Tuesday, March 28, 2023

All hands on deck

 The Supreme Court has asked for amicus briefs regarding whether it should grant certiorari in the case of Moore v. United States, in which taxpayers challenged the constitutionality of the transition tax in the 2017 tax act regarding undistributed earnings from controlled foreign corporations (which were taxed at a low rate in combination with the repeal of deferral, under which they would have been taxable upon repatriation).

The taxpayers' challenge is based on the view that Eisner v. Macomber (1920) makes realization  a constitutional prerequisite to taxing income (without apportionment between the states) under the Sixteenth Amendment. The Ninth Circuit rejected this challenge, based on extensive post-Macomber precedents, and held forthrightly that realization is not a constitutional prerequisite to taxing income. 

Macomber has never been expressly overruled by the Supreme Court, but by 1940 (in Helvering v. Bruun) it was very openly refusing to follow it outside of its particular facts, which related to stock dividends. There has probably been no time since, until the right-wing takeover of the court accelerated in the last few years, when there would have been any chance of the Court's relying on it to block a provision such as the 2017 transition tax. But Chief Justice Roberts cited Macomber as apparently still good precedent in his 2012 opinion upholding Obamacare (National Federation of Independent Business v. Sebelius) - a sly nudge that (to mix my metaphors) may now be on the verge of bearing fruit.

It is difficult to exaggerate how destructive a Supreme Court decision reviving Macomber's constitutionalized realization requirement could potentially be. In addition to ruling out efforts to tax unrealized appreciation (e.g., through new legislation such as that proposed by Senator Wyden), it might also conceivably, depending on how broadly it was worded, make impossible the taxation of original issue discount (OID) bond interest until the due date. This, in turn, could unleash tax sheltering that might cost the federal government billions of dollars in revenue, most or all of it from the upper income brackets. That prospect, however, may actually be enticing to several members of the Supreme Court, who appear to want to blow things up.

Not that it would necessarily make much of a difference, but responsible members of the legal tax academy ought to weigh in on this issue if the Supreme Court grants certiorari in Moore v. Harper.

Sunday, March 19, 2023

ChatGPT strikes (out) again

 Here is what ChatGPT thinks my novel, Getting It, is about. Not a word of this (attribution of authorship aside) is correct:

"Getting It" is a book written by Daniel Shaviro, a tax law professor at NYU School of Law. The book explores the current state of U.S. tax policy and suggests reforms that could improve the fairness and effectiveness of the tax system.

Shaviro argues that the U.S. tax system is overly complex, inefficient, and inequitable, and that it fails to achieve its stated goals of raising revenue and promoting economic growth. He proposes a number of reforms that would simplify the tax code, reduce tax evasion and avoidance, and ensure that the wealthy pay their fair share.

Some of the specific proposals in the book include replacing the income tax with a consumption tax, increasing taxes on the wealthy and corporations, and reforming the estate tax. Overall, the book is a thought-provoking and accessible exploration of one of the most important and contentious issues in American public policy.

By contrast, here is what the book description at Amazon says.:

"Young D.C. lawyer Bill Doberman, who fancies himself the James Bond of the Potomac. is a liar, a conniver, a phony, a hypocrite, and a cad, and those are his good points. But will they be enough to win him the much desired booby prize of partnership at Ashby & Cinders?

Friday, March 17, 2023

My "Law, Literature, and Social Science" seminar

I have posted on SSRN a syllabus and the weekly discussion questions for the seminar, "Law, Literature, and Social Science," that I am now teaching for the second time. Conceptualizing and executing it took a TON of work, and I feel it's been a successful class both times. Also, I feel that it's fairly novel, albeit perhaps idiosyncratic. Given the unlikelihood that I could either publish this work conventionally or monetize it any way, I thought I'd share it, in the hope that others might find it of interest. It's available here.

Wednesday, March 08, 2023

Talk on Bonfires of the American Dream, part 2

 As I noted in the prior blog post, yesterday, at an NYU Law and Culture Colloquium, I discussed the Great Gatsby chapter from my recent book, Bonfires of the American Dream. That post offered broader background concerning the project; this one will briefly discuss the Gatsby chapter.

Again as personal background, I have always liked The Great Gatsby (which I first read in high school, but I think on my own rather than for class), but I don't quite love it. It's obviously well-written, and I like its darkness, unhappiness, sense of estrangement, noir elements, and use of a very passive, and possibly quite unreliable, narrator. But I have never personally resonated enormously either to its poetry (e.g., the famous closing paragraph about boats beating against the current), or to the somewhat heavy-handed use of symbolism that makes high school English teachers so happy (e.g., Dr. T.J. Eckleberg).

Obviously, Gatsby has been written about a lot. In finding my own discussion space for it, I was interested in its changing cultural reception over time. As the chapter discusses, it was a flop when it came out, forgotten and seemingly buried by the time F. Scott Fitzgerald died. Then it rose from the dead, starting in about 1945, becoming perhaps the Great American Novel for a while, although more recently its star has dimmed, at least among elite literary critics. It may be modernist, but it isn't very post-modern.

In the 1950s, the literary critics who embraced it appeared to be especially entranced by its arguably supporting what I call a hipster critique of American culture - suggesting that, while upward mobility and social / economic success might be within reach for the aspiring, the pursuit thereof was empty, alienating, and unsatisfying. Many regarded it as a devastating indictment, the grounds for which weren't entirely clear, of the American Dream. Given underlying elements of social and self-satisfaction among these critics, it functioned as pessimism for optimists.

In today's much angrier and more pessimistic era, that has become pretty thin gruel as a critique of American culture. Hence my suggestion that Gatsby now operates more as voyeurism for pessimists than as pessimism for optimists - as in the Baz Luhrmann movie version.

The underlying ambiguity between those two responses is baked in the novel itself. But rather than more fully review my Gatsby chapter here, I'll just mention a couple of related themes. The first is the relationship between conscious authorial intent and what we might learn for sociological purposes from reading literature. The second is whether what we might choose to call "great" literature offers deeper or different insights than, say, really bad literature.

On conscious authorial intent, Gatsby offers an interesting picture. There is something intentionally didactic going on, relating to Fitzgerald's autobiographically rooted anxieties about the contemporary American upper class. That's probably why Tom Buchanan is the least nuanced of the major characters in the book. (Daisy Buchanan is a bit more nuanced, in relation to her travails as a woman.) We also get Fitzgerald's personal pet theory about why high-end inequality matters, which is that, unless you are born rich, you will lack self-confidence. This theory falls fairly far short in illuminating all of the issues that are raised by modern high-end inequality. Especially, since we are now past the era of the leisure class and of status's primary reliance on birth, and living in an era where even the dynastically wealthy claim to be self-made.

But the book is at its best when it gets away from Fitzgerald the would-be social thinker, and isn't just reflecting the beliefs that he could have put into an op-ed (had these existed at the time). An example is the Gatsby parties, which Gatsby says are full of "interesting people ... who do interesting things." Fitzgerald is showing us the rise of celebrity culture alongside the old hierarchy of birth and inherited wealth.

The book is also great on consumerism and ennui. Plus, its disturbing elements of racism (along with mockery of overly intense racism) and of anti-Semitism make for interesting, if unsettling, reading today.

If you wanted to defend the proposition that great literature has more to offer sociologically than bad literature, Gatsby arguably suggests that the former, by escaping in interesting ways the author's conscious or didactic beliefs, can become especially revelatory.

But I'm not sure that I would defend the proposition that you learn more sociologically from great than bad literature.

I do mainly focus my writing in this area on great and very good works (by my estimation) - although the John Galt speech in Atlas Shrugged is an exception, and possibly the single worst thing that I have ever read. (Although, I haven't read Mein Kampf and don't plan to.) But my main reason for doing so is simply that it's more enjoyable to spend your time in good company than bad.

Talk on Bonfires of the American Dream, part 1

 Yesterday, at an NYU Law and Culture Colloquium, I discussed the Great Gatsby chapter from my recent book, Bonfires of the American Dream. This book has been falling between the cracks a bit, although here is its Kirkus review - which is a shame, certainly from my personal standpoint but also because I think it's a good read (as well as short) that has important things to say. This may be true of a lot of books that fall between the cracks (as there are just so many of them), but a lot of people out there might connect with it, if only they knew about it and gave it a chance. Maybe including you?

Anyway, here is a considerably fleshed-out version of notes that I used to make brief remarks at the start of the session:

Instead of presenting my Gatsby chapter as if it were a separate paper, let me give some context for the book it's in, as well as the genre in my recent work of which it is a part.

Going back 40+ years, when I was in college (at Princeton) I majored in history, and (despite focusing on American history) participated in the European Culture Studies (ECS) program, then run by Carl Schorske. The central ECS idea was to treat cultural products - from literature, the visual arts, philosophy, music, etc. - as objects for historical study. I wrote my senior thesis on some very interesting diaries that were left behind by the eighteenth century Virginia planter (and slaveholder) William Byrd II, which gave a remarkably intimate portrait of his life.

For most of my college career I was planning to go to graduate school in history and, while not enormously methodologically self-conscious, I had a fairly clear idea of the sort of work that I might do. But on a glorious spring day near the end of my junior year, as I struggled to find materials for a term paper on the medieval town, it suddenly occurred to me that I didn't want to do this with my life. (This reflected a combination of my understanding the already dire career prospects for history PhDs, with a comprehension that scouring library shelves was not really what I wanted for myself.) This left me with the obvious default plan for that era: I'll go to law school like 90% of my friends! 

After law school I entered tax practice, and subsequently tax law & policy in academia, because I almost accidentally stumbled into learning about its advantages in both realms.

Academic tax law features a mix between "just law," math/quantitative, social scientist, and (to a lesser degree) humanities approaches. My work has been mainly in the social scientist camp, with an occasional side helping of humanities.

I've enjoyed working in that space, and I still do. But it was perhaps under-utilizing my humanities side.

I've always had strong arts interests, extending to books, film/TV, and popular music, and also once wrote a satirical novel about scoundrels competing with each other at a law firm that is also, I think, a fun short read (and only $4.03 at Amazon!). But about 10 years ago I saw an opportunity to expand my academic use of the humanities side to my interests.

With the rise of high-end inequality as a tax (and other) policy problem, I noticed that the dominant public economics frame treated declining marginal utility as the only reason for being concerned about it. I agree about the relevance of declining marginal utility, but believe that there are also other concerns, relating to hierarchy, status competition, etcetera. Those problems call for a broader sociological approach, which might be enlightened by (among other things) studying cultural products ECS-style.

Then came Piketty's famous publication of Capital in the 21st Century. I got on the bandwagon early enough to invite him (before his dance card was filled) to a symposium discussing the book at NYU Law School, and i co-authored one of the papers at the conference.

Piketty got a lot of popular mileage in the book from his discussing famous novels by Austen and Balzac. His use of them was a bit limited by my ECS standards, but he did make some interesting points about them.

I noticed, however, that he got Balzac wrong! He treats Le Pere Goriot as showing the utter futility of using personal effort to get rich, as opposed to relying on inheritance. Yet Goriot's closest thing to a lead character is Eugene de Rastignac, who is surely the preeminent arriviste or social climber in all of French literature. Rastignac learns in the novel (from the famous Vautrin speech) that there is simply no point to his seeking wealth as a lawyer. The returns would simply be too small, deferred, and uncertain. But he doesn't give up on social climbing through personal effort - rather, he learns that a better career choice is that of social parasite (e.g., going to salons, seducing rich women who can help him, trying to inveigle or finagle their husbands, etc.).

That paper plus my ECS training and my sense that the legal and economics literatures about high-end inequality were missing something led to a book, Literature and Inequality, that features 9 studies of classic French, British, and American novels from the nineeteenth through the early twentieth century. That was going to be Part 1, and then Part 2 would hypothetically feature 9 more recent British and American works (e.g., Waugh, Wodehouse, GatsbyBonfire of the Vanities, and several others TBD).

But then I realized that I didn't want to write Part 2. Instead, I'd do something much shorter, focused on the US setting where I feel more sure-footed, and shifting the emphasis to factors that might help to explain the rise of Trump and American fascism.

In particular, I was interested in the role played by the tensions between two deeply rooted American cultural ideals: egalitarianism (at least for white males) and what I call market meritocracy, or the view that everyone has a fair chance, and that market outcomes decide who is worthy and who is not. (Suggesting that the "winners" deserve everything that the market gives them, while the "losers" deserve nothing but hatred and scorn.)

The book has three main substantive chapters (leaving aside the Introduction and Conclusion). The first discusses the John Galt speech in Ayn Rand's Atlas Shrugged, and compares it to a much less malignant late 19th century entry in the so-called success literature genre, Russell Conwell's Acres of Diamonds speech, which he gave to paying audience thousands of times between 1870 and 1925, thereby earning enough moolah to found Temple University.

The last chapter compares 2 movies that have a surprising amount in common, apart from the pervasive cultural influences of their very different eras: Frank Capra's It's a Wonderful Life from 1946, and Martin Scorsese's The Wolf of Wall Street from 2013.

The middle chapter, which I presented at the workshop and will recapitulate briefly in a follow-up blog post to this one, discusses The Great Gatsby.

Sunday, March 05, 2023

Fiction recommendation

 I just finished Olivia Manning's Levant Trilogy, a follow-up to her Balkan Trilogy. These are 6 novels (about 1,500 pages total) set during World War II, and following her own experiences as a young Englishwoman who follows her newly-married husband (whom she barely knows) from England to his posting as a university lecturer in Bucharest in 1939. The fortunes of war (which is also the name generally given to the sextet) chase them first to Athens and then to Cairo. Her husband Guy is the single worst husband I have ever seen in fiction, if you eliminate all those who are angry, violent, abusive, dangerous, unfaithful, etcetera. There is also a broader rotating cast, composed of numerous other mainly English characters whose foibles and vanities are generally at center stage.

Despite the drama surrounding the War's events, these are quiet, observant social novels full of character observation, almost like country house fiction except set amid violent chaos, and generally lacking major dramatic events other than those on the broader canvas imposed by history. It seems like they ought to be boring, but instead I found them enthralling throughout. (I didn't read them straight through, however, but over some months with other books in between.)

Highly recommended, although I can't guarantee that everyone will find them as compelling as I did.

Friday, March 03, 2023

New paper posted on SSRN

I have just posted on SSRN a paper that I wrote last year, entitled "Would an Unapportioned U.S. Federal Wealth Tax Be Constitutional, and What Does That Mean?"

It's available here, and the abstract is as follows:

To assess the constitutionality of an unapportioned federal wealth tax, and/or of a federal income tax provision reaching wealthy taxpayers’ unrealized gains, one needs an underlying framework for making judgments about legal claims. While no such framework can be entirely specified, at least to general agreement, this does not support nihilistically rejecting all comparative judgments about better versus worse, or more versus less convincing, instances of legal analysis.
While it appears nearly certain that the Supreme Court‘s current right-wing majority would strike down an unapportioned federal wealth tax, the “correct” answer to this constitutional question cannot be proven to general agreement. I myself would disagree with such a holding by the Court. An important variable in resolving the issue for oneself is how much continuing precedential weight one should give to Pollock v. Farmers’ Loan & Trust Co. – a case that itself blatantly disrespected precedent, but that did so more than a century ago, and that (on the other hand) some argue has already ceased to be good law. The principle of respecting precedent both has instrumental value and has been long (if fitfully) honored within the American legal system, but all agree that its weight is not absolute.
An unapportioned minimum income tax on the wealthiest Americans that included in income their unrealized capital gains would likely be constitutional under currently prevalent legal doctrine. It is true, however, that Eisner v. Macomber (1920), if it were held to remain good law beyond its immediate facts, would support holding it unconstitutional. The prospect that the current Supreme Court’s six right-wingers will decide to revive Macomber provides only one reason for suspecting that they might strike down such a provision, perhaps while also launching a broader constitutional war against central tenets of the current regime for taxing wealthy individuals and capital income. However, it lies beyond the power of conventional legal analysis to predict either what form such a war would take, or on what terms it might end up being resolved.