Paul L. Caron
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Sunday, June 28, 2020

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:

  1. SSRN Logo (2018)[335 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  2. [293 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)
  3. [268 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  4. [196 Downloads]  The Troubling Case of the Unlimited Pass-Through Deduction, by Clint Wallace (South Carolina)
  5. [156 Downloads]  Coronavirus, Telecommuting, and the 'Employer Convenience' Rule, by Edward Zelinsky (Cardozo) (reviewed by Young Ran (Christine) Kim (Utah) here)

June 28, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 27, 2020

This Week's Ten Most Popular TaxProf Blog Posts

GAO: IRS Sent $1.4 Billion In Stimulus Funds To Dead People

Wall Street Journal, IRS Paid $1.4 Billion in Stimulus Payments to Dead People, GAO Report Says:

GAO (2016)The Internal Revenue Service paid nearly $1.4 billion in stimulus checks to dead people, according to a Government Accountability Office report that provides the first tally of such payments.

Citing data from the tax agency’s inspector general through April 30, GAO said Thursday that the IRS made almost 1.1 million such payments before Treasury Department officials determined that deceased people were ineligible and began asking recipients to return the money.

New York Times, $1.4 Billion in Stimulus Funds Sent to Dead People, Watchdog Finds

Michael J. Graetz, a Columbia University law professor and former deputy assistant secretary for tax policy at the Treasury Department, said government money improperly going to the dead is a continuing problem when it comes to tax refunds and Social Security payments. In fact, improper payments for a broad range of expenses have been a long-term problem for the federal government. The G.A.O. reported that from 2003 to 2017, estimates of improper payment totaled about $1.4 trillion cumulatively.

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June 27, 2020 in IRS News, Tax, Tax News | Permalink | Comments (2)

Friday, June 26, 2020

Kleiman Reviews Hasen's Section 338 And The Step Transaction Doctrine

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by David Hasen (Florida), Section 338 and the Step Transaction Doctrine, 73 Tax Law. ___  (2020).

StevensonDavid Hasen’s recent article on Code § 338 – which governs taxable acquisitions – displays the kind of dizzyingly intricate logical reasoning that attracts many curious law students to tax law. Marshalling legislative history, Congressional intent, and administrative rulings, Hasen makes a compelling case for how § 338 should be applied, and also shows that current regulations under § 338(h)(10) exceed the statute’s boundaries. In doing so, the article offers the sort of elegant doctrinal analysis that lawyers and law students dream of, but rarely get to craft in practice.

Because the article discusses Code § 338, it must start with the Kimball-Diamond (K-D) case, which Hasen dutifully recounts. To refresh the reader’s memory, in K-D the taxpayer bought all the stock of Whaley and then liquidated the resulting subsidiary under a predetermined plan. Because K-D always intended to hold Whaley’s assets directly, the court applied the step-transaction doctrine to collapse the two steps together into one asset purchase. As a result, K-D took the lower cost basis in the assets.

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June 26, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Free Webinar Today On #BlackTaxpayersMatter

BlackTaxpayersMatterABA, #BlackTaxpayersMatter – COVID-19 and Communities of Color: CARES Act Failures & Constitutional Litigation (today at 3:00 ET/noon PT) (registration):

Families of color are disproportionately facing greater challenges from COVID-19. These families are not only more likely to contract and die from the disease, but they are more likely to have family members who have lost jobs, work hours or work-related income. Recent data indicate that 57 percent of Latinx households and 41 percent of Black households have suffered these hardships as compared to only 38 percent of white households. As a result of these and other COVID-19 issues, more than 45 percent of Black and Latinx families reported they have suffered a financial hardship in the last month. This is almost twice the rate of hardship reported by white households who are more likely to have liquid savings, assets and credit to draw upon than their neighbors of color. There are many aspects of economic injustice including racial discrimination that have brought us to this place in history. Given the national uprising against racial violence, which itself has links to economic injustice, there is no more urgent time than now to ask what can we do to change racial economic injustice? Tax systems can deliver justice when properly structured. Our expert panel will propose structural remedies that the CARES Act has not delivered. Notably, tax and constitutional law scholars will discuss pending federal litigation regarding the denial of Economic Impact Payments for families of mixed immigration status.

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June 26, 2020 in Tax | Permalink | Comments (3)

Batchelder: Tax The Rich And Their Heirs

New York Times op-ed:  Tax the Rich and Their Heirs, by Lily Batchelder (NYU):

A massive transfer of wealth is underway and will accelerate in the coming years. Baby boomers and the generation that preceded them currently own $84 trillion, or 81 percent of all U.S. household wealth — wealth that will before long be inherited by their children and other beneficiaries.

This extraordinary transfer of resources will further cement the economic inequality that plagues the United States because this wealth is tightly concentrated in the hands of a few. And it will be passed on as taxes on such transfers are at historic lows.

Among high-income countries, the United States has one of the lowest levels of intergenerational economic mobility, meaning a child’s economic future is heavily influenced by his or her parents’ income. We have the second-highest level of income inequality after taxes and government transfers, and the highest level of wealth inequality. These disparities are sharply skewed by race. Median black household wealth is only 9 percent that of white households, a racial wealth gap that is even larger than in 1968New research suggests the pandemic will further increase wealth inequality, as the affluent save more and the poor earn less.

Effectively addressing these systemic inequalities will require many things. But increasing the taxation of inheritances is one vital component. ...

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June 26, 2020 in Tax, Tax News | Permalink | Comments (6)

Thursday, June 25, 2020

Turksen Presents Human Factors In Tax Compliance And Tax Crimes Today At The Indiana/Leeds Summer Zoom Tax Workshop Series

DownloadUmut Turksen (Coventry) presents The Role of Human Factors in Tax Compliance and Countering Tax Crime today as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

The term ‘human factors’ covers extra-legal, social, psychological, institutional and organisational aspects affecting the behaviour of tax payers and the enforcement of tax laws, including the fight against tax crime by competent authorities. While legal analysis can proceed along abstract criteria, considering consistency, coherence, clarity of legal regulations, research on human factors has to look at empirical evidence of real-world behavior of citizens as tax payers. When investigating tax crimes, the problem is, that no reliable data exist about tax evasion, tax fraud or asset recovery from such crimes. Most research on tax payers’ behavior uses models of individuals as utility-maximising rational actor as developed in economic theory. Hypotheses derived from these models are then either tested in psychological experiments or used to interpret whatever evidence about tax compliance and tax evasion are available. Two principal approaches can be distinguished in research on tax evasion and compliance focusing on deterrence and motivation respectively.

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June 25, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

Dharmapala: Do Multinational Firms Use Tax Havens To The Detriment Of Other Countries?

Dhammika Dharmapala (Chicago), Do Multinational Firms Use Tax Havens to the Detriment of Other Countries?:

The use of tax havens by multinational corporations (MNCs) has attracted increasing attention and scrutiny in recent years. This paper provides an exposition of the academic literature on this topic. It begins with an overview of the basic facts regarding MNCs’ use of havens, which are consistent with the location of holding companies, intellectual property, and financial activities in havens. However, there is also evidence of significant frictions that limit MNCs’ use of havens. These limits can be attributed to non-tax frictions (such as the legal and business environment in different jurisdictions), to tax law provisions limiting profit shifting, and to the costs of tax planning. There is evidence consistent with the relevance of each of these channels.

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

Wednesday, June 24, 2020

U.S. Parents, Non-U.S. Parents, And Global Firm Taxes

Eric Allen (USC) & Susan Morse (Texas), Does Parenting Matter? U.S. Parents, Non-U.S. Parents, and Global Firm Taxes, 4 J. L., Fin. & Accounting 239 (2019):

In this paper we examine whether, under pre-2018 tax law, a global firm reported a lower income tax expense simply because its publicly traded parent was incorporated outside the United States. Our study considers loss years as well as profit years and isolates the effect of the incorporation location of the parent by considering only U.S. and non-U.S. multi-national companies (MNCs) with a significant U.S. presence. We find that, in profit years, U.S. firms show an effective tax rate that is greater by 5 percentage points compared to non-U.S. firms. Conversely, in loss years, which make up approximately 30% of our sample, U.S. firms have better tax results, which can be expressed as an effective tax rate advantage of 4 percentage points among firms that do not record a valuation allowance. Our study demonstrates that the relative tax cost of organizing as a U.S. firm is smaller than some have suggested, and reinforces the importance of considering loss year results when evaluating tax policies. The results also suggest that the reduction in the U.S. corporate income tax rate under the 2017 Tax Cuts and Jobs Act, or TCJA, will provide smaller benefits to U.S.-parented corporations when loss years are also considered.

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

The Effect Of The 2017 U.S. Tax Reform On U.S. Acquisitions Of Foreign Firms

Harald Amberger (Vienna University) & Leslie A. Robinson (Dartmouth), The Effect of the 2017 U.S. Tax Reform on U.S. Acquisitions of Foreign Firms:

The Tax Cuts and Jobs Act (TCJA) of 2017 is the most significant tax reform that the U.S. has experienced in decades, thereby changing incentives for many significant corporate investment decisions. We emphasize the key tax reform provisions altering incentives for outbound investment and examine changing patterns in outbound acquisitions of U.S. firms before and after the TCJA. We find a decreased probability that a foreign target is acquired by a U.S. firm after the TCJA, particularly those that hold IP or are located in low-tax or low-growth markets. We also find a decreased probability that a U.S. firm with untaxed foreign earnings closes a foreign M&A deal after the TCJA, but an increased probability if the firm had no significant foreign presence prior to the TCJA. Taken together our results suggest that the TCJA was largely effective in reducing tax distortions to outbound M&A activity.

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

An Empirical Assessment Of The Effects Of Taxation On Growth

Marco Alfò (Università degli Studi La Sapienza), Lorenzo Carbonari & Giovanni Trovato (Università di Roma Tor Vergata), On the Effects of Taxation on Growth: An Empirical Assessment:

Growth models predict that taxation may have permanent effects on per capita real GDP growth. We look at, and test this prediction for 21 OECD countries, over the period 1965-2010. We employ a semi-parametric technique - namely, a Finite Mixture model - to estimate an augmented version of the Barro (1990) model, in order to consider both direct and indirect effects of taxation on capital share parameters. The estimation technique allows to deal with unobserved heterogeneity and to perform a cluster analysis. Our results support the idea that taxes are generally harmful for growth. The coefficient estimates indicate that a cut in the corporate income tax rate by 10 % raises the GDP growth rate by 0.9% while a cut in the personal income tax rate by 10% raises the GDP growth rate by 1%.

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June 24, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Tuesday, June 23, 2020

Cockfield, Hellerstein & Lamensch: Taxing Global Digital Commerce

Arthur Cockfield (Queen's University), Walter Hellerstein (University of Georgia) & Marie Lamensch (Institute for European Studies), Taxing Global Digital Commerce (2020):

Taxing GlobalThis latest edition of the preeminent text on the taxation of cross-border digital commerce transactions — formerly titled Electronic Commerce and International Taxation (1999), Electronic Commerce and Multijurisdictional Taxation (2001) — revises, updates, and expands the book’s coverage. It includes a detailed and up-to-date analysis of digital VAT and global income tax developments, and explores the implications of digital commerce for the US state and local sales and use tax regime in the wake of the US Supreme Court decision in South Dakota v. Wayfair, Inc. (2018). Analysing the practical tax consequences of digital commerce from a multijurisdictional perspective and using examples to illustrate the application of different taxes to digital commerce transactions, the book offers in-depth treatment of such topics as: (a) the OECD and G20’s digital tax reforms under the Base Erosion and Profit Shifting project; (b) the new or proposed equalization levies, digital services taxes, minimum taxes and other approaches some countries are adopting to level the tax playing field; (c) how technology enhances cross-border tax information exchanges; (d) how technology change is driving global income tax reforms surrounding nexus and profit attribution; (e) US state and local sales and use tax issues raised by cloud computing; and (e) trends toward collecting VAT from online platforms that facilitate international digital commerce, including cross-border trade in low-value goods and peer-to-peer supplies in the ‘sharing’ economy.

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June 23, 2020 in Book Club, Tax, Tax Scholarship | Permalink | Comments (0)

Shanske & Gamage: How To Interpret Public Law 86-272

Darien Shanske (UC-Davis) & David Gamage (Indiana), The Ordinary Diet of the Law: How to Interpret Public Law 86-272, 96 Tax Notes State 161 (Apr. 13, 2020):

This essay argues against expansive interpretations of Public Law 86-272 (the primary federal statute limiting state income taxation of out-of-state businesses). Specifically, this essay argues against interpretations of Public Law 86-272 that would broaden its coverage to protect business practices that differ from the practices that Congress specifically intended to protect at the time of the statute’s enactment.

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June 23, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, June 22, 2020

Buchanan Reviews Haneman's Tax Incentives For Green Burial

Jotwell (Tax) (2016)Neil Buchanan (Florida), The Bereaved Should Not Be Preyed Upon: Can The Tax System Help? (reviewing Victoria Haneman (Creighton), Tax Incentives for Green Burial, 20 Nev. L.J. ___ (2020)):

Dealing with the death of a loved one is one of the most stressful and debilitating experiences in most people’s lives. As Victoria J. Haneman summarizes some key empirical insights:

After a major loss, such as the death of a spouse or child, a third of survivors will suffer detrimental physical or mental health issues. One-quarter of surviving spouses will suffer clinical depression or anxiety within the first year of loss. Grief is frequently accompanied by weight loss, anxiety, despair, hypnagogic hallucinations, temporarily impaired immune response, disorganization, and/or disorientation. (P. 41.)

Setting aside the emotional turmoil, how do Americans deal with the practical side of these inevitable events? Not well at all. ...

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June 22, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Supreme Court Denies Certiorari In Altera

The U.S. Supreme Court today denied certiorari in Alterna Corp. & Subsidiaries v. Commissioner, No. 19-1009 (June 22, 2020), despite "the glut of high-powered amicus briefs in support of the taxpayer’s petition for certiorari and last week’s landmark APA decision on DACA."

Prior TaxProf Blog coverage:

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June 22, 2020 in New Cases, Tax | Permalink | Comments (1)

Lesson From The Tax Court: How Taxpayers Can Sometimes Benefit From IRS Errors

Tax Court (2017)Last week my son got a job at Auto Zone, a company that sells auto parts to the entire U.S.  The IRS administers a wickedly complex set of tax laws to same population.  Guess which one employs more people?  Auto Zone.  It has over 87,000 workers to sell you windshield wipers.  The IRS does its job using about 74,000 workers.  Oh, and while both organizations employ computer support, can you guess whose computers are the mother of all outdated legacy systems?  I am sure you can.

Overworked IRS employees and outdated computer systems commit errors.  Last week, two Tax Court cases teach us when taxpayers might benefit from IRS errors.  In Askar Moukhitdinov and Sana Abeuova v. Commissioner, T.C. Memo. 2020-86 (June 16, 2020) (Judge Colvin), a computer error did not invalidate a Notice of Deficiency (NOD) and the taxpayer thus could not get preassessment review.  But in Carl William Cosio v. Commissioner, T.C. Memo. 2020-90 (June 18, 2020) (Judge Vasquez), a human error gave the taxpayer another chance for prepayment review of a disputed IRS assessment.  Details below the fold.

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June 22, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 21, 2020

What The Bible Has To Say About Black Anger: 'The Cross Helps Us Make Sense Of The Lynching Tree'

New York Times op-ed:  What the Bible Has to Say About Black Anger, by Esau McCaulley (Wheaton; author, Reading While Black: African American Biblical Interpretation as an Exercise in Hope (2020)):

Reading While BlackWhen these videos [of the killings of Ahmaud Arbery, George Floyd, Eric Garner, and Tamir Rice] stack one upon another and are added to our personal slights, a deep unsettling anger rises in the soul of a disinherited and beleaguered people. James Baldwin said, “To be a Negro in this country and to be relatively conscious is to be in a rage almost all the time.” ...

The Bible is not silent about the rage of the oppressed. One of the most startlingly violent passages in the Bible comes from the lips of the disinherited. In Psalm 137 the psalmist says, “Daughter Babylon, doomed to destruction, happy is the one who repays you according to what you have done to us. Happy is the one who seizes your infants and dashes them against the rocks.”

How can wishing such an atrocity be in any sense a religious text? Psalm 137 is a psalm of the traumatized. It depicts the aftermath of the destruction of Jerusalem, the sack of the city, sexual assault and brutalization of the innocent. What kind of song do you write if you are forced to watch the murder of your wife, your child, your neighbor? Psalm 137 is trauma literature, the rage of those who lived. ...

The miracle of the Bible is not that it records the rage of the oppressed. The miracle is that it has more to say. The same texts that include a call for vengeance upon Israel’s enemies look to the salvation of its oppressors. Isaiah 49 says, “It is too small a thing for you to be my servant to restore the tribes of Jacob and bring back those of Israel I have kept. I will also make you a light for the Gentiles, that my salvation may reach to the ends of the earth.”

For Christians, rage (Psalm 137) must eventually give way to hope (Isaiah 49). And we find the spiritual resources to make this transition at the cross. Jesus could have called down the psalms of rage upon his enemies and shouted a final word of defiance before he breathed his last. Instead he called for forgiveness: “Father, forgive them, for they do not know what they are doing,” he says in Luke 23.

It was not a false reconciliation: Jesus experienced the reality of state-sponsored terror. That is why the black Christian has always felt a particular kinship with this crucified king from an oppressed ethnic group. The cross helps us make sense of the lynching tree. ...

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June 21, 2020 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (1)

The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper, a aper returning to the list at #4, and a new paper debuting on the list at #5:

  1. SSRN Logo (2018)[290 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  2. [273 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)
  3. [252 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  4. [184 Downloads]  The Troubling Case of the Unlimited Pass-Through Deduction, by Clint Wallace (South Carolina)
  5. [147 Downloads]  Coronavirus, Telecommuting, and the 'Employer Convenience' Rule, by Edward Zelinsky (Cardozo) (reviewed by Young Ran (Christine) Kim (Utah) here)

June 21, 2020 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 20, 2020

This Week's Ten Most Popular TaxProf Blog Posts

CRS: The Section 199A Deduction — How It Works And Illustrative Examples

Congressional Research Service, The Section 199A Deduction: How It Works and Illustrative Examples (R46402 June 10, 2020):

CRS LogoCongress made numerous changes to the federal tax code for individuals and corporate and noncorporate businesses in December 2017, as part of P.L. 115-97 (referred to in this report as the 2017 tax revision but also known as the Tax Cuts and Jobs Act). At the core of the law was a permanent cut in the corporate income tax rate from a top rate of 35% to a flat rate of 21%.

During the congressional debate over the 2017 tax revision, pass-through business owners sought tax relief comparable to any reduction in corporate tax rates. Heeding this request, Congress added a new deduction under Section 199A of the federal tax code. The deduction allows pass-through business owners to deduct up to 20% of their qualified business income (QBI) in determining their personal tax liability. This reduces effective tax rates for pass-through business profits by up to 20%. Like most of the changes in the individual income tax in P.L. 115-97, the new Section 199A deduction is temporary: it is available from 2018 to 2025.

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June 20, 2020 in Congressional News, Tax | Permalink | Comments (0)

Friday, June 19, 2020

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews COVID-19 And The American Safety Net

This week, Mirit Eyal-Cohen (Alabama) reviews Andrew Hammond (Florida), Ariel Jurow Kleiman (San Diego) & Gabriel Scheffler (Miami), How the COVID-19 Pandemic Has and Should Reshape the American Safety Net (2020):

Mirit-Cohen (2018)

Amidst the online pandemic and the strain it is putting on the ability of Americans to meet basic needs, and our government’s capacity to assist them, this important and timely Essay aims to accomplish four goals:  a) identifying the ways in which the pandemic feeds on and exacerbates both racial and economic inequality in America, b) analyzing the government response, c) considering which changes should outlast the current crisis, and d) how government should design social welfare programs to better meet the needs of all Americans in the coming years.  

The authors begin by highlighting the two upshots of the pandemic, that is the epidemiological and the economic crises and their effects on low-income households and communities of color. The latter are at higher risk of contracting COVID-19 and of enduring worse health consequences because low-pay individuals are more likely to live in overcrowded housing conditions, to utilize public transportation, to work in occupations that require close-contact interactions, to be uninsured with limited access to health services, and to suffer from preexisting conditions like diabetes and COPD that puts them at higher risk of COVID-19 complications. Although data on racial disparities in this pandemic is limited, existing studies supports similar premises.

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June 19, 2020 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

President's Niece Says She Was Source For NY Times' Investigation Of Trump's Taxes

Daily Beast, Revealed: The Family Member Who Turned on Trump:

The president’s niece Mary Trump is set to publish a tell-all this summer—and to reveal that she was a primary source for The New York Times’ investigation into Trump’s taxes.

Donald Trump’s niece, his deceased brother’s daughter, is set to publish a tell-all book this summer that will detail “harrowing and salacious” stories about the president, according to people with knowledge of the project.

Mary Trump, 55, the daughter of Fred Trump Jr. and eldest grandchild of Fred Trump Sr., is scheduled to release Too Much And Never Enough on July 28, Simon & Schuster confirmed Monday, just weeks before the Republican National Convention.

One of the most explosive revelations Mary will detail in the book, according to people familiar with the matter, is how she played a critical role helping The New York Times print startling revelations about Trump’s taxes, including how he was involved in “fraudulent” tax schemes and had received more than $400 million in today’s dollars from his father’s real estate empire.

As she is set to outline in her book, Mary was a primary source for the paper's Pulitzer Prize-winning investigation, supplying Fred Trump Sr.’s tax returns and other highly confidential family financial documentation to the paper. 

New York Times, Trump’s Niece to Publish Book With ‘Harrowing’ Revelations:

Mary Trump will say that she was a source of The New York Times’s coverage of the president’s tax returns. The Times declined to comment on the claim.

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June 19, 2020 in Tax, Tax News | Permalink | Comments (1)

International Tax Evasion And Human Rights

Elizabeth Donald (LL.M. (Tax) 2021, NYU), Note, Revenue Mobilization Accountability: Combating Harmful Tax Regimes With the Law of Human Rights, 50 Geo. J. Int'l L. 517 (2019):

International tax evasion has gained much consideration in recent years. Between Apple’s assertion that it was tax resident “nowhere,” and a whistleblower’s leak of Luxembourg’s secret tax rulings, the legal field has tried to remedy international tax schemes on all fronts. Recently, a number of human rights advocates and scholars have started to turn their attention to tax evasion. So the argument goes: if Luxembourg issues secret rulings to give corporations lower tax rates, it illegally takes revenue away from other countries that need the money to support their citizens. The issue with this argument is that most human rights treaties, and especially those relating to economic rights, do not have an extraterritorial application—Luxembourg cannot be held accountable for the effects of its actions abroad. For this reason, the line between international tax evasion and human rights is far too attenuated.

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

Thursday, June 18, 2020

Oei & Ring Present Economic And Financial Policy Responses To COVID-19 Today At The Indiana/Leeds Summer Zoom Tax Workshop Series

Shu-Yi Oei (Boston College) & Diane Ring (Boston College) present Regulating In Pandemic: Evaluating Economic And Financial Policy Responses To The Coronavirus Crisis today as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Oei ringIn March of 2020, the United States began to confront a fast-moving public health crisis. Over the next two and a half months, the COVID-19 pandemic killed more than one hundred thousand Americans and wrought unprecedented economic damage across the country. Some forty million U.S. workers filed for unemployment between mid-March, when the first stay-at-home orders were issued, and the end of May, by which point every U.S. state had begun to “reopen” in some capacity.

In responding to the economic aspects of the COVID-19 crisis, U.S. policymakers confronted three interrelated but potentially conflicting policy priorities: (1) providing social insurance and a social safety net to individuals and families in need; (2) managing systemic economic and financial risk; and (3) encouraging critical spatial behaviors to help contain COVID-19 transmission.

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

NY Times: Trump Opportunity Zones Tax Break Is Not Spurring Job Creation

New York Times, A Trump Tax Break Is Not Spurring Job Creation, Study Finds:

A new tax break that President Trump frequently touts as a boon to black Americans and hard-hit communities is spurring relatively little job creation while disproportionately helping high-profit real estate projects and not small businesses, an extensive new study by the Urban Institute has found.

The report, released on Wednesday, draws on interviews from more than 70 key players in the deployment of money — mostly from wealthy investors — into so-called opportunity zones. It is the most comprehensive look to date at the effects of the zones, which were created as part of the 2017 tax law and for which the government has scant data.

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June 18, 2020 in Tax, Tax News | Permalink | Comments (2)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking 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.  Here is the new list (through June 1, 2020) 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 (Michigan)  191,246 Reuven Avi-Yonah (Michigan) 7,362
2 Dan Shaviro (NYU) 120,723 Lily Batchelder (NYU) 4,985
3 David Gamage (Indiana-Bloom.) 116,722 David Kamin (NYU) 4,851
4 Lily Batchelder (NYU) 116,660 Daniel Hemel (Chicago) 3,873
5 Daniel Hemel (Chicago) 116,321 Ruth Mason (Virginia) 3,044
6 Darien Shanske (UC-Davis) 110,035 Bridget Crawford (Pace) 2,828
7 David Kamin (NYU) 105,138 David Gamage (Indiana-Bloom.) 2,676
8 Cliff Fleming (BYU)    104,851 Diane Ring (Boston College) 2,520
9 Manoj Viswanathan (UC-Hastings) 102,023 Hugh Ault (Boston College) 2,435
10 Rebecca Kysar (Fordham) 100,855 Shu-Yi Oei (Boston College)  2,433
11 Ari Glogower (Ohio State) 99,638 Richard Ainsworth (BU) 2,381
12 Michael Simkovic (USC) 44,460 Dan Shaviro (NYU) 2,226
13 D. Dharmapala (Chicago) 38,979 D. Dharmapala (Chicago) 2,098
14 Paul Caron (Pepperdine) 36,860 Robert Sitkoff (Harvard) 1,941
15 Louis Kaplow (Harvard) 33,290 Darien Shanske (UC-Davis)  1,874
16 Richard Ainsworth (BU) 30,016 Brad Borden (Brooklyn) 1,865
17 Ed Kleinbard (USC) 26,781 Manoj Viswanathan (UC-Hastings) 1,778
18 Vic Fleischer (UC-Irvine) 26,149 Louis Kaplow (Harvard) 1,718
19 Jim Hines (Michigan) 25,156 Margaret Ryznar (Indiana-Indy)    1,591
20 Brad Borden (Brooklyn) 24,532 Ari Glogower (Ohio State) 1,475
21 Ted Seto (Loyola-L.A.) 24,316 Cliff Fleming (BYU) 1,461
22 Robert Sitkoff (Harvard) 24,226 Rebecca Kysar (Fordham) 1,459
23 Gladriel Shobe (BYU) 24,175 Michael Simkovic (USC) 1,426
24 Bridget Crawford (Pace) 23,780 Paul Caron (Pepperdine)   1,387
25 Richard Kaplan (Illinois) 23,749 Yariv Brauner (Florida)  1,329

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June 18, 2020 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink | Comments (0)

Doran: Deferred Compensation Unbound

Michael Doran (Virginia), Deferred Compensation Unbound:

This paper argues for enactment of accrual-based taxation of deferred compensation. Changes made by the Tax Cuts and Jobs Act of 2017 expanded the tax subsidy for deferred compensation, increasing an unjustifiable drain on federal revenues. Under accrual-based taxation, a corporate executive would include deferred compensation in gross income as soon as the deferred compensation vests. Accrual-based taxation better reflects economic income and removes the tax subsidy under current law.

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

Wednesday, June 17, 2020

Symposium: The Impact And Future Of The Tax Cuts And Jobs Act

Symposium, The Impact and Future of the Tax Cuts and Jobs Act, 45 Ohio N.U. L. Rev. 501-560 (2019):

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

The Deficit Myth: Modern Monetary Theory And The Birth Of The People’s Economy

New York Times op-ed:  Learn To Love Trillion-Dollar Deficits, by Stephanie Kelton (Stony Brook; author, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy (2020)):

Deficit MythAs a proponent of what’s called Modern Monetary Theory and as a former chief economist for the Democrats on the Senate Budget Committee, intimately familiar with how public finance actually works, I am not worried about the recent multitrillion-dollar surge in spending.

But there was a time when it would have rattled me too.

I understand the deficit myth because in the early part of my career in economics I, too, bought into the conventional way of thinking. I was taught that the federal government should manage its finances in ways that resemble good old-fashioned household budgeting, that it should hold spending in line with revenues and avoid adding debt whenever possible. ...

It is true that the dollars in your pocket are, in a physical sense, just pieces of paper. It’s the state’s ability to make and enforce its tax laws that sustains a demand for them, which in turn makes those dollars valuable. It’s also how the British Empire and others before it were able to effectively rule: conquer, erase the legitimacy of a given people’s original currency, impose British currency on the colonized, then watch how the entire local economy begins to revolve around British currency, interests and power. Taxes exist for many reasons, but they exist mainly to give value to a state’s otherwise worthless tokens.

Coming to terms with this was jarring — a Copernican moment. By the time I developed this subject into my first published, peer-reviewed academic paper, I realized that my prior understanding of government finance had been wrong.

In 2020, Congress has been showing us — in practice if not in its rhetoric — exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not “have.” It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for.

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June 17, 2020 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Ryznar: Emergency Funds In The Wake Of The Coronavirus

Margaret Ryznar (Indiana-McKinney), Emergency Funds in the Wake of the Coronavirus, 96 State Tax Notes 65 (Apr. 6, 2020):

The CARES Act targeting the economic effects of the COVID-19 pandemic allows taxpayers to withdraw up to $100,000 from their retirement savings, such as section 401(k) plans, without the typical 10% penalty for early withdrawal. However, retirement accounts do not make for ideal emergency funds. This Article therefore advocates that future legislation should incentivize separate savings funds.

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

Tuesday, June 16, 2020

Fox: Does Capital Bear The U.S. Corporate Tax After All?

Edward G. Fox (Michigan), Does Capital Bear the U.S. Corporate Tax After All? New Evidence from Corporate Tax Returns, 17 J. Empirical Legal Stud. 71 (2020):

This article uses U.S. corporate tax return data to assess how government revenue would have changed if, over the period 1957–2013, corporations had been subject to a hypothetical corporate cash flow tax—that is, a tax allowing for the immediate deduction of investments in long‐lived assets like equipment and structures—rather than the corporate tax regime actually in effect. Holding taxpayer behavior fixed, the data indicate actual corporate tax revenue over the most recent period (1995–2013) differed little from that under the hypothetical cash flow tax. This result has three important implications.

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June 16, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

NY Times: Leading Foundations Pledge To Give More, Hoping To Upend Philanthropy

New York Times, Leading Foundations Pledge to Give More, Hoping to Upend Philanthropy:

The Ford Foundation plans to announce on Thursday that it will borrow $1 billion so that it can substantially increase the amount of money it distributes. To raise the money, the foundation — one of the country’s most well-known and oldest charitable organizations — is preparing to issue a combination of 30- and 50-year bonds, a financial maneuver common among governments and companies but extremely rare among nonprofit groups.

Four other leading charitable foundations will pledge on Thursday that they will join with Ford and increase their giving by at least $725 million.

The decision by the five influential foundations — major sponsors of social justice organizations, museums and the arts and environmental causes — could shatter the charitable world’s deeply entrenched tradition of fiscal restraint during periods of economic hardship. That conservatism has provoked anger that foundations, which benefit from generous federal tax breaks, are hoarding billions of dollars during a national emergency, more interested in safeguarding their endowments than in helping those in need. 

The Ford Foundation, which has a $13.7 billion endowment, plans to distribute the newly raised money over the next two years, effectively increasing the percentage of its endowment that it pays out annually to about 10 percent from nearly 6 percent.

The four other foundations are among America’s most storied: the John D. and Catherine T. MacArthur Foundation; the W.K. Kellogg Foundation; the Andrew W. Mellon Foundation; and the Doris Duke Charitable Foundation. ...

There are more than 100,000 private foundations in the United States, and they are together sitting on endowments worth nearly $1 trillion, according to Candid, a group that tracks nonprofit groups and foundations. Some — including the Bill and Melinda Gates Foundation — already pay out a substantial chunk of their endowments every year. But many more hover near the legal floor, on average distributing roughly 7 percent of their funds annually.

NYT

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

Morse & Shay: In Altera Reply Brief, Taxpayer Doubles Down On Flawed Argument That The Government Changed Its Tune

Susan C. Morse (Texas) & Stephen E. Shay (Harvard), In Altera Reply Brief, Taxpayer Doubles Down on Flawed Argument that the Government Changed Its Tune:

AlteraThe Altera reply brief doubles down on an argument that the government brief has already persuasively dispatched: that Treasury gave the impression during the rulemaking process that comparability analysis—i.e., the analysis of comparable transactions between unrelated parties—was relevant to the determination of an arm’s length result under the transfer pricing regulation at issue, and that then the government changed its tune. ...

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June 16, 2020 in New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, June 15, 2020

Morse Presents Modern Custom in Tax At The Indiana/Leeds Summer Zoom Tax Workshop Series

Susan C. Morse (Texas) presented Modern Custom In Tax as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Sm55475-largeSometimes we think of custom as old news. But instead custom is alive and well. In nearly every area of modern life, including tax, it provides rules that people follow, unless and until positive law requires otherwise. Tax customs generally arise when private ordering responds to positive tax law. This happens in markets, in the programming of machines, and in compliance advisors’ practices. One example is the historic rule of thumb that valued startup company preferred and common stock using a 10:1 ratio. This custom supported low compensation income inclusions for company founders.

The fact that tax customs are the on-the-ground reality of tax law means that legal scholars and legal policymakers can and should assess these customs. This is a legal process question about institutional competence. When can tax custom competently make the rules that people follow? When, in contrast, should institutions of positive law intervene? 

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June 15, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

WSJ: The Long Arm Of State Tax Law Threatens Telecommuters

Wall Street Journal Tax Report, The Long Arm of State Tax Law Threatens Telecommuters:

The new popularity of remote work is putting a spotlight on income taxes that New York and five other states impose on workers living elsewhere.

My last column took a nationwide look at how the states are taxing, or not taxing, remote workers who took refuge there due to the pandemic. This one will focus on a single controversial rule that will likely affect thousands of New Yorkers and others whose offices were closed this year due to the pandemic. The rule’s importance will grow as out-of-state telecommuting becomes more common, especially if more states adopt it.

It’s known as the “convenience” rule. In a nutshell, it says that if a person has a job based in one state but lives and works in another state out of convenience rather than because the employer requires it, then that person owes income tax to the state where the job is based.

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June 15, 2020 in Tax, Tax News | Permalink | Comments (0)

Lesson From The Tax Court: How To Pay A Deficiency And Still Get To Tax Court

Tax Court (2017)A basic lesson I teach students is that clients often have choices in where to obtain judicial review of a Notice of Deficiency (NOD).  The usual choices are (1) file a petition in Tax Court and get pre-payment review or (2) pay the proposed deficiency in full and follow the procedures to, eventually, sue for a refund in either federal district court or the U.S. Court of Federal Claims.  The downside of Tax Court is that interest keeps accruing so, if you lose, you lose more than if you had paid and gone the refund route. 

We find a more sophisticated lesson in Robert J. Peacock and Bonita B. Peacock v. Commissioner, T.C. Memo. 2020-63 (May 19, 2020) (Judge Vasquez).  There, at the end of the audit the taxpayers sent the IRS a check for more than the deficiency proposed in the later-issued NOD.  They even wrote “payment” in the memo line.  Yet they were allowed to contest that later-issued NOD in Tax Court.  How can that be?  The answer is below the fold.    

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June 15, 2020 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 14, 2020

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[984 Downloads]  The Transformation of International Tax, by Ruth Mason (Virginia)
  2. [385 Downloads]  Summary of the Tax Provisions of the CARES Act, by David Miller, Muhyung Lee, Kathleen Semanski & Sean Webb (Proskauer, New York)
  3. [290 Downloads]  Taxation of the Digital Economy: Preliminary Analysis of OECD Pillar 1 Impact Assessment + KPMG Transfer Pricing Study of Amounts B & C, by Allison Christians (McGill)
  4. [239 Downloads]  COVID-19 and Us Tax Policy: What Needs to Change?, by Reuven Avi-Yonah (Michigan)
  5. [216 Downloads]  The Legality of Digital Taxes in Europe, by Ruth Mason (Virginia) & Leopoldo Parada (Leeds)

June 14, 2020 in Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, June 13, 2020

This Week's Ten Most Popular TaxProf Blog Posts

The Wealth Tax: Apportionment, Federalism, And Constitutionality

Alex Zhang (J.D. 2021, Yale), The Wealth Tax: Apportionment, Federalism, and Constitutionality, 23 U. Pa. J. L. Soc. Change ___ (2020):

Proposals of wealth taxation — as a mechanism to combat economic inequality and raise revenue for welfare programs — have dominated recent political debate. Despite extensive academic commentary, questions surrounding the constitutionality of a wealth tax remain unresolved. Previous scholarly approaches have drawn a dichotomy between two key cases. Supporters of the wealth tax emphasize Hylton’s functional rule for identifying direct taxes, which must be apportioned under the Constitution, and reject Pollock, which invalidated the federal income tax on the grounds that it was a direct tax. Opponents of the wealth tax, in contrast, argue that Pollock, rather than Hylton, was correctly decided.

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June 13, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (3)

Friday, June 12, 2020

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Dagan's Re-Imagining Tax Justice In A Globalized World

This week, David Elkins (Netanya) reviews a recently posted work by Tsilly Dagan (Oxford, Bar-Ilan), Re-imagining Tax Justice in a Globalized World (2020):

Elkins (2018)

In recent years, international taxation has moved to front and center stage. Once considered one of the more esoteric aspects of taxation, of interest to a few specialists and their clients, the field of international tax has drawn the attention of academics, politicians, the popular press, and international organizations. However, more often than not, those engaged in the discourse rely upon unexamined postulates and rehashed mantras that do little either to identify or to solve the serious challenges of taxation in a globalized world.

Tsilly Dagan is one of the rare breed of scholars who refuses to accept the conventional wisdom of international taxation and prefers to subject some of the field’s most well-entrenched principles to undogmatic scrutiny. In her current paper, she considers some of the challenges faced by countries in designing their tax policy, given the fact that taxpayers are no longer a captive audience over whom the sovereign state has virtually unlimited powers of coercion, but can freely choose where to reside and thus to which country’s tax regime to subject themselves.

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June 12, 2020 in David Elkins, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Repetti Presents Equity And Efficiency In A Progressive Income Tax At The Indiana/Leeds Summer Zoom Tax Workshop Series

ProfileImage.img James R. Repetti (Boston College) presented The Appropriate Roles for Equity and Efficiency in a Progressive Income Tax yesterday as part of the Indiana/Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

Increased focus on economic efficiency in formulating tax policy, at the expense of achieving equity, has resulted in decreased rate progressivity in our individual income tax. This decrease has exacerbated inequality.

There are several explanations for the intense focus on efficiency and reduced emphasis on equity. Predictions of efficiency gains from low individual income tax rates appear more certain than equity gains from progressive tax rates. Efficiency gains seem measurable, while equity gains appear intangible and unquantifiable. In addition, distributive justice, which underlies and shapes tax equity, exists in many abstract forms, some of which may not require progressive tax rates.

This article argues, however, that the emphasis on efficiency is misplaced. Inequality imposes measurable costs on the health, social wellbeing and intergenerational mobility of our citizens, as well as on our democratic process, which are corroborated by significant empirical analysis.

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June 12, 2020 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink | Comments (0)

The Perception Of The Ethics Of Tax Evasion In The United Kingdom

Aidan Collymore (University of Portsmouth), The Perception of the Ethics of Tax Evasion in the United Kingdom:

This research’s focus was ‘The perception of the ethics of tax evasion in the United Kingdom’. Previous research had identified numerous factors that influence tax morale, including: Age; gender; education level; nationality; religion; trust in government; career/education; country’s economic situation as well as view on law abiding. Age and religion were not focussed on due to the population sampled. The study, conducted in the UK in 2019, had a population sample consisting mainly of University of Portsmouth students with 204 suitable responses. Participants completed a questionnaire based on Robert W. McGee’s 18-statement survey to improve comparability with previous studies. Factors found to affect tax morale were gender, student status and view on law abiding. Student status and view on law abiding had overall significant differences with gender significant on statements regarding human rights issues. The study also compared findings to that of studies conducted in the UK and other countries.

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June 12, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Thursday, June 11, 2020

Dagan: Re-Imagining Tax Justice In A Globalized World

Tsilly Dagan (Oxford), Re-Imagining Tax Justice in a Globalized World:

In this paper I explain why designing a country’s tax policy with the elasticity of taxpayers’ choices of residency in mind, although a rational welfare-maximizing move by the state as a whole, and possibly even for its immobile as well as mobile constituents, is a policy that may not be justified under a liberal-egalitarian social contract.

I discuss two polar views of the social contract: one endorsing the state with the coercive power to promote the joint interests of its constituents. The other views the coercive power of the state as a way to fulfill the collective will of its constituents as a society of equals in order to promote who they are as people.

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June 11, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Fogg: Can The Taxpayer Bill Of Rights Assist Your Clients?

T. Keith Fogg (Harvard), Can The Taxpayer Bill Of Rights Assist Your Clients?, 91 Temple L. Rev. 705 (2019):

The Taxpayer Bill of Rights (TBOR) passed by Congress in 2016 has started to draw attention from tax litigators and others seeking to use the provisions of the legislation to obtain results that they might not otherwise achieve. Facebook brought the first substantial litigation seeking to involve TBOR as a basis for relief Facebook’s effort to rely on TBOR failed. Several other cases now also seek relief based in whole or in part on TBOR. This Article examines several pending cases, each of which relies on TBOR for a different reason, in order to discuss situations in which TBOR may assist litigants in achieving the desired result or will likely provide no benefit. In addition to discussion of pending cases in which taxpayers have asserted TBOR as a basis for relief, this Article examines the effect that TBOR might have generally in determining the outcome of an examination or collection action.

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June 11, 2020 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

UC-Hastings Podcast Series: Law And The Pandemic

Law and the PandemicCOVID-19 Legal Perspectives & Information from UC Hastings Law:

UC Hastings Law has created a podcast series to share insights related to pressing legal questions arising out of the COVID-19 pandemic. Subscribe on Apple PodcastsStitcherSpotify, or YouTube

Where’s My Stimulus? Why the IRS is Ghosting You (17:30):

In this episode, we speak with Professor Amy Spivey about the economic impact payments and get answers to many logistical questions related to this and the IRS more generally.

A Bird’s Eye View of Tax Provisions of the CARES Act (21:00):

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June 11, 2020 in Coronavirus, Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (0)