Law Commons^™

Phased Mark-To-Market For Billionaire Income Tax Reforms, David Gamage, Darien Shanske

Articles by Maurer Faculty

In this installment of Academic Perspectives on SALT, Gamage and Shanske advocate for phased mark-to-market as a mechanism for reforming the taxation of investment gains of billionaires and megamillionaires.

Saving The Nonessential With Radical Tax Policy, Rodney P. Mock, Kathryn Kisska-Schulze

University of Cincinnati Law Review

Under the Internal Revenue Code of 1986, as amended, for-profit entities are distinguishable from tax-exempt entities in that they, among other factors, pursue profits, and enjoy unrestricted commercial activities. The COVID-19 lockdowns prevented commercial activity for numerous for-profit small businesses. For the first time in United States history, a distinction was made between "essential" and "nonessential" businesses. Such distinction is historically absent in both legal scholarship and tax law; instead, it is a product of governmental reaction to the COVID-19 pandemic. Via executive order, nonessential businesses were characterized as being trivial to the fabric of society, and thus shuttered, while …

Comparing Capital Income And Wealth Taxes, Ari Glogower

Pepperdine Law Review

As part of the Pepperdine Law Review Symposium The Impact of the 2017 Tax Act on Income and Wealth Inequality: Lessons for 2020 and Beyond, this Essay compares two reform directions to rebuild the progressive tax system: an improved capital income tax—which would eliminate the benefit from deferring gains until a sale—or a wealth tax. The Essay first introduces the concept of a “rate-equivalent” wealth or capital income tax as a way to assess reform alternatives consistently and to identify the assumptions as to how the reforms would be structured. For any chosen capital income tax (or wealth tax) reform, …

Designing A More Sustainable Global Tax System, Allison Christians

Dalhousie Law Journal

The international tax system incentivizes unsustainable business practices because it ignores the private profits created by externalizing human, societal, and environmental costs. This paper proposes a novel reform: applying living wage and externality assessment tools to the rules for establishing where income arises for tax purposes. To do so, I propose a method that is relatively complex but arguably more accurate (in tax terms) and a complementary but relatively simpler proxy method. I examine how each method would implicate treaty-based and domestic rules and processes and conclude that the proposed design provides a viable starting point to make the global …

Healthcare As One Of Jordanian Tax Legislation Purposes A Comparative Study, Mwaffaq Almahameed

UAEU Law Journal

Tax legislation purposes, in the modern financial literature, are not limited to collecting revenues that cover expenditures neutrally without taking into consideration society’s political, economical and social circumstances. Tax, as a financial duty, aims to achieve a country’s variant purposes, including the healthcare purpose which may appear clearly and separately or within the social purpose contents. This is supported by the constitutional confirmation on the importance of complying with the social justice and persons' ability to pay. As a result, a close relationship is emerging between tax legislation purposes on one hand, and using tax as a tool in achieving …

Federalizing Tax Justice, Reuven Avi-Yonah, Orli Avi-Yonah, Nir Fishbien, Hayian Xu

Articles

The United States is the only large federal country that does not have an explicit way to reduce the economic disparities among more and less developed regions. In Germany, for example, federal revenues are distributed by a formula that takes into account the relative level of wealth of each state (the so-called Finanzausgleich, or fiscal equalization). Similar mechanisms are found in Australia, Canada, India, and other large federal countries. The United States, on the other hand, has no such explicit redistribution. Each state is generally considered equal and sovereign, and the federal government does not distribute revenues to equalize …

Stanley Surrey, The 1981 Us Model, And The Single Tax Principle, Reuven S. Avi-Yonah

Articles

2021 marks the fortieth anniversary of the 1981 US Model Tax Treaty as well as the fifth anniversary of the 2016 US Model Tax Treaty. The first author has repeatedly argued that the 1981 Model gave life to the single tax principle (‘STP’). The 2016 Model updates effectively implemented the principle that cross-border income should be taxed once – that is not more and but also not less than once. For example, the 2016 Model does not reduce withholding taxes on payments of highly mobile income that are made to related persons that enjoy low or no taxation with respect …

A Positive Dialectic: Beps And The United States, Reuven S. Avi-Yonah

Articles

This essay addresses the interaction between the changes in the international tax regime identified by Mason and U.S. international tax policy. Specifically, I will argue that contrary to the general view, the United States actively implemented the Organisation for Economic Co-Operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) recommendations through the Tax Cuts and Jobs Act of 2017 (TCJA). Moreover, the changes of the TCJA influenced the current OECD effort of BEPS 2.0. Thus, the current state of affairs can be characterized as a constructive dialogue: The OECD moves (BEPS 1), the United States responds (TCJA), the OECD …

Contractual Tax Reform, Michael Abramowicz, Andrew Blair-Stanek

William & Mary Law Review

One-size-fits-all taxation fails to accommodate diverse taxpayer circumstances. This Article proposes allowing taxpayers to contract into alternative tax regimes administered by private intermediaries. Participating taxpayers would make payments to the intermediaries pursuant to contract, and the intermediaries would be required to pay to the government at least as much as these taxpayers would have paid the government otherwise. That amount is determined based on the actual tax receipts of a control group, taxpayers who wish to contract with an intermediary but instead are chosen at random to continue under the status quo. These alternative tax regimes might better accommodate taxpayers’ …

Legal Nature Of Tax Liabilities As A Result Of Tax Administration, I. Ergashev

Review of law sciences

This article explores the theoretical and practical aspects of the legal nature of tax liability as a result of tax administration. Suggestions for improving tax legislation have been developed.

Why Study Tax History?, Reuven S. Avi-Yonah

Reviews

Since the beginning of this century, John Tiley organized an annual tax history conference at Cambridge, a tradition that was continued after his death under the leadership of Peter Harris. These are the papers from the ninthCambridge Tax Law History Conference, held in July 2018. In the usual manner, the papers have been selected from an oversupply of proposals for their interest and relevance, and scrutinized and edited to the highest standard for inclusion in this prestigious series. The result is an outstanding book, with many high quality contributions to historical tax research.

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.

Fiscal Citizenship: How Can Tax Efficiency And Isonomy Aid In The Promotion Of Economic Rights, Social Participation, Political Accountability, And Cultural Diversity?, Gustavo Voeroes Dénes

Biennial Conference: The Social Practice of Human Rights

According to the World Inequality Report 2018 (WID 2017), Brazil is one of the few countries that has not recently displayed an increase in income inequality, having instead sustained it on persistently very high levels, actually composing the world’s “inequality frontier”. While such levels of inequality may be partly attributed to poor distribution of property rights, human capital endowments, and specificity of labor relations, a significant part of it is undoubtedly due the national fiscal system’s reduced distributive capacity, compromised by one the worst taxation systems in the world. Occupying the 184th position out of 190 countries in the World …

Tax Attorneys As Defenders Of Taxpayer Rights, Michelle Lyon Drumbl

Scholarly Articles

What is the modern role of a tax practitioner, in particular a tax attorney, in the United States? In an era in which the Internal Revenue Service (IRS) is underfunded, understaffed, and struggles to address its mission, tax attorneys play an important role as advocates for taxpayer rights.

Tax attorneys act as advocates who represent ordinary individual taxpayers in controversies with the IRS. These controversies include post-filing disputes, such as audits, as well as issues arising with the collection of assessed taxes. Many of these cases are resolved at the administrative level; those that cannot be resolved are litigated, most …

Legal Instruments Of State Practice And International Initiatives Undertaken To Fight Corruption In The Banking And Financial Sector, N. D. Nodirxonova

International Relations: Politics, Economics, Law

In this article we analyze the legal aspects of leading international experience in countering corruption in bank and financial sectors. It must be noted that these issues have gained even more importance given the universal character of corruption related criminal activities. The trans-boundary character of this kind of crimes makes it significant to properly study and learn foreign expertise in the sphere. Having analyzed experience of various countries we have come up with relevant conclusions, regarding institutional base, legal tools, involvement of civil society actors, significance of transparency and etc.

The Tcja And The Questionable Incentive To Incorporate, Part 2, Michael S. Knoll

All Faculty Scholarship

The Tax Cuts and Jobs Act (TCJA) has put the question should a business be organized as a passthrough entity or as a corporation at center stage. The TCJA eliminated much of the tax disadvantage from using the corporate form, but did Congress go so far that it advantaged corporations relative to pass-through entities? Some prominent commentators say yes. They argue that the federal income tax now encourages individual owners of pass-through businesses to restructure their business as subchapter C corporations, and they predict that the TCJA will lead to a cascade of incorporations. The principal driver of the shift …

The Tcja And The Questionable Incentive To Incorporate, Michael S. Knoll

All Faculty Scholarship

The Tax Cuts and Jobs Act (TCJA) has put the question should a business be organized as a passthrough entity or as a corporation at center stage. The TCJA eliminated much of the tax disadvantage from using the corporate form, but did Congress go so far that it advantaged corporations relative to pass-through entities? Some prominent commentators say yes. They argue that the federal income tax now encourages individual owners of pass-through businesses to restructure their business as subchapter C corporations, and they predict that the TCJA will lead to a cascade of incorporations. The principal driver of the shift …

The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Kamin, David Gamage, Ari Glogower, Rebecca Kysar, Darien Shanske, Reuven S. Avi-Yonah, Lily Batchelder, J. Clifton Fleming, Daniel Hemel, Mitchell Kane, David Miller, Daniel Shaviro, Manoj Viswanathan

Articles

The 2017 tax legislation brought sweeping changes to the rules for taxing individuals and business, the deductibility of state and local taxes, and the international tax regime. The complex legislation was drafted and passed through a rushed and secretive process intended to limit public comment on one of the most consequential pieces of domestic policy enacted in recent history. This Article is an effort to supply the analysis and deliberation that should have accompanied the bill’s consideration and passage, and describes key problem areas in the new legislation. Many of the new changes fundamentally undermine the integrity of the tax …

America's (D)Evolving Childcare Tax Laws, Shannon Weeks Mccormack

Articles

Proponents have touted the ability of the Tax Cuts and Jobs Act (the TCJA) — enacted in the twilight of 2017 — to help American working families. But while the TCJA expanded some benefits available to parents with dependent children, these parental tax benefits may be claimed regardless of whether or to what extent childcare costs are incurred to work outside the home. To help working parents with these costs (which are often their largest expense), Congress might have turned to two other mechanisms in the tax law — the “child and dependent care credit” and the “dependent care exclusion.” …

Preventing Tax-Exempt Propaganda: The Case For Defining The Second Prong Of The Methodology Test, Jordanne Miller

Catholic University Law Review

Under current Treasury Regulations, various propaganda groups throughout the United States are exempt from paying federal income tax. This is so because the current test used by the IRS to determine tax-exempt eligibility, the methodology test, is incapable of separating wild propaganda from viewpoints supported by facts.

The IRS created the methodology test in the late 1970s/early 1980s. Since then, groups denied tax-exempt status have repeatedly challenged its validity. The IRS has responded, and the test has evolved. However, the second prong of the test remains undefined—it is still unclear what it means for facts to be “distorted.” This Comment …

The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Gamage, David Kamin

Articles by Maurer Faculty

The 2017 tax legislation brought sweeping changes to the rules for taxing individuals and business, the deductibility of state and local taxes, and the international tax regime. The complex legislation was drafted and passed through a rushed and secretive process intended to limit public comment on one of the most consequential pieces of domestic policy enacted in recent history. This Article is an effort to supply the analysis and deliberation that should have accompanied the bill’s consideration and passage and describes key problem areas in the new legislation. Many of the new changes fundamentally undermine the integrity of the tax …

The Perspective Of Improvement Of Legal Mechanisms Of Extending Information-Communication Technology In Tax Administration, I.A. Ergashev

Review of law sciences

this article studies the theoretical and practical aspects of the use of information technology in improving the legal mechanisms of tax administration. Proposals are given on further improvement of electronic document circulation between the bodies and organizations that provide information on the occurrence of taxpayers' obligations.

The Persistent Appeal Of S Corporations: How Tax Cuts Might Not Help Small Corporations, Manas Kumar

Michigan Business & Entrepreneurial Law Review

This Note will first review the tax preferences for entity choice under the old tax regime for the sake of context. It will then compare the tax benefits of electing to C and S corporation status under the regime created by the Act. The Note will conclude with an analysis of the factors sustaining the tax appeal of pass-through firms for lower-earning businesses with special attention to the largely unaltered state of tax law and business entity choice. It proposes that the Act did not sufficiently reform the Internal Revenue Code to close up the tax advantage that high-earning corporations …

The International Provisions Of The Tcja: Six Results After Six Months, Reuven S. Avi-Yonah

Law & Economics Working Papers

Over six months have passed since the enactment of the TCJA, so it is now possible to reach some preliminary conclusions on its impact. The main ones are:

1. The transition tax plus anticipated GILTI tax minus territoriality have resulted in higher GAAP effective tax rates for 2017. In some cases they approach 35% for large multinationals with a lot of offshore income. For the first six months of 2018, however, overall corporate tax revenues are sharply down because of the 21% rate plus expensing. This is the exact reverse of the situation before TCJA in which MNEs showed very …

Perils Of Tax Reform, James R. Hines Jr.

Articles

Tax reforms dangle possibilities of improving the tax system, but are fraught with perils that are evident from the 2017 U.S. experience and caution against frequent reforms of its ilk. The first peril is that reforms containing tax provisions selected simply on the basis of their projected revenue contributions will produce less tax revenue than anticipated, illustrative calculations suggesting shortfalls of roughly 8–16 percent. The second peril is that reforms will not advance the objectives of efficiency and tax equity to the extent that they include provisions intended to influence future tax legislation or government spending. The third peril is …

A Global Treaty Override? The New Oecd Multilateral Tax Instrument And Its Limits, Reuven S. Avi-Yonah, Haiyan Xu

Michigan Journal of International Law

This article will proceed as follows. Section 2 summarizes the main provisions of the MLI. Section 3 discusses the purpose of tax treaties in the twenty-first century, because it can be argued that they are less necessary under conditions of tax competition. Section 4 raises the question whether tax treaties can be improved short of a full-fledged multilateral tax treaty by inserting a most favored nation (MFN) provision similar to those found in bilateral investment treaties. Such an MFN provision operates over time to create a de facto multilateral treaty without the negotiation of one. Section 5 concludes this article.

Was The Amt Effectively Repealed?, Reed Shuldiner

All Faculty Scholarship

The individual alternative minimum tax (AMT) was a much disliked feature of the tax law prior to the Tax Cuts and Jobs Act (TCJA). Yet, despite repeated promises to repeal the AMT as part of tax reform, the TCJA dropped AMT repeal in favor of increasing the AMT exemption and its phaseout threshold. The question raised by this development is whether the AMT changes should be viewed as yet another stop-gap tweak of the AMT or whether the changes should be viewed as returning the AMT to its roots as a tax on high-income taxpayers using excessive loopholes. In this …

Accessible Reliable Tax Advice, Emily Cauble

University of Michigan Journal of Law Reform

Unsophisticated taxpayers who lack financial resources are disadvantaged by a shortage of adequate tax advice. The IRS does not have the resources to answer all questions asked, and the IRS’s informal advice comes with no guarantee as to its accuracy and offers the taxpayer no protection when it is mistaken. Furthermore, non-IRS sources of advice have not sufficiently filled the void left by a lack of satisfactory IRS guidance. These biases against unsophisticated taxpayers have been noted by existing literature. This Article contributes to existing literature by proposing several novel reform measures to assist unsophisticated taxpayers.

First, with respect to …

A Timely Proposal To Eliminate The Student Loan Interest Deduction, Victoria J. Haneman

Victoria J. Haneman

No abstract provided.

The Elephant Always Forgets: Us Tax Reform And The Wto, Reuven S. Avi-Yonah, Martin G. Vallespinos

Law & Economics Working Papers

The “Tax Cuts and Jobs Act” (TCJA) enacted on December 22, 2017 includes several provisions that raise WTO compliance issues. At least one such provision, the Foreign-Derived Intangible Income (FDII) rule, is almost certain to draw a challenge in the WTO and is likely to lead to another US loss and resulting sanctions. This outcome would be another addition to the repeated losses suffered by the US for export subsidies from the 1970s to 2004, which led to the imposition of sanctions and the ultimate repeal of the offending regime. The important question for 2018 and beyond is whether the …