Tax Law Commons^™

Was The Niit A Treaty Override?, Reuven S. Avi-Yonah

Law & Economics Working Papers

Three court decisions have recently addressed the interaction of the Net Investment Income Tax (NIIT) and US tax treaties. The issue was whether the treaty provided an independent basis for crediting a foreign tax against the NIIT, because no such credit is available under the Code. First, in Toulouse, the Tax Court held that there was no treaty based credit. Second, in Christensen, the Court of Federal Claims held that a treaty-based credit was available, distinguishing Toulouse. Third, in Bruyea, the Court of Federal Claims issued a broader opinion that allowed the credit. Importantly, Bruyea addressed an issue that was …

Should The United States Abandon Citizenship-Based Taxation?, Reuven S. Avi-Yonah

Law & Economics Working Papers

President Trump proposed during the election campaign to end the "double taxation" of American citizens living overseas. To which the answer is, what double taxation? Americans living overseas already benefit from three significant provisions that in most cases prevent any double taxation, and because of these most of them do not have any U.S. tax liability. Those who do are typically wealthier, derive income from investments or from high wages, and are not subject to foreign tax because they live in tax havens or in countries that do not tax rich immigrants on foreign source income, and they do not …

Through A Glass Darkly: How Securities Disclosures Give A Distorted View Of The Economy, Gerald F. Davis

Seattle University Law Review

Our understanding of the American economy often relies on stylized facts derived from mandatory disclosures by listed corporations. Data vendors like Standard & Poor’s vacuum up 10Ks and proxy statements into databases, and scholars distill these into tentative maps. This may have been adequate for a postwar economy centered on asset-heavy manufacturers, but it is increasingly out of step with an information-based economy. Companies listed on the stock market are fewer in number and less representative than they were, light in tangible assets and people, and heavy on IP. Basic facts such as what industry they are in are increasingly …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Corporate Scenarios: Drawing Lessons From History, Madison Condon

Seattle University Law Review

As corporations are increasingly pressed to reveal information about their exposure to climate-related risks, they are often asked to undertake and disclose the outcome of “scenario analysis.” In this exercise, corporations, including financial institutions, examine how their business would fare under different pathways the future may take. One oft-used scenario, for example, is the International Energy Agency’s “Net-Zero by 2050: A Roadmap for the Energy Sector.” This Essay presents a history of the use of scenarios as a corporate planning tool, particularly in the oil industry, arguing that it is key for understanding our present moment and the role of …

Shareholder Expression In A Time Of Heightened Political Tension, Aaron A. Dhir

Seattle University Law Review

In this article, I provide context for my forthcoming research project on shareholder proposals and racial equity audits. Since the murder of George Floyd in May of 2020, progressive shareholder actors have increasingly used the proposal mechanism to advance diversity, equity, inclusion, and justice-related goals. These proposals have frequently gone beyond requesting the usual corporate fare of diversity trainings, intersectionality workshops, affinity groups, etc. Instead, a more ambitious type of proposal asks corporate America to conduct racial equity audits, defined as “an independent, objective and holistic analysis of a company’s policies, practices, products, services and efforts to combat systemic racism …

Corporate Governance Speech, Sarah C. Haan

Seattle University Law Review

The State has always regulated the intra-firm communications that make corporate governance possible, most commonly by mandating disclosures of information by a corporation to its shareholders. Some such laws are labeled “securities regulation,” but securities regulation is a broad category that extends to speech by actors who are outside the corporate enterprise as well. Also, the conventional securities regulation category does not capture all such laws; other examples, including informationforcing mandates, can be found in state corporate law. This Article uses the term “corporate governance speech” to describe the communications among shareholders, directors, and officers through which corporate governance is …

Dark Accounting Matter, Colleen Honigsberg

Seattle University Law Review

Physicists calculate that approximately 85% of the matter in the universe is composed of “dark matter” that “does not absorb, reflect, or emit electromagnetic radiation and is therefore difficult to detect.” The S&P 500 currently trades at a price-to-book value of 4.2, suggesting that book value accounts for less than 20% of the S&P 500’s market value. The remaining 80% appears nowhere in these firms’ balance sheets—it is invisible to contemporary accounting techniques and constitutes “dark accounting matter.”

Some “dark accounting matter” is composed of factors commonly described as components of “ESG.” Human capital, for example, is an intangible asset …

The Employees’ Dilemma: Balancing Internal Reporting, Whistleblowing, And Insider Trading Risks, Geeyoung Min

Seattle University Law Review

The Essay examines how recent developments in insider trading regulations and whistleblower reward programs can lead to unintended and counterproductive results of discouraging employees from using internal reporting channels within corporate compliance programs. While the presence of a robust and well-functioning corporate compliance program is a critical factor both in mitigating the level of public enforcement actions against companies and in protecting corporate managers from liability in private litigation, these programs often provide little incentive for employees to report potential misconduct internally.

Corporate compliance programs are designed to promote the upward information flow within the company, which is essential for …

How The Antidiscrimination Law Of Commercial Transactions Really Works, Helen Norton

Seattle University Law Review

A variety of businesses now cite 303 Creative when seeking First Amendment protection for their refusal to serve certain customers based on those customers’ protected class status. How this litigation will play out remains to be seen. But future courts need not, and should not, repeat the 303 Creative Court’s misunderstanding of how the antidiscrimination law of commercial transactions actually works.

Part I of this Essay explains the Court’s longstanding understanding of the antidiscrimination law of commercial transactions, and then describes the Court’s failure to engage with this precedent in 303 Creative. Part II then identifies the 303 Creative decision’s …

Improper Use Of Tax Treaties And Source Taxation: Policy, Practice And Beyond, Eivind Furuseth, Jinyan Li

Conference Papers

The question of improper use of tax treaties (or treaty shopping) defies a simple or straightforward answer. The line between “proper use” and “improper use” a tax treaty depends on the determination of the intended use of a treaty provision by Contracting States (i.e. the common intention as well as the object and purpose of the treaty provision). As a treaty interpretation issue, that determination varies from country to country. Furthermore, the extent of taxpayers’ right to tax planning and expectation of tax certainty also varies across countries. Finally, the effect of domestic general-anti-avoidance rules (GAARs) and the new principal …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Voting Matters: Materiality Considerations And The Shareholder Vote, Renee M. Jones

Seattle University Law Review

For the shareholder franchise to have meaning, shareholders must have access to relevant information to inform their voting decisions. The securities laws’ disclosure requirements play an essential role in informing the shareholder vote.

This Essay focuses on the question of the materiality of information in the context of shareholder voting. It addresses the question of whether ESG-related information is material, positioning the materiality inquiry within the context of shareholders’ voting decisions. It explores the definition of materiality with a focus on the “reasonable investor” concept embedded within the definition. The Essay argues that the implicit expectations of many commentators that …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Understanding The Big Three’S Wavering Support Of Environmental And Social Shareholder Proposals, Jeff Schwartz, Jefferson Jensen

Seattle University Law Review

Because of their substantial equity portfolios, BlackRock, Vanguard, and State Street (the Big 3) are central players in corporate governance. It is, therefore, critical to understand how they vote. One puzzle is that their support for shareholder proposals on environmental and social matters appears to waiver. In 2020, for instance, BlackRock supported 11.1% of environmental proposals at S&P 500 firms. In 2021, it seemingly reversed course, supporting 55.2%. It then flipped again, supporting 32.1% in 2022. Such statistics suggest that the Big 3 are constantly changing their views on these topics. This Article seeks to better understand whether this is …

Volume 48 Masthead, Seattle University Law Review

Seattle University Law Review

Volume 48 Masthead

Green Dividends: A Case Study In Green Dividends And The Conditions For Private Ordering Solutions, Anne M. Tucker

Seattle University Law Review

This Essay introduces a novel private ordering solution to facilitate corporate investments in pro-social and environmental initiatives: Green dividends. Green dividends are an optional increase in shareholder dividends that are returned to the company to be reinvested in environmental initiatives or kept by a shareholder.

Green dividends pose an alternative to the current gridlocked debate that corporations can’t, won’t, shouldn’t, and shouldn’t even try to act in pro-social or environmental ways. Turning the common refrains on their head converts each narrative into an element for a successful private ordering solution: authority, accountability, shareholder buy-in, and government- backed enforcement. With Green …

Does Climate Disclosure Work To Reduce Greenhouse Gas Emissions? Emerging Evidence Suggests Cautious Optimism, Cynthia A. Williams

Seattle University Law Review

Significant regulatory resources have been spent developing global, voluntary climate and sustainability disclosure standards, such as the TCFD, TNRD, and ISSB’s Sustainability and Climate Disclosure standards, or domestically required disclosures, such as in the EU and in the U.S. Thus, it is important to evaluate whether this disclosure, particularly voluntary, qualitative disclosure, will have the power to shift the allocation of capital, will have a significant effect on the management of climate risk within firms, and ultimately will reduce climate change risk and biodiversity loss.

In this Article, several interrelated questions will be discussed. First, what does the empirical evidence …

Allocative Justice As A Constraint On Fiscal Imperialism In International Tax, Okanga Ogbu Okanga, Kim Brooks

Articles, Book Chapters, & Popular Press

Taxpayers’ cross-border activities often result in two (or more) states claiming the right to tax their income. To address concerns about how those tax liabilities might aggregate and suppress international activities, states typically agree to split the tax base between them. But how can states fairly share tax revenue from cross-border activities? Tax scholars and policymakers offer different normative perspectives to address this inter-nation equity conundrum. In this article, we conceptualize these normative perspectives into two types. One centres on identifying where the economic factors that lead to the ability to produce the income are located (and uses that determination …

Tax Treaty Arbitration: An Unacceptable Surrender Of National Sovereignty Or An Expression Of Sovereign Power?, Kim Brooks, Richard Krever

Articles, Book Chapters, & Popular Press

The release in 2016 by the Organisation for Economic Co-operation and Development of a draft multilateral treaty to modify thousands of global bilateral tax treaties was met with surprisingly strong support by the international community, with many states signing, ratifying, and implementing the treaty. One of the treaty’s most contentious elements is the addition to the dispute resolution measures in bilateral treaties, a process known as mutual agreement procedure, of a mandatory arbitration procedure that is to be available where agreement cannot be reached under the conventional process. In contrast to the mutual agreement procedure, which includes no requirement that …

Us Policy And Pillar 2: The Evolution Of Us Tax Policy Toward Oecd Pillar 2 And Its Global Implications, Reuven S. Avi-Yonah

Articles

This paper analyzes the United States’ evolving position on OECD Pillar 2, focusing on the Trump administration’s initial rejection and subsequent negotiations to exempt US multinationals from the Undertaxed Profits Rule (UTPR). It examines the legislative and diplomatic strategies that led to international acceptance of GILTI as a valid IIR. The analysis concludes that the resulting compromise preserves US tax sovereignty while maintaining the global framework’s integrity.

Un Tax Negotiations: North-South Tensions And The Challenge Of Institutional Legitimacy, Assaf Harpaz

Scholarly Works

The drafting process for a United Nations Framework Convention on International Tax Cooperation, along with two early protocols, is now underway. A UN framework convention represents a Global South effort to shift international tax policymaking from the OECD to the UN. For developing countries, the UN has long been viewed as a more inclusive space for tax policy negotiations, producing more favorable but historically less influential standards compared to the OECD.

Support for the UN framework convention, including its terms of reference, has been sharply divided across traditional Global North-South lines. The backlash following the OECD’s recent two-pillar reform triggered …

Global Tax Wars In The Digital Era, Assaf Harpaz

Scholarly Works

The digital economy fundamentally disrupts international tax principles that rely on physical presence. When a business earns income abroad, the country of residence (where the taxpayer resides) and the country of source (where income is generated) both have legitimate, competing claims to tax that income. The international tax system tends to favor residence-based taxation. The source country has the right to tax business profits only if the enterprise carries on a permanent establishment within its borders, which typically requires physical presence. The permanent establishment standard becomes flawed in a digital economy where profit shifting practices are abundant and businesses no …

International Economic Agreements As Impediments To Carbon Tax Climate Change Mitigation: Is The Un Framework Tax Convention The Way Forward?, Edwin Vanderbruggen

Indian Journal of International Economic Law

This article outlines some of the international legal impediments to domestic environmental tax policies in furtherance of climate change mitigation, i.e. certain WTO rules on trade in goods, fuel tax exemptions in aviation treaties, and tax stabilisation provisions that are protected under the umbrella clause of investment treaties. It argues that international action is the most effective and often the only option to address those legal obstacles. The emergence of the United Nations Framework Convention on International Tax Cooperation (‘FTC’) is, in that regard, a timely development. Given the central institutional role UN-related bodies already have in climate change, sea …

A New Governance Framework In Cross-Border Tax Policymaking, Tamir Shanan, Doron Narotzki, Noam Zamir

Brooklyn Journal of Corporate, Financial & Commercial Law

The first tax treaty can probably be traced to the end of the 19th century: the treaty between the Swiss Federal Council (on behalf of the Canton of Vaud) and Great Britain. However, most tax scholars refer to the period following World War I, including the work of the League of Nations, as the formative period in which the international tax regime was founded. In the 1920s, the League of Nations formed a committee of four renowned economists that was asked to formulate a set of rules that would assist states in allocating taxing rights of cross-border income and gains …

Outlier On Lgbtq Rights: Japanese Ban On Same-Sex Marriage And Its Contradiction In The Age Of Globalization, Yumi Higashi

Brooklyn Journal of International Law

Japan is the only Group of Seven country yet to recognize same-sex marriage. Despite strong public support for marriage equality, the conservative dominance of the Japanese legislature and the Japanese courts’ deferential approach have stalled the change. This Note will analyze the legal issues and implications of Japan’s failure to recognize same-sex marriage and Japan’s worldwide inheritance tax regime, with an emphasis on cross-border succession and estate planning. Specifically, the Note argues that the United States, as the only country with which Japan has a treaty in estate, inheritance, and gift tax, should renegotiate the treaty as it could have …

Taxation's Limits, Luís C. Calderón Gómez

Northwestern University Law Review

Countless pages have been devoted to the question of why everyone should pay tax, yet its opposite has gone largely unnoticed: why should some people and organizations not pay tax? Our tax system exempts from ordinary income taxation a wide and diverse array of people and organizations engaged in significant economic activity—from parents providing childcare services for their family to consular activities and charities operating animal shelters—seemingly without a convincing explanation. Perhaps because of the dizzying diversity of tax-exempt activities, scholars and policymakers have avoided comprehensively or coherently justifying our exemption regimes.

This Article develops a novel normative theory that …

The U.N. Framework Tax Convention: Can It Bridge The North-South Divide?, Assaf Harpaz

Scholarly Works

The United Nations recently concluded the second session of negotiations on terms of reference for a framework convention on international tax cooperation. The framework convention presents an opportunity to multilaterally address pressing global tax issues. Its goal is to “strengthen international tax cooperation and make it fully inclusive and more effective.” The extensively negotiated terms of reference make several substantive commitments, including the fair allocation of taxing rights; tax evasion and avoidance by high-net worth individuals; sustainable development; mutual administrative assistance in tax matters; tax-related illicit financial flows; and prevention and resolution of tax disputes. The ongoing multilateral effort brings …

United Nations: Will It Take The Road ‘Less Traveled’ In International Taxation?, Ashrita Prasad Kotha

Popular Media

Excerpt:

"We are amid what promises to be a significant moment in international tax law. Recently, an ad hoc committee of experts held extensive meetings in New York to draft the terms of reference for future work on international tax cooperation. The work responds to the UN General Assembly Resolution 78/230 passed in December 2023 which steers the path for UN to work towards a fully inclusive and effective international tax cooperation. The UN General Assembly Resolution was prompted by a resolution tabled by the representative of Nigeria on behalf of the African Group of countries.

[...]This ad hoc committee …

Dol Fiduciary Rule 3.0 Strikeout, Base Knock, Or Home Run?, Antolin Reiber

DePaul Business & Commercial Law Journal

No abstract provided.