealth and accrual taxation are deemed too difficult, a combination of conventional changes and taxing gains at death are options. ...

Summing Up
At the heart of the problem of taxing the rich is that the individual income tax does not reach much of the income of the extremely affluent. Each of the options for doing so has advantages and limitations. Individual income tax changes tax only income already subject to tax. There are significant problems surrounding a wealth tax and many barriers to be overcome; a wealth tax also increases taxes on assets already subject to tax in many cases.

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September 21, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (2)

Lesson From The Tax Court: Receipts Are Not Enough

Tax Court (2020)In Anna M. Armstrong v. Commissioner, T.C. Sum. Op. 2020-26 (Sept. 17, 2020), Judge Panuthos teaches that substantiation does not just mean showing the amount of an expense; it means showing entitlement to deduct that expense.  It's an exemplary lesson in substantiation, including a review of the Cohan doctrine, and of the home office deduction.  Along the way, we learn just how tax practitioners can give value to their clients: teach them that receipts are not enough.

At first glance, this case might seem unimportant because it concerns below-the-line miscellaneous itemized deductions for unreimbursed employee expenses.  Section 67(g) totally disallows those types of deductions for tax years 2018-2025.

But I think this opinion is worth your time.

First, COVID.  Congress might actually re-authorize the deduction of unreimbursed employee expenses for tax year 2020 as part of the next COVID relief bill.  I do not have any inside knowledge on this, but some in Congress might view reviving unreimbursed employee expense deductions as a benefit to taxpayers forced to work from home during COVID shutdowns.  Others might believe that Congress gave enough relief in the Economic Impact Payments.  And this tax benefit is one that invites conflict and, hence, litigation.  Regardless of what Congress does, those taxpayers who are independent contractors continue to qualify for a home office deduction and this opinion teaches how to substantiate that use.  I give a couple of COVID thoughts at the end of the post.

Second, Judge Panuthos gives a wonderfully compact, lucid explanation of what taxpayers and their representatives need to know about substantiation.  I repeatedly tell my students that when you want to understand the law, find a good trial court opinion that explains it.  This is one of those opinions.  It’s a great teaching case.

Finally, some readers might find current utility from these lessons because 2017 and possibly 2016 are still open years.  Besides, taxpayers frequently stumble over the substantiation rules, especially for establishing a home office, whether or not they are taking deductions above or below the line.  For all those reasons I invite you to continue reading....

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September 21, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Sunday, September 20, 2020

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[495 Downloads]  Policy Options for Taxing the Rich, by Lily Batchelder (NYU) & David Kamin (NYU)
  2. [493 Downloads]  Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals, by Kimberly Clausing (UCLA), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley),
  3. [477 Downloads]  Rethinking Tax for the Digital Economy After COVID-19, by Tarcisio Diniz Magalhaes (McGill) & Allison Christians (McGill) (reviewed by Young Ran (Christine) Kim (Utah) here)
  4. [219 Downloads]  Economic Reality in EU VAT, by Ad van Doesum (Maastricht) & Frank Nellen (Maastricht)
  5. [137 Downloads]  Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones, by Alina Arefeva (Wisconsin), Morris Davis (Rutgers), Andra Ghent (North Carolina) & Minseon Park (Wisconsin)

September 20, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Friday, September 18, 2020

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Brunson's Georgia, The IRS, And The KKK

This week, Sloan Speck (Colorado) reviews a new work by Samuel D. Brunson (Loyola Chicago), Addressing Hate: Georgia, the IRS, and the Ku Klux Klan.

Speck (2017)

The Ku Klux Klan’s second iteration began at a time of transformation for the American fiscal state. As economists and politicians reoriented the federal tax system towards progressive income taxation, white ethnonationalists consolidated and organized around false and pernicious understandings of the historic hate group. In 1915, a new Klan emerged, claiming as many as four million members at its peak in 1924. As Sam Brunson argues in his important new article, Addressing Hate: Georgia, the IRS, and the Ku Klux Klan, the Bureau of Internal Revenue and the State of Georgia each played crucial roles in both facilitating the rise of the second Klan and hastening its formal demise in the mid-1940s. Brunson’s valuable work resonates in our current political climate, as contemporary supremacist groups claim privileges under state corporate law and the Internal Revenue Code. How we address these groups today should be informed by the important history that Brunson uncovers.

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September 18, 2020 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Shurtz: Tax, Class, Women, And Elder Care

Nancy E. Shurtz (Oregon), Tax, Class, Women, and Elder Care, 43 Seattle U. L. Rev. 225 (2019):

Elder care is a large and growing sector in the comprehensive health care system in the United States. It is an issue of particular importance to women because women live longer than men, have higher incidences of degenerative ailments, and are more likely to be institutionalized. Women also face greater financial challenges in funding their health care maintenance. Whereas wealthy individuals enjoy a multitude of elder care choices and can even self-insure to avoid the steep expense and risk of long-term care insurance, most women do not possess the resources to exercise such a wide degree of choice. Middle-income women increasingly feel the squeeze of concurrent rises in medical and housing costs and must often engage in contingency Medicaid planning. Low-income women, particularly those who are single, living in rural areas, or members of an ethnic minority, have few viable health care options and are the most likely to be herded into institutional care facilities. Nursing homes carry high costs and often do not offer high-level or personalized care. Current tax policy, however, is structured to favor institutional care. Conspicuously lacking are adequate subsidies to facilitate home-based options and meaningful support for caregiving labors, both key factors that contribute to the dearth of care options for our poorest citizens. The tax system is in dire need of modification to address this exploding elder care crisis, requiring explicit acknowledgment of the need to generate revenues dedicated to fulfilling our public commitment to the basic welfare of this rapidly growing cohort of the American population.

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September 18, 2020 in Legal Education, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, September 17, 2020

Bi-Annual Taxes: A Simple Solution to Rising Tax Non-Compliance, Shrinking IRS Budgets, And Increasing Taxpayer Burden

Jeffrey A. Dubin (MIT) & Emma Cockerell (USC), Bi-Annual Taxes – A Simple Solution to Rising Tax Non-Compliance, Shrinking IRS Budgets, and Increasing Taxpayer Burden:

Each year, individual tax non-compliance results in billions of dollars of lost tax revenue. While the Internal Revenue Service (IRS) conducts examinations of select returns, the audit rate has fallen precipitously in past decades.

MIT 3

Meanwhile, the number of individual returns has grown and return complexity has risen. Individuals face a dauntingly complex tax code that requires the assistance of paid preparers. More than ever, the IRS experiences greater demands for assistance from taxpayers but fewer resources to fulfill these demands. Instead of the oft-proposed IRS budget increase, we propose a simple and pragmatic, but transformative, solution: the bi-annual filing and collection of taxes, which would minimize taxpayer and paperwork burdens, free up IRS funding, and result in a de facto doubling of the audit rate.

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September 17, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (5)

Brunson: Addressing Hate — Georgia, The IRS, And The KKK

Sam Brunson (Loyola-Chicago), Addressing Hate: Georgia, the IRS, and the Ku Klux Klan:

In 1944, the Ku Klux Klan officially suspended its operations. Two years later, it had entirely ended. In part this was the inevitable result of a decade of declining influence and membership. In part, though, it was the result of actions by the federal government and the state of Georgia.

In 1916 the Ku Klux Klan incorporated as a Georgia fraternal organization, following a model of the Masons and other fraternal organizations. It also claimed to be a tax-exempt fraternal beneficiary society under the new federal income tax. These legal statuses provided the Klan with legal rights and benefits and also shrouded it in a cloak of respectability: it could claim that it was not merely a terroristic white supremacist group, but that it provided fraternal benefits to its members and the surrounding community.

Its incorporation and tax status provided it with benefits, it also imposed obligations on the organization. The Klan ultimately proved incapable of meeting these requirements. It violated the terms of its corporate charter and of tax exemption as a fraternal beneficiary society. The Bureau of Internal Revenue assessed a $685,305 tax on the Klan and, when the Klan did not pay, filed a lien. The state of Georgia in turn revoked its corporate charter. While these moves did not cause the second Klan’s death, they did seal its death.

This Article relates the story of the Klan’s corporate and tax statuses.

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September 17, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Shanske & Gamage: How The Federal Reserve Should Help States And Localities

Darien Shanske (UC-Davis) & David Gamage (Indiana), How the Federal Reserve Should Help States and Localities Right Now, 96 Tax Notes State 765 (May 11, 2020):

This essay explains how and why the Federal Reserve could support state and local governments during the COVID-19 emergency to prevent drastic spending cuts.

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September 17, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, September 16, 2020

Repetti Presents The Appropriate Roles For Equity And Efficiency In A Progressive Income Tax Virtually Today At Oregon

Jim Repetti (Boston College) presents The Appropriate Roles for Equity and Efficiency in a Progressive Income Tax, 24 Fla. Tax Rev. ___ (2020), virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

ProfileImage.imgIncreased focus on economic efficiency in formulating tax policy, at the expense of achieving equity, has resulted in decreased rate progressivity in our individual income tax. This decrease has exacerbated inequality.

There are several explanations for the intense focus on efficiency and reduced emphasis on equity. Predictions of efficiency gains from low individual income tax rates appear more certain than equity gains from progressive tax rates. Efficiency gains seem measurable, while equity gains appear intangible and unquantifiable. In addition, distributive justice, which underlies and shapes tax equity, exists in many abstract forms, some of which may not require progressive tax rates. 

This article argues, however, that the emphasis on efficiency is misplaced. Inequality imposes measurable costs on the health, social wellbeing and intergenerational mobility of our citizens, as well as on our democratic process, which are corroborated by significant empirical analysis.

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September 16, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Ordower Posts Three Tax Papers On SSRN

Henry Ordower (St. Louis), Capital, an Elusive Tax Object and Impediment to Sustainable Taxation, 24 Fla. Tax Rev. ___ (2021):

Florida Tax Review (2019)Sustainable taxation requires stability and predictability. Sustainable taxation is a tax or taxes that collect sufficient revenue to support the governmental goods and services the society needs and wants. The taxes must provide for 1) even-handedness — something akin to horizontal equity, 2) distributional fairness — a concept emerging from notions of vertical equity, 3) transparency in application so that the populace understands and accepts the tax and the need for it and 4) collection mechanisms that do not favor some societal groups, especially those with resources to secure creative tax advisors, over others who lack the resources. Narrow base taxes — fuel, alcohol, tobacco — cannot meet these criteria and the broad base taxes currently applicable — value added, payroll and income — also fail to meet one or more of the criteria. While specialized taxes like environmental taxes and sin taxes (alcohol, tobacco) serve useful regulatory functions and may achieve their behavioral objectives in part, they do so primarily by increasing the cost of engaging in the undesirable behavior and pricing some actors out of the activity. Using a pricing rather than a direct regulatory mechanism, the specialized taxes change the conversation from social rejection of the behavior to acceptance as long as the actor is willing and able to pay the high price. Is it all right to pollute if one pays to do so? Direct regulation might prove less regressive and less likely to be viewed as simply a matter of price and more as a matter of societal mainstream and commitment to addressing a problem.

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September 16, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

How Well-Targeted Are Payroll Tax Cuts As A Response To COVID-19? Evidence From China

Wei Cui, Jeffrey Hicks & Max B. Norton (British Columbia), How Well-Targeted Are Payroll Tax Cuts as a Response to COVID-19? Evidence from China:

Numerous countries cut payroll taxes in response to economic downturns caused by COVID-19. This includes China, which completely exempted most firms from making social insurance (SI) contributions, resulting in an average tax cut of 21 percentage points on formal labor costs and approximately 20% of total tax remittances made by firms. We use novel data on 900,000 firms in one Chinese province to document new facts about the structure of SI in China and evaluate payroll tax cuts as a COVID-19 relief measure. We calculate that labor informality causes 54% of tax-registered firms---representing 24% of aggregate economic activity---to receive no benefits. Labor formality also increases with firm size, further skewing the benefit of payroll tax cuts towards large firms.

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September 16, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Tuesday, September 15, 2020

Kern Presents Illusions Of Justice In International Taxation Virtually Today At NYU

Adam Kern (Ph.D. 2021, Princeton) presents Illusions of Justice in International Taxation virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

0I criticize a common way of thinking about justice in international taxation, and I propose an alternative. My critical target is a claim I call the Capture Principle. Common ground among many government officials, leading tax scholars, and several of the few philosophers who have thought about international taxation, the Capture Principle asserts that each state should have rights to tax income generated from economic activities within its territory, rights whose value scales in proportion to the income generated from the hosted economic activities.

The Capture Principle appears to embody an ideal of reciprocity. I argue that this appearance is illusory. I examine three arguments that connect those two ideas, and I show that each fails on its own terms. Even if we ought not to free-ride off others, ought to pay compensation for the burdens we place on others’ public sectors, ought to reward people for the surplus value that they create— the Capture Principle does not follow.

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September 15, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Stetson Competition Generates Tax Solutions To Address Climate Change

New Competition Generates Tax Solutions to Address Climate Change:

Stetson Logo (2020)Stetson University College of Law launched a new competition to galvanize students to develop innovative tax law policies that could fund solutions for sea level rise.

Though tax policy might not be the first discipline to come to mind in which to seek tools to combat climate change, attorney and author Richard O. “Dick” Jacobs felt confident Stetson students, if given the challenge, could mine it to great effect. Rising sea levels are a pressing issue for Florida’s future, and Jacobs thought funding a competition would jump start a conversation by focusing on tax policy solutions to help address the problem.

And so The Stetson Environmental Tax Policy Writing Competition: Tax Policy Solutions to Address Sea Level Rise was born. Students submitted their ideas in late spring, and a committee of tax and environmental lawyers judged the competition using the following criteria: (1) breadth and depth of analysis and sources, (2) creativity and originality, (3) objectivity and legal accuracy, (4) effectiveness of writing style, (5) practicality for addressing the issue, and (6) compliance with the contest rules.

Submissions could include proposed changes to the Florida Constitution and to Florida tax and regulatory law. The first and second place winners split a $1,000 cash prize. The winners of the inaugural competition were:

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September 15, 2020 in Legal Ed News, Legal Education, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Oei & Ring: When Data Comes Home — Next Steps In International Taxation's Information Revolution

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), When Data Comes Home: Next Steps in International Taxation's Information Revolution, 66 McGill L.J. ___ (2020):

Over the last decade, there has been a revolution in cross-border tax information exchange and reporting. While this dramatic shift was the product of multiple forces and events, a fundamental reality is that politics, technology, and law intersected to drive the shift to the point where nation-states will now transmit and receive from each other significant ongoing flows of taxpayer information. States can now expect to accumulate large stashes of data on cross-border income, assets, and activities on a scale and level of comprehensiveness unmatched by previous information exchange regimes.

This article examines the pressing follow-up question of how this data will be used and what issues nation-states will confront when data comes home.

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September 15, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

2020 IFA International Tax Student Writing Competition (Sept. 30 Deadline)

IFA Logo (2015)The deadline in the International Fiscal Association's 2020 International Tax Student Writing Competition is September 30:

2020 IFA International Tax Student Writing Competition:
Subject: Any topic relating to U.S. taxation of income from international activities, including taxation under U.S. tax treaties.
Open to: All students during the 2019-20 academic year (including independent study and summer 2020 school courses) pursuing a graduate degree (J.D., L.L.M., S.J.D., M.S.T., MTA, Masters of Taxation, or similar program). Any appropriate papers written in fall 2019 or spring and summer 2020.
Publication: The winning author will be entitled to publish his/her article in the Tax Management International Journal, which is produced by Bloomberg BNA.
Submission DeadlineSeptember 30, 2020.
Prize:  $2,000 cash, plus expenses-paid invitation to the IFA USA Branch Annual Meeting in Chicago on April 22-23, 2021.

Here are the recent winners:

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September 15, 2020 in Legal Ed News, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink | Comments (0)