Superficial Proxies for Simplicity in Tax Law

Emily Cauble*

Simplification of tax law is complicated. Yet, political rhetoric surrounding tax simplification often focuses on simplistic, superficial indicators of complexity in tax law such as word counts, page counts, number of regulations, and similar quantitative metrics. This preoccupation with the volume of enacted law often results in law that is more complex in a real sense. Achieving real simplification—a reduction in costs faced by taxpayers at various stages in the tax planning, tax compliance, and tax enforcement process—often requires enacting more law, not less. In addition, conceptualizing simplicity in simplistic terms can leave the public vulnerable to policies advanced under the guise of simplification that have real aims that are less innocuous. A perennial example involves lawmakers proposing a reduction in the number of tax brackets under the heading of simplifying tax law. In reality, this change does very little, if anything, to simplify law in a meaningful sense, and its truer aim is to reduce progressivity in the tax code. Although the tax legislation ultimately enacted in December 2017 did not change the number of brackets applicable to individual taxpayers, political discourse preceding its enactment once again touted a reduction in the number of tax brackets as a simplifying measure.

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* Professor of Law, DePaul University. The author would like to thank Jordan Barry, Jennifer Bird-Pollan, John Brooks, Steven Dean, Wendy Netter Epstein, Miranda Perry Fleischer, Brian Galle, Heather Field, Will Foster, David Herzig, Sarah Lawsky, Daniel Morales, Susan Morse, Leigh Osofsky, and David Walker for their helpful comments on this article.

The Historical Case for Constitutional “Concepts”

Glenn E. Chappell*

The concepts/conceptions dichotomy is prominent in both the philosophy of language and the field of constitutional interpretation. It is most prominently illustrated through the provisions in the Constitution that contain broad, open-ended moral language. Those who hold the “conceptions” view believe that the legal content of those provisions includes both abstract moral concepts and its communicators’ subjective beliefs about, or conceptions of, how those concepts should apply. Under this view, the judge’s role is mostly empirical: he is tasked with examining historical evidence to ascertain those conceptions, which in turn supply applicational criteria by which he can decide specific cases. Alternatively, those who hold the “concepts,” or conceptual, view believe that the Constitution’s language directs the reader to objective moral concepts only; hence, its legal content does not contain any particular person’s or group of persons’ conceptions of those concepts. Thus, under this view, the judge’s task is mostly analytical: he must attempt to analyze the concepts to ascertain their defining criteria and develop applicational criteria from that analysis.

Through a focused study of the interpretive methods of William Cushing, James Madison, and lawmakers in the Virginia House of Delegates, this article demonstrates that this debate has existed since at least the founding era, and that the above-named founding-era authorities held a conceptual view of the Constitution’s language, as evidenced by the logic-driven, as opposed to historical, research-driven, mode of construction they employed to apply the Constitution’s provisions to particular cases. Specifically, they analyzed the Constitution’s text, structure, and moral authority to develop an American conception of the concept at issue—a conception wholly unconcerned with the subjective beliefs of any particular person or polity as to how the concept should apply. Finally, this article sets forth a preliminary sketch of the conceptual approach’s normative claim. It concludes that the conceptual approach taken by these authorities better respects the constitutional text, the Rule of Law, and the ideal of objectivity in law than those that seek to derive legal content from the conceptions of past actors.

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* Law Clerk to the Honorable Anthony J. Trenga, United States District Court for the Eastern District of Virginia, 2018–2019; Law Clerk to the Honorable Gerald Bard Tjoflat, United States Court of Appeals for the Eleventh Circuit, 2017–2018. J.D., 2017, Duke University School of Law; B.A., 2011, Saint Leo University. The views expressed in this article are my own and do not necessarily reflect those of my employers. I owe special gratitude to Ryan Pitts for his generous contributions to this article, which include hours of proofreading, editing, and challenging discussion, and to Judge Tjoflat for his mentorship and encouragement. I would also like to thank Cory Fleming, Spencer Hughes, and Alexander Flynn Kasnetz for their helpful suggestions and edits, and my family for their unending patience and support. Finally, I would like to thank the editors of the University of Richmond Law Review for their superb, indispensable work in preparing this article for publication.

The Unconstitutional Tampon Tax*

Bridget J. Crawford** & Emily Gold Waldman***

Thirty-five states impose a sales tax on menstrual hygiene products, while products like spermicidal condoms and erectile dysfunction medications are tax-free. This sales tax—commonly called the “tampon tax”—represents an expense that girls and women must bear on top of the cost of biologically necessary items that they need in order to attend school, work, and otherwise participate in public life. This article explores the constitutionality of the tampon tax and argues that it is an impermissible form of gender discrimination under the Equal Protection Clause. First, menstrual hygiene products are a unique proxy for female sex, and therefore any disadvantageous tax classification of these products amounts to a facial classification on the basis of sex. There is no “exceedingly persuasive justification” for taxing menstrual hygiene products, and so the tax must fail intermediate scrutiny. Even assuming arguendo that the tampon tax is not viewed as a tax on female sex, it is still unconstitutional because it cannot pass rational basis review.

Since 2016, four states and the District of Columbia have legislatively repealed their sales tax on menstrual hygiene products. One state, Nevada, did so by ballot referendum in 2018. Other states will consider repeal bills in upcoming legislative sessions or may consider ballot initiatives in the future. Women have also brought class action litigation in four jurisdictions, seeking declarations that the state tampon tax is unconstitutional and requesting refunds of prior taxes paid. The article develops the constitutional arguments that can be used by litigators in any ongoing or future case, recognizing that menstrual equity activism, including impact litigation, is likely to continue in the future.

Ultimately, what and whom a society seeks to tax signal its larger values. The continued imposition of state sales tax on menstrual hygiene products, seemingly without a principled distinction from other products that are exempted as necessities, exacerbates the aggregate economic inequality that already exists between the sexes. The tampon tax is unconstitutional and should be repealed in all states.

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* © 2018, Bridget J. Crawford and Emily Gold Waldman. All rights reserved.
** James D. Hopkins Professor of Law, Elisabeth Haub School of Law at Pace University. Ph.D., 2013, Griffith University; J.D., 1996, University of Pennsylvania School of Law; B.A., 1991, Yale University.
*** Professor of Law and Associate Dean for Faculty Development & Operations, Elisabeth Haub School of Law at Pace University. J.D., 2002, Harvard Law School; B.A., 1999, Yale University.
For helpful comments and conversation, the authors thank Deborah Dinner, Kate Gallo- way, Holning S. Lau, and Carla Spivack.

Partnership Lost

Christine Hurt*

A century ago, two distinct business entities existed that could best be defined by describing either one of them as simply not the other. The corporation and the general partnership were mirror images of one another and opposites on a spectrum of corporate governance, limited liability, and taxation. Partnerships, seen as small, livelihood enterprises between active-owner partners, had personal liability but pass-through taxation. Corporations, seen as larger, capital-intensive enterprises with passive-owner shareholders, had limited liability but double taxation. The tax distinctions survive today, but the stereotypical partnership does not; in fact, the modern partnership is more corporation-like than partnership-like.

Today, the corporation-partnership dichotomy has disappeared.“Tax partnerships” for federal tax purposes can be formed undervarious state statutes that mimic closely the traditional corporation: centralized management; freely transferable shares; limited liability; perpetual life; and even elimination of fiduciary duties. In response to requests by various constituencies, state legislatures have spent the past few decades creating hybrid business entities that boast the best characteristics of both corporations and general partnerships. As state lawmakers made the pass-through entity more corporation-like, federal lawmakers conceded the fight on which entities could have pass-through taxation. Now, any noncorporate entity receives pass-through taxation as a default classification, and even publicly traded partnerships with thousands of“partners” may qualify. The hybrid entity is more corporation-like than the corporation, for which nonwaivable duties still remain.

However, in December 2017, Congress passed and President Donald J. Trump signed the 2017 Tax Cuts and Jobs Act into law. This legislation, arguably the first major piece of tax legislation since 1986, reduces the top corporate tax rate, decreasing the “double tax”on corporate profits to nearly equal the partnership tax rate. The 2017 tax reforms present a perfect point in time to study why hybrid entities have gained in popularity so swiftly. Are these entities popular because of the freedom of the parties to contract for optimal governance mechanisms, mimicking the best parts of corporate governance without drawbacks of fiduciary duties? On the other hand, the popularity of the hybrid entities may be merely economic, based on these entities tax advantages. If entity tax rates have converged, perhaps federal taxation should rethink whether two types of entity taxation is necessary at all or, in the alternative, whether pass- through taxation should be granted to entities based on criteria other than state law classification, such as size, active ownership, or limited liability.

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* George Sutherland Chair and Professor of Law, J. Reuben Clark Law School, Brigham Young University. The author would like to thank the faculty of Brooklyn Law School for their thoughtful comments, as well as participants at the Law & Society Association Conference and the National Business Law Scholars Conference.

Private Ordering and Improving Information Flow to the Board of Directors: The Duty to Inform Bylaw

Jennifer O’Hare* 

It seems that almost every day there is another report of a corporate scandal at a public company. Whether the scandal involves sexual harassment by senior management or widespread illegal conduct by employees, the first question asked by investors and themedia is usually, “Where was the board?” And the board’s response is almost always, “We didn’t know.” Directors of public companies rely on officers to provide the information the board needs to manage the corporation, but, strangely enough, officers may not even be legally required to provide information to the board. The Delaware General Corporation Law is silent on the issue. Some commentators have argued that fiduciary duties impose on officers a duty to provide information to the board, but the Delaware courts have been slow to address this issue. In this article, I demonstrate that the few cases addressing the fiduciary duties of officers do not completely clarify whether officers have a fiduciary duty to provide information to the board or what the duty requires. I then propose a new approach: using private ordering to improve the information flow to the board of directors. I recommend that the bylaws of all public companies should include a new type of bylaw, a “Duty to Inform Bylaw.” A Duty to Inform Bylaw would impose on the Chief Executive Officer and the Chief Financial Officer a duty to inform the board promptly of all information necessary to enable the board to manage the business and affairs of the company in conformity with its statutory and fiduciary obligations.

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* Professor of Law, Villanova University Charles Widger School of Law. J.D., George Washington Law School; B.S.E., Wharton School of the University of Pennsylvania.
The author gratefully acknowledges that research for this article was supported by a summer stipend from the Villanova University Charles Widger School of Law.

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