Paul L. Caron
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Friday, October 16, 2020

Dagan Presents Re-Imagining Tax Justice In A Globalized World Virtually Today At Boston College

Tsilly Dagan (Oxford) presents Re-Imagining Tax Justice in a Globalized World virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

Dagan (2020)In this paper I explain why designing a country’s tax policy with the elasticity of taxpayers’ choices of residency in mind, although a rational welfare-maximizing move by the state as a whole, and possibly even for its immobile as well as mobile constituents, is a policy that may not be justified under a liberal-egalitarian social contract.

I discuss two polar views of the social contract: one endorsing the state with the coercive power to promote the joint interests of its constituents. The other views the coercive power of the state as a way to fulfill the collective will of its constituents as a society of equals in order to promote who they are as people.

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October 16, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Thursday, October 15, 2020

Goldin & Michelmore: Who Benefits From The Child Tax Credit?

Jacob Goldin (Stanford) & Katherine Michelmore (Michigan), Who Benefits from the Child Tax Credit?:

The Child Tax Credit (CTC) provides a cash transfer of up to $2,000 per child under age 17 to millions of families in the United States. Using the Current Population Survey, we examine the aggregate effects and distributional implications of the rules governing children’s eligibility for the credit. While approximately 90% of all children qualify for at least a partial CTC, we document striking disparities in eligibility by income and race. The vast majority of children living in households in the bottom decile of the national AGI distribution are completely ineligible for the CTC and the majority of filers in the bottom thirty percent are eligible only for a partial credit. In contrast, virtually all children living in households in the top half of the income distribution qualify for the full credit amount. Approximately three-quarters of white and Asian children are eligible for the full CTC, compared to only about half of Black and Hispanic children. We use our results to estimate the distributional effects of a range of reforms to the CTC eligibility rules. Our results suggest that reforming the credit to include a larger share of children would more evenly distribute the credit’s benefits across children of different races and incomes.

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

Cockfield: How To End The Conflict Over Taxing Global Digital Commerce

Arthur J. Cockfield (Queen's University), Tax Wars: How to End the Conflict over Taxing Global Digital Commerce, 17 Berkeley Bus. L.J. 353 (2020):

In the last two years, dozens of governments have proposed or implemented unilateral tax measures to tax foreign-based technology companies. The new tax innovations include special withholding taxes, diverted profit taxes, minimum taxes, and digital services taxes. The rise of these unilateral measures threatens an international tax “war” among governments that could stifle new business models or even the spread of the global digital economy. This Article reviews the failure of international reform efforts to constrain aggressive international tax planning within the digital economy, and how the global digital tax conflict masks a growing dissatisfaction with how to tax value associated with global transactions.

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

Christians & Tazeem: Facebook’s Libra Is The Next Tax Challenge For The Digital Economy

Allison Christians (McGill) & Mahwish Tazeem (McGill), Facebook’s Libra: The Next Tax Challenge for the Digital Economy, 3 Stan. J. Blockchain Law & Pol'y 228 (2020):

LibraIn 2019 Facebook announced its plan to launch a cryptocurrency within the coming year, with the express goal of extending past its existing user base to those who lack access to traditional banking services. The prospect of Facebook enabling millions of global transactions outside of the (highly regulated) conventional banking system prompted scrutiny, most immediately in the area of financial services regulation. But it should also heighten the sense of urgency to reconstruct prevailing global tax rules to ensure that highly digitalized businesses pay an appropriate amount of taxes wherever they carry out business activities and create value. This paper lays out Facebook Libra’s original design concept, the problems it sought to solve, and the potential implications its successful launch would have on the redesign of the global tax system that is already in progress.

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

Wednesday, October 14, 2020

Kim Presents Blockchain Initiatives For Tax Administration Virtually Today At Oregon

Young Ran (Christine) Kim (Utah) presents Blockchain Initiatives for Tax Administration virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

ImageBlockchain has become an attractive topic not only among techies, but also entrepreneurs, policymakers, and even laymen. A thriving body of literature discusses various legal issues related to blockchain, but it often mixes the discussion of blockchain with Bitcoin and other cryptocurrencies. However, cryptocurrencies and blockchain are not synonymous. Blockchain is a decentralized, immutable, peer-to-leer ledger technology, whereas cryptocurrencies are built on a blockchain. In other words, blockchain is the original, underlying technology of cryptocurrencies. Recently, not only the private sector—e.g., financial services, smart contracts, medical records, property records, supply chain—but also the public sector—e.g., defense, budget allocation, government approval chain, voting—have gone beyond the cryptocurrencies and have begun to utilize blockchain technology itself as a newly emerged data management system, appreciating its resilient and immutable features. Considering that more data is processed remotely and thus digitally in post COVID-19 era, the data management system built upon blockchain will gain stronger momentum.

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October 14, 2020 in Christine Kim, Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Kysar Presents Interpreting By The Rules Virtually Today At UC-Irvine

Rebecca Kysar (Fordham) presents Interpreting by the Rules, 99 Tex. L. Rev. ___ (2020), virtually at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

RebeccaKysar_240x240A promising new school of statutory interpretation has emerged that tries to wed the work of Congress with that of the courts by tying interpretation to congressional process. The primary challenge to this process-based interpretive approach is the difficulty in reconstructing the legislative process. Scholars have proposed leveraging Congress’s procedural frameworks and rules as reliable heuristics to that end. This Article starts from that premise but will add wrinkles to it. The complications stem from the fact that each rule is adopted for distinct reasons and is applied differently across contexts. As investigation into these particularities proceeds, it becomes apparent that the complications are also rooted in something deeper—that Congress’s procedures are often hollow, even fraudulent. Congress, it turns out, breaks its own rules with impunity.

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October 14, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Saito Presents Tax Coordination Virtually Today At Northeastern

Blaine Saito (Northeastern) presents Tax Coordination virtually at Northeastern today as part of its Faculty Colloquia Series:

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 14, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

NY Times: Four Books That Explain The U.S. Tax System

New York Times, Four Books that Explain the U.S. Tax System:

David Foster Wallace, The Pale King (2012), reviewed by Darien Shanske (UC-Davis) and Larry Zelenak (Duke):

The Pale KIngIn this posthumous novel, set at an I.R.S. office in Illinois, the agency is a microcosm of human nature: “greed, politics, power, goodness, charity.

The agents at the IRS Regional Examination Center in Peoria, Illinois, appear ordinary enough to newly arrived trainee David Foster Wallace. But as he immerses himself in a routine so tedious and repetitive that new employees receive boredom-survival training, he learns of the extraordinary variety of personalities drawn to this strange calling. And he has arrived at a moment when forces within the IRS are plotting to eliminate even what little humanity and dignity the work still has.

The Pale King remained unfinished at the time of David Foster Wallace's death, but it is a deeply compelling and satisfying novel, hilarious and fearless and as original as anything Wallace ever undertook. It grapples directly with ultimate questions -- questions of life's meaning and of the value of work and society -- through characters imagined with the interior force and generosity that were Wallace's unique gifts. Along the way it suggests a new idea of heroism and commands infinite respect for one of the most daring writers of our time.

David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else (2003), reviewed by Joel Newman (Wake Forest):

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October 14, 2020 in Book Club, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, October 13, 2020

Zucman Presents The Rise Of Income And Wealth Inequality Of America Virtually Today At NYU

Gabriel Zucman (UC-Berkeley) presents The Rise of Income and Wealth Inequality of America: Evidence from Distributional Macroeconomic Accounts (with Emmanuel Saez (UC-Berkeley)) virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Zucman (2021)This paper studies inequality in America through the lens of distributional macroeconomic accounts—comprehensive distributions of the aggregate amount of income and wealth recorded in the official macroeconomic accounts of the United States. We use these distributional macroeconomic accounts to quantify the rise of income and wealth concentration since the late 1970s, the change in tax progressivity, and the direct redistributive effects of government intervention in the economy. Between 1978 and 2018, the share of pre-tax income earned by the top 1% rose from 10% to 19% and the share of wealth owned by the top 0.1% rose from 7% to 19%. In 2018, the tax system was regressive at the top-end; the top 400 wealthiest Americans paid a lower average tax rate than the macroeconomic tax rate of 28%. We confront our methods and findings with those of other studies, pinpoint the areas where additional data and more research is needed, and describe how additional data collection could improve inequality measurement.

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October 13, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Holderness: Tax Relief For Commuters After COVID-19

Hayes Holderness (Richmond), Changing Lanes: Tax Relief for Commuters:

Tax law reaches all parts of life, and societal views about life activities often affect how the law is applied. As those societal views change, then, application of the law should be expected to change in turn. This Essay highlights changing societal views about commuting, particularly as a result of the COVID-19 pandemic, to demonstrate how even long-standing positions under the tax law can be quickly uprooted.

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October 13, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

15th Annual Junior Tax Scholars Workshop Kicked Off Oct. 2 Virtually At Utah

Utah Logo (2016)Zach Liscow (Yale, presenting) & Ed Fox (Michigan), The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule
Commentators: Jon Choi (Minnesota), Sloan Speck (Colorado)

Goldburn Maynard (Indiana Business School), Enjoying Luxury while Black
Commentators: Jacob Goldin (Stanford), Blain Seto (Norteastern)

Tracey Roberts (Cumberland), Regulatory Taxation (Revisited)
Commentators: Hayes Holderness (Richmond), Eleanor Wilking (Cornell)

Blaine Saito (Northeastern), Tax Coordination
Commentators: Jacob Goldin (Stanford), Clint Wallace (South Carolina)

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October 13, 2020 in Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Monday, October 12, 2020

Bearer-Friend Presents In-Kind Tax Paying: Lessons And Risks Virtually Today In California

Jeremy Bearer-Friend (George Washington) presents In-Kind Tax Paying: Lessons and Risks virtually today as part of the San Diego-Davis-Hastings Tax Law Speaker Series:

JeremyBearerFriend_0 (1)This Article documents and evaluates noncash remittance of tax obligations, referred to as “in-kind tax paying.” Such forms of tax paying include: paying a federal income tax bill by remitting a used, flatbed truck to the IRS; paying a property tax bill by working a few hours a month answering phones at city hall; and, conveying a proportion of all seashells farmed within a state to that state. These are not just hypotheticals, but forms of in-kind tax paying that occur in the United States throughout periods when many taxes are also paid in cash. Nevertheless, despite its long history and prevalence, in-kind tax paying has consistently been overlooked.

By providing a comprehensive account of in-kind tax paying within a cash economy, this Article makes three contributions. First, it improves our definition of tax paying by identifying the wide variety of in-kind remittances that already occur in our current tax system and offering a taxonomy for how to understand in-kind remittances within an economy that relies primarily on cash taxes. Second, it refutes the presumption that in-kind remittance of tax obligations is not viable, thus expanding the tax tools available to local, state, and federal governments and demonstrating how narrow presumptions about tax remittance have predetermined core tax policy choices.

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October 12, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Shanske Presents States Should Issue Debt In Emergencies Virtually Today At Loyola-L.A.

Darien Shanske (UC-Davis) presents States Should Issue Debt in Emergencies virtually today at Loyola-L.A. as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Shanske-darienWe are in the midst of overlapping national crises, which call for a national response. So far the national response has not been adequate. Facing revenue shortfalls and constrained by balanced budget rules, the states have started to cut services, a cruel response that will perpetuate the misery. It would be far better to raise taxes on those who can afford to pay as compared to making such cuts. But can states raise enough revenue fast enough? Likely not.

What if the Federal Reserve extended long-term loans to the states at the federal government’s cost of funds and only for revenue shortfalls caused by the pandemic/recession? I argue that the Fed could and should do so and that, if the Fed were to make the offer, then the states should take it and could take it under current state law (at least in some states). To be clear, borrowing from the Fed is far inferior to direct federal support, but, I argue, borrowing is far better than making cuts during a pandemic and recession.

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October 12, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Lesson From The Tax Court: The Slippery Slope Of Tax Court Review

Tax Court (2020)Today’s post is about how the Tax Court reviews decisions of the IRS Whistleblower Office (WBO).  If you want to report a tax cheat, you have a variety of choices, detailed in this IRS webpage.  Typically, you write a letter or submit a Form 3439-A.  But if you want to also claim an award for blowing the whistle, you must submit a Form 211 with the IRS Whistleblower Office (WBO).  That is because the WBO is the office in the IRS that decides whether the information you gave resulted in additional collections of tax.  If it did, you get a cut.  If you don’t like the amount of the award, you can ask the Tax Court to review the WBO’s decision on the amount.

When the WBO decides that you are entitled to no award, however, it could be for a variety of reasons, only some of which are reviewable by the Tax Court.  In John Worthington v. Commissioner, T.C. Memo 2020-141 (Oct. 8, 2020) Judge Gustafson teaches the difference between those decisions the Tax Court will review and those it will not; it turns on the difference between the words “rejection” and “denial.”  To me, this case represents a wobbly first step onto a slippery slope towards reviewing IRS audit decisions.  That is not what WBO review used to cover but times, they may be a-changing!  Details below the fold.

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October 12, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, October 11, 2020

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[549 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. [256 Downloads]  Good Tax Governance: International Corporate Tax Planning and Corporate Social Responsibility – Does One Exclude the Other?, by Ave-Geidi Jallai (Tilburg)
  3. [244 Downloads]  The Rise of Cooperative Surplus Taxation, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
  4. [238 Downloads]  Economic Reality in EU VAT, by Ad van Doesum (Maastricht) & Frank Nellen (Maastricht)
  5. [95 Downloads]  U.S. Tax Systems Need Anti-Racist Restructuring, by Francine Lipman (UNLV), Nicholas Mirkay (Hawaii) & Palma Joy Strand (Creighton) (reviewed by Ariel Jurow Kleiman (San Diego) here)

October 11, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, October 10, 2020

Boz Among The Radicals: Dickens Records A Turning Point In Tax History

Stephen Utz (Connecticut), Boz Among the Radicals: Dickens Records a Turning Point in Tax History:

Charles Dickens recorded many trials conduct by his friend, the attorney Thomas Talfourd. Dickens was only twenty-two years old when he recorded the trial of the Weekly True Sun's principal officers for their challenge to the Whig Parliament's rejection of an income tax. Liberal members of Parliament and the public opposed the trial. Dickens' perfect capture of the trial attorneys' and defendants' speeches at the trial reveals his understanding of the issues and his apparent sympathy with the defendants' cause. Yet he later stood back from all this, with the apparent exception of his parting of the ways with Harriet Martineau, his partner in the publishing venture of Dickens' middle years, which have been his rejection of her taking the same side the Whigs had taken in 1934. ...

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October 10, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Friday, October 9, 2020

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Lunney's The Copyright Tax

This week, Mirit Eyal-Cohen (Alabama) reviews Glynn S. Lunney, Jr. (Texas A&M), The Copyright Tax.

Mirit-Cohen (2018)

This empirical Article makes the claim that copyright should be viewed as a form of government-imposed tax and a government-provided subsidy. Although Lord Thomas Babington Macaulay of the House of Commons had made this claim almost 180 years ago, the author reiterates it by examining the scope of such tax and comparing consumer price increases in copies of popular books and public transmissions of sound recordings. He observes the Amazon prices of top 250 books written in the 19th century and in the 21st century and the analog v. digital (Kindle) prices of these books on Amazon. The 19th century book market was unregulated allowing free entry so multiple publishers could offer paper or electronic books while the 21st century book market has been subject to copyright regulation that restricted entry. This empirical study aspires to provide insights on the scope of the “copyright tax”, its incidence, and the return that end users receive.

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October 9, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Kysar Presents Interpreting By The Rules Virtually Today At Florida

Rebecca Kysar (Fordham) presents Interpreting by the Rules, 99 Tex. L. Rev. ___ (2020) virtually today at Florida as part of its Tax Colloquium Series:

RebeccaKysar_240x240A promising new school of statutory interpretation has emerged that tries to wed the work of Congress with that of the courts by tying interpretation to congressional process. The primary challenge to this process-based interpretive approach is the difficulty in reconstructing the legislative process. Scholars have proposed leveraging Congress’s procedural frameworks and rules as reliable heuristics to that end. This Article starts from that premise but will add wrinkles to it. The complications stem from the fact that each rule is adopted for distinct reasons and is applied differently across contexts. As investigation into these particularities proceeds, it becomes apparent that the complications are also rooted in something deeper—that Congress’s procedures are often hollow, even fraudulent. Congress, it turns out, breaks its own rules with impunity.

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October 9, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, October 8, 2020

McMahon: Tax As Part Of A Broken Budget

Stephanie McMahon (Cincinnati), Tax as Part of a Broken Budget: Good Taxes are Good Cause Enough, 2018 Mich. St. L. Rev. 513:

The federal budget is a myth. Despite being a myth, Congress uses the budget to limit its choices by linking its revenue-raising and spending powers under a federal debt ceiling. Through its self-imposed limits, Congress puts tremendous pressure on how it calculates its budget, and that calculation generally assumes any tax provisions will raise revenue when the law becomes effective. However, many tax provisions require additional direction to ensure they operate as the budgetary process expects. That task falls to the Treasury Department and the Internal Revenue Service (IRS) as a bureau of the Department. Consequently, limiting the production of tax rules that implement, interpret, and sometimes limit possible interpretations of tax statutes is problematic because their projected revenue is used to balance the budget. Nevertheless, these Treasury Department rules are under attack on the grounds that their issuance fails to comply with the Administrative Procedure Act (APA). The APA generally requires notice and comment for the promulgation of rules, a costly process in terms of time and agency resources.

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October 8, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

International Corporate Tax Planning And Corporate Social Responsibility: Does One Exclude The Other?

Ave-Geidi Jallai (Tilburg), Good Tax Governance: International Corporate Tax Planning and Corporate Social Responsibility – Does One Exclude the Other?:

International corporate tax planning and corporate social responsibility are topics that might not seem to have common ground at first sight. The aim of this research was to prove the contrary. This research addressed international corporate tax planning from various perspectives, such as regulation, ethics, business, and society.

Not all forms of legal tax planning are considered (socially) legitimate anymore. Corporate tax planning is a complex issue: on the one hand, it is common corporate practice to keep costs low. On the other hand, corporations have to contribute to society and common goods by paying (corporate income) taxes as any other member of society. Not all kinds of corporate tax practices are (socially) illegitimate per se. Tax planning can be carried out in various forms. This research focused on tax planning activities that remain within the boundaries of the law (thus tax evasion is not part of this research). Tax planning activities that remain within the law can be divided into a number of sub-categories based on a degree of social legitimacy: tax mitigation, tax avoidance and aggressive tax planning. Even though all of the different kinds of behaviour described by these concepts are legal, not all of these practices are socially legitimate, because, in the case of tax avoidance and aggressive tax planning, multinationals fail to contribute their fair share to society.

As a result of legal tax planning that is not always socially acceptable, discussions of morality have entered the picture.

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October 8, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

The American Dream Is Tax Reform’s Biggest Obstacle

New York Times op-ed:  The American Dream Is Tax Reform’s Biggest Obstacle, by Christopher Faricy (Syracuse University; Co-author, The Other Side of the Coin: Public Opinion Toward Social Tax Expenditures (forthcoming 2020)):

Much of the commentary on the fresh revelations about President Trump’s tax returns has focused on how they illustrate the vulnerability of the federal tax system to exploitation by the ultrarich. This is for good reason: Mr. Trump aggressively used a set of tax breaks popular with real estate developers to pay no taxes in 11 out of the previous 18 years, and just $750 for both 2016 and 2017.

But the most expensive subsidies in the federal tax code are not used by real estate developers, energy chief executives or bankers. They are used by upper-middle-class households under the guise of earned economic security. The main obstacle to reforming the tax code is not Mr. Trump, but rather the upper-middle-class American voter.

There are close to 300 subsidies in the tax code that, in total, cost the federal government over a trillion dollars each year. According to the Congressional Budget Office, in 2019 more money was lost to the federal government through the nation’s regressive tax breaks than was spent combined on Medicare and Medicaid.

And six out of 10 of the most expensive federal tax subsidies — including the exclusion for employment-based health insurance, benefits for company pensions and the charitable contribution deduction — are commonly used by wealthier suburban families. In sum, they drain close to $680 billion annually from the U.S. Treasury.

These subsidies are sold as providing necessary assistance — affordable housing, health care and higher education — to middle-class families. But they also apply a veneer of political legitimacy to a system that shovels billions of taxpayer dollars every year to the wealthiest families and corporations in America. ...

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October 8, 2020 in Book Club, Tax, Tax News, Tax Scholarship | Permalink | Comments (8)

Wednesday, October 7, 2020

Layser Presents Magnet Zones Virtually Today At UC-Irvine

Michelle Layser (Illinois) presents Magnet Zones virtually at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

Layser (2018)Many place-based tax incentives “work” by creating new fiscal geographies—places where government actors actively shape urban processes through tax law and other public expenditures. A goal of these incentives is to influence the location of investments in order to improve upon preexisting uneven development patterns in ways that reduce geographic inequality. A recent example is the new and highly controversial Opportunity Zones tax incentive. However, the Opportunity Zones tax incentive has drawn criticism for targeting investment to gentrifying and relatively high-income neighborhoods in addition to low-income areas. If tracts like these serve as magnets to attract a disproportionate share of investment, then those “magnet zones” may undermine program goals.

Specifically, it employs spatial analysis methods to identify social, economic, and legal factors that are predictive of investment locations within fiscal geographies. In doing so, it provides powerful new evidence that magnet zones may form in areas with high vacancy rates, positive income trajectories, and overlapping fiscal geographies. These findings have far reaching implications for the design of tax incentives used to reduce geographic inequality.

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October 7, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Choi: The Substantive Canons Of Tax Law

Jonathan H. Choi (Minnesota), The Substantive Canons of Tax Law, 72 Stan. L. Rev. 195 (2019) (reviewed by Kristin Hickman (Minnesota) here):

Anti-abuse doctrines in tax law have traditionally been formulated as multi-factor tests that weigh the facts of the taxpayer’s case but ignore the tax statute at issue. This approach has proven problematic: some judges import statutory considerations regardless, creating inconsistency and confusion, and some scholars criticize the doctrines as antitextual violations of the separation of powers.

This Article argues that anti-abuse doctrines should be considered substantive canons of construction, interpretive presumptions that can be rebutted by statutory text or purpose. This resolves apparent arbitrariness in the doctrines’ application as simply the rebuttal of presumptions and reconciles them to textualists as constitutionally permissible background norms. It also provides a framework to test the validity of disputed doctrines and allows them to be more flexible and intuitive.

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October 7, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, October 6, 2020

Shaviro Presents Minimum Taxes Virtually Today At NYU

Daniel Shaviro (NYU) presents What Are Minimum Taxes, and Why Might One Favor or Disfavor Them? virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder:

XeDldp2y_400x400Minimum taxes (including global minimum taxes) have serious drawbacks, and generally make sense, if at all, only if otherwise superior options must be ruled out for reasons of optics or political economy. Yet, given the “compared to what?” question that haunts all real-world tax policymaking, one cannot reasonably say that they should never be used. Still, any such use should generally be contingent, reluctant, and based on understanding their structural deficiencies. ...

Conclusion
To a veteran of the 1986 tax reform, such as I am, the recent rise of interest in global and other minimum taxes induces feelings somewhere between déjà vu and nauseous regurgitation. In retrospect, the history of the AMT is not encouraging with regard to minimum taxes more generally, although some of the problems that it had were contextspecific. The basic logic behind relating two tax bases, or tax liability computations with respect to the same base, in the manner that results from employing minimum taxes, seems generally elusive. 

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October 6, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Fleming Presents Worldwide vs. Territorial Taxation: The State Of The Conflict In The U.S. Virtually Today In Austria

J. Clifton Fleming (BYU) presents Worldwide vs. Territorial Taxation: The State of the Conflict in the United States virtually today at the Institute for Austrian and International Tax Law of the Vienna University of Economics and Business:

FlemingThis paper is an extension of  J. Clifton Fleming (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Boston College), Expanded Worldwide Versus Territorial Taxation after the TCJA, 161 Tax Notes 1178 (Dec. 3, 2018). It explains that on an overall basis, the TCJA did not accomplish a meaningful movement in the direction of either worldwide or territorial taxation although it rearranged the U.S. international income tax system in complex ways that necessitate new tax planning strategies. Possibilities for movement, as well as current developments, are examined and the conclusion is reached that it continues to be difficult to determine which way the U.S. is going.

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October 6, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Andy Grewal: The Lucky Law Professor

Jonathan Curry (Tax Analysts), Academic Spotlight: Andy Grewal — The Lucky Law Professor, 168 Tax Notes Fed. 2527 (Sept. 28, 2020):

Grewal (2021)By Andy Grewal’s own accounting, the course of his career has often been marked by luck — “dumb luck,” in his own words.

In fact, the Iowa University College of Law professor, known for his witty Twitter account and often contrarian stances on noteworthy topics like congressional Democrats’ quest for President Trump’s tax returns, didn’t even initially set out to be a lawyer, much less a tax law academic. Grewal wanted to be a journalist.

He initially applied to Northwestern University’s Medill School of Journalism, but was rejected. “I was so heartbroken that I just gave up journalism entirely,” he told Tax Notes.

Instead, Grewal took up law. But after his first year of law school, he decided he didn’t like any of those first-year courses all that much, so he just decided — without having taken any tax classes — that he would specialize in whatever area seemed completely different from everything else.

“Somehow it worked out,” he said.

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October 6, 2020 in Legal Ed News, Legal Education, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Why Millionaires Don't Move Despite Higher State Taxes

New York Times Wealth Matters:  Why These Millionaires Are Staying Put Despite a New Tax on Them, by Paul Sullivan:

The reason has little to do with money. Family and community ties keep them from leaving their state.

New Jersey recently decided to impose a so-called millionaires tax — effectively increasing state taxes 20 percent on people earning more than $1 million.

Critics had an immediate, and unsurprising, reaction, arguing that such taxes will push the wealthy to move to lower- or no-tax states. But is that true?

While some wealthy people will move, proponents of these taxes argue, few will make good on the threat to move to Florida (with no state income tax) or, in New Jersey’s case, to Pennsylvania (where the state tax rate is one-third its neighbor’s rate). They argue that high earners and entrepreneurs have family and community ties that keep them from moving away.

Bloomberg Opinion:  Low Taxes Are Never Enough to Attract Wealthy Residents, by Stephen Mihm (University of Georgia):

A lot of people dream of leaving New York and California and saving a ton. But it takes more to get them to actually do it.

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October 6, 2020 in Tax, Tax News, Tax Scholarship | Permalink | Comments (2)

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)