2021 NYU Tax Policy Colloquium Week 1: Brooks and Gamage on drafting a constitutional wealth tax, Part 1

 This past Tuesday (on September 14), Jake Brooks and David Gamage jointly appeared at the colloquium (Gamage by Zoom) for a discussion of their paper, The Indirect Tax Canon, Apportionment, and Drafting a Constitutional Wealth Tax. 

This was the first of our seven public colloquium sessions for the year (the other 6 meetings are just with the enrolled students, and generally serve to gear us all up for the public session). It was the first time we’ve had a “hybrid, ” live plus Zoom colloquium, although last year we were all-Zoom. I thought the hybrid aspect went decently well, although Zoom participants could only see the stage (with Jake Brooks and myself), rather than all of the speakers. I gather that the acoustics were also mainly okay, although the fact that all live participants were wearing masks surely did not help in this regard. [Footnote: I hate masks, necessary though I agree that they are.]

I look forward to our having more remote attendees in the future, including perhaps from even faraway time zones. (We had a few Zoom attendees from well outside NYC on Tuesday, although technically I think they were all in EST.)

We conducted the discussion on Tuesday in two distinct segments. The first was the paper’s discussion of using apportionment to render a wealth tax constitutional after all if the Supreme Court were to hold that it was a “direct tax” and thus unconstitutional otherwise. The second topic was “everything else.”

Apportionment logically comes second as a discussion topic, and indeed that is how the paper is organized. But the novelty of the paper’s approach to this issue, which I think the authors would agree is its most important new contribution, supports putting it first for our purposes.

1. APPORTIONMENT

Two points have generally attracted near-consensus in the literature discussing the possible enactment of a federal wealth tax. The first is that, if  the infamous 1895 Supreme Court case, Pollock v. Farmers’ Loan & Trust Co., is binding precedent, then a federal wealth tax is a “direct tax” under the Constitution, making it unconstitutional unless duly apportioned between the states. The second is that so apportioning a federal wealth tax is impossible and unacceptable, with the consequence that applying Pollock would be a death knell for such an enactment.

On the first of these two standard claims, the paper adds context and background regarding Pollock‘s status (well-known to the cognoscenti) as a truly rogue case by a blatantly political Supreme Court that did not care about precedent, history, or the basics of coherent legal reasoning. It also argues that Pollock has been subsequently overruled in large part, not just by subsequent cases but also (beyond just the boundaries of the income tax, they argue) by the Sixteenth Amendment. But I will return to this in Part 2 of this discussion.

More notably, the paper also rejects the second of the above claims. It argues not only that apportionment between the states has frequently been done before – albeit, not for some time – but also that it can politically, practically, and reasonably be done today, with regard to the wealth tax or even certain expansions to the income tax that the current right-wing Supreme Court might strike down.

Apportionment is a bit of an intricate thing, so a simple hypothetical may help to present clearly what we are talking about here.

Apportionment hypothetical: Suppose there are just 2 states, New York (NY) and Alabama (AL). Each has a population of 10 people. Congress enacts a 10% wealth tax on wealth above a statutory threshold, yielding the following toy example:

                        Population     People Subject to WealthTax            $$ Subject to Wealth Tax

NY                       10                                3                                                 $500

AL                        10                                2                                                 $300

Unapportioned Wealth Tax: Absent apportionment, this 10% tax on wealth above threshold would raise $50 from New York and $30 from Alabama, for a total of $80.

Apportioned Wealth Tax: If the Supreme Court held that this was a direct tax requiring apportionment, then,the two states’ equal populations would mean that equal $$ had to come from each. Thus,  assuming it was still raising $80 of total revenue, both NY and AL taxpayers would need to supply $40.

Solution: The standard response would be to say: In that case, the wealth tax rate must be 8% in NY and 13.3% in AL, thus raising $40 from each. But this is assumed to be crazy. A higher tax rate in the state that, at least only counting $$ above  the threshold, is poorer??

Drawing on 19th century precedents, the paper suggests instead doing something like the following:

(a) 8% wealth tax in both jurisdictions, raising $40 in NY and $24 in AL.

(b) To make up AL’s shortfall, raise an additional $16 there through, say, a federal tax on AL’s real property base, using AL valuations, and perhaps exempting, say, the bottom 5 (or whatever) of AL’s taxpayers, based on their personal income or wealth,

(c) What’s unfair here, they argue, is not AL’s taxpayers paying higher rates on something as such – given federalism, taxpayers in different states pay different net state and local tax rates all the time – but rather, AL’s not getting the money from this extra $16 federal tax. This does indeed relate to the apparent reasons for the apportionment rule, which related to the feds using tax bases that applied unevenly in practice, such that some states ended up contributing excessively (in relative terms) to the common federal purse. So they say, all we need to do is give Alabama $16 (or so back), in a manner that is sufficiently independent of and unlinked to the $16 levy here that the Supreme Court will not in good faith be able to group this return of the $$ with the extra $16 levy and disregard the latter as a sham.

The solution they propose, therefore, is that Congress also enact a fiscal equalization program between states like that which countries, with federal systems, that are more civilized than the US already have. AL, as the poorer state, would be losing in a certain sense relative to NY under the apportioned wealth tax, but winning under fiscal equalization, so overall it would be doing fine. And, we should take the fiscal equalization into account in deciding whether things are fair and just, but the Supreme Court must ignore it because they have no authority in this sort of context to look at EVERYTHING in the federal fiscal system – just at the particular tax instrument that is being tested under an apportionment requirement.

This might be done by enacting the straight-up wealth tax, but with back-up provisions implementing this thing instead if the Supreme Court, as expected given its right-wing political slant, upholds the applicability of Pollock to a modern federal wealth tax. Or maybe a tricky way of doing it is to enact the back-up proposal first – and then, a week later, enact the federal wealth tax, saying that it repeals the apportioned version, but conditional on its not being itself held a direct tax. This might have formal or technical advantages under Byrd Rule angles that I don’t personally know much about.

We had an interesting discussion about all this on Tuesday, which even continued to a degree by emails between some of the participants afterwards. But, for present purposes, I will settle for offering the following discrete comments. (I am hoping that this blogpost will help the paper’s analysis enter the broader dialogue for consideration by lots of people outside this particular space.) Anyway, here with the comments:

1) What with the lack of an explicit link (or one at the margin) to fiscal equalization, this might still be a hard sell politically. Also, if we did fiscal equalization just right but then added this, we would in effect now be giving AL, as the poorer state, too little. But then again, the US has no explicit fiscal equalization program today (although it does of course effectively transfer $$ between states).

2) While the best shouldn’t be the enemy of the good, it is possible that this proposal, as it ended up operating, would be less to the taste of wealth tax proponents than the program that they preferred. A key feature is getting the make-up revenues from people below the top threshold where the wealth tax would otherwise have exclusively applied.

3) In this example, AL is by hypothesis both the poorer state and the one that gets socked with the extra $16 under apportionment. But a state that, in a pure wealth tax, would pay “too little” and thus get hit up for extra would not necessarily win under fiscal equalization that went from richer states to poor states. Suppose Minnesota (MN) is richer than Louisiana (LA) per capital because it has more middle class folks and fewer oppressed poor. But suppose as well that LA has more super-rich people (its oppressing plutocrats), or more precisely more $$ per capital held by rich people that is subject to the wealth tax. In short, while LA is richer at the top, MN is more affluent overall. Then MN would have to pay the supplemental tax under apportionment, AND fiscal equalization transfers might be expected to flow from MN to LA.

4) The paper also discusses doing this for income tax enactments that a right-wing Supreme Court might strike down under the authority (such as it is) of Eisner v. Macomber, with its ludicrously constitutionalized realization requirement. Suppose Senator Wyden’s proposal to tax people above a certain threshold on a mark-to-market basis were struck down by the current Supreme Court – as they would no doubt be slavering to do, and I note that (ever since Barrett joined the Court as right-winger #6) their reluctance to do whatever they want has certainly declined. Applying apportionment here might be trickier, as the rest of the income tax would still presumably be valid. But that is not to say that it would be impossible, e..g, based on “stacking” the income from this provision on top of everything else in the tax code in order to determine its marginal revenue yield that then needed to be equalized relative to population.

5) More on this in Part 2 (which will be a separate blog post), but a Supreme Court that was acting in bad faith, as I for one certainly believe that the current majority does, would surely find a way – or perhaps, many ways – to strike it down, simply because they don’t like it. The paths they might use, if so minded, might include at least the following:

a) Despite the clear precedents in favor of amalgamating the separate pieces of a given enactment – as here, where NY pays “too much” under the wealth tax proper and AL pays “too much” under the property tax add-on – they’d look at each part separately and ruled that both, albeit in opposite directions, violated apportionment. Why would they do this? A better question might be: Why wouldn’t they do this?

b) They could call the extra piece a sham given fiscal equalization, even if the offset was imprecise and the two were not actually linked at the margin,

c) They could say that the interstate competitive pressure on AL to rebate fiscal equalization $$ about equal to the extra property tax placed them under an improper constraint, analogous to the reasons for the Court’s holding that states must be allowed to reject free Medicaid $$ under the ACA.

d) No matter how the residual tax to even up the pure wealth tax part worked, they could say: Sorry, but you didn’t do it just right, so the whole thing is invalid! Again, why wouldn’t they do this?

In my next blogpost, Part 2 on the Brooks-Gamage paper, I will address selected aspects of “everything else” in the paper apart from apportionment.

Let me just say, however, that people who are interested in the prospects for a federal wealth tax – if not this year, than under a future Congress that has not loosed the shackles of a runaway right-wing Supreme Court – should definitely read the article for themselves.

New short video

Here you can watch my cat Gary steal the show as I discuss a recent tax paper of mine with Leandra Lederman and Allison Christians on their new short video series, Break Into Tax.

New book forthcoming next year

I’ve signed a contract with Anthem Press for the publication of my most recent book, currently titled Bonfires of the American Dream in American Rhetoric, Literature, and Film. Anthem also published Literature and Inequality. Currently scheduled to come out in May 2022.

The book includes 3 main case studies. The first discusses Russell Conwell’s Acres of Diamonds speech and the John Galt speech near the end of Ayn Rand’s Atlas Shrugged. The second discusses The Great Gatsby, with reference not just to the text itself but also its changing reception across the decades. The third discusses the films It’s a Wonderful Life and The Wolf of Wall Street.

The new book is only half as long as Literature and Inequality, and more tightly focused. L & I not only had a much broader canvas but also was engaged in making the methodological case for such studies. Here much of the focus is on what features of our national culture across time could have brought us to where we are now.

Recent short explainers

 I have recently posted a couple of sort “explainer” pieces on websites that cover ongoing issues.

First, on the Just Security website run by my NYU colleague Ryan Goodman, I posted this piece on the Weisselberg indictment, aiming to correct misperceptions in the press that this was merely a technical or politically motivated “fringe benefits” case, rather than an assertion of rampant fraud that no responsible prosecutor could reasonably decline to file. This one got much broader coverage than reflections I post on this blog, so it probably isn’t news to most of my readers here.

Second, last night Econofact.org posted a short solicited piece of mine entitled “Taxing Multinational Corporations.” Here the question of interest is as follows:

“In debates regarding higher versus lower corporate income taxes, an important issue is the impact that changes in either direction would have on the level of domestic investment, and consequently on economic growth, the strength of the labor market, and government revenues…. What do economic reasoning and recent experience teach us about the effects of corporate tax rates on investment and economic growth in a global environment?”

This one dovetails nicely with an article in progress, entitled “The Economics, Law, and Politics of Increased Taxation of Multinationals” that I presented this past Friday at the Indiana-Leeds Summer Zoom Tax Workshop Series. I will probably post a draft of this on SSRN soon, but thought that I would advance it closer to a final draft first. That is the piece I will most likely be workshopping this fall at places such as the National Tax Association (although it might conceivably be superseded in some settings by other stuff that I’m working on now). It’s fairly crisp, short, and I hope readable, and I might aim to publish it in Tax Notes, although it’s not impossible that I might aim instead for a tax law review, especially one with decently quick turnaround.

Remote attendance at the 2021 NYU Tax Policy Colloquium

This coming fall, I will be doing the NYU Tax Policy Colloquium solo, and hence cutting it back from a 4-credit to a 2-credit course. This means that, rather than meeting twice each week – first with the students, and then in a public session with the author(s), I’ll meet with the students one week to discuss the upcoming paper, and then in public the next week. Hence, the public sessions will only be biweekly, or if you prefer fortnightly. However, since we’re having a 13-week semester, I’ve decided to have the extra session be a public one.

The public sessions will be hybrid, meaning that they are both live and on Zoom. I already knew that the authors can attend remotely via Zoom if they wish, although I am hoping to see them live. But now it’s been confirmed that, for the public sessions, I can offer remote Zoom attendance to any and all who are interested, apart from the enrolled students, who – like me – are required to be there in person. Hence, I am hoping that, without too much cannibalizing of our live audience, we will get remote attendees from different places, time zones, and indeed continents.

So mark your virtual calendar if you are potentially interested. The live sessions, all meeting from 2:15 to 4:15 pm EST, will feature the following speakers and their papers:

1) Tuesday, September 14 – Jake Brooks and David Gamage

2) Tuesday, September 28 – Daniel Hemel

3) Tuesday, October 12 – Jennifer Blouin

4) Tuesday, October 26 – Manoj Viswanathan

5) Tuesday, November 9 – Ruth Mason and Michael Knoll

6) Tuesday, November 23 – Mindy Herzfeld

7) Tuesday, November 30 – Alan Auerbach.

There might also be small group dinners after the sessions – only for live attendees! (although I suppose one could attend via Zoom and then join the live dinner). But obviously that depends on pandemic developments, including both NYU’s rules as they evolve or not over the course of  the year, and my own (along with potential attendees’) degrees of comfort with doing this by the fall. Also, I would think we won’t do a dinner in any week when the author is Zooming in.

New Jotwell post on Isabel Wilkerson’s CASTE

 At Jotwell (aka “The Journal of Things We Like Lots”), I have posted here a short review of Isabel Wilkerson’s recent book Caste.  It also mentions Dorothy Brown’s recent book, The Whiteness of Wealth, although I don’t review that book as such, as another Jotwell contributor had already stepped up to do that.

My piece also discusses broader issues of race and class in tax scholarship, albeit briefly as these are very short pieces.

G7 Finance Ministers Communique re. international tax policy

The G7 Finance Ministers’ Communique from this past weekend included the following discussion of international tax policy:

“We strongly support the efforts underway through the G20/OECD Inclusive Framework to address the tax challenges arising from globalisation and the digitalisation of the economy and to adopt a global minimum tax. We commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises. We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies. We also commit to a global minimum tax of at least 15% on a country by country basis. We agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.”

Here are a few comments on this paragraph:

1) The proposed allocation to market countries raises a few questions. For one, what is the relevant “profit”? By definition, this term requires comparing specified gross revenues to specified expenses and other deductible outlays. Are these to be determined by using standard income tax source rules? I would think not, as this would make the proposed allocation wildly ineffective. For example, the UK may consider itself the market country with respect to the revenues that Facebook earns from the use of its digital platform by UK residents. This probably has more in common with how gross revenues are defined in its digital services tax (DST) than with anything in its income tax. 

2) Note also that this rule will ostensibly apply to all of the “largest and most profitable multinational enterprises,” without apparent limitation to those that are subject to DSTs. And it is also supposed to apply in countries that don’t have DSTs. Moreover, even those that do have DSTs may define relevant revenues (as well as companies subject to the DST) quite distinctively.

3) Next and relatedly, what about the outlay/deduction side? This is needed not only to define profit, but also to determine the profit that exceeds a 10% margin.

4) To identify the “largest and most profitable multinational enterprises,” one needs a measure of global income. How is this to be computed?

5) What if a country wants to retain its DST? The G7 statement says only that it will “provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies.”

6) Obviously, the 15% global minimum tax has lots of design work ahead (to put it mildly). It is presumably to be applied by the multinationals’ residence countries – requiring a uniform definition of corporate residence? – and presumably with (100%?) foreign tax credits for source-based taxes. While the foreign tax credits would make it a residual tax, applying only insofar as the source-based taxes don’t get there, this might leave plenty of scope for it, if source countries restrict themselves to 20% of profits above the 10% level (especially given the likelihood that there will be plenty of flex in how those profits are being defined).

7) How are countries are likely to respond in practice? While there is certainly room for pessimism, I don’t think the standard view of how countries pursue their self-interest (like profit-seeking individuals in a simple neoclassical model) necessarily applies very strongly. Countries are collective entities that make political choices based on multiple actors who themselves may have narrow, not national, goals in mind. These may also be symbolic goals reflecting internal political dynamics. Consider the “self-interest” of the United States. Even in academic debate among knowledgeable people who are debating things in good faith, there is absolutely no consensus as to what is in the national self-interest in the international tax policy realm. Indeed, even only counting people whom I consider good personal friends, there is extreme dissensus.

8) When we start thinking in terms of a Biden Administration versus a Trump Administration, things get even less determinate, insofar as predicting the settings of the national policymaking compass is concerned. Even if we accept both administrations as trying to act in what they deem to be the national interest (which I don’t think accurately describes the corrupt and treasonous Trump White House), they evidently define it radically differently. Suppose that all of the G7 countries had either (a) center-left to progressive regimes, or alternatively (b) right-wing “nationalist,” plutocratic, pseudo-populist regimes. These two scenarios would lead to very different sets of policies being followed.

Upcoming summer Zoom talks

 Can you be in two places at once? With Zoom, the answer is yes. Thus, towards the end of this week I will be attending and participating in two conferences during the same stretch of days, although if not for the pandemic they would have been held live in distinct locations. I will also be an active participant in one session of each.

This Friday (May 28), at the Fifth Annual Public Finance Consortium at Indiana University (normally held in Bloomington, IN), from 10 to 10:40 am EST, I will be the discussant when David Gamage and Jake Brooks present their work-in-progress, “Tax Now or Tax Never: Political Optionality and the Case for Current-Assessment Reform.”

Then this Sunday (May 30) at the Law and Society Association’s 2021 Annual Meeting, which in the ordinary course would have been held in Chicago, from 10 to 11:45 am EST, I will participate in an “Author Meets Readers” session regarding my book Literature and Inequality. Tracey Roberts will be the session’s moderator, and I very much look forward to the comments that will be offered by Diane Klein, Shu-Yi Oei, and Luisa Scarcella (plus members of the virtual audience).

Somewhat further down the road, on July 9, from 11:30 am to 1 pm EST, I will present my work-in-progress, “The Economics, Law, and National Politics of Seeking Increased Taxation of Multinationals” at the Indiana/Leeds Summer Tax Workshop Series, hosted by Leandra Lederman and Leopoldo Parada. I will also be presenting this paper later in the year, e.g., most likely at both the National Tax Association’s Annual Meeting and in Vienna, Austria towards the end of the year.

I also anticipate attending a conference in USC Law School on November 5, honoring Ed Kleinbard, at which Joe Bankman and I are planning to present (after we have written it) a paper discussing Ed’s work and contributions to the field.

Meanwhile I will be hosting the Tax Policy Colloquium at NYU this fall, although with what mix between live and Zoom is not yet clear. I am hoping for live public (as well as class) sessions, but it would be better still if the former accommodated remote attendees by Zoom. We will see.

What is the Bone Marrow Transplant?

Bone Marrow Transplant is the bone marrow transfer from the healthy donor to the recipient whose bone marrow is affected by the ailment. A bone marrow transplant can be used to treat sickle cell anemia, several malignant diseases of forming of blood tissues, leukemia, lymphoma, and multiple myeloma or some solid cancers like immune deficiency disease, neuroblastoma, or metabolic disease.

In 1956, USA physician E. Donnall Thomas performed the best syngeneic transplant of bone marrow between the two persons. In 1990, Thomas was co-recipient with Joseph of the Nobel prize for medicine or physiology for his excellent work on transplantation of bone marrow.

What is called Allogeneic and Autologous Transplantation?

Nowadays, the two most commonly used transplantation of bone marrow is called Allogeneic and Autologous transplantation. Both types of bone marrow transplants are examined forms of therapy of stem cells. An autologous bone marrow transplant is utilized in cancer patients ready to undergo high doses of radiation and chemotherapy. After the patient has undergone therapy to diminish cancer cells, the stem cells are injected into the stream of blood to speed the recovery of transplantation of bone marrow.

If a person marrow is an ailment from leukemia, an individual with a matching type of tissue is explored to donate stem cells.  It is called allogeneic transplantation.

The Main Dangers of Transplantations of Bone Marrow 

There are several risks associated with bone marrow transplantation, concluding expended susceptibility to anemia, infection, respiratory distress, and excess fluid, leading to liver and pneumonia dysfunction. When cells of graft attack host cells, the result is a critical condition called graft versus host disease, which can be chronic and acute. You may minimize the risk of graft versus host disease through the matching of careful tissues.

Transplantation of bone marrow was initially not recommended for 50 age-old patients because of the morbidity and mortality resulting. The incidence of graft versus host disease expands in 30 age patients.

Some Collection of Contributor Stem Cells

From the bone marrow donor, hematopoietic stem cells are gathered using apheresis. During this experiment, blood is drawn from the arm and passes through a machine that collects the cell’s stem. The remaining portion of the blood is returned to the contributor through the catheter inserted in the arm. Before undergrowing apheresis, the contributor gets drug injections like filgrastim, which mobilize the stem cells into blood circulation peripherally.

Moreover, in this experiment, the USA’s donor is placed under anesthesia, or aspiration of leukemia bone marrow transplant is performed by taking bone marrow from the breastbone or hip.

Conclusion

It can be concluded that, In the USA, there are the most prominent hospitals which are leading to be the best hospitals which transplant the bone marrow in the best way and provides the best services to save the life of the patient. Hence bone marrow transplantation in the USA in the treatment of medical that replaces the bone marrow with healthier cells and transplantation of bone marrow is also called transplantation of stem cell.

Gift Of Life Marrow Registry Also Offers Following Services :

Stem Cell Donor Registry

Bone Marrow Registry Search

Blood Cancer Donor

Contact US:

Gift of Life Marrow Registry
Address:  800 Yamato Rd suite 101  Boca Raton, FL
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Things to Know About Business Coaching In Oklahoma

Proper coaching is necessary for a person who is already in a business and wants to make it successful. When you will see that your business is growing then you will consider it as a benefit of the business coaching. A business coach in Oklahoma can help you in improving the profitability of your business by growing it gradually.

Benefits of learning the business from a business coach

A business coach in Oklahoma will teach you the ways to increase the profitability of your business, interact with your employees, handle your business more confidently and learn skills to resolve issues. In this way, a business coach can help in growing a business regardless of its size. He will also teach you the strategies and action plans to improve your business. He can also help in increasing the productivity of your business along with expanding it successfully. He will also help you in learning the importance of management of time which can be beneficial for both you and your business. So, if you want to take all the benefits discussed in this write-up then you must enrol with a reputed business coach in this city.

Tips to find the right business coach

After knowing the importance of a business coach in Oklahoma it becomes necessary to find the best coach in this city who can make you a real businessman after developing your skills. While selecting a business coach in this city you must satisfy yourself as you can find a number of them in Oklahoma City.

While searching for the best business coach you must ask your family and friends who have recently taken such coaching to help you. It will help you in getting complete information about the coach. While finding a good coach you must keep in mind that he will guide you on how to execute your business plans and how to modify them properly. He will try his best to improve your business in many ways. You can improve the performance of your business by making a few changes to it according to the guidance and suggestions of your coach.

Online coaching through a virtual platform

Today you can also join an online business coach in Oklahoma if you cannot spare time from your busy schedule to physically attend the classes. While starting the coaching session the coach will tell you all the important things to avoid any confusion later on.

When you opt for online business coaching then you must find a coach with experience in online coaching for 2-3 years at least. For continuous online coaching, you must be well-versed with the techniques, tools, and software required.

 

You should also interact with the previous students of the online business coach in Oklahoma to know your coach a bit more closely.

In this way, you can easily improve your business by finding a good business coach in Oklahoma City. Before joining with an online or offline coach you must satisfy yourself fully with him.

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