Tax Law Commons^™

Taxing The Metaverse, Young Ran (Christine) Kim

Articles

The buzz surrounding the Metaverse has been growing steadily for the past couple of years, but the tax implications of this novel ecosystem remain fuzzy to most tax scholars. Such uncertainty is concerning, given the potential and momentum of this emerging technology. Although the Metaverse evolved from online video games focused only on user consumption, it now allows users to produce income and accumulate wealth entirely within the Metaverse. Current law seems to defer taxation of such until a realization or cash-out event. This Article challenges this approach and offers novel arguments justifying Metaverse taxation. Because economic activity within the …

The Need For A New Political Playbook Which Mitigates The Public Harm Caused By Tax Incentives, Robert Louis Perkins

MC Law Review

This article is politically pragmatic and written with a clear acknowledgement that tax incentives will continue to be utilized by policymakers, despite data continuing to reflect that the actual influence tax incentives have in determining where a company or industry locates is often exceeded by their cost. Government investment in public services such as education and infrastructure are often scaled back to accommodate the cost of the incentives. However, public officials have strong incentives of their own which encourage them to rely on these costly measures. These incentives include the resulting political points they score from being able to take …

Charity Law & Blockchain Technology: Using Old Wineskins For New Wine?, Lloyd Hitoshi Mayer

Journal Articles

Whenever something new emerges, the question of how existing law applies arises. Sometimes it is both easy to answer that question and the answer is consistent with the policy goals of existing law. But sometimes the answer to that question is uncertain, does not fit well with those policy goals, or reflects a mixture of these two issues.

This question is particularly vexing today with respect to new assets facilitated by blockchain technology. These new assets include cryptocurrencies, non-fungible tokens (NFTs), and ownership interests in decentralized autonomous organizations (DAOs). Commentators have written about how certain laws, particularly securities law, apply …

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, …

Building The Gateway: Why The Two Pillars Need Each Other, Reuven S. Avi-Yonah, Ajitesh Kir

Law & Economics Working Papers

There is a reason the OECD proposed two pillars for its gateway to a better tax future. A gateway requires both pillars, and neither can stand without the other. Pillar 2 is a fait accompli, but it needs countries to implement Pillar 1 as well. Pillar 1 is not going forward in the absence of a Multilateral Tax Convention, but it can be implemented unilaterally, although that would require overriding existing tax treaties.

Coping With California’S Deficit, Part 1: Borrowing And Taxes, David Gamage, Darien Shanske

Faculty Publications

In this installment of Academic Perspectives on SALT, Shanske and Gamage examine California’s projected budget deficit and possible solutions. California has a large budget deficit that is predicted to last for several years. In this two-part series, we will place California’s situation in context and propose solutions.

The state should use short-term borrowing to cover at least some of the cyclical shortfall. That the real revenue cycle is unlikely to neatly unfold over one traditional fiscal year should not change this conclusion. To that end, we will show how California can operationalize this simple insight despite the impression some may …

What Matters In Moore, Reuven Avi-Yonah

Articles

Why does the pending Moore case in the Supreme Court matter? The obvious answer is that if the Court decides that realization is a constitutional requirement for an income tax, the holding will have significant implications for the existing income tax regime. Depending on how broad the decision is, it could enable constitutional challenges to subpart F, the global intangible low-taxed income regime, partnership and subchapter S taxation, and sections 275, 877A, 1256, and 1259, to name just a few. And even if most or all of these challenges are ultimately decided against the taxpayers (for example, because realization does …

Building Resilience By Removing Barriers: Addressing Structural Impediments To Advocacy By Nonprofit Organizations On Behalf Of The Unenfranchised, Kirsten Widner, Heather M. Kolinsky

University of Cincinnati Law Review

Charitable contributions, particularly from private foundations, are an essential source of support for many nonprofit charitable organizations. However, the ability to accept these contributions comes with significant restrictions on lobbying and advocacy. Using vulnerability theory and an original survey of nonprofit advocacy organizations, we show that current restrictions on 501(c)(3) organizations disproportionally limit advocacy on behalf of the most politically disadvantaged groups—those without the right to vote. This, in turn, reinforces existing inequalities in whose voices are heard and whose interests are considered by policymakers. This Article argues that reforming the laws that structure what organizations can take tax-deductible charitable …

Artful Imbalance: How The Us Tax Code And State Trust Laws Enable The Growth Of Inequality Through High-Value Art Collections, Mimi Strauss

Brooklyn Law Review

The United States has become the leading jurisdiction for those who wish to buy and store high-value art and NFTs, pay as few taxes as possible, and ultimately secure their wealth for generations. This “onshore” tax crisis is the result of tax loopholes, money laundering, the securitization of art and NFTs, and the state-by-state trust system. These forms of tax dodging—both legal and illegal—contribute to wealth inequality and deplete the welfare state. As natural disasters and pandemics become ever more present, the United States will rely more heavily on taxes, and that burden should be carried by everyone, not just …

A Tale Of Two Subject-To-Tax Rules, Sol Picciotto, Jeffery M. Kadet, Bob Michel

Articles

In this article, we analyze and compare two proposals for a new subject-to-tax rule (STTR) provision to be included in tax treaties, one from the U.N. Tax Committee and the other from the G20/OECD inclusive framework on base erosion and profit shifting. The U.N. proposal is broad, and would clarify that restrictions in tax treaties on taxation of income at the source where it is derived are conditional on that income being taxed at an agreed-upon minimum rate in the country where it is received. The inclusive framework version is much more limited, being confined to payments between connected entities …

Building Resilience By Removing Barriers: Addressing Structural Impediments To Advocacy By Nonprofit Organizations On Behalf Of The Unenfranchised, Kirsten Widner, Heather Kolinsky

UF Law Faculty Publications

Charitable contributions, particularly from private foundations, are an essential source of support for many nonprofit charitable organizations. However, the ability to accept these contributions comes with significant restrictions on lobbying and advocacy. Using vulnerability theory and an original survey of nonprofit advocacy organizations, we show that current restrictions on 501(c)(3) organizations disproportionally limit advocacy on behalf of the most politically disadvantaged groups—those without the right to vote. This, in turn, reinforces existing inequalities in whose voices are heard and whose interests are considered by policymakers. This Article argues that reforming the laws that structure what organizations can take tax-deductible charitable …

The Untold Tale Of A Tax Rulings Haven, Leandra Lederman

Articles by Maurer Faculty

When the International Consortium of Investigative Journalists (ICIJ) broke the “LuxLeaks” scandal, it revealed hundreds of billions of dollars in secret deals granted by the small country of Luxembourg to large multinational companies such as Apple, Disney, and Pepsi. These sweetheart deals, in the form of Luxembourg tax rulings, allowed many name-brand companies to dodge huge amounts of tax that would otherwise be due to the U.S. or other countries. Surprisingly, a tiny tax agency had produced thousands of tax rulings in the course of a few years.
This Article makes three major contributions. First, it explores where Luxembourg’s informal …

Taxing Fat Cats Abroad, Reuven S. Avi-Yonah

Articles

On January 12 the IRS announced that it was able to collect $482 million from a new initiative focused on taxing millionaires: The IRS has ramped up efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt, with dozens of revenue officers focused on these high-end collection cases. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. In an initial success, the IRS collected $38 million from more than 175 high-income earners. The IRS last fall began contacting …

Constitutional Restraints On Intrastate Distribution Of Taxing Authority, Walter Hellerstein

Scholarly Works

No abstract provided.

Tax-Letics: Addressing The Constitutionality Of The "Jock Tax", Stanley D. Ference Iv

Ohio Northern University Law Review

No abstract provided.

The Case Against Expensing R&E, Reuven S. Avi-Yonah

Articles

On January 16 Senate Finance Committee Chair Ron Wyden, D-Ore., and House Ways and Means Committee Chair Jason Smith, R-Mo., introduced a bipartisan tax package that would revive the child tax credit and modify three provisions in the Tax Cuts and Jobs Act. Under the proposal, the 30 percent limit on interest deductions would be relaxed by including depreciation and amortization in calculating deductible interest, expensing of corporate investment would be extended, and expensing of research and experimentation would be restored in lieu of amortization.

European Union/Oecd/International - Klaus Vogel Lecture 2023: The Past, Present And Future Of Destination-Based Income Taxation., Reuven S. Avi-Yonah

Articles

A significant obstacle to the unilateral adoption of the OECD’s Pillar One are tax treaties since many countries cannot override tax treaties unilaterally. In his Klaus Vogel Lecture for 2023, Professor Reuven Avi-Yonah asks what are the chances for adopting a true multilateral convention for income taxation?

Exploring Flexibility In 83(B) Elections: A Tax Policy Proposal, Brayden Call

BYU Law Review

Property awards, such as equity, are taxable to the recipient and have tax implications for employers, too. Without a recipient making an 83(b) election, property awards are taxable when they are granted. For awards that have vesting requirements or are considered “restricted,” they are generally taxable upon vesting. However, making an 83(b) election allows recipients of restricted property awards to be taxed as if the property were vested, meaning more income will shift from ordinary tax rate treatment to preferential tax rate treatment.

The preferential tax system is foundational to the 83(b) election. Advocates believe that preferential tax rates in …

Valuing Esg, Aneil Kovvali, Yair Listokin

BYU Law Review

Corporate environmental, social, and governance (ESG) commitments promise to make capitalism better. Unfortunately, ESG has become a hotbed of hype and controversy. The core problem is that ESG mixes vague environmental and social goals with a profit maximization goal and does not provide a framework for resolving the conflicts that exist between them. The result is confusion that invites deception and cynicism. This Article proposes a mechanism for resolving conflicts between goals by translating them into the common language of money. Once nonpecuniary environmental or social goals are translated into dollar values, they can provide clear and actionable guidance for …

How Abusive Was Tribune Media's Disguised Sale?, Karen C. Burke

UF Law Faculty Publications

In this article the proper application of the general antiabuse rule in Tribune Media is addressed.

Pillar 2 And The United States: What's Next, Reuven S. Avi-Yonah

Articles

January 1 marked the official effective date of the 15 percent global corporate minimum tax imposed by pillar 2 as part of the G-20/OECD/ inclusive framework base erosion and profitshifting 2.0 project. Pillar 2 went into effect in Australia, Canada, the EU, Japan, Norway, South Korea, and the United Kingdom, with more countries expected to adopt it soon, including low-tax countries like Barbados, Ireland, Luxembourg, the Netherlands, and Switzerland. Critics have argued that pillar 2 violates tax treaties, customary international law, or bilateral investment treaties. But it seems unlikely that legal challenges against it will succeed. Most of the countries …

The Global Corporate Minimum Tax And Mne Home Countries, Reuven S. Avi-Yonah

Other Publications

This Perspective explores the implications for the home countries of large MNEs of the agreement reached by over 140 countries in 2021 to enact a corporate minimum tax of 15%. It argues that the corporate minimum tax complements the trend to reduce the negative impact of unfettered globalization on labor, and it protects the ability of home countries to finance a robust social safety net. Home countries should adopt the corporate minimum tax, and that includes the US, which last year failed to adapt its Global Intangible Low-Taxed Income approach to the corporate minimum tax.

Brief For Amicus Curiae Professor Edward A. Zelinsky In Support Of Appellants And Reversal, Edward A. Zelinsky

Amicus Briefs

DOL’s tie-breaking rule violates ERISA’s duty of loyalty under ERISA § 404(a)(1)(A). ERISA’s duty of loyalty requires ERISA-regulated trustees to invest plan resources for the “exclusive purpose of . . . providing” economic benefits to plan participants and their beneficiaries, “solely in the interest of the participants and beneficiaries.” The tie-breaking rule violates this stringent statutory duty of loyalty because it permits plan trustees investing plan resources to consider “collateral benefits,” i.e., the welfare of third parties or social goals. But ERISA‟s plain text does not permit this result. The words ““solely” and “exclusive purpose” in § 404(a)(1)(A) do not …

Public Law 86-272 And The Texas Margin Tax, Marvin J. Williams

St. Mary's Law Journal

No abstract provided.

Taxation And Corporate Governance, Reuven S. Avi-Yonah, Ariel Siman

Law & Economics Working Papers

In recent years, legal and economic research has shown a growing interest in the interaction between corporate governance and taxation. Some specific aspects have drawn more interest, particularly the tax rules related to the remuneration of directors, measures taken by management in the context of market for corporate control, and the double taxation of inter-corporate dividends. However, there is still little legal literature on many other aspects of the interplay between the two systems, and several authors have identified this gap in the literature and the dire need for further study in this “fertile area of research.” The aim of …

It's A Soft Shell Life For Me: The Case For Expanding Npdes Permitting To Include Causes Of Ocean Acidification, Natalie L. Nowatzke

Ocean and Coastal Law Journal

Ocean acidification, a lesser-known counterpart to climate change, is primarily caused by the ocean’s absorption of carbon dioxide from the atmosphere. This absorption, in turn, reduces the ocean’s pH, and has detrimental effects on the health of the entire ecosystem. This Comment examines the applicability of the “functional equivalent test,” coined by the Supreme Court in County of Maui v. Hawaii Wildlife Fund, to the causes of ocean acidification. Using this test, this Comment proposes expanding NPDES permitting under the Clean Water Act to cover some landbased sources emitting carbon dioxide.

Why Did The Irs Win? A Remarkable Year In Tax Litigation, Part 2, Reuven S. Avi-Yonah

Articles

In my previous column, 2023 was a remarkably good year for government litigators in tax cases. That column focused on two transfer pricing cases (3M and Coca-Cola). This column will focus on two other government victories (YA Global and Liberty Global).

Tax Enforcement At The Intersection Of Social Welfare And Vulnerable Populations, Michelle Lyon Drumbl

Scholarly Articles

This Essay engages with Professor Bernadette Atuahene’s theory of stategraft in the context of tax administration and the role that the Internal Revenue Service (IRS) plays in implementing certain social welfare benefits, including the Earned Income Tax Credit (EITC). Specifically, it considers whether the IRS’s denials of the EITC to those who might otherwise be eligible and entitled to it constitutes a wrongful taking by the state or a violation of basic human rights. While this Essay concludes that denials of the EITC generally do not fit within Atuahene’s definition of stategraft, it highlights two particularly problematic concerns with modern …

A Roadmap To Nil And Taxation, Doron Narotzki, Yariv Brauner

American University Business Law Review

The landscape of college sports has dramatically changed in recent years. What was once considered a place for amateur athletes pursuing education now partially mirrors, at least for some student-athletes, the structure and financial dynamics of professional leagues such as the NFL, NBA, and MLB. However, the collegiate sports ecosystem still remains distinct, shaped by unique regulatory frameworks governed by the NCAA. This article reviews and analyses the implications of these changes, and focuses on the tax considerations surrounding Name, Image, and Likeness (NIL) rights and how the evolving nature of college sports also presents certain tax implications, some of …

Reimagining The Deduction For Employee Compensation, Daniel Schaffa

University of Michigan Journal of Law Reform

U.S. businesses pay trillions of dollars in employee compensation, a substantial fraction of which is deductible for tax purposes. This deduction reduces the taxable income of businesses, ultimately lowering business tax burdens by hundreds of billions of dollars. With a few exceptions, the tax code confers the same deduction to a business for every dollar of employee compensation, regardless of whether that compensation goes to an employee earning millions or an employee earning minimum wage. This is consistent with a pure Haig-Simons income tax, under which any business expense incurred ought to be deductible dollar-for-dollar. But many, if not most, …