Abstract

http://ssrn.com/abstract=1804364
 


 



Tax Reform Paul McDaniel Style: The Repeal of the Grantor Trust Rules


Laura Cunningham


Benjamin N. Cardozo School of Law

Noel B. Cunningham


New York University Law School

April 6, 2011

Cardozo Legal Studies Research Paper No. 328

Abstract:     
In this essay, which is to be published as part of a Festschrift in the memory of Paul McDaniel (forthcoming, Kluwer Law International), we argue that repeal of the grantor trusts rules would represent real tax reform in the Paul McDaniel sense. The grantor trust rules are not tax expenditures; they are structural provisions of the Code that were enacted for vertical equity reasons, to preserve the progressivity of the income tax rate structure. We believe that not only do they no longer serve their original purpose, they actually defeat that purpose today. They are being used by wealthy taxpayers to avoid transfer taxes. This not only creates equity problems within the transfer tax system, it has the ripple effect of reducing progressivity of the overall federal tax system. Repeal of these provisions would represent significant and important tax reform.

Number of Pages in PDF File: 14

Keywords: estate tax, gift tax, grantor trust, FLP, progressivity, progressive taxation

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Date posted: April 8, 2011  

Suggested Citation

Cunningham, Laura and Cunningham, Noel B., Tax Reform Paul McDaniel Style: The Repeal of the Grantor Trust Rules (April 6, 2011). Cardozo Legal Studies Research Paper No. 328. Available at SSRN: http://ssrn.com/abstract=1804364

Contact Information

Laura Cunningham (Contact Author)
Benjamin N. Cardozo School of Law ( email )
55 Fifth Ave.
New York, NY 10003
United States
Noel B. Cunningham
New York University Law School ( email )
40 Washington Square South
New York, NY 10012-1099
United States
(212) 998-6159 (Phone)
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