Tax Law Commons^™

Putting The Reign Back In Sovereign, Allison Christians

Pepperdine Law Review

In its first term, the Obama administration enacted two pieces of legislation, each designed to protect an increasingly vulnerable income tax base, and each of which had the potential to set a new and unprecedented course for no less than the regulation of the global economy by the nation-state. The first, the Foreign Account Tax Compliance Act (FATCA), sought to end global tax evasion through tax havens. The second, a little-noticed two-page addendum to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), sought to end the contribution of American multinationals to corruption in governance by codifying the transparency ...

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 ...

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

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 ...

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 ...

The Globalization Of Corporate Tax Reform, Steven A. Bank

Pepperdine Law Review

With the growth of multinational corporations and its effect on corporate tax revenues, it is not surprising that international tax reform is a major part of President Obama’s Framework for Business Tax Reform as he begins his second term. Noticeably missing from this and other discussions of the major structural reform proposals, however, is any mention of the influence and importance of international corporate tax reform efforts. Although the concern over corporate tax evasion is especially pronounced in the U.S., the "decentering" of multinational corporations and corporate tax revenues is by no means an exclusively American problem. Around ...

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 ...

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 ...

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 ...

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

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” that ...

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 ...

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 ...

The Impact On Maryland's Budget Of Allowing Same-Sex Couples To Marry, M.V. Lee Badgett, Amanda K. Baumle, Shawn Kravich, Adam P. Romero

University of Maryland Law Journal of Race, Religion, Gender and Class

No abstract provided.

Justifications And Proportionality: An Analysis Of The Ecj's Assessment Of National Rules For The Prevention Of Tax Avoidance, Maria Hilling

Maria Hilling

This article deals with the limitations imposed by the Treaty on the Functioning of the European Union (TFEU) on Member States´right to prevent tax avoidance and protect national tax bases. It focuses on some recent ECJ case law developments. One central question concerns the implications of the legal situation for Member States´ tax legislators.

Kansas V. Prairie Band Potawatomi Nation: Undermining Indian Sovereignty Through State Taxation, Jesse K. Martin

University of Maryland Law Journal of Race, Religion, Gender and Class

No abstract provided.

Through A Latte, Darkly: Starbucks' Window Into Stateless Income Tax Planning, Edward D. Kleinbard

University of Southern California Law and Economics Working Paper Series

This paper uses Starbucks Corporation, the premier roaster, marketer and retailer of specialty coffee in the world, as an example of stateless income tax planning in action. “Stateless income” comprises income derived for tax purposes by a multinational group from business activities in a country other than the domicile of the group’s ultimate parent company, but which is subject to tax only in a jurisdiction that is neither the source of the factors of production through which the income was derived, nor the domicile of the group’s parent company.

The paper reviews both Starbucks’ recent U.K. tax ...

Internal Revenue Code Section 4061(B), Manufacturers' Excise Tax On Parts And Accessories Of Motor Vehicles, Jerome L. Bleiweis

Pepperdine Law Review

No abstract provided.

From Here To Eternity: The Folly Of Perpetual Trusts, Lawrence W. Waggoner

University of Michigan Program in Law and Economics

Trusts that can operate for as many as a thousand years or even forever, typically for the benefit of the settlor’s descendants living from time to time, now and in the future, are all the rage in banking and estate-planning circles. Before 1986, when Congress passed the federal generation-skipping transfer tax (GST tax), settlors had little incentive and probably little desire to establish perpetual trusts, even though they were permitted to do so under the law of Wisconsin, South Dakota, or Idaho. The GST tax created an artificial incentive for the wealthy to establish such trusts.

The origin of ...

Practicalities And Peculiarities: The Heightened Due Process Standard For Notice Under Jones V. Flower, Emily Riley

Journal of the National Association of Administrative Law Judiciary

No abstract provided.