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How to Raise $3.5 Trillion, Without a Rate Increase

Posted on Mar. 18, 2024
Calvin H. Johnson
Calvin H. Johnson

Calvin H. Johnson is the John T. Kipp Chair Emeritus in Business and Corporate Law at the University of Texas Law School. This report originated as a dinner presentation to the Austin Tax Study Group on February 20. The author thanks the group for helpful questions and comments.

In this report, Johnson explains the principles of raising tax revenue, reviews 21 proposals for increasing revenue without increasing tax rates, and argues for a major shift from deficit funding to tax funding of our national goals.

Copyright 2024 Calvin H. Johnson.
All rights reserved.

The goal of this report is to raise $3.5 trillion over 10 years, starting in 2025. I did not set the goal. That is the business of the economics profession.1 But it is a plausible goal, and I accept it, so we can talk about the ways and means of achieving it.

I. Shifting Funding From Borrowing to Tax

It is not my role to decide nor second-guess a spending decision. It is Congress’s decision, for instance, whether we should support Israel, Ukraine, Taiwan, or all three, and the issue here is only how to fund the spending once decided. Indeed, from the funding-alternatives perspective, it does not matter whether the spending is wise. If all tax revenue were burned in a satanic rite in the middle of a beltway on the East Coast, it remains important that the sacrificial dollars be collected for delivery with as little added damage as possible. It is the wrong perspective to “cut their allowance,” that is, to cut tax first. Across-the-board spending cuts are mindless. They cut into critical programs the people need and want, on par with programs the people could do without. Congress has to get into the merits (and popularity) of various spendings. Decide what you want to achieve with rational spending, then fund that project in the best way with either tax or borrowed money.

At whatever the level of government spending, we should be shifting about now to tax funding instead of deficit-debt funding. A year ago, the federal risk-free (meaning short-term) interest rates were below the inflation rate by 1.5 percent a year.2 Borrowing was better than free because the spending value of dollars the federal government had to repay was shrinking faster than was offset by the interest charged. There was a global glut of capital willing to pay Treasury storage fees for keeping capital (semi-) safe. Taxes hurt, so when deficit borrowing is better than free, of course, borrow and avoid the tax pain.

We were, moreover, in a period of underuse of capacity, and the Keynesian stimulus of deficit-funded spending allowed us to make use of that overwise-wasted capacity. Not to borrow would have been a lost opportunity. Now interest rates are positive, above inflation by about 2.5 percent, and the days of better-than-free borrowing are gone.3 We have also moved from a period calling for Keynesian deficit borrowing into a period calling for inflation control, in which the excess capacity is no longer excessive and deficit stimulus becomes dubious. At the least, Treasury needs to be making war plans, plausibly at the level of $3.5 trillion over 10 years, for the coming critical fiscal needs.

II. No Tax Rate Increases

The first principle of raising revenue by tax is that necessary revenue needs to be collected by defending the tax base, making tax less avoidable, and emphatically not by raising tax rates. Tax rate increases raise the incentives for tax planners and ordinary humans to avoid tax. When tax can be avoided with accounting or transaction tricks, or even worse, by real economic changes in taxpayer behavior, taxpayers will rationally take damage or pay fees to avoid tax up to a dollar short of the tax they successfully avoid.

We need to meet our distributional needs by expanding and protecting the tax base, not by raising rates. Reducing avoidance opportunities makes the tax system less harmful to the economy as a whole, even as it raises revenue. Expanding the tax base also allows the given revenue needs to be spread more broadly. Spreading given revenue needs over a broader tax base automatically lowers the tax rates. A narrow and avoidable tax base, like we have now, does more harm to the sum of human happiness than a broad-based, low-rate tax system would yield.

III. Distribution

Collect your tax money from the top, not the bottom. Uncle Scrooge McDuck, the richest duck in the world, gets very little value from new dollars, just putting them on top of his vault swimming pool. The vault swimming pool doesn’t get much better with another dollar added on. The Little Match Girl, by contrast, will freeze to death tonight if you take her last dollar. A dollar has infinite value in her hands. Now Elon Musk and the Little Match Girl have equal value in the sight of God, but Musk must spread his value over $200 billion net worth, and the Little Match Girl must spread her worth over the $1. It will do less damage to national well-being to collect tax from the top.

The gross domestic product measure of how we are doing treats dollars as if they had the same value no matter who gets them. That has to be wrong. Under the GDP measure, and indeed under the perspective of the economics profession in general, if McDuck invented a vacuum to suck every dollar out of every other person’s pocket on the planet, and the vacuum also increased goods by a dollar, GDP would rate that vacuum as a positive contribution even though it added only infinitesimal value to the McDuck swimming pool and starved or froze everyone else.

Everyone displays the diminishing marginal utility of a dollar, proved by our behavior. Taxpayers rationally save for retirement from their peak-year salaries, because dollars are more valuable when you don’t have any other dollars than in the peak years, on top of a pile of other dollars. Taxpayers rationally set aside a cushion for unexpected events like getting fired or sick because when you don’t have any other dollars, those dollars are so much more valuable. Insurance is a money-losing investment judged by an equal-value-of-a-dollar scale, because insurance is a high transaction-cost enterprise in which the insured can expect to pay more in premiums than they get out as insurance proceeds. But insurance premiums are paid when times are good, and the payout comes when times are desperate, and the difference makes insurance a rational choice. Investors rationally diversify to moderate their investments’ volatility because losses cut into bone, and hurt more than symmetrical gains help. Any shift in dollars from Pharaoh’s-dream seven-fat-cow years over to the seven-thin-cow years increases the value of the dollar. The diminishing value of a dollar as income rises should never be denied.

Back of the envelope calculations say that billionaires alone can carry between one-third and 43 percent of the projected $3.5 trillion needs, without increasing tax rates above current levels. Forbes has estimated American billionaires as having total net worth of $4.5 trillion.4 Assuming a (probably low for billionaires) 10 percent annual real economic income on that wealth, the billionaires will have $0.42 trillion of yearly real income, and hence $4.5 trillion of income over 10 years. Oxfam has collected estimates of average tax paid by billionaires currently of between 3.4 and 8.2 percent.5 Raising tax on $4.5 trillion from 3.4 percent to 8.2 percent to the current statutory maximum rate of 37 percent would raise between $1.2 trillion and $1.5 trillion over 10 years without a rate increase, but only if their accounting income is not defined too narrowly. Billionaires alone would not cover the estimated needs, but one-third to 43 percent is a reasonable estimate of their tax-bearing capacity without a rate increase.

IV. Make Taxable Income Less Elastic

Tax has two elements. One is transfer of dollars from the private to the public sector. Economists don’t even consider a transfer a serious cost worth studying by economists because economists do not look at who gets the dollars — only how taxes affect behavior. The other element in tax, however, is that taxpayers will warp their affairs with changes that inflict self-damage, just short of the tax they can successfully avoid. Tax avoided is a lose-lose situation. The taxpayer does self-damage right up to the tax avoided, and Treasury needs to find revenue from some inferior sources. The point of any tax design must be to make tax less avoidable, less elastic.

Working hours and investment in total do respond to tax, but not by much and indeed perhaps in the counterintuitively wrong direction. People will invest in the face of negative return rates to carry money forward to when it will be more desperately needed. They tend to work full-time or not in big quanta. But if after-tax results vary between forms of investment or work, then the variations will elastically induce tax avoidance. Variations in the tax impact of investments that compete with one another induce the investor to go into the investment with less real utility to themselves because tax variations warp the decisions elastically.

Indeed, savings usually seem to decline in response to greater after-tax returns, but the issue is close.6 Target savings are those with a purpose, for down payment, children’s tuition, and then retirement. Target savings go down in response to higher after-tax rates. When return rates go up, target savers can party more now, and still meet their savings goals. When return rates go down, target savers get very unhappy, but they do save more to meet their goals. For “reward savings,” by contrast, higher returns incentivize higher savings — some savers are saving for power, not specific goals. Reward savings do not dominate over target savings in the overall savings statistics.

Tax avoidance is the cause of deadweight loss, above the revenue collected. If taxes went up to 50 percent but the founder kept working the same extraordinary hours, there would be a greater transfer from founder to public coffers, but no added deadweight loss. If there is no tax avoidance response, the tax system has then reached rents — amounts in excess of the minimum about to induce the founder to keep working — but has not caused collateral damage, deadweight loss. A major goal of all tax design is to minimize the collateral deadweight loss by minimizing the opportunity to avoid tax, and, of course, transferring money for public use because that is the sole justification for tax.

V. Treasury Needs to Do It

The war plans for the coming fiscal needs should be made in the Treasury Department. The Congress is a body of 538 separate elections, and it has trouble focusing on the global needs for revenue when all its politics are local. George Yin has a wonderful history of the career of Stanley Surrey and how he battled in his Treasury career against Colin Stam, the longtime chief of staff of the Joint Committee on Taxation. Surrey was working for fairness and a simple rational tax, and Stam was responding to members who were trying to get reelected by responding to constituents’ and campaign contributors’ demands for special exceptions and a narrower tax base.7 Individual legislators like to think of tax as a honey pot — an unbudgeted supply of free money to help them get reelected — and not as the necessary source of funding.

Republican administrations have passed grand expansions of the tax base that were planned in Treasury under Democratic administrations but launched and enacted under Republican administrations. The Tax Reform Act of 1986, the most successful tax act during my career, was passed thanks to support from Ronald Reagan, but it started under Gene Steuerle at Treasury, which composed the base-expanding “Treasury I” during the prior Carter administration.8 The Tax Reform Act of 1969 originated in proposals from Treasury under the Lyndon B. Johnson administration, although the proposals were both offered to Congress and passed under the subsequent Nixon administration.9 Give Treasury $5 million now for 25 tax professionals willing to come to the aid of their Treasury. That investment could transform the tax system for a cheap price, like the genie at the gate, who can divert the direction of a mighty river down the channel toward the good.

Tax reform for whatever the level of spending is not a partisan issue. Good tax systems are derived like geometry proofs from sound principles. Analytic methods are valid on both sides of the political aisle.

VI. Turn Expenditures Into On-Budget Spending

The worst government waste occurs regarding tax incentives, that is, the tax benefits given to subsidize behaviors, because there is no serious budgeting or cost-benefit analysis or skeptical attack to ensure that the loss of revenue is justified by what the public gets back in return.

The standards of what constitutes research and development for tax incentives, for instance, are lax, so there is a lot of true junk unworthy of subsidy that qualifies for the tax subsidy. Business costs need to be justified by what customers are willing to pay, without warping by government, because real pretax demand generally measures what customers get out of a good — not always, but it is a fine default assumption. The patent subsidy, that is, a monopoly on use of the innovation for a limited time, is restricted to significant innovations that are not obvious to an ordinary mechanic having the ordinary skills in the arts to which the invention pertains.10 Routine improvements that any trained mechanic could do are not granted the patent monopoly subsidy because for products made by using well-established skills, the business needs to look to the real demand for product to make their profit and not a government-made advantage. R&D qualifying for the tax subsidy, however, can be within ordinary day-to-day business, performed by employees familiar with the tools of the trade. Subsidies for that distort investment into paths not justified by real demand.

Similarly, the National Science Foundation funds only projects that have the capacity of generating path-breaking, transformative discoveries, and the National Institutes of Health authorizes grants to just 22 percent of the potentially transformative discoveries presented to them.11 Tax-subsidized projects, however, do not need to reach the level of potentially path-breaking discoveries. You need to apply intelligence to identify projects that might be transformative. Repeal all the tax subsidies and give the money to the National Science Foundation or National Institutes of Health and the desert will bloom. Routine employee work is justified by the profits the work will produce and does not deserve government subsidy beyond what the real demand in the market will pay for.

Computer “shoot ‘em up” games like Doom III are said (by me) to be the most heavily subsidized industry in America because input is expensed and output can be capital gain.12 The case for the subsidy was effectively satirized by The Onion.13 The unemployed adult son playing Doom III in his mother’s basement for 17 hours a day is getting pleasure from playing a new computer game, but I for one am skeptical that he was giving enough externality benefits to the public that the public should so intensely subsidize his play.

People hate government spending so much that spending dollars are subjected to intense scrutiny, which limits their waste. Not entirely, but better to do so under hateful skepticism than under tax expenditures, for which budget responsibility is weak to nonexistent. The tax system, by contrast to government spending, is easy pickings, like stealing candy from a baby.

In an income tax system and world of debt financing, tax expenditures need to be measured from a base of reduction of pretax internal rate of return by the statutory tax base.14 A tax regime that does not reduce the pretax internal rate of return by the statutory tax rate is a tax expenditure for which Congress and Treasury should exercise expenditure responsibility. That usually means cut them off.

VII. 21-Gun Salute to Defending the Tax Base

Following is a sample of 21 proposals to defend the tax base and make it fairer and more efficient. The 21 proposals are the most important or logical, or just more entertaining proposals taken from a larger group of 90 proposals, all previously published or to be published in Tax Notes.15

1. Cut off the equity funds.

Section 279 of the code now disallows deduction of interest on acquisition indebtedness used to acquire controlling stock of another corporation.16 Section 279 should be extended modestly to disallow deduction of interest on acquisition debt used to acquire a corporation’s own stock. Four words — “or issuer’s own stock” — would be enough.

Leveraged buyouts move capital out from the corporation’ productive business to shareholders. Nothing in a leveraged buyout goes to productivity or jobs at the level of the business. Shareholders get a flood of cash. Some of that cash will go into other investments, but not without a significant toll charge by which once productive capital is moved into luxury consumption, that is, horses, private planes, and small Caribbean islands. Leveraged buyouts also do harm by (1) turning a resilient capital structure of some target into a fragile high-leverage one; (2) inducing management to risk the company on bets with a negative expected value; and (3) allowing the new shareholder to suck capital out of the business with consulting fees higher than the operating income they produce. The profit from a leveraged buyout comes from Uncle Sam, the interest deduction, which we should cut off. Uncle Sam should not be giving up millions of dollars’ subsidy to move such massive amounts of capital from productive use to luxury. The incentives go in exactly the wrong direction.

2. Take away interest that yields negative tax.

Avoiding negative tax subsidies, better than mere tax exemption, requires a ceiling on interest deductions equal to taxpayers’ adjusted basis in property creditors can reach.17 However, there is a necessary exception for borrowing to incur expenses that is repaid by year-end.18 Negative tax subsidies are worse than mere differential tax rates. They depart from the Nirvana of investment set by real demand in a nontax world and make Treasury’s revenue needs worse.

3. A fair tax on our trillion-dollar behemoths.

We cannot even reach the income of our richest corporations. Our trillion-dollar market capitalization behemoths — Apple, Amazon, Google, and Microsoft — pay (internal-rate-of-return-reducing) effective tax rates of between 0.65 and 2.9 percent because they deduct immediately (“expense”) their intangible investments that have value beyond the end of the year.19 Current regulations, however, allow Treasury to call for capitalizing costs with value beyond the end of the year by merely posting in the Federal Register, and without entangling Congress. This is worth $6 trillion this year, enough in one stop to cover our needs.

4. No deduction for tax planning and controversy costs.

In our system in which tax itself is included in the tax base, the benefits of reducing tax, by planning or litigation, are exempt from tax.20 To match the expenses with the tax-free reduction in tax that a planning or litigation cost yields, the expenses of tax planning and compliance must be nondeductible. Otherwise there is a negative tax subsidy — worth $30 billion to $50 billion per year, but critical in reducing overinvestment in tax planning and litigation.

5. The wonderful mark-to-market tax.

Mark-to-market for publicly traded instruments and entities is a wonderful idea.21 The appraisals of value set by public market result from hundreds of thousands of dollars of research by experienced self-interested bulls and bears. No accounting system either in generally accepted accounting principles or tax is remotely as accurate. That market-set appraisal of the increased value of debt, equity, and other financial instruments traded on a public market can be taxed at shareholder individual rates. Nonpublic businesses can be taxed on earnings on an interim basis as an estimate of income, with reconciliation when sales provide better evidence.

6. Step-up.

Anything done to restrict or abolish step-up in basis at death constitutes good work. Section 1014 gives heirs a basis as if they had just purchased the property for cash. That induces the now deceased owners to avoid sales, whereas they should be moving on to some other enterprise, or just to get out of the Enrons and GEs that were once good investments but then were not. To have capital gain to avoid by death requires capital, and those with capital are called rich. Step-up in basis at death is an American reception of British concepts of capital under which the castle and manor belong to the next heir no matter what their worth, but America never has had that social structure under which the step-up made some (limited) sense.

  • Repeal step-up in basis in full. Step-up in basis is unfair and inefficient. Seventy-five percent of the gain of America’s richest taxpayers avoids tax forever. If the heir does not know cost, the inheritance is windfall with zero cost.22

  • Put a low ceiling on section 1014. Perhaps allow $15,000 of household goods to pass on, without tax on gain, which is much higher than the average value of household goods, but no more. Or anything reducing the scope of section 1014 increases efficiency.

Lesser remedies would prune back step-up in basis to its more traditional core rationale:

  • No step-up for “income interests.” Assets that are not capital assets do not belong to the capital interest and are not capital gain under the original meaning nor properly within the step-up.23

  • Capital gain realized in life. Nonrecognition is articulated to be a tax deferral remedy, but not an exemption. Amounts realized in life are not properly exempted by basis step-up.24 The model of qualified pension plan distributions taxed in full to successors and income in respect to a decedent needs to be expanded to all properties.

  • No double deduction. Farm expenses, bad debts, and expensed equipment should not benefit from step-up. Step-up is thought of as giving an exemption, not a double deduction that is better than exemption.25

7. Amazing waste: tax subsidies for qualified retirement plans.

There is only a modest overlap between the high-income beneficiaries of qualified pension plans and those who need help for retirement security.26 The median worker gets crumbs and nobody below that gets anything. A welfare program that starts its measure by height of salary and height of tax inevitably is Robin Hood in reverse, taking from the public to serve the rich. But in addition, lower-wage employees are filtered out because they turn over more, can be shifted to independent contractor status, and have their Social Security deducted from employer costs. It also makes sense, as a part-way reform, to tax account balance at death as ordinary income to ensure that qualified plans focus only on pension security, not dynastic saving for family power. It is not the role of government to enhance the power of its richest families.

8. Repeal Opportunity Zones.

Opportunity Zones harm the poor.27 The fair market value of land goes up because the rents go up or are expected to go up, and higher rents put the poor out on the street. The program needs to be stopped, and existing owners need to pay reparations to the poor equal to the present value of the increased rents, that is, the increase in the value of the land. At minimum, Opportunity Zones must come with obligations to safely house the displaced renters and increase the affordable housing in the zone. Opportunity Zone benefits go only to those with capital gain, and those with disproportional capital are called rich. So we pay the rich to inflict damage on the poor. Say it isn’t so.

9. Taxing the publicly traded stock in a corporate acquisition.

Publicly traded stock is a cash equivalent — even more convenient than cash — and it should be capital gain boot when received in a merger or acquisition.28 (Worth $7 billion a year.)

10. Carbon tax.

Recent EPA proposals reevaluate the harm of carbon in the atmosphere at $109 a ton, which amounts to 50 cents a gallon at the gas pump. A tax of 50 cents per gallon is high enough to fund the technology to capture a ton of carbon from the air. We can go our profligate ways with cars and airplanes with only a 50-cent-per-gallon tax to fund extraction. The combination of a 50-cent per gallon tax and funding reduction of carbon in the air is a viable political package.

11. Home mortgage interest and home property taxes.

Interest on home mortgages and property taxes on homes are consumption, the rent paid for shelter. The bottom 75 percent do not itemize, and the benefit goes to high-bracket neighborhoods. When the tax benefits are capitalized into seller prices, ambitious people trying to get into better neighborhoods are harmed by the subsidy, and only opportunists going into lower-tax-bracket neighborhoods get to keep the value of the tax subsidy. No homeless person needing shelter has ever gotten anything out of the deductions. The deductions just increase the size of McMansions. Rental use increases movement to better jobs. If home ownership needed subsidy over rentals, neighbors alone should chip in and pay it if they are willing. Imputed value from really big houses can be taxed to dampen the shift from debt funding to equity funding of really big houses.

12. Impose capital gains tax on like-kind exchanges.

Cash is kept just offstage in like-kind exchanges, but both sides know the value down to the dime.29 Tax them all and the cash will appear. (Worth $2 billion per year.)

13. Corporate meltdowns and the deduction of credit risk interest.

High-leverage, high-interest-rate debt acts like an option that induces management to invest in high-volatility assets.30 Limit the interest deduction to a risk-free rate to take away the incentives to increase volatility of assets.

14. Corporate meltdowns caused by compensatory stock options.

Giving controlling officers options gives them incentive to go into high-volatility investments that risk the whole company.31 Some investments have a negative expected value but improve the value of the controlling officer’s option.

15. Partnership allocations from nickel-on-the-dollar substance.

Partnership capital accounts determine partnership allocations, as if they were worth face amount, but capital accounts not quickly settled have trivial and avoidable real value.32

16. Nyet, nein, non, no to capital gain on depreciable property.

Capital gain on the sale of depreciable property means negative tax on every sale because the capital tax on the seller is less than the value of the extra depreciation deductions to the buyer.33 Section 1239 denies capital gain treatment for the sale of depreciable property to a related party, but the economic advantage is the same even when the buyer and seller are unrelated, except that the advantage must be shared by negotiation.

17. No orchard, no capital gain.

Under its original meaning, capital gain is available only for capital, that is, property in which the seller had basis.34

18. Business and casualty losses when basis has not been lost.

To identify and tax the internal rate of return, adjusted basis must be equal to the real remaining investment value of the investment.35 Thus, for instance, if a casualty destroys unrealized appreciation but value remains above basis, there is no legitimate tax loss.

19. Determine dividends by shareholder gains, not corporate E&P.

Under today’s law, whether a distribution from a corporation is a tax-free recovery of basis or a gain is determined by looking to the corporation’s earnings and profits account.36 The corporate E&P account is that of another taxpayer, and minority shareholders cannot see it. Corporate E&P is an inchoate mixture of three different theories (taxable income, accounting income, and dividend distribution law) and court-added nonsense. Look to the shareholder’s own situation. If a dividend causes the FMV to drop below basis, the shareholder has lost basis and should get the tax-free recovery of the basis lost against the distribution, but not if basis is above value even after the dividend.

Compliance can be increased with logically necessary reforms.

20. GAAP standards for tax reporting.

GAAP say that if a tax is more likely than not to be paid, it must be reported as a tax expense on the SEC financial statements by which a corporation reports to potential investors and current owners.37 A corporation’s duty to its government is at least as high as its duty to investors. If standards for reporting on a tax return conformed to GAAP financial statement standards, the IRS will have an army of SEC CPAs to audit and enforce tax law. Current law allows taxpayers to report on the basis of positions that might be victorious, but probably won’t be. Tax reserves for amounts likely to be due, but not paid, should be paid, in every case. Positions that are less likely than not should be prosecuted by litigation, not tax returns.

21. Ending reliance on opinions of the taxpayer’s own lawyer.

The opinions that companies pay lawyers for are legal briefs for a position, but they are not reliable regarding what the law actually is and how a court, duly informed of all the facts, would rule.38 An opinion is a legal brief that furthers the economic interests of the taxpayer-client, and if it is persuasive, it will win. But if it loses, it is not evidence of a good-faith attempt to comply with actual law. Legal opinions de facto make the law firm the judge and jury of its own case. Legal opinions should be treated as briefs but not be admissible as reliable advice on real law. Real advice is given in private; public advice on letterhead is given to move the law, not describe it accurately.


1 Kimberly Clausing and Natasha Sarin, “The Coming Fiscal Cliff: A Blueprint for Tax Reform in 2025,” Hamilton Project (Sept. 2023).

2 Interest of 3.36 percent for Treasury borrowing with one-month maturity April 21, 2023, see “1 Month Treasury Rate (I:1MTCMR),” Ycharts; CPI of 4.9 percent in April 2023 is found at Bureau of Labor Statistics, “Consumer Prices Up 4.9 Percent From April 2022 to April 2023,” The Economics Daily (May 15, 2023).

3 Treasury interest for one-month borrowing is at 5.5 percent and inflation is at 3.1 percent. Ycharts, supra note 2; BLS, “Consumer Price Index — January 2024,” USDL-24-0265 (Feb. 13, 2024).

5 Oxfam, “Do the Rich Pay Their Fair Share?” (Jan. 14, 2024; accessed Mar. 5, 2024).

6 Jonathan Skinner and Daniel Feenberg, “The Impact of the 1986 Tax Reform Act on Personal Savings,” National Bureau of Economic Research Working Paper No. 3257, at 17 (1990) (describing a consensus in the economic literature that any positive response of savings to an interest rate increase is “fragile and fleeting” and that overall reaction of savings to greater after-tax returns has been negative in the postwar period).

7 Yin, “‘Who Speaks for Tax Equity and Tax Fairness?’: Stanley Surrey and the Tax Legislative Process,” 39 Va. Tax Rev. 39 (2019).

8 Jeffrey Birnbaum and Alan Murray, Show Down at Gucci Gulch: Lawmakers, Lobbyists, and the Unlikely Triumph of Tax Reform (1987); Charles E. McLure and George R. Zodrow, “Treasury I and the Tax Reform Act of 1986: The Economics and Politics of Tax Reform,” 1 J. Econ. Persp. 37 (1987); Steuerle, “How to Design Tax Reform: 8 Lessons From 1986,” Committee for a Responsible Federal Budget Blog (Sept. 18, 2017).

9 Treasury Department, “Tax Reform Studies and Proposals” (1969).

10 35 U.S.C. section 103.

11 Calvin H. Johnson, “R&D Credit: Intelligent Is Better Than Random,” Tax Notes, Mar. 23, 2015, p. 1553.

12 Johnson, “Capitalize Costs of Software Development,” Tax Notes, Aug. 10, 2009, p. 603.

13 “U.S. Funding Video Games,” The Onion (Sept. 13, 2011).

14 Johnson, “Measure Tax Expenditures by Internal Rate of Return,” Tax Notes, Apr. 15, 2013, p. 273.

15 Many of the 21 proposal samples and the 90 proposals group rely heavily on “Shelf Projects,” published and supported by Tax Notes starting in 2007. See, e.g., Johnson, “Evolution of the Shelf Project,” Tax Notes, Oct. 8, 2012, p. 216, for description of the origins and evolution of the Shelf Project.

16 Johnson, “Cut Off the Equity Funds,” Tax Notes Federal, Sept. 5, 2022, p. 1601.

17 Johnson, “Interest Ceiling Must Be Adjusted Basis Times Interest Rate,” Tax Notes Federal, Sept. 26, 2022, p. 1987.

18 Johnson, “Annex and Errata on Ceiling on Interest Deductions,” Tax Notes Federal, Nov. 28, 2022, p. 1251.

19 Johnson, “A Fair Income Tax on the Trillion-Dollar Behemoths,” Tax Notes Federal, May 24, 2021, p. 1199.

20 Johnson, “No Deductions for Tax Planning and Controversy Costs,” Tax Notes, Oct. 18, 2010, p. 333.

21 Johnson, “The Wonderful Mark-to-Market Tax,” Tax Notes Federal, Nov. 29, 2021, p. 1277.

22 Johnson, “Elephant in the Parlor: Repeal of Step-Up in Basis at Death,” Tax Notes, Dec. 8, 2008, p. 1181. See also Johnson, “Plump Target: Basis Step-Up,” Tax Notes, Dec. 22, 2008, p. 1459.

23 Johnson, “Step-Up at Death but Not for Income,” Tax Notes, Aug. 21, 2017, p. 1023.

24 Johnson, “Gain Realized in Life Should Not Disappear by a Step-Up in Basis,” Tax Notes, Sept. 4, 2017, p. 1305.

25 Id.

26 Johnson, “Amazing Waste: Tax Subsidies to Qualified Retirement Plans,” Tax Notes, Aug. 11, 2014, p. 727.

27 Johnson, “Repeal Opportunity Zones,” Tax Notes Federal, Oct. 26, 2020, p. 625; see also Johnon, “Opportunity Zone Investors Need to Pay Reparations to Poor People,” Tax Notes Federal, Dec. 14, 2020, p. 1781.

28 Johnson, “Taxing the Publicly Traded Stock in a Corporate Acquisition,” Tax Notes, Sept. 28, 2009, p. 1363.

29 Johnson, “Impose Capital Gains Tax on Like-Kind Exchanges,” Tax Notes, Oct. 27, 2008, p. 475.

30 Johnson, “Corporate Meltdowns and the Deduction of Credit-Risk Interest,” Tax Notes, May 2, 2011, p. 513.

31 Johnson, “Corporate Meltdowns Caused by Compensatory Stock Options,” Tax Notes, May 16, 2011, p. 737.

32 Johnson, “Partnership Allocations From Nickel-on-the-Dollar Substance,” Tax Notes, Feb. 13, 2012, p. 873.

33 Johnson, “Nyet, Nein, Non, No to Capital Gain on Depreciable Property,” Tax Notes, Sept. 5, 2016, p. 1455.

34 Johnson, “No Orchard, No Capital Gain,” 72 Tax Law. 501 (Jan. 13, 2019).

35 Johnson, “Casualty and Business Losses When Basis Hasn’t Been Lost,” Tax Notes, July 28, 2008, p. 357; see also Johnson, “Applause for Reification of Basis,” Tax Notes, Sept. 1, 2008, p. 903.

36 Johnson, “Determine Dividends by Shareholder Gains, Not Corporate E&P,” Tax Notes, May 6, 2019, p. 871.

37 Bret Wells, “Adopting the More Likely Than Not Standard for Tax Returns,” Tax Notes, Apr. 26, 2010, p. 451.

38 Johnson, “Ending Reliance on Tax Opinions of the Taxpayer’s Own Lawyer,” Tax Notes, Dec. 2, 2013, p. 947. See also Johnson, “Opinions by the Taxpayer’s Own Lawyer: Johnson’s Response,” Tax Notes, Jan. 6, 2014, p. 129; Johnson, “Johnson Responds: The Opinions Are Not Reliable,” Tax Notes, Jan. 20, 2014, p. 352.


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