Law Commons^™

Framing Middle-Class Insecurity: Tax And The Ideology Of Unequal Economic Growth, Martha T. Mccluskey

Martha T. McCluskey

Prevailing tax discourse rationalizes growing economic inequality. Using the example of state and local economic development “subsidy wars,” this article explores how conventional tax ideas present unequal sacrifice and risk as a public responsibility, driven by economic fact rather than unjust politics. Over the last several decades, one contributing cause of inequality has been the escalating tax and spending incentives offered by local governments to attract private business investment. This competition operates to favor wealthy corporations over small businesses, without producing broad or lasting economic gains to communities, and it erodes resources for public education, infrastructure, social services, health care, …

Lipstick, Light Beer, And Backloaded Savings Accounts, Karen C. Burke, Grayson M.P. Mccouch

Grayson McCouch

The article addresses current proposals for expanding tax-preferred individual savings accounts and their implications for retirement security and tax policy. The authors argue that the yield-exempt approach embraced by the Bush Administration in its proposals is likely to generate enormous long-term revenue losses, exacerbate inequalities in income and wealth, and erode broad-based coverage under employer-sponsored retirement plans. In addition to these fiscal and distributional concerns, they conclude that the proposals pose a serious obstacle to fundamental tax reform.

Lipstick, Light Beer, And Backloaded Savings Accounts, Karen C. Burke, Grayson M.P. Mccouch

Karen Burke

The article addresses current proposals for expanding tax-preferred individual savings accounts and their implications for retirement security and tax policy. The authors argue that the yield-exempt approach embraced by the Bush Administration in its proposals is likely to generate enormous long-term revenue losses, exacerbate inequalities in income and wealth, and erode broad-based coverage under employer-sponsored retirement plans. In addition to these fiscal and distributional concerns, they conclude that the proposals pose a serious obstacle to fundamental tax reform.

Brain Drain Taxation As Development Policy, Yariv Brauner

Yariv Brauner

This article examines the potential use of taxation to generate development funds in connection with the immigration of skilled immigrants from developing into developed countries, known as the "brain drain," if designed according to the principles of the new development agenda. It explains that a tax on the brain drain that has been discussed for several decades, yet considered impossible to administer, may be administratively and legally implementable within the framework of the current international tax regime. It argues that designing such a tax according to the principles of the new development agenda, tying together the collection and use of …

A Fact Book On Proposition 2 1/2, Padraig O'Malley

Padraig O'Malley

In this age of inflation many tax reduction plans have been proposed throughout the nation. This November Massachusetts voters will vote on Proposition 2 1/2 - a tax reduction proposal sponsored by a coalition of citizens. This booklet describes the costs and benefits of Proposition 2 1/2 in an objective way, so that you can make an informed decision when you cast your vote. The University of Massachusetts' Center for Studies in Policy and the Public Interest and the Massachusetts Cooperative Extension Service believe that when you have access to unbiased information you will make better decisions and participate more …

The Massachusetts Fiscal System: Structure And Performance, Padraig O'Malley, Raymond G. Torto

Padraig O'Malley

On November 4, 1980 the citizens of Massachusetts, by a vote of 59% to 41%, resoundingly endorsed a tax reduction plan known as Proposition 2 1/2. All communities in the Commonwealth were faced with an immediate reduction in their local revenues due to the immediate cut in the excise tax that Proposition 2 1/2 called for, and up to 130 communities will have to implement a 15% reduction in their tax levies for FY 1982. Already there are protestations from many local officials that they cannot make the required tax cuts without severely reducing the level of local services. The …

Ending The Specialty Hospital Wars: A Plea For Pilot Programs As Information-Forcing Regulatory Design, Frank Pasquale

Frank A. Pasquale

This chapter focuses on the need for more targeted assessment of the impact of market forces on communities. Pilot programs encourage experimentation in the delivery system without risking widespread disruption of care for the uninsured and emergency services. The Center for Medicare & Medicaid Services (CMS) has already embraced the idea of pilot programs in other contexts, and they could be especially appropriate if specialty hospitals were permitted in markets where general hospitals had a demonstrably poor record of community service. In such markets, cross-subsidization is probably already low, and specialty hospital threats to it are not as much of …

Partisan Politics And Income Tax Rates, William E. Foster

William E Foster

With income tax reform dominating so much of the current political discourse, now is an optimal time for tax scholars to reflect on the lessons and trends from a century of legislative tinkering with the primary revenue-generating device in the United States. Tax rate changes do not occur in a vacuum, and this article explores one increasingly prominent and often overlooked ingredient in the mixture of variables that can produce or inhibit tax reform―partisan politics. It does so by comparing individual income tax rates with partisan control of federal political bodies. This article reviews majority party status in the House …

Democracy, Sovereignty And Tax Competition: The Role Of Tax Sovereignty In Shaping Tax Cooperation, Diane M. Ring

Diane M. Ring

This paper considers the question of how sovereignty shapes arguments over the merits of tax competition and how sovereignty influences the design of responses to tax competition. Part I provides a basic overview of sovereignty concepts, in particular their relevance to a nation-state desirous of control over tax policy. Part II defines tax competition, identifies the different kinds of states involved, reviews the emergence of the OECD project to limit harmful tax competition, and traces the EU experience with tax competition. Part III explores the normative grounds for challenging tax competition and the role of sovereignty in shaping and limiting …

E Tax: The Flat Tax As An Electronic Credit Vat, Daniel S. Goldberg

Daniel S. Goldberg

The article builds on the Hall-Rabushka Flat Tax and proposes a consumption tax called the “E Tax,” which is an electronically collected credit invoice VAT. The Hall-Rabushka Flat Tax is a two-tier consumption tax that is based on a subtraction method VAT. The Hall-Rabushka nuance, however, allows a deduction for wages as if they were purchases of materials by the employer. Wage earners would be taxed on those wages at rates that could be set as graduated or flat, with or without a zero rate or bracket amount and with or without personal exemptions and deductions. Hall and Rabushka proposed …

The Aches And Pains Of Transition To A Consumption Tax: Can We Get There From Here?, Daniel S. Goldberg

Daniel S. Goldberg

This article discusses probably the most significant obstacle to the adoption of a consumption tax: the negative effects on existing wealth that the transition from the income tax to most forms of a consumption tax would have. The Congressional Budget Office in its 1997 study posed the question, “How to Get There from Here.” The difficulty with transition and the changes in the tax law since the CBO study, however, prompt the more basic question: “Can we get there from here?” This article deals with this question by examining the effects of transition on existing wealth under a variety of …

The "Illegal Tax", Francine J. Lipman

Francine J. Lipman

Almost fifty years ago in 1965, on the steps of the State Capital in Montgomery, Alabama, Dr. Martin Luther King, Jr., asked a crowd of twenty-five thousand "How long will prejudice blind the visions of men, darken their understanding, and drive bright-eyed wisdom from her sacred throne?" The crowd, celebrating the completion of the five-day, twenty-five mile march from Selma to Montgomery and their First Amendment rights encouraged Dr. King to "speak, speak." And he did answering his own question with poetry, faith, and optimism, "How long? Not long, because the arc of the moral universe is long, but it …

Using The Law To Reduce Systemic Risk, Bernard S. Sharfman

Bernard S Sharfman

The recently enacted Dodd-Frank Act will have a major impact on how the financial sector operates. For example, the Act will prohibit banking entities from engaging in the ‘proprietary trading” of financial instruments unrelated to customer-driven business. Surely, this and other provisions found in the Act will help reduce the financial sector’s proclivity for creating systemic risk.

However, the approach taken in the Act to reduce systemic risk is incomplete. The problem is that it is backward-looking. The Act does not take into consideration that, if history is any guide, financial innovation will lead to the development of new financial …

Like Water For Energy: The Water-Energy Nexus Through The Lens Of Tax Policy, Roberta F. Mann

Roberta F Mann

Water is essential for life. Inadequate potable water supplies lead to poverty, disease, starvation, and civil strife. Climate change is likely to put more pressure on the world’s supply of fresh water. Rising sea levels will introduce salt into some fresh water systems. As high mountain snow cover and glaciers decline, they will store less fresh water. As regions heat up, droughts will become more persistent. Producing energy uses water. How much water is used depends on the source of the energy. Yet in the rush to transition to a renewable energy economy, policy makers have paid little heed to …

Mlea Presentation: Moving Beyond The Dodd-Frank Act: Reducing Systemic Risk By Cooling Wall Street's Bonus Culture, Bernard S. Sharfman

Bernard S Sharfman

Presentation given at the Midwestern Law and Economics Association annual meeting (Oct. 9, 2010)

Effects Of Strategic Tax Behaviors On Corporate Governance, Nicola Sartori

Nicola Sartori

This paper addresses agency tensions and conflicts that may emerge between managers (agents) and shareholders (principals) as a result of aggressive tax planning strategies adopted by publicly held corporations. The interactions between corporate governance and taxation are bilateral and biunique: in fact, on one side, the manner in which corporate governance rules are structured affects the way a corporation fulfills its tax obligations; on the other side, the way tax designs (from the government perspective) and related tax strategies (from the corporation perspective) are planned influences corporate governance dynamics. This article investigates such bilateral relationship limiting the analysis to the …

Saving Private Ryan's Tax Refund, Francine J. Lipman

Francine J. Lipman

Sergeant Horvath: This time the mission IS a man. Saving Private Ryan (1998)

Almost two million men and women serve the United States as enlisted personnel in the Army, Navy, Marines and Air Force. This essay will examine certain tax provisions unique to members of the armed forces and suggest a sweeping procedural change to save Private Ryan's tax refund. The proposed change is structured to better serve the unique demographics of the targeted taxpayers. A threshold issue when designing a tax benefit should be "Who is the targeted taxpayer?" Thus, the essay begins with a review of the demographics …

More Private Equity, Less Government Subsidy, And More Tax Efficiency In Urban Revitalization, Roger M. Groves

Roger M. Groves

MORE PRIVATE EQUITY, LESS GOVERNMENT SUBSIDY, AND MORE TAX EFFICIENCY IN URBAN REVITALIZATION: Modeling Profitable Philanthropy and Investment Incentives In hopes of revitalizing depressed urban areas, US tax policy has been to use tax credits as a major incentive to induce private equity re-investment. But those give away subsidies to private investors have failed to have transformative effects, and come at a price in the billions to the public treasury. This article seeks a shift in the tax policy paradigm to increase the private equity investment, while reducing tax subsidy dependence. For the philanthropic urban investor, the short term incentive …

"Can Tax Policy Stop Human Trafficking?", Diane Fahey

Diane L. Fahey

ABSTRACT

Can Tax Policy Stop Human Trafficking?

The total number of victims who are held in captivity to perform forced labor at any one time is estimated to be as high as twenty-seven million. That would be equivalent to every man, woman, and child in the states of New Hampshire, Vermont, Massachusetts, and New York being held in captivity and forced twelve to fourteen hours each day to labor in sweatshops, or toil as agricultural workers, or service sexually many customers every day with no hope that it will ever end except by death. They would live in crowded, dirty …

Ability-To-Pay And The Taxation Of Virtual Income, Adam S. Chodorow

Adam S Chodorow

Whether to tax virtual income raises a vexing question. Most people’s intuition suggests that virtual income should be exempt from tax, but the real-world economic value inherent in such income suggests otherwise. Those who have considered the question to date have attempted to justify non-taxation using either an intent-based or imputed-income approach. In this Article, I argue that neither of these approaches nor the proposals they produce are fully satisfactory. Using the ability-to-pay principle, I offer a new approach to this question, which better conforms to existing tax policy and doctrine and produces a more administrable proposal than those made …

Generous To A Fault? Fair Shares And Charitable Giving, Miranda P. Fleischer

Miranda P. Fleischer

Given the vital role that charities play in our society, it is not surprising that the tax Code encourages philanthropy by allowing a deduction for charitable gifts. What is surprising is that it treats the most generous among us less favorably than those of average generosity. This stems from one of the most puzzling limits in the Code: the cap preventing someone from claiming a charitable deduction greater than 50% of her income, even if she gives more than half her income to charity. As a result, someone generous enough to donate all her income must still pay income tax. …

Adhering To The Old Line: Uncovering The History And Political Function Of The Unrelated Business Income Tax, Ethan Stone

Ethan G. Stone

The paper examines the history of the building pressure during the 1940s the pass the UBIT and finds that the traditional explanations hide an underlying political function. As the charitable exemption became more important with the expansion of the income tax in the 1940s, it attracted new attention from both policymakers and a growing tax-shelter industry. Charities and sympathetic policymakers tried to justify a suddenly important blanket subsidy to charity on the basis of the charities exclusive dedication to good works. Tax-shelter promoters made the effort more difficult by featuring charities in roles, such as buying and leasing commercial real …

Incentive Stock Options And The Alternative Minimum Tax: The Worst Of Times, Francine J. Lipman

Francine J. Lipman

Congress enacted the Alternative Minimum Tax (AMT) to preclude high income individuals from escaping their federal income tax liabilities by artful manipulation of certain tax provisions. In recent years, increasing numbers of moderate-income taxpayers have been subject to AMT. The problem has been especially acute for technology sector employees who exercised incentive stock options (ISOs) while the market was high, sold their stock after its value fell, and found themselves owing AMT they could not afford to pay. This Essay explains the complexity of ISOs and the AMT and argues that the AMT adjustment for ISOs should not be eliminated, …

Avoiding Malpractice Traps In Noncash Charitable Contributions, Francine J. Lipman

Francine J. Lipman

Substance usually rules over form, but form is a very necessary and critical component of any tax practice. This maxim is especially true when taxpayers claim tax deductions for the FMV of their noncash charitable contributions. As the recent Tax Court decision in Hewitt v. Commissioner, 109 T.C. 258 (1997), and that decision's subsequent affirmation, 166 F.3d 332, 98-2 U.S.T.C. (CCH) P50,880 (4th Cir. 1998), demonstrate, taxpayers must follow very detailed and technical rules to substantiate deductions for charitable contributions of property. The Internal Revenue Service and the courts have confirmed that unless taxpayers (and their tax attorneys) follow the …

Heteronormativity And The Federal Tax Code, Nancy J. Knauer

Nancy J. Knauer

Proponents of same-sex marriage demand equal marriage rights as a matter of fundamental human dignity and as a means to gain certain legal benefits and protections. The ability to file joint federal income tax returns is invariably listed as one of the benefits associated with marriage. This outsider perspective contradicts the popular notion that the income tax is anti-marriage and offers a useful vantage point from which to analyze the marital provisions of the federal tax code, the treatment of the provisions in tax scholarship, and legislative proposals for "pro-family" tax reform. The joint filing provisions are just one example …

Will Refinancing An Installment Sale Obligation Trigger Recognition Of Gain?, Francine J. Lipman, James E. Williamson

Francine J. Lipman

With the recent decrease in interest rates, many real estate owners are taking the opportunity to improve their financial position by refinancing existing mortgages at the new lower rates. This most recent movement to restructure debt raises an interesting tax question: Will the refinancing of an existing installment sale debt instrument at a lower interest rate, either by changing the terms of the original instrument or by substituting a new debt instrument in place of the original, trigger immediate recognition of the balance of the previously deferred gain for income tax purposes?

How Charitable Organizations Influence Federal Tax Policy: "Rent-Seeking" Charities Or Virtuous Politicians?, Nancy J. Knauer

Nancy J. Knauer

Tax-exempt charitable organizations exert considerable influence over Congress, the Department of the Treasury, and the Internal Revenue Service in matters dealing with exemption from federal income tax and the tax deductibility of charitable contributions. This Article uses both public choice and public interest analysis to help identify various features of the charitable community and explain how exempt organizations weild political influence despite the restrictions placed on their activities under the tax code. Arguing that the influence of charitable organizations over tax policy can be explained from either a public choice or public interest vantage point, the Article concluds that the …

Improving The Principal Residence Disaster Relief Provisions, Francine J. Lipman

Francine J. Lipman

In this article, the author proposes a simple statutory solution to an inequity in the disaster relief provisions of the Internal Revenue Code. Using two hypothetical taxpayers, the paper demonstrates that similarly situated disaster-struck taxpayers may not be treated equally. She then analyzes the Service's position in this area, including a discussion of case law in which she focuses on the interactions between sections 1033 and 1034. The author then reviews legislative history to discern Congress's intent when it enacted section 1034. Finally, in her conclusion, the author sets forth a simple statutory amendment to remedy this inequity.

The Paradox Of Corporate Giving: Tax Expenditures, The Nature Of The Corporation, And The Social Construction Of Charity, Nancy J. Knauer

Nancy J. Knauer

Corporate charitable giving is big business. Fundraisers estimate that in 1992, U.S. corporations contributed $6 billion to qualified charitable organizations. Hard-pressed for funds, qualified charities actively seek and compete for corporate contributions. Fundraising literature identifies corporate giving as the last great frontier of philanthropy. Marketing literature touts corporate giving as the latest advertising and public relations technique. Both camps proclaim that corporate giving is good for business and extol the business advantages which flow from transfers to charity. In short, corporate giving means doing best by doing good. Legal scholarship ignores the way corporate giving is described, justified, and expressed …