Paul L. Caron
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Wednesday, October 20, 2021

Gamage Presents Political Optionality And Current-Assessment Tax Reform Today At UC-Irvine

David Gamage (Indiana; Google Scholar) presents Tax Now or Tax Never: Political Optionality and the Case for Current-Assessment Tax Reform (with John Brooks (Georgetown; Google Scholar)) at UC-Irvine today as part of its Tax Policy Colloquium:

Gamage-davidThe U.S. income tax is broken. Due to the realization doctrine and taxpayers’ consequent ability to defer taxation of gains, taxpayers can easily minimize or avoid the taxation of investment income, a failure that is magnified many times over when considering the ultra-wealthy. As a result, this small group of taxpayers commands an enormous share of national wealth yet pays paltry taxes relative to the economic income their wealth produces—a predicament that this Article condemns as being economically, politically, and socially harmful.

The conventional view among tax law experts has assumed that the problems created by the realization doctrine can be fixed on the back end by adjusting the rules that govern taxation at the time of realization. Specifically, most tax scholars have favored reform proposals that would retain the realization doctrine, while aiming to impose taxes in a way that would erase or reduce the financial benefits of deferral. Examples include retrospective capital gains tax reforms, progressive consumption tax reforms, and more incremental reforms such as ending stepped-up basis.

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October 20, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Barbieri: Opportunism Zones

Edward W. De Barbieri (Albany; Google Scholar), Opportunism Zones, 39 Yale L. & Pol'y Rev. 82 (2020):

In 2017, Congress adopted the Opportunity Zone, an unheralded yet powerful place-based economic development tool, as part of tax re-form. Place-based economic development tools and strategies provide incentives to attract jobs and capital to areas where jobs and capital have fled. Investors in state-designated Opportunity Zone districts are able to (1) defer capital gains on qualified investments, and (2) reduce their tax bills when selling qualifying real estate or business property. Proponents of the bipartisan Opportunity Zone argue that tax incentives are an efficient way to direct investment dollars to poor areas. Critics, however, point out that such government interventions in the economy are stricken by corruption, abuse, and waste.

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October 20, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tuesday, October 19, 2021

Wallace & Lutkenhaus: Measuring Scholarly Impact In Law

Karen L. Wallace (Drake) & Rebecca Lutkenhaus (Drake; Google Scholar), Measuring Scholarly Impact in Law, 28 Widener L. Rev. ___ (2022):

In February 2019, U.S. News & World Report announced a proposal to use HeinOnline data to publish a scholarly impact ranking of law schools. As a result, interest in using scholarly metrics to quantitatively assess legal scholarship soared. Legal scholars debated several issues, including: the concept of evaluating scholarly impact through citation metrics; the ramifications of publishing this information alongside the highly criticized, but undeniably influential, U.S. News law school rankings; the optimal procedures for creating such a ranking; the rationale underlying the decisions involved in establishing a methodology; and HeinOnline’s available content and metrics. The concerns raised ultimately led U.S. News to abandon its planned ranking in summer 2021, two and a half years after its initial announcement. 

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October 19, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Beller: S Corporations As Shareholders, LLC Members, And Partners

Herbert N. Beller (Professor of Practice, Northwestern; Of Counsel, Eversheds-Sutherland), S Corporations as Shareholders, LLC Members, and Partners, Part 1, 172 Tax Notes Fed. 1713 (Sept. 13, 2021); S Corporations as Shareholders, LLC Members, and Partners, Part 2, 172 Tax Notes Fed. 1915 (Sept. 20, 2021):

Tax Notes Federal (2020)This two-part article focuses on numerous transactional scenarios involving S corporations that have sole or partial ownership interests in other entities, including C corporations, qualified S corporation subsidiaries, single- and multiple-member limited liability companiess and partnerships. Part 1 outlines the fundamentals of how subchapter S operates and examines the tax treatment of transactions through which the S corporation comes into existence, other entities become affiliated with the S corporation group, and cash or other property is transferred from an affiliate to the S corporation or to another affiliate. Part 2 examines the tax consequences of transactions in which a complete or partial interest in an affiliate is sold or otherwise disposed of by the S corporation, including through a taxable stock or assets acquisition, a tax-free reorganization under section 368 or a tax-free corporate separation under section 355.

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October 19, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, October 18, 2021

Maag Presents The Next Stage Of The Child Tax Credit Today At Loyola-L.A.

Elaine Maag (Tax Policy Center) presents Issues In Child Benefit Administration In The United States: Imagining the Next Stage of the Child Tax Credit (with Samuel Hammond (Niskanen Center)) at Loyola-L.A. today as part of its Tax Policy Colloquium:

Maag-elaineThe American Rescue Plan Act of 2021 (ARP) expanded the Child Tax Credit (CTC) for one year and delivered it as a monthly benefit to the vast majority of recipients. Whether the credit will retain its current form, revert to its previous form, or take on a new form altogether is unclear. Even if the credit is extended, it is unlikely to be extended permanently and there remains the possibility that if will continue to evolve as discussions around providing a robust child benefit continue. A robust child benefit could provide a minimum source of support to all or most families with children which would mean that fewer children would grow up in poverty and would be harmed by temporary income drops. We compare how a tax credit such as the Child Tax Credit (CTC) administered by the Internal Revenue Service (IRS) or a universal child allowance administered by the Social Security Administration (SSA) could be structured to best meet the needs of families with children. Tax credits, in general, have been the more popular tool of choice for both Democrats and Republicans to redistribute income in recent years (Faricy 2015)–including the temporary expansion of the Child Tax Credit (CTC).

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October 18, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

The Unsung Heroes Of The Desegregation Of American Law Schools

Gail S. Stephenson (Southern; Google Scholar), The Unsung Heroes of the Desegregation of American Law Schools, 51 J. of L. & Educ. ___ (2022):

In 1940 seventeen American states prohibited interracial education by force of law. In 1945 the south offered white students sixteen law schools, but African-American students were limited to one segregated law school. Thurgood Marshall and the NAACP developed a strategy to desegregate American education by first attacking the inequities in graduate and professional education in the courts. Law schools were the first targets as Marshall hoped to develop a cadre of civil rights advocates who could carry on his work.

These lawsuits required courageous individuals to step forward to serve as test plaintiffs. These individuals were vilified, intimidated, and threatened. Ultimately only two actually graduated from the schools they sued to attend and practiced law, although some graduated from other law schools and went on to highly successful careers.

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October 18, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Lesson From The Tax Court #200: The Great Divide

Camp (2021)Today's Lesson is an appropriate one for my 200th post.  While the line separating my 199th from my 201st post is not big—not a great divide—the line does make visible a degree of effort and consistency that might otherwise be obscure.  So, yeah, I'm kinda proud about crossing this line.

The concept of Adjusted Gross Income (AGI) also creates a line, one that confuses my students enormously.  They have trouble understanding that the ability to take a deduction is affected not simply by the statute that authorizes the deduction but also by the statutes that tell you where to take the deduction in the process of calculating taxable income.  And not only does the concept of AGI create a line—dividing deductions taken above the line from those taken below the line—it sometimes creates a great divide.

In Carl L. Gregory and Leila Gregory v. Commissioner, T.C. Memo. 2021-115 (Sept. 29, 2021)(Judge Jones), the taxpayer’s lawyers had the same trouble my students have.  The case teaches a graphic lesson on the great divide that can exist between treatment of deductions taken above the line and those taken below, not to mention the great divide between the really rich and the rest of us.  There, the taxpayers were unable to deduct a penny their yacht hobby expenses.  While §183 allowed over $340,000 of deductions, this amount did not exceed 2% of the Gregorys' AGI.  Wow.  That fact at least explains why they may have thought it a good idea to pay attorneys to argue that the expenses went above the line.  It does not explain why the attorneys did not advise that such an argument was groundless, bordering on frivolous.  Details below the fold.    

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October 18, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Scholarship | Permalink | Comments (0)

Sunday, October 17, 2021

Symposium: Is This A Christian Nation?

Symposium, Is This a Christian Nation?, 26 Roger Williams U. L. Rev. 237-665 (2021):

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October 17, 2021 in Conferences, Legal Ed Scholarship, 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 debuting on the list at #5:

  1. SSRN Logo (2018) [571 Downloads]  Federal Tax Procedure (2021 Practitioner Ed.), by John Townsend (Houston)
  2. [404 Downloads]  Mega-IRAs, Mega-401(k)s, and Other Mega-Retirement Accounts: Statement for the Record, by Daniel Hemel (Chicago; Google Scholar) & Steven Rosenthal (Tax Policy Center)
  3. [308 Downloads]  State Aid Prohibition — The New GAAR in Town, by Joachim Englisch (Muenster)
  4. [260 Downloads]  Has Cross-Border Arbitrage Met Its Match?, by Ruth Mason (Virginia; Google Scholar) & Pascal Saint-Amans (OECD) (reviewed by Young Ran (Christine) Kim (Utah; Google Scholar) here)
  5. [220 Downloads]  Closing Gaps in the Estate and Gift Tax Base, by Daniel Hemel (Chicago; Google Scholar) & Robert Lord (Americans for Tax Fairness)

October 17, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, October 15, 2021

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).

Layser (2018)

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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October 15, 2021 in Michelle Layser, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup | Permalink

Next Week’s Tax Workshops

Monday, October 18: Elaine Maag (Tax Policy Center) presents Issues In Child Benefit Administration In The United States: Imagining The Next Stage of The Child Tax Credit (with Samuel Hammond (Niskanen Center)) as part of the Loyola-L.A. Tax Policy Colloquium. If you would like to attend, please RSVP here.

Tuesday, October 19: Stephanie Hoffer (Indiana-Indianapolis; Google Scholar) presents Tax Legislation in Crises as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Brian Galle.

Wednesday, October 20: David Gamage (Indiana; Google Scholar) presents Tax Now or Tax Never: Political Optionality and the Case for Current-Assessment Tax Reform (with John Brooks (Georgetown; Google Scholar)) as part of the UC-Irvine Tax Policy Colloquium. If you would like to attend, please email taxpolicy@law.uci.edu

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October 15, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Workshops | Permalink

Michigan And Rutgers Host Virtual Symposium Today On Treaty Override

Michigan, Rutgers, and the Michigan Journal of International Law host the Treaty Override Virtual Symposium today (zoom link here): 

Michigan-rutgersThis symposium will consider the legitimacy and scope of treaty overrides, i.e., situations in which a country unilaterally changes the outcome of a bilateral treaty through its domestic law. This practice appears to be unlawful under the Vienna Convention on the Law of Treaties (which is generally accepted as customary international law) but is constitutional in certain countries, including the United States. There has been a long, ongoing debate on the advisability of such overrides and the conditions under which they are possible in the United States. These days, the debate centers on whether some parts of the Tax Cuts and Jobs Act of 2017 were an override. The symposium will focus on this debate and compare it to similar debates in other jurisdictions. 

10:30 - 11:00 AM: Welcome and Opening Remarks 

  • Gracy Brody (Editor in Chief, Michigan Journal of International Law) 
  • Monica Hakimi (Associate Dean for Faculty and Research, Michigan; Google Scholar)

11:00 AM - 12:30 PM: Treaty Overrides Abroad

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October 15, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Call For Tax Papers And Panels: Law & Society Hybrid Annual Meeting

Law & Society

Neil Buchanan (Florida) has issued his annual call for tax papers and panels for next year's hybrid  annual meeting of the Law & Society Association in Lisbon and online (July 13-16, 2022):

The Law & Society Association (LSA) will host its next annual meeting from July 13 - 16, 2022, in Lisbon, Portugal.  For the eighteenth year in a row, I will organize sessions for the "Law, Society, and Taxation" group (Collaborative Research Network 31).  For the sixth year in a row, I am pleased that Professors Jennifer Bird-Pollan and Mirit Eyal-Cohen have committed to working tirelessly to make our conference-within-a-conference a success. ...

As currently planned, the conference will be held in a hybrid format, with some sessions entirely in person and others entirely virtual.

Although there is an official call for papers, please remember that you are not bound by the official theme of the conference ("Rage, Reckoning, & Remedy").  We will give full consideration to proposals in any area of tax law, tax policy, distributive justice, interdisciplinary scholarship, and so on.

The deadline for submissions is 11:59 p.m. ET (USA) on Wednesday, November 10, 2021.

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October 15, 2021 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Thursday, October 14, 2021

Hines Presents Evaluating Tax Harmonization Today At Georgetown

James Hines (Michigan; Google Scholar) presents Evaluating Tax Harmonization at Georgetown today as part of the OMG Transatlantic Tax Talks Series (OMG = Oxford-Michigan-MIT-Munich-Georgetown):

James-HinesTax harmonization can address downward rate pressure due to tax competition, but does so by imposing a common rate that may not suit all governments.  A second-order Taylor approximation yields the simple rule that tax rate harmonization advances collective government objectives only if tax competition reduces average tax rates by more than the standard deviation of observed tax rates.  Consequently, any objective-maximizing harmonized tax rate must exceed the sum of the observed average tax rate and the standard deviation of tax rates.  In 2020 the standard deviation of world corporate tax rates weighted by GDP was 4.5%, and the mean corporate tax rate 25.9%, so if competition sufficiently depresses tax rates then governments may find it attractive to harmonize at a corporate tax rate of 30.4% or higher. The minimum tax rate that most effectively advances collective objectives equals the average effect of tax competition plus the average tax rate in affected countries.  Hence there are dominated regions: in the 2020 data, there is no degree of tax competition for which a world minimum corporate tax rate between 4% and 27% would be consistent with maximizing collective objectives.

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October 14, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Hoffer Presents Tax Legislation In Crises Today At Indiana

Stephanie Hoffer (Indiana-Indianapolis; Google Scholar) presents Tax Legislation in Crises at Indiana-Bloomington today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

Stpehanie-hoffer

Introduction
Congress, during crises, uses tax law as an instrument of mitigation. A legislature convened in crisis, though, faces unusual informational, political, and time constraints. Tax legislation tends toward complexity. Passing complex legislation under unusual constraints likely precludes thorough contemporaneous consideration of the distributional or other policy effects of the legislation on a diverse group of stakeholders. Perhaps as a consequence, tax legislation passed in times of crises typically builds on prior crisis legislation and contains many recurring provisions. 

This essay examines recurring provisions in crisis-motivated tax and presents preliminary observations on a study of tax legislation passed in response to national crises during the years the 2000 – 2020. The study period includes the September 11 terrorist attacks, hurricanes Katrina, Rita, and Wilma, the 2008 housing market collapse, the Great Recession, and the COVID pandemic. The study examines which kinds of provisions recur under which circumstances, for whose benefit, and at what cost.

The broader work of which this essay is a part addresses three hypotheses. First, crisis tax legislation is formulaic, generally including a number of provisions drawn from prior tax crisis bills. Second, subsequent crisis tax legislation tends to expand the scope of provisions repeated from earlier crisis tax legislation. Third, among recurring provisions, privately-directed outlays via tax expenditure will outweigh Congressionally-directed outlays.

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October 14, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Jewish Lawyers And The Legal Profession: The End Of The Affair?

Eli Wald (Denver), Jewish Lawyers and the U.S. Legal Profession: The End of the Affair?, 36 Touro L. Rev. 299 (2020):

Scholars of the legal profession have long puzzled over the apparent affinity between Jewish lawyers and the law, in and outside of the United States. This article advances a new explanation to account for the overrepresentation of Jewish lawyers in the U.S. legal profession in the twentieth century: the Confluence of Circumstances theory. The theory shows that a confluence of circumstances including evolving practice realities, changing professional ideologies, increased competition, discrimination, and the cost of legal education coalesced to account for the affinity. Moreover, tracking the same conditions in the twenty-first century the theory predicts the end of the affair explaining why the practice of law no longer represents a particularly attractive proposition for Jews.

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October 14, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Kleiman: Revolutionizing Redistribution — Tax Credits And The American Rescue Plan

Ariel Jurow Kleiman (Loyola-L.A.), Revolutionizing Redistribution: Tax Credits and the American Rescue Plan, 133 Yale L.J.F. ___ (2021):

Yale Law Journal Logo (2018)The American Rescue Plan Act (ARPA) dramatically alters the federal government’s approach to redistribution in 2021. Among its boldest reforms are its temporary expansions of the Child Tax Credit and the Earned Income Tax Credit. For the first time, ARPA authorizes meaningful cash support for nonworking families and childless workers, two groups that have been historically disadvantaged by social safety net programs. This Essay considers ARPA’s effects on low-income American taxpayers, spotlighting in particular how the reforms will protect millions of households from being pushed into poverty or further into poverty as a result of paying taxes—a phenomenon called “fiscal impoverishment.” Policy makers must make ARPA’s reforms permanent in order to ensure that low-income taxpayers remain protected past 2021. As they work to do so, policy makers should be mindful of gaps in the tax credits that will undermine the reforms’ positive effects. The Essay identifies several such gaps and argues that Congress should legislate more dramatic inclusion for households with and without children.

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October 14, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Bearer-Friend: Colorblind Tax Enforcement

Jeremy Bearer-Friend (George Washington; Google Scholar), Colorblind Tax Enforcement, 97 N.Y.U. L. Rev. ___ (2022):

NYU Law ReviewThe United States Internal Revenue Service (“IRS”) has repeatedly taken the position that, because the IRS does not ask taxpayers to identify their race or ethnicity on submitted tax returns, IRS enforcement actions are not affected by taxpayers' race or ethnicity. This claim, which I call “colorblind tax enforcement,” has been made by multiple IRS Commissioners serving in multiple Administrations (both Democratic and Republican). This claim has been made to members of Congress and to members of the press.

In this article, I refute the IRS position that racial bias cannot occur under current IRS practices. I do so by identifying the conditions under which race and ethnicity could determine tax enforcement outcomes under three separate models of racial bias: racial animus, implicit bias, and transmitted bias. I then demonstrate how such conditions can be present across seven distinct tax enforcement settings regardless of whether IRS asks about race or ethnicity. The IRS enforcement settings analyzed include summonses, civil penalty assessments, collection due process hearings, innocent spouse relief, and DOJ referrals.

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October 14, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Profit Shifting During Foreign Tax Holidays

Travis Chow (Hong Kong; Google Scholar), Jeffrey L. Hoopes (North Carolina; Google Scholar) & Edward L. Maydew (North Carolina; Google Scholar), Profit Shifting During Foreign Tax Holidays:

We undertake the first empirical analysis of profit shifting by U.S. firms during foreign tax holidays. We show that foreign tax holidays have become a prevalent and powerful tax planning strategy among U.S. firms. We find that U.S. firms significantly increase their outbound profit shifting while participating in foreign tax holidays. However, we also find that profit shifting associated with tax holidays comes at the cost of increased tax uncertainty. Our results have important implications for policy making and for understanding firm behavior.

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October 14, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, October 13, 2021

The Rise Of Law And The Fall Of Circular 230

Michael Hatfield (Washington), The Rise of Law and the Fall of Circular 230: Tax Lawyer Professional Standards, 1985-2015, 24 Fla. Tax Rev. 828 (2021):

Florida Tax Review (2021) (1)This third article focuses on the two issues that dominated discussions of professional responsibility standards for tax lawyers in the 1985-2015 period: return position standards and tax shelter opinions. It opens with consideration of the ABA’s 1965 opinion providing “reasonable basis” as the standard for undisclosed return positions, and then traces the response to that opinion as the response prods the development of the 1985 replacement with its “realistic possibility of success” standard. The Article documents the extensive interaction between Congress, the Treasury Department, and the tax bar over the next 30 years during which penalties are studied and revised and, eventually, § 6694, Circular 230, and the “substantial authority” standard succeed to primary importance. It chronicles the rise of the Treasury Department and Circular 230 and the idea of a single regulator of the full scope of professional tax work until Loving and Ridgely trip-up Treasury in its efforts to become that regulator.

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October 13, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Taxing Interstate Remote Workers After New Hampshire v. Massachusetts: The Current Status Of The Debate

Edward A. Zelinsky (Cardozo), Taxing Interstate Remote Workers After New Hampshire v. Massachusetts: The Current Status of the Debate, 25 Fla. Tax Rev. __ (2022):

Florida Tax Review (2021)Under the dormant Commerce Clause, Massachusetts, New York and other states emulating them violate their constitutional duty to apportion when they tax the income nonresident telecommuters earn remotely working at their out-of-state homes. Also for Commerce Clause purposes, nonresident telecommuters lack substantial presence to their employer’s state when such nonresidents work at their out-of-state homes. New Hampshire thus argued correctly in New Hampshire v. Massachusetts that, for Due Process purposes, Massachusetts taxed extraterritorially and unconstitutionally when Massachusetts taxed income earned by nonresident telecommuters from their homes outside Massachusetts’ borders.

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October 13, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Townsend: Preconditions Of Leadership In Law

Kenneth Townsend (Wake Forest), Preconditions of Leadership in Law, 56 Wake Forest L. Rev. __ (2021):

While lawyers have long been over-represented in various leadership contexts, law schools and legal employers have not always been concerned with teaching and cultivating leadership. This historic reluctance is rooted in many things, including an overconfidence that the study and practice of law somehow automatically prepared one for leadership; a fear that legal education and practice would be compromised by a focus on “soft skills” associated with leadership studies; a belief that leadership capacities are established by the time students arrive at law school; and concerns that a more holistic approach would lead law schools into the fraught business of moral formation.

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October 13, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

True Confessions Of A Legal Writing Professor: I Will Never Surrender To The Sinful Comma Splice

Diana Simon (Arizona; Google Scholar), More True Confessions of a Legal Writing Professor: I Will Never Surrender to the Sinful Comma Splice, __ Ariz. Att'y __ (2021):

This, at times, irreverent and tongue-in-cheek article analyzes the increase in the use of comma splices from a legal writing professor’s perspective and suggests ways to fix the problem. First, it traces the increase of comma splices to the Harry Potter series because, as English professors have suggested, that best-selling series is full of comma splices. Second, it explains exactly what a comma splice is and how historically, the use of comma splices was acceptable. Third, it provides examples of sentences with comma splices and suggests different methods of fixing the sentence to correct the problem. Finally, it addresses exceptions to the ban on comma splices.

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October 13, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Fordham Symposium: Mental Health And The Legal Profession

FordhamFordham Symposium, Mental Health and the Legal Profession, 89 Fordham L. Rev. 2415-2595 (2021):

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October 13, 2021 in Conferences, Legal Ed Conferences, Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Accounting Firms Are Beating Law Firms In The Tax Services Battle

Danielle Higgins Green (Fordham), & Stanley Veliotis (Fordham; Google Scholar), Law vs. Accounting Firms: Competing Over Three Decades of Change, 173 Tax Notes Fed. 13 (Oct. 4, 2021):

In this report, Green and Veliotis investigate how major regulatory and legislative changes over the past three decades have affected the competitive market for tax services between large U.S. law firms and accounting firms — particularly the supply side of the market for tax services provided to corporations.

Tax Notes 1

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October 13, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, October 12, 2021

Blouin Presents Does Tax Planning Affect Organizational Complexity: Evidence From Check-the-Box Today At NYU

Jennifer Blouin (Penn) presents Does Tax Planning Affect Organizational Complexity: Evidence from Check-the-Box (with Linda Krull (Oregon; Google Scholar)) at NYU today as part of its Tax Policy and Public Finance Colloquium hosted by Dan Shaviro:

Blouin (2021)This study investigates the effect of the 1997 check-the-box regulations on the current effective income tax rates of U.S. multinational firms. Following the empirical methodology developed in Dyreng and Lindsey (2009), we measure the effect that the change in tax law has on the average worldwide, U.S., and foreign taxes paid on worldwide, federal and foreign pretax book income for a large sample of U.S. multinational firms. We find that on average U.S. multinational firms’ worldwide tax rates declined by 7.5% in the post-1996 period. Further, we find that the effect of the regulations was greater on U.S. multinational firms’ average foreign tax rates as compared to their average U.S. foreign tax rates. Our results also suggest that the effect is concentrated in the U.S. multinational firms that had a greater change in their ownership structures and a greater change in the balance of their intercompany payments in the post-1996 period.  

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October 12, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Maag Presents Imagining The Next Stage Of The Child Tax Credit Today At Georgetown

Elaine Maag (Tax Policy Center) presents Imagining the Next Stage of the Child Tax Credit (with Samuel Hammond (Niskanen Center)) at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Brian Galle:

Maag-elaineThe American Rescue Plan Act of 2021 (ARP) expanded the Child Tax Credit (CTC) for one year and delivered it as a monthly benefit to the vast majority of recipients. Whether the credit will retain its current form, revert to its previous form, or take on a new form altogether is unclear. Even if the credit is extended, it is unlikely to be extended permanently and there remains the possibility that if will continue to evolve as discussions around providing a robust child benefit continue. A robust child benefit could provide a minimum source of support to all or most families with children which would mean that fewer children would grow up in poverty and would be harmed by temporary income drops. We compare how a tax credit such as the Child Tax Credit (CTC) administered by the Internal Revenue Service (IRS) or a universal child allowance administered by the Social Security Administration (SSA) could be structured to best meet the needs of families with children. Tax credits, in general, have been the more popular tool of choice for both Democrats and Republicans to redistribute income in recent years (Faricy 2015)–including the temporary expansion of the Child Tax Credit (CTC).

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October 12, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Listokin Presents Monetary Finance Today At Boston College

Yair Listokin (Yale; Google Scholar) presents Monetary Finance (with Brian Galle (Georgetown; Google Scholar)) (reviewed by David Elkins (Netanya) here) at Boston College today as part of its Tax Policy Collaborative hosted by Jim Repetti, Diane Ring, and Shu Yi Oei:

Listokin_yair_yjl6Conventional economic wisdom holds that governments cannot pay their bills by printing money. Running the printing press—or, at modern central banks, tapping a few keys to create electronic funds—causes inflation, and inflation can destroy economies. Yet as it turns out, since 2008 developed countries throughout the world have in effect printed trillions of dollars’ worth of new money without any real hint of inflation. In the United States, for example, this “monetary finance” has amounted to ⅓ of all deficit spending over the last decade.

The power of central banks to finance government at this scale should transform how we think about the fiscal state, our system of taxing and spending. Yet because this phenomenon is new, runs contrary to decades of theory, and is not yet fully understood, little scholarship yet grapples with how governments should use monetary finance. Most nations’ basic architectures for revenue and spending decisions assume that taxes and government borrowing are the primary sources of government finance. What should happen to fundamental legal rules, such as balanced-budget requirements, debt ceilings, or the tax legislative process, when central banks are also key players in financing national expenditures? And how should the structure of central banks change to reflect this new power, which could turn into a dangerous temptation?

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October 12, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Faulhaber: Lost In Translation — Excess Returns And The Search For Substantial Activities

Lilian V. Faulhaber (Georgetown; Google Scholar), Lost in Translation: Excess Returns and the Search for Substantial Activities:

Since 2010, international tax policymakers have proposed a variety of minimum taxes on excess returns, but every proposal has defined excess returns differently. This Article asks what excess returns are supposed to represent – and concludes that the answer is very different from what policymakers have suggested.

The trend of targeting so-called excess returns started in 2010 with a one-page idea in the Obama Treasury’s proposed budget. Over the next decade, this idea became the basis for one of the major international tax reform provisions in the 2017 U.S. tax reform and is now being considered as part of Pillar Two of the OECD’s current digital tax project. The idea in question is a minimum tax on foreign excess returns. Yet even though the general idea of a minimum tax on foreign excess returns has stayed the same across administrations and jurisdictions, the specifics of this idea have changed with every iteration, and the proponents of this idea have justified each version differently and defined its various elements differently.

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October 12, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Blank & Glogower: The Trouble With Targeting Tax Shelters

Joshua D. Blank (UC-Irvine; Google Scholar) & Ari D. Glogower (Ohio State; Google Scholar), The Trouble with Targeting Tax Shelters, 74 Admin. L. Rev. ___ (2022):

Abusive tax shelters—complex transactions that produce tax benefits that Congress never intended, but that may resemble legitimate business deals—frequently escape IRS detection. For the past 20 years, the federal government has attempted to bolster the IRS’s ability to detect these transactions by requiring taxpayers and their advisors to disclose “reportable transactions” to the IRS Office of Tax Shelter Analysis. While mandatory disclosure rules can serve valuable tax enforcement functions, including deterrence of abusive tax planning, they are also subject to significant limitations, especially when applied against high-income and wealthy taxpayers who have access to sophisticated legal counsel. In July 2021, the U.S. Supreme Court introduced an additional potential obstacle as a result of its decision in CIC Services, LLC v. Internal Revenue Service—the reportable transaction rules may now be subject to preemptive administrative law challenges without being barred by the Anti-Injunction Act.

This Article argues that in the wake of CIC Services, policymakers should look beyond simply reforming the IRS’s process of issuing tax shelter notices to avoid potential administrative law challenges. Instead, they should reconsider more generally the government’s primary reliance on “activity-based rules” to combat abusive tax planning. This Article brings new perspective to the challenges of targeting tax shelters and explains how they result from the government’s activity-based approach.

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October 12, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, October 11, 2021

Devereux Presents Taxing Profit In The Market Country Today At Loyola-L.A.

Michael Devereux (Oxford; Google Scholar) presents Taxing Profit in a Global Economy and Comparing Proposals to Tax Some Profit in the Market Country (with Richard Collier (Oxford) & John Vella (Oxford)) at Loyola-L.A. today as part of its Tax Policy Colloquium:

Michael-devereuxTaxing Profit in a Global Economy
This book undertakes a fundamental review of the existing international system of taxing business profit. It steps back from the current political debates on how to combat profit shifting and how taxing rights over the profits of the digitalized economy should be allocated. Instead, it starts from first principles to ask how we should evaluate a tax on business profit—and whether there is any good rationale for such a tax in the first place. It then goes on to evaluate the existing system and a number of alternatives that have been proposed. It argues that the existing system is fundamentally flawed, and that there is a need for radical reform. The key conclusion from the analysis is that there would be significant gains from a reform that moved the system towards taxing profit in the country in which a business made its sales to third parties. That conclusion informs two proposals that are put forward in detail and evaluated: the Residual Profit Allocation by Income (RPAI) and the Destination-based Cash Flow Tax (DBCFT). 

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October 11, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Classic Lesson From The Tax Court: Sex And Deductions

Camp (2021)I was going to title this week’s blog “The Concept of Inherently Personal.”  But I could not resist trying to put some clickbait in the title.  Today I want to discuss two classic cases from Tax Court.  They explore the never-ending balancing act needed to decide when an expense is deductible when it has both a personal and business aspect.  Between them, the two cases teach us a lesson about life in all its fullness.  That they both involve sex makes the lesson perhaps more memorable, but no less appropriate to any type of mixed business/personal deduction.  And while both cases involve sex, they do so from interestingly different perspectives.

In Vitale v. Commissioner, T.C. Memo. 1999-131 (Judge Fay), the Court denied deduction of certain expenses (payments to prostitutes), finding that the concededly business purpose of the expense was overcome by its inherently personal nature.  Yet in Hess v. Commissioner, T.C. Summary Opinion 1994-79 (Judge Joan Seitz Pate), the Court permitted a depreciation deduction for certain expenses (breast implants), finding that the inherently personal nature of the expense was overcome by its obvious business purpose.

You will find the surprisingly non-salacious details below the fold. 

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October 11, 2021 in Bryan Camp, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (2)

Sunday, October 10, 2021

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. SSRN Logo (2018) [558 Downloads]  Federal Tax Procedure (2021 Practitioner Ed.), by John Townsend (Houston)
  2. [393 Downloads]  Mega-IRAs, Mega-401(k)s, and Other Mega-Retirement Accounts: Statement for the Record, by Daniel Hemel (Chicago; Google Scholar) & Steven Rosenthal (Tax Policy Center)
  3. [379 Downloads]  Serenity Now! The (Not So) Inclusive Framework and the Multilateral Instrument, by Yariv Brauner (Florida; Google Scholar)
  4. [305 Downloads]  State Aid Prohibition — The New GAAR in Town, by Joachim Englisch (Muenster)
  5. [245 Downloads]  Has Cross-Border Arbitrage Met Its Match?, by Ruth Mason (Virginia; Google Scholar) & Pascal Saint-Amans (OECD) (reviewed by Young Ran (Christine) Kim (Utah; Google Scholar) here)

October 10, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, October 8, 2021

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).

Saito-blaine-800x800-1

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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October 8, 2021 in Blaine Saito, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week’s Tax Workshops

Monday, October 11: Michael Devereux (Oxford; Google Scholar) presents Taxing Profit in the Market Country (with Richard Collier & John Vella (Oxford)) virtually as part of the Loyola-L.A. Tax Policy Colloquium. If you would like to attend, please RSVP here

Tuesday, October 12: Elaine Maag (Tax Policy Center) presents Imagining the Next Stage of the Child Tax Credit (with Samuel Hammond (Niskanen Center)) virtually as part of the Georgetown Tax Law and Public Finance Workshop. If you would like to attend, please contact Brian Galle.

Tuesday, October 12: Jennifer Blouin (Penn) presents Does Tax Planning Affect Organizational Complexity: Evidence from Check-the-Box (with Linda Krull (Oregon; Google Scholar)) as part of the NYU Tax Policy and Public Finance Colloquium. If you would like to attend, please contact Dan Shaviro

Tuesday, October 12: Yair Listokin (Yale; Google Scholar) presents Monetary Finance (with Brian Galle (Georgetown; Google Scholar)) virtually as part of the Boston College Tax Policy Collaborative. If you would like to attend, please contact James RepettiDiane Ring, or Shu Yi Oei.

Thursday, October 14: Stephanie Hoffer (Indiana-McKinney; Google Scholar) presents Tax Legislation in Crises virtually as part of the Indiana-Maurer Tax Policy Colloquium. If you would like to attend, please register here

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October 8, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Workshops | Permalink

Thursday, October 7, 2021

Shanske: Agglomeration And State Personal Income Taxes

Darien Shanske (UC-Davis; Google Scholar), Agglomeration and State Personal Income Taxes: Time to Apportion (With Critical Commentary on New Hampshire's Complaint Against Massachusetts), 48 Fordham Urb. L.J. 948 (2021): 

Sometimes easy cases make bad law — or at least might make bad law. The Supreme Court is currently considering granting certiorari in New Hampshire v. Massachusetts. At issue is the State of New Hampshire’s (and its amici’s) claim that Massachusetts’s insistence on applying its income tax to residents of New Hampshire, who once commuted to work for businesses in Massachusetts but now remotely work for those businesses in New Hampshire because of the COVID19 pandemic, violates the Due Process Clause and dormant Commerce Clause. The claim is simple and seductive: if these New Hampshire residents barely leave their own homes, much less their state, how can it accord with due process for Massachusetts to tax them?

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

Haneman: Prepaid Death

Victoria J. Haneman (Creighton; Google Scholar), Prepaid Death,  59 Harv. J. on Legis. ___ (2022):

The cost of an adult funeral exceeds $9,000. Funerals are expensive and death is not considered an appropriate time to bargain shop. The consumer is generally inexpert and vulnerable due to bereavement. Decisions are often time-pressured and perceived as irreversibly final. Accordingly, the death care industry benefits both from information asymmetry and etiquette uncertainty. Protecting the bereaved consumer calls for reversing the current norm of at-need (after death) purchasing in favor of pre-need (before death) planning and prepayment. Due to excessive influence of the industry over its state regulators, referred to as regulatory capture, current pre-need prepayment instruments are so deeply flawed that conventional wisdom recommends against prepayment. 

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

Wednesday, October 6, 2021

The Tax Gap, Shades Of Gray, And The Manchin Memo

Daniel J. Hemel (Chicago; Google Scholar), Janet Holtzblatt (Tax Policy Center) & Steve Rosenthal (Tax Policy Center), The Tax Gap's Many Shades of Gray:

The “tax gap”—the difference between the amount of “true tax” and the amount of tax actually paid—has garnered widespread attention in recent months. Much of the commentary on the subject equates the tax gap with “tax evasion,” a term broadly understood to connote intentional (and potentially criminal) underreporting. This paper cautions against conflating the tax gap with tax evasion. The tax gap includes substantial gray areas where the law is ambiguous and the IRS’s determination of “true tax” is debatable. On top of that, the IRS’s methodology for measuring the tax gap includes upward adjustments that are recommended by front-line examiners but reversed on administrative appeal or judicial review. Moreover, a substantial portion of the estimated tax gap is derived from a statistical technique called “detection controlled estimation” that potentially magnifies the impact of later-reversed recommendations on the ultimate tax gap measure. Weighing in the opposite direction, the IRS’s approach to measuring the tax gap excludes some amounts that clearly constitute tax evasion (most significantly, underreporting of tax on illegal-source income).

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

Winchester: A GILTI Fix For An Employment Tax Glitch

Richard Winchester (Seton Hall; Google Scholar), A GILTI Fix for an Employment Tax Glitch, 48 Pepp. L. Rev. 915 (2021):

When a self-employed individual operates through a business entity, they can frequently dictate the extent to which the firm's profits are included in their employment tax base. That permits such individuals to control how much employment tax they pay, if any. They enjoy this power because the rules permit them to dictate whether the earnings they derive through the firm count as labor income, which is subject to employment tax, or the returns on any capital they have invested in the business. The GILTI rules enacted as part of the 2017 Tax Act contain an assumption that amounts invested in capital generally earn a 10 percent annual rate of return. That same assumption can be used to determine whether the earnings of a self-employed individual count as labor income or returns to capital. Such a mandatory rule would eliminate the abusive practices that self-employed individuals currently utilize, permitting the entire employment tax system operate in a more equitable way.

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

Save The Date: Ed Kleinbard Memorial Conference At USC

Kleinbard

USC Gould School of Law is pleased to announce that it will be hosting a virtual conference on November 5, 2021, in memory of our esteemed departed colleague Professor Edward Kleinbard.  

We are excited to have a prestigious lineup of speakers to discuss the wide range of Professor Kleinbard’s lifetime work, including:

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October 6, 2021 in Conferences, Legal Education, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Legal Education In The United States: Moving Toward More Practical Experience

Hon. Sandra R. Klein (U.S. Bankruptcy Court, Central District of California), Legal Education in the United States: Moving Toward More Practical Experience, 42 Loy. L.A. Int'l & Comp. L. Rev. 371 (2019):

More than twenty-five years ago, I had the good fortune to be a Loyola Law School (“Loyola”) student and a member of the Loyola Law School International and Comparative Law Journal (“ILJ”). One of the highlights of my law school career was having my comment published in the ILJ: Legal Education in the United States and England, A Comparative Analysis, 13 Loy. L.A. Int'l & Comp. L.J. 601 (1991) [hereinafter Legal Education]. 

Many things have changed since then. The ILJ changed its name to the International and Comparative Law Review. I graduated from Loyola, clerked for two amazing jurists, the Honorable Arthur L. Alarcón, United States Court of Appeals for the Ninth Circuit, and the Honorable Lourdes G. Baird, United States District Court for the Central District of California, worked as a litigation associate at O’Melveny & Myers LLP and, for more than thirteen years, worked for the United States Department of Justice. For the past eight years, I have had the honor to serve as a United States Bankruptcy Judge in the Central District of California. 

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October 6, 2021 in Legal Ed Scholarship, Legal Education, Scholarship | Permalink

Tuesday, October 5, 2021

Layser Presents A Spatial Analysis Of Place-Based Tax Incentives Today At Georgetown

Michelle D. Layser (Illinois; Google Scholar) presents Subsidizing Gentrification: A Spatial Analysis of Place-Based Tax Incentives, 11 UC Irvine L. Rev. __ (2021), virtually at Georgetown today as part of its Tax Law and Public Finance Workshop hosted by Brian Galle:

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

This Article analyzes 15 years of NMTC data to explore the location patterns of tax-subsidized projects in 20 U.S. cities.

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October 5, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Hayashi Presents Dynamic Property Taxes And Racial Gentrification Today At UC-Hastings

Andrew T. Hayashi (Virginia; Google Scholar) presents Dynamic Property Taxes And Racial Gentrification, 96 Notre Dame L. Rev. 1517 (2021), virtually at UC-Hastings today as part of its 2021 Tax Speaker Series hosted by Heather Field and Manoj Viswanathan:

Hayashi_andrew_Many jurisdictions determine real property taxes based on a combination of current market values and the recent history of market values, introducing a dynamic aspect to property taxes. By design, homes in rapidly appreciating neighborhoods enjoy lower tax rates than homes in other areas. Since growth in home prices is correlated with — and may be caused by — changing neighborhood demographics, dynamic property taxes will generally have racially disparate impacts. These impacts may explain why minority-owned homes tend to be taxed at higher rates. Moreover, the dynamic features of local property taxes may subsidize gentrification and racially discriminatory preferences.

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October 5, 2021 in Colloquia, Scholarship, Tax, Tax Workshops | Permalink

Supporting Small Businesses In Place

Edward De Barbieri (Albany; Google Scholar), Supporting Small Businesses in Place, 48 Fordham Urb. L.J. __ (2021): 

How do lawmakers support small businesses most deserving of assistance in places most in need of governmental support? As a means for approaching this question, this Essay examines two recent laws — the Paycheck Protection Program and the Opportunity Zone tax incentive. The Paycheck Protection Program was the cornerstone of the CARES Act, designed to keep employees on payroll during the worst parts of the COVID-19 pandemic. The Opportunity Zone incentive was implemented to provide economic development stimulus to neighborhoods identified as needing capital investment following the Great Recession.

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October 5, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Blue J Predicted With 95% Confidence That 7th Circuit Would Affirm Tax Court In Innocent Spouse Cases

Benjamin Alarie & Stefanie Di Giandomenico (Blue J Legal), Blue J Predicted With 95% Confidence That Seventh Circuit Would Affirm Tax Court In Innocent Spouse Cases, 172 Tax Notes Fed. 2149 (Sept. 27, 2021):

Tax Notes Federal (2020)Clients often ask tax practitioners what their prospects of success are in litigation. Although the practitioner may have an opinion on the issue, the chances of success are often difficult if not impossible to quantify accurately and reliably. The question becomes even more complicated at the appellate stage because standards of review come into play, and the evidence to draw on is generally limited to what has already been considered by the lower court. New technology is bringing about change. Practitioners can now leverage machine learning systems trained on data from all other relevant decisions to assess the strength of their appeals on the merits. Consequently, tax practitioners and clients can together make data-driven decisions about whether to appeal and, if they do so, to formulate an optimal strategy.

In this article, we examine Rogers [v. Commissioner, No. 20-2789 (7th Cir. Aug. 17, 2021)], a case about innocent spouse relief that was recently decided by the Seventh Circuit. We use this case to illustrate how Blue J’s machine learning technology could have been used by the appellant’s counsel to assess the likelihood of success on appeal and the key factors required to succeed.

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October 5, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Monday, October 4, 2021

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 40, No. 1 (Fall 2020):

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October 4, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Fleming Presents The Decline Of Deferral In U.S. International Tax Planning Today At Vienna

Cliff Fleming (BYU; Google Scholar) presents The Decline of Deferral in U.S. International Tax Planning virtually at Vienna University of Economics and Business today:

JCliftonFlemingPrior to the 2017 TCJA, international tax planning by U.S. multinationals concentrated heavily on deferring U.S. residual tax on income earned in low-tax foreign countries and on enhancing the deferral benefit through cross-crediting and aggressive transfer pricing. Post TCJA, deferral planning has been rendered largely vestigial by the Section 245A dividends received deduction, the Section 965 transition tax, and the GILTI regime. Now international tax planning by U.S. multinationals focuses on maximizing the benefit of the low GILTI rate, cross-crediting within the GILTI foreign tax credit basket, minimizing Subpart F income, and shifting income from high-taxed foreign subsidiaries to low-taxed foreign subsidiaries. Aggressive transfer pricing remains an important tool.

October 4, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Lesson From The Tax Court: The Many Rooms Of Tax Court Power

Camp (2021)All federal courts (except the Supreme Court) are created by Congress.  Congress defines the extent to which each federal court can invoke the power of the federal government to coerce the parties before them.  The fancy legal term for that power is “jurisdiction.”  Like all other federal courts, the Tax Court is a court of limited jurisdiction, limited to the powers that Congress permits it to exercise.

The Tax Court sometimes claims its power is more limited than other federal courts but that idea has been rightly called “fatuous.” Flight Attendants v. Commissioner, 165 F.3d 572, 578 (7th Cir. 1999) (Posner, J.) (“The argument that the Tax Court cannot apply the doctrines of equitable tolling and equitable estoppel because it is a court of limited jurisdiction is fatuous. All federal courts are courts of limited jurisdiction.”).

What is true, however, is that Congress gives the Tax Court much specific grants of powers than other federal courts.  I think of the varied jurisdictional grants as different rooms of power.  When you go to Tax Court, the extent of its powers depends on which door you enter and what room of power you find yourself in.  What the Court can do for you in some cases, it cannot do for you in others because of the way that Congress has written the statute.  It depends on which room of power you are in.  That’s the lesson we learn in Michael D. Brown v. Commissioner, T.C. Memo. 2021-112 (Sept. 23, 2021), where Judge Kerrigan explains that what the Tax Court can do when exercising its CDP jurisdiction is more limited than what it can do when exercising its deficiency jurisdiction.  The taxpayer was in the CDP room and wanted relief that could only be granted in the Deficiency room.  Those different rooms of power are different in scope and do not overlap.   Details below the fold.

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October 4, 2021 in Bryan Camp, New Cases, Scholarship, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (0)

Sunday, October 3, 2021

The Top Five New Tax Papers

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

  1. SSRN Logo (2018) [538 Downloads]  Federal Tax Procedure (2021 Practitioner Ed.), by John Townsend (Houston)
  2. [382 Downloads]  Mega-IRAs, Mega-401(k)s, and Other Mega-Retirement Accounts: Statement for the Record, by Daniel Hemel (Chicago; Google Scholar) & Steven Rosenthal (Tax Policy Center)
  3. [372 Downloads]  Serenity Now! The (Not So) Inclusive Framework and the Multilateral Instrument, by Yariv Brauner (Florida; Google Scholar)
  4. [300 Downloads]  State Aid Prohibition — The New GAAR in Town, by Joachim Englisch (Muenster)
  5. [231 Downloads]  Has Cross-Border Arbitrage Met Its Match?, by Ruth Mason (Virginia; Google Scholar) & Pascal Saint-Amans (OECD) (reviewed by Young Ran (Christine) Kim (Utah; Google Scholar) here)

October 3, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, October 2, 2021

A Response To Avi-Yonah's A New Corporate Tax

Kellen Yent (LL.M. (Tax) 2021, Florida; Senior Tax Associate, PwC (Washington, D.C.)), A Response to "A New Corporate Tax":

This is a response to Professor Avi-Yonah's paper on a "New Corporate Tax" (2021). This paper's aim is to discuss the justifications and aims of a corporate tax and corporate tax policy. Specifically, this paper seeks to understand Avi-Yonah's proposal of a graduated system for the corporate tax, which is highly relevant given the new Build Back Better tax proposals from September 2021. A graduated system, may at first seem to fix many of the problems a current, stagnant rate corporate tax system has. However, after discussing the aims and justifications of a corporate tax, this seems to miss the mark. The paper seeks to ask the question: if the answer is to really tax the rich, why not do it in a more direct and sensible way, given that the actual incidence of such a tax does not fall on "corporations"?

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