Law Commons^™

Congressional Power To Institute A Wealth Tax, Will Clark

Notre Dame Law Review Reflection

Over the last few years, several high-profile politicians have pushed to impose a federal “wealth tax.” For example, a recent bill introduced in the Senate would create a two percent tax on the value of assets between fifty million and one billion dollars, plus a higher percentage on wealth valued over one billion dollars. The proponents of the tax argue that it would reduce the growing wealth inequality in the United States, while opponents say that it would disincentivize investment in the American economy.

Policy arguments, however, are only relevant if the federal government has the authority to institute such …

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

Notre Dame Law Review

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 …

Valuation As A Challenge For Tax Administration, Leandra Lederman

Notre Dame Law Review

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 …

Dynamic Property Taxes And Racial Gentrification, Andrew T. Hayashi

Notre Dame Law Review

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.

Advocating A Carryover Tax Basis Regime, Richard Schmalbeck, Jay A. Soled, Kathleen Delaney Thomas

Notre Dame Law Review

For close to a century, an important (but unfortunate) feature of the Internal Revenue Code has been a rule that the tax basis of any inherited asset is made equal to its fair market value at the time of the decedent’s death. Notwithstanding the substantial revenue losses associated with this rule, Congress has retained it for reasons of administrative convenience.

But from three different vantage points, pressure has been mounting to change what is commonly referred to as the “step-up in basis rule.” First, politicians and commentators have historically tied the step-up in basis rule to the estate tax on …

The Equitable Anti-Injunction Act, Erin Morrow Hawley

Notre Dame Law Review

The Anti-Injunction Act of 1867 (AIA or the Act) has never been more important. Originally enacted to expedite the collection of revenue-raising taxes, courts and scholars have for years assumed that the statute imposes a jurisdictional bar on any pre-enforcement challenge to a tax. On this interpretation, taxpayers subject to an invalid tax have two choices only: comply or pay the tax and pursue a refund. Read this way, the Act is a marked departure from the general rule that pre-enforcement challenges are permissible so long as justiciability requirements are met. And it imposes a marked burden on aggrieved taxpayers …

Nfib V. Sebelius And The Transformation Of The Taxing Power, Barry Cushman

Notre Dame Law Review

In National Federation of Independent Business v. Sebelius, Chief Justice Roberts wrote for a majority of five Justices in holding that the “shared responsibility payment” required by the Patient Protection and Affordable Care Act (“ACA”) constituted an imposition of a “tax” rather than a “penalty.” Thus, even though the Chief Justice and four other Justices had concluded that the provision was not a legitimate exercise of the commerce power, the Court held that it was a valid exercise of the taxing power.

The origin of the distinction between taxes and penalties in taxing power jurisprudence is found in the 1922 …