Paul L. Caron
Dean




Tuesday, July 5, 2022

Marian: Taxing Data

Omri Marian (UC-Irvine; Google Scholar), Taxing Data, 47 BYU L. Rev. 511 (2022): 

BYU Law Review (2022)The Article offers a new theory of tax on data collection and transmission as a primary source of government revenue. This tax does not depend on the monetary value of data. This "data tax" can supplement, and in some instances replace, income taxes. The data tax can (1) mitigate some of the failures of income taxes in a globalized data based economy, and (2) serve to alleviate some of the externalities of a data based economy.

The Article advances the following four arguments. First, current challenges to tax systems stem largely from the fact that traditional models of taxation were designed for an economy in which the location of labor, the ownership of capital, and the monetary value of income were identifiable. These assumptions no longer stand in the modern economic environment: the data economy. Today, one the most significant sources of value creation is the analysis, manipulation, and utilization of large quantities of dispersed data. In so called "data-rich markets," source, ownership, and value are not only hard to identify — they are not always economically meaningful concepts. 

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July 5, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: No §163 Deduction From Foreclosure Proceeds

Camp (2021)It’s not just Death and Taxes that are certainties in life.  Having lived through the economic downturns in 1973, 1981, 2001, and 2008, I now believe we can add Recessions to the list.  And another one seems to be coming.  So this may be a good time to pay attention to Ronald W. Howland, Jr. and Marilee R. Howland v. Commissioner, T.C. Memo. 2022-60 (June 13, 2022) (Judge Weiler), where we learn some of the obstacles taxpayers face in taking a §163 interest deduction when foreclosure proceeds only partially pay off a loan balance that includes principal and accrued interest.

In Howland, the Court did not permit any §163 deduction.  This week and next I'm going to try something new and compare the Tax Court case with a recent Circuit Court case.  I think the comparison is instructive.  This week, we compare Howland to the recent 9th Circuit opinion in Milkovich v. U.S. 24 F.4th 1 (9th Cir. 2022), where the 9th Circuit did permit a §163 deduction from foreclosure proceeds.  Both Howland and Milkovich arose from the Great Recession.  Looking at the similarities and difference of the two cases gives us the lesson, which is in part a cautionary tale on how at least some of the obstacles to deduction may be self-created.

Details below the fold

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July 5, 2022 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Sunday, July 3, 2022

The Top Five New Tax Papers

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

  1. SSRN Logo (2018)[535 Downloads]  Tax Administration and Technology: From Enhanced to No-Cooperation?, by João Félix Pinto Nogueira (Catholic University Portugal & IBFD; Google Scholar)
  2. [452 Downloads]  Tax Neutrality Regimes and GloBE, by Leopoldo Parada (Leeds; Google Scholar)
  3. [311 Downloads]  Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax, by Reuven Avi-Yonah (Michigan; Google Scholar) & Young Ran (Christine) Kim (Utah; Google Scholar; moving to Cardozo)
  4. [255 Downloads]  Congress Takes Its War On Cash To Digital Assets: Understanding Tax Code Section 6050I, by Abraham Sutherland (Virginia; Google Scholar)
  5. [251 Downloads]  The Treatment of Tax Incentives under Pillar Two, by Belisa Ferreira Liotti (Google Scholar), Joy Waruguru Ndubai, Ruth Wamuyu, Ivan Lazarov (Google Scholar) & Jeffrey Owens (all of Vienna University of Economics and Business)

July 3, 2022 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, July 2, 2022

Avi-Yonah Posts International Tax Papers On SSRN

Reuven S. Avi-Yonah (Michigan; Google Scholar) has posted these international tax papers on SSRN:

July 2, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Friday, July 1, 2022

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).

Elkins (2018)

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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July 1, 2022 in Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink

The International Law Association's Project On International Tax Law—Phase 1

Juliane Kokott (Court of Justice, European Union), Pasquale Pistone (Vienna) & Robin Miller (Court of Justice, European Union), Public International Law and Tax Law: Taxpayers' Rights: The International Law Association's Project on International Tax Law—Phase 1, 52 Geo. J. Int'l L. 381 (2021): 

Georgetown Journal of Internation LawPublic international law recognizes rights to non-state actors. In tax matters, these include taxpayers and other private persons involved in the levying of tax. Their fundamental rights are human rights, which must be effectively protected even when there is a general interest of the community to the collection of tax. This Article contains a comprehensive worldwide analysis of such rights and addresses the different issues that arise—in national and cross-border situations—in connection with tax procedures and sanctions. 

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July 1, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Thursday, June 30, 2022

Insider Giving

Sureyya Burcu Avci (Sabanci University; Google Scholar), Cindy A. Schipani (Michigan; Google Scholar), H. Nejat Seyhun (Michigan; Google Scholar) & Andrew Verstein (UCLA; Google Scholar), Insider Giving, 71 Duke L.J. 619 (2021):

Duke Law Journal (2022)Corporate insiders can avoid losses if they dispose of their stock while in possession of material nonpublic information. One means of disposal, selling the stock, is illegal and subject to prompt mandatory reporting. A second strategy is almost as effective, yet it faces lax reporting requirements and enforcement. That second method is to donate the stock to a charity and take a charitable tax deduction at the inflated stock price. This “insider giving” is a potent substitute for insider trading. We show that insider giving is far more widespread than previously believed. In particular, we show that insider giving is not limited to officers and directors. Large investors appear to regularly receive material nonpublic information and use it to avoid losses.

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June 30, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Get Out: Structural Racism In The Legal Academy And Academic Terror

Renee Nicole Allen (St. John's; Google Scholar), Get Out: Structural Racism and Academic Terror, 29 Wm. & Mary J. Women & L. __ (2023):

Get OutReleased in 2017, Jordan Peele’s critically acclaimed film Get Out explores the horrors of racism. The film’s plot involves the murder and appropriation of Black bodies for the benefit of wealthy, white people. After luring Black people to their country home, a white family uses hypnosis to paralyze victims and send them to the Sunken Place where screams go unheard. Black bodies are auctioned off to the highest bidder; the winner’s brain is transplanted into the prized Black body. Black victims are rendered passengers in their own bodies so that white inhabitants can obtain physical advantages and immortality.

Like Get Out, this article reveals academic horrors that are far too familiar to people of color. In the legal academy, structural racism is the monster, and under the guise of academic freedom, faculty members inflict terror on marginalized people. Black bodies are objectified and colonized in the name of diversity and antiracism. No matter how loud we scream, it remains a Sunken Place. Only time will tell if the antiracism proclamations of 2020 are a beginning or a killer ending.

This article explores the relationship between structural racism and academic terror in the legal academy and articulates an effective framework for analyzing academic terrorism.

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June 30, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Haneman: Tax Incentives For Green Burial

Victoria J. Haneman (Creighton; Google Scholar), Tax Incentives for Green Burial, 21 Nev. L.J. 491 (2021):

Every living being is doomed to decay and die and decay some more. Death is inevitable, and the disposal of our dead is a fundamental global activity with the potential to have significant environmental impact. In the United States, the environmental toxicity of “traditional” modern burial is stark. A cosmeticized body is pumped with three gallons of embalming fluid (containing chemicals such as formaldehyde) that eventually leaches through metal and wood and into the ground. An estimated 5.3 million gallons of embalming chemicals are buried annually in what are essentially luxury landfill-slash-golf-courses, with landscaping and grass to maintain and mow, in coffins that are typically constructed of nonbiodegradable chipboard. And while cremation is a more environmentally friendly alternative, incineration cremation falls short of being labeled “green.” Fire-based cremation utilizes significant resources and energy, attributable to the substantial quantity of fossil fuel required to burn human remains at 1,562° F (850° C) to reduce a corpse to ash. Pollutants are generated in doing so, including an average of 250,000 tons per year of carbon emissions and an estimated 320 to 6,000 pounds of mercury (from incineration of dental fillings) per year.

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June 30, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Blockchain And Tax Administration: A Critical Assessment

Eliza Mik (Chinese University of Hong Kong; Google Scholar) & Noam Noked (Chinese University of Hong Kong; Google Scholar), Blockchain and Tax Administration: A Critical Assessment, 50 Australian L. Rev. 180 (2021):

Recent publications argue that blockchains could substantially improve tax administration. This article critically evaluates these claims and examines several proposed use cases. It argues that many of the problems that blockchains purportedly solve exist off-chain, in the real world, and cannot be addressed by a blockchain. Blockchains can facilitate the storage and sharing of tax information. They cannot, however, streamline reporting requirements or enhance cooperation between tax authorities. This article also claims that the main benefit from several use cases derives from digitalization in general, not from the deployment of any specific type of database. It remains to be determined whether blockchains are in fact superior to other digitalized systems that perform comparable functions in tax administration.

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June 30, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, June 29, 2022

A Fresh Perspective On The Valuation Of Conservation Easements

Alan Feld (Boston University), Jacob Nielsen (J.D. 2021, Boston University) & Theodore S. Sims (Boston University), Green, or Greed? A Fresh Perspective on the Valuation of Conservation Easements, 76 Tax L. Rev. __ (2022):

Charitable contributions of "conservation easements" have since 1980 allowed high-income taxpayers to shelter income from taxation through overvalued deductions. Overvaluation has increased dramatically in the past 20 years: a 2016 study of all easement decisions since 1980 reported that while overvaluation had averaged by a factor of two before 1994, it averaged by a factor of ten for decisions between 1994 and 2016. SOI data disclose that aggregate easement contributions deducted on Schedule A grew from $2.26 billion in 2015 to $6.5 billion in 2018 (the most recent year available). A recent report by supporters of conservation easements acknowledges that "neither the [IRS] nor the courts have sufficient resources to effectively police valuation abuse."

Most of the concern has been with "syndicated conservation easements" ("SCEs"), and most proposed remedies to easement overvaluation focus on SCEs. We show, however, that exactly the same traits that produce overvalued SCEs — allowing charitable deductions based on "fair market" value, which sanctions deducting unrealized appreciation without taxing the corresponding gain, combined with the unavoidable need to value contributed easements through as manipulable a process as appraisal -— have facilitated abusive overvaluation of non-syndicated easements too.

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June 29, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Congress Takes Its War On Cash To Digital Assets: Understanding Tax Code Section 6050I

Abraham Sutherland (Virginia; Google Scholar), Congress Takes Its War on Cash to Digital Assets: Understanding Tax Code Section 6050I:

The United States government really does not like Americans to make large cash transactions. Now, due to a new law, it really, really does not want Americans to use “digital assets,” either. My goal is to convince you that the first claim is true. The second claim will then be self-evident.

Of course, no one cares about cash anymore, except criminals. We’ve always known something better: bank accounts, paper checks, and wire transfers. Cash has been obsolete for meaningful commerce for a long time, and since 1984 we’ve had a law in place to make sure it stays that way. Cash, as a tool for large, non-criminal transactions in the modern economy, is dead. Cash is a relic.

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June 29, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Tuesday, June 28, 2022

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through June 1, 2022) 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)  209,682 1 Reuven Avi-Yonah (Michigan) 9,738
2 Daniel Hemel (NYU) 125,718 2 Daniel Hemel (NYU) 5,526
3 Dan Shaviro (NYU) 124,944 3 Bridget Crawford (Pace) 4,157
4 Lily Batchelder (NYU) 124,498 4 Edward McCaffery (USC) 3,462
5 David Gamage (Indiana-Bloom.) 121,781 5 D. Dharmapala (Chicago) 2,931
6 Darien Shanske (UC-Davis) 114,774 6 Zachary Liscow (Yale) 2,898
7 David Kamin (NYU) 112,036 7 Lily Batchelder (NYU) 2,869
8 Cliff Fleming (BYU)    107,028 8 Ruth Mason (Virginia) 2,804
9 Manoj Viswanathan (UC-Hastings) 103,776 9 David Gamage (Indiana-Bloom.) 2,754
10 Rebecca Kysar (Fordham) 102,888 10 Darien Shanske (UC-Davis) 2,639
11 Ari Glogower (Ohio State) 102,674 11 Robert Sitkoff (Harvard) 2,637
12 D. Dharmapala (Chicago) 47,503 12 Kim Clausing (UCLA)     2,599
13 Michael Simkovic (USC) 46,794 13 David Kamin (NYU) 2,571
14 Paul Caron (Pepperdine) 39,579 14 Richard Ainsworth (Boston Univ.) 2,524
15 Louis Kaplow (Harvard) 37,015 15 Kyle Rozema (Washington University) 2,193
16 Richard Ainsworth (Boston Univ.) 35,171 16 Dan Shaviro (NYU) 2,040
17 Bridget Crawford (Pace) 32,107 17 Margaret Ryznar (Indiana-Indy)   1,983
18 Robert Sitkoff (Harvard) 29,200 18 Ari Glogower (Ohio State) 1,828
19 Ed Kleinbard (USC) 28,593 19 Louis Kaplow (Harvard) 1,797
20 Vic Fleischer (UC-Irvine) 28,508 20 Brad Borden (Brooklyn) 1,718
21 Brad Borden (Brooklyn) 28,126 21 Francine Lipman (UNLV) 1,630
22 Jim Hines (Michigan) 26,637 22 Hugh Ault (Boston College) 1,579
23 Ruth Mason (Virginia) 26,433 22 Vic Fleischer (UC-Irvine) 1,536
24 Ted Seto (Loyola-L.A.) 25,596 24 Yariv Brauner (Florida) 1,521
25 Katie Pratt (Loyola-L.A.) 25,472 25 Gregg Polsky (Georgia) 1,466

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June 28, 2022 in Legal Education, Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink

Monday, June 27, 2022

Shaviro: Stanley Surrey And The Public Intellectual Practice Of Tax Policy

Following up on my previous post, 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) (reviewed by Tracey Roberts (Cumberland; Google Scholar) here): Daniel Shaviro (NYU), 'Moralist' Versus 'Scientist': Stanley Surrey and the Public Intellectual Practice of Tax Policy:

Stanley-surreyNearly forty years after his untimely death, Stanley Surrey, the renowned Harvard law professor (and Treasury official), remains perhaps the most important and influential tax law scholar in American history. The recent publication of his highly illuminating memoirs offers a convenient occasion for reassessing his work.

In offering such a reassessment, this essay takes its title from William F. Buckley’s 1974 observation that, while Surrey claimed to analyze tax policy issues with “scientific detachment,” in fact he was a tax “moralist,” whose policy recommendations were “based on a highly articulated set of personal value principles.” Largely agreeing with Buckley as a descriptive matter, the essay considers what Surrey’s work both gained and lost intellectually by hewing so strongly to a set of career-long, deeply held beliefs. Along the way, the essay contrasts Surrey’s moral and intellectual certainty with the skepticism and resistance to grand system-building of Boris Bittker of Yale Law School, Surrey’s only mid-century rival for intellectual leadership of the tax legal academy. ...

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June 27, 2022 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: A Reasonable Basis For Deducting Scrubs?

6a00d8341c4eab53ef02a2eec9be35200d-800wiMy students—especially those with accounting backgrounds—come to class expecting that tax law is all about bright line rules and lots of calculations.  They are either disappointed, frustrated, or relieved to find that tax law is like other law: it’s words, words that are generally complex, often opaque, and frequently mysterious.  That’s why taxpayers need competent tax practitioners to advise them!

Some tax practitioners are more aggressive and some are more cautious.  Today’s lesson is for the more aggressive ones.  In Raul Romana and Maria Corazon Romana v. Commissioner, T.C. Sum. Op. 2022-9 (June 16, 2022), Judge Carluzzo generously allowed a taxpayer to deduct the cost of a her “scrublike clothing.”

Those of us who are more cautious will disregard this decision.  It’s an outlier and, no, I certainly would not advise my client to start deducting the cost of this type of clothing!  At the same time, however, the opinion may well provide aggressive taxpayers and their advisors protections from penalties if and when they try this trick at home.  The substantive tax lesson is short and sweet.  The penalty lesson is more complex, opaque, and mysterious.

Details below the fold.

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June 27, 2022 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, June 26, 2022

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 #1 paper and a new papers joining the list at #3:

  1. SSRN Logo (2018)[401 Downloads]  Tax Neutrality Regimes and GloBE, by Leopoldo Parada (Leeds; Google Scholar)
  2. [289 Downloads]  Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax, by Reuven Avi-Yonah (Michigan; Google Scholar) & Young Ran (Christine) Kim (Utah; Google Scholar; moving to Cardozo)
  3. [224 Downloads]  Tax Administration and Technology: From Enhanced to No-Cooperation?, by João Félix Pinto Nogueira (International Bureau of Fiscal Documentation; Google Scholar)
  4. [221 Downloads]  Designing an Equitable Border Carbon Adjustment Mechanism, by Ivan Ozai (Osgoode Hall; Google Scholar)
  5. [207 Downloads]  Preventing Unacceptable Tax Treaty Overrides, by Craig Elliffe (Auckland; Google Scholar)

June 26, 2022 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, June 24, 2022

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).

Saito-blaine-800x800-1

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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June 24, 2022 in Blaine Saito, Scholarship, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Hemel: The Passthrough Entity Tax Scandal

Daniel J. Hemel (NYU; Google Scholar), The Passthrough Entity Tax Scandal:

Twenty-seven states have enacted laws since 2018 that are designed to provide passthrough entity owners with an unlimited federal tax deduction for state and local business income taxes. These “passthrough entity tax” regimes respond to the December 2017 federal tax law, which imposed a $10,000 cap on the state and local tax deduction. The new state laws generally allow passthrough entities to opt into paying an entity-level state income tax in exchange for a dollar-for-dollar benefit on their owners’ state personal income tax returns. The optional tax has proven to be immensely popular among passthrough entity owners across the country.

But there is a problem with the passthrough entity tax concept: Under the plain text of the Internal Revenue Code, the workaround does not work. The December 2017 law clearly precludes passthrough entities and their owners from deducting state and local income taxes beyond the $10,000-per-individual cap. And the legislative history of the December 2017 law—read in context—aligns with the statutory text.

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June 24, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Surrey Workshop On Fairness In International Taxation

The two-day University of Surrey Fairness in International Taxation Workshop (program) concludes today:

SurreyThe nature of international tax policy has changed dramatically in recent years. Twentieth century international tax policy sought to prevent double taxation of income, to treat taxpayers doing business abroad fairly and to mitigate inefficiencies in the allocation of investment. Recently, the focus of international tax policymaking has shifted, aiming to prevent double non-taxation of corporate income and to achieve a fair division of the resulting tax revenue. This is illustrated most prominently by the recent agreement on a global minimum corporation tax rate. As international tax policy raises its ambitions, there is a need for normative theories adequate to the challenges of this new era.

Fairness in International Taxation brings together legal scholars, political theorists and political philosophers to consider both high-level theories of distributive justice and the normative underpinnings and implications of leading policy proposals. The workshop will cover questions such as how to divide tax revenue from multinationals between nations, how to strike a fair balance between combating profiting shifting and respecting national autonomy, and how to tax internationally mobile workers. By combining theoretical approaches to distributive justice with analysis of the political and institutional context of policymaking we aim to develop new accounts of fairness in international taxation.

U.S. presenters include:

Amanda Parsons (Colorado), The Economic Allegiance of Capital Gains:

How to ensure that multinational companies are paying their “fair share” of taxes in the countries in which they create value has been the subject of lively debate within the international tax community in recent years. These debates have led to significant and exciting reforms, namely the OECD/G20 Inclusive Framework. While these reforms represent an important step towards creating a more coherent and equitable international tax system, the current conversations have overlooked an essential fact. Value created by a company’s business activities manifests itself in two ways—as business income and as an increase in the overall market value of the company, which then translates into capital gains income when investors sell their shares. Thus far, the conversation has focused exclusively on how to divide taxing authority over company income, missing half the story. A truly comprehensive reform that ensures fairness and equity in international taxation must address the question of how taxing authority over income stemming from the growth in company value should be allocated amongst countries.

This paper fills this gap and assesses how taxing authority over this capital gains income should be divided amongst countries under the normative principles that have guided international tax law for the past 100 years.

Adam Kern (Law Clerk, Hon. Jed S. Rakoff, U.S. District Judge Court for the Southern District of New York), Optimal Taxation for the World:

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June 24, 2022 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Thursday, June 23, 2022

Davis: Taxing Choices

Tessa Davis (South Carolina), Taxing Choices, 16 Fla. Int'l U. L. Rev. __ (2022):

Tax has a choice problem. At all stages of the making of tax, choice plays a role. Lawmakers consider how tax will impact the range and appeal of choices available to an individual. Scholars critique how tax may drive an individual toward or away from a given choice. Courts craft stories of how an individual had either free or deeply constrained choice, using their perception of the facts to guide their interpretation of tax law. And yet for all the seeming relevance of choice to tax, we have no clear definition of what we mean when we talk about choice or agreement on whether and when it matters. 

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June 23, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Inazu: Beyond Unreasonable

John Inazu (Washington Univ.), Beyond Unreasonable, 99 Neb. L. Rev. 375 (2020):

The concept of “reasonableness” permeates the law: the “reasonable person” determines the outcome of torts and contracts disputes, the criminal burden of proof requires factfinders to reach conclusions “beyond a reasonable doubt,” and claims of self-defense succeed or fail on reasonableness determinations. But as any first-year law student can attest, the line between reasonable and unreasonable is not always clear. Nor is that the only ambiguity. In the realm of the unreasonable, many of us intuit that some actions are not only unreasonable but beyond the pale—we might say they are beyond unreasonable. Playing football, summiting Nanga Parbat, and attempting Russian roulette all risk serious injury or death, but most people do not view them the same. These distinctions raise vexing questions: What is it that makes us feel differently about these activities? Mere unfamiliarity? Moral condemnation? Relative utility? Or something else altogether? Moreover, who exactly is the “we” forming these judgments?

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June 23, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Wednesday, June 22, 2022

Administering Taxes Democratically?

Clint Wallace (South Carolina; Google Scholar) & Jeff Blaylock (J.D. 2019, South Carolina), Administering Taxes Democratically?, 94 Temp. L. Rev. 49 (2021) (online appendix) (reviewed by Blaine Saito (Northeastern; Google Scholar) here): 

This Article queries how the administrative tax guidance used to implement the Tax Cuts and Jobs Act of 2017 has met the normative commitment to democratic legitimacy that often animates general administrative law. This Article argues that several reforms to the tax administrative process that came to fruition in recent years have failed to advance democratic tax administration. 

This argument is made by analyzing each piece of administrative guidance issued to implement the Tax Cuts and Jobs Act, as compared to similar guidance issued to implement tax cuts in 2001, as well as the Tax Reform Act of 1986. To do this, we created a database of 864 guidance documents issued across six total years in three time periods: 1986–1988, 2001–2003, and 2017–2019. Our examination shows that although tax procedures may now better conform to procedures applied by other administrative agencies, these changes have in some respects set back the pursuit of democratic legitimacy in tax administration.

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June 22, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Tuesday, June 21, 2022

Tax Harmony: The Promise And Pitfalls Of The Global Minimum Tax

Reuven S. Avi-Yonah (Michigan; Google Scholar) & Young Ran (Christine) Kim (Utah, moving to Cardozo; Google Scholar), Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax, 43 Mich. J. Int'l L. __ (2022):

The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue.

In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework of a global minimum corporate tax, known as Pillar Two. It aims to set a floor for corporate tax rates with various corrective measures so that multinational enterprises’ income will be taxed once in either source country or residence country at a substantive tax rate. Hence, Pillar Two is the first implementation of the “single tax principle” at the global level. Because Pillar Two requires an unprecedented amount of coordination among countries, it is important to understand Pillar Two thoroughly so that countries can maneuver the challenges of implementation, while still enjoying the ultimate benefit that would come from this global tax harmony.

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June 21, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: How To Tell When Land Is Held As A Capital Asset

Camp (2021)When a taxpayer buys land and later sells it, the character of the resulting gain or loss will depend on whether taxpayer held the land as an investment or instead held it like inventory, to be sold to customers as part of a trade or business.  It is not always easy to tell how the land is being held and courts look at a variety of factors.

The lesson I take from William E. Musselwhite Jr. and Melissa Musselwhite v. Commissioner, T.C. Memo. 2022-57 (June 8, 2022) (Judge Ashford), is that how the taxpayer self-reports the activity in years prior to the year of disposition is one important factor in determining when land is held as investment.  There, Mr. Musselwhite acquired four lots in what was to become a residential development.  No development happened.  For years he consistently reported holding the lots for investment.  But when he eventually sold them for a big loss he and his wife reported the loss as ordinary, claiming on that return that he held the land for development.  In an informative opinion, Judge Ashford held Mr. Musselwhite to his prior reporting position.  Details below the fold.

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June 21, 2022 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (2)

Monday, June 20, 2022

Osofsky & Thomas: Implicit Legislative Bias — The Case Of The Mortgage Interest Deduction

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):

UC Davis Law ReviewThe home mortgage interest deduction is over 100 years old. The deduction has been subject to increasing and, at times, withering criticism from commentators. Scholars have argued that the mortgage interest deduction may be a particularly ineffective and regressive way to subsidize homeownership. Other scholars have made the important point that the mortgage interest deduction has a disparate racial impact: homeowners are disproportionately white, so the deduction disproportionately benefits white people at the expense of people of color. Yet, the mortgage interest deduction has retained remarkable and costly staying power despite all the critiques.

How has the mortgage interest deduction persisted over a century, despite extensive critique? We argue that an underappreciated part of the story of the mortgage interest deduction is how its very creation arose out of implicit racial bias and other cognitive biases. First, scholars and policymakers ignored the racialized history of homeownership in the United States and relied on racist tropes in studying the potential economic benefits of the deduction. After such associations occurred, policymakers misattributed to homeownership benefits that were really, at least in part, benefits that flowed from whiteness. Perceiving positive benefits from homeownership, legislators viewed it as a good worth subsidizing through the tax system. Cognitive biases such as confirmation bias then made it unlikely that, once in place, the mortgage interest deduction would be substantially changed.

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June 20, 2022 in Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

Sunday, June 19, 2022

The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers joining the list at #3, #4, and #5:

  1. SSRN Logo (2018)[463 Downloads]  A Matter of High Interest: How a Quiet Change to an Actuarial Assumption Turbocharges the Life Insurance Tax Shelter, by Andrew Granato (J.D.|Ph.D., Yale; Google Scholar)
  2. [364 Downloads]  Tax Neutrality Regimes and GloBE, by Leopoldo Parada (Leeds; Google Scholar)
  3. [209 Downloads]  Designing an Equitable Border Carbon Adjustment Mechanism, by Ivan Ozai (Osgoode Hall; Google Scholar)
  4. [207 Downloads]  Tax Harmony: The Promise and Pitfalls of the Global Minimum Tax, by Reuven Avi-Yonah (Michigan; Google Scholar) & Young Ran (Christine) Kim (Utah; Google Scholar; moving to Cardozo)
  5. [162 Downloads]  Preventing Unacceptable Tax Treaty Overrides, by Craig Elliffe (Auckland; Google Scholar)

June 19, 2022 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, June 18, 2022

17th Annual Junior Tax Scholars Workshop Concludes Today At Illinois

Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), Crisis Lawmaking, Automatic Stabilizers, and Democracy
Commentators: Blaine Saito (Northeastern; Google Scholar), Christine Speidel (Villanova; Google Scholar)

Andrew Appleby (Stetson; Google Scholar), Digital Property Taxation
Commentators: Hayes Holderness (Richmond), Shelly Layser (Illinois; Google Scholar; moving to San Diego)

Amanda Parsons (Colorado), The Economic Allegiance of Capital Gains
Commentators: Jonathan Choi (Minnesota; Google Scholar), Eleanor Wilking (Cornell)

Jeesoo Nam (USC; Google Scholar), Just Taxation of Crime: Should the Commission of Crime Change One’s Tax Liability?
Commentators: Blaine Saito, Gaga Gondwe (NYU, moving to Wisconsin)

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June 18, 2022 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Friday, June 17, 2022

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).

Sloan-speckIn 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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June 17, 2022 in Scholarship, Sloan Speck, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

17th Annual Junior Tax Scholars Workshop Kicks Off Today At Illinois

Illinois college of lawGaga Gondwe (NYU, moving to Wisconsin), The Black Tax: How the Charitable Contribution Subsidy Reinforces Black Poverty, 76 Tax L. Rev. ___ (2023)
Commentators: Jeesoo Nam (USC; Google Scholar), Goldburn Maynard (Indiana-Kelley; Google Scholar)

Hayes Holderness (Richmond), Individual Home-Work Assignments for State Taxes
Commentators: Andrew Appleby (Stetson; Google Scholar), Shelly Layser (Illinois; Google Scholar; moving to San Diego)

Shelly Layser, Fighting the Affordable Housing Crisis Through State-Federal Tax (Dis)Conformity
Commentators: Andrew Appleby, Hayes Holderness

Blaine Saito (Northeastern; Google Scholar), Public Tax Actors
Commentators: Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), Jeesoo Nam

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June 17, 2022 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Litigation Bias

Adam Eckart (Suffolk), Litigation Bias, 101 Or. L. Rev. __ (2022):

Oregon Law ReviewThere is pervasive litigation bias in law schools. Despite significant interest in transactional law fields among law students, law schools disproportionately teach to the student interested in litigation: litigation-based legal writing assignments outnumber transactional-based ones 19 to 1; litigation-based clinics outnumber transactional ones 9 to 1; and doctrinal classes focus primarily on appellate court cases, often failing to entertain substantive discussion on the creation or content of the documents that led to the dispute. As a result, law school graduates are 44% less prepared for transactional careers than litigation careers.

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June 17, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Thursday, June 16, 2022

Mason: Does The Prohibition Of State Aid Limit Tax Competition?

Ruth Mason (Virginia; Google Scholar), Does the Prohibition of State Aid Limit Tax Competition?:

At the inception of a new and potentially transformative type of tax enforcement, this Article reviews the goals underlying the prohibition on state aid and whether they properly encompass limitations on tax competition. To explore this question, this Article examines treaty text and structure, doctrine, and policy arguments for and against using state aid to curb tax competition. It concludes that the Commission’s expansion of state-aid doctrine to limit tax competition improperly constrains Member State tax autonomy, arrogates tax policy power to the unelected Commission, and increases legal uncertainty. This Article urges the Court of Justice to clarify that preventing tax competition is not an independent goal of state-aid enforcement, although limits on tax competition may arise instrumentally via a free-trade interpretation of the prohibition of state aid. Unlike the anti-tax-competition interpretation, the free-trade interpretation of the prohibition of state aid is well grounded in history, text, and regulatory guidance.

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June 16, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

A Supreme Dilemma: Admissions v. Representation In Law School And Legal Profession

Ahmuan Williams (Oklahoma), A Supreme Dilemma: Admissions v. Representation in Law School and Legal Profession:

Diversity in the legal profession does not have to be a myth, but we have to put in the effort to do it. A Supreme Dilemma: Admissions v. Representation in Law School and Legal Profession gives you an idea of the challenges and history of being a minority in the legal profession created exclusively for white men. This paper examines affirmative action and its need to diversify the legal profession. It starts by examining the controversies in diversity and the legal profession. Then it acknowledges the positive impacts of diversity initiatives in the legal profession. It concludes by recommending that we adopt long-term diversity initiatives through our state constitutions, amendments, and education.

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June 16, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Zelinsky: The Case For Letting States Experiment With Private Sector Retirement Savings Plans

Edward A. Zelinsky (Cardozo), How Should Congress Respond to Jarvis? The Case for Letting States Experiment With Private Sector Retirement Savings Plans:

The U.S. Supreme Court has ended the saga of Howard Jarvis Taxpayers Association v. California Secure Choice Retirement Savings Program by declining to review the decision of the U.S. Court of Appeals for the Ninth Circuit. By refusing to review this circuit court decision, the Supreme Court left intact that decision and its holding that ERISA does not block the CalSavers IRA program.

In the wake of these events, some urge the federal government to move into the space occupied by CalSavers and other state programs encouraging less affluent Americans to save for retirement. I instead propose that, the post-Jarvis world, Congress should eschew any mandate that private employers adopt IRAs or other retirement programs for their employees. The states should continue to experiment in this area rather than the federal government imposing a single national pattern. Different states will pursue different courses, thereby testing alternative possibilities. Experimentation by the states will provide information about diverse approaches.

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June 16, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Piketty Calls For 'Participatory Socialism': $150,000/Person Universal Inheritance, 'Confiscatory' Income And Wealth Taxes

New York Times, Thomas Piketty's Case For 'Participatory Socialism':

Brief History of InequalityThe French economist Thomas Piketty is arguably the world’s greatest chronicler of economic inequality. For decades now, he has collected huge data sets documenting the share of income and wealth that has flowed to the top 1 percent. And the culmination of much of that work, his 2013 book Capital in the Twenty-First Century, quickly became one of the most widely read and cited economic texts in recent history.

Piketty’s new book, A Brief History of Equality, is perhaps his most optimistic work. In it, he chronicles the immense social progress that the U.S. and Europe have achieved over the past few centuries in the form of rising educational attainment, life expectancy and incomes. Of course, those societies still contain huge inequalities of wealth. But in Piketty’s view, this outcome isn’t an inevitability; it’s the product of policy choices that we collectively make — and could choose to make differently. And to that end, Piketty proposes a truly radical policy agenda — a universal minimum inheritance of around $150,000 per person, worker control over the boards of corporations and “confiscatory” levels of wealth and income taxation — that he calls “participatory socialism.”

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June 16, 2022 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, June 15, 2022

Saito: Tax Coordination

Blaine Saito (Northeastern; Google Scholar), Tax Coordination, 38 Ga. St. U. L. Rev. 735 (2022) (reviewed by Hayes Holderness (Richmond) here):

The United States implements much of its social policy through its income tax laws. The Code is rife with tax expenditures for education, housing, community economic development, retirement savings, and health care to name a few. But the IRS is not an agency with expertise in any of these areas and developing such expertise would draw resources away from its core tax administration mission. Commentators have thus called for a series of changes from turning these tax expenditures into outlays for these programs to divesting the IRS/Treasury of most of the administration of social policy tax expenditures. Yet, given American politics and the institutional structure of the federal government, these moves are both unlikely to occur and unwise.

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June 15, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

How COVID-19 Made Me A Better Law Teacher

Amy Soled (Rutgers), How COVID-19 Made Me a Better Teacher, 34 The Second Draft 1 (2021):

COVID-19 has caused havoc in the world as we know it, altering every aspect of life, including education. The pandemic forced me and other educators to teach online, and by doing so, it has made me a better teacher. I now (1) employ more teaching techniques; (2) assess more frequently; and (3) engage every student. As I emerge from the COVID-19 pandemic, I have reflected on the positive lessons I learned from teaching online, lessons that I plan to bring with me when I return to the classroom.

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June 15, 2022 in Legal Ed Scholarship, Legal Education, Scholarship, Teaching | Permalink

Avi-Yonah & Salaimi: A New Framework For Taxing Cryptocurrencies

Reuven Avi-Yonah (Michigan; Google Scholar) & Mohanad Salaimi (S.J.D. 2022, Michigan), A New Framework for Taxing Cryptocurrencies, 175 Tax Notes Fed. 1391 (May 30, 2022):

Tax Notes Federal (2020)In this article, Avi-Yonah and Salaimi propose a new framework for taxing cryptocurrency throughout its life cycle. This article summarizes Avi-Yonah and Salaimi, A New Framework for Taxing Cryptocurrencies (Mar. 31, 2022).

This article describes a proposal to tax cryptocurrencies based on their unique features.1 It argues that while various ways of earning or receiving crypto tokens (for example, mining in proof-of-work (PoW) protocols like bitcoin and staking in proof-of-stake (PoS) protocols like ether) generate taxable income, the tax results should take into account positive and negative externalities. It also claims that because of its volatility, crypto should not be taxed until tokens are exchanged for real-world items like fiat currency or goods and services. Finally, this article argues that when crypto tokens are exchanged for fiat currencies or goods and services, they should be treated as foreign currency if held for less than one year. ...

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June 15, 2022 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Reflections On Legal Education In The Aftermath Of A Pandemic

Timothy Casey (California Western), Reflections on Legal Education in the Aftermath of a Pandemic, 28 Clinical L. Rev. 85 (2021):

This essay considers two significant changes to legal education in the aftermath of the COVID-19 pandemic. First, on-line programs will expand, based on the largely successful experiment in delivering legal education on-line during the pandemic. But this expansion must be thoughtful and deliberate. The legal education curriculum could include more on-line courses, but only if the learning outcomes and the pedagogy are aligned with on-line education. Experiential courses may not be the best fit for on-line given the specific learning outcomes and the benefits of in-person instruction in those courses.

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June 15, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Tuesday, June 14, 2022

Choi: Beyond Purposivism In Tax Law

Jonathan H. Choi (Minnesota; Google Scholar), Beyond Purposivism in Tax Law, 107 Iowa L. Rev. 1439 (2022):

Iowa Law Review 2 (2022)Conventional wisdom holds that purposivist theories of statutory interpretation solve the problem of tax shelters, because shelters comply with the text but not the purpose of tax statutes. But the predominant form of purposivism in tax scholarship, which combines specific statutory purposes with general structural principles of tax law, cannot separate shelters from ordinary tax planning. Although tax shelters claim benefits that exceed specific purposes and do not align with objective general principles, so do some widely accepted tax strategies.

This Article therefore proposes a new framework to go beyond purposivism in tax law, complementing purposivist techniques with pragmatism or doctrinalism. Pragmatism applies explicit policy judgments when statutory purposes run out; doctrinalism applies rules, like canons of construction, that provide determinate answers when statutory purpose is ambiguous. Pragmatism generally leads to better results in any particular case, while doctrinalism provides taxpayers certainty in planning legitimate transactions.

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June 14, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Deo: The End of Affirmative Action

Meera E. Deo (Southwestern), The End of Affirmative Action, 100 N.C. L. Rev. 237 (2021):

We have arrived at the end of affirmative action. Now, more than ever, institutions of higher learning must move beyond a single-minded focus on educational diversity, which admits students of color primarily to enrich the classroom experiences of their white peers and then ignores what they may need to maximize both engagement and retention. Instead, affirmative action programs need an immediate update; they should take contemporary issues of race and racism into account, as well as the lived realities of students of color—by including multiracial students, recognizing diversity beneath the student of color umbrella, acknowledging intra-racial differences in pan-ethnic groups, and accepting that the resources and realities of Black immigrants differ from native-born Black Americans. Furthermore, to maximize the benefits of educational diversity, institutions must also prioritize equity and inclusion once students are enrolled.

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June 14, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Practical Considerations In Starting And Operating An Academic Low-Income Taxpayer Clinic

Amy Spivey (UC-Hastings) & Manoj Viswanathan (UC-Hastings; Google Scholar), Practical Considerations in Starting and Operating an Academic Low-Income Taxpayer Clinic, 76 Tax Law. __ (2022):

ABA Tax Lawyer (2022)Low-income taxpayer clinics (“LITCs”) provide legal assistance to underserved clients with active federal tax controversies, conduct educational outreach to low-income and English-as-a-second-language taxpayers, and work to ensure the fairness and integrity of the tax system. Despite the availability of IRS grant funding for LITCs and the alignment of LITC goals with the core values that underlie clinical legal education, a relatively small percentage of U.S. law schools currently operates an LITC. Moreover, many law school LITCs have closed within the past ten years, demonstrating that even if started, academic LITCs are challenging to sustain.

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June 14, 2022 in ABA Tax Section, Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

Assessing Affirmative Action's Diversity Rationale: Student-Run Law Reviews

Adam Chilton (Chicago; Google Scholar), Justin Driver (Yale), Jonathan S. Masur (Chicago; Google Scholar) & Kyle Rozema (Washington University; Google Scholar), Assessing Affirmative Action's Diversity Rationale, 122 Colum. L. Rev. 331 (2022):

Columbia Law ReviewEver since Justice Lewis Powell’s opinion in Regents of the University of California v. Bakke made diversity in higher education a constitutionally acceptable rationale for affirmative action programs, the diversity rationale has received vehement criticism from across the ideological spectrum. Critics on the right argue that diversity efforts lead to “less meritorious” applicants being selected. Critics on the left charge that diversity is mere “subterfuge.” On the diversity rationale’s legitimacy, then, there is precious little diversity of thought. In particular, prominent scholars and jurists have cast doubt on the diversity rationale’s empirical foundations, claiming that it rests on an implausible and unsupported hypothesis.

To assess the diversity rationale, we conduct an empirical study of student-run law reviews.

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June 14, 2022 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Blue J's AI Prediction Of Result Of Tax Court Appeal Faces First Test In Federal Circuit Court

Benjamin Alarie (Osler Chair in Business Law, University of Toronto; CEO, Blue J Legal) & Christopher Yan (Senior Legal Research Associate, Blue J Legal), Disguised Distributions and Management Fees: Aspro Revisited, 175 Tax Notes Fed. 1401 (May 30, 2022):

Tax Notes Federal (2020)In this article, Alarie and Yan analyze the Eighth Circuit’s recent decision in Aspro concerning the deductibility of management fees the business paid to its shareholders.

In our Blue J Predicts column we use advances in machine learning to analyze pending or recently decided federal income tax cases. This month we follow up on the appeal of a Tax Court decision that we first examined in October 2021. In Aspro, the taxpayer challenged the IRS’s determination that the “management fees” it paid were not deductible because they were disguised corporate distributions of profits. Our initial analysis focused on the pending appeal and on April 26 the Eighth Circuit released its opinion, upholding the Tax Court’s decision. This is the first time a case we have examined in Blue J Predicts has been decided by an appellate court since we began the column in mid-2021.

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June 14, 2022 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, June 13, 2022

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 41, No. 1 (Fall 2021):

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June 13, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: Ask The Right Court

Camp (2021)It’s sweet to beat the tax man.  It’s even sweeter when you can make the government pay your litigation costs and attorneys fees under §7430.  But the bitter lesson for today is that you must be careful to ask the right court.  Law is hierarchical.  You can appeal a lower court’s adverse decision to a higher court.  But you cannot appeal a higher court’s adverse decision to a lower court!

In Celia Mazzei v. Commissioner, T.C. Memo. 2022-43 (May 2, 2022) (Judge Thornton), the taxpayer asked the wrong court for attorneys fees and because of that had nowhere to go when the court denied fees.  Ms. Mazzei had fought the IRS for over 10 years, losing in Tax Court in a reviewed opinion in 2018.  Undaunted, she appealed to the Ninth Circuit.  She won!  Yay!  Her attorneys then filed a “protective” motion with the Ninth Circuit for both her appellate litigation costs (about $70,000) and her trial court litigation costs (some $330,000).  The government argued that its litigating position was substantially justified.

The Ninth Circuit’s response was disappointingly succinct: “denied.”  Undaunted, Ms. Mazzei’s attorneys then asked the Tax Court for the $330,000 in trial court litigation costs.  The government opposed the motion for the same reason it gave the Ninth Circuit.  Judge Thornton, however, rejected the §7430 request for a different reason.  He ruled that the  Ninth Circuit’s single word left the Tax Court powerless to act on the request.  Appeals go up the hierarchy, not down.  The taxpayer had asked the wrong court.  Details below the fold.

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June 13, 2022 in Bryan Camp, New Cases, Scholarship, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, June 12, 2022

Race, Immigration Law, And Christianity: Despair Or Hope?

Jennifer Lee Koh (Pepperdine), Race, Immigration Law, and Christianity: Reflections and Tensions Raised by United States v. Wong Kim Ark:, 23 Pol. Theology ___ (2022):

Political TheologyIn 1898, the United States Supreme Court held that the Fourteenth Amendment of the U.S. Constitution guarantees citizenship to the children of immigrants born on U.S. soil. The case, United States v. Wong Kim Ark, involved the son of Chinese immigrants who was born in and had spent the vast majority of his life in the U.S. Immigration officials denied his claim to citizenship when he attempted to return to the country after a trip to China. Its direct legal holding—that birthright citizenship is a constitutional right—continues to have salience for immigration law debates and discourse today.

This Essay, written for a joint symposium between the Journal of Law and Religion and Political Theology on Wong Kim Ark and James Baldwin’s 1955 essay, Equal in Paris, reflects upon several themes—and tensions—present in the case and echoed in contemporary society. The Essay first explores the influence of race in the development of immigration law, along with the simultaneous discomfort with race as a basis for legal rights and remedies. The second theme, raised by Wong Kim Ark’s holding and subsequent history, is the necessity and shortcomings of law as a source of protection, particularly in the context of bureaucratic systems with the power to incarcerate. Finally, the conclusion briefly highlights ways in which Christianity might serve as a source of both despair and hope for the future.

IV. Christianity in America as a Source of Despair and Hope
The Wong Kim Ark decision is now over one hundred years old and stands for a relatively simple legal assertion about birthright citizenship. But the decision, along with the historical context and personal experience of Wong, offers various moments of resonance with contemporary conversations around similar themes present in the case: citizenship, belonging, formal law, actual practice, and the impact of incarceration on the value of the self. What if any relevance does Christianity in the US have on these themes? I suggest here that Christianity can serve as either a source of despair or of hope, depending on one’s perspective and which aspects of American Christianity receive emphasis.

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June 12, 2022 in Faith, Legal Education, Scholarship | Permalink

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 joining the list at #5:

  1. SSRN Logo (2018) [459 Downloads]  Taxing Robots, by Rita de la Feria (Leeds; Google Scholar) & Maria Amparo Grau Ruiz (Universidad Complutense de Madrid; Google Scholar)
  2. [421 Downloads]  A Matter of High Interest: How a Quiet Change to an Actuarial Assumption Turbocharges the Life Insurance Tax Shelter, by Andrew Granato (J.D.|Ph.D., Yale; Google Scholar)
  3. [364 Downloads]  Taxation and the Knowledge Economy, by Alan Kirkpatrick (Bournemouth) & Anne Fairpo (Bournemouth)
  4. [322 Downloads]  Filing While Black: The Casual Racism Of The Tax Law, by Steven Dean (Brooklyn)
  5. [297 Downloads]  Tax Neutrality Regimes and GloBE, by Leopoldo Parada (Leeds; Google Scholar)

June 12, 2022 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, June 10, 2022

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Appleby's State Exit Taxes

This week, Michelle Layser (Illinois; moving to San Diego; Google Scholar) reviews Andrew Appleby (Stetson; Google Scholar), No Migration Without Taxation: State Exit Taxes, 60 Harv. J. on Legis. ___ (2023).

Layser (2018)In recent years, U.S. individuals and businesses have tended to move “from cold, high-tax northern states to warm, low-tax southern and southwestern states” (CNBC). These migration patterns have accelerated during the COVID-19 pandemic, as the work environment has shifted to remote settings, and “[m]ost experts expect more people and businesses will choose to locate where they can pay lower taxes.” (CNBC). When wealthy taxpayers and large businesses leave a state, they take income with them, eroding the state’s tax base. To fight these trends, states have traditionally engaged in tax competition to attract and retain wealthy taxpayers and businesses. A large body of research, including my ownforthcoming article (Overcoming Constitutional (And Political) Barriers to State Place-Based Tax Incentive Reform, 170 U. Pa. L. Rev. ___ (2022)), focuses on how states use tax incentives to discourage out-migration and encourage in-migration. In his forthcoming article, Professor Andrew Appleby focuses on another strategy states can use to fight out-migration: exit taxes.

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June 10, 2022 in About This Blog, Scholarship, Tax, Tax Scholarship | Permalink

Brown Reviews Maynard's Biden’s Gambit: Advancing Racial Equity While Relying On A Race-Neutral Tax Code

Dorothy Brown (Emory; moving to Georgetown), The Biden Administration's Racial Equity Challenges (JOTWELL) (reviewing Goldburn P. Maynard Jr. (Kelley School of Business, Indianal (Goolgle Scholar), Biden’s Gambit: Advancing Racial Equity While Relying on a Race-Neutral Tax Code, 131 Yale L.J. Forum 656 (2022)):

JOTWELL (2020)Professor Goldburn Maynard’s excellent Essay: Biden’s Gambit: Advancing Racial Equity While Relying on a Race-Neutral Tax Code, analyzes the Biden’s Administrations efforts to advance racial equity through the American Rescue Plan Act (ARPA) enacted by Congress and signed into law on March 11, 2021.

Professor Maynard wryly observes that “[w]ith courts standing in the way, [racial equity] must be promoted in a neutral, indirect way that ignores systemic discrimination.” (P. 679.) Perhaps however it is the Biden Administration that should bear some responsibility for not engaging in better fact finding to prove its legislative scheme was narrowly tailored. Nevertheless, Professor Maynard’s conclusion is more than supported by constitutional precedent. Ultimately, Professor Maynard believes what is needed is “both targeted and universal programs to tackle inequality.” (P. 686.)

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June 10, 2022 in Scholarship, Tax, Tax Scholarship | Permalink

Thursday, June 9, 2022

Hasen: Forget (Arguing About) Redistribution

David Hasen (Florida; Google Scholar), Forget (Arguing About) Redistribution, 29 Geo. J. on Poverty L. & Pol'y 41 (2021):

Reformers often argue that the benefits of ameliorating inequality are worth the cost in higher tax rates and reduced economic efficiency that redistributive social policy supposedly requires. This paper suggests that these arguments are mostly misplaced. Focusing solely on the marginal benefit of government- versus private-sector spending, there is ample reason to conclude that many governmental expenditures directed to reducing inequality are independently justifiable on the basis that they increase efficiency and, over time, more than pay for themselves. Because the efficiency argument directly addresses concerns that might otherwise counsel restraint in redistributive programs, treating the reduction of inequality as a worthwhile tradeoff against efficiency or higher tax rates is mostly counterproductive from a social policy perspective. In fact, the failure to adopt or enhance many spending programs itself represents a form of upward redistribution as measured from a baseline of social wealth maximization. This redistribution is difficult or impossible to justify from either a welfarist perspective or a libertarian one

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June 9, 2022 in Scholarship, Tax, Tax Scholarship | Permalink