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Articles 1 - 30 of 104
Full-Text Articles in Law
Why States Should Conform To The New Corporate Amt, David Gamage, Darien Shanske
Why States Should Conform To The New Corporate Amt, David Gamage, Darien Shanske
Articles by Maurer Faculty
In 2022, as a key component of the Inflation Reduction Act, Congress enacted a new corporate alternative minimum tax (CAMT). With the possible exception of Alaska, states with corporate income taxes will not automatically conform to this change. But should they? Although states may not currently be seeking additional tax revenue, seasons change quickly when it comes to revenue needs. Further, there is increasing reason to believe that the corporate income tax is a progressive tax, and if so, a state might consider conforming to the CAMT as part of a revenue-neutral change to make its tax system more progressive. …
Avoiding Scandals Through Tax Rulings Transparency, Leandra Lederman
Avoiding Scandals Through Tax Rulings Transparency, Leandra Lederman
Articles by Maurer Faculty
In 2014, the International Consortium of Investigative Journalists broke the “LuxLeaks” scandal, revealing numerous tax rulings that the press termed “sweetheart deals” granted to multinational companies. Many countries offer tax rulings because they provide certainty to taxpayers and the government on the tax consequences of a planned transaction. Yet, secrecy that is followed by leaks and criticism is a recurring aspect of these rulings, both in the United States and Europe. LuxLeaks, which revealed secret rulings from the small European country of Luxembourg, was international headline news. It helped trigger widespread reforms. Tax authorities, including those of European countries and …
Phased Mark-To-Market For Billionaire Income Tax Reforms, David Gamage, Darien Shanske
Phased Mark-To-Market For Billionaire Income Tax Reforms, David Gamage, Darien Shanske
Articles by Maurer Faculty
In this installment of Academic Perspectives on SALT, Gamage and Shanske advocate for phased mark-to-market as a mechanism for reforming the taxation of investment gains of billionaires and megamillionaires.
Tax Now Or Tax Never: Political Optionality And The Case For Current-Assessment Tax Reform, David Gamage, John R. Brooks
Tax Now Or Tax Never: Political Optionality And The Case For Current-Assessment Tax Reform, David Gamage, John R. Brooks
Articles by Maurer Faculty
The U.S. income tax system 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 …
Weathering State And Local Budget Storms: Fiscal Federalism With An Uncooperative Congress, David Gamage, Darien Shanske, Gladriel Shobe, Adam Thimmesch
Weathering State And Local Budget Storms: Fiscal Federalism With An Uncooperative Congress, David Gamage, Darien Shanske, Gladriel Shobe, Adam Thimmesch
Articles by Maurer Faculty
Throughout most of 2020, state and local governments faced severe budget crises as a result of the COVID-19 pandemic. Increased demand for state welfare services and rising state expenses related to controlling the spread of COVID-19 stretched state and local budgets to their breaking points. At the same time, layoffs, business closures, and social distancing measures reduced states’ primary sources of tax revenues. The traditional practice of American fiscal federalism is for the federal government to step in to provide aid during a national emergency of this magnitude, because state and local governments lack the federal government’s monetary and fiscal …
Maryland’S Digital Tax And The Itfa’S Catch-22, David Gamage, Darien Shanske, Christopher Moran
Maryland’S Digital Tax And The Itfa’S Catch-22, David Gamage, Darien Shanske, Christopher Moran
Articles by Maurer Faculty
In this installment of Academic Perspectives on SALT, the authors examine whether statelevel taxes on digital advertising — like Maryland’s new tax — are barred by the Internet Tax Freedom Act and discuss how the act’s prohibition against “discriminatory” taxes on electronic commerce should be construed narrowly.
Is New York’S Mark-To-Market Act Unconstitutionally Retroactive?, Reuven S. Avi-Yonah, David Gamage, Kirk J. Stark, Darien Shanske
Is New York’S Mark-To-Market Act Unconstitutionally Retroactive?, Reuven S. Avi-Yonah, David Gamage, Kirk J. Stark, Darien Shanske
Articles by Maurer Faculty
It is well known in tax literature that rudimentary tax planning strategies enable wealthy individuals to avoid state and federal income tax on much of their true economic income. Indeed, the existing income tax has been described as being effectively optional for those who derive their income chiefly from the ownership of assets rather than the provision of services. The reason is — except for a few relatively narrowly tailored deemed-realization rules — both state and federal income taxes rely on the realization principle. Under realization accounting, taxpayers generally do not owe tax on economic gains until they sell their …
How States Should Now Consider Expanding Sales Taxes To Services, Part 2, Grace Stephenson Nielsen, Gladriel Shobe, Darien Shanske, David Gamage
How States Should Now Consider Expanding Sales Taxes To Services, Part 2, Grace Stephenson Nielsen, Gladriel Shobe, Darien Shanske, David Gamage
Articles by Maurer Faculty
As we explained in our prior essay, state governments are experiencing severe revenue needs because of COVID-19, and expanding state sales tax bases to include services is a promising option for state governments to manage their budget shortfalls. In this, the second essay in this series — a contribution to Project SAFE: State Action in Fiscal Emergencies — we explain some of the implementation details and options for how states might go about expanding their sales tax bases to include services. In particular, we argue that there are some incremental steps that seem to be technically and politically feasible as …
Why A Federal Wealth Tax Is Constitutional, Ari Glogower, David Gamage, Kitty Richards
Why A Federal Wealth Tax Is Constitutional, Ari Glogower, David Gamage, Kitty Richards
Articles by Maurer Faculty
The 2020 Democratic presidential primaries brought national attention to a new direction for the tax system: a federal wealth tax for the wealthiest taxpayers. During their campaigns, Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) both introduced proposals to tax the wealth of multimillionaires and billionaires, and to use the revenue for public investments, including in health care and education. These reforms generated broad public support—even among many Republicans—and broadened the conversation over the future of progressive tax reform.
A well-designed, high-end wealth tax can level the playing field in an unequal society and promote shared economic prosperity.
Critics have …
How To Measure And Value Wealth For A Federal Wealth Tax Reform, David Gamage, Ari Glogower, Kitty Richards
How To Measure And Value Wealth For A Federal Wealth Tax Reform, David Gamage, Ari Glogower, Kitty Richards
Articles by Maurer Faculty
Over the last several decades, wealth inequality has exploded, warping economic outcomes and limiting opportunity—for individuals and for the US at large.
Sky-high income inequality and runaway income gains for the nation’s highest earners compound that wealth inequality and are insufficiently taxed under the current tax regime.
Further, wealth in the US has always been heavily skewed by race.
Since the country’s founding, US laws and customs have prevented Black and brown people from receiving fair wages and accruing assets, thereby creating and perpetuating today’s massive racial wealth gap.
While our existing tax systems are ill-equipped to tackle these challenges, …
Valuation As A Challenge For Tax Administration, Leandra Lederman
Valuation As A Challenge For Tax Administration, Leandra Lederman
Articles by Maurer Faculty
Valuation issues have long posed challenges for the U.S. federal tax system. This is not just because of questions about what technique will most accurately value particular types of property. A key problem for tax administration is that taxpayers have a financial incentive to claim erroneous, self-serving valuations. This Essay analyzes tax valuation through this tax compliance lens. In so doing, it highlights the importance that third parties to the taxpayer-government relationship act at arm’s length from the taxpayer. It also explains why penalties are insufficient to deter erroneous self-reported valuations. The Essay also draws on the tax compliance perspective …
The Fraud Triangle And Tax Evasion, Leandra Lederman
The Fraud Triangle And Tax Evasion, Leandra Lederman
Articles by Maurer Faculty
The “fraud triangle”—a theory of why people commit fraud —is the preeminent framework for analyzing fraud in the accounting literature. It developed out of studies of fraudsters, including inmates convicted of embezzlement. The three components of the fraud triangle are (1) an incentive or pressure (usually financial); (2) opportunity; and (3) rationalization.
There is a separate, extensive legal literature on tax compliance and evasion. The fraud triangle is largely absent from this legal literature, although tax evasion is a type of fraud. This Article rectifies that oversight, analyzing how using the fraud triangle as a lens can inform the legal …
Why States Should Now Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage
Why States Should Now Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage
Articles by Maurer Faculty
States are facing a severe budget crisis as a result of the coronavirus pandemic. And with the federal government unlikely to pass a relief bill to address those state budget issues,1 states will need to play a significant role in making up revenue shortfalls.
This is the first in a three-part series, which is a contribution to Project SAFE: State Action in Fiscal Emergencies. This essay will lay out the general case for why states should consider expanding their sales tax bases to more services as a response to the COVID-19 crisis. The follow-ups will discuss further mechanics and details …
Why States Should Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage
Why States Should Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage
Articles by Maurer Faculty
States are facing a severe budget crisis as a result of the coronavirus pandemic. And with the federal government unlikely to pass a relief bill to address those state budget issues,1 states will need to play a significant role in making up revenue shortfalls.
This is the first in a three-part series, which is a contribution to Project SAFE: State Action in Fiscal Emergencies. This essay will lay out the general case for why states should consider expanding their sales tax bases to more services as a response to the COVID-19 crisis. The follow-ups will discuss further mechanics and details …
The Case For State Borrowing As A Response To The Current Crisis, David Gamage, Darien Shanske
The Case For State Borrowing As A Response To The Current Crisis, David Gamage, Darien Shanske
Articles by Maurer Faculty
The coronavirus pandemic is a national emergency that requires a national response. Asking states to absorb the budgetary losses caused by the pandemic while they are tasked with providing essential frontline services is comparable to asking states during World War II to pay for the landing in Normandy.
This article is a contribution to Project SAFE: State Action in Fiscal Emergencies. We have already argued, more than once, that the federal government should borrow to prevent steep state and local budget cuts. But because the federal government will apparently not take sufficient action, we offer these ideas to states for …
Strategic Nonconformity To The Tcja, Part I: Personal Income Taxes, Darien Shanske, Adam Thimmesch, David Gamage
Strategic Nonconformity To The Tcja, Part I: Personal Income Taxes, Darien Shanske, Adam Thimmesch, David Gamage
Articles by Maurer Faculty
The dire revenue situation that COVID-19 has created for state and local governments is a well documented and looming reality for state legislatures. We and others have explored a variety of ways that states should respond to this crisis in prior articles as a part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations backed by research. We think, as do many others, that in the absence of sufficient federal action, the states should prioritize raising revenue through targeted taxes on economic actors that are best enduring …
Reforming State Corporate Income Taxes Can Yield Billions, Darien Shanske, Reuven S. Avi-Yonah, David Gamage
Reforming State Corporate Income Taxes Can Yield Billions, Darien Shanske, Reuven S. Avi-Yonah, David Gamage
Articles by Maurer Faculty
The federal government should be providing states and localities with hundreds of billions of dollars in aid. The arguments against such aid, including the claim that the states have somehow been profligate, do not stand up to scrutiny. Nevertheless, it seems unlikely that the federal government will do enough, and it is already the case that the federal government is acting too slowly. States and local governments, which generally operate under balanced budget constraints, are, accordingly, already making sweeping cuts4 that will deepen the recession and reduce services when they are most needed.
Rather than make these cuts, it would …
States Should Consider Partial Wealth Tax Reforms, David Gamage, Darien Shanske
States Should Consider Partial Wealth Tax Reforms, David Gamage, Darien Shanske
Articles by Maurer Faculty
This article is a contribution to Project SAFE (State Action in Fiscal Emergencies). In other essays in this project, we explain steps the federal government should take to help state and local governments cope with their looming budget crises. The federal government is much better positioned to manage these crises than states and localities and, ideally, it would act sufficiently to prevent the need for state and local governments to cut spending or raise taxes. However, we fear that the federal government may fail to act sufficiently, leaving states and localities with the need to make painful spending cuts, raise …
How The Federal Reserve Should Help States And Localities Right Now, Darien Shanske, David Gamage
How The Federal Reserve Should Help States And Localities Right Now, Darien Shanske, David Gamage
Articles by Maurer Faculty
The COVID-19 pandemic is a giant catastrophe, but the Federal Reserve can still mitigate the looming fiscal crises facing state and local governments. This article — a contribution to Project SAFE (State Action in Fiscal Emergencies) — builds on our prior background essay explaining state and local budget issues.
States Should Quickly Reform Unemployment Insurance, Brian Galle, David Gamage, Erin Scharff, Darien Shanske
States Should Quickly Reform Unemployment Insurance, Brian Galle, David Gamage, Erin Scharff, Darien Shanske
Articles by Maurer Faculty
COVID-19 is causing mass layoffs and related economic hardship, as well as budget crises for state and local governments. This article is part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations backed by research. This article will focus on how state governments should reform unemployment insurance (UI) eligibility and benefits and the taxes funding these programs.
The Ordinary Diet Of The Law: How To Interpret Public Law 86-272, Darien Shanske, David Gamage
The Ordinary Diet Of The Law: How To Interpret Public Law 86-272, Darien Shanske, David Gamage
Articles by Maurer Faculty
Indeed, in today’s world, filled with legal complexity, the true test of federalist principle may lie, not in the occasional constitutional effort to trim Congress’ commerce power at its edges, or to protect a State’s treasury from a private damages action, but rather in those many statutory cases where courts interpret the mass of technical detail that is the ordinary diet of the law.
Public Law 86-272 is an important feature of the landscape of both state corporate income taxation and state tax policy more generally. The Multistate Tax Commission is completing an important project on updating the guidance given …
Tax Cannibalization By State Corporate Taxes: Policy Implications, Darien Shanske, David Gamage
Tax Cannibalization By State Corporate Taxes: Policy Implications, Darien Shanske, David Gamage
Articles by Maurer Faculty
The tax cannibalization problem is especially large for state corporate income taxes because state governments piggyback on a deeply flawed federal corporate tax base. In this article, we clarify a point of possible confusion about these issues and then discuss some policy implications.
Tax Cannibalization By State Corporate Taxes: Revised Estimates, David Gamage, Darien Shanske
Tax Cannibalization By State Corporate Taxes: Revised Estimates, David Gamage, Darien Shanske
Articles by Maurer Faculty
To what extent do our prior estimates for the tax cannibalization problem still apply post-2017? In this article we address that question, focusing on the implications of the reduced federal corporate income tax rate.
Information Matters In Tax Enforcement, Leandra Lederman, Joseph C. Dugan
Information Matters In Tax Enforcement, Leandra Lederman, Joseph C. Dugan
Articles by Maurer Faculty
Most scholars recognize both that the government needs information about taxpayers’ transactions to determine whether their reporting is honest, and that third third-party reporting helps the government obtain that information. Given governments’ reliance on tax collections, it would be risky to think that information or third third-party reporting is not needed by tax agencies. However, a recent article by Professor Wei Cui asserts that “modern governments can practice ‘taxation without information.’” Professor Cui’s argument rests on two claims: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he …
Will States Step Up In 2020? We Hope So, Darien Shanske, David Gamage
Will States Step Up In 2020? We Hope So, Darien Shanske, David Gamage
Articles by Maurer Faculty
We offer no predictions about the next year in tax, but we will offer what we hope will happen — if not next year, then soon. To paraphrase Chief Justice John Roberts, we hope that when it comes to the taxation of multinational corporations in particular, states will act more like the “separate and independent sovereigns” that they are. often rely on volatile revenue sources. More stable tax bases, like the sales tax and the property tax bases, are riddled with design flaws, from the sales tax base not including services and intangibles to the property tax failing to provide …
The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Gamage, David Kamin
The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Gamage, David Kamin
Articles by Maurer Faculty
The 2017 tax legislation brought sweeping changes to the rules for taxing individuals and business, the deductibility of state and local taxes, and the international tax regime. The complex legislation was drafted and passed through a rushed and secretive process intended to limit public comment on one of the most consequential pieces of domestic policy enacted in recent history. This Article is an effort to supply the analysis and deliberation that should have accompanied the bill’s consideration and passage and describes key problem areas in the new legislation. Many of the new changes fundamentally undermine the integrity of the tax …
Does Enforcement Reduce Voluntary Tax Compliance?, Leandra Lederman
Does Enforcement Reduce Voluntary Tax Compliance?, Leandra Lederman
Articles by Maurer Faculty
Governments generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This article analyzes the existing evidence to determine if this occurs. In fact, field studies suggest that enforcement tools, such as audits, are effective deterrents, generally greatly increasing tax collections. A few recent studies have found that audits have a negative effect on the …
Charitable Contributions In Lieu Of Salt Deductions, David Gamage
Charitable Contributions In Lieu Of Salt Deductions, David Gamage
Articles by Maurer Faculty
State governments are considering new charitable tax credits designed to circumvent the 2017 federal tax overhaul’s cap on state and local tax deductions. Will these plans work? This essay argues that the answer is: yes, but with some qualifications.
A New Theory Of Equitable Apportionment, David Gamage, Darien Shanske
A New Theory Of Equitable Apportionment, David Gamage, Darien Shanske
Articles by Maurer Faculty
This essay analyzes the purpose of the equitable apportionment doctrine in state and local tax jurisprudence, arguing that the doctrine remains coherent in the context of single-sales-factor apportionment regimes.
Why A State-Level Carbon Tax Can Include Border Adjustments, David Gamage, Darien Shanske
Why A State-Level Carbon Tax Can Include Border Adjustments, David Gamage, Darien Shanske
Articles by Maurer Faculty
This is our third in a series of articles considering taxation and greenhouse gas mitigation. To date, all state-level attempts to mitigate greenhouse gas emissions by placing a price on carbon have involved cap-and-trade regimes. In our previous two articles, we considered how importing tax features into a cap and- trade regime could ease distributive concerns and also make cap-and-trade regimes more efficient.