Who Gets the Big 199A Tax Loophole?

In December 2017, Congress signed the Tax Cuts and Jobs Act (TCJA) into law. It was largely unpopular for most Americans but has left some people and companies quite pleased—the ultra wealthy ones like the Koch Brothers and Pfizer. The TCJA has lowered the individual income tax from 39.6% to 37%, lowered the corporate income tax from 35% to 21%, and doubled the estate tax’s exemption to $11 million per person and $22 million per couple. One of the most glaring issues with the TCJA comes from a loophole created in the Internal Revenue Code section 199A Qualified Business Income. Corporate income is a type of business income that is taxed twice federally, once at the corporate level and once at the shareholder level. However, pass-through income is a type of business income that skips the corporate level tax and jumps straight into the owner’s personal tax returns. Section 199A potentially allows a major tax deduction for certain “qualified” pass-through income. One question is who will qualify for this deduction, the majority of Americans or only the wealthiest among them—my pennies are on the latter. 199A—Some of What is Known The new law offers a 20% deduction for pass-through entities, [read more]

Contract for Deed Sales Killing the American Dream

Contract for deed sales, also known as installment land contracts, is an alternative way to purchase a home. Like the traditional home loan, buyers make a down payment and promise to pay the purchase price in installments; they are also responsible for making (and paying for) any necessary repairs and insurance. The buyer takes possession of the home, but under this method of purchase, the seller keeps the title to the property until all payments are made. This contract almost always includes a provision allowing the seller to evict the buyer immediately if even one payment is missed. Meaning that the buyer immediately loses all the money they paid into the house. Currently, there are no federal protections to prevent these types of sales. The Consumer Financial Protection Bureau (CFPB) must enact federal protections to prevent deceptive buyers from making themselves rich at the expense of the American Dream. A New York Times article estimates that a lot of these homes were purchased by investment firms at prices under $10,000 and then sold to buyers for four times the original purchase price with interest rates sometimes double the rate of a standard federally-backed home loan. Additionally, the properties usually always [read more]

Labor Strife in Major League Baseball

The word “collusion” has been thrown around fairly frequently over the last few months in Major League Baseball (MLB). It is currently the baseball off-season, meaning that no regular-season games are currently played (and will not be until March). It is also during this time that teams are typically most active in trading and signing players. However, this off-season has been notably quiet with regard to player acquisitions. There are a multitude of players who have played well enough that a team should sign them, yet they remain free agents for reasons that are not entirely clear. While many may look at this and see it as purely an issue with the MLB, there are several legitimate labor issues at play here. The Major League Baseball Players Association (MLBPA) is the collective bargaining representative for all current MLB players. MLBPA and the 30 MLB clubs have signed numerous collective bargaining agreements (CBA) over the years, including the most recent one, which is in effect until 2021. In 1968, the CBA barred collusion by writing, “Players shall not act in concert with other Players and Clubs shall not act in concert with other Clubs.” More importantly, the current CBA retains that [read more]

Fair Play for Minor League Baseball

People are often quick to criticize professional athletes for the amount of money they make. And within the world of professional sports, baseball players often make more money than their peers in other professional sports. Some of the reasons for this, as some have pointed out, are that Major League Baseball (MLB) has no salary cap, the MLB has a strong players’ union, and sports agents wield a tremendous amount of power. Compared to other major American sports, Major League Baseball also cultivates talent in a unique way. In the National Basketball Association (NBA) and the National Football League (NFL), professional teams typically recruit players from college. In the National Hockey League (NHL), there are minor league teams, but there are numerous leagues, and individual teams do not have contractual control over all players on the team. In baseball, however, virtually the only way that a player reaches the MLB is by progressing through Minor League Baseball (MiLB). MLB teams typically exercise control over 3-5 MiLB teams, and the MiLB teams have contractual control over all of their players. This level of control has led to unequal bargaining power that teams have over their players, which has not only resulted [read more]

A Rushed Effort to Initiate Tax Legislation

On Wednesday, September 27, 2017, the White House and Congressional Republicans revealed a new tax plan. Obtained and reported by the Washington Post, Congress released a nine-page document titled, “Unified Framework for Fixing Our Broken Tax Code,” which summarizes the proposed tax code reformations. With this tax plan, President Trump expects to bring “revolutionary change” to the United States, especially to the middle class and American businesses. One of the single greatest revisions that Congress’ plan proposes is the transition of the U.S. from a worldwide to a territorial based tax system. That is, the United States would depart from its position to tax U.S. citizens and corporations on worldwide income. To better explain how the current worldwide tax system works, here is an example. Currently, a U.S. Corporation that receives a dividend from a foreign corporation will be taxed both in that foreign country and by the U.S. Under this worldwide system, a U.S. corporation is allowed to credit a portion of the foreign corporate income tax, or, “deemed to have paid” a portion of the foreign income tax, if the U.S. corporation owns at least 10% voting stock in the foreign corporation (S 902(A) of the Internal Revenue [read more]

Children Behind Bars: Justice for Juveniles Sentenced to Life Without Parole

“I want to know how it feels to sit with my sister and have a cup of coffee . . . to walk down the street . . . to sit in the car and hear the rain just beat down.” Six months before her death, Sharon Wiggins described her aspirations to a news reporter for a Philadelphia newspaper. In March 2014, Wiggins died at age 62 in a maximum-security prison, where she had been serving a life sentence without the possibility of parole since she was 17. While in prison, Wiggins obtained a degree from Penn State University and became employed by the university as a student services liaison; she tutored other prisoners to help them obtain GEDs and oversaw “back-on-track” programs for parole violators. Wiggins was one of about 2,500 prisoners serving life sentences without the possibility of parole for crimes they committed as juveniles (“juvenile lifers”); the United States is the only country in the world that still imposes this sentence. In consideration of the story of Wiggins, the evidence of differences between children and adults and the Supreme Court cases mandating changes in sentencing schemes, states should no longer impose mandatory life sentences without parole on [read more]

The Russia Investigation: Informing the American Public

Now that more than a year has passed since the 2016 presidential election and the reports of Russian interference, we should evaluate the progress and status of the Russia investigation to ensure that the goals of the investigation are being met. Currently, the investigative efforts are splintered across the House, Senate, and Department of Justice and, as we will see, each actor has a different purpose and goal. Perhaps the highest profile portion of the investigation, and the one many view as showing the most potential to produce quantifiable results, is the effort led by former FBI Director Robert Mueller. However, it is important to consider the limitations of Mueller’s position as special counsel. Historically, many of the high profile investigations involving the executive branch (Iran Contra, Whitewater, and Monica Lewinsky) were led by special prosecutors (also referred to as independent counsel), a role very different from that of special counsel. After the Watergate scandal, Congress passed the Ethics in Government Act in 1978, which created the special prosecutor. The special prosecutor would be appointed (at the request of the attorney general) by a three judge panel and would have the ability to pursue the investigation and prosecute any charges [read more]

A True Underdog Story: How New Jersey Can Shape the Future of American Sports Gambling

Sports gambling is an extremely lucrative industry—and it is growing at a rapid pace. In 2016, the Nevada State Gambling Control Board reported $4.5 billion in profits from legal sports wagering. Nevada, however, is the only state currently allowed to profit off of state-sanctioned sports betting under the Professional and Amatuer Sports Protection Act (“PASPA”). PASPA is a federal law passed by Congress in 1992 that effectively banned sports betting nationwide with the exception of state-sponsored sports betting in Nevada and sports lotteries in Oregon, Montana, and Delaware. With the goal of joining these states in profiting from state-sanctioned sports betting, the New Jersey State Legislature passed the Sports Wagering Act of 2012 (“2012 Law”), which legalized certain types of sports gambling in the state. In response to the passage of the 2012 Law, five major American sports leagues (the NCAA, NFL, MLB, NHL, and NBA, together, the “Leagues”) filed a lawsuit in 2012 to enjoin the 2012 Law for violating PASPA. The Third Circuit Court ruled in favor of the Leagues in National Collegiate Athletic Ass’n v. Governor of New Jersey. In 2014, New Jersey Governor Christie signed into law Senate Bill 2460 (the “2014 Law”). The major difference [read more]

Ezekiel Elliot v. The NFL

The National Football League (NFL) has been flooded with off the field controversies this year, including, the ongoing legal battle between the NFL and Dallas Cowboys’ running back, Ezekiel Elliot. On August 11, 2017, the NFL suspended Ezekiel Elliot six games for violating the NFL’s personal conduct policy. This resulted from a year-long investigation by the NFL into domestic violence accusations made against him by Tiffany Thompson, an alleged ex-girlfriend. On August 15th, the NFLPA filed an appeal of the suspension. Roger Goodell, the Commissioner of the NFL chose to appoint Harold Henderson as the arbiter of the appeal hearing. Henderson upheld the suspension, sparking an ongoing legal battle between Elliot and the NFL. On August 31, Ezekiel Elliot’s legal team filed a lawsuit against the NFL in the U.S. District Court of Eastern Texas. Elliot claims that the NFL willingly overlooked critical information in their investigation that shows Thompson’s claims of domestic violence may not be credible. On September 8, the U.S. District Court of Eastern Texas ruled that “Elliot did not receive a fundamentally fair hearing”, and granted a preliminary injunction on the Henderson appeal hearing. Consequently, Elliot has been able to play; however the NFL has filed [read more]

Taking on the National Football League

On October 15, 2017, several news and media outlets reported that former San Francisco 49ers quarterback Colin Kaepernick would be filing a grievance against the National Football League. Kaepernick, following the requisite procedure, filed his grievance under the National Football League’s Collective Bargaining Agreement alleging collusion amongst the 32 owners of NFL teams. What started out as an individual practicing his right to protest, particularly to shed light on specific social injustices, has escalated rapidly into a national debate centered on players kneeling during the national anthem. As a result of his protest, and in combination with both the immense media coverage and fellow athletes who joined in protest, Colin Kaepernick remains unsigned a year later. In what is undoubtedly a monumental task taking on the NFL, Kaepernick still stands on the verge of making more history if an arbitrator finds the allegations are true. Article XVII(a)(1) of the NFL collective bargaining agreement states that no NFL team or employee “shall enter into any agreement, express or implied, with the NFL or any other club, its employees or agents to restrict or limit individual club decision making as to . . . whether to negotiate or not to negotiate with [read more]
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