Paul L. Caron
Dean




Tuesday, December 7, 2021

2021 Tannenwald Tax Writing Competition Winners

Tannenwald (2016)The Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship has announced the winners of the 2021 tax writing competition:

First Prize ($5,000):
Mohanad Salaimi (Michigan), Corporate Inversions: Getting on the Tax Reform Train Before It Leaves the Station
Faculty Sponsor: Reuven S. Avi-Yonah

Second Prize ($2,500):
Alexander Pettingell (NYU), A Machine Learning Approach to the Debt-Equity Multifactor Test
Faculty Sponsor: Mitchell Kane

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December 7, 2021 in ABA Tax Section, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

WSJ: A Couple Stored IRA Gold At Home. They Owe The IRS $300,000.

Following up on Bryan Camp (Texas Tech), Lesson From The Tax Court: How To Mess Up Your Checkbook IRA:  Wall Street Journal Tax Report, A Couple Stored IRA Gold at Home. They Owe the IRS More Than $300,000.:

It’s official: Owners of individual retirement accounts with assets invested in gold and silver coins can’t store them in a safe at their home.

So ruled the judge in a recent Tax Court case, Andrew McNulty et al. v. Commissioner [157 T.C. No. 10 (Nov. 18, 2021)]. The decision will cost Mr. McNulty and his wife Donna dearly—taxes of nearly $270,000 on about $730,000 of IRA assets, plus penalties likely to exceed $50,000.

The ruling disallows a scheme that was heavily promoted several years ago, when radio and internet ads touted the benefits of using IRA assets to buy gold and silver coins and then store them at home or in a safe-deposit box. Promoters based pitches on a perceived ambiguity in the law, despite warnings from the Internal Revenue Service and legal specialists.

These pitches are less common now, but they’re still around. Savers who have bought into them or are considering such a move should reconsider right away.

The McNulty case has a broader lesson as well: It’s a cautionary tale showing how dangerous it can be to invest retirement-plan funds in alternative assets without proper guidance.

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December 7, 2021 in New Cases, Tax, Tax News | Permalink

Economic Freedom Of North America 2021

Fraser Institute Cover

Fraser Institute, Economic Freedom of North America 2021:

Economic Freedom of North America 2021 is the seventeenth edition of the Fraser Institute’s annual report. This year it measures the extent to which—in 2019, the year with the most recent available comprehensive data—the policies of individual provinces and states were supportive of economic freedom, the ability of individuals to act in the economic sphere free of undue restrictions. There are two indices: one that examines provincial/state and municipal/local governments only and another that includes federal governments as well. The former, our subnational index, is for comparison of individual jurisdictions within the same country. The latter, our allgovernment index, is for comparison of jurisdictions in different countries. ...

Figure 1.2b shows the subnational scores for the US states. After a one-year absence in last year’s report, New Hampshire is again in the top spot with 7.83, followed closely by Tennessee (7.82), then Florida (7.78), Texas (7.75), and Virginia (7.59).3 The least free state was again New York with 4.33, far behind California (4.68), Vermont (4.86), West Virginia (5.00), and New Mexico (5.01).

Fraser Institute Chart 1

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December 7, 2021 in Tax, Think Tank Reports | Permalink

Tax System Working Group Discussion Series: Diversity In The Tax Bar

Tax-system-working-group-discussion

Law Firm Antiracism Alliance Tax System Working Group discusses Diversity in the Tax Bar today at 1:30 PM EST (RSVP here): 


The LFAA Tax System Working Group, in conjunction with the American College of Tax Counsel, the American Tax Policy Institute and the Tax Section of the American Bar Association, is sponsoring a ten-part discussion series on diversity in the tax bar. Over the course of this series of virtual discussions, participants will learn about the current state of diversity in the tax bar, opportunities for diverse tax attorneys in different practice settings, and steps that the tax bar should be taking to create sustainable diversity, equity and inclusion strategies.

Panelists:

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December 7, 2021 in Conferences, Legal Education, Tax, Tax Conferences | Permalink

Coherent Capital Structure Policy: Between Bailouts And The Interest Deduction

Jeff Gordon (J.D. 2021, Yale), Note, Coherent Capital Structure Policy: Between Bailouts and the Interest Deduction, 38 Yale J. on Reg. 1182 (2021):

Yale J on Reg (2022)The Federal Reserve’s recent, unprecedented corporate debt purchases will further reduce the cost of corporate debt relative to equity. Given the already high degree of leverage in the corporate sector, I argue that this is a dangerous policy choice. However, the best solution is not to outlaw the Fed’s crisis actions, but to reform other federal laws that create a debt bias in aggregate.

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December 7, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, December 6, 2021

Leviner Presents International Taxation: Contemporary Challenges And Trajectories Today At Hebrew University

Sagit Leviner (Ono Academic College; Google Scholar) presents International Taxation: Contemporary Challenges & Trajectories, Analytical Report to The Bank of Israel (with Yehuda Porath (Bank of Israel)) at Hebrew University today as part of its Faculty of Law Tax Law Forum hosted by David Gliksberg:

LevinerThe existing rules of taxation and the international division of taxing powers and jurisdiction originated more than a hundred years ago. This was when physical boundaries and the nation-state played a prominent geopolitical role, most trade was in physical goods, global value chains were fairly compact and unsophisticated, and trade made a relatively modest contribution to world GDP. While the global economy has drastically evolved over the past century, the international tax architecture, to this date, echoes its origins and determines the allocation of the tax base largely by reference to the geopolitical affiliation of the taxpayer and their source of income.

The existing rules of taxation and the international division of taxing powers and jurisdiction originated more than a hundred years ago. This was when physical boundaries and the nation-state played a prominent geopolitical role, most trade was in physical goods, global value chains were fairly compact and unsophisticated, and trade made a relatively modest contribution to world GDP. While the global economy has drastically evolved over the past century, the international tax architecture, to this date, echoes its origins and determines the allocation of the tax base largely by reference to the geopolitical affiliation of the taxpayer and their source of income.

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December 6, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Holden & Kisska-Schulze: Taxing Sports

John T. Holden (Oklahoma State; Google Scholar) & Kathryn Kisska-Schulze (Clemson), Taxing Sports, 71 Am. L. Rev. ___ (2021):

Sports are no longer mere games. In today’s money-driven culture, they have cultivated into a lucrative business enterprise where everyone – whether professional or amateur; owner or player; coach or spectator – stands to make significant money. Modern sports have also morphed into a landscape encompassing both traditional athletic events, and the more novel esports and daily fantasy sports (DFS) arenas. Across all of these physical, digital, and biological spheres, sports revenues are being measured in terms of billions. It thus stands to reason why taxes have become a progressively critical discussion point within U.S. professional and collegiate sports, the videogaming world, and the newly-legalized sports gambling industry.

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December 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: Taxpayer 'Filed' Return Even Though IRS Could Not Process It

Camp (2021)Case law gets made when things go wrong.  When things go right, a taxpayer will file a return, the IRS will process the return, and the taxpayer will receive any claimed overpayment as a refund.  Today's lesson arises from a breakdown between filing and processing.  It teaches us the difference between those concepts.

In James Forrest Willetts v. Commissioner, T.C. Sum. Op. 2021-39 (Nov. 22, 2021) (Judge Kerrigan), the taxpayer sought refund of an overpayment on the basis of a Form 1040 the IRS had refused to accept for processing because of concerns about identify theft.  The IRS was not sure whether the return was genuine.  By the time the taxpayer demonstrated the genuineness of the Form 1040, it was too late to get the refund unless the taxpayer’s submission of the rejected Form 1040 constituted the “filing” of a “return.”  The Tax Court framed the question as follows: “whether the Form 1040 petitioner mailed...constitutes a properly filed return.”  Op. at 5.  But do you see there are two questions presented in this framing?  First, did the rejected Form 1040 qualify as a “return.”  The Court said yes.  Second, was the rejected Form 1040 “filed” when the IRS could not process the Form? Again, the Court said yes.

The holdings in this non-precedential opinion are consistent with the recent Tax Court precedential opinion Fowler v. Commissioner, 155 T.C. No. 7 (2020), curiously uncited by Judge Kerrigan.  Fowler held a taxpayer had validly filed electronically even though the taxpayer had not supplied his Identify Protector Taxpayer Identification Number (IP-TIN) and thus the IRS could not process the return because, as in today’s case, it did not know who had submitted the return.

In this age of computer processing, especially as taxpayers and the IRS wrestle with such issues as identify theft and the complications created by COVID regarding return filing requirements, discerning whether and when a taxpayer “files” a document that qualifies as a “return” becomes all the more critical.  This Lesson helps us understand the issues at play.  Details below the fold.

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December 6, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, December 5, 2021

The Top Five New Tax Papers

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

  1. SSRN Logo (2018) [316 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center)
  2. [216 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)
  3. [183 Downloads]  Slicing the Shadow: A Proposal for Updating U.S. International Taxation, by Reuven Avi-Yonah (Michigan; Google Scholar)
  4. [150 Downloads]  Reducing Administrative Burdens to Protect Taxpayer Rights, by Leslie Book (Villanova; Google Scholar), Keith Fogg (Harvard) & Nina Olson (Center for Taxpayer Rights),
  5. [98 Downloads]  Top Wealth in America: New Estimates and Implications for Taxing the Rich, by Matthew Smith (U.S. Treasury Department, Office of Tax Analysis), Owen Zidar (Princeton; Google Scholar) & Eric Zwick (Chicago; Google Scholar)

December 5, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, December 4, 2021

This Week's Ten Most Popular TaxProf Blog Posts

Break Into Tax: The Limitation On Capital Losses

Learn or review the limitation on capital losses of IRC § 1211. This video covers this disallowance provision, as well as the treatment of individuals' capital loss carryforward under IRC § 1212. Professor Lederman & Professor Emily Cauble co-host. A prior video in this series covers how to determine if a gain or loss is capital or ordinary. A planned future video will cover the capital gains preference applicable to individuals.

TaxProf Blog coverage of Break Into Tax videos:

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December 4, 2021 in Legal Education, Tax | Permalink

Friday, December 3, 2021

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Taxing Buybacks By Hemel & Polsky

This week, Young Ran (Christine) Kim (Utah; Google Scholar) reviews a new work by Daniel J. Hemel (Chicago; Google Scholar) and Gregg D. Polsky (Georgia; Google Scholar), Taxing Buybacks, 38 Yale J. Reg. 246 (2021).

Kim

Before the COVID-19 pandemic, one of the hottest topics in the U.S. capital market was the rise in the volume of corporate share repurchases, also known as stock buybacks. In 2018, U.S. corporation stock buybacks topped $1 trillion, a record-breaking volume. In 2019, stock buybacks remained the single biggest source of demand for U.S. public equity. Despite the pandemic in 2020, stock buybacks continued to be in high demand. This trend has attracted attention from commentators and bipartisan politicians who have raised concerns about the surge. In recent days, most recent criticisms have focused on securities law issues; however, tax scholars have been considering the problem for decades. A monumental example is Marvin A. Chirelstein's seminal article, Optional Redemptions and Optional Dividends: Taxing the Repurchase of Common Shares, published in the Yale Law Journal in 1969.    

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December 3, 2021 in Christine Kim, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Tax Policy In The Biden Administration

Colinvaux: Speeding Up Benefits to Charity

Roger Colinvaux (Catholic), Speeding Up Benefits to Charity: Donor Advised Fund and Foundation Reform, 63 B.C.L. Rev. __ (2022):

Charitable giving incentives are failing to achieve their purposes. Currently $1.26 trillion has accumulated in donor advised funds (DAFs) and private foundations, a massive accumulation of wealth under the effective control of the wealthiest in society. Gifts to these charitable intermediaries inherently frustrate the purpose of the charitable giving incentives. Until the funds are released from the intermediary, no working charity is able to benefit from the donation. Congress recognized this delay in benefit problem with respect to private foundations in landmark legislation in 1969, but has never addressed the problem for DAFs, and the rules for foundations are now too easy to avoid. Recent bi-partisan legislation introduced in Congress would address these issues. The Accelerating Charitable Efforts (ACE) Act would impose a time limit on advisory privileges for DAF contributions and close loopholes in the private foundation payout rules, among other reforms. While the ACE Act has many supporters, there is organized opposition in favor of the status quo. The article explains the case for change and addresses the various arguments made against reform, including that current payout levels are sufficient, that reform would harm charitable giving and introduce costly new burdens on charities, that the timing of grants within a DAF does not matter and so should not be regulated, and that to limit advisory privileges is to target DAFs and to attack philanthropic freedom.

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

Linda Jellum Leaves Mercer For Idaho

Jellum

Linda Jellum, Ellison Capers Palmer Sr. Endowed Chair in Tax Law at Mercer, has accepted a lateral position from Idaho to begin in Fall 2022:

Professor Jellum is a prolific scholar whose work has appeared in top law journals. She is also the author of multiple books. During her professional career Professor Jellum has served as the Deputy Executive Director for the Southeastern Association of Law Schools, the Deputy Director for the Association of American Law Schools, and the Chair of the American Bar Association Section’s on Administrative Law and Regulatory Practice.

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December 3, 2021 in Legal Education, Tax, Tax Prof Moves | Permalink

Applying The Procedural Standing Analysis To Post-Mayo, Pre-Enforcement APA Treasury Challenges

Casey N. Epstein (J.D. 2021, Minnesota), Note, Standing Up to the Treasury: Applying the Procedural Standing Analysis to Post-Mayo, Pre-Enforcement APA Treasury Challenges, 105 Minn. L. Rev. 1947 (2021):

Administrative law and tax law have clashed for the past several decades. While recent caselaw, starting with Mayo Foundation in 2010, has indicated that administrative law, such as the Administrative Procedure Act (APA), does apply to the Treasury, many questions remain unanswered. Much attention has recently focused on the interplay between the Anti-Injunction Act (AIA) and the Treasury and whether the AIA prevents taxpayers from suing the Treasury for APA violations.

With the Supreme Court poised to answer this question in CIC Services this coming Term, this Note poses the next question that the courts will need to answer: even if the AIA does not bar a taxpayer from launching a pre-enforcement administrative challenge against the Treasury, will the taxpayer have standing to secure judicial review?

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

Thursday, December 2, 2021

Nam: Taxing Option Luck

Jeesoo Nam (USC), Taxing Option Luck, 11 U.C. Irvine L. Rev. 1067 (2021):

As economic inequality reaches new heights every decade, academics stress the importance of the tax system in matters of equity. In contemporary winner-take-all markets, much of the massive income and wealth accumulated by the rich are the result of deliberate and calculated economic gambles that turned out in their favor. Yet theories of distributive justice such as Ronald Dworkin’s brute luck egalitarianism have committed themselves to the position that even if these market outcomes are the results of luck, the unequal outcomes are justified insofar as investors chose to take such risks.

This Article argues, in contrast to the aforementioned theories, that inequalities resulting from option luck, the luck involved in deliberate and calculated gambles, remain unjust.

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

Shanske & Niemeier: Subsidizing Sprawl, Segregation, And Regressivity — Sublocal Tax Districts

Darien Shanske (UC-Davis; Google Scholar) & Deb Niemeier (Maryland), Subsidizing Sprawl, Segregation, and Regressivity: A Deep Dive into Sublocal Tax Districts, 106 Iowa L. Rev. 2427 (2021):

Much ink has already been spilled demonstrating that our current built environment was—and is—the product of numerous policy decisions. Some of these decisions are accidental (as with the mortgage interest deduction provided by the federal income tax), some can be reasonable at times, but are problematic overall (as with local power over zoning), and some are outright immoral (as with redlining). This Essay will demonstrate yet another policy tool that has contributed to the current structuralization of the built landscape: the sublocal tax district. These districts are very common, but are also, by virtue of their nature and spatial heterogeneity, very difficult to study.

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

Ed Kleinbard Memorial Conference At USC

Kleinbard

Following up on my previous post on the Ed Kleinbard Memorial Conference At USC:  the conference recordings and downloads are here:

Welcome:  Andrew Guzman (Dean, USC):

Panel 1 - High Noon in the Tax Policy Corral: Ed Kleinbard’s Race Against Time

  • Joseph Bankman (Stanford)
  • Daniel Shaviro (NYU) (slides)

Panel 2 - Financial Products

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December 2, 2021 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Lipman: Tax Audits, Economics, And Racism

Francine J. Lipman (UNLV; Google Scholar), Tax Audits, Economics, and Racism, in Oxford Research Encyclopedia of Economics and Finance (2022):

OxfordThe Internal Revenue Service (IRS) is the federal agency charged with tax revenue collection. In fiscal year 2020, the IRS collected $3.5 trillion in taxes, which represented about 96 percent of aggregate annual federal funding (IRS, 2020). In its mission statement the IRS states that its primary role is to enforce tax laws. The IRS’ website announces that it is responsible “to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share,” among similar duties. Nevertheless, the IRS’ most recent official estimate of the “tax gap” or the amount of net taxes owed by taxpayers who did not “pay their fair share” even after IRS enforcement efforts was $1.143 trillion for the three-year period 2011-2013 or $381 billion average annually. This amount is more than all the income taxes paid by 90 percent of all taxpayers (Rossotti & Forman, 2020). Assuming constant compliance rates, the Treasury has estimated that the tax gap in 2019 was $584 billion, $7 billion over the decade, or 15 percent of annual tax liabilities (IRS, 2019). Economists have estimated that the tax gap was at least $630 billion in 2020 (Sarin & Summers, 2019).

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

Johnson: The Wonderful Mark-to-Market Tax

Calvin H. Johnson (Texas), The Wonderful Mark-to-Market Tax, 173 Tax Notes Fed. 1227 (Nov. 29, 2021):

Tax Notes Federal (2020)Whatever its role in the current U.S. budget decisions, the proposal for mark-to-market taxation is a wonderful idea, so good to be inevitable — at some point. Mark-to-market taxation would tax shareholders on the annual gain from publicly traded stock even when those gains have not been reduced to cash. ...

Both accounting and economics define income to include mark-to-market gains. The 16th Amendment specifically authorizes a tax on income. That alone is sufficient.

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

Wednesday, December 1, 2021

Fleischer Presents Tax Policy — Legislative Updates Today At UC-Irvine

Victor Fleischer (UC-Irvine; Google Scholar) presents Tax Policy - Legislative Updates at UC-Irvine today:

UCI Logo (2018)Professor Fleischer will provide an overview of the tax legislation currently under consideration on Capitol Hill, including important changes to individual tax, capital gains, carried interest, corporate tax, and international tax provisions. He will also discuss developments at the OECD and the interaction between the OECD process and U.S. domestic legislation.

December 1, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Layser: A Spatial Analysis Of Place-Based Tax Incentives

Michelle D. Layser (Illinois; Google Scholar), Subsidizing Gentrification: A Spatial Analysis of Place-Based Tax Incentives, 12 U.C. Irvine L. Rev. 163 (2021):

Place-based tax incentives, such as the New Markets Tax Credit (NMTC) and Opportunity Zones incentives, are often used to promote investment in low-income neighborhoods. However, not all low-income neighborhoods have an equal need for investment subsidies. Subsidies for investment in already gentrifying neighborhoods, for example, may reflect inefficient inframarginal investment, and they may lead to inequitable outcomes. Critics fear that when gentrifying neighborhoods are eligible for tax incentives, they will draw investment away from the neighborhoods that need it most. However, few studies have provided empirical analysis to assess whether these concerns have merit. Through a novel geospatial analysis of the location patterns of tax-subsidized projects, this Article provides new evidence that critics’ concerns are justified.

This Article analyzes fifteen years of NMTC data to explore the location patterns of tax-subsidized projects in twenty U.S. cities.

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

Economists Don’t Always Agree. On This Hot-Button Issue (Child Tax Credit), They Do.

Stanford Law, Economists Don’t Always Agree. On This Hot-Button Issue, They Do.:

Goldin (2021)Jacob Goldin recently helped pull off an unlikely feat: As federal lawmakers battled over President Biden’s economic agenda, he worked to recruit more than 460 American economists in urging that a large, but temporary, cash benefit for children as part of an earlier $1.9 trillion stimulus package be made permanent.

In September, the economists, led by Hilary Hoynes and Diane Schanzenbach, sent a letter to Congress that proved propitious. Soon after, the cash benefit they were advocating for — the Child Tax Credit (CTC) — took center stage in negotiations over the future of Biden’s bid to expand the country’s social safety net. Not only are the potential costs of the CTC a point of contention, so, too, is the rekindled argument by opponents that motivated welfare reform a quarter century ago — the notion that giving a handout to the lowest-income families creates disincentives to work.

Goldin’s leading role in corralling support for the expanded CTC makes sense. An associate professor at Stanford Law School and faculty fellow at the Stanford Institute for Economic Policy Research (SIEPR), he is an expert on the taxation of low-income households and how human behavior shapes economic decision-making. He understands the CTC’s historical limitations as a poverty-reducing tool. He is also the co-author of a new working paper that gets to the heart of the current debate: What will broadening the credit ultimately cost the federal government, and are the benefits worth the price? [Whose Child is this? Improving Child-Claiming Rules in Safety Net Programs, 131 Yale L. J. ___ (2022) (with Ariel Jurow Kleiman (Loyola-L.A.)]

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December 1, 2021 in Legal Education, Scholarship, Tax, Tax News, Tax Scholarship | Permalink

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

Nuts And Bolts Of the 2021 Advanced, Enhanced Child Tax Credit

Francine J. Lipman (UNLV; Google Scholar) & James E. Williamson (San Diego State), Nuts and Bolts of the 2021 Advanced, Enhanced Child Tax Credit, 173 Tax Notes 319 (Oct. 18, 2021):

Tax-notes-federalThe enhancements in the child tax credit (CTC) in the American Rescue Plan Act of 2021 (ARPA) signed by President Biden on March 11 are a targeted child-centered, economic stimulus. Economists estimate that the 2021 CTC enhancements will increase consumer spending by $27 billion to $37 billion, generate $1.9 billion in state and local sales taxes, and create 511,000 new jobs at the median wage. Similar to the economic stimulus in rural areas from Social Security benefits, the enhanced CTC doubles its pre-ARPA spending power of $14 billion for households in rural America.

Less than four months after enactment starting on July 15, Treasury, through the IRS, is delivering almost 40 million monthly installments of estimated advanced, enhanced child tax credits (AECTC) to households, including 60 million children and their families. The Urban-Brookings Tax Policy Center estimates that 92 percent of families with children will receive an average annual CTC of $4,380 in 2021. The Joint Committee on Taxation has estimated that ARPA CTC enhancements cost $110 billion, while Columbia University based Center on Poverty and Social Policy determined that the benefits should be about eight times the cost at $800 billion. CTC benefits include increases to children’s future earnings, retirement benefits, and tax payments, and decreases in child protection and criminal justice services as well as healthcare costs for children and their families because of better health and longevity.

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December 1, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

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

The Application Of International Tax Treaties To Digital Services Taxes

Katherine E. Karnosh (J.D. 2021, Chicago), Comment, The Application of International Tax Treaties to Digital Services Taxes, 21 Chi. J. Int'l L. 513 (2021):

ChicagoAs digital services and electronic commerce have become more prevalent aspects of the global economy, there have been concerns over how tax systems will adapt to this change. International tax treaties in particular seem to be outdated and unprepared for the digital economy. Many international tax treaties provide that businesses are to be taxed on their income only in jurisdictions where they have a sufficient physical presence. By establishing their European headquarters and digital servers in countries with low corporate income tax rates (such as Ireland) and then using those headquarters to provide digital services to the rest of Europe, large, sophisticated, multinational digital businesses have been able to generate much revenue from most European countries without paying significant taxes in those countries.

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

Tuesday, November 30, 2021

Auerbach Presents Tax Policy Design With Low Interest Rates Today At NYU

Alan Auerbach (UC-Berkeley; Google Scholar) presents Tax Policy Design with Low Interest Rates at NYU today as part of its Tax Policy and Public Finance Colloquium hosted by Daniel Shaviro:

Alan-auerbachInterest rates on government debt have fallen in many countries over the last several decades, with markets indicating that rates may stay low well into the future. It is by now well understood that sustained low interest rates can change the nature of long-run fiscal policy choices. In this paper, we examine a related issue: the implications of sustained low interest rates for the structure of tax policy. We show that low interest rates (a) reduce the differences between consumption and income taxes; (b) make wealth taxes less efficient relative to capital income taxes, at given rates of tax; (c) reduce the value of firm-level investment incentives, and (d) substantially raise the valuation of benefits of carbon abatement policies relative to their costs.

Conclusion
It is by now generally recognized that the presence of low interest rates – sustained over time and across countries – has important implications for the fiscal stance of the federal government. In this paper, we argue that if low interest rates are expected to persist, there are important implications for the design of tax policy as well.

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November 30, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Dean & Brakman Reiser Present For-Profit Philanthropy Today At Georgetown

Steven Dean (Brooklyn) & Dana Brakman Reiser (Brooklyn; Google Scholar) present For-Profit Philanthropy: Constraining Elite Power in Limited Liability Companies, Donor-Advised Funds and Strategic Corporate Giving (Oxford University Press 2022) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Brian Galle:

Dean-brakmanreiserConclusion
In response to revelations that more than 100 extremely wealthy taxpayers paid no income tax at all (without breaking a single rule) the Tax Reform Act of 1969 created the alternative minimum tax. More than half a century later, the country seems genuinely surprised to find that while they may have traded yachts for spacecraft, the wealthiest Americans still often pay not even one dollar of tax. As was true decades ago, they need not break—or even bend—any laws to do so.

Perhaps doubting its wherewithal to directly turn private wealth into public resources through taxation, the 1969 tax reform also attempted to tame elite power with a strategic Grand Bargain. And for a time, it seemed to have succeeded. Its private foundation regime demanded accountability and a golden age of philanthropy unfolded. Extraordinary public benefits flowed from a partnership between the wealthiest Americans and the most vulnerable.

While other legislative bulwarks of the 1960s have been sunk by devastating broadsides, the Grand Bargain’s slow death has been one of a thousand small cuts. The Supreme Court eviscerated the 1965 Voting Rights Act’s protections against discrimination, dismissing its worries about the disenfranchisement of voters as “based on 40-year-old facts having no logical relationship to the present day.” The unsettling consequences of the Supreme Court’s failure to anticipate a new wave of voting limits have come to dominate our nation’s political discourse.

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November 30, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Steven Dean Named Co-Director Of Block Center For International Studies At Brooklyn Law School

Professor Steven Dean Named Co-Director of Block Center for International Studies:

Dean_steven_blockcenter 500x310Professor Steven Dean, an expert in international tax policy, has been named co-director of the Dennis J. Block Center for the Study of International Business Law, joining co-directors Professors Julian Arato and Robin Effron to lead one of the most active international law institutions in New York. Professor Roberta Karmel, who founded the center with Professor of Law Emeritus Arthur Pinto in 1987, has stepped down from a leadership role.

Dean has previously served as Vice Dean at Brooklyn Law School and, while a Visiting Professor of Law at NYU School of Law, as Faculty Director of its Graduate Tax Program. He is also host of the Tax Maven Podcast.

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November 30, 2021 in Legal Education, Tax, Tax Prof Moves | Permalink

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through November 1, 2021) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

    All-Time     Recent
1 Reuven Avi-Yonah (Michigan)  203,642 1 Reuven Avi-Yonah (Michigan) 8,180
2 Dan Shaviro (NYU) 123,837 2 Daniel Hemel (Chicago) 4,706
3 Lily Batchelder (NYU) 123,137 3 Lily Batchelder (NYU) 4,658
4 Daniel Hemel (Chicago) 122,232 4 David Kamin (NYU) 4,211
5 David Gamage (Indiana-Bloom.) 120,170 5 Bridget Crawford (Pace) 4,184
6 Darien Shanske (UC-Davis) 113,104 6 Kim Clausing (UCLA)     3,944
7 David Kamin (NYU) 110,865 7 D. Dharmapala (Chicago) 3,346
8 Cliff Fleming (BYU)    106,579 8 Ruth Mason (Virginia) 3,129
9 Manoj Viswanathan (UC-Hastings) 103,426 9 Richard Ainsworth (Boston Univ.) 2,682
10 Rebecca Kysar (Fordham) 102,517 10 David Gamage (Indiana-Bloom.) 2,632
11 Ari Glogower (Ohio State) 101,869 11 Zachary Liscow (Yale) 2,524
12 Michael Simkovic (USC) 46,038 12 Margaret Ryznar (Indiana-Indy)   2,390
13 D. Dharmapala (Chicago) 45,841 13 Darien Shanske (UC-Davis)  2,288
14 Paul Caron (Pepperdine) 38,834 14 Robert Sitkoff (Harvard) 2,264
15 Louis Kaplow (Harvard) 35,870 15 Dan Shaviro (NYU) 2,179
16 Richard Ainsworth (Boston Univ.) 33,587 16 Yariv Brauner (Florida) 2,152
17 Bridget Crawford (Pace) 29,420 17 Louis Kaplow (Harvard) 2,005
18 Ed Kleinbard (USC) 28,191 18 Hugh Ault (Boston College) 1,848
19 Vic Fleischer (UC-Irvine) 27,859 19 Ari Glogower (Ohio State) 1,772
20 Robert Sitkoff (Harvard) 27,335 20 Brad Borden (Brooklyn) 1,759
21 Brad Borden (Brooklyn) 27,066 21 Gregg Polsky (Georgia) 1,522
22 Jim Hines (Michigan) 26,180 22 Francine Lipman (UNLV) 1,481
23 Ted Seto (Loyola-L.A.) 25,257 22 Shu-Yi Oei (Boston College)  1,457
24 Ruth Mason (Virginia) 24,954 24 Michael Simkovic (USC) 1,416
25 Katie Pratt (Loyola-L.A.) 24,841 25 Vic Fleischer (UC-Irvine) 1,398

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November 30, 2021 in Legal Education, Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink

Avi-Yonah: A Different Way to Tax Stock Buybacks

Reuven Avi-Yonah (Michigan), A Different Way to Tax Stock Buybacks, 173 Tax Notes Fed. 1107 (Nov. 22, 2021):

Tax Notes Federal (2020)In this article, Avi-Yonah reviews the Build Back Better Act, which would impose a 1 percent excise tax on corporate stock buybacks. He argues that while the measure is an effective way to raise revenue from high-income taxpayers, it will not address the main tax problem with buybacks: the tax exemption for foreign shareholders, which Congress should reconsider.

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November 30, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, November 29, 2021

Salib: The Pigouvian Constitution

Peter N. Salib (Houston; Google Scholar), The Pigouvian Constitution, 88 U. Chi. L. Rev. 1081 (2021): 

How can lawmakers reduce the skyrocketing rate of gun deaths in the United States? How can they stymie the spread of viral fake news stories designed to undermine our elections? Certain constitutionally protected activities—like owning a gun or speaking online—can generate social harms. Yet when lawmakers enact regulations to reduce those harms, they are regularly struck down as unconstitutional. Indeed, the very laws designed to most aggressively reduce social harms—like total criminal bans—are the least likely to be upheld. As a result, regulators appear stuck with an unpleasant choice—regulate constitutionally or effectively, but not both.

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November 29, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Mitchell: State Income Tax Rankings

Dan Mitchell, Ranking State Income Taxes:

Motivated in part by an excellent graphic that I shared in 2016, I put together a five-column ranking of state personal income tax systems in 2018.

Given some changes that have since occurred, it’s time for a new version. The first two columns are self explanatory and columns 3 and 5 are based on whether the top tax rate on households is less than 5 percent (“Low Rate”) or more than 8 percent (“Class Warfare”).

Mitchell

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November 29, 2021 in Tax, Tax News | Permalink

Jason Oh Named Lowell Milken Chair In Law At UCLA

Oh Receives Faculty Chair Appointment:

Oh (2021)UCLA School of Law Professor Jason Oh has received a faculty chair appointment in recognition of his substantial contributions to the study of tax law. ...

Faculty chairs acknowledge the distinction of the law school’s outstanding professors and are made possible by the incredible generosity of UCLA Law’s alumni and friends. UCLA Law has 69 full-time faculty members and 35 endowed chairs. ...

Oh has been appointed to the Lowell Milken Chair in Law. A member of the UCLA Law faculty since 2012 and the faculty co-director of UCLA Law’s Lowell Milken Institute for Business Law and Policy, he is an authority in tax policy and public finance. His record of scholarship and policymaking features multiple publications, appearances in the media, and testimonies before Congress. Oh also serves on the board of directors of the National Tax Association. The Lowell Milken Chair in Law was endowed in 2020 with a $1 million gift to support the career development of an emerging leader in the tax or business law areas. ...

Before joining UCLA Law, Oh was a tax attorney at Wachtell, Lipton, Rosen & Katz and an acting assistant professor of tax law at NYU School of Law. He earned his B.A. from Harvard University and J.D. from Harvard Law School.

November 29, 2021 in Legal Education, Tax, Tax Prof Moves | Permalink

Lesson From The Tax Court: Who Is An IRS Employee's Immediate Supervisor For §6751 Penalty Approval?

Camp (2021)Today’s lesson involves yet more litigation over IRS compliance with the penalty approval process required by the formerly toothless §6751(b)(1).  In Sand Investment Co., LLC, et al. v. Commissioner, 157 T.C. No. 11 (Nov. 23, 2021) (Judge Lauber), the Tax Court continues teaching us the scope and operation §6751(b), a series of lessons it started back in 2017 when its decision in Graev v. Commissioner, 149 T.C. 485 (2017), gave the statute sharp teeth.  Among other requirements, the statute says approval must come from an IRS employee's “immediate supervisor.”  In today’s case, the IRS employee who proposed a bunch of penalties had two supervisors but only one definitely signed timely.  Judge Lauber finds that function trumps form in identifying which of the two supervisors was the right one to approve the proposed penalties.  This is a short lesson, and also one that will may be rendered moot.  Legislation passed by the House and now before the Senate de-fangs §6751(b).  Details below the fold.

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November 29, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Holiday Weekend Roundup

Sunday, November 28, 2021

The Top Five New Tax Papers

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

  1. SSRN Logo (2018) [296 Downloads]  The Tax Gap's Many Shades of Gray, by Daniel Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center)
  2. [210 Downloads]  The 2021 Compromise, by Ruth Mason (Virginia; Google Scholar) (reviewed by Charlotte Crane (Northwestern; Google Scholar) here)
  3. [194 Downloads]  Implementing an International Effective Minimum Tax in the EU, by Joachim Englisch (Münster) & Johannes Becker (Münster; Google Scholar)
  4. [188 Downloads]  Colorblind Tax Enforcement, by Jeremy Bearer-Friend (George Washington; Google Scholar)
  5. [169 Downloads]  Slicing the Shadow: A Proposal for Updating U.S. International Taxation, by Reuven Avi-Yonah (Michigan; Google Scholar)

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

Saturday, November 27, 2021

This Week's Ten Most Popular TaxProf Blog Posts

Break Into Tax: Capital Gains & Losses — An Introduction

Learn or review the building blocks of capital gains & losses. This video covers the 3 elements needed for a gain or loss to be "capital" rather than "ordinary," including what constitutes a "capital asset." It also discusses holding period. Professor Lederman & Professor Emily Cauble co-host. Planned future videos will cover the capital gains preference and the limitation on capital losses.

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November 27, 2021 in Legal Education, Tax | Permalink

Friday, November 26, 2021

Next Week’s Tax Workshops

Next Week's Tax WorkshopsTuesday, November 30: Steven Dean (Brooklyn) & Dana Brakman Reiser (Brooklyn; Google Scholar) will present For-Profit Philanthropy as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Brian Galle.

Tuesday, November 30: Alan Auerbach (UC-Berkeley; Google Scholar) will present Tax Policy Design With Low Interest Rates as part of the NYU Tax Policy and Public Finance Colloquium. If you would like to attend, please contact Daniel Shaviro

Wednesday, December 1: Victor Fleischer (UC-Irvine; Google Scholar) will present Tax Policy - Legislative Updates on behalf of the UC-Irvine Graduate Tax Program. If you would like to attend, please contact taxpolicy@law.uci.edu

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

Tax Policy In The Biden Administration

Thursday, November 25, 2021

WKRP In Cincinnati Thanksgiving Turkey Drop

WSJ Refuses To Cancel Its Annual Thanksgiving Editorials

Wall Street Journal editorial, Censoring the Pilgrims:

WSJ OpinionNo doubt it was only a matter of time. The progressives have come for our annual Thanksgiving editorials. They won’t succeed, but we thought we’d share the tale with readers for an insight into the politicization of everything, even Thanksgiving.

Since 1961 we’ve run a pair of editorials written by our former editor Vermont Royster. The first is a historical account about the Pilgrims in 1620 as related by William Bradford, a governor of Plymouth Colony. The second is a contemporary contrast from the mid-20th century about the progress a prosperous America has made that we can all be thankful for.

The editorials are popular with readers, who tell us they appreciate the sentiments about hardship and gratitude during what should be a unifying national holiday. For decades we’ve run them with nary a discouraging word.

But we live in a new era when the left sees nearly everything through the reductive lens of identity politics. It sees much of American history as a racist project that should be erased. This is the motivation of a petition campaign to censor the Pilgrim editorial.

The effort comes via Change.org, a website that calls itself “the world’s platform for change.” It mobilizes campaigns to promote progressive causes. The petition driver is Randy Kritkausky, an author who writes about Native Americans. His petition has gathered some 50,000 signatures and here’s its argument:

Tell the Wall Street Journal that it’s 2021. It’s time to stop publishing 17th century racism. ...

We don’t mind giving critics a chance to make their case, but we won’t bend to political demands for censorship. We will run the editorials as usual this week.

Wall Street Journal op-ed:  Don’t Let Ideologues Steal Thanksgiving, by Melanie Kirkpatrick (Hudson Institute):

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November 25, 2021 in Legal Education, Tax | Permalink

Happy Thanksgiving, Pepperdine

Pepperdine

November 25, 2021 in Legal Education, Tax | Permalink

Avi-Yonah Posts Three New International Tax Papers On SSRN

Reuven Avi-Yonah (Michigan; Google Scholar), Slicing the Shadow: A Proposal for Updating U.S. International Taxation:

This article advances a proposal for market-based formulary apportionment.

Gucci Gulch Redux: The Problems of Wyden Proposal:

This paper addresses the problems of Sen Wyden’s international tax reform proposal.

The New International Tax Regime:

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

Wednesday, November 24, 2021

Rosenbloom & Shaheen: Toulouse — No Treaty-Based Credit?

H. David Rosenbloom (Caplin & Drysdale; NYU) & Fadi Shaheen (Rutgers; Google Scholar), Toulouse: No Treaty-Based Credit?, 104 Tax Notes Int'l 417 (Oct. 25, 2021):

Tax Notes Int'lThis article maintains that the U.S. Tax Court’s decision in Toulouse [v. Commissioner, 157 T.C. No. 4 (2021)]— that U.S. tax treaties with France and Italy do not provide a treaty-based foreign tax credit against the net investment income tax — is mistaken.

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November 24, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Kim: Taxing Teleworkers

Young Ran (Christine) Kim (Utah; Google Scholar), Taxing Teleworkers, 55 U.C. Davis L. Rev. __ (2021):

UC Davis Law ReviewSince COVID-19 has forced many governments to restrict travel and impose quarantine requirements, telework has become a way of life. The shift towards teleworking is raising tax concerns for workers who work for employers located in another state than where they live. Most source states where these employers are located could not have taxed income of out-of-state teleworkers under the pre-pandemic tax rules. However, several source states have unilaterally extended their sourcing rule on these teleworkers, resulting in unwarranted risk of double taxation — once by the residence state and again by the source state. At this time, there is no uniform guideline by state or federal governments.

Recently, New Hampshire, supported by fourteen other states, asked the U.S. Supreme Court to exercise its original jurisdiction challenging Massachusetts’ telecommuting taxes of nonresident teleworkers. Tax commentators believed this case would be one of the most significant tax decisions in recent years, but the Supreme Court declined to hear it. New Jersey also opposes New York’s long-standing telecommuting taxes under the “convenience of the employer” rule. This Article examines the constitutional challenges of maintaining pre-pandemic work arrangements for tax purposes, arguing that a source state’s extraterritorial assertion to tax nonresident teleworkers’ income likely violates the Dormant Commerce and Due Process Clauses. Also, this Article finds the Supreme Court’s decision not to exercise original jurisdiction dissatisfying in light of the substantial increase in remote work.

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