Tax Law Commons^™

The Inequity Of Informal Guidance, Joshua D. Blank, Leigh Z. Osofsky

Faculty Publications

The coexistence of formal and informal law is a hallmark feature of the U.S. tax system. Congress and the Treasury enact formal law, such as statutes and regulations, while the Internal Revenue Service offers the public informal explanations and summaries, such as taxpayer publications, website frequently asked questions, virtual assistants, and other types of taxpayer guidance. Throughout the COVID-19 pandemic, the IRS increased its use of informal law to help taxpayers understand complex emergency relief rules implemented through the tax system.

In contrast to many other legal scholars who have examined important administrative law issues regarding informal tax guidance, in …

First Impressions Of The International Tax Provisions Of Bbb: A Reasonable Compromise., Reuven S. Avi-Yonah

Articles

U.S. critics of Pillar 2 of the Organisation for Economic Co-operation and Development (OECD)/Inclusive Framework (IF) Base Erosion and Profit Shifting (BEPS) 2.0 project have focused on the impact of the Undertaxed Profits Rule (UTPR) on tax credits such as the ones included in the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act. In fact, those credits are unlikely to be affected because they are refundable. But this raises a broader question of why the line between qualifying and non-qualifying credits should be drawn at refundability. This article addresses this question and …

Turnover Taxes: Their Origin, Fall From Grace, And Resurrection, Richard Pomp

Faculty Articles and Papers

The turnover tax, a hallmark of developing nations and even once blamed for Spain’s decline, has made a comeback in the states, starting with Ohio.

A turnover tax is a gross receipts tax that is applied every time a good or service “turns over,” that is, every time the good or service transfers from one entity to another for consideration. The tax base is therefore turnover, and the measure of the tax is gross receipts.

In this article, Professor Richard Pomp examines the turnover tax’s deep roots dating back to ancient Athens, and tracks its course from the time the …

Incentivizing Innovation, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

This Article advocates for a new approach to incentivizing innovation through the design of ex post tax incentives for research and development (R&D) investment. In contrast to many nations, the United States relies largely on ex ante tax incentives, namely a tax deduction and tax credit for qualified R&D spending. Fundamental design flaws exist with these ex ante incentives; moreover, innovation occurs continuously and yields results at the back end of the innovation cycle. An appropriate framework should take into consideration the key players in the innovation landscape. These players are often treated differently under the tax laws such that …

The Global Tax Agreement: Some Truths And Legal Realities, Jinyan Li

All Papers

With much pomp and ceremony, it was announced that member jurisdictions of the G20/OECD BEPS Inclusive Framework “agreed to a two-pillar solution to address the tax challenges from the digitalization of the economy” (the “Two-Pillar Agreement”) This agreement has been hailed by some as “historic”, “momentous”, “revolutionary”, but criticized by others as “harmful to developing countries”, cartelistic power grabbing by a few powerful countries, or neocolonialism. So, is the agreement a cause for celebration or the opposite? What is the chance of the Agreement become real law? In this article, I try to first explain what the two-pillar agreement is …

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Seattle University Law Review

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The Beat And The Bits: Can The United States Be Sued Over The Beat?, Reuven S. Avi-Yonah

Articles

On December 21, 2020, the government of India announced that it will appeal an arbitration award of $5.6 billion issued in favor of Vodafone PLC by the Permanent Court of Arbitration (PCA) in the Hague. The award resulted from the decision of India to impose capital gains tax on Vodafone (as withholding agent) for its acquisition of a Cayman Islands subsidiary from Hutchison, which held the Indian telecommunication assets of the Hong Kong-based Hutchison group. The Indian Supreme Court had decided that no tax was due, but the Indian government passed legislation to overturn that decision retroactively. This, the PCA …

Minimum Taxation In The United States In The Context Of Globe, Reuven S. Avi-Yonah, Mohanad Salaimi

Articles

The introduction of the minimum tax in Pillar II of the OECD/G20/IF framework was generally seen as a response to the U.S. Tax Cuts and Jobs Act (TCJA) of 2017. The TCJA included both a minimum tax on outbound income (the Global Intangible Low-Taxed Income, or “GILTI”) and a minimum tax on inbound income (the Base Erosion Anti-Avoidance Tax, or “BEAT”). These were seen as the precursors to the IIR and the UTPR. Thus, unlike Pillar I which was perceived as a device to impose more tax on the U.S. digital giants, Pillar II was seen as more consistent with …

The Parallel March Of The Ginis: How Does Taxation Relate To Inequality, And What Can Be Done About It?, Reuven S. Avi-Yonah

Articles

The United States currently has one of the highest levels of inequality among industrialized economies. In addition, numerous scholars have shown that social mobility in the United States is significantly lower than it was in the period between 1945 and 1970, when inequality was declining. The combination of these trends is dangerous because it risks transforming the United States into a society where small elites capture most of the gains, a pattern in which growth cannot be sustained over time. The level of inequality in the United States after taxes and transfers are taken into account is much lower, but …

A New Framework For Digital Taxation, Reuven S. Avi-Yonah, Young Ran (Christine) Kim, Karen Sam

Articles

The international tax regime has wide implications for business, trade, and the international political economy. Under current law, multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence there. Digital companies, like Google and Amazon, can operate entirely online, thereby avoiding market country taxes. Multinationals can also exploit existing tax rules by shifting their profits to low-tax jurisdictions, thereby avoiding taxes in the residence country where their headquarters are located.

Recently, a global tax deal was reached to tackle these …

The Intergenerational Equity Case For A Wealth Tax, Daniel Schaffa

Law Faculty Publications

Intergenerational equity is commonly set aside in favor of other policy objectives, perhaps because of the extreme challenges inherent in adopting and applying an intergenerational equity normative framework. Even when there is a near consensus that the choices of today will have substantial costs in the future, these costs are often downplayed or disregarded. This Article asks whether there are measures that might offer redress to a generation for the costs imposed on it by its predecessors and finds that a one-time wealth tax is a promising option. Although its analysis applies more generally, this Article focuses on the widely …

Block Rewards, Carried Interests, And Other Valuation Quandaries In Taxing Compensation, Henry M. Ordower

All Faculty Scholarship

In this article, Ordower contextualizes block rewards litigation with historical failures to tax compensation income paid in kind. Tax fairness principles demand current taxation of the noneconomically diluting block rewards’ market value.

Substance Over Form In Transfer Tax Adjudication, Richard Schmalbeck, Jay A. Soled

Faculty Scholarship

The elevated exemption level under the federal transfer tax system (now in excess of $24 million for a married couple) has opened up new and abusive tax-avoidance opportunities. In many areas of the tax law, the substance over form doctrine historically has been effective in controlling such abuses; however, for a myriad of reasons, transfer tax jurisprudence has been marred by the reluctance of courts to embrace this doctrine. In this analysis, we urge reconsideration of that posture.

World Tax Policy In The World Tax Polity? An Event History Analysis Of Oecd/G20 Beps Inclusive Framework Membership, Shu-Yi Oei

Faculty Scholarship

The last decade has seen the emergence of a new global tax order spearheaded by the OECD and G20 and characterized by increased multilateral consensus and cooperation. This new order appears to reflect the emergence of a new “world tax polity” with shared structures, practices, and norms, which have been shaped through the work of the OECD, G20, and other global actors. But what are the pathways by which this new world tax polity has emerged?

Using event history regression methods, this Article investigates this question by studying membership in the OECD/G20 BEPS Inclusive Framework, a multilateral tax agreement among …

Filing While Black: The Casual Racism Of The Tax Law, Steven Dean

Faculty Scholarship

The tax law's race-blind approach produces bad tax policy.' This Essay uses three very different examples to show how failing to openly and honestly address race generates bias, and how devastating the results can be.² Ignoring race does not solve problems; it creates them. ProPublica has shown, for example, that because of the perils of filing income taxes while Black, the five most heavily audited counties in the United States are Black and poor.

The racial bias long tolerated-and sometimes exploited-by tax scholars and policymakers affects all aspects of the tax law. In 1986, Sam Gilliam was denied tax …

Taxing Creativity, Jeffrey A. Maine

Faculty Publications

The recent sell offs of song catalogs by Bob Dylan, Stevie Nicks, Neil Young, and Mick Fleetwood for extraordinarily large sums of money raise questions about the law on creativity. While patent and copyright laws encourage a wide array of creative endeavors, tax laws governing monetization of creative works do not. The Songwriters Capital Gains Equity Act, in particular, solidifies creativity exceptionalism, exacerbates tax inequities among creators, and perpetuates racial disparities in the tax Code. This Article asserts that the law must encourage creativity from all creators. It is time to eliminate tax exceptionalism for musical compositions or expand its …

A Critical Problem Needing A Bolder Solution?: A Response To Atinuke O. Adediran's "Nonprofit Board Composition", Lloyd Hitoshi Mayer

Journal Articles

The governing boards of nonprofit organizations, and particularly of nonprofits that serve low income and other vulnerable populations, fail to adequately include the populations that they serve. At least this is the common understanding among people familiar with these boards. Professor Atinuke Adediran not only confirms the existence of this problem but clarifies it in four important ways. Professor Adediran also proposes concrete steps to address it; although, the clarity she has brought to the problem raises the question of whether she could have been bolder in her proposed solutions.

The clarity comes from new data, careful consideration of previous …

Tax Harmony: The Promise And Pitfalls Of The Global Minimum Tax, Reuven Avi-Yonah, Young Ran (Christine) Kim

Articles

The rise of globalization has become a double-edged sword for countries seeking to implement a beneficial tax policy. On one hand, there are increased opportunities for attracting foreign capital and the benefits that increased jobs and tax revenue brings to a society. However, there is also much more tax competition among countries to attract foreign capital and investment. As tax competition has grown, effective corporate tax rates have continued to be cut, creating a “race-to-the-bottom” issue.

In 2021, 137 countries forming the OECD/G20 Inclusive Framework on BEPS passed a major milestone in reforming international tax by successfully introducing the framework …

Negotiating Bilateral Tax Treaties: Should Tax Treaties Involving Low-Income Countries Contain A Sunset Clause?, Okanga Ogbu Okanga

Reports & Public Policy Documents

This policy brief reflects on an underexplored proposition: that bilateral tax treaties – particularly treaties involving (middle- and) low-income countries – should contain an expiration or sunset clause. The brief examines some reasons why it may be sensible for a low-income country to make its bilateral tax treaty expirable, from its onset. It also highlights a few reasons why such a policy may not be advisable – or tenable. The brief concludes by exploring the design of a model sunset clause for inclusion in the UN Model Tax Convention.

Empirical Evidence On Robot Taxation: Literature Review And Technical Analysis, Bret N. Bogenschneider

American University Business Law Review

The literature on robot taxation has continued to expand since 2018 with numerous articles now referring to empirical evidence. The evidence presented in prior studies comprises abstract modeling and statistical pattern reviews with no statistically significant findings reported to date. Notably, one article is an advocacy piece by a tech lobbyist who at one point purchased priority Google results for the search "robot taxation." In some cases, technical errors are sufficient to reverse the stated results. Examples of error in empirical analyses include (i) motivated reasoning, such as the failure to model simpler or best explanations; (ii) lack of causal …