Monthly Archives: September 2020

Towards the Consistent and Equitable Treatment of Phantom Income in Determining Domestic Support Obligations

Timothy M. Todd, Phantom Income and Domestic Support Obligations, 67 Buff. L. Rev. 365 (2019), available at SSRN.

Professor Todd’s article addresses an issue at the intersection of divorce/family law, federal income tax law, and, even, trusts and estates law. For me, the article highlights that the ideal situation for spouses in a divorce (if, among other things, money were no object) is for each of them to have their own divorce/family law attorney, tax attorney, and estate planning attorney. That, or have Professor Todd on call.

The issue addressed in the article is how “phantom income” should be treated by courts in determining a domestic support obligation (whether child support or spousal support or a modification to either one, hereinafter “DSO”). “Phantom income” is “amounts that are includible as [gross] income under the federal tax code but that have not resulted in any actual current cash receipt.” (P. 386.) Individuals obligated to make DSO payments “have argued that phantom income should not be included when calculating such obligations because the individual’s ability to pay has not materially changed.” (P. 386.) Because those individuals never received any current cash receipt, they contend that the court should not increase a DSO based on any phantom income. Continue reading "Towards the Consistent and Equitable Treatment of Phantom Income in Determining Domestic Support Obligations"

Planning For The Next Recession (Oh, Wait A Second …)

Recession-Ready: Fiscal Policies to Stabilize the American Economy (Heather Boushey, Ryan Nunn & Jay Shambaugh eds., 2019), available at The Hamilton Project.

Legal scholars, in tax and elsewhere, have increasingly recognized the need for countercyclical policy instruments. (An important example is Yair Listokin’s Law and Macroeconomics: Legal Remedies to Recessions.) Much of the tax system, of course, automatically responds to economic slowdowns, such as by generating less revenue when economic activity declines. In severe recessions, however, non-tax instruments become indispensable to delivering adequate stimulus and individual support.

In this regard, the Great Recession of 2007-2009 taught us several important things the hard way. One was that down business cycles are likely to be a recurrent feature of modern economic life. A second was that austerity makes absolutely no sense as a response to economic slowdowns. A third was that the political system cannot be trusted to respond adequately through discretionary policy changes.

The political economy concern used to be that Congress would simply act too slowly – as in the metaphor of a home heating system that has a six-month time lag, and hence that responds to a January deep freeze by turning on the boiler in July. But now there is also the threat of deliberate obstruction by Republicans whenever there is a Democratic president, alongside a rigid, non-reality-based ideology that tamps down responsiveness even when Republicans control both Congress and the White House. This creates an urgent need for the Democrats, if they win in 2020, to design automatic countercyclical fiscal policy changes that do not require any further discretionary enactment of legislative changes.

Luckily, an important recent book – Recession-Ready: Fiscal Policies to Stabilize the American Economy, edited by Heather Boushey, Ryan Nunn, and Jay Shambaugh and published by the Hamilton Project – offers a wide-ranging set of suggestions. These suggestions would merit serious consideration as cornerstones of a Biden Administration legislative agenda in January 2021. Continue reading "Planning For The Next Recession (Oh, Wait A Second …)"

WP2Social Auto Publish Powered By : XYZScripts.com