Tax Law Commons^™

Addressing The Stale Line Of Sports-Betting Behavior: Examining The Economic Shortfalls And Tax Solutions In Legalizing Sports Betting, Peyton Rameas

Vanderbilt Journal of Entertainment & Technology Law

Sports betting is a form of gambling that does not suffer from the same negative social stigma as casino gambling despite its equally addictive properties and damaging impact on household consumption. While sports betting was previously banned in most of the United States, following the Murphy v. National Collegiate Athletic Association decision, which empowered states to regulate sports betting within their borders, a wave of states that previously banned all forms of sports betting legalized the practice. Unsurprisingly, this rapid legalization of sports betting was accompanied by a flurry of statewide regulations, leading to disparate consumer protection across the states. …

The Myth Of Credit Card Competition, Benjamin Dinovelli

Vanderbilt Law Review

You pay an invisible tax every time you swipe your credit card to pay—whether to buy groceries, grab a coffee, or access transportation. Credit card companies charge merchants to process your transaction, who in turn increase their own prices. These swipe fees are both extractive—higher than the cost of service and the fees in most other countries—and regressive—placing more of the cost burden on lower-income consumers and smaller merchants. Such outcomes are typically associated with firms having material market power. Yet, this market has competition: Consumers choose various cards offered by multiple card issuers, including banks and networks like American …

The Missing "T" In Esg, Danielle A. Chaim, Gideon Parchomovsky -- Professor Of Law

Vanderbilt Law Review

Environmental, social, and governance (“ESG”) philosophy is the zeitgeist of our time. The rise of ESG investments came against the perceived failure of the government to adequately promote socially important goals. And so, corporations are now being praised and credited for stepping up where the government has fallen short. In this Essay, we contend that the standard narrative of ESG suffers from a major flaw. The reason for this discrepancy is taxes. The companies that are widely perceived as saviors of the ESG era are in fact the cause of some of the main deficiencies ESG seeks to redress. Astoundingly, …

The Inequity Of Informal Guidance, Joshua D. Blank, Leigh Osofsky

Vanderbilt Law Review

The coexistence of formal and informal law is a hallmark feature of the U.S. tax system. Congress and the Treasury enact formal law, such as statutes and regulations, while the Internal Revenue Service offers the public informal explanations and summaries, such as taxpayer publications, website frequently asked questions, virtual assistants, and other types of taxpayer guidance. Throughout the COVID-19 pandemic, the IRS increased its use of informal law to help taxpayers understand complex emergency relief rules implemented through the tax system.

In contrast to many other legal scholars who have examined important administrative law issues regarding informal tax guidance, in …

Executive Compensation In The Charitable Sector: Beyond The Tax Cuts And Jobs Act, Lauren Rogal

Vanderbilt Law School Faculty Publications

The Tax Cuts and Jobs Act of 2017 (“TCJA”) reformed charity executive compensation for the first time in decades, introducing an across-the-board excise tax on compensation over $1 million.1 Its enactment represents a significant step toward securing accountability for the use of the charitable tax exemption under Section 501(c)(3) of the Internal Revenue Code. These organizations receive preferential tax treatment to subsidize their provision of socially beneficial outputs that would otherwise be undersupplied. Overcompensation of charity executives subverts this purpose by diverting those subsidies for private gain and undermining public confidence in the charitable sector.

With the enactment of the …

Private Benefits In Public Offerings: Tax Receivable Agreements In Ipos, Gladriel Shobe

Vanderbilt Law Review

Historically, an initial public offering ("IPO") was a process whereby a company sold all of its underlying assets to the public. A new tax innovation, the "tax receivable agreement" ("TRA'), creates private tax benefits in public offerings by allowing pre-IPO owners to effectively keep valuable tax assets for themselves while selling the rest of the company to the public. Prior to 2005, TRAs were almost never used in IPOs. Today they have become commonplace, changing the landscape of the IPO market in ways that are likely to become even more pronounced in the future. This Article traces the history of …

How Countries Should Share Tax Information, Arthur J. Cockfield

Vanderbilt Journal of Transnational Law

Offshore tax evasion, international money laundering, and aggressive international tax planning significantly reduce government revenues. In particular, for some low-income countries the amount of capital flight (where elites move and hide monies offshore in tax havens) exceeds foreign aid. Governments struggle to enforce their tax laws to constrain these actions, and they are inhibited by a lack of information concerning international capital flows. The main international policy response to these developments has been to promote global financial transparency through heightened cross-border exchanges of tax information. The Article examines elements of optimal cross-border tax information exchange laws and policies by focusing …

When Tech Startups Outgrow The 1099 Model: Moving Firms Out Of The Kiddie Pool, Chelsea Fitzgerald

Vanderbilt Journal of Entertainment & Technology Law

The 1099 independent contractor has become the new norm for Silicon Valley startups. In the wake of the Ninth Circuit Court of Appeals decision in Alexander v. Fed Ex, tech startups have been scrutinized for their financially savvy preference for 1099 contractors through both class action lawsuits and administrative proceedings. As these movers and shakers grow from humble beginnings to companies with multi-billion dollar valuations, the choice between classifying workers as traditional W-2 employees or 1099 contractors will have dramatic effects on the peer economy's labor force and tax status. This Note examines the startup worker classification dilemma, concludes that …

Curb Your Enthusiasm For Pigovian Taxes, Victor Fleischer

Vanderbilt Law Review

Pigovian (or "corrective") taxes have been proposed or enacted on dozens of harmful products and activities: carbon, gasoline, fat, sugar, guns, cigarettes, alcohol, traffic, zoning, executive pay, and financial transactions, among others. Academics of all political stripes are mystified by the public's inability to see the merits of using Pigovian taxes more frequently to address serious social harms, some even calling for the creation of a "Pigovian state." This academic enthusiasm for Pigovian taxes should be tempered. A Pigovian tax is easy to design-as a uniform excise tax-if one assumes that each individual causes the same amount of harm with …

If You Can't Beat Them, Join Them: The U.S. Solution To The Issue Of Corporate Inversions, Scott Deangelis

Vanderbilt Journal of Transnational Law

There is an old proverb, "If you can't beat them, join them, "that suggests that those who cannot win against some group should stop fighting and instead band together with them. It seems clear that when it comes to corporate inversions, the United States cannot win. Instead, countries overseas have taken advantage of tax break schemes to lure multinational companies away from the United States. This Note suggests that to prevent further foreign inversions, the United States should join these foreign countries in two ways. First, the United States should put its support behind the OECD's plan of a multilateral …

Strange Bedfellows: The Federal Constitution, Out-Of-State Nongrantor Accumulation Trusts, And The Complete Avoidance Of State Income Taxation, Jeffrey Schoenblum

Vanderbilt Law Review

With the maximum rate of federal income tax at 39.6 percent, the Medicare surtax on investment income of 3.8 percent, and some state income tax rates exceeding 9 percent, taxpayers in the highest brackets have been seeking to develop strategies to lessen the tax burden. One strategy that has been receiving increased attention is the use of a highly specialized trust known as the NING, a Nevada incomplete gift nongrantor trust, which eliminates state income taxation of investment income altogether without generating additional federal income or transfer taxes. A major obstacle standing in the way of accomplishing this objective, however, …

Strange Bedfellows: The Federal Constitution, Out-Of-State Nongrantor Accumulation Trusts, And The Complete Avoidance Of State Income Taxation, Jeffrey Schoenblum

Vanderbilt Law School Faculty Publications

With the maximum rate of federal income tax at 39.6 percent, the Medicare surtax on investment income of 3.8 percent, and some state income tax rates exceeding 9 percent, taxpayers in the highest brackets have been seeking to develop strategies to lessen the tax burden. One strategy that has been receiving increased attention is the use of a highly specialized trust known as the NING, a Nevada incomplete gift nongrantor trust, which eliminates state income taxation of investment income altogether without generating additional federal income or transfer taxes. A major obstacle standing in the way of accomplishing this objective, however, …

The Supercharged Ipo, Victor Fleischer, Nancy Staudt

Vanderbilt Law Review

A new innovation on the IPO landscape has emerged in the last two decades, allowing owner-founders to extract billions of dollars from newly public companies. These IPOs-labeled supercharged IPOs-have been the subject of widespread debate and controversy: lawyers, financial experts, journalists, and members of Congress have all weighed in on the topic. Some have argued that supercharged IPOs are "brilliant, just brilliant," while others have labeled them "underhanded" and "bizarre."

In this Article, we explore the supercharged IPO and explain how and why this new deal structure differs from the more traditional IPO. We then outline various theories of financial …

The Oecd's Flawed And Dated Approach To Computer Servers Creating Permanent Establishments, Monica Gianni

Vanderbilt Journal of Entertainment & Technology Law

As the digital economy changes the way that we do business, tax laws have been challenged to adapt appropriately to this nontraditional business method. International tax rules were developed in a different technological era. To accommodate electronic commerce, existing tax rules either have to be applied to electronic-commerce transactions, or new rules have to be developed. The Organisation for Economic Co-operation and Development (OECD) has taken the lead in studying and recommending appropriate international taxation rules for electronic commerce. This Article focuses on the original central tax issue that the OECD considered--jurisdiction to tax income from electronic commerce based on …

Unpacking The Force Of Law, Kristin E. Hickman

Vanderbilt Law Review

In its 2011 decision in Mayo Foundation for Education and Research v. United States,' the Supreme Court rejected tax exceptionalism, holding that the general administrative law standards articulated in United States v. Mead Corp. and Chevron USA Inc. v. Natural Resources Defense Council, Inc. govern judicial review of U.S. Department of the Treasury ("Treasury") regulations. In so doing, the Court admonished, "[W]e are not inclined to carve out an approach to administrative review good for tax law only." A few months later, the D.C. Circuit, sitting en banc in Cohen v. United States, reinforced the policy of administrative law uniformity …

Tax Incentives For Innovation In A Modern Ip Ecosystem, Joshua Chao

Vanderbilt Journal of Entertainment & Technology Law

Technological innovation is a long-recognized catalyst for economic growth in the United States, and its promotion is an important feature of national economic policy, as evidenced by the presence of various tax incentives for innovation in the US Internal Revenue Code. Tax incentives are an important means by which governments can deliver subsidies to promote such innovation. To be effective, however, any system of tax incentives must be tailored for current economic conditions and competitive landscapes. In the current ecosystem of innovation in the United States, this means that, at the very least, the incentives for innovation in the US …

Islamic Law Meets Erisa: How America's Private Pension System Unintentionally Discriminates Against Muslims And What To Do About It, Beverly I. Moran

Vanderbilt Law School Faculty Publications

This article asks whether Muslims whose religious beliefs prevent investment in their employers’ private pension plans have a right to religious accommodation. This is a real issue for a growing part of the population whose spiritual lives are governed by rules that prohibit the giving or taking of interest. As one might expect, the investments available through most American pension plans involve some aspect of interest making those investments unsuitable retirement vehicles for devote Muslims. Consequently, in order to secure their retirement income, Muslims are faced with either violating their religious beliefs, losing years of investment opportunity as they wait …

Piercing The Veil Of Secrecy: Securing Effective Exchange Of Information To Remedy The Harmful Effects Of Tax Havens, Hedda Leikvang

Vanderbilt Journal of Transnational Law

The enforcement of tax laws abroad has long posed problems for authorities. However, that enforcement becomes increasingly more problematic when the information necessary for proper enforcement is located within an impenetrable system whose sole purpose is to protect that information from tax authorities in other countries. Although much effort has been expended to remedy the harmful effects of tax havens, few strategies have succeeded. But with the prospects of a record federal deficit and an ever-increasing tax gap, U.S. authorities have begun to look for new ways to strengthen the enforcement of U.S. tax laws abroad. The most prominent of …

How To Kill The Scapegoat: Addressing Offshore Tax Evasion With A Special View To Switzerland, Niels Jensen

Vanderbilt Law Review

It began with headlines of nearly $20 billion in hidden assets, 52,000 secret bank accounts, confidential informants, court proceedings, and a $780 million fine.' The Union Bank of Switzerland ("UBS") controversy, with all its dramatic appeal, attracted international attention and brought taxation issues to the forefront of public debate. As the scope of tax evasion activities involving UBS began to unfold, U.S. authorities on numerous fronts mobilized against international tax haven abuse-a problem much broader in scope than the scandal at hand.

In order to attract foreign capital to their respective markets, many countries have enacted favorable tax laws with …

Why Every State Should Have An Income Tax (And A Retail Sales Tax, Too), Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

Some states (like Florida and Texas) collect retail sales taxes but no income taxes; one state (Oregon) collects income taxes but no retail sales taxes; most states collect both. This paper examines the decision of a state to collect retail sales taxes, income taxes, or both in light of the state's spending policy and the ability of at least some of the state's residents to strategically migrate to another state (to take advantage of a more favorable mix of taxes and benefits). It concludes that states that rely solely (or even primarily) on either a retail sales tax or an …

Rationalizing The Taxation Of Reorganizations And Other Corporate Acquisitions, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

This article examines the taxation of human shareholders in the case of mergers and acquisitions. Currently, the relevant law is extraordinarily complex, utterly inconsistent, and in many instances arguably unfair. There are really only two plausible ways to cure these ills. The first would involve moving to a tax system with more fulsome gain recognition, most likely in the form of mark-to-market taxation. This option is not in my opinion feasible (either technically or what is perhaps more important, politically). Accordingly, the second potential cure, moving to a tax system with less gain recognition, merits attention. In this article, I …

Hand-Holding, Brow-Beating, And Shaming Into Compliance, Craig A. Max

Vanderbilt Journal of Transnational Law

Tax authorities and policy planners have a variety of tools at their disposal to create mechanisms to encourage and enforce compliance with revenue collection systems. Traditionally, these mechanisms include the possibility of criminal prosecution as well as civil pecuniary sanctions. Despite the dominate role that prosecution and pecuniary sanctions hold internationally, there exists a range of alternative enforcement mechanisms utilized. The United States has recently started to implement nonpecuniary enforcement devices to achieve policy goals, namely the encouragement of participating with the federal taxing system. This Note attempts to take an initial step into exploring the range of international enforcement …

A Minimalist Approach To Corporate Income Taxation, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

An ever-shrinking hallmark of our federal income tax system is the apparent double taxation of some, but not all, business income. That is, some business income ultimately flows to the human shareholders of C corporations. These corporations pay corporate income tax on the taxable income they generate. Then, as and when such corporations distribute their after-corporate-income-tax income to their human shareholders (or equivalently, as and when their human shareholders sell their shares in such corporations), the human shareholders pay individual income tax on the amounts so distributed (or equivalently, on their capital gains).

A Lifetime Income Tax, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

Under current tax law, there can be considerable period-by-period divergence between a taxpayer's after-tax income and her desired or actual consumption. This divergence will cause the taxpayer to borrow. One can view such borrowing either as being incurred to fund consumption, or as being incurred to fund the taxpayer's income tax payments. If one takes the latter view, one can ask whether a good income tax law should force a taxpayer to borrow to pay her taxes. I answer the question in the negative, and propose a lifetime income tax that would eliminate the need for typical taxpayers to borrow …

Perpetuation Of The Foreign Earned Income Exclusion, Hale E. Sheppard

Vanderbilt Journal of Transnational Law

This Article discusses Section 911 of the Internal Revenue Code, also known as the Foreign Earned Income Exclusion (FEIE), as an example of a provision that has been sustained, not on the basis of sound economic analysis and compliance with established U.S. international tax policy, but rather because of effective lobbying and political circumstance. First providing an overview of the U.S. system of worldwide taxation, and the place of the FEIE within that framework, Mr. Sheppard explores the forces underlying the perpetuation of the FEIE. He demonstrates that FEIE is inconsistent with each of the primary components of U.S. international …

How I Learned To Stop Worrying And Love Double Taxation, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

This Article is divided into three Parts. The first Part is devotedto an example demonstrating that, while double taxation may be gratuitous in a purely domestic context, it invariably becomes necessary in a multinational context. The second Part formalizes and generalizes the example, and concludes that double taxation is not only necessary in a multinational context, but also in any multi-period domestic context. The third Part contains a few policy prescriptions that, I fervently hope, will guide future administrations.

I Come Not To Praise The Corporate Income Tax, But To Save It, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

This Article began with a search for a theoretical underpinning that could explain the structure of the current corporate income tax regime, and found such underpinning lacking. It proposed an alternative underpinning for a "corporate" income tax based on the theory of the firm. The basic idea is that every firm generates incremental economic returns that would not be achieved but for its organizational structure as a firm. Thus, a sovereign could rationally choose to confiscate a portion of such returns, since it has made such returns possible (by enacting legislation that recognizes firms, etc.). (Whether or not a sovereign …

Myth Of Ownership / Myth Of Government, Jeffrey Schoenblum

Vanderbilt Law School Faculty Publications

Indisputably, the lives of all individuals, now and throughout history, have not been commensurate in every respect. No individual has the most of everything at all times - net worth, love, happiness, security, companionship, fame, food, land, grandchildren, or whatever else he or she values.1 Nevertheless, a utopian strain in intellectual thought, emanating as the Enlightenment afterglow,2 continues to place its faith in the public construction of an ersatz equality that has never existed naturally.3 The Myth of Ownership, a recent book by two New York University law/philosophy professors, Liam Murphy and Thomas Nagel, is a striking exemplar of this …

Little Boxes: Can Optimal Commodity Tax Methodology Save The Debt-Equity Distinction?, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

Optimal commodity tax methodology has been proposed as a way of making difficult line drawing decisions in the income tax. This paper explores some practical difficulties with the approach, and concludes that in one area - the debt-equity divide - the approach is unlikely to prove useful over any significant time horizon.

Spontaneous Tax Coordination: On Adopting A Comparative Approach To Reforming The U.S. International Tax Regime, Anthony C. Infanti

Vanderbilt Journal of Transnational Law

The excessive complexity of the U.S. international tax regime is well documented. Although many commentators have cited the need for simplification, their proposals often maximize other policy goals at the expense of simplicity. Even reform proposals aimed principally at clarifying the tax code are ordinarily focused on the "internal" complexity of the code, seeking improvements only for U.S. taxpayers struggling with a single complex provision of the code or the baffling interaction, of two U.S. rules. This Article focuses on the interaction between U.S. tax law and the rules of other nations, and is intended to illustrate the benefits that …