Calvin Johnson
Andrews & Kurth Centennial Professor of Law, University of Texas at Austin - School of Law, USA
Omnibus Capitalization Proposals
This shelf project proposal covers several expenditures that are allowed as expenses as soon as they are incurred under current law but should be treated as capital expenditures. Given the treatment of debt financing, capitalization is needed to prevent negative tax or subsidy for investments, many with dubious merit. The expensing subsidy allows projects to [...]
Common Trust Funds: The Living Fossil of Passthroughs
A common trust fund (CTF) is a fund maintained by a bank exclusively for the collective investment of the funds of trust clients. Under section 584 of the code, a CTF pays no tax, but each participant must include its proportionate share of income and losses computed at the CTF level, even if the common [...]
Taxing the Publicly Traded Stock In a Corporate Acquisition
Under current law, if a corporate acquisition qualifies as a reorganization, the target shareholders do not recognize built-in gain on the stock they surrender when they receive publicly traded stock. The proposal would treat sale stock would be taxed as if the stock had no sale restrictions. Restrictions on votes or the absence of votes [...]
How to Raise $1 Trillion without a VAT or a Rate Hike
We should be able to raise at least $1 trillion more revenue a year within the current income tax system just by making our tax accounting better reflect economic income. Our system has too many tax pits, which absorb revenue and distort investment decisions. We allow deductions for fictitious losses. We should tax high-class consumption [...]
Closing Deferred Revenue
Under current law, taxpayers can receive cash but not pay tax on it because the cash is considered deferred revenue. When a taxpayer writes an option or sells stock short, for example, the taxpayer receives cash, but the cash is not considered gain or loss until the option is exercised or until the short sale [...]
Percentage Depletion of Imaginary
Costs Of all the dispensations . . . percentage depletion is the most remarkable achievement. It enables certain taxpayers to reduce their incomes by imaginary costs. Other taxpayers are not considered so deserving. They may only deduct what they spend. .— Louis Eisenstein, Ideologies of Taxation[1] The proposal would limit the exclusions allowed under percentage [...]
Tax on Insurance Buildup
Andrew Pike Eric A. Lustig Life insurance contracts often combine a savings or investment element with pure insurance protection that covers the risk of death during the year. Current law will tax the buildup in the value of a ‘‘life insurance contract’’ only if the policy is surrendered for its cash value during life. If [...]
End Tax-Free Monetization of Wealth
Cash withdrawn from appreciated property using financial instruments has become a major source of untaxed support for the standard of living of our wealthiest citizens. The proposal would treat cash received under a contract for sale of property or for writing an option on property as realization of gain to the extent the taxpayer or [...]
Taxation of the Really Big House
A. Overview Serious long-term tax reform will need to limit the considerable tax advantages now available in owning the very largest houses and other personal-use properties. The primary return from the investment in residences and similar property is the rental value of the personal use of the house, which is always tax exempt. If the [...]
Gains and Losses on Business Depreciable Property
This proposal would repeal section 1231, which accords capital gain treatment to gains but gives ordinary treatment to losses. That asymmetry increases the expected value of volatile investments over the pretax value of the investments. During a revenue crisis, the tax system should not increase an investment’s value. Moreover, section 1231 has been expanded to [...]
Replace the Corporate Tax With a Market Capitalization Tax
This proposal would replace the 35 percent corporate tax on publicly traded companies with a low 20-basis point quarterly tax on the issuer on the market capitalization including both traded debt and equity. A low-yield corporate tax would remain for corporations that are not publicly traded, and for a transition period, the tax would apply [...]
Impose Capital Gain Tax on Like-Kind Exchanges
Current law allows a taxpayer to avoid taxation of gain on a disposition of real estate to the extent the taxpayer is willing to acquire other real estate as a replacement. The proposal would repeal section 1031 regarding gain and require an exchange broker to file an information return showing the amount realized by the [...]
