Next Week’s Tax Workshop

Friday, May 24: Guido Alfani (Bocconi University; Google Scholar) will present Economic Inequality in Preindustrial Times: Europe and Beyond, 59 J. Econ. Lit. 3 (2021), as part of the Oxford-Virginia Legal Dialogs. If you would like to attend, please RSVP. 

Continue reading

Hayashi & Deeks: Tax Sanctions And The Russia-Ukraine Conflict

Andrew T. Hayashi (Virginia; Google Scholar) & Ashley Deeks (Virginia; Google Scholar), Tax Sanctions and the Russia-Ukraine Conflict, 48 N.C. J. Int'l L. 433 (2023):

The Russian invasion of Ukraine in 2022 provoked the imposition of economic sanctions that are unprecedented in their swiftness, severity, and novelty. In this essay, we evaluate the possible role of tax law as another sanctions tool for addressing the Russia-Ukraine conflict and discuss a recent legislative proposal to impose tax sanctions.

Conclusion
When we wrote about the need for tax sanctions in January 2022, our primary concern was the need to find alternative points of leverage over foreign targets that would broaden the reach of U.S. sanctions and reduce the pressure being exerted through traditional financial sanctions, which risked divestment from the U.S. financial system and currency over the long term. More generally, we saw the possibility of making more favorable tradeoffs between foreign policy goals and domestic concerns through tax sanctions and through sanctions rules that allowed for finer calibration. 

Continue reading

Smith Presents Taxing Business Owner-Managers Today At Oxford

Kate Smith (London School of Economics and Political Science; Google Scholar) presents It’s All About the Base: Taxing Business Owner-Managers (with Helen Miller (Institute for Fiscal Studies)) at Oxford today as part of its Centre for Business Taxation Seminar:

Business owner-managers form an important part of the workforce in many countries, including the US and UK. We develop an empirical dynamic model to study the taxation of this group, who commonly benefit from preferential tax rates aimed at boosting entrepreneurship and investment. We study all UK owner-managed businesses, explicitly accounting for heterogeneity in their activities and traits, and allow for a wide range of responses to tax, including avoidance margins. We model a rich set of policy instruments, including tax rates, bases and loans, accounting for how their interaction affects inter- and intra-temporal incentives. Increasing capital gains tax (CGT) rates on business owners raises revenue in a progressive manner and leads to a small drop in aggregate owner-managed business investment. There are large declines in investment for some high income incorporated businesses, because higher rates increase the cost of capital associated with new equity investments. 

Continue reading

27th Annual Critical Tax Conference At Florida

Florida hosts the 27th Annual Critical Tax Conference today and tomorrow. If you would like to attend via Zoom, contact David Hasen. 

Friday 

9:00 AM: Welcome 

9:10 AM: First Morning Session 

• Ted Afield (Georgia State), A Catholic Social Teaching Approach to Tax Administration and Enforcement 
• Emily Cauble (Wisconsin; Google Scholar), The Impact of Informal Tax Guidance

10:25 AM: Second Morning Session  

• Rebecca Morrow (Wake Forest; Google Scholar), The Income Tax As a Market Correction 
• Daniel Schaffa (Richmond; Google Scholar), The Regressivity of Complexity 

Continue reading

Next Week’s Tax Workshop

Monday, May 13: Kate Smith (London School of Economics and Political Science; Institute for Fiscal Studies; Google Scholar) will present It’s All About the Base: Taxing Business Owner-Managers (with Helen Miller (Institute for Fiscal Studies)) as part of the Oxford Centre for Business Taxation Seminar. If you would like to attend, please RSVP here. 

Continue reading

Columbia Tax Workshop (Day 2)

Today's Columbia Tax Workshop is being held at its Manhattanville Campus: 

Katarzyna Bilicka (Utah State; Google Scholar), The Role of Intellectual Property in Tax Planning (with Paul Organ (U.S. Treasury Department; Google Scholar) & İrem Güçeri (Oxford; Google Scholar)) 
Discussant: Michael Love (Columbia)

Multinational enterprises (MNEs) that invest in research and development (R&D) and innovation find it easier to shift profits between their subsidiaries located in jurisdictions with different tax rates. While MNEs invest in R&D and develop intellectual property (IP) across multiple jurisdictions, they can also strategically move profits arising from that IP from high- to low-tax jurisdictions to reduce their overall tax bill. In this paper, we analyze and quantify the importance of two different strategies that MNEs use to move their IP to low-tax jurisdictions: selling a patent developed in a high-tax jurisdiction to a low-tax jurisdiction directly, or signing a cost-sharing arrangement (CSA) between those two jurisdictions to cover the costs of developing further IP. Combining administrative data on CSAs, patent applications and transactions, and US tax returns, we provide novel stylized facts on the use of both those strategies by MNEs. We then show that CSAs increase jurisdiction-level patenting activity, royalty payments, profits, and profitability, especially the CSAs signed with low-tax jurisdictions. At the MNE level, a new CSA significantly increases firm sales, profitability, and R&D investment, without affecting the MNE’s effective tax rates. Private firms are the only ones that experience the significant MNE-level effects on sales, profitability, and intangible assets after they sign their first CSA.

Ari Glogower (Northwestern; Google Scholar), Closing the Life Insurance Tax Loophole (with Andrew Granato (J.D.-Ph.D. Candidate, Yale))
Discussant: John Vella (Oxford) 

Permanent life insurance contracts enjoy an unparalleled combination of tax benefits. In a permanent or “cash value” contract, a portion of the premium paid is allocated to an internal savings account or “cash value reserve,” which over time reduces the amount of insured risk in the contract. The cash value reserve enables the policyholder’s beneficiary to ultimately receive a guaranteed “death benefit” that includes the policyholder’s accumulated savings upon the death of the insured person, resulting in an arrangement that resembles an investment account, rather than financial protection in the event of an untimely death.

Continue reading

Columbia Tax Workshop (Day 1)

Today's Columbia Tax Workshop is being held at its Manhattanville Campus: 

Kimberly Clausing (UCLA; Google Scholar), Capital Taxation and Market Power
Discussant: Wojciech Kopczuk (Columbia; Google Scholar)

In recent decades, market power has increased substantially, according to multiple measures that describe industry concentration, mark-ups, and business profitability. While market power can generate benefits, it also raises vexing policy concerns, including the potential for adverse effects on labor markets, income inequality, and the dynamism of market competition. The concept of market power also has implications for how we conceptualize capital income, making it important to distinguish between normal and above-normal returns to capital. The tax system taxes both types of returns to capital, but often imperfectly and incompletely. Full consideration of the relationship between market power and capital income suggests important implications for optimal capital taxation design, including the role of entity taxation, the use of graduated business tax rates, and international tax reform.

Conor Clarke (Washington University; Google Scholar) & Wojciech Kopczuk (Columbia; Google Scholar), Income Inequality and the Corporate Sector
Discussant: Yair Listokin (Yale; Google Scholar)

Continue reading

Pepperdine Tax Policy Workshop Series (Spring 2024)

Thanks to Deanna Newton, the faculty who came to Malibu, and our students who made the Spring 2024 Pepperdine Tax Policy Workshop Series such a rousing success:

• January 22: Jason Oh (UCLA), How Does The Corporate Tax Distort Choice Of Corporate Governance? 
• February 5: Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), Taxing Nannies (with Shayak Sarkar (UC-Davis; Google Scholar) & Emily A. Satterthwaite (Georgetown; Google Scholar))
• February 19: Young Ran (Christine) Kim (Cardozo; Google Scholar), Taxing the Metaverse, 112 Geo. L.J. ___ (2024)
• March 11: Jordan Barry (USC; Google Scholar), Tax and the Boundaries of the Firm (with Victor Fleischer (UC-Irvine; Google Scholar)
• March 25: Goldburn Maynard, Jr. (Indiana-Kelley; Google Scholar), Penalizing Precarity, 123 Mich. L. Rev. __ (2024) (with Clinton Wallace (South Carolina; Google Scholar)) 
• April 8: Shayak Sarkar (UC-Davis; Google Scholar), Internal Revenue's External Borders, 112 Calif. L. Rev __ (2024)
• April 22: Michael Graetz (Columbia), The Power to Destroy: How the Antitax Movement Hijacked America (Princeton University Press 2024) 

Continue reading

Advani Presents How Responsive Are Top Earners To Tax Rates? Today At Oxford

Arun Advani (Warwick; Google Scholar) presents Top Flight: How Responsive Are Top Earners to Tax Rates? (with Cesar Poux (London School of Economics) & Andy Summers (London School of Economics)) at Oxford today as part of its Oxford Centre for Business Taxation Seminars:

Using administrative data on the universe of UK taxpayers, we leverage major top tax rate reforms in the UK and France to evaluate how much top earners respond to tax increases by migrating. We document four main facts. First, looking across foreigners we find a migration semi-elasticity with respect to the net-of-average-tax rate of -0.2, somewhat lower than has been found for specific groups studied previously. Second, migration responses are driven by those with the highest predicted baseline emigration probability, highlighting the importance of accounting for heterogeneity. Third, there is little migration response from natives. Finally, we estimate the long term impact of tax changes on the stock of migrants among UK top earners taking a structural approach, and find that even our modest migration elasticity implies substantial stock changes in the long run.

Continue reading

Next Week’s Tax Workshop

Monday, April 29: Arun Advani (Warwick; Google Scholar) will present Top Flight: How Responsive Are Top Earners to Tax Rates? (with Cesar Poux (LSE) & Andy Summers (LSE)) as part of the Oxford Centre for Business Taxation Seminars. If you would like to attend, please RSVP here. 

Continue reading

Sarin Presents Broken Budgeting Today At Georgetown

Natasha Sarin (Yale; Google Scholar) presents Broken Budgeting (with Safia Sayed (J.D. 2025, Yale)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

As peacetime deficits rose over the course of the last half century, policymakers searched for tools to assess how close—or far off—new budget, tax, and spending proposals would bring them to fiscal sustainability. This search led to the birth of modern scorekeeping, a complex and highly technical exercise undertaken by neutral government analysts known as scorekeepers. Because its origins are tied to rising deficits, scorekeepers are governed by rules that focus their attention on myopic cost/benefit analysis, rather than long-term policy evaluation. Over the years, many have criticized the process and questioned the accuracy of scores in particular arenas.

This Article offers a more provocative and fulsome take. While ostensibly neutral, the primacy of scorekeeping and scorekeepers has created impediments to legislating a progressive vision of government. Progressive policymaking has at its core government interventions that give society the ability to reap benefits down the line—like investments in children, or in combatting climate change—benefits that accrue in the long-term and are difficult to quantify. Presently, scorekeepers register these types of interventions as costs to the fisc rather than profitable investments, and that hinders their adoption. This is not the fault of scorekeepers, who have limited scope to act outside their mandate. But it is a critique of that mandate, which creates a process that is far from neutral: instead, one that skews policy outcomes against progressive reforms that invest in future generations and in redressing inequality.

Continue reading

Graetz Presents The Power to Destroy: How The Antitax Movement Hijacked America Today At Pepperdine

Michael J. Graetz (Columbia), presents The Power to Destroy: How the Antitax Movement Hijacked America (Princeton University Press 2024) (reviewed by Martin Sullivan here) at Pepperdine today as part of the Tax Policy Workshop Series hosted by Deanna Newton:

The postwar United States enjoyed large, widely distributed economic rewards—and most Americans accepted that taxes were a reasonable price to pay for living in a society of shared prosperity. Then in 1978 California enacted Proposition 13, a property tax cap that Ronald Reagan hailed as a “second American Revolution,” setting off an antitax, antigovernment wave that has transformed American politics and economic policy. In The Power to Destroy, Michael Graetz tells the story of the antitax movement and how it holds America hostage—undermining the nation’s ability to meet basic needs and fix critical problems.

In 1819, Chief Justice John Marshall declared that the power to tax entails “the power to destroy.” But The Power to Destroy argues that tax opponents now wield this destructive power. Attacking the IRS, protecting tax loopholes, and pushing tax cuts from Reagan to Donald Trump, the antitax movement is threatening the nation’s social safety net, increasing inequality, ballooning the national debt, and sapping America’s financial strength. The book chronicles how the movement originated as a fringe enterprise promoted by zealous outsiders using false economic claims and thinly veiled racist rhetoric, and how—abetted by conservative media and Grover Norquist’s “taxpayer protection pledge”—it evolved into a mainstream political force.

Continue reading

Raskolnikov Presents Equality Plus Equity: Law And Redistribution In A Capitalist Democracy Today At Cornell

Alex Raskolnikov (Columbia) presents Equality Plus Equity: Law and Redistribution in a Capitalist Democracy at Cornell today as part of its Faculty Workshop Series:

If the law of capitalism is rigged in favor of the wealthy, why is the rigging so shoddy? If majority rule offers an easy path to soaking the rich, why are the rich still not soaked? Clearly, there are real constraints on the distributional effects of legal rules in modern Western societies. These constraints are binding, long-standing, and consequential—but what are they, exactly, and why do they exist?

This paper offers an answer. Formal equality—same rules for the rich and the poor, the strong and the weak—is essential to a modern capitalist democracy. Political theories ranging from libertarianism to liberalism and Marxism all hold this view. A widely shared commitment to the rule of law reflects it as well. Even theories that reject formal equality reveal its strong influence. But the commitment to formal equality cannot be absolute. A legal system that fully reflects formal equality would allow deprivation. Not only is deprivation inequitable, it undermines, even destroys, the fundamental values underlying every political theory just mentioned. 

Continue reading

Next Week’s Tax Workshops

Monday, April 22: Michael J. Graetz (Columbia) will present The Power to Destroy: How The Antitax Movement Hijacked America (Princeton University Press 2024) (reviewed by Martin A. Sullivan here) as part of the Pepperdine Tax Policy Workshop Series. If you would like to attend, please contact Deanna Newton. 

Tuesday, April 23: Natasha Sarin (Yale; Google Scholar) will present Broken Budgeting (with Safia Sayed (J.D. 2025, Yale)) as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Continue reading

Maynard Presents Penalizing Precarity Today At Georgetown

Goldburn P. Maynard, Jr. (Indiana-Kelley; Google Scholar) presents Penalizing Precarity, 123 Mich. L. Rev __ (2024) (with Clinton Wallace (South Carolina; Google Scholar)), at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

Retirement policy in America is oriented around 401(k) accounts and other employer-sponsored savings plans, which will receive a whopping $1.5 trillion in tax subsidies over the next decade. This Article uncovers a harmful flaw in a common feature of these plans. The problem arises from a gap in the rules governing withdrawals made prior to reaching retirement age. Employees are generally required to seek approval from their plan administrator to receive a “hardship distribution,” which they are granted if they face an “immediate and heavy financial need,” like eviction or an unexpected medical expense. But even with this approval, these distributions are frequently subject to an “early withdrawal penalty,” a separate regime that is not coordinated with the hardship distribution rules.

This Article shows that the gap between the two sets of rules is little known to workers, employers and even policymakers. We document instances of taxpayers surviving financial calamity thanks to a hardship distribution only to learn that they now face a tax penalty—resulting in another cash crunch. 

Continue reading

Newton Presents Inclusive Prosperity Today At San Diego

Deanna S. Newton (Pepperdine) presents Inclusive Prosperity at San Diego today as part of its Tax Law Speaker Series hosted by Michelle Layser:

Gentrification affects almost every American city to varying degrees, involving different parties with different interests. While positive changes are associated with gentrification, low-income individuals are often displaced from their communities due to increased rent costs and property values. Throughout our nation’s history, the federal government has offered tax incentives to those who invest in low-income areas that have historically suffered disinvestment. These tax incentives encourage investment by providing tax benefits and minimal investment constraints. However, because investors are not required to tailor their investments to meet the needs of communities, the unintended consequence of these programs is that residents do not typically benefit and are instead displaced from their communities. There is little in the current literature that proposes how economic development tax incentives should be practically designed to ensure community members are not displaced.

Continue reading

Next Week’s Tax Workshops

Tuesday, April 16: Goldburn P. Maynard, Jr. (Indiana-Kelley; Google Scholar) will present Penalizing Precarity, 123 Mich. L. Rev __ (2024) (with Clinton Wallace (South Carolina; Google Scholar)) as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Friday, April 19: Alex Raskolnikov (Columbia) will present Equality Plus Equity: Law and Redistribution in a Capitalist Democracy as part of the Cornell Faculty Workshop.

Continue reading

Cauble Presents Informal Tax Guidance’s Impact Today At Indiana

Emily Cauble (Wisconsin; Google Scholar) presents Informal Tax Guidance’s Impact at Indiana-Maurer today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

This Article presents the results of a new survey of 2191 U.S. adults designed to gain insight into the impact that statements in informal IRS guidance have on non-expert taxpayers. The results of the survey demonstrate that such statements (taken from actual guidance) are susceptible to interpretations that are inconsistent with actual tax law.

These results underscore the need for reforms that would mitigate the harms that follow when users interpret guidance inconsistently with tax law. In addition, while some of the participants’ misconceptions were predictable, others differed from what legal experts might anticipate. This finding suggests a potential role for studying how non-experts actually interpret guidance – to supplement analysis of technical measures of its readability and reliance on expert review.

Continue reading

Mehrotra Presents The Rise And Fall Of The 1970s National VAT Today At Duke

Ajay K. Mehrotra (Northwestern; Google Scholar) presents Nixon’s VAT: Lawyers, Economists, and the Rise and Fall of the 1970s National Value-Added Tax to Fund Education at Duke today as part of its Tax Policy Seminar hosted by Larry Zelenak:

Nearly all developed countries and many in the developing world have some type of a broad-based, national consumption tax, frequently in the form of a value-added tax (VAT). These levies generate tremendous revenues that often underwrite expansive social-welfare spending, such as national healthcare, free education, and ample retirement savings – spending that mainly addresses economic inequality by promoting redistribution.

The United States is a glaring exception. While there are numerous U.S. subnational consumption taxes, in the form of state and local sales taxes, the federal government has consistently rejected broad-based national consumption taxes. Likewise, the United States has comparative low levels of direct social-welfare spending. This paper – which is part of a larger project exploring the question “why no VAT in the U.S.?” – examines the rise and fall of the 1970s national VAT aimed at funding education.

Continue reading

Hickman Presents OIRA Review Of Treasury Regulations Today At UC-Irvine

Kristin Hickman (Minnesota; Google Scholar) presents OIRA Review Of Treasury Regulations Project at UC-Irvine today as part of its Tax Policy Colloquium hosted by Natascha Fastabend:

In a major retreat for presidential administration and a reassertion of tax exceptionalism, the Biden Administration pulled the plug—at least for now—on Office of Information and Regulatory Affairs (OIRA) review of tax regulations. The interagency memorandum of agreement (the 2023 MOA) ended the OIRA-facilitated interagency review process and compliance with Executive Order (EO) 12,866 for tax regulatory actions. Contrary to some assertions, the 2023 MOA goes further than any of its predecessor agreements by exempting not merely some or most but rather all tax regulatory actions from OIRA review. The move also ended a short-lived effort, memorialized in a 2018 memorandum (the 2018 MOA), that required OIRA review more often in the tax context than had been the case in the past.

Several justifications have been offered in support of the 2023 MOA and the retreat from OIRA review and EO 12,866 in the tax context. These justifications inhabit two dimensions

Continue reading

Organ Presents The Role Of Intellectual Property In Tax Planning Today At Georgetown

Paul Organ (U.S. Treasury Department; Google Scholar) presents The Role of Intellectual Property in Tax Planning (with Katarzyna Bilicka (Utah State; Google Scholar) & İrem Güçeri (Oxford; Google Scholar)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

Multinational enterprises (MNEs) that invest in research and development (R&D) and innovation find it easier to shift profits between their subsidiaries located in jurisdictions with different tax rates. While MNEs invest in R&D and develop intellectual property (IP) across multiple jurisdictions, they can also strategically move profits arising from that IP from high- to low-tax jurisdictions to reduce their overall tax bill. In this paper, we analyze and quantify the importance of two different strategies that MNEs use to move their IP to low-tax jurisdictions: selling a patent developed in a high-tax jurisdiction to a low-tax jurisdiction directly, or signing a cost-sharing arrangement (CSA) between those two jurisdictions to cover the costs of developing further IP. Combining administrative data on CSAs, patent applications and transactions, and US tax returns, we provide novel stylized facts on the use of both those strategies by MNEs. We then show that CSAs increase jurisdiction-level patenting activity, royalty payments, profits, and profitability, especially the CSAs signed with low-tax jurisdictions. 

Continue reading

Sarkar Presents Internal Revenue's External Borders Today At Pepperdine

Shayak Sarkar (UC-Davis; Google Scholar) presents Internal Revenue's External Borders, 112 Calif. L. Rev __ (2024), at Pepperdine today as part of its Tax Policy Workshop Series hosted by Deanna Newton:

The mandate of tax agencies seems clear: to secure revenue for the government and ensure taxpayer compliance. Yet for decades, the Internal Revenue Service (IRS) has regularly facilitated violent immigration enforcement. Scholars and the public have paid significant attention to the state and local policing of immigration law. But the role of tax bureaucrats as generals—no mere foot soldiers—has largely been overlooked.

This Article corrects that oversight. Building on emerging critiques of the tax system, I first describe tax-agency leadership in immigration raids, holding the dry mechanics of agency procedures against stark examples of IRS complicity in civil rights violations. I then raise several concerns about tax-agency involvement in immigration enforcement. After describing the tax-law origins of immigration raids’ constitutional exceptionalism, I assess residual constraints on tax-agency involvement: taxpayer privacy, regulatory suppression, and civil rights liability.

Continue reading

Mirkay Presents Formulating Tax Policy Through The Lens Of Economic Dignity At Indiana

Nicholas Mirkay (Hawaii; Google Scholar) presented Formulating Tax Policy Through the Lens of Economic Dignity at Indiana-Maurer yesterday as part of its Tax Policy Colloquium hosted by Leandra Lederman:

We must examine our federal and state tax systems, which play a central role in overall fiscal policy, through the lens of economic dignity with an eye on the effect of these policies at the human or individual level. To harness the power of economic dignity, instructs Gene Sperling, policy determinations must begin with “the end goals of lifting human well-being.” Economic growth, an often pronounced as an end by policy makers, is not an end goal in and of itself because growth does not ensure it will lift all people from various socioeconomic, racial, and ethnic backgrounds. It does not automatically take into account differences in wealth accumulation or even the types of wealth held. A focus on growth alone likewise does ensure fairness and equal treatment. The end goal of human well-being must supersede ideology and not allow policy makers to get mired in the weeds of programmatic details. Such details may be necessary, but they are not the end goal.

In order to “go out of the comfort zone of [economic] numbers,” Sperling recommends this beginning with this question: “What would a person on his or her death bed say mattered most in his or her economic life?” What is the destination – the ultimate goal to which we aspire?

Continue reading

Next Week’s Tax Workshops

Monday, April 8: Shayak Sarkar (UC-Davis; Google Scholar) will present Internal Revenue’s External Borders, 112 Calif. L. Rev __ (2024) as part of the Pepperdine Tax Policy Workshop Series. If you would like to attend, please contact Deanna Newton. 

Tuesday, April 9: Paul Organ (U.S. Treasury; Google Scholar) will present The Role of Intellectual Property in Tax Planning (with Katarzyna Bilicka (Utah State; Google Scholar) & İrem Güçeri (Oxford; Google Scholar)) as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Wednesday, April 10: Kristin Hickman (Minnesota; Google Scholar) will present OIRA Review Of Treasury Regulations Project as part of the UC-Irvine Tax Policy Colloquium. If you would like to attend, please contact Natascha Fastabend. 

Thursday, April 11: Ajay K. Mehrotra (Northwestern; Google Scholar) will present Nixon’s VAT: Lawyers, Economists, and the Rise and Fall of the Education Value-Added Tax as part of the Duke Tax Policy Seminar. If you would like to attend, please contact Larry Zelenak. 

Friday, April 12: Emily Cauble (Wisconsin; Google Scholar) will present Informal Tax Guidance’s Impact as part of the Indiana Tax Policy Colloquium. If you would like to attend, please RSVP here. 

Continue reading

Satterthwaite Presents Taxing Nannies Today At Duke

Emily Satterthwaite (Georgetown; Google Scholar) presents Taxing Nannies (with Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar) & Shayak Sarkar (UC-Davis; Google Scholar)) at Duke today as part of its Tax Policy Seminar hosted by Larry Zelenak:

Nannies in the U.S. work long hours for low wages and risk retaliation if they complain. Informal, or “off the books,” work exacerbates their precarity, keeping it secret from state and federal tax agencies, as well as employment and labor agencies. Yet we have little understanding of how nannies navigate the tax reporting that renders them formal or informal.

This Article investigates nannies’ preferences for or against formal employment and tax reporting, the reasons behind such preferences, and how such preferences inform nannies’ relationships with their employers and legal institutions more broadly. The Article employs a multi-method research approach that includes an original and innovative survey of nannies and an analysis of nannies’ tax-related posts on the online forum Reddit. To supplement this research, the Article also discusses interviews with fifteen subject-matter experts regarding industry norms, common challenges nannies face, and policy reforms.

Continue reading

Zwick Presents Tax Policy And Investment In A Global Economy Today At Northwestern

Eric Zwick (Chicago; Google Scholar) presents Tax Policy And Investment In A Global Economy (with Gabriel Chodorow-Reich (Harvard; Google Scholar), Matthew Smith (U.S. Treasury Department) & Owen Zidar (Princeton; Google Scholar) at Northwestern today as part of its Advanced Topics in Taxation Colloquium hosted by Ari Glogower:

This paper combines administrative tax data and a model of global investment behavior to evaluate the investment and firm valuation effects of the Tax Cuts and Jobs Act (TCJA) of 2017, the largest corporate tax reduction in the history of the United States. We extend the canonical model of Hall and Jorgenson (1967) to a multinational setting in which a firm produces in domestic and international locations. We use the model to characterize and measure four determinants of domestic investment: domestic and foreign marginal tax rates and cost-of-capital subsidies. We estimate elasticities of domestic investment with respect to each and use them to identify the structural parameters of our model, to quantify which parts of the reform mattered most to investment, and to conduct policy counterfactuals.

We have five main findings. First, the TCJA caused domestic investment of firms with the mean tax change to increase by roughly 20% relative to firms experiencing no tax change. Second, the TCJA created large incentives for some U.S. multinationals to increase foreign capital, which rose substantially following the law change. 

Continue reading

Herzfeld Presents What’s An Income Tax? Today At Toronto

Mindy Herzfeld (Florida) presents What’s an Income Tax? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series hosted by Ben Alarie:

Developments in international taxation – including the substitution of accounting standards for tax laws -- and tensions in the interaction between tax and trade and investment agreements and trends, mandate a renewed attempt to better define and provide a principled meaning to the term income tax, to distinguish income from other types of taxes, and to make sense of the use of other terminology – such as the distinctions drawn between direct and indirect taxes. Meanwhile, the U.S. Congress has mandated that the Treasury allow taxpayers a credit for foreign inome taxes paid, but has provided no guidance as to what an income tax means for this purpose, leaving the government struggling to apply decades old law to new types of foreign taxes. The exercise of trying to distinguish between taxes imposed on income and other types of taxes is inherently interdisciplinary, yet law, economics and accounting all come to the table with different principled approaches and objectives. 

Continue reading

Brooks Presents The Original Meaning Of The Sixteenth Amendment Today At UC-Irvine

John Brooks (Fordham; Google Scholar) presents The Original Meaning Of The Sixteenth Amendment, 102 Wash. U. L. Rev. ___ (2024) (with David Gamage (Missouri-Columbia; Google Scholar)), at UC-Irvine today as part of its Tax Policy Colloquium hosted by Natascha Fastabend:

The Sixteenth Amendment to the United States Constitution enshrines Congress’s “power to lay and collect taxes on incomes, from whatever source derived.” Challenges to the exercise of that power have typically turned on whether the thing being taxed is “income” or not. In the most recent example, the 2023 Supreme Court case of Moore v. United States, taxpayers have argued that the Sixteenth Amendment only authorizes taxation of realized income—this is, that gain from appreciated property can only be taxed as “income” when there has been a sale or conversion of that property.

In this Article we argue—based on the original meaning of the Sixteenth Amendment—that this approach to constitutional tax questions is wrong. The focus of the Sixteenth Amendment and of the Congressional income tax power is not “income” per se, but rather “taxes on incomes, from whatever source derived.” Thus, the question should not be whether the thing being taxed satisfies some isolated definition of “income,” but rather whether that tax in question comports with the original meaning of “taxes on incomes.” 

Continue reading

de la Feria Presents Designing a Progressive VAT Today At Georgetown

Rita de la Feria (Leeds; Google Scholar) presents Designing a Progressive VAT at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli:

This paper presents a novel approach to addressing VAT regressivity, by proposing the adoption of a progressive VAT: a single-rate, broad-base, VAT, whereby tax paid on consumption is re-paid to lower income households in real-time, at the moment of purchase. Such a system can effectively eliminate regressivity, while minimizing the political economy, cash-flow, and welfare stigma obstacles that are often associated with standard welfare transfers used in modern VAT systems. It would also have other significant advantages, particularly in terms of compliance incentives.

Perkins Presents The Exigent AI Mandate For All Law Faculty Today At Florida

Rachelle Holmes Perkins (George Mason; Google Scholar) presents The Exigent AI Mandate for All Law Faculty at Florida today as part of its Marshall M. Criser Distinguished Faculty Workshop: 

Legal scholars have made important explorations into the opportunities and challenges of generative artificial intelligence within legal education and the practice of law, as well as its broader impact on the legal profession. This Article adds to this literature by directly engaging with members of the legal academy. As a collective, law professors, who are responsible for cultivating the knowledge and skills of the next generation of lawyers, are seemingly adopting a laissez faire posture towards the advent of generative artificial intelligence. In stark contrast to law practitioners, law professors generally have displayed a lack of urgency in responding to the repercussions of this emerging technology.

This Article contends that all law professors have an inescapable duty to understand the capabilities and applications of generative artificial intelligence. This obligation stems from the pivotal role faculty play on three distinct but interconnected dimensions: pedagogy, scholarship, and governance. No law faculty are exempt from this mandate because all are entrusted with responsibilities that intersect with at least one, if not all three dimensions, whether they are teaching, research, clinical, or administrative faculty. 

Continue reading

Next Week’s Tax Workshops

Monday, April 1: Rachelle Holmes Perkins (George Mason; Google Scholar) will present The Exigent AI Mandate for All Law Faculty as part of the Florida Marshall M. Criser Distinguished Faculty Workshop. If you would like to attend, please contact RSVP here.

Tuesday, April 2: Rita de la Feria (Leeds; Google Scholar) will present Designing a Progressive VAT as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Wednesday, April 3: John Brooks (Fordham; Google Scholar) with present The Original Meaning Of The Sixteenth Amendment, 102 Wash. U. L. Rev. ___ (2024) (with David Gamage (Missouri-Columbia; Google Scholar)) as part of the UC-Irvine Tax Policy Colloquium. If you would like to attend, please contact Natascha Fastabend. 

Wednesday, April 3: Eric Zwick (Chicago; Google Scholar) will present Tax Policy And Investment In A Global Economy (with Gabriel Chodorow-Reich (Harvard; Google Scholar), Matthew Smith (U.S. Treasury Department) & Owen Zidar (Princeton; Google Scholar)) as part of the Northwestern Advanced Topics in Taxation Colloquium. If you would like to attend, please contact Ari Glogower.

Wednesday, April 3: Mindy Herzfeld (Florida) will present What’s an Income Tax? as part of the Toronto James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Ben Alarie. 

Thursday, April 4: Emily Satterthwaite (Georgetown; Google Scholar) will present Taxing Nannies (with Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar) & Shayak Sarkar (UC-Davis; Google Scholar)) as part of the Duke Tax Policy Seminar. If you would like to attend, please contact Larry Zelenak.

Friday, April 5: William G. Gale (Brookings Institution; Google Scholar), Jacob Goldin (Chicago; Google Scholar), Omri Marian (UC-Irvine; Google Scholar) & Nicol E. Turner-Lee (Brookings Institution) will present AI, Tax, and Society as the 2024 Ellen Bellet Gelberg Tax Policy Lecture. If you would like to attend, please RSVP here.

Friday, April 5: Nicholas Mirkay (Hawaii; Google Scholar) will present Formulating Tax Policy Through the Lens of Economic Dignity as part of the Indiana Tax Policy Colloquium. If you would like to attend, please contact Leandra Lederman. 

Continue reading

Ring Presents The Conflictual Core Of Global Tax Cooperation Today At Duke

Diane M. Ring (Boston College; Google Scholar) presents The Conflictual Core of Global Tax Cooperation (with Shu-Yi Oei (Duke; Google Scholar)) at Duke today as part of its Duke Tax Policy Seminar hosted by Larry Zelenak:

Conventional wisdom suggests that the world is in a transformative era of global tax cooperation, as evidenced by the launch of a sweeping multilateral tax reform project to confront tax base erosion and profit shifting (“BEPS”) spearheaded by the OECD and G20. This Article argues that this dominant cooperation-centric account of OECD/G20-based global tax reform is overstated and masks fundamental conflicts in how developing and developed countries evaluate these reforms.

This Article illuminates and decodes the conflictual core imbedded in the OECD/G20 tax reform project by analyzing developing countries’ criticisms of the project and by identifying their unifying drivers. We argue that, fundamentally, developing countries are intensely concerned about the wide historical gulf in resources and power between developing and developed countries (particularly the United States and the European Union), and how the OECD/G20 global tax reform fails to address, and may even exacerbate, that gulf. Meanwhile, OECD and developed country defenses of the global tax reform have largely missed this fundamental crux of developing country criticisms—as evinced by their focus on the project’s incremental short-term benefits for inter-developing country tax competition.

Continue reading

Brooks Presents The Original Meaning Of The Sixteenth Amendment Today At Washington University

John Brooks (Fordham; Google Scholar) presents The Original Meaning of the Sixteenth Amendment, 102 Wash. U. L. Rev. ___ (2024) (with David Gamage (Missouri-Columbia; Google Scholar)) at Washington University today as part of its Faculty Workshop Series: 

The Sixteenth Amendment to the United States Constitution enshrines Congress’s “power to lay and collect taxes on incomes, from whatever source derived.” Challenges to the exercise of that power have typically turned on whether the thing being taxed is “income” or not. In the most recent example, the 2023 Supreme Court case of Moore v. United States, taxpayers have argued that the Sixteenth Amendment only authorizes taxation of realized income—this is, that gain from appreciated property can only be taxed as “income” when there has been a sale or conversion of that property.

In this Article we argue—based on the original meaning of the Sixteenth Amendment—that this approach to constitutional tax questions is wrong. The focus of the Sixteenth Amendment and of the Congressional income tax power is not “income” per se, but rather “taxes on incomes, from whatever source derived.” Thus, the question should not be whether the thing being taxed satisfies some isolated definition of “income,” but rather whether that tax in question comports with the original meaning of “taxes on incomes.” 

Continue reading

Jones Presents Charitalism And Federal Tax Exemption: A Case Study Using OpenAI And The PGA Tour Today At UC-Irvine

Darryll K. Jones (Florida A&M) presents Charitalism and Federal Tax Exemption: A Case Study Using OpenAI and The PGA Tour, 52 Cap. U. L. Rev. __ (2024), at UC-Irvine today as part of its Tax Policy Colloquium hosted by Natascha Fastabend: 

OpenAI and the Professional Golf Association Tour (PGAT) have entered separate partnerships with private investors who, in exchange for necessary capital, share in the organizations’ net assets. In effect, capitalists have been invited to share in profits generated by tax subsidized charities, that term expanded a bit to include the PGAT. The PGAT is a business league but subject to the same profit-prohibitions as charities. I argue that tax law’s resistance to explicit profit sharing is futile because the market is incessant and capitalists are indispensable to the charitable goal. My purpose is to discover and give meaning to “charitalism,” a portmanteau used to describe the co-dependent relationship between tax law’s prohibition against profit-taking, and capitalism’s unceasing quest for profit. The relationship is fraught, most of all, when charitalists form partnerships with capitalists. The private inurement doctrine prohibits unreasonable payments — amounts beyond fair market value — but only payments made in self-dealing transactions. It doesn’t demarcate the extent to which charitalists may facilitate profit taking on the open market — “outsider profit taking” — to acquire necessary inputs.

Continue reading

Nam Presents Luck Egalitarian Redistribution: What Should We Do About Addiction? Today At Georgetown

Jeesoo Nam (USC; Google Scholar) presents Luck Egalitarian Redistribution: What Should We Do About Addiction? at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

Suffering from substance use disorder is a material disadvantage. Drug addiction is the cause of many serious harms, often harms to the addicted person.

But when it comes to the issue of redistributing benefits and burdens in our society, many think that the disadvantage of being addicted requires no corrective redistribution because addicted people brought that disadvantage on themselves by choosing to use recreational drugs. Those who hold this view might prefer that redistributive welfare benefits that we ordinarily give to the less fortunate be withheld from drug users.

Is that view right?

Continue reading

Maynard Presents Penalizing Precarity Today At Pepperdine

Goldburn P. Maynard, Jr. (Indiana-Kelley; Google Scholar) presents Penalizing Precarity, 123 Mich. L. Rev __ (2024) (with Clinton Wallace (South Carolina; Google Scholar)) at Pepperdine today as part of its Tax Policy Workshop Series hosted by Deanna Newton:

Retirement policy in America is oriented around 401(k) accounts and other employer-sponsored savings plans, which will receive a whopping $1.5 trillion in tax subsidies over the next decade. This Article uncovers a harmful flaw in a common feature of these plans. The problem arises from a gap in the rules governing withdrawals made prior to reaching retirement age. Employees are generally required to seek approval from their plan administrator to receive a “hardship distribution,” which they are granted if they face an “immediate and heavy financial need,” like eviction or an unexpected medical expense. But even with this approval, these distributions are frequently subject to an “early withdrawal penalty,” a separate regime that is not coordinated with the hardship distribution rules.

This Article shows that the gap between the two sets of rules is little known to workers, employers and even policymakers. We document instances of taxpayers surviving financial calamity thanks to a hardship distribution only to learn that they now face a tax penalty—resulting in another cash crunch. 

Continue reading

Gómez Presents Taxation's Limits At Indiana

Luís Calderón Gómez (Cardozo; Google Scholar) presented Taxation's Limits at Indiana-Maurer yesterday as part of its Indiana Tax Policy Colloquium hosted by Leandra Lederman:

Countless pages have been devoted to the question of why should everyone pay tax, yet its obverse has gone largely unnoticed: why should some people and organizations not pay tax? Our tax system exempts from ordinary income taxation a wide and diverse array of people and organizations engaged in significant economic activity—from parents providing childcare services for their family, to consular activities and charities operating animal shelters—seemingly without a convincing explanation. Perhaps as a result of the dizzying diversity of activities that have been exempted from tax, scholars and policymakers have eluded comprehensively or coherently justifying our exemption regimes.

This Article develops a novel normative theory that rationalizes and justifies our current tax exemption regime. Rather than conceiving exemptions as subsidies or individual deviations from a normative base explainable by ordinary politics, the Article argues that exemptions are best understood as mapping the “limits” of tax. 

Continue reading

Next Week’s Tax Workshops

Monday, March 25: Goldburn P. Maynard, Jr. (Indiana-Kelley; Google Scholar) will present Penalizing Precarity (with Clinton Wallace (South Carolina; Google Scholar)) as part of the Pepperdine Tax Policy Workshop Series. If you would like to attend, please contact Deanna Newton.

Tuesday, March 26: Jeesoo Nam (USC; Google Scholar) will present Luck Egalitarian Redistribution: What Should We Do About Addiction? as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Wednesday, March 27: Darryll K. Jones (Florida A&M) will present Charitalism and Federal Tax Exemption: A Case Study Using OpenAI and The PGA Tour, 52 Cap. U. L. Rev. __ (2024), as part of the UC-Irvine Tax Policy Colloquium. If you would like to attend, please contact Natascha Fastabend. 

Thursday, March 28: Diane M. Ring (Boston College; Google Scholar) will present The Conflictual Core of Global Tax Cooperation (with Shu-Yi Oei (Duke; Google Scholar))  as part of the Duke Tax Policy Seminar. If you would like to attend, please contact Larry Zelenak. 

Continue reading

Clotfelter Presents Better State Lotteries Today At Duke

Charles T. Clotfelter (Duke; Google Scholar) presents Better State Lotteries at Duke today as part of its Tax Policy Seminar hosted by Larry Zelenak:

One objectionable feature of state lotteries has been that they impose an extraordinarily high rate of implicit tax on one particular category of consumer spending, namely lottery games. But a little-noted change has taken place over the last three decades that has ameliorated this defect. This change is an increase in the average payout rate, the share of sales that is returned to players in the form of prizes. Because it reduces the rate of implicit taxation on lottery purchases and its accompanying welfare loss, this change has inadvertently made lotteries better, or at least less objectionable. This paper reviews the normative case for reducing the implied tax, notes its inapplicability to problem gamblers, documents the rise in payout rates across the U.S., offers an explanation for that rise, notes the starring role played by instant games, illustrates its effect on the regressivity of lottery finance, and documents the surprising correlation between the price of instant games and their payout rates. 

Continue reading

Kim Presents Taxing Litigation Finance Today At Toronto

Young Ran (Christine) Kim (Cardozo; Google Scholar) presents Taxing Litigation Finance, 93 Geo. Wash. L. Rev. __ (2024), at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series hosted by Ben Alarie: 

The emerging litigation financing industry has the capacity to expand access to justice but also raises important legal and ethical questions. While much has been said about the potential to increase frivolous lawsuits and permit improper control over a claim by the funders, scholarly discussion on the proper tax treatment of the parties involved has fallen by the wayside. Aside from a largely unhelpful 2015 memorandum, the tax authority has chosen to remain silent on the topic.

The problem arises in classifying litigation financing contracts as either a nonrecourse loan, immediate sale of a claim, or a variable prepaid forward contract, all of which have a discrete impact on the timing and character of income. Unfortunately, courts have traditionally found it difficult to draw clear distinctions between these three categories for tax purposes, and the opaque nature of the industry combined with the complexity of the transaction enhances the confusion. The consequences are tax uncertainty and an opportunity for taxpayers to engage in aggressive tax planning by structuring transactions to obtain favorable tax treatment without altering their economic position.

Continue reading

Clarke Presents Income Inequality And The Corporate Sector Today At UC-Irvine

Conor Clarke (Washington University; Google Scholar) presents Income Inequality and the Corporate Sector (with Wojciech Kopczuk (Columbia; Google Scholar)) at UC-Irvine today as part of its Tax Policy Colloquium hosted by Natascha Fastabend: 

In recent decades, scholars have turned to tax data to study the distribution of United States income and wealth. In more recent years, the focus has expanded from information that appears on individual income tax returns to a broader set of data. This shift partly reflects the observation that what appears on individual tax returns is only a subset of “national income” — a subset that is subject to change as laws and incentives change. But the use of both individual tax data and national accounts data has been controversial, and one important piece of this controversy is the role of corporate income and the corporate sector. We provide a framework for thinking about the historical and conceptual relationship between income, inequality, and the corporate sector. We make several contributions.

First, we assemble a variety of previously unused data to study the corporate sector and corporate income over the long run.

Continue reading

Millard Presents Using Behavioral Insights In Notice Design To Improve Taxpayer Responses And Achieve Compliance Outcomes Today At Georgetown

Jan Millard (IRS) presents Using Behavioral Insights in Notice Design to Improve Taxpayer Responses and Achieve Compliance Outcomes (with Anne Herlache (IRS), Alicia Miller (IRS) & Michelle Theel (IRS)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Emily Satterthwaite and Dayanand Manoli: 

This paper introduces the Notice Redesign Initiative and highlights its use of behavioral insights (BI). Behavioral insights are drawn from a robust and rapidly growing body of research from the Behavioral Sciences (e.g., psychology, cognitive science, and behavioral economics). This research is centered on how individuals absorb, process, and react to information; that knowledge is then applied to design practical policies and interventions with human behavior in mind. 

Continue reading

Graetz Presents The Power To Destroy: How The Antitax Movement Hijacked America Today At Case Western

Michael J. Graetz (Columbia), presents The Power to Destroy: How the Antitax Movement Hijacked America (Princeton University Press 2024) at Case Western today as part of the Sugarman Tax Lecture:

The postwar United States enjoyed large, widely distributed economic rewards—and most Americans accepted that taxes were a reasonable price to pay for living in a society of shared prosperity. Then in 1978 California enacted Proposition 13, a property tax cap that Ronald Reagan hailed as a “second American Revolution,” setting off an antitax, antigovernment wave that has transformed American politics and economic policy. In The Power to Destroy, Michael Graetz tells the story of the antitax movement and how it holds America hostage—undermining the nation’s ability to meet basic needs and fix critical problems.

In 1819, Chief Justice John Marshall declared that the power to tax entails “the power to destroy.” But The Power to Destroy argues that tax opponents now wield this destructive power. Attacking the IRS, protecting tax loopholes, and pushing tax cuts from Reagan to Donald Trump, the antitax movement is threatening the nation’s social safety net, increasing inequality, ballooning the national debt, and sapping America’s financial strength. The book chronicles how the movement originated as a fringe enterprise promoted by zealous outsiders using false economic claims and thinly veiled racist rhetoric, and how—abetted by conservative media and Grover Norquist’s “taxpayer protection pledge”—it evolved into a mainstream political force.

Continue reading

Walker Presents Evolving Corporate Philanthropy Today At Florida

David I. Walker (Boston University; Google Scholar) presents Evolving Corporate Philanthropy at Florida today as part of its Marshall M. Criser Distinguished Faculty Workshop hosted by Yariv Brauner:

With the rise of corporate ESG initiatives and public benefit corporations, corporate philanthropy is evolving from an emphasis on cash contributions (contributional philanthropy) to an emphasis on adjusting operations to advance the public good (operational philanthropy). All forms of corporate philanthropy are controversial, but this article evaluates the impact of this evolution on the relative benefits and concerns of corporate philanthropy, arguing that the shift in emphasis towards operational philanthropy increases the comparative advantage of corporate philanthropy, increases agency costs, both simplifies and complicates shareholder primacy concerns, and increases the difficulty of prescriptively regulating corporate philanthropy through the tax code or otherwise. 

Continue reading

Next Week’s Tax Workshops

Monday, March 18: David I. Walker (Boston University; Google Scholar) will present Evolving Corporate Philanthropy as part of the Florida Marshall M. Criser Distinguished Faculty Workshop. If you would like to attend, please contact Yariv Brauner. 

Tuesday, March 19: Jan Millard (IRS) will present Using Behavioral Insights in Notice Design to Improve Taxpayer Responses and Achieve Compliance Outcomes (with Anne Herlache (IRS), Alicia Miller (IRS, RAAS) & Michelle Theel (IRS, S&E PMO)) as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Emily Satterthwaite and Dayanand Manoli. 

Wednesday, March 20: Young Ran (Christine) Kim (Cardozo; Google Scholar) will present Taxing Litigation Finance, 93 Geo. Wash. L. Rev. ___ (2024), as part of the Toronto James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Ben Alarie. 

Wednesday, March 20: Conor Clarke (Washington University; Google Scholar) will present Income Inequality and the Corporate Sector (with Wojciech Kopczuk (Columbia; Google Scholar)) as part of the UC-Irvine Tax Policy Colloquium. If you would like to attend, please contact Natascha Fastabend. 

Thursday, March 21: Charles T. Clotfelter (Duke; Google Scholar) will present Better State Lotteries as part of the Duke Tax Policy Seminar. If you would like to attend, please contact Larry Zelenak. 

Friday, March 22: Luís Carlos Calderón Gómez (Cardozo; Google Scholar) will present Taxation’s Limits, 119 Nw. U. L. Rev. ___ (2024), as part of the Indiana Tax Policy Colloquium. If you would like to attend, please contact Leandra Lederman. 

Continue reading

Kim Presents Taxing The Metaverse Today At UCLA

Young Ran (Christine) Kim (Cardozo; Google Scholar) presents Taxing the Metaverse, 112 Geo. L.J. ___ (2024), at UCLA today as part of its Colloquium on Tax Policy and Public Finance hosted by Kirk Stark and Jason Oh: 

The buzz surrounding the Metaverse has been growing steadily for the past couple of years, but the tax implications of this novel ecosystem remain fuzzy to most tax scholars. Such uncertainty is concerning, given the potential and momentum of this emerging technology. Although the Metaverse evolved from online video games focused only on user consumption, it now allows users to produce income and accumulate wealth entirely within the Metaverse. Current law seems to defer taxation of such until a realization or cash-out event. This paper challenges this approach.

This paper offers novel arguments justifying Metaverse taxation. Because economic activity within the Metaverse satisfies the Haig-Simons and Glenshaw Glass definitions of income, its exclusion will create a tax haven. Tax policy can also play an essential role in regulating the virtual economy. Furthermore, this emerging technology allows policymakers to modernize the tax system. 

Continue reading

Pratt Presents Taxing Reparations Today At Northwestern

Katie Pratt (Loyola-L.A.; Google Scholar) presents Taxing Reparations at Northwestern today as part of its Advanced Topics in Taxation Colloquium hosted by Ari Glogower:

This Article explores the tax consequences of receiving reparations, including recovery of wrongfully taken property and receipt of money or nonmonetary benefits as reparations. The tax treatment of reparations can advance or undermine the remedial goals of reparations, yet reparation programs often ignore tax issues. Historical and contemporary reparation examples illustrate the significance of taxation for reparation programs. This Article analyzes the tax consequences of reparation examples under existing income tax rules and rationales and normative frameworks for both income tax rules and reparation programs. Parts I and II provide background and normative frameworks for reparations and the federal income tax. Part III introduces substantive and procedural income tax rules that are relevant in the context of reparations. These tax rules include the statutory exclusion for payments received on account of personal physical injury and an administrative doctrine known as the General Welfare Doctrine (GWD). Part IV analyzes the tax consequences of the receipt of various types of reparation remedies, including: payments for wrongful physical injury or death; payments for wrongful internment and incarceration; payments for forced labor; payments to survivors of state-sponsored involuntary sterilization; payments for wrongfully taken property; recovery of wrongfully taken property; and cancellation of indebtedness. The analysis demonstrates how application of existing tax law sometimes furthers – but often undermines – the remedial goals of reparations. 

Continue reading

Alarie Presents Generative AI For Tax: Looking Back, Looking Ahead Today At Toronto

Benjamin Alarie (Toronto, Blue J Legal; Google Scholar) presents Generative AI For Tax: Looking Back, Looking Ahead at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series hosted by Ben Alarie:

This article canvases the highlights of what has been going on with generative AI over this past year. It outlines the main developments ushered in by the large technology players for the development and commercialization of AI in 2023 and then, more importantly for the purposes of tax professionals, offers a quick rundown of some of the principal developments in the world of tax law specifically for generative AI in 2023, particularly regarding tax analysis. It then forecasts what lies ahead for generative AI in tax in 2024.

This exercise is inevitably somewhat fraught since AI technology is moving quickly, but my view is that it is better to hazard a fuzzy speculative view of what lies ahead than to be too timid to posit any view at all. To this end, the discussion outlines what we can expect in terms of developments from the tech giants and from the providers of tools that are most relevant to tax professionals.

Continue reading

Barry Presents Tax And The Boundaries Of The Firm Today At Pepperdine

Jordan Barry (USC; Google Scholar) presents Tax and the Boundaries of the Firm (with Victor Fleischer (UC-Irvine; Google Scholar); reviewed by Tracey Roberts (Cumberland; Google Scholar) here) at Pepperdine today as part of its Tax Policy Workshop Series hosted by Deanna Newton:

One of the most fundamental questions of economics is how firms decide what to produce themselves (“make”) and what to purchase from other firms (“buy”). We analyze how income taxes distort firms’ decisions along this and related dimensions. Three main effects emerge.

First, intrafirm transactions allow firms to reduce their tax burdens, such as by shifting their income to lower-tax jurisdictions. This effect is inherent to an income tax. It makes firms bigger, encouraging them to “make” more and “buy” less. Second, implementing an income tax entails enacting many additional rules, none of which is inherent to an income tax. Many of these rules affect the boundary of the firm. Some expand it; others contract it. However, these expansions and contractions generally operate along different dimensions, and thus do not offset each other. Finally, income taxes encourage regulatory arbitrage transactions, which enable firms to achieve their desired tax treatment without changing the economic boundary of the firm. These transactions preserve the boundary of the firm, but also create complexity, opacity, and inefficiency.

Continue reading

Next Week’s Tax Workshops

Monday, March 11: Jordan Barry (USC; Google Scholar) will present Tax and the Boundaries of the Firm (with Victor Fleischer (UC-Irvine; Google Scholar)) as part of the Pepperdine Tax Policy Workshop Series. If you would like to attend, please contact Deanna Newton. 

Wednesday, March 13: Katie Pratt (Loyola-L.A.; Google Scholar) will present Taxing Reparations as part of the Northwestern Advanced Topics in Taxation Colloquium. If you would like to attend, please contact Ari Glogower. 

Wednesday, March 13: Ben Alarie (Toronto, Blue J Legal; Google Scholar) will present Generative AI For Tax: Looking Back, Looking Ahead as part of the Toronto James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Ben Alarie. 

Thursday, March 14: Young Ran (Christine) Kim (Cardozo; Google Scholar) will present Taxing the Metaverse as part of the UCLA Colloquium on Tax Policy and Public Finance. If you would like to attend, please contact Kirk Stark and Jason Oh. 

Continue reading