Michael J. Graetz

Income Tax Discrimination and the Political and Economic Integration of Europe

In recent years, the European Court of Justice (ECJ) has invalidated many income tax law provisions of EU member states as violating the guarantees of the European constitutional treaties of freedom of movement for goods, services, persons, and capital. These decisions have not, however, been matched by significant European income tax legislation, because no European political institution has the power to enact such legislation without unanimous consent from the member states. Under the treaties, the member states have retained a veto power over income tax legislation. In this Article, we describe how the developing ECJ jurisprudence threatens the ability of member states to use tax incentives to stimulate their domestic economies and to resolve problems of international double taxation. We conclude that the ECJ approach is ultimately incoherent because it constitutes an impossible quest - in the absence of harmonized income tax bases and rates throughout Europe - to eliminate discrimination based on both origin and destination of economic activity. We also compare the ECJs jurisprudence with the resolution of related issues in the U.S. taxation of interstate commerce and international taxation. Finally, we consider the potential responses of both the European Union and the United States to these developments.

State Income Tax Amnesties: Causes

This paper analyzes empirically for the years 1980-1988 the factors that led states with state income taxes to run tax amnesty programs. We find that the potential yield from an amnesty is more important than the fiscal status of a state. Furthermore, we estimate that if the 1RS audit rate had remained constant during the 1980–1988 period (instead of falling by almost one half), then the cumulative probability that an average state would have had a tax amnesty by 1988 would have fallen by just over 25 percent.

Energy Policy: Past or Prologue?

Abstract The United States was remarkably complacent about energy policy until the Arab oil embargo of 1973. Since then, we have relied on unnecessarily costly regulations and poorly designed subsidies to mandate or encourage particular forms of energy production and use. Our presidents have quested after an elusive technological “silver bullet.” Congress has elevated parochial interests and short-term political advantages over national needs. Despite the thousands of pages of energy legislation enacted over the past four decades, Congress has never demanded that Americans pay a price that reflects the full costs of the energy they consume. Given our nations economic fragility, our difficult fiscal situation, and the daunting challenges of achieving energy security and limiting climate change, we can no longer afford second- and third-best policies. This essay discusses the failures of the past and how we might avoid repeating them.

Constitutional Uncertainty and the Design of Social Insurance: Reflections on the Obamacare Case

The gravamen of the constitutional complaint against the individual mandate is its supposed intrusion on personal freedom. But, when all was said and done, no one attacked a state government’s requirement that individuals must purchase health insurance, nor advanced any constitutional limitation on the states doing so. All we have is a holding that if the federal government wishes to do the same, it must exercise its powers to tax and spend, not its power to regulate. The ACA case then is best understood as a legal attack on the means but not the goals of the health care legislation.This emphasis on means rather than ends and on state over federal powers potentially poses significant risks for the complex institutional arrangements for social insurance that now exist and may imply harmful constraints on how Congress can restructure these programs to better meet the needs of the American people in our 21st Century economy. Not coincidentally, the new constitutional framework announced in the ACA decision favors those who want to dismantle rather than strengthen our nation’s social insurance protections. We explain why this is so with regard not only to health insurance, but also unemployment insurance and social security.

Constitutional Uncertainty and the Design of Social Insurance

In 2010, Barack Obama signed the Patient Protection and Affordable Care Act (the ACA), a complex statute of more than nine hundred pages that fulfilled his goal of extending health-insurance coverage to virtually all Americans—an objective that previous U.S. presidents had sought and failed to achieve for a century.2 This legislation was hotly contested in the Congress, passing with the support of very few Republicans in the Senate and none in the House. To broaden access to health insurance, the ACA relies primarily on two devices: (1) an expansion to Medicaid—a joint federal-state healthinsurance program for the poor and certain other persons with disabilities or specified illnesses—to cover adults with incomes up to 133% of the poverty level, and (2) refundable tax credits for families earning up to 400% of the poverty level to subsidize purchases of private health insurance.3 The Medicaid expansion includes a federal requirement that states expand their coverage to meet the new, higher income threshold or face the potential withdrawal of all federal Medicaid funds.4 Private insurers are required to take all applicants, regardless of their health, and are prohibited from increasing premiums based on preexisting medical conditions.5 The ACA also

The End of an Era

Neshe Yashin’s poem spoke for an entire generation of Cypriot peace activists whose voices, until the early 1990s, were silenced by the omnipresent ethno-nationalist discord. And then, for a fleeting moment in 1989, it appeared that fragments of the Berlin Wall might ricochet down Ledra Street, demolish the Green Line, and usher in a new epoch for Cyprus. The end of the Cold War, however, beyond some internal rumblings and existentialist angst caused to AKEL, barely impacted Cyprus. Third parties and foreign nongovernment organizations (NGOs) felt more euphoria than the afflicted communities who, throughout the crisis, remained stoic in the face of the new world order rhetoric.

Taxation of Unrealized Gains at Death -- An Evaluation of the Current Proposals

Forty-two years ago, in the Virginia Law Review, long before Congress twice enacted — and twice repealed — carryover basis for assets transferred at death, I published this article examining and evaluating a number of proposals for taxing gains at death, as well as for carryover basis. (One of these was being advanced by the American Bankers Association.) The president, in his State of the Union address on January 20, 2015, has again proposed a tax on gains on assets transferred at death. This article may be helpful in identifying some of the main issues and alternatives if Congress considers the proposal in its upcoming tax reform deliberations. I have made no attempt to update this article for current circumstances. Most of the design issues remain unchanged, although the exemption and illustrative numbers are out of date.