Tax Law Commons^™

Can The United States Curb Its Debt?, Reuven S. Avi-Yonah

Articles

After the upcoming presidential election, the United States is almost certainly going to have a president who is barred from running for reelection, regardless of the outcome in November. This situation has never happened before and it presents an important opportunity for fundamental tax reform.

Try Again: The Problems Of Befit, Reuven S. Avi-Yonah

Articles

In September 2023, the European Commission proposed the directive Business in Europe: Framework for Income Taxation (BEFIT) for corporate income taxation of large groups (COM(2023) 532 final (Sept. 12, 2023)). This is the latest iteration of the EU’s effort to harmonize corporate taxation within the single market. But like its predecessor the Common Consolidated Corporate Tax Base, BEFIT suffers from flaws that undermine its stated goals. The EU can do better, especially given that pillar 1 of the base erosion and profit-shifting’s project 2.0 shows the way forward.

Towards An Understanding Of Tax Complexity, Daniel Schaffa

Law Faculty Publications

The study of tax complexity has reached consensus on two things. First, complexity pervades the U.S. tax system. And second, it is not always clear what tax complexity means. Indeed, it is common practice for tax complexity scholarship to note the absence of a universal tax complexity definition and then conduct its inquiry without one. A universal definition of tax complexity has proven elusive because tax complexity means many different (although often related) things. This has made the tax policy analysis of complexity challenging. As an alternative to a definition, this Article proposes a framework with four elements for considering …

Rethinking Eisner V. Macomber, And The Future Of Structural Tax Reform, Alex Zhang

Faculty Articles

In June 2023, the Supreme Court granted the petition for a writ of certiorari in Moore v. United States, ostensibly a challenge to an obscure provision of the 2017 tax legislation. Moore’s real target is the constitutionality of federal wealth and accrual taxation, which policymakers have proposed to combat record inequality and raise revenue for social-welfare reform. At the center of the doctrinal dispute in Moore is a century-old case, Eisner v. Macomber, on which the Moore petitioners and other commentators have relied to argue that Congress has no power to tax wealth or unrealized gains—e.g., appreciation …

Tax Treaties, Jinyan Li, Paul Lamarre

Articles & Book Chapters

Canada has close to 100 bilateral tax treaties and an active body of case law on treaty interpretation, including the recent Supreme Court of Canada decision in Alta Energy S.A.R.L. v. Canada (2021 SCC 49) on treaty shopping. This chapter in a forthcoming book examines Canada's treaty network, interpretation issues, the impact of the MLI and the relationship between the domestic GAAR and the principal purpose test in the MLI.

What Is The Best Candidate For A Post-Moore Constitutional Challenge?, Reuven S. Avi-Yonah

Articles

On December 5, 2023, the Supreme Court heard oral arguments in Moore, the case challenging the constitutionality of the mandatory repatriation tax enacted in 2017 (section 965). Most of the justices' questions focused on the potential collateral consequences from requiring realization as a constitutional matter, and the majority seemed inclined to avoid the constitutional issue by focusing on the fact that the income in Moore was realized and that section 965 simply followed a long list of precedents by attributing this corporate income to shareholders in a closely held corporation.

Effects From Moore: Does The Corporate Tax Require Realization?, Reuven S. Avi-Yonah

Articles

This paper explores the history of the corporate tax as an excise versus income tax and explains potential effects from the Moore and Altria cases.

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

Articles

Legal and economic scholars have examined the intersection between corporate governance and taxation; however, recent legal scholarship has generally focused on the interplay between director compensation, management measures in the face of the market for corporate control, and the double taxation of inter-corporate dividends. Other aspects of the relationship between corporate governance and taxation have received limited attention. This article aims to fill this gap in the literature. First, this paper discusses the corporate agency problem and the existing justifications for the corporate tax. Second, this paper argues that the corporate tax can be justified on the ground that it …

Fifty Years Of 'Cut To Grow': How Changing Narratives Around Corporate Tax Policy Have Undermined Child And Family Well-Being, Reuven S. Avi-Yonah, Emily Divito, Niko Lusiani

Articles

What follows in this report is an assessment, though not exhaustive, of the central worldviews and set of assumptions driving key US corporate tax reform moments in history—and their consequences for the well-being of children and families in the US. Though political narratives of all kinds are never cleanly chronological (and this remains true of those pertaining to corporate taxation and well-being policies), we aim to build on existing understanding of how dominant narratives come to be and how they, to the extent that they do, drive corporate tax policy outcomes in the US. Looking back over the past 50 …

Corporate Taxpayers And Frivolous Arguments, Part 2, Reuven S. Avi-Yonah

Articles

In my previous column, I discussed the Liberty Global cases and argued that the taxpayer’s positions were frivolous or lacked economic substance. I also argued that a corporate tax director who knows that a return position is frivolous or that a transaction has no economic substance should “just say no.” Until the day arrives that most tax directors take this view (I am not holding my breath), the IRS must rely on a combination of the uncertain tax position schedule and penalties under section 6662.

Answering The Right Questions In Rawat, Reuven S. Avi-Yonah

Articles

The Rawat case, which is currently before the D.C. Circuit, has generated a huge amount of commentary. The problem is that much of this commentary has focused on the partnership tax issues in the case and not on the international tax issue, which is the source of the relevant income. In my opinion, the international tax issue should be dispositive.

Should Digital Services Taxes Be Creditable?, Reuven S. Avi-Yonah

Articles

The impending collapse of pillar 1 of the OECD’s base erosion and profit-shifting 2.0 project means that many countries are likely to join Austria, France, Italy, Spain, and the United Kingdom in enacting digital services taxes. There is a moratorium on new DSTs that has been extended until the end of 2024, but any extension beyond that is unlikely because the elimination of DSTs was premised on pillar 1 coming into effect, and that cannot happen without U.S. ratification of the multilateral tax convention (MLC). It is safe to predict that there will not be 67 votes in the Senate …

Why The United States Needs A Gaar, Reuven S. Avi-Yonah

Articles

The Internal Revenue Code of 1986, as amended, has over 1 million words and more than 5,600 pages. It is by far the longest and most complicated law in the U.S. code. The regulations add over 4 million words. Why?

Whither Lob?, Reuven S. Avi-Yonah

Articles

On January 1, 2024, the 1979 tax treaty between the United States andHungary was officially terminated.A revised treaty was signed in 2010but was never ratified by the United States, and it is unlikely that it willcome into effect any time soon.This situation is an anomaly because the United States has tax treaties withmost other members of the European Union (EU) and the Organisation forEconomic Co-operation and Development (OECD). Why did the UnitedStates terminate the treaty in July 2022?

Can Tribes Get A Receipt?: Seeking Transparency For State Spending Of Tribal Tax Dollars, Adam Crepelle

Faculty Publications & Other Works

No abstract provided.

Juries And Tax: The Effect Of Income Taxation On Tort Damages, Jeffrey H. Kahn, John E. Lopatka

Scholarly Publications

In some shape or form, most tort damages for personal injuries have been excluded from federal income taxation since 1919. Despite this rule having celebrated its 1 0 0th birthday, the tax policy justification for the exclusion eludes consensus. Whether the policy is justified or not, the exclusion raises two other issues: should compensatory damage awards reflect non-taxability, and should juries be informed about tax treatment when determining awards? Like the disagreement over policy justifications for the exclusion, states are not in accord on their damage rule or approach to jury instructions. Proponents of a rule that awards should reflect …

Foreign Owned Canadian Corporations, Jinyan Li, Paul Lamarre

Articles & Book Chapters

Canadian income tax rules applicable to foreign owned Canadian corporations have become increasingly complex, in part owing to the implementation of recommendations of the OECD/G20 BEPS project to address the issue of base erosion and profit shifting. This paper considers these anti-avoidance rules, including the hybrid mismatch arrangement rules, excessive interest and financing expense limitation rules and various surplus stripping rules.

We Shall Overcome: The Evolution Of Quotas In The Land Of The Free And The Home Of Samba, Stella Emery Santana

Seattle University Law Review

When were voices given to the voiceless? When will education be permitted to all? When will we need to protest no more? It’s the twenty-first century, and the fight for equity in higher education remains a challenge to peoples all over the world. While students in the United States must deal with the increase in loans, in Brazil, only around 20% of youth between the ages of twenty-five and thirty-four have a higher education degree.

The primary objective of this Article is to conduct an in-depth comparative analysis of the development, implementation, and legal adjudication of educational quota systems within …

Pacific Islands And The U.S. Military: The Legal Borderlands Of The Environmental Movement, Sonia Lei

Seattle University Law Review

Climate change remains an urgent, ongoing global issue that requires critical examination of institutional polluters. This includes the world’s largest institutional consumer of petroleum: the United States military. The Department of Defense (DoD) is a massive institution with little oversight, a carbon footprint spanning the globe, a budget greater than the next ten largest nations combined, and overly generous exemptions to environmental regulations and carbon reduction targets. This Comment examines how this lack of accountability and oversight plays out in the context of three Pacific islands that have hosted U.S. military bases for decades. By considering the environmental impact of …

Taxing The New With The Old: Capturing The Value Of Data With The Corporate Income Tax In Virginia, Coleman H. Cheeley

Law Student Publications

The Commonwealth of Virginia markets itself as “The Largest Data Center Market in the World.” In 2019, the Northern Virginia market alone was the largest in the United States by inventory, with room to grow. In 2021, data centers in Northern Virginia required an estimated 1,686 megawatts of power; that number is expected to increase by 200 megawatts in the near future, reflecting data centers currently under development. For reference, in 2022, it was estimated that more than 100 homes could be powered by one megawatt of solar power in Virginia. Historically, data centers have been located in the Commonwealth …