TaxProf Blog

Tax Prof Spotlight: Richard Pugh

Saturday, June 12, 2004

Richard Pugh has led the consummate tax life, with high powered positions in private practice, public service, and legal education.

After graduating from Dartmouth in 1951, Professor Pugh studied at Oxford as a Rhodes Scholar and spent three years as a naval officer before returning to the U.S. to earn his J.D. from Columbia Law School (where he was an editor of the Law Review). After 3 years as a tax associate at Cleary, Gottlieb, Steen & Hamilton in New York City, he returned to Columbia in 1961 as a Professor of Law teaching courses in tax and international law.

Professor Pugh remained on the Columbia faculty for 8 years, interrupted by 2 years of public service as Deputy Assistant Attorney General in the Tax Division of the U.S. Department of Justice. In 1969, he returned to private practice as a tax partner at Cleary, Gottlieb where he enjoyed an extraordinary 20-year career representing some of the leading national and international corporations in tax matters. He also continued to teach 1 tax course per year as an Adjunct Professor at Columbia.

Professor Pugh began the final chapter of his tax career in 1989 when he returned to academia and accepted a position as Distinguished Professor of Law at the University of San Diego, joining an already strong tax faculty of Bert Lazerow, Virginia Shue, and Lester Snyder. Over the past 15 years, Professor Pugh has been a productive scholar, perhaps best known as the co-author of three leading casebooks: Taxation of Business Enterprises (West Group, 2d ed. 2002), Taxation of International Transactions (West Group, 2d ed. 2001), and International Law (West Group, 4th ed. 2001), as well as coordinating editor of the annual International Income Taxation: Code and Regulations–Selected Sections (CCH). His most recent law review article was published as the lead article in the inaugural issue of the San Diego International Law Journal: Policy Issues Relating to the U.S. Taxation of Foreign Persons Engaged in Business in the United States Through Agents: Some Proposals for Reform, 1 San Diego Int’l L.J. 1 (2000).

Although Professor Pugh is in phased retirement at USD, he continues to teach a full load in the spring term and remains an active scholar, with revised editions of his casebooks and code and regulations volume in the works.

Throughout his long tax career, Professor Pugh has held various leadership posts within the academy and profession. He is a fellow of the American College of Tax Counsel and a member of the American Law Institute. He is the former chair of The Tax Forum and past president of the U.S.A. Branch of the International Fiscal Association.

Professor Pugh’s tenure at the University of San Diego has coincided with the schools’s meteoric rise into the top echelons of American law schools, both generally and with respect to its tax program. In recent years, USD has made a number of noteworthy lateral hires of top scholars from other law schools, including tax stars Karen Burke (from Minnesota) and Grayson McCouch (from Miami).

In his most recent survey of law school faculty quality, Texas law professor (and rankings guru) Brian Leiter rates USD as having the 22nd best faculty among the 180 law schools (and thus confirming his earlier observations that USD was on a "steep upward trajectory" and was "on the verge of cracking the 'big leagues' of the great law school hierarchy").

In the most recent U.S. News & World Report tax rankings, USD is 11th overall and 6th among law schools with graduate tax programs. Indeed, USD’s tax program is the highest ranked program west of the Mississippi River. USD's program is strengthened by the involvement of several national tax figures, including M. Carr Ferguson (Senior Counsel at Davis Polk & Wardwell) as Executive Advisor; Richard Shaw (Chair of the ABA Tax Section) as Distinguished Adjunct Professor; and the Honorable David Laro (U.S. Tax Court Judge) as Visiting Professor.

By his own account, Professor Pugh is an avid tennis player and inept golfer. His legions of San Diego students have enjoyed his sense of humor – he has summered in Vermont for over 25 years and collected various examples of Vermont lore that he deploys in class to provide much-needed relief from the rigors of tax law.

Professor Pugh is off this summer to celebrate his 50th anniversary and 75th birthday with his wife, three children and their spouses, and seven grandchildren – his greatest legacy.

Each Saturday, TaxProf Blog shines the spotlight on one of the 700+ tax professors in America's law schools. We hope to help bring the many individual stories of scholarly achievements, teaching innovations, public service, and career moves within the tax professorate to the attention of the broader tax community. Please email me suggestions for future Tax Prof Profiles. For prior Tax Prof Profiles, see here.

Joint Committee Releases Description and Revenue Effects of Jobs Creation Act

Saturday, June 12, 2004

The Joint Committee on Taxation has released a 261-page Description of H.R. 4520, the "American Jobs Creation Act of 2004" (JCX-41-04) along with Estimated Revenue Effects of H.R. 4520 (JCX-38-04).

Goldwater Institute Ties State Population Shifts to Relative Tax Burdens

Saturday, June 12, 2004

The Goldwater Institute has issued a report, The Tax Man and the Moving Van: Fiscal Policy and State Population Shifts, concluding that "people make rational decisions about where to work and do business, placing states into a healthy competition that gives jobs and economic strength to states with low tax burdens and favorable business climates." Here is part of the Executive Summary:

This study examines U.S. Census data from 1995 to 2000 in an effort to determine if, and in response to which conditions, Americans take advantage of their liberty to relocate under a federalist system. Strong evidence suggests that people exercise their options by moving into states with low tax burdens and favorable business climates, and exiting states with high tax burdens, poor business climates, and higher relative costs of living.

Over the years examined, the 10 states with the lowest overall tax burdens (Alaska, New Hampshire, Delaware, Tennessee, Alabama, Texas, Florida, South Dakota, Nevada, and Colorado, respectively) enjoyed a total net gain of more than 1,300,000 residents resulting from across-state migration. The nine states and the District of Columbia with the highest total tax burdens suffered a total net loss of more than 1,700,000 residents as a result of migration.

A regression analysis of the census data reveals that tax burdens, business climate, and cost of living strongly influenced millions of household decisions to move across state lines during the late 1990s. These inflows and outflows are significant enough to profoundly impact the political and economic strength of states.

(Thanks to reader Ben Cunningham for the tip.)

Who Am I?

Friday, June 11, 2004

Who is this non-tax professor at Harvard?

• From Brian Leiter: "Harvard Law School's best-known and least accomplished faculty member. (Folks outside law don't seem to know this, but [name] hasn't made a substantive contribution to legal scholarship in two decades or more.)"

• From Richard Posner: "Although [he/she] is a professor at Harvard Law School, [name] is not a scholar."

Lawyers Behaving Badly

Friday, June 11, 2004

Forgive the non-tax related nature of this post, but as one who has been to many law firm and law school retreats, the report of this Scotland law firm retreat gone awry (via lawschool.com) caught my eye:

One of Edinburgh’s most prestigious legal firms has launched an investigation after trouble flared during a corporate weekend at a luxury timeshare development. It is believed two senior legal staff at top corporate lawyers Dickson Minto have been suspended following a fracas last weekend at the up-market Langdale resort in the Lake District...
Two senior members of the legal firm began arguing and others became involved. It is claimed by those present that during a series of incidents one male member of staff was headbutted and another punched.

And to think the most exciting thing I've ever done at a retreat is golf!

Tax Profs Remember Ronald Reagan

Friday, June 11, 2004

As Ronald Reagan is laid to rest today, Tax Profs offer their remembrances of our 40th President:

• Ellen Aprill (Loyola-L.A.): "Although a liberal Democrat, I was completely comfortable serving in the Office of Tax Legislative Counsel during President Reagan’s second term. My experience confirmed the reputation of the office for quality work and bipartisanship. In fact, when tax policy and politics intersected, the administration protected the work of our office. At one point, the idea of denying tax exemption to any charity performing abortions was floated by abortion foes. As the staffer responsible for exempt organizations, I remember worrying that I would be forced to resign from my job. Quickly, however, it was decided that any discussion of that possible new rule would come from the White House and not from the Office of Tax Policy. Moreover, former Assistant Secretaries for Tax Policy from both parties publicly opposed the idea. President Reagan’s death reminds me that, not so long ago, politics was not as polarized as it is today."

• Michael Waggoner (Colorado): "President Reagan and his appointees were among many people who helped to produce the 1986 Tax Reform Act. Many students of taxation consider that act to have been the recent high water mark in the U.S. tax system."

• James Maule (Villanova): "Unquestionably, Ronald Reagan's impact on the tax world was the enactment of the Internal Revenue Code of 1986. Replacing the Internal Revenue Code of 1954, it simplified the tax law by removing a variety of exclusions and deductions in exchange for fewer and lower tax rates . . . . Reagan's tax legacy was tarnished long before he reached his grave. No matter how many things are named after him, the trashing of the tax code will remain as a reminder of what once was, replaced by something that cannot, under any circumstance, be called an improvement. The best memorial to Reagan, and the best gift to all citizens, would be for Congress to fix the tax code. Don't hold your breath." For the full tribute, see here.

• Jack Bogdanski (Lewis & Clark): "I think Paul Krugman of The New York Times said it best the other day. Reagan pushed through some of the most irresponsible tax cuts of all time, in the 1981 tax act (ERTA), but then he quickly came to his senses. In 1982 (TEFRA) and 1984 (DRA or TRA), he wisely took back some of the massive giveaways with which he started out his term. Of course, the current occupant of the White House is not even close to being smart enough to see the parallels. Says Krugman:

Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. To his credit, he was more pragmatic and responsible than that; he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people. This is not a criticism: the tale of those increases tells you a lot about what was right with President Reagan's leadership, and what's wrong with the leadership of George W. Bush."

• Calvin Johnson (Texas): "When Reagan was elected, he came in with fervor of the supply siders to enact ACRS depreciation. McKee says that Treasury could have adopted any depreciation it wanted to in 1981, so long as it was ACRS. ACRS with the Investment Tax Credit gave tax benefits that were as good as or better than exempting income from equipment from tax, that is, the discounting present value of the tax savings from investing in equipment were more valuable than the cost of tax on the revenue stream from the equipment. Real estate got both 15 year writeoffs and 30 year decelerated mortgages in the commercial world. My "tenure piece" said that ACRS with debt created tax shelters. The indictment against tax shelters had two counts: (1) they allowed luxurious consumption in the highest classes, when that was by consensus the single best source of tax is suppression of low utility luxury consumption by the top brackets. (2) tax shelters wasted capital by allowing empty real estate and bad projects to go forward even though those projects could not meet the prevailing cost of capital, set by the free market. ACRS was not free market, but subsidy. When interest rates dropped and discount rates dropped, ACRS for equipment was better than tax exemption: mere tax exemption would have reduced the value of the equipment. Tax shelters are also stealth tax exemption at the top: The rates remained the same nominally, but were too easily avoidable at the top. Leona Helmsley was nearly right: Mostly only Little People pay tax.

Part of the awfulness of the 1981 Act must rest on Rostenkowski's "defense." Rostenkowski decided that the Republic would be better served if the bill passed had a Democratic party label on it, and he decided that that was possible only if the Democratic bill had more hogs at his trough than the Republican Bill had. In the end, the hogs decided to stay with the Republican bill, but the combination of two parties each trying to destroy tax base meant that the final bill had very little loyalty to the soundness of the tax base. I remember feeling at the time that"the lights were going out all over Europe and that they would not be relit in our time." 1981 was a big act and the end of the commitment to the progressivity principle that money is more valuable in the hands of the less rich.

The rest of the 1980s was a correction of the error of 1981, and Reagan was a constructive participant in the correction. Norman Ture, Mr. Supply sider, expressed disappointment that supply side tax cuts increased the deficit rather than fixing it. The Treasury announced that perhaps ACRS had gone a little far. The 1982 Act cut back on the value of ACRS depreciation, and the 1984 Act took on time value of money errors that supported shelters.

The big effective weapon action against tax shelters, however, was in the passive activity provisions of section 469, which basically deferred tax losses until the end of the investment when the fake deductions disappeared and the real ones showed up in cash. It is an Aggie shelter to deduct only money you have actually lost, so that section 469 against all prognostications, was surprising effective against shelters.

The big deal in 1986 was a truce in class warfare: that is, all tax changes had to be distributionally neutral and revenue neutral. The rich got a cut in tax rates, from 50% to a target (not quite met) of 25%. But they had to give up their tax shelters. Investors who were zeroed out with shelters were bitter about the tax rise. The 1986 Act deal was the best act of century, however, because both in decreasing rates and restricting shelters so severely, the Act increased economic efficiency. In adopting distributional neutrality, hwoever, it did confirm the distributional aspects of the 1981 act, giving tax cuts to the rich without their having to buy into shelters.

Reagan played a personal role in making the 1986 possible and making it go forward at critical junctures. His Treasury did the leg work for expanding the tax base rationally. He pushed the rate cuts-base strengthening in the Republican Senate where it could not have gone forward without his support.

One of his most important roles was in trying to control the crazy wing of his party. One of the leaders of the crazy-wing revolt against the Tax Reform Act of 1986 was a Republican Congressman and chairman of the Republican policy committee who left Reagon "angered and perplexed." Jeffery Bernbaum & Alan S. Murray, Showdown at Gucci Gulch: Lawmaker, Lobbyists and the Unlikely Triumph of Tax Reform 165-166 (1987). Trent Lott, Michels and Jack Kemp were in favor of the bill, but his Congressman "just dug himself in, absolutely opposed to both the rule and the bill." Both Donald Regan and Treasury Secretary James Baker had meetings with this Congressman, described as "tense." But the Congressman, Richard Cheney of Wyoming, called the Tax Reform Act of 1986 ''an abominable piece of legislation" and said, "he best we can do is to kill it.'' "People don't give a damn about tax reform.," Chaney said.

We should give thanks today for the moderating presence of Ronald Reagan. We will miss him when we need him."

• Jeffrey Sherman (Chicago-Kent): "De mortuis nil nisi bonum." (Let nothing be said of the dead but what is good.)

• Bryan Camp (Texas Tech): "Ars longa, Reagan brevis." (Art is long, life is short.)

The Tax Foundation has prepared an interesting historical perspective on President Reagan's tax legacy.

Beware of New Tax Prof Jobs in Phoenix

Friday, June 11, 2004

Tax Profs (and indeed all law professors) recently received this ad trolling for new faculty at the new law school in Phoenix:

Phoenix International School of Law (PISL) seeks candidates for full-time and visiting faculty positions. Applicants should be (1) student-centered; (2) skilled instructors and effective mentors; (3) comfortable with change; (4) attracted by the unique challenges and opportunities of a start-up institution; (4) multiculturally competent; and (5) committed to management and faculty development based on a best practices model. They also should have the capacity not only to educate but inspire, share the institution’s priorities of graduating practice-ready lawyers, possess interpersonal skills that contribute to positive group dynamics, and appreciate the need for processes that facilitate a nimble and agile institution. PISL is committed to meeting all standards necessary for approval by the American Bar Association, including those governing job security and academic freedom. It seeks to attract individuals, however, who understand that these interests are optimized not by formal safeguards but upon the quality of group dynamics. PISL anticipates commencing operations with a small part-time division in Spring 2005 and full-time and part-time divisions in Fall 2005. Please submit applications to Donald E. Lively, Dean, at cwarner@carolynwarner.edu.

As Michael Froomkin notes, there are several land mines in this ad:

Despite the stuff about “meeting all standards necessary for approval by the American Bar Association, including those governing job security and academic freedom” this doesn’t sound like they believe in tenure, does it? That should set the cat among the pigeons.

As it happens I agree that it’s group dynamics — esprit de corps, shame even — that keeps some tenured people being good citizens, teaching well, and being productive long after their salaries have maxed out in real dollar terms. (For most, though, it’s their natural obsessive-compulsive tendencies.) But an ad that feels a need to make a point of this stuff, plus the reference to “comfortable with change” and “committed to management and faculty development based on a best practices model,” well, that looks like code for something I don’t think I’m going to like the looks of.

Dramatic Decline in Estate Planning Practice Traced to Uncertain Estate Tax

Friday, June 11, 2004

The Wall Street Journal has an interesting article (subscription required) blaming a drop of 5% in the number of adults with wills on uncertainties surrounding the estate tax's scheduled 2010 repeal and 2011 resurrection. Several law firms report a dramatic reduction in estate planning business, with 800-lawyer Gibson Dunn & Crutcher ditching its estate planning department altogether.

Mining Supreme Court Justices' Financial Disclosure Forms

Thursday, June 10, 2004

As one who enjoys using Presidential tax returns in tax class, I am intrigued by the wonderful web site sent in by a reader that contains copies of the detailed financial disclosure forms filed by the Justices of the U.S. Supreme Court. The forms certainly are of prurient interest (at least to me), offering a window into the lifestyle of the Justices. (One thing that jumps out is the widely varying amounts paid by law schools for speeches by the Justices -- why are some speeches "worth" 15k (or more) while others 1k (or less)? Who decides?) There may be a gold mine here for classroom use -- readers are invited to email me any tax issues lurking in these forms for inclusion on TaxProf Blog.

Kinsler on Application of Tax Law by Circuit

Thursday, June 10, 2004

Jeffrey Kinsler (Appalachian) has published Circuit-Specific Application of the Internal Revenue Code: An Unconstitutional Tax, 81 Denv. U. L. Rev. 113 (2003). Here is the Conclusion:

The Internal Revenue Code is interpreted by thirteen different circuit courts. The circuit courts' interpretations are not always in accord, but they are usually final, as the Supreme Court rarely hears tax appeals. As a result, the IRS is often forced to apply different tax laws in different circuits in violation of the spirit, if not the letter, of the Uniformity Clause of the Constitution. There is, however, a simple, practical, and constitutional solution to this problem. This Article proposes that Congress amend 28 U.S.C. § 1295(a) by adding a provision granting exclusive jurisdiction of federal tax appeals to the Court of Appeals for the Federal Circuit. Such an amendment would not only unify and stabilize the tax law, it would permanently solve the Uniformity Clause issue identified in this Article.

Honoring Ronald Reagan By Rejecting Tax Bill

Thursday, June 10, 2004

An article in the Washington Post argues that Republicans should honor the memory of Ronald Reagan by ditching the pending American Jobs Creation Act because it undermines the 1986 tax act, the Gipper's greatest legislative achievement.

Yet More on Intersection of Tax, Religion, and Politics

Thursday, June 10, 2004

Following up on Tuesday's post about the intersection of tax, religion, and politics with 2 Washington Post articles:

• Speaker Pushes Jobs Bill Provision, describing House Speaker Hastert's insertion of a provision into the American Jobs Creation Act to give churches more freedom to engage in partisan politics without endangering their tax exempt status.
• Religious Groups Resist Change in Tax Laws, observing that Hastert's provision is losing support in Congress after coming under fire from both liberal and conservative religious groups.

Thanks to reader Steven Sholk for the tip.

Tax Views of Libertarian Party Presidential Candidate

Thursday, June 10, 2004

For those disappointed with the tax proposals offered thus far by Bush and Kerry, check out the tax views of Libertarian Party Presidential Candidate Michael Badnarik. As blogged by The Curmudgeonly Clerk, Badnarik says he will do this on his first day as President:

Issue another valid executive order to my subordinates executives working for the IRS. That order would instruct them to come to work, make a pot of coffee, and begin working on their resumes' pending a federal grand jury investigation as to the legitimacy of the Sixteenth Amendment and the Internal Revenue Code. High ranking officials from that department would be closely monitored as flight risks, pending indictments for fraud in the event that evidence proves that they knew that no statute exists that requires Americans to fill out a 1040 form and relinquish a significant percentage of their hard earned money to an unconstitutional government that refuses to operate within a budget.

For the Libertarian Party's full tax platform, seehere.

2nd Annual International Tax Conference Today at Fordham

Thursday, June 10, 2004

The Second Annual International Tax Institute, sponsored by the ABA Tax Section, Fordham, and the Taxes Committee of the International Bar Association Section of Business Law, is being held today and tomorrow at Fordham. Tax Prof Jeffrey Colon (Fordham) is Conference Co-Chair, and Tax Prof John Steines (NYU) is one of the speakers. For the full program, see here.

Gamage on Contribution Taxes in Campaign Finance

Wednesday, June 9, 2004

David Gamage has published Taxing Political Donations: The Case for Corrective Taxes in Campaign Finance, 113 Yale L.J. 1283 (2004). Here is part of the Conclusion:

It is time for campaign finance scholars to consider incentive-based regulations. Contribution taxes might not be a panacea for all our campaign finance ills, but they have enough potential to merit a thorough debate. This Note is an attempt to spark that debate by presenting the initial case for contribution taxes.

To this end, I have argued that, compared to contribution ceilings, contribution taxes produce more total surplus and less overall diversion. I have also responded to the potential objections that contribution taxes would exacerbate the problems of corruption and inequality, be held unconstitutional, or result in the tax rates being set incorrectly. A great deal more remains to be said on these issues. Nevertheless, I believe my arguments constitute a prima facie case for contribution taxes. I leave it to future papers to expand the parameters of this debate.

Brennen Named to Titled Professorship

Wednesday, June 9, 2004

David Brennen has been named Ellison C. Palmer Professor of Tax Law at Mercer.

Tax Prof Loses "Law Prof Hunk" Contest

Wednesday, June 9, 2004

In a gigantic upset, the Tax Prof nominee has lost out in the "Law Prof Hunk" contest to -- as predicted here -- a Con Law Prof! I mean, I know that Con Law is viewed by many as a "sexier" area than Tax Law, but come on: look at this guy!

Tax Profs Shine at Critical Tax Conference

Wednesday, June 9, 2004

After two days spent reporting the lack of Tax Prof participation in the Law & Society Association and Asssociation for the Study of Law, Cultre and Humanties annual conferences, I am delighted to carry Neil Buchanan's report of the glittering array of Tax Profs who presented pathbreaking work at the Critical Tax Conference at Rutgers-Newark in April:

On April 2, 3, and 4, the Rutgers School of Law - Newark hosted the 2004 edition of the Critical Tax Conference. Tax Analysts generously provided funding for the conference. The Critical Tax Conference was started by Prof. Nancy Staudt in 1995, when she was at Buffalo. In the years since then, the not-quite-annual conference has been held at Wisconsin, Washington University (St. Louis), Michigan, and Tulane.

This year's conference brought together over 30 tax scholars from 21 law schools, discussing fifteen papers as well as nascent ideas for future work. In addition, two keynote speakers provided their insights on current issues in tax law: David Cay Johnston (New York Times) and Lee Sheppard (Tax Analysts).

One of the unique aspects of this year's conference was the emphasis on "draft panels" (as opposed to "formal panels"), which we defined as providing an opportunity for authors to present "papers that are in the early stages of development, where the author has made a substantial start on the paper but where some sections might not yet have been written or some concepts might not yet be fully worked through. The authors of these papers will benefit from constructive criticism and suggestions, allowing them to iron out and discuss difficult and unresolved issues in the drafts." Four of the five panels at the conference were designated as draft panels, which made the conference especially fertile ground for helpful interaction among colleagues at the most critical stage of writing.

Another feature of the conference designed to assist in the development of research projects wasthe "incubator sessions." These sessions provided those participants who were not presenting papers with an opportunity to discuss research ideas in their earliest stages. Depending on time constraints, future authors were given 10-20 minutes to present their ideas and receive feedback from others.

The only drawback to these sessions--indeed, the only unfortunate part of the entire conference--was that there was far too little time to discuss everyone's projects. With that much talent and creativity gathered in one place, something had to give. (As the person responsible for keeping the trains running on time, I was only too aware that every paper, and every idea, deserved more time for discussion than was available.)

The list of presenters and the titles of their papers appears below, with links that will allow you to download copies of some of the papers that were presented. Because the "incubator" sessions were informal, presenters and titles for those sessions are not available. For a copy of the entire program, see here.

It is surely a good sign that, at the end of the conference, there were several participants who expressed interest in hosting future versions of this gathering. Although nothing is set in stone, the tentative plan for future conferences is: 2005--Seattle University (Prof. Lily Kahng), 2006--Mercer University (David Brennen), 2007--UCLA (Steve Bank), and 2008--Florida State (Joe Dodge).

On behalf of my colleagues Charles Davenport and Cynthia Blum, we thank everyone who came to Newark in April for lively discussions of tax policy.

Draft Session Moderator: Ajay Mehrotra (Indiana-Bloomington)
• Sagit Leviner, S.J.D. candidate (Michigan): The case for redistribution in a modern democracy: theological and consequentialist perspectives
• Michael Livingston (Rutgers-Camden): Progressive taxation and social justice in four democracies
• Ann Thomas (New York Law School): Religious reform and the income tax in the 19th century

Draft Session Moderator: Richard Schmalbeck (Duke)
• William Blatt (Miami): Why did Congress repeal the estate tax but not the gift tax?
• David Brennen (Mercer): A normative rationale for tax exemptions for charities
• Michael McIntyre (Wayne State): Limitations on Congressional Power under the Commerce Clause to Constrain State Taxing Power

Formal Session Moderator: Neil Buchanan (Rutgers-Newark)
• Daniel Shaviro (NYU): The Bush tax cuts as steps toward bigger government
• Joseph Dodge (Florida State) & Jay Soled (Rutgers-Newark): The misreporting of tax basis
• Nancy Staudt (Washington University): Models of statutory interpretation: an empirical analysis of Supreme Court tax cases

Draft Sessions Moderator: Cynthia Blum (Rutgers-Newark)
• Dorothy Brown (Washington & Lee): Employer-provided pension plans: a race, class, and gender analysis
• Maureen Cavanaugh (Washington & Lee): Are Tax Shelters the necessary consequences of the rule of law?
• Diane Ring (Harvard): Analyzing international tax issues through the lens of international relations theory

Draft Session Moderator: Maureen Cavanaugh (Washington & Lee)
• Steven Bank (UCLA): An empirical analysis of tax and other factors affecting dividends in the United Kingdom, 1949-2002
• Leandra Lederman (George Mason): An empirical analysis of the effect of taxpayer representation in Tax Court cases on case resolution time and IRS recovery rate
• Lawrence Zelenak (Duke): The income tax and the equity risk premium

Watch here for future blogging of these pieces in the coming weeks.

ABA Teleconference Today on Application of Section 108 to Consolidated Groups

June 9, 2004

The ABA Tax Section's "Last Wednesday of the Month" Teleconference and Webcast on the Application of Section 108 to Consolidated Groups, postponed on May 26, will be held today at 1:00 - 2:30 pm EST. Here is a description:

The teleconference faculty will review recent temporary regulations under Section 1502 that describe how section 108 applies to consolidated groups. Under section 108, a debtor may exclude cancellation of indebtedness income (COD) from gross income, but it must reduce tax attributes. The temporary regulations primarily describe how a consolidated group reduces tax attributes if a debtor member excludes COD from gross income under section 108. The faculty will provide an overview of the temporary regulations, will discuss proposed regulations concerning the timing of section 108(b) adjustments for consolidated groups, and will consider possible planning options presented by the temporary regulations.

The panelists include Tax Prof Don Leatherman (Tennessee).

Pratt Notes Scholarly Meat Behind "Fat Tax" Idea

Wednesday, June 9, 2004

In response to my post yesterday on blogosphere calls for a "Fat Tax" to combat America's obesity, Katie Pratt (Loyola-L.A.) observes that there is far more scholarly meat here than is commonly known:

Commentators from the fields of nutrition and public health (e.g. Yale prof Kelly Brownell and public health advocate Michael Jacobson at the Center for Science in the Public Interest) have written articles advocating food excise taxes, but little has been written by tax commentators. Jeff Strnad (Stanford) has written an article about the normative justifications for a fat tax. I have begun to research fat taxes, snack food taxes (aka Twinkie taxes), and super-size portion taxes. Jeff, Ed McCaffery (USC), and I are going to be on a panel on food excise taxes during a Spring 2005 conference on legal responses to the obesity epidemic.

TaxProf Discussion of Rouse v. Jacaway

Tuesday, June 8, 2004

Yesterday's grant of certiorari by the U.S. Supreme Court in Rouse v. Jacoway (No. 03-1407), blogged here, sparked a spirited dicussion on the TaxProf Discussion Group over whether federal bankruptcy law should protect IRAs from creditors. Greg Germain (Syracuse) and Tom Allington (Indiana-Indianapolis) were two of the most vocal participants and they have agreed to allow TaxProf Blog to share their views with the broader tax community here.

IRS Releases New Form 8802 for U.S. Residency Certification

Tuesday, June 8, 2004

The IRS today released Form 8802, with additional information, to permit taxpayers to obtain lower tax rates in countries with a tax treaty with the U.S. The IRS expects to inssue more than 3 million residency certifications in 2004 in light of increased foreign investment by U.S. taxpayers. For a copy of Information Release 2004-78, see here.

More on the Intersection of Tax, Religion, and Politics

Tuesday, June 8, 2004

The New York Times today has an article on House Republican efforts to loosen the restrictions on the political activities of churches. Coming on the heels of the brouhaha over the efforts of some Catholics to deny communion to pro-choice politicians like Sen. Kerry (blogged here, here, and here), Democrats are crying foul and characterize the effort as a ham-fisted attempt to aid the re-election of President Bush. For a timely law review article, The Politically Active Church, see here. (Thanks to reader Steven Sholk for the tip.)

Marr on Estate Planning Implications of Same-Sex Marriage

Tuesday, June 8, 2004

Jeremy Marr has posted The Estate Planning Implications of Goodridge v. Department of Public Health for Massachusetts Same-Sex Couples on SSRN. Here is the abstract:

In November 2003, the Supreme Judicial Court of Massachusetts (the "SJC") held in Goodridge v. Department of Public Health that the Massachusetts Constitution protects the right of same-sex partners to marry. In Goodridge, the SJC noted several "protections, benefits, and obligations" married couples enjoy that are not available to committed, unmarried partners. This paper explores the effect of the Goodridge decision on the estate planning activities of same-sex couples who choose to marry. Part I reviews the elements of comprehensive estate planning for unmarried partners. Part II explores the areas of estate planning Goodridge most affects. Finally, Part III explores the areas of estate planning that Goodridge and the Federal Defense of Marriage Act leave relatively intact.

Another Call To Tax Prof Scholarly Action

Tuesday, June 8, 2004

Following yesterday's call for Tax Profs to become more engaged in the Law & Society Annual Meeting, David Brennen (Mercer) makes a similar plea on behalf of the Association for the Study of Law, Culture, and the Humanities (ASLCH):

ASLCH's website states:

ASLCH is dedicated to establishing links between scholars who work in both law and the humanities. We sponsor an annual conference where interested scholars from disciplines including Law, English, Comparative Literature, History, Philosophy, Classics, Linguistics, Religion, Anthropology, and Cultural Studies can meet and discuss their latest work. The ASLCH hopes to encourage interdisciplinary scholarship that brings together the best of the various humanities and legal approaches and methods.

I like ASLCH because the panels are centered around broad theoretical themes, of which tax law may be a component. I am working on alternatives to the traditional law and economics approach to law, with a particular focus on law and market theory as it relates to the federal income tax exemption. If anyone is working on something similar and is interested in possibly putting together a thematic panel which is exclusively (or only partially) tax-focused, please let me know.

Another TaxProf Blog tip of the hat to Professor Brennen for his efforts!

The Fat Tax

Tuesday, June 8, 2004

From the you knew it was coming department: there is a growing clamor in the blogosphere for various "fat taxes" to address the obesity problem in the U.S. Calls for a "fat tax" come from the World Health Organization and The Center for Consumer Freedom, among others. The term apparently was coined in a a December 2002 Atlantic Monthly article.Southern Appeal describes a variety of such taxes, including a sliding scale based on the fat content of foods. The Evangelical Outpost offers, tongue-in-check I think, a "tubby tax."

IRS Announces Progress on Tax Shelter Front

Monday, June 7, 2004

The IRS announced today that its partnership with the states already has borne fruit in the war against tax shelters. Here's the opening of the announcement:

The Internal Revenue Service announced today it has seen promising early results from a partnership with the states to target abusive tax avoidance schemes.
So far, the IRS and states have uncovered tens of millions of dollars in previously unidentified abusive transactions during the early stages of the program.
“We are pleased with the initial progress on this partnership,” said IRS Commissioner Mark W. Everson. “We’ve already shared 28,000 leads with the states. We’re going to build on this effort to pursue cheaters and expand the program to attack money laundering.”

For the full text of Information Release 2004-77, see here. For more IRS tax shelter news, see here.

Supreme Court Grants Certiorari in Rousey v. Jacaway

Monday, June 7, 2004

The U.S. Supreme Court today granted certiorari in Rousey v. Jacoway (No. 03-1407), which raises the important issue of whether federal bankruptcy law protects IRAs from creditors. The 8th Circuit ruled that IRAs are unlike pensions and annuities and thus not protected in bankruptcy.

Brown Named Facuty Fellow at Washington & Lee

Monday, June 7, 2004

Dorothy Brown (Washington & Lee) has been named 2004-2005 Alumni Faculty Fellow.

Gale, Orszag & Shapiro on Distributional Effects of 2001 & 2003 Tax Cuts

Monday, June 7, 2004

William Gale, Peter Orszag & Isaac Shapiro have posted Distributional Effects of the 2001 and 2003 Tax Cuts and Their Financing on the Tax Policy Center web site. Here is the abstract:

Tax cuts are not free; they must be financed with some combination of tax increases or spending cuts. The central goal of this paper is to apply this standard insight from public finance to the analysis of the distributional effects of making the 2001 and 2003 tax cuts permanent. We estimate not only who benefits directly from the tax cuts, but also who benefits and who loses once the financing of the tax cuts is considered. We consider two scenarios: one in which each household pays an equal dollar amount to finance the tax cuts and one where each household pays the same share of income. In both cases, more than three-quarters of households end up worse off if the tax cuts are made permanent and financed. In addition, there are large aggregate transfers from the majority of low- and middle-income households to an affluent minority. These results show that, far from simply "giving people their money back," making the tax cuts permanent would impose significant losses on tens of millions of American households.

Guest Blogger Schwidetzky's Final Report on European Ass'n of Tax Profs Conference

Monday, June 7, 2004

Guest blogger Walter Schwidetzky (Baltimore) shares his final report on the Paris meeting of the European Association of Tax Professors (see his first report here):

One of the issues facing the EU countries is how to deal with the fact that they have a variety of tax systems but are subject to the jurisdiction of the EJC that can issue rulings that can require them to change their tax laws. Uniform tax systems across the EC would aid in the formation of a common market, and one question that arose at the conference is whether thre was some basis for developing a common system. One proposal in this regard was internatinal accounting standards currently usually used by larger companies. Indeed, something similar to that exists in the UK, and a UK representative gave a talk in this regard. The UK apparently incorporates some mark to market rules as do the accounting standards, and there was a discussion of the viability of this and whether it was appropriate to move away from realisation principles, particularly in light of the fact that most EC businesses are small. A concern was also expressed of whether accounting rules developed by a private body (IATLB) were an appropriate starting point for democratically enacted statutes, and some felt that the rules were too business friendly. There would also inevitably be pressure on the various governments to engage in various tax expenditures in the context of each country's political dynamic; making it difficult to maintain consistent rules across the EC.

The overall level of the discussion was high and rather more formal than would have occurred in the US (as was the dress). There were about 7 US Tax Pros at the meeting.

Health Hazards of Blogging

Monday, June 7, 2004

See the press reports of this new study--oh what I endure for the good of the tax community!

Tax Profs AWOL at Law & Society Annual Meeting

Monday, June 7, 2004

Neil Buchanan (Rutgers-Newark) reports that at last weekend's Law & Society Association Annual Meeting in Chicago, there were nearly 300 scholarly panels spread out over four days, but not a single tax panel. He challenges Tax Profs to get on the stick and organize one or more tax panels for next year's annual meeting in Las Vegas on June 2-5, 2005:

It is, of course, always possible for anyone to submit a panel idea--or an individual paper proposal--to the association office directly. But since I'm complaining publicly about this issue, I guess I'm also volunteering to do some organizing. Therefore, if anyone is thinking that far ahead and wants to present some tax work at next year's meetings, please let me know.

A TaxProf Blog tip of the hat to Professor Buchanan for his efforts!

Weekend Roundup

Monday, June 7, 2004

This weekend's TaxProf Blog posts:

Saturday

• Tax Prof Spotlight: Ellen Aprill
• Guest Blogger Schwidetzky on European Ass'n of Tax Profs Conference
• Big Four Accounting Firm's PowerPoint Presentation Offers View of Seamy Side of State Tax Incentives

Sunday

• PBS and Tax Profs Take Aim at Tax Shelter "SILOs"
• Tax Prof Finalist for "Law Prof Hunk" Award
• Top 5 Tax Paper Downloads

PBS and Tax Profs Take Aim at Tax Shelter "SILOs"

Sunday, June 6, 2004

The PBS News Hour on Friday had a segment called Taxes at the Top (available in both audiotape and transcript formats) on a new breed of tax shelters called "SILOs" ("Sale-In, Lease-Out"). The segment re-aired part of a Frontline program on tax shelters, Tax Me If You Can, originally broadcast February 19 (also available in both audio tape and transcript formats). Both programs feature Tax Prof Joe Bankman (Stanford).

What is a SILO? Here's a good example from Forbes:

A typical deal works something like this. A subway authority owns a rail car. A corporation buys the car from the authority for $100,000 and then leases it back to the subway authority for 15 years, with a buyout option at the end of the lease. The authority invests enough of the $100,000 to cover lease payments and the buyout, typically pocketing 6%. The transit authority now has cash it wouldn't otherwise have and the corporation can claim valuable tax benefits, including depreciation deductions and interest deductions, as "owner" of the train car. (Those tax benefits would have been useless to the not-for-profit.) Of course, the $6,000 cash that the tax-exempt gets pales in comparison to the tax benefits accrued to the corporate buyer.

Victor Fleischer (UCLA) offers some thoughts on how Tax Profs can use SILOs in class:

I taught a class hour on this topic earlier this year based on a term sheet I found on the web from the LA transit authority. What struck me were the huge transaction costs – about $8 million on a $100 million deal. Most of these fees went to the promoter, although the lawyers did okay too. (LA got some needed transit financing; Philip Morris got rid of some tax liability.)

At the end of the hour, I asked the students how they would have voted if they were on the City Council asked to approve the deal as proposed by the LA transit authority. Most of the students voted in favor of entering the deal. I guess all tax shelters, like politics, are local.

Calvin Johnson (Texas) disagrees with the UCLA students:

Your students should have voted the other way, and not because of any politics. The implicit tax on municipal bonds is under 10% these days and since muni bonds compete with SILOs, to the investor that indicates that SILOs are running with an implicit tax of under 10%. Philip Morris is saving tax at 35% and giving up say 8.5% to LA. So 3/4 of the cost is wasted.

Ask your students if it were their money so wasted, what would they do? Would they pay $100 so LA transit can get $25? And indeed it is their money that is being so wasted. They are paying it.

I am of course am too old to worry about paying it, so I object to such waste in government money only on ideological grounds.

For a great story on SILOs (also featuring Joe Bankman!), see Helter Shelter in the December 2003 American Lawyer. See also Gimme Shelter on the PBS web site.

Tax Prof Finalist for "Law Prof Hunk" Award

Sunday, June 6, 2004

Friday also marked the close of balloting in the "Law Prof Hunk" contest run by Tax Prof Jack Bogdanski (Lewis & Clark) as "a statement, however small, about the silliness of the many 'best of' lists that now surround the practice of law and the legal academy" (such as LawTV's current search for the "The Law Prof 100"). After I joked in a Tax Prof Undressed post that I hoped LawTV would not make its decision based on a swimsuit competition, and later noted that Professor Bogdanski would fare well in such a contest in light of the picture on his blog of him walking on the beach with his 3-year old daughter, traffic flooded to his site as the joke spread in the blogosphere (e.g., Topless Tax Prof Teases Students, Topless Tax Prof: For Law Students and Mature Law Professors).

Professor Bogdanski received 16 nominees for the "Law Prof Hunk" award. (The contest originally included included "Hunk" and "Babe" categories, but he dropped the latter after receiving several complaints.) To ensure that votes were cast purely on the basis of physical attributes, and were not influenced by scholarly or teaching reputations, nominees were listed by number with an accompanying photograph without revealing their name or school affiliation. As America awaits the results of the election, I can now reveal that at least one of the 16 nominees is a Tax Prof. Can you guess which one? Hint: it is not, as you might think, #10. Lest you wonder if this is an attempt at shameless self-promotion, in the interest of full disclosure I offer this picture of me taken during my summer stint in San Diego so you can see that I look nothing like any of the 16 nominees.

Top 5 Tax Paper Downloads

Sunday, June 6, 2004

This week's list of the Top 5 Tax Paper Downloads on SSRN is identical to last week's:

1. Corporate Tax Avoidance and High Powered Incentives by Dhammika Dharmapala (Connecticut - Economics Department) & Mihir Desai (Harvard Business School)

2. The New Dividend Puzzle by William Bratton (Georgetown)

3. Masking Redistribution (or its Absence) by Jonathan Baron (Penn - Wharton) & Edward McCaffery (USC)

4. Evidence of Differing Market Responses to Meeting or Beating Targets Through Tax Expense Management by Cristi Gleason (Iowa - Dep't of Accounting) & Lillian Mills (Arizona - College of Business & Public Administration)

5. Keeping Two Sets of Books: The Relationship Between Tax & Incentive Transfer Prices by Charles Hyde (Unviersity of Melbourne) & Chongwoo Choe (Australian Graduate School of Management)

The Hyde & Choe paper will drop from the list next week because it will fall outside the 60-day measurement period, so there will be at least one new paper in the Top 5 next week