Tax Law Commons^™

The Cashless Corporate Tax, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

Proposals for reforming the federal corporate income tax are neverending and ever-multiplying. They range from those that merely tinker around the edges, such as most recent proposals attacking the various perceived abuses that masquerade under the moniker "corporate tax shelter," to various integration approaches that arguably would gut the enterprise of a corporate income tax altogether. Since everything and the kitchen sink is at least theoretically in play, it seems appropriate to add this modest proposal, which I call the "cashless corporate tax" (CCT). As described below, the CCT is a "tax" that would replace the current corporate income tax-defined …

Bibliography Of Tax Articles In High Prestige Non-Specialized Law Journals: A Comparison Of Australia, Britain, Canada And The United States 1954-2001, Beverly I. Moran

Vanderbilt Law School Faculty Publications

The bibliography surveys all tax articles (but not Notes) from 1954 to 2001 in high prestige law journals in the United States, United Kingdom, Australia and Canada. The bibliography compares number of articles produced in each country and also shows what areas of interest dominate in each market. For example, Canadian journal produce more scholarship on Comparative Taxation while Australian journals are more likely to publish in the area of Evasion and Avoidance.

U.K. Charity Law: Is It Creating A True Democracy Of Giving?, James R. Michels

Vanderbilt Journal of Transnational Law

In November 1999, the British government announced important legislative reforms affecting the various methods of providing charitable contributions. The government expressed its desire to create a "democracy of giving" by expanding tax relief for charitable donations. These changes took effect in April 2000.

This note argues that the recent legislation reforms, while a step in the right direction, do not create a true "democracy of giving." In arriving at this conclusion, the note will outline the evolution of British tax law related to individual charitable donations. The note will also explore the problems experienced by the charitable sector that prompted …

The Zen Of Corporate Capital Structure Neutrality, Herwig J. Schlunk

Vanderbilt Law School Faculty Publications

Given the current tax rate structure - where the marginal tax rate of some persons exceeds the corporate tax rate and the marginal tax rate of others is exceeded by it - corporations are generally well advised to employ both debt and equity in their capital structures. The former will be held by low tax rate taxpayers and will serve to lower the effective aggregate tax rate6 on the corporation's taxable income. The latter will be held by high tax rate taxpayers and will serve to keep low the effective aggregate tax rate on the corporation's unrecognized economic income (such …

Learning To Live With The New Foreign Nongrantor Trust Rules, Carlyn S. Mccaffrey, Elyse G. Kirschner

Vanderbilt Journal of Transnational Law

The Small Business Job Protection Act of 1996 (the 1996 Act) was intended to deal a heavy blow to the appeal of foreign trusts to U.S. persons. The results were mixed. On the one hand, the 1996 Act imposes an array of reporting requirements, imposes harsh penalties on failures to comply with these requirements, increases the interest charge imposed on taxes paid on distributions of accumulated income from foreign trusts, treats loans of cash from foreign trusts as distributions, and expands the kinds of gifts that can be treated as indirect transfers from foreign trusts. On the other hand, curiously, …

Setting An Agenda For A Study Of Tax And Black Culture, Beverly I. Moran

Vanderbilt Law School Faculty Publications

At present the Internal Revenue Code unthinkingly reflects many aspects of white culture including historical opportunities that whites have received for wealth building and marriage. In order for the federal tax laws to tax fairly all cultures within the purview of taxation must also find their values reflected. The article sets out how the tax laws might begin to incorporate black culture.

Respect For "Form" As "Substance" In U.S. Taxation Of International Trusts, Donald D. Kozusko, Stephen K. Vetter

Vanderbilt Journal of Transnational Law

...we might decide that the attribution rule should not be applied so broadly, or so automatically. But how would such a system be devised by regulation? The attribution rule could be applied to trusts in which the discretion of the trustee is very limited and the beneficial interests so clearly ascertainable that the trust is, for all practicable purposes, transparent. That is, however, only a small universe of cases. This leads to the further conclusion that the attribution rule has to be applied based on a facts and circumstances determination of the beneficial interest in each case. Yet that seems …

Emerging Leader Of The Tax Avant-Garde, Andrzej J. Burba

Vanderbilt Journal of Transnational Law

In 1998, Poland's Minister of Finance Leszek Balcerowicz unveiled a plan to restructure the tax system. His fiat tax proposal promises numerous benefits to individual and corporate taxpayers with significant reduction in tax rates for both groups. The new plan offers to further strengthen Poland's growing economy--a consequence that is especially significant in light of the country's aspiration to join the European Union. It provides a remedy for virtually every ailment plaguing the current tax system and, most importantly, the reform offers to finance itself This Note argues that the plan should be adopted immediately for the following reasons: (1) …

A Comparison Of New Zealand Taxpayers' Rights With Selected Civil Law And Common Law Countries, Adrian J. Sawyer

Vanderbilt Journal of Transnational Law

This article seeks to ascertain the breadth of rights that taxpayers enjoy in New Zealand in comparison with their counterparts in a number of common law and civil law jurisdictions. Such a comparison enables the wealth of experience that codification of rights in civil law countries can provide in comparison to the traditionally lower reliance on statutory protection in common law jurisdictions. From this comparative analysis common themes are distilled, as well as differences between New Zealand and various civil law and common law nations with respect to the legal position and state of taxpayers' rights. The author mounts a …

Behavioral Economics Analysis Of Redistributive Legal Rules, Christine Jolls

Vanderbilt Law Review

This Essay offers a behavioral economic analysis of redistributive legal rules. Redistributive legal rules are rules chosen for their effects in shifting wealth from high-income to low-income individuals(progressive redistribution). The desirability of such rules has been the subject of intense debate within the legal community. Many law and economics scholars have urged that legal rules be chosen solely with an eye towards Kaldor-Hicks efficiency (which I will call simply "efficiency" for the remainder of this Essay); these scholars often urge that distributional considerations be addressed (if they are to be addressed at all) exclusively through the tax and welfare systems. …

The Hidden Costs Of The Progressivity Debate, Nancy C. Staudt

Vanderbilt Law Review

Progressive taxation-taxing high income individuals at a proportionally higher level than low income individuals-has sparked more than a century of controversy. Those who support progressive taxation have heralded it as a policy that promotes the greatest good for the greatest number in society protects traditional democratic values, reflects the communitarian world-view of women who see themselves as responsible for the well-being of all individuals, and reveals the "aesthetic judgment" that income inequality is "distinctly evil or unlovely." At the same time, critics have condemned progressive income taxation as social policy that amounts to theft and involuntary servitude, reflects the democratic …

A Comparative Proposal To Reform The United States Gift Tax Annual Exclusion, Jeffrey S. Kinsler

Vanderbilt Journal of Transnational Law

The U.S. tax system receives much criticism. Recurrent themes in criticizing tax laws concern their complexity and the many loopholes relieving the wealthy from large amounts of taxation. This Article demonstrates how very wealthy U.S. taxpayers often do not pay gift and estate taxes. In fact the tax laws do not require these taxes to be paid. The Internal Revenue Code provides mechanisms through which taxpayers can evade estate and gift taxes in the United States. Furthermore, U.S. gift tax laws are extremely generous to taxpayers relative to tax laws of other industrialized countries. This Article analyzes the U.S. gift …

The United States Policy Of Stringent Anti-Treaty-Shopping Provisions: A Comparative Analysis, Simone M. Haug

Vanderbilt Journal of Transnational Law

Tax avoidance through international treaty shopping has become a subject of intense controversy in the international community. By shrewdly structuring businesses, corporations are currently able to take advantage of tax exemptions contained in tax treaties, though the countries that have joined the treaties never intended for them to benefit from such provisions. Many nations, including the United States, view this practice as tax treaty abuse. In response to such abuses, many countries are now incorporating strict anti-treaty-shopping provisions in their bilateral tax treaties.

Ms. Haug begins the Article by describing the practice of treaty shopping and, specifically, the various methods …

Malpractice And Environmental Law: Should Environmental Law "Specialists" Be Worried?, J.B. Ruhl

Vanderbilt Law School Faculty Publications

This article examines the field of environmental law as a potential minefield for malpractice claims given its complex and dynamic nature. The article outlines principles for malpractice law applied to environmental law, based on malpractice principles applied in the tax and patent fields.

Department Of Revenue Of Montana V. Kurth Ranch: The Demise Of Civil Tax Fraud Consequences?, Theresa M. Elliott

Vanderbilt Law Review

In Department of Revenue of Montana v. Kurth Ranch' the United States Supreme Court held, for the first time, that a state tax statute violated the Double Jeopardy Clause of the Federal Constitution. The future impact of this decision has been the subject of much recent speculation. In particular, commentators have debated Kurth's effect on the civil consequences labeled "additions to tax' found in the Internal Revenue Code which are assessed and collected in connection with criminal taxpayer fraud. These additions were examined in Helvering v. Mitchell over fifty years ago, and up-held against a double jeopardy challenge. However, the …

United States Tax Rules For Nonresident Authors, Artists, Musicians, And Other Creative Professionals, Don R. Spellmann

Vanderbilt Journal of Transnational Law

Although the United States rules for taxation of non-resident creative professionals may seem straight forward, the Internal Revenue Code contains significant traps for the unwary nonresident. However, it also offers significant opportunities for nonresidents to protect themselves from United States taxation. Discovering these traps and loopholes requires close attention to the Code and to income tax treaties which further complicate the system. This Note examines the Code's rules on taxation of nonresidents and discusses the effect that tax treaties have on those rules. The Note, intended to be a practical guide for nonresident authors, artists, musicians, and other creative professionals, …

Unfunded Mandates, Hidden Taxation, And The Tenth Amendment: On Public Choice, Public Interest, And Public Services, Edward A. Zelinsky

Vanderbilt Law Review

Few contemporary issues concern state and local policymakers as intensely as unfunded mandates.' Mayors, county executives, city councilmen, and the professional associations representing them routinely argue that the federal and state governments have, in recent years, imposed at an accelerating rate expensive requirements on municipalities without granting corresponding funds for compliance, thereby irresponsibly straining the fiscal capacity of municipalities, hampering their ability to provide essential services, and improperly infringing upon the scope of local control. The complaints of municipal policymakers have provoked a variety of proposals for restraining unfunded mandates: obligatory disclosure of the projected costs of proposed mandates, requirements …

Taxing Gains At Death: A Further Comment, Charles O. Galvin

Vanderbilt Law Review

Professor Lawrence Zelenak's recent Article provides an excellent analysis of the relevant issues and their treatment in a tax regime in which gains and losses are recognized at gifttime and deathtime transfers.' I have argued for the same policy change, suggesting further the repeal of the wealth transfer tax system altogether and possibly the repeal of Section 1022 to require the inclusion in recipients' gross income of gifts, bequests, devises, and inheritances.' Still further, in agreement with Professor Zelenak, I would retain the present concepts of the marital deduction, unlimited charitable deduction for deathtime transfers, and some minimum exemption that …

Third Party Assignment, Statutes Of Limitation, And The Tax Refund Offset Program: Breathe A Little Easier Student Deadbeats, The Fifth Circuit Is On Your Side, Michael S. Smith

Vanderbilt Law Review

The economic downturn of the early 1990s has brought with it a dramatic increase in the number of defaults on student loans.' Legislators have thrashed about trying to plug the collection leaks with a myriad of legislative proposals. Despite this congressional movement, the United States Court of Appeals for the Fifth Circuit recently removed another rock from the dike of federal regulations that prevents the student loan program from completely drowning in unpaid debt. In Grider v. Cavazos, the Fifth Circuit held that Department of the Treasury (Treasury Department) regulations prohibit the Internal Revenue Service (IRS) from offsetting a delinquent …

Common Misconceptions: The Function And Framework Of "Trade Or Business Within The United States", Nancy H. Kaufman

Vanderbilt Journal of Transnational Law

In this Article, Professor Kaufman examines the administrative and jurisdictional functions of the Internal Revenue Code's term "trade or business within the United States" in the taxation of foreign persons' income and the existing framework established for the term's interpretation. The author contends that the courts, by relying on two common misconceptions of the term, have made the term's application unpredictable. The author further believes that defining the term according to its functions would serve United States tax policy and economic interests. This definition would focus primarily on facts indicating an ongoing commitment to participation the United States economy. The …

Navigating The Minefields Of Russian Joint Venture Law And Tax Regulations: A Procedural Compass, Christopher Osakwe

Vanderbilt Journal of Transnational Law

In this Article, Professor Osakwe explores the precarious field of Russian joint venture law and tax regulation. The author gives detailed accounts of the major laws, discusses their evolution, and projects their future course. Additionally, the author notes the continuing influence of USSR law on current Russian joint venture practice. Throughout his analysis, the author provides specific and pragmatic advice for businesses and entrepreneurs considering joint ventures in Russia.

The Taxation Of Nonshareholder Contributions To Capital: An Economic Analysis, Thomas L. Evans

Vanderbilt Law Review

Every year, billions of dollars are contributed to corporations by persons who are neither owners nor shareholders of those corporations. These contributions, categorized under the income tax laws as "non- shareholder contributions to capital," play an important economic role in subsidizing the construction of new factories and other improvements to the nation's infrastructure.

This Article concerns the federal income tax treatment of the two principal categories of nonshareholder contributions to capital, which together encompass the great majority of these transactions. The first category consists of contributions made for the purpose of obtaining economic development. Typically, this occurs when governments and …

Income Tax Rhetoric (Or Why Do We Want Tax Reform?), Beverly I. Moran

Vanderbilt Law School Faculty Publications

The 1992 presidential election is over but the United States economy still faces hard times. Each man who hoped to lead us promised to revive our sick economy, and each cure promised included a strong dose of tax reform. At no time during the campaign or the transition did anyone seem to ask: Can tax reform actually increase employment, lower the deficit, nwerse our trade imbalance, or provide any other boost out of the recession? Why do Americans accept the notion that economic recovery requires tax reform? We did not always think this way. Why does it seem so natural …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

This Case Digest provides brief analyses of cases that represent current aspects of transnational law. The Digest includes cases that establish legal principles and cases that apply established legal principles to new factual situations. These cases are grouped in topical categories and references are given for further research.

TABLE OF CONTENTS

I. ALIENS: CITIZENSHIP AND NATURALIZATION ......... 857

II. TAXATION AND FOREIGN COMMERCE .................. 862

III. AIR CARRIER LIABILITY--WARSAW CONVENTION ........ 865

Books Received, Law Review Staff

Vanderbilt Journal of Transnational Law

Taxation in the People's Republic of China

By Jinyan Li

New York, New York: Praeger Publishers, 1991. Pp. 208. $49.95.

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Liberating the Law: Creating Popular Justice in Mozambique

By Albie Sachs and Gita Honwana Welch

Atlantic Highlands, New Jersey: Zed Books, 1990. Pp. 132. $55.00.

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International Fugitives: A New Role for the International Court of Justice

By Barbara M. Yarnold

New York, New York: Praeger Publishers, 1991. Pp. 168. $37.95.

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Effective Lobbying in the European Community

By James N. Gardner

Boston, Massachusetts: Kluwer Law and Taxation Publishers,1991. Pp. xix, 162. $45.00.

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European Human Rights Law

By …

The Innocent Spouse Problem: Joint And Several Liability For Income Taxes Should Be Repealed, Richard C.E. Beck

Vanderbilt Law Review

Husbands and wives who elect to file joint federal income tax returns are jointly and severally liable for the entire tax due. Ninety-nine percent of married couples who file income tax returns make the election to file jointly, and each spouse thereby incurs personal liability for the other spouse's income taxes.' This Article argues that the rule is unfair and unjustified and should be repealed.

Part II of the Article describes the nature and scope of the problems caused by joint and several liability of spouses filing joint re-turns (hereinafter "joint return liability"). When separation or divorce is involved, the …

Stargazing: The Alternative Minimum Tax For Individuals And Future Tax Reform, Beverly I. Moran

Vanderbilt Law School Faculty Publications

The article uses the provisions of the Alternative Minimum Tax in an attempt to predict the course of future tax reform.

A Capital Tax System To Preserve America's Heritage, Valerie M. Fogleman

Vanderbilt Journal of Transnational Law

This Article looks to the British national heritage capital tax system as a model to propose provisions in the United States Internal Revenue Code to aid in preserving the United States cultural and natural heritage. After an overview of the capital tax systems in Britain and the United States, Ms. Fogleman examines features of the British tax system that promote preservation of the national heritage. The British system conditionally exempts the owners of national heritage assets from estate or gift tax liability on the transfer of those assets in exchange for permitting public access to and maintaining the assets; allows …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

United States Tax Principles Govern Determination of Accumulated Profits Under Foreign Tax Credit Section of Internal Revenue Code, United States v. Goodyear Tire & Rubber Co. 110 S. Ct. 1172 (1990).

Tax Injunction Act Bars Foreign Parent of Subsidiary Doing Business in California from Raising Foreign Commerce Objections to Tax Board's Formula Franchise Tax Board of California v. Alcan Aluminum Ltd. 110 S. Ct. 661 (1990).

Correspondence Bank Account with United States Trust Company Held Insufficient Contact with United States to Establish Subject Matter Jurisdiction under the FSIA--International Housing Ltd. v. Rafidain Bank Iraq, 893 F.2d 8(2d Cir. 1989).

Successful …

1988 Amendment To 26 U.S.C. Section 7430: Expanding Taxpayers' Rights To Recover Costs In Tax Controversies, Debra A. Chini

Vanderbilt Law Review

Bureaucratic mistakes at the Internal Revenue Service (IRS) forced Barbara and David Kaufman to seek a court-ordered injunction prohibiting the IRS from collecting a 14,380 dollar tax assessment for 1980. Even though the Kaufmans had notified the IRS office in Chicago of their new Maine address, the IRS mistakenly mailed the preliminary notice of deficiency to the Kaufmans' prior Illinois address. In addition, the Service mailed the statutory notice of deficiency to another couple also named Barbara and David Kaufman.' Because the Kaufmans never received notice of the proposed deficiency, they did not have an opportunity to contest the tax …