Tax at the National Parks: Grand Portage Edition

By Sam Brunson

A year ago, the National Parks surprised me with a tax name-check. I mean, realistically, there shouldn’t have been anything surprising about encountering a picture of Al Capone at Alcatraz, but I didn’t think I’d see taxes there.

So consider this the second year in a row where the National Parks have surprised me with tax. My family was at Grand Portage National National Monument (which is incredibly cool, btw) learning about the Ojibwe and the North West Company and the thriving fur trade. In one room, there was a display about hatmaking. And, on the wall, was this cartoon:

Continue reading “Tax at the National Parks: Grand Portage Edition”

Mortgage Interest Deduction

By: David J. Herzig

The Trump and Republican tax plans have circled around the idea of repealing the mortgage interest deduction.  Although I’m not convinced it will happen (see e.g., Treasury Secretary Mnuchin’s remarks).  The mere threat of the repeal has garnered a fair amount of attention.

For example, the other day this chart was making its rounds on twitter.

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I have not verified the methodology of the chart or the data.  I interpret that the chart examines (in absolute numbers) how many mortgages exist at $1,000,000. The implicit conclusion of the chart is that homeowners in states like D.C., Hawai’i, California and New York have the most at stake in retaining the deduction.

Why?

Because there seems to be evidence that the mortgage interest deduction contributes to housing inflation.  Back in 2011 the Senate held hearings on incentives for homeownership. [1]  It has been suggested that the elimination of the deduction will drop home prices between 2 and 13% with significant regional differences. [2]  So, if the mortgage interest deduction is eliminated, then the aforementioned states might have numerous problems, including a smaller property tax base.

What exactly is the Mortgage Interest Deduction?

Continue reading “Mortgage Interest Deduction”

Prognosticating Estate Tax Repeal using State Interests

By: David Herzig

Last week Tax Foundation tweeted about the states that have either a state level estate or inheritance tax.

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The map and subsequent conversations I have had reinvigorated my interest in the prospect of an estate tax.  Briefly in this post, I wanted to say a couple things about the state level estate or inheritance tax, the map, and the effect of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRAA“) on the prospects of the elimination of federal estate tax.

I’ll readily admit that it has been a while since I did an estate tax return.  So, I needed some refreshing regarding the idiosyncrasies of the interaction between the state and federal taxes.  Some recent history is not only necessary but illustrative of the prospects of permanent federal estate tax repeal.

Brief History of Switch From Credit to Deduction

Prior to the enactment of EGTRAA, the federal estate tax provided an tax credit for an amount paid because of a state level estate tax.  The mechanics of credit was essentially a revenue sharing agreement for the tax collected between the federal government and the states – essentially, up to 16% of an estate’s value.  The credit applied whether or not the state had an independent estate tax.  This tax was known as a “pick-up” or “sponge” tax.

Continue reading “Prognosticating Estate Tax Repeal using State Interests”

On Marginal and Effective Tax Rates

By Sam Brunson

A friend sent me a cartoon that’s been going around his Facebook feed. The cartoon’s message amounts, roughly, to: undocumented immigrants are far better-off than legal residents because taxes.

The various assertions the cartoon makes are an amazing collection of racist and wrong. In fact, there’s too much racist, and too much wrong, to address. But it’s worth pointing out that, although the cartoon uses numbers, its numbers are wildly, wildly wrong.

If you want to hate-read the whole thing, you can see it here, but for my purposes, we’re going to look at these two panels: Continue reading “On Marginal and Effective Tax Rates”

AALS Call for Papers by Junior Scholars

By: Leandra Lederman

The AALS has issued a call for papers for presentation at the 2018 meeting in San Diego, CA. “Those who will have been full-time law teachers at an AALS member or fee-paid school for five years or less on July 1, 2017, are invited to submit a paper on a topic related to or concerning law.” The deadline is August 4, 2017. There is more information at this link on the AALS website.

… and police are on their way to your house to arrest you

By Sam Brunson

Over the last couple weeks I’ve gotten at least three calls from numbers I’m not familiar with. When I pick up, a heavily-accented recorded voice tells me that I haven’t paid my taxes, the IRS has filed a lawsuit (or, in one recording, a “law-sweet”) against me, and that police are on their way to arrest me. I can get out of my problems if I call them back immediately.

I’ve called back three times. The first time, I got flustered when asked for personal information, and told the guy I knew it was a scam. The third time, the call center noises were so loud that I could barely hear the person, and eventually, she put me on hold and then the call dropped. The second, though …

The second, I told the guy on the phone that my name was Carlos Danger. (I had to spell “Danger” for him.) I gave him a fake string of 9 digits (that he read back to me, and I was lucky that I mostly remembered it. Protip: if you’re giving a fake SSN to scammers, do something memorable. David Herzig, for example, recommends 867-53-0909). He put me on hold, and checked his computer, and then told me his records showed I owed $9,700 in back taxes. Continue reading “… and police are on their way to your house to arrest you”

Macron and the Potential Future of Tax Leaks

By: Diane Ring

The French election for president—an event worthy of note in its own right (particularly on the heels of the Brexit vote)—generated a political, international relations, security and media firestorm due to a late-breaking data leak and hack. On Friday, the campaign of French centrist candidate Emmanuel Macron announced that it had been the subject of a major computer hack. At least 9GB of emails and personal and business documents from Macron’s campaign were posted to a document sharing site called Pastebin. Initial reports contended that the hack and leak were an effort to aid Macron’s far-right opponent Marine Le Pen, and may have been undertaken with Russian assistance. While Macron won the election, the potential fallout out from these leaks may have only just begun.

There’s an important tax dimension to the story, which may have been slightly overshadowed by Friday’s massive data dump. Two days before, on Wednesday, Le Pen hinted during a debate at possibility that Macron might have an offshore account in the Bahamas. Apparently, two hours before the debate, documents were anonymously posted on an internet forum that purported to include Macron’s signature and to show that he had a Bahamas bank account. During the debate, Macron responded that the claim was false and constituted “defamation.” On Thursday, Macron and his campaign outlined the spread of this offshore-account assertion on various sites and contended some were connected to “Russian interests.” On Friday, Macron lodged a complaint with the French prosecutor’s office regarding offshore account allegations made online.

Though the Friday hack and data dump have dominated the spotlight, the alleged tax leak is in fact part of the bigger and quite troubling picture of leaks in the modern cyber environment . . .

Continue reading “Macron and the Potential Future of Tax Leaks”

About the ACLU’s [Update: FFRF’s] Challenge to the Promoting Free Speech and Religious Liberty EO

By Sam Brunson

Trump signed his Promoting Free Speech and Religious Liberty executive order earlier today. The EO was expected to order the IRS to stop enforcing the so-called Johnson Amendment against religious organizations. As Ben explained, by its language, it may have done significantly less—it appears to merely reaffirm the status quo for enforcement. Whatever its substantive effects, though, the existence of the order is no surprise, and, as has happened with any number of Trump’s previous EOs, the ACLU Freedom From Religion Foundation has already announced that it will challenge the EO in court. [Update: the ACLU looked at the EO and agreed with Ben that there was nothing there, and decided not to sue. The FFRF, otoh, decided to sue. So it’s the FFRF that will face these procedural hurdles before it has to face the substantive (or rather, lack of substance) ones.]

Leaving aside the question of whether this EO actually does anything substantive, it’s worth remembering that any judicial challenge to the executive order faces two significant hurdles: standing and administrative discretion.[fn1] It’s also possible that the Trump administration inadvertently made those hurdles easier to pass. Continue reading “About the ACLU’s [Update: FFRF’s] Challenge to the Promoting Free Speech and Religious Liberty EO”

Trump’s Johnson Amendment Executive Order Does Not Say What He Said it Said

By Benjamin Leff

Trump issued an Executive Order (EO) today, the text of which was a complete shock (at least to naive little me). I had written a thousand-word blog post based on reporting before the release of the EO that Trump would direct the Internal Revenue Service to “exercise maximum enforcement discretion to alleviate the burden of the Johnson amendment which prohibits religious leaders from speaking about politics and candidate from the pulpit[.]” Then I watched the whole signing ceremony and Trump confirmed that he was planning to clearly open the door for religious leaders to communicate their views on candidates from the pulpits of their houses of worship.

The pre-prepared post argued that the IRS should issue some guidance explaining how it would enforce the Johnson Amendment in light of the EO, especially (1) whether it would create a “safe harbor” only for the speech of the organization, or also for the organization’s money and (2) whether it would extend the “safe harbor” to all 501(c)(3) organizations, or just houses of worship. The general consensus among advocates of changing the Johnson Amendment is that any liberalization of the rule should apply equally to all 501(c)(3) organizations and that it should permit speech but not spending.

Then, after a couple of hours, the White House released the actual text of the Executive Order. Unless I’m blind, what it says is literally nothing like what the Trump Administration said it would say, and even less like what Trump said it said when he signed it in the Rose Garden ceremony just a few hours ago. Continue reading “Trump’s Johnson Amendment Executive Order Does Not Say What He Said it Said”

What is the Johnson Amendment?

By: David Herzig

As the world braces for the upcoming Executive Order from President Trump,

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I wanted to take a minute and describe the Johnson Amendment.  Later today, after the actual Executive Order is made public, Ben Leff will be writing up a more through post.

A couple of months ago President Donald Trump told the audience at the National Prayer Breakfast that he would “get rid of and totally destroy” the Johnson Amendment. Which raises the question: what is the Johnson Amendment. Because he brought it up at the National Prayer Breakfast, it also leads to the question of how does affects churches.

In 1954, without explanation, Lyndon Johnson proposed a small amendment to the tax law governing tax-exempt organizations: forbid them from endorsing or opposing candidates for office. One of the few consistent talking points during president-elect Donald Trump’s campaign was that this so-called “Johnson Amendment” should be repealed; since comprehensive tax reform is part of Trump’s plan for his first 100 days in office, the repeal may happen immediately. Continue reading “What is the Johnson Amendment?”