Taxation-State and Local Commons^™

State Fiscal Policies And Transitory Income Fluctuations, James R. Hines Jr.

Articles

State and local expenditure and tax revenue respond less to the business cycle than do federal spending and revenue, thereby reducing the countercyclicality of total government expenditure and revenue. This paper considers forces responsible for the cyclical pattern of state expenditure and revenue. Annual fluctuations in state personal income are associated with small changes in state spending and significant changes in tax receipts; receipt of federal grants is associated with greater state spending. Tax collections, and to a lesser degree expenditure, of larger states are more closely associated with annual income fluctuations than are the tax collections and expenditure of …

The Judicial Instinct To Harmonize Statutes, Steve R. Johnson

Scholarly Publications

Judges like to reach results that harmonize statutory meanings, both meanings within given statutes and meanings among statutes. That inclination applies as fully in tax cases as in nontax cases, and in state and local tax cases as well as in federal tax cases. Effective advocates in state-local tax controversies recognize that judicial tropism and use it, whenever possible, in their clients’ interests.

Part I discusses the harmonization instinct generally. Part II illustrates application of the harmonization approach in state and local cases. Part III notes some limitations on and unsettled questions regarding the harmonization.

Maine's General Sales Tax: An Exploration Of Policy Issues And Options, Sarah Rawlings

Muskie School Capstones and Dissertations

Introduction The role of sales taxation in states’ economies has been a topic of much discussion and controversy since its inception in some states more than 70 years ago. The sales tax has been a critical component of revenue generation for some 98% of states over the last 50 years, but policy-makers and economists have become concerned in recent years about the dwindling revenues being generated by sales taxation in most states.

When General Statutes And Specific Statutes Conflict, Steve R. Johnson

Scholarly Publications

It’s no secret that the pace of lawmaking in the United States has accelerated dramatically in recent decades. So much so that one may be forgiven for thinking that the best law reform would be a moratorium on further law reform – - to give citizens, their legal representatives, and government officials the opportunity to catch up with the laws we already have made.

Legislatures, agencies, and courts all have made their contributions to the torrent of lawmaking. The phenomenon has been attributed to various causes, including growing populations, greater population densities as a result of urbanization, rapid technological changes, …

Online Travel Companies Find Issues With Hotels Extremely Taxing: Georgia's Hotel- Motel Occupancy Excise Tax And Expedia, Inc. V. City Of Columbus, T.J. Evans

Mercer Law Review

In Expedia, Inc. v. City of Columbus, the Georgia Supreme Court held that under a plain reading of the "Hotel-Motel Occupancy Excise Tax" ordinance of Columbus, Georgia, and the Official Code of Georgia Annotated (O.C.G.A.) enabling statute, the applicable tax rate must be applied to the amount an online travel company (OTC) charges a purchaser for the right to occupy a hotel room, rather than the discounted amount for which the OTC contracts with hotels to pay for a room. The supreme court's decision "marks the first time any state's highest court has ruled on the substantive issues at …

Is Lost Tax Revenue Property Under Rico?, Steve R. Johnson

Scholarly Publications

The last installment of this column began an examination of the use of the federal civil RICO Act in state and local tax administration controversies. This installment closes the loop by answering questions posed, but not resolved, last time. This column explores whether uncollected tax revenue - or loss of the opportunity to collect tax revenue - constitutes “business or property” under the civil RICO statute. This exploration also takes up the related question whether tax authorities will be able to overcome judicial reluctance to turning RICO into a tax collection statute.

Part I of this column reprises how RICO …

Civil Rico And State And Local Taxes, Steve R. Johnson

Scholarly Publications

Vast is the garden of state and local taxation, and exotic are some of the blossoms to be found there. This installment of Interpretation Matters will consider one of those curious blooms: use of the civil RICO statute directly or collaterally in state-local tax administration. The U.S. Supreme Court has addressed the state-local tax implications of civil RICO three times in recent years: in the Anza case in 2006, Bridge in 2008, and Hemi, decided on January 25, 2010.

The first section below sketches civil actions under the Racketeer Influenced and Corrupt Organizations Act. The next three sections describe Anza, …

Curing The Structural Defect In State Tax Systems: Expanding The Tax Base To Include Services, Timothy R. Hurley

Mercer Law Review

"The state retail sales tax in America can be likened to an illegitimate child that was not wanted but that came anyway." At least that is how one economist has described the sales tax. He went on to state, "Being unwanted is not really unusual and it is certainly no bar to normal growth. It is even possible for the illegitimate to gain respectability." Apparently, the sale tax has gained respectability. Less than eighty years ago, there was no such tax in the United States. In 1932 Mississippi introduced what is the modem-day sales tax. Since then, forty-four states have …

The Tax Injunction Act And Federal Jurisdiction: Reasoning From The Underlying Goals Of Federalism And Comity, David Fautsch

Michigan Law Review

States routinely contest federal jurisdiction when a state tax is challenged in federal district court on federal constitutional grounds. States argue that the Tax Injunction Act, 28 U.S.C. § 1341 (2006), bars jurisdiction and, even if the Tax Injunction Act does not apply, the principals of federalism and comity require abstention. The United States Supreme Court has not squarely addressed the scope of federalism and comity in relation to the Tax Injunction Act, and federal courts of appeal are split. In the Fourth and Tenth Circuits, federalism and comity require federal district courts to abstain even where the Tax Injunction …

State Taxation: The Role Of Congress In Defining Nexus, Walter Hellerstein

Presentations and Speeches

Testimony before the Subcommittee on Commercial and Administrative Law Regulatory Reform and Oversight to "help us understand the implications of defining nexus."

Currently, States levy a tax on income earned or on a transaction occurring within its borders. The taxpayer is liable only if there exists a nexus or a connection between the State and the activities of the taxpayer. Some taxpayers have expressed concerns that current State tax policies are difficult to navigate, leading to unpredictable tax bills or incurring onerous paperwork. They contend that States utilize an overly broad tax nexus standard to impose unnecessary taxes and urge …

E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg

Faculty Scholarship

This report proposes replacing the income tax with an electronic, progressive consumption tax that couples a credit-method VAT (modified for wages) with a progressive wage tax. I have called this proposal e-VAT (a convenient contraction for an electronic value added tax), because it is based on a business-level-credit VAT and can be collected automatically and electronically at the point of sale.

The essential advantage of e-VAT over the Hall-Rabushka flat tax is that e-VAT’s use of a credit VAT as its foundation facilitates automatic and electronic collection of the tax. A credit VAT lends itself to electronic monitoring and auditing …

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

Scholarly Publications

No abstract provided.

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.

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 …

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 …

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.