Wealth, Philanthropy and Politics — Considering 'Wealth Tax' Proposals

By Professor Ellen P. Aprill

This op-ed originally appeared in the Tuesday, October 15, 2019 edition of The Hill.

The impact of private wealth on public policy through tax-exempt organizations has garnered much attention of late, with recent scandals involving the Sacklers, Jeffrey Epstein, and a number of prestigious universities. Recent critiques, however, fail to emphasize sufficiently the role of wealth in campaign finance. Citizens United and the rise, in its wake, of Super PACS able to solicit and spend unlimited amounts make such consideration crucial. Today more than ever, political power of the wealthy means that government spending, like charitable spending, is likely to reflect the interests of the wealthy.

Current proposals for a wealth tax also need to confront this issue. On Sept. 5, as part of the Brookings Papers on Economic Activity, Emmanuel Saez and Gabriel Zucman presented an important new paper on progressive wealth taxation. The Saez-Zucman paper describes a wealth tax as a means of reducing wealth concentration needed because of such concentration’s effect on democratic institutions and policy-making. (The paper notes that political contributions are extremely concentrated, with 1.01 percent of the population accounting for over a quarter of all such contributions.) According to those present, discussion at the session included whether a wealth tax would reduce billionaires’ political influence.

To prevent abuses of a wealth tax, the Saez-Zucman paper proposes that donor advised funds — accounts at public charities for which donors can make recommendations as to the distribution or investment of amounts in the accounts — and funds in private foundations controlled by funders “should be subject to the wealth tax until the time such funds have been spent or moved fully out of the control of the donor.” (The paper leaves to another day the question about how to treat private foundations no longer controlled by the original funder and how to avoid gaming of “control.”)

Read the complete op-ed>>

Amending the Johnson Amendment in the Age of Cheap Speech

This is an excerpt from Professor Ellen Aprill's article published in the Illinois Law Review, in which Professor Aprill concludes: 

Charities can have enormous influence on political campaigns with little expense in today’s digital world. Contributions to charities are deductible; contributions to PACs and non-charitable section 501(c) organizations are not. Many who wish to intervene in political campaigns will shift their contribution from PACs and social welfare organizations to charities. I suspect that the Joint Committee of Taxation underestimates the revenue loss from even a five-year de minimis exception.

Under our current campaign finance regime, only dollars that have been taxed can be used for political intervention. A de minimis exception for campaign intervention for charities would undermine this basic principle. Moreover, over time, permitting charities to engage in partisan politics would reduce the respect long afforded to these entities and thus harm the sector. A de minimis exception to the campaign intervention prohibition would damage both the laws regulating charities and the laws regulating campaign finance. Our country would be far poorer for such changes.

Read the full article here.

2017 Tax Reform: We Hate Employees

By Professor Theodore Seto

This post originally appeared on Understanding Tax

Current tax law is moderately unfriendly to employees, more friendly to folks who can structure their businesses as sole proprietorship or partnerships. Sole proprietor expenses are deductible above-the-line, reduce adjusted gross income, and are deductible for AMT purposes. Employee expenses are only deductible below-the-line, are subject to the 2-percent floor and the overall limitation on itemized deductions, and are not deductible at all for AMT purposes.

Under the House Republican bill, things are about to get much worse.

Religious Organizations, Refuge for Undocumented Immigrants, and Tax Exemption

By Professor Ellen P. Aprill

This op-ed originally appeared in the Los Angeles Daily Journal.

For many houses of worship, the Biblical injunction, “You should not wrong a stranger or oppress him, for you were strangers in the land of Egypt” (Exodus 22:21, JPS), constitutes an important religious doctrine. The Trump administration has announced plans for aggressive enforcement of immigration laws, plans that are expected to expand massively the number of people detained and deported. This new policy has forced many houses of worship and other religious organizations to consider whether their beliefs call upon them to grant refuge or so-called sanctuary to undocumented immigrants.

Under long-standing immigration laws, harboring undocumented immigrants carries the potential for both fines and imprisonment. An organization can lose its exempt status if its purpose is illegal. Moreover, illegal activity is deemed not to further an exempt purpose, and an organization can also lose its exempt status if a substantial part of its activities are not in furtherance of its exempt purpose. Houses of worship and religious organizations face some risk, at least in theory, of losing exemption for such activity. As a practical matter, loss of exemption is unlikely, but the organization needs to document the religious basis for its actions and the criteria it will use.

One piece of official IRS guidance offers important guidance. It involved an organization formed to educate the public on the principles of pacifism and nonviolent action, including civil disobedience. This 1975 “Revenue Ruling” explains that no Section 501(c)(3) organization can have an illegal purpose. The ruling’s analysis, however, emphasized the group’s primary activities of undertaking protest demonstrations and other nonviolent actions, including deliberately blocking traffic, disrupting the work of government, and preventing the movement of supplies, all breaches of the peace in violation of local ordinances. The ruling concluded that the organization’s activities “demonstrate an illegal purpose which is inconsistent with charitable ends.” The Tax Court in Church of Scientology of California v. Commissioner similarly concluded that pervasive illegal activities, including a number of felony convictions, constituted an illegal purpose and that the organization’s claimed status as a church did not protect it from application of the illegality doctrine.

Trump's Failure to Disclose Taxes Should be a Disqualifier

By Professor Katherine Pratt

Just days before the presidential election, concerns about Donald Trump’s payment of his tax obligations persist. Recent press coverage has focused on an issue that (at least so far, based on very limited information) probably does not disqualify him to be our president, and has not focused enough on two more fundamental tax issues that disqualify him to be our president.

In the past few days, press coverage has emphasized a technical business tax question: what specific tax strategies did Trump use to generate and preserve $916 million of net operating losses (NOLs), despite massive debt discharge, and were those strategies legally questionable? A front page November 1 New York Times article on this topic asserts that the “stock for debt swap” part of Trump’s overall tax strategy was a new tax “dodge” dreamed up by tax lawyers to avoid debt discharge income (COD) on the cancellation of debt. This characterization of such swaps as a new tax scam is inaccurate. My academic articles on corporate COD explain the long history and theory of the exception and its gradual repeal. Suffice it to say that “stock for debt swaps” in bankruptcy cases were relatively common in the 1980s and early 1990s. Unless there is more to be revealed, Trump’s use of the stock for debt exception to COD does not disqualify him to be president.

But Trump’s conduct regarding two other tax issues does disqualify him to be president.

First, Trump’s continuing failure to disclose his tax returns is a disqualifier. For decades, all other presidential candidates have disclosed their tax returns. As Republican Fred Goldberg (IRS Commissioner under President George H.W. Bush) argues, a candidate who refuses to disclose tax returns has not earned our trust and is not qualified to be our president.

Although Trump claims that he cannot disclose his tax returns because he is being audited, many of Trumps’ tax returns are not under audit. The statute of limitations (SOL) for tax returns is generally three years (or six years if large amounts of income are omitted) from the filing date. This means that the IRS generally has three years to challenge the return and claim that the taxpayer owes additional tax for a specific tax year. In addition, a special rule extends the SOL for years to which NOLs are carried back. Once an audit begins, a taxpayer often consents to extend the SOL, to give the IRS and the taxpayer time to settle the case without a lawsuit. If a taxpayer does not extend the SOL or agree to pay extra tax, the IRS sends the taxpayer a letter that initiates a lawsuit in the US Tax Court. The upshot of this is that Trump’s tax returns for a number of years currently may be in the administrative audit process with the IRS -- but they can’t ALL be in audit. In addition, it is doubtful that the IRS has audited Trump’s most recent income tax return. If, as is likely, his 2015 tax return is not under audit, Trump should disclose it. Also, he should disclose his returns for any earlier years that currently are not under audit.

Second, Fred Goldberg and fellow Republican Michael Graetz (Deputy Assistant Secretary, Tax Policy, under President George H.W. Bush) conclude that Trump likely failed to pay Medicare taxes on salary income he understated. In addition, unless Trump reported all of the salary he was paid for his services as self-employment income, he likely also failed to pay Social Security taxes. (Only disclosure of his self-employment income and other details from his tax returns could refute that conclusion.) Even minimum wage workers pay Social Security and Medicare taxes. Trump’s conduct shows that he shares the view expressed by another famous New York City business tycoon, Leona Helmsley: “only the little people pay taxes.” His avoidance of payroll taxes is an insult to law-abiding, taxpaying Americans and disqualifies him from being our president.

Scrutinizing the Candidates' Tax Policy Proposals

Professor Katherine Pratt, who teaches Tax Policy and related subjects, scrutinizes the tax policies of the Democratic and Republican presidential candidates:

Hillary Clinton’s Tax Plan
Hillary Clinton’s tax plan would increase federal revenue by over $1 trillion in the next 10 years, by increasing taxes on very high-income Americans, but not on middle-class and poor Americans. Her tax proposals, which are detailed and complex, combine a new surtax (an income tax rate increase) on the top 1 percent of earners, a new minimum 30% effective tax on taxpayers earning $1 million or more per year, limitations on the tax benefits of itemized deductions, and estate and gift tax increases. She also proposes an “exit tax” on U.S. corporations that try to avoid U.S. taxes by moving to low-tax jurisdictions overseas.

Follow-up questions for Hillary Clinton:
What do you propose to do with the additional $1+ trillion of revenue your tax plan would raise in the next decade? For example, would you prioritize federal deficit reduction, funding the infrastructure improvements or new child care programs you’ve proposed already, or funding new proposals for tax cuts for middle-class or poor Americans?

Donald Trump’s Tax Plan
Donald Trump has scaled back an earlier tax plan that would have dramatically reduced income taxes, but also would have reduced federal revenue by many trillions of dollars and risked serious, negative macroeconomic effects. His revised tax plan proposes tax rate cuts for taxpayers at all income levels, but disproportionately benefits high-income Americans, through individual income tax rate cuts, corporate tax and business tax rate cuts, repeal of the estate tax and alternative minimum tax, and the conversion of certain tax credits into tax deductions. The revised tax plan is difficult for economists to model because it quite vague and lacks details. In light of the extensive tax cuts in the revised plan, it probably would reduce federal revenue and increase deficits and interest costs over the next 10 years, which ultimately would undermine the intended pro-growth effects of the Trump tax plan unless Trump proposes enormous new spending cuts.

Follow-up questions for Donald Trump:

• How would you pay for your tax cut proposals? Both liberal and conservative economists agree that “pro-growth” tax cuts don’t pay for themselves. Your proposals are intended to promote economic growth, but that assumes that your tax cuts are not deficit-financed. If you plan to fund tax cuts through spending cuts, what spending programs would you cut? “Discretionary” federal spending already has been slashed. Would you propose spending cuts in any of the mandatory spending programs (such as Medicare and Social Security) that comprise over half of federal spending? 
• How and when will you fill in the details of your revised tax plan, so that economists can model the revenue effects of your plan?
• Are you being vague about your tax plan to deflect attention away from federal taxes and your refusal to disclose your tax returns? 
• Why do you propose converting tax credits (such as the child tax credit), which benefit all taxpayers, into deductions, which do not benefit non-itemizers at all and disproportionately benefit Americans in the highest tax brackets? Respected scholars in economics and law (Lily Batchelder, Fred Goldberg, and Peter Orszag) recommend the opposite of what you are proposing; they suggest that we convert tax deductions and exclusions into tax credits, to contain the runaway costs of unlimited tax benefits and to eliminate upside-down tax subsidies that disproportionately benefit high-income Americans. Why are you proposing the conversion of tax credits into deductions?

Reflections on the Chan Zuckerberg Initiative

By Professor Ellen P. Aprill
Originally published on TaxProf Blog
 
A little more than two weeks have passed since Priscilla Chan and Mark Zuckerberg announced that they would give away 99% of their Facebook stock, currently valued at $45 billion, during their lives. This distance, albeit short, gives time to reflect back on what the Chan Zuckerberg Initiative is and what it is not.

Early coverage, particularly headlines, suggested that Chan and Zuckerberg had made a current donation to charity. Facebook quickly worked to correct this erroneous impression. The Chan Zuckerberg Initiative involves a transfer to Delaware LLC, a limited liability company, not a public charity or private foundation. For tax purposes, the transfer to the LLC is a tax nothing; it has no effect on the couple’s taxes. As Professor Michael Graetz stated Mr. Zuckerberg “has moved money from one of his pockets to another.” Chan and Zuckerberg have given nothing away yet.

Prof. Katie Pratt discusses tax consequences of sex-reassignment surgery

Professor Katie Pratt discussed the tax consequences of sex-reassignment surgery at the Loyola of Los Angeles Law Review symposium, "LGBT Identity & the Law."

A ballot box battle brewing over the 'Amazon tax'

This op-ed was originally published by the Los Angeles Daily Journal.

By Associate Clinical Professor Jessica A. Levinson

A small but well-publicized part of California's newly enacted budget, the so-called "Amazon tax," looks to be the catalyst behind California's next big ballot initiative battle. The law requires Internet retailers with a "physical presence" in the state to collect a sales tax from customers in the state and expands the definition of physical presence to include online retailers that have related companies or affiliates in the state. After the passage of the law, Amazon promptly cut ties with approximately 10,000 affiliates in the state.

Who would like this tax? Well, in addition to those hoping to raise revenues for the state (the state estimates that it could receive in the low hundreds of millions in tax revenues each year if residents paid taxes on online sales), anyone losing business to online retailers. Exhibit A: Wal-Mart Inc.

So what is an online retail giant to do? Since this is California, a resource-depleting two-front attack is the likely course.

First, online retailers have filed a referendum petition to repeal the tax. Yes, that's right, there is another ballot measure coming as soon as June 2012, perhaps. This petition has already faced legal problems.

The Amazon tax was passed as a trailer bill to the budget and contains an appropriation of $1,000 to the Board of Equalization for administration. The law includes an appropriation because the recently enacted ballot measure - Proposition 25 - lowered the required threshold vote on budgetary matters, including appropriations, from two-thirds to a simple majority of both Legislature houses. Proposition 25 also provided that budget-related bills take effect immediately upon enactment, and therefore added a new category to the list of statutes that go into immediate effect.

Four Loyola professors on SSRN top 25 list

Loyola Law School Professors Ellen Aprill, Jennifer Kowal, Katie Pratt and Ted Seto are among the top 25 U.S. tax professors as ranked by downloads on the Social Science Research Network.

Politics and the gift tax: The role of noncharitable exempt organizations

By Professor Ellen Aprill

This is another installment in the Summary Judgments summer series, "The Headline Club," in which Loyola Law School professors will discuss legal issues ripped from the front page.

The role of noncharitable exempt organizations, in particular section 501(c)(4) social welfare organizations, was perhaps the key feature of last year's election. One New York Times editorial, for example, declared: "For all the headlines about the Tea Party and blind voter anger, the most disturbing story of this year's election is embodied in an odd combination of numbers and letters: 501(c)(4)." IRS rules permit Section 501(c)(4) organizations to engage in political campaign activity so long as such is not their primary activity. At the same time, section 501(c)(4) organizations need not disclose their contributors to the public. There is, however, no statutory exception to the gift tax for transfers to section 501(c)(4) organizations., and the IRS announced as far back as 1982 that it considered such transfers subject to gift tax.

Until recently, the IRS has not enforced the gift tax on transfers to section 501(c)(4) organizations for many years. Moreover, few contributors would be subject to the gift tax. Currently, a contributor to a section 501(c)(4) organization does not treat annual transfers of the first $13,000 as a taxable gift; a contributor would owe no gift tax out of pocket until total transfers to these organizations and other taxable gifts exceeded $5,000,000.

Nonetheless, some individuals do contribute very large amounts to section 501(c)(4) organizations. It recently became known - and the IRS confirmed - that the agency has sent letters to five donors to section 501(c)(4) organizations asking why they had not filed a gift tax return for these transfers. The IRS stated that the inquiries were initiated by agency employees, not the White House or other administration officials, as part of increased efforts to enforce the estate and gift tax. (We know, for example, that in addition to inquiries regarding transfers to section 501(c)(4) organizations, the IRS has asked a number of states for records of intrafamily transfers.)

The current gift tax treatment of transfers to section 501(c)(4) organizations is an anomaly. Under the Internal Revenue Code, neither transfers to charitable organizations nor transfers to political organizations are subject to the gift tax. Yet, transfers to section 501(c)(4) organizations, which can share features of charities and political organizations, enjoy no such statutory exception. Perhaps the current furor over IRS enforcement of the gift tax for transfers to section 501(c)(4) organizations will impel Congress to do what it should have done long ago and change the law and provide a statutory exception for such transfers. At the same time, as I have suggested in a recent article, Congress could reconsider the disclosure rules applicable to section 501(c)(4) organizations.

California's Living Originalism

Recent graduate Michael Boardman published the following op-ed in the Friday, May 20 edition of the Los Angeles Daily Journal.

By Michael Boardman, Class of 2011

Back in January, a California Court of Appeal sided with one of California's most influential special interests, the Howard Jarvis Taxpayer Association, and overturned the state Legislature's ability to draft language for the titles and summaries that explain legislative initiatives on state ballots.

The decision itself is not necessarily a surprise. Titles of initiatives are supposed to be impartial descriptions, yet the Legislature had suggestively titled Proposition 9 the "Safe, Reliable High-Speed Passenger Train Bond Act," and the Howard Jarvis Taxpayer Association has been a juggernaut in state politics since it shepherded the infamous Proposition 13 in 1978. The surprise is that Jarvis and other special interests have repeatedly transformed the California Constitution with the help of the courts' standard of review, which takes inspiration from the harshest critics of constitutional dynamism -- the originalists.

For decades, the state Supreme Court has interpreted ambiguous language in initiatives by attempting to identify the intent of the voters. Since voters function as the legislature in direct democracy, this practice appears to be a natural extension of traditional statutory construction principles; courts generally seek to resolve ambiguities in the plain language of the law by identifying the intent of the lawmakers and interpreting their words accordingly.

But on a closer look, California's scheme seems to confuse philosophical principles, acting as a sort of Scalia-Breyer hybrid by using originalist principles to create a dynamic constitution. On the one hand, the court interprets initiative amendments based on the understanding of the public at the time it was passed (Justice Antonin Scalia's "original understanding"), and on the other it relies heavily on election materials as "legislative history," which Scalia finds largely irrelevant, to interpret initiative statutes consistently with current norms (Justice Stephen G. Breyer's responsive "living document"). This strange combination of values essentially creates a series of floating "originalist" interpretations, each based on its own constitutional amendment, a practice that tethers new laws to past interpretations and erodes the basic principles of California's direct democracy.

In 2011, those serious about reducing the deficit will look to tax expenditures

By Professor Katherine Pratt

This is the year in which the president and the Congress should focus on reducing inefficient and out-of-control spending through the tax code, to reduce federal budget deficits without gutting worthwhile discretionary spending programs.

President Barack Obama deserves credit for speaking frankly in his recent State of the Union address about the critical need to cut "spending" in all parts of the federal budget, not just in the non-defense discretionary spending that makes up a relatively small part of the federal budget. Obama also deserves credit for suggesting that we eliminate tax "loopholes" - also known as "tax expenditures" (targeted tax subsidies that benefit a narrow group of taxpayers, reduce tax revenue and drive up tax rates for other taxpayers). However, the president missed an opportunity to call for reform of many of the loopholes in the individual income tax, to make the tax system more efficient and fair, and to contain the rapid growth of tax expenditures, currently estimated to total over $1 trillion a year.

Tax expenditures frequently are the economic equivalent of a federal spending program. Generally, in an income tax system, legitimate business expenses (e.g., the cost of renting an office) are deductible, but personal living expenses (e.g. the cost of renting an apartment) are not deductible. Our tax code provides generally that personal expenses are not deductible, but allows individual taxpayers to take certain types of itemized deductions (e.g., the home mortgage interest deduction) if the taxpayer's total itemized deductions exceed the "standard deduction" ($11,600 for married couples and $5,800 for individuals in 2011). The itemized deductions allowed by the tax code thus generally are the functional equivalent of a loophole-free income tax code plus a federal spending program. For example, the home mortgage interest deduction is a federal housing subsidy that disproportionately benefits upper-income homeowners. Our tax code also provides tax subsidies in the form of "exclusions," meaning that the excluded item is not treated as income and is not taxed. An example is the income tax exclusion for employer-sponsored health insurance ("ESI"), which drives up the cost of healthcare and disproportionately benefits taxpayers whose employers provide "Cadillac" health insurance.

Tax Notes recognizes 10th anniversary of Loyola's graduate tax program

Tax Notes recently spoke to Professors Jennifer Kowal, Katie Pratt and Ted Seto for an article on the 10th anniversary of Loyola's graduate tax program. The story discusses the steps the program is taking to respond to changes in the legal market, as well as issues in tax policy.

Read the entire article on TaxProfBlog.

Professors Aprill and Hasen on lobbying

Professors Ellen Aprill and Rick Hasen co-authored the article "Lobbypalooza" for The American Interest magazine. The article briefly describes the history of tax-related and disclosure-related regulation of lobbying. It also flags some developments in the lower courts, in which lower courts are relying on Citizens United to strike down some lobbying regulations. Hasen describes those lower court developments in his draft, "Lobbying, Rent Seeking, and the Constitution" (posted on SSRN).

Excerpt from "Lobbyapalooza":

"In the face of the financial crisis, partisan recriminations and other problems of contemporary American governance, some have urged limits on lobbying in order to promote the public interest. They fear not only potential lobbyist corruption, but also lobbyists facilitating a raiding of the public fisc...Lobbyists provide legislators and other government officials with crucial information and convey the points of view of important constituencies. A responsive government needs to hear various viewpoints, and in a complex world legislators and staffers need help analyzing, and even writing, important legislation. It is hard to imagine the U.S. government today functioning without lobbying. Moreover, lobbying also enjoys constitutional protections. The First Amendment guarantees both free speech and the right to petition the government.

Tax reform event live streaming on web today

Loyola Law School, Los Angeles is hosting "Starving the Hidden Beast: New Approaches to Tax Expenditure Reform" today in partnership with the Urban-Brookings Tax Policy Center. Video from the daylong event is:

David Gamage, University of California, Berkeley School of Law: "Tax Salience and Tax Expenditures"

COMMENTATOR: Damon Jones, Harris School of Public Policy, University of Chicago

10-11:30 a.m.: Reforming the Tax Expenditure Budget Presentation

MODERATOR: Sarah Lawsky, University of California, Irvine School of Law

PANELISTS:

Linda Sugin, Fordham Law School: "Tax Expenditures, Reform, and Distributive Justice"

Eric Toder and Donald Marron, Urban-Brookings Tax Policy Center: "Tax Expenditures and the Size of Government"

COMMENTATOR: Daniel Shaviro, New York University School of Law

11:30 a.m.: Lunch

12:45-2:15 p.m.: Evaluating Tax Expenditures

MODERATOR: Rosanne Altshuler, Rutgers University

PANELISTS:

Theodore Seto, Loyola Law School, Los Angeles: "Reframing the Tax Expenditure Budget"

Thomas Hungerford, Congressional Research Service: "Tax Expenditures"

COMMENTATOR: Edward Kleinbard, USC Gould School of Law

2:30-4 p.m.: Approaches to Tax Expenditure Reform

MODERATOR: Katherine Pratt, Loyola Law School, Los Angeles

PANELISTS:

Marvin Phaup, Federal Budget Reform Initiative, Pew Economic Policy Group: "Integrating Tax Expenditures with the Budget Process"

Diane Lim Rogers, Chief Economist, Concord Coalition: "Tax Formed in the Proposal of the Deficit-Reduction Commissions"

COMMENTATOR: Elizabeth Garrett, USC Gould School of Law

4:00 p.m.: Reception

Show Me the Money: A Hidden Source of Funding for Federal Deficit Reduction

By Professor Katie Pratt

This op-ed was originally published in the Jan. 12, 2011 edition of the Los Angeles Daily Journal.

If President Barack Obama and Congress ever decide to get serious about

federal deficit reduction, there is a potential $1 trillion deficit reduction funding source that they have ignored. With annual federal budget deficits projected to average $1 trillion for the next decade, they should seriously consider this funding source, instead of assuming - contrary to fact - that radical cuts in federal discretionary spending programs can painlessly and equitably achieve meaningful deficit reduction.

Last week, the new Speaker of the House, John Boehner, citing the "Pledge to America," committed to cut federal spending, reduce federal budget deficits, cut federal taxes and shrink the size of the federal government. Democrats also have acknowledged the serious threat posed by projected

federal budget deficits, and Obama has proposed a freeze on discretionary spending programs. Freezing discretionary spending or cutting wasteful discretionary spending will not achieve meaningful deficit reduction, however, because the total funding for non-defense domestic discretionary spending programs adds up to only about one-sixth of the federal "spending" budget; defense and homeland-security spending, interest on the federal debt and entitlement-benefit spending account for most federal outlays.

Boehner and other prominent Republicans do not acknowledge any connection between tax cuts and federal budget deficits, despite the fact that federal revenue fell during the Bush administration to the lowest levels since the 1950s, and that revenue loss has been a major contributor to federal budget deficits. Instead, they frame tax cuts as "pro-growth" measures and budget deficits as the result of the federal government spending too much money on wasteful and inefficient programs. Many voters also erroneously assume that spending cuts can be achieved painlessly by cutting wasteful, inefficient or overly generous programs.

Loyola partners with Urban-Brookings Tax Policy Center on tax-expenditure reform conference

Subsidies totaling over $1 trillion, known as "tax expenditures," are woven throughout the federal tax code. These tax expenditures provide federal subsidies that are targeted to specific industries and activities. Some of these tax expenditures (e.g., the home mortgage interest deduction) are well known and considered by most Americans as entitlements. Many tax expenditures are hidden from public view, however, buried in the complex morass of the federal tax code.

Unlike discretionary spending programs, most tax expenditures are not subject to annual budget scrutiny or performance review (such as cost-benefit analysis), and often provide disproportionate subsidies to upper-income Americans.

-Excerpt from Professor Katie Pratt's op-ed, "Show Me the Money: A Hidden Source of Funding for Federal Deficit Reduction," scheduled to appear in the Jan. 12 edition of the Los Angeles Daily Journal

Loyola Law School and the Urban-Brookings Tax Policy Center are co-hosting a daylong exploration of tax-expenditure reform during "Starving the Hidden Beast: New Approaches to Tax Expenditure Reform" to be held from 8 a.m.-4 p.m. on Friday, Jan. 14 at Loyola Law School's downtown L.A. campus. Speakers include Loyola Professors Ellen Aprill, Katie Pratt and Ted Seto, as well as tax law and policy experts from academia and think tanks such as the Urban-Brookings Tax Policy Center, the Federal Budget Reform Initiative of the Pew Economic Policy Group and the Congressional Research Service. The panels will dissect a range of topics: "The Salience of Tax Expenditures and Implications for Reform," "Reforming the Tax Expenditure Budget Presentation," "Evaluating Tax Expenditures" and "Approaches to Tax Expenditure Reform.

See the event website for complete details.