Law Commons^™

The Intellectual Foundations Of The Modern American Fiscal State, Ajay K. Mehrotra

Articles by Maurer Faculty

No abstract provided.

"Render Unto Caesar...": Religion/Ethics, Expertise, And The Historical Underpinnings Of The Modern American Tax System, Ajay K. Mehrotra

Articles by Maurer Faculty

A variety of scholars and commentators have been recently exploring the connections between religion and current U.S. tax policy. The relationship between religion and American taxation, however, runs much deeper than our present period. Indeed, it is no coincidence that roughly a century ago the foundations of our current tax system were taking shape at the height of the religious and ethical fervor known as the Social Gospel movement. At that time, religious and ethical sentiments played a central, though ambivalent, role in fiscal reform. This Article investigates the influence of religious and ethical values on the tax reform struggles …

Ebay's Second Life: When Should Virtual Earnings Bear Real Taxes?, Leandra Lederman

Articles by Maurer Faculty

Millions of people participate in virtual worlds. The popular virtual world Second Life is designed to be a platform for commerce. This essay argues that profits received in the form of Linden dollars (Second Life's currency) should be taxed in much the same way profits received via PayPal, a widely used electronic-payment system, are. Although Second Life profits could instead be taxed once the taxpayer cashes out, that would create a special exception for Second Life that does not exist for platforms such as eBay, which would facilitate abuse and distort economic activity.

Forging Fiscal Reform: Constitutional Change, Public Policy, And The Creation Of Administrative Capacity In Wisconsin, 1880-1920, Ajay K. Mehrotra

Articles by Maurer Faculty

In 1911, Wisconsin became one of the first U.S. states to adopt an effectively administered income tax. Wisconsin reformers were able to overcome several institutional barriers to create the administrative capacity necessary to assess and collect a graduated income tax that in time raised significant revenue, but did not supplant the property tax. With this limited success, the Wisconsin income tax soon became a model for other states and even the national government. In this sense, Wisconsin was a leader in forging fiscal reform. Political activists, lawmakers, and other government actors in the Badger State led a turn-of-the-century property tax …

Book Review. Einhorn, Robin L., American Taxation, American Slavery, Ajay K. Mehrotra

Articles by Maurer Faculty

No abstract provided.

Statutory Speed Bumps: The Roles Third Parties Play In Tax Compliance, Leandra Lederman

Articles by Maurer Faculty

Recent legal and economic scholarship has recognized that the government can use structural systems as an efficient way to reduce prohibited behavior. The federal tax system employs structural mechanisms, such as withholding taxes, to foster compliance. The use of structural systems to reduce tax evasion need not be limited to tax administration, however. The Article argues that substantive federal income tax law can - and in many contexts does - foster compliance by harnessing the structural incentives of third parties. Although this phenomenon has gone largely unnoticed, third parties are routinely used by the tax system to verify the bona …

"Stranger Than Fiction": Taxing Virtual Worlds, Leandra Lederman

Articles by Maurer Faculty

Virtual worlds, including massive multi-player on-line role-playing games (game worlds), such as City of Heroes, Everquest, and World of Warcraft, have become popular sources of entertainment. Game worlds provide scripted contexts for events such as quests. Other virtual worlds, such as Second Life, are unstructured virtual environments that lack specific goals but allow participants to socialize and engage virtually in such activities as shopping or attending a concert. Many of these worlds have become commodified, with millions of dollars of real-world trade in virtual items taking place every year. Most game worlds prohibit these real market transactions, but some worlds …

Debunking The Basis Myth Under The Income Tax, Joseph M. Dodge, Jay A. Soled

Indiana Law Journal

Tax basis is one of the most important, yet least studied, aspects of the income tax. This analysis calls attention to its importance and argues that taxpayers have the motivation, opportunity, and means to inflate the tax basis they have in their assets and, in some cases, to avoid the reporting of gains. We discuss the likely causes of these phenomena, estimate the probable revenue loss, and propose appropriate reforms.

The Federal Income Tax Consequences Of The Bobble Supreme Phenomenon, Leandra Lederman

Articles by Maurer Faculty

Since 2003, the Green Bag Journal has been commissioning and distributing limited edition bobblehead likenesses of the Justices of the United States Supreme Court. Demand for the bobble Supremes has not been limited to existing recipients, and bobble longing has inspired purchases and even poetry. Given the importance of the bobble Supreme phenomenon to the national economy, the time has come for guidance on the tax consequences of their receipt, ownership, and transfer. Fortunately, draft proposed regulations on the federal income tax treatment of bobble Supremes recently surfaced. Although the regulations have not and never will be officially sanctioned (and, …

Envisioning The Modern American Fiscal State: Progressive-Era Economists And The Intellectual Foundations Of The U.S. Income Tax, Ajay K. Mehrotra

Articles by Maurer Faculty

At the turn of the twentieth century, the U.S. system of public finance underwent a dramatic, structural transformation. The late nineteenth-century system of indirect taxes, associated mainly with the tariff, was eclipsed in the early decades of the twentieth century by a progressive income tax. This shift in U.S. tax policy marked the emergence of a new fiscal polity - one that was guided not simply by the functional and structural need for government revenue but by concerns for equity and economic and social justice. This Article explores the paradigm shift in legal and economic theories that undergirded this dramatic …

Addressing Imperfections In The Tax System: Procedural Or Substantive Reform?, Leandra Lederman, Stephen W. Mazza

Articles by Maurer Faculty

In his book "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else", David Cay Johnston, the Pulitzer Prize-winning reporter for the New York Times, covers a wide array of topics, including some that are quite complex, in a very readable way. The federal income tax system generally and tax compliance in particular are important focuses of the book, but the theme that implicitly connects chapters that otherwise appear unrelated is a variety of aspects of income inequality.

Although "Perfectly Legal" does not make a clear case that politicians and …

Must The Reports Of Tax Court Special Trial Judges Be Disclosed?, Leandra Lederman

Articles by Maurer Faculty

No abstract provided.

Taxing Political Donations: The Case For Corrective Taxes In Campaign Finance, David Gamage

Articles by Maurer Faculty

Command-and-control regulations are generally thought to be inferior to incentive-based alternatives. This essay proposes an incentive-based approach for regulating campaign finance. In place of our current regime of contribution ceilings, the essay calls for a graduated system of contribution taxes. Rather than capping the size of political donations at a specified dollar level, we should tax donations based on a schedule of graduated rates - the larger the size of a contribution, the higher the level of taxation.

Contribution taxes generate two primary advantages over contribution ceilings. First, contribution taxes preserve more total surplus. This surplus can be shared by …

"More Mighty Than The Waves Of The Sea": Toilers, Tariffs, And The Income Tax Movement, 1880-1913, Ajay K. Mehrotra

Articles by Maurer Faculty

No abstract provided.

The Interplay Between Norms And Enforcement In Tax Compliance, Leandra Lederman

Articles by Maurer Faculty

What will increase individuals' compliance with the federal income tax? There are rich legal, economic, and sociological literatures examining this question. The traditional answer that increased enforcement will increase compliance is supported by both economic modeling and a number of experiments. However, studies show that appeals to normative beliefs about honesty in taxpaying play an important role as well.

A number of scholars have suggested that vigorous enforcement of the tax laws may be counterproductive because it may suggest that noncompliance is the norm. This article argues, in part, that enforcement and a compliance norm are not inconsistent but rather …

Tax Compliance And The Reformed Irs, Leandra Lederman

Articles by Maurer Faculty

The Internal Revenue Service Restructuring and Reform Act of 1998 directed the IRS to transform itself into an agency focused on "customers." What affect will such a focus on service have on compliance? This article analyzes not only the post-IRS reform statistics on enforced compliance but also considers the more important question of the likely impact of IRS friendliness on so-called "voluntary compliance."

Although some have suggested that a kinder IRS might prompt increased voluntary compliance, this article argues that it likely will not, based on the literature examining the impact on voluntary compliance of tax collector service to taxpayers …

Federal Tax Collection Controversies In The Era Of Drye, Steve R. Johnson

Articles by Maurer Faculty

By "tax collection controversies," I mean cases in which it has been established that the taxpayer owes additional taxes, those taxes remain unpaid, and the IRS is attempting to enforce collection out of the taxpayer's assets. Such cases are numerous and involve attorneys in general legal practice as well as tax specialists. For example, the taxpayer may be your client for non-tax matters, and may expect you to handle her tax collection controversy as well. Or, your client may not be the taxpayer herself, but instead someone who co-owns property with the taxpayer. Your client expects you to make sure …

Are There Procedural Deficiencies In Tax Fraud Cases? A Reply To Professor Schoenfeld, Leandra Lederman

Articles by Maurer Faculty

No abstract provided.

Equity And The Article I Court: Is The Tax Court's Exercise Of Equitable Powers Constitutional?, Leandra Lederman

Articles by Maurer Faculty

Article I courts are the other federal courts, infrequently studied despite their important role in the judiciary. This article focuses on the United States Tax Court, an Article I court that hears approximately 95 percent of litigated federal tax cases. The article argues that the Tax Court's current tendency to apply equitable doctrines when necessary to avoid harsh outcomes dictated by statute lacks constitutional authority. First, the article examines the role of Article I courts in the federal judicial system and under the Constitution. Next, it considers the historical and modern meanings of equity and equitable powers in the context …

The Death Of The Income Tax (Or, The Rise Of America’S Universal Wage Tax), Edward J. Mccaffery

Indiana Law Journal

The killing of the income tax has not been open and notorious: such is not the style of contemporary politics. As with other markers of progressive social policy—the promises of universal health care, Obamacare, come to mind6—the income tax is dying a death by stealth, albeit stealth played out in plain view. The plot lines of the tragedy are apparent. The individual “income” tax has been split in two. One tax, for the masses, is a simple, increasingly formless wage tax. This wage/income tax adds higher brackets onto the payroll tax, the model toward which the wage/income tax aims, to …

Unfinished Business On The Taxpayer Rights Agenda: Achieving Fairness In Transferee Liability Cases, Steve R. Johnson

Articles by Maurer Faculty

No abstract provided.

The Dangers Of Symbolic Legislation: Perceptions And Realities Of The New Burden-Of-Proof Rules, Steve R. Johnson

Articles by Maurer Faculty

One provision of the 1998 IRS Restructuring and Reform Act is new I.R.C. sec. 7491. That section purports to alter the long established rule that the burden of proof in civil tax litigation generally is on the taxpayer. It was enacted with considerable fanfare as a taxpayer-protection measure. However, to minimize the serious effects that a genuine and general burden reversal would occasion, sec. 7491 contains many exceptions and limitations. I argue that these conditions largely swallow the rule, such that the burden of proof will shift in very few actual cases. But ineffective does not mean innocuous. Section 7491 …

The Phoenix And The Perils Of The Second Best: Why Heightened Appellate Deference To Tax Court Decisions Is Undesirable, Steve R. Johnson

Articles by Maurer Faculty

In our judicial structure, both courts of general jurisdiction and specialized courts are empowered to adjudicate federal income tax controversies. A proper relationship among those courts has proved difficult to forge and maintain. Absent an enduring intellectual and political consensus, institutional arrangements have been subject to recurring question and challenge.

Targets Missed And Targets Hit: Critical Tax Studies And Effective Tax Reform, Steve R. Johnson

Articles by Maurer Faculty

No abstract provided.

The Taxpayer's Third Personality: Comments On Redlark V. Commissioner, William D. Popkin

Indiana Law Journal

No abstract provided.

The Excludability Of Employment Discrimination Awards Under Code Section 104(A)(2) After Burke V. United States And Commissioner V. Schleier, Leandra Lederman

Articles by Maurer Faculty

No abstract provided.

"Civil"Lzing Tax Procedure: Applying General Federal Learning To Statutory Notices Of Deficiency, Leandra Lederman

Articles by Maurer Faculty

Tax procedure has been rather isolated from the main currents of civil procedure. Using the statutory notice of deficiency as an exemplar, the article explores how viewing tax procedure issues from the perspective of general civil litigation can facilitate procedural regularity and foster fairness to United States Tax Court contestants. The statutory notice is the document by which the IRS forewarns a taxpayer of impending assessment of tax greater than the amount reported on the taxpayer's return. The article identifies three functions of the notice and their general civil litigation analogues. First, like legal process, it provides the taxpayer with …

Fog, Fairness, And The Federal Fisc: Tenancy-By-The-Entireties Interests And The Federal Tax Lien, Steve R. Johnson

Articles by Maurer Faculty

No abstract provided.

The Morality Of Money: American Attitudes Toward Wealth And The Income Tax, Marjorie E. Kornhauser

Indiana Law Journal

No abstract provided.

Redemptions Incident To Divorce: Reconciling Section 1041 And General Tax Principles, Leandra Lederman

Articles by Maurer Faculty

No abstract provided.