Tax Law Commons^™

Is A Gender-Neutral Income Tax Feasible—Or Desirable?, James Alm, Yvette Lind

Loyola of Los Angeles Law Review

It is increasingly recognized that the individual income tax leads to disparate treatment by race, ethnicity, and gender, even when the statutory tax code is written in a race-, ethnicity-, and gender-blind way. Partly in response to these disparate treatments, there have been many suggestions for moving the income tax to more neutral treatments of taxpayers. In this paper, we focus on a specific aspect of these reform efforts: making the individual income tax gender-neutral. We first examine the many sources of gender non-neutrality in the income tax. We argue that gender non-neutrality arises largely because of deviations of “income” …

Wealth Taxes Under The Constitution: An Originalist Analysis, David M. Schizer, Steven G. Calabresi

Faculty Scholarship

A federal wealth tax is high on the wish list of progressives, but is it constitutional? This Article shows that under the original public meaning of the Constitution, a wealth tax is a “direct tax” that must be apportioned. This means that the percentage of revenue collected in each state must match its percentage of the population. For instance, if two states both have three percent of the population, each must provide three percent of the revenue. This leads to an unappealing outcome: if one state is less wealthy, it needs a higher tax rate to supply its share.

Article …

Reforming The Foreign Tax Credit, Subpart F, And Gilti In Light Of Pillar Two, Andrew Duxbury, Jonathan D. Grossberg, Genevieve Tokic

Akron Law Review

The foreign tax credit has been a cornerstone of the United States international tax system since as early as 1919. However, there have been a number of recent developments in the international tax landscape that warrant a significant revision to the foreign tax credit rules as they apply to controlled foreign corporations (“CFCs”). In particular, the current global tax deal known as the OECD/G20 Inclusive Framework, Pillars One and Two, may cause the United States to lose significant tax revenue if changes are not made to international tax rules, including the foreign tax credit. Thus far, the United States has …

Sovereignty, Sins, And The Reassertion Of Primary Taxing Rights By The United States, Michael J. Graetz

Faculty Scholarship

In this report, Graetz argues that the United States must reassert its primary taxing rights over income long conceded to other countries, especially income from intellectual property created in the United States, and he explains some changes necessary to make that happen.

Taxing The Ten Percent, Alex Raskolnikov

Faculty Scholarship

The United States government is rapidly approaching the point when it will have no choice but to raise taxes. But whose taxes should go up, and why? The argument for higher taxes on the top one percent is well known. The case for higher taxes on the next nine percent is not. This Article makes that case.

Americans with incomes in the top ten percent but not the top one percent are not rich, but they are not middle class either—they are affluent. These affluent Americans have seen mostly tax cuts over the past three decades. Yet today, as progressive …

A Global Wealth Tax?, Reuven S. Avi-Yonah

Articles

Mitt Romney famously said during his 2012 presidential campaign that “corporations are people.” Mindy Herzfeld’s column comparing the proposed 2 percent global wealth tax on billionaires with the corporate minimum tax (pillar 2) raises the opposite question: Are people like corporations for tax purposes? I would say no, for several reasons.

The Original Meaning Of The Sixteenth Amendment, David Gamage, John R. Brooks

Faculty Publications

The Sixteenth Amendment to the United States Constitution enshrines Congress’s “power to lay and collect taxes on incomes, from whatever source derived.” Challenges to the exercise of that power have typically turned on whether the thing being taxed is “income” or not. In the most recent example, the 2024 Supreme Court case of Moore v. United States, taxpayers argued that the Sixteenth Amendment only authorizes taxation of realized income—that is, that gain from appreciated property can only be taxed as “income” when there has been a sale or conversion of that property.

In this Article we argue—based on the original …

Brief Of Amicus Curiae Tax Professors In Support Of Respondent In Moore V. United States, Donald B. Tobin, Ellen P. Aprill

Faculty Scholarship

Petitioners in Moore v. United States have argued to the Supreme Court that the word “incomes” in the Sixteenth Amendment authorizes only the taxation of “realized” income. Thus, they assert, a repatriation tax (referred to as MRT) in the Tax Cuts and Jobs Act is invalid because it taxes unrealized gains. While other briefs in the case explain that, as properly understood, the tax at issue taxes only realized gains, this brief counters the petitioners’ Sixteenth Amendment argument. It explains that economists, accountants, and lawyers in the early twentieth century all defined income in broad terms, embracing the definition of …

Individual Home-Work Assignments For State Taxes, Hayes R. Holderness

Washington Law Review

The surge in work-from-home arrangements brought on by the COVID-19 pandemic threatens serious disruptions to state tax systems. Billions of dollars are at stake at this pivotal moment as states grapple with where to assign income earned through these remote work arrangements for tax purposes: the worker’s home or the employer’s location? Some states—intent on modernizing their income tax laws—have assigned such income to the employer’s location, but have faced persistent challenges on both constitutional and policy grounds in response.

This Article provides a vigorous defense against such challenges. The Supreme Court has long interpreted the Constitution to be deferential …

Administrative Settlement Of Tax Disputes: (A Comparative Study Between The Emirati And The Egyptian Legislations), Dr. Mohamad El Shafie, Ahmed Aldalgawy

مجلة جامعة الإمارات للبحوث القانونية UAEU LAW JOURNAL

Contemporary economic, financial and political developments have imposed on the UAE the necessity of adopting an appropriate tax policy from 2016 to contribute to enhancing its financial revenues and keeping the balance of its public budget.

In this context, UAE issued the Tax Procedures Law No. 7/2017 to lay down the rules regulating tax disputes.

This study aims to discuss and analyse the administrative means established by law to settle tax disputes, compared to the similar Egyptian taxing legislations, so as to ultimately reach an optimal situation for resolving such disputes.

This study consists of two sections, the first one …

The Psychology Of Taxing Capital Income: Evidence From A Survey Experiment On The Realization Rule, Zachary Liscow, Edward G. Fox

Articles

We conduct the first survey experiment to understand public attitudes about the capital gains realization rules. These rules requires that assets usually must be sold before gains on them are taxed and thus makes taxing capital income much harder. We have three main findings. First, respondents strongly prefer to wait to tax gains on stocks until sale: 75% to 25%. But the flip side is that there is surprisingly strong support for taxing gains on assets at sale or transfer, including at death, in areas where current law never taxes those gains. Second, these stated views change only modestly when …

The Rise Of The Minimum Tax, Christopher H. Hanna, Michelle Hanlon, Norman Richter, Michael Schler

Faculty Scholarship

In January 1969, during the last few weeks of the Johnson Administration, Treasury Secretary Joseph Barr testified before the Congressional Joint Economic Committee that in 1967, 155 individuals had $200,000 or more of income but paid no Federal income taxes.5 In fact, twenty-one of them had income of more than $1 million and paid no Federal income taxes.6 It has been reported that Secretary Barr's testimony caused more letters of outrage from the American public to members of Congress in 1969 than the United States' involvement in the Vietnam War.7 Congress responded to Secretary Barr's testimony by enacting a minimum …

The Parallel March Of The Ginis: How Does Taxation Relate To Inequality, And What Can Be Done About It?, Reuven S. Avi-Yonah

Articles

The United States currently has one of the highest levels of inequality among industrialized economies. In addition, numerous scholars have shown that social mobility in the United States is significantly lower than it was in the period between 1945 and 1970, when inequality was declining. The combination of these trends is dangerous because it risks transforming the United States into a society where small elites capture most of the gains, a pattern in which growth cannot be sustained over time. The level of inequality in the United States after taxes and transfers are taken into account is much lower, but …

Tax Now Or Tax Never: Political Optionality And The Case For Current-Assessment Tax Reform, David Gamage, John R. Brooks

Faculty Scholarship

The U.S. income tax system is broken. Due to the realization doctrine and taxpayers’ consequent ability to defer taxation of gains, taxpayers can easily minimize or avoid the taxation of investment income, a failure that is magnified many times over when considering the ultra-wealthy. As a result, this small group of taxpayers commands an enormous share of national wealth yet pays paltry taxes relative to the economic income their wealth produces—a predicament that this Article condemns as being economically, politically, and socially harmful. The conventional view among tax law experts has assumed that the problems created by the realization doctrine …

Estate Planning For Cannabis Business Owners: An Introduction, Bridget J. Crawford, Jonathan G. Blattmachr

Elisabeth Haub School of Law Faculty Publications

As more states legalize cannabis sales, estate planners may increasingly be called upon to advise clients with interests in cannabis-related businesses. This essay seeks to assist estate planners in two ways. First, it aims to raise general awareness of cannabis business owners' unique concerns. Second, the essay provides an overview of some of the fundamental issues about which cannabis business owners are likely to seek estate planning advice: business formation matters, wealth transfers, the ability of trusts to own cannabis-related businesses, and gift, estate, and income tax considerations.

In most states that permit legal cannabis sales, there is limited (or …

Taxation Of Long-Term Unemployment In The Digital Economy: Facing The Twenty-First Century Challenges, Limor Riza

Catholic University Law Review

The article examines the policy of taxing long-term unemployment. We claim that tax systems should not tax the unemployed regardless of whether they reenter the labor market. Unemployment is a socioeconomic problem. The fear of expanding unemployment increases due to COVID-19 that shut down large sectors of the economy for a long period and also due to the digital economy. As early as the 1930s, Keynes expressed his fear of the economic challenges his grandchildren's generation would face, coining the term "technological unemployment." Several contemporary economists substantiate this fear by showing that some occupations are bound to disappear. Unemployment insurance …

A Gilti Fix For An Employment Tax Glitch, Richard Winchester

Pepperdine Law Review

Self-employed individuals who operate through a business entity can often dictate how much employment tax they pay, if any. That’s because the rules permit them to control whether their earnings count as labor income – which is subject to employment tax – or the returns on any capital invested in their business – which is not subject to the tax. The GILTI rules enacted as part of the 2017 Tax Act assume that capital investments generally earn a 10 percent annual rate of return. That same assumption can be used to allocate the earnings of a self-employed individual between the …

The Case For Reviving The Corporate Amt, Reuven S. Avi-Yonah

Articles

In this article, Avi-Yonah examines the bill introduced by Senate Finance Committee member Elizabeth Warren, D-Mass., to revive the corporate alternative minimum tax as a 15 percent tax on corporate book income, and he argues that it is a sensible way to address some problems of the corporate tax system.

Administrative Settlement Of Tax Disputes: (A Comparative Study Between The Emirati And The Egyptian Legislations), Dr. Mohamad El Shafie, Ahmed Aldalgawy

UAEU Law Journal

Contemporary economic, financial and political developments have imposed on the UAE the necessity of adopting an appropriate tax policy from 2016 to contribute to enhancing its financial revenues and keeping the balance of its public budget. In this context, UAE issued the Tax Procedures Law No. 7 / 2017 to lay down the rules regulating tax disputes. This study aims to discuss and analyse the administrative means established by law to settle tax disputes, compared to the similar Egyptian taxing legislations, so as to ultimately reach an optimal situation for resolving such disputes. This study consists of two sections, the …

Is New York's Market-To-Market Act Unconstitutionally Retroactive?, Reuven S. Avi-Yonah, David Gamage, Darien Shanske, Kirk J. Stark

Articles

In this installment of Academic Perspectives on SALT, the authors argue that if New York’s proposed Billionaire Mark-to-Market Tax Act is enacted, it should be upheld against any constitutional challenge based on retroactivity.

A ‘No Exceptions’ Tax System For The 21st Century, Stephen G. Marks

Faculty Scholarship

With a new administration come new opportunities. Here I present a tax proposal that I believe could garner support on both sides of the aisle. It has elements of the negative income tax, first proposed by conservative economist Milton Friedman; the flat tax (also called the “fair tax”), supported by many conservatives; and a universal basic income, promoted by Democrat Andrew Yang, combined in a way that is of the utmost simplicity. Call it the “No Exceptions Tax” (NExT). NExT is a federal personal income tax that replaces the current one. Here’s how it works

Inmates May Work, But Don't Tell Social Security, Stephanie Mcmahon

Faculty Articles and Other Publications

This Article examines the ways in which inmates are carved out of the protections offered by the Social Security and Medicare systems. By statute, inmates are unable to receive Social Security or disability benefits while incarcerated. Additionally, in many circumstances, their labor does not constitute employment for purposes of calculating quarters of employment for benefits. Therefore, inmates may work their entire prison sentence and, yet, on release discover that they no longer have sufficient years left in their working lives to earn the benefits of Social Security for themselves or their dependents. As the United States grapples with its mass …

Stanley Surrey, The 1981 Us Model, And The Single Tax Principle, Reuven S. Avi-Yonah

Articles

2021 marks the fortieth anniversary of the 1981 US Model Tax Treaty as well as the fifth anniversary of the 2016 US Model Tax Treaty. The first author has repeatedly argued that the 1981 Model gave life to the single tax principle (‘STP’). The 2016 Model updates effectively implemented the principle that cross-border income should be taxed once – that is not more and but also not less than once. For example, the 2016 Model does not reduce withholding taxes on payments of highly mobile income that are made to related persons that enjoy low or no taxation with respect …

A New Corporate Tax, Reuven S. Avi-Yonah

Articles

If we can regulate our corporations simply through the medium of taxation, we can destroy every trust in a fortnight. It would be a great deal better for the Finance Committee to turn its attention to the imposition of such a tax upon corporations and the persons who actually need regulation, who are exercising powers that are injurious to the American people, destroying competition and invading our prosperity, than to attempt to levy a revenue tax upon all the little shareholders of all the little corporations throughout the length and breadth of the United States.

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 …

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.

Antitrust And The Corporate Tax: Why We Need Progressive Corporate Tax Rates, Reuven S. Avi-Yonah, Lior Frank

Articles

In this article, Avi-Yonah and Frank explore how progressive corporate tax rates could address the abuse of power by monopolistic big tech companies.

A Constitutional Wealth Tax, Ari Glogower

Michigan Law Review

Policymakers and scholars are giving serious consideration to a federal wealth tax. Wealth taxation could address the harms from rising economic inequality, promote equality of social and economic opportunity, and raise the revenue needed to fund critical government programs. These reasons for taxing wealth may not matter, however, if a federal wealth tax is unconstitutional.

Scholars debate whether a tax on a wealth base (a “traditional wealth tax”) would be a “direct tax” subject to apportionment among the states by population. This Article argues, in contrast, that this possible constitutional restriction on a traditional wealth tax may not matter. If …

Coronavirus, Telecommuting, And The ‘Employer Convenience’ Rule, Edward A. Zelinsky

Articles

In this article, Zelinsky criticizes New York’s income tax penalty for nonresident telecommuters, particularly in the context of the coronavirus emergency.

Does Capital Bear The U.S. Corporate Tax After All? New Evidence From Corporate Tax Returns, Edward Fox

Articles

This article uses U.S. corporate tax return data to assess how government revenue would have changed if, over the period 1957–2013, corporations had been subject to a hypothetical corporate cash flow tax—that is, a tax allowing for the immediate deduction of investments in long-lived assets like equipment and structures—rather than the corporate tax regime actually in effect. Holding taxpayer behavior fixed, the data indicate actual corporate tax revenue over the most recent period (1995–2013) differed little from that under the hypothetical cash flow tax. This result has three important implications. First, capital owners appear to bear a large fraction of …