Weekly SSRN Tax Article Review And Roundup: Saito Reviews Scharff And Shanske’s Local Income Taxes In The Era Of Increased Remote Work

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Erin Adele Scharff (Arizona State) & Darien Shanske (UC-Davis; Google Scholar), The Surprisingly Strong Case for Local Income Taxes in the Era of Increased Remote Work, 74 Hastings L.J. __ (2022).

Conventional wisdom and heuristics are often helpful, but when they are not reexamined every so often, they ossify and lead us astray. One of those adages is that U.S. local governments should never use income taxes and only rely on property taxes. But in their piece, The Surprisingly Strong Case or Local Income Taxes in the Era of Increased Remote Work, Erin Adele Scharff and Darien Shanske show that a relatively low and simple local income tax has great benefits to municipal governments.

As noted, numerous people have said that localities should not impose progressive income taxes.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Helman's Innovation Funding And The Valley Of Death

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews reviews Lital Helman (Ono Academic College) Innovation Funding and the Valley of Death, 76 SMU L. Rev. ___ (2023).

Economic theorists have long held that innovation is the key to economic development and many positive spillovers. Alas, as a public good with high risk, non-rivalry, non-exclusive characteristics, it may suffer underinvestment and underproduction in the free private market. Accordingly, almost every legal system in the world has long incorporated an array of innovation incentives that overcome this inherent market inefficiency. Some of those stimuli mechanisms include intellectual property rights (IP), cash transfers (mostly grants and prizes), and various tax incentives. In their recent article Innovation Policy Pluralism, Daniel Hemel & Lisa Quellette discuss ways to combine, complement, and alternate between such innovation policy mechanisms based on the overall government purpose (allocation or incentive) in each case.

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Kamin's Ambition, Limits, And Politics Of The Global Minimum Tax

This week, Young Ran (Christine) Kim (Cardozo; Google Scholar) reviews two new works by David Kamin (NYU), Why Book Minimum Taxes? Taking Politics Seriously, 177 Tax Notes Fed. 193 (Oct. 10, 2022), and The Ambition and Limits of the Global Minimum Tax, 177 Tax Notes Fed. 385 (Oct. 17, 2022).

The two articles I introduce today were written by David Kamin, who served as Deputy Assistant and Deputy Director of the National Economic Council under President Biden until May of 2022. Kamin’s articles focus on the corporate alternative minimum tax (AMT) and are his first publications since returning to academia. On a personal note, I was thrilled to discover that Kamin chose to write on a topic that is dear to me.

 

Kamin’s first article, Why Book Minimum Taxes? Taking Politics Seriously, presents a political argument for book minimum taxes. It explains how book minimum taxes address the challenge of coordinating political actors inside the United States and around the world. The recent enactment of a new corporate AMT in the United States has generated a mixed response. Some critics argue that Congress should fix the corporate income tax system directly by limiting subsidies, raising rates and not imposing another tax base as a backstop. 

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Dagan's Tax Justice In The Era Of Mobility And Fragmentation

This week, Tracey Roberts (Cumberland; Google Scholar) reviews Tsilly Dagan (Oxford; Google Scholar), Tax Justice in the Era of Mobility and Fragmentation, 4 Revue européenne du droit, Paris: Groupe d’études géopolitiques (Summer 2022).

At a recent Oxford University Philosophy, Law, and Politics Colloquium at All Souls College, Dr. Liam Murphy (NYU) presented his paper, “Why Tax Wealth?” to a large assembly of students and scholars hailing from countries all over the globe and bringing insights from an array of disciplinary fields. He acknowledged that taxing wealth may be an effective and efficient means to tax income from capital (which largely escapes taxation in the United States), but noted that his focus in this article was on the role wealth taxation plays in securing economic justice; he asked whether wealth, itself, contributes to welfare. As some of the colloquium participants noted, Murphy’s fellow political philosopher, Professor Martha Fineman (Emory), would argue that human beings experience an array of vulnerabilities in this material world, that we have differing levels of resilience, that wealth provides an important form of resilience, and that the state has an important role in ensuring our resilience. 

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Raskolnikov's Should Only The Richest Pay More?

This week, David Elkins (Netanya, visiting NYU 2021-2023; Google Scholar) reviews a new paper by Alex Raskolnikov (Columbia), Should Only the Richest Pay More? (2022).

Reportedly, F. Scott Fitzgerald once remarked to Ernest Hemingway that “the rich are different from you and me,” to which the latter replied, “Yes, they have more money.”

Taxing the rich has a strong intuitive and political appeal. However, the call to do so means little unless we identify whom we mean by “the rich.” In 2011, the Occupy Wall Street movement demanded in the name of the “99%” that the “1%” pay more. Under this conception, a person who is wealthier than 98.99% of the population is a member of the downtrodden “99%,” and has a place in the front line of protesters calling for increased taxes on the rich. Since then, proposals to tax the rich have tended to raise the threshold even higher. The Biden administration’s proposal to include unrealized gain in the income tax base would have applied only to those with assets of over $1 billion or income of over $100 million per year for three consecutive years. 

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Weekly SSRN Tax Article Review And Roundup: Sarkar Reviews Gondwe's The Tax-Invisible Labor Problem: Care, Work, Kinship, And Income Security Programs

This week, Shayak Sarkar (UC-Davis; Google Scholar) reviews Nyamagaga Gondwe (Wisconsin; Google Scholar), The Tax-Invisible Labor Problem: Care, Work, Kinship, and Income Security Programs in the IRC, 102 B.U. L. Rev. ___ (2022)

We must all care for others. Yet for the millions of women who do the yeoman’s share of American care work, the ways they are compensated, if at all, raise questions for tax law and implications for us all.  It is to the phenomenon of nonmarket care work that Professor Nyamagaga Gondwe turns in her forthcoming Article, The Tax-Invisible Labor Program: Care, Work, Kinship, and Income Security Programs in the IRC. Gondwe advocates for greater recognition of nonmarket care work, in tax law and beyond.

The Article lies at the intersection of at least two literatures: on one hand, tax scholarship focused on the lives of those deemed poor and different (and often both) and on the other, scholarship on domestic workers that tries to understand how we value those who work intimately with humanity. Both literatures center household formation, household labor, gender, and race, all of which animate Gondwe’s Article.

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews New Work On Form And Substance In Tax Cases By Gillis & Grewal

This week, Sloan Speck (Colorado; Google Scholar) reviews new work by Rory Gillis (Western; Google Scholar), The Limits of Legal Substance: Tax Avoidance and Equitable Remedies After Collins Family Trust, 66 Can. Bus. L.J. __ (2022), and Amandeep S. Grewal (Iowa; Google Scholar), When Is the Economic Substance Doctrine “Relevant” to a Transaction? (Aug. 17, 2022).

According to a well-traveled adage among tax experts, United States tax law looks to economic substance over legal form—except when it doesn’t. In new work, Rory Gillis and Andy Grewal explore the complex dynamics between form and substance in two very different contexts: a recent Supreme Court of Canada decision that denies equitable remedies to tax-motivated transactions gone wrong, and the statutory interpretation issues that may arise from the IRS’s recent relaxation of internal procedures with respect to audit-level application of the economic substance doctrine. Both Gillis and Grewal emphasize the fundamental challenges faced by courts in implementing appropriate understandings of form and substance in taxation.

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Falcão's Carbon Tax Policy And The EU Green Deal

This week, Young Ran (Christine) Kim (Cardozo; Google Scholar) reviews a new work by Tatiana Falcão (international tax consultant), Updating Carbon Tax Policy Is Crucial to the EU Green Deal, 103 Tax Notes Int'l 485 (July 26, 2021).

The 2022 Congress of the International Fiscal Association (IFA) was held in Berlin, Germany, earlier this month after the two virtual Congresses in 2020 and 2021. In this long-awaited in-person event, the OECD's tax head Pascal Saint-Amans, who led the base erosion and profit shifting (BEPS) project and brokered the two-pillar global tax deal, announced his departure. Although the successful implementation of the global tax deal is still uncertain, it is hard to deny that Saint-Amans has been at the center of the efforts to update the international tax system. Personally, I appreciate his making the international tax a more exciting and dynamic subject, not only because he led the BEPS project and the global tax deal but also because he contributed to establishing the automatic exchange of tax information systems and building the inclusive framework on BEPS. It is indeed the end of a chapter in the international tax discourse.

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews Reimagining The Tax System Through The Work Of Dorothy Day By Crawford & Afield

This week, Michelle Layser (San Diego; Google Scholar) reviews Bridget J. Crawford (Pace; Google Scholar) & W. Edward Afield (Georgia State; Google Scholar), Yesterday’s Protestor May be Tomorrow’s Saint: Reimagining the Tax System Through the Work of Dorothy Day, 76 Tax L. Rev. __(2023).

Political protests have become more frequent in recent years, but tax protests are nothing new. The Tax Revolt of the 1970s may be fresh in memory, but people have been protesting taxation since the earliest days of the Christian church. In fact, first century tax protests against the Roman Empire were so frequent that Jesus himself is said to have weighed in on the issue, telling the Pharisees they should “render unto Caesar what belongs to Caesar and to God what belongs to God.” A simplistic reading of this passage might suggest a Christian moral imperative to pay taxes. But as Professors Bridget Crawford and W. Edward Afield remind us, at least one prominent Catholic figure disagreed. Dorothy Day, the founder of the Catholic Worker movement, made conscientious tax protest a central part of her religious practice, setting her on a path toward sainthood.

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Doran’s Executive Compensation And Corporate Governance

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Michael Doran (Virginia; Google Scholar), Executive Compensation and Corporate Governance (Aug. 25, 2022).

Some say that the definition of insanity is doing the same thing repeatedly and expecting different results. In Executive Compensation and Corporate Governance, Michael Doran illustrates Congress’s tendency to meet this definition, especially in policy areas that implicate big business. Doran starts from the observation that, while significant empirical uncertainty exists as to whether lavish executive compensation reveals a breakdown of corporate governance, Congress’s extensive deployments of tax policy to curtail executive pay generally have fared poorly. Indeed, Doran argues that these legislative efforts, which span four decades, may have harmed shareholders and workers—the precise constituencies that Congress intended to protect.

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Holderness’s Individual Home-Work Assignments For State Taxes

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Hayes Holderness (Richmond), Individual Home-Work Assignments for State Taxes, 98 Wash. L. Rev. ___ (2023).

The COVID-19 pandemic pushed much of work online. But this move to greater remote work raises issues for state taxation of that labor income. In his piece Individual Home-Work Assignments for State Taxes, Hayes Holderness makes a convincing case that the dominant view that the employees’ residency jurisdiction should be the only one able to tax this labor income is misguided. The result is a thoughtful and forceful argument that the states where the employer is located should be allowed to tax remote work income.

Holderness first notes that the Constitution allows the employer’s state, the source state, to tax the income even in a remote work situation. He further argues that it is unlikely that the Supreme Court is going to reverse course and limit source states’ rights to tax this income.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Harpaz's International Tax Reform — Challenges To Multilateral Cooperation

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Assaf Harpaz (Drexel; Google Scholar), International Tax Reform: Challenges to Multilateral Cooperation, 44 U. Penn. J. Int’l L. __ (2022).

With the digitalization transformation of the economy where commerce has been occurring mainly online, and most functions become automated, concerns for cross-border taxation of multinational corporations became the focus of international tax discussions. The digital platform allows greater mobility of large multinational enterprises (MNEs) to shift profits more easily to low-tax jurisdictions or avoid paying tax altogether in market jurisdictions. It is estimated that corporate tax avoidance amounts to between $100 to $240 billion in annual costs, equal to 4% to 10% of global corporate income tax revenues. The OECD has had a central role in designing international tax norms. In mid-2021, while implementing the BEPS agreements, the OECD began working with an Inclusive Framework of over 140 countries that includes non-OECD members on a major reform to profit-shifting rules governing cross-border taxation of multinationals. Indeed, this reform marks a crucial juncture in international tax history and cross-border taxation.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Plekhanova's Taxes Through The Reciprocity Lens

This week, David Elkins (Netanya, visiting NYU 2021-2023; Google Scholar) reviews a new paper by Victoria Plekhanova (Massey), Taxes Through the Reciprocity Lens, 70 Can. Tax J. 303 (2022).

In this week’s feature article, Victoria Plekhanova formulates what she describes as a reciprocity-based framework for a systematic assessment of the normative merits and effectiveness of taxes. Painting with a broad brush, the author begins by describing Aristotelian concepts of justice, and in particular distributive justice (those who are equal are entitled to equal shares, and those who are unequal are entitled to unequal shares in proportion to their inequality) and commutative justice (a corrective remedy should rectify the injustice inflicted by one person on another). Each deals with a different moral problem. Distributive justice focuses on the sharing of burdens and benefits, while corrective justice links the wrongdoer and the sufferer of injustice in terms of their correlative positions prior to and after an interaction.

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Carbon Pricing And The Elasticity Of Co2 Emissions

This week, Tracey Roberts (Cumberland; Google Scholar) reviews Ryan Rafaty (Oxford; Google Scholar), Geoffroy Dolphin (Cambridge) & Felix Pretis (Victoria; Google Scholar), Carbon Pricing and the Elasticity of Co2 Emissions, (Aug. 12, 2022).

In December of 2014, at the 21st Conference of the Parties to the Framework Convention on Climate Change in Paris, nearly 200 countries agreed to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.” These temperature goals are designed to avoid the extraordinary economic, social, and ecological damage likely to occur if we fail to address climate change in an effective way. To meet these goals, all countries will need to transform their economies to change their power generation and transmission systems, transportation systems, their industrial processes, their built environments, including heating and cooling systems, and land use policies for timberlands, grasslands, and farms. It will also require that we change our consumption habits. The next question was: “How can we do all of that?”

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews Opportunity Zones: A Program In Search Of A Purpose By Eldar & Garber

This week, Michelle Layser (San Diego; Google Scholar) reviews Ofer Eldar (Duke; Google Scholar) and Chelsea Garber (J.D. 2023, Duke), Opportunity Zones: A Program in Search of a Purpose, 102 B.U. L. Rev. 1397 (2022).

When I give talks about place-based tax incentives, the discussion nearly always turns to an important question: What is the purpose of providing tax breaks for investment in low-income communities? Or, more directly, am I sure that the purpose of these laws is to benefit low-income residents? My answer: Not really (see here), but they tend to be sold as such, so it’s worth thinking about how they could be designed to advance that purpose. (Some of my thoughts about that are set forth in How Place-Based Tax Incentives Can Reduce Geographic Inequality, 74 Tax L. Rev. 1 (2020)).

That said, it is overwhelmingly clear that most place-based tax incentives are not designed to benefit low-income communities, and they may even harm them. 

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Kysar’s Interpreting By The Rules

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Rebecca Kysar (Fordham; Google Scholar), Interpreting by the Rules, 99 Tex. L. Rev. 1115 (2021).

Famed Senate Parliamentarian Floyd Riddick said that “[t]he rules of the Senate are perfect. And if they changed every one of them, the rules will be perfect.”[1] The statement shows how rules define both the U.S. Senate and House of Representatives. Recently, scholars have turned their attention to the rules and process of the legislation as a form of pushback against strict textualist approaches to statutory interpretation. These process-based approaches are often invoked in interpreting tax and mandatory spending statutes. But as Rebecca Kysar shows in her piece, Interpreting by the Rules, such an approach requires context and caution. As Riddick’s quote notes, the rules are malleable, and furthermore, they are made to be broken.

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Klein’s The Corporate Tax Paradox

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Israel Klein (Ariel University; Google Scholar), The Corporate Tax Paradox, 42 Va. Tax Rev. __ (2022).

In The Corporate Tax Paradox, Israel Klein presents (and offers a resolution to) a puzzle: After the IRS began requiring certain corporate taxpayers to report uncertain tax positions in 2010, the net dollar value of these positions increased annually for large public companies, growing from $162 billion in 2013 to $241 billion in 2020. If the IRS has quantitative and qualitative information on these uncertain tax positions, why doesn’t it audit each and every one of them to conclusion? Alternatively, why do large public companies continue to report these uncertain (and, in Klein’s terminology, unsustainable) positions, if they’re required to be disclosed to both shareholders and the IRS?

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Grimmelmann's Programming Languages And Law

This week, Young Ran (Christine) Kim (Cardozo; Google Scholar) reviews a new work by James Grimmelmann (Cornell; Google Scholar), Programming Languages and Law (2nd ACM Symposium on Computer Science and Law, forthcoming 2022).

Programming language and law are conceptually and methodologically similar. They both use words. Computer science and law are both linguistic professions whose practitioners use language to create, manipulate, and interpret complex abstractions. Such similarity creates a unique opportunity for programming-language theory (PL theory) to contribute to law. But how and to what extent? A lawyer with no programming background might find it difficult to answer. I would like to introduce a recent paper, Programming Languages and Law (2nd ACM Symposium on Computer Science and Law, forthcoming 2022), by James Grimmelmann. Grimmelmann is a professor at Cornell Law School and Cornell Tech, and his interdisciplinary background makes the paper accessible to lawyers. The paper presents three case studies of the use of PL theory for law and ten promising topics for potential research. This review will introduce several examples that resonate with a tax audience. Please note that I edited some examples to make them accessible to a broader tax audience.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Shaviro's Stanley Surrey And The Public Intellectual Practice Of Tax Policy

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Daniel Shaviro (NYU; Google Scholar), ‘Moralist’ Versus ‘Scientist’: Stanley Surrey and the Public Intellectual Practice of Tax Policy (July 2022).

The dichotomy of tax—as pure scientific neutral field versus encompassing a moral and social agenda—received much attention with recent years’ renewed spotlight on critical tax theory. In an interview in 1974 Firing Line TV Dialog, Stanley Surrey was confronted with this dichotomy when host William Buckley blamed Surrey that although he asserts relying on scientific observations, he is truly a tax moralist who aims to improve the world based on his own personal value principles. Following A Half-Century with the Internal Revenue Code: The Memoirs of Stanley S. Surrey (Lawrence Zelenak (Duke) & Ajay Mehrotra (Northwestern; Google Scholar) eds. Carolina Academic Press 2022), in this Essay, Shaviro explores Surrey’s tax moralism as it is self-professed in this autobiographical collection and evaluates the effect it has on the tax expenditure analysis.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Hemel's The Passthrough Entity Tax Scandal

This week, David Elkins (Netanya, visiting NYU 2021-2023; Google Scholar) reviews a new paper by Daniel J. Hemel (NYU; Google Scholar), The Passthrough Entity Tax Scandal (2022).

One of the more fascinating aspects of the 2017 Tax Cuts and Jobs Act concerns the limitation on deducting state and local income taxes. Prior to the enactment of the TCJA, state and local income taxes were fully deductible when computing federal tax liability. The TCJA capped that deduction for individuals at $10,000. In itself the cap was not particularly remarkable. There are innumerable sections in the Code that cap deductions at some arbitrary amount. What was fascinating about the SALT cap was the politics involved. The TCJA cap primarily strikes at the wealthiest taxpayers: the vast majority of individuals pay much less than $10,000 in state and local income taxes. One might therefore expect that, were there to be any political bickering on the issue, it would be the Democrats who would fully support the cap and the Republicans who would resist. It did not play out that way. The highly contentious measure was proposed by the Republicans and fiercely denounced by the Democrats. The reason for this seeming reversal of the usual political positions was pure partisan politics: blue states tend to have higher income taxes than red states (the only states with top marginal rates higher than 10% are California, New York, and New Jersey).

In this week’s feature article, Professor Daniel Hemel describes how states have attempted to bypass the SALT cap by enacting pass-through entity taxes (PETs).

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Implicit Legislative Bias And The Mortgage Interest Deduction By Osofsky & Thomas

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Leigh Osofsky (North Carolina; Google Scholar) & Kathleen DeLaney Thomas (North Carolina; Google Scholar), Implicit Legislative Bias: The Case of the Mortgage Interest Deduction, 56 U.C. Davis L. Rev. ___ (2022).

Why do so many bad tax policies stick around for so long? The story told is often one of public choice theory and capture. Legislators optimize getting reelected and that leads toward catering to certain interest groups. To be sure, this account does have some explanatory force. But there is often more to the story. Using the mortgage interest deduction (MID) as an example, Leigh Osofsky and Kathleen DeLaney Thomas show that cognitive biases, including implicit racial assumptions and other heuristics, also play a role in keeping this problematic policy. These cognitive biases conspire to create a self-reinforcing system that perpetuates racial inequalities. The article is thus important to broader conversations on how to think about enacting tax policy and for the discussions of racial justice.

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Galler's Tax Opinion Policies And Procedures

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Linda Galler (Hofstra), Tax Opinion Policies and Procedures, 75 Tax Law. 443 (2022).

In Tax Opinion Policies and Procedures, Linda Galler analyzes and discusses the results of a 2021 survey of tax professionals’ approaches to opinion practice. In this fourteen-question survey, the American College of Tax Counsel (ACTC) asked its limited membership of lawyers and accountants about their firms’ procedures for reviewing and issuing opinions. Although the ACTC survey’s results are more impressionistic than comprehensive, Galler notes that the survey “provides an excellent starting point” for establishing the current landscape of tax opinion practice (473). After detailing the form and function of tax opinions, as well as ethical considerations in opinion practice, Galler highlights the ACTC survey’s critical results and offers various recommendations for firms and future study.

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Stanley Surrey's Memoirs Edited By Zelenak & Mehrotra

This week, Tracey Roberts (Cumberland; Google Scholar) reviews A Half Century with the Internal Revenue Code, The Memoirs of Stanley S. Surrey (Carolina Academic Press 2022), edited by Lawrence A. Zelenak (Duke) and Ajay K. Mehrotra (Northwestern; Google Scholar).

Stanley Surrey devoted five decades to shaping and elucidating the structures of the income tax, to decrying its use as a mechanism to grant unwarranted financial favors to select interest groups, and to training generations of students and lawyers for leadership in government, in academia, and in private practice in the U.S. and internationally. Surrey served as an advisor and Tax Legislative Counsel to the Department of Treasury from 1937 to 1947, as the Assistant Secretary of the Treasury from 1961 to 1969, and as a professor of law at the University of California, Berkeley School of Law and at Harvard Law School, where he founded the International Tax Program. Surrey saw himself as an activist scholar. In their introduction to their edited edition of Surrey’s memoirs, Larry Zelenak and Ajay Mehrotra survey Surrey’s extraordinary career as largely one of unified thought and action in service to fairness, equity, the integrity nation’s tax system, and its effectiveness in securing the federal fisc. 

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Dean's The Casual Racism Of The Tax Law

This week, Young Ran (Christine) Kim (Utah, moving to Cardozo; Google Scholar) reviews a new work by Steven A. Dean (Brooklyn), Filing While Black: The Casual Racism of the Tax Law, 2022 Utah L. Rev. __.

In response to a growing recognition of the absence of demographic data in federal datasets, including tax data, President Biden signed Executive Order 13985 in 2021, which, inter alia, established an Interagency Working Group on Equitable Data. The Treasury Department is also undertaking a comprehensive research initiative to study the relationship between the U.S. tax code and racial inequities. Senate Finance Committee Chair Ron Wyden (D-OR) has called for the IRS to collect and disclose more information relating to the tax code’s effect on different demographics because it makes no sense to blind lawmakers to the key data that would illuminate injustice in our tax laws. Those recent developments are the results of hard work by dedicated scholars like Alice Abreu, Jeremy Bearer-Friend, Dorothy Brown, Wei Cui, Steven Dean, Francine Lipman, and Goldburn Maynard. In this review, I would like to recognize Steven Dean's recent essay, Filing While Black: The Casual Racism of the Tax Law, 2022 Utah L. Rev. ___. Dean's essay is adapted from his testimony given before the Committee on Ways and Means of the U.S. House of Representatives on June 10, 2021, and was presented at the 2021 Utah Law Review Symposium, entitled #includetheirstories: Rethinking, Reimagining, and Reshaping Legal Education, for which I was an organizer. (Video clips are available here.)

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews AI, Taxation, And Valuation By Soled And Thomas

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Jay Soled (Rutgers; Google Scholar) & Kathleen DeLaney Thomas (North Carolina; Google Scholar), AI, Taxation, and Valuation, 108 Iowa L. Rev. __ (2023).

Artificial intelligence (AI) is improving our lives by utilizing technology and machine learning to accomplish tasks that require considerable human labor. It can deliver similar and often better outcomes in a cost-effective manner. I have written here that calculative actions do not require much creativity thus are the most obvious fields in which machines are superior to humans. It is very fitting to ask, then, how can AI improve tax enforcement and compliance? Valuation is one of the most calculative and arduous areas in tax administration that automation can greatly improve. 

Valuation often requires many efforts determining fair market value (FMV) when there is no willing buyer and seller that negotiate the asset’s purchase price. Because of the essential role that asset valuations play in determining tax liabilities, there is a high sensitivity by the IRS and taxpayers to their accuracy. Transactions between related parties or not at arm’s length such as transfer of bequests, nonfungible real estate, or closely held business interests present complex valuation issues as there is no clear FMV. Congress uses a traditional carrot-and-stick approach to valuation by encouraging taxpayers to comply through clarifying and simplifying reporting obligations, along with imposing penalties for misstating the value of assets.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews International Response To The U.S. Tax Haven By Noked & Marcone

This week, David Elkins (Netanya, visiting NYU 2021-2023; Google Scholar) reviews Noam Noked (Chinese University of Hong Kong (CUHK); Google Scholar) & Zachary Marcone (CUHK), International Response to the U.S. Tax Haven, 48 Yale J. Int’l L. ___ (2022):

The term “tax haven” tends to evoke images of sparsely populated Caribbean islands with pristine beaches and whose most important industry is the registration of corporations. Alternatively, it may bring to mind countries such as Switzerland or Luxembourg, whose banking laws have traditionally provided for strict secrecy, enabling wealthy individuals to shield their capital and income from the prying eyes of their home countries’ tax authorities.

Wherever they may be and whatever function they serve, tax havens have been the subject of intense scrutiny and criticism in recent years. The United States has been particularly active in this regard. One of the primary tools in its arsenal is the Foreign Account Tax Compliance Act (FATCA) that prohibits foreign financial institutions from aiding and abetting tax evasion by U.S. persons. Foreign financial institutions that run afoul of these regulations are subject to stiff penalties (even, it may be noted, when abiding by the regulations would constitute a violation of local law).

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Blue J's Use Of Machine Learning To Predict Tax Litigation Results

This week, Sloan Speck (Colorado; Google Scholar) reviews new works by: 

• Benjamin Alarie (Toronto; Google Scholar) & Stefanie Di Giandomenico (Blue J Legal), Timing Is Everything: The Step Transaction Doctrine in GSS Holdings, 174 Tax Notes Fed. 1849 (Mar. 28, 2022)
• Benjamin Alarie (Toronto; Google Scholar) & Christopher Yan (Blue J Legal), Using Machine Learning to Evaluate the Existence of a Trade or Business: Olsen, 174 Tax Notes Fed. 1231 (Feb. 28, 2022)
• Benjamin Alarie (Toronto; Google Scholar) & Bettina Xue Griffin (Blue J Legal), Using Machine Learning to Crack the Tax Code, 174 Tax Notes Fed. 661 (Jan. 31, 2022)

Since 2014, Ben Alarie and his team at Blue J Legal have worked to apply machine learning (ML) principles to the process of tax advising (among other areas of law). Through a series of articles in Tax Notes Federal, Alarie and his coauthors provide a window into their artificial intelligence prediction engine. Their commentary is crucial: big data has arrived in legal and accounting practice, and some degree of transparency may improve tax equity and administration. In addition, these articles yield important and interesting insights about various doctrines in tax law.

In winter 2022, Alarie and his coauthors gave us three short articles: a general review of ML’s potential in tax practice and two applications of Alarie’s ML model to existing controversies.

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews A New Framework For Digital Taxation By Avi-Yonah, Kim & Sam

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Reuven Avi-Yonah (Michigan; Google Scholar), Christine Kim (Utah; moving to Cardozo; Google Scholar) & Karen Sam (Michigan), A New Framework for Digital Taxation, 63 Harv. Int’l L.J. __ (2022).

Last October, the OECD/G20 announced a global deal that sought to remake the international tax system. Key to that change was the commitment of the many nations, including the U.S. and members of the E.U., to support, in principle, two pillars. Pillar One focused on eliminating physical presence requirements thereby allowing market countries to tax digital platforms. Pillar Two created a minimum tax backstop in residence countries. But as Reuven Avi-Yonah, Young Ran “Christine” Kim, and Karen Sam, show in their article A New Framework for Digital Taxation, forthcoming in the Harvard Journal of International Law, for Pillar One, the declaration of victory is premature. And so-called Digital Service Taxes (DSTs) may not be so terrible either.

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Taxation, Aristocracy, And The Constitution

This week, Tracey Roberts (Cumberland; Google Scholar) reviews new works by:

• Jeremy Bearer-Friend (George Washington; Google Scholar) & Vanessa Williamson (Brookings; Google Scholar), Thomas Paine and Taxation as Freedom from Aristocracy, 26 Fla. Tax Rev. __ (2022)
• John R. Brooks (Fordham; Google Scholar) and David Gamage (Indiana; Google Scholar), Taxation and the Constitution, Reconsidered, 74 Tax L. Rev. __(2022)

Recently, ProPublica uncovered troves of tax information for the wealthiest Americans, revealing numerous pathways by which they avoid taxes. Last year the Department of the Treasury estimated that the tax gap, the difference between taxes that are owed and the taxes that have been paid, has increased to approximately $600 billion per year. Over the next ten years, this comes to $7 trillion in lost tax revenue, important resources that might be used to reduce the federal debt, for those concerned about such matters, and to address other needs as COVID 19 recedes and we recover from its impacts. Using tax data, Emmanuel Saez and Gabriel Zucman have estimated that the top one percent of taxpayers are responsible for one-third of that tax gap. These recent reports demonstrate that the federal income tax and the estate and gift taxes are inadequate in ensuring that the ultrawealthy in the United States pay their fair share. Two recent papers delve into historical resources, constitutional caselaw, and constitutional history to underscore that concerns about adequate taxation of the wealthy are not new, but are instead central to our nation’s founding, to the periods in which our country has faced its greatest challenges, and to democracy.

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Sanchirico's A Game-theoretic Analysis of Global Minimum Tax Design

This week, Young Ran (Christine) Kim (Utah, moving to Cardozo; Google Scholar) reviews a new work by Chris William Sanchirico (Penn; Google Scholar), A Game-theoretic Analysis of Global Minimum Tax Design (March 2022).

In the globalized, open economy, multinational enterprises (MNEs) can easily shift their profits from high tax jurisdictions to low tax jurisdictions. Many countries, especially developing countries, were increasingly squeezed by MNEs to provide lower corporate tax rates and tax holidays as conditions for receiving foreign direct investment. Furthermore, those countries had to compete with peer countries vying to attract foreign capital to their economy. The epitome of such rivalry is “tax competition.” As tax competition has grown, global effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom.” In order to curb harmful tax competition, the OECD/Inclusive Framework has proposed a global minimum tax at 15% rate and to impose a top-up tax to the extent that the effective tax rate paid by the MNE falls short of the said minimum tax rate.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Thimmesch's Tax, Incorporated: Dynamic Incorporation And The Modern Fiscal State

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Adam B. Thimmesch (Nebraska; Google Scholar), Tax, Incorporated: Dynamic Incorporation and the Modern Fiscal State, 53 Ariz. St. L. J. __ (2021):

States’ fiscal stability is crucial to providing residents with health, economic security, and physical safety. Most states rely heavily on the personal income tax, which is often an unpredictable source of revenue. Yet, even more so, states increase the volatility of that stream of tax revenues by relegating tax-writing authority to Congress through referral or fully incorporating the federal tax code (the “Tax Code”) into their own laws.  

In this Article, Thimmesch reviews the practice of incorporation—also known as conformity, piggybacking, or delegating up, thereby excusing states from having to devise tax policy or craft income tax de novo. Perhaps the most notable examples to this phenomenon include the referral to federal level AGI, determination of a taxable gift, calculating tax basis, or allowing deductibility of business meal expenses, among others. 

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Oxford Business Tax Policy Brief On Pillar 2

This week, David Elkins (Netanya, visiting NYU 2021-2022; Google Scholar) reviews a new paper by Michael P. Devreux (Oxford; Google Scholar), John Vella (Oxford) & Heydon Wardell-Burrus (Oxford), Pillar 2: Rule Order, Incentives, and Tax Competition (2022).

International taxation is undergoing a transformation the likes of which have not been seen for a century, responding to challenges of globalization and digitalization that the current international tax regime is ill-equipped to handle. Twenty-five years have passed since the OECD shot the first arrow across the bow, twenty-five years during which the discourse has expanded to include over 140 countries in the Inclusive Framework and the goals of the project have been constantly evolving. Whether and to what extent the transformation will come to fruition and, if it does, will survive the test of time is a matter of speculation.

The latest iteration on the subject is the Pillar Two Global Minimum Tax Model Rules released on December 22, 2021. In this week’s feature article, three scholars from the Oxford University Centre for Business Taxation examine how the Model Rules deal with two of the more controversial questions relating to Pillar Two: the extent to which it will allow countries to engage in tax competition, and which countries will collect the tax revenue that it generates. 

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Parsons’ Tax’s Digital Labor Dilemma

This week, Sloan Speck (Colorado; Google Scholar) reviews a new work by Amanda Parsons (Columbia), Tax’s Digital Labor Dilemma, 71 Duke L.J. __ (2022).

In Tax’s Digital Labor Dilemma, Amanda Parsons develops a compelling challenge to conventional frameworks for international tax reform by reconceptualizing traditional distinctions between consumers and workers in digital economy enterprises. Parsons generally agrees with the critics of the 1920s compromise: the historical allocation of taxing authority between source and residence countries fails in the world of today. Under longstanding international tax norms, market countries—in which an enterprise’s goods and services are consumed or used—receive little consideration and less tax revenue. Parsons, among many others, sees justice in transferring some measure of taxing authority to these market countries. The sticky question—and where Parsons shows her careful creativity—is how policymakers should address this shared goal.

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Davis’s Taxing Choices

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Tessa Davis (South Carolina), Taxing Choices, 15 Fla. Int'l U. L. Rev. __ (2022).

Choice is often bandied about in tax discussion. Indeed, the very notion of marginal effects that taxation is based on the idea of either inducing or avoiding such inducement of choices. We also use choice as a proxy to determine what should count or not count as an item of income or deduction. But as Tessa Davis argues in her piece Taxing Choices, forthcoming in the Florida International University Law Review, there is a choice problem in taxation. Too often, we use choice and related concepts like neutrality, to hide our value judgments and normative frames. In pushing an idea called “choice as heuristic” and in drawing from some of the debates about choice in Contract Law, Davis forces us to rethink what we are doing when we use the concept of choice in our tax discussions.

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews Aprill's Governmental And Semi-Governmental Federal Charitable Entities

This week, Michelle Layser (Illinois; Google Scholar) reviews Ellen Aprill (Loyola-L.A.; Google Scholar), Governmental and Semi-Governmental Federal Charitable Entities (2022).

The federal tax deduction for charitable contributions is sometimes defended on the theory that charitable organizations provide public goods that may be under-produced by the government. This understanding of tax-exempt nonprofits imagines charities as existing in a sphere that is separate and distinct from the government. Professor Ellen Aprill challenges the conventional view, arguing that government and charities are better understood as “resting on a continuum rather than in separate spheres.”

Aprill begins by reviewing the basics of the charitable contribution deduction under I.R.C. § 170. Contributions to 501(c)(3) nonprofits, commonly called charitable organizations, are undoubtedly the most familiar deductible donations. But Aprill points out that section 170 also authorizes a deduction for contributions or gifts to the United States, provided that the gifts are used for “exclusively public purposes.” In other words, taxpayers can claim a charitable contribution deduction for gifts to the federal government itself. Congress can also authorize federal agencies to accept charitable deductions, and in some cases it has done so. In a sense, the federal government and its agencies represent an extreme end of the spectrum of what Aprill calls “federal charitable entities.”

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Love's Measuring The Flow Of Partnership Income To Tax Havens

This week, Tracey Roberts (Cumberland; Google Scholar) reviews a new work by Michael Love (Berkeley), Where in the World Does Partnership Income Go? Evidence of a Growing Use of Tax Havens.

In 2016, in The Hidden Wealth of Nations, UC Berkeley Associate Professor of Economics Gabriel Zucman quantified the amount of the world’s assets held in tax havens, clarified the ways large-scale tax evasion undermined global markets, and explained the connection between tax evasion and financial, budgetary and democratic crises occurring throughout the world. He argued that tax evasion can be stopped, but only if we have statistics to measure it, if we implement policies and penalties to address it, and if we monitor our progress. In his recent research, Michael Love has made important progress in measuring the flow of partnership income to tax havens and monitoring the effects of the Foreign Account Tax Compliance Act (FATCA) in improving reporting and compliance by U.S. investors.

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Weekly SSRN Tax Article Review And Roundup: Kim Reviews Warren's Evaluating The Oxford Corporate Cash Flow Tax Proposal

This week, Young Ran (Christine) Kim (Utah; Google Scholar) reviews a new work by Alvin C. Warren Jr. (Harvard), Evaluating the Oxford Proposal for a Corporate Cash Flow Tax, 173 Tax Notes Fed. 1223 (Nov. 29, 2021).  

Many tax commentators would remember the discourse on the proposed "destination-based cash flow tax (DBCFT)" during the presidential election debate in 2016-17. Although I lamented the acronym of the proposal, DBCFT, as an unwelcome addition to the already-crowded alphabet soup in tax law, such as CFC, ECI, PE, TOB, CEN, CIN, UBIT, DRD, GILTI, and so on, I enjoyed the concept itself, which is to replace the traditional corporate income tax with taxation of a corporation's domestic cash flow. I particularly enjoyed the comments by Michael Devereux (Oxford) and Alan Auerbach (Berkeley), who are renowned experts in business cash flow taxation. The DBCFT proposal was not included in the Tax Cuts and Jobs Act (TCJA) of 2017.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Layser's Financing Affordable Housing Through Opportunity Funds

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Michelle D. Layser (Illinois; Google Scholar), Financing Affordable Housing Through Opportunity Funds, 19 Pitt. Tax Rev. __ (2022):

Affordable housing is a national challenge, now more than ever. While the idea is not new, utilizing the tax system to incentivize creation of affordable housing has been endorsed by current and previous administrations. The Opportunity Zone Fund and the Opportunity Zones tax incentive are programs that provide tax relief to taxpayers who would otherwise be subject to the capital gains tax but choose to invest in low-income communities.  Specifically, they provide deferral of capital gains from sale if gains are reinvested in an opportunity fund; they make available partial exclusion of pre-investment gains if kept for five years (through increases in basis); and they offer complete exclusion for post-investment gains if held for ten years.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Infanti's Tax And Time: On The Use And Misuse Of Legal Imagination

This week David Elkins (Netanya, visiting NYU 2021-2022; Google Scholar) reviews a new paper by Anthony C. Infanti (Pittsburgh; Google Scholar), Tax and Time: On the Use and Misuse of Legal Imagination (NYU Press 2022). 

Time is one of the more perplexing phenomena of the universe. Astrophysicists distinguish between what they call “real time” (time as we experience it, as a series of continuous moments moving from the past to the future) and “imaginary time” (time as viewed from outside the time-space continuum, as a unitary whole with past, present, and future existing simultaneously). However, lest we misinterpret the terms, real time is not more real than imaginary time, and imaginary time is not more imaginary than real time. The terms “real” and “imaginary” simply refer to the real and imaginary axes in Cartesian complex number coordinates. In fact, in ordinary language, it is probably more accurate to describe imaginary time as “real” (an objective portrayal of the universe) and real time as “imaginary” (our psychological perception of the flow of time). One example of the complexities that arise in this field is the conundrum of the arrow of time: Why do we remember the past, but not the future? Why do we experience time as always flowing in one direction? The arrow of time has intrigued philosophers also. Why is the knowledge that I am to experience future pleasure preferable to the knowledge that I experienced past pleasure? Why is knowledge that I am to experience future pain more disconcerting than the knowledge than I experienced pain in the past?

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Weekly SSRN Tax Article Review And Roundup: Roberts Reviews Zelinsky's The Proposed Regs On ESG Investing

This week, Tracey Roberts (Cumberland; Google Scholar) reviews a new work by Edward A. Zelinsky (Cardozo), Comments to the Department of Labor Proposed ERISA Regulations, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” amending and restating 29 CFR §2550.404a-1.

The Employee Retirement Income Security Act of 1974 (ERISA) protects retirement plan participants and beneficiaries in a variety of ways. Under ERISA, pension plans must meet certain standards with respect to (i) participation, identifying who may participate, (ii) vesting, establishing how long those individuals must work to receive retirement funds, (iii) funding, determining the minimum amount of funds that must be set aside to pay future plan participants, (iv) management, requiring fund managers to adhere to a fiduciary standards, handling funds prudently and in the best interests of plan participants, and (v) disclosure, requiring plan managers to inform participants of their rights and the financial status of the plan. The Department of the Treasury and the Internal Revenue Service oversee plan participation, vesting, and funding. Participants in qualifying plans enjoy tax deduction and deferral benefits. They also retain the right to sue to recover earned benefits. The Department of Labor regulates fiduciary standards and requirements for reporting and disclosure of financial information.

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Lederman’s Best Practices In Tax Rulings Transparency

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Leandra Lederman (Indiana-Maurer; Google Scholar), Best Practices In Tax Rulings Transparency.

Justice Brandeis once said that “sunlight is the best disinfectant.” Disclosure and transparency are often important for the legitimacy of government. In her article, Best Practices in Tax Rulings Transparency, Leandra Lederman not only creates a new typology for thinking about the costs of tax rulings in the dark, but also convincingly argues that many of the concerns against broader transparency of tax rulings is weak.

Tax rulings, as described by Lederman are rulings made by a tax authority or authorities to a specific taxpayer based on specific facts. For U.S. readers, the two most known in federal practice are Private Letter Rulings (PLRs), which speak to a specific taxpayer’s transaction, and Advanced Pricing Agreements (APAs), which fixes how the IRS will handle transfer pricing issues for a taxpayer over the course of about 3 to 5 years. In the U.S. context, PLRs are made public after a period with redactions of specifics regarding the taxpayer and their transactions, but APAs in the U.S. are never released widely.

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews Field’s Taxpayer Choices, Itemized Deductions, And The Federal And State Tax Systems

This week, Michelle Layser (Illinois; Google Scholar) reviews Heather M. Field (UC Hastings; Google Scholar), Taxpayer Choices, Itemized Deductions, and the Relationship Between the Federal & State Tax Systems, 13 Col. J.Tax L. __ (forthcoming 2021).

Some of most significant changes implemented under the Tax Cuts & Jobs Act of 2017 (the “TCJA”) were an increased standard deduction and the scaling back of several itemized deductions. Together, the anticipated impact of these changes was to dramatically reduce the number of taxpayers who report itemized deductions on their tax returns. Proponents touted these changes as a simplification measure. But how well did it work?

In a new article, Professor Heather Field provides empirical evidence to suggest that itemization rates fell considerably more in some states than others, and in some states, the TCJA may have even complicated tax filing more than it simplified it. Field demonstrates that these geographic disparities can be traced to states’ different approaches to conformity with federal law. Not only do these findings have important implications for how we understand the impact of the TCJA, but they also show how state law can interact with federal law in ways that undermine federal policy.

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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).

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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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Automated Government For Vulnerable Citizens — Intermediating Rights

This week, Sloan Speck (Colorado; Google Scholar) reviews a new paper by Sofia Ranchordás (University of Groningen) & Luisa Scarcella (University of Antwerp), Automated Government for Vulnerable Citizens: Intermediating Rights, 30 Wm. & Mary Bill Rts. J. ___ (2021).

In Automated Government for Vulnerable Citizens, Sofia Ranchordás and Luisa Scarcella survey the landscape of digital governmental services, concluding that, while these automated mechanisms may enhance convenience and efficiency for some, they inflict differential effects on vulnerable populations and often entrench existing disparities. Prominent in the authors’ analysis (and in governments’ digital transitions) is tax compliance: in particular, electronic return preparation and algorithmic enforcement. Ranchordás and Scarcella conclude by offering various prescriptions to ameliorate the digital revolution’s disproportionate harms and promote humanity—literal and metaphorical—in public administration.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Pratt's Learning To Live Without Form 1040

This week, Mirit Eyal-Cohen (Alabama; Google Scholar) reviews Katherine Pratt (Loyola-L.A.; Google Scholar), Learning to Live Without Form 1040, 75 Tax Law. __ (2022).

From its inception, our federal revenue system has been based on income rather than consumption. Over the year, there have been numerous failed academic and practical proposals to switch to a consumption tax base, mainly for the latter’s promise for greater simplicity and administrability. Accordingly, we came to accept the fact that our system is so deeply ingrained in the concept of income that the transformation to a consumption tax base (such as the VAT and GST prominent in other countries) has become purely theoretical at this point.

Nonetheless, this Article is not another academic exercise. Pratt points out that the switch to consumption tax is extremely relevant today (and even more than ever) in light of the growing inequity gap and erosion of anti-poverty programs. With the diminished share of corporate tax revenues and multinational tax transfers, fulfilment of the growing need for alternative sources of revenues lies with Federal consumption taxes. 

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Hasen's Debt And Taxes

This week, David Elkins (Netanya, visiting NYU 2021-2022) reviews a new paper by David Hasen (Florida; Google Scholar), Debt and Taxes, 12 Columbia J. Tax L. 89 (2021).

As indicated by its whimsical title, David Hasen’s well-written paper considers the tax treatment of debt. Under the standard view, in exchange for the loan proceeds, the borrower commits to paying the lender interest and, eventually, repaying the loan proceeds. Because of the obligation to repay, the borrower does not report income on receipt of the loan proceeds. The idea is that income is accession to wealth, and wealth, in turn, is assets minus obligations. Increasing one’s assets (i.e., the cash received) and one’s liabilities by the same amount does not cause any change to one’s wealth. Similarly, for the lender, the cash is replaced by the borrower’s obligation. Thus, while the composition of the lender’s assets undergoes a transformation, the value of the assets remains the same and the lender cannot deduct the loan proceeds.

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Weekly SSRN Tax Article Review And Roundup: Sarkar Reviews Rationalizing The Arbitrary Foreign Tax Credit By Barry And Kleiman

This week, Shayak Sarkar (UC-Davis) reviews Jordan Barry (USC) & Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), Rationalizing the Arbitrary Foreign Tax Credit, 74 Tax L. Rev. __ (2022).

In a globalized world, taxpayers often answer to multiple sovereigns. The United States, with its unique worldwide taxation system, addresses this reality with the century-old Foreign Tax Credit (FTC).  In Rationalizing the Arbitrary Foreign Tax Credit, 74 Tax L. Rev. ___ (2022), Jordan Barry and Ariel Jurow Kleiman provide a far-reaching but precise perspective on this credit’s many limitations.

They begin by taking the Supreme Court to task for its questionable algebra in the primary case on the foreign tax credit, PPL v. Commissioner, 569 U.S. 329 (2013). o There, the Justices characterized the United Kingdom’s Windfall Tax as a creditable “pure” income tax, despite a similar tax that the regulations deemed noncreditable.  From this tenuous distinction (given the possibility of infinite algebraic manipulation), Barry and Kleiman revisit and rebuild the foundations of the FTC.

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Two New Papers By Kleiman And Widiss

This week, Sloan Speck (Colorado; Google Scholar) reviews new works by Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), Revolutionizing Redistribution: Tax Credits and the American Rescue Plan, 131 Yale L.J. F. __ (2021) and Deborah A. Widiss (Indiana; Google Scholar), Chosen Family, Care, and the Workplace, 131 Yale L.J. F. __ (2021).

Historically, the American legal system has struggled to adequately recognize and accommodate individuals’ lived experiences of family and care relationships. Over the last two decades, however, there has been a veritable revolution in legislative, regulatory, and judicial positions regarding “nontraditional” family structures. In many ways, public and private responses to the COVID-19 pandemic accelerated and intensified this shift. In separate essays, Ariel Kleiman and Deborah Widiss explore and evaluate pandemic-era government actions in taxation and workplace leave (respectively) that implicate families and care, situating these most recent changes within larger narratives of social provisioning and asking how these changes should influence future policy. Both authors are optimistic but cautionary: we collectively face a tremendous opportunity to advance and cement more inclusive understandings of family and care. How this opportunity unfolds may establish the American welfare state’s trajectory for years to come.

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews The Trouble With Targeting Tax Shelters By Blank & Glogower

This week, Michelle Layser (Illinois; Google Scholar) reviews Joshua D. Blank (UC-Irvine; Google Scholar) and Ari D. Glogower (Ohio State; Google Scholar), The Trouble with Targeting Tax Shelters, 74 Admin. L. Rev. __ (2022).

The subject of tax avoidance hit the headlines a couple weeks ago when news organizations began to publish analyses of the Pandora Papers. The leaked documents contain confidential records related to offshore accounts held by “130 Forbes billionaires, as well as celebrities, fraudsters, drug dealers, royal family members and leaders of religious groups around the world” (ICIJ). Among other things, analyses of the Pandora Papers illustrate the challenges governments face when trying to detect and deter abusive tax avoidance strategies used by the ultra-wealthy. Though the problem itself is not new, Professors Joshua Blank and Ari Glogower argue that a recent Supreme Court case, CIC Services, LLC v. Internal Revenue Service, may have made it even harder for the IRS to target tax shelters.

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Weekly SSRN Tax Article Review And Roundup: Saito Reviews Seto’s Modeling The Welfare Effects Of Advertising

This week, Blaine Saito (Northeastern; Google Scholar) reviews a new work by Theodore P. Seto (Loyola-L.A.; Google Scholar), Modeling the Welfare Effects of Advertising: Preference-Shifting Deadweight Loss, 75 Tax L. Rev. ___ (2022).

Advertising is ubiquitous. Ads appear in almost every form of media from newspapers to television. Today, advertising is more powerful, with large tech companies using data collected on their users to create and sell targeted ads. The question for economics, and by extension tax policy, is do these advertisements influence our consumption patterns and how does that affect optimal tax theory. Ted Seto’s new piece, forthcoming in the Tax Law Review, Modeling the Welfare Effects of Advertising: Preference-Shifting Deadweight Loss reveals how the preference-shifting forces us to change our thinking about optimal tax theory.

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