This Week's Ten Most Popular TaxProf Blog Posts

1. Bryan Camp (Texas Tech), Lesson From The Tax Court: Form Over Substance Gives Taxpayers A Double Tax Benefit
2. Eugene Volokh (UCLA), USC Professor Removed From Class After Using Mandarin Word That Sounds Like English N***** Racial Slur
3. Florida Times-Union, Two Professors Sue Florida Coastal Law School For Breach Of Contract Over Pay Cut
4. American Lawyer, Jobs Report: U.S. Economy Adds 1.4 Million Jobs, Legal Profession Adds ... Nothing
5. Chronicle of Higher Education, Will Covid-19 Revive Faculty Power?
6. William Patton (USC Law & UCLA Medicine), Allowing Law School Graduates To Practice Law Without Taking A Bar Exam Through A Diploma Privilege Does Not Put The Public At Greater Risk Of Attorney Misconduct
7. Anthea Butler (University of Pennsylvania) (@AntheaButler) & Kevin Gannon (Grand View University), #ScholarStrike: Professors Plan Strike For Racial Justice
8. Daniel Halliday (Melbourne) & Miranda Stewart (Melbourne), On 'Dynastic' Inequality
9. Stephen Thomson (City University of Hong Kong), Letterhead Bias and the Demographics of Elite Journal Publications
10. ABA Tax Section, 20th Annual Law Student Tax Challenge Problem

Zelinsky Posts Two Tax Papers On SSRN

Edward Zelinky (Cardozo), New York's Ill-Advised Taxation of Nonresidents During COVID-19, 167 Tax Notes Fed. 1001 (May 25, 2020):

For 2020, New York should tax neither the incomes of nonresident telecommuters nor the incomes of the volunteers who came from across the country to help New York confront the COVID-19 emergency.If New York will not act in this sensible fashion, Congress should. In the next round of coronavirus legislation, Congress can prohibit the states from taxing, for the duration of the coronavirus emergency, the incomes of nonresident telecommuters and out-of-state medical volunteers.

Edward Zelinky (Cardozo), CalSavers and ERISA Redux: The District Court’s Second Opinion in Howard Jarvis Taxpayers Association v. The California Secure Choice Retirement Savings Program, NYU Rev. Employee Benefits & Executive Compensation (2020):

Continue reading

Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Walker's Tax Complexity And Technology

This week, Hayes Holderness (Richmond) reviews David I. Walker (Boston University), Tax Complexity and Technology:

Tax preparation platforms like TurboTax and TaxAct offer taxpayers a (relatively) easy way to complete and file their tax returns. Tax preparation businesses like H&R Block similarly ease the burden on taxpayers of completing and filing tax returns; those businesses also use technology to provide their services. Cumulatively, over 90% of individual taxpayers do their taxes with the help of these platforms or businesses, as opposed to filling out the returns themselves. Technology appears to be a tax simplification salve for the vast majority of individual taxpayers.

Not quite so fast, argues David Walker, in his draft article, Tax Complexity and Technology. While technology has undeniably simplified the return process for many, it has also helped mask the inner workings of the tax laws. Tax preparation platforms and businesses can operate like “black box” algorithms: just plug in the data and get a nice round number; don’t worry about how the number is reached. These black boxes allow for the complexity of the tax laws to grow.

Continue reading

Tax Policy In The Trump Administration

• American Enterprise Institute, The Tax Burden on Business Investment Under Joe Biden’s Tax Proposals
• Bloomberg, Biden Offshore Tax Plan Unlikely to Renew Rust Belt Factories
• Bloomberg, Major Companies Have Rejected Trump's Payroll Tax Deferral
• Bloomberg, Trump Tax Cut Was Neither Bane Nor Boon
• Forbes, Record Stimulus And Social Unrest Create Perfect Storm For Wealth Tax

Continue reading

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

Revuen S. Avi-Yonah (Michigan) presents A New Corporate Tax, 99 Tax Notes Int’l 497 (July 27, 2020), virtually today at Florida as part of its Tax Colloquium Series:

The US corporate tax is over 100 years old, and many academic observers have doubted its value. The standard explanation for why we tax corporations is that it is an indirect tax on shareholders, but that is not a valid reason to have a corporate tax because (a) shareholders can be taxed directly and (b) many shareholders are tax exempt and should not be taxed at all. However, there is another reason to tax corporations, which was in fact the original rationale why we adopted the corporate tax in 1909: To limit the power of large monopolistic corporations and regulate their activities. If that is the reason for the corporate tax, the US should have a different tax structure than the current 21% flat tax. 

Continue reading

2021 Vault Law Firm Tax Rankings: Skadden Is #1 For 11th Year In A Row

Vault has released its annual ranking of the Top 100 Law Firms, based on prestige as voted on by associates (methodology here). The Top Tax Practices are:

Rank	Firm	Home City	% Vote
1	Skadden	New York	42.55%
2	Cravath	New York	22.25%
3	Davis Polk	New York	21.17%
4	Kirkland & Ellis	Chicago	20.52%
5	Baker McKenzie	Chicago	18.14%
6	Wachtell	New York	16.63%
7	McDermott, Will & Emery	Chicago	16.42%
8	Cleary Gottlieb	New York	11.66%
9	Latham & Watkins	Los Angeles	9.94%
10	Sullivan & Cromwell	New York	8.64%
11	Weil Gotshal	New York	7.78%
12	Morgan Lewis	Philadelphia	7.56%
13	Simpson Thacher	New York	7.34%
14	Caplin & Drysdale	D.C.	7.13%
15	Mayer Brown	Chicago	6.48%
16	Paul Weiss	New York	6.26%
17	Miller & Chevalier	D.C.	5.18%
18	Eversheds Sutherland	Atlanta	4.75%
19	Alston & Bird	Atlanta	3.67%
19	Roberts Holland	New York	3.67%

For the eleventh year in a row, Skadden is #1. The city rankings are:

Continue reading

Layser: The Pro-Gentrification Origins Of Place-Based Investment Tax Incentives

Michelle Layser (Illinois), The Pro-Gentrification Origins of Place-Based Investment Tax Incentives and a Path toward Community Oriented Reform, 2019 Wis. L. Rev. 745 (reviewed by Ezra Rosser (American) here):

Place-based investment tax incentives, which encourage taxpayers to invest in poor areas, constitute a particularly controversial, yet undertheorized, category of tax laws. The central problem presented by current place-based investment tax incentives is a contradiction between rhetoric and reality. They are presented as laws that benefit low-income communities, yet the dominant types of place-based investment tax incentives are not designed for this purpose. Understanding the reasons for this disconnect is key to assessing the limits and potential of place-based investment tax incentives as anti-poverty tools. By tracing the development of place-based investment tax incentives to their pro-gentrification origins, this Article argues that what many anti-poverty advocates view as a flaw — the lack of safeguards for poor communities that allegedly opens the door to abuses — is, in fact, a feature of most current place-based investment tax incentives.

Continue reading

Kahn & Kahn: Tax And Cross-Collateralized Nonrecourse Liability

Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), Tax and Cross-Collateralized Nonrecourse Liability, 24 Fla. Tax Rev. __ (2021):

This article explores the tax treatment of cross-collateral nonrecourse debt. When using the term cross-collateral debt, we are referring to nonrecourse debt that is connected with more than one piece of property. While tax issues concerning cross-collateralized properties can arise in several circumstances, the focus of this article is on the tax treatment of a transfer of property subject to a cross-collateralized nonrecourse liability to a controlled corporation in exchange for stock that qualifies for some or all nonrecognition under § 351. The article also discusses two other tax issues involving cross-collateralized nonrecourse liability – namely, cancellation of debt and determination of basis issues.

Christians & Magalhaes: The Rise Of Cooperative Surplus Taxation

Allison Christians (McGill) & Tarcisio Diniz Magalhaes (McGill), The Rise of Cooperative Surplus Taxation:

The world’s tax policy leaders are currently engaged in debate over who should tax the income streams produced with the help of cross-border regulatory coordination—the cooperative surplus over the gains that, in a counterfactual world, would be available if investments were confined to the domestic economy. To the extent there ever was a coherent relationship between consensus tax policy norms and the distribution of cooperative surplus, that relationship is now hopelessly skewed by real life factors, chief among them the rapid advancement of innovative technology that transcends physical boundaries of all kinds. The growing dissatisfaction of those on the wrong side of the skew had already initiated a rise in innovative ways to tax cooperative surplus when COVID-19 struck, significantly increasing the stakes for taxation and prompting yet more reform proposals. There are now at least fourteen strategies in play, each drawing varying levels of scrutiny, buy-in, and pushback.

Continue reading

Rutgers Seeks To Hire An Entry Level Or Junior Lateral Tax Prof

Rutgers Law School invites applications from entry level and junior lateral candidates for a tenure-track appointment at the rank of Assistant or Associate Professor of Law at the Newark campus starting in the 2021-22 academic year. We are especially interested in candidates with demonstrated interest in one or more of the following areas: Property, Tax, Intellectual Property, Nonprofit Organizations, and Trusts & Estates.

Continue reading

Walker: Tax Complexity And Technology

David I. Walker (Boston University), Tax Complexity and Technology:

The federal income tax code has become increasingly complex over time with the implication that many taxpayers no longer understand the connection between their life decisions and their taxes. Some commentators have suggested that increasing computational complexity may be attributable in part to the proliferation of tax preparation software that renders such complexity manageable at filing time, but otherwise does nothing to mitigate the “black box” nature of the tax system. While such complexity and opacity undercut explicit incentives embedded in the Code, make planning more difficult, and undermine political accountability for taxes, they may also reduce the inefficient distortion or deadweight loss of the income tax, particularly with respect to higher-income taxpayers.

This Article argues that technology represents a potential response to tax complexity and opacity as well as a contributing factor.

Continue reading

Piketty Presents Unequal Societies: Slavery, Abolition, And Long-Run Consequences Virtually Today At UC-Berkeley

Thomas Piketty (Paris School of Economics) presents Unequal Societies: Slavery, Abolition, and Long-Run Consequences, in Capital and Ideology (Harvard University Press 2020) virtually at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Thomas Piketty’s bestselling Capital in the Twenty-First Century galvanized global debate about inequality. In this audacious follow-up, Piketty challenges us to revolutionize how we think about politics, ideology, and history. He exposes the ideas that have sustained inequality for the past millennium, reveals why the shallow politics of right and left are failing us today, and outlines the structure of a fairer economic system.

Our economy, Piketty observes, is not a natural fact. Markets, profits, and capital are all historical constructs that depend on choices. Piketty explores the material and ideological interactions of conflicting social groups that have given us slavery, serfdom, colonialism, communism, and hypercapitalism, shaping the lives of billions. He concludes that the great driver of human progress over the centuries has been the struggle for equality and education and not, as often argued, the assertion of property rights or the pursuit of stability. The new era of extreme inequality that has derailed that progress since the 1980s, he shows, is partly a reaction against communism, but it is also the fruit of ignorance, intellectual specialization, and our drift toward the dead-end politics of identity.

Continue reading

The Tax Cut For The Rich That Democrats Love: The State & Local Tax Deduction

New York Times op-ed:  The Tax Cut for the Rich That Democrats Love, by Richard V. Reeves & Christopher Pulliam (Brookings Institution):

Why on earth ... are Democrats fighting — and fighting hard — for a $137 billion tax cut for the richest Americans? Mr. Biden, Nancy Pelosi and Charles Schumer don’t agree on everything, but on this specific issue they speak with one voice: the $10,000 cap on deductions for state and local tax (better known as the SALT deduction) must go. ...

Lifting it would therefore reverse one of the few good things about the 2017 bill. Almost 60 percent of the benefit of removal would go to the top 1 percent of households (of which 90 percent are white). For the superrich, the top 0.1 percent, repeal would make for an average tax cut of around $145,000 a year. In isolation, this change would be more skewed to the rich than the Republican tax bill as a whole.

Continue reading

ABA Tax Section Releases 20th Annual Law Student Tax Challenge Problem

The ABA Tax Section has released the J.D. Problem (rules; entry form) and LL.M. Problem (rules; entry form) for the 20th Annual Law Student Tax Challenge (infographic):

An alternative to traditional moot court competitions, the Law Student Tax Challenge (LSTC) is organized by the Section’s Young Lawyers Form. The LSTC asks two-person teams of students to solve a complex business problem that might arise in everyday tax practice. Teams are initially evaluated on two criteria: a memorandum to a senior partner and a letter to a client explaining the result. Based on the written work product, six teams from the J.D. Division and four teams from the LL.M. Division receive a free trip to the Section’s Midyear Meeting, where each team presents its submission before a panel of judges consisting of the country’s top tax practitioners and government officials, including tax court judges. The competition is a great way for law students to showcase their knowledge in a real-world setting and gain valuable exposure to the tax law community.

Continue reading

OECD: Tax Policy Reforms 2020

OECD, Tax Policy Reforms 2020: OECD and Selected Partner Economies (more here):

This is the fifth edition of Tax Policy Reforms: OECD and Selected Partner Economies, an annual publication that provides comparative information on tax reforms across countries and tracks tax policy developments over time. The report covers the latest tax policy reforms in all OECD countries, as well as in Argentina, China, Indonesia and South Africa. In addition to providing an overview of the tax reforms adopted before the COVID-19 crisis, the report includes a Special Feature that takes stock of the tax and broader fiscal measures introduced by countries in response to the crisis from the beginning of the virus outbreak up to mid-June 2020.

Executive Summary
Tax Policy Reforms: OECD and Selected Partner Economies is an annual publication that provides comparative information on tax reforms across countries. It tracks tax policy developments over time and gives an overview of the latest tax reform trends. This year’s edition focuses on the tax reforms that came into force or were due to come into force in the second half of 2019 and 2020. However, given the significant packages of measures that were introduced in the first half of 2020 in response to the COVID19 crisis, the report also includes a Special Feature on “Tax and Fiscal Policy Responses to the COVID19 Crisis”. This Special Feature takes stock of the tax and broader fiscal measures introduced by countries from the beginning of the virus outbreak up to mid-June 2020, largely based on countries’ updates to the database compiled by the OECD on tax and fiscal policy responses to the crisis.

Continue reading

Sarin Presents Understanding The Revenue Potential Of Tax Compliance Investments Virtually Today At NYU

Natasha Sarin (Pennsylvania) presents Understanding the Revenue Potential of Tax Compliance Investments virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

In a July 2020 report, the Congressional Budget Office estimated that modest investments in the IRS would generate somewhere between $60 and $100 billion in additional revenue over a decade. This is qualitatively correct. But quantitatively, the revenue potential is much more significant than the CBO report suggests. We highlight five reasons for the CBO’s underestimation: 1) the scale of the investment in the IRS contemplated is modest and far short of sufficient even to return the IRS budget to 2011 levels; 2) the CBO contemplates a limited range of interventions, excluding entirely progress on information reporting and technological advancements; 3) the estimates assume rapidly diminishing returns to marginal increases in investment; 4) the estimates leave out the effect of increased enforcement on taxpayer decisionmaking; and 5) the use of the 10-year window means that the long-run benefits of increased enforcement are excluded.

Continue reading

Lederman Presents Best Practices In Tax Rulings Transparency Virtually Today At UC-Hastings

Leandra Lederman (Indiana-Bloomington) presents Of Risks and Remedies: Best Practices in Tax Rulings Transparency virtually at UC-Hastings today as part of its Tax Speakers Series hosted by Heather Field and Manoj Viswanathan:

The phrase “international scandal” hardly brings to mind tax rulings. It is not just that tax rulings may seem arcane, they are also a legitimate tax administration tool. Advance tax rulings provide certainty to taxpayers and the tax administration on the tax treatment of a planned transaction, lowering costs on both sides. Advance tax rulings are therefore openly used by many countries, including the United States and numerous European countries. Yet, secrecy that is followed by criticism and often by revelations that may embarrass a country’s leaders is a recurring aspect of these rulings. The United States has experienced this, and currently keeps Advance Pricing Agreements (APAs) confidential, while publishing letter rulings in anonymized form.

The 2014 “LuxLeaks” scandal, revealing what the press sometimes termed “sweetheart deals” between the Luxembourg tax authority and multinational companies, is probably the best-known scandal regarding tax rulings. LuxLeaks helped trigger legal changes that require tax authorities, including those of European countries and the United States, to automatically share information about cross-border advance rulings with other countries’ tax authorities. Luxembourg’s tax rulings, along with U.S. APAs, otherwise remain confidential.

Continue reading

Lesson From The Tax Court: Form Over Substance Gives Taxpayers A Double Tax Benefit

Today’s lesson is about form and substance.  Tax practitioners are often called upon to decide what transactional form best accomplishes a client’s substantive purpose.  The power to choose the form of transactions sometimes creates a tension with the underlying economic substance when taxpayers and their advisors use form to disguise substance in the never-ending quest to gain tax benefits.  Courts and the IRS regularly police transactions using various doctrines to decide when form must yield to substance (e.g. step transaction doctrine, economic benefit doctrine).   When form is too much in tension with substance, substance wins.  Congress has attempted to codify this idea in §7701(o).

Today's lesson illustrates where tax law permits form to triumph over substance.  In Jon Dickinson and Helen Dickinson v. Commissioner, T.C. Memo. 2020-128 (Sept. 3, 2020)(Judge Greaves) the taxpayers were able to obtain the double tax benefit of donating appreciated shares of stock to charity by being very careful with the form of the donation.  Congress explicitly permits the form of a transaction to govern the tax result in charitable stock donation.  The tricky part of this case was that the taxpayers were donating shares of a closely held corporation.  And that implicates the assignment of income doctrine, one of those substance-over-form doctrines that courts use.  To see how Judge Greaves resolves the tension in favor of the taxpayer, see below the fold.

Continue reading

TaxProf Blog Holiday Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• Jobs Report: U.S. Economy Adds 1.4 Million Jobs, Legal Profession Adds ... Nothing
• Attorneys For Dan Markel Murder Suspect Katherine Magbanua Seek Pretrial Release From Prison
• On 'Dynastic' Inequality

Sunday:

• Two Professors Sue Florida Coastal Law School For Breach Of Contract Over Pay Cut
• A First Step Toward Loving Our Enemies
• Practicing Faith
• The Top Five New Tax Papers

Labor Day:

• Hatfield Presents Tax Lawyer Professional Standards, 1985-2015 Virtually Today At Christ's College, Cambridge
• Allowing Law School Graduates To Practice Law Without Taking A Bar Exam Through A Diploma Privilege Does Not Put The Public At Greater Risk Of Attorney Misconduct
• Kysar: Unravelling The Tax Treaty
• USC Professor Removed From Class After Using Mandarin Word That Sounds Like English N***** Racial Slur

Kysar: Unravelling The Tax Treaty

Rebecca Kysar (Fordham), Unravelling the Tax Treaty, 104 Minn. L. Rev. 1755 (2020) (reviewed by David Elkins (Netanya) here):

Coordination among nations over the taxation of international transactions rests on a network of some 2,000 bilateral double tax treaties. The double tax treaty is, in many ways, the roots of the international system of taxation. That system, however, is in upheaval in the face of globalization, technological advances, taxpayer abuse, and shifting political tides. In the academic literature, however, scrutiny of tax treaties is largely confined to the albeit important question of whether tax treaties are beneficial for developing countries. Surprisingly little consideration has been paid to whether developed countries, like the United States, should continue to sign tax treaties with one another, and no formal revenue or economic analyses of the treaties has been undertaken by the United States government. In fact, little evidence or theory exists to support entrance into tax treaties by the United States, and examination of investment flows indicates the treaties may even lose U.S. revenues. Problematically, the treaties also thwart reforms of the antiquated and broken international tax system. The trajectory of the recent U.S. tax legislation illustrates this phenomenon.

Continue reading

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, with some minor reshuffling of the order within the Top 5:

1. [479 Downloads]  Policy Options for Taxing the Rich, by Lily Batchelder (NYU) & David Kamin (NYU)
2. [444 Downloads]  Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals, by Kimberly Clausing (UCLA), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley),
3. [406 Downloads]  Rethinking Tax for the Digital Economy After COVID-19, by Tarcisio Diniz Magalhaes (McGill) & Allison Christians (McGill) (reviewed by Young Ran (Christine) Kim (Utah) here)
4. [237 Downloads]  The Effect of U.S. Tax Reform on the Tax Burdens of U.S. Domestic and Multinational Corporations, by Scott Dyreng (Duke), Fabio Gaertner (Wisconsin), Jeffrey Hoopes (North Carolina) & Mary Vernon (Wisconsin)
5. [234 Downloads]  What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?, by Daniel Shaviro (NYU)

This Week's Ten Most Popular TaxProf Blog Posts

1. Fire, Tenured Law Prof Diane Klein Sentenced To ‘Academic Death Penalty’
2. U.S. News & World Report, Washburn Law School Removes Statues Of Ben Franklin, Thomas Jefferson
3. Anthea Butler (Pennsylvania) & Kevin Gannon (Grand View University), #ScholarStrike: Professors Plan Strike For Racial Justice
4. Eugene Volokh (UCLA), The Controversy Over Quoting Racial Epithets, Now at UC-Irvine Law School
5. Bryan Camp (Texas Tech), Lesson From The Tax Court: Audit Reconsideration Is Not CDP
6. Randall Kennedy (Harvard): How Racist Are Universities, Really?
7. Jeremy Bearer-Friend (George Washington) & Vanessa Williamson (Brookings Institution), Tax-Time Voter Registration
8. Inside Higher Ed, University Of Iowa Condemns Faculty Sickout Protesting Campus Reopening Plan
9. Rory Bahadur (Washburn), High 1L Attrition And 2L Transfer Rates Contribute To Florida International's Over Performance On The Bar Exam
10. Paul Caron (Dean, Pepperdine), Pepperdine Year In Review (2019-2020)

On 'Dynastic' Inequality

Daniel Halliday (Melbourne) & Miranda Stewart (Melbourne), On 'Dynastic' Inequality, in The Oxford Handbook of Intergenerational Ethics (Stephen Gardiner (Washington) ed., Oxford University Press 2020):

This chapter investigates whether the replication of inequality is, other things being equal, morally objectionable in ways not applicable to inequality that remains confined to a single generation or ‘birth cohort’. The focus is both theoretical and practical. The chapter considers the philosophical foundations that might lie behind an objection to dynastic inequality, negotiating the diversity of egalitarian views supporting this position, and the complexity around the causal mechanisms at work in cases where inequality has a dynastic tendency. It then discusses the policy reforms that might target inequalities that replicate old distributive trends while leaving newly produced trends more intact, with a focus on tax policy. Current tax rules in most developed economies do not make a distinction between new and old influences on the material distribution. Accordingly, it is likely that the tax reforms implied could be quite extensive. ...

Continue reading

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Shanske's How The States Can Tax Shifted Corporate Profits

This week, Michelle Layser (Illinois) reviews Darien Shanske (UC Davis), How the States Can Tax Shifted Corporate Profits: An Application of Strategic Conformity, 93 S. Cal. L. Rev. ___ (2020).

A dangerous consequence of the economic disruptions caused by the COVID-19 pandemic has been steep declines in state and local tax revenue. As is often the case during crisis periods, these revenue shortfalls have arrived at precisely the time when many residents are in dire need of a social safety net (see here and here).  Under the circumstances, Professor Darien Shanske observes that “it would be reasonable for states to contemplate inefficient—and even regressive—revenue-raising measures.” In a new Article, Shanske cautions against such an approach and offers what he says is a more efficient, more equitable alternative that is also relatively easy to administer.

Continue reading

Tax Policy In The Trump Administration

• Neil Buchanan (Florida), The Dangerous Silliness of Trump's Suspension of Social Security Taxes
• Center for American Progress, Foreign Investors Were Big Winners From Trump’s Tax Law
• Forbes, What The Apple Decision Means For Global Tax Reform
• The Hill, Author Thom Hartmann Says Average Family Pays $5k 'Monopoly Tax' to Large Companies
• The Hill, Democrats Call For IRS to Review Tax-Exempt Status of NRA

Continue reading

Glogower & Kamin: The Progressivity Ratchet

Ari D. Glogower (Ohio State) & David Kamin (NYU), The Progressivity Ratchet, 104 Minn. L. Rev. 1499 (2020) (reviewed by Sloan Speck (Colorado) here):

This Article evaluates the consequences of the 2017 tax legislation for the future of progressive tax reform. The 2017 tax legislation introduced significant preferences for business income, including a cut in the corporate rate and the new Section 199A deduction for “pass-through” income. Many commentators criticized the design of the pass-through deduction and the legislation’s generally regressive effects but tacitly accepted or applauded the corporate rate cut as a desirable response to international pressures. These changes also prompted renewed calls for progressive tax reforms, to increase the share of tax revenues raised from the wealthy. For one example, in early 2019, recently elected Representative Alexandria Ocasio-Cortez proposed a 70% top individual rate on taxpayers with the highest incomes.

Continue reading

Discounts For Fractional Ownership Of Artwork

Maren N. Eisenmesser (J.D. 2020, Brooklyn), Note, Discounts for Fractional Ownership of Real Property Are Accepted, So Why Haven't the IRS and Courts Accepted Discounts for Fractional Ownership of Artwork?, 14 Brook. J. Corp. Fin. & Com. L. 75 (2019):

In 2014, the Fifth Circuit held that Mr. Elkins’s estate was entitled to apply a fractional ownership discount to determine the taxable value of the undivided interest in artwork. The estate received a $14 million refund plus interest. The Internal Revenue Code directs taxpayers to value the items in a gross estate at their fair market value. Fractional ownership adds another problem in the valuation of an estate’s interest property. In general, courts have accepted fractional ownership discounts for real property. In contrast, courts have been reluctant to apply a fractional ownership discount for artwork.

Continue reading

You Want Progressive Policies? You Need Progressive Taxes

New York Times op-ed:  You Want Progressive Policies? You Need Progressive Taxes, by Kitty Richards (Roosevelt Institute) & Joseph E. Stiglitz (Columbia):

As the coronavirus pandemic — and Congress’s undersize response — wreaks havoc throughout the economy, tax receipts are cratering. This means that state and local governments are facing enormous revenue shortfalls at the exact time they are dealing with large additional demands. So far, states and localities have responded by slashing spending and jobs, with 1.5 million public-sector workers laid off by the end of June.

The federal government, which unlike most states does not have to balance its budget every year, could solve the problem tomorrow by providing fiscal relief to states and localities, like the $1 trillion provided by the HEROES Act that passed the House in May.

But regardless of whether Congress acts, states and localities can bolster their local economies and support their residents by raising taxes on those who have not been hard hit by the recession. This is not only the right thing to do from a humanitarian standpoint, it is sound economics. ...

Continue reading

NY Times: Trump Wins Another Delay In Turning Over Tax Returns

New York Times, Trump Wins Another Delay in Turning Over Tax Returns:

President Trump on Tuesday won another delay in the long-running legal battle over whether he must turn over eight years of tax returns to the Manhattan district attorney’s office, which subpoenaed them a year ago in a criminal investigation focused on Mr. Trump, his business and his associates.

In a brief order, a federal appeals court in New York said it would temporarily block a grand jury subpoena issued by the district attorney, Cyrus R. Vance Jr., a Democrat, while it considers Mr. Trump’s arguments that the request was “wildly overbroad” and politically motivated.

The ruling is the latest development in the president’s aggressive effort to keep his tax returns and other financial records out of the hands of prosecutors, Congress and others — a dispute that has reached the United States Supreme Court once and is likely to end up there again.

With the election looming, the ruling means that as a practical matter the prosecutors, even if they are ultimately successful, will not receive Mr. Trump’s records for at least another month, and perhaps longer if he seeks a review in the Supreme Court.

Continue reading

Field: Tax MACs — A Study of M&A Termination Rights Triggered By Material Adverse Changes In Tax Law

Heather M. Field (UC-Hastings), Tax MACs: A Study of M&A Termination Rights Triggered by Material Adverse Changes in Tax Law, 73 Tax Law. 823 (2020):

A “Tax MAC” provision—one that triggers termination or other rights upon a material adverse change in tax law—can be crucial to a business deal if a change in tax law would change a party’s interest in consummating the deal, particularly at the specified price and on the articulated terms. Tax MAC provisions may be particularly important when taxpayers make business decisions in a political climate like today’s, when tax laws could change again, perhaps dramatically, if control of Congress and the White House changes. Yet little has been written about Tax MAC provisions. In response, I studied Tax MAC provisions included in publicly filed M&A agreements from the past five years, focusing on provisions that could trigger termination of the deal if tax laws change adversely. This Article details the findings of that study.

Continue reading

Field Presents Allocating Tax Transition Risk Online Today At UC-Irvine

Heather Field (UC-Hastings) presents Allocating Tax Transition Risk online at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

The enactment of sweeping tax changes in late 2017 by Republicans without any bipartisan support and the calls by Democrats to reverse those changes (and make more) when they regain political power create an unstable tax landscape that is challenging for taxpayers who are trying to make economic decisions that are affected by tax law. One strategy for grappling with this instability and uncertainty is for taxpayers to use contracts to allocate the economic benefits and burdens of a possible future tax law change among themselves. The literature says almost nothing about this contract-based strategy for managing tax transition risk. This gap is surprising because (a) the leading view on tax transition policy argues that taxpayers should account for the risk of tax law changes the same way they take other market risks into account when making decisions, and (b) private contracting is a well-accepted method for addressing market risks. To fill this gap, this Article uses four case studies—involving derivatives, credit agreements, municipal bonds, and merger agreements—to demonstrate that taxpayers are using tax transition risk-shifting contracts and to illustrate how this risk-management strategy varies. 

Continue reading

Holderness: Insidious Regulatory Taxes

Hayes Holderness (Richmond), Insidious Regulatory Taxes:

Courts have long held the utmost respect for tax laws, reflecting a recognition that the revenue-raising function of taxes allows legislators to distribute the burden of funding the government as they see fit. Unelected judges, the sentiment goes, should thus be hesitant to trifle with tax laws. However, taxes are also used to regulate individual behavior, but in such cases, rather than protect individuals’ rights as they would in the case of direct regulations, courts continue to defer to the institutional interests in taxation. The problems with this approach are highlighted by state-level controlled substance taxes, which impose taxes on individuals engaging in the criminal possession and sale of illegal drugs without providing those individuals the protections of the criminal law.

Continue reading

University Of Florida's Laura Rosenbury Is Fourth Law School Dean ($100,000), Neil Buchanan Is Second Tax Prof ($25,001) To Make Major Gifts To Students During COVID-19

Following up on my previous posts (links below):  UF Law Students Receive Nearly $1 Million in Financial Support During Pandemic:

More than 280 University of Florida Levin College of Law students received financial support from the law school this summer, totaling nearly $1 million. ...

UF Law applied for funding from AccessLex, which generously provided a $25,000 grant to the law school for emergency student support.  UF Law Dean Laura Rosenbury immediately contributed an additional $25,000 from her personal funds, and UF Law Tax Professor Neil Buchanan followed Dean Rosenbury’s contribution with a gift of $25,001.  Several alumni also contributed to the emergency fund to help reach the $100,000 goal.

“The pandemic created additional financial stress for many of our students, as they traveled to care for sick loved ones, lost part-time jobs, or assisted family members who had lost their jobs,” Dean Rosenbury said. “I am glad we were able to provide some relief for students incurring these unexpected expenses.”

Dean Rosenbury has also contributed an additional $75,000 to support student scholarships at UF Law.  Her most recent gift of $25,000 supported the HBCU Pathway to Law Endowed Scholarship Fund, which provides full-tuition scholarships to graduates of HBCUs seeking to enroll at UF Law.

Continue reading

St. Thomas Seeks To Hire A Tax Prof

St. Thomas University School of Law invites applications for an entry-level tenure-track position beginning in Fall 2021. St. Thomas University School of Law is located in Florida’s beautiful, cosmopolitan Miami area and is ranked as one of the most diverse, student-oriented law schools in the nation. STU LAW has earned a national reputation for its mission of inclusion and opportunity for students from historically underrepresented groups and for its programs in immigration law, tax law, business law, trial advocacy, human trafficking, and intercultural human rights. We encourage potential applicants to visit our website at www.stu.edu/law to learn more about our law school, our community, and our programs.

We welcome applications from candidates interested in the areas of Tax, Health Law, and the traditional first-year courses, although we will consider other doctrinal areas depending on our institutional needs. STU LAW encourages applications from women and minority candidates and from all other persons who would add to the diversity of our academic community. Candidates must have a Juris Doctorate from an ABA-accredited law school, or equivalent academic doctorate(s), degrees, and fellowships, and a demonstrated commitment to outstanding teaching, scholarship, and service. Applicants should send a cover letter indicating teaching and scholarly interests, a curriculum vitae, and a list of at least three professional references to the Faculty Recruitment Committee Chair, Professor Jay Silver, by email at jsilver@stu.edu.

Continue reading

Wallace Presents Democratic Justice In Tax Policymaking Virtually Today At NYU

Clinton Wallace (South Carolina) presents Democratic Justice in Tax Policymaking virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

The Tax Cuts and Jobs Act was the most significant tax law in more than three decades, but the strategy for getting it enacted included a variety of maneuvers to avoid public scrutiny. As a result, many taxpayers did not know how they would be affected until they filed their own tax returns more than a year later. This Article identifies this lack of transparency as part of a persistent pathology in tax policy making of avoiding and constraining democratic forces. To this end, various scholars and policy makers have sought to channel tax policy making away from democratic input and towards prescribed outcomes. This Article argues that these moves are grounded in strands of public choice theory that are expressly critical of democratic decision making.

This Article proposes four reforms to tax lawmaking in Congress to make resulting tax laws more democratically legitimate. One proposal, for example, is to require Congress to consider (and publicize) precisely how a proposed change in tax law is expected to affect different example taxpayers, including taxpayers from each Congressional District. This would allow actual taxpayers observing the policy making process to anticipate their treatment under a proposed law, and in turn demand greater responsiveness to their real interests from their representatives. Other proposals build on this approach, calling for drastically more transparency and a radical—but entirely achievable—reworking of the types of analysis produced and publicized in the federal tax legislative process.

Continue reading

Shanske: How The States Can Tax Shifted Corporate Profits

Darien Shanske (UC-Davis), How the States Can Tax Shifted Corporate Profits: An Application of Strategic Conformity, 93 S. Cal. L. Rev. ___ (2020):

The combination of pandemic, recession and federal dysfunction has put severe fiscal strain on the states. Given the scale of the crisis and the essential nature of the services now being cut, it would be reasonable for states to contemplate inefficient — and even regressive — revenue-raising measures. Yet surely they should not start with such measures. They should start with making the efficient and progressive improvements to their revenue systems that they should have made anyway.

Improving the taxation of the profits of multinational corporations — the topic of this Article — represents a reform that would be efficient, progressive and relatively straightforward to administer. Not only would such a reform thus represent good tax policy, but it would raise significant revenue. And, if substantial revenue, efficiency, progressivity and administrability are not sufficiently motivating, then I will also add that it would be particularly appropriate to make these changes during the pandemic so as to raise revenue from those best able to pay during the current crisis.

Continue reading

Wayne State Seeks To Hire A Tax Prof

Wayne State University Law School is seeking to fill up to three tenure-track or tenured faculty positions. We encourage applications from candidates who will enhance the diversity of our faculty and whose scholarship engages with questions of social justice.

Although we welcome applications from candidates in all fields, we have particular interest in the following areas: (i) race and the law and/or critical race theory, (ii) tax or a combination of tax and business, and (iii) criminal law and criminal procedure.

One of the three positions we seek to fill is the Coleman A. Young Foundation Endowed Chair of Urban Affairs. This Chair will be held jointly in the Department of Urban Studies and Planning in the College of Liberal Arts and Sciences and the Law School. The position provides a unique opportunity to promote high-impact activities and research on matters central to modern urban affairs. The holder of the chair will occupy a highly visible and influential position in the university, the metropolitan Detroit area and the broader community by playing a leadership role on issues of urban affairs in academia. The minimum qualifications for the Young Chair are: (a) an earned doctorate and/or a JD; (b) a substantial record of published work based either on research or reflections on practice; or (c) career experience in related government or foundation management, urban policy, health policy, social justice policy, or a related field; and (d) a record of direct involvement in public service achievement.

Continue reading

Subscribing To TaxProf Blog

We offer three ways to have TaxProf Blog content automatically delivered to your computer, tablet, or smart phone:

Follow @SoCalTaxProf

RSS Feeds:  You can subscribe to one of three different feeds to receive TaxProf Blog posts via your RSS reader:

• All Posts will send you all blog posts
• Tax Posts will send you only tax-related blog posts
• Legal Education will send you only law school-related blog posts

Email:  You can subscribe to receive TaxProf Blog posts via email through one of three approaches:

• FeedBlitz:  Enter your email address here to receive TaxProf Blog posts via email, delivered to you either daily, every 12 hours, every 8 hours, every 4 hours, or hourly (at your option).
• TaxProf Blog Tax Email Service:  Email me to be added to my twice daily (during the week) and once daily (on the weekend) emails to the TaxProf Discussion Group with titles and links to recent TaxProf Blog posts on tax topics.
• TaxProf Blog Legal Education Email Service:  Email me to be added to my email distribution list with titles and links to recent TaxProf Blog posts on legal education topics.

Support TaxProf Blog By Shopping On Amazon

TaxProf Blog participates in the amazon.com affiliate program. You can help support TaxProf Blog at no cost to you by making purchases through Amazon links on the blog and through the search box in the right column of the blog:

Bearer-Friend & Williamson: Tax-Time Voter Registration

Jeremy Bearer-Friend (George Washington) & Vanessa Williamson (Brookings Institution), Tax-Time Voter Registration, 168 Tax Notes Fed. 1013 (Aug. 10, 2020):

In this article, we examine the rationale for voter registration at the time of return filing, lay out a strategy for a new “Schedule VR,” and consider some potential implementation challenges. We conclude that various options are available for expanding voter registration through tax return filing, either at the federal or state level. Those committed to ensuring broad access to voting in the United States should consider these tax-time voter registration options.

Continue reading

Free Zoom Today On Federal Career Opportunities In Tax Law

Federal Career Opportunities in Tax Law

Why a federal career in tax law?  Contrary to popular belief, accounting expertise is not required to excel in this rewarding field.  In fact, you don’t even have to be a math whiz!  You are invited to hear a panel of federal tax (and non-tax) attorneys discuss the variety of federal career opportunities in the IRS Office of Chief Counsel and the Department of Justice, Tax Division.  We will also discuss opportunities for attorneys who want to focus on federal labor and employment practices.  Our panel will describe a typical day for experienced and new attorneys working for the Department of Justice, Tax Division, or the IRS Office of Chief Counsel.  Following the discussion, the panel will answer your questions.  So, by now you may be wondering: are we hiring?  YES, and we hope to meet you soon!

When and Where
Tuesday, September 1, 2020, at 12:00 p.m. – 1:00 p.m. EDT (live) and 3:00 p.m. – 4:00 p.m. EDT (video rebroadcast with live Q&A) via Zoom:
Meeting ID: 161 406 7274; Passcode: 9i?LhBYb

Continue reading

Weisbach: The Trade-Off Between Tax Administration And Tax Compliance

David A. Weisbach (Chicago), The Trade-Off Between Tax Administration and Tax Compliance:

This paper revisits optimal tax enforcement policy, focusing on two elements of that policy: (1) the optimal mix of government-level tax administration and individual-level tax compliance; and (2) the optimal mix of this combination (together, tax enforcement) and tax rates. The standard view is that we should weight tax administration but not tax compliance by the government’s cost of funds because we must pay for tax administration, but not compliance, through distorting taxes. As a result, we might want to rely on tax compliance measures even when using tax administration would otherwise be less expensive. Using a flexible model that allows the costs of tax ad-ministration and compliance to be imposed in arbitrary ways, I find instead that we should choose between administration and compliance costs purely on effectiveness grounds, without weighting.

Continue reading

Lesson From The Tax Court: Audit Reconsideration Is Not CDP

I cannot say it often enough: the IRS is not an entity.  It’s a collection of functions that, taken together, administer the internal revenue laws written by Congress.  So when someone says “the IRS did this” or “the IRS did that” they really mean that an action was taken by a discrete function, office, or employee within the organization we call the IRS.

Today we learn why taxpayers (and their representatives) need to understand how IRS functions relate to one another.   The taxpayer in Duy Duc Nguyen v. Commissioner, T.C. Memo. 2020-97 (June 30, 2020) (Judge Pugh) thought he was dealing with “the IRS” but he was really dealing with two separate functions: Exam and Appeals.  Because the information he supplied to Exam was not also supplied to Appeals, he was unable to contest the merits of an assessment in his CDP hearing.  Details below the fold.

Continue reading

TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• Florida Bar Exam Rescheduled For Oct. 13, With New Subjects To Be Tested And New Tech Provider; Applicants Say Prior Tech Company's Software Led To Russian Hacking Of Their Computers
• University Of Florida Law Professor Allowed to Teach ‘Critical Race Theory’ Course Online
• Forman & Mann: Tax Policy And Intergenerational Equity

Sunday:

• Volokh: The Controversy Over Quoting Racial Epithets, Now at UC-Irvine Law School
• Where Liberty University (And Christian Higher Education) Go From Here
• Pepperdine Year In Review (2019-2020)
• The Top Five New Tax Papers

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 #2:

1. [469 Downloads]  Policy Options for Taxing the Rich, by Lily Batchelder (NYU) & David Kamin (NYU)
2. [420 Downloads]  Ending Corporate Tax Avoidance and Tax Competition: A Plan to Collect the Tax Deficit of Multinationals, by Kimberly Clausing (UCLA), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley),
3. [383 Downloads]  Rethinking Tax for the Digital Economy After COVID-19, by Tarcisio Diniz Magalhaes (McGill) & Allison Christians (McGill) (reviewed by Young Ran (Christine) Kim (Utah) here)
4. [231 Downloads]  What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?, by Daniel Shaviro (NYU)
5. [229 Downloads]  The Effect of U.S. Tax Reform on the Tax Burdens of U.S. Domestic and Multinational Corporations, by Scott Dyreng (Duke), Fabio Gaertner (Wisconsin), Jeffrey Hoopes (North Carolina) & Mary Vernon (Wisconsin)

This Week's Ten Most Popular TaxProf Blog Posts

1. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Cost Of Inattention
2. Boston Magazine, Boston University Uses F-Bomb In Marketing Slogan To Get Students To Follow COVID-19 Guidelines On Campus
3. Wall Street Journal, The Best-Timed Charitable Gift Ever: 'There Is No Law Against Insider Giving'
4. Frank McIntyre (Rutgers) & Michael Simkovic (USC), The Value Of A Law Degree By College Major: $45,000 Humanities/$29,000 STEM Per Year For Life
5. UC-Irvine,  Call For Papers: UC-Irvine Symposium On Taxation In Times Of Crisis
6. Inc, Google's Career Certificates Aim To Replace College Degrees
7. Press Release, A Message From Pepperdine Caruso Dean Paul Caron: Our New Academic Year
8. Karen Sloan (Law.com), A Day In The Life Of A Law School Dean During COVID-19: Song Richardson (UC-Irvine)
9. John Diamond (Rice) & George Zodrow (Rice), The Economic Effects of Wealth Taxes
10. Karen Sloan (Law.com), More Dean Generosity: Who Will Be Next?

Forman & Mann: Tax Policy And Intergenerational Equity

Jonathan Barry Forman (Oklahoma) & Roberta F. Mann (Oregon), Borrowing from Millennials to Pay Boomers: Can Tax Policy Create Sustainable Intergenerational Equity?, 36 Ga. St. U. L. Rev. 799 (2020):

This Article explores the relationship between taxes and inter-generational equity. At the outset, Part I of the Article provides an overview of sustainable inter-generational justice and tax policy. Part II then provides an overview of the U.S. tax system, deficits, and public debt. Part III then considers how taxes can influence the level of resources that are available to future generations, and Part IV considers how taxes can influence the mix of resources that are available to future generations.

Continue reading

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Is Unilateral Formulary Apportionment Better Than the Status Quo? By Fleming, Peroni & Shay

This week, Young Ran (Christine) Kim (Utah) reviews a new work by J. Clifton Fleming, Jr. (BYU), Robert J. Peroni (Texas), and Stephen E. Shay (Boston College), Is Unilateral Formulary Apportionment Better than the Status Quo?, in The Allocation of Multinational Business Income: Reassessing the Formulary Apportionment Option (Wolters Kluwer 2020).

It is always exciting to find a new international tax paper written by the famous cohort of authors—our learned Professors J. Clifton Fleming, Jr. (BYU), Robert J. Peroni (Texas), and Stephen E. Shay (Boston College). These authors can be trusted to provide insight into carefully selected topics relevant to current issues in international tax. In each paper, they demonstrate profound knowledge and experience in the chosen topic, and share thoughtful policy suggestions. The new book chapter, Is Unilateral Formulary Apportionment Better than the Status Quo?, in The Allocation of Multinational Business Income: Reassessing the Formulary Apportionment Option (Wolters Kluwer 2020), is not an exception. It provides a condensed analysis of the arm's length standard and the rise of formulary apportionment as an alternative. Additionally, the paper suggests criteria for the cost/benefit analysis of unilaterally adopted formulary apportionment in both territorial and worldwide system paradigms. Readers with advanced knowledge of international tax will find this chapter to be interesting, and, thanks to the authors’ mastery of the topic, the paper is also accessible to readers with only a basic knowledge of international tax. I highly recommend this paper to professors who are looking for reading material on transfer pricing.

Continue reading

Tax Policy In The Trump Administration

• Accounting Today, Trump vs. Biden on Corporate Tax Policy
• Bloomberg, The Tax Biden Wants to Double and Trump Might Cut
• Boston Herald op-ed (Veronique de Rugy), Wealth Tax Does Much More Harm Than Good
• Common Dreams, As Trump Pushes New Tax Cuts for Wealthy, Analysis Shows US Billionaires $800 Billion Richer Since Pandemic Hit
• Council on Foreign Relations, Could Trade Agreements Help Limit Tax Competition?

Continue reading

Michigan State Seeks To Hire A Tax Prof

Michigan State University College of Law invites applications for full time faculty positions at various levels. The Law College expects to hire a tenured faculty member with exceptional teaching and scholarship credentials to fill the John F. Schaefer Chair in Matrimonial Law. Additionally, the Law College needs a Clinical Professor to direct its Intellectual Property and Entrepreneurial Law Clinic. Finally, the Law College seeks to hire a tenure-track faculty position and up to two Visiting Assistant Professors. The Law College’s curricular needs include criminal law, health care law, torts law, trusts and estates, family law, tax law, and intellectual property. The Law College seeks applicants with a commitment to excellence in teaching and scholarly achievement. All hires are subject to budgetary approval.

Michigan State University is the nation’s premier landgrant university, established in 1855. More information about the Law College can be found at www.law.msu.edu.

Continue reading