Law Commons^™

Tax Deregulation, Steven Dean

Faculty Scholarship

Deregulation has played both the hero and the villain in recent years. This Article evaluates the impact of deregulation on what may be the single most economically important regulatory regime: the income tax. In order to accomplish this goal, it applies the concepts of fiscal arbitrage and compliance spirals to three deregulatory tax reforms. Compliance spirals describe an enforcement dynamic in which the regulator encourages compliance through a system of rewards for cooperation and punishment for noncooperation. Fiscal arbitrage describes policy measures that exploit cognitive biases and other anomalies to deliver political benefits by using minimal political capital. The combination …

Misguided Relief: The Real Property Tax Addition To The Standard Deduction, Alan L. Feld

Faculty Scholarship

The push to use federal money for benevolent purposes occasionally produces more cost than benefit, particularly when the outlay comes in the form of taxes forgiven. The Housing Assistance Tax Act of 2008 added a supplement to the basic standard deduction. A nonitemizing taxpayer may claim a deduction for real property taxes paid, up to $500, $1,000 in the case of a joint return. Initially, the change applied only to 2008, but subsequent legislation extended its life through 2009, and pending legislation would make it a permanent part of the Code. Although well intentioned, the real property tax provision makes …

Fairness In Rate Cuts In The Individual Income Tax, Alan L. Feld

Faculty Scholarship

The Economic Recovery Tax Act of 1981 (the 1981 Act) made significant changes in federal income, estate, and gift taxation, touching virtually every taxpayer.¹ The centerpiece of the 1981 Act consisted of rate reductions in the individual income tax.² These reductions, said to average 23%, served a number of different but related objectives. First, those in favor of the tax cuts posited that all taxpayers would benefit from equitable, across-the-board reductions in an excessive and growing tax burden.³ Related to this objective was an anticipated reduction in the size of the federal government, because less tax money …

Artists, Art Collectors And Income Tax, Alan L. Feld

Faculty Scholarship

The federal income tax law treats artists and art collectors differently. Similar transactions concerning artworks produce disparate income tax results, depending on whether they involve the artist or the collector. On balance, these results seem to favor the collector over the artist. But notwithstanding the dismay of some artists and their advocates, the differences in result flow, in the main, from the differences in the source of the taxpayer's investment in the work.

The collector buys the work with after-tax income. Any gain is properly treated as an investment return and is eligible for capital gain benefits.' The collector, however, …

Fiscal Jurisdiction And Accrual Basis Taxation: Lifting The Corporate Veil To Tax Foreign Company Profits, William W. Park

Faculty Scholarship

"No rules of international law exist to limit the extent of any country's tax jurisdiction." Although not yet locus classicus, this assertion summarizes a view that finds favor among academic and practicing lawyers. Even if it is admitted that a relevant nexus must exist between the taxing sovereign and the person, property, or income to be taxed, the competing jurisdictional claims of other states are seldom viewed as imposing limits on national competence. This Article will examine the conflicts among rival assertions of fiscal jurisdiction that result from attempts of capital-exporting states to tax the undistributed income of foreign companies.

Abortion To Aging: Problems Of Definition In The Medical Expense Tax Deduction, Alan L. Feld

Faculty Scholarship

Administration of the medical expense deduction has generated its share of litigation and rulings. The major areas of dispute center on two questions. By far the more important question is how to distinguish deductible medical expenses from other expenses that should be characterized as personal, living, or family expenses. The statutory definition of medical care is a broad one, encompassing amounts paid for "diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body."' ¹⁰ It also includes transportation to obtain medical care." Because normal expenses of a personal nature, …

Deductibility Of Expenses For Child Care And Household Services: New Section 214, Alan L. Feld

Faculty Scholarship

It is increasingly common to find families composed of husband, wife and young children, where both husband and wife are gainfully employed. For some, this pattern is regarded as preferable to the older "ideal" family, where the husband was the sole breadwinner and the wife cared for the children, performed household chores and perhaps engaged in social or charitable activities. Where both spouses are gainfully employed, it is often necessary for the family to employ household help to care for the children and do the housework. These expenditures are "necessary" to the gainful employment of both spouses in the sense …