US Tax Scholarship in Comparative Perspective

By: Shu-Yi Oei

Does tax scholarship look different across different countries? If so, how? And why? In a recently posted paper on SSRN, Wolfgang Schön of the Max Planck Institute for Tax Law and Public Finance looks at these questions, focusing on a comparison of tax law scholarship in the United States and Germany. The abstract is here. Briefly, the paper delineates key distinctive features of US and German tax scholarship and analyzes the similarities and differences between the two. As someone who teaches at a law school with a strong international, comparative and civil law tradition, I found many aspects of this paper interesting and informative, and agreed with many of its arguments. I won’t go into all of them here, but two stood out as especially thought provoking.

First, Schön points out that in US tax scholarship (and in US legal scholarship in general), the “internal” approach to scholarship—that is, doctrinal analyses and interpretations of law—has largely been replaced by an “external” approach that analyzes jurisprudence and the impact of legal rules from an “outsider” (i.e., policy or interdisciplinary) perspective. German academics, by contrast, are more likely to adhere to an internal approach that focuses on systematizing, understanding, and categorizing legal doctrine. This observation doesn’t strike me as very controversial. What was intriguing, however, was Schön’s claim that this external turn is due, in part, to the fact that US academics have less influence over the direction and what he calls the “production” of the actual law than their German counterparts. Specifically, he argues that US judges are less likely and less obliged to consult academic writing in coming to decisions than judges in Germany. Thus, many US legal academics gravitate towards the “external” approach, rather than simply being content to make a limited (and likely ignored) doctrinal contribution. This sounds right to me, at least on the US side. (Anecdotally, I have heard more than one person point out that one’s academic and theoretical freedom is very much tied to the fact that one’s theories are irrelevant to pretty much everybody, and that this is the very thing that allows legal scholars to really push the theoretical and policy boundaries.)

Continue reading “US Tax Scholarship in Comparative Perspective”

Oklahoma Decreases Working Poor Family Benefits

By Francine J. Lipman
OklahomaLRGThis Sunday New York Times editorial caught my eye (and heart) this morning, because I have been researching and writing about state EITCs and lobbying legislators to consider enacting or increasing this demonstrably effective work incentive and antipoverty tool. When I first looked into the issue I was pleasantly surprised to discover that twenty-six states and the District of Columbia have EITCs that build on the antipoverty success of the federal EITC. Continue reading “Oklahoma Decreases Working Poor Family Benefits”

Follow-up Friday: Messi and McDonald’s

By David J. Herzig

In what I’m dubbing follow-up Friday, I wanted to give a quick update to two stories I am following regarding tax avoidance structuring.  One on the corporate side: the French Tax Authority Raids on Multinationals; and, one on the individual side: the Messi Tax Fraud Trial. Both stories are heating up.

French Tax Raids


It was reported overnight that McDonald’s French headquarters was raided by French taxing authorities.  Unlike the Google raid that was reported in real time, this raid appeared to take place on May 18.

Much like the Google raid this investigation is centered on tax avoidance.  McDonald’s problems seem to have started in December when a lawsuit was brought against the company for understating earnings.  Apparently, in France, workers are entitled to a share of profits. A February 2015 report stated that McDonald’s avoided almost 1 billion euros of taxes using its Luxembourg subsidiary.

I guess Diane Ring was correct in her comment that all multinationals should be preparing for tax raids in France.  If you don’t have a plan in place, you should be working on one now.  Finally, Professor Byrnes at Texas A&M wrote an interesting story on his blog about routes for the United States to increase its involvement.

Messi Tax Fraud Trial

The most trustworthy news outlet, World Soccer Talk, is reporting that Lionel Messi will testify on June 2 for in his tax fraud trial.  As I previously reported, the trial is due to start on May 31.

A fascinating wrinkle that the article points out is that although there is potential jail time (22 months) if Messi is convicted of tax fraud, often that sentence is suspended.  “However, any such sentence would likely be suspended as is common in Spain for first offences carrying a sentence of less than two years.”

As I keep looking into sports figures tax avoidance planning, more and more amazing items come to light.  In January, Kelly Phillips Erb, reported in Forbes about another FC Barcelona player, Javier Mascherano, pled guilty to not paying tax for 2011 and 2012.  How fun would it be if two players of the NY Yankees were convicted of tax fraud.

These stories are why I love Europe!

SSA Guidance Changes the Impact of Section 529A


By: Stephanie Hoffer

Passed as part of the Stephen Beck, Jr. Achieving a Better Life Experience Act of 2014 (the “ABLE Act”), IRC § 529A permits the creation of savings accounts, similar to college savings accounts, for individuals with qualifying disabilities.  Although ABLE accounts are tax-preferred, tax preference is not the star of the show.  Rather, the key feature of ABLE is its requirement that when determining an account owner’s eligibility for federal benefits like Medicaid and Supplemental Security Income (SSI), “any amount (including earnings thereon) in the ABLE account . . . of the individual, any contributions to the ABLE account of the individual, and any distribution for qualified disability expenses (as defined in subsection (e)(5) of such section) shall be disregarded . . . .”  Medicaid, in particular, is important for individuals with qualifying disabilities because it covers social services that enable individuals to remain in the community rather than in institutional settings.  SSI is also important, and not just as a source of income.  In many states, eligibility for Medicaid is pegged to eligibility for SSI, and income and asset limitations apply to both.

As I noted in my prior article about ABLE, one viable interpretation of the statute could be that income contributed to an ABLE account is not countable income when determining an account owner’s eligibility for SSI (which, again, in many states is the key to Medicaid eligibility).  Such an interpretation would be in keeping with Congress’s goals for ABLE, one of which was to overcome perverse incentives against savings faced by individuals with disabilities.  But the Social Security Administration, in recently released POMS guidance, took a different position.  The POMS provides, “[t]he fact that a person uses his or her income to contribute to an ABLE account does not mean that his or her income is not countable for SSI purposes.”  So it’s back to the drawing board for individuals like Sarah Wolff, a woman with Down Syndrome who testified before the Senate Finance Committee, “I currently work two part-time jobs, and my employers have been gracious enough to work with me so I do not earn more than seven-hundred dollars a month . . . .”  ABLE could have (and I believe it was meant to) provide Sarah with a place to save her extra income so that she could cover her own disability-related expenses and rely less on the government.  SSA chose the well-worn path to dependence instead.


Avocados and Other (Delicious) Tax Shelters

Nice_AvocadosLast night, I flew back from the (wonderful!) AMT conference. After a three-hour storm delay, I landed at Chicago O’Hare and, walking to get my bag, I checked Twitter. A tweet from Voice of San Diego (VoSD) (which seems largely to be a geographically-focused ProPublica) highlighted a convergence between two of my favorite things: taxes and avocados.

I grew up in and around San Diego, and I grew up eating avocados (both in guacamole and BLAT form),[fn1] but I’ll confess that I’d never much thought about why there were so many avocados grown in San Diego; I probably always assumed that they were native to Mexico, and that San Diego had a similar climate to Mexico, so they were a natural fit. Continue reading “Avocados and Other (Delicious) Tax Shelters”

Presidential Tax Transparency Act

By: David J. Herzig

I was given a heads up yesterday about new legislation requiring disclosure of a presidential candidate’s tax returns (thanks Janet Novack). In the wake of our coverage of the tax issues related to the presidential race, it is worth mentioning the legislation proposed by Senate Finance Committee Ranking Member Ron Wyden, D-Ore.

According to the press release: “‘Since the days of Watergate, the American people have had an expectation that nominees to be the leader of the free world not hide their finances and personal tax returns,’ said Wyden.

“The Presidential Tax Transparency Act says that within 15 days of becoming the nominee at the party convention, the candidate must release their most recent 3 years of tax returns to the Federal Election Commission (FEC). Should the candidate refuse to comply, the Treasury Secretary will provide the tax returns directly to the FEC for public release.”

A summary of the bill is here and the full text is here.

As an initial matter, I am in favor of codifying a rule requiring the disclosure of tax returns if you a candidate for president on any State’s ballot. As I read the legislation, there seem to be major problems with the language of the statute.  This makes me think that the legislation is more of a publicity stunt then a force for meaningful change.

Here are some of the problems I see with the legislation: Continue reading “Presidential Tax Transparency Act”

Will New Data on the Volume of Sharing Economy Workers Prompt Tax Reform?

By: Diane Ring

Sharing economy and other platform workers are frequently classified as independent contractors and bear many of their own costs. Thus, these workers whom we don’t think of as “small businesses”—and don’t really think of themselves as small businesses—are thrust into the exciting world of quarterly reporting and calculation of proper deductions. Exciting if you are a tax lawyer, but less so if you are making limited income and are facing daunting tax compliance requirements. Despite these compliance challenges, there has not been much movement in responding to the tax challenges faced by sharing economy workers. These observations about the sharing economy sector have been around for a while; they were the focus of two forthcoming articles by my co-author, Shu-Yi Oei, and me (Can Sharing Be Taxed? and The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums).

Yesterday, a new report coming out of American University echoed our observations and findings. Caroline Bruckner of the Kogod Tax Policy Center presented testimony (and a supporting report) to Congress regarding the size and scope of worker participation in the sharing economy. Her goal was not to provide a definitive calculation nationwide of sharing and platform workers, but to offer a solid sense of the scale of participation in the sector (more than 2.5 million individuals) and note important growth trends. Based on the percentage of the American workforce active in the sharing/platform sector, she urged more government attention to reform that would address the tax compliance and administration challenges in this sector.

Will Congress and Treasury/IRS respond? Continue reading “Will New Data on the Volume of Sharing Economy Workers Prompt Tax Reform?”

Tax Benefits of Government-Owned Marijuana Stores

By Benjamin Leff

I promise that I think about things other than marijuana, but if you’re following my posts on this blog so far, there is little evidence of that.  In 2014, I published Tax Planning for Marijuana Dealers, which argued that sellers of marijuana could qualify as tax-exempt organizations under section 501(c)(4), which would enable them to avoid a draconian federal tax created by IRC section 280E.  This article inspired a thoughtful response by fellow blogger Philip Hackney, in which Phil argued that such organizations cannot qualify for tax exemption.  Among other things, he argued that that the so-called public policy doctrine applies to (c)(4) organizations just as much as it applies to (c)(3)s.  We replayed some of our disagreement about the breadth of the public policy doctrine last month on this blog (here, here and here).  But now I’ve posted a new draft article that addresses the application of the public policy doctrine to independent government entities that are exempt from federal income tax under IRC section 115 instead of 501(c). Continue reading “Tax Benefits of Government-Owned Marijuana Stores”

French Tax Authorities Raid Google

By: David J. Herzig

Don’t ever say that The Surly Subgroup is not on some breaking news.  It is being reported starting at 5 am French time some 100 French authorities conducted a “ultra secrète” raid on Google’s Paris headquarters.  This past February, Google was assessed a deficiency of some 1.6 Billion euros in back taxes.



Une perquisition a lieu ce mardi au siège de Google à Paris.  LP/F. DUGIT

There is nothing really new about the Google tax story.  Members of the European Union are in constant complaint about the use of tax strategies used by multinationals.  With awesome names such as the Double Irish with a Dutch Sandwich, multinationals that have portable revenue generation items, e.g., algorithms, can house those assets in low tax EU jurisdictions such as Ireland.  By then using EU laws to their advantage, e.g., EU tax law protects companies from paying tax in a non-permanent establishment country, they can avoid or mitigate tax.

In January this year, Google settled similar claims with the United Kingdom.   Continue reading “French Tax Authorities Raid Google”

Tax at Midlife

I am at the Association of Mid-Career Tax Professors (AMT) Annual Conference today and tomorrow, along with Surly co-bloggers Jennifer Bird-Pollan, Sam Brunson, and Stephanie Hoffer. The conference is hosted by Dennis Ventry and Darien Shanske at UC Davis. Sam, Stephanie, and I are on the organizing committee, along with Dennis and Brian Galle. The conference itself is, I think, Brian’s brainchild–thanks, Brian!

I’m presenting an early-stage piece called The Distributive Case against Offshore Tax Enforcement, which I hope to workshop more extensively over the fall and spring. Jennifer is presenting Taxes, Democracy, and Investment Treaties; Stephanie, Corporate Acquisitions and Integration; and Sam, Playthings of the Wealthy: RICs, Pease, and the AMT.

A question I keep asking myself is: What’s the mission of the AMT conference? Or more broadly, what should we be focusing on at this stage of our scholarly lives?

Back in the day when dinosaurs roamed the earth and I used to attend the still-extant Junior Tax Workshop, the goals were pretty clear: Continue reading “Tax at Midlife”

About last night …

IMG_5486“Ask not what your country can do for you, but ask what you can do for your country.”  John F. Kennedy

We celebrated Volunteer Income Tax Assistance (VITA) in Las Vegas … and the numbers are impressive. Almost 200 volunteers spent 12,000 hours generating over $25 million in federal refunds that have and will continue to exponentially benefit our local communities and working families, including thousands of children. But for anyone who has served as a VITA volunteer, the personal rewards and deep fulfillment from helping others are priceless. If you are a tax professional looking for something more out of work-life-balance (or are curious about Woody Allen’s antihero advice and afterlife plan) … read more about encore tax opportunities here. Details about VITA programs and generous grant opportunities with fast-approaching deadlines (June 1) follow the fold …

Continue reading “About last night …”

Trump Tax (Non) Disclosure

By David J. Herzig

Today, Paul Caron in his TaxProf Blog, highlighted an article by John McGinnis (a Constitutional Law Scholar at Northwestern).   In the article, McGinnis states that Trump should not have to disclose his income tax returns.  His premise is that the norm of tax return disclosure is “bad.”  He believes that privacy norms should trump any right of the electorate to see a candidates taxes.  I vehemently disagree with this normative position. I hesitate to write a “hot take” or half-baked reaction to the article.  But there is dangerous precedent failing to highlight the error(s) in McGinnis’ position. (I am under the assumption that McGinnis had limited space to write his opinion and nuance he would normally make is lost to space constraints).

I, as well as others such as, Joe Thorndike, have previously made the point that tax return disclosure is very important.  In my Forbes article, I made the point of a variety of reason tax return disclosure is very important.  I said, “First, tax returns can be a window to understanding how someone truly thinks and behaves; what you do when you think the public isn’t looking, shows the more authentic self.  (Hillary Clinton’s tax return is arguably less revealing, since she has long known her returns would be made public.)  Trump’s tax filings might provide some additional insight into how he would run the country.  Does he follow rules? Stake out very aggressive positions?  Take unnecessary risks?”  I think how people act in private is the best proxy for understanding what they think.  With a candidate like Trump, this may be the only window into how a Trump presidency would look like.

McGinnis starts his discussion by making the first point in support of his thesis that Continue reading “Trump Tax (Non) Disclosure”

Sugin: Rhetoric and Reality in the Tax Law of Charity

Linda Sugin (Fordham) has a new article out  Rhetoric and Reality in the Tax Law of Charity, 84 Fordham L. Rev. 2607 (2016) that looks essential to anyone who is interested conceptually in the place of charity in state law and tax law. The abstract:

“The rhetoric of public purposes in charity law has created the mistaken impression that charity is public and fulfills public goals, when the reality is that charity is private and cannot be expected to solve the problems that governments can solve. The rhetoric arises from a combination of charity-law history and tax expenditure analysis. The reality follows the money and control of charitable organizations. On account of the mismatch of rhetoric and reality, the tax law of charity endorses an entitlement to pre-tax income and (ironically) creates a bias against taxation. This article reorients the project of defining public and private in the tax law by starting from a normative theory of government responsibility.

It challenges the conventional economic justifications for the charitable deduction and exemption, arguing for a more philosophical approach that makes affirmative demands on government to distribute the returns to social cooperation. Under this approach, the appropriate role of private organizations is residual; they must achieve what governments cannot. The article concludes by arguing that current law’s tax benefits for charity are easily justified in this new understanding.”

Can EU-wide Corporate Consolidation Be Revived?

By: Diane Ring

On Tuesday, Shuyi  mentioned the EU’s Common Consolidated Corporate Tax Base proposal (CCCTB) in her post, noting some interesting parallels between maritime/bankruptcy coordination and international tax efforts at coordination. This motivated me to take a look at the recent developments that have happened around the CCCTB proposal. The CCCTB would provide a single set of rules for calculating the income of businesses operating in the EU – and would allow for such businesses to file a single consolidated return for their EU activities. The group’s income would then be allocated across the member states. Under this scheme, individual EU member states would still be able to tax their portion of the group’s income at their own country-specific tax rate. But I was curious–the CCCTB proposal is not new; it has been around for more than a decade. What has been happening on this stalled cooperation front? And, more importantly, will the EU’s announced re-launch of the proposal have a greater chance of success than previous attempts? Continue reading “Can EU-wide Corporate Consolidation Be Revived?”

Trump Claims $557 Million in Income in 2015

By:  David J. Herzig

Yesterday, Donald Trump filed his personal financial disclosure with the Federal Election Commission.  This updated his initial financial disclosures.  On his web site he claimed the disclosures  were “the largest in the history of the FEC.”  Unfortunately, he did not file his disclosures on-line like Hillary Clinton.  Alas, we will have to wait a little bit to get to the details.

Nonetheless, according to Mr. Trump’s website he made $557 million in income in 2015. That number does not include “dividends, interest, capital gains, rents and royalties.”  So, his real income should be substantially higher.

I have been writing about why a disclosure of Mr. Trump’s tax returns are necessary (at Forbes and the Wall Street Journal).  Once I have a copy of the disclosures, I will give some updates (hopefully shortly) about various items that raise some red flags. From what I gather in innuendo and rumor about his disclosure, the calls for full disclosure of his tax returns to sort out facts from fiction will continue to gain steam.

The key reason the tax returns are needed is to permit a thoughtful discussion (hopefully more global tax policy discussions) between the relationship between his over $557 million in gross income and his taxable income.

[QUICK UPDATE: I was amazed how ABC, NBC, FOX, CBS, The Wall Street Journal and the New York Times all seemed to know what was in the not yet public disclosure.  The rule according to the FEC is that the return is not public until they have approved it.  However, despite the non-public disclosure, the FEC has apparently sent the disclosure out to certain news sources.  It is amazing how a governmental agency can partake in such mishegoss!]

[UPDATE 7:45 pm] The Wall Street Journal put up Trump’s FEC disclosure.  Available at: