TaxProf Blog

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

Monday, March 26, 2007

WSJ Tax Articles

Kratzke on The (Im)Balance of Externalities in Employment-Based Exclusions from Gross Income

Kratzke Tax_lawyerWilliam P. Kratzke (Memphis) has published The (Im)Balance of Externalities in Employment-Based Exclusions from Gross Income, 60 Tax Law. 1 (2006).  Here is the Introduction:

Through the Internal Revenue Code, Congress implicitly defines, by design or by accident, what the nature of the employment relationship is, or can be. Through a pattern of employer deductions for certain expenditures that benefit employees and exclusions of these expenditures from employees’ gross income, Congress subsidizes the procurement of certain benefits. Congress has tied some increments to a social safety net to the employment relationship. It also has made available other benefits (e.g., certain fringe benefits, adoption assistance, education assistance, and employee achievement awards) to at least some employees at reduced costs. The Code is not Congress’s exclusive tool to shape the employment relationship. For example, Congress may mandate that employers provide certain benefits or pay a minimum wage. However, through the Code, Congress suggests in the employment relationship the outer parameters of a social safety net, the nature of compensation, and various not-so-inexpensive perquisites (“perks”). By subsidizing some purchases but not others, Congress encourages employees to seek these benefits from employers who, in turn, may be indifferent to their employees’ choice(s) and might even prefer to provide such benefits as a substitute for payment of cash wages. The Code’s provisions generate inequities among individual taxpayers and competitive inequities among employers because some employers and their employees can exploit these provisions and others cannot (or will not).

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March 26, 2007 in ABA Tax Section, Scholarship | Permalink | Comments (0) | TrackBack (0)

Simon Presents Legal Protections for Civil Society in China Today at Johns Hopkins

SimonKarla W. Simon (Catholic) discusses the latest developments in legal protections for civil society in China today at the Johns Hopkins School of Advanced International Studies.  From the press release:

[Simon is a co-founder] of the International Center for Civil Society Law. The organization was formed in 2003 to protect human freedoms by improving the laws that affect the freedoms of belief, expression, association, assembly, information, and participation. It operates both on its own and through affiliates such as universities, associations of civil society organizations, individuals, governments, and individual CSOs and foundations.

March 26, 2007 in Colloquia | Permalink | Comments (0) | TrackBack (0)

TIGTA Releases 3 Tax Reports

Lederman on Taxing Virtual Worlds

Lederman Ssrn_2Leandra Lederman (Indiana) has posted "Stranger than Fiction": Taxing Virtual Worlds on SSRN.  Here is the abstract:

Virtual worlds, including massive multi-player on-line role-playing games (game worlds), such as City of Heroes, Everquest, and World of Warcraft, have become popular sources of entertainment. Game worlds provide scripted contexts for events such as quests. Other virtual worlds, such as Second Life, are unstructured virtual environments that lack specific goals but allow participants to socialize and engage virtually in such activities as shopping or attending a concert. Many of these worlds have become commodified, with millions of dollars of real-world trade in virtual items taking place every year. Most game worlds prohibit these real market transactions, but some worlds actually encourage it. Second Life, for example, grants participants intellectual property rights in their creations.

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March 26, 2007 in Scholarship | Permalink | Comments (4) | TrackBack (1)

More on Underrated Law Schools

Vault_3On Friday, I blogged Vault's new ranking of the Top 25 Most Underrated Law Schools, based on the views of legal recruiters.  On the Emprical Legal Studies Blog, Bill Henderson asks What Does It Mean?:

As I read the list, I wondered, what is the practical implication of a law school being underrated by the people who make hiring decisions for entry level lawyers? Presumably, it means that graduates of certain law schools tend to perform [better] than their school's U.S. News ranking; thus, legal employers are more likely to hire them. If this is true, what is the source of superior performance? Here are two possibilities:

  1. Stronger Students. Some schools may enroll a stronger student body than their rank might suggest.
  2. Better Education. Some law schools may equip graduates with more or better skills than other schools of comparable rank.

Based on some preliminary statistical analysis, there is fairly clear quantitative evidence for the first hypothesis. There is also some qualitative evidence for the second--enough to warrant some additional research.

March 26, 2007 in Law School | Permalink | Comments (1) | TrackBack (0)

Borden on Policy and Theoretical Dimensions of Qualified Tax Partnerships

Borden_1 Ssrn_1 Bradley T. Borden (Washburn) has posted Policy and Theoretical Dimensions of Qualified Tax Partnerships on SSRN.  Here is the abstract:

Qualified tax partnerships are arrangements that come within the definition of tax partnership but elect out of the subchapter K partnership tax rules. Tax entity classification discussions often overlook qualified tax partnerships. This Article identifies them as a definite part of the tax entity classification spectrum (along with disregarded arrangements, tax partnerships, S corporations, and C corporations). The Article presents a theoretical model that describes the relationship qualified tax partnerships have with other tax arrangements. By illustrating that relationship, the Article dismisses misconceptions about qualified tax partnerships. The Article also demonstrates that tax policy does not support the current definitional construct of qualified tax partnerships. A better classification model would provide for a narrower definition of tax partnership and eliminate qualified tax partnerships. Lawmakers, however, may never construct that better model. If they do not, qualified tax partnerships will continue to play an important role in the U.S. tax system. That being the case, Treasury should expand the regulatory definition of qualified tax partnership. Finally, the Article posits that policy and theory suggest that tax laws should apply to qualified tax partnerships in very limited circumstances.

March 26, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, March 25, 2007

Top 5 Tax Paper Downloads

Ssrn_logo_85This week's list of the Top 5 Recent Tax Paper Downloads on SSRN is the same as last week's list. The #1 paper has climbed to #198 in all-time downloads among 4,247 tax papers:

1.  [245 Downloads]  Which Countries Become Tax Havens?, by Dhammika Dharmapala (University of Connecticut, Department of Economics) & James R. Hines Jr. (Michigan)  [blogged here]

2.  [169 Downloads]  Tax Shelters and the Code: Navigating Between Text and Intent, by Steven Dean (Brooklyn) & Lawrence M. Solan (Brooklyn)  [blogged here]

3.  [110 Downloads]  Tax Opinions, by David T. Moldenhauer (Clifford Chance, New York) [blogged here]

4.  [100 Downloads]   Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior, by Dorothy A. Brown (Washington & Lee)  [blogged here]

5.  [83 Downloads]  Patents, Tax Shelters, and the Firm, Dan L. Burk (Minnesota) & Brett McDonnell (Minnesota)  [blogged here]

March 25, 2007 in Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Time: Colleges Contemplate Opting Out of U.S. News Rankings

Us_news_logo Interesting article in this week's Time:  The College Rankings Revolt, by Julie Rawe:

Because in the race for consumers—er, students—few colleges, no matter how well endowed, are willing to risk their prestige by dropping out of what has become a hugely influential beauty contest, U.S. News & World Report's annual college rankings. Like many magazines—this one included—U.S. News compiles lists because, well, readers buy them, but lists can invite gamesmanship. This year, however, a small but growing number of schools are starting to fight back. Or preparing to fight back. O.K., contemplating fighting back. The heads of a dozen private colleges are waiting for the final draft of a letter they will probably sign and send within the next few weeks to their counterparts at 570 or so small to midsize schools asking whether they would be willing to pull out of the U.S. News survey, stop filling out part of it, stop advertising their ranking or, most important, help come up with more relevant data to provide as an alternative. Says an early draft: "By acting collectively, we intend to minimize institutional risk and maximize public benefit." Translation: We can't afford to go solo.

March 25, 2007 in Law School | Permalink | Comments (0) | TrackBack (0)

WSJ: Dealing With Tax Day's Ugly Problems

Interesting article in the Weekend Wall Street Journal:  Dealing With Tax Day's Ugly Problems, by Ron Lieber:

This could -- in fact, it should -- be so much easier. That's the unofficial refrain of tax time, the season of wringing of hands, tearing of hair and crossing of fingers. It's also a season of complicated questions, ones that your tax professional may have as much trouble answering as you do: How best to do the "cost basis" calculations when you sell an investment? Why can't you just file your taxes online on your own through the IRS's Web site? And what's the oddball logic behind the flexible-spending account rule that gives bigger tax breaks to commuters in cars than those on more environmentally friendly trains? The answers below aren't always satisfying, but there are tactics that can make the underlying problems a bit less onerous.

March 25, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Kaufmann on Federal Income Tax Incentives for Energy from Renewable Resources

John Kaufmann (PriceWaterhouseCoopers, New York) has published Federal Income Tax Incentives for Energy from Renewable Resources, 20 J. Nat. Resources & Envtl. L. 163 (2006).  Here is part of the Introduction:

One of the factors that business people need to weigh in evaluating a renewable energy project is the tax effect thereof. The current Tax Code contains several sections which provide tax subsidies for users and producers of energy from renewable sources. Many of the credits available in the current code were added or amended by the American Jobs Creation Act of 2004 and Title XIII of the Energy Policy Act of 2005. This article lists some of these subsidies, and briefly discusses their effect on different classes of taxpayers. The discussion below is limited to federal income tax benefits for investment in renewable energy sources. A subject for another article would be state tax benefits and non-tax governmental benefits for investments of this type. This article also does not discuss the federal income taxation of topics separate from, although related to, investment in renewable sources of energy, such as subsidies for energy conservation, or subsidies for efficient production of energy from traditional sources.

March 25, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Saturday, March 24, 2007

Tax Foundation Publishes Who Pays Taxes and Who Receives Government Spending?

Tax_foundation_2Andrew Chamberlain & Gerald Prante have posted Who Pays Taxes and Who Receives Government Spending? An Analysis of Federal, State and Local Tax and Spending Distributions, 1991-2004 on the Tax Foundation web site.  Here is the abstract:

While the U.S. tax system is progressive, the distribution of government spending makes the overall fiscal system much more progressive than is apparent from tax distributions alone. Using a microdata model we estimate the distribution of federal, state and local taxes and spending between 1991 and 2004. We find households in the lowest quintile of income received roughly $8.21 in federal, state and local government spending for every dollar of taxes paid in 2004, while households in the middle quintile received $1.30, and households in the top quintile received $0.41. Overall, tax payments exceeded government spending received for the top two quintiles of income, resulting in a net fiscal transfer of between $1.031 trillion and $1.527 trillion between quintiles. Both taxes and spending appear to have large distributional effects on households, and these effects have grown since 1991. The results suggest tax distributions alone are an inadequate measure of progressivity, and policymakers should examine both tax and spending distributions when judging the overall fairness of policy toward income groups.

There also is a shorter version, with executive summary, for nontax specialists.  Here are three of the many interesting charts and tables in the 121-page paper:




March 24, 2007 in Think Tank Reports | Permalink | Comments (12) | TrackBack (2)

Chairman of World's Largest Accounting Firm Does Not Do His Own Taxes

PwcDennis Nally, Chairman and CEO of PricewaterhouseCoopers, the world's largest accounting firm, revealed in a Wall Street Journal interview that he does not do his own taxes:

WSJ: Do you do your own taxes?

Mr. Nally: I do not. We actually have a program we make available to all partners to have their taxes done. It's a lot easier, a lot more efficient. I used to do my own. I probably did my taxes up till about five years ago.

March 24, 2007 in News | Permalink | Comments (0) | TrackBack (0)

House Ways & Means Committee to Investigate Private Tax Collection, Requests Halt in New Contracts

House House Ways & Means Committee Chairman Charles B. Rangel yesterday sent a letter to IRS Commissioner Mark Everson requesting that the IRS not award any new private tax collection contracts this year.  Chairman Rangel also announced a Ways & Means Committee investigation into the use of private companies to collect federal income tax debts.

Press coverage:

March 24, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)

NY Times: Foreign Companies Get Tax Cut Denied to U.S. Firms

Interesting article in today's New York Times: Foreigners Get Benefit of Tax Cut, by David Cay Johnston:

A 2003 tax cut that President Bush promoted as a way to create jobs in the United States includes a provision that has given some foreign companies a financial advantage over their American competitors by making it cheaper for them to raise capital. The heart of the issue is in the treatment of the payments to investors as either interest, like bond payments, or as dividends, from stocks, which qualify for a lower tax rate under the 2003 law. Foreign companies can sell securities known as hybrids, which are bonds with interest payments that are treated as dividends and taxed at the lower rate. The option is unavailable to American companies. ...

Investors in the United States must pay income taxes of as much as 35% on interest earned from lending money to American companies, but their tax is limited to just 15% on foreign bonds with no maturity date. Americans are taxed at the 15% rate on dividends, but for American companies, dividends paid on shares come from after-tax profits while foreign companies are allowed to deduct the cost of their payments on the hybrid bonds in their home countries. ...

Yesterday, one Democrat in Congress who has long fought tax shelters introduced legislation to halt the subsidy. “Why are we spending American taxpayer dollars to subsidize foreign companies?” asked the congressman, Richard E. Neal of Massachusetts. “I’ll be taking a serious look at this issue in the Ways and Means Committee, and if the Bush administration believes this provision is worthwhile, they should step forward publicly and justify its place in our tax code.”

March 24, 2007 in News | Permalink | Comments (3) | TrackBack (0)

Hellwig on A Contribution to the Theory of Optimal Utilitarian Income Taxation

Ssrn_244Hellwig_5 Martin F. Hellwig (Max Planck Institute) has posted A Contribution to the Theory of Optimal Utilitarian Income Taxation on SSRN.  Here is the abstract:

The paper provides a new formulation of the Mirrlees-Seade theorem on the positivity of the optimal marginal income tax, under weaker assumptions and in a more general model. The formulation of the theorem is independent of whether the model involves finitely many types or a continuous type distribution. The formal argument makes the underlying logic transparent, relating the mathematics to the economics and showing precisely how each assumption enters the analysis.

March 24, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, March 23, 2007

ABA Tax Section Submits Comments on Proposed Amendments to U.S. Court of Federal Claims Rules


The ABA Tax Section has submitted comments to Edward J. Damich, Chief Judge of the U.S. Court of Federal Claims, on Proposed Amendments to the Rules of the U.S. Court of Federal Claims Concerning Assignment and Processing of Indirectly Related Tax Cases


March 23, 2007 in ABA Tax Section | Permalink | Comments (0) | TrackBack (0)

Ohio Northern Hosts Symposium Today on Frontiers of Estate Planning: Changing Laws for Changing Times

Ohio_northern_2The Ohio Northern University Law Review hosts its annual symposium today on Frontiers of Estate Planning: Changing Laws for Changing Times.  Here are the speakers and their topics:

  • Lawrence W. Waggoner (Michigan):  Class Gifts Under the Restatement Third of Property
  • Charles M. Bennett (Blackburn & Stoll, Salt Lake City, UT):  Frontiers in Ethics: Did the ABA Finally Get it Right
  • Ira M. Bloom (Albany):  Powers of Appointment Under the Restatement Third of Property
  • Gerry W. Beyer (Texas Tech): Electronic Wills and Trusts: Is the Writing Requirement Ready for Relegation to History?
  • Anne-Marie Rhodes (Loyola-Chicago):  Consequences of Heirs Misconduct
  • Jeffrey A. Cooper (Quinnipiac):  Speak Clearly and Listen Well: Negating the Duty to Diversify Trust Investments
  • Charles D. Fox (McGuire-Woods, Charlottesville, VA):  How "Revocable" is "Irrevocable?" Obtaining Flexibility in Irrevocable Trusts

For more details, see:

March 23, 2007 in Conferences | Permalink | Comments (0) | TrackBack (0)

Top 25 Most Underrated Law Schools

Vault_3Vault has named the Top 25 Most Underrated Law Schools, based on 512 votes by legal recruiting professionals (law firm recruiting managers, law firm hiring partners, and corporate counsel):

Recruiters were asked to name law schools that, based on their experience as hiring managers, are underrated. There was no limit to the number of law schools a hiring manager could name as underrated. Recruiters were also asked to provide comments about underrated schools.

Here are the Top 10 Most Underrated Law Schools:

  1. Emory
  2. Fordham
  3. Howard
  4. Chicago-Kent
  5. Oregon
  6. George Mason
  7. Illinois
  8. William & Mary
  9. Vanderbilt
  10. Georgia

For the full list, see here.  For other underrated law schools by region, see here.  For more on the methodology, see below the fold.

Continue reading

March 23, 2007 in Law School | Permalink | Comments (0) | TrackBack (2)

U.S. News: Bush's Nuclear Option on Taxes

Interesting article on U.S. News & World Report:  Bush's Nuclear Option on Taxes, by James Pethokoukis:

Let's say Democrats choose to pay for AMT reform by undoing the 2003 tax cuts. That would be a tough veto for Bush since the AMT will hit hard millions of middle-class taxpayers. So Bush could sign such a bill and then simply ring up Hank Paulson next door at Treasury and tell him to tell his staff to begin indexing capital gains for inflation by using its little-known and admittedly legally fuzzy power to define the word "cost" in the part of the tax code that concerns capital gains. Treasury did just the opposite back in 1913 after the income tax was ratified. So essentially, it would merely be undoing what it did back then. This would also be a way for a future president to save the 2003 tax cuts if Congress wants to let them expire at the end of 2010. Would many Democrats scream? Surely. Would a lawsuit be filed? Assuredly.

March 23, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Ranking of Law Reviews by Judicial Citations to Student Notes

SsrnFollowing up on my recent posts on the declining influence of law reviews on courts (here and here): Blake K. Rohrbacher (Richards, Layton & Finger, Wilmington, DE) has posted an interesting paper on SSRN:  Twenty-Five Years of Student Scholarship in Judicial Opinions.  Here is the abstract:

This paper examines patterns in judicial citation of student notes. The paper discusses a data set of opinions citing notes written in the last twenty-five years (roughly 4000 unique note citations), from all levels of U.S. courts, including data on the location, level, and nature (state or federal) of each court citing each note, as well as the years in which each note was cited. These data allow detailed analysis of citation patterns and provide a way to measure, albeit indirectly, the influence of student scholarship on judicial common-lawmaking. The paper first presents data regarding the most-cited individual notes. Then, the paper examines the journals that garnered the most citations to notes published in those journals. Finally, the paper discusses various citation patterns, including a breakdown of court characteristics and their relationship to note citations, the trend of decreasing note citations over time, and the effect of recency of publication on note citation. Finally, the paper presents data on the states and courts that most cite student notes.

Here are the twenty law reviews whose student notes are cited most often by courts:

  1. Harvard Law Review
  2. Yale Law Journal
  3. Columbia Law Review
  4. Fordham Law Review
  5. Cornell Law Review
  6. NYU Law Review
  7. Duke Law Journal
  8. Virginia Law Review
  9. Stanford Law Review
  10. Michigan Law Review
  11. Georgetown Law Journal
  12. Texas Law Review
  13. William Mitchell Law Review
  14. Iowa Law Review
  15. Washington & Lee Law Review
  16. Washburn Law Journal
  17. St. John's Law Review
  18. University of Chicago Law Review
  19. Hofstra Law Review
  20. Notre Dame Law Review

March 23, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tax Court Releases Fall 2007 Trial Schedule

Tax_courtThe Tax Court has released its Fall 2007 Trial Schedule, with trial dates from the week of September 10 through the week of December 17 in 44 U.S. cities.  The busiest trial calendars are in:

  • Los Angeles (8 weeks)
  • Newark (4 weeks)
  • Philadelphia (4 weeks)
  • San Francisco (4 weeks)
  • Washington, D.C. (4 weeks)
  • Westbury (4 weeks)
  • Chicago (3 weeks)
  • Houston (3 weeks)
  • San Diego (3 weeks)

March 23, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Temple Seeks Tax Visitor for 2007-08

Temple_2 Temple University's Beasley School of Law may need to fill at least one visiting position for the 2007-2008 academic year. Primary course needs are Civil Procedure, Professional Responsibility, Trusts and Estates, and Tax.  One-semester or full-year visits are possible.  For more information, or to apply, email Tax Prof Alice G. Abreu, Chair, Faculty Recruitment and Selection Committee.

March 23, 2007 in Tax Prof Moves | Permalink | Comments (0) | TrackBack (0)

Li Presents Tax Policy and Development: A Case Study of China at Toronto

TorontoLi_2Jinyan Li (Osgoode Hall Law School) presented Tax Policy and Development: A Cases Study of China at the University of Toronto yesterday as part of the James Hausman Tax Law and Policy Workshop Series.  Here is the abstract:

Over the past three decades, China has experienced remarkable economic development. The gross domestic product (GDP) grew from CNY 362,410 million in 1978 to CNY 13,687,590 million in 2004. China is one of the world’s largest economies and recipients of foreign direct investment. China has been successful in reducing poverty and improving key social indicators. However, income disparities have been rising rapidly. In the early 1990s, the top 10% of the population held 40% of savings in China. By 2005, the top 5% of the population own about 50% of the national savings. The economic and social developments have been accompanied by significant progress in legal development, although China still does not have the western style of rule of law. During the same period of time, the Chinese government has relied on taxation as its main source of revenue, used tax policy as a “leverage” in regulating economic and social activities. This paper examines the role of tax policy in China’s economic, social and legal development. It concludes that tax policy has played an important, but somewhat mixed, role in China’s economic development. Tax policy has not been effective in enhancing social development in terms of redistributing social income or encouraging socially-desirably activities. The relationship between legal development and tax policy is perhaps not as obvious. In China’s case, however, a case can be made that tax policy has had a positive impact on the development of a system of rule-by-law.

March 23, 2007 in Colloquia | Permalink | Comments (0) | TrackBack (0)

IRS Releases Updated 2007 Filing Season Statistics

The IRS yesterday released (IR-2007-65) updated 2007 filing season statistics:


March 23, 2007 in IRS News | Permalink | Comments (1) | TrackBack (0)

Prosecutors Seek Revocation of Former D.C. Mayor Marion Barry's Probation for Failure to File 1999-2004 Tax Returns Because He Missed Deadlines for Filing 2005 Return

Marion_barryWe previously have blogged the tax troubles of former Washington, D.C. Mayor Marion Barry.  The Washington Post updates the story in Barry's Tax Troubles May Not Be Over Push for Jail Time Could Continue, by Paul Duggan:

Barry pleaded guilty in 2005 to misdemeanor charges based on his failure to file federal and D.C. income tax returns covering six years, from 1999 to 2004. He could have been jailed for as long as 18 months. Instead, in a plea bargain, he promised to pay his back taxes and file future returns on time, and [Federal Magistrate] Robinson placed him on supervised probation for three years. Within weeks of being put on probation last March, however, Barry missed the April deadlines for filing his 2005 federal and local tax returns. The IRS gave him an extension until October, but he missed that deadline, too. He filed the returns only last month, after prosecutors James W. Cooper and Thomas E. Zeno cited the delinquencies in a motion asking Robinson to punish him. ...

Robinson's stated reason for rejecting the motion had nothing to do with her view of Barry's behavior. She denied it on procedural grounds, without a hearing, citing her interpretation of the rules on how such motions should be filed.

See also Prosecutors Appeal Barry Decision Probation Revocation, Jail Time Sought for Missed Deadlines, by Carol D. Leonnig.  Prior TaxProf Blog coverage:

March 23, 2007 in Celebrity Tax Lore | Permalink | Comments (0) | TrackBack (0)

IRS Invites Taxpayers to Apply for Membership on Taxpayer Advocacy Panel

Taxpayer_advocacy_panelThe IRS yesterday invited taxpayers to apply for membership on the Taxpayer Advisory Panel:

The IRS is inviting civic-minded individuals to help improve the nation’s tax agency by applying to be members of the Taxpayer Advocacy Panel. The panel provides a forum for citizens from each state to make suggestions regarding IRS decision making.

Taxpayer Advocacy Panel (TAP) members:

  • Provide opportunities for citizen input and make recommendations to the IRS and Treasury on customer-service issues.
  • Identify and prioritize taxpayer issues.
  • Report annually to Treasury, the IRS and the National Taxpayer Advocate.
  • Participate in meetings where taxpayers are invited to raise issues about their experiences with the IRS.
  • Refer taxpayers who contact the panels to the IRS offices best able to address their issues.

The deadline to apply is April 30, 2007. For further details, see:

March 23, 2007 in IRS News | Permalink | Comments (0) | TrackBack (0)

Thursday, March 22, 2007

BNA Tax Management Advisory Board Meets on Estates, Gifts and Trusts

Bna_2_2The BNA Tax Management Advisory Board met last night in New York City on Estates, Gifts and Trusts and discussed these three papers:

March 22, 2007 in Conferences | Permalink | Comments (0) | TrackBack (0)

Keen Presents The Flat Tax(es): Principles and Evidence Today at UCLA

Ucla_4Keen_2Michael Keen (International Monetary Fund) presents The Flat Tax(es): Principles and Evidence (with Yitae Kim & Ricardo Varsano) at UCLA today as part of its Tax Policy and Public Finance Workshop Series, moderated by Kirk Stark & Eric Zolt.  Here is the abstract:

One of the most striking tax developments in recent years, and one that continues to attract considerable attention, is the adoption by several countries of a form of “flat tax.” Discussion of these quite radical reforms has been marked, however, more by assertion and rhetoric than by analysis and evidence. This paper reviews experience with the flat tax, seeking to redress the balance. It stresses that the flat taxes that have been adopted differ fundamentally, and that empirical evidence on their effects is very limited. This precludes simple generalization, but several lessons emerge: there is no sign of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reforms; their impact on compliance is theoretically ambiguous, but there is evidence for Russia that compliance did improve; the distributional effects of the flat taxes are not unambiguously regressive, and in some cases they may have increased progressivity, including through the impact on compliance; adoption of the flat tax has not resolved common challenges in taxing capital income; and it may have strengthened, not weakened, the automatic stabilizers. Looking forward, the question is not so much whether more countries will adopt a flat tax as whether those that have will move away from it.

March 22, 2007 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Burman Presents The Rising Tide Tax System Today at NYU

Burman Nyu_15Leonard E. Burman (Fellow, Urban Institute; Director, Tax Policy Center) presents The Rising Tide Tax System (with Robert J. Shiller (Professor of Economics, Yale University), Gregory Leiserson (Research Assistant, Urban Institute) & Jeffrey Rohaly (Senior Research Methodologist, Urban Institute; Director of Modeling, Tax Policy Center)) at NYU today as part of its Colloquium on Tax Policy and Public Finance Series, moderated by Alan Auerbach & Daniel Shaviro. Here is the abstract:

Experience over the past three decades suggests that growing inequality is a serious risk. A change in the tax system to index against changes in inequality is motivated both by financial theory and by classical welfare economics. Inequality indexation would partially insure against future increases in after-tax inequality. Tax rates would endogenously adjust to changes in inequality to dampen changes in the after-tax “Lorenz curve.” We develop a method of implementing the system using U.S. tax return data and illustrate its effect using the Urban-Brookings Tax Policy Center Microsimulation Model. We study the outcomes if inequality indexation had begun in 1979 or 1994. Distributive effects and incentive effects are described. If future inequality is unpredictable and redistribution were costless then it is easy to demonstrate that full indexation would increase social welfare (assuming risk aversion). Redistribution is, of course, costly—for example, because high marginal tax rates entail disproportionately large efficiency costs—so partial indexation is likely to be optimal. This conclusion also holds if policies that could increase both economic growth and inequality are subject to electoral approval. Basically, the expected winners could use indexation to induce the expected losers to approve pro-growth, but inequality-increasing, policies.

March 22, 2007 in Colloquia | Permalink | Comments (0) | TrackBack (0)

WSJ: We Peak (Financially) at Age 53

Interesting front-page story in today's Wall Street Journal:  Why Middle Age May Be Healthy For Your Wallet; Your Financial Savvy May Hit Its Peak at 53, Survey of Data Suggests, by David Wessel:

Wsj_page_2_3Baseball players are said to peak in their late 20s. Chess players in their mid-30s. Theoretical economists in their mid-40s. But in ordinary life, there's an obvious tension between sheer smarts, often seen in the supple minds of the young -- and experience, which comes only with age. Which one is more valuable in making personal-finance decisions?

A quartet of economists think they have found an answer. In looking at which consumers get stuck paying those pesky credit-card fees, the economists noticed a puzzling pattern: Younger and older consumers were more likely than others to get hit with easily avoided fees. So the economists expanded their inquiry to loans and other products, and sifted through records of tens of thousands of consumers.

They found that middle-aged adults tend to borrow at lower interest rates and pay fewer fees than younger and older adults. The age at which consumers are least likely to make financial mistakes: a few months past their 53rd birthday, despite all the pressures that accompany middle age. The economists call it "the age of reason."

[Click on chart to enlarge.]

March 22, 2007 in News | Permalink | Comments (0) | TrackBack (0)

W&L Receives $66 Million Gift to Raise Faculty Salaries -- $400k Per Faculty Member

Wl_universityWashington & Lee University announced yesterday that it has received a $33 million gift, which will be matched by $33 million in other funds, to be used exclusively to raise faculty salaries.  From the press release:

Washington and Lee University in Lexington, Virginia, America's 9th oldest university, announced today that it will receive a gift of $33 million from H.F. (Gerry) Lenfest to be used to increase and maintain faculty salaries. Lenfest is a 1953 graduate and former trustee of W&L. He is also a graduate of Columbia Law School. ...

The gift will require a match of $33 million to be raised from other sources by the University. Lenfest matching funds will be transferred as University money is raised. The gift is solely for enhancing faculty compensation.

W&L has 170 faculty -- so the gift amounts to almost $400,000 per faculty member!  (Hat Tip:  Inside Higher Ed.)

Update:  Bryan Camp notes that as an endowment, the $66 million would generate $3.3 million per year at 5%, or $19,000 per faculty member.

March 22, 2007 in Law School | Permalink | Comments (0) | TrackBack (1)

U.S. News: Would Hillary Preserve the Capital Gains Tax Cuts?

Hillary_3On the U.S. News & World Report web site, James Pethokoukis asks:  Would Hillary Preserve the Capital Gains Tax Cuts?:

The new Democratic federal budgets, both House and Senate, floating around Congress put the kibosh on the 2003 cap gains cuts due to expire at the end of 2010. But a veteran Washington insider E-mails me this: "Hillary Clinton visited Bear Stearns investors last week–and basically hinted that she would extend the cap gains/dividend relief, but allow the top income tax rate to rise." My take: That would sure be an interesting development, but then again, politicians always seem a bit more investor-oriented when speaking to a Wall Street audience.

March 22, 2007 in Political News | Permalink | Comments (0) | TrackBack (0)

Professor Who Threw Marker at Student's Face to "Get His Attention" Will Retire Next Year

KordsmeierThe Associated Press reports that William Kordsmeier, a economics professor at the University of Central Arkansas, will be retiring after a classroom incident in which he threw a marker at an allegedly disuptive student:

According to a university police report, 20-year-old Cesar Francisco Orea said he was quietly taking notes in class when Kordsmeier threw a marker, similar to a highlighter, that struck him in the face and told him to leave. Kordsmeier told police that Orea was disrupting class and that he'd tried to start his lecture several times. Kordsmeier says he was trying to get Orea's attention.

For more, see today's Chronicle of Higher Education.

March 22, 2007 in Law School | Permalink | Comments (0) | TrackBack (0)

Law Prof Rapper

My Civ Pro colleague Adam Steinman has already published several major articles in less than three years in this business.  He reveals another side of his talent in this Tax Rap video, entrant #145 in TurboTax's Tax Rap Contest (hosted by Vanilla Ice and blogged here):

The grand prize is $25,000.  The deadline to submit entires is March 30.  Voting begins March 31 and ends April 8.

Adam is an important contributor to Cincinnati's strong showing in the SSRN law school rankings.  Perhaps Cincinnati will be at the forefront of a new law school ranking metric:  YouTube video views!  Schools wanting to jump ahead of the curve may troll next year's meat market for joint J.D.-Music degrees!

My colleague Tim Armstrong, our IP guru, blogs an interesting legal aspect of Adam's video.  His original entry contained a reference to Tony Danza, which caused TurboTax to reject the video on the ground that it infringed Mr. Danza's intellectual property rights. Tim's detailed post contends that Danza does not have any rights under either copyright or trademark law, and that his only arguable claim rests on the right of publicity.  In the end, Tim concludes that "perhaps Intuit is right; hearing the words “Tony Danza” might indeed call to mind Tony Danza, the celebrity, and perhaps that’s enough for liability. I’m inclined to think that ... there’s room enough for Tony Danza to make a comfortable living off his natural talents without forbidding Adam to utter Tony’s name in a rap about tax preparation software."

March 22, 2007 in Celebrity Tax Lore | Permalink | Comments (1) | TrackBack (0)

Why Isn't Tax on Every State's Bar Exam?

Thoughtful post on Conglomerate by guest blogger Seth Chandler (Houston):  Another Call for Bar Reform.

March 22, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Office of Tax Policy Releases Tax Relief Kit

Treasury_logo The Treasury Department's Office of Tax Policy has released a Tax Relief Kit:

  • Millions of American Families Are Benefiting from Tax Relief
  • The Toll of Two Taxes: The Regular Income Tax and the AMT
  • Who Pays Most Individual Income Taxes?
  • State-by-State Estimates & Effects of President's Tax Cuts 2001-2006

March 22, 2007 in IRS News | Permalink | Comments (0) | TrackBack (0)

House Holds Hearing Today on The AMT

House The Subcommittee on Select Revenue Measures of the House Ways & Means Committee holds a hearing today on The Alternative Minimum Tax.  From the announcement:

This hearing will examine the impact of the AMT on individual taxpayers, particularly middle-income taxpayers who were never intended to be subject to this tax.

Here are the witnesses scheduled to testify:

  • Margaret Rauh (Individual Taxpayer, accompanied by Jay Primack, Moriarty & Primack, CPAs, Springfield, MA)
  • Joel Campbell (Individual Taxpayer, accompanied by Art Auerbach, Goodman & Co., CPAs, McLean, VA)
  • Joseph W. Walloch (American Institute of Certified Public Accountants)
  • David A. Lifson (President-Elect, New York State Society of Certified Public Accountants)
  • Michael K. Day, Sr. (International Association of Fire Fighters)
  • Jon A. Nixon (Partner, Katzman Weinstein & Co., Bethpage, NY)

The hearing begins at 10:00 a.m. in 1100 Longworth House Office Building.

March 22, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)

Joint Tax Committee Holds Organizational Meeting Today

The Joint Committee on Taxation will hold on organizational meeting today at 1:15 p.m. in Room H-208 of the U.S. Capitol.  From the press release:

Members of the Joint Committee on Taxation will elect a Chairman and Vice Chairman of the Committee and will review the ongoing operations of the Committee. The meeting will be open to the public.

March 22, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 21, 2007

Postlewaite Presents The C-T-B Election: Is It Time to Close Pandora's (Check-the-) Box? Today at Tel Aviv University

Tel_aviv_5Philip F. Postlewaite (Northwestern) presents The C-T-B Election: Is It Time to Close Pandora's (Check-the-) Box? (with Stephanie Hoffer (Northwestern)) at Tel Aviv University today as part of its Tax Policy Colloquium hosted by Yoram Margalioth. Here is the abstract:

Like Pandora’s box which, notwithstanding the admonition of others that such action would change the world dramatically by introducing evil, she opened because her curiosity overcame her, the Check the Box Regulations have had a similar seismic impact on the administration of the United States tax law in the international context.

The Regulations allow an enterprise to be treated as transparent in one jurisdiction and as a separate entity in the other—an opportunity far more difficult to accomplish under prior law. Not only can the enterprise select its classification, but it also possesses the flexibility after the initial election to transform its essence for tax purposes by a mere “checking of the box” should such prove advantageous.

The paper describes some of the tax planning opportunities created by the Regulations and illustrates how this flexibility in the international arena distorts existing tax policy. It concludes by offering a number of alternative solutions ranging from a modification of the per se listing for foreign enterprises to outright repeal of the Regulations for foreign enterprises. Under any circumstances, it is time to close the box in such cases.

March 21, 2007 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Senate Seeks Suggestions for Closing the Tax Gap

Over the summer, I signed a letter with over ninety other tax professors calling on Senator Baucus to end his block of Eric Solomon's appointment as Assistant Secretary for Tax Policy until the Treasury produced a specific plan for closing the tax gap.  In response, I received the following letter yesterday from the Senate Finance Committee, requesting my "suggestions on ways to improve compliance with our tax laws, including specific recommendations to reduce the tax gap":


March 21, 2007 in Congressional News | Permalink | Comments (2) | TrackBack (0)

Tax News Roundup

Bankman Presents Mr. Smith Gets an Education: Why It Is So Hard to Get Easy Tax Filing Today at Michigan

Conway on The Inconsistent Tax Treatment of Security Holders in Tax-Free Reorganizations

Conway_2Meredith R. Conway (Texas Wesleyan) has published "Clowns to the Left of Me, Jokers to the Right, Here I Am, Stuck in the Middle With You": The Inconsistent Tax Treatment of Security Holders in Tax-Free Reorganizations, 56 Cath. U. L. Rev. 99 (2006).  Here is part of the Introduction:

Part II of this Article will provide a hypothetical that illustrates the inconsistent tax treatment of security holders in a tax-free reorganization as compared to holders of stock and holders of non-security debt instruments. Following the hypothetical, Part III of this Article will discuss the tax consequences of an exchange of security instruments and non-security instruments in a tax-free reorganization, the policy reasons or justifications behind the reorganization provisions, and the possible justifications for the disparate treatment of security holders. This discussion will include an examination of whether or not an interest that a taxpayer holds is a security instrument, what the tax consequences are of the underlying exchange to the holders of security instruments, and the tax consequences to the corporation of the tax-free exchange. Once the tax consequences of an exchange of security instruments in a tax-free reorganization have been evaluated, Part IV of this Article will then discuss the tax consequences of a fully taxable exchange. Then, Part V of this Article will examine the policy justifications and the legislative history behind these provisions as well as current public policy and will suggest solutions that are consistent with current public policy motivations. Finally, Part VI of this Article will raise and then refute arguments in favor of retaining the current tax provisions regarding security instruments.

The tax treatment of security instruments in tax-free reorganizations is puzzling and inconsistent. A security instrument has been defined as a long-term debt instrument, an interest that represents a continuing ownership interest in the corporation. Non-security debt instruments enerally represent a mere creditor's interest. Yet, when compared to the tax consequences of an exchange of non-security debt instruments in a corporation in connection with a tax-free reorganization an exchange of security instruments has less favorable tax consequences.

March 21, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Rebranding the IRS to "Resonate with a Younger, More Trendy Audience"

Stoute_2Business Week has an interesting profile (A McKinsey of Pop Culture?) of Steve Stoute, Chairman and Chief Creative Officer, Translation Consultation and Brand Imaging:

More executives overseeing brands that have gone stale are turning to the 36-year-old consultant and former music executive for help. Stoute's agency ... offers to imbue brands with a combination of hip-hop ethos and practicality to help reposition products, from Chevy Impalas to Crest Whitestrips to Reese's peanut butter cups. The end result is for brands to resonate with a younger, more trendy audience.

From the bio box:

A Brand He Would Like to Make Over:  The Internal Revenue Service.  "The IRS should no longer hide behind the stick and allow fear to dominate its image. There is an opportunity to illustrate to Americans that the IRS is of value to them in ways both societal and personal."

(Hat Tip:  Marie Siesseger.)

March 21, 2007 in IRS News | Permalink | Comments (0) | TrackBack (1)

U.S. News: President Bush's Tax Cut Suicide

Interesting article in U.S. News & World Report:  President Bush's Tax Cut Suicide, by James Pethokoukis:

Here are 400 billion reasons President Bush's 2001and 2003 tax cuts may not see the next decade of the 21st century. The five-year federal budget proposed by Senate Democrats last week lets the reductions stay in place after their current 2010 expiration date–if backers can come up with $400 billion to pay for them in 2011 and 2012. Extending them to 2017 would "cost" $1.8 trillion....Now given that the current Congress is having trouble coming up with $40 billion-$50 billion for a temporary fix to the alternative minimum tax, finding a spare $200 billion a year seems like a tall order indeed....

Most Washington watchers say that the Bush capital gains, dividend, and marginal rate tax cuts would be left to die with only the social policy tax cuts–such as increased child tax credit–standing any chance of surviving.... If Bush's primary domestic legacy does disappear, he really only has himself ultimately to blame–not Democrats. That may seem counterintuitive or even unfair given that Bush is the biggest tax-cutter since President Reagan. But consider these four ways in which the president has inadvertently planted the seeds for the demise of his own fiscal policies.

  1. Failed to properly time the 2001 tax cuts
  2. Failed to make the 2001 tax cuts "growthy" enough
  3. Failed to control spending
  4. Failed to reform entitlements

....[A]s economist John Maynard Keynes famously commented, "In the long run, we are all dead." And so, it seems likely–unless the budget is showing a big surplus in 2010–are the Bush tax cuts.

March 21, 2007 in News | Permalink | Comments (0) | TrackBack (0)

House Marks Up Katrina Housing Tax Relief Act

House The House Ways & Means Committee today marks up H.R. 1562, The Katrina Housing Tax Relief Act of 2007, beginning at 10:00 a.m. in 1100 Longworth House Office Building. In conjunction with the hearing, the Joint Committee on Taxation has released:

March 21, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)

Shaviro on Why Worldwide Welfare as a Normative Standard in U.S. Tax Policy?

Ssrn_241Shaviro_7 Daniel N. Shaviro (NYU) has posted Why Worldwide Welfare as a Normative Standard in U.S. Tax Policy? on SSRN.  Here is the abstract:

Debate about U.S. international tax policy often emphasizes norms, such as capital export neutrality (CEN) and capital import neutrality (CIN), that relate to worldwide welfare rather than U.S. national welfare. While this focus may seem paradoxical, or at least surprisingly altruistic in a world full of self-interested players, it potentially makes sense from a purely national perspective. Worldwide welfare norms can strengthen the impetus to cooperate with other countries rather than following beggar-your-neighbor strategies, potentially making all countries better off if adherence to the worldwide norm is sufficiently reciprocal.

Continue reading

March 21, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 20, 2007

Joint Tax Committee Releases Revenue Effects of President Bush's Proposed Standard Deduction for Health Insurance

Bluebook_2The Joint Committee on Taxation yesterday released Estimating the Revenue Effects of the Administration's Fiscal Year 2008 Proposal Providing a Standard Deduction for Health Insurance: Modeling and Assumptions (JCX-17-07):

The Administration’s Fiscal Year 2008 Budget includes a proposal to create a new standard deduction for health insurance, while generally repealing the present-law tax subsidies relating to health coverage. The Administration provided a brief description of this proposal in the General Explanations of the Administration’s Fiscal Year Revenue Provisions (Feb. 2007) prepared by the Treasury Department (the “Blue Book”).  While a number of the details of the proposal remain unclear, this document, prepared by the staff of the Joint Committee on Taxation describes the economic modeling that the Joint Committee staff has undertaken to assess the revenue effects of this proposal.

March 20, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)