Law Commons^™

Digital Barter Taxes: A Legal Defense, Young Ran (Christine) Kim, Darien Shanske

Faculty Articles

This short essay, aimed at state legislators, defends digital barter taxes from the most common legal objections.

Digital Barter Taxes Are Good Tax Policy, Young Ran (Christine) Kim, Darien Shanske

Faculty Articles

This short essay, aimed at state legislators, argues that digital barter taxes are good tax policy.

Reply Brief Of Edward A. And Doris Zelinsky In The New York Tax Appeals Tribunal, Edward A. Zelinsky, Doris Zelinsky

Faculty Amicus Briefs

Three reasons of state law independently compel a refund of the New York income tax Professor Edward A. Zelinsky paid on the Cardozo Law School salary Professor Zelinsky earned during the COVID period from March 15, 2020 through December 31, 2020. That salary was not New York source income because Professor Zelinsky earned that COVID period salary at his home in Connecticut “wholly without” New York’s borders. 20 N.Y.C.R.R. § 132.4(b). In addition, New York’s “convenience of the employer” rule does not apply to that COVID period salary because Professor Zelinsky’s remote work at home was for Cardozo’s necessity rather …

Taxing The Metaverse, Young Ran (Christine) Kim

Faculty Articles

The buzz surrounding the Metaverse has been growing steadily for the past couple of years, but the tax implications of this novel ecosystem remain fuzzy to most tax scholars. Such uncertainty is concerning, given the potential and momentum of this emerging technology. Although the Metaverse evolved from online video games focused only on user consumption, it now allows users to produce income and accumulate wealth entirely within the Metaverse. Current law seems to defer taxation of such until a realization or cash-out event. This Article challenges this approach and offers novel arguments justifying Metaverse taxation.

Because economic activity within the …

Taxation’S Limits, Luís C. Calderón Gómez

Faculty Articles

Countless pages have been devoted to the question of why should everyone pay tax, yet its obverse has gone largely unnoticed: why should some people and organizations not pay tax? Our tax system exempts from ordinary income taxation a wide and diverse array of people and organizations engaged in significant economic activity—from parents providing childcare services for their family, to consular activities and charities operating animal shelters—seemingly without a convincing explanation. Perhaps as a result of the dizzying diversity of activities that have been exempted from tax, scholars and policymakers have eluded comprehensively or coherently justifying our exemption regimes.

This …

Brief For Amicus Curiae Professor Edward A. Zelinsky In Support Of Appellants And Reversal, Edward A. Zelinsky

Faculty Amicus Briefs

DOL’s tie-breaking rule violates ERISA’s duty of loyalty under ERISA § 404(a)(1)(A). ERISA’s duty of loyalty requires ERISA-regulated trustees to invest plan resources for the “exclusive purpose of . . . providing” economic benefits to plan participants and their beneficiaries, “solely in the interest of the participants and beneficiaries.” The tie-breaking rule violates this stringent statutory duty of loyalty because it permits plan trustees investing plan resources to consider “collateral benefits,” i.e., the welfare of third parties or social goals. But ERISA‟s plain text does not permit this result. The words ““solely” and “exclusive purpose” in § 404(a)(1)(A) do not …

Common Sense Recommendations For The Application Of Tax Law To Digital Assets, Luís Calderón Gómez, Young Ran (Christine) Kim, Edward A. Zelinsky

Faculty Online Publications

In response to the Joint Committee on Taxation’s July 2023 request for comments on application of various Internal Revenue Code sections on digital assets, we propose a consistent set of rules to apply current law to digital assets. We highlight that the underlying economics and characteristics of transactions should be the primary concern for the application of rules and the valuation of digital assets. We believe any digital asset rules should (1) treat classes of digital assets with unique characteristics differently based on their economics, (2) minimize incentives for users to engage in tax-motivated structuring of transactions, and (3) allow …

Reply Brief Of The Petitioners-Taxpayers Edward A. And Doris Zelinsky, Edward A. Zelinsky

Faculty Amicus Briefs

The Division’s Brief confirms that the Tribunal should rule for the taxpayers, Edward A. and Doris Zelinsky Perhaps most egregiously, the Division disparages binding factual stipulations to which the parties agreed at the outset of this litigation. These stipulations confirm that, from March 15, 2020 through December 31, 2020 (“the COVID period”), Professor Zelinsky had no New York office or classroom available to him. Consequently, Professor Zelinsky taught his classes and met with students exclusively on zoom from his Connecticut home. He did not step foot in New York for this nine and one-half month period.

The stipulated facts lead …

Tax Reporting As Regulation Of Digital Financial Markets, Young Ran (Christine) Kim

Faculty Articles

FTX’s recent collapse highlights the overall instability that blockchain assets and digital financial markets face. While the use of blockchain technology and crypto assets is widely prevalent, the associated market is still largely unregulated, and the future of digital asset regulation is also unclear. The lack of clarity and regulation has led to public distrust and has called for more dedicated regulation of digital assets. Among those regulatory efforts, tax policy plays an important role. This Essay introduces comprehensive regulatory frameworks for blockchain-based assets that have been introduced globally and domestically, and it shows that tax reporting is the key …

Brief Of The Petitioners-Taxpayers Edward A. And Doris Zelinsky, Edward A. Zelinsky

Faculty Amicus Briefs

As a matter of state law, New York’s own regulations and case law do not permit taxation of Professor Zelinsky’s income earned at home in Connecticut for the COVID-19 period starting on March 15, 2020. Even if New York law permitted the taxation of Professor Zelinsky’s Cardozo salary during this COVID-19 period, as a matter of federal constitutional law, the Due Process and dormant Commerce Clauses do not permit New York’s taxation of this salary earned in Connecticut. In addition, Zelinsky v. Tax Appeals Tribunal, 1 N.Y. 3d 85 (2003), cert. denied, 541 U.S. 1009 (2004), does not apply to …

Taxing Digital Platforms, Andrew Hayashi, Young Ran (Christine) Kim

Faculty Articles

The proliferation of digital services taxes (DSTs) in Europe is generally understood as a way for those countries to claim taxing rights over the profits of large digital platforms such as Google, Facebook, and Amazon. Under prevailing norms of international income taxation, these businesses had been able to avoid paying taxes in countries where they had no physical presence, even if they had many users in those countries. But the rise of big tech has generated a set of regulatory and political challenges, and tax is only one of these. The adoption of DSTs is not only about the fair …

The Commerciality Of Non-Profit Hospitals Requires Them To Be Taxed: Bringing The Debate To A Conclusion, Edward A. Zelinsky

Faculty Articles

It is now time to conclude our prolonged debate about the tax-exempt status of nonprofit hospitals. The contemporary nonprofit hospital is a commercial enterprise, materially indistinguishable for tax purposes from its profit-making, taxed competitor. The federal income tax and the states’ income, sales and property taxes should treat all hospitals alike, regardless of whether such hospitals are nonprofit or for-profit enterprises. In the interests of equity and efficiency, these similar institutions should be taxed similarly.

As a political matter, nonprofit hospitals will continue to defend their tax-exempt status. Like any other lucrative, vested interest, nonprofit hospitals will continue to fight …

Brief Of Amici Curiae Tax Law Professors, Young Ran (Christine) Kim

Faculty Amicus Briefs

Professors Reuven S. Avi-Yonah, David Gamage, Orly Mazur, Young Ran (Christine) Kim, and Darien Shanske (collectively, “Tax Law Professors”) write this amici curiae brief in support of the Appellant in COMPTROLLER OF MARYLAND v. COMCAST — the Maryland Digital Advertising Case.

Many digital transactions currently evade sales taxation in Maryland, even though the closest non-digital analogues are subject to tax. Specifically, digital advertising platforms like Respondents obtain vast quantities of individualized data from and on Marylanders in currently untaxed transactions. The scope and value of these transactions is vast and growing, as they allow advertising platforms the lucrative opportunity to …

Too Good To Be True: Private Placement Life Insurance Policies, Luís C. Calderón Gómez

Faculty Articles

In this article, Calderón Gómez examines a tax avoidance scheme involving private placement life insurance policies — large policies that potentially allow wealthy taxpayers to move their traditionally tax-inefficient investments in private equity and hedge funds into a life insurance policy and accumulate, borrow against, and pass on those investment gains effectively tax free — and sketches some possible alternatives to stop the abuse of these policies.

State Digital Services Taxes: A Good And Permissible Idea (Despite What You Might Have Heard), Young Ran (Christine) Kim, Darien Shanske

Faculty Articles

Tax systems have been struggling to adapt to the digitalization of the economy. At the center of the struggles is taxing digital platforms, such as Google or Facebook. These immensely profitable firms have a business model that gives away “free” services, such as searching the web. The service is not really free; it is paid for by having the users watch ads and tender data. Traditional tax systems are not designed to tax such barter transactions, leaving a gap in taxation.

One response, pioneered in Europe, has been the creation of a wholly new tax to target digital platforms: the …

Whose Debt Is It Anyway?, Luís C. Calderón Gómez

Faculty Articles

Every year, companies issue hundreds of billions of dollars of debt with a feature carrying unclear tax consequences. So do individuals, who frequently tie their most significant financial asset to this type of instrument. Yet this instrument is not an exotic or innovative financial derivative, but is simple vanilla debt with two or more borrowers, or “co-obligated debt”. Co-obligated debt poses a conceptual problem for the law because it does not fit neatly into the simple and dyadic legal framework underlying the law’s conception of debt, where one creditor lends money to one borrower in exchange for a direct promise …

Is Bitcoin Prudent? Is Art Diversified? Offering Alternative Investments To 401(K) Participants, Edward A. Zelinsky

Faculty Articles

Whether 401(k) plans’ investment menus should feature “alternative” investments is a fact-driven inquiry applying ERISA’s fiduciary standards of prudence, loyalty, and diversification. Central to this fact-driven inquiry is whether the alternative investment class in question is broadly accepted by investors in general and by professional defined benefit trustees in particular. A similarly salient concern when making this inquiry is the financial unsophistication of many, perhaps most, 401(k) participants. Accounting for these considerations, this Article concludes that REITs, private equity funds, and hedge funds can, with limits, today be offered as investment choices to 401(k) participants, but that cryptocurrencies (including Bitcoin), …

A New Framework For Digital Taxation, Reuven Avi-Yonah, Young Ran (Christine) Kim, Karen Sam

Faculty Articles

The international tax regime has wide implications for business, trade, and the international political economy. Under current law, multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence there. Digital companies, like Google and Amazon, can operate entirely online, thereby avoiding market country taxes. Multinationals can also exploit existing tax rules by shifting their profits to low-tax jurisdictions, thereby avoiding taxes in the residence country where their headquarters are located.

Recently, a global tax deal was reached to tackle these …

Tax Harmony: The Promise And Pitfalls Of The Global Minimum Tax, Reuven Avi-Yonah, Young Ran (Christine) Kim

Faculty Articles

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 …

Brief Of Professor Edward A. Zelinsky As Amicus Curiae In Support Of Plaintiff’S Motion For Leave To File Bill Of Complaint, Edward A. Zelinsky

Faculty Amicus Briefs

Professor Edward Zelinsky submitted an amicus brief with the U.S. Supreme Court in New Hampshire’s constitutional challenge against Massachusetts’s recently promulgated regulation imposing its income tax on nonresident remote workers, arguing that the Court should grant New Hampshire’s motion for leave because a state cannot source nonresidents’ income earned beyond the state’s borders; taxpayers have “no practical remedy” for relief from unconstitutional taxation under the Tax Injunction Act; and only the Court can make rulings over the boundaries of state authority.

Coronavirus, Telecommuting, And The ‘Employer Convenience’ Rule, Edward A. Zelinsky

Faculty Articles

In this article, Zelinsky criticizes New York’s income tax penalty for nonresident telecommuters, particularly in the context of the coronavirus emergency.

Applying The First Amendment To The Internal Revenue Code: Minnesota Voters Alliance And The Tax Law’S Regulation Of Nonprofit Organizations’ Political Speech, Edward A. Zelinsky

Faculty Articles

On its face, Minnesota Voters Alliance v. Mansky is about which T-shirts, hats and buttons voters can wear at the polls. However, the U.S. Supreme Court’s First Amendment analysis in Minnesota Voters Alliance extends beyond apparel at polling places. That decision impacts the ongoing debate about the Johnson Amendment, the now controversial provision of the Internal Revenue Code which forbids Section 501(c)(3) organizations from intervening in political campaigns. Minnesota Voters Alliance also affects the proper construction of Section 501(c)(3)’s ban on lobbying by tax-exempt entities as well as other provisions of the tax law taxing and precluding campaign intervention by …

Section 4968 And Taxing All Charitable Endowments: A Critique And A Proposal, Edward A. Zelinsky

Faculty Articles

No abstract provided.

Brief Of Amici Curiae Law Professors And Economists In Support Of Petitioner, Edward A. Zelinsky

Faculty Amicus Briefs

Amici are professors of tax law and economics at universities across the United States. As scholars and teachers, they have considered the economic consequences of this Court’s decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), and have concluded that Quill’s dormant Commerce Clause holding should be overruled. Amici join this brief solely on their own behalf and not as representatives of their universities. A full list of amici appears in Appendix A.

Brief Of Tax Law Professors As Amici Curiae In Support Of Petitioner, Edward A. Zelinsky

Faculty Amicus Briefs

Amici are professors of tax law at universities across the United States. As scholars and teachers, they have considered the doctrinal roots and practical consequences of judicial limits on state and local taxation. Amici join this brief solely on their own behalf and not as representatives of their universities. A full list of amici appears in the Appendix to this brief.

Brief Of Interested Law Professors As Amici Curiae Supporting Petitioner, Edward A. Zelinsky

Faculty Amicus Briefs

Amici curiae are 14 professors of law who have devoted much of their teaching and research to the area of state taxes and the role of state tax policy in our federal system. The names and affiliations (for identification purposes only) of amici are included in an addendum to this brief. The amici are concerned with the effect of this Court’s dormant Commerce Clause jurisprudence on the development of fair and efficient state tax systems. No decision of this Court has had more effect on state sales and use tax systems than Quill Corporation v. North Dakota. We believe …

The Enigma Of Wynne, Edward A. Zelinsky

Faculty Articles

The five-justice Wynne majority used that case to make a major statement about the dormant Commerce Clause. In many respects, Wynne is an enigma that perpetuates an inherent problem of the Courts dormant Commerce Clause doctrine: the Court declares some ill-defined taxes as unconstitutionally discriminatory because they encourage in-state investment, while other economically equivalent taxes and government programs that similarly encourage intrastate economic activity are apparently acceptable under the dormant Commerce Clause.

Wynne is thus more important than the immediate situation it addresses, and will have consequences beyond the immediate circumstances it addresses. A decision as enigmatic as it is …

Hillenmeyer, "Convenience Of The Employer," And The Taxation Of Nonresidents' Incomes, Edward A. Zelinsky

Faculty Articles

In Hillenmeyer v. Cleveland Board of Review, Ohio’s Supreme Court unanimously declared that Cleveland’s municipal income tax violated the Due Process Clause of the U.S. Constitution by taxing a nonresident athlete under the “games-played” method rather than the “duty-days” method. According to the Ohio court, the games-played approach overtaxed Mr. Hillenmeyer by allocating to Cleveland Mr. Hillenmeyer’s compensation from the Chicago Bears using the percentage of the Bears’ games played in Cleveland. By this approach, Cleveland taxed Mr. Hillenmeyer extraterritorially, reaching income he earned from services he performed for the Bears outside of Cleveland’s borders. Due Process, the Ohio …

Why Wynne Worries Me, Edward A. Zelinsky

Faculty Articles

No abstract provided.

Why The Buffett-Gates Giving Pledge Requires Limitation Of The Estate Tax Charitable Deduction, Edward A. Zelinsky

Faculty Articles

The Buffett-Gates Giving Pledge, under which wealthy individuals promise to leave a majority of their assets to charity, is an admirable effort to encourage philanthropy. However, the Pledge requires us to confront the paradox that the federal estate tax charitable deduction is unlimited while the federal income tax charitable deduction is capped. If a Giving Pledger leaves his wealth to charity, the federal fisc loses significant revenue since the Pledger thereby avoids federal estate taxation as charitable bequests are deductible without limit for federal estate tax purposes. Despite its laudable qualities, the Giving Pledge is a systematic (albeit inadvertent) threat …