Paul L. Caron

Thursday, August 22, 2019

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, 16 J. Empirical Legal Stud. ___ (2019):

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 — i.e., 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.

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August 22, 2019 in Scholarship, Structuring a Tax Workshop Series, Tax | Permalink | Comments (0)

Kysar: Critiquing (And Repairing) The New International Tax Regime

Rebecca M. Kysar (Fordham), Critiquing (and Repairing) the New International Tax Regime, 128 Yale L.J. F. 339 (Oct. 25 2018):

In this Essay, I address three serious problems created — or left unaddressed — by the new U.S. international tax regime. First, the new international rules aimed at intangible income incentivize offshoring and do not sufficiently deter profit shifting. Second, the new patent box regime is unlikely to increase innovation, can be easily gamed, and will create difficulties for the United States at the World Trade Organization. Third, the new inbound regime has too generous of thresholds and can be readily circumvented. There are ways, however, to improve upon many of these shortcomings through modest and achievable legislative changes, eventually paving the way for more ambitious reform. These recommendations, which I explore in detail below, include moving to a per-country minimum tax, eliminating the patent box, and strengthening the new inbound regime.

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August 22, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Field: An Introduction To Tax Careers for JDs

Heather M. Field (UC-Hastings), An Introduction to Tax Careers for J.D.s, ABA Tax Times, Vol. 38, No. 3, p. 30 (Spring 2019):

To many people, the tax field seems like a very narrow niche. The tax profession does require specialized expertise, but tax professionals know that there is actually great diversity in the career paths available to law school graduates. Yet for law students and junior lawyers interested in the tax field, it can be difficult to appreciate the range of possible tax careers and to distinguish between what different tax practitioners do. Thus, to help aspiring tax professionals easily understand the range of tax careers they might pursue, this article offers a 3-pronged framework for describing tax careers available to J.D.s.

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August 22, 2019 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (1)

Analyst In IRS Criminal Investigation Division Pleads Guilty To Leaking Michael Cohen's Confidential Financial Information To Michael Avenatti, Stormy Daniels' Ex-Lawyer

NBC News, IRS Staffer Pleads Guilty to Giving Michael Cohen Data to Stormy Daniels' Lawyer:

IRS Logo 2An IRS staffer who leaked confidential details about former Trump lawyer Michael Cohen's finances to Michael Avenatti, ex-lawyer for adult film star Stormy Daniels, pleaded guilty Wednesday to illegally accessing and distributing that information.

John C. Fry was an investigative analyst with the IRS Criminal Investigation Division, the law enforcement arm of the agency, in May 2018 when he twice logged on to the Financial Crimes Enforcement Network (FinCEN) database and downloaded five Suspicious Activity Reports (SARs) — reports filed by banks when they note potentially suspicious transactions — related to Cohen and his company Essential Consultants.

In court Wednesday, Fry admitted giving Avenatti the information via cellphone and emailing him screenshots of the SARs. He pleaded guilty to one county of unauthorized disclosure of SARs. ...

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August 22, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Wednesday, August 21, 2019

University Of Florida Seeks To Hire A Tax Prof

Florida Logo (2017)University of Florida Levin College of Law seeks to hire multiple professors, across an array of fields, over the next several years as part of the university’s quest to become a top five public research institution. The University of Florida, located in Gainesville, FL, is currently the eighth best public research institution in the nation and the flagship university of the third largest state. In addition to seeking candidates for tenured and non-tenure-track positions, advertised separately, the Levin College of Law seeks highly qualified candidates for tenure-track positions.

The Appointments Committee welcomes applications from tenure-track candidates in all areas of law. Successful candidates will have a publication record, strong scholarly potential, a commitment to excellence in teaching, and enthusiasm for creating an inclusive environment for all students. Candidates must also have a JD, PhD, or equivalent degree in a related field. In reviewing applications, the Appointments Committee will consider long-term teaching needs in large enrollment classes, environmental law, health law, tax, and law and technology.

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August 21, 2019 in Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

The 25 Wealthiest Dynasties On The Planet Are Worth $1.4 Trillion, Up 24% From Last Year


Bloomberg, The World’s Wealthiest Family Gets $4 Million Richer Every Hour:

The Walton fortune has swelled by $39 billion, to $191 billion, since topping the June 2018 ranking of the world’s richest families.

Other American dynasties are close behind in terms of the assets they’ve accrued. The Mars family, of candy fame, added $37 billion, bringing its fortune to $127 billion. The Kochs, the industrialists-cum-political-power-players, tacked on $26 billion, to $125 billion.

So it goes around the globe. America’s richest 0.1% today control more wealth than at any time since 1929, but their counterparts in Asia and Europe are gaining too. Worldwide, the 25 richest families now control almost $1.4 trillion in wealth, up 24% from last year.

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August 21, 2019 in Tax, Tax News | Permalink | Comments (0)

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part II)

TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part II), by Daniel Hemel (Chicago):

Hemel (2018)In Bullock v. IRS, a federal district court in Montana held that states have standing to challenge the IRS’s rollback of information reporting requirements and that those requirements can only be amended through notice and comment. As my last post explained, the immediate significance of the decision is that noncharitable tax-exempt entities—including but not limited to politically active section 501(c)(4) groups—will have to disclose their large-dollar donors to the IRS (though not to the public). But the potential implications are much broader than that. The decision in Bullock suggests a possible new path for states to exert influence over federal tax policy through administrative law litigation. This post explores that possibility.

Bullock is the latest in a series of cases that might be seen as auguring the end of “tax exceptionalism.” By “tax exceptionalism,” I refer to the long-held view that general principles of administrative law—such as Chevron deference for agency statutory interpretations and the notice-and-comment requirement for agency rules—do not apply in the tax domain. Paul Caron put forward an early and influential critique of that view in his unforgettably titled 1994 article “Tax Myopia, or Mamas Don’t Let Your Babies Grow Up to Be Tax Lawyers.” Kristin Hickman advanced the attack on tax exceptionalism in a series of significant articles starting in the mid-2000s. The effort to end tax exceptionalism scored a major victory in January 2011 when Chief Justice John Roberts, in the case of Mayo Foundation for Medical Education and Research v. United States, said that the court was “not inclined to carve out an approach to administrative review good for tax law only.” Declarations of the “death of tax exceptionalism” soon followed.

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August 21, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (1)

University of Calgary Seeks To Hire A Tax Prof

Position Description:

Calgary (2019)The University of Calgary’s Faculty of Law is in the midst of a sustained period of growth and renewal. In its Strategic plan – Energy.Innovation.Impact. – UCalgary Law set itself the dual goals of enhancing its international eminence in the areas of energy, environmental and natural resources law and continuing its position of national leadership in the area of experiential learning. Since 2011, we have made twenty three new Faculty appointments, and we are looking to make further appointments to begin in 2019 and in years to follow.

The Faculty of Law at the University of Calgary invites applications for a tenure-track appointment at the rank of Assistant Professor in the area of tax law. The anticipated start date is July 1, 2020.

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August 21, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Tuesday, August 20, 2019

WSJ: The IRS Is Coming For Your Bitcoin

Wall Street Journal Tax Report, The IRS Is Coming For Your Bitcoin:

Bitcoin IRSThe Internal Revenue Service is on the war path against Americans who haven’t reported income from cryptocurrencies like bitcoin.

In late July, the IRS said it had started to send warning letters to more than 10,000 people who may not have complied with tax rules on virtual currencies. Agency officials have said criminal tax indictments involving cryptocurrencies are expected soon, and other enforcement letters are going out.

Tax specialists are urging crypto users who aren’t in compliance to act quickly. While coming clean involves a maze of tricky decisions, ignoring the agency could cost a crypto holder dearly. ...

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August 20, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part I)

Following up on my previous post, Federal Judge Overturns IRS Rule To Shield Political Donor Identities:  TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part I), by Daniel Hemel (Chicago):

Hemel (2018)The world of “dark money” became a bit less opaque at the end of last month when a federal district court in Montana struck down an IRS revenue procedure that had shielded section 501(c)(4) organizations from having to disclose large-dollar donors to tax authorities. The decision in the case—captioned Bullock v. IRS—is significant both because of its immediate implications for the oversight of section 501(c)(4) groups and other exempt organizations as well as its broader ramifications for judicial review of IRS actions. Tax law practitioners and professors—whether or not they focus on exempt organizations in their work, study, and teaching—should take note.

This is the first of two posts on Bullock v. IRS and its implications. Here, I’ll lay out the facts of the case and some thoughts on discrete legal issues that it raises. In the next post, I’ll try to situate Bullock within the wider debate over tax exceptionalism (and its alternative, which we might call “tax ordinaryism”). I’ll argue there that Bullock represents both a continuation of the trend toward tax ordinaryism and a novel twist.

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August 20, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Chaffee: Collaboration Theory And Corporate Tax Avoidance

Eric C. Chaffee (Toledo), Collaboration Theory and Corporate Tax Avoidance, 76 Wash. & Lee L. Rev. 93 (2019):

Tax revenue is the primary source of income for the government, yet corporations regularly engage in tax avoidance. Corporate managers and advisers commonly claim that the corporate form requires that they undertake this behavior because the nature of that form mandates it. Direct and indirect references are made to the classic case of Dodge v. Ford, as providing an edict that corporations must engage in unrelenting profit maximization that requires them to undertake aggressive tax avoidance.

As explored in my co-authored piece with Professor Karie Davis-Nozemack [Georgia Tech), Corporate Tax Avoidance and Honoring the Fiduciary Duties Owed to the Corporation and Its Stockholders [58 B.C. L. Rev. 1425 (2017)], the “Dodge Mandate,” as it may be termed, is far from absolute.

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August 20, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sons Of BOSS Rocks Out UC-Irvine

Sons of BossLast Friday, the UC-Irvine Graduate Tax Program hosted a welcome reception for its inaugural class of LL.M. students. The reception featured a special performance by “Sons of BOSS.” (Tax cognoscenti know that the Son of BOSS is a successor to BOSS (Bond and Option Sales Strategy) tax shelter.)

The leader of the band is Omri Marian (UC-Irvine). The other band members are: Frank Rork (Senior Director, Tax, Edwards Lifesciences), Michael Strasser (Senior Manger, Global Supply Chain Strategy, Edwards Lifesciences), Neil Richmond (International Tax Services, EY) and Joseph Cruz (EY). The band played numerous songs for UCI students and faculty, including, of course,  Taxman by the Beatles.

For video of the band's performance, see below the fold:

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August 20, 2019 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (1)

Monday, August 19, 2019

Law Degree Held Against Defendant In Tax Scam

Peter J. Reilly (Forbes), Law Degree Held Against Defendant In Tax Scam:

Anthony Charles Dwight Box was at what I consider the end of the line in tax litigation — appealing his sentence from prison — when he heard from the Eleventh Circuit last month. It was not good news. The Circuit Court approved the 36 month sentence handed down by Judge Federico Moreno of the Southern District of Florida.

Judge Moreno had made an upward adjustment from the 24 to 30-month sentence called for by the guidelines because Mr. Box's legal education should have made him know better, a conviction in 1989 and failure to make any restitution.

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August 19, 2019 in Legal Ed News, Legal Education, New Cases, Tax, Tax News | Permalink | Comments (0)

The Effect Of Tax Avoidance On Capital Structure Choices

Yoojin Lee (California State University, Long Beach), Terry J. Shevlin (UC-Irvine) & Aruhn Venkat (UC-Irvine), The Effect of Tax Avoidance on Capital Structure Choices:

In this study, we examine whether tax avoidance affects firm-level external financing choices. We hypothesize that firms marginally choose equity over debt because tax avoidance generates incremental cash flows but is likely risky. Consequently, we predict that tax avoidance induces a relative price increase in debt relative to equity. Our results are consistent with tax avoidance inducing firms to choose equity over debt. Importantly, our theory and results are distinct from the effects of marginal tax rates on capital structure (e.g., Modigliani and Miller 1963) and we control for marginal tax rates in all specifications. From an identification standpoint, we use path analyses, a plausibly exogenous 9th Circuit decision and cross-sectional tests to support our main results.

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August 19, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: A Lesson Of Interest

Tax Court (2017)Politicians love to brag about the voluntary nature of the U.S. tax system.  Back in 1862, the first Commissioner of Internal Revenue, George Boutwell, reported glowingly that, “sustained by the patriotic sentiments of the people, it is a matter for congratulation that the taxes assessed have, with few unimportant exceptions, been paid with cheerfulness...”  Those with boots on the ground had a different view: “Human nature must greatly change, before we shall find that patriotism is more universal than selfishness,” wrote the tax assessor Charles Emerson in 1867.

Good tax administration works with, rather than fights against, the selfishness of human nature.  One way to do that is by creating structural mechanisms that put taxpayers into a default posture of compliance.  Withholding is one of those.  Another way is to give taxpayers incentives to accurately comply with their reporting and payment obligations, incentives such as avoiding penalties and interest.

Enhancing taxpayer compliance is a central purpose of both penalties and interest.  See Policy Statement 20-1 in IRM (08-01-2019).  Last week’s case of Jon D. Adams v. Commissioner, T.C. Memo. 2019-99 (Aug. 12, 2019) (Judge Urda) is an object lesson in how penalties and interest do that.  In particular the case illustrates how the difficulty in obtaining relief from interest, coupled with the very robust statutory interest rates, suggest that imposition of interest is more than just a mechanism to compensate the government for the lost time value of money; it is a compliance tool.

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August 19, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure | Permalink | Comments (3)

Amazon Wins $1.5 Billion Ninth Circuit Tax Dispute Over Intangible Assets Shifted To Europe v. Commissioner, No. 17-72922 (9th Cir. Aug. 16, 2019):

Amazon logo (2018)The panel affirmed the Tax Court’s decision [148 T.C. 108 (2017)] on a petition for redetermination of federal income tax deficiencies, in an appeal involving the regulatory definition of intangible assets and the method of their valuation in a cost-sharing arrangement.

In the course of restructuring its European businesses in a way that would shift a substantial amount of income from U.S.-based entities to the European subsidiaries, appellee, Inc. entered into a cost sharing arrangement in which a holding company for the European subsidiaries made a “buy-in” payment for Amazon’s assets that met the regulatory definition of an “intangible.” See 26 U.S.C. § 482. Tax regulations required that the buy-in payment reflect the fair market value of Amazon’s pre-existing intangibles. After the Commissioner of Internal Revenue concluded that the buy-in payment had not been determined at arm’s length in accordance with the transfer pricing regulations, the Internal Revenue Service performed its own calculation, and Amazon filed a petition in the Tax Court challenging that valuation.

At issue is the correct method for valuing the preexisting intangibles under the then-applicable transfer pricing regulations. The Commissioner sought to include all intangible assets of value, including “residual-business assets” such as Amazon’s culture of innovcation, the value of workforce in place, going concern value, goodwill, and growth options. The panel concluded that the definition of “intangible” does not include residual-business assets, and that the definition is limited to independently transferrable assets.

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August 19, 2019 in New Cases, Tax, Tax News | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, August 18, 2019

The Taxation Of Religious Organizations In America

Grant M. Newman (J.D. 2019, Harvard), Note, The Taxation of Religious Organizations in America, 42 Harv. J.L. & Pub. Pol'y 681 (2019):

Christ taught his disciples to “[r]ender to Caesar the things that are Caesar’s, and to God the things that are God’s." The Supreme Court has, to an extent, rendered to God what is God’s by repeatedly acknowledging that it will not involve itself in the internal affairs of religious organizations. Nevertheless, the extent to which religious organizations remain vulnerable to involvement from other branches of government remains a pertinent question, especially with regards to the government’s power to tax.

This Note investigates the extent to which religious organizations are vulnerable to such involvement. A prime example of such involvement is Congress’ ability to use the Internal Revenue Code to the detriment of religious organizations. As it ensures that what is Caesar’s (i.e., taxes) is rendered to Caesar (i.e., the federal government), any policy of Congress and the Internal Revenue Service (I.R.S.) that thwarts the faithful from rendering to God what is God’s has the potential to impose a prohibitive burden on the operation of religious organizations. The potential to hinder the work of religious organizations through taxation is great. Indeed, “the power to tax involves the power to destroy.” Insofar as Congress retains the power to tax religious organizations, it likewise maintains the power to destroy.

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August 18, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)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. [530 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [400 Downloads]  Five Key Research Findings on Wealth Taxation for the Super Rich, by David Gamage (Indiana)
  3. [170 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  4. [128 Downloads]  The Substantive Canons of Tax Law, by Jonathan Choi (NYU)
  5. [105 Downloads]  Recent Developments in Federal Income Taxation: The Year 2018, by Bruce McGovern (South Texas) & Cassady Brewer (Georgia State)

August 18, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, August 17, 2019

Tax, Technology And Privacy: The Coming Collision

Andrew Leahey (Tax LL.M. 2019, NYU), Tax, Technology and Privacy: The Coming Collision:

In the last decade a dominant storyline in the realm of technology and the law has been the rise of Big Data and the various state responses, or lack thereof, to concerns stemming from the same. At first, technology companies pursued methods of monetizing accumulated data almost by default — massive stores of data were a byproduct of other business ventures. Like early wildcat oil drillers that struck natural gas, the stores of data was seen more as a hindrance than anything else. Over time, oil companies found a use for natural gas and Silicon Valley found a use for our stores of data. The next trove of data is going to be found in our tax information. Let us insure that this time, from the outset, our privacy is kept front of mind.

August 17, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Friday, August 16, 2019

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews The Property Tax Forty Years After Prop 13 and Alternative Local Government Revenues

This week, Ariel Jurow Kleiman (San Diego) reviews two recent articles on Californians’ perceptions of property taxes,by Ronald C. Fisher (Michigan State), Robert W. Wassmer (Cal State Sacramento), and Zachary Kuloszewski (Michigan State): Perspectives of the Property Tax Forty Years after Proposition 13 and Support for Alternative Local Government Revenues.

StevensonTax experts are befuddled and frustrated by Americans’ diehard aversion to the property tax, which contravenes professional wisdom on the tax’s salutary qualities and hamstrings local governments’ ability to provide necessary and popular public services.  The rich trove of survey research sparked by the 1970’s property tax revolt, e.g., here and here, speaks to decades of such consternation.  Two recent papers by Fisher, Wassmer, and Kuloszewski use 2016 CalSpeaks surveys to add modern texture to this body of data.

In Support for Alternative Local Government Revenues, the authors conclude that the property tax revolt is “alive and well in California forty years after Proposition 13.”  To arrive there, they asked survey respondents to choose a preferred revenue source to either: 1) make up for a public revenue shortage, or 2) raise revenue to improve inadequate services.  (Side note, data on respondents’ opinions of the adequacy of various public services is interesting on its own.)  In both cases, only about 15% of respondents preferred to raise property taxes, compared to about 30% who preferred to raise the sales tax, and 42-52% preferring to raise fees.  Unsurprisingly, they find that those who self-identify as progressive are more likely to support raising revenue via property taxes, and less likely to support doing so via fees.  Those who identify as conservative are more likely to support fees over taxes.  Aside from ideology, they also find that most other personal characteristics (such as race or education) are not correlated with tax preferences.  Two exceptions to this are homeowners and people with income above $150K, both of whom are less likely to prefer the property tax over other revenue sources. 

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August 16, 2019 in Scholarship, Tax, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink | Comments (1)

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

UConn Seeks To Hire A Clinical Tax Prof

UConn Law Logo (2015)The University of Connecticut School of Law seeks candidates for the position of Assistant Clinical Professor of Law to serve as the Director of the Tax Clinic beginning July 1, 2020. This is a full-time, non-tenure-track position subject to the Law School’s Policy on Long-Term Contracts for Non-Tenure Track Clinical Faculty, which complies with ABA Standard 405(c).

The Tax Clinic is one of 18 clinics and field placement programs operated by the Law School. Students in the clinic, under faculty supervision, provide free legal assistance to low-income taxpayers in disputes with the Internal Revenue Service and/or the Connecticut Department of Revenue Services. The Director is responsible for training students in the relevant law and lawyering skills and supervising them in their clinical fieldwork. The Director also manages and oversees all aspects of clinic operations, including but not limited to: client selection, intake, and representation; case-flow; quality control; supervision of clinic staff; and relationships with external University, state, and private stakeholders. The clinic is partially funded by a federal grant through the IRS Low-Income Taxpayer Clinic (LITC) program, and the Director’s duties include working with the University’s grant office to periodically renew the grant and provide required reports and documentation to ensure compliance. The Director also provides academic and career counseling to students; participates in public service activities; and may teach additional courses if mutually agreed upon with the Associate Dean for Clinical and Experiential Education.

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August 16, 2019 in Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Jim Maule's Reflections On 40 Years Of Teaching Tax Law

Shanske: State Tax Administrators In An Age of Statutes

Darien Shanske (UC-Davis), State Tax Administrators: Please Do Your Part in Sending PL 86–272 Off Into the Sunset:

This is the story of an arbitrary and destructive interstate tax shelter, one created by the federal government. No, this is not about collecting the sales and use tax. That tax shelter is largely on its way out; it was created by the Supreme Court in 1967, embraced anew in 1992 and finally ended, by the Court, in 2018, in a case called Wayfair. The tax shelter I am talking about in this post was created in 1959, by Congress. It was meant to be temporary, but is still with us and it shields certain large multistate taxpayers from the state corporate income tax.

The law in question, PL 86–272, shields taxpayers from paying the corporate income tax if certain conditions are satisfied. In particular, the taxpayer must be engaged in selling only tangible personal property in the state and the only activity in the state must be “solicitation.” Leaving aside the wisdom and propriety of Congress creating a tax shelter at all, these requirements indicate how dated the statute is now — and how poorly thought through it always was. Why are only sellers of tangible person property given the benefit of this special rule? Why only solicitation? How is solicitation a proxy for whether it would be fair and reasonable to ask a taxpayer to pay the income tax? If one remember the statute’s vintage, then one can understand the focus on tangible personal property because that was a more important part of the economy. This also explains the emphasis on solicitation as this refers to a then much more common business model of relying on an in-state sales force, though it never made a lot of sense to give a break to taxpayers large enough to engage in only solicitation. ...

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August 16, 2019 in Scholarship, Tax, Tax News | Permalink | Comments (0)

Thursday, August 15, 2019

Grinberg: Reestablishing International Tax Order

Itai Grinberg (Georgetown), Stabilizing 'Pillar One': Corporate Profit Reallocation in an Uncertain Environment:

This paper is about how the world reestablishes international tax order.

The paper focuses on the OECD’s work on profit reallocation and asks whether this multilateral effort can be successful in stabilizing the international tax system. The analysis centers on the current leading concepts for reallocating profit among jurisdictions under what is known as “Pillar One” of the OECD work programme. To analyze whether any Pillar One concept can be turned into a stable multilateral regime, it is necessary to specify certain elements of what a proposal to reallocate profits might entail. Accordingly, this paper sets out two strawman proposals. One strawman uses a “market intangibles” concept that explicitly separates routine and residual returns. The other strawman may reach a similar result, but does not explicitly attempt to separate routine and residual returns. Instead, in current OECD parlance, it might be described as a “distribution-based” approach.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Dayton Seeks To Hire A Tax Prof

DaytonThe University of Dayton School of Law invites applications for a tenure-track Assistant Professor position and a Full Professor with tenure position to begin in August 2020.

Applicants for the Assistant Professor position must have a J.D. or the equivalent international law degree. We welcome applications from candidates across all areas of law. Areas of particular interest include secured transactions, business organizations, constitutional law, family law, wills and trusts, tax, conflicts of law, contracts, and property. Applications must be received by January 1, 2020. Applications should include a cover letter and CV and must be submitted through the University of Dayton's electronic employment site.

Applicants for the Full Professor position must have tenure at a United States or International law school, a J.D. or the equivalent international law degree, a record of outstanding scholarship and publication in the fields of commercial or constitutional law, and excellent teaching evaluations. Applications must be received by September 12, 2019. Applications should include a cover letter, CV, and a sample of recent teaching evaluations. Applications must be submitted through the University of Dayton’s electronic employment site.

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August 15, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Avi-Yonah & Fishbien: Tax Expenditures And Horizontal Equity — A Lost Lesson From Stanley Surrey

Reuven S. Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2020, Michigan), Tax Expenditures and Horizontal Equity: A Lost Lesson from Stanley Surrey:

Tax expenditures are “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.’’ The concept of tax expenditures was invented by the first Assistant Secretary for Tax Policy, Stanley S. Surrey, in the late 1960s, and was codified by the Congressional Budget Act of 1974, which requires that a list of tax expenditures be included in the US budget. The tax expenditure budget relies on the Haig Simons definition of income as the base, while acknowledging the fact that not all deviations from Haig Simons are treated as tax expenditures.

The basic problem with attempts to define tax expenditures against a Haig Simons baseline is that it is not clear why such deviations are normatively problematic. Put bluntly, who cares whether a specific tax provision is a deviation from some theoretical definition of income by two long dead economists? That, presumably, is why most of the literature now accepts the Weisbach and Nussim view that the debate between Surrey and Bittker was meaningless, and we should just learn to live with the tax expenditures.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Foreign Branch Income Issues In Transitioning From GILTI To FDII

Jeffery M. Kadet (University of Washington) & David Koontz, Transitioning From GILTI to FDII? Foreign Branch Income Issues, 164 Tax Notes 57 (July 1, 2019): 

In this article, Kadet and Koontz discuss certain issues that must be considered when a multinational analyzes whether it should transition certain operations conducted within a CFC (along with the associated income) into a domestic group member so as to achieve an FDII-qualifying structure. In doing so, there will likely be a need to move some key income-earning operations and functions to the United States to assure that the FDII foreign branch rule is not violated.

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August 15, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Wednesday, August 14, 2019

Aprill: Revisiting Federal Tax Treatment Of States, Political Subdivisions, And Their Affiliates

Ellen P. Aprill (Loyola-L.A.), Revisiting Federal Tax Treatment of States, Political Subdivisions, and their Affiliates, 23 Fla. Tax Rev. ___ (2019):

Florida Tax Review (2018)Several provisions of the 2017 tax legislation, known as Tax Cuts and Jobs Act (TCJA), focused attention on federal taxation of states, their political subdivisions and their affiliates. Most prominently, TCJA limited the federal income tax deduction for state and local taxes to $10,000. States have sued and attempted work-arounds. Another provision, which imposes an excise tax of 21% on “excessive compensation” paid by certain entities not subject to income tax, inadvertently failed to subject to tax entities that are integral parts of states or political subdivisions or are themselves political subdivisions. Calls for a technical correction have so far gone unheeded.

More than twenty years ago, I wrote two articles about federal taxation of state governments, political subdivisions, and their affiliates. The Teacher’s Manual to a leading casebook on nonprofit organizations describes these two articles as “as much as anyone knows about this confusing patchwork and its ramifications.” The passage of time, changes in my own thinking and new developments call for my returning to this topic. I do so here. Moreover, far more than in my earlier work, I examine the applicable rules regarding charitable contribution deductions to these entities as well as discuss the special rules applicable to governmental charities and the category of charities that lessen the burdens of government.

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August 14, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Cincinnati Seeks To Hire A Tax Prof

Cincinnati Logo (2019)The University of Cincinnati College of Law invites applications from entry-level candidates for the tenure-track position of Assistant Professor of Law. We welcome candidates across all areas of law, although subject areas of particular interest include business law, health law, intellectual property, property, and tax. Applicants must possess a J.D. or equivalent degree and outstanding academic credentials and have demonstrated potential for outstanding teaching and scholarship. Relevant experience in private practice, government service, or a judicial clerkship is strongly preferred. We welcome applications from persons who would add to the diversity of our academic community and engage with the broader community. Questions about the hiring process should be directed to Professor Felix Chang, Chair of the Faculty Appointments Committee. Candidates must also apply online via the UC recruitment system to be considered an applicant.

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August 14, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

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.  This ranking includes downloads from two 30- and 35-page papers by 12 tax professors on the new tax legislation that garnered a lot of media attention (including the New York Times and Washington Post) and generated a massive amount of downloads (the papers are the most downloaded tax papers of all-time by over 200%).  See Brian Leiter (Chicago), 11 Tax Profs Blow Up The SSRN Download Rankings. (For some reason, Mitchell Kane (NYU) — the twelfth academic co-author of the two papers — is not included in the SSRN download rankings (although the downloads are included on his individual author page)).  Here is the new list (through August 1, 2019) 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
Reuven Avi-Yonah (Michigan)  184,986 Reuven Avi-Yonah (Michigan) 12,878
Dan Shaviro (NYU) 118,783 Daniel Hemel (Chicago) 10,565
David Gamage (Indiana-Bl.) 114,647 David Gamage (Indiana-Bl.) 8,640
Daniel Hemel (Chicago) 113,015 Darien Shanske (UC-Davis)  8,555
Lily Batchelder (NYU) 111,898 Dan Shaviro (NYU) 8,305
Darien Shanske (UC-Davis) 108,497 Manoj Viswanathan (UC-Hastings) 7,627
Cliff Fleming (BYU) 103,607 Ari Glogower (Ohio State) 7,290
8 David Kamin (NYU) 100,506 David Kamin (NYU) 7,073
9 Manoj Viswanathan (UC-Hastings) 100,501 Lily Batchelder (NYU) 7,024
10  Rebecca Kysar (Fordham) 99,652 Cliff Fleming (BYU) 6,803
11  Ari Glogower (Ohio State) 98,391 Rebecca Kysar (Fordham)  6,735
12  Michael Simkovic (USC) 43,223 Richard Ainsworth (BU) 2,663
13  D. Dharmapala (Chicago) 37,181 Michael Simkovic (USC) 2,650
14  Paul Caron (Pepperdine) 35,672 Bridget Crawford (Pace) 2,591
15  Louis Kaplow (Harvard) 31,925 Brad Borden (Brooklyn) 2,495
16  Richard Ainsworth (BU) 27,900 Kyle Rozema (Chicago) 2,493
17  Ed Kleinbard (USC) 25,959 D. Dharmapala (Chicago) 2,335
18  Vic Fleischer (UC-Irvine) 25,557 Ruth Mason (Virginia) 2,221
19  Jim Hines (Michigan) 24,586 Robert Sitkoff (Harvard) 2,051
20  Gladriel Shobe (BYU) 24,043 Jacob Goldin (Stanford) 1,976
21  Ted Seto (Loyola-L.A.) 23,574 Louis Kaplow (Harvard) 1,856
22  Richard Kaplan (Illinois) 23,450 Hugh Ault (Boston College) 1,849
23  Brad Borden (Brooklyn) 23,022 Joe Bankman (Stanford) 1,716
24  Robert Sitkoff (Harvard) 22,713 Yariv Brauner (Florida) 1,635
25  Katie Pratt (Loyola-L.A.) 22,295 George Yin (Virginia) 1,558

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August 14, 2019 in Legal Education, Scholarship, Tax, Tax Prof Rankings, Tax Rankings, Tax Scholarship | Permalink | Comments (0)

A Global Financial Transaction Tax: Theory, Practice And Potential Revenues

Atanas Pekanov & Margit Schratzenstaller (Austrian Institute of Economic Research), A Global Financial Transaction Tax — Theory, Practice and Potential Revenues:

This study presents in detail the concept of a financial transaction tax (FTT) and the theoretical and empirical evidence in favour and against introducing it, the potential revenues, different implementation designs and its ability to correct various market failures. We analyse the benefits and challenges of introducing a tax on financial transactions, putting special focus on the introduction of such a tax on a world-wide scale. For a number of reasons, international cooperation is deemed a central prerequisite for an efficient FTT. The purpose of the tax is to raise substantial revenues and help dampen excessive financial market speculation and market volatility. An FTT would ensure that the financial sector contributes more substantially to government revenues. In its optimal form, the tax would be broad-based and there will be no financial instrument types exempted. In a second step, we analyse from a political economy perspective the prospects, the current status, and the lessons learnt from the European discussion on the implementation of an FTT. Finally, we calculate the revenue potential of a global FTT and report how much revenues would accrue to specific countries. We estimate that the tax, if imposed globally and taking into account still evasion, relocation and lock-in effects, can bring significant revenues — between 237.9 and 418.8 billion $ annually.

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August 14, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Tuesday, August 13, 2019

Smith: Exploiting The Charitable Contribution Deduction's Hypersalienc

Eric Smith (Weber State), Exploiting the Charitable Contribution Deduction's Hypersalience, 2019 Utah L. Rev. ___:

Hypersalience describes the cognitive error that occurs when taxpayers are highly aware of a tax provision generally, but fail to correctly perceive its associated limitations. The charitable contribution deduction provides a strong example of hypersalience as taxpayers have general awareness that tax benefit follows charitable giving, but often fail to understand the deduction’s limits—most notably the standard deduction’s preclusion to any direct tax benefit for charitable giving. As cognitive error drives inaccurate perception of the tax law, the question arises: what, if anything, should the government do to correct taxpayer understanding?

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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Southwestern Law School Seeks To Hire A Tax Prof

Southwestern Law SchoolSouthwestern Law School invites applications for entry-level and experienced faculty positions for the 2020-21 academic year. Curricular needs are most pressing in the areas of Torts, Corporate Law/Entrepreneurship, Tax, and Criminal Law. Applications from members of underrepresented groups are particularly encouraged. Interested persons should send resume, references, subject area and scholarship agenda via email to Senior Associate Dean Doreen Heyer, Chair, Faculty Recruitment Committee, Southwestern Law School, 3050 Wilshire Blvd., Los Angeles, CA 90010.

August 13, 2019 in Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Should We Tax Soda? An Overview Of Theory And Evidence

Hunt Allcott (NYU), Benjamin Lockwood (Wharton) & Dmitry Taubinsky (UC-Berkeley), Should We Tax Soda? An Overview of Theory and Evidence, 33 J. Econ. Persp. 202 (2019):

Taxes on sugar-sweetened beverages (SSBs) are growing in popularity and have generated an active public debate. Are they a good idea? If so, how high should they be? Are such taxes regressive? Americans and some others around the world consume a remarkable amount of SSBs, and the evidence suggests that this generates significant health costs. Building on recent work by Allcott, Lockwood, and Taubinsky (2018) and others, we review the basic economic principles for an optimal sin tax on SSBs. The optimal tax depends on (1) externalities: uninternalized costs to the health system from SSB consumption; (2) internalities: costs consumers impose on themselves by overconsuming sweetened beverages due to poor nutrition knowledge or lack of self-control; and (3) regressivity: how much the financial burden and the internality benefits from the tax fall on the poor. We then summarize the empirical evidence on the key parameters that determine how large the tax should be, which suggests that SSB taxes can be welfare enhancing. We end with seven concrete suggestions for policymakers considering an SSB tax. First, tax grams of sugar, not ounces of soda. Second, focus on counteracting externalities and internalities, not on minimizing SSB consumption. Third, design soda taxes to reduce consumption among people generating the largest externalities and internalities. Fourth, make taxes consistent across geographic boundaries. Fifth, use caution when pre-allocating tax revenues. Sixth, when judging regressivity, consider internality benefits, not just who pays the taxes. Finally, our read of the evidence is that taxing soda is probably a good idea.


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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (1)

Dharmapala & Khanna: Stock Market Reactions To India's 2016 Demonetization: Implications For Tax Evasion, Corruption, And Financial Constraints

Dhammika Dharmapala (Chicago) & Vikramaditya Khanna (Michigan), Stock Market Reactions to India's 2016 Demonetization: Implications for Tax Evasion, Corruption, and Financial Constraints, 16 J. Empirical Legal Stud. 281 (2019):

On November 8, 2016, the Indian government made a surprise announcement that certain currency notes (representing 86% of the currency then in circulation) would no longer be legal tender (although they could be deposited in banks over a limited period). The stated reason for this sudden “demonetization” was to combat tax evasion and corruption associated with “unaccounted-for” cash. We compute abnormal returns for different subsamples of firms — defined by industry, ownership structure, and other characteristics — on the Indian stock market around this event. There is little evidence that sectors thought to be associated with greater tax evasion or corruption experienced significantly different returns. However, we find substantial positive returns for banks and for state owned enterprises (SOEs).

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August 13, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Monday, August 12, 2019

Burke: Exploiting The Medicare Loophole

Karen C. Burke (Florida), Exploiting The Medicare Loophole, 21 Fla. Tax Rev. 570 (2018):

Florida Tax Review (2018)Section 1411 imposes a 3.8 percent surtax on investment income of high earners that mirrors Medicare taxes on earned income. The enactment of the net investment income tax highlights gaps in the employment tax rules for passthrough entities — particularly limited partnerships, S corporations, and limited liability companies. This article considers how businesses can be structured to allow active high-income owner-employees of passthrough entities to avoid all three of the 3.8 percent Medicare taxes (SECA, FICA and section 1411). Part I considers the anachronistic limited partner exception to the SECA tax and the well-known S corporation loophole under the FICA tax, as well as the failure of section 1411 to reach active business income that avoids these employment taxes. Part II considers the recent Renkemeyer case, which has reignited the employment tax debate and threatens to upend structures used in investment and real estate funds to shelter management fees from all of the 3.8 percent taxes.

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August 12, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

AALS Tax Section Call For Papers Due Aug. 15: New Voices In Tax Law & Policy

AALS (2018)The AALS Section on Taxation has issued a Call for Papers to be presented at a works-in-progress session at the 2020 AALS Annual Meeting in Washington, D.C. The works-in-progress session is tentatively scheduled for Friday, January 3, 2020. This program will provide speakers the opportunity to present their work and receive feedback from commentators in the field.

Eligibility: Scholars teaching at AALS member schools or non-member fee-paid schools with seven or fewer years of full-time teaching experience as of the submission deadline are eligible to submit papers. For co-authored papers, all authors must satisfy the eligibility criteria.

Due date: 5 p.m. PDT, Thursday, August 15, 2019.

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August 12, 2019 in Conferences, Legal Education, Tax, Tax Conferences, Tax Scholarship | Permalink | Comments (0)

Lesson From The Tax Court: Know The Difference Between IRAs And 401(k)s

Tax Court (2017)Every year I lecture on the time value of money.  Part of the lecture compares a normal taxed savings account funded with after-tax dollars to a tax-free retirement account funded with pre-tax dollars.  At the end of my assumed 40-year investment period the difference astonishes the students and drives home my main point about the time value of money.

The effectiveness of my point does not depend on which type of tax-deferred retirement account is being used.  I figure most of my students will make use of a traditional IRA, or Roth, or spousal, or will be able to make use of a 401(k) plan or a 408(k) SEP plan.  It does not matter which type of plan they use: the power of tax deferral works in all of them.

But the type of retirement plan can make a huge difference to the treatment of early withdrawals.  That is the lesson from last week’s case of Lily Hilda Soltani-Amadi and Bahman Justin Amadi v. Commissioner, T.C. Summary Opinion 2019-19 (Aug. 8, 2019) (Judge Armen).  The taxpayers there had made an early withdrawal from their 401(k) plan to help buy their first home.  The distribution would have been penalty-free had it come from an IRA.  But it came from a 401(k) and so, while permitted, it carried with it the §72(t) 10% penalty.  Details below the fold.

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August 12, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (4)

TaxProf Blog Weekend Roundup

Sunday, August 11, 2019

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #2 and #5:

  1. [527 Downloads]  The President's Tax Returns, by Andy Grewal (Iowa)
  2. [374 Downloads]  Five Key Research Findings on Wealth Taxation for the Super Rich, by David Gamage (Indiana)
  3. [158 Downloads]  Fixing the Five Flaws of the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed College)
  4. [122 Downloads]  Back to Basics: Rethinking Normative Principles in International Tax, by Shay Shimon Moyal (S.J.D. 2020, Michigan)
  5. [122 Downloads]  The Substantive Canons of Tax Law, by Jonathan Choi (NYU)

August 11, 2019 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink | Comments (0)

Saturday, August 10, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Uber Created A $6.1 Billion Dutch Weapon To Avoid Paying Taxes

Bloomberg, Uber Created a $6.1 Billion Dutch Weapon to Avoid Paying Taxes:

UberUber, responding to a European crackdown on offshore tax havens, created a $6.1 billion Dutch tax deduction that will help the company reduce a chunk of its global tax bill for years to come.

San Francisco-based Uber generated the outsized deduction before its initial public offering in May because it moved some of its offshore subsidiaries to different countries as a result of new European Union rules governing multinational companies.

The $6.1 billion deduction came through an increase in the value of intellectual property that Uber transferred between its offshore subsidiaries, according to the company’s first quarterly filing. When an intangible asset increases in value, so do the tax deductions that come with its use over time.

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August 10, 2019 in Tax, Tax News | Permalink | Comments (0)

Friday, August 9, 2019

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews McCaffery's A Better Hope For Campaign Finance Reform

This week, Mirit Eyal-Cohen (Alabama) reviews Edward J. McCaffery (USC), A Better Hope for Campaign Finance Reform.

Mirit-Cohen (2018)

McCaffrey begins this Article with a gloomy picture of American politics—”dark money” has made the identity of mega-givers and the degree of their political contributions opaque. Referring to 2016 presidential and congressional election biggest givers, he blames the social and political issues in the U.S. to the role of money in politics. Many wealthy donors are spending huge sums to influence democratic politics—to buy politicians or political offices or laws. McCaffery has little hope of changing these facts of human nature.  He demonstrates how legislative, judicial and regulatory actions have failed in solving this problem. But not to worry because he has a plan. McCaffery proposes to utilize the tax system to reduce campaign spending by raising the pre-tax costs of political expenditures. Similar to other Pigouvian models like the cigarettes tax, raising the costs of harmful political activities through taxation will reduce their occurrence. He claims that political contributions is another example where taxation is more efficient in reducing undesired behavior than other regulatory measures or public education campaigns. Yet, his proposal is not exclusive to political campaign contributions. Here, too, he advances his longtime proposal to switch from an income-based to consumption-based tax system, also known as a progressive spending tax. In fact, he admits that there would be no change in the tax treatment of campaign contrition—there will be no provision in the reformed consumption tax system that is specific to political expenditures, other than rules similar to today’s disallowing them as ordinary business deductions or as charitable contributions.

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August 9, 2019 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

McCaffery: A Better Hope For Campaign Finance Reform

Edward J. McCaffery (USC), A Better Hope for Campaign Finance Reform:

There is too much money in American politics, and too much of it comes from too few citizens. Mega-donors like Sheldon Adelson or Tom Steyer make $100 million political expenditures every election cycle. Attempts to limit such large political contributions have failed at every level: judicially, legislatively, and administratively. Much of the academic literature has joined the real world’s sense of despair. This Article takes a new tack. By changing our tax system from an income to a consistent progressive spending tax, the true cost of political expenditures by mega-donors could increase tenfold.

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August 9, 2019 in Scholarship, Tax | Permalink | Comments (0)

Todd: Phantom Income And Domestic Support Obligations

Timothy M. Todd (Liberty), Phantom Income and Domestic Support Obligations, 67 Buff. L. Rev. 365 (2019):

The tax code is designed to raise government revenue. Domestic support obligations (DSOs) — namely, child support and spousal support — are designed to ameliorate the financial burdens that arise upon divorce. To determine the amount of domestic support obligations, statutes often refer to commonly used taxation concepts, such as “income.”

Courts determining domestic support obligations have been confronted with the question of how to treat “phantom income” — that is, amounts that are includible as gross income under the federal tax code but that have not resulted in any actual current cash receipt. Individuals obligated to make domestic support payments have argued that phantom income should not be included when calculating or modifying such obligations because the individual’s ability to pay has not materially changed. This Article analyzes the intersection of federal tax law and domestic support obligations concerning phantom income.

This Article considers several solutions — judicial and legislative — to address the phantom income issue in the domestic support context.

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August 9, 2019 in Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)