Paul L. Caron
Dean





Thursday, March 4, 2021

Wilking Presents Does It Matter Who Remits? Evidence From U.S. States’ Voluntary Collection Agreements Virtually Today At Duke

Eleanor Wilking (Cornell) presents Does It Matter Who Remits? Evidence from U.S. States’ Voluntary Collection Agreements (with Yeliz Kacamak (Boğaziçi University; Google Scholar) & Tejaswi Velayudhan (Ohio State; Google Scholar)) virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

Eleanor Wilking 450x515 reducedThe South Dakota vs. Wayfair (2018) Supreme Court decision changed a long-standing difference in the way U.S. sales tax administrations treated online and brick-and-mortar commerce. Online retailers now have to remit sales taxes just like their brick-and-mortar counterparts in most states. Despite the attention this decision received, we know little about how shifting the responsibility to remit will affect the tax system.

Using states’ staggered adoption of Voluntary Collection Agreements (VCAs) which committed large online retailers to remit taxes prior to the Wayfair decision, we find that the increase in compliance resulting from these arrangements was almost fully passed-through to consumers via higher tax-inclusive prices. Consumers also reduced their online expenditures. However, we do not find strong evidence of an impact on the elasticity of the tax base.

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March 4, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Avi-Yonah Presents A New Corporate Tax Virtually Today At Indiana

Reuven Avi-Yonah (Michigan; Google Scholar) presents A New Corporate Tax, 168 Tax Notes Fed. 653 (July 27, 2020), virtually at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Avi-Yonah (2021)This article will argue that we should tax corporations for the same reason we originally adopted the corporate tax in 1909: to limit the power and regulate the behavior of our largest corporations, which are monopolies or quasi-monopolies that dominate their respective fields and drive their competitors out of business (the best example being Big Tech — that is, Amazon, Apple, Facebook, Google, and Microsoft). But if that is the reason to have a corporate tax, it should have a different structure from the current flat corporate tax of 21 percent. Instead, the tax should be set at zero for normal returns by allowing the expensing of physical capital, but at a sharply progressive rate for supernormal returns (rents).

Conclusion
This article has sought to develop a new corporate tax that is appropriate for targeting rents earned by large, monopolistic, or quasimonopolistic enterprises like Big Tech. Its main recommendations are that normal corporate returns be functionally exempt by allowing permanent expensing for capital expenditures, but that supernormal returns be taxable progressively (up to 80 percent above $10 billion in profit) and on a broad base that (a) includes foreign subsidiaries, (b) disallows current R&D and interest deductions, and (c) limits deductions for stock-based compensation to value on date of grant.

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March 4, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Call For Proposals: Association For Mid-Career Tax Law Professors

The Association for Mid-Career Tax Law Professors (“AMT”) has issued a Call for Proposals:

Mid-CareerThe unvaccinated but optimistic 2021 AMT organizing committee—Jennifer Bird-Pollan, Emily Cauble, Brian Galle, Ben Leff, and Leigh Osofsky—welcomes proposals for our annual conference.

AMT is a recurring conference intended to bring together relatively recently tenured professors of tax law for frank and free-wheeling scholarly discussion. Our sixth (*: not counting last year’s summer Zoom series) annual meeting will be held virtually over two to three dates this summer: June 9, June 30, and July 21. We expect to convene for about 4 hours each day, not including the cocktail hours that Shu-Yi will inevitably organize. Presenters are asked to commit to attending at least 2/3 of the session hours; non-presenting guests (in addition to pets, inquisitive children, and in-home contractors) are welcome.

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March 4, 2021 in Legal Education, Tax, Tax Conferences, Tax Scholarship | Permalink

The IRS Paid $3 Billion In Interest To Taxpayers Because It Failed To Get Refunds Out On Time

Washington Post, The IRS Paid $3 Billion in Interest to Taxpayers Because It Failed to Get Refunds Out on Time:

The IRS penalizes taxpayers who don’t pay their tax bills on time, but the agency’s own delays are costing taxpayers billions of dollars as well.

The IRS paid $3.03 billion — yes that’s with a “b” — in interest on delayed refunds to taxpayers for fiscal 2020 because it didn’t get the payments to them in time, according to a report released by the Government Accountability Office this week [Actions Needed to Address Processing Delays and Risks to the 2021 Filing Season (GAO-21-251) (Mar. 1, 2021)]. That’s almost a 50 percent increase compared with the $2.06 billion paid in interest on refunds in fiscal 2019.

GAO

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March 4, 2021 in Tax, Tax News | Permalink

Tax Profs: Senator Warren's Wealth Tax Is Constitutional

Following up on Tuesday's post, Warren Revives Wealth Tax, Citing Pandemic InequalitiesLetter To Senator Elizabeth Warren (Feb. 25, 2021):

Dear Senator Warren,
Your proposed wealth tax reform would impose a federal tax of 2% on taxpayers’ accumulation of net assets in excess of $50 million, and a 3% tax on net assets in excess of $1 billion. The 3% tax would increase to 6% if legislation establishing universal healthcare is in effect.

Article I Section 8 of the Constitution allows Congress to implement your proposed wealth tax reform as an exercise of the congressional taxing power. Some have suggested that a federal wealth tax would be a “direct tax” subject to the “apportionment rule” in Article I Section 2, which provides that “direct Taxes shall be apportioned among the several States … according to their respective Numbers.” A tax on an individual’s net wealth, however, is not a direct tax, and need not be apportioned among the states according to their population.

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March 4, 2021 in Congressional News, Tax, Tax News | Permalink

Wednesday, March 3, 2021

Sanchirico Presents Why The Optimal Tax Rate On Capital Is Zero … Or Very High Virtually Today At Oxford

Chris Sanchirico (Pennsylvania; Google Scholar) presents Why the Optimal Long-Run Tax Rate on Capital is Zero…or Very High: The Missing Explanation virtually at Oxford's Centre for Business Taxation today:

CsanchirJudd’s (1985) finding that the optimal long-run rate of tax on capital is zero—even if equity is an important social objective—has exerted substantial influence in academic and policy circles over the last quarter century [Redistributive Taxation in a Simple Perfect Foresight Model]. Only very recently has it become clear that Judd’s zero-tax result rests on an implicitly adopted assumption about how savings responds to taxation. Working within the very same model structure, Straub and Werning (2020) demonstrate that the optimal long-term tax rate is positive and potentially large under an alternative equally plausible assumption. This paper attempts to fill a remaining gap in the literature by providing a clear explanation of what is driving results in both variants of Judd’s original model [Positive Long Run Capital Taxation: Chamley-Judd Revisited]. 

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March 3, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Hemel: Regulation And Redistribution With Lives In The Balance

Daniel J. Hemel (Chicago), Regulation and Redistribution with Lives in the Balance, 88 U. Chi. L. Rev. ___ (2021):

A central question in law and economics is whether non-tax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion dollar impacts on the US economy and profound effects on millions of Americans’ lives. In the past, agency cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: On his first day in office, President Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into cost-benefit analysis, thus bringing renewed relevance to a long-running law-and-economics debate.

This article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis.

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March 3, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tax Prof Presentations At Today's Florida Tax Institute

Tax Prof presentations at the two-day Florida Tax Institute:

Cassady V. Brewer (Georgia State) & Bruce A. McGovern (South Texas), Recent Developments in Federal Income Taxation:

This session will review the most significant statutory enactments, judicial decisions, IRS rulings, and Treasury regulations promulgated during the last twelve months that affect general domestic income taxation, corporate taxation, partnership taxation, and tax procedure.

Samuel A. Donaldson (Georgia State), Transfer Tax Update:

Stay up to date with this informative and entertaining recap of the important cases, rulings, regulations, and legislation from the past 12 months related to federal income, estate, and gift taxes.

Charlene Luke (Florida), Proposed Partnership Regulation Projects: Where Do They Stand? How Should They Be Handled?:

This presentation will provide an overview of the current state of U.S. Treasury partnership regulation projects and consider potential future approaches in light of a new tax administration.

Nancy A. McLaughlin (Utah), Trying Times: Conservation Easements and Federal Tax Law (207 pages):

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March 3, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Crespi: Teaching A Class On Income And Wealth Inequality

Gregory S. Crespi (SMU), Teaching a Class on Income and Wealth Inequality:

I am offering a course on “Income and Wealth Inequality” for the first time during this spring, 2021 semester at the Dedman School of Law at Southern Methodist University, and the course is going well. I am here discussing my choice of materials and providing my course syllabus and my weekly reading assignment list for use by anyone else who is considering offering such a course at the college or graduate or law school level.

March 3, 2021 in Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

Johnson: Taxing Meals And Civic Virtue

Calvin H. Johnson (Texas), Return to Civic Virtue: Tax Meals, 170 Tax Notes Fed. 1105 (Aug. 15, 2021):

Tax Notes Federal (2020)Excluding meals from taxation, when other forms of compensation are taxed, inevitably causes a loss of value — a waste — that economists call deadweight loss. The exclusion for meals causes a shift from cash to meals, until in equilibrium, the loss of value from the meals is just short of the tax avoided. In equilibrium, the loss is a tax-caused destruction of resources — not physically, but by value. The recent Consolidated Appropriations Act decreased the tax on meals by allowing a 100 percent deduction for some business meals, repealing the prior law’s 50 percent deduction, which is the wrong direction to go. The end of the limited deduction was instigated by former President Trump himself and was a high priority for the Trump Treasury in its negotiations with Congress over the appropriations bill. Trump personally takes advantage of tax-exempt meals and has interests in restaurants selling meals. Thus, the change in law was narcissistic and a betrayal of civic virtue.

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March 3, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, March 2, 2021

Cauble Presents Questions The IRS Will Not Answer Virtually Today At Florida State

Emily Cauble (DePaul) presents Questions the IRS Will Not Answer virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

CaubleWhen a taxpayer plans to undertake a transaction and its tax consequences are unclear, the taxpayer can request a letter ruling from the IRS. The IRS issues numerous letter rulings each year. In 2020, for instance, the IRS issued 777 letter rulings. The IRS refrains from issuing letter rulings on certain topics. At the beginning of each year, the IRS publishes an updated list of the topics on which it will not rule. Many of the topics on which it will not rule arise in areas of tax law governed by standards where the tax outcome depends heavily on each transaction’s specific facts. This pattern is consistent with the IRS’s stated position that it ordinarily does not rule in certain areas because of the factual nature of the matter involved.

This Article suggests that a policy against ruling on fact-specific topics sacrifices an opportunity to rule on many of the very topics for which a letter ruling could be particularly useful. Because the fact-specific nature of a topic makes it ill-suited for generally applicable guidance, such a topic is a particularly good candidate for a letter ruling.

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March 2, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Cockfield: International Tax Transparency

Arthur J. Cockfield (Queen's University Faculty of Law), International Tax Transparency:

An imbalance exists between tax authorities and taxpayers when it comes to the latter’s financial information. Taxpayers have the information they need to calculate their tax liabilities and file their returns. Tax authorities, on the other hand, tend to have little beyond what is in the tax return. Thus it can be hard for tax authorities to detect non-compliance. The solution? Pass laws to force the taxpayer (or a third party) to provide more and better information to tax authorities. In other words, increase tax transparency.

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March 2, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lazerow: Income Tax Planning For Visual Artists, Their Dealers, Investors, And Collectors

Herbert I. Lazerow (San Diego), Income Tax Planning for Visual Artists, Their Dealers, Investors, and Collectors, 170 Tax Notes Fed. 923 (Feb. 8, 2021):

Tax Notes Federal (2020)The tax issues of visual artists, art dealers, art investors, and art collectors all revolve around the same type of property: artwork. Be it a painting, drawing, print, sculpture, photograph, fabric, or glass art, that property raises tax issues for which advance planning can be useful. Some tax problems are shared by artists, dealers, investors, and collectors alike, such as the necessity to prove a profit motive in order to deduct expenses. However, those four categories of taxpayers face different tax results for the same activity in some cases, such as when artwork is sold or donated. This report explores those similarities and differences and suggests steps advisers can take to maximize tax benefits for their clients. It occasionally questions whether the similarities and differences — or the rules applied by the IRS — make sense.

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March 2, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

NY Times: Warren Revives Wealth Tax, Citing Pandemic Inequalities

New York Times, Warren Revives Wealth Tax, Citing Pandemic Inequalities:

A tax on the net worth of America’s wealthiest individuals remains popular with voters, but has yet to be embraced by President Biden.

Senator Elizabeth Warren, Democrat of Massachusetts, introduced legislation on Monday that would tax the net worth of the wealthiest people in America, a proposal aimed at persuading President Biden and other Democrats to fund sweeping new federal spending programs by taxing the richest Americans.

Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion. ..,

The latest version, which would begin to apply in 2023 to net worth as calculated in 2022, would raise $3 trillion, Mr. Saez and Mr. Zucman calculate. Other economists, including Natasha Sarin of the University of Pennsylvania and Lawrence H. Summers of Harvard, estimate the tax would raise significantly less.

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March 2, 2021 in Tax, Tax News | Permalink

Monday, March 1, 2021

Liscow: Redistribution For Realists

Zachary D. Liscow (Yale; Google Scholar), Redistribution for Realists:

Inequality is a defining issue of our time. Nevertheless, the longstanding economic orthodoxy for addressing inequality is that we should redistribute solely through tax and transfer policies because those are the most efficient means for doing so.

While the orthodoxy holds in theory, it fails in practice because of the public’s psychology about redistribution. New evidence shows that individuals silo their policy views: many are reluctant to redistribute through taxes and transfers but are willing to do so in other policy domains, like provision of necessities such as transportation, food, and housing. The orthodoxy thus restricts redistribution efforts to a policy domain where the public resists redistribution while neglecting the many policy domains where the public embraces redistributive policies. The current orthodoxy may be more efficient, but it is also a prescription for widespread inequality.

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March 1, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Cotropia: Law’s Ability To Further The 'Menstrual Movement'

Christopher Anthony Cotropia (Richmond; Google Scholar), Law’s Ability to Further the 'Menstrual Movement', 41 Colum. J. Gender & L. __ (2021):

The current menstrual movement calls for overcoming the cultural stigma associated with menstruation and achieving “menstrual equity” and “period poverty”. The movement seeks to increase awareness of menstruation by rectifying and removing discrimination against those who menstruate and providing greater access to menstrual hygiene products (“MHPs”), particularly for the homeless and those with lower incomes. To achieve these goals, the movement is advocating for the elimination of the “tampon tax” and requiring schools provide MHPs to students for free. There are also lawsuits challenging the constitutionality of the tampon tax. Advocates view these legal changes as instrumental in furthering the goals of equity and access to MHPs underlying the movement. This essay discussions whether these legal changes achieve the movement’s goals and also explores their expressive effects.

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March 1, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: No Second Bite In CDP For Rejected OIC

Tax Court (2020)One overarching theme of my Tax Procedure course is that tax collection is a process, not an event.  Many events occur during the time between assessment of a liability and the collection of that liability, and it is easy to fixate on them in isolation, forgetting their place in the process.  One important event can be a Collection Due Process hearing and subsequent appeal to Tax Court.  Since I started writing these posts (back in September 2017) we’ve learned a lot of lessons from the Tax Court about the shape and scope of CDP.  In Craig L. Galloway v. Commissioner, T.C. Memo. 2021-24 (Feb. 24, 2021) (Judge Urda), we learn that what a taxpayer can do in a CDP hearing may be limited by earlier events in the collection process.  Details below the fold.

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March 1, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

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March 1, 2021 in About This Blog, Legal Education, Tax | Permalink

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March 1, 2021 in About This Blog, Legal Education, Tax | Permalink

TaxProf Blog Weekend Roundup

Sunday, February 28, 2021

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #303 among 15,769 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,229 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [466 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  3. [462 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  4. [364 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois; Google Scholar)
  5. [240 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)

February 28, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, February 27, 2021

This Week's Ten Most Popular TaxProf Blog Posts

Tobin: The Tax Code Can Save The $15 Minimum Wage

TaxProf Blog op-ed:  The Tax Code Can Save the $15 Minimum Wage, by Donald Tobin (Dean, Maryland):

Tobin (2020)The Senate Parliamentarian has ruled that minimum wage legislation cannot be included in the President’s COVID relief package because it does not meet requirements under the Congressional Budget Act. While I think there is a strong argument that minimum wage legislation meets the Budget Act’s requirements, it is clear that Congress could pass the equivalent of a minimum wage through the tax code in a way that clearly satisfies the Budget Act.

The Congressional Budget Act created a procedure for reconciling the budget when it is not in balance.  This procedure, termed “reconciliation,” provides for an expedited procedure for approval of certain bills related to the budget.

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February 27, 2021 in Legal Education, Tax, Tax News | Permalink

Friday, February 26, 2021

Weekly SSRN Tax Article Review And Roundup: Kim Reviews The IRS's Decisive Transfer Pricing Victory In Coca Cola By Avi-Yonah & Mazzoni

This week, Young Ran (Christine) Kim (Utah; Google Scholar) reviews a new work by Reuven Avi-Yonah (Michigan; Google Scholar) & Gianluca Mazzoni (Michigan SJD), Coca Cola: A Decisive IRS Transfer Pricing Victory, at Last, 169 Tax Notes Fed. 1739 (2020).

Kim

Coca-Cola has offshore manufacturing facilities that produce beverage concentrate in low tax countries, such as Brazil, Ireland, and Egypt. Because the beverage concentrate is a Coca-Cola product, though it is not a final product, the US Parent co. licenses its intangibles, such as trademarks and secret formulas, and the manufacturing facilities pay royalties and dividends. But the role of offshore manufacturing facilities stops there. The final products are made by third party entities, called “Bottlers,” and the marketing activities of the Coca-Cola brand and the final products are conducted by another foreign subsidiary (ServCos). Given such a limited role of offshore manufacturing facilities, called "Supply Points," what portion of profits under the transfer pricing rules should be allocated to those Supply Points compared to the US Parent co.? Probably not much.

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February 26, 2021 in Christine Kim, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Tax Policy In The Biden Administration

Next Week's Virtual Tax Workshops

Thursday, March 4: Eleanor Wilking (Cornell) will present Does It Matter Who Remits? Evidence from U.S. States’ Voluntary Collection Agreements (with Yeliz Kacamak (Boğaziçi University; Google Scholar) and Tejaswi Velayudhan (Ohio State; Google Scholar)) virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Thursday, March 4: Reuven Avi-Yonah (Michigan; Google Scholar) will present A New Corporate Tax virtually at Indiana as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Leandra Lederman.

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February 26, 2021 in Colloquia, Legal Education, Tax, Tax Scholarship, Tax Workshops | Permalink

Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax

Dialogs

Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax:

In an environment of increasing academic specialization, Oxford-Virginia Legal Dialogs seeks to build bridges across academic disciplines by introducing a new kind of workshop. For each session, a tax scholar will select a non-tax, but legal, work that is prominent in its own field and explain how the work is relevant to the study of taxation. The author of the work will then respond before we open the session to questions and discussion by workshop attendees.

All sessions will take place on Zoom, unless otherwise indicated, and the work to be discussed will be distributed on this page in advance of the session.

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February 26, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Dean Presents Ten Truths About Tax Havens Virtually Today At British Columbia

Steven Dean (Brooklyn) presents Ten Truths About Tax Havens: Inclusion and the 'Liberia Problem' (with Attiya Waris (University of Nairobi; Google Scholar)) virtually at Allard School of Law, University of British Columbia today as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

Dean_Steven_Portrait_002There has been a decades-long effort to repair an increasingly fragile international tax system. One reason it has foundered has been what we identify as the ‘Liberia problem’. In 2000, the powerful Organisation for Economic Cooperation and Development identified Liberia—but not Switzerland—as a tax haven and targeted it for sanctions.  It did not go well. During the two decades since, everything has changed yet seemingly from this lens of inclusion nothing has changed at all. Awkwardly similar “blacklists” still target ‘Black’ and ‘Brown’ jurisdictions despite the fact that experts mean something quite different when they speak of the harms caused by secrecy jurisdictions. We think differently in important respects, but we share a conviction that a more inclusive and more level playing field in the international tax arena would benefit all states.

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February 26, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

American Taxation Association Outstanding Paper Award

Doron Narotzki (Akron; Google Scholar) & Melanie McCoskey (Akron; Google Scholar) received the Best Paper Award at last week's 33rd Annual American Taxation Association Midyear Meeting for their article, Code Section 304: The Gift That Keeps on Giving, 17 ATA J. Legal Tax Res. 25 (2019):

One central focus of the TCJA was to encourage U.S. international firms to "bring back earnings to the U.S." In an attempt to achieve this goal, the legislation enacted Section 245A, which provides a 100% DRD to U.S. corporations for certain foreign-sourced distributions. Section 304 requires the reclassification of stock sales between affiliated corporations as dividends. However, for many years, Code Section 304 was not fulfilling the original "anti-avoidance" tax policy that was behind its legislation, as is explained in this paper. Currently, the TCJA has created an opportunity to utilize Section 304 and Section 245A via a much more powerful tax planning tool. By utilizing the rules related to redemptions by related corporations under the (purportedly) anti-abuse provisions of Section 304 combined with the new 100% DRD of Section 245A, extracting earnings from affiliated foreign corporations tax-free has never been easier. This paper will discuss these two Code Sections and the micro-policy behind them.

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February 26, 2021 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink

Thursday, February 25, 2021

Bearer-Friend Presents Tax Without Cash Virtually Today At Duke

Jeremy Bearer-Friend (George Washington) presents Tax Without Cash virtually at Duke today as part of its Tax Policy Workshop Series:

Bearer Friend (2021)This Article documents and evaluates tax obligations paid without cash, referred to as “in-kind tax paying.” Such forms of tax paying include paying federal income taxes by remitting a used, flatbed truck to the IRS, paying local property taxes by working a few hours a month answering phones at city hall, and paying state excise taxes by conveying a proportion of all seashells farmed within a state to that state. These are not just hypotheticals, but forms of in-kind tax paying that occur in the United States throughout periods when many taxes are also paid in cash. Nevertheless, despite its long history and prevalence, in-kind tax paying has been underexplored as a viable, and potentially appealing, form of tax remittance.

By providing an original taxonomy of in-kind tax paying within a cash economy, this Article makes three contributions. First, it improves our definition of tax paying by identifying the wide variety of in-kind remittances that occur in our current tax system. Second, it refutes the tacit presumption that in-kind remittance of tax obligations is not viable, thus expanding the tax tools available to local, state, and federal governments and demonstrating how narrow presumptions about tax remittance have predetermined core tax policy choices. Third, it confronts the substantial dangers of in-kind tax paying, using these risks to propose new principles for limiting the design and administration of in-kind tax paying.

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February 25, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Book: Tax Administration And Racial Justice

Leslie Book (Villanova), Tax Administration and Racial Justice: The Illegal Denial Of Tax Based Pandemic Relief To The Nation's Incarcerated, 72 S.C. L. Rev. ___ (2021) (Symposium on Taxation, Finance, And Racial (in)Justice):

In the midst of a devastating pandemic that would sicken millions, kill hundreds of thousands, and cause widespread financial distress, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CARES provided for the IRS to deliver up to $1,200 for adults and $500 for dependent children. It was ostensibly structured as a refundable credit to be claimed on a 2020 tax return, but with a twist. The statute authorized the IRS to pay it in advance, even to those who did not have a tax return filing obligation, and to do so as “rapidly as possible.” While there were some problems, the IRS generally did remarkably well, and within six months it had delivered about 160 million payments totaling over $270 billion.

This Essay addresses one of those exceptional problems: it involves the IRS’s unexplained change in position on the eligibility of those incarcerated in our nation’s federal, state, and local prisons and jails.

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February 25, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

2020 IFA International Tax Student Writing Award; Call For Entrants In 2021 Competition

The winner of the International Fiscal Association's 2020 International Tax Student Writing Competition is Shay Moyal (S.J.D. 2020, Michigan; Davis Polk & Wardwell, New York), Don’t Stop the Beat, 166 Tax Notes Fed. 721 (Feb. 3, 2020).
Faculty Sponsor: Reuven Avi-Yonah

IFA Logo (2015)The recent addition to the Internal Revenue Code, the Base Erosion Anti-Abuse Tax (BEAT), is a subject of concern for many tax scholars and practitioners. This new provision joins a large family of measures that have been adopted worldwide and in the U.S.; however, unlike the other new International Tax provisions from the 2017 reform, the BEAT has neither a predecessor in prior laws nor in former proposals. To start, the phrase “Base Erosion” itself lacks clarity. Furthermore, the relatively short amount of time lawmakers took to enact the addition and the lack of any stated objectives require an inquiry into the objectives and original intent of this complex section of the code. This paper seeks to illuminate the original intent of the BEAT and the expansive language of its provisions by examining multiple factors such as its structure, legislative history, other International Tax principles, and the BEAT’s similarities to recent international tax trends – like Pillar II of the OECD BEPS or the Digital Services Minimum Taxes around the globe.

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February 25, 2021 in Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

Free Webinar Today On #BlackEconomistsMatter: Economic Justice Recommendations For The Biden Administration

#BlackEconomicrsMatter

Following up on my previous posts:

The ABA Section of Civil Rights and Social Justice hosts a free webinar today at 3:00 PM ET on #BlackEconomistsMatter: Economic Justice Recommendations for the Biden Administration:

For over 100 years, Black economists have been erased by the profession and media. Occupational segregation in economics not only results in loss of opportunities and wage gaps for qualifying women, candidates of color, and others who are discriminated against, but undermines and narrows access to innovative solutions, diverse strategies, broad-based data collection, targeted recommendations, and practical remedies for societal inequities.

In 2017, seven Black women received a Ph.D. in economics in the U.S. In 2018, the number dropped to four out of over 1,000 economic doctoral degree graduates. A 2018 AEA report found that Black, Latinx, and Native American students were less likely to complete degrees in economics compared to any other subject. In 2017, only 16% of all economics degrees were awarded to these students of color.

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February 25, 2021 in Legal Ed Scholarship, Legal Education, Tax, Tax Conferences, Tax Scholarship | Permalink

The Corporate Tax Revolution Is Coming—Are We Ready?

Bloomberg, The Corporate Tax Revolution is Coming—Are We Ready?:

Creating a global solution for the taxation of the digital economy is right up there with finding an instant cure for climate change—seemingly impossible. Nonetheless, this has been a primary focus of the Organization for Economic Cooperation and Development (OECD) for a number of years and, with a mid-2021 deadline looming, negotiations are getting down to the wire.

The brainchild of the OECD’s efforts is a global-taxation overhaul, known as Pillar 1 and Pillar 2. These controversial proposals defy a system born in the 1920s, when determining a final destination for corporate profits was as easy as reading a business’s brick-and-mortar address. Businesses, of course, are no longer that simple—and neither is the global tax landscape, where the “digital economy” has quickly morphed into the economy itself.

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February 25, 2021 in Tax, Tax News | Permalink

1-Liners Wanted: Why Should Law Students Take A Tax Class?

From Leandra Lederman (Indiana) and Allison Christians (McGill):

BiT

1-liners are due on Twitter by this Sunday, February 28.

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February 25, 2021 in Legal Education, Tax | Permalink

Wednesday, February 24, 2021

Haslehner Presents International Tax Arbitration After BEPS Virtually Today At Boston College

Werner Haslehner (NYU; Google Scholar) presents International Tax Arbitration after BEPS (with Mike Kobetsky (Melbourne)) virtually at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

W Haslehner_portraitAs international taxation rules become ever more complex – illustrated by the number of acronyms and jargon that have become so familiar to the ‘initiated’ in recent years (BEPS, MLI, PPT, LOB, Pillar One, Amount A, BEAT, GILTI, GLOBE, DST, anyone?) – calls for an internationalized system of dispute resolution have also become increasingly loud. Both the OECD and the EU are making a serious effort to provide taxpayers with access to effective remedies via tax arbitration. Yet acceptance of this mode of dispute resolution appears limited: only 30 States have adopted the relevant provision of the Multilateral Instrument for the modification of bilateral tax treaties – a number that still tends to overestimate the actual impact in practice! Meanwhile, the EU has adopted harmonized legislation giving a right to taxpayers to have cross-border disputes resolved by arbitration.

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February 24, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Galle Presents Making Money: Central Banks, Seigniorage, And The Fiscal System Virtually Today At Toronto

Brian Galle (Georgetown; Google Scholar) presents Making Money: Central Banks, Seigniorage, and the Fiscal System (with Yair Listokin (Yale; Google Scholar)) virtually at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Bdg9-200x300 (1)Conventional economic wisdom holds that governments cannot pay their bills by printing money. Running the printing press---or, at modern central banks, tapping a few keys to create electronic funds---causes inflation, and inflation can destroy economies. Yet as it turns out, since 2008 developed countries throughout the world have in effect printed trillions of dollars worth of new money without any real hint of inflation. In the United States, for example, this “seigniorage” (an Old French term for the power to mint coins) has produced revenue equivalent to 1⁄3 of all individual income taxes over the last decade.

The power of central banks to create revenue at this scale should transform how we think about the fiscal state, our system of taxing and spending. Yet because this phenomenon is new, runs contrary to decades of theory, and is not yet fully understood, no scholarship yet grapples with how governments should use seigniorage. Most nations’ basic architecture for revenue and spending decisions assume that taxes are the primary source of revenue. 

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February 24, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Targeted Taxes: Localities Take Aim At Large Employers To Solve Homelessness And Transportation Challenges

Andrew D. Appleby (Stetson), Targeted Taxes: Localities Take Aim at Large Employers to Solve Homelessness and Transportation Challenges, 98 Or. L. Rev. 477 (2020):

Many localities are facing unprecedented challenges — such as a dramatic rise in homelessness and insufficient transportation infrastructure — that have reached crisis levels. These localities are in a precarious position. If they do not solve these problems quickly, or if they impose overbearing and poorly designed taxes, there will be dire economic and social repercussions.

In response to these challenges, several localities recently enacted or proposed taxes targeted directly at large businesses, with revenues allocated explicitly for a designated purpose. Localities are gravitating toward targeted taxes for several reasons. Some assert that the success of large employers within the locality contributed to, or even directly created, these challenges. Perhaps most importantly, targeted tax laws serve a clear expressive function. Depending on the locality’s primary objective, targeted taxes may be problematic and counterproductive.

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February 24, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Christians & Lederman: Should You Get A Tax LLM?

U.S. Tax Court's Tax Trailblazers: Loretta Collins Argrett

U.S. Tax Court's Diversity & Inclusion Series, Tax Trailblazers: Mentoring the Next Generation:

ArgrettPlease join the United States Tax Court in honoring Black History Month and kicking off the first in a series of monthly programs celebrating diversity and inclusion in tax law. Moderated by Chief Judge Maurice B. Foley, February’s webinar will focus on Loretta Collins Argrett and her path to—and success in—the field of tax law. Today at 7:00-8:15 PM EST (register here).

Loretta Collins Argrett graduated from Howard University with a B.S. degree in chemistry, with honors. Upon graduation, she received a Fellowship for summer study with the Swiss Federal Institute of Technology in Zurich, Switzerland whose Chief years later was awarded the Nobel prize in Chemistry. When she returned to the States, she worked for several years as a research chemist at local U.S. government institutions and became the co-author, with senior researchers, of a few scientific publications. Then, she decided she wanted to become a lawyer and, with the support of her husband, applied to Harvard Law School where she was accepted. At the time, she was 35 years old and the mother of two children (13 and10 years), who also moved with her to new schools in the Boston area. She graduated in 1976, and the family moved back to their home in Maryland. She has had a trailblazing series of firsts in her tax law career:

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February 24, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Tuesday, February 23, 2021

Sarkar: Capital Controls As Migrant Controls

Shayak Sarkar (UC-Davis), Capital Controls as Migrant Controls, 109 Cal. L. Rev. ___ (2020):

The disparate treatment of capital and labor reflects one of globalization’s central asymmetries: the law often allows financial capital, but not people, to move freely across borders. Yet scholars have largely neglected the intersection of these two regimes, the legal restrictions on migrants’ capital, particularly when the migrants themselves are deemed illegal. These restrictions on migrants’ capital abound even while migratory capital generally faces few such restrictions. As such, capital controls may operate as migrant controls.

This Article canvasses established and emerging examples of capital controls as migrant controls and the pressing legal questions these controls raise. Capital is guarded when remittances are taxed, particularly when the taxation is explicitly conditioned on immigration status. Capital is expelled when capital receipts, such as Social Security benefits, are made contingent on departure and non-residency. And capital is marginalized when financial laws require particular identity and immigration documents on penalty of exclusion from key financial services.

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February 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Christians: Tax Justice As Social License — The Fair Tax Mark

Allison Christians (McGill; Google Scholar), Tax Justice as Social License: The Fair Tax Mark:

Fair TaxTax justice advocates have spent the past decade building public consciousness about the tax planning practices of financial elites and large multinational corporations. They approached the project from a series of angles, from grassroots name-and-shame campaigns to documentary filmmaking to political lobbying. An early focus on transparency in the resources sector led to broader campaigns across industries and across countries, with multiple platforms around transparency and accountability. Inspired by the growing consumer response to these campaigns, a group of tax justice advocates created a “fair trade”-style branding and marketing strategy, called the Fair Tax Mark. The primary objective is to directly influence firm and consumer behaviors in the UK, but the standard has broader potential influence as an emergent quasi-legal regime.

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February 23, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

America’s Future: Trillionaire Trust Babies?

Bob Lord (Institute for Policy Studies), America’s Future: Trillionaire Trust Babies?:

Back in 1982, with Reaganomics in its infancy, the first Forbes list of America’s ultra-wealthy had just 13 billionaires on top. The two richest of these billionaires, Daniel Ludwig and Gordon Getty, held personal fortunes estimated in the $2 billion range. The other 11 billionaires on that first annual Forbes list clustered together at the $1 billion level.

Multiply that 1982 billionaire breakdown by 100 and you’d have something awfully close to the present list.

The nine current wealthiest Americans today — all white men — each hold a net worth above or rapidly approaching the $100 billion mark. Two of these “hectobillionaires,” Jeff Bezos and Elon Musk, hold around $200 billion.

To what do we owe this awesome increase in billionaire fortune? ...

Over recent decades, Republicans have hollowed out our estate and gift tax laws. Their legislating has allowed tax avoidance planners to effortlessly pass billions from one generation to the next — and often to the next generation after that — without incurring tax liabilities.

One former Donald Trump economic adviser, Gary Cohn, infamously noted that “only morons pay estate tax.” We can condemn Cohn’s disparagement of wealthy Americans who choose not to engage in tax avoidance, but we can’t challenge his basic point: In the United States today, the estate tax has become essentially a voluntary levy. ...

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February 23, 2021 in Tax, Tax News | Permalink

IRS Low Income Taxpayer Clinic Program Annual Report

IR-2021-41 (Feb. 19, 2021), Low Income Taxpayer Clinics Represented Over 20,000 Taxpayers Dealing With an IRS Tax Controversy; See the Latest Program Report and the 2021 LITC Grant Recipient List:

LITCThe Internal Revenue Service's Low Income Taxpayer Clinic (LITC) Program office today announced highlights from its 2020 annual report, featuring successful taxpayer outreach to thousands of taxpayers. The report describes how LITCs provide representation, education and advocacy for taxpayers who are low income or speak English as a second language (ESL). The program also announced its 2021 LITC grant recipient list. ...

During 2019, LITCs represented 20,259 taxpayers dealing with an IRS tax controversy. They helped taxpayers secure more than $6.8 million in tax refunds and reduced taxpayers' liabilities by more than $50 million. They also brought more than 4,100 taxpayers back into payment compliance.

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February 23, 2021 in IRS News, Tax, Tax News | Permalink

Monday, February 22, 2021

Hemel & Lord: Jeffrey Epstein’s Billionaire Tax Avoidance Assistance Business

Following up on my previous post, NY Times: College Dropout Jeffrey Epstein Earned Hundreds Of Millions As His Cut Of Billions Of Taxes Saved By Clients Using His Strategies — Typically GRATs:  Daniel Hemel (Chicago; Google Scholar) & Bob Lord (Institute for Policy Studies), Beyond Lucrative: Jeffrey Epstein’s Billionaire Tax Avoidance Assistance Business:

The sex-trafficking scandal surrounding the late Jeffrey Epstein already has tarnished the reputations of prominent politicians, businessmen, and the British royal family. Now it’s casting a dark shadow on an estate tax-avoidance strategy popular among Wall Street CEOs and tech entrepreneurs.

The strategy exploits a loophole that Congress unintentionally left open when it passed provisions related to grantor retained annuity trusts, or GRATs, in 1990. Use of these trusts already has cost the IRS—by one estimate—well over $100 billion in just the last two decades. A recent filing with the Securities and Exchange Commission by the private equity firm Apollo Global Management reveals that the firm’s longtime CEO, Leon Black, relied on Epstein’s assistance to extract more than $500 million of tax savings from GRATs.

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February 22, 2021 in Celebrity Tax Lore, Tax, Tax News | Permalink

Supreme Court Again Rejects Trump’s Bid To Shield His Tax Returns From Manhattan Prosecutor

UC-Irvine Hosts Virtual Symposium Today On Taxation In A Time Of Crisis

UC-Irvine hosts a virtual symposium today on Taxation in a Time of Crisis (program):

UC Irvine (20192)Panel #1: Tax Relief During the COVID-19 Pandemic:

Panel #2: Equitable Tax Administration During the COVID-19 Pandemic

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February 22, 2021 in Conferences, Legal Education, Tax, Tax Conferences, Tax Scholarship | Permalink

Lesson From The Tax Court: The Fearsome Scope Of Evil §280E

When Congress creates a tax benefit, it often qualifies that benefit.  Many time Congress does that in the very provision granting the benefit.  For example, the exclusion for employee fringe benefits in §132 contains many qualifiers, such as a non-discrimination requirement for several of the benefits. Other times, however, Congress writes a completely different statute to qualify a benefit.  You find many of these statutes gathered in Chapter 1 (“Normal Taxes), Subchapter B (“Computation of Taxable Income”), Part IX (“Items Not Deductible”), starting with §261.  Just when a taxpayer gets all happy by being allowed a deduction by some statute, one of these swoops in to deny or qualify the deduction.  So I call these the “evil 200’s.”

PotBusinessPictureSection 280E creates a draconian qualification for businesses engaged in the trafficking of substances that are illegal under federal law.  Because marijuana is still illegal under federal law, that has caused no end of tax headaches for businesses that are perfectly legal under state law.  Those businesses keep attacking the scope of §280E, with decidedly mixed results.

In San Jose Wellness v. Commissioner, 156 T.C. No. 4 (Feb. 17, 2021) (Judge Toro) the Tax Court interpreted §280E broadly to prohibit deductions for depreciation and for charitable contributions.  While one might read the opinion as saying that §280E prohibits deductions for all expenditures made by a marijuana business, regardless of that expenditure’s relationship to the operation of the business, I do not think it actually goes that far.  At least I hope not.  Details below the fold.

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February 22, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, February 21, 2021

New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires

Wall Street Journal, Some Democratic Lawmakers Push for Wealth Tax on New York Billionaires:

New York state lawmakers are considering an unprecedented form of wealth tax as they search for revenues to plug a budget hole exacerbated by the coronavirus pandemic.

A growing coalition of unions, progressive advocacy groups and Democratic officials has endorsed a slate of six revenue bills, including a so-called mark-to-market tax on billionaires, which would require them to pay capital-gains taxes each year as their assets appreciate, even if they don’t sell.

The tax menu also includes increases to income and capital-gains taxes as well as a proposed tax on financial transactions. Gov. Andrew Cuomo, a Democrat, proposed a $1.5 billion income tax hike as part of his $193 billion budget plan, but hasn’t embraced a mark-to-market tax.

Opponents said the tax is unworkable and could drive away wealthy people who already pay a large share of state taxes. They also said the proposal might violate a provision of the state constitution, which prohibits ad valorem or excise taxes on intangible personal property, including securities. ...

David Gamage, a professor at Indiana University law school who helped draft Ms. Ramos’ bill, said the proposal was constitutional in New York because it taxed changes in the value of assets, not simply the value of assets themselves. He said the valuations were possible because the number of affected taxpayers was likely below 200.

“It’s only in recent years that governments around the world have started to realize that our existing tax rules aren’t working as applied to the superrich, so that reforms are needed,” he said.

David Gamage (Indiana), Emmanuel Saez (UC-Berkeley) & Darien Shanske (UC-Davis), The NY Billionaire Mark-to-Market Tax Act: Revenue, Economic, and Constitutional Analysis:

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February 21, 2021 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink