Paul L. Caron
Dean



Thursday, November 26, 2020

WKRP In Cincinnati Thanksgiving Turkey Drop

NRA Reports Misspending By Executives To IRS

Washington Post, NRA Reports Alleged Misspending by Current and Former Executives to IRS:

NRA Logo (2019)After years of denying allegations of lax financial oversight, the National Rifle Association has made a stunning declaration in a new tax filing: Current and former executives used the nonprofit group’s money for personal benefit and enrichment.

The NRA said in the filing that it continues to review the alleged abuse of funds, as the tax-exempt organization curtails services and runs up multimillion-dollar legal bills. The assertion of impropriety comes four months after the attorney general of New York state filed a lawsuit accusing NRA chief executive Wayne LaPierre and other top executives of using NRA funds for decades to provide inflated salaries and expense accounts.

The tax return, which The Washington Post obtained from the organization, says the NRA “became aware during 2019 of a significant diversion of its assets.” The 2019 filing states that LaPierre and five former executives received “excess benefits,” a term the IRS uses to describe executives’ enriching themselves at the expense of a nonprofit entity.

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November 26, 2020 in Tax, Tax News | Permalink | Comments (0)

Modern Call For A Renewed Commitment To Charitable Giving

Joey Bloodworth (J.D. 2020, USC), Note, Charity for All: A Modern Call for a Renewed Commitment to Charitable Giving, 93 S. Cal. L. Rev. 273 (2020):

This Note will center on the TCJA’s unpopularity, the charitable contribution deduction, and the adverse effect the TCJA is projected to have on charitable giving. It will conclude that now is an optimal time to expand the charitable contribution deduction. The expansion of the charitable contribution deduction would likely be popular for many of the same reasons that the TCJA is currently unpopular. The proposed expansion will also address some of the problems with charitable giving created or exacerbated by the TCJA. ...

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November 26, 2020 in Legal Ed News, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, November 25, 2020

Oei & Osofsky: The Making Of The § 199A Regulations

Shu-Yi Oei (Boston College) & Leigh Osofsky (North Carolina), Legislation and Comment: The Making of the § 199A Regulations, 69 Emory L.J. 209 (2019):

In 2017, Congress passed major tax legislation at warp speed. After enactment, it fell to the Treasury Department to write regulations clarifying and implementing the new law. To assure democratic legitimacy in making regulations, administrative law provides that an agency must issue a notice of proposed rulemaking, followed by an opportunity for the public to comment (socalled “notice and comment”). But, after the 2017 tax overhaul, many sophisticated actors did not wait until the issuance of a notice of proposed rulemaking to comment, instead going to the Treasury Department immediately with comments designed to influence the regulations.

In this Article, we examine empirically this phenomenon of post-enactment commenting by studying the making of the Internal Revenue Code Section 199A regulations—some of the most important regulations implementing the 2017 tax reform.

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November 25, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

It Is Time To Eliminate The Federal Corporate Income Tax

Edward Lane (Albany) & L. Randall Wray (UMKC), Is It Time to Eliminate Federal Corporate Income Taxes?:

As the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation’s infrastructure, and many other worthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In this working paper, Edward Lane and L. Randall Wray examine who really pays the corporate income tax and argue that it does not serve the purposes most people believe.

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

UNC Professor Patricia Bryan Eases Into Retirement

Professor Patricia Bryan Eases Into Retirement:

Bryan UNC 3As Professor Patricia Bryan eases into her retirement, we wanted to look back on her illustrious career.

Bryan joined the Carolina Law faculty in 1982 and serves as the Henry P. Brandis Distinguished Professor of Law. Her teaching and research interests include tax and law and literature. She is the author of Midnight Assassin: A Murder in America’s Heartland (Algonquin 2005, University of Iowa 2007) and the co-editor of Her America: "A Jury of Her Peers" and other Stories, a collection of stories by Susan Glaspell. Bryan has written and spoken extensively about Glaspell’s work. She has also done historical research into several criminal cases from the 19th century and has published articles about them in the Stanford Law Review and the Annals of Iowa. Most recently, she has researched and written about the federal tax exemption and public financing for sports stadiums.

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November 25, 2020 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Moves | Permalink | Comments (0)

Time For A Social Solidarity Tax?

Heinz Klug (Wisconsin), Time for a Social Solidarity Tax?:

Covid-19 is transforming the world, but we do not yet know how much. Across the globe the pandemic has exposed and exacerbated social and economic problems. From medical systems to livelihoods, Covid-19 is revealing how inequality impacts death rates, job losses, education, and housing. In many societies, including the United States, it has also exposed how these gross inequalities fall along racial and ethnic lines, with devastating impacts on marginal individuals, poor and minority communities. This article looks back at the comparative historical experience of wealth taxes and capital levies in Europe and Asia to put the present calls for wealth taxes in perspective and to suggest that a Social Solidarity Tax designed with this history as a guide may be necessary to address the coming economic catastrophe.

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

Tuesday, November 24, 2020

Faulhaber Presents Excess Returns And The Search For Substantial Activities Virtually Today At NYU

Lilian Faulhaber (Georgetown) presents Lost in Translation: Excess Returns and the Search for Substantial Activities virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Lvf6-200x300Starting in 2010, one international tax reform proposal moved from being a one-page idea in the Obama Treasury’s proposed budget to being one of the OECD’s options for CFC reform to becoming the basis for one of the major international tax reform provisions in the 2017 U.S. tax reform to being considered as part of Pillar Two of the OECD’s current digital tax project. This proposal, for a minimum tax on foreign excess returns, has changed shape with every iteration, and its proponents have justified each version of this differently and defined its various elements differently.

This Article tells the story of the many recent proposals for minimum taxes on foreign excess returns, starting with the Obama Treasury’s brief proposal and ending with the OECD’s current negotiations over digital taxation. This Article highlights the common threads that links all of these rules, and it also shows how differently the drafters of each rule have understood the purpose and design of a minimum tax on foreign excess returns.

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November 24, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Cooper: Rethinking The Estate Planning Curriculum

Jeffrey A. Cooper (Quinnipiac), Rethinking the Estate Planning Curriculum, 46 ACTEC L.J. (2020):

As a result of recent changes in Federal estate tax law, fewer and fewer clients need sophisticated estate tax planning. Many lawyers are thus spending less time acting as estate tax planners and instead deploying different skills and expertise.

In this brief article, I explore the extent to which law schools are rethinking their curricula as a result.

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November 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Stark: The Power Not To Tax

Kirk J. Stark (UCLA), The Power Not to Tax, 69 Am. U. L. Rev. 565 (2019):

Among the most controversial changes in federal tax policy in recent years is the new limitation on the deductibility of state and local taxes—or SALT cap. Introduced as part of the Tax Cuts and Jobs Act of 2017, the SALT cap differentially burdens residents of high-tax “blue states,” prompting some lawmakers to characterize the cap as an act of “economic civil war.” In one of the opening salvos of this “war,” a handful of blue states turned to alternative devices for raising revenue through the use of tax credits for charitable donations to state-designated funds. This strategy, modeled on long-standing “red state” tax credits used to fund private school vouchers, is rooted in the government’s “power not to tax,” understood here as the power to conditionally refrain from imposing taxes in exchange for the taxpayer making some legislatively sanctioned outlay. The introduction of the SALT cap has given new significance to this power not to tax, encouraging state and local lawmakers to devise strategies for funding public goods without utilizing formal tax mechanisms. This Article explores and evaluates the structural features of the law that account for this new state of affairs, as well as the ongoing controversy regarding how best to address the basic discontinuity in the law’s treatment of formal taxation versus conditional reductions in taxation.

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November 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Americans Increasingly Are Leaving High-Tax States For Low-Tax States

Cato Institute, Will High‐​Tax “Superstar Cities” Finally Need to Consider — Gasp! — Their Residents?:

As my Cato colleague Chris Edwards documented here a couple weeks ago, interstate migration data from the U.S. Census Bureau indicate that state tax policy affects where Americans, especially wealthy ones, are choosing to live and work. The following charts ...  confirm Chris’ initial impressions: in 2018 there was a strong, statistically significant (p‐​values < 0.01) relationship between (1) personal state tax burdens — as measured by either the Tax Policy Center or the Tax Foundation — and (2) net interstate migration (ratio of inflows to outflows):

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November 24, 2020 in Tax, Think Tank Reports | Permalink | Comments (2)

Monday, November 23, 2020

Cauble: Presumptions of Tax Motivation

Emily Cauble (DePaul), Presumptions of Tax Motivation, 105 Iowa L. Rev. 1995 (2020):

Rebuttable presumptions are scattered throughout the Internal Revenue Code and the Treasury Regulations. In many cases, they are employed in service of determining a taxpayer’s motive or state of mind. They are not, however, always utilized when motive or state of mind must be assessed. In some contexts, courts are called upon to examine all relevant facts and circumstances in order to divine a taxpayer’s state of mind – which facts are relevant and the weight to be accorded to various facts are not specified ahead of time except to the extent set forth in judicial precedent. At the other extreme, in yet another subset of situations in which tax outcome turns on motive or state of mind, tax law provides that a given fact establishes an irrebuttable presumption of a given motive. In between the two extremes, tax law makes use of a variety of tools including rebuttable presumptions. When a rebuttable presumption is at work, the proof of a specified fact is deemed to establish the existence of a given state of mind, unless the party who is disadvantaged by that state of mind determination presents sufficient evidence to overcome it.

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November 23, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

How California's Projected $54 Billion Deficit Turned Into a $26 Billion Surplus

Los Angeles Times, California Could See a $26-Billion Windfall Followed By Growing Deficits, Analysts Say:

California’s state budget faces a dramatic boom-and-bust period over the next four years, analysts said Wednesday, a roller-coaster period that could begin with a $26-billion tax windfall and later plunge to a projected deficit of $17.5 billion by the middle of 2025.

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Though the gradual trend toward budget shortfalls was expected when lawmakers and Gov. Gavin Newsom crafted a state budget in June, the large supply of extra cash — equal to almost 20% of all current-year spending out of California’s general fund — is a surprise, Legislative Analyst Gabriel Petek said.

“Many of us thought that the state revenues were headed for a plunge,” Petek said Wednesday of fears over an economic slowdown sparked by the pandemic. “But as it turns out, revenues have proven to be much more resilient than that.”

In essence, the report issued by analysts [The 2021-22 Budget: California's Fiscal Outlook] said that state officials may have over-corrected in trying to limit spending in the budget year that began on July 1. The budget signed by Newsom was designed to erase a projected $54.3-billion deficit and assumed the recession would lead to a sharp decline in tax revenues. As a result, lawmakers agreed to tap the state’s cash reserves and used one-time spending delays in hopes of staving off deep cuts to funding for schools and social services.

Instead, the state’s tax revenues have remained strong — in part, Petek said, because high-income residents have not suffered any notable setbacks and California’s budget relies heavily on those taxpayers.

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November 23, 2020 in Tax, Tax News | Permalink | Comments (2)

Pace Seeks To Hire Entry Level Or Lateral Tax Prof

Elisabeth Haub School of Law Faculty Hiring Announcement:

Pace Logo (2018)The Elisabeth Haub School of Law at Pace University invites applications to fill up to two full-time, academic tenure-track/tenured faculty positions at the rank of assistant professor, associate professor, or professor. The positions will begin in August 2021. Applicants must be committed to providing excellent legal training both in person and online, engaging in meaningful service within the law school and in the broader community, and producing excellent scholarship.

Applicants should have teaching and research interests in any of the following areas: environmental law, natural resources law, sustainable business law, energy and climate law, public health law, contracts law, business law, and tax law. Applicants whose interests cover multiple of these areas are particularly encouraged to apply. We welcome applications from candidates interested in doctrinal, experiential, and/or clinical teaching.

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November 23, 2020 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Lesson From The Tax Court: International Pilot’s Tax Home Argument Does Not Fly

Tax Court (2020)Douglas H. Cutting v. Commissioner, T.C. Memo. 2020-158 (Nov. 19, 2020) (Judge Pugh), teaches a useful lesson about that puzzling concept called “tax home” as it relates to the §911 foreign earned income exclusion.  Taxpayers can claim the §911 exclusion if their tax home is in a foreign country.  Mr. Cutting's wasn’t, even though his personal home — the place he returned to when not flying — was Thailand, where he lived with his wife and step-daughter.  A tax home, however, is not where the heart is.  Details below the fold.

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November 23, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

NY Times: Trump Tax Write-Offs Are Ensnared In 2 New York Fraud Investigations

New York Times, Trump Tax Write-Offs Are Ensnared in 2 New York Fraud Investigations:

Two separate New York State fraud investigations into President Trump and his businesses, one criminal and one civil, have expanded to include tax write-offs on millions of dollars in consulting fees, some of which appear to have gone to Ivanka Trump, according to people with knowledge of the matter.

The inquiries — a criminal investigation by the Manhattan district attorney, Cyrus R. Vance Jr., and a civil one by the state attorney general, Letitia James — are being conducted independently. But both offices issued subpoenas to the Trump Organization in recent weeks for records related to the fees, the people said.

The subpoenas were the latest steps in the two investigations of the Trump Organization, and underscore the legal challenges awaiting the president when he leaves office in January. There is no indication that his daughter is a focus of either inquiry, which the Trump Organization has derided as politically motivated. ...

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November 23, 2020 in Tax, Tax News | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, November 22, 2020

Penn Regulatory Review: Reforming Federal Income Tax

Penn Regulatory Review, Reforming Federal Income Tax:

Penn RegulatoryIn this week’s Saturday Seminar, scholars discuss income tax law and proposals to change an imperfect system.

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

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[428 Downloads]  State Aid: The General Court Decision in Apple, by Stephen Daly (King's College London) & Ruth Mason (Virginia) (reviewed by Young Ran (Christine) Kim (Utah) here)
  2. [289 Downloads]  Federal Tax Procedure (2020 Practitioner Ed.), by John Townsend
  3. [260 Downloads]  Intangibles and the Transfer Pricing Reconstruction Rules: A Case Study of Amazon, by Antony Ting (Sydney)
  4. [187 Downloads]  An Analysis of Vice President Biden’s Economic Agenda: The Long Run Impacts of Its Regulation, Taxes, and Spending, by Timothy Fitzgerald (Texas Tech), Kevin Hassett (Hoover Institution), Cody Kallen (Wisconsin) & Casey Mulligan (Chicago)
  5. [168 Downloads]  Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment, by Zachary Liscow (Yale) & Abigail Pershing (J.D. 2020, Yale)

November 22, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 21, 2020

This Week's Ten Most Popular TaxProf Blog Posts

NTA 113th Annual Conference On Taxation

Highlights of the third day of the National Tax Association's virtual 113th Annual Conference on Taxation (full program here):

National Tax Association (2016)

Advances in Tax Administration
Session Chair: Elliott Ash (ETH Zurich)

Behavioral Issues in Tax Administration & Retirement Plans
Session Chair: Jason Seligman (Investment Company Institute)

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November 21, 2020 in Conferences, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Friday, November 20, 2020

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Nadler's Tax-Motivated Trading And Price Efficiency

This week, Sloan Speck (Colorado) reviews a new work by Hillel Nadler (Program on International Financial Systems), The Only Sure Alpha: Tax-Motivated Trading and Price Efficiency (Aug. 12, 2020).

Speck (2017)

In The Only Sure Alpha: Tax-Motivated Trading and Price Efficiency, Hillel Nadler examines tax-motived trading in financial instruments from a novel and compelling perspective: the ways in which tax rules affect the process of price discovery in otherwise well-functioning markets. Nadler argues that tax considerations may drive “noisy trading”—trading that moves prices away from an equilibrium based on non-tax information. Although markets (eventually) should resolve these deviations of price from fundamental value, Nadler notes that the noise itself may have significant and detrimental systemic effects. Transitions to equilibrium matter, and taxation may cause distortions that leave financial markets in a constant state of low-level flux.

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November 20, 2020 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Next Week's Virtual Tax Workshop

Tuesday, November 24: Lilian Faulhaber (Georgetown) will present Lost in Translation: Excess Returns and the Search for Substantial Activities virtually at NYU as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Dan Shaviro.

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November 20, 2020 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Satterthwaite Presents Taxing Domestic Workers Virtually Today At Florida

Emily Satterthwaite (Toronto) presents Taxing Domestic Workers: Trading a Safety Net for a Living Wage? (with Ariel Jurow Kleinman (San Diego)) virtually today at Florida as part of its Tax Colloquium Series:

Satterthwaite (2019)Paid domestic workers play a central and often intimate role in the day-to-day lives of many North Americans, including the affluent but also other groups. The livelihoods and health of, for example, the elderly, persons with serious disabilities, and women who work outside the home (and their children) may depend on the labor of one or more paid domestic workers. Yet domestic workers and their hirers tend to rely on very different workplace protections and social insurance guarantees. Our project seeks to better understand the role that tax law plays in this troubling status quo by surveying domestic workers about their tax-related experiences. The domestic sector rightly has been called “the original gig economy” because of its structural similarities with higher-technology sectors like ride-sharing. However, existing doctrinal and policy-oriented tax scholarship, including that which attends to the significant tax policy challenges presented by platform service providers and the role of contract work, has largely overlooked the domestic sector.

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November 20, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Hemel: Beyond The Marriage Tax Trilemma

Daniel Hemel (Chicago), Beyond the Marriage Tax Trilemma, 54 Wake Forest L. Rev. 661 (2019):

For decades, the well-known “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

The overwhelming emphasis on the trilemma is surprising once one recognizes that there is in fact no trilemma at all: we need not choose among couples neutrality, marriage neutrality, and progressivity because we can have all three. The solution — which several scholars have noted, but the tax policy debate has largely ignored — lies in a flat tax rate combined with a refundable per-person tax credit (or “demogrant”), which could be constructed so as to yield a highly progressive average rate structure while maintaining couples neutrality and marriage neutrality. Whatever the merits of the flat tax plus demogrant as a policy matter, it plays a useful role as a thought experiment: If we achieved progressivity through a flat tax and a demogrant, such that we could have couples neutrality and marriage neutrality simultaneously, would we want to deviate from these neutrality norms anyway? If so — if we would want to violate the couples neutrality and marriage neutrality norms even if they were compatible with a progressive tax structure — then the trilemma is not the central challenge in the taxation of singles and couples.

This Essay examines the arguments for couples neutrality and marriage neutrality, concluding that neither norm is an appropriate objective for tax policy.

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November 20, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Thursday, November 19, 2020

Bankman Presents Why It Is So Hard To Get Easy Tax Filing Virtually Today At NYU

Joseph Bankman (Stanford) presents Mr. Smith Gets an Education: Why it is so Hard to get Easy Tax Filing virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

6a00d8341c4eab53ef0240a4ec01e4200b-300wiImagine that one day, you get a note in the mail from Visa saying that starting next month, Visa will no longer be sending itemized bills (or indeed, any bills at all) to its cardholders. Instead, it will be the responsibility of every Visa cardholder to keep a record of all purchases, and refunds charged or credited to their account during the month, along with late payments and late fees, interest accruing on unpaid balances, and then tote it all up at the end of the month to figure out how much they owe Visa. If cardholders inadvertently omit some charges and pay Visa too little, you’re informed, Visa will assess interest and penalties on the underpayment.

Why on earth would Visa do such a thing?, you wonder. After all, Visa already has all that information in its computers, which can automatically calculate from that information the net amount you owe. Why should individual cardholders duplicate that effort, at considerable annoyance and expense to themselves, and with the dead certainty of errors?

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November 19, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (1)

Oei & Ring: Tax Law's Workplace Shift

Shu-Yi Oei & Diane M. Ring (Boston College), Tax Law's Workplace Shift, 100 B.U. L. Rev. 651 (2020) (reviewed by Ariel Jurow Kleiman (San Diego) here):

In December 2017, Congress passed major tax reform. The reform included an important new provision that granted independent contractors and other pass-through taxpayers—but not employees or corporations—a potential tax deduction equal to 20% of their qualified business income. Critics have argued that this new deduction (codified at 26 U.S.C. § 199A) could lead to a widespread shift toward independent contractor jobs as workers seek to reduce taxes paid. This shift could cause workers to lose important employee protections and leave them more economically vulnerable.

This Article examines whether this new tax provision will create a large-scale workplace shift and, if it does, how that shift should be normatively evaluated.

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November 19, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

NTA 113th Annual Conference On Taxation

Highlights of the first two days of the National Tax Association's virtual 113th Annual Conference on Taxation (full program here):

National Tax Association (2016)

COVID-19 and Business Tax & Credit Policies
Session Chair: Yilin Hou (Syracuse)

Electricity Sector: Policy Design and Outcomes
Session Chair: Agustin Leon-Moreta (New Mexico)

Legal Issues in International Taxation
Session Chair: Lilian Faulhaber (Georgetown)

Nonprofit Organizations
Chair: Jeremy Bearer-Friend (George Washington)

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November 19, 2020 in Conferences, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Polito: Corporate Tax Integration And TCJA

Anthony P. Polito (Suffolk), Corporate Tax Integration and TCJA: How Near the Mark?:

Congress, by the Tax Cuts and Jobs Act of 2017 (hereinafter “TCJA”), made a number of changes to the income tax rates applicable to individuals and profits of businesses conducted both in corporate and non-corporate form. Elsewhere, in an article entitled Advancing to Corporate Tax Integration: A Laissez-Faire Approach, I advanced the case for an Integrationist Norm of business income taxation. In the tax regime of the Integrationist Norm, all business profits would be subject to exactly the same tax burden as if a business were conducted directly by the individual equity holders without an intervening legal fiction of a juridical business entity.

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November 19, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, November 18, 2020

Fox & Liscow Present The Psychology Of Taxing Capital Income Virtually Today At UC-Irvine

Edward Fox (Michigan) & Zachary Liscow (Yale) present The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule virtually at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

8b851abe8a6e051adc45ff6981fbddcd1f375618The realization rule is central to income tax law, but often decreases the efficiency, equality, and simplicity of the system. Given these problems, it is surprising that we do not have a good explanation for why the rule exists for liquid assets. Scholars have long speculated about the role of the public’s views here, but little is known empirically about them. We conduct the first survey experiment to understand the psychology of taxing gains on unsold assets.

In this draft, we present the results of a pilot version of the survey. Though results are very preliminary, we have three main findings. First, respondents are far less supportive of taxing gains in unsold publicly-traded stock than sold stock, with a difference in support of 37 percentage points. This lack of support persists and seems strengthened when looking across a variety of other policy framings. Second, informing people of the arguments on “both sides” of taxing unsold stock considerably decreases support (by 19 percentage points) for taxing unsold stock.

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November 18, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Roberts Presents Whiskey, Women, And Taxes Virtually Today At Oregon

Tracey M. Roberts (Cumberland) presents Whiskey, Women, and Tax: The Unexpected and Interlocking History of the 16th, 18th, and 19th Amendments virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

Roberts (2020)Before they became the most famous pair of advocates in the U.S. women’s suffrage movement, Susan B. Anthony and Elizabeth Cady Stanton were temperance activists. Advocating for the prohibition of alcohol in a world in which women lacked both political and property rights, they sought to curb other social ills: family poverty, unemployment, domestic violence, and violent crime. Through the early 20th Century, however, the U.S. relied heavily on excise taxes, including those on liquor, to fund government operations. The passage and ratification of the 16th Amendment, authorizing a federal income tax, was needed before the 18th Amendment, prohibiting alcohol, could be passed. In turn, the 19th Amendment, granting women the right to vote, was ratified, in part, on the strength of the time-honored argument that women should not face taxation without representation. Old enemies die hard, however. The ratification of the Susan B. Anthony Amendment prohibiting discrimination on the basis of sex in access to the ballot required that suffrage activists counter the (then illegal) liquid advocacy of well-known whiskey distillers and brewers.

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November 18, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Cauble: Superficial Proxies For Simplicity In Tax Law

Emily Cauble (DePaul), Superficial Proxies for Simplicity in Tax Law, 53 U. Rich. L. Rev. 329 (2019):

Simplification of tax law is complicated. Yet, political rhetoric surrounding tax simplification often focuses on simplistic, superficial indicators of complexity in tax law such as word counts, page counts, number of regulations, and similar quantitative metrics. This preoccupation with the volume of enacted law often results in law that is more complex in a real sense. Achieving real simplification—a reduction in costs faced by taxpayers at various stages in the tax planning, tax compliance, and tax enforcement process—often requires enacting more law, not less. In addition, conceptualizing simplicity in simplistic terms can leave the public vulnerable to policies advanced under the guise of simplification that have real aims that are less innocuous. A perennial example involves lawmakers proposing a reduction in the number of tax brackets under the heading of simplifying tax law. In reality, this change does very little, if anything, to simplify law in a meaningful sense, and its truer aim is to reduce progressivity in the tax code.

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November 18, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Pandemics, Paid Sick Leaves, And Tax Institutions

Alex Zhang (J.D. 2021, Yale), Pandemics, Paid Sick Leaves, and Tax Institutions, 52 Loy. U. Chi. L.J. ___ (2021):

The COVID-19 pandemic is currently ravaging the world, and the United States has been largely unsuccessful at containing the coronavirus. One long-standing policy failure stands out as having exacerbated the pandemic in our country: the lack of a national mandate of paid sick leaves, without which workers face financial and workplace-cultural pressures to attend work while sick, thus spreading the virus to their fellow employees and the public at large.

This Article provides the blueprint for a national, subsidized mandate of paid sick leaves and two additional insights about our tax institutions as mechanisms of effectuating broader societal goals.

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November 18, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, November 17, 2020

Bearer-Friend: Restoring Democracy Through Tax Policy

Jeremy Bearer-Friend (George Washington), Restoring Democracy Through Tax Policy:

Restoring DemocracyIn this white paper, commissioned by the Great Democracy Institute, I offer a broad menu of tax tools to help restore our democracy. By undoing current levels of inequality, our tax code can help fulfill the promise of equal political voice and equal opportunity for all. To do this, progressives must be willing to move beyond loophole closers to assert a new, affirmative vision for tax policy. This report offers such a vision — one that puts workers before holders of capital, revives the regulatory potential of tax policy, and treats taxpaying as a civic act.

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

Contemptuous Tax Reporting

Israel Klein (Ariel University), Contemptuous Tax Reporting, 2019 Wis. L. Rev. 1161 (reviewed by Mirit Eyal-Cohen (Alabama) here):

The use of self-reporting and self-assessment principles in the collection of corporate income tax means that companies are not subject to administrative tax assessment and ex-ante examination of tax positions taken, but rather to infrequent ex-post examination of tax returns submitted by their managers. Thus, while acting as the government’s agents for the purpose of assessing corporate taxes, managers can engage in contemptuous self-reporting that involves knowingly reporting tax positions that do not conform to the tax code and prevailing tax doctrines.

According to estimates provided by Congress, US companies will enjoy more than 25 billion dollars of R&D incentives in 2019 & 2020. The majority thereof will come from self-reported R&D credits claimed on companies’ tax returns. While being one of the most expensive tax expenditures claimed by corporations in the federal budget, this article argues that R&D tax incentives provide a prominent example of contemptuous tax reporting in which managers knowingly take positions that contradict prevailing tax doctrines.

This article presents a novel conceptualization of contemptuous tax reporting along with empirical findings that point to the tremendous loss of tax revenues resulting from such abusive tax behavior by S&P 500 companies.

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

Clausing: 5 Lessons On Profit Shifting From U.S. Country-By-Country Data

Kimberly A. Clausing (UCLA), 5 Lessons on Profit Shifting From U.S. Country-by-Country Data, 169 Tax Notes Fed. 925 (Nov. 9, 2020):

Tax Notes Federal (2020)One of the signature achievements of the base erosion and profit-shifting project is the collection of multinational enterprises’ country-by-country reporting data for government use in tax enforcement efforts. In late 2019 the United States became the first country to release a complete set of those data, in aggregate form, for 2017.

This article analyzes those data, demonstrating five important lessons for scholars investigating international corporate tax avoidance.

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

Biden’s IRS Could Finally Give Trump’s Tax Returns To Democrats

Politico, Biden’s IRS Could Finally Give Trump’s Tax Returns to Democrats:

President Donald Trump’s defeat will make it a lot easier for Democrats to finally get his tax returns, and some prominent lawmakers plan to keep the heat on the incoming Biden administration and House leaders to deliver.

Once Biden controls the Treasury Department, his administration could simply hand over the long-sought records to its allies in Congress, who have been fighting in court to force Trump to turn them over, so far unsuccessfully.

But Biden is casting himself as a moderate uniter, and releasing Trump’s returns risks looking like a vindictive investigation of his predecessor.

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November 17, 2020 in Tax, Tax News | Permalink | Comments (7)

Monday, November 16, 2020

Suarez Serrato Presents The Race Between Tax Enforcement And Tax Planning In Chile Virtually Today At Loyola-L.A.

Juan Carlos Suarez Serrato (Duke) presents The Race Between Tax Enforcement and Tax Planning: Evidence from a Natural Experiment in Chile (with Sebastian Bustos (Harvard), Dina Pomeranz (Zurich), Jose Vila-Belda (Fribourg), and Gabriel Zucman (UC-Berkeley)) virtually today at Loyola-L.A. as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Thumb_image_9070502A large body of work highlights the key role of information reporting for tax enforcement and the development of modern tax systems. In this paper, we provide evidence that information reporting is not always sufficient to improve tax collection. Using micro-level administrative tax and custom data covering the universe of internationally active Chilean firms, we study a reform that greatly increased information reporting by multinational firms, following Chile’s accession to the OECD. We first document that multinationals conduct tax-motivated cross-border transactions: Payments to foreign subsidiaries decrease with the destination country’s tax rate, while there is no such relationship for payments to non-affiliated firms. We then use difference-in-differences regressions to estimate the impacts of the reform on taxes paid and intra-group flows of royalties, interest, goods, and services. 

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

Japan Can Teach U.S. Lessons In Income Growth And Equality

The Japan Times, Japanese Capitalism Can Teach U.S. Lessons in Income Growth and Equality:

U.S. President-elect Joe Biden can learn a lot from Japan.

I say this not because Japan-style capitalism does not have its share of problems, but because the overall result generated by the Japanese economic system is extremely positive. Japan is the global best-in-class for balancing both income growth and income distribution. The result is not just extraordinary socioeconomic stability, but also strong resilience against the temptations of divisive populism — a la Donald Trump.

Creating and sustaining a stable society is one of the fundamental goals of economic policymaking. For this, an economy must both grow and distribute the spoils of wealth creation in a fair and equitable way. So what’s the score? How wealthy are the people and how is that wealth distributed? At the end of last year, the median net financial wealth — all financial assets minus liabilities — for households in Japan stood at $104,000. In the United States, it was $62,000.

Clear-speak: The average Japanese is actually about 40% richer than the average American. ...

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November 16, 2020 in Tax, Tax News | Permalink | Comments (0)

Lesson From The Tax Court: Taxpayer Wins CDP Case But Cannot Recover Costs

Tax Court (2020)The Tax Code contains a variety of statutes designed to protect taxpayers from unreasonable and arbitrary decisions by the IRS.  I think of them as quality control measures: they require supervisory approval of certain decisions, such as the decision to impose a penalty (§6751) or the decision to open a second examination (§7605(b)).  One can also think of quality control as any procedure that allows a different decision-maker to enter the picture, not just a supervisor.  That was the lesson last week, when the Office of Chief Counsel entered the picture and fixed a problem.

But no matter what quality controls the IRS uses, or what training it gives its employees, final decisions about either the assessment or collection of taxes are sometimes simply not defensible.  Getting such decisions corrected in court costs taxpayer both time and money.  Section 7430 permits such taxpayers to recover the costs they incurred to fix an unreasonable decision.  In that sense, it is another quality control measure.

In Tung Dang and Hieu Pham Dang v. Commissioner, T.C. Memo. 2020-150 (Nov. 9, 2020) Judge Marvel teaches a lesson on the limits a taxpayer’s ability to recover costs under §7430.  There, the Office of Appeals made an indefensible decision about the collection of the Dangs’ unpaid taxes and the IRS conceded the case in Tax Court.  Nonetheless, the Dangs were not eligible to recover the costs they incurred in fixing that unreasonable CDP decision.  Details below the fold.

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November 16, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, November 15, 2020

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[403 Downloads]  State Aid: The General Court Decision in Apple, by Stephen Daly (King's College London) & Ruth Mason (Virginia) (reviewed by Young Ran (Christine) Kim (Utah) here)
  2. [278 Downloads]  The Rise of Cooperative Surplus Taxation, by Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill)
  3. [272 Downloads]  Federal Tax Procedure (2020 Practitioner Ed.), by John Townsend
  4. [243 Downloads]  Intangibles and the Transfer Pricing Reconstruction Rules: A Case Study of Amazon, by Antony Ting (Sydney)
  5. [181 Downloads]  An Analysis of Vice President Biden’s Economic Agenda: The Long Run Impacts of Its Regulation, Taxes, and Spending, by Timothy Fitzgerald (Texas Tech), Kevin Hassett (Hoover Institution), Cody Kallen (Wisconsin) & Casey Mulligan (Chicago)

November 15, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 14, 2020

This Week's Ten Most Popular TaxProf Blog Posts

Thompson: Congress And Treasury's Federal Income Tax COVID-19 Initiatives

Samuel C. Thompson, Jr. (Penn State), Congress and Treasury's Federal Income Tax COVID-19 Initiatives, 167 Tax Notes Fed. 2067 (June 22, 2020):

Tax Notes FederalIn this article, Thompson principally focuses on the business tax provisions of the CARES Act.

The article is based on a chapter in a published special supplement (titled The Deal Lawyer’s Weapons in the War on COVID- 19) to Thompson’s Mergers, Acquisitions and Tender Offers: Law and Strategies — Corporate, Securities, Taxation, Antitrust, Cross Border (updated semi-annually).

November 14, 2020 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink | Comments (0)

Friday, November 13, 2020

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Polsky's The Impact Of The 2017 Tax Act On Personal Injury Plaintiffs

This week, Michelle Layser (Illinois) reviews Gregg D. Polsky (Georgia), The Impact of the 2017 Tax Act on Certain Personal Injury Plaintiffs, 12 Colum. J. Tax L. ___ (2021).

Layser (2018)

Between spiking COVID rates and election drama, it can be easy to forget that just a few years ago—before 2020 somehow stopped the passage of time—the country was rocked by the #MeToo movement. The 2017 movement,[1] which emboldened women across the world to use social media to signal that they had experienced sexual harassment or assault using the hashtag #MeToo, was spurred by highly public sexual-abuse allegations against film producer Harvey Weinstein.

Since everything has a tax angle, the #MeToo movement made its mark on the 2017 Tax Cuts and Jobs Act in the form of a new rule 162(q), which is informally known as the Harvey Weinstein rule. The rule disallows taxpayers’ deductions for settlement payments related to sexual harassment or sexual abuse cases when the settlement is subject to a nondisclosure agreement (NDA). Seems like a win for the movement, right? Maybe not. In a new article, Professor Gregg Polsky argues that the Harvey Weinstein rule—no matter how well intended—may actually harm sexual assault plaintiffs.

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November 13, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Viswanathan: The Qualified Small Business Stock Exclusion — How Startup Shareholders Get $10 Million (Or More) Tax-Free

Manoj Viswanathan (UC-Hastings), The Qualified Small Business Stock Exclusion: How Startup Shareholders Get $10 Million (Or More) Tax-Free, 120 Colum. L. Rev. F. 29 (2020):

The IPO parade of 2019 is making the early shareholders of technology startups such as Uber, Lyft, Slack, and Pinterest (among others) staggeringly wealthy. Now that these companies are publicly traded, equity owners can cash out at a huge profit. This profit would normally be taxed at long-term capital gains rates. But the qualified small business stock exclusion of Section 1202 of the Internal Revenue Code, a provision whose ostensible purpose is to promote investment in small businesses, will result in many of these millionaires paying zero federal taxes on much of this sudden wealth.

This Piece demonstrates that the loss in federal tax revenue due to Section 1202 is far greater than previously estimated, with the provision almost exclusively benefitting the wealthy.

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

Tax Innovators Exchange Today At Stetson

New Tax Innovators Exchange Brings National Tax Experts to Stetson Law:

STIX 3The Tax Law Society at Stetson University College of Law will present the Stetson Tax Innovators Exchange (S.T.I.X.) on Nov. 13, 2020, featuring nationally renowned experts in environmental taxation and tax technology.

S.T.I.X. is a new and forward-thinking tax law collaboration event focused almost exclusively on tax practitioners – those working in the trenches every day.  The nation’s top tax attorneys will dive into bleeding edge approaches to the practice of tax law and lead group discussions where practitioners can share challenges they face…and have a platform full of the greatest tax minds in the country work the problem out with them.

This interactive seminar will feature topics that run the gamut, but the overall goal is to ensure attendees leave armed with useful new techniques to advance not only their practice, but the field itself.

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November 13, 2020 in Legal Ed News, Legal Education, Tax, Tax Conferences | Permalink | Comments (0)

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 39, No. 1 (Fall 2019):

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

Thursday, November 12, 2020

Leff Presents Cannabis Taxation: Theory And Practice Today At Boston University

Benjamin M. Leff (American) presents Cannabis Taxation: Theory and Practice at the Virtual Boston University Law Review Conference today on Marijuana Law 2020: Lessons from the Past, Ideas for the Future:

Leff (2020)My goal in my presentation is to make two primary points: (1) In designing a tax instrument to tax cannabis at the state level, it is misguided to get distracted by any theory of Pigouvian taxes, since the most important market substitute for legal cannabis is illegal cannabis, and so (except for some special cases) taxation of legal cannabis is not Pigouvian.  (2) In designing a tax instrument to tax cannabis at the federal level, the most important issue is the degree to which any federal tax crowds out state-level taxation, not the purported incoherence (or injustice?) of section 280E.  In fact, section 280E has some plausible benefits as compared to federal excise taxes.

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November 12, 2020 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)