Friday, May 27, 2016

Heading to Amsterdam

I'll be there a week, touristically with the exception of my talk, on one of the panels at the June 1 conference that I've mentioned in previous posts.

I like traveling, but this is also my favorite time of the year in NYC.

Wednesday, May 25, 2016

New Alice film

I've been distressed by the unavoidability, in some media settings, of ads, previews, feature articles, etc., that bring to mind the forthcoming film based on Lewis Carroll's Alice Through the Looking Glass.  Part of the problem is its reminding me of my distress when, during a long airplane flight, I watched the Tim Burton version of Alice in Wonderland.  (And I usually like Tim Burton.)

The Alice books are on a very short list of my favorite books ever.  I first read them as a child, have done so many times since, and still love them, reflecting how profound they are, not to mention how audaciously radical (not, of course, in a political sense),  But I understand that books and movies are different sorts of creatures, and that one should generally view the latter as wholly separate works.  I actually rather like the Disney cartoon version of Alice in Wonderland, although obviously this requires not holding it even remotely to the books' standard.

So what bothers me about the new film adaptations of Alice?  I think it has to do with their making the Mad Hatter a lovable snuggle toy whom Alice must try to save, and the Red Queen a figure of evil whom the heroes must vanquish.  To me, this grotesquely gets the books wrong, and in a way that particularly stupidizes them (to coin a word).

As to the Mad Hatter, it's rank sentimentalizing.  While the books have sentiment, they ruthlessly limit where and how it is expressed (and the Mad Hatter is a chilly weirdo). As done in the movies, I find it repulsive and cloying.

And the Red Queen as evil, requiring the standard Hollywood denouement?  This just feels totally wrong (albeit, with no criticism whatever of Helena Bonham Carter's - as always - game and spirited efforts). While the Queen of Hearts in Alice's Adventures in Wonderland (whose amalgamation with the Red Queen in Looking Glass I am willing to accept) does, it's true, go around threatening to have everyone's head chopped off, she isn't evil, in that context - she's crazed and absurd, in a weird, hyperbolically comic manner that relates to Carroll's own stepping into a child's shoes to look at the grown-up world (not to mention at competing visions of logic and reason, with a sheltered and naive child being the only sane one).  To me, it trivializes and vulgarizes the book's vision to make the Red Queen a standard Hollywood villain, even if an unusually flamboyant one.

Then again, it's only a movie (or two), and the books are still there, both free on Kindle and on any decent home library's shelves.

I suppose it's good in a way for the Alice books to get renewed attention.  I have the impression that, while they were widely loved by people in my generation and those preceding us, they mysteriously have enjoyed less of a following among millennials and still-younger age cohorts.

Tuesday, May 24, 2016

Another upcoming talk

On June 17, I will be back in Washington, to participate in a panel (9-10:30 am at AEI) discussing Eric Toder's and Alan Viard's forthcoming "A Proposal to Reform the Taxation of Corporate Income."  This is the follow-up, with significant revisions, to their preliminary study from 2014, "Major Reform Needed: A Call for Structural Reform of the U.S. Corporate Income Tax," which discussed entirely replacing the existing corporate income tax with a shareholder-level mark--to-market regime.  The other discussant will be Joann Weiner.

UPDATE: More information about the event is available here.

Monday, May 23, 2016

Godwin's Law versus the Wodehouse Rule

The corollary to Godwin's Law holds that whoever first makes a Hitler comparison in a debate loses.

But it's probably also a good rule of thumb that whoever first makes an apt Wodehouse reference in a debate automatically wins.

In today's NY Times, Matthew D'Ancona risks the Godwin corollary in order to take advantage of the Wodehouse rule:

"There is a magnificent passage from P.G. Wodehouse's 1938 comic masterpiece 'The Code of the Woosters' that is often cited as definitive evidence of Britain's exceptional immunity to demagogues, autocrats, and Trumps.  Confronted by Roderick Spode, tyrannical leader of the Black Shorts, Bertie Wooter lets rip:

"'The trouble with you, Spode, is that just because you have succeeded in inducing a handful of half-wits to disfigure the London scene by going about in black shorts, you think you're someone.  You hear them shouting 'Heil, Spode!' and you imagine it is the Voice of the People.  That's where you make your bloomer.  What the Voice of the People is saying is: 'Look at that frightful ass Spode swanking about in footer bags! Did you ever in your puff see such a perfect perisher?'

"One of the many reasons that Bertie's outburst is so enduringly funny is that he is normally such an equable gent.  His exasperation is the voice of Englishness recoiling from the sheer vulgarity of the would-be autocrat."

D'Ancona goes on to disclaim, but not quite 100%, the evidently suggested Hitler to Trump analogy.  But, in contrast to the optimism behind seeing Bertie's rant as definitive and unanswerable, he adds: "If a figure like Mr. Trump can stand at the threshold of the Oval Office in a freedom-loving country like America, then we must assume the reverse: It could happen anywhere."

He then goes on to note Wodehouse's later naivete about giving radio broadcasts from a German prison camp, based on not understanding that "his celebrated comic language was being annexed by the Third Reich to gloss over a terrifying reality."  D'Ancona concludes, in relation to the currently high levels of Trump-mockery in the U.K.: "Britain must not make Wodehouse's error, believing that a gift for repartee provides everlasting immunity [from] vicious autocrats."

Without myself running afoul of Godwin's Law, let me draw a different conclusion from the above-quoted Wooster passage. While derision and belittling laughter don't work against bullets, they can be powerful tools indeed against bullies, and against bombastic would-be autocrat types.  Indeed, in many settings they work better than anger (a point that Bill Clinton's seemingly good-humored, and yet sharply pointed, 2012 convention speech deftly showed).  In 2016, if done astutely and effectively, they might prove to be Trump's political (and even psychological) kryptonite.

Wooster for President!  (Since Jeeves is surely uninterested in the job.)

Sunday, May 22, 2016

Lack of empathy

Here's an enjoyable song by a new group (Car Seat Headrest) that hit an unfortunate speed bump (as described here) right before the May 20 release of their new album.

Ric Ocasek, who had two catchy hits in the 1980s and that's pretty much it, refused to give these guys permission to use a sample from "Just What I Needed," with the result - since they mistakenly (but in good faith) thought they had permission - that all physical copies of the album had to be destroyed just before its May 20 release.  The song with the sample was apparently great, but this one's not bad either.

Thursday, May 19, 2016

OECD-BEPS conference in Amsterdam next week

I have now written my (15-20 minute) talk, along with skeletal slides, for the upcoming NYU-Amsterdam Center for Tax Law conference, in Amsterdam on June 1, concerning OECD-BEPS et al.  My topic will be "The U.S. Response to OECD-BEPS and the EU State Aid Cases."

I'll plan on posting the slides here early in the week after the conference, and I may even post the talk (which is about 2500 words long) on SSRN.  I figure that, since I tend to prepare distinctive presentations each time I speak at a conference, I might as well seek a larger audience than just the people in the room, and a longer half-life than just until the next talk starts.

Totally different from my last talk (at NTA), and much more focused on current developments.

I'll note that my assigned topic, the "U.S. response," is ambiguous, as it could refer either to what people in the U.S. international tax policy community seem to be thinking about the above-referenced developments, or to what U.S. policymakers might actually do.  I'll address both, although the latter is inevitably speculative, not to mention tied in with what ends up being the outcome of the 2016 presidential and Congressional elections.

Information about the conference is available here.

Wednesday, May 18, 2016

An example of why I still need my own iTunes playlists and CDs ...

... is Big Star's Third/Sister Lovers album, not available on Spotify.

Monday, May 16, 2016

My lunch talk last Thursday at the NTA Spring Symposium

Here are the slides that I used last Thursday for my lunch talk at the National Tax Association's 46th Annual Spring Symposium, in Washington, DC.  I called the talk "Ten Observations Concerning International Tax Policy."  I am planning to publish and/or to post in some way, and then to link here, a written-out version of my full remarks using these slides, but the mechanism for that is still being determined.

UPDATE: It looks as if the talk will be appearing in Tax Notes, perhaps on or about June 20.  I'll be publishing it, expressly as a recent talk that I gave, in "Current and Quotable," rather than turning it into an article.

Saturday, May 14, 2016

Immune system McCarthyism

Whenever I get seasonal allergies, as now, I'm reminded of the fact that this apparently results from our immune systems' being set at too high a level given our actual (these days, in economically advanced societies) routine exposure to internal "enemies."  In particular, some of the parasites we regularly hosted in real evolutionary time had apparently evolved ways of tamping down our immune systems, to which we responded (arm's race style) by gearing them up higher.  Remove the parasites and their tamp-down effects, and we're left with over-excited immune systems that are roving the body restlessly, determined to root out enemies even if they aren't there.

Small surprise, then, that they invent fake enemies (such as pollen) when they can't find enough real ones, and that this in turn triggers broader bodily disease-fighting responses, even if there isn't actually a disease to fight.

The McCarthyism parallel is getting ancient by now; I suppose one could update it with a reference to presumptive nominees' supposed anti-domestic terrorism policies.

Thursday, May 12, 2016

NTA Spring Symposium

Today I gave my lunch talk at the NTA Spring Symposium, "Ten Observations Regarding International Tax Policy."  Went OK, I think, although I did feel as if I was trying to say too much too fast.

I'll be posting the slides here, although they're perhaps more skeletal than my usual, within a couple of days.  I wrote out my remarks, but I ended up not reading what I wrote - riffing off it instead - because just reading written words to an audience is hard for me to get my head around.  I am, however, looking into my options of publishing them (or a version of them) otherwise than by just pasting them into a blog post here, although that remains my fallback position.

If that's his story, I guess he's sticking to it

Donald Trump now says that he won't be releasing any of his tax returns before the November election because, darn it, his audits are still ongoing.  Tough luck and all, but still.

When this issue came up earlier in the campaign, a few reporters called to ask me if it was true that, if you're being audited, you can't release your tax returns.  This was so clearly contrary to the actual rules - not having your returns released is a right you have against the IRS, not a right it has against you, and audits have nothing to do with it - that I half-asked myself: Am I missing something?  It was such a non sequitur as to be kind of like saying, I can't pay the bill for dinner, even though I said it's my treat, because I had a sandwich for lunch.

So I asked myself: Might Trump's tax advisors have asked him not to release his returns while they were being audited, for some tactical reason that I'm unaware of?  But I couldn't quite make sense of that either.  Plus, a presidential candidate is free to override what his attorneys who are handling the audit urge him to do for tactical reasons (whatever they might be).  So I assume the line about audits is just what he's decided to say.

That said, it is comical to see Romney saying that this is "disqualifying" for Trump's presidential campaign.  Romney released just 2 years of tax returns, well below the norm, possibly because something unpleasant was lurking in the years he declined to release.  Trump has merely reduced the number to be released from 2 to 0.  Perhaps Romney knows something from personal experience about just how "disqualifying" past years' tax returns can be.

Friday, May 06, 2016

Onward and upward

I've now virtually completed my 21st year at NYU Law School, and my 29th year in legal academia (I was at the University of Chicago Law School for my first 8 years in the biz).  Whew, things seem to be moving kind of fast.

All that remains for the semester is deciding, with my colleague, on final grades in my colloquium (hint: given grades on weekly papers, it probably won't be much of a surprise in most or all cases), plus reading and grading a few longer term papers that are also on my docket.  Other than that, I'm done.  Leaving aside a summer institute appearance, I will next be seen in an NYU Law School classroom on the afternoon of Thursday, September 1, when I'll be teaching my first class of the fall semester in Survey of International Taxation.

As it happens, I only have at present about 2 weeks worth of summer vacation plans - I usually take a bit more, but possibly not this time around for various planning & coordination reasons.  So otherwise I'll usually be working on writing projects during regular business hours.

One main focus will be my ongoing book project on literature and high-end inequality.  To my immense relief, I just finished a short chapter on Dickens's A Christmas Carol, on top of 5 earlier chapters (3 of them on particular works of literature).  This project is still a bit of a leap of faith, however.  It's mostly quite different from other work that I've done, and I'm finding it a bit harder to write than my usual, plus the evaluative criteria that one should use are murkier.  That said, I like it, especially when it's going well.

My next projected chapter will be on Trollope's The Way We Live Now, but before getting to that I plan to do some more conventional / traditional (for me) writing, including perhaps a bit on international taxation.  I also have my next 2 speaking appearances, both in that area, to think about.

Next Thursday (May 12), perusal of this program will reveal to the sharp-eyed that I am the lunch speaker at the National Tax Association's 46th Annual Spring Symposium, to take place in Washington, D.C., at the Holiday Inn Capitol.  My remarks, which are pretty much ready, are informally entitled "Ten Observations Regarding International Tax Policy."  I'll post the somewhat terse slides afterwards, and may also turn the body of the talk into a short-ish piece that I might conceivably aim at, say, Tax Notes or Tax Notes International.  I don't plan to turn it into a full-blown article, however.

Then on Wednesday, June 1, I'll be speaking at a conference in Amsterdam entitled "Anti-BEPS Implementation in the EU - the Anti-Tax Avoidance Directive: the major implications for the Tax (Planning) Landscape in the EU."  My talk, on one of the afternoon panels, is entitled "The U.S. Response to OECD-BEPS and the EU State Aid Cases."  The conference is part of a co-sponsored series that involves, among other players, the Amsterdam Center for Tax Law and NYU Law School. My involvement in this conference might conceivably involve my also turning the talk into a short piece that would appear in a conference volume.

Wednesday, May 04, 2016

NYU Tax Policy Colloquium, week 14: Monica Prasad's "The Popular Origins of Neoliberalism in the Reagan Tax Cut of 1981"

Yesterday, in our final session for the semester, Monica Prasad presented the above paper.  While published in 2012, it's a current project in that she is planning to expand it into a book.

The paper studies the enactment of the Reagan ERTA tax cut of 1981, taking advantage of recently released Reagan Library materials that cover not just the early Reagan Administration but the proposal's formation during the period of the 1980 presidential campaign.  A central thesis of the paper is that this story, when properly understood, clashes to a degree with a common narrative regarding the rise of neoliberal policies more generally.

Suppose we define neoliberalism as a set of policies that took hold in the U.S. under Reagan (although in certain ways extended by Clinton), and in the U.K. under Thatcher, that involved pro-market retrenchment, relative to New Deal through 1960s-style policies, through such measures as privatization and deregulation of business activity, free trade, fiscal austerity, lower tax rates, and changing welfare benefits to place greater emphasis on work incentives.

In the 1990s (heyday of the "Washington Consensus"), such measures were lauded as the golden key to prosperity and growth.  In the post-2008 era, they have faced criticism as sources of rising high-end inequality and economic instability.

While the question of how much truth one ultimately assigns to each of these two views is independent from that of how neoliberal policies actually gained sway politically, the more negative view perhaps encourages looking for big business's fingerprints.  But for the 1981 individual tax cuts that were ERTA's centerpiece, the paper finds that business (the Chamber of Commerce et al) was not supportive.  Indeed, business leaders were skeptical about the individual tax cuts, due to concern both about their budgetary and macroeconomic effects, and about whether their large size would lead to a scale-back of the business tax cuts in ERTA that these leaders of course loved.  (This latter concern was prescient - the offsetting tax increases that the Reagan Administration successfully backed in 1982 and 1984 did indeed come from the business side of the ledger.)

One shouldn't necessarily expect all neoliberal policies to have the same genesis.  In addition, the political forces that produce them need not be the same as those that later sustain them, once they have contributed to the economic and social transformations of the last 35 years.  But the 1981 ERTA tax cuts are well worth looking at for the own sake.  In retrospect - and largely due to subsequent events - they have become the dominant tax policy act of the last fifty years.

The other candidate for this title is the Tax Reform Act of 1986.  But looking at modern tax politics, I would say that the dominant meme - although perhaps its day is finally close to passing - is that of the 1981 Act, as modified to incorporate the 1986 Act.  But this involves its having an accepted meaning that it didn't initially have, by reason in particular of the presidential elections in 1984 (Mondale advocates tax increase, loses in a landslide) and 1992 (Bush I backs off his "read my lips, no new taxes" pledge, and loses, supposedly for this reason, although actually 95% for other reasons).

So where are we now with the 1981 Act?  Initial point: at a minimum, it was not insane.  For example, marginal rates were quite high then (and if they should be  that high again, it's for different reasons - the rise of high-end inequality since that time).  And when revenue losses exceeded expectations - not just due to the local inapplicability of the Laffer Curve, but to the unexpectedly rapid decline in inflation - the Reagan Administration, being run by sane adults quite unlike any known Republicans in the leadership ranks since 1994, promptly got behind tax increases in 1982, 1983 (for Social Security), and 1984.

But once it was ratified as Saint Reagan on the Holy Mount, and once the actual Reagan Administration (with its support for multiple offsetting tax increases) was forgotten, it became this thing - this meme - that grotesquely distorts modern tax policy and needs to be buried forthwith with a stake through its heart.  We have a long-term fiscal gap and rising high-end inequality - so let's not continually try to repeat this Ur-moment with zero regard for the actual surrounding circumstances.

Its perverse and brain-dead grip on policymaking, especially on the Republican side (but with the Democrats generally having little to say against it) brings to mind a reverse Jimmy Stewart from Vertigo.  He has this searing memory that he can't put behind him, so he wants to relive it.  For policymakers, Saint Reagan on the Mount (1981 with a tincture of 1986) is apparently so thrilling a memory - as misremembered - that they, too, are doomed to just keep on trying to relive it.  The ultimate consequences may be as dire for the United States as they were for the Jimmy Stewart character in Vertigo - if, for example, Trump's gynormous (synonym for "yuuge") proposed tax cuts end up being enacted.

I call the dominant meme 1981, with just a tincture of 1986, because the main feature is reducing the rates, especially at the high end, and losing lots of revenue.  But the tincture of 1986 manifests via claims or gestures towards offsetting base-broadening.  In 2012, for example, Romney falsely claimed that he could make his tax cuts revenue-neutral and distribution-neutral through unspecified magic-asterisk offsets. And it's generally common practice these days for Republican presidential candidates to include some base-broadening, even if they fall far short of claiming revenue neutrality so that they can avoid being accused (as Romney was) of planning to raise taxes for the bottom 99%.

But here's one hopeful development from the 2016 presidential campaign (if that doesn't sound too oxymoronic).  It's true that all 17 Republican candidates proposed gigantic tax cuts.  And it's also true that the apparent winner was the one who proposed the largest tax cuts of all.  But no one cared - least of all Trump himself.  He pretty much never discussed his tax cuts on the stump.  They weren't a sales pitch in his campaign.  And the other candidates found that their tax cuts weren't an effective sales pitch, even just with the Republican primary electorate.

So maybe 1981's death grip will loosen at some point, although this depends on (a) the outcome of the election and (b) where the Republicans go next if Trump loses.

But whether or not the 1981 death grip loosens any time soon, there's been an interesting transformation as between 1981 and today.  As Prasad's article shows, among influential Republican insiders in 1981, support for the tax cuts was decidedly muted and mixed.  Jack Kemp had come forward as a policy entrepreneur, and state-level tax revolt events, such as Proposition 13, had caught Reagan (among other leading Republicans) flat-footed, yet intrigued by the political possibilities.

Reagan proposed the tax cuts that turned into ERTA partly just to keep Kemp on the sidelines, and to get his support. Then Reagan and his team stuck to it partly because political leaders pay a price if they are viewed as "flip-flopping." The other main reasons for the proposal, according to the sources Prasad finds, were (a) the public seemed to like tax cuts, so maybe it was a good way to try to win the election, and (b) frustration over 1970s stagflation created a widespread appetite for doing something, anything, differently somehow.

So the 1981 tax cuts had a measure of popular support, leading to their cautious and ginger embrace by insiders and elites.  But today it's the other way around - tax cuts are an elite / Washington insider cause, enforced on Republicans by Grover Norquist et al, and reflecting as well our political turn towards plutocracy.  It's not coming from the voters, although this is not to deny that they could potentially be sold a package of tiny tax cuts for them plus gigantic tax cuts for billionaires.  (This is the Bush 2000 model that all Republican candidates still follow, or at least pretend to follow.)

It's also not to deny that tax increases remain a hard sell.  Both President Obama and Hillary Clinton, for example, have consistently opposed them, other than for people at high income levels.  This presumably reflects their political read - and while it may be a timorous one, that's easy for me to say as I am not running for office.  (Sanders would be a test case, but I suspect the test wouldn't go well for him in the general election, or at least in a normal general election.  However, this may partly reflect his particular limitations and vulnerabilities.)

A final point about the 1981 tax cut that the article makes clear is that, politically inevitable though it may appear with hindsight today - given its having spawned multiple decades of slavish yet distorted imitation - in many ways it was the product of a set of accidents.  Even apart from the fortuity of Reagan's proposing what he did, suppose that either (a) Carter had sent one or two more helicopters into the Iranian desert, (b) Carter had prepared a snappy comeback for Reagan's famous debate line, "There you go again," or (c) Reagan hadn't been shot in March 1981.  It's conceivable that, whether for better or worse, in any of these scenarios modern tax history might look significantly different than it actually does.

The Sheppard-Lennon debate

In Lee Sheppard's Tax Notes column this week, before segueing to her actual (tax) topic, she offered a well-deserved Prince tribute, but couldn't resist a drive-by slag at the Beatles, in the form of claiming that George Martin was their most important member.

I'll subcontract the answer to this to John Lennon, from a 1971 letter:

"When people ask me questions about 'What did George Martin really do for you?' I have only one answer, 'What does he do now?'  I noticed you had no answer for that!.... [A]nd, by the way, I hope Seatrain is a good substitute for the Beatles."

Had he written this letter 3 years later, he could have added America and "Tin Man" - a song that is unforgettable if you listened to the radio in the early 1970s, but not for lack of trying.

(Sorry, George Martin, whom I of course appreciate and admire.)