State Responses to Federal Tax Reform: Charitable Tax Credits

This paper summarizes the current federal income tax treatment of charitable contributions where the gift entitles the donor to a state tax credit. Such credits are very common and are used by the states to encourage private donations to a wide range of activities, including natural resource preservation through conservation easements, private school tuition scholarship programs, financial aid for college-bound children from low-income households, shelters for victims of domestic violence, and numerous other state-supported programs. Under these programs, taxpayers receive tax credits for donations to governments, government-created funds, and nonprofits. A central federal income tax question raised by these donations is whether the donor must reduce the amount of the charitable contribution deduction claimed on her federal income tax return by the value of state tax benefits generated by the gift. Under current law, expressed through both court opinions and rulings from the Internal Revenue Service, the amount of the donor’s charitable contribution deduction is not reduced by the value of state tax benefits. The effect of this Full Deduction Rule is that a taxpayer can reduce her state tax liability by making a charitable contribution that is deductible on her federal income tax return. In a tax system where both charitable contributions and state/local taxes are deductible, the ability to reduce state tax liabilities via charitable contributions confers no particular federal tax advantage. However, in a tax system where charitable contributions are deductible but state/local taxes are not, it may be possible for states to provide their residents a means of preserving the effects of a state/local tax deduction, at least in part, by granting a charitable tax credit for federally deductible gifts, including gifts to the state or one of its political subdivisions. In light of recent federal legislation further limiting the deductibility of state and local taxes, states may expand their use of charitable tax credits in this manner, focusing new attention on the legal underpinnings of the Full Deduction Rule. The Full Deduction Rule has been applied to credits that completely offset the pre-tax cost of the contribution. In most cases, however, the state credits offset less than 100% of the cost. We believe that, at least in this latter and more typical set of cases, the Full Deduction Rule represents a correct and long-standing trans-substantive principle of federal tax law. According to judicial and administrative pronouncements issued over several decades, nonrefundable state tax credits are treated as a reduction or potential reduction of the credit recipient’s state tax liability rather than as a receipt of money, property, contribution to capital, or other item of gross income. The Full Deduction Rule is also supported by a host of policy considerations, including federal respect for state initiatives and allocation of tax liabilities, and near-insuperable administrative burdens posed by alternative rules. It is possible to devise alternatives to the Full Deduction Rule that would require donors to reduce the amount of their charitable contribution deductions by some or all of the federal, state, or local tax benefits generated by making a gift. Whether those alternatives could be accomplished administratively or would require legislation depends on the details of any such proposal. We believe that Congress is best situated to balance the many competing interests that changes to current law would necessarily implicate. We also caution Congress that a legislative override of the Full Deduction Rule would raise significant administrability concerns and would implicate important federalism values. Congress should tread carefully if it seeks to alter the Full Deduction Rule by statute

Caveat IRS: Problems with Abandoning the Full Deduction Rule

Several states have passed — and many more are considering — new tax credits that would reduce tax liability based on donations made by a taxpayer in support of various state, local or non-profit programs. In general, taxpayer contributions to qualifying organizations — including public charities and private foundations, as well as federal, state, local, and tribal governments — are eligible for the federal charitable contribution deduction under section 170. In a previous article, we explained how current law supports the view that qualifying charitable contributions are deductible under section 170, even when the donor derives some federal or state tax benefit by making the donation. We referred to this treatment as the “full deduction rule.” Some commentators have suggested that Treasury and the IRS could change existing law, whether through new regulations or by issuing a new interpretation of existing regulations, to limit the deductibility of taxpayer contributions when they trigger a state or local tax benefit to the donor. Many legal and administrative concerns are associated with those actions. In this report, we argue that even if the IRS has the legal authority to implement the changes absent new legislation, it should decline to do so

The regional economic impact of more graduates in the labour market: a “micro-to-macro” analysis for Scotland

This paper explores the system-wide impact of graduates on the regional economy. Graduates enjoy a significant wage premium, often interpreted as reflecting their greater productivity relative to non-graduates. If this is so there is a clear and direct supply-side impact of HEI activities on regional economies. We use an HEI-disaggregated computable general equilibrium model of Scotland to estimate the impact of the growing proportion of graduates in the Scottish labour force that is implied by the current participation rate and demographic change, taking the graduate wage premium in Scotland as an indicator of productivity enhancement. While the detailed results vary with alternative assumptions about the extent to which wage premia reflect productivity, they do suggest that the long-term supply-side impacts of HEIs provide a significant boost to regional GDP. Furthermore, the results suggest that the supply-side impacts of HEIs are likely to be more important than the expenditure impacts that are the focus of most HEI impact studies

Nation-Building Through Compulsory Schooling During the Age of Mass Migration

By the mid-19th century, America was the most educated nation on Earth: significant financial investments in education were being undertaken and the majority of children voluntarily attended public schools. So why did states across America start introducing compulsory schooling laws at this time in history? We provide qualitative and quantitative evidence that states adopted compulsory schooling laws as a nation-building tool to instill civic values to the tens of millions of culturally diverse migrants who arrived during the ‘Age of Mass Migration’ between 1850 and 1914. We show the adoption of state level compulsory schooling laws occurred significantly earlier in states that hosted a subgroup of European migrants with lower exposure to civic values in their home countries. We then use cross-county data to show the same subgroup of European migrants had significantly lower demand for American common schooling pre-compulsion, and so would have been less exposed to the kinds of civic value or discipline instilled by the American education system had compulsory schooling not been passed. By studying the link between mass migration and the endogenous policy responses of American-born voters in receiving states, our analysis provides new micro-foundations for compulsory schooling laws, the legislative bedrock on which all future developments of the American schooling system were built

Diagnostic criteria for idiopathic pulmonary fibrosis: a Fleischner Society White Paper.

This Review provides an updated approach to the diagnosis of idiopathic pulmonary fibrosis (IPF), based on a systematic search of the medical literature and the expert opinion of members of the Fleischner Society. A checklist is provided for the clinical evaluation of patients with suspected usual interstitial pneumonia (UIP). The role of CT is expanded to permit diagnosis of IPF without surgical lung biopsy in select cases when CT shows a probable UIP pattern. Additional investigations, including surgical lung biopsy, should be considered in patients with either clinical or CT findings that are indeterminate for IPF. A multidisciplinary approach is particularly important when deciding to perform additional diagnostic assessments, integrating biopsy results with clinical and CT features, and establishing a working diagnosis of IPF if lung tissue is not available. A working diagnosis of IPF should be reviewed at regular intervals since the diagnosis might change. Criteria are presented to establish confident and working diagnoses of IPF

Higher Education as modulator of gender inequalities: Evidence of the Spanish case

Raising educational levels may help to reduce inequalities between men and women in certain social and economic aspects. Using statistics for Spain, we analyse labour market behaviours such as the rates of activity and unemployment by sex according to the educational level. The results reveal that the differences between men and women decrease as the educational level increases. In particular, the modulator effect of education is very important at the higher level, where differences in labour market behaviour between men and women with an university education almost disappear, except in terms of salaries. Nevertheless, it can be seen that the current economic crisis has reduced the modulator role of education in gender differences in Spain

Brief of Tax Law Professors as \u3ci\u3eAmici Curiae\u3c/i\u3e in Support of Petitioner in \u3ci\u3eLoudoun County, Virginia v. Dulles Duty Free, LLC\u3c/i\u3e

Amici are professors of tax law at universities across the United States. As scholars and teachers, they have considered the doctrinal roots and practical consequences of judicial limits on state and local taxation. Amici join this brief solely on their own behalf and not as representatives of their universities. A full list of amici appears in the Appendix to this brief

Competitive and Cooperative Interactions Mediate RNA Transfer from Herpesvirus Saimiri ORF57 to the Mammalian Export Adaptor ALYREF

The essential herpesvirus adaptor protein HVS ORF57, which has homologs in all other herpesviruses, promotes viral mRNA export by utilizing the cellular mRNA export machinery. ORF57 protein specifically recognizes viral mRNA transcripts, and binds to proteins of the cellular transcription-export (TREX) complex, in particular ALYREF. This interaction introduces viral mRNA to the NXF1 pathway, subsequently directing it to the nuclear pore for export to the cytoplasm. Here we have used a range of techniques to reveal the sites for direct contact between RNA and ORF57 in the absence and presence of ALYREF. A binding site within ORF57 was characterized which recognizes specific viral mRNA motifs. When ALYREF is present, part of this ORF57 RNA binding site, composed of an a-helix, binds preferentially to ALYREF. This competitively displaces viral RNA from the a-helix, but contact with RNA is still maintained by a flanking region. At the same time, the flexible N-terminal domain of ALYREF comes into contact with the viral RNA, which becomes engaged in an extensive network of synergistic interactions with both ALYREF and ORF57. Transfer of RNA to ALYREF in the ternary complex, and involvement of individual ORF57 residues in RNA recognition, were confirmed by UV cross-linking and mutagenesis. The atomic-resolution structure of the ORF57-ALYREF interface was determined, which noticeably differed from the homologous ICP27-ALYREF structure. Together, the data provides the first site-specific description of how viral mRNA is locked by a herpes viral adaptor protein in complex with cellular ALYREF, giving herpesvirus access to the cellular mRNA export machinery. The NMR strategy used may be more generally applicable to the study of fuzzy protein-protein-RNA complexes which involve flexible polypeptide regions