Pay for Play: The Compensated Leisure Flaw of Contract Damages

Contract damages aim to leave the injured party in as good a position as if the contract had been fulfilled. But discharged laborers often obtain a much better result due to the lack of a reduction for their excused work effort on breach. After first exposing the problematic ramifications of this unjustified deviation, this Article then provides two workable corrections

Goodwill Hunting Gone Bad: Tax Law ’s Outmoded Treatment of Goodwill

Goodwill reflects the positive consumer association with a business. Goodwill thus overlaps with trademarks and other related assets. This close association impedes the separation of goodwill value from such related assets. Difficulties thus arise when the tax law treats goodwill more (or less) favorably than related intangible assets.For instance, the tax law previously denied any depreciation deductions for goodwill. Business buyers thus often allocated their costs away from goodwill and towards related assets like depreciable customer lists. The IRS responded with the initial “goodwill hunting” wave, challenging taxpayers’ low goodwill valuations. Congress addressed this litigious area in 1993 with new, matching depreciation rules for purchased goodwill and related intangible assets.But the goodwill hunting problem remains, albeit with reversed roles, due to other provisions which treat goodwill more favorably than other intangibles. Taxpayers now overstate goodwill with the government in defense against this second goodwill hunting wave. For instance, U.S. corporations inflate goodwill on transfers to foreign subsidiaries given a special gain avoidance rule on such transfers for goodwill. While recent regulations have lessened these particular attempts, the Treasury Department’s limited authority prevented a full response for these subsidiary transfers. In addition, similar inconsistent tax rules incentivize high goodwill claims by taxpayers to obtain either more favorable capital gains rates or better foreign tax credit usage.This Article proposes four precise fixes to counteract these negative goodwill manipulations. These changes efficiently draw upon existing tax provisions. Such utilization of tried and tested provisions counteracts the status quo bias against untested reform proposals. These four changes together forge a common theme: the pressing need for a more uniform tax treatment of goodwill and other closely-related intangibles. With these changes, Congress would restore the positive association of goodwill back to the tax law

A Progressive Consumption Tax for Individuals: An Alternative Hybrid Approach

Dissatisfaction with the existing income tax has increased in recent years. Practical problems with the income tax base create numerous loopholes, increasingly exploited by well-advised taxpayers. For the most part, these gaps are attributable to the income tax\u27s realization requirement, under which taxpayers report gains and losses as realized through market transactions. A consumption tax appeals as a response to these significant current loopholes since realization loses its significance under a consumption-based tax. The consumption tax\u27s appeal has been further enhanced by the recent and growing recognition of the narrow difference between income and consumption taxes, assuming away practical problems. Contrary to the long-standing belief that the income tax imposes an excess tax burden on all investment return, recent scholarship establishes that, relative to a pure income tax, the consumption tax relinquishes the tax burden on only the risk-free investment return. Accordingly, the consumption tax addresses the loopholes while relinquishing relatively little. Despite such threshold appeal, a consumption tax has not yet replaced the income tax. This Article descriptively explains this failure through an analysis of the leading progressive consumption tax proposal: the cash flow tax. The Article recaps the serious offsetting concerns raised by commentary on the cash flow tax, exhibiting how such concerns relate primarily to the cash flow tax\u27s wholesale removal of current tax on saved wages. Specifically, the lack of any current tax on saved wages raises tax avoidance, transition, and revenue concerns. In addition, saving decisions could be impacted in undesirable ways under a cash flow tax with progressive rates. Accordingly, the case for the consumption tax has been weakened by these concerns. The normative portion of this Article then presents a new progressive consumption tax proposal: a hybrid approach. Like the current income tax, the hybrid approach generally would tax wages, even if saved for future consumption. In addition, the hybrid approach would utilize a modified cash flow approach to tax the excess of (i) savings withdrawals for consumption, over (ii) previously saved wages, increased by the risk-free return thereon. As a result, the hybrid approach would capture the benefits of consumption taxation without the disabling problems of the cash flow tax. As discussed in the Article, the hybrid approach achieves this result since (i) the wage tax component addresses the cash flow tax concerns, and (ii) the modified cash flow component addresses the income tax problems

Progressive Consumption Taxes

Recent intellectual and political forces have moved the consumption tax to the forefront of tax policy debate. Since traditional flat-rate consumption taxes like the VAT raise serious distributional concerns, tax scholars have responded with innovative progressive consumption taxes. Two such taxes - the Hybrid Approach and the X-tax - were independently analyzed in a recent symposium on fundamental tax reform. These two proposals contain striking similarities. Both would tax individuals at progressive rates on their wages, with a separate tax on consumption less wages. Important differences exist, though, regarding the latter tax. The Hybrid Approach would impose such tax on individuals while the X-tax contemplates a VAT-like tax on all businesses. The X-tax and the Hybrid Approach are intriguing as they address the distributional objections to conventional consumption taxes. Standing alone, however, each raises problematic implementation tradeoffs. On the one hand, the X-tax simplifies individual tax reporting compared to the Hybrid Approach and current law. On the other hand, the X-tax would change current law significantly more than the Hybrid Approach, thereby exacerbating transition costs. Blending the respective strengths of the X-tax and the Hybrid Approach, I propose a new consumption tax consisting of three parts: a progressive wage tax, a business tax solely on corporations, and a limited individual tax on consumption less wages. This combination minimizes both individual tax reporting and changes to current law, thereby easing the way to a more equitable, efficient, and administrable tax system

Sham on You: Too Good to Be True

Of course, many taxpayers manipulate their affairs to minimize their taxes. The new December 2017 limits on state tax deductions evidence, however, the more endemic nature of the sham problem. Some state government officials have joined the loophole quest on behalf of their citizens. For instance, some states have proposed new state tax credits for “voluntary” contributions to state charities. Treasury Secretary Mnuchin aptly challenged this “ridiculous” attempt to “dress up” non-deductible tax payments as deductible charitable contributions. Despite Mnuchin’s convincing rebuke, state officials carry on with their ongoing avoidance efforts. In addition, similar avoidance schemes permeate many other legal areas such as property law, contract law, family law, and copyright law. While some courts strike down the sham attempts, other courts are less vigilant. Occasionally, some courts even endorse the workaround to achieve a desired goal. How should the legal system respond to all these legal gymnastics? First, lawmakers should avoid even sanctioned indirect workarounds. Even though intended as a narrowly circumscribed allowance, these endorsed maneuvers foster disrespect for legal requirements and create an air of legitimacy for other unintended manipulations. Instead, lawmakers should endeavor to achieve their desired ends more directly, without resort to these problematic formalisms. Unsanctioned schemes present a more intricate challenge. After analyzing the reasons behind the current judicial inertia, this Article crafts a new sham defense system sensitive to the root causes. A precise, but limited, sham definition provides the first line of a defense against the most egregious cases. Next, a balanced summary judgment approach further reinforces the new sham definition. Finally, legislative recommendations for vulnerable provisions complete the necessary protection

The Untaxed King of South Beach: LeBron James and the NBA Salary Cap

In contrast to Major League Baseball, the National Basketball Association (NBA) has a salary cap designed to provide every team an equal and fair chance of competing for the championship. The Miami Heat\u27s recent, incredible success in signing the game\u27s three most hotly desired free agents, including mega-superstars LeBron James and Dwyane Wade, therefore flies in the face of the NBA\u27s attempted level playing field. How could one team so outmaneuver all the others in a sport that tried to eliminate such uncompetitive results via a salary cap? As discussed in this Article, the answer lies in the law of unintended consequences and perverse incentives. Some NBA teams are located in more attractive jurisdictions with nicer amenities or lower costs, such as taxes. For instance, Miami provides a highly favorable climate both as to weather and taxes because Florida does not have a state income tax. In the absence of any salary cap limitations, teams in higher tax jurisdictions could compete better with Miami for free-agent players by offering higher salaries to offset the extra tax. But the NBA salary cap, by its very terms, blocks this usual free market response. Having flagged this perverse and unintended benefit to the no-tax clubs like Miami, this Article then proposes an appropriate solution. Rather than scrapping the salary cap and restoring a competitive advantage to the wealthier clubs, a relatively simple state tax adjustment to the cap amounts would counteract the rich clubs\u27 advantage without substituting an unintended benefit to the no-tax clubs. To achieve this result, the salary cap amounts of no-tax teams simply should be reduced by a percentage equal to the highest state tax rate of any NBA team. After making this simple adjustment, this Article then refutes more sophisticated arguments as to why the proposed adjustment might go too far

Effect of homogenisation conditions on recrystallisation in the Al-Mg-Mn alloy AA5454

The purpose of the present work is to understand the microstructure development and, particularly, to control the progress of recrystallisation in hot strip in the Al-Mg-Mn alloy AA 5454, which is typically used for the manufacture of structural automotive components. The chemical composition, together with the thermomechanical processing history of this material, has a strong influence on the microstructure of the product and the resulting properties as it is supplied to the customer. Electrical conductivity measurements, thermal analysis and electron microscopy have been carried out to characterise the evolution of precipitation state at various stages in the processing route. The conditions of the homogenisation heat treatment have been varied, and the effect on subsequent recrystallisation after hot rolling has been evaluated in both the as cast and rough rolled condition by optical microscopy techniques. Results indicate that the conditions of homogenisation heat treatment and roughing rolling are critical for the generation of a suitable recrystallised microstructure in AA 5454 hot strip. A new two stage homogenisation practice has been developed to expedite post-rolling recrystallisation in this alloy

Implications of the structural change in dairy products trade on milk price paid to producers in Chile

Engler, A (reprint author), Univ Talca, Fac Ciencias Agr, Casilla 747, Talca, ChileSince 1990 row milk production has exhibited it rapid increase from 890 million liters in 1990 to 1818 million in 2006. The excess production has allowed for the expansion of the export sector, converting Chile in a net exporter in 2001. A relevant question in this new market scenario is how this Structural change can affect milk prices paid to producer,; in Chile. the consequences of this Structural change were explored in this study using a Vector Error Correction (VEC) model and cointegration analysis. The results indicated that the domestic, CIF (Cost. Insurance, Freight) and FOB (Free Oil Board) prices were cointegrated, implying that changes in the import and export prices are transmitted to the domestic market affecting the milk price paid to producers. Prior to 200 1, the import price (CIF) was the relevant reference dictating the movements of the domestic price. After 2001, the export price (FOB) became the reference, whereas the CIF price was no longer significant. the parameters of the VEC model SLIcroest that the conitegrating relation between CIF and domestic prices for the first period Under analysis ( 1990-2000) was clearer than that between FOB and domestic prices for the second period (2001-2007/3). the price elasticity for the FOB-domestic price vector had a large confidence interval, which is Why it IS difficult to draw strong conclusions regarding the impact Of future FOB fluctuations Oil the milk price paid to producers in Chile after 2001