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Full-Text Articles in Tax Law
Comparing Capital Income And Wealth Taxes, Ari Glogower
Comparing Capital Income And Wealth Taxes, Ari Glogower
Pepperdine Law Review
As part of the Pepperdine Law Review Symposium The Impact of the 2017 Tax Act on Income and Wealth Inequality: Lessons for 2020 and Beyond, this Essay compares two reform directions to rebuild the progressive tax system: an improved capital income tax—which would eliminate the benefit from deferring gains until a sale—or a wealth tax. The Essay first introduces the concept of a “rate-equivalent” wealth or capital income tax as a way to assess reform alternatives consistently and to identify the assumptions as to how the reforms would be structured. For any chosen capital income tax (or wealth tax) reform, …
The Transfer Pricing Regs Need A Good Edit, Susan C. Morse
The Transfer Pricing Regs Need A Good Edit, Susan C. Morse
Pepperdine Law Review
The U.S. government has broad discretion to change the transfer pricing regulations as they apply to corporate multinationals, and these regulations need changing because they give too much leeway to taxpayers and will continue to serve an important function in the division of international tax jurisdiction regardless of the fate of pending reform proposals. Xilinx and Veritas illustrate that taxpayers whose transfer pricing is challenged can successfully defend themselves using arm’s length definitions in the government’s own regulations. U.S. tax administrators should write revised transfer pricing rules that afford taxpayers less contracting freedom. They should incrementally add formulaic elements to …
A Proposal For The Tax Treatment Of Interest In A Territorial System, Martin A. Sullivan
A Proposal For The Tax Treatment Of Interest In A Territorial System, Martin A. Sullivan
Pepperdine Law Review
To prevent negative effective tax rates in a territorial system, a multinational corporation’s deductions for interest expense attributable to foreign profits must be disallowed. To determine what portion of worldwide interest is foreign, it is commonly suggested that interest be allocated in proportion to assets. Because it would ease administrative problems and because it would reduce the incentives to shift profits through aggressive transfer pricing, allocation of interest in proportion to gross profits would be a superior approach. Also, contrary to the usual argument, the United States should not be reluctant to unilaterally adopt interest disallowance rules because it would …
Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah
Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah
Pepperdine Law Review
The passage of the American Taxpayer Relief Act of 2012 (“ATRA”) offers an opportune moment to consider proposals for corporate and international tax reform. With the debate over individual tax rates for the income and estate tax settled for the present, the President and Congress are free to consider broader reforms. This paper will attempt to raise some proposals for US corporate and international tax reform, beginning with long-term options (a 10 year horizon), continuing with the medium term (2-5 years) and concluding with short-term options (1-2 years). The main proposals are for the US to adopt a VAT and …
Passthrough Entities: The Missing Element In Business Tax Reform, Karen C. Burke
Passthrough Entities: The Missing Element In Business Tax Reform, Karen C. Burke
Pepperdine Law Review
Reform of the U.S. corporate tax system is again on the agenda. Despite important differences, many current proposals share two common goals: (1) reducing the statutory corporate tax rate to improve U.S. international competitiveness and (2) broadening the corporate tax base by reducing or eliminating business expenditures to offset revenue losses. Given the significance of the passthrough sector and the relationship between individual and corporate taxes, however, such reforms need to be considered within a broader context. Part I of this article discusses the growing significance of the passthrough sector, which now accounts for roughly half of net business income. …
Who Killed The Rule Against Perpetuities?, Grayson M. P. Mccouch
Who Killed The Rule Against Perpetuities?, Grayson M. P. Mccouch
Pepperdine Law Review
During the last two decades more than half the states have either abolished or substantially weakened the traditional rule against perpetuities. The increased demand for perpetual trusts is widely attributed to the ability of such trusts to avoid federal wealth transfer taxes. Furthermore, recent empirical studies confirm a correlation between repeal of the rule against perpetuities (coupled with favorable state income tax treatment) and increased personal trust assets and average account size. This symposium article discusses the asymmetric benefits and drawbacks of perpetual trusts and concludes that the decline of the rule against perpetuities cannot be explained solely in terms …
Occupy The Tax Code: Using The Estate Tax To Reduce Inequality And Spur Economic Growth, Paul L. Caron, James R. Repetti
Occupy The Tax Code: Using The Estate Tax To Reduce Inequality And Spur Economic Growth, Paul L. Caron, James R. Repetti
Pepperdine Law Review
Inequality has been increasing in the United States. We should care about this increase because inequality contributes to a variety of adverse social consequences that persist across generations. There is also substantial empirical evidence that inequality has a long-term negative impact on economic growth. For many decades, federal tax policy has played an important role in reducing inequality, although the impact of federal taxes on inequality has waxed and waned depending on the focus of elected officials. We argue that the estate tax is a particularly apt vehicle to reduce inequality because inheritances are a major source of wealth among …
Distracted From Distraction By Distraction: Reimagining Estate Tax Reform, Edward J. Mccaffery
Distracted From Distraction By Distraction: Reimagining Estate Tax Reform, Edward J. Mccaffery
Pepperdine Law Review
Recent legislation has left a gift and estate tax that will apply to far fewer than 1% of all decedents each year. This Article, prepared for a symposium on Tax Advice for the Second Obama Administration, argues that the estate tax has become largely irrelevant, except ironically as a spur to the creation and perpetuation of dynastic wealth via 'Dynasty Trusts.' The tax no longer meets any compelling policy rationale, such as raising revenue, 'backing up” the income tax, injecting progression into the tax system, or breaking up large concentrations of wealth. It is time to move on, and to …
Access To Tax Injustice, Francine J. Lipman
Access To Tax Injustice, Francine J. Lipman
Pepperdine Law Review
Every morning, Monday through Friday, school children across the United States raise their voices in unison and pledge allegiance to America, with liberty and justice for all. America, in turn, pledges to these children and the world that it is a nation of liberty, justice, and laws. Laws drafted by representatives intended to follow through on America’s promise of liberty and justice for all. Yet for more than 16 million of these children and 30 million adults living in poverty in 2011, America does not deliver on its promise of justice. In a recent global study, America ranked 27th out …
Tax Reform And The American Middle Class, Kirk J. Stark, Eric M. Zolt
Tax Reform And The American Middle Class, Kirk J. Stark, Eric M. Zolt
Pepperdine Law Review
This essay examines how concern for the economic plight of the middle class should influence debates over federal tax reform. It begins with an overview of data on two key developments in American economic life over the past quarter century. The first is the deteriorating economic position of the middle class, a long-term trend illustrated by stagnant income growth, job polarization, and more limited economic opportunities as compared to earlier eras. The second development is the declining federal tax burden of the American middle class, including historically low average tax rates and relative tax shares, not just for the federal …
The 535 Report: A Pathway To Fundamental Tax Reform, Dorothy A. Brown
The 535 Report: A Pathway To Fundamental Tax Reform, Dorothy A. Brown
Pepperdine Law Review
This Essay argues that current tax policies that include special tax rates, loopholes and deductions disadvantage most Americans in favor of income received by a select few – especially members of Congress. The majority of taxpayers of color as well as white taxpayers are not eligible for the loopholes and special tax breaks that currently exist in our tax laws. Tax reform that eliminates special deals as a means to lowering tax rates for all is the best way forward towards a fairer and simpler tax system. Such reform is unlikely to occur in the absence of a “focusing event” …
Tax Advice For The Second Obama Administration, Paul L. Caron
Tax Advice For The Second Obama Administration, Paul L. Caron
Pepperdine Law Review
Twenty-five of the nation’s leading tax academics, practitioners, journalists, and public intellectuals gathered in Malibu, California on the Friday before President Obama’s second inauguration to plead for tax reform. The papers published in this issue of the Pepperdine Law Review provide very different prescriptions for America’s tax ills. But there is a unanimous diagnosis that the country’s tax system is sick indeed. A re-elected president’s inauguration offers a particularly propitious moment to put politics aside and embark on a treatment plan. If our lawmakers are interested in healing our tax wounds, the ideas presented in these pages offer a good …