Law Commons^™

Shining A Bright Light On The Color Of Wealth, A. Mechele Dickerson

Michigan Law Review

A Review of The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It . By Dorothy A. Brown.

A Constitutional Wealth Tax, Ari Glogower

Michigan Law Review

Policymakers and scholars are giving serious consideration to a federal wealth tax. Wealth taxation could address the harms from rising economic inequality, promote equality of social and economic opportunity, and raise the revenue needed to fund critical government programs. These reasons for taxing wealth may not matter, however, if a federal wealth tax is unconstitutional.

Scholars debate whether a tax on a wealth base (a “traditional wealth tax”) would be a “direct tax” subject to apportionment among the states by population. This Article argues, in contrast, that this possible constitutional restriction on a traditional wealth tax may not matter. If …

Tax Policy And Our Democracy, Clinton G. Wallace

Michigan Law Review

Review of Anthony C. Infanti's Our Selfish Tax Laws: Toward Tax Reform That Mirrors Our Better Selves.

Tax Havens As Producers Of Corporate Law, William J. Moon

Michigan Law Review

A review of Christopher M. Bruner, Re-Imagining Offshore Finance: Market-Dominant Small Jurisdictions in a Globalizing Financial World.

Overtaxing The Working Family: Uncle Sam And The Childcare Squeeze, Shannon Weeks Mccormack

Michigan Law Review

Today, many working parents are caught in a “childcare squeeze”: while they require two incomes just to make ends meet, they end up spending a strikingly large percentage of their income on childcare so that they can work outside the home. Worse still, some parents find themselves “squeezed out” of the market entirely, unable to earn the additional income their families require because they cannot find jobs that pay enough to offset soaring childcare expenses. This Article argues that the tax laws have played an important role in aggravating these hardships. Currently, the Internal Revenue Code treats the childcare costs …

Delegating Tax, James R. Hines Jr., Kyle D. Logue

Michigan Law Review

Congress delegates extensive and growing lawmaking authority to federal administrative agencies in areas other than taxation, but tightly limits the scope of Internal Revenue Service (IRS) and Treasury regulatory discretion in the tax area, specifically not permitting these agencies to select or adjust tax rates. This Article questions why tax policy does and should differ from other policy areas in this respect, noting some of the potential policy benefits of delegation. Greater delegation of tax lawmaking authority would allow administrative agencies to apply their expertise to fiscal policy and afford timely adjustment to changing economic circumstances. Furthermore, delegation of the …

Reviving Fiscal Citizenship, Ajay K. Mehrotra

Michigan Law Review

April 15 is a day that most Americans dread. That date is, of course, when federal and nearly all state-level individual income tax returns are due. Agonizing over the filing of income tax returns has long been a perennial part of modern American legal culture. Since the mid-1940s, when the United States first adopted a return-based mass income tax, the vast majority of Americans have been legally required to file an annual Form 1040. Over the years, taxpayers have been complaining about, procrastinating over, and generally loathing the filing of their annual tax returns. Indeed, in recent times, April 15 …

The Price Of Conflict: War, Taxes, And The Politics Of Fiscal Citizenship, Ajay K. Mehrotra

Michigan Law Review

This Review proceeds in four parts, paralleling the chronological organization of War and Taxes. It focuses mainly on the book's analysis of the leading modern American wars, from the Civil War through the global conflicts of the twentieth century, up to the recent war on terror. Part I contrasts the tax policies of the Union and Confederacy during the Civil War to show how the Lincoln Administration was able to overcome Yankee resistance to wartime tax hikes to wage a war against a Southern Confederacy that resolutely resisted any type of centralized taxation until, of course, it was too late. …

The Economic Impact Of Backdating Of Executive Stock Options, M. P. Narayanan, Cindi A. Schipani, H. Nejat Seyhun

Michigan Law Review

This Article discusses the economic impact of legal, tax, disclosure, and incentive issues arising from the revelation of dating games with regard to executive option grant dates. It provides an estimate of the value loss incurred by shareholders of firms implicated in backdating and compares it to the potential gain that executives might have obtained through backdating. Using a sample of firms that have already been implicated in backdating, we find that the revelation of backdating results in an average loss to shareholders of about 7%. This translates to about $400 million per firm. By contrast, we estimate that the …

The Theory And Practice Of Tax Reform, Lawrence Zelenak

Michigan Law Review

On January 7, 2005, President Bush-flush with recent electoral victory- issued an Executive Order creating the President's Advisory Panel on Federal Tax Reform. The Order instructed the bipartisan Panel to recommend one or more plans for major reform of the federal income tax. The president did not, however, permit the Panel to begin its work on a blank slate. Instead, the Order required (among other things) that the Panel's proposals be revenue-neutral, simpler than current law, "appropriately progressive," and supportive of homeownership and charity. Although the Order contemplated that the Panel might offer more than one tax reform plan, it …

A New Understanding Of Tax, Edward J. Mccaffery

Michigan Law Review

Perhaps we should blame it all on Mill. A great deal and possibly all of the mind-numbing complexity of America's largest and least popular tax follows from the decision to have a progressive personal income tax. Proponents wanted an individual income tax notwithstanding - indeed, in large part because of - such a tax's "double taxation" of savings. This double-tax argument is an analytic point generally attributed to Mill's classic 1848 treatise, Principles of Political Economy. Historically, much of the support for the Sixteenth Amendment, ratified in 1913, came from Southern and Midwestern, progressive, agricultural interests, who wanted, in …

The Progressive Consuption Tax Revisited, Steven A. Bank

Michigan Law Review

Over the last decade, it has become increasingly evident that our current federal income tax is too complex, too easily evaded by the wealthy, and too likely to distribute the burdens of taxation to the people least able to bear it. Several years ago, frustration with these realities led to a groundswell of reform proposals, ranging from replacing the current graduated income tax rates with "flat," or proportionate, rates to abolishing the income tax altogether in favor of a national sales tax. While this tax reform frenzy dissipated almost as quickly as it began, the seeds of discontent remain. Professor …

The Myth Of Pretax Income, Lawrence Zelenak

Michigan Law Review

What constitutes a fair distribution of the burdens of taxation among the members of a society? Even as politicians and academics vigorously debate the answer to that question, there is widespread agreement that all are asking the right question. In The Myth of Ownership, however, Liam Murphy and Thomas Nagel claim that everyone has been asking the wrong question. To ask about the fair distribution of tax burdens is to take the distribution of pretax incomes as "presumptively just," so that justice in taxation "is a question of what justifies departures from that baseline" (p. 15). But Murphy and Nagel …

An Assignment By Any Other Name: Contingent-Fee Agreements As Partial Assignments Of The Claim, Andrew P. Lycans

Michigan Law Review

In 1959, Mrs. Ethel West Cotnam of Alabama won a groundbreaking lawsuit against the Internal Revenue Service when the Fifth Circuit Court of Appeals allowed her to subtract her legal fees, paid to her lawyer on a contingency basis, from her gross income. Mrs. Cotnam sued the estate of her former employer when the administrator refused to honor the decedent's promise to pay her one-fifth of his estate if she would care for him for the rest of his life. Upon the successful disposition of this suit, the Supreme Court of Alabama awarded Mrs. Cotnam $120,000. Of that amount, $50,365.83 …

The Zen Of Corporate Capital Structure Neutrality, Herwig J. Schlunk

Michigan Law Review

It is well understood that corporate capital structure affects tax collections. Most basically, corporate interest expense is deductible. With each interest accrual, the corporate tax base shrinks. Thus, there is a broad range of circumstances in which corporate managers are encouraged by the Internal Revenue Code (the "Code") to load their corporate capital structures with debt. But there is little support for the proposition that Conpress desires corporations to adopt such debt-laden capital structures. Indeed, much tax legislation suggests congressional displeasure with the achievable degree of corporate self- integration. On the other hand, corporate equity has its charms: shareholders are …

The Tyranny Of Money, Edward J. Mccaffery

Michigan Law Review

The more things change, the more they stay the same. A human activity almost as venerable as the accumulation and opulent display of vast riches is the condemnation of the accumulation and opulent display of vast riches. People have been busily engaged at each for several millennia now. Both continue in full flower as America races into the twenty-first century with its liberal capitalist democracy ascendant around the world, its rich richer than ever, its less-rich curiously lagging behind. Yet figuring out what, exactly, is wrong with the excessive accumulation and opulent display of wealth, on the one hand, and …

The Limited Liability Company: A Catalyst Exposing The Corporate Integration Question, Susan Pace Hamill

Michigan Law Review

The rise of the domestic limited liability company (LLC) from obscurity to its present position as a viable, mainstream alternative to the corporation or partnership was met with enormous enthusiasm by the business community and the practicing bar. First introduced by the State of Wyoming in 1977 and recognized by the Internal Revenue Service (IRS) as a partnership for federal income tax purposes in 1988, the LLC offers for the first time a domestic entity that combines the tax advantages of a partnership with limited liability protection for all members, an advantage commonly associated with corporations. The advantages of the …

An Economic And Political Look At Federalism In Taxation, Daniel Shaviro

Michigan Law Review

Part I of this article examines the reasons for preferring locationally neutral taxes and explains the basic tension between locational neutrality and state and local autonomy in taxation. Part II examines the federal judicial check on state and local taxation, which often relies on a principle barring discrimination against outsiders or interstate commerce. Part III explores the need for a broad federal judicial check by examining state and local governments' reasons for imposing (or avoiding) locationally distortive taxes, the countervailing benefits of allowing such governments broad autonomy in taxation, and Congress' willingness to strike down locationally distortive taxes under its …

Fighting Exclusion From Televised Presidential Debates: Minor-Party Candidates' Standing To Challenge Sponsoring Organizations' Tax-Exempt Status, Gregory P. Magarian

Michigan Law Review

This Note argues that courts should recognize minor-party presidential candidates' standing to challenge the section 50l(c)(3) tax-exempt status of organizations sponsoring televised debates that exclude minor-party candidates. Part I situates the issue within the context of the Supreme Court's standing jurisprudence and concludes that the validity of a third-party tax-status challenge by an aggrieved minor-party presidential candidate remains an open question. Part II analyzes the Second and District of Columbia Circuits' decisions and concludes that the Second Circuit's approach properly interprets the Supreme Court's standing doctrine and correctly resolves the particular arguments which both courts consider. Part III first demonstrates …

Rolling Down The Curtain On "Roll-Ups": The Case For Federal Legislation To Protect Limited Partners, Kenneth R. Hillier

Michigan Law Review

This Note examines roll-ups and the lack of alternatives available to reluctant limited partners. Part I focuses on existing judicial remedies for limited partners, such as injunctions and actions for damages, and explains why these courses of action provide inadequate protection. This Part then reviews recent attempts at statutory protection and points out the shortcomings of these remedies. Part II examines safeguards afforded analogously situated corporate shareholders and sets forth arguments why limited partners should receive similar protection. After demonstrating the need for legislation, Part III suggests a workable structure for this statutory protection. Then, the Note discusses the relative …

Realization, Recognition, Reconciliation, Rationality And The Structure Of The Federal Income Tax System, Patricia D. White

Michigan Law Review

There are a few structural requirements that are necessarily common to any tax system. In Part I of this article I examine those requirements. I show that by isolating the necessary structure of a tax system from its particular content or goals, we can better understand the role played within the federal system of certain of its most characteristic features. In particular, I trace the function of the realization requirement for the recognition of income and distinguish it from another sort of function that could lead to the recognition of income within an income tax system. This second function is …

A Comprehensive Attack On Tax Deferral, Mary Louise Fellows

Michigan Law Review

This article explores the operation of T ARET and demonstrates that it produces economic neutrality and fairness among taxpayers, while simplifying the tax system by eliminating the need for provisions designed to reduce deferral advantages or ameliorate the inequities created by the realization-event rule. Finally, even if one decides that TARET should not be implemented, considering its operation provides a useful and quite different perspective on tax policy and taxing issues. In Simons' words, exploring the T ARET model allows us "to consider fruitfully the problem of bettering the system of presumptions."

Part I establishes the foundation for the time-adjustment …

Omnibus Taxpayers' Bill Of Rights Act: Taxpayers' Remedy Or Political Placebo?, Creighton R. Meland Jr.

Michigan Law Review

This Note examines whether the bill, as drafted, addresses the problems which spawned it. It anticipates the bill's effects on existing law and identifies areas where the bill would likely create new problems in the administration of the federal tax laws. It further identifies areas where the bill would solve problems. This Note concludes that (1) the bill's audit provisions will not significantly expand taxpayer rights, and may in fact disrupt the audit process; (2) except for safeguards for installment agreements, the bill's attempts to reform IRS collections procedures will not achieve its intended objectives; and (3) the bill's damages …

What Has Happened To The Tax Legislative Process?, Pamela Brooks Gann

Michigan Law Review

A Review of Showdown at Gucci Gulch: Lawmakers, Lobbyists and the Unlikely Triumph of Tax Reform by Jeffrey H. Birnbaum and Alan S. Murray

The Rhetoric Of The Anti-Progressive Income Tax Movement: A Typical Male Reaction, Marjorie E. Kornhauser

Michigan Law Review

This article examines the arguments against progressivity and the supporting philosophic premises behind the mask of rhetoric. It neither treats exhaustively nor demolishes the legitimacy of the arguments or the underlying philosophy. Part I briefly summarizes the major arguments against progressivity. Part II examines the economic argument, its underlying assumptions, and its limitations. Part III examines the neoconservative philosophy which underlies the justification for a flat tax and contrasts it with an alternative feminist vision of people and society, which provides strong justification for progressive taxation.

Part IV concludes that there is a strong case for progressive taxation based not …

Patrons Despite Themselves: Taxpayers And Arts Policy, Michigan Law Review

Michigan Law Review

A Review of Patrons Despite Themselves: Taxpayers and Arts Policy by Alan L. Feld, Michael O'Hare, and J. Mark Davidson Schuster

L. Hart Wright -- Bibliography, Elizabeth Gaspar Brown

Michigan Law Review

A Bibliography of L. Hart Wright

Irs Denials Of Charitable Status: A Social Welfare Organization Problem, Michigan Law Review

Michigan Law Review

This Note argues that the courts and the Service should recognize social welfare organizations as charitable and, consequently, contributions to such organizations should be tax deductible. Part I describes the Service's position and sets forth the statutory arguments supporting it. Part II raises two objections to the Service's position: (1) the distinction between social welfare organizations and charitable organizations lacks an adequate statutory justification, and (2) this distinction produces unpredictable and arbitrary results. Part III proposes that all social welfare organizations be accorded charitable status under subsection 50l(c)(3). This proposal would eliminate the arbitrary results now reached by the Service, …

An Essay On The Conceptual Foundations Of The Tax Benefit Rule, Patricia D. White

Michigan Law Review

My aim in this essay is to explore the foundations of the tax benefit notion. My strategy is simple, but it is probably best to state it explicitly at the outset. I begin with a straightforward and uncontroversial example of the application of the "inclusionary aspect" of the tax benefit rule. Using it as a paradigm, I try to discern why the law deems it appropriate to increase a taxpayer's taxable income. Next I examine the account of the tax benefit rule given by the Supreme Court in Hillsboro to see if it is consistent with the paradigm. I conclude …

The Internal Revenue Service's "Hart Wright Method", Mortimer Caplin

Michigan Law Review

A Tribute to L. Hart Wright