Nonprofit firms may earn profits, but they may not distribute them to any affiliated persons. If a nonprofit firm has a “charitable” purpose under § 501(c)(3) of the tax code, the firm receives numerous tax advantages. For example, donors may deduct their donations to the firm from their taxable personal income. For-profit firms may distribute profits to affiliated persons, but receives no tax advantages for engaging in “charitable” activities. We argue that the law should not link tax benefits to corporate form in this way. There may be good arguments for recognizing the nonprofit form and good arguments for providing tax subsidies to charitable firms, but there is no good argument for making those tax subsidies available only to charities that adopt the nonprofit form. Indeed, there are reasons to think the ability to distribute profits to affiliates may both increase and improve charitable activities. Moreover, the extensive charitable activities of many for-profit commercial firms suggest that in the absence of discriminatory tax treatment for-profit charities would flourish. Therefore, the current tax benefits offered to charitable nonprofits should be extended to for-profit charities, and to the charitable activities of for-profit commercial firms.
Issue 8
A New Model of Administrative Enforcement
This Essay proposes a new method of monitoring regulatory compliance by a firm that operates multiple sources of risk, such as air polluting smokestacks. The expense of individually monitoring such sources may consume a large share of the agency’s enforcement budget, undermining deterrence objectives. Under our approach, regulators would instead randomly select one of the firm’s sources of risk, determine the firm’s liability at that source, and apply that outcome perforce as determinative of liability at all of the sources. This method, which we call single-outcome sampling (“SOS”), replicates or improves deterrence generated by the current source-by-source enforcement model, but at a fraction of the cost. To demonstrate these benefits, we apply SOS to the EPA’s monitoring of compliance with Clean Air Act regulations. We also address potential risk-bearing and judgment-proof costs associated with our proposal and explain how both problems can be solved.
The Questionable Use of Custom in Intellectual Property
The treatment of customary practices has been widely debated in many areas of the law, but there has been virtually no discussion of how custom is and should be treated in the context of intellectual property (“IP”). Nevertheless, customary practices have a profound impact on both de facto and de jure IP law. The unarticulated incorporation of custom threatens to swallow up IP law, and replace it with industry-led IP regimes that give the public and other creators more limited rights to access and use intellectual property than were envisioned by the Constitution and Congress. This article presents a critique of the current system of unreflected and often wholesale incorporation of custom in IP law. The article then provides a theoretical framework exploring the limited ways customary practices should be considered in IP law. The analysis provides additional support to those who have criticized the incorporation of custom in tort, contract, and property law, while at the same time providing guidelines that could revolutionize the treatment of custom in IP.