Wednesday, October 25, 2006
Lawrence Lokken (Florida) has posted Territorial Taxation: Why Some U.S. Multinationals May Be Less Than Enthusiastic About the Idea (and Some Ideas They Really Dislike), 59 SMU L. Rev. 751 (2006), on SSRN. Here is the abstract:
In November 2005, the President's Advisory Panel on Federal Tax Reform issued a report that, among other things, proposed a significant change in the rules for taxing foreign income of U.S. companies: a move from the present worldwide/credit system to a territorial or exemption system under which U.S. persons' income from active business operations in foreign countries, whether carried on directly or thru subsidiary corporations, would be exempt from U.S. taxation. Earlier in 2005, the staff of the Joint Committee on Taxation suggested a similar shift. The Panel and Joint Committee staff relied on two arguments: (1) The current system, by deferring taxation of foreign earnings of U.S.-owned foreign corporations, distorts business decisions on where and how to invest these earnings; and (2) the current system often allows U.S. multinational enterprises to achieve U.S. tax results more favorable than they could obtain under a territorial system. This paper addresses the second of these justifications. It explains some of the techniques used by U.S. multinational enterprises to achieve U.S. tax results more favorable than territorial taxation, and it examines whether these results are inevitable consequences of the current regime or flow from aspects of the current rules that could easily be changed. It concludes that Congress and the Treasury could, without adding significant complexity to the law, reform the historical worldwide/credit system in ways that would ensure tax results largely consistent with the underlying premises of this system. Moreover, if not corrected, many of the deficiencies in the current system will plague the proposed system much as they have the current system. The Panel and the Joint Committee staff fell into a common error in tax policy discussions: comparing current law, in its highly-corrupted state, with an idealized alternative and reaching the obvious conclusion that the latter is preferable. In fairness, the proposed system must be compared with the best feasible version of a worldwide/credit system.
George Will has an interesting column on the letter sent by Ways & Means Committee Chair Bill Thomas questioning the NCAA's tax-exempt staus: Tax Breaks for Football:
Twelve days before the Orange Bowl brawl, Republican Rep. Bill Thomas wrote, as chairman of the tax-writing Ways and Means Committee, an eight-page letter to the president of the National Collegiate Athletic Association, asking awkward questions. Thomas wonders how, or whether, big-time college sports programs, which generate billions of tax-exempt dollars -- CBS pays the NCAA an annual average of $545 million, mainly for the rights to televise the March Madness basketball tournament -- further the purposes for which educational institutions are granted tax-exempt status.
I am sorry to bring you the news of the death of Joseph P. Spellman, a notable tax lawyer (J.D. 1959, Michigan; Tax LL.M. 1961, NYU). He worked in the tax division of the Department of Justice, in private practice in Phoenix, and finally on the Joint Committee on Taxation (1967-1989). He also was a special correspondent for Tax Notes.
PrawfsBlawg is hosting an ambitious Research Canons Project -- the goal is to solicit input from readers on the most important works of scholarship in various areas of law to create "a bibliography for new scholars." Today's topic is tax -- I invite TaxProf Blog readers to participate in the Tax Canon Project by submitting comments. As long time readers know, we maintain as part of our left column permanent resources a link to Vic Fleischer's 2003 effort at constructing a tax canon. I hope the PrawfBlawg effort will expand and update the Tax Canon.
David L. Lenter (Legislation Counsel, Joint Tax Committee) speaks at Washburn today on Recent Developments in Tax Legislation. Additional discussion may include pending legislative issues, the current status of the estate tax repeal, and other current topics. For the program, see here.
Thomas Piketty (Centre for Economic Policy Research) & Emmanuel Saez (UC-Berkeley, Department of Economics) have posted The Evolution of Top Incomes: A Historical and International Perspective on NBER. Here is the abstract:
This paper summarizes the main findings of the recent studies that have constructed top income and wealth shares series over the century for a number of countries using tax statistics. Most countries experience a dramatic drop in top income shares in the first part of the century due to a precipitous drop in large wealth holdings during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries but not at all in continental Europe countries or Japan. This increase is due to an unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s. As a result, top wage earners have replaced capital income earners at the top of the income distribution in English speaking countries. We discuss the proposed explanations and the main questions that remain open.
The paper is featured in the October 2006 NBER Digest.
Tuesday, October 24, 2006
This week's Tax Foundation podcast features Tax Foundation Economists on the 2007 State Business Tax Climate Index:
State tax systems are complex, and their provisions vary widely. Which state tax systems represent sound tax policy? How can lawmakers judge the quality of their tax codes relative to neighboring states? In this podcast, Tax Foundation researchers Curtis Dubay and Chris Atkins discuss the recent release of the 2007 State Business Tax Climate Index, which provides a comprehensive ranking of the "business friendliness" of the 50 state tax systems (11 minutes, 19 seconds).
Chamales v. Commissioner, T.C. Memo. 2000-53, is a staple casualty loss case in the basic income tax course. Gerald Chamales and his wife paid $2,849,000 in 1994 for the home at 359 North Bristol Avenue in the fashionable Brentwood neighborhood next door to O.J. Simpson's home. Just before the sale closed, Nicole Brown Simpson and Ronald Goldman were murdered outside of her Brentwood condo.
The Chamales claimed a $750,000 casualty loss deduction on their 1994 tax return on the ground that the media feeding frenzy after the murders reduced the value of their home by that amount. The Tax Court denied the casualty loss deduction because the home had not suffered any physical damage; a mere decline in fmv was not sufficient to support the deduction. (However, the court refused to impose a negligence penalty because the Chamales' had relied on a CPA's advice in claiming the deduction and had disclosed it on their return.)
Subsequent events indicate that, if anything, the Chamales would have enjoyed a casualty gain. The case recites that the Chamales spent $2 million remodeling the home in 1995. Moreover, Defamer reports that Nicole's condo recently sold after being on the market for 38 days at $1.7 million. The condo had been on the market for two years after the murders, before finally selling for $590,000 ($200,000 less than the asking price). (Hat tip: Steve Bank.)
Linda Beale (Wayne State) has an interesting post today on Defense of Marriage, Poe v. Seaborn, and IRS's position on Community Property Redux:
Perhaps the more important question is whether the change in the California law, in spite of DOMA, could lead to a re-interpretation of domestic partners' ownership of income for federal tax purposes, even without joint filing, based on a broader reading of the 1930 Poe v. Seaborn case. In other words, did the IRS get it wrong in its February 2006 memorandum when it focused on community property rights only in the context of marriage? Does the further change in California law push even harder towards a different interpretation of Poe v. Seaborn than provided by the IRS? If Poe v. Seaborn applies in any context where similar property rights are conveyed under state law, does that make both marriage and DOMA irrelevant?
Following up on our post on Harvard's 1L curriculum reform: today's National Law Journal has an interesting story: Shift in Harvard Curriculum Reflects Larger Trend Toward Global Law, by Leigh Jones:
Harvard Law School's announcement that it's making the most sweeping changes to its first-year curriculum in 100 years heralds a major shift in legal education. Harvard will begin requiring first-years to take new courses with a focus on legislation and regulation, global legal systems, and problems and theories. But some competing schools say they've already revamped their programs in similar ways and are a bit perturbed by all the fuss over Harvard's news.
Interesting op-ed in today's Wall Street Journal: Voters Still Want Tax Cuts -- And Some Democrats Are Smart Enough to Deliver, by Brendan Miniter:
The unreported story this election cycle is that while scandals and the war have dominated congressional races, on the state level conservative economic ideas are still winning elections. Voters continue to support promoting economic growth by cutting taxes.
Our first TaxProf Poll produced 200 responses to the question: How do you prepare your tax return? Our readers are do-it-yourselfers: 87% prepare their own tax returns (23% by hand and 64% with computer software programs), while only 12% used accountants or lawyers to prepare their returns. Interestingly, not a single respondent used a tax preparation firm like H&R Block or Jackson Hewitt.
Katherine T. Pratt (Loyola-L.A.) has posted Deficits and the Dividend Tax Cut: Tax Policy as the Handmaiden of Budget Policy, 41 Ga. L. Rev. ___ (2006), on SSRN. Here is the abstract:
Tax policy has dominated President Bush's domestic policy agenda. The centerpiece of that agenda is the dividend tax cut enacted in 2003. The dividend tax cut is scheduled to expire in 2010, but President Bush continues to urge Congress to make it permanent. President Bush argues that the dividend tax cut promotes long-term economic growth, stimulates the economy, makes the tax system fairer, provides a steady source of income for needy senior citizens, and pays for itself. This Article evaluates the various rationales President Bush offered to justify the dividend tax cut, with an emphasis on the long-term growth rationale.
Senators Bill Bradley and Ron Wyden held a press conference yesterday calling for a new push for federal tax reform:
Twenty years after the last major tax reform act was signed into law, former U.S. Senator Bill Bradley (D-NJ) and Senator Ron Wyden (D-OR) today teamed up to urge President George W. Bush to join Congress in once again enacting real tax reform for the American people. Bradley, the original senator to push for tax reform and author of legislation that was a model for the 1986 Tax Reform Act, remains one of the nation’s leading advocates for a fairer and simpler tax code. Wyden is the author of the Fair Flat Tax Act, a tax reform package which calls for a simplified tax code to benefit middle-income Americans.
Monday, October 23, 2006
The Urban-Brookings Tax Policy Center today published Tax Policy: Facts and Figures, which analyzes who benefits and who doesn’t from recent tax legislation, as well as the future of the estate tax and the alternative minimum tax.
Thomas Cooley Law School has released the 8th annual edition of its law school rankings, Judging the Law Schools. The ranking is based on equal weights assigned to 32 objective variables, all but one of which are from the Official ABA Guide to Approved Law Schools. Many of these variables favor large law schools:
- Total enrollment
- Total applications
- Number of full-time faculty
- Number of part-time faculty
- Total teaching faculty
- Number of minority faculty
- Number of 2L & 3L courses
- Total volumes in library
- Total titles in library
- Total serial subscriptions
- Number of professional librarians
- Library seating capacity
- Number of networked computers available for student use
- Total library square footage
- Total law school square footage
- Number of states in which graduates are employed
Here are the Top 20 schools under this methodology:
9. George Washington
16. Thomas M. Cooley
Bridget J. Crawford (Pace) has posted Tax Practice in a Circular Revolution: A Review of PLI's Circular 230 Deskbook, 41 Real Prop., Prob. & Tr. J. ___ (2007), on SSRN. Here is the abstract:
This short review essay evaluates the Practicing Law Institute's Circular 230 Deskbook by Jonathan G. Blattmachr, Mitchell M. Gans and Damien Rios. For attorneys, accountants and others who "practice" before the IRS, the Circular 230 Deskbook is a masterful analysis and an important guide to the Internal Revenue Service's labyrinthine rules and regulations governing tax penalties, reportable transactions and the conduct of tax practitioners.
We are delighted to announce the launch of a new Law School Innovation blog as part of our Law Professor Blogs Network. LSI is the brainchild of Doug Berman (Ohio State), editor of the influential Sentencing Law & Policy blog. From Doug's mission statement:
Welcome to the launch of a new blogging adventure: Law School Innovation (LSI). My goal starting this blog is to create a forum for discussing ... law school innovations....Topics ranging from Harvard Law School's new 1L curriculum to the recent emergence of Supreme Court clinics to blogging as scholarship to PowerPoint and internet access in the classroom are just some of the issues I hope will get discussed here.
Though my ambitions for this blog are huge, my time is limited. Thus, I hope other law professors, law students, practicing lawyers and anyone else interested in law school design and evolution will become regular contributors. I would be happy — indeed, eager — to bring on as co-blogger anyone prepared to do a post or two a week on law school innovation topics. Also, I have created a Board of Advisors for this blog. I have no idea exactly what Advisors will do, but at least such a Board is an innovation in the blogosphere. I encourage early visitors to use the comments to tell me whether this new blog adventure seems like a good idea. If I get encouraging feedback, I'll probably invest (too much) energy in this new project; if the feedback is less encouraging, this blog may wither away once college basketball season gets going.
LSI joins our growing stable of law professor blogs:
- AntitrustProf Blog (Shubha Ghosh (SMU))
- Aviation Law Prof Blog (Brian Havel (DePaul), Michael Jacobs (DePaul) & Andrew Eastmond)
- Banking Law Prof Blog (Ann Graham (Texas Tech))
- Business Law Prof Blog (Dale Oesterle (Ohio State))
- Chinese Law Prof Blog (Donald Clarke (George Washington))
- ContractsProf Blog (Carol Chomsky (Minnesota) & Frank Snyder (Texas-Wesleyan))
- CrimProf Blog (Mark Godsey (Cincinnati))
- Elder Law Prof (Kim Dayton (William Mitchell))
- Environmental Law Prof Blog (Susan Smith (Willamette))
- Family Law Prof Blog (Barbara Glesner Fines (Missouri-Kansas City) & Nancy Ver Steegh (William Mitchell))
- Health Law Prof Blog (Betsy Malloy (Cincinnati))
- ImmigrationProf Blog (Jennifer Chacón (UC-Davis), Bill Hing (UC-Davis) & Kevin Johnson (UC-Davis))
- Land Use Prof Blog (Paul Boudreaux (Stetson))
- Law & Econ Prof Blog (Jagdeep Bhandari (Florida Coastal) & Tom Ulen (Illinois))
- Law Librarian Blog (Joe Hodnicki (Cincinnati) & Ron Jones (Cincinnati))
- Law School Academic Support Blog (Daniel Weddle (UMKC) & Elizabeth Stillman (Suffolk))
- Legal Profession Blog (Alan Childress (Tulane), Michael Frisch (Georgetown) & Jeffrey Lipshaw (Tulane))
- Legal Writing Prof Blog (Nancy Soonpaa (Texas Tech) & Sue Liemer (Southern Illinois))
- Leiter's Law School Reports (Brian Leiter (Texas))
- Mass Tort Litigation Blog (Byron Stier (Southwestern))
- Media Law Prof Blog (Cristina Corcos (LSU))
- Products Liability Prof Blog (J. David Prince, Michael Steenson & Kenneth Ross (all of William Mitchell))
- PropertyProf Blog (D. Benjamin Barros (Widener))
- Science & Law Blog (David Faigman (Hastings), David Kaye (Arizona State), Michael Saks (Arizona State), Joseph Sanders (Houston) & Edward Cheng (Brooklyn))
- Sentencing Law and Policy (Douglas Berman (Ohio State))
- State & Local Government Law Prof Blog (Judith Welch Wegner (North Carolina))
- Statutory Construction Blog (David Hricik (Mercer))
- TaxProf Blog (Paul Caron (Cincinnati))
- Tech Law Prof Blog (Mark Giangrande (DePaul))
- TortsProf Blog (Bill Childs (Western New England))
- Unincorporated Business Law Prof Blog (Greg Duhl (Southern Illinois))
- White Collar Crime Prof Blog (Peter Henning (Wayne State) & Ellen Podgor (Stetson))
- Wills, Trusts & Estates Prof Blog (Gerry Beyer (Texas Tech))
- Workplace Prof Blog (Richard Bales (NKU) & Paul Secunda (Mississippi))
Our sponsor -- Thomson (Foundation Press, RIA, and West Publishing Co.) -- is supporting our efforts to expand the network into other areas of law. Please email me if you would be interested in learning more about starting a blog as part of our network. We provide you with a turn-key operation: we will create your blog for you and walk you through the very simple mechanics of posting. Thomson's sponsorship enables us to provide modest stipends to our editors.
The Loyola-L.A. Graduate Tax Program invites applications for three full -tuition scholarships. Graduate Tax Scholarships are awarded on the basis of merit to applicants who present outstanding academic records and show exceptional promise. For more information or to apply, contact Jennifer Kowal, Director of the Graduate Tax Program.
Selected papers given in 2005 at the annual meetings of the American Statistical Association and the National Tax Association have been included in a recent edition of Special Studies in Federal Tax Statistics . . . . The papers are organized into seven areas of interest:
- New research from the IRS
- Corporate book-tax differences
- Effects of taxation on corporate financial policy
- Issues in quantifying measurement error
- Methodological topics related to IRS tax statistics
- Estate and personal wealth sample design
- IRS area-to-area migration data
Sunday, October 22, 2006
- Tax Prof Profile: Steve Willis
- Tax Court: S Corp Election Outlasts Marriage
- Cords Presents Administrative Law and Judicial Review of IRS Collection Decisions Today at the Central States Conference
- ABA Tax Section Fall Meeting Concludes Today in Denver
- Geier: An International Perspective on the Mortgage Interest Deduction
- Top 5 Tax Paper Downloads
- Minnesota to Host October 27 Conference on The Future of Tax Shelters
- WaPo: Taxing Lessons, 20 Years In the Making
- Wesley Snipes Update
- Tax Foundation: Tax Code More Progressive in 2004 than in 2000
- Open Deanships
2. [129 Downloads] Jewish Perspecitves on the Ethics of Tax Evasion, by Robert W. McGee (Barry University, Andreas School of Business) & Gordon Cohn (City University of New York, Stan Ross Department of Accountancy) [blogged here]
3. [118 Downloads] The Federal Income Tax Consequences of the Bobble Supreme Phenomenon, by Leandra Lederman (Indiana) [blogged here]
4. [96 Downloads] Super-Recognition and the Return-to-Sender Exception: The Federal Income Tax Problems of Liquidating the Family Limited Partnership, by Samuel A. Donaldson (Washington) [blogged here]
5. [71 Downloads] Substance Over Form? Phantom Regulations and the Internal Revenue Code, by Andy Grewal (Mayer, Brown, Rowe & Maw, Washington, D.C.) [blogged here]
The University of Minnesota Law School will host a conference on Friday, October 27 on The Future of Tax Shelters:
Tax shelter activity has been widespread for decades. IRS attempts to curtail that activity have met with mixed results. For a time, it seemed that the IRS might have succeeded as never before, as Congress held hearings, the Treasury Department substantially expanded tax shelter disclosure requirements, and the Department of Justice brought criminal prosecutions against several KPMG tax professionals. Recently, however, there has been pushback from the courts, the tax profession, and even Congress. Did the government overreach and target legitimate business activity? Was the KPMG-prompted decline merely a cyclical downturn, to be followed by a return to previous levels of tax shelter activity? What will the future hold for tax shelters?
This conference will bring together top tax scholars and professionals as well as scholars from other disciplines who are thinking about tax shelters from different perspectives to evaluate the present and future of tax shelters.
Keynote Speaker: Pamela Olson (Skadden, Arps, Slate, Meagher & Flom; former Assistant Secretary of the Treasury (Tax Policy))
Penel #1: Moderator: Morgan Holcomb (Minnesota)
- Paper: State Tax Shelters and State Taxation of Capital, by Joseph Bankman (Stanford)
- Commentary: Kirk Stark (UCLA)
Panel #2: Moderator: Claire A. Hill (Minnesota)
- Paper: Tax Investment Strategies, Business Method Patents, and the Firm, by Dan L. Burk (Minnesota) & Brett H. McDonnell (Minnesota)
- Commentary: Brant Hellwig (South Carolina)
- Paper: Legal Evolution and Gaming the System, by Philip Curry (Simon Fraser University)
- Commentary: David Weisbach (Chicago)
- Commentary: The Consistency of Inconsistency, by Terrance Chorvat (George Mason)
Panel #3: Moderator: Bruce Snider (Minnesota)
- Paper: Compaq Redux: Implicit Taxes and the Question of Pre-Tax Profit, by Michael Knoll (Penn)
- Commentary: Robert J. Peroni (Texas)
- Paper: Of Lenity, Chevron, and KPMG, by Kristin E. Hickman (Minnesota)
- Commentary: Tax Shelters: Intentionalism’s Greatest Challenge, by Lawrence M. Solan (Brooklyn)
Paper #4: Moderator: Kristin E. Hickman (Minnesota)
To register for this wonderful, free conference, email here.
Interesting article in the Sunday Washington Post: Taxing Lessons, 20 Years In the Making, by Jeffrey H. Birnbaum:
Twenty years ago today, President Ronald Reagan signed into law the broadest revision of the federal income tax in history. The Tax Reform Act of 1986 -- the biggest and most controversial legislative story of its time -- had lawmakers, lobbyists and journalists in Washington in an uproar for two years. Despite nearly dying several times, the measure eventually passed, producing a simpler code with fewer tax breaks and significantly lower rates. The changes affected every family and business in the nation.
In the years since, however, rates have gradually risen and Congress has passed nearly 15,000 changes to the tax law. Many of the loopholes that disappeared two decades ago are back. Now, as then, politicians (including President Bush) are branding the income tax unfair and calling for reform. And now, as then, few expect it to happen. But what lessons from the tax revisions of 1986 might apply to a similar effort today?
1. Reuters reports that Snipes is filming a movie ("Gallowwalker") in Nambia, which does not have an extradition treaty with the U.S.
2. YouTube has this report from Fox News:
Overall, the federal income tax became markedly more progressive between 2000 and 2004. Without knowing exactly how much the Bush tax cuts caused this growing progressivity, one can tentatively conclude that in the mix of tax cuts passed in 2001 and 2003, the ones geared to people making less than $100,000 turned out to be more powerful relative to those geared to help people making more than $100,000.
Saturday, October 21, 2006
For Tax Profs thinking about crossing over to the other side and becomming a dean, here are the law schools currently conducting dean searches (courtesy of Ed Richards & LawProf):
- John Marshall (Chicago)
- Lewis & Clark
- Michigan State
- Texas Wesleyan
- Wake Forest
- Washington & Lee
For over 30 years, the University of Florida Graduate Tax Program has been one of the nation's leading programs for the advanced study of tax law. Among the country's 30 graduate tax programs, Florida has by far the largest number of full-time faculty and is the only school to offer three advanced tax degrees:
Graduate tax students assist in the publication of the Florida Tax Review, one of the most prestigious peer-reviewed tax journals in the country. In this 12-part series, TaxProf Blog will profile the Florida Graduate Tax Faculty.
Steven teaches tax courses in both the J.D. program and the Graduate Tax Program. He is married to Vickey Broussard, with whom he has one son, Scott Willis, and one daughter, Annie Willis.
His recent publications include:
Joe Kristan flagged an interesting decision from the Tax Court this week: Sweeney v. Commissioner, T.C. Summ. Op. 2006-169 (10/19/06). Husband and Wife were each 50% shareholders of an S Corp that earned $18,627 of net income in 2002. The IRS assessed a deficiency against Husband for not reporting his $9,314 share as reported on his K-1. Husband's defense was that marital discord (they were later divorced) prevented him from accessing the money:
This is my whole argument, Your Honor. During the second week of January 2002, my wife proceeded to throw me out of my home, which is where the business was located. She changed the locks. She stripped our corporate bank accounts, our personal bank accounts, charged up all the cash she could on my credit cards to over $50,000, $60,000, and she physically, lock, stock, and barrel, locked me out of the corporation.
Although Judge Couvillion was sympathetic, he sustained the IRS's determination:
Although it is obvious to the Court that petitioner and his spouse had serious differences between them, this Court is not the proper forum for the resolution of these differences. All formalities of the Internal Revenue Code were followed with respect to the S corporation for the year 2002, and the distributive share of that income to petitioner constitutes taxable income to him.
Cords Presents Administrative Law and Judicial Review of IRS Collection Decisions Today at the Central States Conference
Danshera Cords (Capital) presents Is Tax Special: Administrative Law and Judicial Review of IRS Collection Decisions at the Central States Conference today in Louisville. Here is the abstract:
Because neither tax law nor the inquiries performed by the Tax Court are unique, this article advocates that all courts apply an abuse of discretion standard to the judicial review of most IRS collection decisions that are permitted to be brought before the courts. This will require the Tax Court to reconsider its approach to the review IRS collection decisions. To conform to the standards applied by other federal courts and to satisfy the requirements set forth by Congress, the Tax Court must reconsider its position regarding the applicability of the APA and the larger body of administrative law in certain tax cases.
The ABA Tax Section Fall Meeting concludes today in Denver. Tax Profs presenting include:
7:20 a.m.: Low Income Taxpayers and Administrative Practice -- Collection Due Process Smorgasbord
- Keith Blair (Baltimore)
8:00 a.m.: Common Interest Developments in the Law Reviews
- Paula Franzese (Seton Hall)
- Susan French (UCLA)
8:30 a.m.: Sales, Exchanges and Basis -- Current Developments
- Erik Jensen (Case Western) (moderator)
- Brad Borden (Washburn)
9:00 a.m.: Sales, Exchanges and Basis -- Sales and Exchanges of Leasehold Interests
- Brad Borden (Washburn) (moderator)
9:00 a.m.: State and Local Taxes: Practitioner’s Roundtable
- Mark Kozik (Denver)
9:50 a.m.: Pro Bono -- Low Income Taxpayer Clinics and the Pro Bono Referral Panel
- Diana Leyden (Connecticut)
10:00 a.m.: Tenant Bankruptcies: Landlord's Survival Kit
- Robert M. Zinman (St. John's)
11:05 a.m.: Corporate Tax -- Hot Topics Debate: Pre-Reorganization Distributions/Redemptions
- Mark L. Yecies (Columbia)
12:00 p.m.: Diversity Lincheon -- Intersection of Race: How Does Race Affect Tax, Probate & Real Estate Policy?
- Darryll K. Jones (Stetson)
- Reginald Robinson (Howard)
Friday, October 20, 2006
More than a year ago, the Wall Street Journal reported that Britain had phased out its home mortgage deduction over a 12-year period and that home prices did not fall but rather kept rising at a good clip. The Institute on Taxation and Economic Policy estimates that nearly 80% of the benefits from the home mortgage interest and property tax deductions (combined) go to the top 20% of taxpayers in terms of income, while only 5% goes to those in the bottom 60%--the very taxpayers struggling to own a home. Because of the upside-down nature of the subsidy, price declines (if any) should be concentrated at the top end. But it's difficult to get this message across to the general public. It's a sacred cow. The best chance is to go slow in a phase-out, as did Britain. Turning it into a credit may also be sellable and clearly right in terms of both fairness and economic policy (as most economists, who fail to agree about most anything, agree that the home mortgage deduction shifts investment dollars from more valuable uses in the economy to homes, which don't add nearly as much punch to the economy as would risk capital and infrastructure spending).
The Joint Committee report makes five new recommendations for improved information reporting:
- Impose basis reporting requirements for publicly-traded securities.
- Reporting requirements for real estate taxes.
- Provide reporting for proceeds of auction sales.
- Improved third-party information reporting relating to the mortgage interest deduction.
- Reporting requirements for individuals with an interest in offshore bank accounts and offshore trusts.
The report also makes three proposals to enhance tax administration:
- Modify the determination of amounts subject to self-employment tax for partners and S corporations shareholders in personal service businesses.
- Denial of deductions and credits with respect to untimely returns of nonresident aliens and foreign corporations.
- Compliance with earnings stripping provision.
To comment on the proposals, email here by December 1, 2006.
The Joint Committee's original reports on closing the tax gap are:
- Options to Improve Tax Compliance and Reform Tax Expenditures (JCS-02-05) (1/27/05)
- Download Additional Options to Improve Tax Compliance (8/3/06)
This week's Tax Foundation podcast features Kevin Hassett on Inequality, Budget Rules, and the Impact of the Corporate Income Tax on Wages
Has recent tax policy increased income inequality? Do federal budget rules really restrain spending? How do corporate income taxes affect the wages of U.S workers? In this podcast, Kevin Hassett, Resident Scholar and Director of Economic Policy Studies at the American Enterprise Institute for Public Policy Research, discusses the effectiveness of federal budget rules, the worldwide impact of the corporate income tax on wages, and the relationship between budget deficits and recent tax policy (11 minutes, 10 seconds).
Interesting article in today's New York Times: You Can’t Use That Tax Idea. It’s Patented., by Floyd Norris:
As the American tax law gets more and more complicated, lawyers have come up with one more way to make life difficult for taxpayers: Now you may face a patent infringement suit if you use a tax strategy someone else thought of first.
“I can’t even imagine what it will be like in 5 or 10 years,” said Dennis B. Drapkin, a tax lawyer with Jones Day in Dallas, “if anytime a lawyer or accountant gives tax advice, they have to find out if there is a patent on this.” He notes that researching patents, and then licensing them, would just make tax compliance more costly....
Why would Congress pass a law allowing such a thing? The answer is that it did not. But a federal appeals court ruled in 1998 that business methods can be patented, and since then the Patent Office has issued 49 tax-strategy patents, with many more pending.
For prior TaxProf Blog coverage, see:
- NYSBA Releases Report on Patentability of Tax Advice and Tax Strategies (8/18/06)
- WSJ on Patenting Tax Advice (7/26/06)
- House Holds Hearing Today on Patenting Tax Advice (7/13/06)
Neil Buchanan (Rutgers-Newark) has issued his annual call on the TaxProf Email Discussion Group for Tax Profs to join with him in organizing one or more tax panels for next year's Law & Society annual meeting at Humboldt University in Berlin, Germany from July 25-28, 2007 (reprinted here with permission):
The Law & Society Association has posted their call for papers for the 2007 annual conference. I am definitely planning to attend the conference, and I will once again be happy to organize panels of tax papers and tax-oriented roundtables. Papers and presentations on any tax-related subject, including "tax policy" broadly defined, are welcome. (Note that, even though the call for papers provides a broad "theme" and nine "sub-themes," "submissions on any valid law and society topic are welcome—papers do not need to directly address the conference theme.")
Please let me know now whether you are interested in participating. In your email, please give me a very short (one of two sentence) description of the paper that you would like to present or the roundtable that you would like to create. Law & Society allows each of us no more than two "participations" in the conference, where a participation is defined as being a member of a panel or a chair/discussant.
If you are unsure about participating, please respond and tell me with some degree of precision/guesstimation how likely it is that you'll be able to attend. Papers will not be due until one month before the conference begins.
The ABA Tax Section Fall Meeting continues today in Denver. Tax Profs presenting today include:
7:30 a.m.: Exempt Organizations Subcommittee on Political and Lobbying Organizations and Activities
- Miriam Galston (George Washington)
7:30 a.m.: Joint Session/Plenary Breakfast -- Can Patents Restrict Our Advice To Our Clients?
- Ellen Aprill (Loyola-L.A.) (moderator)
- Richard Gruner (Whittier)
8:30 a.m.: Affiliated and Related Corporations -- Consolidated Return Developments
- Don Leatherman (Tennessee) (moderator)
9:20 a.m.: Virtual Income or Just Plain Fun: Taxing On-Line Gaming
- Bryan Camp (Texas Tech)
- Theodore P. Seto (Loyola-L.A.)
10:45 a.m.: Individual and Family Taxation -- Family Tax Planning Using Conservation and Historic Easements
- Roberta F. Mann (Widener) (moderator)
- Mona L. Hymel (Arizona)
10:45 a.m.: Individual and Family Taxation -- Collection Due Process: The Increasing Importance of Administrative Record
- Diane Fahey (New York Law School)
1:30 p.m.: Teaching Taxation -- Looking a “Gift” Horse in the Mouth: When a “Gift” Is Not a Gift
- Michael B. Lang (Chapman) (chair)
- Martin D. Begleiter (Drake) (moderator)
- Jeffrey H. Kahn (Penn State)
- Wendy Gerzog (Baltimore)
- Richard L. Kaplan (Illinois)
2:30 p.m.: Exempt Organizations and Charitable Planning & Exempt Organizations Committees -- Task Force Report: Tax Shelters and Tax- Exempt Organizations
- Frances R. Hill (Miami)
Hawaiian "surf king" Sunny Garcia, the six-time winner of surfing's Triple Crown who won more than $1 million surfing, was sentenced Wednesday to three months in federal prison for failing to pay taxes on the prize money:
Garcia, 36, said he knowingly signed false returns because his focus was on surfing.
(Hat Tip: Lloyd Mayer.)
Thursday, October 19, 2006
From Religion Clause:
- Citizens for Responsibility and Ethics has filed a complaint with the Internal Revenue Service against a Brooklyn Park, Minnesota church alleging that the church violated the terms of its tax exempt status when its minister personally endorsed a Congressional candidate from the pulpit last Saturday night.
- The six Catholic bishops of Illinois issued a statement on Elections, Conscience, and the Responsibility to Vote. In part, it reads:
Catholics should always vote for that person most committed to being a public servant dedicated to the common good. ...[A]ny candidate who supports a public policy where part of humanity (such as the pre-born, the elderly, the handicapped, or the sick) is excluded from the protection of law and treated as if they were non-persons is gravely deficient in his or her view of the requirements of a just society.
(Hat tip: Allan J. Samansky.)
The Grocery Manufacturers Association has funded a study by PriceWaterhouseCoopers on the Economic Impact of the Selective Taxation of Snack Foods. From the press release:
- Specific taxes on snack foods require complicated definitions of the tax base, and the associated compliance costs impose losses on the economy and make such taxes a less efficient means of raising revenues.
- Taxes on snack foods require arbitrary distinctions between taxable and tax exempt products: granola bars have been taxable but not trail mix, potato chips but not pork rinds, salted nuts but not plain nuts, croissants but not bagels.
- Small businesses face administrative burdens from retail sales taxes that can be up to six times larger than those for large retailers, consequently the burden of a selective tax on snack foods would disproportionately hit small business.
- Given consumption patterns, a tax on snack foods would be more regressive than a general sales tax. Households with incomes below $10,000 spent 11.9 percent of their income on snack food purchases in 2004, compared to 1 percent for households with incomes greater than $70,000.
The Cato Institute has published Fiscal Policy Report Card on America's Governors: 2006. Here is the Executive Summary:
This report presents the findings of the Cato Institute's eighth biennial fiscal policy report card on the nation's governors. The report card's grading is based on 23 objective measures of fiscal performance. Governors who have cut taxes and spending the most receive the highest grades. Those who have increased spending and taxes the most receive the lowest grades.
Only one governor receives an A this year— Republican Matt Blunt of Missouri. The next two highest-scoring Republicans are Rick Perry of Texas and Mark Sanford of South Carolina. The highest-scoring Democratic governors are John Lynch of New Hampshire and Phil Bredesen of Tennessee.
Nine governors receive Fs. In alphabetical order, they are Kathleen Blanco of Louisiana, Michael Easley of North Carolina, Kenny Guinn of Nevada, Christine Gregoire of Washington, Mike Huckabee of Arkansas, Ruth Ann Minner of Delaware, Janet Napolitano of Arizona, Bob Riley of Alabama, and Brian Schweitzer of Montana.
Governors who received praise in previous editions of the report card but have lower grades this year include Arnold Schwarzenegger of California (current grade, D); Jeb Bush of Florida (current grade, C); Bill Owens of Colorado (current grade, D); George Pataki of New York (current grade, D); and Bill Richardson of New Mexico (current grade, C).
The IRS today issued Notice 2006-96, 2006-46 I.R.B. ___ (11/13/06), which:
- provides transitional guidance on the new definitions of “qualified appraisal” and “qualified appraiser” in § 170(f)(11) for purposes of substantiating deductions for charitable contributions of property; and
- provides guidance on complying with new § 6695A, regarding penalties for appraisals that result in substantial or gross valuation misstatements.
In response to the Government's October 5 petition for rehearing en banc in Murphy v. United States, 460 F.3d 79 (D.C. Cir. 8/22/06), the D.C. Circuit on October 11 ordered that Murphy file a response by October 26 and stated that the court would not permit the Government to file a reply:
ORDERED, on the court’s own motion, that, within 15 days of the date of this order, appellants file a response to the petition for rehearing en banc, not to exceed 15 pages. Absent further order of the court, the court will not accept a reply to the response.
This suggests that the D.C. Circuit may be considering granting the the petitiion, as Rule 40(a)(3) provides:
(3) Answer. Unless the court requests, no answer to a petition for panel rehearing is permitted. But ordinarily rehearing will not be granted in the absence of such a request.