Law Commons^™

Brief Of Amicus Curiae Tax Professors In Support Of Respondent In Moore V. United States, Donald B. Tobin, Ellen P. Aprill

Faculty Scholarship

Petitioners in Moore v. United States have argued to the Supreme Court that the word “incomes” in the Sixteenth Amendment authorizes only the taxation of “realized” income. Thus, they assert, a repatriation tax (referred to as MRT) in the Tax Cuts and Jobs Act is invalid because it taxes unrealized gains. While other briefs in the case explain that, as properly understood, the tax at issue taxes only realized gains, this brief counters the petitioners’ Sixteenth Amendment argument. It explains that economists, accountants, and lawyers in the early twentieth century all defined income in broad terms, embracing the definition of …

Tax Now Or Tax Never: Political Optionality And The Case For Current-Assessment Tax Reform, David Gamage, John R. Brooks

Faculty Scholarship

The U.S. income tax system is broken. Due to the realization doctrine and taxpayers’ consequent ability to defer taxation of gains, taxpayers can easily minimize or avoid the taxation of investment income, a failure that is magnified many times over when considering the ultra-wealthy. As a result, this small group of taxpayers commands an enormous share of national wealth yet pays paltry taxes relative to the economic income their wealth produces—a predicament that this Article condemns as being economically, politically, and socially harmful. The conventional view among tax law experts has assumed that the problems created by the realization doctrine …

Charitable Subsidies And Nonprofit Governance: Comparing The Charitable Deduction With The Exemption For Endowment Income, David M. Schizer

Faculty Scholarship

Charitable subsidies are supposed to encourage positive externalities from charity. In principle, the government can pursue this goal by evaluating specific charitable initiatives and deciding how much each should receive. Although the government sometimes makes this sort of fine-grained judgment, this Article focuses on two income tax rules that leave the government essentially no discretion about which charities to fund: the deduction for donations to charity ("the deduction") and the exemption of a charity's investment income ("the exemption"). With each subsidy, federal dollars flow automatically as long as charities satisfy very general criteria.

As a result, these subsidies are especially …

Foreword – The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy, Michael J. Graetz

Faculty Scholarship

By lowering the corporate tax rate from 35% to 21%, the 2017 tax legislation brought the U.S. statutory rate into closer alignment with the rates applicable in other Organisation for Economic Co-operation and Development (OECD) nations, thereby decreasing the incentive for businesses to locate their deductions in the United States and their income abroad. Its overhaul of the U.S. international income tax rules simultaneously reduced preexisting incentives for U.S. multinationals to reinvest their foreign earnings abroad and put a floor on the benefits of shifting profits to low-tax jurisdictions. The 2017 legislation also added an unprecedented, troublesome lower rate for …

Art Resale Royalty Options, Herbert I. Lazerow

Faculty Scholarship

Proposed federal law requires payments from the reseller of art to an artist when her work is resold. They can be conceptualized as a substitute for copyright royalties or for the profits of a joint venture between the artist and the collector. Application is analyzed by art type, especially multiples, place of sale, and nationality or residence of the seller, buyer, intermediary or artist, and by what constitutes a sale in a world of leases, exchanges, gifts, bequests, charitable donations, loans and casualty losses. If the base is gross sales price, is that the amount the seller receives, the amount …

Up In The Air Over Taxing Frequent Flyer Benefits: The American, Canadian, And Australian Experiences, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

Tearing Out The Income Tax By The (Grass)Roots, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

The Almost-Restatement Of Income Tax Of 1954: When Tax Giants Roamed The Earth, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

Will The Federal Income Tax Have A Bicentennial?, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

Tax Advice For The Second Obama Administration, Michael J. Graetz

Faculty Scholarship

Delivered January 18, 2013 as the keynote address at a conference cosponsored by Pepperdine Law School and Tax Analysts.

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 …

E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg

Faculty Scholarship

This report proposes replacing the income tax with an electronic, progressive consumption tax that couples a credit-method VAT (modified for wages) with a progressive wage tax. I have called this proposal e-VAT (a convenient contraction for an electronic value added tax), because it is based on a business-level-credit VAT and can be collected automatically and electronically at the point of sale.

The essential advantage of e-VAT over the Hall-Rabushka flat tax is that e-VAT’s use of a credit VAT as its foundation facilitates automatic and electronic collection of the tax. A credit VAT lends itself to electronic monitoring and auditing …

Philosophical Objection To The Optimal Tax Model, A , Linda Sugin

Faculty Scholarship

This article questions the normative power of the optimal tax model by examining assumptions made by the developer of that model, James Mirrlees' . It makes a case for moving beyond utilitarian conceptions of social welfare that are at the foundation of the optimal tax model, and that have become the dominant construct in tax policy analysis. In explaining why the Mirrlees assumptions are problematic, the Article argues for a nuanced, philosophical understanding of fairness that incorporates the role of taxation into a broader conception of a just society. A fair tax must satisfy the full range of demands that …

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 …

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

Faculty Scholarship

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 …

Taxes That Work: A Simple American Plan, Michael J. Graetz

Faculty Scholarship

In November 2005, the President's Advisory Panel on Tax Reform, appointed by President Bush to suggest options for reforming and simplifying the federal tax code, unanimously recommended two alternative plans: a "simplified income tax" (SIT) and a "growth and investment tax" (GIT). The two plans shared much in common. For example, both would: (1) Reduce the top marginal tax rate-to 33% under the SIT plan and 30% under GIT plan; (2) eliminate the alternative minimum tax (AMT); (3) replace the earned income tax credit (EITC) and refundable child credits with a "work credit"; (4) replace personal exemptions, the standard deduction, …

Computing Interest On Overpayments And Underpayments: How Difficult Can It Be? Very!, Mary A. Mcnulty, David H. Boucher, Joseph M. Incorvaia, Robert D. Probasco

Faculty Scholarship

Taxpayers often assume that the difficult part of a tax dispute is resolving the tax liability and penalties, while interest computation is fairly straightforward. In the authors' experience, however, interest determinations are as subject to controversy and prone to error as tax liability determinations. The Article explores some of the areas that taxpayers should review carefully in the process of finalizing interest computations.

- Frequent Errors. The Article reviews twelve areas in which, even though the law is settled and the facts are usually clear, the Service's interest computations frequently include mistakes. Taxpayers need to be aware of these provisions, …

The U.S. Consumption Tax: Evolution, Not Revolution, Daniel S. Goldberg

Faculty Scholarship

The article expresses the view that the current Internal Revenue Code has evolved into a hybrid income tax and consumption tax. It begins by explaining the difference between an income tax and a consumption tax and provides the backgrounds of the alternative forms of consumption tax: (1) consumed income, (2) yield exemption, and (3) point-of-sale taxation. Under the consumed income tax model of consumption tax, the individual taxpayer includes all items of income, both from labor and from capital, in its tax base, and then subtracts or deducts the portion of that income that he saves or invests. The resulting …

100 Million Unnecessary Returns: A Fresh Start For The U.S. Tax System, Michael J. Graetz

Faculty Scholarship

We are now in a quiet interlude awaiting the next serious political debate over the nation's tax system. No fundamental tax policy concerns were at stake in the 2002 disputes over economic stimulus or the political huffing and puffing about postponing or accelerating the income tax rate cuts of the 2001 Act. Those arguments were concerned principally with positioning Democratic and Republican candidates for the 2002 congressional election, not tax policy.

But the coming decade, with its paint-by-numbers phase-ins and phaseouts of 2001 Act tax changes, the tax cuts waiting to spring into effect, and the sunset of the entire …

Erwin Griswold's Tax Law – And Ours, Michael J. Graetz

Faculty Scholarship

It is a pleasure for me to be here today to deliver the Erwin N. Griswold Lecture. And it is an honor to follow those who have graced this lectern before me. They include important mentors to me. Several are close friends. Today, we are in a quiet interlude awaiting the next serious political debate about restructuring the nation's tax system. No fundamental tax policy concerns are at stake in the current disputes over economic stimulus or in the political huffing and puffing about postponing or accelerating the income tax rate cuts of the 2001 Act. Those arguments are concerned …

Randolph W. Thrower Lecture: Your Tax Dollars At Work: Why U.S. Tax Law Needs To Be Changed, Michael J. Graetz

Faculty Scholarship

I focus here on prospects for tax reform. Things are quiet, politically, on the tax reform front. The Republicans in 1999 are talking about an across-theboard tax cut less extensive than Ronald Reagan's tax cut of 1981. On February 1, 1999, President Clinton, in his budget proposals, offered thirty-eight "targeted" tax reduction proposals and seventy-four tax increase proposals. It took the Treasury Department 197 closely typed, single-spaced pages to describe the proposals. We do not appear to be on the verge of major tax simplification.

Reforming Social Security: A Practical And Workable System Of Personal Retirement Accounts, Fred T. Goldberg, Michael J. Graetz

Faculty Scholarship

This paper details a method for implementing personal retirement accounts (PRAs) as a part of Social Security reform. The approach described here answers the following questions: how funds are collected and credited to each participants' retirement account; how money is invested; and how funds are distributed to retirees. It is designed to accommodate a variety of answers to a wide range of important policy questions; to minimize administrative costs and distribute those costs in a fair and reasonable way; to minimize the burden on employers, especially small employees who do not now maintain a qualified retirement plan; and to meet …

Long Overdue: The Single Guaranteed Minimum Income Program, David Allen Larson

Faculty Scholarship

This article provides an overview of income support programs in the United States. The article first examines proposals for a guaranteed income. This initial examination consists of four separate sections. It begins with a summary of negative income tax plans. Second, it discusses legislation introduced in the United States Congress. Third, current guaranteed income proposals are examined. Finally, it concludes with a brief examination of social experiments conducted in several communities. Because no proposal for a comprehensive guaranteed income program has been adopted, this article next discusses the income maintenance programs including a short description and selected statistical information.

Unlimited Liability And Law Firm Organization: Tax Factors And The Direction Of Causation, Ronald J. Gilson

Faculty Scholarship

In a recent issue of this Journal, Carr and Mathewson (1988) test a model of the impact of limited and unlimited liability regimes on the nature of firms by comparing the performance of law firms operated as partnerships and sole proprietorships (and therefore subject to unlimited liability) with that of law firms operated as corporations (and therefore subject to limited liability).

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, …

The Case For Highly Graduated Rates In State Income Taxes, Robert I. Keller

Faculty Scholarship

No abstract provided.

Fairness And A Consumption-Type Or Cash Flow Personal Income Tax, Alvin C. Warren Jr.

Faculty Scholarship

No abstract provided.