TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, February 9, 2019

WSJ: Trump Tax Law Spurs Job Creation . . . For Tax Lawyers And Accountants

Wall Street Journal, Trump Tax Law Spurs Job Creation . . . For Tax Lawyers and Accountants:

WSJIn 2017, Congress passed the Tax Cuts and Jobs Act. Many of the jobs it is creating, it turns out, are in the tax industry.

The overhaul continues to generate thousands of jobs for tax professionals as companies analyze the law, restructure operations and rely on tax experts to do all the work flowing from the legislation and IRS regulations, according to lawyers and executives at tax firms. Business is unusually strong and should remain robust for years as a result of the law, they say. ...

Deloitte Tax LLP grew by 10% this fiscal year and expects another 10% bump next year. KPMG LLP says it hired twice as many experienced employees in 2018 in its U.S. tax practice as it did the year before. ...

Republicans sold the tax law to the public on the premise that the new tax system would be simpler, and that’s true for many individuals. Many companies, however, are encountering complex new provisions that create demand for sophisticated tax advice and seasoned experts who can do the work. Top law firms and accounting firms are expanding, and they’re battling for experienced tax professionals. ...

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February 9, 2019 in Tax | Permalink | Comments (2)

Friday, February 8, 2019

Tax Policy In The Trump Administration

Moreno Presents Indirect Transfers Of Resident Companies Today At Florida

MorenoAndrés Báez Moreno (Universidad Carlos III, Madrid, Spain) presents Indirect Transfers of Resident Companies: The Problems of Taxing Who Is Not Here on Something That Is (Not) Here at Florida today as part of its Tax Colloquium Series:

A significant amount of recent scholarly work has considered the appropriateness from a policy perspective of taxing capital gains realized by non-resident on alienation of domestic sources and, in this context, almost by implication also the opportunity of taxing ITRC [indirect transfers of resident companies]. However, this article will consider taxation of capital gains realized by non-residents and ITRC as a given fact; there are two reasons for this: 1) Despite good policy reasons for a different approach –as regards particularly assets different from real property — the truth is that a significant amount of (developing) countries do tax these gains; 2) The review of the existing work on ITRC demonstrates a significant attention on policy issues frequently at the expense of legal and technical matters.

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

More Reactions To The Alexandria Ocasio-Cortez And Elizabeth Warren Tax Plans

The Global Con Hidden In Trump’s Tax Reform Law

New York Times op-ed:  The Global Con Hidden in Trump’s Tax Reform Law, Revealed, by Brad Setser (Council on Foreign Relations):

Last night, President Trump reserved a few minutes of his State of the Union address to praise his tax reform law, which turned a year old last month. To promote its passage, Mr. Trump and his congressional allies promised Americans that drastically lowered corporate tax rates would bring home large sums of capital that had been stashed overseas and finance a surge of domestic investment.

“For too long, our tax code has incentivized companies to leave our country in search of lower tax rates,” he said, pitching voters in the fall of 2017. “My administration rejects the offshoring model, and we have embraced a brand-new model. It’s called the American model.”

The White House argued they wanted a system that “encourages companies to stay in America, grow in America, spend in America, and hire in America.” Yet the bill he signed into law includes a sweetheart deal that allows companies that shift their profits abroad to pay tax at a rate well below the already-reduced corporate income tax — an incentive shift that completely contradicts his stated goal.

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February 8, 2019 in Tax | Permalink | Comments (3)

Thursday, February 7, 2019

Camp: New Thinking About Jurisdictional Time Periods In The Tax Code

Bryan Camp (Texas Tech), New Thinking About Jurisdictional Time Periods in the Tax Code:

Tax law is notoriously insular. For example, even as courts evolved their approach to reviewing agency regulations in general, they continued to embrace a special rule for the review of Treasury Regulations until the Supreme Court instructed otherwise in 2011 in Mayo Foundation for Medical Education and Research v. United States. Since that time, tax law has only haltingly abandoned old thinking about judicial review of the Internal Revenue Service (IRS) and only tentatively embraced the new thinking.

This article addresses another area of insularity in tax: the extent to which statutory periods of limitation in the Tax Code are properly viewed as jurisdictional restrictions on the authority of the Tax Court. Starting in the mid-2000’s the Supreme Court began an enthusiastic campaign to distinguish between time limits that were jurisdictional and time limits that were not jurisdictional (which it sometimes calls “claims processing rules”). The Court has explained that it means to restrict the term “jurisdictional” to “the classes of cases (subject-matter jurisdiction) and the persons (personal jurisdiction) falling within a court's adjudicatory authority.”

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February 7, 2019 in Scholarship, Tax | Permalink | Comments (0)

Pennell: Basis Of Grantor Trust Assets Before The Grantor's Death

Jeffrey Pennell (Emory), Basis of Grantor Trust Assets Before the Grantor's Death:

The government’s Priority Guidance Plan includes an item whether §1014 new-basis-at-death should apply when the status of a grantor trust changes at the grantor’s death. The unstated assumption appears to be that assets transferred from a grantor to the grantor’s trust will have a carryover of the grantor’s basis prior to the grantor’s death. This essay addresses that notion, and whether a grantor’s transfer of assets into a grantor trust in what purports to be a sale or exchange transaction (that is, not a gift) causes the trust to instead have a basis equal to fair market value rather than a carryover basis.

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February 7, 2019 in Scholarship, Tax | Permalink | Comments (0)

Satterthwaite: Electing Into A Value-Added Tax — Evidence From Ontario Microentrepreneurs

Emily Satterthwaite (Toronto), Electing Into a Value-Added Tax: Evidence From Ontario Microentrepreneurs, 66 Canadian Tax J. 761 (2018):

Why would an entrepreneur elect, on behalf of her business, to comply with a tax that is not required? A little-studied provision embedded in the majority of value-added tax (VAT) statutes worldwide permits otherwise exempt "small suppliers" (typically defined as businesses with annual revenues below a specified registration threshold) to register voluntarily for, collect, and remit VAT on their sales to customers. Economic models of the input credit mechanism that refunds registered sellers for the VAT that they pay on inputs show that incentives to register voluntarily for VAT increase as small suppliers (1) purchase more of their inputs from registered firms (the input channel) or (2) sell more of their output to registered firms (the customer channel). Promoting such "formality chain effects" through voluntary registration can improve the efficiency and self-enforcing properties of a VAT. In the real world, however, many VAT registration thresholds are far lower than the level recommended by economists. Low VAT thresholds imply that only the smallest businesses, which often bear disproportionately high VAT compliance costs, are eligible to opt in. But the question of whether formality chain effects are relevant for the key taxpayer population in low-threshold settings — microentrepreneurs — is an open one.

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February 7, 2019 in Scholarship, Tax | Permalink | Comments (0)

Who Really Benefits From Consumption Tax Cuts?

Youssef Benzarti (UC-Berkeley) & Dorian Carloni (Congressional Budget Office), Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France, 11 Am. Econ. J.: Econ. Pol'y 38 (2019):

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four groups: workers, firm owners, consumers, and suppliers of material goods. Using a difference-in-differences strategy on firm-level data, we find that: firm owners pocketed more than 55 percent of the VAT cut; consumers, sellers of material goods, and employees shared the remaining windfall with consumers benefiting the least; and the employment effects were limited.

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February 7, 2019 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, February 6, 2019

Goldin Presents Sharp Lines And Sliding Scales In Tax Law Today At Toronto

Goldin (2017)Jacob Goldin (Stanford) presents Sharp Lines and Sliding Scales in Tax Law (with Edward Fox (Michigan)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The law is full of sharp lines, where small changes in one’s circumstances lead to significant changes in legal treatment. In many cases, a sharp line can be smoothed out by replacing it with a sliding scale. Under a sliding scale, small changes in one’s circumstances lead to small changes in legal treatment. In this paper, we study the policy choice between sharp lines and sliding scales in the tax law, focusing particularly on concerns related to efficiency, complexity, and administration. Sliding scales are common for tax provisions that depend on income, but relatively uncommon for provisions that depend on non-income factors. We argue that sliding scales merit more consideration than they typically receive, and set out several principles for choosing between the two designs.

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

Hackney Presents Section 501(C)(4) Social Welfare Organizations And Tax Exemption Today At UCLA

Hackney (2019)Philip Hackney (Pittsburgh) presents Dark Democracy? Section 501(C)(4) Social Welfare Organizations and Tax Exemption at UCLA today as part of its Colloquium on Tax Policy and Public Finance hosted by Jason Oh:

Karl Rove’s Crossroads GPS, The AARP, and the American Civil Liberties Union, Inc. all take advantage of the tax benefits of a “social welfare organization” as defined in Internal Revenue Code section 501(c)(4). Though often referred to as “dark money” organizations, because these ideologically active organizations need not publicly disclose their donors, many large health insurance organizations and homeowner’s associations use this tax-exempt structure as well. A social welfare organization must be “operated exclusively” for the “promotion of social welfare.” In 2016, more than 80,000 of these organizations were registered with the IRS, and as an aggregate they earned over $86 billion in revenue. Should we exempt these organizations from the corporate income tax?

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

Lederman & Dugan: Information Matters In Tax Enforcement

Leandra Lederman (Indiana) & Joseph Dugan, Information Matters in Tax Enforcement:

Most legal and economics scholars recognize both that the government needs information about taxpayers’ transactions in order to determine whether their reporting is honest, and that third-party reporting helps the government obtain that information. Given governments’ reliance on tax funds, it is risky to think that information or third-party reporting is not needed by tax agencies. However, a recent article [Taxation Without Information: The Institutional Foundations of Modern Tax Collection, 20 U. Pa. J. Bus. L. 93 (2018)] by Professor Wei Cui asserts that “modern governments can practice ‘taxation without information.’” Professor Cui’s argument rests on two premises: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he argues, some important taxes, such as the value added tax (VAT), do not involve information reporting; and (2) modern tax administration succeeds because business firms are “sites of social cooperation under the rule of law,” fostering compliance. As this Article explains, the literature demonstrates that both arguments are mistaken.

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February 6, 2019 in Scholarship, Tax | Permalink | Comments (0)

Pepperdine Seeks To Hire Visiting Professors For 2019-20

Pepperdine (2019)Pepperdine University School of Law is seeking to hire one or more visiting professors for the fall 2019 semester and/or the spring 2020 semester. Applications will be accepted and reviewed on a rolling basis depending on curricular needs. Possible areas of need include Civil Procedure, Contracts, Criminal Law, Property, Torts, Community Property, Copyright. Corporations, Evidence, Federal Income Tax, and Wills & Trusts.

The School of Law is an ABA accredited, AALS member law school located in Malibu, California. Pepperdine is a Christian university committed to the highest standards of academic excellence and Christian values, where students are strengthened for lives of purpose, service, and leadership.

The School of Law welcomes applications from people of all faiths and is particularly interested in receiving applications from candidates who may bring greater racial, ethnic, and gender diversity to the faculty.

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February 6, 2019 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

12% Of US Multinationals Fail To Comply With UK Tax Transparency Law

Tax Justice Network, One in Nine US Multinationals Fail to Comply With Tax Transparency Law:

Analysis of more than 600 US multinational corporations has revealed that 12 per cent failed to comply with UK law requiring them to publish their tax strategies. With the UK estimated to lose £25 billion in corporate tax revenue each year due to multinational corporations shifting profits out of the country, campaigners are calling on the UK government to enforce the law fairly and to also make use of a more rigorous transparency legal power that the government acquired in 2016 but has so far shied away from exercising.

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February 6, 2019 in Tax | Permalink | Comments (1)

Tuesday, February 5, 2019

Mason Presents Benchmarking Illegal Subsidies Today At Georgetown

Mason (2016)Ruth Mason (Virginia) presents Benchmarking Illegal Subsidies at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Lilian Faulhaber:

The United States vigorously contests the EU Commission’s recent decisions that U.S. multinationals received illegal tax subsidies from EU Member States, including its decision that Apple must pay a staggering $14.5 billion in back taxes to Ireland. The controversy involves the Commission’s departure from a traditional tax-expenditure approach to identifying subsidies.Under the traditional approach—employed in EU, U.S., and WTO law—a state confers a tax subsidy only when it deviates from its own regularly applicable tax law to relieve a company of taxes normally due. Because the recent EU cases involved “structural mismatches” that are not susceptible to reference-law benchmarking, however, the Commission advanced a radical normative approach , under which a state confers an illegal subsidy when it deviates from ideal tax rules to favor companies.

This Article argues that rather than turning to normative benchmarking, the Commission could have made structural mismatches tractable under a reference-law benchmark by borrowing the “internal consistency test,” an approach developed by the U.S. Supreme Court to analyze tax discrimination under the dormant Commerce Clause.

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

How I Learned To Love The Patriots (Again)

Boston GlobeFollowing up on Sunday's post, Death, Taxes, And The New England Patriots: New York Times op-ed: How I Learned to Love the Patriots (Again), by Russ Douthat:

I became a besotted baseball fan at the age of 6, watching the Boston Red Sox, my mother’s ancestral team, march to the World Series against the New York Mets. My parents woke me up near midnight on Oct. 25, 1986, to come downstairs with them and “watch the Red Sox win” — an eventuality that was, at that moment, just a single out away. It remained one out away through three singles, a devastating wild pitch and an incident that shall not be described involving one William Joseph Buckner. I wept, slept and awoke a gloomy pessimist, forever haunted by the fall of man.

I became a football fan around the same time, and I figured I should root for the Patriots as well, in New England solidarity. They had recently played (albeit embarrassingly badly) in a Super Bowl, so I was unaware of their long, distinguished legacy of lousy play. But by the time I turned 10 and they were working their way through a 1-15 season, with a 2-14 encore just around the corner, I understood a little better the implications of my choice.

This combination of Red Sox tragedy and Patriot futility defined my relationship to professional sports until adulthood, at which point (as you may have heard) absolutely everything changed for both teams and they became insufferably dominant. And my fandom, forged in suffering and melodrama and “wait ’till next year” rue, never quite recovered from my favorite teams’ success. ...

[T]rying to raise my children to be New England sports fans in an age of constant New England winning has given me real sympathy with the lukewarmly religious, the Christmas-and-Easter sort of believer who wants to impart some measure of piety to their children without really experiencing the flame of faith themselves. ...

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February 5, 2019 in Legal Education, Tax | Permalink | Comments (0)

How Much Accountants And Tax Preparers Earn In Every State

Forbes, Here's How Much Money Accountants and Tax Preparers Earn In Every State:

Using occupational data from the Bureau of Labor Statistics, we analyzed and put together a review of the average salary of accountants and tax preparers in each U.S. state for 2019. Check out the full breakdown below of where accountants and tax preparers take home the least money, and where they earn the most. ...

Here’s a breakdown of the top-10 states in which accountants and tax preparers earn the most, based on the BLS’s mean annual wage data:

State Accountants
New York $95,430
New Jersey $91,400
Virginia $84,740
California $83,540
Alaska $82,040
Connecticut $82,040
Texas $81,330
Maryland $80,930
Massachusetts $80,280
Illinois $80,050

State Tax Preparers
Colorado $73,740
Massachusetts $62,300
California $61,970
Pennsylvania $57,720
New York $54,470
Maryland $53,560
Minnesota $52,780
New Jersey $52,620
Texas $50,120
Ohio $49,860

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February 5, 2019 in Tax | Permalink | Comments (0)

Grewal: Congress Might Already Have Trump’s Taxes

Andy Grewal (Iowa), Congress Might Already Have Trump’s Taxes:

Since the control of the House switched earlier this month, Democrats have reiterated their desire to obtain President Trump’s tax returns. According to a recent Wall Street Journal article, Rep. Richard Neal, the chairman of the Ways & Means Committee, intends to request those returns from the IRS. My prior posts have examined some of the legal and political complications associated with any such request. (See here and here.) However, Congress might already have access to some of the President’s tax return information.

Under Section 6405(a) of the tax code, the IRS cannot pay a refund greater than $2 million to any individual unless it first provides a report to the Joint Committee on Taxation (JCT). That report must identify the taxpayer involved, the amount of the proposed refund, and a summary of the facts relating to his or her refund. In practice, this review provision acts as a veto provision – the IRS generally will not issue a refund without the JCT’s approval.

Given Trump’s apparent wealth and business activities, it would be hardly surprising if, at some point, he received a refund from the IRS that triggered the JCT refund review procedures. ... Congress thus likely has, or at least once had, some significant tax return information related to the President. ...

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February 5, 2019 in Tax | Permalink | Comments (0)

Temple Seeks To Hire Graduate Tax Program Director

TempleThe Temple Law School Graduate Tax Program seeks to hire a new Director:

The Director will have the title of "Director of the Graduate Tax Program and Practice Professor of Law" and will be responsible for overseeing all aspects of the program. The individual selected will:

  • Direct LL.M. program, including administration, student affairs, and faculty support
  • Oversee and conduct student recruitment, enrollment, and support, including through marketing, communications, and admissions events and projects
  • Design curriculum and recruit adjunct faculty
  • Oversee both live and online content of the program, which involves both day and evening coursework and certificate programs
  • Ensure program complies with ABA requirements
  • Manage and engage network of LL.M. alumni
  • Work with law school leadership and faculty to develop tax program opportunities, potentially including increasing online offerings, launching and managing a Masters in Taxation program for non-lawyers
  • Teach two tax courses annually

Applicants should have the following credentials, experience and skills:

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February 5, 2019 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Fogg Posts Two Tax Papers On SSRN

SSRN Logo (2018)Keith Fogg (Harvard) has posted two tax papers on SSRN:

Can the Taxpayer Bill of Rights Assist Your Clients?, 92 Temple L. Rev. ___ (2019):

Congress has added a Taxpayer Bill of Rights (TBOR) to the Internal Revenue Code following the administrative adoption by the IRS of the identical slate of rights. The question for taxpayers and practitioners with respect to TBOR concerns its impact, if any, in seeking a remedy for certain IRS behavior.

Practitioners have begun to argue for remedies based on the rights enumerated in TBOR. Facebook became one of the first taxpayers to seek to use TBOR to obtain a right that the IRS had otherwise denied. The Tax Court found that the remedy Facebook sought based on perceived rights in TBOR was not a remedy the court could provide. In the Facebook case the IRS followed the guidance set forth in a Revenue Procedure.

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February 5, 2019 in Scholarship, Tax | Permalink | Comments (0)

Monday, February 4, 2019

Oh Presents The Effects Of Capital Gains Rate Uncertainty On Realization Today At Pepperdine

OhJason Oh (UCLA) presents The Effects of Capital Gains Rate Uncertainty on Realization (with David Kamin (NYU)) at Pepperdine today as part of our Tax Policy Workshop Series hosted by Dorothy Brown and Paul Caron and funded in part by a generous gift from Scott Racine:

Taxpayers should expect capital gains rates to fluctuate in light of frequent historical changes and the current divergence of rates preferred by Democrats and Republicans. This paper is the first to model the effect of such rate uncertainty on the realization incentives of asset holders and finds those effects to be potentially large. There are several implications. First, rate uncertainty may alleviate the lock-in effect of the realization rule when rates are low and exacerbate lock-in when rates are high. Second, there could be significant inaccuracies extrapolating the elasticity of capital gains realizations measured at one rate to another. Third, some policy solutions aimed at addressing distortions created by the realization rule may not work as well as expected.

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

Kades: Of Piketty And Perpetuities — Dynastic Wealth In The 21st Century

Eric Kades (William & Mary), Of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond), 60 BC L. Rev. 145 (2019):

For the first time since independence, in a nation founded in large part on the rejection of a fixed nobility determined by birth and perpetuated by inheritance, America is paving the way for the creation of dynastic family wealth. Abolition of the Rule Against Perpetuities in over half the states along with sharp reductions in, and likely elimination of, the federal estate tax mean that there soon will be no obstacles to creating large pools of dynastic wealth insuring lavish incomes to heirs for generations without end. The timing of these legal changes could hardly be worse. Marshaling innovative economic data extending back centuries, Thomas Piketty has shown that the relatively egalitarian incomes enjoyed in developed economies from the end of World War II until around 1980 were an aberration and that we are in the process of returning to the historical norm of much greater income and wealth inequality. This Article shows, unhappily, that this revival of unending inherited wealth is of even greater concern than previously thought.

Kades 1

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February 4, 2019 in Scholarship, Tax | Permalink | Comments (1)

How To Design Carbon Dividends

Donald Marron & Elaine Maag (Urban Institute), How to Design Carbon Dividends:

A robust carbon tax would generate considerable revenue. Some carbon tax advocates have suggested returning those revenues to Americans through direct payments, often called carbon dividends. We examine how to design these dividends considering two, sometimes conflicting, principles. Carbon dividends can be viewed as shared income from a communal property right, much as Alaskans share in income from the state’s oil resources. Dividends can also be viewed as rebating the carbon tax back to consumers. These views often have different implications for designing carbon dividends. Political and practical considerations are also important.

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February 4, 2019 in Scholarship, Tax | Permalink | Comments (0)

Lesson From The Tax Court: The Pain of Disappointment

SabanThere are two pains in life. There is the pain of discipline and the pain of disappointment. If you can handle the pain of discipline, then you’ll never have to deal with the pain of disappointment.
Nick Saban

Nick Saban may be a great coach, but that aphorism is unhelpful in its opaqueness. Perhaps he means that if you are disciplined enough, or prepared enough, no type of disappointment can hurt you because you will have done your best. If that’s his idea, litigators likely disagree. The pain of disappointment permeates any litigator’s professional life. Even the most disciplined litigators have to deal with the disappointment of adverse fact finding by a judge or jury. 

Last week it was government litigators’ turn to feel the pain of disappointment, in the case of 2590 Associates v. Commissioner, T.C. Memo. 2019-3 (Jan. 31, 2019). The case teaches a substantive lesson about the §166 bad debt deduction and a procedural lesson about the power of fact-finders, here Judge Goeke. It's a fun case to follow a Super Bowl Sunday because it tangentially involves Nick Saben. The mainstream press erroneously types it as Nick Saban's win over the IRS. That is wrong.  Saban was neither a party to the litigation nor did its outcome affect his taxes. He had already taken his winnings long before the litigation even commenced. Details and lessons below the fold.

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February 4, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure | Permalink | Comments (2)

UC-Irvine Conference: Tax Reform — One Year Later

UC Irvine Logo (2019)The UC-Irvine Graduate Tax Program hosts its first annual tax conference on Tax Reform: One Year Later on Monday, February 11.  The keynote speaker is Mark Prater (Managing Director, Tax Policy Services, PriceWaterhouseCoopers (Washington, D.C.)).

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February 4, 2019 in Conferences, Scholarship, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, February 3, 2019

Death, Taxes, And The New England Patriots

PatriotsMockingbird, Death, Taxes, and the New England Patriots:

In 2 Corinthians 3:7-11, Paul writes about two “ministries.” Here’s what he says:

Now if the ministry of death, carved in letters on stone, came with such glory that the Israelites could not gaze at Moses’ face because of its glory, which was being brought to an end, will not the ministry of the Spirit have even more glory? For if there was glory in the ministry of condemnation, the ministry of righteousness must far exceed it in glory. Indeed, in this case, what once had glory has come to have no glory at all, because of the glory that surpasses it. For if what was being brought to an end came with glory, much more will what is permanent have glory”

The New England Patriots are a ministry of death. Their greatness is carved in letters on stone. They are so glorious that mere mortals cannot look them full in the face. Tom Brady wears Ugg boots in public and barely takes any heat for it. The Patriots are unassailable. I do not rend my garments and I do not gnash my teeth for a simple reason: I am already dead.

The42, Death, Taxes, and the New England Patriots:

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February 3, 2019 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0)

Nick Saban Beats The IRS In Tax Court

SabanFollowing up on my previous post, Will Nick Saban Sack The IRS In Tax Court?:  Wall Street Journal, Nick Saban Wins Again in Baton Rouge—Over the IRS:

Alabama football coach Nick Saban racked up a win this month after all, prevailing over the Internal Revenue Service in court.

Mr. Saban, whose Crimson Tide lost the national championship game Jan. 7, will get to claim a bad-debt deduction that the government tried to deny, the U.S. Tax Court ruled on Thursday [2590 Associates v. Commissioner, T.C. Memo. 2019-3 (Jan. 31, 2019)].

The deduction stems from a real-estate investment Mr. Saban made in Baton Rouge, La., through a property developer he met when he was head coach at Louisiana State University.

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February 3, 2019 in New Cases, Tax | Permalink | Comments (1)

The Top Five New Tax Papers

SSRN Logo (2018)This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [504 Downloads]  Spiritus Ex Machina: Addressing the Unique BEPS Issues of Autonomous Artificial Intelligence by Using 'Personality' and 'Residence', by Lucas de Lima Carvalho (University of Sao Paulo)
  2. [403 Downloads]  How Data Should (Not) Be Taxed, by Johannes Becker (University of Muenster), Joachim Englisch (University of Muenster) & Deborah Schanz (Ludwig Maximilian University of Munich)
  3. [376 Downloads]  Ten Reasons to Prefer Tax Partnerships Over S-Corporations, by Bradley Borden (Brooklyn)
  4. [305 Downloads]  The Impact of Soda Taxes: Pass-through, Tax Avoidance, and Nutritional Effects, by Stephen Seiler (Stanford), Anna Tuchman (Northwestern) & Song Yao (Minnesota)
  5. [281 Downloads]  The Proposed Section 163(j) Regulations, by David Miller, Sejin Park, Mani Kakkar & Sean Webb (Proskauer)

February 3, 2019 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, February 2, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Estate Planning For Your Dog

Gerry W. Beyer (Texas Tech) & Barry Seltzer, Don't Forget About Pets When Planning for Disability and Death, 42:3 Generations 109 (2018):

Dogs, cats, parrots, and other pet animals play significant roles in the lives of many individuals. The bond between a pet owner and his or her companion is strong, and recent studies show that this bond can be even deeper with older owners. Accordingly, it is of vital importance to include pets when a pet owner, especially an older one, makes plans for disability and death. This article provides an overview of the techniques a pet owner should consider when planning his or her estate.

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February 2, 2019 in Scholarship, Tax | Permalink | Comments (3)

Oxfam: World's 26 Richest People Own As Much As The Poorest 50% (3.8 Billion People)

Oxfam

Oxfam, Public Good or Private Wealth?:

Our economy is broken, with hundreds of millions of people living in extreme poverty while huge rewards go to those at the very top.

The number of billionaires has doubled since the financial crisis and their fortunes grow by $2.5bn a day, yet the super-rich and corporations are paying lower rates of tax than they have in decades. The human costs – children without teachers, clinics without medicines – are huge. Piecemeal private services punish poor people and privilege elites. Women suffer the most, and are left to fill the gaps in public services with many hours of unpaid care.

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February 2, 2019 in Tax | Permalink | Comments (2)

Friday, February 1, 2019

Weekly SSRN Tax Article Review And Roundup: Wallace Reviews Aprill's Enterprise Zones

This This week, Clint Wallace (South Carolina) reviews an old work (newly posted to SSRN) by Ellen Aprill (Loyola-L.A.), Caution: Enterprise Zones (66 S. Cal. L. Rev. 1341 (1993).

Wallace (2019)Twenty five years ago we stood at the dawn of the age of “targeted tax cuts.” President Clinton introduced that terminology to the political lexicon, and his administration added all variety of politically appealing tax breaks to the Code, seeking to expand access to college, help make healthcare more affordable, and promote home ownership, among other goals. One version of political-rally-friendly tax policy that the Clinton administration promoted with particular enthusiasm was geographically targeted tax breaks.  In 1993, Prof. Aprill published an article (new to SSRN this week) critiquing and offering guidance on how to effectively design this kind of tax incentive.

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February 1, 2019 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Toder Presents Distributional Effects Of Individual Income Tax Expenditures After The 2017 Tax Act Today At Boston College

Toder (2017)Eric Toder (Tax Policy Center) presents Distributional Effects of Individual Income Tax Expenditures After the 2017 Tax Cuts and Jobs Act (with Daniel Berger (Tax Policy Center)) at Boston College today as part of its Tax Policy Workshop Series hosted by Shu-Yi Oei, Jim Repetti, and Diane Ring:

After taking account of interactions among provisions, non-business tax expenditures will reduce tax liability by $1.2 trillion in 2019, about 5 percent more than the sum of the costs of the separate provisions. Tax expenditures, on average, reduce taxes as a share of income more for upper-income than for lower-income taxpayers. The Tax Cuts and Jobs Act (TJCA) of 2017 reduced and eliminated some tax expenditures, increased others, and introduced a new preference for business income of individual taxpayers. Changes in tax rates and the standard deduction also reduced tax expenditures.

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February 1, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Simkovic: Billionaire Taxes

Simkovic (2018)TaxProf Blog op-ed:  Billionaire Taxes, by Michael Simkovic (USC):

Alternatives to Elizabeth Warren’s ultra-high net-worth wealth tax are riddled with loopholes

Senator Elizabeth Warren recently proposed an ultra-high net-worth wealth tax that would raise hundreds of billions in revenue per year while taking no money from 99.9% of U.S. households. Warren would annually tax household fortunes above $50 million at 2 percent of their value, and fortunes above $1 billion at 3 percent. 99.5% of U.S. households have net worth’s below $16.5 million according to the Survey of Consumer Finance. Even highly successful, hard-working, and well-educated people are extremely unlikely to pay a dime because of this proposed tax.

You do not have to favor government spending to support a high-net-worth tax. While Warren envisions using the revenue to fund public investment programs to support the middle class, tax revenue could instead be used to fund tax relief for middle class and poor Americans. The middle class and the working poor and their employers pay payroll taxes—literally a tax on wages—which collectively exceed 15% of wages below $133,000 per year. This tax wedge drives up the cost of U.S. labor for employers and drives down take-home pay for workers.

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February 1, 2019 in Scholarship, Tax | Permalink | Comments (1)

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February 1, 2019 in ABA Tax Section, Legal Education, Tax | Permalink | Comments (0)

Hemel: Elizabeth Warren’s Wealth Tax On The Super-Rich Is The Wrong Solution To The Right Problem

Time (2014)Time:  Elizabeth Warren’s Wealth Tax on the Super-Rich Is the Wrong Solution to the Right Problem, by Daniel Hemel (Chicago):

Senator Elizabeth Warren’s proposal for a 2% annual wealth tax on households with a net worth of $50 million or more has drawn praise from progressives who view it as a necessary response to rising economic inequality and jeers from conservatives who see it as confiscatory and unconstitutional. But commentators on both ends of the ideological spectrum seem to agree on one thing: Warren’s idea is “radical.”

In fact, a 2% annual wealth tax isn’t all that dissimilar — at least in theory — to something more familiar and less controversial: an income tax. The major differences are administrative and legal. A wealth tax is more difficult to enforce, and it’s more likely to be struck down by the courts. All of which raises the question: Why did Warren, the senior Democratic senator from Massachusetts and now a candidate for her party’s 2020 presidential nod, propose a new wealth tax rather than an improved income tax that would accomplish much the same result?

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February 1, 2019 in Tax | Permalink | Comments (2)

Georgetown/International Tax Policy Forum Conference: Who Should Tax International Income?

GITEPThe Georgetown Law School Institute of International Economic Law (IIEL) and the International Tax Policy Forum (ITPF) host a conference today on Who Should Tax International Income? (program):

Panel #1: Recent Efforts to Assert Taxing Right

  • James R. Hines, Jr. (Michigan) (moderator)
  • William Morris (PwC)

Panel #2: Expanding Source, Destination, and User Taxation

  • Mihir Desai (Harvard) (moderator)
  • Michael Devereux (Oxford)
  • Lilian Faulhaber (Georgetown)
  • Ruud de Mooij (IMF)

Panel #3: Strengthening Residence-Basis Taxation

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February 1, 2019 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Taxes And U.S. Oil Production

Nirupama L. Rao (Michigan), Taxes and U.S. Oil Production: Evidence from California and the Windfall Profit Tax, 10 Am. Econ. J.: Econ. Pol'y 268 (2018):

The recent boom in U.S. oil production has prompted debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affected production. After-tax price elasticity estimates range between 0.295 (0.038) and 0.371 (0.025). Response along the shut-in margin is minimal. There is no evidence of spatial shifting of production to minimize tax liabilities. Taken together the results suggest that taxes reduced domestic production in the 1980s, and the response largely came from wells that continued to pump oil, but at a reduced rate.

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February 1, 2019 in Scholarship, Tax | Permalink | Comments (0)

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February 1, 2019 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

Thursday, January 31, 2019

Thomas Presents The Modern Case For Withholding Today At Duke

Thomas (2017)Kathleen Delaney Thomas (North Carolina) presents The Modern Case for Withholding at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Who is responsible for paying taxes to the government? Currently, the answer depends on one’s employment status. Employees enjoy the luxury of not having to think about tax remittance during the year because their employers withhold taxes from their paychecks. Non-employees, on the other hand, face a much more onerous system. They must keep track of and budget for taxes during the year, make quarterly remittances to the IRS, and may face penalties for failing to do so. Although this regime has been in place for many decades, there are several reasons why reform may be in order.

First, the rise of the Internet and other advances in technology have made withholding taxes by third parties more efficient and less costly than was historically the case. Second, advances in the social sciences have shed new light on why many taxpayers appear to prefer withholding and why it may serve to enhance overall welfare. Finally, the independent contractor workforce is expanding, propelled in large part by the growth of the gig economy. This means an increasing number of taxpayers are earning income outside of employment that is not captured by withholding, which imposes social costs and facilitates tax evasion.

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

Batchelder Presents Optimal Tax Theory As A Theory Of Distributive Justice Today At Indiana

Lily Batchelder (NYU) presents Optimal Tax Theory as a Theory of Distributive Justice at Indiana today as part of its Tax Policy Colloquium Series hosted by David Gamage.

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

U.S. v. Davis And Prof. Cain’s Rewritten Opinion: An Intersectional Argument For Capping Section 1041

Diane Klein (La Verne), U.S. v. Davis and Prof. Cain’s Rewritten Opinion: An Intersectional Argument for Capping Section 1041:

Tax cases are about rich people. Given the demographic distribution of income and wealth in the United States, that means tax cases are mostly about rich White people. The tax issue in Davis can be stated simply: when shall transfers of appreciated assets incident to divorce be taxed? But thinking about these rules only from the point of view of the taxpayers themselves, and what is “fair” inter se or as compared to others similarly situated, may distract us from seeing broader issues also properly considered in tax policy. When we take into account not just sex/gender and marital status, but also race and class, the focus on one sort of inequality (between divorcing couples in different states) obscures another that is larger and more far-reaching (race-based wealth inequality). To address this, I suggest an amendment to Section 1041, a limit on tax-free transfers of appreciated assets incident to divorce. 

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January 31, 2019 in Scholarship, Tax | Permalink | Comments (2)

Cranor & Goldin: Does Informing Employees About Tax Benefits Increase Take-Up?

Taylor Cranor (J.D. 2022, Yale) & Jacob Goldin (Stanford), Does Informing Employees About Tax Benefits Increase Take-Up?: Evidence From EITC Notification Laws:

Incomplete take-up of the Earned Income Tax Credit (EITC) is a source of persistent policy concern, with an estimated one-fifth of eligible households failing to claim the credit. To promote take-up, a growing number of jurisdictions require employers to provide EITC information to employees. We study the effect of these requirements, linking state and time variation in the adoption of the notification laws to administrative tax data.

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January 31, 2019 in Scholarship, Tax | Permalink | Comments (0)

Tax Law's Effects On Colleges Unfolding

Inside Higher Ed, Tax Law's Effects on Colleges Unfolding:

When President Trump at the end of 2017 signed a Republican-backed tax-reform package into law that included significant changes for colleges and universities, higher ed leaders were left waiting for answers.

They wondered about rules for calculating a new tax on endowments. They sought guidance regarding a tax on parking and transportation benefits for employees. Questions circulated about a new tax on highly compensated nonprofit employees that had drawn criticism while the tax law was still being drafted.

And leaders also wondered about the tax law’s effects on human behavior. For instance, how would an increase in the standard deduction affect donor behavior? Would alumni newly covered by the larger standard deduction be less likely to give to colleges and universities because they wouldn’t be itemizing their taxes?

About a year later, some answers have become clearer, while others remain clear as mud -- and still others can be addressed by mucking around with pages of guidance from the Internal Revenue Service.

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January 31, 2019 in Tax | Permalink | Comments (0)

Wednesday, January 30, 2019

A Better Way To Tax The Rich (Raise Capital Gains Rate, Treat Investment Earnings Like Ordinary Income)

New York Times op-ed:  A Better Way to Tax the Rich, by Steven Rattner:

Kudos to our latest political supernova, Alexandria Ocasio-Cortez, for helpfully bringing taxes back into focus, with her call for a new top tax rate of 70 percent on incomes above $10 million a year.

That seemingly simple concept makes for a great headline, but it’s not great tax policy. While I’m all for raising taxes on the wealthy (in large part because we need to deal with our growing deficit), there are more sensible ways to do it. ...

There are other, better ways to raise revenue — in particular, by increasing the tax rate on capital gains and dividends and closing loopholes.

NYT 2

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January 30, 2019 in Tax | Permalink | Comments (2)

Pac-12 May Sell Off 10% Stake For $500 Million Cash Infusion To Close Money Gap With SEC, Big Ten

Inside Higher Ed, For Sale: Renowned Sports League?:

In the last year, the Pacific-12 Conference — one of the country's best-known sports brands, whose members have won more national championships than any other league — has continued its multiyear decline.

Its member universities have had a lackluster showing in the most lucrative college sports, football and men’s basketball. And Pac-12 presidents and athletics leaders have complained about not keeping financial pace with the conference’s peers like the Big Ten and Southeastern Conferences, which are sharing significantly more revenue with their institutions.

That gap has apparently led to an unprecedented proposal: consolidating some of Pac-12’s assets and then selling a piece of that new entity to private investors.

Industry experts question whether the plan, which was first reported by The Oregonian, could succeed given the complexity in managing both a nonprofit (the conference) and a separate for-profit entity.

Pac-12 Newco

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January 30, 2019 in Tax | Permalink | Comments (2)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  This ranking includes downloads from two 30- and 35-page papers by 12 tax professors on the new tax legislation that garnered a lot of media attention (including the New York Times and Washington Post) and generated a massive amount of downloads (the papers are the most downloaded papers over the past 12 months across all of SSRN and the most downloaded tax papers of all-time by over 200%).  See Brian Leiter (Chicago), 11 Tax Profs Blow Up The SSRN Download Rankings. (For some reason, Mitchell Kane (NYU) — the twelfth academic co-author of the two papers — is not included in the SSRN download rankings (although the downloads are included on his individual author page)).  Here is the new list (through December 30, 2018) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

181,138

Reuven Avi-Yonah (Mich.)

38,425

2

Dan Shaviro (NYU)

116,407

Daniel Hemel (Chicago)

36,224

3

David Gamage (Indiana)

112,061

David Gamage (Indiana)

31,785

4

Lily Batchelder (NYU)

109,917

Darien Shanske (UC-Davis) 

31,572

5

Daniel Hemel (Chicago)

109,616

Manoj Viswanathan (Hastings)

30,983

6

Darien Shanske (UC-Davis)

106,140

Dan Shaviro (NYU)

30,969

7

Cliff Fleming (BYU)

101,597

Lily Batchelder (NYU)

28,620

8

Manoj Viswanathan (Hastings)

98,469

David Kamin (NYU)

28,593

9

David Kamin (NYU)

98,444

Ari Glogower (Ohio State)

28,333

10

Rebecca Kysar (Fordham)

97,750

Cliff Fleming (BYU)

28,326

11

Ari Glogower (Ohio State)

95,987

Rebecca Kysar (Fordham) 

28,159

12

Michael Simkovic (USC)

41,885

Jacob Goldin (Stanford)   3,979

13

D. Dharmapala (Chicago)

35,883

Joe Bankman (Stanford)

3,520

14

Paul Caron (Pepperdine)

34,923

Richard Ainsworth (BU)

3,494

15

Louis Kaplow (Harvard)

30,698

Michael Simkovic (USC)

3,487

16

Richard Ainsworth (BU)

26,407

Kirk Stark (UCLA)

3,401

17

Ed Kleinbard (USC)

25,369

Dennis Ventry (UC-Davis)

3,120

18

Vic Fleischer (UC-Irvine)

25,151

D. Dharmapala (Chicago)

3,027

19

Jim Hines (Michigan)

24,115

Ruth Mason (Virginia) 

2,680

20

Gladriel Shobe (BYU)

23,803

Sam Donaldson (Georgia St.)

2,534

21

Richard Kaplan (Illinois)

23,213

Brad Borden (Brooklyn)

2,498

22

Ted Seto (Loyola-L.A.)

23,067

Kyle Rozema (Chicago)

2,267

23

Katie Pratt (Loyola-L.A.)

21,625

Hugh Ault (Boston College) 

2,065

24

Robert Sitkoff (Harvard)

21,512

Shu-Yi Oei (Boston College)

2,045

25

David Weisbach (Chicago)

20,663

Margaret Ryznar (Indiana-Indy)

1,870

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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January 30, 2019 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Homeownership Tax Subsidies And Structural Racism

Victoria J. Haneman (Creighton), Contemplating Homeownership Tax Subsidies and Structural Racism, 54 Wake Forest L. Rev. ___ (2019):

An insidious form of racism is facilitated by those who are heedless of structural inequities — or in this instance, the fact that legal structures have been developed to protect the experiences of those who are white, with an underlying obliviousness to the fact that persons of color may have a different experience. Almost 80% of the United States’ four centuries of existence has involved racialized slavery and extreme racial segregation. The subject of structural discrimination should be almost noncontroversial by this point: established social and political structures have been built upon a foundation of racial inequality, inherently conferring power and privilege to some, while perpetuating the marginalization of others. A system that treats equally those who are positioned unequally will only serve to exacerbate the pre-existing inequalities.

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January 30, 2019 in Scholarship, Tax | Permalink | Comments (0)