Taxation-State and Local Commons^™

Sparks Nugget: State Tax Exemption Of Food Used By Casinos For Comped Meals, Steve R. Johnson

Scholarly Publications

No abstract provided.

Proposition 13 And The California Fiscal Shell Game, Colin H. Mccubbins, Mathew D. Mccubbins

Faculty Scholarship

We study the effects of California’s tax and expenditure limitations, especially Proposition 13. We find that Proposition 13 was indeed effective at reducing both ad valorem property taxes per capita and total state and local taxes per capita, at least in the short run. We further argue that there have been unintended second- ary effects that have resulted in an increased tax burden, undermining the aims of Proposition 13. To circumvent the limits imposed by Proposition 13, the state has drastically increased nonguaranteed debt, has privatized the public fisc, and has devolved the authority to lay and collect taxes and …

Foreword: Rights, Remedies, And Rose, Scott R. Bauries

Law Faculty Scholarly Articles

In this Foreword to the University of Kentucky’s “Rose at 20” Special Feature, I seek to introduce the three featured articles, as well as to identify two major paradigm shifts in school finance litigation that grew out of the Kentucky Supreme Court’s decision in Rose v. Council for Better Education. The Rose decision is commonly thought of as a bridge between prior education litigation strategies founded primarily on theories of equity or equality and subsequent litigation strategies founded primarily on theories of adequacy. Although the distinction between these two strategies is well-worn, it obscures two important changes to …

Beyond Batsa: Getting Serious About State Corporate Tax Reform, Quinn T. Ryan

Washington and Lee Law Review

The state corporate income tax system is broken, and only Congress can fix it. The current state of affairs is problematic for states, burdensome for multistate corporations,2 and unfair to smaller, local businesses.3 States are unable to resolve these problems themselves; federal intervention is the only solution.

Preventing State Budget Crises: Managing The Fiscal Volatility Problem, David Gamage

Articles by Maurer Faculty

Forty-nine of the U.S. states have balanced budget requirements, and every state acts as though bound by such constraints. These constraints create fiscal volatility - the states must either cut spending or raise taxes during economic downturns, while doing the opposite during upturns. This paper discusses how states should cope with fiscal volatility on both the levels of ordinary politics and of institutional-design policy. On the level of ordinary politics, the paper applies principles of risk allocation theory to conclude that states should primarily adjust the rates of broad-based taxes as their economies cycle, rather than fluctuating public spending. States …

Managing Fiscal Volatility By Redefining "Tax Cuts" And "Tax Hikes", David Gamage, Jeremy Bearer-Friend

Articles by Maurer Faculty

This report analyzes how states should cope with fiscal volatility at the level of institutional-design policy. We propose that states reconsider how they define terms like ‘‘tax cuts’’ and ‘‘tax hikes.’’ By adopting a new baseline for defining those terms, states can increase the likelihood of using tax rate adjustments to cope with fiscal volatility rather than more harmful spending fluctuations.

Minimizing The Harm Of State Fiscal Volatility, David Gamage, Jeremy Bearer-Friend

Articles by Maurer Faculty

This report’s primary concern is how U.S. state governments should respond to the fiscal volatility created by their balanced budget constraints. Applying the principles of risk allocation theory to this recurring problem, we conclude that states should primarily adjust the rates of broad-based taxes as their economies cycle, rather than fluctuating public spending.

The Difficulty Of Getting Serious About State Corporate Tax Reform, Charles E. Mcclure

Washington and Lee Law Review

In his Note, Beyond BATSA: Getting Serious About Corporate Tax Reform,1 Quinn Ryan examines several common defects of state corporate income taxes that, in isolation or in combination, create distortions, inequities, and complexity, and argues for federal legislation that would substantially reduce the problems he describes. I will expand a bit on Ryan's analysis, review some history, and argue that neither multilateral state action nor federal legislation-especially legislation that would not make matters worse-is likely to occur.

Beyond Batsa: State Taxation Without State Boundaries?, Neil V. Birkhoff

Washington and Lee Law Review

In his Note, Beyond BA TSA: Getting Serious About State Corporate Tax Reform, Quinn Ryan provides us with the following: (1) an overview of the problem of diminishing state corporate tax revenues;2 (2) the basic legal principles applicable in administering state corporate income taxes;3 and (3) a history of the development of state tax nexus standards.4 Ryan uses the Business Activity Tax Simplification Act of 2009 (BATSA) to point out where reform is necessary and argues that BATSA is not the answer.6 While Ryan notes the myriad of problems with corporate income tax apportionment statutes 7 he leaves the mechanics …

The Unfulfilled Promise Of The Indian Commerce Clause And State Taxation, Richard Pomp

Faculty Articles and Papers

The Constitution gives Congress the right to “regulate Commerce . . . with the Indian tribes.” Has the Indian Commerce Clause achieved its purpose? Have the Courts interpreted the Clause consistent with Congressional intent? I argue that the answer is, disappointingly, “no.”

The Supreme Court has emasculated and denigrated the Indian Commerce Clause, preventing implementation of the Founders’ vision. The Court has refused to use the Clause as a shield against state taxation.

Chief Justice John Marshall had the opportunity in 1832 in Worcester v. Georgia to shape the Clause into a powerful doctrine. As a ratifier, he was privy …

Where Credit Is Due: Advantages Of The Credit-Invoice Method For A Partial Replacement Vat, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

If a value-added tax (VAT) were chosen to supplement or replace some portion of the revenue from the income tax, a choice would likely be made between the credit-invoice method and the subtraction-method for calculating VAT liability. Credit-invoice method VATs and subtraction-method VATs are, at a conceptual level, very similar taxes. The key substantive difference between most subtraction-method VAT proposals and extant credit-invoice method VATs is that subtraction-method VAT proposals generally do not impose an invoice requirement. The invoice requirement substantially reduces tax avoidance opportunities in the VAT, and also ensures the ability to provide appropriate treatment for exports while …

The False Modesty Of Department Of Revenue V. Davis: Disrupting The Dormant Commerce Clause Through The Traditional Public Function Doctrine, Edward A. Zelinsky

Articles

No abstract provided.

Living By The Initiative And Dying By The Initiative, Steve R. Johnson

Scholarly Publications

A significant fiscal development in recent decades in many states has been revision of tax laws and policy not by legislatures but by voters through the initiative process. Initiatives often have been used to restrain the growth of taxes and spending, and to that extent the owners of wealth, property, and income have benefitted from initiatives. Among the many examples of controversial and important state tax and spending initiatives, one may think of the Taxpayer Bill of Rights in Colorado, the supermajority requirement for tax increases in Nevada, and of course Proposition 13 in California.

However, that gate swings both …

The Virginia Historic Tax Credit Funds Case And The Uncertain Federal Income Tax Treatment Of State Tax Credits, William F. Machen

William & Mary Annual Tax Conference

No abstract provided.

Recent Developments In Virginia Taxation: The Present And The Future?, Craig D. Bell, William L.S Rowe

William & Mary Annual Tax Conference

No abstract provided.

Taxation, Craig D. Bell

University of Richmond Law Review

No abstract provided.

The 'Absurd Results' Doctrine In State And Local Cases, Steve R. Johnson

Scholarly Publications

A statute will not be applied according to the literal meaning of its words if to do so would produce absurd results. Cases considering this principle have never been in short supply, but the rule has appeared in a striking number of cases in recent months. Accordingly, it is timely to explore this doctrine in this installment of Interpretation Matters.

The first part describes the doctrine generally. The second part identifies a critical question – and point of dispute – about the doctrine: What results can be considered to be absurd enough for the doctrine to apply? The third part …

Legislative Rhetoric, Or How To Oppose Anything, Steve R. Johnson

Scholarly Publications

This installment of the column involves a change of focus. Instead of looking at the end of the legislative process – how courts interpret enacted statutes – this installment looks at the phase at which bills are enacted by or defeated in the legislature. However, the two phases have underlying similarities. As we will see, arguments used in legislative advocacy have counterparts in statutory interpretation advocacy. Our topic is particularly timely. Proposals to revise state and local tax statutes are always with us, of course, but recent budgetary stresses have increased both the number and significance of those proposals.

This …

Misguided Relief: Unsimplifying The Standard Deduction, Alan L. Feld

Faculty Scholarship

The push to use federal money for benevolent purposes occasionally produces more cost than benefit, particularly when the outlay comes in the form of taxes forgiven. The Housing Assistance Tax Act of 2008 added a supplement to the basic standard deduction. A nonitemizing taxpayer may claim a deduction for real property taxes paid, up to $500, $1,000 in the case of a joint return. Initially, the change applied only to 2008, but subsequent legislation extended its life through 2009, and pending legislation would make it a permanent part of the Code. Although well intentioned, the real property tax provision makes …

Substantial Compliance, Steve R. Johnson

Scholarly Publications

There are many exceptions to the juvenile saw that “close counts only in horseshoes and hand grenades.” State and local tax practice may be among those exceptions – depending on possible application of the doctrine of substantial compliance. The tax law often makes the legal validity of one action contingent on a party having taken preliminary steps. Strict compliance – having to take those steps in precisely the right way at precisely the right time – is not always necessary. Courts sometimes hold that substantial compliance – “close enough” - suffices.

This installment of Interpretation Matters discusses the substantial compliance …

Equitable Tolling In State And Local Tax Cases, Steve R. Johnson

Scholarly Publications

Tax statutes, like statutes of all kinds, frequently prescribe dates or times by which actions are to be taken. If the actor – either the taxpayer or the state or local revenue authority – fails to act by the specified date or time, the actor sometimes can be rescued by any of several legal and equitable mechanisms.

This installment of Interpretation Matters addresses one of those mechanisms: the doctrine of equitable tolling. Part I below describes the doctrine generally and gives examples of successful use of the doctrine by taxpayers and by revenue authorities. Part II identifies possible barriers to …

State Constitutional Limits On New Hampshire‘S Taxing Power: Historical Development And Modern State, Marcus Hurn

Law Faculty Scholarship

The New Hampshire Constitution is, in most of its fundamental parts, very old. It is long (nearly 200 articles) and wordy, even by the standards of the eighteenth century. It expresses essential principles in more than one place, in more than one way, and in language that to modem eyes is more suited to political philosophy than to positive law. Most of it was copied from the original Massachusetts Constitution, itself based on a draft by John Adams. However, there is no other state in the union with a structure of taxing powers and limits comparable to New Hampshire's.

Massachusetts Zappers - Collecting The Sales Tax That Has Already Been Paid, Richard Thompson Ainsworth

Faculty Scholarship

No other New England state is as vulnerable to Zappers as is the State of Massachusetts. Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs).

Zappers are a global revenue problem, but to the best of this author’s knowledge they have not been uncovered in Massachusetts. A global perspective says: it is highly unlikely that Zappers are not in the Commonwealth – we just need to find them. In fact, using a Quebec template, tax losses from Zappers and related frauds in …

Supertext And Consistent Meaning, Steve R. Johnson

Scholarly Publications

Opponents of textualism as an approach to statutory interpretation sometimes deride it as myopic. The textualist, those opponents contend, puts on blinders, narrowing the perhaps vast panorama of possible perspectives on meaning to a narrow slice of the whole. Modern textualists beg to differ. They view that criticism as reductionist and are often quick to distinguish textualism from mere literalism. Thus, the leading contemporary textualist jurist – U.S. Supreme Court Justice Antonin Scalia – cautions:

Textualism should not be confused with so-called strict constructionism, a degraded form of textualism that brings the whole philosophy into disrepute .... [T]he good textualist …

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Minnesota Mandates: County Government Fiscal Stress In An Era Of Declining State Support, Selena Krueth

Political Science Theses and Capstones

Minnesota counties are experiencing more than just financial burdens from state mandates these days. Counties and local governments currently are seeking the most effective solution of implementing state mandates; leaving behind the argument of no mandates without funding to "give us mandates that work". In my analysis I combined county budgetary and demographic data, with phone survey data gathered from Minnesota counties. I anticipate results that will show a wide variety in county administrator attitudes towards state mandates and varying local capacity to meet them. Costly state mandates, such as health services, and large county populations have proven significant in …

Safe Haven No More: How Online Affiliate Marketing Programs Can Minimize New State Sales Tax Liability, Jennifer Heidt White

Washington Journal of Law, Technology & Arts

Affiliate marketing has become a popular and profitable way for online merchants to access potential buyers, especially where those merchants lack a physical presence in the buyer’s home state. By increasing market penetration and brand recognition, affiliates have contributed to the growth of e-commerce and, consequently, the growth of untaxed electronic purchases. As a result, affiliates recently became the focus of states looking to capture lost sales tax revenue from online sales. In 2008, New York became the first state to target affiliate marketing programs with a tax amendment that requires out-of-state vendors that solicit more than $10,000 worth of …

The Two Kinds Of Legislative Intent, Steve R. Johnson

Scholarly Publications

What is a court trying to do when it interprets or applies a statute? This installment of my column looks at two different answers to that question, doing so through the lens of cases involving state and local tax statutes. Both approaches sometimes use the language of “intent,” so it becomes important for the state-local tax practitioner to understand, and to accommodate his or her arguments to the kind of intent that actually controls in the particular jurisdiction.

The first part describes the two approaches: subjective intent and objectified intent. The second part describes a middle position that some courts …

Interpreting State Tax Exemptions, Deductions, And Credits, Steve R. Johnson

Scholarly Publications

Modern tax statutes serve many purposes beyond simply raising revenue, and the contours of those statutes are shaped by many (and sometimes conflicting) economic, social, and political objectives. Legislatures choose a variety of structural mechanisms – including exemptions, deductions, and credits – to advance those policy goals. Sometimes those features are drafted with less than meticulous precision. Other times, business practices have evolved since enactment of the provisions. In either event, revenue agencies and courts are frequently required to interpret those provisions.

This installment of “Interpretation Matters” concerns one such principle of interpretation: The canon that exemptions, deductions, and credits …

Pro-Taxpayer Interpretation Of State-Local Laws, Steve R. Johnson

Scholarly Publications

Sometimes, from a taxpayer’s perspective, it is better to be challenging a state or local tax determination than a federal tax determination. One reason for that is the canon that “[tax] statutes are to be construed most favorably for the taxpayer.” Scores, if not hundreds, of federal tax cases espoused that principle, especially during the 1890s to 1940s. However, the principle fell into disuse at the federal level in ensuing decades and, indeed, was replaced by prorevenue canons. A seeming attempt to revivify the canon at the federal level earlier this decade appears to have withered on the vine. In …

California Biometrics: A Second Proposal For California's Commission On The 21st Century Economy, Richard Thompson Ainsworth

Faculty Scholarship

This proposal takes a long view to revenue reform. It seeks to fundamentally align the sales tax with the digital foundation of the 21st Century economy.

The core policy question is whether California is willing to change the way it defines sales tax exemptions; is it willing to move from product-centric to person-centric exemptions. Certified tax determination systems can be relied upon. A key element in this proposal is the encryption of exemption certificates in IDs (smart cards with biometric identifiers that will allow the poor or handicapped to make certain purchases tax free).

This proposal suggests that (for example) …