Tax Law Commons^™

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 …

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

Buffalo Law Review

No abstract provided.

The U.S. As Tax Haven? Aiding Developing Countries By Revoking The Revenue Rule, Samuel D. Brunson

Faculty Publications & Other Works

Over the years, many OECD countries, including the United States, have identified tax havens as a significant problem, and have acted to limit the ability of their taxpayers to use tax havens to reduce their taxes. The United States has implemented tax regimes, including subpart F and the passive foreign investment company rules, and disclosure regimes, such as the recently-enacted FATCA rules, to prevent U.S. taxpayers from taking advantage of tax haven jurisdictions.

But the intersection of a number of U.S. tax rules, it turns out, makes the United States an attractive place for foreigners to invest—and hide …

Bankruptcy’S Corporate Tax Loophole, Diane Lourdes Dick

Faculty Articles

Imagine you are a company with a failing business that is drowning in debt. On the bright side, you also possess a very valuable asset. This asset is unique because, unlike most assets, if you liquidate the business through a Chapter 7 bankruptcy, it will be extinguished and its value will not be realized by any shareholders or creditors. On the other hand, even if you substantially liquidate the business using Chapter 11, you can, thanks to an extraordinary ambiguity in the law, preserve this valuable asset. Even better, you can direct the value of this asset to your preferred …

Charitable Giving, Tax Expenditures, And Direct Spending In The United States And The European Union, Lilian V. Faulhaber

Georgetown Law Faculty Publications and Other Works

This Article compares the ways in which the United States and the European Union limit the ability of state-level entities to subsidize their own residents, whether through direct subsidies or through tax expenditures. It uses four recent charitable giving cases decided by the European Court of Justice (ECJ) to illustrate the ECJ’s evolving tax expenditure jurisprudence and argues that, while this jurisprudence may suggest a new and promising model for fiscal federalism, it may also have negative social policy implications. It also points out that the court analyzes direct spending and tax expenditures under different rubrics despite their economic equivalence …

Charity At Work: Proposing A Charitable Flexible Spending Account, Alyssa A. Dirusso

Utah Law Review

The current federal system of tax law, in attempting to encourage the shift of assets from private individuals to charitable organizations, fails to reach significant portions of Americans. Not all donors are equal in the eyes of the law; donors with particular demographic characteristics—ranging from income, to race, to state of residence—are more likely to itemize than others. Despite its aim to reflect a pluralistic society, the charitable deduction sanctions the privileging of one-third of American voices over the rest. If taxes are ballots, the election is rigged.

The Taxation Of Gratuitous Services Gone Out Of "Control", Allen Madison

Faculty Publications

How does the IRS’s ruling that both parties to an exchange of services are subject to income tax apply in the dating context? When meeting, dating, living together, or potentially raising a child together, single people provide services for each other. Most are unaware that potential tax liability lurks behind their performance and receipt of services. This article proposes a framework for determining when a service is gratuitous and thus subject to income tax and then applies that framework to the four potential phases of singlehood. When a service received by an individual has value and occurs subject to the …

Comments: The Illegal Immigrant Tax: Evaluating State Remittance Taxes Under The Dormant Commerce Clause And The Equal Protection Clause, Meredith Cipriano

University of Baltimore Law Review

No abstract provided.

Tax, Command -- Or Nudge?: Evaluating The New Regulation, Brian Galle

Georgetown Law Faculty Publications and Other Works

This Article compares for the first time the relative economic efficiency of “nudges” and other forms of behaviorally-inspired regulation against more common policy alternatives, such as taxes, subsidies, or traditional quantity regulation. Environmental economists and some legal commentators have dismissed nudge-type interventions out of hand for their failure to match the revenues and informational benefits taxes can provide. Similarly, writers in the law and economics tradition argue that fines are generally superior to non-pecuniary punishments.

Drawing on prior work in the choice-of-instruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or …

Tax Advisors And Conflicted Citizens, Milton C. Regan

Georgetown Law Faculty Publications and Other Works

Thousands of lawyers are involved every day in advising clients outside of litigation. These lawyers counsel clients on how they can benefit from or avoid violating statutes, regulations, and other sources of law. How should we think about the obligations of the lawyer in this setting? This article argues that we should eschew a single prescriptive model of the advisor in favor of a pluralistic conception that bases responsibilities on the salient factors of the context in which the advisor operates.

The model of the advocate that suggests that the lawyer take a relatively aggressive approach to interpreting the legal …

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 …

Cook County Prevents Source Of Income Discrimination From Begetting Unlawful Race Discrimination And So Should Illinois, Jonathan Sheffield

Public Interest Law Reporter

No abstract provided.

Evaluating Trickle Down Charity, Matthew Rossman

Faculty Publications

As our nation's philanthropic sector becomes more entrepreneurial, ambitious and influenced by the private sector, longstanding legal standards on what constitutes “charity” struggle to stay relevant. More and more often, organizations that seek classification by the Internal Revenue Service as a Section 501(c)(3) charity (and the substantial public subsidy that this status unlocks) are not the soup kitchens and homeless shelters of yesteryear, but highly sophisticated ventures which accomplish their missions in ways that are less obviously charitable. In no case is this more true than in the recent widespread emergence of nonprofit organizations whose primary activity is providing direct …

The Individual Mandate Tax Penalty, Jeffrey H. Kahn

University of Michigan Journal of Law Reform

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 …

California – Land Of “Lawless Taxation” And The “Midnight Special”: Outlier Or Leader In A Growing Trend?, Mystica M. Alexander

The University of New Hampshire Law Review

[Excerpt] “Taxpayers in California recently found themselves the target of a retroactive grab for revenue by the Franchise Tax Board (FTB) in what has called an act of “lawless taxation” by the state of California. The source of the conflict was the Qualified Small Business Stock credit that had been in place in California since 1993. The tax credit, which was designed to encourage innovation and investment in California-based enterprises, allowed business owners who had at least eighty percent of their assets and employees in California to take a credit of fifty percent of the capital gain realized on a …

It Takes A Federalist Village: A Revitalized Property Tax As The Linchpin For Stable, Effective K-12 Public Education Funding, Mildred Wigfall Robinson

Richmond Journal of Law and the Public Interest

Public education in the United States is a big business. In the fall of 2011, more than 55.5 million students from kindergarten through 12th grade were expected to enroll in the nation's public schools at a total cost of $599,145,678,000. Though it is a service provided by local governments, its cost is borne by local, state, and, to a more limited extent, federal taxpayers. Providing public education is a massive undertaking and no one level of government can solely bear its cost. Governmental revenue sources, from which allocated shares of expense are presently borne, differ. Local funding is provided predominately …

Does Federal Spending 'Coerce' States? Evidence From State Budgets, Brian Galle

Georgetown Law Faculty Publications and Other Works

According to a recent plurality of the U.S. Supreme Court, the danger that federal taxes will “crowd out” state revenues justifies aggressive judicial limits on the conditions attached to federal spending. Economic theory offers a number of reasons to believe the opposite: federal revenue increases may also float state boats. To test these competing claims, I examine for the first time the relationship between total federal revenues and state revenues. I find that, contra the NFIB plurality, increases in federal revenue -- controlling, of course, for economic performance and other factors -- are associated with a large and statistically significant …

Taxing Social Enterprise, Lloyd Histoshi Mayer, Joseph Ganahl

Journal Articles

The fairly strict divide in the United States between for-profit and nonprofit forms presents a quandary for many entrepreneurs who want to combine doing good with doing well. On the one hand, for-profits offer great flexibility and access to capital and so attract entrepreneurs who would like to take advantage of the ability of for-profits to scale up rapidly to meet growing demand. At the same time, however, for-profit forms also limit entrepreneurs’ ability to engage in philanthropy, due to the fiduciary duties managers owe to the equity holders. On the other hand, nonprofits offer their founders the freedom to …

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 …