This article provides an overview of three theories that are important in developing a pure income tax system: the Haig-Simons definition of income, the Cary Brown model, and Samuelson depreciation. The article devotes a section to each theory, and, within each section, the article discusses the history of each theory and demonstrates an application of the theory. Next, the article describes how the three theories interact with one another in shaping a tax system and explains how the United States has shifted from an income-based system to a consumption-based system, adopting a piecemeal approach. The article then concludes that regardless of one’s stance in the tax policy debate, the three theories are important to understand in formulating a tax system.

This article is a tribute to Charles O’Neill Galvin, an ever-present and powerful participant and leader in the tax policy debates and tax reform efforts that span five decades. It reviews his many accomplishments and contributions as a significant participant in tax law and policy. This includes an overview of a brief biographical background as well as a more detailed description of his contributions and writings including contributions to academic journals and contributions to institutional and government tax policy reforms.

Currently, the clarity of the rule based check-the-box regulations for disregarded entities is becoming blurred by the Internal Revenue Service and the Treasury’s reversion to a standards based approach. Professor Abreu argues that the Service should return to the rule based approach that led to the check-the-box regulations and to focus more on administrability rather than the substance for entity classifications. Such a rule based approach leads to predictability and certainty as to the results of the taxpayer’s elections. To do so, Professor Abreu proposes a bifurcated approach which applies a clear rule for ex-ante entity classification, such as the check-the-box regulations and a standards based approach for ex-post matters of assessment, collection, and payment of taxes. The proposed method provides a means for predictability and certainty while allowing for a more nuanced approach when it is necessary for equitable and sound administration of tax laws.

The President’s Advisory Panel on Federal Tax Reform submitted its report to the Secretary of the Treasury in November, 2005. This article seeks to evaluate the report. The article begins by giving the report context, based on the debate over whether income or consumption is the proper tax base. The author determines that neither of the panel’s plans eliminates income taxation. The article continues by evaluating the panel’s proposals, discussing some of the problems created by each proposal. The author concludes by submitting an alternative proposal that incorporates parts of both of the panel’s plans.

Legislators seem to believe that maintaining a maximally comprehensive tax base is necessary to further progressivity. But legislators should rethink many aspects of the current tax-base approach if they want to acknowledge other priorities, including either a notion of income commensurate with total value added to the economy, or the notion that Congress actually intended to provide tax benefits more substantial than simple timing in granting certain exclusions.

Author and noted Brigham Young University law professor, J. Clifton Fleming, Jr., sets forth his preliminary thoughts on completely replacing the federal income tax regime with a postpaid consumption tax. In this article, Professor Fleming contends that a postpaid consumption tax would create an unlimited obligation of the federal government to make a tax-rate-prescribed match of all private saving, regardless of the saver’s income level or the purpose and amount of the saving. From this perspective, he then goes on to examine issues related to the debate surrounding investment income and whether it is taxed once under a comprehensive income tax and not at all under a postpaid consumption tax, or whether it is double-taxed under a comprehensive income tax and only once under a postpaid consumption tax.

This article discusses the novel theory that Congress has been using traditional magic tricks, both gimmicks and fakes, in order to benefit certain taxpayers, scale back tax benefits, and lower revenue cost. The article begins with a topical discussion on gimmicks and fakes, two traditional devices used in the field of conjuring and magic. Next, the article advances illustrations of two broad categories of tax law changes and exhibits that these two categories are virtually identical to the magical terms gimmicks and fakes. Specifically, the article describes the use of non-code provisions and legislative history as gimmicks in tax law, and to illustrate fakes in the tax law, the article employs the “alternative minimum tax” and the distinction between income tax and consumption tax. Finally, the article reflects on the current state of these practices in the legislative process.

Professor Johnson supports the President's Advisory Panel on Federal Tax Reforms idea of creating a comprehensive tax base. However, he finds numerous faults in the manner in which the President's Advisory Panel on Federal Tax Reforms attempts to incorporate a comprehensive tax base into federal tax law. Specifically, he finds the President's Advisory Panel on Federal Tax Reforms recommendations lack overall consistency.

Lawrence Lokken's article, Territorial Taxation: Why Some U.S. Multinationals May Be Less Than Enthusiastic About the Idea (and Some Ideas They Really Dislike), addresses proposed changes to the current Internal Revenue Code tax system which allows U.S. multinational enterprises to achieve U.S. tax results more favorable than they could obtain under a territorial system. He suggests that the current system fosters inconsistent results from the purported policy of the system. Lokken's paper argues that an exemption system will cure these defects.

Professor McDaniel's article explores the tax ramifications on the current charitable contribution deduction found in the United States tax code. He outlines various approaches to giving the charitable deduction and how this affects the donors and donees. Professor McDaniel then suggests an alternative to these models by examining a method which would not classify the charitable gift as a tax expenditure by taxing the charitable organizations themselves, as surrogates for the beneficiaries.

In this article, the author advocates the introduction of transfer payments, such as food stamps and housing subsidies, into the discussions regarding the current and proposed structures of marginal tax rates in the United States. Although marginal tax rates are currently analyzed based on taxes, that computation is often incorrect because of the harsh impact on those families who have taken advantage of many state and federal welfare assistance programs. Furthermore, we should honestly examine both welfare and cash grant proposals in order to have a better understanding of the policies we subscribe to in our fiscal system.

Lawrence Zelenak, in The Sometimes-Taxation of the Returns to Risk-Bearing Under a Progressive Income Tax, analyzes the arguments for and against the taxation of risk premium. If risk premium is to be taxed, there is further debate as to the most effective mechanism for reaching the returns. Zelenak makes the argument that a taxation model based on a single or flat rate is not as effective in reaching the returns on risk-bearing investments as would a model based on progressive marginal rates. Zelenak also explores the possibility of using non-income tax approaches to tax risk premium.