Law student tutorial: 8 minutes to construct a better term paper

Having given students one-on-one tutorials on how to organize their papers so many times that I have lost count, I finally made a tutorial. This is obviously aimed at my own students but as the fall semester gets into full swing and term paper writing projects take shape, others might find it helpful as well so here it is.

Enjoy: 8 minutes and only a few steps to constructing a better paper.

Assessing BEPS: Origins, Standards, and Responses

If you are an IFA member or are attending IFA this fall, you can now download the full IFA 2017 Cahiers. The general report for Subject 1 on BEPS is co-authored by myself and Stephen Shay and is also available on SSRN. Here is the abstract:

The G20/OECD’s multi-year campaign to combat base erosion and profit shifting (BEPS) marks a critical step in the evolution of the international tax regime and the roles of institutions that guide it. This General Report for Subject 1, IFA Congress 2017, provides a snapshot of the outcomes of the BEPS project by comparing national responses to key mandates, recommendations and best practices through the end of October, 2016 based on National Reports representing the perspectives of 48 countries.  These National Reports reveal that the impact of the BEPS initiative on a particular country corresponds to at least three key factors, namely: (1) the extent to which domestic law is already in substantial compliance with BEPS outcomes; (2) the degree to which implementation of BEPS outcomes appears capable of delivering positive revenue or economic results, or both, relative to a country’s experiences and perceptions prior to BEPS; and (3) the type and degree of involvement of a country in the formative stages of the initiative preceding the release of the final BEPS action plans.  As BEPS continues to unfold, it is difficult to gauge the full extent to which countries in fact will adhere or defect from the rules. However, the BEPS project has witnessed the transition of global tax governance from the OECD countries exclusively to global fora. This leaves open questions regarding agenda-setting for international tax policy going forward. As we conclude this interim snapshot of the origins, standards, and responses to BEPS to date, we look to future IFA congresses for answers to these questions and a final assessment of the BEPS project.

 

Update: The Price of Entry: Latest Research plus Infographic

* September update: I've found some more information on Russia's program, which brings it closer to the global averages instead of being a glaring outlier. I've also now uploaded my working paper, Buying in: Residence and Citizenship by Investment, and would welcome comments. Here is the abstract:

States have complex and often conflicted attitudes toward migration and citizenship. These attitudes are not always directly expressed by lawmakers, but they may be reflected quite explicitly in tax regimes: for the world’s most prosperous individuals and their families, multiple states extend a warm welcome. Sometimes prospective migrants are offered fast track to physical residence which can lead to citizenship if the migrant desires it. Others are offered a mere commercial transaction, with citizenship granted to applicants with the right credentials and a willingness to pay. Migrants might seek to obtain residency or citizenship for personal, family, economic, or tax reasons, or some combination of them. For the granting country, the tax significance of obtaining new residents or citizens will vary depending on domestic policy goals. However, the consequences of residence and citizenship by investment programs could be severe for the international tax regime: the jurisdiction to tax and the allocation of taxing rights among countries are commonly based on residence and citizenship factors. This article accordingly surveys contemporary residence and citizenship by investment programs on offer around the world and analyzes their potential impact on international tax policy.

* update: I've found a couple of additional programs (e.g. France has a lower cost program, making it less of an outlier)--thank you twitterverse) and I've corrected a few currency conversion errors. This is still a work in progress as previously noted, and I expect to be revising again in the coming weeks.

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I've been working on residence and citizenship by investment programs, and thanks to some stellar research assistance by Jake Heyka, have developed a set of data comprising what I believe is a fairly thorough look at the residence and citizenship by investment programs currently on offer around the world. I made the above infographic to show the lowest cost program per country for all countries that offer either residence or citizenship by investment.

The lowest cost residence by investment programs are offered by Panama and Paraguay, each coming in at about USD$5,000, while the most expensive is Russia, at over USD$5 million now Austria, at about $3.3M. The average price for all residence and citizenship by investment programs that we found is about $1 million, but this number isn't perfect because some programs are based on job creation rather than investment (e.g., Portugal, Turkey, UK), some involve having entrepreneur/angel investment support rather than a direct investment (e.g. Australia, Canada), and some involve annual amounts (Italy and Switzerland).

One of the things I wondered about in looking over the programs is the inequality factor at play--that is, how much can richer/larger countries demand in terms of higher prices and more stringent requirements (such as actual residence) for entry, and how much must poorer/smaller countries be satisfied with smaller investments and fewer commitments by the applicant? The answer seems to be that there appears definitely a "rich get richer" quality to the distinctions among programs, but there are lots of details in the programs that require further thought.

The paper itself is still in progress but here is an explanation of what I am looking at:

International law and political theory scholars have long wrestled with the normative implications of commodifying citizenship and access to immigration with pay-to-play visa programs, but the analysis does not typically consider the role the tax system plays or could play in these schemes, nor how such schemes might impact the tax regime in terms of gross revenue or distributional effect.  Yet governments increasingly view their tax systems as a means of potentially increasing the value of residence and citizenship in their countries, whether intrinsically or in relation to the treatment of those who gain such status by other means.  Given the cost involved in reducing revenue from those arguably most able to pay, whether the programs actually produce the predicted outcomes is one obvious question to be asked.  Even if the programs in fact achieve their goals, a second question surely arises regarding the normative justification for using the tax system to lure the wealthy away from other countries in this manner. Does the normative case differ when applied to humans as opposed to companies? Does it differ when the luring state is richer or poorer relative to the countries of origin of prospective immigrants? To sketch out a framework for analyzing these questions requires a sense of the various competing programs on offer. This essay takes the first step by comparing national programs that use their taxing power in some manner in order to attract immigration, and highlights some of the factors that raise normative questions about the appropriate design and uses of a tax system. 

Comments welcome.

The Seven Rules for Tax Research, Now Ten

The OECD released the multilateral instrument (MLI) on tax, so (assuming that at least five countries ratify it), we have to revise the old rules for doing tax research. The MLI means that any given tax situation will be impacted by relevant statutes, relevant tax treaties, and the portions of the MLI that are in effect as to those treaties. So here they are, the revised rules for tax research:

You can find the text of the MLI here. The Explanatory Statement, also at that link, is so far only in English.

Three months after five countries ratify, the MLI will be in effect; subsequent accessions will take effect one month after ratification. However, as to optional provisions, no substantive changes take effect until both parties notify which provisions they intend to apply to which of their treaties. 

The OECD has designed three types of provisions and explains how they relate to existing tax treaties. Here are my notes to self:

Much more analysis to do obviously, but my first cut at this is to try to understand the process of integrating the MLI into the existing tax law order. 

Luring the rich: investor residence and citizenship packages

CBC ran a story yesterday on Canada allowing rich people to buy permanent residency status, which provoked some discussion on twitter about whether such a thing was something associated with secrecy jurisdiction (aka tax haven) behavior. I don't know what kind of behavior this is, but I think it is widespread and growing. It's all part of the complicated dance politicians around the world are doing: all trying to lure rich people and multinationals from everywhere else, in a relentless quest to keep impossible electoral promises about jobs and growth.

I've done some research on and off on these residence and citizenship purchase programs. My student Alexander Robinson got interested in the topic and put together a table last year; below are some of the basic numbers, more detail available on file. All the programs listed here are for residency unless citizenship is indicated. One important recent development that is missing in the table involves Puerto Rico, which I suggested a long time ago was poised to be the last, best tax haven for US citizens (while the U.S. will remain the world's last, best tax haven for everyone else in the world, but that is a different story). Janet Novack ran a story on PR yesterday, Puerto Rico Expands Tax Haven Deal For Americans To Its Own Emigrants. It seems policymakers understand PR's unique position in the world vis à vis US citizens, but so far it is having a limited luring effect.

Country	Type of Program	Cost
Antigua &Barbuda	National Development Fund (non-refundable)	USD 675,000.00
	Real-Estate	USD 1,080,000.00
	Business Investment (Sole Investor)	USD 4,000,000.00
	Business Investment (Two or more Investors)	USD 13,500,000.00
Australia	Significant Investor Program	AUD 5,000,000
Bulgaria	Investor (Full Investment)	BGN 1,000,000
	Investor (Financed Investment	BGN 180,000
	Investor (Fast Track Option)	BGN 2,000,000
Canada	Investment	CAD 800,000.00
	Investment - Quebec Investment	CAD 800,000.00
	Self-Employed Worker Program (Quebec)
	Quebec Entrepreneur Program
	Canadian Entrepreneur Program - (CDN Venture Fund)	CAD 200,000.00
	Canadian Self-Employed Program (Start Up - CDN Angel Investor)	CAD 750,000.00
China	Investor (1)	$2,000,000.00
	Investor (2)	$1,000,000.00
	Investor (3)	$500,000.00
	Investor (4)	$500,000.00
Cyprus	Direct Citizenship by Investment Program	EUR 200,000.00
Dominica	Package A:  Single Applicant (Non-Refundable)	USD 100,000.00
	Package B:  Family Application (Spouse, Non-Refundable)	USD 175,000.00
	Package C:  Family Application 2 (Spouse, 2 children, Non-Refundable	USD 200,000.00
	Package D:  Family Application Three	USD 250,000.00
Greece	Residency - Strategic Investments	EUR 250,000.00
	Residency - Property Purchase	EUR 250,000.00
Grenada	Approved Real Estate Project	USD 500,000.00
	Non-Refundable Donation	USD 200,000.00
Hong Kong	Capital Investment Program - Applications After 14 Oct 2010	HKD 10,000,000.00
	Capital Investment Program - Applications Before 14 Oct 2010	HKD 6,500,000.00
Ireland 5 Regimes	Investor - Government Bonds	EUR 2,000,000.00
	Investor - Job Producing Irish Companies	EUR 1,000,000.00
	Investor - Irish Publicly traded companies
	Investor - Government Bonds	EUR 2,000,000.00
	Investor - Venture Capital	EUR 1,000,000.00
	Investor - Blend (50% Property & 50% Securities)	EUR 1,000,000.00
	Investor - Endowment Funds	EUR 500,000.00
	Start-Up Entrepreneur Program	EUR 75,000.00
Latvia 4 Regimes	Investor - Equity Capital Investment	LVL 25,000.00
	Investor - Real Estate - (Regia area)	LVL 100,000.00
	Investor - Real Estate - (Other)	LVL 50,000.00
	Investor - Credit Institution	LVL 200,000.00
Malta	Investor	EUR 650,000.00
New Zealand	Investor Plus	NZD 10,000,000.00
	Investor	NZD 1,500,000.00
Panama	Macro Company Investment	USD 160,000.00
(Residency and Second Passport)	Mixed Fixed Deposit/Real-Estate	USD 300,000.00
	Economic Investment in Real Estate	USD 300,000.00
	Forest Investor	USD 80,000.00
	Fixed Term Deposit Real Estate	USD 300,000.00
Portugal	Property Investment	USD 500,000.00
	Financial Investment	1,000,000.00 €
	Creation of 10 Permanent Jobs
Saint-Kitts and Nevis	Citizenship by Investment	Real Estate Option
	SIDF Contribution	USD 250,000.00
Singapore	Global Investors Program - Option A	SGD 2,500,000.00
	Global Investors Program - Option B	SGD 2,500,000.00
Spain	Investment in Spanish Companies	EUR 1,000,000.00
	Deposit with Spanish Financial Entities	EUR 1,000,000.00
	Real-Estate Investment	EUR 500,000.00
	Business Project	Undefined
	Entrepreneur	Undefined
	Highly Qualified Professionals	Undefined Investment
	Other Category	Employees transferred to Spain within the same group of companies
Switzerland	Swiss Lump Sum Taxation	CHF 150,000.00
United States	Investor Visa (1) - EB 5	USD 1,000,000.00
	Investor Visa (2) - EB 5	USD 500,000.00
United Kingdom	Investor (type A)	£1,000,000.00
	Investor (type B)	net asset value of £2,000,000 plus loan £1,000,000 from a British Institution
	Exceptional Talent
	Entrepreneur	£ 50,000 of venture capital money

Tax and Human Rights: What's Next? #TJHR

Yesterday we concluded the McGill Tax Justice and Human Rights Research Collaboration Symposium. It was an action-packed three days and I left feeling that what I had set out to generate had in fact been accomplished: a cross-platform, cross-disciplinary conversation on the intersection of taxation and human rights. Everyone learned a great deal about a range of people who want to think about how taxation and human rights concepts work together, and a range of ideas and challenges generated by that exercise. I think I came away with at least a sense of the current landscape of this field, its recurring themes and questions, and where the research is likely to go in the near future. 

I'll write some more on this as I have a chance to reflect on the proceedings and review some of the tape of the sessions I had to miss (running a conference is all too unfortunately more about moving people around and dealing with technology and such than sitting back and listening). We have sought waivers from the conference participants and will be able to upload some of the sessions, or parts thereof, in the coming weeks. We are also in process of obtaining permission to post papers and presentations, and as those come in we will post those as well.  Not all presenters and presentations will be available online but enough, perhaps, to give a sense of what took place over the past three days. Updates on available content will be available at the conference website, linked above. 

As with any conference, what the participants say is only part of the story: the other and more lasting part is the networking and connection building that takes place. I heard from some of the participants about exciting new connections and possibilities for future collaboration. I myself managed to connect with many participants with whom I hope to collaborate again in the future. It is an exciting field and one I believe is gaining momentum. There is much work to be done.

The photo on the conference flyer, reproduced above, is a detail of the grand entrance to Old Chancellor Day Hall at McGill. We added it to the flyer as a tribute to the history of research and learning that goes on in this institution, and as a symbol of openness, welcome, and inclusion that characterizes the Faculty of Law at McGill. I hope and believe that the symposium opened many doors for future collaboration on the subject of tax justice and human rights. 

More updates in the weeks to come. 

This Week at McGill Law: Tax Justice and Human Rights Symposium #TJHR

This week I am so pleased to welcome to the McGill Faculty of Law an international group of students, academics, researchers, and activists to collaborate on the topic of tax justice: what is it, how is tax connected to human rights or how could it be, and what research needs to be done to further this emerging field. You can find info about the symposium, including the full program and speaker bios, here. I hope that this collaboration will raise interesting questions, inform, educate, and inspire future work on this emerging topic.

I will post each day's program as we get to it this week; we will be on twitter at #TJHR and welcome input from participants whether they are virtual or on the premises.

IBFD Seeking two Tax Research Fellows

This is a great opportunity and an interesting project: IBFD, a European publisher well known for its tax research and publishing, has two post-doctoral tax research fellowships available in Amsterdam, on Human Rights and Taxation and on Tax Treaty Related Issues. Each is a half-time position. Neither description says anything about the substance of the research, but simply notes:

The research activity will be carried out in the framework of the specific guidelines set by the Academic Chairman. Candidates applying for the position must be able to make themselves available to be at the IBFD headquarters in Amsterdam for 50% of the working days in the period of one year (reduced by holidays and other entitlements that may apply). The IBFD welcomes the application of professors and other candidates that have already positions in universities or research centres and that are enjoying sabbaticals, temporary or other leaves or that can organize their schedule in order to be present in the IBFD for the period mentioned above.

Application are due before 21 August 2014 to Recruitment at ibfd dot org.

New series of papers on why government can and should bring financial services into the tax base

The Victoria University of Wellington (Australia) has a new SSRN issue of interest, featuring a series of papers by Sybrand van Schalkwyk and the ever-prolific John Prebble, all on the topic of consumption tax and financial services. The first of these is the big picture:

"Value Added Tax and Financial Services"  Asia-Pacific Tax Bulletin, Vol. 10, pp. 363-370, 2004 Victoria University of Wellington Legal Research Paper No. 29/2013 Value added tax (VAT) is a relatively modern development. Designers of VAT recognized from the outset that the way in which financial institutions are remunerated creates significant difficulty when the tax is applied to their services. Administrative difficulties relate to imposing invoice-based VAT on service fees charged as part of the margin between buy and sell rates. Theoretical reasons relate to arguments that financial services should not be taxed under a consumption tax because, it is argued, financial services are not consumed in the way in which goods and services are consumed. Because of these difficulties, most jurisdictions have opted to exempt financial services from VAT. However, the commonly accepted reasons to exempt financial services from VAT are not compelling, since financial services are no different in relevant respects from other services. Moreover, there are methods by which financial services could be brought within the VAT base. Furthermore, although exemption is the simplest way for a VAT to treat financial services, it causes significant distortions in the economy.  This paper is of special interest to me because it confirms my own view that societies are increasingly accepting tax systems that intentionally tax the "easy-to-tax" most vigorously, the "hard-to-tax" much less vigorously and more randomly, and the "impossible-to-tax" not at all, and that these categories have been intentionally constructed from regulatory decision-making that renders various activities to a given category in systematic and purposeful ways. There are fundamental justice issues at stake in these regulatory outcomes. If Prebble and van Schalkwyk are correct that exempting financial services from VAT is a policy choice that has been made on the basis of an unexamined theory that these flows are hard or impossible to tax which in turn has been decided because of a failure to institute measures that would make them easy (or at minimum easier) to tax, then the failure to include financial services within existing VAT systems is a grave source of injustice within that tax policy choice (that is, in addition to and apart from the question about whether consumption taxation is itself a violation of justice in the exercise of taxation by states). The papers that follow focus on various ways to increase the coherency of the taxation of financial flows--what I would suggest is an effort to show us that financial flows could in fact be easier to tax, if not "easy-to-tax," given various regulatory reforms: "Defining Interest-Bearing Instruments for the Purposes of Value Added Taxation"   Asia-Pacific Tax Bulletin, Vol. 10, pp. 418-426, 2004Victoria University of Wellington Legal Research Paper No. 30/2013  This is the second of a series of four articles on the taxation of financial services under a value added tax. The first article considered whether, from a theoretical viewpoint, financial services should be included under a value added tax. It concluded that the arguments in favour of treating financial services in the same manner as any other service outweighed the arguments against doing so. This second article considers the definition of interest bearing financial instruments in some detail. It also considers the kinds of activities that qualify as financial services in relation to the instruments. The definition of financial services is important where a different type of treatment is applied to financial services. If financial services were taxed like any other service, then no definition would be needed. However, where, as in New Zealand, supplies of financial services can be exempted, the definition of financial services becomes very important. Alternatively, if some financial services are to be zero rated or taxed but not others, then it is necessary to have a global definition of financial services followed by individual definitions of the particular kinds of service that are to be brought within the tax base one way or the other. This article begins by considering interest-bearing instruments.  "Imposing Value Added Tax on Interest-Bearing Instruments and Life Insurance"  Asia-Pacific Tax Bulletin, Vol. 10, pp. 471-468, 2004 Victoria University of Wellington Legal Research Paper No. 31/2013  Exemption of financial services from Value Added Tax (VAT) is commonly accepted as being an anomaly in the New Zealand goods and services tax legislation. While exempting financial services from VAT is attractive to the legislature because it is a simple way of addressing the difficulties of applying VAT to financial services, it causes significant distortions, for instance tax cascading, which in turn causes price distortions. The application of VAT to interest-bearing financial instruments and life insurance is complicated by the way in which financial intermediaries charge for these services. The first part of this article investigates how interest-bearing instruments can be taxed under VAT, and the second part how life insurance can be taxed under VAT. There are several options for the treatment of interest-bearing instruments. They can be exempted, zero-rated, or included in the tax base. In this last category, there are three possible methods of including interest-bearing instruments: the invoice, cash flow, and truncated tax flow systems. The last is recommended because policy makers have come to realize that the cash flow system cannot be applied without significant modification.  "Imposing Value Added Tax on the Exchange of Currency"  Asia-Pacific Tax Bulletin, Vol. 10, pp. 469-483, 2004 Victoria University of Wellington Legal Research Paper No. 32/2013  Exemption of financial services from Value Added Tax (VAT) is commonly accepted as being an anomaly in the New Zealand goods and services tax legislation. While exempting financial services from VAT is attractive to the legislature because it is a simple way of addressing the difficulties of applying VAT to financial services, it causes significant distortions, such as tax cascading, which in turn causes price distortions. The application of VAT to services that bring about the exchange of currency is one instance where financial services could be included in the VAT base. Services bringing about the exchange of currency are a species of financial service, but are inherently different from other financial services since they are relatively simpler than other financial services. Reasons advanced for exempting financial services in general do not necessarily apply to services bringing about the exchange of currency. Bravo to the authors--this represents a lot of work and adds much to the discussion of how economically-integrated yet politically independent nations can approach the subject of taxation from the perspective that justice matters in policy decisions.

Workshop on social economic rights in practice-Coventry

The Human Rights Centre in Practice and the Institute of Advanced Study at the University of Warwick are holding a workshop tomorrow on Strategies for realising social economic rights in practice: Multi-disciplinary experiences from early career researchers.  The program asks:

1. Should social economic rights be considered human rights at all?
2. How helpful is the international legal framework in enabling the achievement of these rights?
3. How do we measure social economic rights in practice?
4. What lessons can we learn from practitioners in our pursuit of achieving social economic rights?

Interesting.  Hope to see some of the papers as they emerge from abstract to publication.

Gender pay gap begins one year out of college

From Salon:

A report from the American Association of University Women (AAUW) flagged by Raw Story found that a gender earning gap usually occurs just one year after graduates leave college, with men making an average of $42,918 one year after graduation while women make an average of $35,296. The report, “Graduating to a pay gap” notes: 

“Graduating to a pay gap” finds that women working full time already earn less than their male counterparts do just one year after college graduation. Taking a closer look at the data, we find that women’s choices—college major, occupation, hours at work—do account for part of the pay gap. But about one-third of the gap remains unexplained, suggesting that bias and discrimination are still problems in the workplace.

More at the link.

Next Monday: Art Cockfield on FATCA

Professor Arthur Cockfield will be at McGill next Monday, where he will present his paper on FATCA as part of our Tax Policy Colloquium Series.  It promises to be a lively discussion, as the issues here are many and difficult.  Here is the title and abstract:

The Limits of the International Tax Regime as a Commitment Projector

The paper examines how transaction cost approaches (as developed by North and Williamson) can inform international tax law and policy discussions.  The international tax regime evolved institutions and institutional arrangements to address transaction costs such as the risk that two countries might doubly tax the same cross-border business profits.  It mainly sought to reduce this risk by serving as a ‘commitment projector’ that enables governments to make credible political promises to taxpayers, other members of the public and other governments that they will not overtax these cross-border profits.  As a result of these political commitments, taxpayers do not need to incur transaction costs they would otherwise have to sustain to identify and protect their global tax liabilities. In other areas, however, the international tax regime does not facilitate credible commitments.   The talk will focus on one such challenge to the regime, namely the 2010 U.S. proposal to create a global tax reporting system via the Foreign Account Tax Compliance Act or FATCA.  By eschewing traditional bilateral and multilateral cooperation when it introduced FATCA, the United States subverted its ability to offer credible commitments and raised transaction costs for economic participants.  The talk will review the impact of FATCA on U.S. expatriates (and others) in Canada as well as potential options available to the Canadian government to resist FATCA.

Anyone following FATCA in Canada knows that Prof. Cockfield has been tough on the regime, and I look forward to hearing him flesh out his position in person.  The Colloquium is open to all.  If you will be in Montreal on Monday, I invite you to join us at 11:35am at the McGill Law Faculty, Chancellor Day Hall Room 202, 3644 Peel Street.  

Tax policy report by UK anti-tax group

Whenever a "report" on tax policy begins with artwork depicting oppressed people in chains, I brace myself for a now familiar chorus about the terrible impact of tax on jobs, growth, productivity, freedom, beauty, and truth.  The UK Taxpayers Alliance "Single Income Tax: Final Report of the 2020 Tax Commission" fits the bill.  Richard Murphy summarizes its overall tone and describes it as a horrid world view.  At over 400 pages long, it's not a light read.  I've only skimmed it but note that the report very quickly dismisses the important work by Piketty & Saez as weak empirically (p. 246), yet blandly summarizes US Congressman Paul Ryan's outrageously lopsided budget plan with no critique whatsoever (p. 390-91).  That's telling.  The foreword says:

"The level of economic and policy debate has long been poor in the UK. There is very little awareness of the oodles of academic research on how high marginal tax rates or punitive income or capital taxes reduce growth and jobs."

Aside from using the term "oodles" in a purportedly serious study, that's an aggressive opener that lets us see the framing that will go to work in this report.  The author complains that "In the very rare instances when they are mentioned, respectable and important studies are dismissed out of hand or not properly understood; the only “moral” arguments ever referred to are those that advocate the state seizing ever greater proportions of individuals’ incomes."  This leaves us in no doubt of the direction and makes the easy dismissal of research by people like Piketty & Saez even more bothersome.

CNN transcript collection

13 years of transcripts, available for download:

For over a decade, CNN (Cable News Network) has been providing transcripts of shows, events and newscasts from its broadcasts. The archive has been maintained and the text transcripts have been dependably available at transcripts.cnn.com. This is a just-in-case grab of the years of transcripts for later study and historical research.