Tax Law Commons^™

Strategic Nonconformity, State Corporate Income Taxes, And The Tcja: Part Ii, David Gamage, Darien Shanske, Adam Thimmesch

Faculty Publications

States will soon be facing dire revenue needs because of COVID-19. This article is part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations

backed by research.1 As we have explained previously,2 in the absence of sufficient federal action, states should prioritize raising revenue through targeted taxes on economic actors that are best enduring the crisis, rather than cutting services needed to protect their economies or residents suffering more from the crisis. Here we focus on how states could raise revenue by rethinking whether and how to …

A Taxing Dilemma: Robot Taxes And The Challenges Of Effective Taxation Of Ai, Automation And Robotics In The Fourth Industrial Revolution, Robert J. Kovacev

The Contemporary Tax Journal

No abstract provided.

Fatca, The U.S. Congressional Black Caucus, And The Oecd Blacklist, Steven Dean

Faculty Scholarship

It may no longer be fashionable to refer to the United States as a melting pot, but it remains an incredibly heterogenous country. Both in terms of the race of those born there and the national origin of its immigrants, the United States has long enjoyed the benefits and burdens that come with diversity.¹ Its diversity can make even a seemingly simple story complicated, producing unexpected twists and surprise endings. This article tells a tale in which diversity helped change the face of international tax policy.

The United States has long wielded great power in international taxation. From the …

Strategic Nonconformity To The Tcja, Part I: Personal Income Taxes, Darien Shanske, Adam Thimmesch, David Gamage

Articles by Maurer Faculty

The dire revenue situation that COVID-19 has created for state and local governments is a well documented and looming reality for state legislatures. We and others have explored a variety of ways that states should respond to this crisis in prior articles as a part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations backed by research. We think, as do many others, that in the absence of sufficient federal action, the states should prioritize raising revenue through targeted taxes on economic actors that are best enduring …

Basis And Bargain Sales: Income Tax And Other Concerns, Bridget J. Crawford, Jonathan G. Blattmachr

Elisabeth Haub School of Law Faculty Publications

In this article, the authors explain the income tax consequences of the sale during lifetime and at death of property for less than fair market value. The authors focus in particular on the tax consequences of a bargain sale by a transferor who wishes to confer some financial benefit on a family member, but leave the rest of her estate to charity. Generally speaking, death-time bargain sales may be preferable to similar transactions during lifetime, if the assets have a low basis pre-death, because of the step up in income tax basis under section 1014. The authors also discuss in …

The Political Economy Of Nigeria’S Digital Tax Experiment, Okanga Ogbu Okanga

Articles, Book Chapters, & Popular Press

In January 2020 when I first read Nigeria’s Finance Act 2019, one of the instinctive questions that came to me was “is Nigeria serious about taxing digital trade now”? There were a few reasons for this skepticism. First, the Act seeks to tax nonresident companies (NRCs) that have a “significant economic presence” (SEP) in Nigeria but then delegates the definition of that pivotal phrase. Second, I questioned how Nigeria can enforce/administer this unilateral tax, which is payable by companies outside its borders. Third, I imagined that Nigeria’s unilateral attempt to tax digital trade could undermine relations with a strategic …

Digitalization And International Tax Dispute Resolution: A Window Of Opportunity For Britacom, Jinyan Li, Nathan Jin Bao, Shanghua Hu, Wei Hu, Matias Zerbino

Articles & Book Chapters

Digitisation technologies are facilitating and transforming tax administration and dispute resolution in various ways. This paper presents some existing and emerging best practices in digitalized tax administration and smart dispute resolution. Inspired by the objectives of the Belt & Road Initiative and BRITACOM and these best practices, this paper suggests that BRITACOM take advantage of digitisation and seize upon the unprecedented opportunity to create a digitalized mechanism for resolving cross-border tax disputes among Belt & Road jurisdictions.

Taxation Of Intangibles, Jinyan Li, Angelo Nikolakakis

Articles & Book Chapters

This paper examines the tax treatment of intangibles in Canada and recent developments internationally. It suggests that the special features of intangibles and the rapid rise of intangibles as value-drivers in the global economy may render existing tax rules inadequate in defining Canada’s tax base and/or competing for investment in research and development in Canada. Recent developments at the international level (such as the BEPS Project) and national level (such as US 2018 tax reform and changes in Japan, UK and China to implement BEPS recommendations) may point to some directions for Canada to consider.

"Do Lawyers Need Economists?" Review Of Economic Transplants: On Lawmaking For Corporations And Capital Markets, Reuven S. Avi-Yonah

Reviews

Katja Langenbucher’s outstanding book seeks to address the question of why and in what ways have lawyers been importing economic theories into a legal environment, and how has this shaped scholarly research, judicial and legislative work? Since the financial crisis, corporate or capital markets law has been the focus of attention by academia and media. Formal modelling has been used to describe how capital markets work and, later, has been criticized for its abstract assumptions. Empirical legal studies and regulatory impact assessments offered different ways forward. This excellent book presents a new approach to the risks and benefits of interdisciplinary …

Portrait Of A Tax Transplant Artist, Kim Brooks

Articles, Book Chapters, & Popular Press

This article explores the process of norm migration through the study of one tax expert, Victor Thuronyi. It situates the literature on the role of experts in tax norm migration and identifies core themes and gaps in the tax transplant literature; explores five themes, connected to the literature on the role of tax experts and tax transplants, that arise from a study of Victor Thuronyi’s contributions to tax transplantation; and concludes with some reflections on the benefits and challenges of having highly specialized, non-insider tax experts engaged in the exercise of drafting tax laws.

Revisiting The Automation Tax Debate In Light Of Covid-19 And Resulting Structural Unemployment, Vincent Ooi

Research Collection Yong Pung How School Of Law

As lockdowns ease around the globe and businesses reopen, the threat of jobs being automated by machines and workers being displaced as a result has significantly increased. Businesses must keep the number of workers on site to a minimum to comply with safe distancing measures. Under these constraints while social distancing remains the norm, automation might be the way forward for companies that still want to continue production while minimising human contact. The threat of a workforce being replaced by robots and automation, a threat that has already alarmed the labour movement, is heightened with Covid-19. There will be considerable …

The Tax Treatment Of Haircuts In Financial Reorganizations, Aurelio Gurrea-Martinez, Vincent Ooi

Research Collection Yong Pung How School Of Law

Over the past few years, Singapore has implemented various ambitious insolvency reforms aimed at making the country an international hub for debt restructuring. This article argues that while Singapore has put in place one of the most sophisticated restructuring frameworks in the world, some tax reforms might be useful to maximise the potential of this new restructuring framework. Namely, it will be pointed out that the tax treatment of debt forgiveness granted by creditors in corporate reorganisation (‘haircuts’) should be reviewed. Under the current legislation, these haircuts may be treated as taxable income. As a result, financially distressed debtors may …

Debugging Irs Notice 2014-21: Creating A Viable Cryptocurrency Taxation Plan, Alex Ankier

Brooklyn Law Review

In 2014, the Internal Revenue Service (IRS) issued Notice 2014-21 in an attempt to address issues with cryptocurrency taxation, essentially reaching the conclusion that cryptocurrency must be treated like property for purposes of taxation. In the time since the IRS pronouncement, several academics have called for an alternative treatment known as “currency treatment.” Each treatment inadequately addresses the comprehensive issues surrounding cryptocurrency because they offer wholesale treatment to nuanced issues with valid concerns from each side. To truly allow this emerging industry to flourish and gain societal acceptance, artful policymaking is required. This note provides an example of such policymaking. …

South Dakota V. Wayfair: An Ill-Conceived Blow To The Free Flow Of Interstate Commerce, Revel Shinn Atkinson

Brooklyn Journal of Corporate, Financial & Commercial Law

For more than a century, brick-and-mortar retailers have been losing local customers—first with the rise of mail-order houses and then more acutely with the rapid growth of online retail. As a result, states have noticed a significant loss in sales tax revenue. While an equivalent amount of tax is typically still owed to the state in the form of a use tax, which is to be remitted to the state by the customer, because these taxes are not automatically collected at the time of the sale, customers have overwhelmingly elected not to pay them. In an effort to recover this …

Reforming State Corporate Income Taxes Can Yield Billions, Darien Shanske, Reuven S. Avi-Yonah, David Gamage

Articles by Maurer Faculty

The federal government should be providing states and localities with hundreds of billions of dollars in aid. The arguments against such aid, including the claim that the states have somehow been profligate, do not stand up to scrutiny. Nevertheless, it seems unlikely that the federal government will do enough, and it is already the case that the federal government is acting too slowly. States and local governments, which generally operate under balanced budget constraints, are, accordingly, already making sweeping cuts4 that will deepen the recession and reduce services when they are most needed.

Rather than make these cuts, it would …

Pub. L. No. 86-272 And The Anti-Commandeering Doctrine: Is This Anachronism Constitutionally Vulnerable After Murphy V. Ncaa?, Matthew A. Melone

Michigan Business & Entrepreneurial Law Review

State taxing authority suffers from little of the structural impediments that the Constitution imposes on the federal government’s taxing power but the states’ power to tax is subject to the restrictions imposed on the exercise of any state action by the Constitution. The most significant obstacles to the states’ assertion of their taxing authority have been the Due Process Clause and the Commerce Clause. The Due Process Clause concerns itself with fairness while the Commerce Clause concerns itself with a functioning national economy. Although the two restrictions have different objectives, for quite some time both restrictions shared one attribute—a taxpayer …

Borrowing From Millennials To Pay Boomers: Can Tax Policy Create Sustainable Intergenerational Equity?, Jonathan B. Forman, Roberta F. Mann

Georgia State University Law Review

At the outset, Part I of the Article provides an overview of sustainable intergenerational justice and tax policy. Part II then provides an overview of the U.S. tax system, deficits, and public debt. Part III then considers how taxes can influence the level of resources that are available to future generations, and Part IV considers how taxes can influence the mix of resources that are available to future generations.

Reforming State Corporate Income Taxes Can Yield Billions, Darien Shanske, Reuven S. Avi-Yonah, David Gamage

Articles

In this installment of Academic Perspectives on SALT, the authors argue that the current crisis is the perfect time to make revenueraising reforms to state corporate income taxes — reforms that would have been desirable policy improvements even during an economic upturn, but that are even more clearly good policy moves in light of the current and upcoming state economic and budgetary crises.

Medical Marijuana, Taxation, And Internal Revenue Code Section 280e, Douglas A. Kahn, Howard J. Bromberg

Articles

Congress enacted § 280E of the Internal Revenue Code in 1982 to punish businesses engaged in illegal drug trafficking, including marijuana. Section 280E denies all credits and deductions, including ordinary business expenses, from gross income of businesses illegally trafficking in a Schedule I or II controlled substance. This provision violates the principle that the tax code should foster a consistent treatment of income, regardless of source; and that the income tax is ill-used for punitive measures. Now that marijuana has been legalized in some form in at least 46 states for therapeutic purposes, this federal tax penalty transgresses principles of …

Wayfair Or No Fair: Revisiting Internet Sales Tax Nexus And Consequences In Texas, Jennifer Mendez Lopez

St. Mary's Law Journal

Since 1967, the Supreme Court has revisited the issue of nexus requirements in interstate commerce to keep up with social and technological advancements. However, these restrictive requirements have deprived states of a substantial tax basis. As technology continues to develop exponentially, this presents the need for a new standard that overturns precedent case law. Specifically, the Internet has grown and now necessitates the consideration for and e-commerce taxation collection.

South Dakota v. Wayfair, Inc. correctly decided that states have the power to collect taxes from qualifying out-of-state businesses without the need for a physical presence. Wayfair is moving in the …

Sharp Lines And Sliding Scales In Tax Law, Edward Fox, Jacob Goldin

Articles

The law is full of sharp lines, where small changes in one’s circumstances lead to significant changes in legal treatment. In many cases, a sharp line can be smoothed out by replacing it with a sliding scale. Under a sliding scale, small changes in one’s circumstances lead to small changes in legal treatment. In this paper, we study the policy choice between sharp lines and sliding scales in tax law. We focus on considerations relating to efficiency, complexity, administration, tax planning, and the objectives of specific provisions. Although sharp lines are currently widespread in tax law, we argue that sliding …

Tax And Arbitration, William W. Park

Faculty Scholarship

When fiscal measures intertwine arbitration, undue mystification sometimes follows. To enhance analytic clarity, tax-related arbitration might be divided into three parts. The first derives from ordinary commercial disputes that become laced with incidental tax questions. A corporate acquisition, for example, might carry tax consequences which in turn implicate contract claims or defences presented to an arbitral tribunal for resolution. The second genre of tax-related arbitration arises in respect of cross-border investment disputes. Rightly or wrongly, foreign investors often perceive host-country fiscal enactments as discriminatory, unfair, or tantamount to expropriation, thus violating international commitments. Finally, arbitration comes into play under income …

Exploiting The Charitable Contribution Deduction’S Hypersalience, Eric S. Smith

Utah Law Review

Hypersalience describes the cognitive error that occurs when taxpayers are highly aware of a tax provision generally, but fail to correctly perceive its associated limitations. The charitable contribution deduction provides a strong example of hypersalience as taxpayers have general awareness that tax benefit follows charitable giving, but often fail to understand the deduction’s limits—most notably the standard deduction’s preclusion to any direct tax benefit for charitable giving. As cognitive error drives inaccurate perception of the tax law, the question arises: what, if anything, should the government do to correct taxpayer understanding?

This paper considers this question from two perspectives. The …

A Proposal For Taxing Cryptocurrency In The Midst Of The Covid-19 Pandemic, Richard Thompson Ainsworth, Xiuyuan (Tony) Hu

Faculty Scholarship

In this article, the authors present the case for a globally effective remedial tax on cryptocurrency transactions that could help fund multinational relief efforts, such as providing aid to jurisdictions affected by the COVID-19 virus and countries fighting the opioid crisis.

Taxes In The Time Of Coronavirus: Is It Time To Revive The Excess Profits Tax?, Reuven S. Avi-Yonah

Law & Economics Working Papers

A recent NY Times headline summarizes one of the biggest economic impacts of the current pandemic: “Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever.” At a time when most American citizens and businesses suffer catastrophic economic damage from the Coronavirus Recession, some corporations such as Amazon, 3M, Gilead, and Zoom see their profits rise dramatically because of the pandemic. Given that most corporations are losing money but some are now earning excess profits due to the crisis, it is time to revive the wartime excess profits taxes that the US deployed in WW1 and WW2 to prevent the …

States Should Consider Partial Wealth Tax Reforms, David Gamage, Darien Shanske

Articles by Maurer Faculty

This article is a contribution to Project SAFE (State Action in Fiscal Emergencies). In other essays in this project, we explain steps the federal government should take to help state and local governments cope with their looming budget crises. The federal government is much better positioned to manage these crises than states and localities and, ideally, it would act sufficiently to prevent the need for state and local governments to cut spending or raise taxes. However, we fear that the federal government may fail to act sufficiently, leaving states and localities with the need to make painful spending cuts, raise …

Qap Out: Why The Federal Government Should Require More From How States Allocate Low-Income Housing Tax Credits, Connor Blancato

Journal of Law and Policy

Prohibitively high land acquisition and construction costs block affordable housing developers from using the Low-Income Housing Tax Credit program in high opportunity areas. Policymakers must study the history of housing policy in the United States and realize that the LIHTC program works because it suitably balances previously problematic private-market competition, federalism concerns, and compliance issues. Federal lawmakers can look to Qualified Allocation Plans drafted by individual states as a way to encourage the construction of affordable housing without upsetting this equilibrium. To encourage such development, the federal government can require states, in determining tax credit allocations through QAPs, to give …

Into The "Vortex Of Legal Precision": Access To Justice, Complexity, And The Canadian Tax System, Colin Jackson

PhD Dissertations

This thesis is an exploration of access to justice issues in the Canadian tax system. Drawing on the work of Roderick Macdonald, it argues for a broad conception of access to justice based on the empowerment of individuals in all of the sites, processes, institutions where law is made, administered, and applied. It argues that tax law shows the usefulness of this comprehensive approach to access to justice. Using the comprehensive approach to access to justice, the thesis goes on to argue that legal complexity should be seen as an important access to justice issue in tax law. It lays …

How The Federal Reserve Should Help States And Localities Right Now, Darien Shanske, David Gamage

Articles by Maurer Faculty

The COVID-19 pandemic is a giant catastrophe, but the Federal Reserve can still mitigate the looming fiscal crises facing state and local governments. This article — a contribution to Project SAFE (State Action in Fiscal Emergencies) — builds on our prior background essay explaining state and local budget issues.

The 2017 Tax Cuts And Jobs Act: Analyzing Its Financial Impact On Division I Universities, Judge Nash Mcwithey

Honors Theses

The Tax Cuts and Jobs Act has had a substantial impact in the United States since its inception in 2017. This tax code overhaul has had a profound effect on the way Division I universities operate their athletic department operations and fundraising efforts. By creating new channels of federal tax revenues and eliminating deductions, such as the “80/20” premium seating deduction that has been used by universities, athletic programs have already begun to see a shift in how they must operate. This modification is done in order to avoid any major repercussions from the new tax code. This thesis discusses …