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Tuesday, July 22, 2014

Life's Secret: Love People, Not Pleasure

New York Times op-ed:  Love People, Not Pleasure, by Arthur C. Brooks (President, American Enterprise Institute):

For decades, psychologists have been compiling a vast literature on the relationships between different aspirations and well-being. Whether they examine young adults or people of all ages, the bulk of the studies point toward the same important conclusion: People who rate materialistic goals like wealth as top personal priorities are significantly likelier to be more anxious, more depressed and more frequent drug users, and even to have more physical ailments than those who set their sights on more intrinsic values.

No one sums up the moral snares of materialism more famously than St. Paul in his First Letter to Timothy: “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” Or as the Dalai Lama pithily suggests, it is better to want what you have than to have what you want. ...

[W]e are unambiguously driven to accumulate material goods, to seek fame, to look for pleasure. How can it be that these very things can give us unhappiness instead of happiness? There are two explanations, one biological and the other philosophical.

From an evolutionary perspective, it makes sense that we are wired to seek fame, wealth and sexual variety. These things make us more likely to pass on our DNA. Had your cave-man ancestors not acquired some version of these things (a fine reputation for being a great rock sharpener; multiple animal skins), they might not have found enough mating partners to create your lineage.

But here’s where the evolutionary cables have crossed: We assume that things we are attracted to will relieve our suffering and raise our happiness. My brain says, “Get famous.” It also says, “Unhappiness is lousy.” I conflate the two, getting, “Get famous and you’ll be less unhappy.”

But that is Mother Nature’s cruel hoax. She doesn’t really care either way whether you are unhappy — she just wants you to want to pass on your genetic material. If you conflate intergenerational survival with well-being, that’s your problem, not nature’s. And matters are hardly helped by nature’s useful idiots in society, who propagate a popular piece of life-ruining advice: “If it feels good, do it.” Unless you share the same existential goals as protozoa, this is often flat-out wrong.

More philosophically, the problem stems from dissatisfaction — the sense that nothing has full flavor, and we want more. We can’t quite pin down what it is that we seek. Without a great deal of reflection and spiritual hard work, the likely candidates seem to be material things, physical pleasures or favor among friends and strangers.

We look for these things to fill an inner emptiness. They may bring a brief satisfaction, but it never lasts, and it is never enough. And so we crave more. ... This search for fame, the lust for material things and the objectification of others — that is, the cycle of grasping and craving — follows a formula that is elegant, simple and deadly:

Love things, use people.

... It is the worldly snake oil peddled by the culture makers from Hollywood to Madison Avenue. But you know in your heart that it is morally disordered and a likely road to misery. You want to be free of the sticky cravings of unhappiness and find a formula for happiness instead. How? Simply invert the deadly formula and render it virtuous:

Love people, use things.

Easier said than done, I realize. It requires the courage to repudiate pride and the strength to love others — family, friends, colleagues, acquaintances, God and even strangers and enemies. Only deny love to things that actually are objects. The practice that achieves this is charity. Few things are as liberating as giving away to others that which we hold dear.

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July 22, 2014 in Legal Education, Tax | Permalink | Comments (1)

Details Begin to Emerge in Murder of Dan Markel

Markel[Updated and Corrected Since Monday]  More details are beginning to emerge in the weekend death of Dan Markel, D’Alemberte Professor of Law at Florida State and the founder of PrawfsBlawg, as the result of a shooting in his home:  Tallahassee police say that Dan was shot in the head and that the shooting was not "a random act" or connected with any burglary or robbery but instead was a "murder" as the result of a targeted attack.

I have collected links to the many tributes to Dan here.

Dan Markel Memorial Fund To Benefit His Sons, Benjamin Amichai Markel and Lincoln Jonah Markel:

Markel Fund

July 22, 2014 in Legal Education | Permalink | Comments (2)

The New Republic: Don't Send Your Kid to the Ivy League

The New Republic:  Don't Send Your Kid to the Ivy League: The Nation's Top Colleges Are Turning Our Kids Into Zombies, by William Deresiewicz (author, Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life (2014)):

Ivy League (2014)These enviable youngsters appear to be the winners in the race we have made of childhood. But the reality is very different, as I have witnessed in many of my own students and heard from the hundreds of young people whom I have spoken with on campuses or who have written to me over the last few years. Our system of elite education manufactures young people who are smart and talented and driven, yes, but also anxious, timid, and lost, with little intellectual curiosity and a stunted sense of purpose: trapped in a bubble of privilege, heading meekly in the same direction, great at what they’re doing but with no idea why they’re doing it. ...

I should say that this subject is very personal for me. Like so many kids today, I went off to college like a sleepwalker. You chose the most prestigious place that let you in; up ahead were vaguely understood objectives: status, wealth—“success.” What it meant to actually get an education and why you might want one—all this was off the table. It was only after 24 years in the Ivy League—college and a Ph.D. at Columbia, ten years on the faculty at Yale—that I started to think about what this system does to kids and how they can escape from it, what it does to our society and how we can dismantle it. ...

SheepI taught many wonderful young people during my years in the Ivy League—bright, thoughtful, creative kids whom it was a pleasure to talk with and learn from. But most of them seemed content to color within the lines that their education had marked out for them. Very few were passionate about ideas. Very few saw college as part of a larger project of intellectual discovery and development. Everyone dressed as if they were ready to be interviewed at a moment’s notice.

Look beneath the façade of seamless well-adjustment, and what you often find are toxic levels of fear, anxiety, and depression, of emptiness and aimlessness and isolation. A large-scale survey of college freshmen recently found that self-reports of emotional well-being have fallen to their lowest level in the study’s 25-year history.

So extreme are the admission standards now that kids who manage to get into elite colleges have, by definition, never experienced anything but success. The prospect of not being successful terrifies them, disorients them. The cost of falling short, even temporarily, becomes not merely practical, but existential. The result is a violent aversion to risk. You have no margin for error, so you avoid the possibility that you will ever make an error. Once, a student at Pomona told me that she’d love to have a chance to think about the things she’s studying, only she doesn’t have the time. I asked her if she had ever considered not trying to get an A in every class. She looked at me as if I had made an indecent suggestion.

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July 22, 2014 in Legal Education | Permalink | Comments (0)

Crawford: Occupy Wall Street, Income Inequality and Tax Scholarship

Patrick B. Crawford (People's College of Law), Occupy Wall Street, Income Inequality and Tax Scholarship: An Ideology Critique of the Consumption Tax Debate, 12 U.N.H. L. Rev. 137 (2014):

This is the first article to address the question: “What does Occupy Wall Street (“OWS”) have to say about American legal scholarship on income inequality (distributive justice) and tax policy?” The article shows, in the example of the leading tax scholarship on distributive justice and the consumption tax, how legal scholarship on economic regulation more generally systematically obscures rather that illuminates the important most important social welfare issue of our time. That is, the form and framing of analysis in the consumption tax literature preempts from serious analysis OWS major beef with our economic regulations: the fact that over the past 30-odd years big-business and big capital has dramatically increased its rent seeking and capture of the regulatory system.

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July 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Kleinbard: Tax Inversions Must Be Stopped Now

Wall Street Journal op-ed:  Tax Inversions Must Be Stopped Now, by Edward Kleinbard (USC):

On Friday the U.S. drug maker AbbVie announced a plan to buy the U.K.-based Shire in a $54 billion deal, from which AbbVie will emerge as a subsidiary of the U.K. firm. It is but the latest example in a flurry of acquisitions known as inversions.

In an inversion, a large U.S. firm acquires a much smaller target company domiciled in a tax-friendly jurisdiction such as Ireland or the U.K., but the deal is structured so that the foreign minnow swallows the domestic whale. U.S. shareholders of the U.S. firm must pay immediate capital gains tax for the privilege of inversion, and the U.S. company ends up as the nominal subsidiary of a publicly held foreign corporation.

The deals are driven by planning to avoid paying the U.S. tax that applies when firms repatriate their low-taxed foreign earnings to the U.S. This has triggered demands—most recently, from Treasury Secretary Jack Lew —to close down inversions through the tax code, or to deprive inverted firms of government contracts or other benefits.

Firms that invert argue that the deals are "legal," harmless to U.S. tax-revenue collection, and a necessary response to our anticompetitive world-wide corporate tax system. The first point is a red herring and the second demonstrably false, but there is a kernel of truth in the third. ...

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July 22, 2014 in Tax | Permalink | Comments (0)

Senate Report Criticizes Hedge Funds' Use of Basket Options Tax Strategy

Senate LogoSenate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits (97 pages):

For the last decade, the U.S. Senate Permanent Subcommittee on Investigations has presented case histories showing how financial institutions, law firms, accountants, and others have designed and implemented complex financial structures to take advantage of and, at times, abuse or violate U.S. tax statutes, securities regulations, and accounting rules. This investigation offers yet another detailed case study of how two financial institutions – Deutsche Bank AG and Barclays Bank PLC – developed structured financial products called MAPS and COLT, two types of basket options, and sold them to one or more hedge funds, including Renaissance Technologies LLC and George Weiss Associates, that used them to avoid federal taxes and leverage limits on buying securities with borrowed funds. While that type of option product was identified as abusive in a public memorandum by the IRS 2010, taxes have yet to be collected on many of the basket option transactions and its use to circumvent federal leverage limits has yet to be analyzed or halted. 

July 22, 2014 in Congressional News, Tax | Permalink | Comments (0)

WaPo: 4 Pinocchios for Rocker’s Off-base Claims About Taxes and the ’1 Percent’

Washington Post:  4 Pinocchios for a Rocker’s Off-base Claims About Taxes and the ’1 Percent’:

Kiss“The 1 percent pays 80 percent of all taxes. Fifty percent of the population of the U.S. pays no taxes. The 1 percent provides all the jobs for everybody else. If the 1 percent didn’t exist, there would be chaos and the American economy would drop dead.”

–Kiss bassist Gene Simmons, in an interview with the San Diego Union-Tribune, published July 4

Kiss rocker Gene Simmons is not a politician, but here he echoes claims that are often made by politicians about who pays taxes in the United States.

There is certainly a history of rock stars being unhappy with taxes. George Harrison of the Beatles penned the iconic “Taxman” after discovering that he was liable for the 95 percent margin tax rate imposed on income at that time in the United Kingdom.

In the interview, Simmons is an unabashed fan of the “1 percent lifestyle,” calling it “fantastic” and noting, “I have been part of the 1 percent for the past 30 years.” We will assume his bold assertion that the 1 percent provides “all of the jobs for everybody else” reflects his enthusiasm rather than hard data. But do his tax claims add up? ...

Simmons may enjoy the 1 percent lifestyle, but he needs to get his facts straight. The top 1 percent certainly pays a large share of taxes (and has a large share of income) but his claims are wildly off-base, especially when talking about “all taxes.”

FOur

(Hat Tip: Bryan Camp.)

July 22, 2014 in Tax | Permalink | Comments (3)

Senate Holds Hearing Today on The Taxation of Income of U.S. Multinational Enterprises

Senate LogoThe Senate Finance Committee holds a hearing today on The U.S. Tax Code: Love It, Leave It or Reform It!:

  • Mihir Desai (Harvard University)
  • Peter Merrill (PricewaterhouseCoopers)
  • Leslie Robinson (Dartmouth College)
  • Pascal Saint-Amans (OECD)
  • Allan Sloan (Fortune)
  • Robert Stack (U.S. Treasury Department)

In connection with the hearing, the Joint Committee on Taxation has released Present Law and Background Related to Proposals to Reform the Taxation of Income of Multination Enterprises (JCX-90-14) (99 pages):

This document ...  includes a description of present law, background on recent global activity related to the taxation of cross-border income, and descriptions and a comparison of recent proposals to reform the U.S. international tax system. ...

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July 22, 2014 in Congressional News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 439

What Are The Chances? (An IRS Love Song):

(Hat Tip: Glenn Reynolds.)

Wall Street Journal, New Information Deepens the Mystery of the Missing IRS Emails:

The mystery of the missing IRS emails has deepened.

An IRS official told congressional investigators in an interview last week that — despite what agency leaders thought previously — some of the missing IRS emails might still exist on backup tapes.

Those tapes were thought to have been recycled several years ago, destroying the data.

Washington Post:  6 Questions About the IRS’s Missing Emails, From IT Experts:

Did the IRS intentionally lose e-mails to cover up potentially incriminating communications relating to the agency’s targeting controversy, or did the records go missing because of bad technology management?

As for the latter question, few organizations are in a better position to make an assessment of the situation than the International Association of Information Technology Asset Managers, which deals with these types of issues on a regular basis.

The group, which runs the only worldwide certification program for IT asset managers, released six questions on Monday that it thinks lawmakers and federal investigators should ask about the missing e-mails of former IRS official Lois Lerner, a central figure in the targeting affair.

  1. What happened to the IRS’s IT asset managers who appear to have disappeared at a key juncture?
  2. Where is the documentation to prove that the IRS wiped or destroyed Lois Lerner’s hard drive?
  3. Were the drives destroyed by an outside vendor or firm? If so, by who, and can they verify the destruction?
  4. What are the IRS’s specific policies and procedures on document retention when hard drives are damaged or destroyed?
  5. What is the IRS’s disaster-recovery policy?
  6. Where are Lois Lerner’s Blackberry e-mails?

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July 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Death of Dan Markel (1972-2014)

Markel[Updated and Corrected Since Saturday] Dan Markel, D’Alemberte Professor of Law at Florida State and the founder of PrawfsBlawg, was shot in his home in Tallahassee on Friday and died this morning:

The Florida State University community is mourning the loss of a law professor who was shot and killed.

According to an email sent out by the school to students, Dan Markel was taken to the hospital after being shot Friday. He died from his injuries Saturday morning. ...

Tallahassee Democrat, FSU Law Professor Dies in Shooting:

Tallahassee police responded to a shooting in Betton Drive neighborhood after a neighbor called police about 11 a.m. upon hearing a "loud bang" in the 2100 block of Trescott Drive, about a half mile north of Betton Drive. Police showed up shortly after and found the person with a gunshot wound.

Update #1:  Brian Leiter has updated his post:  "From what colleagues at FSU tell me, Prof. Markel was murdered after opening the door of his home, though whether as part of a robbery or something else is unclear."

Update #2:  WCTV, Tallahassee Police Dep't Investigating FSU Law Professor's Death as a Homicide

Update #3

Update #4Details Begin to Emerge in Murder of Dan Markel

July 22, 2014 in Legal Education | Permalink | Comments (2)

Monday, July 21, 2014

Wealthier New Yorkers Are Not Fleeing the City for Tax Havens

New York Times:  Wealthier New Yorkers Aren’t Fleeing the City for Tax Havens, a Study Says, by Sam Roberts:

Sean Hannity, the Fox News prime-time host, threatened last month to leave New York for a tax haven down south. Tiger Woods transplanted himself from California to Florida for the same reason. The actor Gerard Depardieu decamped from France and sought citizenship in Russia after complaining that 85 percent of his income was consumed by taxes. ...

But a new analysis being released Monday undermines the frequent assertion that wealthy people reflexively flee New York City — where Mayor Bill de Blasio campaigned to raise taxes on those who make more than $500,000 — for low-tax states.

The study, by the city’s Independent Budget Office, found that the share of higher-income households that moved from the city in 2012, 1.8 percent, equaled the share of lower-income households that left.

Moreover, the budget office determined that 42 percent of households that made more than $500,000 and left the city in 2012 moved elsewhere in New York State. Another 22 percent departed for New Jersey, which is hardly considered a tax haven and where a so-called millionaire’s tax was imposed in 2004.

The third favorite destination among the wealthy, with 12 percent, was Connecticut, where the Tax Foundation, a nonpartisan research group, estimated that taxpayers typically did not earn enough until May 9, the latest of any state, to pay their total tax bill. Fourth on the list of top destinations was California, where 9 percent of the wealthy households went. That means that 86 percent of the households making $500,000 or more that left the city moved to four states with reputations for high taxes. Only 45 percent of the less wealthy households relocated to those states.

Despite the allure of tropical fishing, only 2 percent of the wealthier households bolted for Florida (compared with 10 percent of households that made less than $500,000, many of them retirees). Just over 4 percent of the wealthier households headed for Texas (as did exactly the same percentage of less wealthy households).

New York City Independent Budget Office, When New Yorkers Move Out of New York City Where Do They Go?:

NYC

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July 21, 2014 in Tax | Permalink | Comments (3)

Marian: The Function of Corporate Tax-Residence in Territorial Systems

Omri Y. Marian (Florida), The Function of Corporate Tax-Residence in Territorial Systems, 18 Chapman L. Rev. ___ (2014):

In this symposium Essay, I explore the instrumentality of corporate tax-residence determination in territorial tax systems. Using the United States as a case study, I show that tax-residence determination had a historic “positive functionality”. Namely, tax-residence positively pointed to the source of income earned, and distributed by, a corporation. However, in current economic environment the positive functionality is obsolete. Instead, the modern functionality of corporate tax residence is a “negative” one. That is, to assure that income is not sourced at a jurisdiction in which income could not have possibly been produced. Under such a view, corporate tax-residence should be constructed as an anti-income-shifting mechanism. One way to achieve such result is to base corporate tax-residence determination on formulary apportionment that takes into account the corporation's real economic attributes, as well as the proportional part of corporation’s contribution to the control-group earnings. The functionality of formulary apportionment in this a context is not to allocate tax jurisdiction (the traditional use of formulary apportionment), but rather to assure that a corporation is not resident where is has no economic existence. Current territorial reform proposals in the United States ignore the important function of tax-residence in supporting source-taxation. I therefore conclude with a call to incorporate a reform of corporate-tax residence determination in any territorial reform legislation.

July 21, 2014 in Scholarship, Tax | Permalink | Comments (0)

NLJ: Law School Enrollment Slump Continues

National Law Journal, Enrollment Slump Continues: For Fourth Year, the Number of Law School Applicants Declined in 2014:

The number of applicants to ABA-accredited law schools declined by about 8 percent this year, dashing hopes for a reversal in a four-year downward trend. Applicants have fallen by more than 37 percent since 2010, according to figures from the Law School Admission Council, offering further proof that plenty of would-be lawyers now view a law degree as a risky investment.

"Law school just isn't the path into the middle class that it once was," said Alfred Brophy, a University of North Carolina School of Law professor who has tracked enrollment. "Things have tumbled downhill very rapidly. … Students are disappearing, and it's unclear when they're going to come back." The latest decline in applicants should translate into about 38,000 new law students next fall, Brophy estimates — a nearly 28 percent drop compared to the first-year class of 2010, which had a record 52,488 students.

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July 21, 2014 in Legal Education | Permalink | Comments (5)

Johnston: California Job Growth Defies Predictions After Tax Increases

Sacramento Bee op-ed:  State’s Job Growth Defies Predictions After Tax Increases, by David Cay Johnston (Syracuse):

WelcomeDire predictions about jobs being destroyed spread across California in 2012 as voters debated whether to enact the sales and, for those near the top of the income ladder, stiff income tax increases in Proposition 30. Million-dollar-plus earners face a 3 percentage-point increase on each additional dollar.

So what happened after voters approved the tax increases, which took effect at the start of 2013?

Last year California added 410,418 jobs, an increase of 2.8 percent over 2012, significantly better than the 1.8 percent national increase in jobs. California is home to 12 percent of Americans, but last year it accounted for 17.5 percent of new jobs, Bureau of Labor Statistics data shows. ...

These results may surprise those who have heard that tax increases are job killers. Taxes can do that – if what is being taxed directly applies to job creation. For example, a 10 percent increase in payroll taxes (Social Security, Medicare and state disability) would probably hamper job growth, said David Neumark, chancellor’s professor of economics and director of the Center for Economics & Public Policy at the University of California, Irvine.

Neumark said he asks his students, “Does raising income tax rates reduce hiring?” “The answer is no. What firms care about when deciding how many workers to hire is the marginal product of workers and the marginal cost of those workers. So if you are an employer and your personal income tax rate is increased, that does not raise the marginal cost of your workers, but it may encourage you to work a little less hard,” Neumark noted, applying standard economic theory.

Some research into tax rates indicates that high rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered. This is known to be the case for people who have a savings target for money to leave their children and are subject to estate taxes – they save more to leave the after-tax sum they prefer, but save less when the tax is lowered or no longer applies to them.

The empirical evidence also shows that the best-paying jobs tend to be clustered in states (and countries) with high taxes. The same tends to be true of wealth creators, including the most money-motivated among scientists, and existing wealth holders not actively engaged in business. ...

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July 21, 2014 in Tax | Permalink | Comments (6)

More Reviews of Piketty's Capital in the Twenty-First Century

CapitalMore reviews of Thomas Piketty (Paris School of Economics), Capital in the Twenty-First Century (Harvard University Press, 2014):

July 21, 2014 in Book Club | Permalink | Comments (0)

The IRS Scandal, Day 438

TaxProf Blog Weekend Roundup

Sunday, July 20, 2014

WSJ: Tax Dos and Don'ts for Hiring Your Child

Wall Street Journal Tax Report:  Tax Dos and Don'ts for Hiring Your Child, by Laura Saunders:

CHildDoes your child work in your family business? Here's a tip: don't pay the wages in pizza if you want to pass muster with the IRS.

This month, a Tax Court judge ruled that Patricia Diane Ross, a tax preparer in Washington who also runs an employment agency, had taken. The children worked in her business, Ross Professional Services, when they were ages 15, 11, and 8. According to the decision, the children together earned more than $15,000 during 2007 and 2008 for services such as stuffing envelopes and filing. Ms. Ross deducted their pay as business expenses, and the IRS disallowed it.

Employing your minor children is legal, as is deducting their pay as a business expense. But the judge found fault with Ms. Ross's method of paying her children, which was often not in cash. The decision says she used most of the children's wages to buy either meals, often of pizza, or tutoring services—the kind of support parents are expected to provide. Ms. Ross said her children told her to use the earnings in these ways. [Ross v. Commissioner, T.C. Summ. Op. 2014-68]...

Here are other tips for taxpayers who want to employ a child:

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July 20, 2014 in Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

An Epic Weekend

Madison 1I am heading back to San Diego today after one of the great weekends of my life, helping my daughter Jayne get settled in Madison, Wisconsin before she starts her job at Epic Systems, a medical records software company recently profiled in the New York Times and Forbes, on September 2.

Jayne graduated from college last month and is spending the summer with us studying for the MCATs before beginning her job.  She will be joining her brother Reed, who started at Epic last summer following his college graduation.  I helped Jayne open a bank account, join a gym, and move into the apartment she will be sharing with her brother.  We took a break today to attend Epic's annual company picnic ("Epicnic") on its amazing campus (photos herehere, and here).

It was a memorable weekend, filled with warm reminisces about the past and excited speculation about the future.  Shopping with Jayne was a different experience than shopping with Reed last year.  She took the time to outfit her place with exactly the right items, including this spiffy shower curtain:

Madison 2

July 20, 2014 in About This Blog, Legal Education, Tax | Permalink | Comments (1)

The IRS Scandal, Day 437

Saturday, July 19, 2014

University of Wisconsin Diversity Plan Requires 'Proportional Participation' in Grades, Majors

The John William Pope Center for Higher Education Policy, Madness in Madison:

WisconsinThe University of Wisconsin's latest diversity plan calls for "equity" in high-demand majors and the distribution of grades

Many American colleges and universities are in the thrall of “diversity,” but none more so than my institution, the University of Wisconsin. This spring, the university adopted a new plan [Framework for Diversity and Inclusive Excellence] that, according to Board of Regents policy, “[p]laces the mission of diversity at the center of institutional life so that it becomes a core organizing principle.” ...

Let us take a closer look at one of these working definitions included, namely “representational equity.” It calls for “proportional participation of historically underrepresented racial-ethnic groups at all levels of an institution, including high status special programs, high-demand majors, and in the distribution of grades.” 

We are not told exactly what adherence to this will entail. It appears to mean that directors of programs and departmental chairs will have to somehow ensure that they have a mix of students with just the right percentages of individuals who embody the various “differences” included in the definition of diversity. I cannot see how that is possible and even if it were, how it improves any student’s education.

Suppose there were a surge of interest in a high demand field such as computer science. Under the “equity” policy, it seems that some of those who want to study this field would be told that they’ll have to choose another major because computer science already has “enough” students from their “difference” group.  

Especially shocking is the language about “equity” in the distribution of grades. Professors, instead of just awarding the grade that each student earns, would apparently have to adjust them so that academically weaker, “historically underrepresented racial/ethnic” students perform at the same level and receive the same grades as academically stronger students.  

At the very least, this means even greater expenditures on special tutoring for weaker targeted minority students. It is also likely to trigger a new outbreak of grade inflation, as professors find out that they can avoid trouble over “inequitable” grade distributions by giving every student a high grade.

Glenn Reynolds (Tennessee), Higher Education Update:  "'Diversity” Plan' Involves Grading By Race And Ethnicity:  "Professors, instead of just awarding the grade that each student earns, would apparently have to adjust them so that academically weaker, ‘underrepresented racial/ethnic’ students perform at the same level and receive the same grades as academically stronger students."

Ann Althouse (Wisconsin), The University of Wisconsin-Madison's "'Diversity' Plan Involves Grading By Race And Ethnicity"... Really?:  "[R]epresentational equity in grading is a goal. Who doesn't share that goal? It's not outrageous unless it's outrageously banal: We want all our students to do well."

Update:

July 19, 2014 in Legal Education | Permalink | Comments (3)

Applying Moneyball to Dating: Finding Undervalued Traits in a Future Spouse

NPR: The Science Of Settling: Calculate Your Mate With Moneyball:

Moneyball Ty[Ty Tashiro's] recent book, The Science of Happily Ever After, explores what "advances in relationship science" can teach us about the partners we choose. Almost 9 in 10 Americans believe they have a soul mate, says Tashiro, but only 3 in 10 find enduring partnerships that do not end in divorce, separation or chronic unhappiness. Clearly something is going wrong — and it starts with our expectations. ...

Our mate preferences have been shaped by natural selection's obsession with physical attractiveness and resources as well as the messages our friends, families and favorite shows transmit about sweethearts and soul mates. And it is at the start of relationships, when we need to make smart, long-term decisions, that we are least likely to do so because we're in the throes of lust, passion and romance. ...

Tashiro advocates a new approach to dating, one that is not so much about lowering standards as giving yourself better ones. Call it "Moneyballing" relationships (Tashiro does); it's all about finding undervalued traits and assets in the dating market. And, just like with baseball, it starts with trying to ignore the superficial indices of value — attractiveness, wealth — in favor of hidden attributes with a stronger correlation to long-term relationship success.

Citing research that finds no reliable link between income level or physical attractiveness and relationship satisfaction, Tashiro steers his readers toward traits such as agreeableness. With married couples, he points out, "liking declines at a rate of 3 percent a year, whereas lust declines at a rate of 8 percent per year," so the smarter, long-term investment is finding someone you genuinely like. Plus, he adds, studies also suggest that agreeable partners are in fact "better in bed" and less likely to cheat over the long haul.

July 19, 2014 in Legal Education, Tax | Permalink | Comments (1)

Blair-Stanek: Intellectual Property Law Solutions to Transfer Pricing Abuse

Tax Analysys Logo (2013)Andrew Blair-Stanek (Maryland), IP Law Solutions to Transfer Pricing Abuse, 143 Tax Notes 175 (June 30, 2014):

The article discusses a new way to attack transfer-pricing abuse: change intellectual property (IP) law.

July 19, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 436

Friday, July 18, 2014

Weekly Tax Roundup

July 18, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

July 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Student Tax Note Roundup

July 18, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Johnson: Reflections on Ridgely v. Lew

Johnson (Steve)TaxProf Blog op-ed:  Reflections on Ridgely v. Lew, by Steve R. Johnson (Florida State):

On July 16, the D.C. district court decided Ridgely v. Lew, Civ. No. 1:12-cv-00565 (CRC). It invalidated part of 31 C.F.R. sec. 10.27, restricting the ability of practitioners to charge contingent fees for services in connection with original returns, amended returns, and refund claims. The purported statutory authority for section 10.27 is 31 U.S.C. sec. 330(a), allowing Treasury to “regulate the practice of representatives of persons before the Department of the Treasury.”

In Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), a panel of the circuit invalidated regulations set out in 31 C.F.R. secs. 10.3 to 10.6 regulating return preparers. Affirming the Loving district court, the panel held that preparers are not “representatives” engaged in “practice” before the IRS, thus that Treasury lacked statutory authority to promulgate the regulations. The government chose not to seek Supreme Court review.

Loving, of course, has been quite controversial and has occasioned much commentary. My view, developed in Loving and Legitimacy: IRS Regulation of Tax Return Preparation forthcoming in the next issue of the Villanova Law Review, is that Loving was correctly decided. The “practice” rationale is not strong, but the “representative” rationale is sound, in my estimation. Cf. All Party Parliamentary Group on Extraordinary Rendition v. United States Dep’t of Defense, 2104 WL 2721381 (D.C. Cir. June 17, 2014) (FOIA case in which the court followed and applied Loving’s definition of “representative”).

The Ridgely plaintiff is a CPA. He brought suit under the Administrative Procedure Act and the Declaratory Judgment Act, arguing that the sec. 10.27 restrictions exceed Treasury’s statutory authority insofar as they apply to the preparation and filing of “Ordinary Refund Claims.” The Ridgely court followed Loving, finding that CPAs who advise as to and prepare Ordinary Refund Claims are not representatives practicing before the IRS. The result is not a big surprise. The government’s half-hearted attempts to distinguish Ridgely from Loving were easily brushed aside, and the district court obviously wasn’t going to disagree with its circuit court. If one believes Loving was correctly decided, then Ridgely too was correctly decided.

As to Ridgely’s aftermath, four thoughts.

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July 18, 2014 in Scholarship, Tax | Permalink | Comments (2)

University of Auckland Hosts Conference Today on Key Issues in the Design of Capital Gains Tax Regimes

AucklandThe University of Auckland Business School and the Faculty of Law host a conference today on Key Issues in the Design of Capital Gains Tax Regimes (speakerstopics):

The basic aim of this conference is to compare the ways in which selected jurisdictions tax capital gains, with a view to determining what might be learned from each jurisdiction’s experience as to the best approach to take.

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July 18, 2014 in Conferences, Tax | Permalink | Comments (0)

Osofsky: Concentrated Enforcement in a Best-Case Tax Enforcement Regime

Leigh Osofsky (Miami), Concentrated Enforcement in a Best-Case Tax Enforcement Regime, 2014 IRS Research Bulletin:

In this Article, I set forth a theory (“concentrated enforcement”) for allocating scarce enforcement resources within a low compliance tax sector. The intuition behind concentrated enforcement is that, under a number of different circumstances, there may be increasing marginal returns to enforcement resources and psychological factors that support concentration. This Article begins by setting forth the notion of a best-case tax enforcement regime, which would allocate scarce tax enforcement resources to maximize the combination of direct revenue and voluntary compliance. The Article then examines some empirical evidence from the criminology context which suggests that, under certain circumstances, concentration of enforcement may be critical to voluntary compliance. The bulk of the Article draws on a number of different disciplines to set forth the conditions under which concentrated enforcement may increase voluntary compliance and explore how it might work in the particularly problematic cash business tax sector. The question of when concentrated enforcement can increase compliance is not merely theoretical. As I explain in this Article, concentrated tax enforcement, in the form of project-based enforcement, already exists in practice. By exploring the conditions under which concentrated enforcement can increase compliance, this Article can help explain and improve existing practice, as well as guide future research. While ultimately determining when concentrated enforcement does increase voluntary compliance requires experimental application and evaluation, examining the conditions under which concentrated enforcement is likely to increase voluntary compliance and the evidence of such conditions is the first step toward such experimentation. This Article takes this first, necessary step toward thinking about concentrated enforcement as part of a best-case tax enforcement regime.

July 18, 2014 | Permalink | Comments (0)

The IRS Scandal, Day 435

IRS Logo 2Forbes:  Despite Yearlong Investigation Of IRS, DOJ Just Learned Of Lost Emails From News Media, by Robert W. Wood:

For over a year now, the DOJ and FBI have been investigating the IRS targeting scandal. Yet a DOJ lawyer testified before a Congressional committee that even a year into its investigation, DOJ had no advance notice of the 2 years’ worth of emails the IRS says went missing years ago. ...

[T]his is astonishing. On June 13, 2014, the IRS admitted that it lost Lois Lerner’s emails from January 2009 through April 2011. DOJ says it learned of the missing emails after June 13, 2014 from the media! Oh, those two-years’ worth of emails to and from the key IRS figure who refused to testify to Congress about her job as a top IRS official? They covered the precise period of time when the alleged IRS targeting of Tea Party groups took place.

Republican Rep. Ron DeSantis asked Deputy Attorney General James Cole, “So you actually read about it in the press and nobody in the IRS ever went to the Justice Department to give you a heads-up, knowing you were conducting the investigation that some evidence may have been destroyed?”

“Not before the 13th of June,” Cole replied. “I think we learned about it after that, from press accounts,” Mr. Cole told House Oversight and Government Reform subcommittee chairman Rep. Jim Jordan. Rep. Jordan pressed Mr. Cole, “Is it a big deal to you Mr. Cole, a big deal to the Justice Department that the head of the Internal Revenue Service waited two months to tell the United States Congress, two months to tell the American people, and, most importantly, two months to tell the FBI and the Justice Department that they had lost Lois Lerner’s emails?”

Mr. Cole’s response seemed practically Presidential, “It depends on what the circumstances were behind,” Cole responded. The whole story may eventually come out, but the investigation has taken on a decidedly pale complection. Now there’s a new DOJ investigation underway into the IRS missing emails. One might wonder if it will ever turn up even a smidgen of corruption.

Meanwhile, a federal court may prove to be tougher. In a suit against the IRS brought by Judicial Watch, U.S. District Judge Emmet G. Sullivan ordered the IRS to explain what happened to Lois Lerner’s emails. The DOJ has done its best to avoid having to explain much of anything to anyone.

It is another seedy chapter that casts further doubt on the tax system. In 2013, the IRS targeting scandal was already brewing, and Ms. Lerner asked an IT specialist at the IRS if the IRS saved texts? They are not saved automatically, came the response, but since saving them was possible, be careful. “Perfect,” Ms. Lerner answered.

So the switch to texts was an even better way to adopt the IRS version of Moscow Rules. Even President Obama’s new IRS Commissioner Koskinen testified that he was completely unaware of the instant-messaging system. Still, he told a House committee he didn’t think Ms. Lerner’s response about the texts meant she was happy that IRS instant messages weren’t saved. ‘Perfect’ must mean different things to different people.

Forbes

Wall Street Journal:  Justice Department Learned of Lost IRS Emails From Press, Official Says:

Justice Department officials didn't learn until June that the Internal Revenue Service had lost two years' worth of emails that could shed light on the agency's treatment of conservative groups, a top Justice official said.

Deputy Attorney General James Cole told a congressional panel Thursday that the agency learned from press accounts in June that the IRS had lost the emails. The Justice Department announced more than a year earlier, in May 2013, that it was investigating the alleged IRS targeting of conservative groups, after an inspector general found tea-party groups faced unusual scrutiny and lengthy delays as they sought tax-exempt status.

Republicans said the disclosure supports their claim that the Justice Department hasn't been aggressive in pursuing its investigation of the matter.

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July 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 17, 2014

Manipulating Citation Rankings

Inside Higher Ed, Manipulating Citation Rankings?:

Highly Cited 2The possession by Saudi Arabia’s King Abdulaziz University of more highly cited researchers than almost any other university in the world raises questions about institutions’ ability to manipulate global rankings.

This is the view of two researchers who last week posted on the arXiv preprint server a paper that ranks universities by the number of highly cited researchers who list them as affiliations. [Which of the World’s Institutions Employ the Most Highly Cited Researchers? An Evaluation of the Data From Highlycited.com] ... They examined the addresses on papers written by the world’s most highly cited researchers between 2002 and 2012, as revealed by Thomson Reuters last month. ...

[T]he University of California system is listed as the primary affiliation of 179 highly cited researchers, followed by Harvard University with 106 and Stanford University with 56. However, some authors also list secondary academic affiliations. When ranked according to how many highly cited researchers list them as either a primary or a secondary affiliation, the University of California remains top, with 198, but King Abdulaziz University leaps from nowhere to second, with 163.

Noting that the Academic Ranking of World Universities, often known as the Shanghai Jiao Tong rankings, takes into account an institution’s proportion of highly cited researchers, the paper says that “the results for King Abdulaziz illustrate that university rankings can be manipulated.” ...

Saudi Arabia is the country with by far the highest proportion (82 percent) of highly cited researchers who list its institutions only as secondary overseas affiliations. The second highest is South Africa, with 45 percent. King Abdulaziz is listed as a secondary affiliation by 122 researchers, compared with 27 for the next most commonly listed institution, Harvard. ...

[S]ome Saudi Arabian universities, including King Abdulaziz, offer highly cited researchers lucrative adjunct professorships, with minimal requirements for them to be physically present, in return for being listed by them as a secondary affiliation. ... King Abdulaziz did not respond to a request for comment.

July 17, 2014 in Legal Education | Permalink | Comments (2)

District Court Joins Loving, Holds IRS Lacks Statutory Authority to Regulate Tax Return Preparers

RTRPThe U.S. District Court for the District of Columbia yesterday followed Loving v IRS, 742 F.3d 1014 (D.C. Cir. 2014), and held that the IRS lacks statutory authority to regulate tax return perparers.  Ridgely v. Lew, 1:12-cv-00565 (D.D.C. July 16, 2014).

Prior TaxProf Blog coverage:

July 17, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

American Cities Couple Progressive Spending With Broad-based Taxes to Combat Inequality

Slate:  You Don’t Have to Move to Scandinavia:  American Towns Are Also Spending More on Social Programs as Inequality Rises, by Leah Platt Boustan (UCLA),  Hernan Winkler (World Bank) & Eric M. Zolt (UCLA):

The New York Times travel section, not known for its frugality, recently warned readers about the sticker shock of a Scandinavian vacation. “Prices do mean that unless money is no object, you’ll need to modify expectations,” the piece advised. In Norway, a burger and fries at a fast food joint will set you back $23. A six-pack of warm grocery-store beer is nearly $30. These hefty price tags are due, in part, to high wages for low-skilled service jobs. But high taxes play a role too. Most products have a 25 percent value-added tax, which means that $5.50 of the cost of that burger goes to fund Norway’s generous social programs.

As a visitor, you get little for the added price. But, as a resident, your daily spending helps to fund an expansive package of benefits, including health care, child care, high-quality education, pensions, and unemployment insurance. While many Americans admire European social safety net, what they may not appreciate is that these programs are typically paid for by a bundle of taxes that are much less progressive than taxes here. In large part, these benefits are not funded by high-income taxes on the rich. Instead, the beneficiaries of the public services also pay for them, kroner by kroner, through high consumption taxes.

Could this system work to combat income inequality in the United States? Usually, the assumption is no, even though the most popular social insurance program in the country, Social Security, fits this template. We’ve recently published research that adds surprising support for the argument that the European model of progressive spending funded by broad-based taxes could work more widely here—by showing that it’s already happening at the local level.  [The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970-2000, 95 Rev. Econ. & Stat. 1291 (2013)]

July 17, 2014 in Tax | Permalink | Comments (0)

Death of the WSJ's Arden Dale

DaleWall Street Journal, Arden Dale, Dow Jones Writer, Dies:

Arden Dale, who covered taxes and estate planning at The Wall Street Journal, died Sunday at her home in Maplewood, N.J., after a battle with cancer. She was 54 years old.

She had a long and distinguished career with Dow Jones and the Journal. She was managing editor for energy coverage at Dow Jones Newswires in the early 2000s, and then a senior writer on personal-finance issues for Wealth Adviser.

"We are deeply saddened by Arden's death. She was a highly talented and widely respected journalist and colleague. Arden served Dow Jones, The Wall Street Journal and their readers well in important news management and reporting positions," said Neal Lipschutz, a deputy managing editor of the Journal.

I blogged Arden's final column, in May, Skirting the New Investment Tax: 'Active' Business Owners Can Escape the 3.8% Investment Tax—If They're Truly Active

July 17, 2014 in Obituaries, Tax | Permalink | Comments (1)

New England Dean John O'Brien Receives 2014 ABA Kutak Award

O'BrienFollowing up on my previous posts:

ABA, John F. O'Brien is 2014 Kutak Award Recipient:

John F. O’Brien, dean and professor of Law at New England Law| Boston, is the 2014 Robert J. Kutak Award Recipient. The ABA Section of Legal Education and Admissions to the Bar and the Kutak Rock national law firm established the Robert J. Kutak Award in 1984. The award is given annually to an individual who has contributed significantly toward increased cooperation among legal education, the practicing bar, and the judiciary. ...

Above the Law, ABA To Honor Law Dean Who Has Done The Most To Embarrass Legal Education

July 17, 2014 in Legal Education | Permalink | Comments (2)

Federalist Society Hosts Teleforum Conference Call Today on Who Judges Who is a Judge?

The Federalist Society hosts a Teleforum Conference Call today at 1:00 p.m. EST on Who Judges Who is a Judge? with Kristin E. Hickman (Minnesota) and Tuan Samahon (Villanova):

FSAt bottom, in Kuretski v. Commissioner  presidential power is at stake. Judges of the U.S. Tax Court (26 USC 7443(f)), were arguably characterized by the U.S. Supreme Court, in Freytag v. Commissioner, as exercising a portion of the judicial power of the United States. Recently, however, the D.C. Circuit Court of Appeals disagreed when it found that the Tax Court exercises only executive power. What are the implications of the D.C. Circuit Court’s opinion on the president’s removal power? Has the D.C. Circuit misread Freytag, or faithfully applied it?

Prior TaxProf Blog op-eds on Kuretski:

July 17, 2014 in Legal Education, Tax | Permalink | Comments (0)

Gamage: Analyzing the Optimal Choice of Tax Instruments

David Gamage (UC-Berkeley), Analyzing the Optimal Choice of Tax Instruments: The Case for Levying (all of) Labor-Income Taxes, Value-Added Taxes, Capital-Income Taxes, and Wealth Taxes, 68 Tax L. Rev. ___ (2014):

Economic analyses of taxation have largely focused on the problems of labor-to-leisure and saving-to-spending distortions. Based on these analyses, the prior literature has generally treated labor-income and consumption taxes as being essentially equivalent, and has also treated capital-income and wealth taxes as being essentially equivalent. Further, based on these analyses, the dominant view in the prior literature has been that neither capital income nor wealth should be taxed.

This Article expands on these prior analyses by incorporating a variety of tax-gaming responses and also administrative and compliance costs. By doing so, this Article argues that it is probably optimal for governments to levy some version of (all of) labor-income taxes, value-added taxes, capital-income taxes, and wealth taxes.

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July 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

Madison: The Futility of Tax Protester Arguments

Allen D. Madison (South Dakota), The Futility of Tax Protester Arguments,  36 T. Jefferson L. Rev. 253 (2014):

Tax protesters offer uncommonly silly arguments in support of their positions -- so silly, in fact, that courts commonly refuse to address them, lest those arguments be given any credence. Yet the wave of tax protestor arguments has not ebbed, and tax protestors continue to challenge, for example, the legal obligation to pay taxes, the constitutionality of the income tax, and the authority of the IRS to enforce the tax laws.

Maybe some education will help solve this problem. This Article provides a framework for analyzing tax protestor arguments through a civics discussion and explains why tax protestor arguments fail under our system of government.

July 17, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 434

IRS Logo 2Wall Street Journal:  Justice Dept. to Investigate Lost IRS Emails:

The Justice Department is conducting a criminal investigation into the loss of Internal Revenue Service emails that could shed light on the agency's treatment of conservative groups.

As part of its criminal probe into the IRS's treatment of politically active conservative groups, the Justice Department is "investigating the circumstances of the lost emails from [former IRS official Lois Lerner's] computer," according to prepared testimony by James Cole, the deputy attorney general. Mr. Cole is set to appear at a hearing scheduled for Thursday before a panel of the House Oversight and Government Reform Committee. The Wall Street Journal reviewed his prepared testimony on Wednesday. ...

Mr. Cole's comments underscore the potential seriousness of the email loss, which has roiled congressional probes of the matter and angered some top GOP lawmakers. The IRS has blamed the loss on a crash of Ms. Lerner's hard drive—a common occurrence at the agency, officials say. They add a backup tape also was routinely recycled after six months.

Some Republicans regard the timing of the email loss in 2011 as suspicious, however, noting that it came just days after Republicans began questioning the agency's treatment of politically active conservative donors and groups.

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July 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 16, 2014

Largest Employment Gains by Law School

National JuristNational Jurist, Largest Employment Gains by School:

While the nationwide employment rate for recent graduates has been largely flat during the past few years, some schools have bucked the trend and significantly improved their employment rates. Twenty law schools improved their employment rate by 10% or more during the past two years, according to a formula created by The National Jurist to analyze data from the ABA. ... The National Jurist calculates its employment rate using a formula that tracks full-time bar passage required employment at 100%, full-time-JD preferred employment at 70%, and ten other categories at percents from 60% to as low as 10% for non-professional, full-time positions.

Top Schools by Improvement 2011 2013   % Improved
1.  Willamette 57.4% 77.2% 19.7
2.  Illinois 64.5% 81.5% 17.1
3.  Brooklyn 59.0% 76.1% 17.0
4.  Appalachian 44.1% 60.6% 16.5
5.  Toledo 52.3% 68.1% 15.7
6.  Washburn 63.7% 78.5% 14.8
7.  Georgetown 76.0% 90.4% 14.4
8.  William & Mary 73.5% 87.1% 13.6
9.  Boston University 64.2% 77.6% 13.4
10. Case Western 63.8% 76.6% 12.8
11. Pepperdine 56.2% 67.9% 11.8
12. Southern Illinois 71.3% 82.7% 11.4
12. New Hampshire 67.8% 79.1% 11.4
14. University of Washington 70.5% 81.6% 11.1
15. Kansas 68.1% 79.1% 11.0
16. Maine 53.3% 63.8% 10.5
17. UDC 38.9% 49.2% 10.3
18, UCLA 74.7% 84.9% 10.2
19. CUNY 48.3% 58.4% 10.1

July 16, 2014 in Legal Education | Permalink | Comments (6)

National Taxpayer Advocate Releases Mid-Year Report to Congress

TASNational Taxpayer Advocate Nina Olson today released (IR-2014-78) her semi-annual report to Congress, FY 2015 Objectives Report to Congress:

[The report] identifies key issues, goals and activities TAS will focus on during the upcoming fiscal year. These include the implementation of the Taxpayer Bill of Rights, resolving refund delays for victims of return preparer fraud, and the need for minimum standards for tax return preparers. This year's report also includes a Volume II that outlines formal IRS responses to the 25 most serious taxpayer problems identified by the NTA in her 2013 Annual Report to Congress, as well as the NTA’s comments on those responses.

July 16, 2014 in IRS News, Tax | Permalink | Comments (1)

CNN: Go to Law School. Rack Up Debt. Make $62,000

CNN Money, Go to Law School. Rack Up Debt. Make $62,000:

CNNLeslie Thompson earns $40,000 a year working two jobs, but her Albuquerque, N.M., house almost went into foreclosure twice this year.

Thompson's trade? She's a lawyer.

Lawyers have been struggling for a while now, but it's gotten even worse: Half of lawyers are now starting at a salary of less than $62,000 a year, according to the National Association for Law Placement.

Not only that, but starting salaries have fallen 13% over the past six years, down from $72,000 in 2008. At the same time, lawyers' student debts are piling up. Thompson is carrying over $150,000 in student loans.

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July 16, 2014 in Legal Education | Permalink | Comments (14)

Bankruptcy’s Corporate Tax Loophole

Diane Lourdes Dick (Seattle), Bankruptcy’s Corporate Tax Loophole, 82 Fordham L. Rev. 2273 (2014):

Imagine you are a company with a failing business that is drowning in debt. On the bright side, you also possess a very valuable asset. This asset is unique because, unlike most assets, if you liquidate the business through a Chapter 7 bankruptcy, it will be extinguished and its value will not be realized by any shareholders or creditors. On the other hand, even if you substantially liquidate the business using Chapter 11, you can, thanks to an extraordinary ambiguity in the law, preserve this valuable asset. Even better, you can direct the value of this asset to your preferred stakeholders—whether they are shareholders or creditors—rather than have the asset’s value allocated among stakeholders according to bankruptcy’s absolute priority rule. You can do this because you have the most information about this valuable asset and because bankruptcy law and courts effectively ignore its existence, leaving you to allocate its value as you see fit. What is this unique asset? Valuable tax attributes, including net operating losses and credit carryovers. This scenario is not purely hypothetical; Solyndra and Washington Mutual, among others, have effectively used Chapter 11 to divert the value of tax losses and credits to a select group of shareholders and creditors in contravention of bankruptcy‘s distributional norms. This Article recommends statutory revisions to the tax and bankruptcy laws to remove the unintended tax advantage and thus neutralize the tax consequences of corporate restructuring decisions.

July 16, 2014 in Scholarship, Tax | Permalink | Comments (1)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through July 1, 2014) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

39,386

Reuven Avi-Yonah (Mich.)

6823

2

Paul Caron (Pepperdine)

26,267

Paul Caron (Pepperdine)

2702

3

Louis Kaplow (Harvard)

22,744

Richard Ainsworth (BU)

2686

4

D. Dharmapala (Illinois)

19,997

D.Dharmapala (Illinois) 

2585

5

Vic Fleischer (San Diego)

19,867

Richard Kaplan (Illinois)

1930

6

James Hines (Michigan)

19,626

Bridget Crawford (Pace)

1900

7

Ted Seto (Loyola-L.A.)

19,004

Katie Pratt (Loyola-L.A.)

1893

8

Richard Kaplan (Illinois)

18,863

Ed Kleinbard (USC)

1825

9

Katie Pratt (Loyola-L.A.)

15,918

Omri Marian (Florida)

1787

10

Dennis Ventry (UC-Davis)

15,341

Louis Kaplow (Harvard)

1751

11

Carter Bishop (Suffolk)

14,896

Robert Sitkoff (Harvard)

1713

12

Jen Kowal (Loyola-L.A.)

14,185

Brad Borden (Brooklyn)

1705

13

David Weisbach (Chicago)

14,162

Jen Kowal (Loyola-L.A.)

1628

14

Chris Sanchirico (Penn)

14,136

James Hines (Michigan)

1466

15

David Walker (BU)

13,885

Dick Harvey (Villanova)

1442

16

Francinet Lipman (UNLV)

13,741

Jeff Kwall (Loyola-Chicago)

1442

17

Richard Ainsworth (BU)

13,692

Francine Lipman (UNLV)

1367

18

Bridget Crawford (Pace)

13,686

Ted Seto (Loyola-L.A.)

1362

19

Brad Borden (Brooklyn)

13,623

Dan Shaviro (NYU)

1350

20

Robert Sitkoff (Harvard)

13,535

Carter Bishop (Suffolk)

1268

21

Ed Kleinbard (USC)

12,846

David Gamage (UCBerkeley)

1237

22

Herwig Schlunk (Vanderbilt)

12,442

Vic Fleischer (San Diego)

1190

23

Dan Shaviro (NYU)

11,947

Brian Galle (BC)

1189

24

Ed McCaffery (USC)

11,692

Dan Simmons (UC-Davis)

1184

25

Wendy Gerzog (Baltimore)

11,682

Chris Sanchirico (Penn)

1169

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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July 16, 2014 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

CPAs Sue IRS, Say its 'Voluntary' Regulation of Tax Preparers Lacks Authorization From Congress

RTRPFollowing up on my prior post, CPAs: IRS's 'Voluntary' Regulation of Tax Preparers Lacks Statutory Authorization From Congress, Contravenes D.C. Circuit Decision, and Violates Administrative Procedure Act:  the American Institute of CPAs yesterday sued the IRS in the U.S. District Court for the District of Columbia over its new "Voluntary" Tax Return Preparer Program:

July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

50 Colleges Charge > $60,000/Year

Business Insider, There Are Now 50 Colleges That Charge More Than $60,000 Per Year:

As the average cost of higher education in America continues to rise, at least 50 American colleges and universities are now charging students more than $60,000 per year. ... Last year, only nine colleges charged more than $60,000.

25 Most

July 16, 2014 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 433

IRS Logo 2Forbes:  Is the IRS Scandal Microsoft's Fault?, by Gene Marks:

Hmm….maybe Microsoft is to blame for this whole IRS-email thing.

Just last week, “…a second federal judge has now ordered the IRS to explain under oath how the agency lost emails from former division director Lois Lerner, the woman at the heart of the Tea Party targeting scandal. U.S. District Court Judge Reggie Walton told Obama administration lawyers on Friday he wants to see an affidavit explaining what happened with Lerner’s hard drive. The IRS claims her computer suffered a crash in 2011 that wiped her email records at the time clean.”

Ah-hah! It’s a brilliant ploy. Can’t provide emails requested by the courts? Then just blame the computer guys! The computers crashed. It was a blue screen of death. You know what’s it like with Windows, right? We’ve all had this happen to us before. Who hasn’t had their computer crash? Curse you, Microsoft! This must be your fault! You’ve foiled us again!

I don’t know if the IRS did anything wrong – that’s for the courts to decide. But I do know a little something about information technology. And this is an IT issue. Judges. Lawyers. IRS people. Congressmen. The Media. Everyone’s trying to get to the bottom of the lost emails. But there’s one group of people missing from the conversation: the tech people. I don’t mean the ones who work for the IRS. They’re scrambling, I’m sure. The ones who should be subpoenaed are the ones who work at IT firms, like mine, across the country. They will tell a different story. When we hear that emails were just “lost,” especially in 2011, we scratch our heads in amazement. Ask any IT firm, the clients they serve, or the IT people that work in corporate America: e-mails don’t get “lost.” And frankly, computers don’t really crash very often. That was a great excuse in…oh…1995. But not anymore.

In other words: you can’t blame Microsoft. Nice try. ...

[D]id Ms. Lerner’s computer really crash, wiping out all her data, including emails? That story’s really hard to believe for anyone with an IT background. It’s easy to blame Microsoft for our problems. That used to be a great excuse. But that excuse is getting harder and harder for anyone, even the IRS, to make.

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July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)