Taxes, the Problem and Solution: A Model for Vanishing Deductions and Exclusions for Residence-Based Tax Preferences

Taxation is an essential component to raising revenue for the government. Despite public resistance to raising taxes during an economic crisis, taxation has historically been successful in addressing revenue shortfalls. While it may be a political risk to increase taxes on ordinary income for the average American, there may not be the same societal resistance to modifying or eliminating tax preferences that primarily benefit the wealthiest taxpayers. By modifying or eliminating certain tax preferences, the government can address some of the revenue shortfalls without raising taxes. This article contributes to the scholarly discussion on the modification and elimination of tax preferences by demonstrating the connection between the tax preferences associated with, and the overinvestment in, homeownership. In addition, this article demonstrates why limitations should be imposed on: (1) the type of taxpayers that qualify for and receive the benefit of these preferences; and (2) how much taxpayers receive. This article proposes limitations based on both household income with phase-outs and on the number of tax benefits a taxpayer may receive based on homeownership. These housing-based tax preferences cost the government billions of dollars in lost revenue, yet benefit only a small percentage of the population without a clear impact on the homeownership rates

EXPLODING WEALTH INEQUALITIES: DOES TAX POLICY PROMOTE SOCIAL JUSTICE OR SOCIAL INJUSTICE?

In reviewing tax policy as a whole, the current system is grossly imbalanced. Although the structure of the U.S. taxing system is labeled as a progressive system, the reality is that the system, in operation, is a regressive taxing system. The benefits and treasures of tax policies flow to those of greater wealth while those with less wealth squarely shoulder the burdens of raising revenue. This Essay will briefly discuss how some tax policies work in concert to systematically shift wealth to the wealthiest taxpayers. This social arrangement is counter to what many would perceive as social justice. Social justice requires that those who are of greater means and receive greater benefits of tax policy should be responsible for a greater weight of the tax burdens. This Essay will focus on the home mortgage interest deduction, capital gains exclusions from the sale of a home, and the estate tax and how these policies perpetuate income and wealth inequality. It will also discuss wealth and income inequality by determining benefits of wealth and measured burdens and responsibilities that should attach to ensure the preservation of social order to achieve social justice as applied to each tax policy discussed. By making adjustments to current policies, the tax code can be used to reduce the massive wealth and income disparity that currently exists

EXPLODING WEALTH INEQUALITIES: DOES TAX POLICY PROMOTE SOCIAL JUSTICE OR SOCIAL INJUSTICE?

In reviewing tax policy as a whole, the current system is grossly imbalanced. Although the structure of the U.S. taxing system is labeled as a progressive system, the reality is that the system, in operation, is a regressive taxing system. The benefits and treasures of tax policies flow to those of greater wealth while those with less wealth squarely shoulder the burdens of raising revenue. This Essay will briefly discuss how some tax policies work in concert to systematically shift wealth to the wealthiest taxpayers. This social arrangement is counter to what many would perceive as social justice. Social justice requires that those who are of greater means and receive greater benefits of tax policy should be responsible for a greater weight of the tax burdens. This Essay will focus on the home mortgage interest deduction, capital gains exclusions from the sale of a home, and the estate tax and how these policies perpetuate income and wealth inequality. It will also discuss wealth and income inequality by determining benefits of wealth and measured burdens and responsibilities that should attach to ensure the preservation of social order to achieve social justice as applied to each tax policy discussed. By making adjustments to current policies, the tax code can be used to reduce the massive wealth and income disparity that currently exists

Saving the Farm or Giving Away the Farm: A Critical Analysis of the Capital Gains Tax Preferences

This Article addresses some of the inequities and offers a multi-faceted proposal to raise revenue and incentivize preferences for a more balanced approached to tax policy. First, I advance a proposal that offers solutions to shift certain aspects of the capital gains tax preferences toward the middle and lower class. To balance the costs, I then propose an option to phase out or eliminate other preferences that primarily benefit the wealthiest taxpayers. This balanced approach will allow the government to raise revenue and change the capital gains tax preferences from a rewards to an incentive-based system. Part II of this Article focuses on the capital gains tax and provides an abbreviated historical background about the preferential rates for capital gains taxes. This discussion includes research supporting the assertion that the wealthiest taxpayers have predominantly benefitted from the capital gains preferential rate, and suggestions to limit the preferential rates based on income levels. Part II also analyzes tax preferences of capital income and demonstrates how policies have failed to encourage the disposition of property to generate revenue. This Part includes reforms necessary to encourage taxpayers to dispose of capital property by proposing policies that remove the benefits associated with holding property for long periods of time. This Part also discusses widening income and wealth inequalities and how the capital gains tax has contributed to these inequalities. Part III begins with a discussion of the income tax implications of the capital gains tax when property passes through the estate. The discussion will conclude with the gross inequities associated with capital property that passes through an estate to a beneficiary. Part IV analyzes the best solutions for reforming capital gain tax policiesthrough the estate. The proposed reforms will create horizontal equity between taxpayers who receive capital property via lifetime transfers and taxpayers who receive capital property via death transfers. This section also discusses the impact of capital gains preferences and analyze how tax preferences on capital income have failed to encourage disposition of property and reforms necessary to encourage taxpayers to dispose of capital property. Part V provides a conclusion

Making Tax Policy Great Again: America, You\u27ve Been Trumped

Tax policy plays a role in shaping the economy. Scholars have long asserted that tax policy should be used to make positive impacts on economic activity by adjusting and creating policies that benefit most of the population rather than the elite few. Scholars advocate for implementing policies to address wealth and income inequality while effectively facilitating other goals such as revenue raising and combating wealth concentration. Scholars and economists found that a key factor in wealth inequality is the increasing capital income concentration of the top income earners. Economists have further found that income and wealth inequality undermined democracy and the economy. Scholars assert tax policy has been historically used to further the financial goals of the very wealthy and contributes to income and wealth inequality. Proponents of lower tax responsibility contend tax reform is necessary to simplify the tax code, stimulate the economy, and provide economic efficiency. Politicizing tax policy contributes to the polarizing effects as politicians use their platforms to incite or satisfy their constituents. Political affiliations influence beliefs and myths about tax policy, with taxpayers often supporting proposed policies consistent with their political ideologies. In his first presidential campaign, one of Donald Trump’s platforms was “Tax Reform that Will Make America Great Again.” He indicated his tax reform would provide tax cuts for everyone, particularly the middle class. On December 22, 2017, President Trump signed legislation, commonly referred to as the Tax Cuts and Jobs Act (TCJA), claiming it as “the largest tax cuts in history.” While proponents of the TCJA claimed this legislation provided tax breaks for everyone, the prediction by most tax policy experts was that the provisions would predominantly benefit the wealthy. This Article asserts tax policy should reflect the values of society and benefit taxpayers who need assistance. The tax base should be modeled on historical justifications for determining tax responsibility, meaning, primarily imposed on the wealthiest taxpayers. In short, tax policy should revert to its roots when tax rates structures were both marginally and effectively progressive. By shifting tax responsibility to the wealthiest taxpayers, we can provide tax relief to middle-and low-income taxpayers. This Article will examine how tax law, particularly the TCJA, continues historical trends to bait taxpayers with proposed tax reform described as benefiting middle-and low-income households but that instead disproportionably benefits the wealthy. Additionally, this Article will address tax policies in the TCJA that exacerbate wealth and income inequality by focusing on two aspects of the TCJA: the transfer tax laws and the mortgage interest deduction (MID)

Teaching Cultural Competence in Law School Curricula: An Essential Step to Facilitate Diversity, Equity, & Inclusion in the Legal Profession

Law schools must recognize and seek to remove the barriers to teaching cultural competence and DEI and provide appropriate training and workshops for law professors. Providing law professors with the tools to integrate cultural competency into existing curricula is a first and crucial step to ensure that law professors are well-versed in both their own cultural competency, and in the ability to provide cultural competency training to their students. The culturally competent student will become a culturally competent lawyer with the skillset to make impactful contributions towards DEI in and beyond the practice of law

May the Odds Be Ever in Your Favor: How the Tax Cuts and Jobs Act Fortified the Great Wealth Divide

Have Americans become so desensitized to inequality that we have morphed into a state of dystopia, and vast inequalities have become normalized? Discussions of dystopia typically describe acts of oppression, tyranny, inequality, and an overall undesirable societal state. Dystopia analysis also requires a hard look at societal values to determine ways to avoid adverse outcomes that vast inequalities may produce. By identifying the undesirable outcome, there is an opportunity to avoid or reverse it by enacting laws to combat inequalities. The Hunger Games is a fictional tale of wealthy society members enjoying the rewards of high society while using the poor societal members for labor and entertainment. This illustration may also depict American realities. For example, Panem is described as a country consisting of twelve districts and the Capitol. The Capitol is the power center where the wealthiest reside. While decisions regarding the entire society are made by a select few, namely the President, those decisions primarily benefit the wealthy, and they intentionally contribute to a state of inequality and selective oppression. America’s growing inequalities were further facilitated through the Tax Cuts and Jobs Act (TCJA). The TCJA has contributed to disparities, and America’s version of dystopia, by disproportionally benefitting the wealthy. There are vast inequalities across multiple areas of the law; however, this article will focus on specific tax policies by comparing the dystopic society depicted in The Hunger Games to tax policies within the TCJA. This analysis will include a discussion of changes to the standard deduction and personal exemptions alliance, historical justifications for both, and the impact of tax policy on inequalities