Superman, Tax Evader?

By: Leandra Lederman, with thanks to my in-house comics expert, Nickolas Cole

Nick, who’s been a Superman fan since childhood, got me the Oct. 1961 issue of the Superman comic for Christmas. It’s got a story in it billed as “Superman Owes a Billion Dollars” in taxes! Here’s the splash panel:

The basic premise is that a new Revenue Agent “at the Internal Revenue Bureau in Metropolis,” Rupert Brand,* discovers “no record that Superman has ever paid taxes!” (In case you’re wondering, nope, the IRS was not called the “Internal Revenue Bureau” back then. In 1953, it changed its name from the “Bureau of Internal Revenue” to the “Internal Revenue Service.” Perhaps a clue that not to rely on any of the tax statements in the story!)

Brand figures out the quickest way to reach Superman about this apparent delinquency, and explains that even the President of the United States pays taxes (cf. these blog posts), and so must Superman!

Why does Superman owe tax? Well, the story explains that “each year, Superman captures countless criminals, collecting a fortune in reward money!” And not just that, “whenever he digs up buried treasure” [treasure trove, anyone?] “or squeezes coal into diamonds, he earns more untold millions! All that wealth is income!”

Continue reading →

Call for Papers for the Indiana/Leeds Summer Tax Workshop Series

By: Leandra Lederman

This summer, the Indiana University Maurer School of Law and the University of Leeds School of Law will run a new Summer Tax Workshop Series. Dr. Leopoldo Parada from U. Leeds and I will host it. It will meet online via Zoom on Thursdays from 10:30am-noon Eastern time (3:30-5pm British Summer Time), starting May 21, 2020.

The Call for Papers opens today and will close on May 10, 2020 at midnight British Summer Time (7pm Eastern Daylight Time). If you are interested in presenting in the Workshop, please send the following before then to llederma@indiana.edu and L.Parada@leeds.ac.uk:

Your name, title, and affiliation.
The paper title and an Abstract of no more than 1,000 words.
Whether or not you already have a draft of the paper. (We expect to circulate a draft of each paper—at least 10 pages—a week in advance of each talk.)
Whether or not the paper has been accepted for publication.
A list of any Thursdays between May 28 and August 6 that you would not be available to present, or a statement that any Thursday in that date range would work for you.

Continue reading “Call for Papers for the Indiana/Leeds Summer Tax Workshop Series” →

IU Tax Policy Colloquium: Hayashi, “Countercyclical Tax Bases”

By: Leandra Lederman

On April 5, Indiana University Maurer School of Law’s Tax Policy Colloquium welcomed Andrew Hayashi from the University of Virginia School of Law. Andrew presented his fascinating new paper, “Countercyclical Tax Bases.” (The paper isn’t publicly available yet, but Andrew offered to share it by email with interested readers.)

The paper argues that the choice of tax base should take into account what tax base is most helpful to the economy in recessions. It points out that recessions are not rare; between 1980 and 2010, there were 5 recessions, covering 16% of that period. The paper does two main things. First, it provides interesting stylized examples showing how, following an economic shock that reduces income or housing value, three types of tax bases (income, sales, and property) each interact with household credit constraints and adjustment costs (committed consumption of housing) to either stabilize or aggravate the negative economic shock. These examples illustrate quantitatively how different tax bases can affect taxpayer behavior in a recession, and thus the local economy.

Second, the paper contains an original empirical study of county tax bases for 2007-2014, to see the effect of tax bases on the recessions of 2001 and the Great Recession of 2008-2009. Andrew combined data from the Government Finance Database, Zillow, the FBI’s Uniform Crime Reports, and the IRS’s Statistics of Income, among other places. Although the results for the two recessions were not identical, Andrew generally found in his OLS regressions that counties that relied more on property taxes had smaller increases in unemployment during the two recessions and may have recovered from the recession more quickly. Sales taxes generally had countercyclical effects, as well, particularly in stabilizing government revenues during the Great Recession. In general, counties that were most reliant on income taxes suffered the most in the two recessions (though the results for income taxes generally were not statistically significant). Continue reading “IU Tax Policy Colloquium: Hayashi, “Countercyclical Tax Bases”” →

The Halloween Parent Tax

halloween-candy1 By Sam Brunson

I was asked on Twitter about the Halloween Parent Tax. And with Halloween coming up, it seemed like it needed a post. So here you are:

Design Considerations

You’ve got a couple options here. Are you going to create an income tax? A consumption tax? A head tax? Each is slightly different, in certain relevant ways:

Income Tax: This is probably what you think of when you think of the Halloween Parent Tax. Essentially, children are required to give their parents some percentage of the candy they get. (My wife’s parents imposed a 15-percent Halloween Parent Tax when she was growing up.) There are some design complications here—for example, are you taking a percentage of the number of pieces of candy the kids get? Or do different kinds of candy have different values? And do you take size into account in calculating candy value?[fn1] Continue reading “The Halloween Parent Tax” →