European Commission Prods OECD, EU, and Members States on Digital Taxation: An Analysis

By: Diane Ring

Complaints regarding the international tax system’s ability to handle the digital economy (think Google, Amazon, and a myriad of online service providers) are now ubiquitous. The heart of the problem is two-fold: (1) technology allows these corporations to effectively conduct business in a country without a physical presence there, and (2) much of these businesses’ value derives from intangibles whose value can be difficult to document.

The first reality limits a host country’s ability, under current law, to assert jurisdiction to tax the businesses. The second means that for core transactions by these businesses, such as licensing intangibles to related parties, it can be very difficult for the tax authorities to guarantee that the transactions are at arm’s length prices (and not shifting profit into low tax jurisdictions). The topic is pervasive enough to have merited its own Action Item in the ongoing OECD BEPS Project (Base Erosion and Profit Shifting).

However, a real, coordinated global response has been much harder to secure.  This week, the European Commission (EC) made its most recent foray into the debate with a Communication from the Commission to the European Parliament and the Council. But the EC was not just talking to European Union (EU) bodies; it was directly speaking to the OECD and EU member states. What exactly is the EC’s goal with this Communication?

Bottom line the EC seems to have several intersecting objectives: (1) clarify the problem, (2) identify and prod global actors, (3) delineate proper approaches, and (4) warn about the implications of nonaction. Continue reading “European Commission Prods OECD, EU, and Members States on Digital Taxation: An Analysis”

FY 2018 Appropriations Bill and the IRS

Last Thursday, the House passed an appropriations bill by a vote of 211 to 198. At this point, it’s anybody’s guess how much of the appropriations bill will survive the Senate, but, just in case, it’s worth taking a look at it. And, it turns out, the House really wants to use the appropriations bill to regulate the IRS. Some of the provisions strike me as warranted. Some innocuous. Some strike me as bizarre, payback, perhaps, for long-held grudges. And some strike me as downright insidious. In this post I’m going to focus on the last two categories because frankly, they’re more fun to write about.

The provisions that regulate IRS behavior can be found in sections 101-116 of the appropriations bill. And what provisions are bizarre payback or downright insidious? Continue reading “FY 2018 Appropriations Bill and the IRS”

Something Old, Something New: Two Workshop Series @ Boston College Law School this Fall

Shu Yi Oei

I’m happy to announce that we have a couple of workshop series happening at BC Law School this academic year. I’m really quite excited about these. Because what’s life without a workshop?

Tax Policy Workshops & Roundtable…

Boston College Law School has run a Tax Policy Workshop Series since 2007. This fall, we continue in that tradition, with speakers Daniel Hemel (Chicago), Ruth Mason (UVA), Zachary Liscow (Yale), and Lily Batchelder (NYU) presenting papers.

BC Law and Tulane Law are also hosting a joint BC-Tulane Tax Roundtable on March 23, 2018. More info about that coming soon.

…and a New Regulation and Markets Workshop Series!

In addition, here’s something a bit fun: Some BC Law colleagues and I have started a new workshop series, focusing on Regulation, Markets, and Business. This multidisciplinary workshop series focuses on the study of regulatory approaches to markets and business. It investigates how such economic regulation should be designed in order to balance the interests of various constituencies. It also explores how traditional approaches to regulation compare, contrast, and intersect with emerging methodologies.

We’ll feature presentations by invited legal scholars of their works-in-progress. The hope is to create opportunities for scholars working on issues of economic regulation to discuss and present their research in a forum of academics working in related intellectual spaces. The workshop is offered to Boston College JD and LLM students as a 1-credit seminar.

Here’s the 2017-18 slate:

FALL 2017

September 12, 2017 – Saule Omarova (Cornell): “Private Wealth and Public Goods: A Case for a National Investment Authority”

September 26, 2017 – Rory Van Loo (Boston University): “Consumer Law as Tax Alternative”

Tuesday, October 17, 2017 – William Birdthistle (Chicago-Kent):  “Free Funds: Retirement Saving as Public Infrastructure”

Tuesday, November 14, 2017 – Cary Martin Shelby (DePaul): “The Role of Competition in the Regulation of Investment Funds”

Tuesday, November 28, 2017, 12:15 pm – Lily Batchelder (NYU), co-sponsored with Tax Policy Workshop: “The Shaky Case for a Business Cash-Flow Tax”

Continue reading “Something Old, Something New: Two Workshop Series @ Boston College Law School this Fall”

Slurpees and the Cook County Sweetened Beverage Tax

Me with my Slurpee.

By Sam Brunson

Today and tomorrow are 7-Eleven’s annual Bring Your Own Cup Day. In case you’re not familiar with it (or your Facebook feeds aren’t filled with bizarre containers of florescent sugar-ice), on #BYOCupDay, you can bring any container in your house to a 7-Eleven and, as long as it fits in the Slurpee machine, you can fill it up for $1.50.

After my wife and kids spent the day on the beach watching the Air and Water Show rehearsal, they were ready for some Slurpee. So, when I got out of work, we walked the three blocks to the nearest 7-Eleven. (Last year, we took berry-picking buckets; this year, we were much more modest and just brought cups my father-in-law bought when we took him to a Cubs game a couple years ago.)

When we got to the store, we were greeted by this sign: Continue reading “Slurpees and the Cook County Sweetened Beverage Tax”

So about that Robot Tax…

Shu-Yi Oei

I came across a couple of news stories recently about how South Korea is introducing the world’s first robot tax. But based on the press reports, it sounds like the so-called robot tax is actually just a reduction of the tax deductions available to businesses that invest in productivity-boosting automation. The news sources themselves concede that this “robot tax” not exactly a tax on robots but rather a tax benefit reduction for automation investment.

Talk of a “robot tax” has landed at the forefront of tax news since Bill Gates mentioned it in a Quartz interview back in February of 2017. But of course, scholarship about robots (not to mention robots themselves) has been around for quite a bit longer. There’s even a “We-Robot” robotics law and policy conference that’s been going on since 2012, which I keep meaning to crash, but then there’s always something else going on.

A lot of what seems to be driving the tax conversation is the fear that robots are taking over jobs, though there’s some uncertainty about the extent to which robots are to blame.

Personally, I’ve been having a hard time squaring the newly ascendant tax conversation about the robot tax with the broader legal scholarship on robots. In some of the news and other commentary discussing Robotaxation, my reaction has been something to the effect of “I’m not sure that word means what you think it means.” Turns out, there is something of an existing conversation about what constitutes a robot in the first place—see, for example, Richards and Smart (2013) for a nice discussion of some of the definitional issues. See also this “What is a Robot?” piece in The Atlantic. In defining “robot,” it might matter how a robot moves in the physical world, what kind of quasi-independent agency it seems to exercise (autonomous vs. semi-autonomous), how humans interact with it, and even what sorts of emotions it triggers in us mere humans. We might understand some automated machines to be robots but others to just be automated equipment. And these distinctions make sense, from the viewpoint of areas like tort law, privacy law, the law of principals and agents, and the more general regulation of robots (and of artificial intelligence as a subcategory of robots).

But in some of the tax discussions about robots that I’ve seen on the interwebs, it’s quite clear that the authors don’t necessarily mean Robot when they say Robot. Continue reading “So about that Robot Tax…”

The Front Lines of Sharing Economy Legal Debates

By: Diane Ring

Last month I blogged about new proposed legislation in Congress that sought to provide a safe harbor for gig worker classification for tax purposes. However, as I noted, the proposal implicitly favored one side of the debate by making the safe harbor one that would ensure the “easy” ability to classify a worker as an independent contractor (rather than an employee). In that post, I suggested that having tax lead the charge in this sharing economy worker classification debate perhaps allowed the tax “tail” to lead the employment relations “dog”. There are pressing nontax issues in the sharing economy that are driving litigation and dominating worker concerns – particularly employment law issues. Just last week, we saw further evidence of serious tensions in the landscape of sharing economy labor law.

On Tuesday, July 31, 207, in Chamber of Commerce of the United States, et al.,  v. The City of Seattle, a U.S. federal judge dismissed a challenge to legislation approved by the Seattle City Council in fall 2015. Pursuant to the Seattle law, businesses that hire or contract with taxi-drivers, for-hire transportation companies and “transportation network companies” must bargain with drivers if a majority want to be represented. That is, Seattle effectively allows Uber and Lyft drivers to unionize. Not surprisingly, Uber and Lyft objected to the law . . . Continue reading “The Front Lines of Sharing Economy Legal Debates”

Tax at the National Parks: Tuskegee Airmen National Historic Site Edition

By Sam Brunson

Last week, my family and I were at the Tuskegee Airmen National Historic Site. I wasn’t terribly familiar with the Tuskegee Airmen before visiting; frankly, their story is amazing, inspiring, and shocking. Basically, Army War College study from the early twentieth century claimed that African Americans lacked intelligence, ambition, and courage, and were thus unfit for the military, and especially unfit to be airmen.

The Tuskegee Institute had an airfield where it trained African American pilots; eventually the government accepted it as a training ground for military pilots. The Tuskegee Airmen proved the Army War College study wrong with a distinguished record of military service. Still, the military in the 1940s was segregated, and these Tuskegee Airmen served in segregated units and, when they returned home, they faced continued racism. Many, tired of what they experienced, went on to join the civil rights movement. And many of them share their stories, through audio, video, pictures, and artifacts, at the NHS. Continue reading “Tax at the National Parks: Tuskegee Airmen National Historic Site Edition”

The Tail, the Dog, and Gig Workers

By: Diane Ring

tail.dog

New legislation has just been introduced in the Senate that creates a “safe harbor” for independent contractor status. The proposed legislation provides that if a worker relationship satisfies certain criteria, then that worker can bypass the sometimes messy, multi-factor test for distinguishing between employees and independent contractors, and will be classified as an independent contractor for tax purposes. What prompted action now to address what has been a decades-old classification challenge for workers, businesses and the IRS alike? The gig economy. (Hence, the not-so-catchy title for the legislation: The New Economy Works to Guarantee Independence and Growth (NEW GIG) Act of 2017 (S. 1549).)

The legislation’s sponsor, Senate Finance Committee member John Thune, (R-S.D), described the impetus for the legislation as follows: “My legislation would provide clear rules so that these freelance style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS.”

Is this really what gig workers are worrying about? . . . Continue reading “The Tail, the Dog, and Gig Workers”

House Appropriations Bill

By: David Herzig

With all the diversions this week, it was easy to miss that the House Committee on Appropriations posted on June 28th the Appropriations Bill for FY 2018.  The bill seems to include a couple items that not many were expecting.  So, I thought I would highlight some of the key provisions.  Since it is Friday before a Holiday weekend, I’ll keep it short for now.  There are four main provisions I will address: (1) IRS Targeting/Johnson Amendment; (2) ACA Penalties; (3) Conservation Easements; and (4) 2704 (Estate/Gift Tax).

I. IRS Targeting/Death of Johnson Amendment

First, is a clear response to the “targeting” of groups from the Lois Lerner Administration. In three separate sections (107, 108 and 116), the bill attempts to regulate the IRS, not Continue reading “House Appropriations Bill”

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.

Screen Shot 2017-06-16 at 7.42.50 AM

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”