Paul L. Caron
Dean
Pepperdine Caruso
School of Law
Monday, May 3, 2004
The IRS has released criminal investigation statistics for the October 1, 2003 – March 30, 2004 period:
…………………………………………………..Totals
Investigations Initiated………………..1880
Prosecution Recommendations..1503
Information/Indictments………………1127
Total Convictions…………………………..930
Total Sentenced…………………………….864
Percent to Prison………………………….85.5%
Average Months to Serve………………..44
Monday, May 3, 2004
The just-released Statistics of Income Bulletin (Winter 2003-04) includes Selected Itemized Deductions, Schedule A, 1990–2001 by Jason Walters and Victor Rehula. Here is the abstract:
Between 1990 and 2001, the number of tax returns claiming itemized deductions increased by 38.5 percent, whereas the total number of tax returns increased by only 14.2 percent. Thus, the share of taxpayers itemizing their deductions increased by 21.3 percent, rising from 28.5 percent of all taxpayers in 1990 to 34.6 percent for 2001.
The total amount of itemized deductions before limitations (in constant dollars) increased at an average annual rate of 3.6 percent between 1990 and 2001. Between 1991 and 1994, the annual changes were relatively small, ranging from a decrease of 1.7 percent to an increase of 0.4 percent. The increases were much larger between 1995 and 2000, ranging from a low of 4.1 percent for 1995 to as high as 8.1 percent for 1999 and 7.6 percent for 2000. For 2001, the increase was 3.5 percent.
Interest paid has been the largest itemized deduction taken by individual taxpayers from 1990 to 2001, with home mortgage interest comprising between 90 percent and 95 percent of the total interest paid. Taxes paid, the second largest itemized deduction, had the largest positive percentage change and the highest frequency of itemized deductions over the period.
For a related Excel table of data, see here. For more statistics on itemized deductions, see here.
Over the coming week, TaxProf Blog will summarize the remaining Featured Articles and Data Releases in the latest SOI and provide links to the full reports and accompanying tables and statistics.
Monday, May 3, 2004
Donald Tobin (Ohio State) has posted Investing in Our Children: A Not So Radical Proposal on SSRN. Here is the abstract:
The United States is currently under-investing in the human capital of its children. This significant investment deficit threatens both our children’s vitality and the nation’s ability to compete in a knowledge-based economy. At all income levels, investment in children – in education, housing, training, and nutrition – has significant long-term beneficial returns for both the recipients of the investment and for society as a whole. This article proposes to shift the focus of our current fiscal policies towards human capital investment in children. It advocates a self-sustaining investment program that delivers resources directly to children and that children are required to repay when they start working. The article relies on the economic literature on human capital, the educational literature on the impact of money on childhood attainments, and the political theory literature on civic responsibility to help justify a self-sustaining investment program implementing through the tax code. This article seeks to promote new ways of evaluating our current programs and policies and to facilitate further discussion about a child-centered investment strategy.
Sunday, May 2, 2004
In a story that reveals a growing fault line in the Republican Party, the names of Republican legislators in Virginia who voted to increase taxes are etched on a stone boulder in the backyard of anti-tax activist Peter Ferrara. Here’s the lead from the Daily Press:
Peter Ferrara, the anti-tax warrior, knows which Republicans in the General Assembly voted for higher taxes. Their names are etched in stone.
Really. Check out his back yard.
The names of certain Senate and House Republicans are chiseled into a boulder where Ferrara can see them, rain or shine, and contemplate their eventual political demise. There are 31 by his count.
People who think they can talk their way out of this,” he said, “are going to be in for a surprise.”
Welcome to the next debate for the Republican Party of Virginia. It rose to power on the promise of small government and limited spending, but the state budget impasse has drawn new battle lines over taxes. Even Virginia’s two Republican U.S. senators are on opposite sides.
Thanks to reader Ben Cunningham for the tip. For a funny editorial cartoon on the same subject, check out the TaxGuru.
Sunday, May 2, 2004
This week’s list of the Top 5 Tax Paper Downloads on SSRN is basically unchanged from last week, with #3 and #4 switching positions:
1. Corporations, Society and the State: A Defense of the Corporate Tax, by Reuven Avi-Yonah (Michigan)
2. The Dividend Divide in Anglo-American Corporate Taxation, by Steven Bank (UCLA)
3. The Progressive Consumption Tax Revisited, by Steven Bank (UCLA)
4. Balance in the Taxation of Derivative Securities: An Agenda for Reform, by David Schizer (Columbia)
5. The Tax Efficiency of Stock-Based Compensation, by Michael Knoll (Pennsylvania)
For the complete Top 10 Tax Paper Downloads over the past two months, see here.
Sunday, May 2, 2004
John Fox has published 10 Questions The Candidates Don’t Want You To Ask.
Here is an exceprt from the preface:
There are two days this year when millions of adults like you play pivotal roles as Americans. The first is April 15, when you pay your taxes. The second is November 2, when you vote for the people you want to spend them.
If you’re like most of us, you’ll pick your candidates mainly by how much you like and trust them—their smiles, their voices, your sense of their integrity and capacity to lead. But policy issues also affect your choice. You’ll want to know where they stand on Iraq, terrorism, unemployment, Social Security, federal deficits. And on lots of social issues—involving housing, health care, education, marriage, and much more.
All of which means that you’d better remember April 15 when November 2 comes around. Why? Because our tax laws cut across all of American life. Except for the U.S. Constitution, they represent the most comprehensive expression of our government’s official values. What these laws tax or exempt, reward or ignore, crucially shape who we are as a nation and what we will become.
The people we elect every other November write these laws, and rewrite them, in every session of Congress. If we can get candidates to address welldesigned questions on the subject, we can learn more than their position on taxes. Their answers will expose their broader values.
Few candidates will welcome this challenge. Incumbents are not going to want to explain their failure to tackle the shortcomings of our tax laws or, perhaps worse, admit that they had no idea that particular laws were so inequitable. And challengers are going to be wary of offending some of their supporters by proposing sensible policies that help people who really need it and require others to pay more.
No, the candidates don’t want to hear these questions. That’s all the more reason to ask them.
Here are the first 2 questions:
Question 1: The McMansion Tax Break. Taxpayers can deduct interest on loans of up to $1 million used to buy one or two personal residences. Ask the Candidate: Would you limit the home mortgage interest deduction so that it subsidizes the purchase of one basic home, and would you redirect some of the tax savings to help qualified renters purchase a basic home?
Question 2: The Inequitable Home Equity Break. Congress offers certain homeowners a preferential deduction for consumer loans. Ask the Candidate: Would you eliminate the deduction for interest on up to $100,000 of consumer loans (called “home equity loans”) that benefits only homeowners who itemize?
Saturday, May 1, 2004
Gary Cornia (BYU), David Sjoquist (Georgia State) & Lawrence Walters (George Mason) have posted Sales and Use Tax Simplification and Voluntary Compliance on SSRN. Here is the abstract:
Because of difficulties collecting sales taxes on Internet sales, several states have engaged in an effort (the Streamlined Sales Tax Project, SSTP) to simplify their sales tax systems. One hope among SSTP proponents is that a simplified system will result in Internet vendors voluntarily collecting the sales tax.
We address two issues:
– Will states adopt the extensive reforms proposed by the SSTP?
– Will vendors voluntarily collect the sales tax?
We argue that states are unlikely to adopt extensive reforms, but if they did, many vendors would voluntarily collect sales taxes.
Saturday, May 1, 2004
Stephen Shay (Ropes & Gray) has posted Exploring Alternatives to Subpart F on SSRN. Here is the abstract:
This paper considers possible changes to the subpart F rules that would be intended to achieve a balance between deferral for a controlled foreign corporation’s active business operations and current taxation in circumstances where a controlled foreign corporation earns passive income or uses tax havens or base company techniques to erode the tax base of countries where economic activity actually occurs. While the discussion is in terms of the U.S. rules, the basic principles could be applied by the increasing number of countries that have adopted foreign controlled company rules that trigger current taxation of the company’s income in the hands of a resident.
The paper begins with a description of the existing U.S. rules for taxation of foreign income relevant to the following discussion, with particular reference to the subpart F anti-deferral rules. In order to highlight the current subpart F rules’ technical deficiencies, the paper then reviews some of the “plain-vanilla” planning techniques used to avoid subpart F. Without endorsing any proposal, the paper next considers alternatives that would in differing respects address these deficiencies. While the author would prefer to see a more systemic approach that would broadly eliminate the deferral privilege, the conclusion of the paper is that there are potential reform proposals that likely would be an improvement over current law. These proposals at least should be considered as part of the ongoing debate over the future of subpart F.
Friday, April 30, 2004
A follow-up on yesterday’s post about the New York Times article on the new “clicker” technology that I use in my tax classes: Jim Maule (Villanova) has posted on his blog a thoughtful explanation of why he supports the technology. Here’s the opening paragraph:
It hasn’t yet been 72 hours since the NY Times article about Prof. Paul Caron’s use of clickers in his courses at the University of Cincinnati Law School and already the reactions are beginning to reverberate throughout the law academy.
Jim addresses the concern expressed by Ann Althouse (Wisconsin) that the clickers interfere with student classroom autonomy. The former law student who runs the popular JD2B site notes that the technology “engages students during lectures and cuts down on solitaire and IM’ing (yikes!).” Exactly!
Update, Part II: More Althouse (anti-clicker by a self-described “cranky old retro lawprof”); more Maule (pro-clicker).
TaxProf Blog delivers timely, insightful coverage of tax law and legal education to inform, connect, and inspire scholars, practitioners, and students.
