Book Symposium on Dan Shaviro’s Fixing U.S. International Taxation at Hebrew University Law School

In June, Daniel N. Shaviro, Wayne Perry Professor of Taxation, participated in a symposium at Hebrew University Law School on his forthcoming book, Fixing U.S. International Taxation (Oxford University Press, 2014).  The commentators were Steve Shay (Harvard), Yariv Brauner (Florida), and Fadi Shaheen (Rutgers-Newark).

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Pathways to Tax Reform: The Future of Pass-Through Entity Taxation (Mon., April 22, 12:30 PM)

Please join us next Monday, April 22 from 12:30-1:30 PM in Furman Hall Room 324 for the next installment in our Pathways to Tax Reform Series.  Next week’s session is titled “The Future of Pass-Through Entity Taxation:  A Discussion of the Ways & Means Committee Proposals.” In March 2013, the House Ways and Means Committee released a discussion draft of proposals that would make fundamental changes to the way that partnerships and S-corporations are taxed.  If enacted, these provisions would take effect in 2014.  These proposals may play an important role as the discussion of business tax reform progresses in DC.  In this one-hour session, Professors Willard Taylor (NYU, Sullivan & Cromwell LLP) and John Steines (NYU) will provide an overview of the proposals and will moderate a group discussion.  In addition, Mark Warren and Harold Hancock (House Ways & Means Committee) will provide commentary by phone.  To help you prepare for the event, we have attached an outline, which describes the proposed legislation.

To RSVP for this event, please e-mail Jason Haynes at HaynesJ@exchange.law.nyu.edu.

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Mitchell Kane files amicus brief in US Supreme Court foreign tax credit case, PPL Corp. v. Comm’r. Erin Scharff (’11) is counsel of record.

Mitchell Kane, Professor of Law, has co-authored an amicus brief in PPL Corp. v. Commissioner, Docket No. 12-43.  Erin Scharff, Acting Assistant Professor of Tax Law, was the counsel of record on the brief.  The U.S. Supreme Court will hear oral arguments in the case on February 20th.  The issue presented is “Whether, in determining the creditability of a foreign tax, courts should employ a formalistic approach that looks solely at the form of the foreign tax statute and ignores how the tax actually operates, or should employ a substance-based approach that considers factors such as the practical operation and intended effect of the foreign tax.”  A copy of the brief is available here.

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David Kamin presents “Are We There Yet?: On a Path to Closing America’s Long-Run Deficit” (Jan. 23, 2013)

KaminOn Tuesday, January 22, David Kamin, Assistant Professor of Law, NYU School of Law, will present Are We There Yet?: On a Path to Closing America’s Long-Run Deficit at the Tax Policy Colloquium at NYU School of Law.  The co-convenors of the Colloquium are Daniel Shaviro, Wayne Perry Professor of Taxation, NYU School of Law, and William Gale, the Arjay and Frances Miller Chair in Federal Economic Policy in the Economic Studies Program at the Brookings Institution.  A brief abstract is below:

Many decry the fact that policymakers are nowhere close to addressing the longterm fiscal shortfall and as evidence they point to the Congressional Budget Office’s projection of enormous long-term deficits under current policy. This report contends that the minimum deficit reduction incorporated in leading progressive and conservative budgets can put us on a path toward closing the long-term deficit. A significant gap would remain even if consensus were fully realized. However, this report describes a plausible path for further cutting the long-term deficit, as well as important revenue and spending backstops. Finally, it explains that while the country can and should try to reach a fiscally sustainable path, because of the uncertainty surrounding many of those reforms — especially the restructuring of the healthcare system — we cannot expect an immediate solution.

A complete list of the Tax Policy Colloquium presentations for the rest of the Spring 2013 semester is available here.

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“Taxation and Multi-period Global Cap and Trade” by Mitchell Kane

Mitchell Kane

Taxation and Multi-period Global Cap and Trade by Mitchell Kane, Professor of Law, NYU School of Law, has been published in the New York University Environmental Law Journal (19 NYU Env.L.J. 87 (2011)).  A brief abstract is below:

This paper analyzes the ways in which taxation can distort prices in greenhouse gas emissions permit markets that encompass multiple periods and multiple jurisdictions. The paper first distinguishes between two broad ways in which the tax system intersects with permit markets. The first relates to the optimal provision of public goods and encompasses the set of questions typically dealt with under the analysis of a potential “double dividend” from environmental taxes. The second relates to abatement efficiency and involves the removal of tax induced distortions to otherwise efficient incentives for firms to abate emissions at least cost. The paper then describes two ways in which a tax system can seek to address abatement efficiency. The tax system can attempt to equalize tax treatment of actual abatement across firms and the tax treatment of permits across firms (inter-firm neutrality). Or, the system can attempt to equalize the tax treatment of actual abatement and permits within each firm (intra-firm neutrality). The paper describes the requisite conditions for these two neutrality approaches and the predicted effects on permit prices. It also demonstrates that in a multi-period regime one can expect to observe both premia to banking permits (the typical lock-in problem described in the literature) as well as penalties to banking permits. Moreover, only the norm of inter-firm neutrality can adequately address both banking premia and banking penalties. The paper also shows that the preferred approach to neutrality is likely to evolve with the geographic expansion of the market. Inter-firm neutrality is the preferred approach in a national market because of its superior ability to deal with inter-temporal distortions; intra-firm neutrality is the preferred approach in the multi-jurisdictional context because of the relative ease of coordinating tax treatment within firms as opposed to across firms. Finally, the paper applies the relevant neutrality norms to two crucial tax policy questions that arise under permit markets: the appropriate treatment of permits allocated gratis and the appropriate sourcing of abatement and permit costs.

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In Memoriam: James S. Eustice (LL.M. ’58)

James S. Eustice

The Graduate Tax Program and NYU Law mourn the loss of James Eustice (LL.M. ’58), Gerald L. Wallace Professor of Taxation Emeritus, who passed away on April 26.  ”Jim was a legendary figure in the field of tax law and a beloved member of the Law School community since he joined our faculty in 1960,” Dean Richard Revesz said in a memo to the NYU Law community. “A distinguished scholar, Jim’s treatise on corporate tax law has long been viewed as the authoritative work on the subject, widely cited by the Supreme Court and regularly used by academics and practitioners. He was deeply committed to the Law School during his more than five decades here, teaching thousands of students in almost every tax course available. After retirement, he remained dedicated to his work as of counsel at the firm of Cooley LLP, where he founded the tax department in 1970, and continued to teach at the Law School. He was co-teaching Taxation of Affiliated Corporations this spring, and remained active and engaged to the very end.”  He was 78.

Some of his colleagues at the Law School have offered these thoughts:

“I feel a sense of great loss, both professionally and personally. Jim was a true giant in the field of federal taxation and will be sorely missed. In addition, he was not only my teacher and colleague, but also my very good friend.” – Noël Cunningham, Professor of Law

“There can be no question about Jim’s enduring contribution to the academy and the tax world. Say B&E to any tax lawyer and they will know instantly to whom you are referring. He was the author of a book that is on every tax lawyer’s desk, in every law library, and read by generations of corporate tax students. His treatise on corporate taxation (Bittker & Eustice) is the first place everyone looks for an answer to any corporate tax question and, I say to my students, if the answer isn’t there, there is no answer.” – Deborah Schenk, Marilynn and Ronald Grossman Professor of Law

“To me, Jim broke the mold in tax academe, along the lines Larry Bird did in basketball–different, even peculiar, stubborn, relentlessly independent, dignified but occasionally fond of zany adventure, quietly friendly, kind-hearted, devilishly funny to those he knew well, extremely bright and hard-working, committed to professional excellence, loyal, and ultimately, with self-knowledge but not arrogance, in a class very few could join. Underneath the seemingly shy, stolid exterior was an always churning, even introspective mind. He surprised me on the occasion of our last visit by sharing, in very un-Jim style, some thoughts on his life. I will miss him.” – John Steines, Professor of Law

“Jim was a brilliant, hardworking and kind colleague. Each evening, on his way to many hours of updating his famous treatise, he would stop at my office door – wearing his tracksuit and “NYU Tax” hat and carrying his trademark pipe – to say hello and, often, share some tax-related humor. The fourth floor of Vanderbilt Hall will never be the same without him.” – Joshua D. Blank, Associate Professor of the Practice of Tax Law

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Tax Policy Colloquium — Joshua Blank (April 14)

Joshua Blank

Joshua Blank

On Thursday, April 14, Joshua Blank, NYU School of Law, presented In Defense of Tax Privacy, 61 Emory L.J. ___ (2011), at the NYU Tax Policy Colloquium.  The co-convenors of the Colloquium are Daniel Shaviro, Wayne Perry Professor of Taxation, NYU School of Law, and Mihir Desai, Harvard Business School.  A brief abstract is below:

The debate over whether tax privacy—a set of statutory rules that prohibits the federal government from publicly releasing any taxpayer’s tax return—promotes individual tax compliance is as old as the income tax itself. It dates back to the Civil War and resurfaces often, especially when the government seeks innovative ways to collect tax revenue more effectively. For over 150 years, the tax privacy debate has followed predictable patterns. Throughout the long history of this debate, both sides have fixated on the question of how a taxpayer would comply with the tax system if he knew other taxpayers could see his personal tax return. Neither side, however, has addressed the converse question: how would seeing other taxpayers’ returns affect whether a taxpayer complies? This Article probes that unexplored question and, in doing so, offers a new defense of tax privacy: that tax privacy enables the government to manipulate taxpayers’ perceptions of its tax enforcement capabilities by publicizing specific examples of its tax enforcement strengths without exposing specific examples of its tax enforcement weaknesses. Because salient examples may implicate well-known cognitive biases, this “manipulation function” of tax privacy can cause taxpayers to develop an inflated perception of the government’s ability to detect tax offenses, punish their perpetrators and compel all but a few outliers to comply. Without the curtain of tax privacy, by contrast, taxpayers could see specific examples of the government’s tax enforcement weaknesses that would contradict this perception. After considering this new defense of tax privacy in the context of deterrence and reciprocity models of taxpayer behavior, I argue that the manipulation function of tax privacy likely encourages individuals to report their taxes properly and that it should be exploited to enhance voluntary compliance.

A complete list of the Tax Policy Colloquium presentations for the rest of the Spring 2011 semester is available here.

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“Anti-Abuse Tax Rules: A Global Perspective” (Tues., Apr. 12th, 12:30 PM)

On Tuesday, April 12 from 12:30 PM to 1:50 PM in Vanderbilt Hall Room 216, the Graduate Tax Program will host an event titled “Anti-Abuse Tax Rules: A Global Perspective.” This event will consider recent developments in the enactment of general anti-abuse rules, such as the economic substance doctrine, in jurisdictions around the globe, including the UK, Europe and the US.

Moderator, Professor Joshua Blank, NYU School of Law

Light refreshments (coffee and cookies) will be served.

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Deborah Schenk Participates in “Women in Tax Law Academia” Panel at Georgetown (March 30th)

Deborah Schenk

On Wednesday, March 30th, Deborah Schenk, Ronald and Marilynn Grossman Professor of Taxation, will participate in “A Symposium Confronting the Intersection of Tax Law, Gender and Sexuality” hosted by The Georgetown Journal of Gender and the Law at the Georgetown University Law Center.  Professor Schenk will serve as the Primary Speaker on a panel titled “Women in Tax Law Academia.”

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“Blockers, Stoppers and the Entity Classification Rules” by Willard Taylor

Willard Taylor

Willard B. Taylor, Sullivan & Cromwell, LLP, Adjunct Professor of Law, NYU School of Law, has published Blockers, Stoppers and the Entity Classification Rules, 64 Tax Lawyer __ (2011). An excerpt from the Introduction is below

Tax lawyers often refer to “blockers” or “stoppers”—what are these? Generically, a blocker or stopper is an entity inserted in a structure to change the character of the underlying income or assets, or both, to address entity qualification issues, to change the method of reporting, or otherwise to get a result that would not be available without the use of more than one entity. One example, discussed further below, would be a case where a regulated investment company (RIC) organizes a foreign subsidiary to invest in commodities or otherwise makes investments that could not be made by the RIC directly without jeopardizing its qualification, and thus converts “bad” assets and income into assets (i.e., shares of the foreign subsidiary) and income (i.e., dividends, subpart F inclusions, and gains from sales of the shares) that are “good” for RIC qualification purposes. The structures vary in significance from, for example, changes in the taxable base to less consequential changes in the way the taxable base is reported. Some are innocent, in the sense of being blessed by the statute (such as the use of a taxable subsidiary of a real estate investment trust (REIT)), but others may require a leap of faith….

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NYU School of Law and UCLA School of Law launch joint annual tax policy conference

NYU School of Law and UCLA School of Law have created the NYU/UCLA Tax Policy Conference, a joint annual conference focusing on tax policy issues from both a legal and economic perspective.

The new venture, which will provide a forum in which leading scholars, policy-makers, and practitioners can analyze complex tax policy questions and options for reform, brings together members of both NYU Law’s tax law faculty and UCLA Law’s business law and policy program. It will build on NYU’s 16-year-old Tax Policy Colloquium, which promotes discussion among scholars, students and practitioners, and the UCLA Colloquium on Tax Policy and Public Finance, started in 2004.

“I’m delighted that these two terrific tax programs will be joining forces for an annual conference on a topic of such critical importance to the private and public sectors alike,” said NYU Law’s Dean Richard Revesz. “I’m confident it will become a sought-after forum for airing significant research and policy perspectives in this area.”

“Tax issues are pervasive—they are important in both structuring private transactions and designing public policy programs to address social and economic issues,” said Rachel F. Moran, dean of UCLA School of Law. “This new conference will allow us to combine our resources to produce a high-quality, bi-coastal tax conference each year to address timely and important tax policy issues.”

The conference, funded in part through the Milken Family Foundation, will alternate each year between Los Angeles and New York. Each year’s proceedings will be published in the Tax Law Review, a leading source of tax policy scholarship edited by Deborah Schenk, Ronald and Marilynn Grossman Professor of Taxation.

The first conference, “Tax Policy and Health Care Reform,” will be held in October 2011 in Los Angeles, with a focus on the tax policy implications of health care reform. Topics will include tax alternatives to fund health care reform, tax subsidies and penalties for health insurance, using the tax system to implement individual health insurance mandates, and the desirability of tax benefits for non-profit health care providers in the post-health care reform world.

The second conference will be held in October 2012 in New York. Tentatively titled “The Income Tax at 100,” it will observe the hundredth anniversary of the modern U.S. income tax in 2013. Participants will take stock of the American income tax at its centennial, and consider prospects for tax reform as the income tax begins its second century.

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Dan Shaviro Participates in “Tax Cuts & The Impending Budget Crisis” at Yale Law School

Daniel Shaviro

On Monday, February 14, Dan Shaviro, Wayne Perry Professor of Taxation, NYU School of Law, will participate in an event titled “Tax Cuts & The Impending Budget Crisis” at Yale Law School hosted by the American Constitution Society. A description of the event is below:

A discussion with Prof. Michael Graetz, Isidor and Seville Sulzbacher Professor of Law at Columbia Law School and author of 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the U.S., and Daniel Shaviro, Wayne Perry Professor of Taxation at NYU School of Law and author of Taxes, Spending, and the U.S. Government’s March Toward Bankruptcy.

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Deborah Schenk and Dan Shaviro Participate in Tax Expenditure Reform Conference

Deborah Schenk

Daniel Shaviro

On January 14, Deborah Schenk, Ronald and Marilynn Grossman Professor of Taxation, NYU School of Law, and Dan Shaviro, Wayne Perry Professor of Taxation, participated in a conference at Loyola Law School Los Angeles on tax expenditure reform.  Professor Schenk participated in a panel titled The Salience of Tax Expenditures and Implications for Reform and Professor Shaviro participated in a panel titled Reforming the Tax Expenditure Budget Presentation.  A video of the event is available here.

“A Short Course on the Collapse of Meaning in Corporate Tax Law” by Charles I. Kingson

Charles I. Kingson

Charles I. Kingson, Adjunct Professor of Law, NYU School of Law, has published A Short Course on the Collapse of Meaning in Corporate Tax Law, 130 Tax Notes 83 (January 3, 2011).  A brief abstract is below:

The report discusses how various corporate transactions are characterized as distributions to shareholders, transfers to third parties, or both. Distributions to shareholders in liquidation are governed at the corporate level by sections 336 and 337 and at the shareholder level by sections 331 and 332. Reorganization transfers are governed at the corporate level primarily by section 361 and at the shareholder level by section 354.

The report addresses the overlap and priority among those sections. Of course, characterizing a transaction depends on what happened for tax purposes. The report therefore examines step transactions, which determine ownership: who owned what, when, and why.

“The Mommy Track Divides” by Lily Batchelder

Lily Batchelder

Lily Batchelder, Professor of Law and Public Policy (on leave), NYU School of Law, who is currently serving as Chief Tax Counsel of the US Senate Finance Committee, has posted a new paper: “The Mommy Track Divides: The Impact of Childbearing on Wages of Women of Differing Skill Levels” (with Elizabeth Wilde and David T. Ellwood).  The paper is available here.  A brief abstract is below:

This paper explores how the wage and career consequences of motherhood differ by skill and timing. Past work has often found smaller or even negligible effects from childbearing for high-skill women, but we find the opposite. Wage trajectories diverge sharply for high scoring women after, but not before, they have children, while there is little change for low-skill women. It appears that the lifetime costs of childbearing, especially early childbearing, are particularly high for skilled women. These differential costs of childbearing may account for the far greater tendency of high-skill women to delay or avoid childbearing altogether.

The paper was recently profiled on the New York Times Economix Blog here and in The Atlantic here.

NYU Law at the National Tax Association (Nov 18 to 20)

The 103rd Annual Conference on Taxation of the National Tax Association was held on November 18th to 20th, 2010 at the Hyatt Regency McCormack Place in Chicago, Illinois.

Daniel Shaviro, NYU School of Law, participated in a panel discussion titled “International Corporate Taxation: Are We Headed in the Right Direction?”.  The slides from his talk are available here.

Joshua Blank, NYU School of Law, participated in a panel discussion titled “Psychology and Taxation.”  He provided commentary on “On Tax Salience” by David Gamage (UC-Berkeley) and Darien Shanske (UC-Hastings).

“Taxation and the Financial Sector” by Daniel Shaviro (with Douglas A. Shackelford and Joel Slemrod)

Daniel Shaviro

Daniel Shaviro, Wayne Perry Professor of Taxation, NYU School of Law, has posted “Taxation and the Financial Sector”, co-authored with Douglas A. Shackelford (UNC) and Joel Slemrod (Michigan), which will be published in the December 2010 issue of the National Tax Journal, here.  A brief abstract is below:

In the aftermath of the recent financial crisis, a variety of taxes on financial institutions have been proposed or enacted. The justifications for these taxes range from punishing those deemed to have caused or unduly profited from the crisis, to addressing the budgetary costs of the crisis, to better aligning banks’ and bank executives’ incentives in light of the broader social costs and benefits of their actions. Although there is a long-standing literature on corrective, or Pigouvian, taxation, most of it has been applied to environmental externalities, and the externalities that arise from the actions of financial institutions are structurally different. This paper reviews the justifications for special taxes on financial institutions, and addresses what kinds of taxes are most likely to achieve the various stated objectives, which often are in conflict. It then critically assesses the principal taxes that have been proposed or enacted to date: financial transactions taxes, bonus taxes, and taxes on firms in the financial sector based on size, bank liabilities, or excess profits.

Deborah Schenk presents “Recent Developments in S Corporations”

Deborah Schenk

On Monday, October 25, 2010, Deborah Schenk, Ronald and Marilynn Grossman Professor of Taxation, NYU School of Law, presented “Recent Developments in S Corporations” at the Northwest Tax Institute in Seattle, Washington.

Victor Fleischer presents “Taxing Founders’ Stock” at NYU Law Faculty Workshop

Vic Fleischer

On Monday, October 18th, Victor Fleischer (University of Colorado Law School), who is visiting NYU Law during the Fall 2010 semester presented a paper titled “Taxing Founders’ Stock” at the weekly NYU Law faculty workshop. A brief abstract is below:

Founders of a start-up usually take common stock as a large portion of their compensation for current and future labor efforts. Getting paid in founders’ stock allows entrepreneurs to defer paying tax and—more importantly—allows them to pay tax at the long-term capital gains rate. Politicians, entrepreneurs, and many academics claim that the favorable tax treatment of founders’ stock is an effective method of subsidizing entrepreneurship.

This Article questions the widely-held view that we should tax founders’ stock at a low rate. The economic efficiency case for a tax preference for founders’ stock is weak. Tax policy is an ineffective policy instrument for subsidizing entrepreneurship; tax has an effect on entrepreneurial entry, but the effect is small. Tax is less important than geographic, cultural, and business factors. And tax is less important than other elements of the legal infrastructure, such as immigration policy, employment law, and securities law.

The case for reform is compelling. Taxing founders at a low rate is a conspicuous loophole in the fabric of our progressive income tax system, uniquely undermining our commitment to equal opportunity and distributive justice. Founders’ stock is often bequeathed to heirs who receive a step up in basis, allowing founders to avoid the income tax altogether, leaving a legacy of dynastic wealth subject only to the rather dodgy application of the estate tax.

While it would be desirable to eliminate the tax subsidy and instead tax gains from founders’ stock as labor income, fixing the problem is not easy. I offer a range of possible solutions that policymakers might consider.

“When Is Tax Enforcement Publicized?” by Joshua Blank

Joshua Blank

Joshua Blank

Joshua Blank, Associate Professor of the Practice of Tax Law and Faculty Director of the Graduate Tax Program, NYU School of Law, has published When Is Tax Enforcement Publicized? (co-authored with Daniel Z. Levin, Rutgers Business School) in the latest issue of the Virginia Tax Review.  A brief abstract is below:

Every spring, the federal government appears to deliver an abundance of announcements that describe criminal convictions and civil injunctions involving taxpayers who have been accused of committing tax fraud. Commentators have occasionally suggested that the government announces a large number of tax enforcement actions in close proximity to a critical date in the tax compliance landscape: April 15, “Tax Day.” Despite their provocative implications, these claims are speculative at best, as they lack any empirical support. This Article fills the empirical void by seeking to answer a straightforward question: when does the government publicize tax enforcement? To conduct our study, we analyzed all 782 press releases issued by the U.S. Department of Justice Tax Division during the seven-year period of 2003 through 2009 in which the agency announced a civil or criminal tax enforcement action against a specific taxpayer identified by name. Our principal finding is that, from 2003 through 2009, the government issued a disproportionately large number of tax enforcement press releases during the weeks immediately prior to Tax Day compared to the rest of the year and that this difference is highly statistically significant. A convincing explanation for this finding is that government officials deliberately use tax enforcement publicity to influence individual taxpayers’ perceptions and knowledge of audit probability, tax penalties and the government’s tax enforcement efficacy while taxpayers are preparing to file their annual individual tax returns.