TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, November 23, 2017

WKRP in Cincinnati Thanksgiving Turkey Drop

November 23, 2017 in Legal Education, Tax | Permalink | Comments (0)

What Tax Profs Are Thankful For

  • ThanksgivingBryan Camp (Texas Tech):  "I am thankful for being able to recognize the joy that comes in life. It’s not always a happy journey, but the bad parts help me appreciate the good."
  • Paul Caron (Pepperdine):  "I am thankful for the incredible opportunity to serve in my new role at this wonderful institution."
  • Bridget Crawford (Pace):  "I am thankful for the health care professionals at the Cleveland Clinic and the Hospice of the Western Reserve who have cared for my family members. I’m also thankful for librarians, hard copy books, my co-authors and co-editors."
  • Cliff Fleming (BYU):  "More than ever, I'm thankful for the checks and balance in our Constitution."
  • David Hasen (Florida):  "I am thankful for John 3:16 ('For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.')."

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November 23, 2017 in Legal Education, Tax | Permalink | Comments (0)

Oxford Sued Over Grades By Student Who Didn't Get Into Yale Law School

OxfordyaleBloomberg, Oxford Sued Over Grades by Student Who Didn't Get Into Yale:

Lawyers for an Oxford graduate who is suing the university over his “disappointing” exam grades nearly two decades ago told a London court Tuesday that he missed out on going to law school in the U.S. because of his results.

Faiz Siddiqui, who received a 2:1 degree, the second-highest grade available, says in a submission to the court that he received poor teaching for one of his papers.

“While a 2:1 degree from Oxford might rightly seem like a tremendous achievement to most, it fell significantly short of Mr. Siddiqui’s expectations and was, to him, a huge disappointment,” his lawyers said in court filings.

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November 23, 2017 in Legal Education | Permalink | Comments (0)

University Of Arkansas To Permit Firing Of Tenured Faculty For Lack Of Collegiality

Arkansas LogoFollowing up on last month's post, University Of Arkansas To Change Tenure Policy To Permit Firing Of Faculty For Lack Of Collegiality

Chronicle of Higher Education, When ‘Collegiality’ and Evaluating Faculty Collide:

Faculty members typically must meet standards related to their research, teaching, and service to earn tenure and keep their jobs. But sometimes, an additional criterion — collegiality — gets added to the mix, and it tends to raise professors’ hackles.

In fact, even the specter of collegiality is enough to cause alarm. Proposed changes to policies that govern tenure, promotion, and faculty dismissals within the University of Arkansas system included language that moved professors there to quickly mobilize in opposition last month. Among the concerns is what faculty see as a thinly veiled attempt by the Board of Trustees to use collegiality — or the lack thereof — as grounds for terminating a tenured professor.

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November 23, 2017 in Legal Education | Permalink | Comments (1)

Wednesday, November 22, 2017

Gillman & Chemerinsky: Professors Are Losing Their Freedom of Expression

Free SpeechWashington Post op-ed:  Professors Are Losing Their Freedom of Expression, by Howard Gillman (Chancellor, UC-Irvine) & Erwin Chemerinsky (Dean, UC-Berkeley) (Co-Authors, Free Speech on Campus (Yale University Press 2017)):

With so much attention focused on whether controversial speakers such as Milo Yiannapoulos or Richard Spencer should be allowed to appear on campus, an even more basic issue has been obscured: universities punishing faculty who, outside of professional settings, express views that are considered controversial or even offensive.

There are many recent examples of this. A year ago, a University of Oregon law professor was suspended for wearing blackface at a Halloween party held at her house. Twenty-three law school faculty members wrote a letter urging the professor to resign. A campus investigation found that by wearing this costume at a party in her home she had engaged in “discriminatory harassment.” [More here]. ...

In responding to those who would silence or censor speakers, many people, especially on the right, argue that, at universities, all ideas should be expressible, and if someone doesn’t like particular ideas, the response should be to engage and rebut the speakers rather than harass them or shout them down. These same sentiments should apply when faculty members express controversial opinions. ...

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November 22, 2017 in Book Club, Legal Education | Permalink | Comments (4)

Cato Institute Reviews Hatfield's Cybersecurity And Tax Reform

CatoChris Edwards (Cato Institute), Tax Reform, the IRS, Cybersecurity, and Privacy (reviewing Michael Hatfield (University of Washington), Cybersecurity and Tax Reform, 93 Ind. L.J. ___ (2018)):

The current tax reform debate has focused on economic growth and the value of cuts to different groups of taxpayers. Tax simplification has received less attention, and Republican bills would only make modest gains in that regard.

Yet a major tax code simplification would not only save time on administration, it would increase financial privacy and deter cyberattacks on the Internal Revenue Service. A new study by Michael Hatfield of the University of Washington looks at the risks posed by the IRS’s vast data collection on 290 million Americans. The more micromanagement there is in the tax code, the more information the IRS collects on our finances, lifestyles, and activities. ...

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November 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

2018 Tannenwald Tax Writing Competition

Tannenwald (2013)The Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship and American College of Tax Counsel are sponsoring the 2018 Tannenwald Tax Writing Competition:

Named for the late Tax Court Judge Theodore Tannenwald, Jr., and designed to perpetuate his dedication to legal scholarship of the highest quality, the Tannenwald Writing Competition is open to all full- or part-time law school students, undergraduate or graduate. Papers on any federal or state tax-related topic may be submitted in accordance with the Competition Rules.

Prizes:

  • 1st Place:  $5,000, and publication in the Florida Tax Review
  • 2nd Place:  $2,500
  • 3rd Place:  $1,500

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November 22, 2017 in Legal Education, Tax, Teaching | Permalink | Comments (0)

Senate Bill Contains Three Spring-Loaded Tax Increases On Multinationals Beginning In 2025 If Economy Lags

Bloomberg:  ‘Future Tax Traps’ Lurk for Multinationals in Senate's Proposal, by Lynnley Browning:

Senate Republicans tucked some multibillion-dollar tax increases for corporations into the 515-page tax bill they released this week — spring-loaded hikes that would begin after 2024 if the economy doesn’t grow as fast as GOP lawmakers have promised.

Some of the taxes in question aim squarely at companies like Apple and Alphabet, which rely on intellectual property, also known as “intangibles,” that they’ve transferred to overseas subsidiaries, tax experts say. Spokesmen for the two tech giants didn’t respond to requests for comment Tuesday.

“These so-called ‘sunrise’ provisions essentially are future tax traps for unsuspecting multinationals,” said David Sites, a partner in Grant Thornton's National Tax Office in Washington. In all, changes made by the Senate Finance Committee last week would boost revenue from international provisions aimed at such companies by about $55.6 billion over a decade, to $154.6 billion; most of the increase would come in 2026 and 2027. ...

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November 22, 2017 in Tax | Permalink | Comments (1)

UC-Hastings Law Dean Calls Bar Exam Failure For Top Schools 'Unconscionable'

July 2017 California BarFollowing up on yesterday's post, July 2017 California Bar Exam Results Rebound From 32-Year Lows: The Recorder, UC Hastings Law Dean Calls Bar Exam Failure for Top Schools 'Unconscionable':  

The pass rate on California’s July bar exam may have risen to a five-year high but one dean says the state remains on “a wayward path” by holding on to a score requirement that is the second highest in the country.

UC Hastings Dean David Faigman said Monday he’s disappointed that only 70 percent of first-time test-takers at American Bar Association-approved schools such as his passed the test. The pass rate for comparable students in New York was 86 percent.

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November 22, 2017 in Legal Education | Permalink | Comments (10)

Dimick: Better Than Basic Income? Liberty, Equality, And The Regulation Of Working Time

Matthew Dimick (SUNY-Buffalo), Better than Basic Income? Liberty, Equality, and the Regulation of Working Time, 50 Ind. L. Rev. 473 (2017):

Basic income has attracted the attention of academics, policy makers, and politicians around the globe. Basic income — a no-strings-attached cash transfer made to all citizens of a country, rich or poor — has been lauded as a plan to eliminate poverty, reduce income inequality, redress imbalances in the labor market, remedy the impending problem of mass technology-induced unemployment — the “robot apocalypse” — and make possible meaningful lives for those otherwise dependent on menial work in the labor market. It has also been proposed as an efficient, nonpaternalistic, and stigma-free alternative to existing welfare state policies. This Article compares basic income to an alternative policy proposal: the regulation of maximum working hours in the labor market.

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November 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

Ten Law Schools Sanctioned By ABA For Lax Admissions

ABA Logo (2016)Following up on last month's post, ABA Notices To Law Schools About Potential Non-Compliance With Accreditation Standards:  Law.com, 10 Law Schools Sanctioned by ABA for Lax Admissions:

The American Bar Association has publicly disciplined 10 law schools since August 2016 for enrolling students that it says are unlikely to graduate and pass the bar — an unprecedented crackdown, given that such actions historically are rare.

The sanctions issued by the ABA’s Council of the Section of Legal Education and Admissions to the Bar range from letters of noncompliance setting out remedial plans to censure to probation.

The schools are:

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November 22, 2017 in Legal Education | Permalink | Comments (1)

Oei & Ring: Will Proposed Tax Legislation Tilt The Worker Classification Debate?

Shu-Yi Oei & Diane Ring (On Labor), Will Proposed Tax Legislation Tilt the Worker Classification Debate? 

Tax reform is in the air. On Thursday, November 9, Senate Republicans released a Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation (JCT)), which contains in substance the Senate version of proposed tax reform legislation. Among other things, that JCT description stated that the bill would clarify the treatment of many workers as independent contractors by providing a safe harbor that, if satisfied, would guarantee such treatment. But in the modification to the Chairman’s Mark released on November 14, that safe harbor provision was stricken from the Senate bill.

In a blog post on TaxProf Blog, we expressed concern about this worker classification clarification provision. In brief, our worry was that even though the legislation “clarifies” the treatment of workers as independent contractors and arguably simplifies some aspects of their tax compliance burdens, it also carries potentially important ramifications for broader fights over worker classification that are occurring in the labor and employment law area.

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November 22, 2017 in Congressional News, Gov't Reports, News, Shuyi Oei, Tax | Permalink | Comments (0)

Tuesday, November 21, 2017

Williamson Presents Why Americans Are Proud To Pay Taxes Today at Columbia

Read My LipsVanessa S. Williamson (Brookings Institution) presents Read My Lips: Why Americans Are Proud to Pay Taxes (Princeton University Press 2017) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Conventional wisdom holds that Americans hate taxes. But the conventional wisdom is wrong. Bringing together national survey data with in-depth interviews, Read My Lips presents a surprising picture of tax attitudes in the United States. Vanessa Williamson demonstrates that Americans view taxpaying as a civic responsibility and a moral obligation. But they worry that others are shirking their duties, in part because the experience of taxpaying misleads Americans about who pays taxes and how much. Perceived "loopholes" convince many income tax filers that a flat tax might actually raise taxes on the rich, and the relative invisibility of the sales and payroll taxes encourages many to underestimate the sizable tax contributions made by poor and working people.

Americans see being a taxpayer as a role worthy of pride and respect, a sign that one is a contributing member of the community and the nation. For this reason, the belief that many Americans are not paying their share is deeply corrosive to the social fabric. The widespread misperception that immigrants, the poor, and working-class families pay little or no taxes substantially reduces public support for progressive spending programs and undercuts the political standing of low-income people. At the same time, the belief that the wealthy pay less than their share diminishes confidence that the political process represents most people.

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November 21, 2017 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (1)

ABA Opposes TRO To Block Release Of Western Michigan-Cooley Law School's Noncompliance With Accreditation Standards: 'Students Deserve To Know The Truth'

Thomas Cooley Logo (2014)Following up on last week's post, Western Michigan-Cooley Law School Seeks TRO To Prevent ABA From Releasing A Letter About Its Accreditation Status:  ABA Journal, Cooley Law School Has It 'Exactly Backward' and Students Deserve to Know the Truth, ABA Filing Says:

The American Bar Association decision that Western Michigan University Thomas M. Cooley Law School was “significantly out of compliance” with an accreditation standard regarding admissions was final and not subject to further appeal, the association argued Friday in a response brief to Cooley Law's motion for a temporary restraining order to seal the finding.

Cooley filed the complaint (PDF) and TRO motion (PDF) on Nov. 14 in the U.S. District Court for the Eastern District of Michigan. They asked the court to seal the ABA’s accreditation standards finding pending further appeals by Cooley. “Cooley has it exactly backward. Those students deserve to know the truth. The preliminary injunction should be denied,” the ABA writes in its Nov. 17 response (PDF).

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November 21, 2017 in Legal Education | Permalink | Comments (0)

NYU Tax Law Review Publishes Symposium Issue: Tax Policy And Upward Mobility

NYUUCLAThe Tax Law Review has published a new issue (Vol. 70, No. 3 (Spring 2017)) on the NYU/UCLA Tax Policy Symposium, Tax Policy and Upward Mobility, 70 Tax L. Rev. 409-543 (2017):

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November 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

Syracuse Faculty Attribute 92% Bar Pass Rate To Requiring Nine Courses For Students With GPAs < 2.5, Repeating 1L Courses For Students < 2.2 GPA

Syracuse (2018)The Daily Orange, Professors: First-year Curriculum May be Reason for Improved College of Law’s Bar Exam Pass Rate:

About 92 percent of Syracuse University College of Law graduates passed the state bar exam this summer, the university recently announced, marking a two-decade high pass rate.

Seven years ago, in 2010, SU’s College of Law had the lowest bar exam pass rate in New York after just about 70 percent of graduates passed the test — 16 percent lower than the state’s average that year, Syracuse.com reported.

A new law curriculum could be part of the reason why the college’s pass rate has improved, two professors said. ...

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November 21, 2017 in Legal Education | Permalink | Comments (2)

July 2017 California Bar Exam Results Rebound From 32-Year Lows

The California State Bar has released the results from the July 2017 bar exam. The overall pass rate was 49.6%, up 6.6 percentage points from last year. For California ABA-accredited law schools, the pass rate rose 8 percentage points from 2016, to 70%, but down 13 percentage points from 2008.

July 2017 California Bar

 

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November 21, 2017 in Legal Education | Permalink | Comments (0)

University of Illinois-Chicago May Absorb John Marshall, Creating Chicago's First Public Law School

JMUICCrain's Chicago Business, UIC May Absorb John Marshall Law School:

The University of Illinois at Chicago is in "preliminary discussions" with John Marshall Law School about the law school becoming a part of the university, which would create the only public law school in the city.

UIC Chancellor Michael Amiridis and Provost and Vice Chancellor for Academic Affairs Susan Poser disclosed the discussions in a campus-wide memo today, noting that the institutions' missions are complementary and would allow for opportunities that "bridge the discipline of law with the disciplinary strengths of UIC."

John Marshall Law School Dean Darby Dickerson sent a similar memo to her school's community, saying “these opportunities come with many questions—a number of which we simply don't have answers to yet—but this will be a transparent process, and I will provide further updates as they emerge.” She said she would host a meeting for students on Nov. 27. ...

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November 21, 2017 in Legal Education | Permalink | Comments (1)

BYU Is Eleventh Law School To Accept GRE For Admissions

BYU (2016)Following up on my previous posts (links below):  BYU is the eleventh law school to accept the GRE as an alternative to the LSAT, joining (in chronological order) Arizona, Harvard, Northwestern, Georgetown, Hawaii, Washington University, Columbia, St. John'sTexas A&M, and Wake Forest.

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November 21, 2017 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1657: Lois Lerner Fears Retaliation If Her Tea Party Targeting Deposition Is Made Public 

IRS Logo 2Wall Street Journal, Lois Lerner Doesn’t Trust You: “You Can’t Handle the Truth,” the Former IRS Official Tells the American People:

In his courtroom apologia in the film “A Few Good Men,” Jack Nicholson’s Col. Nathan Jessup made the words famous. Now, in her bid to keep her testimony in a recently settled tea-party lawsuit against the IRS secret, Lois Lerner has picked up the Jessup argument: “You can’t handle the truth!”

They used different words but the meaning is the same. Here’s how lawyers for Ms. Lerner and her former IRS deputy, Holly Paz, put it in a filing aimed at persuading a judge to keep their testimony from becoming public: “Public dissemination of their deposition testimony would expose them and their families to harassment and a credible risk of violence and physical harm.” They’re not just thinking of themselves, they add. Young children, family members, might be hurt too.

That’s quite an argument. So enraged would the American public become upon learning what Ms. Lerner and Ms. Paz said that they and those around them would be in physical peril. Which probably makes most people wonder what the heck must the two have said that would get everyone so agitated? ...

[W]hat a crippling precedent it would be if government officials from powerful agencies such as the IRS were permitted to keep their abuses secret on grounds they fear that the people whom they are supposed to serve might be upset if they found out.

There can be good reasons to keep a deposition sealed, from ensuring the privacy of the innocent to protecting the life of a mafia informant. But Ms. Lerner is no innocent. Indeed, given all the falsehoods that have been spread in an effort to whitewash what the IRS had done, the case for transparency becomes even more compelling here. ...

[I]n this case the plaintiffs, the government and a newspaper all say they are for disclosure. Is a judge really going to buy Ms. Lerner’s argument that the American people can’t handle the truth?

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November 21, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, November 20, 2017

Eyal-Cohen Presents The Cost Of Inexperience Today At Loyola-L.A.

Eyal-Cohen (2017)Mirit Eyal-Cohen (Alabama) presents The Cost of Inexperience at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Free market entry is vital in preventing concentration of market power and eliminating large deadweight losses. Yet, in recent years, studies show that newcomers are less successful than existing firms that have diversifies their products in the market. What might explain this phenomenon?

This Article unveils a regulatory catch 22. It reveals that although a regulation may be efficient in correcting a certain market failure, its distributional effects may create another. It exposes the degree to which “economies of experience” in regulation create significant disadvantages to newcomers and provide substantial advantages to oldtimers. Being well-versed in their marketplace, old-timers possess knowledge, familiarity, and influence over the rulemaking process. New or “green” entities entering regulated market or dealing with a new rule face proportionally larger costs to obtain regulatory insight. Consequently, an anomaly exists when government choice may de facto hamper innovation and survival of newcomers, the same goals it seeks to promote.

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November 20, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Cost, Affordability, And Access In Legal Education

ABFStephen Daniels (American Bar Foundation), The Perennial (and Stubborn) Challenge of Cost, Affordability, and Access in Legal Education: 'We Will Continue to Muddle Through':

This paper explores the long-term challenge of legal education’s financial viability and focuses on the business model that serves contemporary legal education. That model — based on a value proposition — sees long-term student loans and plentiful lawyer jobs as the way to underwrite legal education’s sustainability, even as tuition rises. Loans and jobs are inextricably connected; the idea being that student debt can be manageably repaid over some amount of time after graduating and obtaining a well-paying lawyer job.

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November 20, 2017 in Legal Education | Permalink | Comments (0)

Colinvaux: The House Tax Bill Could Be The End Of Charities As We Know Them

Chronicle of Philanthropy op-ed:  The House Tax Bill Could Be the End of Charities as We Know Them, by  Roger Colinvaux (Catholic):

If the tax bill passed by the House of Representatives becomes law, partisan politics would overtake the nonprofit world, casting institutions designed to promote the public good into the depraved den of identity politics and selfish motives. Charities would use tax-subsidized contributions to favor or oppose political candidates at the behest of wealthy, anonymous donors with devastating results for charities and democracy.

This is a seismic moment for the conduct of politics in America. The House bill must be changed.

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November 20, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (8)

Wells: International Tax Reform By Means Of Corporate Integration

Florida Tax Review  (2015)Bret Wells (Houston), International Tax Reform By Means of Corporate Integration, 20 Fla. Tax Rev. 70 (2016):

This Article focuses on a single organizing question, namely how should a dividend paid deduction regime be designed so that it achieves acceptable international tax outcomes. By focusing on the international tax implications attendant with a dividend paid deduction regime, the author is not attempting to minimize the broader benefits of achieving shareholder-corporate integration. The dividend paid deduction proposal, as to distributed earnings, would equate the tax treatment of debt and equity, and in so doing it would reduce distortions that current law creates with respect to debt and equity in the corporate context. Furthermore, recent economic works suggest that the incidence of the corporate income tax burden is partially shifted to labor and away from shareholders whereas a properly designed integration proposal puts the incidence of business taxation squarely on shareholders. Furthermore, shareholder-corporate integration for C corporations harmonizes the divergent tax treatment that currently exists between C corporations and pass-through entities. Thus, a corporate integration proposal provides a broad spectrum of potential benefits, and so not surprisingly significant scholarship has been dedicated towards how to best achieve shareholder-corporate integration. But, in today’s era, the overwhelming tax policy problem that must be solved rests on finding a solution to the systemic international tax challenges that face the country, and so that is where this Article will focus.

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November 20, 2017 in Scholarship, Tax | Permalink | Comments (0)

Cunningham: Compliance Costs Of The ABA's New Bar Passage Data Collection Requirement Outweigh Its Benefits

ABA Logo (2016)Larry Cunningham (Vice Dean, St. John's), Collecting Ultimate Bar Passage Data: Weighing the Costs and Benefits:

Friday afternoon the ABA Associate Deans’ listserv received a message from William Adams, Deputy Managing Director of the ABA.  In it, he described a new process for collecting data on bar passage. A copy of the memo is on the ABA website. This change was authorized at the June 2017 meeting of the Council.  Readers may remember that the June meeting was the one that led to a major dust-up in legal education, when it was later revealed that the Council had voted to make substantial (and some would say, detrimental) changes to the Employment Questionnaire. When this came to light through the work of Jerry Organ and others, the ABA wisely backed off this proposed change and indicated it would further study the issue.

The change that the ABA approved in June and announced in greater detail on Friday is equally problematic.  In the past, schools would report bar passage as part of the Annual Questionnaire process. The bar passage section of the questionnaire asked schools to report first-time bar passage information. If a school was going through a site visit, it would also report this information on the Site Evaluation Questionnaire. If a school could not demonstrate compliance with Standard 316 with first-time bar passage, it was asked to show compliance using ultimate bar passage in the narrative section of the SEQ, specifically question 66, or as part of an interim monitoring or report-back process, described here (page 6).

Now, per the ABA, all schools — even those that can show that their graduates meet the minimums of Standard 316 through first-time passage data—must track, collect, and report ultimate bar passage information going back two years. (There is a phase-in process as outlined in the memo.) Hypothetically, let us assume that a school always has a pass rate of 80% (for sake of argument with 100% of graduates reporting) in a state with a consistent average of 75%. The school is in compliance with Standard 316, but it must nevertheless track the 20% of graduates who did not pass on the first attempt to see if they passed on subsequent attempts.

I have several problems with this change.

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November 20, 2017 in Legal Education | Permalink | Comments (4)

Lesson From The Tax Court: It's Not Really Self-Assessment

Tax Court (2017)Myths are not reality, even if they do reflect basic truths.  A cherished myth in tax law is that ours is a system of “voluntary self-assessment.”  Last week’s opinion in Ramsay v. Commissioner, T.C. Memo. 2017-223 (Nov. 15, 2017), teaches a lesson about that myth.

This myth is not reality.  Despite the rhetoric of hobbyists, it is not as though taxpayers have any legal choice in the matter:  the law requires them to file returns, report their income and deductions, calculate their taxes, and pay any amounts owed when the return is filed.  IRC §§ 6201-6204.   Congress weaves together civil and criminal penalties to enforce these duties and leaves the ever unpopular IRS to swing the net.  Like Bentham’s Panopticon, the discipline of self-reporting and payment cannot be divorced from the constant coercive threat of discovery and the resulting civil or criminal sanctions.

But there is a basic truth behind the myth.  Tax administration rests on taxpayers truthfully disclosing their financial affairs and paying what they owe — through withholding or otherwise — without overt government compulsion.  It is “voluntary” in the same sense that stopping one’s car at a red light — at midnight with no traffic and no one looking — is voluntary.  It is each citizen’s self-enforcement of the legal duty that keeps both the tax and transportation systems running smoothly.  With hundreds of millions of returns filed each year, the system depends on the veracity, not the kindness, of taxpayers. 

The myth exists because of IRS decisions just after World War I to start accepting initial returns as presumptively accurate if properly filed.  For those interested I explain both the history of tax return processing, and how it started the myth in Theory and Practice in Tax Administration, 29 Va. Tax Rev. 227 (2009).

Mr. Ramsay appears to be the kind of taxpayer who helps the system work.  He filed his returns timely.  He was careful to be in an overpayment posture at the end of each year.  He cautiously directed that part of each year’s overpayment be applied to the following year’s tax liability.  He appears to be a model of a taxpayer working within the system. 

But when Mr. Ramsay made two mistakes on his 2011 return, he discovered he was unable to fix one of them precisely because ours is not a “self-assessment” system.  When a taxpayer attempts to correct a mistake by amending a return, the IRS does not use the same presumption it uses when processing the initial return.  Mr. Ramsay learned that lesson the hard way.  You can learn it by clicking below the fold.

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November 20, 2017 in Bryan Camp, New Cases, Tax Practice And Procedure | Permalink | Comments (1)

ABA Tax Section Publishes New Issue Of Tax Times

ABA Tax Times (2016)The ABA Tax Section has published 37 Tax Times No. 1 (Nov. 2017):

FROM THE CHAIR
So Much To Do, So Little Time
By Karen L. Hawkins (Hawkins Law, Yachats, OR)
Notwithstanding the challenges of going forward with a meeting in Austin, Texas, in the midst of one of the worst hurricane seasons in recent history, the committees did their usual stellar jobs in providing top-notch continuing education presentations and materials for the attendees.

AT COURT
Gaylor v. Mnuchin - A Step Toward Greater Clarity on Clergy Tax Exemptions?
By Adam Chodorow (Arizona State)
On October 6, 2017, the U.S. District Court for the Western District of Wisconsin declared section 107(2) of the Internal Revenue Code unconstitutional. The provision permits "ministers of the gospel" to exclude from income compensation designated as a housing allowance, thus giving churches and other religious organizations the ability to provide tax-free housing to their ordained ministers. The government foregoes around $800 million in revenue per year as a result of this provision, and, if the decision stands, it could have a significant impact on churches and other religious institutions.

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November 20, 2017 in ABA Tax Section, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, November 19, 2017

ABA Proposes Changes To Law School Accreditation Standards

ABA Logo (2016)Memorandum From Maureen A. O’Rourke (Council Chair) & Barry A. Currier (Managing Director of Accreditation and Legal Education), ABA Section of Legal Education and Admissions to the Bar (Nov. 17, 2017):

At its meeting held on November 3-4, 2017, the Council of the Section of Legal Education and Admissions to the Bar approved for Notice and Comment proposed revisions to the following Standards and Rules of Procedure of the ABA Standards and Rules of Procedure for Approval of Law Schools:

  • Standard 205. Non-Discrimination and Equality of Opportunity
  • Standard 206. Diversity and Inclusion
  • Standard 303. Curriculum
  • Standard 304. Simulation Courses, Clinics, and Field Placements
  • Standard 503. Admissions Test
  • Standard 601. Library and Information Resources, General Provisions
  • Rule 3: Accreditation Committee Responsibility and Authority
  • Rule 5: Site Evaluations
  • Rule 10: Notice of Accreditation Decision by Other Agency
  • Rule 14: Actions on Determinations of Noncompliance with a Standard
  • Rule 22: Council Consideration of Recommendation of Accreditation Committee
  • Rule 23: Council Consideration of Appeal from Accreditation Committee Decision
  • Rule 24: Evidence and Record for Decision
  • Rule 25: Decisions by the Council
  • Rule 34: Teach-Out Plan
  • Rule 52: Disclosure of Decision Letters

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November 19, 2017 in Legal Education | Permalink | Comments (0)

Overlooked Passage In GOP Tax Bill Would Gouge Gig Economy Workers

Salon, Overlooked Passage in GOP Tax Bill Would Gouge Gig Economy Workers:

The Republican tax bill now in Congress would imperil many of the last century’s hardest-won labor rights for workers by building a new legal wall between businesses and so-called gig economy workers that absolves management of many obligations owed to employees, according to law school professors tracking the bill.

“There is an important battle going on right now in labor and employment law over the appropriate classification of workers in the gig/platform/sharing economy,” wrote Boston College’s Shu-Yi Oei and Diane M. Ring for TaxProf Blog from Pepperdine University School of Law. “At stake in the fight are the rights of workers to collectively bargain, and to overtime pay, minimum wage, child labor laws, and family and medical leave. The battle also holds implications for application of health and safety regulations and anti-discrimination laws. Employee classification confers many of these protections. Independent contractor classification does not.”

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November 19, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Lawmakers Ask Dept. Of Ed To Extend Student Loan Discharge For Charlotte Law School Students

Charlotte Logo (2016)Following up on my previous posts (links below): ABA Journal, Lawmakers Ask Dept. of Ed to Extend Student Loan Discharge for Charlotte School of Law Students:

The Department of Education has the authority to extend enrollment requirements for school loan discharges if there are “exceptional circumstances,” which is what should happen for students at the now-shuttered Charlotte School of Law, say a group of North Carolina U.S. Congress members.

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November 19, 2017 in Legal Education | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [402 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  2. [295 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)
  3. [294 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  4. [201 Downloads]  Slicing and Dicing: The Structural Problems of the Tax Reform Framework, by Reuven Avi-Yonah (Michigan)
  5. [182 Downloads]  Exploiting the Medicare Tax Loophole (review here), by Karen C. Burke (Florida)

November 19, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, November 18, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Cornell Law Prof: I Never Thought The Anti-Free Speech Mob Would Come Me. Until They Did.

Vassar 3USA Today op-ed:  My Pro-free Speech Views Made Me the Target of a Smear Campaign at Vassar College, by William Jacobson (Cornell):

From UC Berkeley in the west to Middlebury College in the northeast, and at dozens of colleges and universities in between, we have seen speakers disrupted, shouted-down, shut-down and threatened. Almost all such speakers were right of center, and almost all of the perpetrators were progressive students.

At Cornell University, where I teach at the law school, former Senator and presidential candidate Rick Santorum was heckled and Tea Party activist Michael Johns was forced to hold his appearance at a secret location due to threats of disruption.

I have watched these anti-free speech mobs from a distance, and from a news perspective. At my website, Legal Insurrection, I’ve written about many dozens of such incidents which started with attacks on Israeli and pro-Israeli speakers going back almost a decade and now have migrated into the mainstream. ...

I’m not a household name. And I’m not particularly controversial, although I do stick out at Cornell as one of only a small number of openly politically conservative faculty members.

So despite my campus speeches and conservative politics, I never really thought the anti-free speech mob would come for me. Until they did, at Vassar College in Poughkeepsie, N.Y. ...

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November 18, 2017 in Legal Education | Permalink | Comments (10)

The 'Trump Bump' Grows As College Grads From Both Sides Of The Political Spectrum Flock To Law School

LSAT TrumpChicago Tribune, After Trump's Election, More Students Consider Law School, Hoping to Make a Difference:

[There is] a group of students across the political spectrum who were so moved by last November’s election that they decided to take the Law School Admissions Test, or LSAT, because they view law school as a means to making a difference

In the past year, the number of people taking the test, which is administered nationally four times a year, has surged. In February, 21,400 people took it, up 5.4 percent from a year earlier. In June, the number of test-takers was up 19.8 percent year-over-year, to 27,606 people. And the number of people who took the test in September rose 10.7 percent from a year ago, to 37,146 people. As of Oct. 30, registrations for the Dec. 2 exam were up 21.4 percent.

It’s been called the “Trump bump” by some in the legal community who believe strong reactions to the current political climate are spurring people on both sides of the political spectrum into action. ...

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November 18, 2017 in Legal Education | Permalink | Comments (6)

Colon: ETFs And In-Kind Redemptions

Jeffrey M. Colon (Fordham), The Great ETF Tax Swindle: The Taxation of In-Kind Redemptions, 122 Penn St. L. Rev. ___ (2017):

Since the repeal of the General Utilities doctrine over 30 years ago, corporations must recognize gain when distributing appreciated property to their shareholders. Regulated investment companies (RICs), which generally must be organized as domestic corporations, are exempt from this rule when distributing property in kind to a redeeming shareholder.

In-kind redemptions, while rare for mutual funds, are a fundamental feature of exchange-traded funds (ETFs). Because fund managers decide which securities to distribute, they distribute assets with unrealized gains and thereby significantly reduce the future tax burdens of their current and future shareholders. Many ETFs have morphed into investment vehicles that offer better after-tax returns than IRAs funded with after-tax contributions.

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November 18, 2017 in Scholarship, Tax | Permalink | Comments (0)

Friday, November 17, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Sloan Speck (Colorado) reviews a new work by Kitty Richards, An Expressive Theory of Tax, 27 Cornell J.L. & Pub. Pol’y ___ (2018).

Speck (2017)In the early twentieth century, Joseph Schumpeter wrote that “[t]he spirit of a people, its cultural level, its social structure, the deeds its policy may prepare—all this and more is written in its fiscal history.” Following the money tells us more than just who has what; it yields insights into who we are, and what we want to be. Kitty Richard’s interesting and provocative article, An Expressive Theory of Tax, gives a framework for understanding these types of connections between tax law and society, as well as a number of examples “where what the tax code says is explicitly preferenced over what the code does.”

A significant accomplishment of Richards’s project is positive: thick description of “the values and desires that animate policy debates and legal opinions” in taxation. Richards analyzes the expressive aspects of public debates over the taxation of legal brothels in Nevada, the marriage penalties and bonuses doled out by the federal income tax, and the public policy exception for the deductibility of certain expenses. Furthermore, Richards claims that “cheap” talk of (frequently ineffective) incentives obscures the expressive inflection of debates over tax benefits for retirement savings, among other areas.

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November 17, 2017 in Scholarship, Sloan Speck, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Geier: Principled Tax Reform

GeierTaxProf Blog op-ed: Principled Tax Reform, by Deborah A. Geier (Cleveland-Marshall)

Republicans often say that their proposed tax reform is the first in 30 years, implicitly invoking the Tax Reform Act of 1986, but the efforts could not be more different in overarching philosophy and context.

First the context. In 1986, President Reagan said that he would not sign a tax bill that was not revenue neutral, at a time when the national debt was $2.1 trillion, the debt-to-GDP ratio was 46%, and the baby boomers were not near retirement. The effort was truly bipartisan with public hearings and significant changes made by both sides of the aisle so that the House passed its bill by voice vote and the Senate passed its bill by 97-3. The final bill reconciling the two versions passed by 292-136 in the House and 74-23 in the Senate.

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November 17, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

After 86% Enrollment Decline, Valparaiso Law School Stops Admitting Students And Will Likely Close

Valpo (2018)Wall Street Journal,  Valparaiso Law School Suspends Admissions:

The tough climate for legal education has claimed another victim.

Valparaiso University, a private university in Northwest Indiana, said Thursday its board of directors voted to stop enrolling new law school students, meaning the law school will likely be wound down over the next few years.

Enrollment has plummeted at Valparaiso University Law School, once a well-respected regional school. This year’s incoming class had just 29 full-time students, down from 206 in 2013.

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November 17, 2017 in Legal Education | Permalink | Comments (3)

ATPI Hosts Conference Today On Tax Incentives For State, Local, And International Economic Development

ATPI Logo (2015)The American Tax Policy Institute hosts its Annual Fall Conference today on Tax Incentives for State, Local, and International Economic Development at Skadden in Washington, D.C.:

US states and localities spend $45 billion annually on tax incentives and other programs intended to spur economic development. Countries around the world similarly offer tax holidays, investment credits, and other preferential tax treatments in a bid to promote investment and create jobs. Do these policies work? At what cost? Are there better and worse ways to spur local economic growth and productivity gains? What might international practitioners learn from their state and local counterparts and vice versa? This one-day conference co-sponsored by the American Tax Policy Institute and the Murphy Institute at Tulane University will explore these questions from a variety of perspectives in international and state and local taxation as well as regional and economic growth. Researchers in law, economics, and accounting will join practitioners at all government levels to identify best practices and how to encourage policies that benefit all taxpayers.

Panel #1:  State & Local Tax Incentives in the United States: Overview and Assessment
Steven Sheffrin (Tulane) (moderator)
Timothy Bartik (W.E. Upjohn Institute)
Patrick Button (Tulane)
Carlianne Patrick (Georgia State)

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November 17, 2017 in Conferences, Tax | Permalink | Comments (0)

Avi-Yonah: Altera, The Arm’s Length Standard, And Customary International Tax Law

Reuven S. Avi-Yonah (Michigan), Altera, the Arm’s Length Standard, and Customary International Tax Law, 38 Mich. J. Int'l L. Opinio Juris 1 (2017):

The recent Altera case in the US Tax Court (on appeal to the Ninth Circuit) raises interesting issues in regard to the much-debated topic of whether customary international tax law (CITL) exists. Altera involved the question whether the cost of employee stock options should be included in the pool of costs that must be shared under a cost sharing agreement. In Xilinx, the Ninth Circuit held under a previous version of the regulations that these costs should not be included because unrelated parties operating at arm’s length would not have agreed to include them. Treasury then amended the regulation to state specifically that “all” costs includes the cost of stock options but did not carve out an exception from the arm’s length standard. In Altera, the Tax Court sitting en banc invalidated the new regulation on the ground that it was inconsistent with the arm’s length standard (ALS).

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November 17, 2017 in Scholarship, Tax | Permalink | Comments (0)

National Taxpayer Advocate Blog: Caring About “Sharing” — The IRS Should Do More For Participants In The Gig Economy

Taxpayer Advocate (2016)NTA Blog, Caring about “Sharing” – The IRS Should Do More for Participants in the Gig Economy:

In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.

Nearly a quarter of the U.S. population earns money from the sharing economy. Although it may be growing at a healthy rate, I want to make clear that not all sharing economy participants are finding it to be a very lucrative endeavor. On the contrary, data show that the vast majority – 85 percent – earn less than $500 per month from their gigs.

Furthermore, many of the service providers are simply unfamiliar with the tax filing and recordkeeping requirements. Service providers in the sharing economy may not fit the mold of the traditional employee who works “9 to 5” and receives a Form W-2 from one employer. Rather, a service provider in the sharing economy may have to take on multiple gigs to help make ends meet, making it difficult to track and allocate expenses among the various gigs. The majority of them do not receive any tax information from the sharing economy platform they use to earn their income. This demonstrates both the need for guidance from the IRS and the opportunity to create a culture of tax compliance among participants in the sharing economy from the outset. Establishing the tax compliance norms for this emerging industry in its infancy will assist the IRS as this segment of taxpayers grows. 

This leads us to the question, “What can the IRS do to help sharing economy participants comply with their tax obligations?” First, when looking at noncompliance, it is important to distinguish between the various types of noncompliance the IRS encounters. Not all noncompliant taxpayers are willfully noncompliant; many of them are tripped up by “unknowing” or “lazy” noncompliance. That is, some taxpayers are simply unaware of their tax compliance obligations. Many sharing-economy entrepreneurs and merchants have never operated a small business and need to understand certain basic tax obligations (i.e., making required quarterly estimated payments throughout the year to avoid penalties).

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November 17, 2017 in Gov't Reports, IRS News, News, Shuyi Oei, Tax | Permalink | Comments (0)

Thursday, November 16, 2017

Goldin Presents Complexity and Take-up of the Earned Income Tax Credit At Northwestern

Goldin (2017)Jacob Goldin (Stanford) presented Complexity and Take-up of the Earned Income Tax Credit at Northwestern yesterday as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Tax benefits like the Earned Income Tax Credit (EITC) represent an important source of income to their recipients, but millions of those who are eligible to claim tax benefits fail to do so. One possible explanation is that the rules governing most tax benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact in thinking about this issue is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. Because APMs eliminate most of the barriers to claiming tax benefits for which one is eligible, I ague that efforts to increase benefit take-up should focus on inducing benefit-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of a benefit (of the type widely employed by governments and nonprofits) are less likely to be successful, except to the extent they themselves induce an increase in tax filing.

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November 16, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Calls For Tougher Oversight Of Florida Coastal Law School

Florida Coastal (2017)Following up on my previous post, Florida Coastal Responds To ABA's Finding Of Noncompliance With Accreditation Standards: 'Our 1L Entering Credentials Exceed 23 Other Law Schools':  Inside Higher Ed, Calls for Tougher Oversight of For-Profit Law School:

Observers say the apparent issues at Florida Coastal are reason for regulators, including the ABA and the Department of Education, to take a more comprehensive look at the law school's parent company, InfiLaw. The company saw one of its law programs, Arizona Summit, placed on probation by the ABA in March over similar issues, and another, Charlotte School of Law, shut down in August after being placed on probation and losing access to Title IV funds last year. And Florida Coastal was one of only two law programs to fail the Department of Education's gainful-employment test in January with a debt-to-discretionary-income ratio of more than 34 percent (the department has since delayed accountability provisions of the gainful-employment rule that would affect an institution's access to Title IV funds).

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November 16, 2017 in Legal Education | Permalink | Comments (0)

Knoll: The Disparate Federal Income Tax Treatment Of Business And Non-Business State And Local Taxes

Michael S. Knoll (Pennsylvania), Not Too SALT-y: The Disparate Federal Income Tax Treatment of Business and Non-Business State and Local Taxes:

The Tax Cuts and Jobs Act, H.R. 1, would eliminate the federal income tax deduction for nonbusiness state and local taxes while maintaining the deduction for business state and local taxes. That disparate treatment has generated a storm of negative commentary. In this short essay, I consider whether the federal tax law should allow a deduction for business state and local taxes assuming that there is no deduction for nonbusiness state and local taxes. I argue that investors and businesses, including pass-through businesses, should be allowed to deduct state and local property and sales taxes, but not general income taxes. 

November 16, 2017 in Scholarship, Tax | Permalink | Comments (0)

NY Times: She Took On Colombia’s Soda Industry. Then She Was Silenced.

New York Times, She Took On Colombia’s Soda Industry. Then She Was Silenced.

BOGOTÁ, Colombia — It began with menacing phone calls, strange malfunctions of the office computers, and men in parked cars photographing the entrance to the small consumer advocacy group’s offices.

Then at dusk one day last December, Dr. Esperanza Cerón, the head of the organization, said she noticed two strange men on motorcycles trailing her Chevy sedan as she headed home from work. She tried to lose them in Bogotá’s rush-hour traffic, but they edged up to her car and pounded on the windows.

“If you don’t keep your mouth shut,” one man shouted, she recalled in a recent interview, “you know what the consequences will be.”

The episode, which Dr. Cerón reported to federal investigators, was reminiscent of the intimidation often used against those who challenged the drug cartels that once dominated Colombia. But the narcotics trade was not the target of Dr. Cerón and her colleagues. Their work had upset a different multibillion-dollar industry: the makers of soda and other sugar-sweetened beverages.

Their organization, Educar Consumidores, was the most visible proponent of a proposed 20 percent tax on sugary drinks that was heading for a vote that month in Colombia’s Legislature. The group had raised money, rallied allies to the cause and produced a provocative television ad that warned consumers how sugar-laden beverages can lead to obesity and diet-related illnesses like diabetes.

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November 16, 2017 in News, Shuyi Oei, Tax | Permalink | Comments (0)

Senate GOP Tax Bill Includes A 'Harvey Weinstein Tax'

WeinsteinUSA Today, Beer, Booze and a Harvey Weinstein Tax Make It Into the Latest Senate Tax Overhaul Plan:

Sex and booze made it into the congressional battle over taxes in a late-night revision.

The latest changes to a Senate Republican tax plan, released at 10:30 p.m. on Tuesday, include tax cuts for producers of beer, wine and liquor, and a new provision that might be called the Harvey Weinstein tax: An end to corporations' ability to deduct attorney fees and settlement payments in sexual harassment or abuse cases if there is a nondisclosure agreement. ...

The change dealing with lawsuit settlements was proposed by Sen. Bob Menendez, D-N.J., and spokesman Juan Pachon said it was motivated by publicity about settlements over harassment by Hollywood producer Weinstein and former Fox News commentator Bill O'Reilly.

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November 16, 2017 in Congressional News, Tax | Permalink | Comments (3)

Herzfeld: A History Of The ABA Tax Section

ABA Tax Section (2017)Mindy Herzfeld (Florida), How Lawyers Dominate: A History of the ABA Tax Section:

The story of how tax attorneys came to dominate the fields of tax policy and sophisticated tax practice is the success story of an organized professional association. The prominence of the role of attorneys in the development and practice of the tax law was not a foregone prerequisite of the U.S. federal income tax system. Rather, the professional organization of attorneys into a specialized group within bar associations has played a significant role in making lawyers the central players in tax policy and tax practice in the U.S.

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November 16, 2017 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)