Paul L. Caron
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Friday, November 8, 2019

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

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

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

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

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

Wednesday, November 6, 2019

Kysar Presents Unravelling The Tax Treaty Today At Pennsylvania

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

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

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

Tuesday, November 5, 2019

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

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

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

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

Glogower Presents Progressive Tax Procedure Today At UC-Hastings

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

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

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

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

Monday, November 4, 2019

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

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

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

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

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

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

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

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

Friday, November 1, 2019

Glogower Presents Progressive Tax Procedure Today At Boston College

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

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

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

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

Thursday, October 31, 2019

Zolt Presents Corporate Responsibility To Pay Taxes At Toronto

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

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

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

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

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

Wednesday, October 30, 2019

Grewal Presents The President’s Tax Returns Today At Pennsylvania

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

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

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

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

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

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

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

Tax Prof reviews:

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

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

Tuesday, October 29, 2019

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

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

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

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

Monday, October 28, 2019

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

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


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

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

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

Friday, October 25, 2019

Oei Presents Falling Short In The Data Age Today At Cornell

Shu-Yi Oei (Boston College) presents Falling Short in the Data Age (Diane Ring (Boston College)) at Cornell today as part of its Faculty Workshop Series:

TesttwoHumans are imperfect and do not always comply with the law, but the reality is that we are sometimes permitted to fall short of law’s requirements without consequences. This informal space to fall short and not be held accountable—which may arise from a confluence of information imperfections, resource constraints, politics, or luck—exists in addition to formal legal provisions that allow flexibility and discretion (such as tiered penalties or equitable provisions allowing leniency under specified circumstances). Fall-short spaces often pass unnoticed, but are in fact quite significant in intermediating the relationship between humans and the law.

This Article examines how the increasing access to data and information will change the availability and shape of law’s fall-short spaces.

 

We introduce a taxonomy of fall-short spaces, outlining the various reasons they exist and the different ways in which they are deployed. Applying this taxonomy, we show how increasingly ubiquitous data and information will cause some fall-short spaces to contract (and in fact is already doing so) and highlight the risk that data will generate disparate contraction of fall-short spaces for different populations.

Building on these observations, we articulate a bounded defense of fall-short spaces. We argue that, while fall-short spaces may compromise rule-of law-values, raise separation of powers concerns, and provide incentives for bad laws to stay on the books indefinitely, there are also contexts in which they serve a valuable function and where their loss might be problematic. We articulate potential policy solutions to help manage the challenge of contracting fall-short spaces in the data age, including data silos, limitations on data collection, and redesign of underlying laws for the data age.

October 25, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Brown Presents Tax Policy: A Tool to Support Sustainable Growth Today At Boston College

Karen Brown (George Washington) presents Tax Policy: A Tool to Support Sustainable Grow at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

Brown (Karen)In the spring of 2019, the World Bank launched the Human-Centered Business Model ("HCBM") that takes corporate social responsibility to a different level by supporting a system in which governments may account for consequences to constituents when businesses operate without reference to a set of minimum guidelines. It seeks to incorporate a common set of corporate goals covering economic, social, and environmental sustainability based on a core set of values to create a coherent business ecosystem. The paper provides an overview of the goals of the Fiscal Pillar (Pillar Four) of the HCBM project. It offers options for governments to design tax regimes that support efficiency and sustainable growth in their economies while providing incentives for enterprises to operate with attention to core principles as well as the considerable costs of doing business in a manner that does not serve sustainable goals.

October 25, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, October 24, 2019

Fleming Presents Is Unilateral Formulary Apportionment Better Than The Status Quo? Today At Michigan

J. Clifton Fleming (BYU) presents Is Unilateral Formulary Apportionment Better Than the Status Quo? (with Robert Peroni (Texas) & Stephen Shay (Harvard)) today at Michigan:

FlemingIt’s doubtful that the world’s large-economy countries will adopt formulary apportionment in a coordinated movement that yields a uniform regime. The more likely scenario is that a formulary apportionment adopter will be a unilateral actor winding up with a system that does not mesh well with the systems of its major trading partners.

This paper points out that formulary apportionment does not require adoption of a territorial system. Formulary apportionment can be used in a worldwide regime to identify foreign-source income for foreign tax credit purposes. Thus, the unilateral adoption issue, with its uncoordinated results, is relevant even for countries that contemplate maintaining some form of worldwide taxation with a limited foreign tax credit.

This paper’s principal purpose is to examine and evaluate the factors that any country must consider when contemplating replacement of the arm’s-length approach with formulary apportionment. Among those factors are:

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October 24, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, October 23, 2019

Vella Presents Residual Profit Allocation By Income Today At Pennsylvania

John Vella (Oxford) presents Residual Profit Allocation by Income (with Michael Devereux (Oxford), Alan Auerbach (UC-Berkeley), Michael Keen (IMF), Paul Oosterhuis (Skadden) & Wolfgang Schön (Max Planck)) (reviewed by Young Ran (Christine) Kim (Utah) here) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Vella (2019)This paper is a draft chapter of a forthcoming book on the taxation of international business profit by the authors of this paper, to be published by Oxford University Press. The group has been meeting regularly for five years, to identify and discuss the key problems of the existing international tax system, and to develop potential options for reform. The book will study two proposals for reform in depth. One is the destination based cash flow tax – a draft chapter on this proposal has already been released. The second proposal – for a form of residual profit allocation - is presented here.

We refer to the proposal set out in this paper as a Residual Profit Allocation by Income, or RPA-I. The RPA-I allocates the right to tax routine profit to the country where functions and activities take place. It allocates the right to tax residual profit to the market, or destination, country where sales are made to third parties.

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October 23, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tuesday, October 22, 2019

Oei And Ring Present Falling Short In The Data Age Today At NYU

Shu-Yi Oei (Boston College) and Diane Ring (Boston College) present Falling Short in the Data Age at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Oei Ring (2018)Humans are imperfect and do not always comply with the law, but the reality is that we are sometimes permitted to fall short of law’s requirements without consequences. This informal space to fall short and not be held accountable—which may arise from a confluence of information imperfections, resource constraints, politics, or luck—exists in addition to formal legal provisions that allow flexibility and discretion (such as tiered penalties or equitable provisions allowing leniency under specified circumstances). Fall-short spaces often pass unnoticed, but are in fact quite significant in intermediating the relationship between humans and the law.

This Article examines how the increasing access to data and information will change the availability and shape of law’s fall-short spaces.

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October 22, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Monday, October 21, 2019

Wallace Presents Democracy-Enhancing Tax Policy Today At Loyola-L.A.

Clint Wallace (South Carolina) presents Democracy-Enhancing Tax Policy at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

Wallace (2019)This paper contests the pervasive notion that democratic governance and good tax policy (however defined) are in conflict, and places the impulse to avoid or constrain democratic forces in tax policy making as a symptom of a more fundamental challenge: a lack of attention to the actual and potential role of taxation in promoting a flourishing democratic community. 

I offer two theoretical arguments in response to this notion and impulse. First, I argue that democracy demands broad participation in tax policy making. This point connects tax scholarship with an important element of democratic theory, the principle of affected interests. Second, I argue that an inclusive tax policy process should have as a central goal non-domination, both in decisionmaking procedures and in substantive policies. This argument is grounded in theoretical work on competitive models of democracy, which recommends a fluid, iterative decisionmaking process, open to challenge and subject to revision, with conditions that promote democratic legitimacy. 

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October 21, 2019 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wong Presents The Financial Burden Of Property Taxes Today At UC-Berkeley

Francis Wong (Ph.D. Economics 2020, UC-Berkeley) presents The Financial Burden of Property Taxes at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Wong

Financial hardship resulting from rising property tax burdens is a common complaint among homeowners, but very little evidence exists evaluating its quantitative importance. Standard frictionless models do not allow for financial strain generated by property taxation because under normal conditions liquid housing wealth sufficiently covers the cost of property taxes. This paper leverages a novel merge between property records, mortgage servicing data, and credit bureau data to demonstrate that relatively small increases in property taxes lead to increases in mortgage default and decreases in consumption. Event study estimates around the month in which homeowners' monthly property tax payments are increased to reflect their new property assessment imply that a $100 monthly tax increase leads to a 1% increase in mortgage delinquency and reduces auto consumption by $28. Moreover, homeowners generally do not draw on their home equity to pay property tax bills. These results contradict the predictions of standard models and imply the existence of important frictions in property taxation.

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October 21, 2019 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Friday, October 18, 2019

Book Presents Administrative Burdens, Sludge, And Individual Taxpayer Rights Today At Florida

Leslie Book (Villanova) presents Administrative Burdens, Sludge, and Individual Taxpayer Rights (with Keith Fogg (Harvard)) at Florida today as part of its Tax Colloquium Series:

Book (2019)The tax system designed by Congress imposes significant administrative burdens on taxpayers. Decisions by the IRS regarding how it administers the tax laws can add to the burdens imposed by Congress. The administrative burdens are consequential and hurt some people, especially lower or moderate-income individual taxpayers, more than others. While the IRS strives to measure and reduce the time and money that taxpayers spend to comply with their tax obligations, the IRS does not consider the effect that administrative burdens have on taxpayer rights, including the right to be informed, the right to pay no more than the correct amount of tax, and the right to a fair and just tax system. In this article, building on the work of public administration scholars Pamela Herd and Don Moynihan, we discuss the concept of administrative burdens and reveal specific examples of how IRS actions and inaction have burdened taxpayers and jeopardized taxpayer rights.

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October 18, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, October 17, 2019

Kleiman Presents Tax Limits And The Future Of Local Democracy Today At Northwestern

KleimanAriel Jurow Kleiman (San Diego) presents Tax Limits and the Future of Local Democracy, 133 Harv. L. Rev. ___ (2019), at Northwestern today as part of its Advanced Topics in Taxation Colloquium Series hosted by Herbert Beller, David Cameron, Charlotte Crane, Sarah LawskyAjay MehrotraPhilip Postlewaite, and Jeffrey Sheffield:

Property tax limits are state-level laws that place caps on local governments’ tax rates and revenue. These statutory limits, which put pressure on already strapped cities and counties in forty-six states, present an inexorable dilemma for local policymakers. On the one hand, they may cause cuts to vital services, bankruptcy, and reliance on regressive revenue sources. At the same time, however, tax limits may reflect genuine concerns about government profligacy and nonresponsiveness. While much research has focused on the first side of the dilemma—examining the laws’ fiscal consequences—this Article explores the second, probing how tax limits affect the distribution of political power between local voters and policymakers.

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October 17, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, October 16, 2019

Kane Presents The Global Battle To Capture Multinational Enterprise Profits Today At Pennsylvania

Mitchell Kane (NYU) presents Collecting the Rent: The Global Battle to Capture MNE Profits, 72 Tax L. Rev. ___ (2019) (with Joseph Bankman (Stanford) & Alan Sykes (Stanford)) (reviewed by David Elkins (Netanya) here) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Kane (2018)Multinational enterprises (MNEs) often earn substantial profits, or "economic rents." Often, these MNEs are domiciled in the United States, and the rents derive from ownership of intellectual property. These MNEs have structured their affairs to pay little taxes to countries outside the United States or otherwise to share their rents in these countries. Apple and Microsoft, for example, may earn roughly half their profits outside the United States but do not pay significant amounts of taxes to any foreign country.

The European Union and other countries have responded to this state of affairs with new tax legislation, antitrust actions, and other policies that have the effect of, and perhaps the intention of, capturing a greater share of MNE rents for their treasuries or citizens. To date, these policies are discussed in separate literatures focused on a particular policy domain (tax, antitrust, and so on). This paper offers the first unified or comparative analysis of the issue.

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October 16, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Shaviro Presents Digital Service Taxes Today At Toronto

Daniel Shaviro (NYU) presents Digital Service Taxes and the Broader Shift from Determining the Source of Income to Taxing Location-Specific Rents at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Shaviro (2018)In recent decades, a number of fantastically successful, mainly American, multinational entities (MNEs) — led and epitomized by the “Four Horsemen,” Apple, Amazon, Facebook, and Google — have risen to global economic hyper-prominence. While their market capitalizations and profits are high, reflecting that they earn substantial rents or quasi-rents, their aggregate global taxes are generally quite low, reflecting their ability to create stateless income.

Often, these MNEs are technology companies, like the Four Horsemen – but not always. Starbucks, for example, enjoys high global profits and low taxes despite its following a classic brick-and-mortar retail business model. This reflects that, like its more obviously high-tech peers, it relies on valuable intellectual property that helps it in creating both global pretax profitability and stateless income.

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October 16, 2019 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink | Comments (0)

Tuesday, October 15, 2019

Liscow Presents Democratic Law And Economics Today At NYU

Zachary Liscow (Yale) presents Democratic Law and Economics at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Liscow (2017)Law and economics typically analyzes ideal policies, ignoring real-world institutions and constraints. It is helpful for real-world political actors, though, to have guidance for the real world, which this Article provides for policymakers setting policy with distributional impacts. Current guidance not considering real-world constraints may significantly hamper policymakers’ effectiveness at addressing today’s crisis of inequality. Critique of law and economics is widespread, but, to provide an alternative framework for policymaking, one needs to start with an account of its failures that can provide such an alternative framework. This Article provides such an account of the failures and an alternative framework.

This Article explores a major dissonance between expert and lay policy views: the set of tax prescriptions required by law and economics is sharply at odds with ordinary citizens’ psychology about taxes. While standard economic reasoning views taxes solely as a system of incentives and redistribution, many ordinary people also think of taxes as rewarding desert—as recent rigorous survey experiments, advances in the economics of taxation, and decades of experience show. Desert-based tax views limit redistribution, since the poor are deemed to not deserve free cash and the rich are deemed to deserve some of their income. A democracy where Congress is attentive to such tax views will need to look elsewhere to achieve distributive justice.

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October 15, 2019 in Colloquia, Scholarship, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Monday, October 14, 2019

Fox Presents The Uneasy Case For Higher Business Taxes Today At Loyola-L.A.

Edward Fox (Michigan) presents The Uneasy Case for Higher Business Taxes at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

FoxDespite the huge stakes, there is little scholarly discussion of the appropriate corporate tax rate. Where there is analysis, discussion focuses overwhelmingly on increasing international competition, which suggests lower corporate tax rates. We try to add some balance to the discussion by elaborating on reasons for higher corporate tax rates. In particular, two recent changes militate in favor of higher taxes on corporations: first, changes in the American economy leading to the rise of rents and, second, recent changes in tax law (and potential future changes) making the corporate tax more efficient. Other arguments favor higher rates as well. Although we cannot say what that rate should be, we offer the reasons favoring a higher rate and describe reforms that could help ease the adoption of higher, efficient taxes on corporate profits. We suggest that, at minimum, proponents of lower corporate tax rates present an incomplete picture and that the “lower corporate tax rates” conclusion is a non-obvious one.

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

Thursday, October 10, 2019

Fleming Presents Is Unilateral Formulary Apportionment Better Than The Status Quo? Today In Vienna

Cliff Fleming (BYU) presents Is Unilateral Formulary Apportionment Better Than the Status Quo? (with Robert Peroni (Texas) & Stephen Shay (Harvard)) at the Institute for Austrian and International Tax Law of the Vienna University of Economics and Business:

FlemingIt’s doubtful that the world’s large-economy countries will adopt formulary apportionment in a coordinated movement that yields a uniform regime. The more likely scenario is that a formulary apportionment adopter will be a unilateral actor winding up with a system that does not mesh well with the systems of its major trading partners.

This paper points out that formulary apportionment does not require adoption of a territorial system. Formulary apportionment can be used in a worldwide regime to identify foreign-source income for foreign tax credit purposes. Thus, the unilateral adoption issue, with its uncoordinated results, is relevant even for countries that contemplate maintaining some form of worldwide taxation with a limited foreign tax credit.

This paper’s principal purpose is to examine and evaluate the factors that any country must consider when contemplating replacement of the arm’s-length approach with formulary apportionment. Among those factors are:

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October 10, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Wednesday, October 9, 2019

Peroni Presents Expanded Worldwide Versus Territorial Taxation After The TCJA Today At Pennsylvania

Robert Peroni (Texas) presents Expanded Worldwide Versus Territorial Taxation After the TCJA, 161 Tax Notes 1178 (Dec. 3, 2018) (with Cliff Fleming (BYU) & Stephen Shay (Harvard)) at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Peroni (2015)In the run up to enactment of the 2017 Tax Cuts and Jobs Act (TCJA) one of the principal U.S. tax policy issues was how foreign-source, active-business income of U.S. multinational enterprises (MNEs) should be taxed by the United States if the system of deferring U.S. tax on active income of a foreign subsidiary was ended. Should active foreign income be taxed under a territorial or exemption system—i.e. bear no residual U.S. tax—or should it be subjected to expanded worldwide taxation—i.e. current taxation at regular U.S. rates coupled with a credit for foreign income taxes paid or accrued, but limited to the U.S. tax on the foreign-source income as measured for U.S. tax purposes.

The opposing sides were not without common ground. Both agreed that the existing U.S. system for taxing the foreign-source, active-business income of U.S. MNEs needed to be changed because it generally did not impose U.S. tax until the active income of foreign subsidiaries was repatriated, either through dividends or by sale of subsidiary stock at a price reflecting accumulated foreign-source income. This was problematic for the advocates of territoriality because it required payment of a U.S. tax before CFC earnings could be directly accessed by U.S. parent corporations when no home country tax would have to be paid by MNEs from some competitor countries. It was unacceptable to worldwide taxation advocates because the resulting deferral of U.S. tax effectively created a preferential tax rate for CFC income that encouraged U.S. MNEs to locate operations in, and engage in income shifting to, low-tax foreign countries. The two sides were, however, at loggerheads over whether the foreign-source, active-business income of U.S. MNEs should bear a current U.S. tax at regular rates, subject to a limited foreign tax credit, or should bear no U.S. tax at all. Neither view prevailed in the TCJA.

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October 9, 2019 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tuesday, October 8, 2019

Pratt Presents The Curious State Of Tax Deductions For Fertility Treatment Costs Today At NYU

Katherine Pratt (Loyola-L.A.) presents The Curious State of Tax Deductions for Fertility Treatment Costs, 28 S. Cal. Rev. L. & Soc. Just. 261 (2019) (reviewed by Sloan Speck (Colorado) here), at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Pratt (2017)The federal tax treatment of assisted reproductive technology (ART) expenses incurred by intended parents is unclear. This lack of clarity in the tax law is curious because millions of intended parents have incurred ART expenses, which typically are quite large, over the past 40 years. ARTs include in vitro fertilization (IVF), intracytoplasmic sperm injection (ICSI), egg donation, and surrogacy. This Article addresses the question of whether various categories of taxpayers can classify the costs of specific types of ART expenses as tax deductible “medical care,” taking into account new developments in the law, including the 2017 federal appellate court decision in Morrissey v. United States.

Part I of this Article outlines the contours of the income tax deduction (and related tax benefits) for “medical care,” incorporating the statutory definition of “medical care” and the interpretation of that definition by the Internal Revenue Service (IRS) and courts. Part II applies the “medical care” definition to expenses incurred by different-sex married couples for specific types of reproductive medical care and ancillary payments. We begin our analysis with this cohort of intended parents because the IRS seems to have had such taxpayers in mind when it initially provided informal advice to taxpayers who incurred fertility treatment costs. Part II then extends the analysis to same-sex couples and unmarried individuals, focusing primarily on the U.S. Tax Court decision in Magdalin v. Commissioner, and briefly summarizing Longino v. Commissioner. In both cases, the court denied fertile unmarried men a medical expense deduction for ART expenses. Part II considers the implications of Magdalin for medically infertile men, married and unmarried women, and married different-sex couples. Part II also articulates a novel argument men could make for deducting some ART costs, notwithstanding Magdalin and Longino.

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

Monday, October 7, 2019

Kim Presents The Digital Services Tax: A Cross-Border Variation Of The Consumption Tax Debate? Today At Loyola-L.A.

Young Ran (Christine) Kim (Utah) presents The Digital Services Tax: A Crossborder Variation of Consumption Tax Debate at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

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

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

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October 7, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, October 2, 2019

Hemel Presents Phaseouts Today At Pennsylvania

Daniel Hemel (Chicago, visiting at Harvard) presents Phaseouts at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Hemel (2019)The Internal Revenue Code is replete with tax benefits that phase out with income. While phaseout provisions are widespread, their effects are little understood. Some commentators have suggested that phaseouts reduce the revenue costs and increase the progressivity of tax benefits. Other leading tax law scholars have assailed these provisions for adding complexity to the Code and for confusing taxpayers about the rates that apply to them. This article presents a comprehensive evaluation of phaseouts and arrives at a more nuanced view. The notions that phaseouts reduce cost and increase progressivity turn out largely to be accounting illusions. At the same time, the implications of phaseouts for tax system complexity and taxpayer comprehension are more ambiguous than their critics charge. Phaseouts are appropriate when the externalities or internalities generated by an activity depend on the actor’s income. Most—though not all—of the phaseouts in the Internal Revenue Code are plausibly justified on these grounds.

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October 2, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tuesday, October 1, 2019

Shaviro Presents Digital Service Taxes Today At NYU

Daniel Shaviro (NYU) presents Digital Service Taxes and the Broader Shift from Determining the Source of Income to Taxing Location-Specific Rents at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder:

Shaviro (2018)In recent decades, a number of fantastically successful, mainly American, multinational entities (MNEs) — led and epitomized by the “Four Horsemen,” Apple, Amazon, Facebook, and Google — have risen to global economic hyper-prominence. While their market capitalizations and profits are high, reflecting that they earn substantial rents or quasi-rents, their aggregate global taxes are generally quite low, reflecting their ability to create stateless income.

Often, these MNEs are technology companies, like the Four Horsemen – but not always. Starbucks, for example, enjoys high global profits and low taxes despite its following a classic brick-and-mortar retail business model. This reflects that, like its more obviously high-tech peers, it relies on valuable intellectual property that helps it in creating both global pretax profitability and stateless income.

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

Friday, September 27, 2019

Zelenak Presents Women And The Politics Of The Early Federal Income Tax Changes Today At Boston College

Larry Zelenak (Duke) presents “We Will See That You Are Troubled Right Along”: Women and the Politics of the Early Federal Income Tax at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

Zelenak (2016)This essay tells the stories of three women who, in the early years of the federal income tax, claimed significant roles in tax policy debates by focusing on the intersection of the income tax and policy issues in the female sphere. In chronological order of their contributions, they are: Helen M. Bent, who critiqued the treatment of married women in the bill that became the 1913 income tax; the leading suffragist Anna Howard Shaw, who shortly after enactment of the 1913 income tax urged passive resistance to the tax by unfranchised women; and attorney Martha Connole, who in 1927 explained to the Ways and Means Committee how the income tax rules were unfair to single women. Shaw was famous during her lifetime and remains well-known today, but neither Bent nor Connole was ever famous, and both are all but forgotten today.

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September 27, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, September 25, 2019

Abreu Presents A Taxpayer's Right To Rely On IRS Publications Today At Toronto

Alice G. Abreu (Temple) presents Relying on IRS Publications: A Taxpayer's Right (with Richard K Greenstein (Temple)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Abreu (2019)The IRS takes the position that taxpayers are not entitled to rely on written statements that it makes in instructions to IRS forms and in Publications that are designed for the specific purpose of helping taxpayers meet their tax obligations. And the courts have approved that position, stating that “taxpayers rely at their peril” on IRS written statements in publications. We believe that the IRS position impugns the legitimacy of the agency and of the tax system; we can also show that it is unnecessary for the IRS to take such a position because in most of the cases in which the courts invoke the “reliance at peril” mantra, there was either no reliance, or the reliance was unreasonable. Invocation of the mantra therefore serves only to threaten the legitimacy of the tax system and the IRS. For those reasons alone, the IRS should announce that taxpayers can indeed rely on what it says in its publications and instructions to forms. If the IRS does not want to go that far, it can at least exercise its enforcement discretion to decline to enforce against taxpayers positions that run counter to those it has clearly expressed in publication or instructions to forms.

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September 25, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Prisinzano Presents Policy Evaluation Under The Penn Wharton Business Model Today At Pennsylvania

Richard Prisinzano (Pennsylvania) presents Policy Evaluation under the Penn Wharton Business Model at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Prisinzano

The speaker, Senior Economist at the Penn Wharton Budget Model, will discuss generally how the PWBM works as well as how it has been applied to estimate the impact of current tax policy proposals including: increasing tax rates on capital gains and dividends; increasing payroll taxes; integrating capital taxation; eliminating itemized deductions; and the packages of proposals put forth by two presidential campaigns. The speaker has provided a series of short papers, which are attached in one file below.

About the Penn Wharton Budget Model:
PWBM is a nonpartisan, research-based initiative that provides accurate, accessible and transparent economic analysis of public policy’s fiscal impact. Using the project’s research briefs and interactive budget tools enables analysis of legislation while it is drafted. PWBM serves as an honest broker at the intersection of business and public policy providing rigorous analysis without policy advocacy. PWBM works directly with policymakers and their staff to provide insight into the effects of policy changes. Our simulators and briefs are informed by the policy changes being debated on Capitol Hill.

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September 25, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tuesday, September 24, 2019

Liu Presents The Real Effects Of Transfer Pricing Regulations Today At NYU

Li Liu (IMF) presents At A Cost: The Real Effects of Transfer Pricing Regulations (with Ruud De Mooij (IMF)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Liu PhotoUnilateral adoption of transfer pricing regulations (TPRS) may have a negative impact on real investment by multinational corporations (MNCs). This paper uses a quasiexperimental research design, exploiting unique panel data on domestic and multinational companies in 27 countries during 2006-2014, to find that MNC affiliates reduce their investment by over 11 percent following the introduction of TPRs. There is no significant reduction in total investment by the MNC group, suggesting that these investments are most likely shifted to affiliates in other countries. The impact of TPRs corresponds to an increase in the “TPR-adjusted” corporate tax rate by almost one quarter.

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September 24, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Oei Presents Falling Short In The Data Age At South Carolina

Shu-Yi Oei (Boston College) presented Falling Short in The Data Age (with Diane Ring (Boston College)) at South Carolina yesterday as part of its Tax Scholars Workshop Series hosted by Tessa Davis & Clint Wallace:

Oei (2018)This Article advances a descriptive claim about how relationships between laws, humans and governments are currently constituted, makes a series of predictions about how data will change that state of the world, and advances policy solutions to manage the fallout.

The descriptive claim is that for better or for worse, humans are often allowed to fall short of law’s requirements without consequence, and this space to fall short has been important in intermediating the relationship between humans and the law. This leeway to fall short—which comes about due to factors like luck, resource constraints, resource prioritization, or limited information—allows humans the space to be imperfect but, importantly, also allows laws and polities the space to be imperfect as well.

Our predictive claim is that the growing ubiquity of data and information will change the size, shape, and distribution of these fall-short spaces in ways that may be beneficial in some contexts but troubling in others. Specifically, we argue that data will cause fall-short spaces to shrink, and to shrink disproportionately for certain populations. We also argue that data will call fundamental aspects of law’s design (such as penalties) into question. We argue that, in certain situations, fall-short spaces serve a valuable function and that their loss is troubling.

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September 24, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Monday, September 23, 2019

Avi-Yonah & Fishbien Present Tax Expenditures, Horizontal Equity, And Stanley Surrey Today At Boston University

AFReuven Avi-Yonah (Michigan) and Nir Fishbien (Mich. SJD) present Tax Expenditures and Horizontal Equity: A Lost Lesson from Stanley Surrey at Boston University today as part of its Tax Policy Workshop Series hosted by David Walker:

Tax expenditures are “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.’’ The concept of tax expenditures was invented by the first Assistant Secretary for Tax Policy, Stanley S. Surrey, in the late 1960s, and was codified by the Congressional Budget Act of 1974, which requires that a list of tax expenditures be included in the US budget. The tax expenditure budget relies on the Haig Simons definition of income as the base, while acknowledging the fact that not all deviations from Haig Simons are treated as tax expenditures.

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September 23, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Layser Presents Evaluating Place-Based Investment Tax Incentives Today At Loyola-L.A.

Layser (2018)Michelle Layser (Illinois) presents More Than Jobs: Evaluating Place-Based Investment Tax Incentives at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

The new Opportunity Zones tax incentive introduced by the Tax Cuts and Jobs Act in 2017 is poised to be much larger than previous place-based tax incentives, and anti-poverty advocates worry that it may also be more destructive—fueling rapid development of neighborhoods that leads to gentrification and displacement. This Article provides a new theoretical framework for evaluating the potential benefits (or harms) associated with place-based tax incentives like Opportunity Zones. Under the framework, tax-subsidized projects are parsed as traditional economic development projects and community infrastructure projects. Using this framework as a guide, this Article employs spatial analytics and exploratory data analysis to visualize and explore original data about tax-subsidized projects. The analysis generates several new insights about place-based tax incentives that shed light on the likely impact of Opportunity Zones.

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September 23, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Yagan Presents Place-Based Redistribution Today At UC-Berkeley

YaganDanny Yagan (UC-Berkeley) presents Place-Based Redistribution at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Place-based redistribution is ubiquitous but has traditionally enjoyed little support among economists. We develop a class of spatial equilibrium models characterizing the equity-efficiency tradeoff that arises when taxes and transfers are indexed to location. Transfers from one region to another are found to be welfare improving under empirically plausible assumptions on preference heterogeneity, even in an environment with optimal place-blind income taxes. A calibration shows that optimal place-based redistribution may be substantial.

 

September 23, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Wednesday, September 18, 2019

Brauner Presents The True Nature Of Tax Treaties Today At Toronto

Yariv Brauner (Florida) presents The True Nature of Tax Treaties at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Brauner (2019)Tax treaties are the building blocks of the international tax regime. Much scholarship has been devoted to them, peaking with Professor Klaus Vogel’s Magnum Opus on Double Tax Conventions. Yet, almost a century after modern tax treaties were formalized into a model, and the derivatives of that model, now over 3000 of them, dominate the tax consequences of cross-border trade and investment, there are still many unanswered fundamental questions, which roots are in the lack of a clear understanding of the true nature of tax treaties. The purpose of this article is to begin filling that void. ...

The article examines tax treaties from four different perspectives: tax treaties as creatures of international law, Tax exceptionalism as reflected in tax treaties, Tax treaties as a consequence of international negotiations, and multilateralism in a world of bilateral tax treaties.

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September 18, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tuesday, September 17, 2019

Schanzenbach Presents Safety Net Investments In Children Today At NYU

Diane Whitmore Schanzenbach (Northwestern) presents Safety Net Investments in Children (with Hilary W. Hoynes (UC-Berkeley)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

SchanzIn this paper, we examine what groups of children are served by core childhood social safety net programs—including Medicaid, EITC, CTC, SNAP, and AFDC/TANF—and how they have changed over time. We find that virtually all gains in spending on the social safety net for children since 1990 have gone to families with earnings, and to families with income above the poverty line. These trends are the result of welfare reform and the expansion of in-work tax credits. We review the available research and find that access to safety net programs during childhood improves outcomes for children and society over the long run. This evidence suggests that the recent changes to the social safety net may have lasting negative effects on the poorest children.

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September 17, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

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

Young Ran (Christine) Kim (Utah) presented Digital Services Tax: A Cross-border Variation of Consumption Tax Debate? yesterday at San Diego as part of its Tax Law Speaker Series:

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

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

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September 17, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Monday, September 16, 2019

Gordon Presents Fiscal Democracy In The States: How Much Spending Is On Autopilot? Today At Loyola-L.A.

Tracy Gordon (Urban Institute) presents Fiscal Democracy In The States: How Much Spending Is On Autopilot? (with Megan RandallC. Eugene Steuerle & Aravind Boddupalli) at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

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

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

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

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

Key findings:

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September 16, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Tax Paper Presentations Today At UC-Berkeley

Tax paper presentations at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Antoine Ferey (Ph.D Candidate (Economics), CREST – École Polytechnique, Paris, France)), Optimal Income Taxation and Tax Complexity with Taxpayers Misperceptions (with Jérémy Boccanfuso (Ph.D Candidate (Economics), Paris School of Economics):

Ferey

We analyze optimal income taxation and tax complexity – defined as the features of a tax system preventing agents from correctly internalizing taxes in their choices – in a Mirrlees economy where agents misperceive taxes. We capture tax complexity along two dimensions – the number of tax instruments and the design (e.g. salience) of each instrument – and demonstrate how these factors shape the overall complexity of an integrated tax system. Tax complexity is a desirable feature of tax systems to the extent that it induces misperceptions which reduce the efficiency costs of taxation and allow an inequality-averse government to increase taxes and redistribution towards poor households. However, misperceptions generate utility misoptimization costs which are heterogeneous across taxpayers: more able workers are relatively more stricken and thus willing to pay more attention to the tax schedule. The possibility to dedicate time and energy to study the tax schedule and to turn to tax advisors give rise to an optimal level of tax complexity that we characterize. Preliminary estimations indicate that the monetary equivalent for internalizing the US income tax system was $2,364 in 2016, whereas our estimate for the optimal level of complexity is around $1,100. Because richest households resort to tax advisors, it is the upper middle class who loses the most from this tremendous complexity.

Malka Guillot (Postdoctoral Research Fellow, Center for Law and Economics, ETH Zürich), Who Paid the 75% Tax on Millionaires? Optimisation of Salary Incomes and Incidence in France:

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September 16, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Zwick Presents Top Wealth In The United States — New Estimates And Implications For Taxing The Rich At NYU

Eric Zwick (Chicago) presented Top Wealth in the United States: New Estimates and Implications for Taxing the Rich (with Matthew Smith (U.S. Treasury Department) & Owen Zidar (Princeton)) at NYU last week as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Zwick (2019)This paper uses administrative tax data to estimate top wealth in the United States. We build on the capitalization approach in Saez and Zucman (2016) while accounting for heterogeneity within asset classes when mapping income flows to wealth. Our approach reduces bias in wealth estimates because wealth and rates of return are correlated. Overall, wealth is very concentrated: the top 1% holds as much wealth as the bottom 90%. However, the “P90-99” class holds more wealth than either group after accounting for heterogeneity. Relative to a top 0.1% wealth share of more than 20% under equal returns, we estimate a top 0.1% wealth share of [15%] and find that the rise since 1980 in top wealth shares falls by [half]. Top portfolios depend less on fixed income and public equity, depend more on private equity and housing, and more closely match the composition reported in the SCF and estate tax returns. Our adjustments reduce mechanical revenue estimates from a wealth tax and top capital income shares in distributional national accounts, which depend on well-measured estimates of top wealth. Though the capitalization approach has advantages over other methods of estimating top wealth, we emphasize that considerable uncertainty remains inherent to the approach by showing the sensitivity of estimates to different assumptions.

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September 16, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Thursday, September 12, 2019

Polsky Presents Two Tax Papers Today At Florida

Polsky (2018)Gregg Polsky (Georgia) presents two papers today at Florida:

There's a Problem With Buybacks, But It's Not What Senators Think, 162 Tax Notes 765 (Feb. 18, 2019) (with Daniel Hemel (Chicago)), as part of the Tax Colloquium Series:

In a deeply divided Washington, one of the few issues on which leading lawmakers on both sides of the aisle appear to agree is that corporations should be discouraged from buying back their stock from shareholders. This short article argues that, while this anti-buyback sentiment is misguided, there nevertheless are good tax policy arguments for reforming the tax treatment of buybacks. The article recommends adoption of a 1969 proposal made by Professor Marvin Chirelstein that would recharacterize (for tax purposes) buybacks as a pro rata cash dividend, followed by sales of shares from the shareholders who participate in the buyback to the shareholders who do not.

Taxing Residential Solar as part of the Marshall M. Criser Distinguished Lecture and Workshop Series (with Ethan Yale (Virginia)):

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

Wednesday, September 11, 2019

Benshalom Presents Recalibrating Moral Feasibility Boundaries Of Taxation Today At Toronto

Ilan Benshalom (Hebrew University, Faculty of Law) presents Recalibrating Moral Feasibility Boundaries of Taxation at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Benshalom (2019)Tax theorists have recognized the importance of linking policy proposals to different ideal theories of distributive justice such as equality of resources, maximin of primary goods, and welfarism. However, they have invested considerably less efforts in trying to engage the tax-distributive debate with a moral analysis that deals with non-ideal settings. This essay offers a new framework that enables a more effective integration of normative considerations into academic analysis the distributive dilemmas associated with existing tax systems.The essay briefly reviews some of the relevant modern social science research dealing with how individuals view the role of the tax system in reducing inequality, and then discusses the importance and limitations of empirical research. I argue that any attempt to rely on measurable concepts such as biases and distributive preferences to normatively evaluate the distributive function of the tax system would likely be insufficient and perhaps even somewhat misleading. Instead, any moral evaluation of tax policymaking should be done with reference to a set of feasibility constraints, which explicitly recalibrate the framework of normative debate based on relevant social science findings.

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

Tuesday, September 10, 2019

Pratt Presents The Curious State Of Tax Deductions For Fertility Treatment Costs Today At UC-Hastings

Katherine Pratt (Loyola-L.A.) presents The Curious State of Tax Deductions for Fertility Treatment Costs, 28 S. Cal. Rev. L. & Soc. Just. 261 (2019) (reviewed by Sloan Speck (Colorado) here), at UC-Hastings today as part of its Tax Speakers Series:

Pratt (2017)The federal tax treatment of assisted reproductive technology (ART) expenses incurred by intended parents is unclear. This lack of clarity in the tax law is curious because millions of intended parents have incurred ART expenses, which typically are quite large, over the past 40 years. ARTs include in vitro fertilization (IVF), intracytoplasmic sperm injection (ICSI), egg donation, and surrogacy. This Article addresses the question of whether various categories of taxpayers can classify the costs of specific types of ART expenses as tax deductible “medical care,” taking into account new developments in the law, including the 2017 federal appellate court decision in Morrissey v. United States.

Part I of this Article outlines the contours of the income tax deduction (and related tax benefits) for “medical care,” incorporating the statutory definition of “medical care” and the interpretation of that definition by the Internal Revenue Service (IRS) and courts. Part II applies the “medical care” definition to expenses incurred by different-sex married couples for specific types of reproductive medical care and ancillary payments. We begin our analysis with this cohort of intended parents because the IRS seems to have had such taxpayers in mind when it initially provided informal advice to taxpayers who incurred fertility treatment costs. Part II then extends the analysis to same-sex couples and unmarried individuals, focusing primarily on the U.S. Tax Court decision in Magdalin v. Commissioner, and briefly summarizing Longino v. Commissioner. In both cases, the court denied fertile unmarried men a medical expense deduction for ART expenses. Part II considers the implications of Magdalin for medically infertile men, married and unmarried women, and married different-sex couples. Part II also articulates a novel argument men could make for deducting some ART costs, notwithstanding Magdalin and Longino.

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September 10, 2019 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Hatfield Presents Professionally Responsible Artificial Intelligence Today In England

Michael Hatfield (University of Washington) presents Professionally Responsible Artificial Intelligence at the 28th Annual Tax Research Network Conference today at the University of Central Lancashire, England:

HatfieldMichael (2017)As artificial intelligence (AI) developers produce more applications for professional use, how will we determine when the use is professionally responsible? One way to answer the question is to determine whether the AI augments the professional’s intelligence or whether it is used as a substitute for it. To augment the professional’s intelligence would be to make it greater, that is, to increase and improve the professional’s expertise. But a professional who substitutes artificial intelligence for his or her own puts both the professional role and the client at risk. The problem is developing guidance that encourages professionals to use AI when it can reliably improve expertise but discourages substitution that undermines expertise.

This Article proposes a solution, using tax professionals as a case study. There are several reasons tax professionals provide a good case study, including that tax practice has a long history of computerization and that AI is already being developed for tax professionals. Tax professionals, including not only lawyers but certified public accountants are directly regulated by the Internal Revenue Service, in addition to their regulation by professional bodies.

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September 10, 2019 in Colloquia, Legal Ed Scholarship, Scholarship, Tax Workshops | Permalink | Comments (0)

Friday, September 6, 2019

Shanske Presents The States Should And Can Conform To GILTI Today At Minnesota

Darien Shanske (UC-Davis) presents The States Should and Can Conform to GILTI at Minnesota today as part of its Perspectives on Taxation Lecture Series hosted by Kristin Hickman:

Shanske (2017)Corporate income taxes are a critical revenue source for both state governments and the U.S. federal government. Yet corporate income tax revenue collections have been increasingly plagued by taxpayers’ use of artificial tax avoidance mechanisms that shift profits to tax havens and other (low-tax) foreign jurisdictions. The sweeping Tax Cuts and Jobs Act of 2017 attempted to deal with this problem in a number of ways, the most important of which is the Global Income Low-Taxed Income (or “GILTI”) regime. This presentation will present the case for state conformity to GILTI.

Darien Shanske (UC-Davis) & David Gamage (Indiana), Why States Can Tax the GILTI, 91 State Tax Notes 967 (Mar. 18, 2019):

A centerpiece of the 2017 federal tax legislation’s reforms to international corporate income tax rules is the new global intangible low-taxed income regime (or GILTI). In a prior essay, we argued that U.S. state governments should conform to GILTI. But might there be constitutional restrictions preventing state governments from doing so? This essay argues that state governments can constitutionally conform to the federal GILTI rules and thereby tax GILTI income as part of the states’ corporate income tax bases. However, in doing so, we explain that state governments will need to be attentive to background constitutional principles. 

Darien Shanske (UC-Davis) & David Gamage (Indiana), Why States Should Tax the GILTI, 91 State Tax Notes 751 (Mar. 4, 2019):

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