Taxation-Federal Commons^™

Federalism And Phantom Economic Rights In Nfib V. Sibelius, Matthew Lindsay

All Faculty Scholarship

Few predicted that the constitutional fate of the Patient Protection and Affordable Care Act would turn on Congress’ power to lay and collect taxes. Yet in NFIB v. Sebelius, the Supreme Court upheld the centerpiece of the Act — the minimum coverage provision (MCP), commonly known as the “individual mandate” — as a tax. The unexpected basis of the Court’s holding has deflected attention from what may prove to be the decision’s more constitutionally consequential feature: that a majority of the Court agreed that Congress lacked authority under the Commerce Clause to penalize people who decline to purchase health insurance. …

What's Wrong With A Federal Inheritance Tax?, Wendy G. Gerzog

All Faculty Scholarship

Scholars have proposed a federal inheritance tax as an alternative to the current federal transfer tax, but there are serious flaws with that idea. In existing inheritance tax systems, those problems include: (1) different tax rates and exemptions based on the decedent’s relationship to the beneficiary; (2) the lack of a tax on lifetime gratuitous transfers, including gifts with retained interests or control; and (3) the persistence of most current valuation distortion abuses. In any inheritance tax model, moreover, there would be significantly decreased compliance rates and increased administrative costs because by focusing on the transferees instead of the transferor, …

Business Lobbying As An Informational Public Good: Can Tax Deductions For Lobbying Expenses Promote Transparency?, Michael Halberstam, Stuart G. Lazar

Journal Articles

The view that “lobbying is essentially an informational activity” has persistently served the suggestion that lobbying provides a public good by educating legislators about policy and the consequences of legislation.

In this article, we link a proposed tax reform with a substantive disclosure requirement to promote the kind of “information subsidy” that serves the public interest, while mitigating – at least to some extent – the distortion that may result from the imbalance of financial resources on the business side and other institutional contraints identified in the literature. We argue that corporate lobbying should be encouraged – by allowing business …

Pass-Through Entity Reform: Is A Major Overhaul Necessary?, Walter D. Schwidetzky

All Faculty Scholarship

No abstract provided.

Unfair And Unintended: The Tax-Exempt Organization Blocker Loophole, Andrew M. Dougherty

BYU Law Review

No abstract provided.

Van Alen: A Reasonable Consistency, Wendy G. Gerzog

All Faculty Scholarship

In Van Alen, the Tax Court held that the duty of consistency required that two of the decedent’s children use the section 2032A basis valuation figures to determine gain on the sale of their interest in the decedent’s ranch, which was left to them in trust. The siblings had argued that their stepmother erroneously completed their father’s estate tax return.

The United States Tax Court: An Historical Analysis (2d Ed. 2014), Harold Dubroff, Brant J. Hellwig

Books and Chapters

The second edition leaves largely intact the first four Parts of the original text, which provide a remarkably detailed history of the creation of Board of Tax Appeals through the congressional chartering of the United States Tax Court as a court of record established under article I of the Constitution. Part V is a new chapter devoted to the judicial consideration of the Tax Court’s constitutional status that culminated in the Supreme Court’s 1991 decision in Freytag v. Commissioner.

Whereas the original text addressed procedural matters following the discussion of the historical development of the Court, the second edition …

The Individual Mandate Tax Penalty, Jeffrey H. Kahn

Scholarly Publications

In 2010, President Obama signed legislation that significantly altered the healthcare and health insurance markets in the United States. An integral part of that reform is the individual mandate, a provision that requires individuals to purchase and maintain healthcare insurance. Failure to maintain such coverage subjects an individual to a tax penalty. The Supreme Court upheld the constitutionality of that provision under Congress’s taxing power.

Despite the Supreme Court upholding the individual mandate, fundamental questions remain. This Article addresses the question of whether the use of a tax penalty to encourage taxpayers to do something that the government desires is …

Loving And Legitimacy: Irs Regulation Of Tax Return Preparation, Steve R. Johnson

Scholarly Publications

No abstract provided.

Tax Favors For Philanthropy: Should Our Republic Underwrite De Tocqueville's Democracy?, Rob Atkinson

Scholarly Publications

This article critically reviews the current rationales for the federal income tax system's favorable treatment of philanthropy, gives those rationales a new descriptive synthesis based on de Tocqueville's account of American democracy, and offers a normative alternative based on neo-classical ethical and political theory. It first identifies the two basic normative questions: What is the function of philanthropy that warrants favorable tax treatment, and how well does favorable tax treatment advance that function? It then examines the answers of three distinct phases of normative tax theory: the traditional subsidy thesis, the antithetical technical definition of income theory, and a set …

What Innocent Spouse Relief Says About Wives And The Rest Of Us, Stephanie Mcmahon

Faculty Articles and Other Publications

Every time spouses sign joint returns, knowingly or not they accept joint and several liability, meaning that either spouse may be held liable for all of the tax due on the joint return. Although joint and several liability facilitates tax collection, it may conflict with a spouse’s claims to have signed the return while being lied to, abused, or manipulated. The question for Congress is how to balance these competing demands. Innocent spouse relief provides some tax relief for spouses Congress does not believe should be jointly and severally liable. The existence of this relief also offers an opportunity to …

Occupy Wall Street, Distributive Justice, And Tax Scholarship: An Ideology Critique Of The Consumption Tax Debate, Partrick Crawford

The University of New Hampshire Law Review

[Excerpt] “This Article argues that the pro-consumption tax literature is wrong to claim that no legitimate fairness objections to the consumption tax exist. It argues that the persistent and widespread wariness about replacing our current hybrid consumption tax/income tax system with a pure consumption tax is, contrary to what the pro-consumption tax literature asserts, completely justified. In fact, our reservations about the consumption tax’s fairness reflect legitimate concern about the role of capitalist power in America, particularly over the past thirty years. Indeed, the more the nation continues to experience the social welfare effects of increased capitalist power, the more …

Recent Developments In Federal Income Taxation: The Year 2013, Martin J. Mcmahon Jr., Ira B. Shepard, Daniel L. Simmons

UF Law Faculty Publications

This recent developments outline discusses, and provides context to understand the significance of, the most important judicial decisions and administrative rulings and regulations promulgated by the Internal Revenue Service and Treasury Department during the most recent twelve months. The outline focuses on primarily on topics of broad general interest — income tax accounting rules, determination of gross income, allowable deductions, treatment of capital gains and losses, corporate and partnership taxation, exempt organizations, and procedure and penalties. It deals summarily with qualified pension and profit sharing plans, and generally does not deal with international taxation or specialized industries, such as banking, …

Reflections On Home Concrete, Steve R. Johnson

Scholarly Publications

Positive statutory law – principally the Internal Revenue Coe – is the most important source of tax rules. Despite its volume, however, the Code contains many gaps. Tax regulations promulgated by the Department of the Treasury are the principal vehicles for filling the most important gaps.

When consistent with the Code and issued pursuant to proper procedures, Treasure Regulations have the force of law. The validity of Treasury Regulations has been a major battleground in contemporary tax litigation. In the last five years alone, the issue has arisen in high profile cases such as Swallows, Mannella, Lantz, Mayo, Dominion Resources, …

The Futility Of Tax Protester Arguments, Allen Madison

Faculty Publications

Tax protesters offer uncommonly silly arguments in support of their positions -- so silly, in fact, that courts commonly refuse to address them, lest those arguments be given any credence. Yet the wave of tax protester arguments has not ebbed, and tax protesters continue to challenge, for example, the legal obligation to pay taxes, the constitutionality of the income tax, and the authority of the IRS to enforce the tax laws. Maybe some education will help solve this problem. This Article provides a framework for analyzing tax protester arguments through a civics discussion and explains why tax protester arguments fail …

Heal The Suffering Children: Fifty Years After The Declaration Of War On Poverty, Francine J. Lipman, Dawn Davis

Scholarly Works

Fifty years ago, President Lyndon B. Johnson declared the War on Poverty. Since then, the federal tax code has been a fundamental tool in providing financial assistance to poor working families. Even today, however, thirty-two million children live in families that cannot support basic living expenses, and sixteen million of those live in extreme poverty. This Article navigates the confusing requirements of an array of child-related tax benefits including the dependency exemption deduction, head of household filing status, the Earned Income Tax Credit, and the Child Tax Credit. Specifically, this Article explores how altering the definition of a qualifying child …

Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah

Articles

This Article will address the question of whether publicly traded U.S. corporations owe a duty to their shareholders to minimize their corporate tax burden through any legal means, or if instead, strategic behaviors like aggressive tax-motivated transactions are inconsistent with corporate social responsibility (“CSR”). I believe the latter holds true, regardless of one’s view of the corporation. Under the “artificial entity” view, such behavior undermines the constitutive relationship between the corporation and the state. Under the “real view,” such behavior runs contrary to the normal obligation of citizens to comply with the law (even absent effective enforcement). And under the …

Exploding Wealth Inequalities: Does Tax Policy Promote Social Justice Or Social Injustice, Phyllis C. Taite

Faculty Articles

This essay discusses how tax policies work in concert to contribute to the wealth and income inequality that disadvantage the poor and middle class in favor of the wealthy. While there is current and past discourse on wealth and income inequality, and impact of the same, as well as discussions of multiple causes of wealth and income inequality, there is little discussion on how various tax policies work together as a common force to perpetuate income and economic inequality. This Essay briefly discussed how certain tax policies work in concert to systematically shift wealth to the wealthiest taxpayers. This social …

Tax Recognition, Barry Cushman

Journal Articles

This article was prepared for the St. Louis University Law Journal’s “Teaching Trusts & Estates” issue. Many law students take a course in Trusts & Estates, but comparatively few enroll in a class devoted to the federal wealth transfer taxes. For most law students, the Trusts & Estates course provides the only opportunity for exposure to some of the basic features of the estate tax, the gift tax, the generation-skipping transfer tax, and some related features of the income tax. The coverage demands of the typical Trusts & Estates course do not allow for intensive discussion of these issues, but …

Fiscal Federalism As Risk-Sharing: The Insurance Role Of Redistributive Taxation, John R. Brooks

Georgetown Law Faculty Publications and Other Works

In addition to funding government and redistributing income, a redistributive tax-and-transfer system, and a progressive income tax in particular, provides insurance against the risk of uncertain future income. By providing for high taxes for high incomes, and low taxes, exemptions, and transfers for low incomes, a progressive income tax lowers the volatility of potential after-tax income relative to a lump-sum tax. This insurance function is distinct from the redistributive function of the system, since it provides a direct risk-mitigation benefit to the taxpayer himself, rather than simply redistributing income from one taxpayer to another.

This article analyzes the question of …

Understanding The Amt, And Its Unadopted Sibling, The Amxt, James R. Hines Jr., Kyle D. Logue

Articles

Four million Americans with extensive tax preferences are subject to the Alternative Minimum Tax (AMT). By taxing a broad definition of income, the AMT makes it possible to have a tax system that both encourages certain activities with generous tax preferences and maintains a semblance of distributional equity. The same rationale supports the imposition of an Alternative Maximum Tax (AMxT), which would cap tax liabilities of individuals with very few preference items and thereby afford Congress greater flexibility in designing the income tax. The original 1969 AMT proposal included an AMxT; it is difficult to justify imposing one without the …

A Proposed Replacement Of The Tax Expenditure Concept And A Different Perspective On Accelerated Depreciation, Douglas A. Kahn

Articles

Over 32 years ago, I published an article on accelerated depreciation in which I concluded that some amount of acceleration was consistent with normal tax principles and should not be classified as a tax expenditure. Over the intervening years, from time to time, I have exchanged comments with authors who have questioned that conclusion. It is time to revisit that topic and renew the consideration of how tax depreciation may properly operate. This Essay’s analysis of depreciation provides one example of how the tax expenditure budgets are flawed. The treatment of some accelerated depreciation as a tax expenditure is based …

Ending The Sweetheart Deal Between Big-Time College Sports And The Tax System, Richard L. Schmalbeck

Faculty Scholarship

This paper was prepared for the annual conference of the National Center for Philanthropy and Law, held at the NYU Law School, held October 24-25, 2013. The overall topic was “Tax Issues Affecting Colleges and Universities,” and I was asked to address specifically those issues relating to athletics. This paper considers two specific issues that have in common only that they involve college sports, and are plagued by egregiously bad, (in this case, egregiously generous), tax treatment: the failure of the IRS to regard any part of the revenue from college sports as unrelated business income, and the choice by …

Mitt Romney, The 47% Percent, And The Future Of The Mass Income Tax, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

The Uneasy Case Against Tax Lien Subordination, Shu-Yi Oei

Faculty Scholarship

I.R.C. § 6323, which governs how the federal tax lien ranks against the interests of the taxpayer’s other creditors, subordinates the tax lien to the claims of other creditors in various ways. Tax lien subordination is commonly justified on the grounds that it enhances taxpayer asset value, facilitates commercial transactions, and reduces monitoring costs for private creditors. This short essay argues, however, that these benefits may be illusory. Tax lien subordination may, in fact, create costs and distortions and may lead to unfair distributive results. This essay suggests that the tax lien priority scheme might be made less costly by …

(Un)Appealing Deference To The Tax Court, Leandra Lederman

Articles by Maurer Faculty

The U.S. Tax Court (Tax Court), which hears the vast majority of litigated federal tax cases, occupies an unusual place in the federal government. It is a federal court located outside of the judicial branch, but its decisions are appealable to the federal courts of appeals. This odd structure, coupled with the court's history as an independent agency in the executive branch, can give rise to important questions, such as the standard of review that should apply to its decisions. In particular, should the courts of appeals treat Tax Court decisions the same as those of district courts in tax …

How Should Governments Promote Distributive Justice?: A Framework For Analyzing The Optimal Choice Of Tax Instruments, David Gamage

Articles by Maurer Faculty

A particular methodology derived from public finance economics has become very influential in the legal literature on taxation and related topics. Sometimes called the “double-distortion” approach, this methodology forms the heart of Louis Kaplow’s book “The Theory of Taxation and Public Economics” and is also the foundation of prominent work by other leading tax legal scholars such as David Weisbach and James Hines.

This Article develops an extended critique of how the double-distortion approach has been used to make legal policy arguments. In doing so, this Article constructs a framework for analyzing how governments can optimally raise revenues and promote …

A Way Forward For Tax Law And Economics? A Response To Osofsky's "Frictions, Screening, And Tax Law Design", David Gamage

Articles by Maurer Faculty

This Essay responds to Leigh Osofsky's, "Who’s Naughty and Who’s Nice? Frictions, Screening, and Tax Law Design." Osofsky’s analysis suggests that tax rules might be designed so as to take account both of heterogeneity in taxpayers’ tax planning proclivities and of taxpayer characteristics relevant for distribution. By designing tax rules so as to create frictions that differentially impose higher costs on those taxpayers who are more successfully circumventing existing taxes we can perhaps reform our tax system so as to better achieve equitable distribution at lower efficiency costs. This Essay argues that Osofsky's analysis is generally correct and that it …

Retreat From Progressive Taxation In The Swedish Welfare State: Does Immigration Matter?, Henry Ordower

All Faculty Scholarship

This paper questions whether late twentieth century immigration patterns may have contributed to retreat from progressive taxation in Sweden (and elsewhere). The paper applies critical methodology to ask whether the societal generosity reflected in development of Sweden’s welfare state yielded to greater parsimony as Sweden opened its borders to ethnically and racially diverse groups of immigrants. The paper explores whether Sweden’s loss of societal homogeneity facilitated the development of a political climate in which protecting traditional Scandinavian-owned capital from taxation became acceptable. Social science literature already has detected various unintentional ethnic and gender biases in delivery of welfare services and …

Income Imputation: Toward Equal Treatment Of Renters And Owners, Henry Ordower

All Faculty Scholarship

This chapter argues that fundamental fairness principles demand changes in U.S. tax law to place those who rent on an equal tax footing with those who own their residences. The disparity in tax treatment of owners and renters results primarily from the failure of the tax law to include the use value from investment of capital in a personal residence in the incomes of owners. While the yield from investment in a personal residence is not cash, the yield is valuable as it replaces an outlay for dwelling use the owner otherwise would have to make. That occupancy right as …