Taxation-State and Local Commons^™

Finding The Pearl In The Oyster: Supercharging Ipos Through Tax Receivable Agreements, Christopher B. Grady

Northwestern University Law Review

A new, “supercharged” form of IPO has slowly developed over the last twenty years. This new form of IPO takes advantage of several seemingly unrelated provisions of the tax code to multiply pre-IPO owners’ proceeds from a public offering without reducing the amount public investors are willing to pay for the stock. Supercharged IPOs use a tax receivable agreement to transfer tax assets created by the IPO back to the pre-IPO ownership, “monetizing” the tax assets. As these structures have become more efficient, commentators have expressed concerns that these agreements deceive shareholders who either ignore or do not understand the …

The "Charitable" Privilege: Evaluating The Status Of Property Tax Exemptions For Institutions Of Purely Public Charity In Pennsylvania, Rebecca L. Traylor

Duquesne Law Review

Pennsylvania has historically exempted institutions of purely public charity from paying property taxes, though that practice is currently under fire from critics who argue many charities no longer warrant this exemption. Adding to this tension is a struggle between the Pennsylvania General Assembly and Pennsylvania Supreme Court over who has the power to define "institutions of purely public charity, " which has culminated in the introduction of Senate Bill 4, a proposed constitutional amendment which purports to give that power solely to the legislature. This article explores the evolution of institutions of purely public charity in Pennsylvania and explores the …

How The 1 Percent Pays Taxes; How The 99 Percent Could: The Subchapter T Worker Cooperative Tax Loophole, Michael Haber

Journal of Law and Policy

The ratification of the Sixteenth Amendment to the United States Constitution granted Congress the right to tax income “from whatever source derived.” Since its inception, the tax code has become long and complicated, filled with broad taxation rules and innumerable exceptions. Over time, the tax code has been amended with the stated purpose of promoting “fairness, efficiency, and enforceability.” However, the complexity of the tax code has led to abuse of “tax loopholes” by wealthy taxpayers who want to avoid paying their fair share of taxes. While abuse is likely to continue, as legislators remain intent on lowering taxes on …

Franchise Tax Board Of California V. Hyatt: A Split Court, Full Faith And Credit, And Federal Common Law, Jonathan M. Gutoff

Law Faculty Scholarship

No abstract provided.

Directv, Inc. V. Imburgia And The Continued Ascendance Of Federal Common Law: Class-Action Waivers And Mandatory Arbitration Under The Federal Arbitration Act, Michael Yelnosky

Law Faculty Scholarship

No abstract provided.

Taxing Social Impact Bonds, Orly Mazur

Faculty Journal Articles and Book Chapters

An exciting new way to fund social services has recently emerged. This new financing mechanism, called a social impact bond (SIB), has the potential to help us tackle some of our nation’s most challenging social problems. Broadly speaking, a SIB is a type of “pay for success” contract where private investors provide the upfront capital to finance a social program, but only recoup their investment and realize returns if the program is successful. Like any new financing instrument, SIBs create numerous regulatory challenges that have not yet been addressed. One unresolved issue is the tax implications of a SIB investment. …

The Political Process Argument For Overruling Quill, Edward A. Zelinsky

Brooklyn Law Review

Should the U.S. Supreme Court overrule Quill Corporation v. North Dakota? A careful assessment of the federal political process suggests that the Supreme Court itself should overturn Quill in the Court’s role as guardian of the states against federal commandeering. A combination of factors underlay this conclusion: the tactical advantage that Quill bestows in the political process upon the internet and mail order industries, the importance of the states in the structure of federalism, the centrality of sales taxes to the financing of state government, the severe impediment which Quill and its physical presence test impose upon the collection of …

Consumer Response To Increases In The State Cigarette Tax, Patrick Nolan

MPA/MPP/MPFM Capstone Projects

In this paper I look at consumer responsiveness to the cigarette tax. Cigarette taxes are motivated by wanting to raise money for the state and wanting to deter smoking in the state’s population. Obviously reducing smoking in the population would reduce the externalities caused by smoking. We know the health effects are completely detrimental to the consumer, and detrimental to those around them. In addition to this we know that tobacco is an addictive substance, meaning than is inherently extremely inelastic.

To find on how consumers respond to tax increases I conducted a difference in difference analysis of tax revenue …

Chapter 701: Protecting Low-Income Families Burdened By Property Taxes, Jessica Wellington

University of the Pacific Law Review

No abstract provided.

Franchise Tax Board Of California V. Hyatt: A Split Court, Full Faith And Credit, And Federal Common Law, Jonathan M. Gutoff

Roger Williams University Law Review

No abstract provided.

Taking Tax Due Process Seriously: The Give And Take Of State Taxation, Hayes R. Holderness

Law Faculty Publications

As the Internet has increased the ease and amount of interstate transactions, the states have struggled to require “remote vendors” — vendors without a physical presence in the taxing state — to collect or pay taxes. The states are attempting to overcome these struggles by lowering Commerce Clause limitations on their jurisdiction to tax, but meaningful limitations on such jurisdiction imposed by the Due Process Clause await the states. The Due Process Clause requires that state actions be fundamentally fair, and, to meet this standard, a state must provide a person with a benefit and the person must indicate acceptance …

The Case For Consumer-Based Use Tax Enforcement, David Gamage, Adam Thimmesch, Darien Shanske

Articles by Maurer Faculty

This essay argues that state governments’ current focus on getting vendors to collect their sales and use taxes is insufficient, especially in regard to e-commerce transactions. If state governments want their use taxes to serve as effective and lawful backstops to their sales taxes—as state governments claim is their goal—then states must also focus on the consumer side of the use-tax equation. This essay explains that both economic and rule of law considerations make it imperative for state governments to better enforce their sales and use taxes with respect to consumer taxpayers.

Consumer-Based Use Tax Enforcement And Taxpayer Compliance, David Gamage, Adam Thimmesch, Darien Shanske

Articles by Maurer Faculty

This essay explains how current state government approaches to use-tax enforcement undermine tax morale and taxpayer compliance. This essay further argues that these threats to tax morale and taxpayer compliance will become even more severe as many states are moving toward adopting notice and reporting statutes for their sales and use taxes.

How The 1 Percent Pays Taxes; How The 99 Percent Could: The Subchapter T Worker Cooperative Tax Loophole, Michael Haber

Journal of Law and Policy

The ratification of the Sixteenth Amendment to the United States Constitution granted Congress the right to tax income “from whatever source derived.” Since its inception, the tax code has become long and complicated, filled with broad taxation rules and innumerable exceptions. Over time, the tax code has been amended with the stated purpose of promoting “fairness, efficiency, and enforceability.” However, the complexity of the tax code has led to abuse of “tax loopholes” by wealthy taxpayers who want to avoid paying their fair share of taxes. While abuse is likely to continue, as legislators remain intent on lowering taxes on …

The Unexpected Role Of Tax Salience In State Competition For Businesses, Hayes R. Holderness

Law Faculty Publications

Competition among the states for mobile firms and the jobs and infrastructure they can bring is a well-known phenomenon. However, in recent years, a handful of states have added a mysterious new tool to their kit of incentives used in this competition. Unlike more traditional incentives, these new incentives — which this Article brands “customer-based incentives” — offer tax relief to a firm’s customers rather than directly to the firm. The puzzle underling customer-based incentives is that tax relief provided to the firm’s customers would seem more difficult for the firm to capture than relief provided directly to the firm …

A State-Level Carbon Tax With Border Adjustments, David Gamage, Darien Shanske

Articles by Maurer Faculty

This essay develops three new doctrinal arguments in support of the conclusion that a state-level carbon tax with border adjustments should be permissible under the dormant commerce clause. This essay builds on our prior work to argue against the view that a single state cannot (practically) impose a significant carbon tax due to the claim that border tax adjustments are Constitutionally impermissible. By demonstrating how a state government could implement a carbon tax with border tax adjustments in a Constitutionally permissible fashion, this essay shows that levying a carbon tax is a realistic and practical option for U.S. state governments. …

Tax Cannibalization And Fiscal Federalism In The United States, David Gamage, Darien Shanske

Articles by Maurer Faculty

We began this project pondering a riddle. Most state governments have adopted what we-and many others-view as clearly suboptimal tax policies, especially in regard to the taxation of corporate income and capital gains. Yet, with the notable exception of those who oppose progressivity and the taxation of capital, state-level tax policymakers have had remarkably little appetite for reform.

This Article provides one major explanation for this riddle by identifying and demonstrating a phenomenon that we label as "tax cannibalization." We argue that flawed state-level tax policies derive in part from perverse incentives inadvertently created by the federal government.

Why A State-Level Carbon Tax Can Include Border Adjustments, David Gamage, Darien Shanske

Articles by Maurer Faculty

This is our third in a series of articles considering taxation and greenhouse gas mitigation. To date, all state-level attempts to mitigate greenhouse gas emissions by placing a price on carbon have involved cap-and-trade regimes. In our previous two articles, we considered how importing tax features into a cap and- trade regime could ease distributive concerns and also make cap-and-trade regimes more efficient.

A New Theory Of Equitable Apportionment, David Gamage, Darien Shanske

Articles by Maurer Faculty

This essay analyzes the purpose of the equitable apportionment doctrine in state and local tax jurisprudence, arguing that the doctrine remains coherent in the context of single-sales-factor apportionment regimes.

The American Health Care Act Would Toss The States A Hot Potato, David Gamage, Darien Shanske

Articles by Maurer Faculty

This essay explains how the American Health Care Act (AHCA) – the House Republicans’ proposed replacement for Obamacare – would toss a hot potato to state governments. Were the AHCA to be enacted into law, state governments would need to act promptly if they are to save individual insurance markets within their states. This essay explains measures that state governments might take to respond to this threat.