Taxation-State and Local Commons^™

Keep Charitable Oversight In The Irs, Philip Hackney

Articles

Critics are increasingly calling for Congress to remove charity regulation from the IRS. The critics are wrong. Congress should maintain charity regulation in the IRS. What is at stake is balancing power between the state, charity as civil society, and the economic order. In a well-balanced democracy, civil society maintains its independence from the state and the economic order. Removing charitable jurisdiction from the IRS would blind the IRS to dollars placed in the charitable sector increasing tax and political shelters and wealthy dominance of charities as civil society. A new agency without understanding of, or jurisdiction over, tax cannot …

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

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 …

Public Good Through Charter Schools?, Philip Hackney

Articles

Should nonprofit charter schools be considered “charitable” under § 501(c)(3) of the Internal Revenue Code and be entitled to the benefits that go with that designation (income tax exemption, charitable contribution deduction, etc.)? Current tax law treats them as such; the question is whether there is a good rationale for this treatment. In addition to efficiency and equity, I consider political justice as a value in evaluating tax policy. By political justice, I mean a democratic system that prioritizes the opportunity for more people to have a voice in collective decisions (political voice equality or PVE). Thus, a tax policy …

A More Capacious Concept Of Church, Philip Hackney, Samuel D. Brunson

Articles

United States tax law provides churches with extra benefits and robust protection from IRS enforcement actions. Churches and religious organizations are automatically exempt from the income tax without needing to apply to be so recognized and without needing to file a tax return. Beyond that, churches are protected from audit by stringent procedures. There are good reasons to consider providing a distance between church and state, including the state tax authority. In many instances, Congress granted churches preferential tax treatment to try to avoid excess entanglement between church and state, though that preferential treatment often just shifts the locus of …

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

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 …

Political Justice And Tax Policy: The Social Welfare Organization Case, Philip Hackney

Articles

In addition to valuing whether a tax policy is equitable, efficient, and administrable, I argue we should ask if a tax policy is politically just. Others have made a similar case for valuing political justice as democracy in implementing just tax policy. I join that call and highlight why it matters in one arena – tax exemption. I argue that politically just tax policy does the least harm to the democratic functioning of our government and may ideally enhance it. I argue that our right to an equal voice in collective decision making is the most fundamental value of political …

The Critical Tax Project, Feminist Theory, And Rewriting Judicial Opinions, Anthony C. Infanti, Bridget J. Crawford

Articles

In this essay, the authors discuss the intellectual foundations for their co-edited book, Feminist Judgments: Rewritten Tax Opinions (2017), the first in a series of subject-matter specific volumes published in the U.S. Feminist Judgments Series by Cambridge University Press. Using only the facts and precedents in existence at the time of the original opinion, the contributors to this and other feminist judgments projects around the globe seek to show how application of feminist perspectives could impact, or even change, the holding or reasoning of judicial decisions. Underlying Feminist Judgments: Rewritten Tax Opinions is the belief that the study of taxation …

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

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 …

Lgbt Families, Tax Nothings, Anthony C. Infanti

Articles

The federal tax laws have never been friendly territory for LGBT families. Before the enactment of the federal Defense of Marriage Act (DOMA), the federal tax laws turned a blind eye to the existence of LGBT families by tacitly embracing state law discrimination against same-sex couples. When it enacted DOMA in 1996, Congress ensured that it would be able to continue to turn a blind eye to LGBT families even if one or more states were to legally recognize families headed by same-sex couples. In a real sense, LGBT families have been, and continue to be, tax outlaws.

This overt …

Putting State Courts In The Constitutional Driver's Seat: State Taxpayer Standing After Cuno And Winn, Edward A. Zelinsky

Articles

This article explores the implications of the U.S. Supreme Court’s decisions in DaimlerChrysler Corp. v. Cuno and Arizona Christian School Tuition Organization v. Winn. In Cuno and Winn, the Court held that state taxpayers lacked standing in the federal courts. Because the states have more liberal taxpayer standing rules than do the federal courts, Cuno and Winn will not terminate taxpayers’ constitutional challenges to state taxes and expenditures, but will instead channel such challenges from the federal courts (where taxpayers do not have standing) to the state courts (where they do). Moreover, municipal taxpayer standing in the federal courts, which …

Citizenship And Worldwide Taxation: Citizenship As An Administrable Proxy For Domicile, Edward A. Zelinsky

Articles

The United States' worldwide taxation of its citizens is less different from international, residence-based norms than is widely believed and is sensible as a matter of tax policy. An individual's citizenship is an administrable, if sometimes overly broad, proxy for his domicile, his permanent home. Both citizenship and domicile measure an individual's permanent allegiance rather than his immediate physical presence. Because citizenship and domicile resemble each other, and because other nations often define residence for tax purposes as domicile, the U.S. system of citizenship-based taxation typically reaches the same results as the residence-based systems of these other nations, but reaches …

State Fiscal Policies And Transitory Income Fluctuations, James R. Hines Jr.

Articles

State and local expenditure and tax revenue respond less to the business cycle than do federal spending and revenue, thereby reducing the countercyclicality of total government expenditure and revenue. This paper considers forces responsible for the cyclical pattern of state expenditure and revenue. Annual fluctuations in state personal income are associated with small changes in state spending and significant changes in tax receipts; receipt of federal grants is associated with greater state spending. Tax collections, and to a lesser degree expenditure, of larger states are more closely associated with annual income fluctuations than are the tax collections and expenditure of …

Foreword: On Publishing Anonymously, Anthony C. Infanti

Articles

In this foreword to the fall 2010 issue of the Pittsburgh Tax Review, I explain the troubling set of circumstances that led to our decision to publish one of the articles anonymously. All of the articles in this issue share a focus on suggestions for state and local tax reform in Pennsylvania. The circumstances surrounding the decision to publish this one article anonymously raise a host of questions regarding the extent to which tax professionals are free to make suggestions for tax reform without being subject to employer censorship.

Tax Incentives For Economic Development: Personal (And Pessimistic) Reflections, Edward A. Zelinsky

Articles

No abstract provided.

Rethinking Tax Nexus And Apportionment: Voice, Exit, And The Dormant Commerce Clause, Edward A. Zelinsky

Articles

The dormant Commerce Clause concept of tax nexus is best understood as a rough, but serviceable, proxy for the taxpayer's standing in the political process. This perspective leads me to defend Quill Corporation v. North Dakota and the much maligned physical presence test for tax nexus. As a matter of legislative policy, the critics of this test may be correct. However, as a matter of constitutional law, the courts should adhere to an expanded physical presence standard as Congress crafts for the long term broader nexus rules based on economic presence. Taxation is an inherently and irreducibly political matter. An …

Tax As Urban Legend, Anthony C. Infanti

Articles

In this essay, I review UC-Berkeley history professor Robin Einhorn's book, American Taxation, American Slavery. In this provocatively-titled book, Einhorn traces the relationship between democracy, taxation, and slavery from colonial times through the antebellum period. By re-telling some of the most familiar set piece stories of American history through the lens of slavery, Einhorn reveals how the stories that we tell ourselves over and over again about taxation and politics in America are little more than the stuff of urban legend.

In the review, I provide a brief summary of Einhorn's discussion of the relationship between slavery and colonial taxation, …

The Incoherence Of Dormant Commerce Clause Nondiscrimination: A Rejoinder To Professor Denning, Edward A. Zelinsky

Articles

A sound intuition animates Professor Denning's defense of the doctrinal status quo under the dormant commerce clause: the courts should not lightly abandon well-established constitutional canons. I nevertheless remain unconvinced by Professor Denning's effort to justify the long-standing interpretation of the dormant commerce clause as forbidding taxes which discriminate against interstate commerce. Whatever the historical justification for this constitutional precept, its past utility, or its visceral appeal, dormant commerce clause nondiscrimination is today doctrinally incoherent in tax contexts. The problem is not one of borderlines and close cases. Rather, at its core, the notion of dormant commerce clause tax nondiscrimination …

The Future Of The Dormant Commerce Clause: Abolishing The Prohibition On Discriminatory Taxation, Edward A. Zelinsky, Brannon P. Denning

Articles

Professor Edward A. Zelinsky, of the Cardozo School of Law, argues that "[i] t is time to abolish the dormant Commence Clause prohibition on discriminatory taxation." This is so, he writes, because "the prohibition is today doctrinally incoherent and politically unnecessary." The incoherence, Zelinsky maintains, stems from the disparate treatment by the United States Supreme Court of economically identical activities: "discriminatory taxation favoring local industries," which the doctrine prohibits, and "direct expenditures subsidizing those same industries," which it permits. It is unnecessary, Zelinsky argues, because Congress is able, and better suited, to police any state abuses. In short, "[l]ike a …

Curtailing Tax Treaty Overrides: A Call To Action, Anthony C. Infanti

Articles

During the past 25 years, Congress has with increasing frequency enacted legislation that is intended to override inconsistent provisions in U.S. tax treaties. These legislative overrides are harmful, and have been decried by our treaty partners, members of the executive branch, and commentators.

Until now, commentators have generally devoted themselves to describing and deploring legislative overrides of tax treaties, and have done no more than repeatedly call on Congress to cease enacting such legislation. Congress has ignored these pleas, and has continued to enact legislative overrides with impunity.

Given this background, the essay calls on commentators to cease pleading with …

Remedies Of Illegal Taxation, Thomas M. Cooley

Articles

Taxation is to a nation what the circulation of the blood is to he individual; absolutely essential to life. In ordinary times it is the chief burden which government imposes upon the people, and is likely, therefore, to be the greatest source of discontent. This renders it of the utmost importance that taxation should as nearly as possible be just, and also that it should appear to those who pay it to be just. Absolute justice, however, is unattainable.