The Role of Intellectual Property in Tax Planning (with Katarzyna Bilicka and İrem Güçeri).
Presented at the NTA Annual Conference (November 2023), Georgetown's Tax Law and Public Finance Workshop (April 2024), IIPF Annual Congress (August 2024), and ASSA Annual Meeting (January 2025)
Family Responses to the College Financial Aid Implicit Income Tax (with Joe Gray-Hancuch and Nick Gebbia).
Slides presented at the OTA Research Conference (September 2023).
Quantifying the 100% Exclusion of Capital Gains on Small Business Stock (with Zahrah Abdulrauf, Gerald Auten, and Quinton White).
Working paper available here. Presented at the OTA Research Conference (September 2024), Tax Economists Forum (October 2024), and NTA Annual Conference (November 2024).
Abstract: In 2010, Congress increased the exclusion for capital gains from the sale of Qualified Small Business Stock (QSBS) from 50 percent of the gains to 100 percent. The prospect of tax-free capital gains encourages taxpayers both to invest in corporations that qualify for this provision and to engage in creative tax planning to increase the amounts of eligible capital gains. This paper uses data from e-filed tax returns between 2012 and 2022 to provide the first empirical estimates of gains excluded under this provision and the increase in such gains after the exclusion was raised to 100 percent. Exclusions under this provision have increased substantially over the past decade, peaking at over $40 billion for tax year 2021 before decreasing in 2022. An average of just under 33,000 individual taxpayers excluded QSBS gains each year. The distribution of QSBS exclusions is highly skewed. The median annual exclusion among individual taxpayers excluding any gains is $2,810; the 90th percentile is $590,940. Individuals who exclude more than $1 million total between 2012 and 2022 account for 90 percent of gains excluded. Taxpayers with average total positive income under $100,000 account for 20 percent of returns claiming an exclusion but less than 2 percent of gains excluded over this period. Taxpayers with average total positive income over $1 million account for 26 percent of returns claiming an exclusion and nearly 75 percent of gains excluded. Total exclusions claimed by trusts are about 1/6 of that claimed by individuals.
American Expatriate Employment Patterns (with Zahrah Abdulrauf).
Working paper available here.
Abstract: This paper presents the first large-scale empirical analysis of American expatriate employment patterns, using US administrative tax data from 2008 to 2022. Despite estimates of 4.4 to 9 million Americans living abroad, limited data has constrained our understanding of how they engage in global labor markets. Drawing on information from tax filings, we examine employment tenure, firm affiliation, industry, occupation, income, and demographic characteristics. Our findings reveal that most American expatriates work for foreign rather than US-based employers, that long-term residence abroad is common, and that self-employment rates vary substantially by region and income levels by employer type. Modest gender differences also emerge. These patterns depart from traditional models of corporate-initiated expatriation and point to a more multifaceted and decentralized structure of American global labor market participation, with implications for research, corporate practice, and policy.
Doubling Down on Tax Avoidance: The Effect of Double Irish Closure on the Profit Shifting of U.S. Multinational Companies (with Navodhya Samarakoon). International Tax and Public Finance (2025). DOI link.
Abstract: The Double Irish, one of the largest tax avoidance strategies used by U.S. multinational companies, was effectively terminated by the Irish government in 2015, with existing users given until 2020 to comply. Using U.S. administrative corporate tax data, we present the first comprehensive analysis of profit repatriation following this landmark policy change. We find that in 2020, the first year of full implementation, firms previously using the Double Irish structure redirected $59 billion in royalty payments to the United States. To isolate the impact of the Double Irish closure from concurrent international tax reforms, we use propensity score matching to construct a comparable control group. Our difference-in-differences analysis finds that Double Irish users reported an average increase of $565 million in royalty payments after closure. However, we demonstrate that this average effect is driven by a small subset of firms, highlighting the structure’s highly skewed distribution. In total, between 1998 and 2018 Double Irish users channeled an estimated $1.2 to $1.4 trillion in profits to low-tax jurisdictions through this structure. Notably, the royalty payments redirected to the United States in 2020 represent only 31 to 38 percent of profits within the Double Irish arrangement as of 2018, suggesting that substantial profits may remain offshore. These findings indicate that existing literature likely underestimates the magnitude of U.S. tax base erosion through profit shifting.
Non-Monetary Sanctions as Tax Enforcement Tools: Evaluating California’s Top 500 Program (with Chad Angaretis, Brian Galle, and Allen Prohofsky). Journal of Policy Analysis and Management 43(4), 1057-1078 (2024). DOI link.
Abstract: Many U.S. states and countries around the world use non-monetary sanctions, including public disclosure, license suspension, and withholding of other government-provided benefits or privileges, to encourage tax compliance. Little is known about the effectiveness of these programs. Using administrative tax microdata from California's “Top 500” program, we study whether notices warning of the imminent publication of a taxpayer's personal information and potential license suspension affect payment and other compliance outcomes. Exploiting variation over time in the cutoff balance for program eligibility, we find evidence of strong positive compliance responses to the program. We also develop estimates of the long-run revenue and social-welfare effects of the program. Together, these results suggest that non-monetary sanctions can be efficient tax enforcement tools, at least among the relatively high-income population we study.
Citizenship and taxes. International Tax and Public Finance 31(2), 404-453 (2024). DOI link.
Abstract: The U.S. tax system applies to its citizens’ worldwide incomes and estates, whether those citizens live in the U.S. or abroad. Fully escaping the U.S. tax system requires renouncing U.S. citizenship, and in recent years a growing number have done so. Using administrative tax microdata, I provide new descriptive information about the population of individuals who have renounced U.S. citizenship. The typical renouncer had long lived abroad, was slightly wealthier than the typical American, and reported no or little net U.S. tax liability prior to their renunciation. Combined with information on the foreign jurisdictions where renouncers reside, the evidence suggests that most recent renunciations are a result of increasing compliance costs of maintaining U.S. citizenship while living abroad, and not a response to U.S. tax liability.
Incentive Effects of the IRS’ Passport Certification and Revocation Process (with Alex Ruda, Joel Slemrod, and Alex Turk). Journal of Public Economics, April 2022, Volume 208, #104625. DOI link.
Abstract: Traditional penalties for tax noncompliance are financial, but many jurisdictions now also use non-monetary tools, including collateral sanctions that deny access to some government-provided service. To learn about the effectiveness of one such penalty, we examine a recent U.S. policy restricting passport access for taxpayers with substantial tax debt, known as “certification.” We take advantage of a field experiment during the policy rollout, and find small but positive effects on taxpayer compliance of the certification notice sent to eligible taxpayers. We then study a subset of certified taxpayers who were denied a passport-related request, and find an immediate and strong positive effect of the denial on compliance.