Law Commons^™

Local Tax Incentives And Behavior Of Foreign Enterprises: Evidence From A Large Developing Country, Jing Xing, Wei Cui, Xi Qu

All Faculty Publications

We analyze how profit reporting and investment behavior of foreign enterprises respond to local tax incentives in China, a large developing country. Using firm-level data between 2000 and 2013 from China’s industrial enterprise survey, we first provide strong evidence for tax competition among Chinese cities (especially cities within the same province) over the average effective income tax rate. We then find that, despite stringent capital controls, both reported pre-tax profits and investment of foreign firms respond strongly to local tax incentives, suggesting that subnational tax competition in China is oriented towards both mobile profits and real resources.

The Economics Of American Higher Education In The New Gilded Age, Paul Campos

Publications

No abstract provided.

The Elephant Always Forgets: Tax Reform And The Wto, Reuven S. Avi-Yonah

Law & Economics Working Papers

The “Tax Cuts and Jobs ACT” (TCJA) enacted on December 22, 2017, includes several provisions that raise WTO compliance issues. At least one such provision, the Foreign-Derived Intangible Income (FDII) rule, is almost certain to draw a challenge in the WTO and is likely to lead to another US loss and resulting sanctions. This outcome would be another addition to the repeated losses suffered by the US for export subsidies from the 1970s to 2004, which led to the imposition of sanctions and the ultimate repeal of the offending regime. The important question for 2018 and beyond is whether the …

The Offshore Tax Enforcement Dragnet, Shu-Yi Oei

Faculty Scholarship

Taxpayers who hide assets abroad to evade taxes present a serious enforcement challenge for the United States. In response, the United States has developed a family of initiatives that punish and rehabilitate non-compliant taxpayers, raise revenues, and require widespread reporting of offshore financial information by financial institutions and taxpayers. Yet, while these initiatives help catch willful tax cheats, they have also adversely affected immigrants, Americans living abroad, and “accidental Americans.”

This Article critiques the United States’ offshore tax enforcement initiatives, such as the Foreign Account Tax Compliant Act and the Internal Revenue Service’s offshore voluntary disclosure programs. It argues that …

The Constitutionality Of A National Wealth Tax, Dawn Johnsen, Walter E. Dellinger Iii

Faculty Scholarship

No abstract provided.

The Constitutionality Of A National Wealth Tax, Dawn Johnsen, Walter Dellinger

Faculty Scholarship

Economic inequality threatens America’s constitutional democracy. Beyond obvious harms to our nation’s social fabric and people’s lives, soaring economic inequality translates into political inequality and corrodes democratic institutions and values. The coincident, relentless rise of money in politics exacerbates the problem. As elected officials and candidates meet skyrocketing campaign costs by devoting more and more time to political fundraising—and independent expenditures mushroom—Americans lose faith and withdraw from a system widely perceived as beholden to wealthy individuals and corporate interests.

The United States needs innovative approaches to help rebuild foundational, shared understandings of American democracy, the American Dream, and opportunity and …

Determining An Asset's Tax Basis In The Absence Of A Meaningful Transfer Tax Regime, Jay A. Soled, Richard L. Schmalbeck

Faculty Scholarship

Until recently, in those circumstances where there was a valuation range with respect to a particular asset, executors faced a choice: among estates subject to the estate tax, declaring a high value would increase the estate tax liability; however, due to the Internal Revenue Code's "basis equal to fair market value" rule applicable at death, declaring a low value would expose heirs to a greater capital gains tax on subsequent asset disposition. Because the estate tax rates were higher and that tax was immediate (as opposed to deferred until a later sale by the heir), executors typically minimized asset values, …

Tax As Part Of A Broken Budget: Good Taxes Are Good Cause Enough, Stephanie Mcmahon

Faculty Articles and Other Publications

The federal budget is a myth. Despite being a myth, Congress uses the budget to limit its choices by linking its revenue-raising and spending powers under a federal debt ceiling. Through its self-imposed limits, Congress puts tremendous pressure on how it calculates its budget, and that calculation generally assumes any tax provisions will raise revenue when the law becomes effective. However, many tax provisions require additional direction to ensure they operate as the budgetary process expects. That task falls to the Treasury Department and the Internal Revenue Service (IRS) as a bureau of the Department. Consequently, limiting the production of …

The Up-C Revolution, Gregg D. Polsky, Adam H. Rosenzweig

Scholarly Works

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange …

Taxing Litigation: Federal Tax Concerns Of Personal Injury Plaintiffs And Their Lawyers, Gregg Polsky

Scholarly Works

This Article addresses the federal tax concerns ofpersonal injury plaintiffs and the lawyers who represent them, typically on a contingencyfee basis. It explains when plaintiffs' recoveries are taxable for income and employment tax purposes and whether and how those recoveries are required to be reported by defendants to the IRS. It also discusses whether attorney's fees and costs are deductible by plaintiffs.

In addition to these tax planning and compliance issues, the Article also considers when tax evidence might be admissible. Plaintiffs and defendants often try to introduce tax evidence in an effort to increase or decrease, respectively, the amount …

Profit-Split Method: Time For Countries To Apply A Standardized Approach, Jeffery M. Kadet, Tommaso Faccio, Sol Picciotto

Articles

Now that the OECD has issued its final guidance on the action 10 profit-split method, individual countries must determine how they might consider and apply the profit-split method.

It’s true that some countries have large and well-staffed transfer pricing audit groups that include economists and other tax professionals knowledgeable in the application of transfer pricing principles and rules. However, those resources are never enough to match the legions of specialists that can be deployed by large multinational groups.

The situation is even worse elsewhere. Most countries not only have significant resource and personnel constraints, but they also simply do not …

Why Examples? Towards More Behaviorally-Intelligent Regulation, Yariv Brauner

UF Law Faculty Publications

Tax regulation authors habitually infuse regulations with explanatory examples. These examples are viewed favorably by both the government that encourages their drafting and the taxpayers who regularly rely on such examples to assist them in dealing with the notoriously complex tax rules. Despite the ubiquity of these examples, there is no published guidance for their drafting, their use, or their interpretation. The first original contribution of this article is the exposition and classification of the advantages and deficiencies in the current use of examples in tax regulations. This article is the first to question the rationale behind the ubiquitous use …

The Definitions Of Income, John R. Brooks

Georgetown Law Faculty Publications and Other Works

What is income? It’s a seemingly simple question that’s surprisingly hard to answer. Income is the basis for assigning tax burdens, for distributing transfers, and for broader normative issues of inequality and justice. Yet we lack a shared conception of income, and a pure, rigorous definition of income is impossible. In this Article I review the intellectual history of the income concept among tax and fiscal theorists to show the difficulty of the problem, and also to show that some important debates about what’s proper under an income tax can be explained instead as arguments over competing income definitions that …

Curing The Cost Disease: Legal Education, Legal Services, And The Role Of Income-Contingent Loans, John R. Brooks

Georgetown Law Faculty Publications and Other Works

The costs of both legal education and legal services have been rising steadily for decades. This is because they share a common root: the constant above-inflation growth in the cost of labor-intensive goods and services known as the “cost disease.” The cost disease story roots cost growth not in market failure or bureaucratic waste, but in natural, even healthy, economic forces—productivity and wage growth. Because the source of this cost growth is productivity growth, the nature of the cost disease is such that an economy as a whole can afford these rising costs. But in a world of deep income …

User Participation In Value Creation, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

This article examines HM Treasury’s proposal to account for the active participation of users in value creation in certain digital platforms. The first key question is whether there is any reason to believe, as HM Treasury suggests, that users only meaningfully or actively contribute to value creation in the context of certain digital platforms. The article accordingly explores the factors HM Treasury sets out for the attribution of income to active user participation, including features such as network effects, multisided business models, and a lack of physical presence in the jurisdiction of the user. It concludes that if a user …

Foreword – The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy, Michael J. Graetz

Faculty Scholarship

By lowering the corporate tax rate from 35% to 21%, the 2017 tax legislation brought the U.S. statutory rate into closer alignment with the rates applicable in other Organisation for Economic Co-operation and Development (OECD) nations, thereby decreasing the incentive for businesses to locate their deductions in the United States and their income abroad. Its overhaul of the U.S. international income tax rules simultaneously reduced preexisting incentives for U.S. multinationals to reinvest their foreign earnings abroad and put a floor on the benefits of shifting profits to low-tax jurisdictions. The 2017 legislation also added an unprecedented, troublesome lower rate for …

Effect Of Irs Nonacquiesence On Tax Planning And Reporting, Bradley T. Borden

Faculty Scholarship

No abstract provided.

2018 Erwin N. Griswold Lecture Before The American College Of Tax Counsel: Tax Policy Elegy, Martin J. Mcmahon Jr.

UF Law Faculty Publications

For over four decades there have been unrelenting calls to make the tax code “fair, simple, and efficient.” But despite nine major tax acts between 1969 and 2003, along with many less extensive tax acts, the refrain for a “fair, simple, and efficient” tax code has continued to be heard. This continuing plea is not surprising, because over the decades the tax system has evolved to ask the highest income earners to pay less in taxes, become ever more complex, and eschewed “efficiency” in favor of the allowance of an ever-increasing number of tax preferences. Tax act after tax act …