• Selected
• Entire List

Abstract:
On February 24, 2006, the IRS issued guidance with respect to the federal income tax treatment of domestic partners in California. The ruling closed the door on those California domestic partners who were considering splitting in half the combined domestic partnership income from property and services for purposes of filing federal income taxes. This article demonstrates that the Service got it wrong in its unpersuasive, historically inaccurate, and ultimately indefensible memorandum.

The California Domestic Partner Rights and Responsibilities Act grants registered domestic partners the same rights, protections, and benefits as married couples under California's community property regime. There is a presumption - as there is for opposite-sex married couples during marriage - that all income and property acquired during the domestic partnership is community property, with each partner enjoying equal ownership interests.

Notwithstanding these equivalent ownership interests - the same interests which have allowed spouses in California to divide income in half when filing federal income taxes for a period that predates by nearly twenty years the enactment of the income-splitting joint return in 1948 - the IRS found that registered domestic partners cannot split income. The Service's analysis relied heavily on Poe v. Seaborn, the 1930 U.S. Supreme Court case granting income-splitting privileges to married couples in the community property state of Washington. According to the IRS, the Supreme Court's decision in Seaborn does not apply to the application of community property law outside the context of a husband and wife.

If the legal analysis in Seaborn had anything to do with marriage, the Service's reasoning might be appropriate. But it didn't. Poe v. Seaborn was about ownership of the community's income from property and services, not about marriage. In fact, during the 1920s and 1930s, marriage per se did not inform the Supreme Court's jurisprudence involving the taxation of husbands and wives residing in community property versus common law states. The Court was much more concerned with, alternatively, management and control (or dominion) over community/marital income and property on the one hand, and ownership (or legal title and vested or expectancy interests) on the other.

taxation, domestic partners, income splitting

Abstract:
This article uses the political history and pre-history of the EITC to describe how the politics of welfare reform influence tax policies that function as social policy. It suggests that the economic tradeoffs inherent in the formulation of tax-transfer programs are also political tradeoffs. It examines policy choices between costs and labor supply incentives, as well as those between ease of participation and compliance rates. This article concludes that although economic analysis influenced the creation and development of the EITC, political factors, not economics, animated the history of the program.

Abstract:
Tax credits, particularly refundable tax credits, are viewed increasingly as a social policymaking magic bullet. Indeed, the tax instrument can be a particularly effective and efficient mechanism for delivering social welfare benefits. However, deploying uniform refundable credits or universal tax subsidies will not solve all anti-poverty woes. In particular, over-reliance on the tax instrument blinds policymakers to a more fundamental conundrum that has plagued government transfers for over thirty years: What exactly is the government trying to accomplish by delivering social welfare benefits through the tax system? The Article explores this systemic question, and poses two further questions. First, what and who are policymakers targeting when they advocate tax-transfer programs like the EITC? And second, are current tax-transfer efforts effectively assisting the targeted beneficiaries? In addition, the Article examines the current political and administrative state of the EITC, and recommends several ways the program can further expand its reach and efficacy. In the process, it offers a sharp rebuttal to recent scholarship suggesting that the EITC is in political danger.

tax, tax policy, tax credits, poverty, welfare

Abstract:
This Article examines the underexplored IRS whistleblower program, which Congress revamped in December 2006 by, among other things, significantly expanding the size of rewards paid to informants. Increased monetary incentives for exposing tax cheats align private citizens on the side of tax collection rather than tax avoidance, and add risk of detection and prosecution to the compliance calculus. This Article recommends that Congress broaden the whistleblower program still further to allow private citizens to bring qui tam lawsuits against tax cheats. Other federal and state whistleblower statutes, including the widely praised False Claims Act (FCA), already provide for qui tam actions against persons submitting false claims to the government. This Article proposes using the FCA as a model for the tax whistleblower statute, and extending qui tam to tax.

The experience of the FCA indicates that private enforcement of public law can be an effective monitoring and prosecutorial mechanism in areas of law where government officials - due to asymmetric information, active concealment by regulated parties, and weak enforcement - are unable or unwilling to enforce the law or prosecute offenders effectively. Current tax regulation suffers from all three symptoms, and could benefit from private enforcement efforts. Extending qui tam to tax would add additional risk to tax cheating. Moreover, the qui tam approach provides an efficient form of regulation by shifting the cost of compliance to those persons with the lower cost of monitoring; i.e., employee insiders, in-house lawyers, and outside counsel.

Taxation, Tax Policy, Tax Practice, Legal Ethics, Administrative Law

Abstract:
In promulgating Opinion 85-352, the ABA Committee on Ethics and Professional Responsibility professed to reconsider the much-maligned reasonable basis standard first articulated in Formal Opinion 314. This Article argues that Opinion 85-352 merely restated the reasonable basis standard without appreciably elevating ethical standards for tax lawyers. In fact, in many ways Opinion 85-352 lowered rather than raised the ethical bar by further separating professional ethical standards (or quasi-legal rules) from legal rules imposed on clients. Indeed, Opinion 85-352 explicitly authorized tax lawyers to advise positions that violate sections of the Internal Revenue Code, and assisted taxpayer-clients in evading the federal tax laws.

Premised on an adversarial relationship, Opinion 85-352, much like Opinion 314, relies on litigation and controversy norms to define the tax lawyer's responsibilities. The tax lawyer is considered an advocate and a litigator to the near exclusion of her role as adviser and planner. The Ethics Committee's commitment to litigation and controversy norms produced an opinion that allowed tax lawyers to render advice subjecting clients to statutory penalties; thus, and ironically, Opinion 85-352 sanctioned tax lawyers to violate the historically sacrosanct ethical duty to serve as zealous client advocates. At the same time, it permitted tax lawyers to violate additional obligations to the government and to the tax system.

Abstract:
This is the first in a series of eleven articles arguing that the failure of the organized bar to promulgate ethical guidelines reflecting the true nature of tax practice has facilitated the market for tax shelters. While the focus of the study examines practice standards and noncompliance in the 1970s and 1980s, its subject matter and conclusions are directly relevant for modern discussions on standards of tax practice and tax compliance.

The articles demonstrate both the reluctance and inability of the organized bar to rein in members participating in aggressive shelter work, and indicates that self-regulation does not work. Time and again the organized bar, when faced with the prospect of Treasury regulating tax practice--most prominently through Circular 230--has said, "Don't worry, we'll be fine if left to our own devices." Time and again, however, the tax shelter lawyers, the "young" lawyers, and the controversy lawyers get more aggressive. While the tax bar appears more committed than the organized bar or the tax shelter bar in preventing overaggressive shelter work, the tax planning norms at the heart of the tax bar have historically been overwhelmed by the tax controversy norms of the organized bar and the tax shelter bar. Controversy norms have prevented planning norms from informing the organized bar's ethical standards governing tax practice, even though tax lawyers serve predominately as planners and advisers rather than as litigators and advocates. In the end, a revised and improved Treasury Circular 230 can act as a useful and necessary countervailing force to dominant controversy norms, giving voice to tax planning norms that better reflect the kind of work in which tax lawyers actively engage. This article provides a framework for the articles that follow.

Abstract:
This article examines the political, economic, and moral cases against transfer taxes. First, it argues that the rhetoric surrounding the effort to repeal the estate and gift tax--particularly the charge that it destroys family farms and closely held businesses—is misleading and even disingenuous. Second, it demonstrates that the estate and gift tax does not threaten aggregate saving, labor supply, or economic growth as its critics maintain. Nor does it generate an insignificant amount of revenue, produce prohibitive compliance costs, primarily tax wealth that has already been taxed, or have no influence on the rate of charitable contributions, again, all of which critics maintain.

This article also challenges the assertion that transfer taxes are immoral because they prevent parents from passing along hard-earned wealth to children, and because they tax saving, not consumption. The fact that we care about our children does not make transfer taxes immoral, anymore than the fact that we care about what we consume makes consumption taxes immoral. More fundamentally, this article challenges the moral case against taxing wealth at death by invoking history. Americans have long considered wealth a civic right, not a birthright. Taxing inherited wealth fulfills a moral obligation in a liberal democratic society.

I conclude that the estate and gift tax should be reformed, not repealed. In the interest of preempting further calls to abolish the estate and gift tax, preserving one of the most progressive features of the federal tax system, and improving horizontal equity, I recommend raising the effective exclusion, broadening the tax base, and lowering marginal rates.

Abstract:
In January 1982, the American Bar Association released Formal Opinion 346, less than two years after the Treasury Department issued proposed amendments to Circular 230. In its final form, Opinion 346 promulgated ethical and disciplinary standards for lawyers rendering opinions on tax shelter investments offered to nonclients. In that way, Opinion 346 differed significantly from ABA Formal Opinion 314, which governed advice to individual clients in the preparation of tax returns. When representing individual clients, the lawyer's relationship with the IRS was largely adversarial. But when providing a tax shelter opinion that the lawyer knew or should have known would be relied on by third persons, the lawyer functioned more as an adviser than an advocate.

The guidelines for tax lawyers in Opinion 346 responded directly to Treasury's 1980 proposed amendments to Circular 230. While officially restricted to legal opinions on tax shelter investment offerings, Opinion 346 examined the relationship between tax lawyers and the IRS in contexts that extended beyond the tax shelter marketplace into everyday tax practice.

Abstract:
While practitioners bickered over the relative merits of the taxpayer substantial understatement penalty in the 1980s, the IRS undertook a comprehensive study of the civil penalty system. In November 1987 then IRS Commissioner Lawrence Gibbs established the Executive Task Force on Civil Penalties, which undertook a thorough examination of the penalty system in order to make sense of more than a decade of penalty legislation. Congress had added penalties for various reasons, including: to create a downside risk to overaggressive tax reporting positions; to offset declining IRS audit coverage; to alter taxpayer behavior and encourage tax compliance; to raise revenues; to educate taxpayers about their tax obligations; to punish noncompliant behavior and maintain fairness from the perspective of compliant taxpayers; and to ensure that noncompliant taxpayers ultimately paid for IRS enforcement programs. The ad hoc and frenzied development of the penalty system had confused taxpayers, practitioners, and administrators.

This article examines the task force's three reports -- each a remarkable document -- which analyzed the civil penalty system from philosophical, economic, political, and administrative perspectives.

Abstract:
The organized bar facilitated the professional misconduct of tax lawyers beginning in the 1960s by setting low ethical standards for tax practice. ABA Formal Opinion 314, issued in 1965, promulgated guidelines governing advice to clients in the preparation of tax returns. The ambit of Opinion 314 quickly widened to represent the prevailing ethical standards not only for advice to clients in return preparation, but generally for lawyers in their relationship with the IRS. In advising a return position, the lawyer could freely urge the statement of positions most favorable to the client so long as there was "reasonable basis" for those positions. The "reasonable basis" standard, according to commentators, permitted lawyers to "support the use of any colorable claim," and to advise "noncompliance with scienter."

This article examines the debased reasonable basis standard in historical context. In the process, it evaluates the flaw of tying tax ethics to legal ethics rather than positive law. It also discusses the appropriateness of controversy norms to modern legal processes; the role of the modern tax lawyer as advocate versus adviser; and the IRS as adversary or partner in tax compliance efforts.

Abstract:
This Article describes a new approach to tax regulation based on cooperation, information sharing, and interest convergence. Currently, tax regulation in the United States relies too heavily on sticks and not enough on carrots. While recognizing that taxpayers will comply with the law in the presence of effective deterrence and enforcement, this Article optimizes the use of penalties as a compliance instrument by, among other things, rewarding compliant taxpayers, engaging taxpayers and their advisors in a participatory process, and appreciating the elegant power of cognitive devices that portray payment of taxes as a bonus rather than nonpayment of taxes as a penalty. Even with optimal penalties, tax officials cannot currently enforce the law effectively due to severe resource and information asymmetries. To overcome these debilitating shortcomings, the government must improve funding, recruiting, training, and retention. It must also partner with taxpayers and practitioners to strengthen detection, enforcement, and prosecution of abusive tax avoidance. Cooperative tax regulation can accomplish a cultural shift not only in taxpaying but also in tax advising and tax administration. Ultimately, it can produce a regulatory environment of collaboration rather than adversity, ex ante resolution rather than ex post controversy, and certainty rather than secrecy.

Abstract:
Concurrent with the IRS investigation of civil penalties in 1988 and 1989, Congress conducted its own inquiry into the penalty regime. Both the House and Senate held hearings on penalty reform in 1988 against the backdrop of tax reform. The congressional effort revealed widespread discontent with the penalty system among taxpayers and tax practitioners, legislators and administrators. Much of the ire was directed at the taxpayer substantial understatement penalty.

This article examines the Congressional penalty investigations as well as the pervasive confidence among tax policymakers that the decade-long battle against tax shelters was over with the government having emerged triumphant. A coherent penalty regime, elevated practice standards, sweeping tax reform legislation, reduced marginal tax rates, a broadened tax base, and alternative minimum taxes stoked the confidence of compliance reformers. At the same time, others warned of undiscovered methods of tax avoidance and the need to remain vigilant.

Despite notable advances against noncompliance during the 1980s, fundamental problems persisted, including: (i) the indefensible gulf between reporting standards for taxpayers and tax practitioners that allowed practitioners to advise overaggressive reporting positions without fear of sanction; (ii) the insidious litigation norms shared by taxpayers and tax practitioners and reflected in practice standards and penalty provisions; and (iii) the acquiescence of Treasury and Congress to minimal reporting standards, opportunistic levels of accuracy, and paltry audit coverage. Conflicting reporting obligations, litigation norms, and inadequate practice standards--all culprits in the first tax shelter wave - remained at large, and enabled the next wave of undiscovered tax avoidance.

Abstract:
Over the last several years, federal courts have invalidated abusive transactions by relying heavily on the judicially created economic substance doctrine. These court decisions not only reinforce the vitality of the doctrine, but also reaffirm the principle that literal compliance with statutory tax provisions is simply not enough to secure tax benefits. Despite the impressive anti-shelter effectiveness of the economic substance doctrine, Congress is preparing to straitjacket the doctrine by codifying it under the Internal Revenue Code. Codification is a terrible idea. Reducing the doctrine to an inelastic administrative rule would sap its power and lead to more rather than less abuse by providing clever tax planners an opportunity to occupy and manipulate the statutory line between permissible and impermissible behavior. The power of the doctrine lies in its ability to adapt to new and unforeseen tax planning strategies. Malleable standards are particularly important in tax law, where the law itself can be ambiguous and where application of fact to law contains numerous outcomes, such that determining the right answer is an inherently uncertain proposition. A rigid rule would provide opportunity rather than certainty, and it would foster overaggressive tax planning. The economic substance doctrine regularly acts as the last line of defense against abusive tax avoidance, and its facts and circumstances analysis is better left in the hands of judges than legislative drafters.

Taxation, Tax Policy, Tax Practice, Tax Shelters

Abstract:
In August 2007, a federal court in Rhode Island quashed an IRS summons seeking tax accrual workpapers pertaining to a taxpayer's investment in abusive tax shelters. The court held in United States v. Textron that the documents at issue were protected under the work-product doctrine, which immunizes from discovery documents prepared "in anticipation of litigation" so long as the prospect of litigation was "objectively reasonable" and the documents would not have been prepared "in substantially the same manner" irrespective of the anticipated litigation. The government has appealed the decision.

This Article argues that tax accrual workpapers never deserve work-product protection, because they are prepared for regulatory rather than for litigation purposes. It also argues that in preparing tax accrual workpapers, it is not objectively reasonable for a taxpayer to anticipate litigation, because the nexus between the two events is so attenuated and fraught with contingencies that one leads to the other only a fraction of the time. Indeed, applying work product in the tax context presents unique challenges for taxpayers, tax advisors, tax authorities, and courts, so much so that this Article suggests reforms to the work-product doctrine for non-litigation, regulatory proceedings.

If affirmed, Textron threatens effective tax enforcement. It expands the work-product doctrine beyond its historical role of protecting the adversarial process, and it swallows the attorney-client privilege, effectively cloaking from discovery not just all legal advice but all advice pertaining to potential litigation, no matter how attenuated. In addition, the decision protects precisely the kind of abusive tax avoidance that Congress and the Treasury Department have fought to root out and punish. In the end, the decision destroys the IRS summons power, prevents the IRS from performing its regulatory function of verifying a taxpayer's self-assessed liability, undermines recent anti-shelter efforts, and protects abusive tax avoidance.

Taxation, Tax Policy, Tax Practice, Tax Shelters, Professional Responsibility

Abstract:
In 1980, the IRS reported that tax shelter activity was threatening the tax system. The shelter industry was bilking the government out of billions of dollars in revenue, overloading the court system, and undermining the voluntary nature of the U.S. federal income tax. Tax lawyers were complicit in the proliferation of tax shelters. Their written opinions legitimized questionable schemes, protected investors from fraud penalties, and encouraged taxpayers to participate in transactions that were likely to be disallowed if challenged.

Attacking tax shelters meant attacking the troublesome opinions, which in turn meant attacking the opinion writers. In the late 1970s and early 1980s, the Treasury Department undertook to remind tax lawyers of their multiple responsibilities not only to clients but also to other taxpayers, the revenue, and the government.

Abstract:
In the wake of a new American Bar Association formal opinion covering tax shelters and a recently enacted suite of anti-shelter statutory penalties in 1982, many observers believed that the Treasury Department would withdraw its proposed amendments to Circular 230 covering legal opinions used in the promotion of tax shelters. They were wrong. Treasury stayed the course. It issued modified proposed regulations in 1982 and final regulations in 1984. Throughout the process, Treasury absorbed input from the practitioner community. And it complemented Congress's continued efforts to curb tax shelter activity with additional rounds of new and strengthened statutory penalties. By the mid-1980s, the Treasury Department and Circular 230 had become the catalyzing force of a coordinated and aggressive anti-shelter effort.

Abstract:
The period between 1980 and 1985 produced tremendous activity over the perceived influence of tax ethics on noncompliance. In 1980, the Treasury Department proposed amendments to Circular 230, attempting to regulate for the first time practice standards for legal opinions used in the promotion of tax shelters. In 1982 the American Bar Association promulgated Formal Opinion 346, covering ethical and disciplinary standards for lawyers rendering opinions on tax shelter investments offered to nonclients. In 1984 the ABA Section of Taxation concluded a multiyear study of the debased "reasonable basis" standard, which prompted the ABA Committee on Ethics and Professional Responsibility to promulgate Formal Opinion 85-352, replacing the reasonable basis standard with the realistic possibility of success standard; also in 1984 Treasury issued final Circular 230 regulations. While Treasury and the ABA attacked noncompliance by addressing practice standards and ethical guidelines, Congress supplied a strengthened penalty regime in three successive tax acts aimed at both tax practitioners and taxpayers.

But Treasury remained on the offensive. Responding in large part to the ABA's failure to elevate ethical standards in Opinion 85-352, Treasury sought to raise practice standards through the Circular 230 regulations and to demonstrate to tax practitioners that they had obligations both to clients and to the government. In 1986, only two years after finalizing amendments to Circular 230, Treasury issued another round of proposed amendments, which underwent withering criticism from practitioners, jealous of their right to self-regulate.

Abstract:
Changes to the taxpayer substantial understatement penalty lay at the heart of the protracted controversy over practice standards in the 1980s. Practitioners objected to Treasury Department efforts to align professional standards with reporting requirements for taxpayers. Proposed amendments to Circular 230, released in 1986, would have prohibited practitioners from advising or recommending a reporting position or preparing or signing a tax return unless they could determine that the section 6661 substantial understatement penalty would not apply. Practitioners recoiled. Prevailing ethical guidelines of the major professional organizations merely required tax practitioners to render advice in good faith evidenced by a realistic possibility of success if litigated; prevailing guidelines did not require them to insure against potential tax liabilities. This article examines the love-hate relationship between the substantial understatement penalty and practitioners in the mid to late 1980s.

Abstract:
The Treasury Department dropped a bombshell on the tax practitioner world in September 1980. Only eight months after indicating that it was willing to wait a reasonable period for the organized bar to offer guidance regulating the issuance of tax shelter opinions and the participation of tax lawyers in the thriving tax shelter market, Treasury released its own guidelines. Proposed amendments to Circular 230 set new standards for legal opinions used in the promotion of tax shelters and outlined punitive disciplinary criteria for practitioners failing to meet the new rules. Treasury's actions incensed the tax bar, which had responded to Treasury's solicitation by beginning to formulate new ethical guidelines for tax lawyers. The American Bar Association Section of Taxation had set about drafting a suggested ethics opinion for the ABA's Standing Committee on Ethics and Professional Responsibility, while the New York State Bar Association Tax Section established a committee to recommend standards for the issuance of tax shelter opinions. However, the organized bar's longstanding reluctance to regulate--and punish--the misconduct of members providing legal opinions enabling and fueling the tax shelter industry suggested that Treasury's preemptive move was more than justified.

Abstract:
This Article examines the historical and jurisprudential development of the principle that ownership determines federal taxation of families. It traces the "ownership equals taxability" principle from the late nineteenth century to 1930; that is, from the decades leading up to ratification of the Sixteenth Amendment to the U.S. Supreme Court's landmark decisions in Poe v. Seaborn and Lucas v. Earl. It is a story of the early federal income tax and its administration; of tax avoidance opportunities for families; of the nature of spouses' legal interests as defined by state property laws; and of early tax enforcement efforts by the Treasury Department and Congress. It is also a story of how the Supreme Court sought to protect Congress' taxing power by articulating an expansive definition of ownership for purposes of determining taxability that relied on indicia of ownership such as control, management, dominion, beneficial interests, equitable interests, enjoyment, and even a "flow of satisfactions" concept that tracked consumption tax principles more closely than income tax principles. In the end, the Article lays the groundwork for removing the modern-day false barometer of marriage between a man and a woman as the basis of family taxation. In place of marriage, it reestablishes ownership principles grounded in longstanding Supreme Court jurisprudence as the historically and legally accurate gauge for family taxation. In so doing, the Article presages an argument that will be articulated in a subsequent Article for taxing members of all state-recognized civil partnerships - marriage, domestic partnerships, civil unions, reciprocal beneficiary relationships - according to ownership interests as determined by state law.

Taxation, Tax Law, Income Tax, Legal History, Economic History, Income Tax, Family Law, Domestic Partner, Same-Sex Couples, Community Property, Tax Avoidance, Seaborn, Joint Returns

Abstract:
This article discusses the application of the work product doctrine in the tax context. It provides an overview of the burdens that an applicant seeking immunity for its tax materials must meet as well as the procedures used by courts to verify an applicant's claim for a privilege traditionally reserved for documents prepared with an objectively reasonable anticipation of litigation in mind. Moreover, it roots the discussion in the primary question currently before the en banc First Circuit in the closely watched case, United States v. Textron: Are a company's tax accrual workpapers protected from discovery under the work product doctrine?

The article concludes that tax accrual workpapers never qualify as protected work product. Corporate taxpayers create these documents to comply with federal securities law, not because of future litigation. Workpapers may discuss the prospect of future litigation or contain analyses that later become the subject of litigation. But the appearance of those discussions and analyses in documents created exclusively for regulatory purposes does not transform the documents into materials created in anticipation of litigation. And it certainly does not transform them into materials created in objectively reasonable anticipation of litigation as required by the work product doctrine. Indeed, in the event an applicant or a court attempts to justify turning regulatory documents into litigation documents, it must face the attenuated temporal connection between preparation of workpapers and future litigation. In combination with the many dispute resolution procedures available to taxpayers and the government, anticipating litigation when preparing workpapers is distinctly unreasonable both as a matter of logic and mathematical probability.

Taxation, Tax Law, Tax Practice, Tax Shelters, Professional Responsibility, Legal Profession, Work Product Doctrine

Abstract:
This chapter in TAX JUSTICE: THE ONGOING DEBATE examines tax justice in the American political tradition, focusing on tax policy and politics since World War II. The postwar period witnessed the decline of vertical equity as a serious topic of study among tax experts, especially economists. Beginning in the 1950s and accelerating in the 1970s, economists turned their attention away from vertical equity and toward efficiency and economic growth. To the extent economists considered questions of tax equity, they examined how deviations from horizontal equity influenced efficiency and growth, rather than how degrees of vertical equity effected prevailing norms of social and economic justice.

The turn away from progressive equity -- in combination with a sustained period of stagnant economic growth, inflation, and public cynicism toward government -- prompted the American public to support tax policies that emphasized efficiency rather than equity. This environment allowed tax-cutters to push through reforms that excluded equity considerations altogether, and it gave credence to the supply-side notion that taxes should be set with the primary purpose of minimizing distortions.

The chapter concludes by arguing that the abandonment of progressive tax equity as a policymaking construct has left tax experts out of touch with the American public, which continues to demonstrate a keen sensitivity to questions of fairness, justice, and progressivity. At a time of acute income and wealth inequalities -- the social ills that historically have motivated considerations of redistributive taxation in the United States -- we would do well to reconsider tax justice and its policymaking implications.

Abstract:
This Article traces the mortgage interest deduction from accident to birthright, from one of many deductible personal interest items to one of the few left standing, and from a nominal tax offset to the second most expensive tax subsidy. It tells the story of how the mortgage interest deduction and other federal housing subsidies fueled the post-World War II surge in rates of homeownership and, more recently, how those programs contributed to the collapse of the housing and financial markets. Finally, the Article offers a eulogy to the mortgage interest deduction that draws on criticisms of the subsidy from two generations of tax reformers and tax policymakers that are more applicable today than at any time during the deduction’s nearly 100-year history.