Category: Scholarship

Paying with Data

By Adam B. Thimmesch

It is an oft repeated adage that if you are not paying for a product, then you are the product. This comment has traditionally been directed at products like Google, Facebook, and Instagram, but it is not just large software companies that are making use of consumer data as “payment” for their services. NPR recently published a story about a café in Rhode Island that is taking this one step further. They sell coffee in exchange for data.

According to the article, students and faculty at Brown University are the only customers allowed at the shop, and students get free coffee by allowing the coffee shop to gather and sell their data. The students also receive corporate pitches from the café’s workers. (Apparently professor data is not so valuable. They have to pay.) According to the article:

To get the free coffee, university students must give away their names, phone numbers, email addresses and majors, or in Brown’s lingo, concentrations. Students also provide dates of birth and professional interests, entering all of the information in an online form. By doing so, the students also open themselves up to receiving information from corporate sponsors who pay the cafe to reach its clientele through logos, apps, digital advertisements on screens in stores and on mobile devices, signs, surveys and even baristas. Continue reading “Paying with Data” →

A Series of Series? Tax, Regulation, and Faculty Workshops at Boston College Law School

I do love a good faculty workshop. Reading and spiritedly discussing the work of other academics always fills me with energy and inspiration for my own projects. Plus, it’s great to be able to spend time with new and old friends and find out what’s been baking in their brains.

Here at BC Law, I’m fortunate to be involved in two exciting workshop series: the BC Tax Policy Workshop and the BC Regulation and Markets Workshop. Both kicked off this week: On Tuesday, we hosted Professor Jens Dammann from the University of Texas at Austin and heard about his paper, “Deference to Delaware Corporate Law Precedents and Shareholder Wealth: An Empirical Analysis.” Today, we welcomed Professor Ajay Mehrotra (Northwestern Law; Executive Director, American Bar Foundation) and had a lively discussion of his book project, “The VAT Laggard: A Comparative History of U.S. Resistance to the VAT.” Tomorrow, BC Law will have its first Faculty Colloquium of the semester. Professor Guy-Uriel Charles (Duke Law; visiting at Harvard Law) will present “The American Promise: Rethinking Voting Rights Law and Policy for a Divided America.”

You can never have too many workshops!

Below are the dates and speakers for the remainder of the semester. If you’re a Boston-area law professor and are interested in attending or would like to be on our workshop email list, just let me know.

Tax Policy Workshop (Fall 2018):

Thursday September 13, 2018
Ajay Mehotra (Northwestern, and American Bar Foundation):
The VAT Laggard: A Comparative History of US Resistance to the VAT
(co-sponsored with BC Legal History Workshop)

Tuesday November 6, 2018
Andrew Hayashi (UVA): title TBD

Tuesday Nov. 13, 2018
Cliff Fleming (BYU): title TBD

Tuesday November 27, 2018
Emily Satterthwaite (University of Toronto): title TBD
(co-sponsored with BC Regulation and Markets Workshop)

Continue reading “A Series of Series? Tax, Regulation, and Faculty Workshops at Boston College Law School” →

New Paper on Tax Legislative Process and Statutory Drafting

Shu-Yi Oei

For those readers in search of some light summer reading, Leigh Osofsky (UNC Law) and I have been working on a paper on statutory drafting, entitled “Constituencies and Control in Statutory Drafting: Interviews with Government Tax Counsels.” We finally got around to posting it on SSRN, here.

In the paper, we report findings from interviews we conducted with government tax counsels who have participated in the tax legislative process, in which we asked questions about various aspects of drafting and creating tax legislation. In addition to reporting our findings, we also discuss the implications of our research for statutory interpretation, tax system design, and the legislative process.

For readers interested in legislation, tax drafting, statutory interpretation, tax shelters, and the political process, the paper is probably worth a look. Feel free to contact either of us with comments.

 

 

 

 

 

 

Call for Papers: New Voices in Tax Policy and Public Finance (2019 AALS Annual Meeting, New Orleans, LA)

The AALS Tax Section committee is pleased to announce the following Call for Papers:

CALL FOR PAPERS
AALS SECTION ON TAXATION WORKS-IN-PROGRESS SESSION
2019 ANNUAL MEETING, JANUARY 2-6, 2019, NEW ORLEANS, LA
NEW VOICES IN TAX POLICY AND PUBLIC FINANCE
(co-sponsored by the Section on Nonprofit and Philanthropy Law and Section on Employee Benefits and Executive Compensation)

The AALS Section on Taxation is pleased to announce the following Call for Papers. Selected papers will be presented at a works-in-progress session at the 2019 AALS Annual Meeting in New Orleans, LA from January 2-6, 2019. The works-in-progress session is tentatively scheduled for Saturday, January 5.

Eligibility: Scholars teaching at AALS member schools or non-member fee-paid schools with seven or fewer years of full-time teaching experience as of the submission deadline are eligible to submit papers. For co-authored papers, both authors must satisfy the eligibility criteria.

Due Date: 5 pm, Wednesday, August 8, 2018.

Form and Content of submission: We welcome drafts of academic articles in the areas of taxation, tax policy, public finance, and related fields. We will consider drafts that have not yet been submitted for publication consideration as well as drafts that have been submitted for publication consideration or that have secured publication offers. However, drafts may not have been published at the time of the 2019 AALS Annual Meeting (January 2019). We welcome legal scholarship across a wide variety of methodological approaches, including empirical, doctrinal, socio-legal, critical, comparative, economic, and other approaches.

Submission method: Papers should be submitted electronically as Microsoft Word documents to the following email address: tax.section.cfp@gmail.com by 5 pm on Wednesday, August 8, 2018. The subject line should read “AALS Tax Section CFP Submission.” By submitting a paper for consideration, you agree to attend the 2019 AALS Annual Meeting Works-in-Progress Session should your paper be selected for presentation.

Submission review: Papers will be selected after review by the AALS Tax Section Committee and representatives from co-sponsoring committees. Authors whose papers are selected for presentation will be notified by Thursday, September 28, 2018.

Additional information: Call-for-Papers presenters will be responsible for paying their own AALS registration fee, hotel, and travel expenses. Inquiries about the Call for Papers should be submitted to: AALS Tax Section Chair, Professor Shu-Yi Oei, Boston College Law School, oeis@bc.edu.

IU Tax Policy Colloquium: Burman, “The Rising Tide Wage Credit”

Colloquium pic)
Left to right: Len Burman, Tim Riffle, Leandra Lederman, Karen Ward, Frank DiPietro, Brad Heim

By: Leandra Lederman

On April 5, the Indiana University Maurer School of Law’s Tax Policy Colloquium welcomed Len Burman from Syracuse University and the Urban Institute/Tax Policy Center, who presented “The Rising Tide Wage Credit.” This intriguing new paper is not yet publicly available.

The paper proposes replacing the existing Earned Income Tax Credit (EITC) with a new credit, the Rising Tide Wage Credit (RTWC), which, unlike the EITC, would be universal for workers, rather than phased out above low income levels. The RTWC also would differ from the EITC in that the amount of the RTWC would not depend on the number of children the taxpayer has. Instead, the RTWC would be a 100% credit in the amount of a worker’s wages, up to $10,000 of wages. The credit could be claimed on the taxpayer’s tax return, or subject to advance payment via the taxpayer’s employer. Thus, the maximum credit for an unmarried taxpayer would be $10,000, and for a married couple filing jointly would be $20,000. (The credit would not have a marriage penalty.) The credit would be indexed to increase with increases in GDP.

Because the proposed new credit would not vary with the number of children the taxpayer is supporting, the paper also proposes increasing the child tax credit from $2,000 to $2,500, and proposes making the child tax credit fully refundable (rather than partly refundable, as it is under current law). The RTWC and the increase in the child tax credit would be funded by a value added tax (VAT). The paper estimates that the proposal could be fully funded with an 8% VAT, along with federal income tax on the RTWC. A VAT was chosen as the funding mechanism because it is closely correlated with GDP. The paper discusses 3 illustrative examples and includes a table that shows the overall progressivity of the proposal under certain assumptions. Continue reading “IU Tax Policy Colloquium: Burman, “The Rising Tide Wage Credit”” →

Call for Papers: “Reshaping Work in the Platform Economy”

By: Diane Ring

Last October, the international conference “Reshaping Work in the Platform Economy” was held in Amsterdam. I blogged about the two-day event that explored a wide range of legal, business and social issues here and here.  The call for papers for the Fall 2018 conference (October 25 & 26, 2018, Amsterdam) has just been issued:

call for papers 2018 2_Page_1

call for papers 2018 2_Page_2

 

 

IU Tax Policy Colloquium: Satterthwaite, “Optional Taxation: Survey Evidence from Ontario Microentrepreneurs”

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Left to right: Maicu Díaz de Terán, Tim Riffle, Emily Satterthwaite, Brian Broughman, Leandra Lederman, David Gamage, #taxprofbaby, Pamela Foohey, Austen Parrish

By: Leandra Lederman

On March 22, the Indiana University Maurer School of Law’s Tax Policy Colloquium welcomed Prof. Emily Satterthwaite from the University of Toronto Faculty of Law, who presented “Optional Taxation: Survey Evidence from Ontario Microentrepreneurs.” This interesting new paper is not yet publicly available.

The paper explores Canada’s “small supplier” exemption from value-added tax (VAT) registration. Canada’s exemption allows suppliers with less than CAD $30,000 of sales (turnover) in a year to avoid registering for and complying with the VAT unless they opt in. (This amount is not indexed for inflation, and Emily’s paper explains that this threshold is fairly low.) Although it may seem odd for someone to opt into a tax system, as Emily’s paper explains, some small suppliers have incentives to do so: if they buy supplies subject to VAT, they can offset that against VAT owed, and obtain a refund if VAT paid exceeds VAT due. In addition, some small suppliers may be encouraged by their VAT-registered customers to become part of a formal supply chain, because the VAT those customers pay on inputs is creditable. The downside of registering is the cost of doing so, which includes the requirement to file an annual return regardless of whether VAT is owed. Continue reading “IU Tax Policy Colloquium: Satterthwaite, “Optional Taxation: Survey Evidence from Ontario Microentrepreneurs”” →

Congratulations to Surly Blogger Sam Brunson!

As announced on Taxprof Blog today, Surly blogger Sam Brunson has been named the Georgia Reithal Professor of Law at Loyola University of Chicago School of Law. Sam’s work focuses on how tax law affects various groups of taxpayers, with a particular focus on investors and families. He also write on tax administration. Sam also has a book, entitled God and the IRS: Accommodating Religious Practice in United States Tax Law,  forthcoming at Cambridge University Press.

Congratulations, Sam!

IU Tax Policy Colloquium: Ring, “Silos and First Movers In the Sharing Economy Debates”

IMG_5114
Prof. Diane Ring

By: Leandra Lederman

On March 1, the Indiana University Maurer School of Law welcomed Surly’s own Prof. Diane Ring from Boston College Law School as the fourth speaker of the year in our Tax Policy Colloquium. Diane presented a new paper, which I believe is not yet publicly available, titled “Silos and First Movers In the Sharing Economy Debates.” This interesting paper focuses on the classification of workers in the “sharing” or “gig” economy as employees or independent contractors, arguing that “[t]wo interacting forces create the most serious risk for inadequate policy formulation: (1) silos among legal experts, and (2) first-mover effects.” (Page 1 of the draft.) The silo argument is that lawyers operate in subject areas that are isolated from each other, such that tax experts, for example, fail to perceive the effects of tax-related worker-classification rule changes on non-tax (such as employment) law, and vice versa. The first-mover argument is that the first actors on the worker-classification issue can wield outsized influence, shaping the debate in legal contexts other than the one directly affected.

The paper and presentation provide interesting insights into how giants of the service-worker sharing economy—not just Uber and Lyft, but also TaskRabbit—influence the development of the law on worker status. And subject-matter silos are a common complaint among legal academics. That issue has arisen in administrative law, for example, where there may be different rules developed in the context of different agencies. Courts and policymakers may struggle with tax exceptionalism (in the parlance of Kristin Hickman). But I wonder both if the legal silos in the gig economy are as strong as the paper suggests, and whether the effects the paper observes are first-mover effects or something else. Continue reading “IU Tax Policy Colloquium: Ring, “Silos and First Movers In the Sharing Economy Debates”” →

The Future of Nexus

By Adam Thimmesch

As I’ve previously blogged, the Supreme Court granted certiorari in South Dakota v. Wayfair last month. The question presented in the cert petition was whether the Court should overrule the physical-presence rule of Quill. For most folks, the resolution of the case will be felt most directly in whether their favorite online stores start to collect use tax on their purchases. (If your favorite vendor is Amazon, fear not, you’re already paying…at least on some of your purchases.) For states, it could mean an infusion of tax revenue at a time when many are struggling with budget issues…or maybe they will use the funds to pay for President Trump’s infrastructure plan.

The primary issue in Wayfair is whether the Court should abandon its long-standing physical-presence rule. That rule dates back to the Court’s early regulation of states and how they taxed the itinerant drummers and mail-order companies of the 1800s and early 1900s. The Court originally imposed that jurisdictional limitation under both the Due Process and dormant Commerce Clauses, but it abandoned the former with its 1967 decision in National Bellas Hess v. Illinois. (Lawyers reading this post should remember something about personal jurisdiction and the Court’s move away from a physical-presences test for purposes of that concept during this same time frame.)

Continue reading “The Future of Nexus” →

IU Tax Policy Colloquium: Brooks, “The Case for Incrementalism in Tax Reform”

By: Leandra Lederman

IMG_4287a
Left to right: Jake Brooks, Leandra Lederman, Bill Popkin, David Gamage, Tim Riffle

On February 1, the Indiana University Maurer School of Law welcomed Prof. Jake Brooks from Georgetown Law School as the second speaker of the year in our Tax Policy Colloquium. Jake presented an early draft of a paper titled “The Case for Incrementalism in Tax Reform,” which led to a lively and interesting discussion about what incrementalism is, what constitutes fundamental reform, how politics may affect the making of tax policy, and whether and how tax law differs from other fields of law.

The paper, which is not yet publicly available, argues that “fundamental tax reform,” while sometimes necessary, should not generally be the goal of tax policy, and that instead, policymakers should take an incremental approach to changing tax laws. “Incrementalism” has a long history in political science, and was first described by Charles Lindblom in an influential 1959 article, “The Science of Muddling Through.” In general, Lindblom’s approach in that article was to reject the urge to use a formal method that involves clarifying the principal goals up front, identifying the means to achieve them, and then analyzing every relevant factor in the decision. Lindblom instead advocated the use of a more casual method that he termed “successive limited comparisons,” which ignored important possible outcomes or alternatives and did not involve distinguishing means and ends. (Page 81 of Lindblom.) Lindblom argued that this “muddling through” approach was not only what was actually practiced by administrators, but also a method for which they need not apologize because administrators are less likely to make serious and lasting mistakes if they proceed through small, incremental changes (pp.86-87). As Jake acknowledges, Lindblom wrote at a time with much more limited ability to model and process large quantities of empirical data. He notes that incrementalism has continued to be an important theory in the literature. Despite technological advances, we cannot see the future, and there remain limits to what empirical data can help us predict.

Jake’s argument is driven in part by arguments in favor of tearing the Internal Revenue Code out by its roots and starting over. I agree with Jake that such an approach seems extremely risky. Policy driven by rhetoric and “horror stories” risks being ill-conceived, hasty, driven by political rent-seeking, and even destructive, as I have written about in the context of IRS reform. But does that necessarily mean that legislative tax changes should take a Lindblom-style incremental approach? Continue reading “IU Tax Policy Colloquium: Brooks, “The Case for Incrementalism in Tax Reform”” →

IU Tax Policy Colloquium: Brennan & McDonald, “Debt and Equity Taxation: A Combined Economic and Legal Perspective”

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Left to right: Tim Riffle, Tom Brennan, Leandra Lederman, David Gamage, Karen Ward

By: Leandra Lederman

 

On January 18, the Indiana University Maurer School of Law welcomed Prof. Tom Brennan from Harvard Law School as the first speaker of the year in our Tax Policy Colloquium. Tom presented an early draft of a paper co-authored with Robert L. McDonald, Debt and Equity Taxation: A Combined Economic and Legal Perspective. We had a lively and interesting discussion about it in the workshop, as well as over dinner.

The paper, which I do not believe is publicly available yet, deals with the taxation of hybrid securities. It describes current law on how those securities are categorized as debt or equity, as well as the history of how the law developed. The paper criticizes the binary categorization of hybrid instruments as either debt or equity. It thus argues for a bifurcated approach.

The core of the current draft is a proposed new approach to debt and equity that considers the capitalization of a corporation as a whole and taxes the components in line with the underlying economics. The paper disaggregates the risk-free return, the risky return, and abnormal returns (rents). The paper proposes two possible systems of taxation: the “unlevered equity system” and the “levered equity system.” In the unlevered equity system, debt consists of risk-free obligations (like short-term Treasury bills) and equity is unlevered ownership of assets. In the levered equity system, the definition of debt is the same but equity is fully leveraged ownership of assets (fully financed by risk-free obligations). Under the unlevered approach, although particular investors may own a mix of debt and equity, the corporation itself effectively issues no net debt because it issues no risk-free obligations.

A key insight of the paper applies the Domar-Musgrave economic result that, under certain assumptions, risky returns on assets do not bear tax. Brennan and McDonald point out that the Domar-Musgrave insight also applies to corporations, although the securities are liabilities for them instead of assets. (Many years ago, I applied Domar-Musgave analysis in an article of mine on the tax favoritism for entrepreneurship, but I had not thought about its possible application to corporate income, which is a fascinating idea.) The implication of that insight, as Brennan & McDonald note, is that the risk-premium portion of return on investment effectively does not bear tax. As a result, under the unlevered system, all corporate income would bear corporate tax because the unlevered system does not have any net debt obligations. By contrast, adopting the levered system would make the corporate tax burden only rents, given a tax deduction for debt. The paper explains that this reaches the same result as the Mirrlees Review’s exemption for “normal returns” on corporate capital, as well as the allowance for corporate equity (ACE), if the ACE deduction is defined in a particular way. Continue reading “IU Tax Policy Colloquium: Brennan & McDonald, “Debt and Equity Taxation: A Combined Economic and Legal Perspective”” →

More on Section 199A and Worker Classification (**Threaded Tweet Alert!)

Shu-Yi Oei

Last Friday, Diane and I posted a new paper called “Is New Code Section 199A Really Going to Turn Us All into Independent Contractors?” on SSRN. This was something that started as a blog post but then grew too long and so became a short paper. We plan to develop the ideas in it more robustly in future work.

On Saturday, I made one of those goofy academic tweet threads summarizing the paper, and then it occurred to me that I really liked my goofy tweet thread! Therefore, I’ve taken the liberty of posting the tweets here for the marginal reader who is just interested enough in the topic to read the tweets but possibly not interested enough to read the actual paper.

Diane and I look forward to continuing conversation on this.

Is New Code Section 199A Really Going to Turn Us All Into Independent Contractors? (New Paper on SSRN)

By: Diane Ring

Shu-Yi and I started a blog post on new Section 199A that morphed into a seven-page essay that ultimately found its proper home on SSRN. Here is the abstract:

Is New Code Section 199A Really Going to Turn Us All Into Independent Contractors?

Abstract

There has been a lot of interest lately in new IRC Section 199A, the new qualified business income (QBI) deduction that grants passthroughs, including qualifying workers who are independent contractors (and not employees), a deduction equal to 20% of a specially calculated base amount of income. One of the important themes that has arisen is its effect on work and labor markets, and the notion that the new deduction creates an incentive for businesses to shift to independent contractor classification. A question that has been percolating in the press, blogs, and on social media is whether new Section 199A is going to create a big shift in the workplace and cause many workers to be reclassified as independent contractors.

Is this really going to happen? How large an effect will tax have on labor markets and arrangements? We think that predicting and assessing the impact of this new provision is a rather nuanced and complicated question. There is an intersection of incentives, disincentives and risks in play among various actors and across different legal fields, not just tax. Here, we provide an initial roadmap for approaching this analysis. We do so drawing on academic work we have done over the past few years on worker classification in tax and other legal fields.

What’s Up with the Sharing Economy? (Report from the 13th International Human Rights Researchers Workshop)

By: Diane Ring

Sometimes we do get what we are seeking. In some of my recent work on the sharing economy I have advocated for more discussion and analysis across legal boundaries, so that the rules we develop have outcomes that more closely match our goals and don’t bring unexpected—and undesired—surprises. The two-day conference on “Sharing Economy: Markets & Human Rights” that I have been attending at the College of Law and Business in Ramat Gan, Israel has provided just such an opportunity. The papers presented cover a wide range of legal fields and issues from taxation to discrimination, and will ultimately be published together in the Law & Ethics of Human Rights Journal. Although we are all benefiting from the discussion of our drafts and will continue to revise our work, some interesting themes have emerged already . . .

Continue reading “What’s Up with the Sharing Economy? (Report from the 13th International Human Rights Researchers Workshop)” →