Law and Economics Commons^™

Something's Gotta Give: Origin-Based E-Commerce Sales Tax, Juliana Frenkel

Brooklyn Journal of Corporate, Financial & Commercial Law

How to tax interstate online purchases is a frequently debated and contentious topic in the business and tax arena. There are numerous parties affected when a transaction occurs and each affected party would like a taxation policy that benefits its own economic interests, without regard for others. Neither the legislative nor the judicial branch has successfully resolved this e-commerce taxation issue. With the growing need for tax revenue, it is prudent for Congress to finally resolve this circuit split and agree on a unifying Online Sales Tax Law. As opposed to the vast majority of proposals pending in Congress, this …

The Triumph Of Beps: Us Tax Reform And The Single Tax Principle, Reuven S. Avi-Yonah

Law & Economics Working Papers

The Tax Cut and Jobs Act (TRA17) as passed by the House on November 16 and by the Senate on December 2, 2017, contains multiple provisions that incorporate the principles of the OECD/G20 Base Erosion and Profit Shifting (BEPS) into domestic US tax law. Together with the changes in the 2016 model US tax treaty, these provisions mean that the US is following the EU and China in implementing BEPS and in particular its underlying principle, the single tax principle (i.e., all income should be subject to tax once: passive income at the residence state rate and active income at …

Macroeconomic Modeling Of Tax Policy: A Comparison Of Current Methodologies, Itai Grinberg, Alan J. Auerbach, Thomas A. Barthold, Nicholas Bull, W. Gavin Elkins, Pamela J. Moomau, Rachel Moore, Benjamin Page, Brandon Pecoraro, Kyle Pomerleau

Georgetown Law Faculty Publications and Other Works

The macroeconomic effects of tax reform are a subject of significant discussion and controversy. In 2015, the House of Representatives adopted a new “dynamic scoring” rule requiring a point estimate within the budget window of the deficit effect due to the macroeconomic response to certain proposed tax legislation. The revenue estimates provided by the staff of the Joint Committee on Taxation (JCT) for major tax bills often play a critical role in Congressional deliberations and public discussion of those bills. The JCT has long had macroeconomic analytic capability, and in recent years, responding to Congress’ interest in macrodynamic estimates for …

A Destination-Based Cash Flow Tax Can Be Structured To Comply With World Trade Organization Rules, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

This paper briefly outlines alternative approaches to enacting a destination-based cash flow tax that are more clearly compatible with the World Trade Organization rules than the approach that has previously been described in the literature. The first structural alternative involves expanding the universe of businesses subject to the tax by clearly defining both the base of the new U.S. business tax and its tax nexus requirement as domestic consumption, and thereafter treating foreign importers and other sellers equivalently, rather than imposing a deduction disallowance or an import tax. The second alternative involves adopting a business activities tax, and then enacting …

Once More, With Feeling: The 'Tax Cuts And Jobs' Act And The Original Intent Of Subpart F, Reuven S. Avi-Yonah, Nir Fishbien

Law & Economics Working Papers

For the first time since 1913, Congress is considering abandoning the principle that US residents should be subject to tax on all income “from whatever source derived.” Specifically, the House proposed tax reform legislation, the so-called “Tax Cuts and Jobs Act”, would completely exempt from US taxation dividends from “Controlled Foreign Corporations”. This is therefore a good occasion for considering the reasons we tax such dividends in the first place.

In the course of investigating the Stanley Surrey papers at the Harvard Law School Library, we discovered a remarkable report that support the view that the main impetus behind Subpart …

What A Difference Thirty Years Make: A Comparison Of The Tax Reforms Of 1986, 2014 And 2017, Reuven S. Avi-Yonah

Law & Economics Working Papers

This paper compares the Tax Cuts and Jobs Act of 2017, as passed by the House (TRA17H) and under consideration by the Senate (TRA17S) with two major previous efforts at comprehensive tax reform: The Tax Reform Act of 1986 (TRA86) and the draft tax reform proposed by former Ways and Means Chair David Camp (R-MI) (TRA14). It shows that TRA14 was quite similar to TRA86, but that TRA17 is very different than both. Congress should abandon TRA17 and go back to considering TRA14 on a bipartisan basis.

A Primer On Able Accounts, Christopher T. Mcgee, G. Alisa Ferguson

University of Richmond Law Review

No abstract provided.

Slicing And Dicing: The Structural Problems Of The Tax Reform Framework, Reuven S. Avi-Yonah

Law & Economics Working Papers

The “Unified Framework for Fixing Our Broken Tax Code” (the “Framework”) released by the “Big Six” group of Treasury, White House and Congressional leaders on September 27 has been the focus of a lot of commentary. Most of the comments have focused on the distributive aspects of the plan and on the proposed rate structure, as well as the impact on revenues and the federal deficit. In this comment, I plan to focus instead on the structural aspects of the plan and in particular on the various new lines that it draws, because these are more likely to be lasting.

Taxing Marijuana: Earmarking Tax Revenue From Legalized Marijuana, Armikka R. Bryant

Georgia State University Law Review

This Article provides an overview of the legal, political, and societal landscapes in states that have legalized marijuana and imposed taxes on its sale. The article begins by summarizing the War on Drugs’ origins, its fiscal expenditures, and the social policies that ultimately led to its failure.

Part I briefly details the history of marijuana regulation starting from the early twentieth century up to the Obama administration’s decision to permit recreational marijuana laws to stand in Washington state and Colorado. Part II dives deeper into the social costs of the War on Drugs and outlines the hardships faced by those …

Comment On 'Fundamental Tax Reform: A Comparison Of Three Options', James R. Hines Jr.

Book Chapters

Alan Viard’s chapter, “Fundamental Tax Reform: A Comparison of Three Options” is a thoughtful, even-handed, and most worthwhile contribution to the analysis of major reforms that, if adopted, would move the tax system strongly in the direction of taxing consumption. The chapter nicely illustrates the complexity of the tax reform problem by exposing a range of available reform options, with an accompanying range of welfare implications. Even among tax reforms with common objectives, there can be strongly differing economic and distributional consequences. Furthermore, otherwise-similar reforms can and do appeal to very different political constituencies....

Blockchain, Bitcoin, And Vat In The Gcc: The Missing Trader Example, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

Blockchain is coming to tax administration and will cause fundamental change. This article considers the potential for blockchain technology as it applies to the introduction of a value added tax in the Gulf Cooperation Council.

Blockchain technology disrupts centralized ledgers. Blockchain improves efficiency, security and transparency. Perhaps no centralized ledger system presents more challenges than that of the modern tax administration. The central data storage system of a modern tax authority contains all return, payment, and audit activity for all taxpayers arranged tax-by-tax for three years or longer periods of time.

It is likely that blockchain will come first to …

Trump & Vat: Nafta, Trade Barriers, And Retaliatory Tariffs, Richard Thompson Ainsworth

Faculty Scholarship

During the first presidential debate President-elect Donald J. Trump argued that the value added tax (VAT) operated as a trade barrier to American business everywhere. He particularly pointed to the North American Free Trade Agreement (NAFTA). Mexico was a special concern. China was also a concern, but in this instance Trump was troubled both by China’s VAT and by China’s alleged currency manipulation.

This paper can only consider the VAT aspect of Trump’s trade policy. There appears to be some confusion about the operation of the VAT, particularly the border adjustment mechanism, and how US tariffs could “level the playing …

The Global Fight Against Base Erosion And Profit Shifting Under The Oecd’S Country-By-Country Reporting Rules: A Possible Solution?, Oladiwura Ayeyemi Eyitayo-Oyesode

LLM Theses

The base erosion and profit shifting (BEPS) phenomenon continues to create detrimental consequences in states. BEPS is engendered by two fundamental factors, namely, unhealthy fiscal policies of tax havens and preferential tax regimes, and transfer mispricing by multinational corporations (MNCs). The OECD, through its BEPS Project notes that the lack of transparency in the global activities of MNCs is a major cause of BEPS. To close this gap, the OECD released the CBCR Rules. This thesis discusses the severity of the BEPS phenomenon and assesses the anti-BEPS efforts of the OECD. Upon an assessment of these efforts, this thesis argues …

Energy Subsidies: Worthy Goals, Competing Priorities, And Flawed Institutional Design, David M. Schizer

Faculty Scholarship

The United States uses on targeted subsidies for both "green" energy and hydrocarbons. These subsidies pursue worthwhile goals. But unfortunately, many have design flaws that make them less effective or even counterproductive. The goal of this Article is to show how to do better.

Specifically, this Article focuses on three sets of issues. First, there often is tension between our environmental and national security goals. Unfortunately, the economics literature on energy largely ignores these trade-offs by omitting national security from the analysis. This Article takes issue with this approach and suggests ways to manage these trade-offs. Second, this Article argues …

Heading Off A Cliff? The Tax Reform Man Cometh, And Goeth, Michael J. Graetz

Faculty Scholarship

The major tax policy challenge of the 21st century is the need to address the nation’s fiscal condition fairly and in a manner conducive to economic growth. But since California adopted Proposition 13 nearly forty years ago, antipathy to taxes has served as the glue that has held the Republican coalition together. Even though our taxes as a percentage of our economy are low by OECD standards and low by our own historical experience, anti-tax attitudes have become even more important for Republicans politically, since they now find it hard to agree on almost anything else. So revenue-positive, or even …

Border Adjustments And The Conservation Of Tax Planning, David M. Schizer

Faculty Scholarship

This article is based on Schizer’s keynote address at the 17th annual NYU-KPMG Tax Symposium on March 10.

In this article, Schizer argues that U.S. corporate and shareholder taxes need to be reformed, and the corporate rate should be much lower. In reforming this dysfunctional regime, according to Schizer, Congress should keep both of these taxes as a form of built-in redundancy; if one tax is avoided, the other can still be collected. More generally, Congress should be wary of Utopian solutions. Tax reform is more likely to change tax planning than to eliminate it entirely, Schizer concludes. For instance, …

The Known Unknowns Of The Business Tax Reforms Proposed In The House Republican Blueprint, Michael J. Graetz

Faculty Scholarship

In 2002, referring to Iraq and its relationship to terrorism, Donald Rumsfeld declared "that there are known knowns, there are things we know we know. We also know that there are known-unknowns, that is to say we know there are some things that we do not know, but there are also unknown-unknowns – the ones that we don't know we don't know."

Is Incorporation Really Better Than Central Management And Control For Testing Corporate Residency? An Answer To Corporate Tax Evasion And Inversion, Charles Edward Andrew Lincoln Iv

Student Scholarship

No abstract provided.

Putting The Substance Back Into The Economic Substance Doctrine, Nicholas Giordano

Brooklyn Journal of Corporate, Financial & Commercial Law

The foreign tax credit, which saves U.S. taxpayers from paying both foreign and domestic income taxes on the same income, is critical to facilitating global commerce. However, as savvy taxpayers discover increasingly complicated ways to abuse the foreign tax credit regime through the structuring of business transactions, courts have become increasingly skeptical of the validity of those transactions. Using the economic substance doctrine, a common law doctrine codified in 2010 at I.R.C. § 7701(o), courts will disallow tax benefits stemming from a transaction that is not profitable absent its tax benefits, and which the taxpayer had no incentive to undertake …

Achieving American Retirement Prosperity By Changing Americans' Thinking About Retirement, Peter H. Huang

Publications

There are many decisions that Americans have to make about retirement before, at, and after retirement. For example, Americans have to decide when to start saving for retirement, how much to save, how to invest those savings, when to retire, when to claim social security, and how to take required minimum distributions from 401(k) plans or Individual Retirement Accounts. Different things can go wrong at each of these decisions for different reasons. Many Americans, for various reasons, including insufficient energy, money, motivation, time, and understanding, do no retirement planning. Some Americans do some retirement planning, yet worry they are doing …

Gcc Vat: The Intra-Gulf Trade Problem, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

It seems reasonably clear that by January 1, 2018 events will be set in motion for the adoption of a community-wide 5% value added tax (VAT) in the six Member States of the Gulf Cooperation Council (GCC).

The GCC’s Framework VAT document is expected to be published by the end of October 2016. One of the clearest, consistently placed observations is that the Arabian VATs will be destination-based and modeled on a European credit-invoice design. Intra-Gulf business-to-business (B2B) transactions will be effectively zero-rated by the supplier, and the buyer’s VAT will be directed to the destination jurisdiction. It is not …

Vatcoin: The Gcc's Cryptotaxcurrency, Richard Thompson Ainsworth, Musaad Alwohaibi, Mike Cheetham

Faculty Scholarship

Bitcoin is the world’s first peer-to-peer cryptocurrency. VATCoin is similar, but it is used in tax compliance. Both Bitcoin and VATCoin are distributive ledger applications built upon blockchain technology. Bitcoin’s ledger is public; VATCoin’s is private. If adopted, VATCoin could well become the world’s first government-mandated cryptotaxcurrency. Unlike Bitcoin, VATCoin will not be a speculative currency. It is always fixed to the home currency.

This paper proposes that the Gulf Cooperation Council (GCC) adopt VATCoin in its VAT Framework. The GCC is expected to have multiple 5% VATs in place by January 1, 2018. There is an ample amount of …

Vat In The Gcc - Missing Trader Frauds, Richard Thompson Ainsworth, Musaad Alwohaibi

Faculty Scholarship

All VATs are susceptible to missing trader (MT) fraud. VATs adopted in an economic community are particularly more susceptible. The EU, for example, loses in excess of €100b annually to this fraud. Given the anticipated adoption of a European-style credit-invoice VAT in the GCC by January 1, 2018, this paper offers a technology-based solution involving the real-time tracking of taxable transactions with centrally collected (securely encrypted) data flows that are risk-analyzed by artificial intelligence (AI).

Book Review: International Tax Planning. By Barry Spitz. London, England: Butterworth & Co. Ltd., 1972. Pp. Xxiii, 159. $12.15 (U.S.)., Donald O. Clark

Georgia Journal of International & Comparative Law

No abstract provided.

Replacing Havoc: Creating Rules For Sovereign Default, Edward J. Kelley

Cleveland State Law Review

Sovereign debt is an ongoing threat to a State’s economic stability and its citizens’ standard of living. A single occurrence of default begins a cycle in which it becomes increasingly more difficult for an indebted State to pay its debts and ensure the survival of its citizens. Because central banking systems and direct spending are often inadequate methods to boost an indebted State’s economy, a more expansive solution to sovereign debt is required. The initial solution to the growing problem of sovereign debt is an international treaty that will allow the world economy to establish monitoring mechanisms to prevent debt …

Tax Treaties-Reciprocal Exchange Of Information-Summons Power Contained In Irc Section 7602 May Be Used To Obtain Information From Domestic Sources For Use By Canadian Authorities In Investigating The Canadian Tax Liability Of A Canadian Company, Tim J. Floyd

Georgia Journal of International & Comparative Law

No abstract provided.

Bringing Continuity To Cryptocurrency: Commercial Law As A Guide To The Asset Categorization Of Bitcoin, Evan Hewitt

Seattle University Law Review

This Note will undertake to analyze bitcoin under the Uniform Commercial Code (UCC) and the Internal Revenue Code (IRC)—two important sources of commercial law—to see whether any existing asset categories adequately protect bitcoin’s commercial viability. This Note will demonstrate that although commercial law dictates that bitcoin should—nay must—be regulated as a currency in order to sustain its existence, the very definition of currency seems to preclude that from happening. Therefore, this Note will recommend that we experiment with a new type of asset that receives currency-like treatment, specifically designed for cryptocurrencies, under which bitcoin can be categorized in order to …

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 …

Bringing International Tax Policy Into The 21st Century, Michael J. Graetz

Faculty Scholarship

Michael J. Graetz delivered the following remarks at the Tax Policy Center's "A Corporate Tax for the 21st Century" conference on July 14 in Washington. These remarks are substantially taken from his April 2015 Ross Parsons Lecture at the University of Sydney Law School.

Follow The Money: Essays On International Taxation – Introduction, Michael J. Graetz

Faculty Scholarship

Publicity about tax avoidance techniques of multinational corporations and wealthy individuals has moved discussion of international income taxation from the backrooms of law and accounting firms to the front pages of news organizations around the world. In the words of a top Australian tax official, international tax law has now become a topic of barbeque conversations. Public anger has, in turn, brought previously arcane issues of international taxation onto the agenda of heads of government around the world.

Despite all the attention, however, issues of international income taxation are often not well understood. This Introduction outlines a collection of essays, …