Calvin H. Johnson (Texas)

• B.A. 1966, Columbia
• J.D. 1971, Stanford
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My new book, Righteous Anger at the Wicked States: The Meaning of the Founders' Constitution (Cambridge University Press, 2005) has been great fun. The Constitution was once a weapon in a hard-fought war and its weapon-like characteristics provide its meaning. I started the book with a theory that the Constitution was a tax document, a pro-tax document to get the Revolutionary War debts paid. But Hamilton made it too easy once he became Secretary of the Treasury. The tax part could have been acheived without the radical nationalizing changes the Constitution effected. Anger at the states provided the necessary, indeed the primary driving force, both to get over some serious hurdles and to keep the movement going. I have presented the book now to student or faculty groups at Yale, Northwestern, Penn, Harvard, Texas and Columbia Law Schools and on C-Span2 Book TV. I was able to write this book only because of the new digital archives. I threw out my net into the digital archives over and over again and I just reported my catch. Try it: Do a search for "direct tax" or "slavery" in Elliot's Records or in Letters of the Delegates here.

In the Constitutional law area, my recent articles include:

• Fixing the Constitutional Absurdity of the Apportionment of Direct Tax, 21 Const. Comm. 2 (2004)
• Homage to Clio: the Historical Continuity from the Articles of Confederation into the Constitution, 20 Const. Comm. 463 (2004)
• The Panda's Thumb: The Modest and Mercantilist Orginal Meaning of the Commerce Clause, 13 Wm. & Mary Bill of Rights J. 1 (2004)

The Dubious Enumerated Power Doctrine should be out in Constitutional Commentary soon; it argues that the section 8 powers of Congress were written to be illustrative not exhaustive.

I will give a lecture in May, in the Supreme Court's chambers, praising the dissenters in Pollock v. Farmers Trust (1896). The lecture will say that the Pollock Court would not have declared the income tax unconstitutional if they had been conservatives who respected doctrinal continuity or who based law on a sound understanding of the original history. Looking at the requirement that direct tax be apportioned among the states counting slaves at three-fifths is the tax problem that got me into the digital archives and the whole of the constitutional stuff.

I became a tax lawyer because of Professor Wayne Barnett at Stanford Law School and because of the Paul, Weiss tax department. I was a Philosophy major at Columbia, and I am sure I looked down my nose at anything I knew of accounting or tax. Wayne Barnett, however, in the first tax course was a great rationalist who built wonderful, elaborate systems to show why Duberstein and Clay Brown needed to be decided for the government. The course was known as "great cases I have lost" in the halls of the law school. If tax could provoke that much fury it must be worth something.

I then went off to the Paul Weiss tax department for the summer and they were brilliant. The weekly tax meetings were like the analysis of a Bobby Fisher chess game, complicated but elegant. Largely incomprehensible to a second year law student, of course, but the fairest most fascinating arguments I had heard.

I spent two years in the Paul Weiss tax department and loved the work. I spent two years at the Treasury Department, Office of Tax Legislative Counsel, negotiating tax legislation, regulations and revenue rulings, for God and Country. I started teaching tax at Rutgers Law School in downtown Newark and moved to Texas Law School in 1981.

Words are actions and my tax writing is almost always trying to accomplish something. I do a lot of expert testimony these days against tax shelters. I testified before the U.S. Senate hearings investigating the U.S. tax shelter industry and then published Tales from the KPMG’s Skunk Works: The Basis-Shift or Defective-Redemption Shelter, 108 Tax Notes 431 (2005).

For years, tax shelters were my primary subject, including my tenure pieces and lots of Tax Notes pieces:

• Inefficiency Does Not Drive Out Inequity: Market Equilibrium & Tax Shelters, 71 Tax Notes 377 (1996)
• What’s a Tax Shelter?, 68 Tax Notes 879 (1995)
• Play Money Basis: When is Nonrecourse Liability a Valid Cost?, 11 Va. Tax Rev. 631(1992)
• The Front End of the Crane Rule, 47 Tax Notes 593 (1990)
• Why Have Anti-Tax Shelter Legislation?, 67 Tex. L. Rev. 591 (1989)
• Financial Impact of the 1986 Tax Reform Act on Real Estate: A View from the Spreadsheets, 36 Tax Notes 309 (1987)
• Silk Purses from a Sow’s Ear: Cost Free Liabilities Under the Income Tax, 3 Am. J. Tax Pol'y 231 (1984)
• A New Way to Look at the Tax Shelter Problem, 23 Tax Notes 765 (1984)
• Tax Shelter Gain: The Mismatch of Debt and Supply Side Depreciation, 61 Tex. L. Rev. 1013 (1983). (This piece, I am told, had some influence on the Treasury to call for cutting back on the 1981 version of ACRS. Ira claims that Financial Impact of the 1986 Tax Reform Act destroyed the S&L industry, but I am avoiding credit.)

I have been involved in three Supreme Court cases on briefs or briefs with a thin veneer called "article":

• Thor Power Tool Co. said that tax would not follow accounting. The clerks tell me my brief influenced that outcome. The Thor Power Tool Decision and Unrealized Inventory Losses, 26 Tax Notes 1259 (1980). GAAP Tax, 83 Tax Notes 425 (1999) still claims I did good.
• I was cited by the Supreme Court in INDOPCO for The Expenditures Incurred by the Target Corporation in an Acquisitive Reorganization are Dividends to the Shareholders: (Pssst, Don’t Tell the Supreme Court), 53 Tax Notes 463 (1991), for the proposition that capitalization was important. The Supreme Court, however, dropped the subtitle of the piece. I tried to defend the holding of INDOPCO in Capitalization After the Government’s Big Win in INDOPCO, 63 Tax Notes 1323 (1994), and Snarling for the Cameras: Hostility and Takeover Expense Deductions, 76 Tax Notes 689 (1997). I regretted the great case's passing when the Treasury destroyed INDOPCO disloyally to its mission: Destroying Tax Base: The Proposed INDOPCO Capitalization Regulations, 99 Tax Notes 1381 (2003).
• I tried very hard to prevent Congress from passing §197 by getting the Supreme Court to decide Newark Morning Star Ledger right, but I could not get through the filters, and the Court got it wrong, so Congress did too. In truth, a newspaper does not lose any invested capital as customers turn over. The Mass Asset Rule Reflects Income and Amortization Does Not, 56 Tax Notes 629 (1992). For the campaign, see:
  • Component Depreciation for the Purchase of Businesses, 58 Tax Notes 983 (1993)
  • Once More Into the Mass Assets, 58 Tax Notes 369 (1993)
  • The Mass Asset Rule is Not the Blob that Ate Los Angeles, 57 Tax Notes 1602 (1992)
  • Sowing Mass Confusion, 57 Tax Notes 1087 (1992)
  • The Argument over Newark Morning Ledger, 57 Tax Notes 1090 (1992)
  • Newark Morning Ledger: Intangibles are Not Amortizable, 57 Tax Notes 691 (1992)
  • Effective Tax Rates on High-Goodwill Takeovers Under House and Senate Bills, 60 Tax Notes 531 (1993)
  • Amortization of Intangibles: Impact of Seller Tax, 59 Tax Notes 285 (1993)

Thor Power seduced me into accounting. I now teach and and write in it, and I have testified before FASB and Congress on accounting, for the reason that I have never had a day of accounting training. I have spent a lot of time warning the world about the awfulness of stock options:

• The Disloyalty of Stock and Stock Option Compensation, 11 Conn. Ins. L.J. 1333 (2005)
• Stock and Stock-Option Compensation: A Bad Idea, 51 Canadian Tax J. 1259 (2003)
• Stealing the Company With Free Stock Options: The Furor Over Accounting Standards, 65 Tax Notes 479 (1994) (Part I)
• Stealing the Company With Free Stock Options: The Furor Over Accounting Standards, 65 Tax Notes 1149 (1994) (Part II)
• Stock Options Aren’t “Free” Compensation, L.A. Times, at B7 (April 8, 1994)

I testified before FASB trying to get the accountants to follow the deep wisdom of tax law on stock options. I testified before Congress against pooling method of accounting for mergers. The Illegitimate "Earned" Requirement in Tax and Nontax Accounting, 50 Tax L. Rev. 373 (1995), tried to get accountants to take retainers into income. In Accounting in Favor of Investors, 19 Cardozo L. Rev. 637 (1997), I corrected Warren Buffet on his bad accounting. With some accounting training, I could be dangerous.

I have had at least one notable failure. I was chairman for two years of the ABA Tax Section's Tax Structure and Simplication Committee, trying very hard to make the tax law simpler.

• Simplification: Replace the Personal Exemptions Phaseout Bubble, 77 Tax Notes 1403 (1997)
• Simplification: Replacement of the Section 68 Limitation on Itemized Deductions, 78 Tax Notes 89 (1998)

The Tax Law has not become simpler, notwithstanding the effort. Turns out simplification is always second, second to whatever else is under consideration.

I started publishing in Tax Notes, and loving it, when it was a mimeo sheet "published " out of Tom Field's narrow basement. Treasury on Fringe Benefits: To Tax or Not to Tax, 4 Tax Notes 3 (1976). Thirty years later, I still am using Tax Notes to set the world right. Tax Incentives are Always the Wrong Way to Go, 111 Tax Notes 90 (2006). Tax Notes collects the audience that needs to hear tax arguments. It is a shame indeed that tax professors kill trees in publishing in nontax journals.

I have tried to stop or shape pending legislation via Tax Notes in:

• Depreciation Policy During Carnival: The New 50 Percent Bonus Depreciation, 100 Tax Notes 712 (2003)
• The Bush 35 Percent Flat Tax on Distributions from Public Corporations, 98 Tax Notes 1881 (2003)
• The Private Advantage of Money-Losing Investments under Cut-Rate Capital Gains, 55 Tax Notes 1125 (1992)
• The Consumption of Capital Gain, 55 Tax Notes 957 (1992)
• Seventeen Culls from Capital Gains, 48 Tax Notes 1285 (1990)

Three Errors in the “Neutral Cost Recovery System” Proposal, 67 Tax Notes 1229 (1995), opposed a proposal that was in fact defeated, and 50% bonus depreciation has now expired. The Case for Taxing Fringe Benefits, 9 Tax Notes 43 (1979), is a reworking of testimony at Ways and Means hearings on fringe benefits. I tried to shape my tax law, not in connection with current legislation, in Error in the Name of Interest, 30 Tax Notes 451 (1986), and The Undertaxation of Holding Gains, 55 Tax Notes 807 (1992). The Tax Notes people funded my brief in Thor Power.

When you publish in Tax Notes you not only get a receptive tax audience but also responses. Kahn Depreciation and the Minitax Baseline in Accounting for Government Costs, 53 Tax Notes 1523 (1991), is part of a long dialog with Douglas Kahn in which I argued that accelerated depreciation is in fact a tax expenditure that needed to be justified by cost-benefit analysis. Purging out “Pollock”: The Constitutionality of Federal Wealth or Sales Taxes, 97 Tax Notes 1723 (2002), and Barbie Dolls in the Archeological Dig: Professor Johnson Responds [to Erik Jensen, The Constitution Matter in Tax], 100 Tax Notes 832 (2003), are part of a long debate on the meaning of the apportionment of direct tax. Can the IRS be Well-Liked?, 108 Tax Notes 145 (2005), is my review of Charles Rossotti’s Many Unhappy Returns.

Chris Hanna keeps convincing me to participate in the wonderful symposiums on tax policy he organizes for SMU Law Review. A Thermometer for the Tax System: The Overall Health of the Tax System as Measured by Implicit Tax, 56 SMU L. Rev. 13 (2003), talked about what awful shape the tax system is in overall. On my watch, the American tax base has gone to hell. I have just given Chris an essay called Was it Lost? Personal Deductions under Tax Reform, defending the comprehensive tax ideal. Am I the Last Believer? Stock Compensation: The Most Expensive Way to Pay Future Cash, 52 S.M.U. L. Rev. 423 (1999), attacked stock compensation.

All this leaves me with lots of unrelated articles and testimony I am still proud of many years later, and I think I will just list them, by reason of pride:

• A Full and Faithful Marriage: The Substantially-All-The-Properties Requirement in a Corporate Reorganization, 50 Tax Law. 319 (1997)
• Deferring Tax Losses with an Expanded § 1211, 48 Tax L. Rev. 719 (1993)
• The Legitimacy of Basis from a Corporation’s Own Stock, 9 Am. J. Tax Pol'y 155 (1991)
• Zarin and the Tax Benefit Rule: Tax Models for Gambling Losses and the Forgiveness of Gambling Debts, 45 Tax L. Rev. 697 (1990)
• Soft Money Investing under the Income Tax, 1989 Ill. L. Rev. 1019
• Tax Models for Nonprorata Shareholder Contributions, 3 Va. Tax Rev. 81 (1983)
• Tax Models for Nonrecourse Employee Liability, 32 Tax L. Rev. 359 (1977) (my first law review article, probably best viewed a training exercise showing off on a quite narrow topic)

My web page has links to text for most of the things I have written.

Columbia shaped me. Everyone at Columbia reads the same great books at the same time for their full freshman year. The core curriculum, called Contemporary Civilization, or just CC, meant we talked about classes all the time and that you get to critique things you dont know anything about. We talked classes talk late into the night in the dorms, over coffee or with much beer to lubricate the conversation. Ideally, tax law and teaching is just a continuation of freshman year arguments on analytic philosophy and the world.

I have a Purple Heart because I served for a tour of duty in the Mekong Delta Vietnam in an infantry reconnaisance platoon. I do think it gives me a Holmesian sense of duty. I was an Eagle Scout, I suspect still. I am a Calvinist in many ways, which means the right name got attached to the right baby.

I have been married for 30 years to a wonderful wife, Maria. We swim 4 miles a week and I try to run another 10 miles a week. Our kids are terrific, except for the vice of being too far away. My son, Calvin (28 year old) works for NYC OMB. Martha (26) is at U.Chicago Medical School. Carolynn (22) just graduated from Carleton College, Minnesota, and Mathew (19) is at Grinnell College, Iowa. Life so far is good, in the working draft.

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