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Saturday, June 30, 2007

Spotlight_1_1Roger M. Groves (Florida Coastal)

        • B.A. 1974, Michigan State
        • J.D. 1978, Wayne State

   

   

Groves Roger undoubtedly is the only TaxProf who played the piano at Magic Johnson's wedding and opened for Stevie Wonder.  He is a former tax judge in Michigan, partner in Howard & Howard and counsel to Lewis & Munday.  He teaches in the fields of federal taxation, state and local taxation, business organizations, and emerging issues in the business of sports. Prior to joining Florida Coastal, he was a visiting professor at Lewis & Clark.

Roger has provided business and tax representation of multi-national corporations, hospitals, governmental agencies, high profile individuals (e.g., Aretha Franklin, The Winans), and major college football coaches.

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June 30, 2007 in Tax Prof Spotlight | Permalink | Comments (0) | TrackBack (0)

Free-File Software Can't Handle Even Simple Returns

The Treasury Inspector General for Tax Administration has issued a report slamming the IRS's Free-File Program, charging that the electronic-filing software is replete with errors that affect even the simplest tax returns. (The Free-File Program allows 70% of all taxpayers -- those earning $52,000 or less -- to prepare and electronically file their returns free of charge using software provided by private companies selected by the IRS.)  In response to the report, the IRS says it lacks authority to test the software for errors and, in any event, it would be impossible to do so.  The leaders of the Senate Finance Committee were sharply critical of the IRS:

  • Chairman Max Baucus:  "When the IRS refers taxpayers to an online filing service, those taxpayers have a right to expect accurate tax preparation. If the IRS really doesn’t have the authority to require its Free File partners to get the software right, then they’ve got a bad agreement with these companies that doesn’t protect taxpayers as it should. ... [T]his report underscores the need for a direct filing portal on the IRS website, where the agency makes certain that the tools supplied to taxpayers comply with the tax code.”
  • Ranking Member Charles Grassley:  "This is frustrating for Congress and taxpayers alike. We’re in the digital age. ...  But we can’t get a free electronic filing option for taxpayers to work right. Some of these software programs can’t properly compute a tax return using common basic scenarios. Reliability and accuracy are a problem.Taxpayers have every reason to question whether they'd be better off with a pencil and an abacus than using the current free-file program."

Report:  Additional Action Is Needed to Expand the Use and Improve the Administration of the Free File Program (2007-40-105) (6/28/07)

Press Coverage:

Prior TaxProf Blog Coverage:

June 30, 2007 in Congressional News, IRS News, News | Permalink | Comments (0) | TrackBack (0)

Rosenzweig on Harnessing the Costs of International Tax Arbitrage

Adam H. Rosenzweig (Washington University) has published Harnessing the Costs of International Tax Arbitrage, 26 Va. Tax Rev. 555 (2007).  Here is the abstract:

The issue of international tax arbitrage has proven a difficult and intractable one. Rather than try to minimize costs of the arbitrage or prevent “abuse” of the laws of a particular regime, the United States should also consider affirmatively bearing some of the costs of the international tax arbitrage transaction to further the policy of international vertical equity and shift the incentives in the worldwide regime that led to the rise of the arbitrage in the first place.

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June 30, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Conference on Legal Education in Europe

The Council of Bars and Law Society of Europe will offer a conference on Legal Education and Training in a Converging Europe at the University of Warsaw, Faculty of Law on September 25-27, 2007.  For the program, see here.  To register, see here.

June 30, 2007 in Conferences, Law School | Permalink | Comments (0) | TrackBack (1)

Friday, June 29, 2007

Sanchirico on The Tax Advantage to Paying Private Equity Fund Managers with Profit Shares

Chris William Sanchirico (Penn) has posted The Tax Advantage to Paying Private Equity Fund Managers with Profit Shares: What Is It? Why Is It Bad? on SSRN.  Here is the abstract:

Private equity funds purchase ailing companies, restructure them over the course of several years, and then sell them at a profit. Fund managers typically receive a share of fund profits in return for their services. The tax treatment of this form of service compensation has recently come under close scrutiny in the press, the academy, and Congress. This paper helps to clarify the nature of the tax advantage accorded to such compensatory profit shares. The paper also critically assesses some of the chief arguments for and against the current tax treatment of such compensation schemes.

June 29, 2007 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Britain Refuses to Extradict Days Inn Mogul to Face U.S. Tax Charges

Interesting article in today's New York Times:  Britain Won’t Extradite New York Hotelier in Fraud and Tax Evasion Case, by Charles V. Bagli:

After three years of hearings and recriminations, a British judge yesterday refused to extradite the multimillionaire hotelier Stanley S. Tollman to New York, a major setback for prosecutors seeking to bring him to trial on charges relating to a $100 million bank fraud and tax evasion scheme. Mr. Tollman was indicted by a federal grand jury in 2002 after prosecutors said he led an effort to defraud lenders and avoid paying taxes during the 1990s, when he and others controlled the Days Inn hotel chain. For much of the 1990s, Mr. Tollman and his wife, Beatrice, were conspicuous figures in high society in New York; Palm Beach, Fla.; and Litchfield County, Conn., where they still own homes.

Timothy Workman, a senior district judge in Westminster, England, ruled yesterday that it would be difficult for Mr. Tollman, 76, to get a fair trial because of the loss of certain documents and the deaths of witnesses who might have aided his defense. The judge also said that sending Mr. Tollman to America “would undoubtedly endanger the health of Mrs. Tollman and possibly her life.

For other press coverage, see the Associated Press, Wall Street Journal, and the WSJ's Law Blog. For a copy of the judge's ruling, see here.

June 29, 2007 in New Cases, News | Permalink | Comments (0) | TrackBack (1)

Hickman on In Search of the Modern Skidmore Standard

Kristin Hickman (Minnesota) has posted In Search of the Modern Skidmore Standard, 108 Colum. L. Rev. ___ (2007), on SSRN.  Here is the abstract:

This Article offers a comprehensive examination of the Skidmore standard for judicial review of agency legal interpretations as applied by the courts in the period since the Supreme Court revitalized Skidmore in United States v. Mead Corp. First, the Article documents an empirical study of five years worth of Skidmore applications in the federal courts of appeals. In the study, we evaluate two competing conceptions of Skidmore review – the independent judgment model and the theoretically more deferential sliding-scale model – and conclude that the appellate courts overwhelmingly follow the sliding scale approach. Also, contrary to two other, significantly more limited studies, we document that Skidmore review is highly deferential to agency interpretations of law, with agency interpretations prevailing in more than 60% of Skidmore applications. Drawing from the Skidmore applications studied, we then analyze more qualitatively how the appellate courts apply the Skidmore review standard as a sliding scale and identify where those courts are struggling to make sense of Skidmore's dictates within that model. To resolve the lower courts' difficulties, we propose reconceptualizing Skidmore's sliding scale as balancing comparative agency expertise against the potential for agency arbitrariness. Finally, we note several burgeoning issues concerning the scope of Skidmore's applicability and offer preliminary thoughts for addressing those questions.

June 29, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Chason on Outlawing Pension-Funding Shortfalls

Eric D. Chason (William & Mary) has published Outlawing Pension-Funding Shortfalls, 26 Va. Tax Rev. 519 (2007).  Here is the abstract:

Before ERISA, employees faced a large risk that their employers would default or renege on pension obligations. By creating a federal guarantor of pensions (the PBGC), ERISA has greatly reduced this risk. All else being equal, low-risk pensions are worth more to employees but cost more to provide. Congress has never had a coherent policy on who should pay for these extra costs. Moreover, legal scholars have failed to create a theoretical framework for dealing with these costs, focusing instead on the supposed “moral hazard” that the PBGC guaranty creates. This Article inserts itself into the scholarly vacuum, asserting that employers should bear the full cost of providing low-risk pensions to their employees.

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June 29, 2007 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Tax News Roundup

DOE Gives ABA 18 Months to Justify New Diversity Standard in Law School Accreditation

Interesting article today in Inside Higher Ed:  Spellings Gets Tougher on the ABA, by Doug Lederman:

Education Secretary Margaret Spellings has upheld the recommendation of a federal advisory committee that she extend for 18 months her department’s recognition of the American Bar Association body that accredits law schools. But the secretary, expressing clear disapproval of the accreditor’s controversial new “diversity” standard, is also — against the recommendation of the advisory panel — requiring the law school accreditor to report about how it applies the diversity standard.

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June 29, 2007 in Law School | Permalink | Comments (1) | TrackBack (0)

SSRN Graduate Tax Faculty Rankings

Theodore P. Seto (Loyola-L.A.) has updated his monthly rankings of the Top 15 Graduate Tax Faculties, as measured by the number of SSRN downloads (through 6/1/07):

Seto_on_the_top_15_graduate_tax_f_2

For purpose of Ted’s analysis, a tax professor is initially defined as any law professor at a U.S. law school (1) self-identifying with one of the tax categories in the AALS faculty listing, (2) who has posted at least one tax or tax-related article in abstract or full text on SSRN. Paul Caron’s listing of new hires and lateral transfers is also reflected. (Lateral transfers due to take effect July 2007 are not yet incorporated.) Further corrections are also made as requested. As is true of Paul Caron’s ranking of individual tax professors, downloads of all SSRN postings of any tax professor, so defined, are then tallied. This month’s tally for Michigan is boosted by the addition of Jim Hines.

For more on the use of SSRN downloads in law school rankings, see Bernard S. Black & Paul L. Caron, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006).

June 29, 2007 in Grad Tax Faculty Rankings | Permalink | Comments (0) | TrackBack (0)

Weisbach on Happiness and Taxation

David A. Weisbach (Chicago) has posted What Does Happiness Research Tell Us About Happiness? on SSRN.  Here is the abstract:

This paper analyzes the consequences of the findings from research into self-reported well being or happiness for taxation. It primarily considers two findings: that happiness depends on status as well as income, and that individuals may adapt to disability, exhibiting relatively small losses in happiness from disabilities. In each case, it examines how adding these concerns to standard tax models changes the results and then compares the empirical findings of the happiness literature to see whether they provide the type of data needed to parameterize the models. In both cases, the theoretical models ask for different types of data than the happiness studies emphasize. The paper also looks at Robert Frank's arguments for a progressive consumption tax based on the findings of the happiness research. It finds that these claims are not supported by the current findings.

June 29, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Taxing Capital Income

The Urban Institute has published Taxing Capital Income, edited by Henry J. Aaron, Leonard E. Burman, and C. Eugene Steuerle:

The question of whether to tax income from wealth has sparked debate since our country’s inception. Does taxing capital income ensure the progressivity of our system or merely discourage saving? Would switching our tax code to one that taxes only consumption be more efficient or only burden middle- and low-income people? And if we were to radically reform the way America taxes its citizens, how could we ensure that vital revenue would not be lost? Some analysts would even argue that, under our present byzantine tax system, we don’t really tax capital income at all. In this volume, eminent economists analyze the problems associated with taxing capital income and propose policy solutions, which are then challenged by their peers in informed commentary. It may not settle the debate, but policymakers, scholars, and the public will find a wealth of information and ideas to consider.

  • Part I:  Do We Tax Capital Income?
    • Chapter 1:  Does the United States Tax Capital Income?, by Joel Slemrod
      • Commentary by Reed Shuldiner & Jane G. Gravell
  • Part II:  Should We Tax Capital Income?
    • Chapter 2:  Should Capital Income Be Subject to Consumption-Based Taxation?, by George R. Zodrow
      • Commentary by Alan J. Auerbach
    • Chapter 3:  Should We Eliminate Taxation of Capital Income?, by Eric Toder & Kim Rueben
      • Commentary by David Weisbach & Joseph J. Thorndike
  • Part III:  Can We Tax Capital Income?
    • Chapter 4:  Designing an Income Tax on Capital, by Edward D. Kleinbard
    • Chapter 5:  Can Income from Capital Be Taxed? An International Perspective, by Julie Roin
      • Commentary by Paul Oosterhuis
    • Chapter 6:  Tax Planning under the Flat Tax, by Joseph Bankman & Michael Schler
      • Commentary by Edmund Outslay & George A. Plesko
  • Part IV:  Concluding Comments by Henry J. Aaron, C. Eugene Steuerle & Daniel Halperin

For some of the reviewers' comments, see below of the fold:

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June 29, 2007 in Book Club | Permalink | Comments (0) | TrackBack (0)

"Law Schools Should be Run for the Students and Not the Faculty"

Interesting article in Lawdragon:  Storming the Castle, by Katrina Dewey:

For 200 years, the pursuit of an education in the law has caused otherwise intelligent people to behave badly. Very, very badly. ...

[H]is bout of affliction at the hands of legal education caused Turow to press for changes so that others would not be similarly afflicted by what we will call Blackstone’s disease, generally identified in Stages 1 through 5, beginning with study for admission to the bar and ending in death. Always death. Over the years, a growing phalanx of practitioners cried ever more loudly that change was needed but were consistently met with a call over the castle wall: Hark, what sullen fellow (who, we might guess is lacking in intelligence and erudition) goes there?

Lawdragon spent the past six months studying the state of legal education in the United States and discovered that a revolution has occurred. Not surprisingly, dollars played a major role, specifically the salaries commanded by fledgling attorneys with no clue how to practice law. “Forget the Harvard and Yale head in the clouds types, give me six good, nonpampered graduates of Loyola or Miami,” had become an all-too-familiar refrain.

Dollars also mattered in the form of donations from alumni, many of whom still bore the marks of the lash. It’s one thing to love the church, another to support the catechism. And thus came reformation, fueled as well by common sense, competition from other disciplines, the oversaturation of ivory tower professors rewarded for arcania rather than teaching and a world of unlimited information that reduces to present time the value of precedent. ...

“The fundamental revolution in legal education is that even the elite law schools are beginning to recognize law schools should be run for the students and not the faculty,” Turow said in a recent interview. “It’s been a hard time coming.” ...

“To the extent that ‘One L’ was the first voice really raised that this can be better for students,” that’s gratifying. The revolution did not just crystallize schools’ primary focus as educating future practicing lawyers, it also changed how the law is taught — and perhaps even the law itself. The revolution found its foothold at schools that needed something instead of a top tier ranking to attract students. Schools established clinics offering real experience with real clients, founded interdisciplinary courses and brought in a range of practitioners who taught under the title adjunct.

June 29, 2007 in Law School | Permalink | Comments (3) | TrackBack (0)

Growing Older in America: The Health & Retirement Study

The National Institute on Aging of the U.S. National Institute of Health has released Growing Older in America: The Health & Retirement Study.  Here is the abstract:

Growing Older in America: The Health & Retirement Study describes the breadth and depth of the HRS to help familiarize a broad range of researchers; policymakers; media; and organizations concerned with health, economics, and aging with this data resource. Published in 2007, this colorful data book describes the HRS's development and features and offers a snapshot of research findings based on analyses of the Study's data. Sections of the report look at older adults’ health, work and retirement, income and wealth, and family characteristics and intergenerational transfers. More than 65 figures and tables illustrate the text.

June 29, 2007 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Thursday, June 28, 2007

World Wealth Report : Number of Millionaires Grew 8.3% in 2006

Merrill Lynch and the Capgemini Group today released the 11th annual World Wealth Report, which shows that the World’s High Net Worth (HNW) population (those with at least $1 million in investible assets, excluding their primary residences) grew to 9.5 million in 2006 (an 8.3% increase from 2005), with their total assets rising to $37.2 trillion (an 11.4% increase from 2006).  In the United States, the HNW population grew to 2.9 million (a 9.4% increase from 2005), lagging the increases in:

  • Singapore:  21.2%
  • India:  20.5%
  • Indonesia:  16.0%
  • Russia:  15.5%
  • United Arab Emirates:  15.4%
  • South Korea:  14.1%
  • South Africa:  13.3%
  • Israel:  12.9%
  • Czech Republic:  12.6%
  • Hong Kong:  12.2%

Press coverage:

June 28, 2007 in News | Permalink | Comments (0) | TrackBack (0)

More Reasons to "Take Back Fridays"

Many law schools (ours included) struggle to resist the pressure for building a four-day teachin schedule, with most classes on Mondays - Thursdays.  Faculty and students prefer not to have classes on Fridays, and law schools often react by putting popular courses and/or teachers on Fridays in order to have a vibrant law school throughout the week.  Today's Inside Higher Ed provides yet another reason to schedule at least some classes on Fridays:

In recent years, one strategy discussed to combat excessive drinking by students on Thursday nights has been to increase the number of classes that meet on Fridays, particularly in the morning. New research from psychology professors at the University of Missouri at Columbia backs the strategy. The researchers tracked the drinking habits of 3,341undergraduates and found that students who don’t take classes Friday consume twice as much alcohol on Thursday as those with early Friday classes.

The paper is College Student Alcohol Consumption, Day of the Week, and Class Schedule, by Phillip K. Wood, Kenneth J. Sher & Patricia C. Rutledge (all of the University of Missouri–Columbia and the Midwest Alcoholism Research Center).  The abstract is below the fold:

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June 28, 2007 in Law School | Permalink | Comments (0) | TrackBack (0)

Margalioth on The Economics of Accelerated Depreciation

Yoram Margalioth (Tel Aviv University Law School) has published Not a Panacea for Economic Growth: The Case of Accelerated Depreciation, 26 Va. Tax Rev. 493 (2007).  Here is the Conclusion:

U.S. tax policy in the past fifty years has closely followed Evsey Domar's advice in a 1953 paper: “Given the choice between a lower tax rate with normal depreciation, or a higher rate with accelerated depreciation, I would, except in severe inflation, certainly recommend the latter.” In this paper, I beg to differ. I argue that much like another influential paper by Domar, promoting investment as a panacea for economic growth -- a paper that is now generally acknowledged to have misguided the World Bank and the IMF in their aid policy for the past fifty years -- so has his 1953 paper misguided U.S. domestic tax policy, though to a smaller degree.

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June 28, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Florida Allows FSU & UF to Raise Tuition 40%

In an abrupt shift, Gov. Charlie Crist yesterday signed legislation allowing Florida's three top research universities to raise tuition by 30% (USF) and 40% (FSU & UF) over the next several years.  The governor had previously stated his opposition to a differential-tuition bill, but changed his mind after presidents of all eleven of the state's public universities backed the measure.

June 28, 2007 in Law School | Permalink | Comments (0) | TrackBack (0)

Oh, To Be Single Again....

Interesting article in today's Wall Street Journal:  Dinner and a PowerPoint?, by Sue Shellenberger:

You've heard of working vacations. Now comes "the working date." Many single people are so busy with careers that they don't have time for a social life. So they're increasingly blending work and romance. For some, the practice has provided a path to lasting love. ...

A matching work ethic is becoming a kind of compatibility test for many career-minded singles. A typical working date for Scott Friedman, 47, of Denver, a motivational speaker and humorist, starts with, "'Look, I'm busy. You're busy. Why don't we order in and we'll work?'" With one recent partner who also has a demanding career, they would dine on Chinese food at his kitchen table, admiring the city lights from his windows. "Then we'd work for a few hours," he says. "At least," he reasons, he could glance at his date across the room. After that came dessert or a trip out for ice cream. "The actual social part of a four- to five-hour date would be 60 to 90 minutes," he says. The relationship ended for other reasons, but the dates "made me feel better, because I wasn't always the one saying, 'Geez, I have so much to do.'" A subsequent relationship tanked partly because the woman wasn't as busy as he was, Mr. Friedman says. Although she agreed to pass time reading a magazine while he worked after dinner, "it was uncomfortable for me because I knew she was just waiting for me to spend time with her," he says. Feeling guilty, he broke it off. "I decided I was better off by myself."

June 28, 2007 in Miscellaneous | Permalink | Comments (1) | TrackBack (0)

More on The Long Tail of Legal Scholarship

I recently blogged my essay, The Long Tail of Legal Scholarship, 116 Yale L.J. Pocket Part 38 (2006) (part of the The Future of Legal Scholarship Symposium):

Long_tail_3 Chris Anderson’s book, The Long Tail: Why the Future of Business Is Selling Less of More, has attracted enormous attention since its publication in July 2006. His insight is that technology and the Internet have transformed the focus of America’s culture and economy. Whereas pre-Internet firms turned out a small number of “hits” or blockbuster products (the “head” of the demand curve), today’s Internet-era firms offer a broader range of niche products (the “tail”). This Essay argues that the long tail theory can help both explain the current state of legal scholarship and chart its future.

Tom Smith's ongoing research project, The Web of Law, tallied citations to law review articles and paints legal scholarship as a hit-driven market, in contrast to the Long Tail theory's predictions: The top 0.5% of articles get 18% of all citations; the top 5.2% of articles get 50% of all citations; and the top 17% of articles get 79% of all citations. The tail ends abruptly, as 40% of articles are never cited at all.

In contrast, I mined SSRN download data and found a much longer tail than is present in the citations data:

Consistent with the Long Tail thesis, 97% of authors have had at least one download in the past year and 100% have had at least one download at some time. (This Long Tail is not present in citations data; 40% of articles have never been cited.)

The Long Tail of the SSRN download data is reflected in the following chart showing the number of new downloads for law authors ranked 1001 through 3501:

Long_tail_chart

Bill Henderson (Indiana) is undertaking a massive project compiling 80 years worth of bibliographic data from the Index of Legal Periodical (ILP) with 85 years of biographical information from the AALS directory. He reported some preliminary findings yesterday, including that there are 314,331 authors and 750,000 articles (2.45 articles per author) in the ILP database. He noted:

Similar to Paul Caron's observation on The Long Tail of Legal Scholarship, the Top 1000 authors account for 9.1% of the entries (70,452). In other words, 1/3 of 1% of the authors produced 9.1% of the entries.

June 28, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

SSRN Tax Faculty Rankings

Theodore P. Seto (Loyola-L.A.) has updated his monthly rankings of the Top 25 U.S. Law School Tax Faculties, as measured by the number of SSRN downloads (through 6/1/07):

Seto_on_the_top_25_tax_faculties_60 

For purpose of Ted’s analysis, a tax professor is initially defined as any law professor at a U.S. law school (1) self-identifying with one of the tax categories in the AALS faculty listing, (2) who has posted at least one tax or tax-related article in abstract or full text on SSRN. Paul Caron’s listing of new hires and lateral transfers is also reflected. (Lateral transfers due to take effect July 2007 are not yet incorporated.) Further corrections are also made as requested. As is true of Paul Caron’s ranking of individual tax professors, downloads of all SSRN postings of any tax professor, so defined, are then tallied. This month’s tally for Michigan is boosted by the addition of Jim Hines.

For more on the use of SSRN downloads in law school rankings, see Bernard S. Black & Paul L. Caron, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006).

June 28, 2007 in Tax Faculty Rankings | Permalink | Comments (0) | TrackBack (0)

Private Equity Tax Developments

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June 28, 2007 in News | Permalink | Comments (0) | TrackBack (0)

AMT Developments

June 28, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Hein and the Roberts' Court's "Disingenuous Respect for Precedent"

Michael Dorf (Columbia) has an interesting post on the Roberts' Court's "disingenuous respect for precedent":

The emerging theme of the Roberts Court is what I'll call disingenuous respect for precedent. In a number of key cases so far this Term, the Court has purported to follow earlier precedents while issuing rulings that are pretty hard to square with those rulings. The most recent example is Hein v. Freedom From Religion Foundation, Inc. [blogged here], in which Justice Alito, for the Court, "distinguishes" the Flast case on the ground that taxpayer standing is permitted in Establishment Clause cases challenging legislative appropriation of funds but not executive expenditure of those funds. (Yeah, and the VP is not part of the executive branch.)

See also:

June 28, 2007 in News | Permalink | Comments (1) | TrackBack (0)

Wednesday, June 27, 2007

The Taxation of Ernest Hemingway

Anthony E. Rebollo (Richardson Plowden Carpenter & Robinson, Columbia, SC) has published The Taxation of Ernest Hemingway, 26 The Hemingway Review 22 (Spring 2007)(published by the Hemingway Society and the University of Idaho). Here is the abstract:

Taxes played a surprisingly prominent role in the life of Ernest Hemingway—so much so that he personally dealt with, or wrote about, most of the major tax concepts embodied in the Internal Revenue Code. “The Taxation of Ernest Hemingway” highlights Hemingway’s written observations about a variety of tax matters, including remarks about the state of his tax affairs and possible investigations by the Internal Revenue Service. Many of Hemingway’s comments about tax issues, such as the complexity of the laws or his frustration with substantiating expenses, would undoubtedly resonate with today’s taxpayers. He referred to tax season as the “bastardly income tax epoch that comes to interrupt and bitch work just at the best working time” and once remarked that if his children were asked what their father did in WW II, they could say that “he paid for it.” But while Hemingway frequently complained about taxes, his approach to reporting and paying taxes was straightforward and, overall, his outlook on having to do so was positive (not what one would necessarily expect from someone in the 90% tax bracket). The best evidence of this? Consider Hemingway’s remarks to his tax attorney: While noting that he had been “crippled, financially, by taxes,” Hemingway nevertheless stated that he was “as proud of haveing [sic] helped my Government in that way as of any aid I was able to give in the field[,]” adding that “I need money, badly, but not badly enough to do one dishonorable, shady, borderline, or ‘fast’ thing to get it.”

June 27, 2007 in Book Club, Scholarship | Permalink | Comments (0) | TrackBack (1)

Warren Buffet Pays 17.7% Tax Rate; His Employees Pay 32.9%

Interesting report from the Hillary Clinton fundraiser last night:  Warren Buffet complained that he paid a 17.7% tax rate on his $46 million of taxable income in 2006, while his employees paid an average 32.9% tax rate (his receptionist's tax rate was 30%).

Update:  For additional commentary, see

June 27, 2007 in Celebrity Tax Lore, News | Permalink | Comments (57) | TrackBack (3)

Goldberg on The Transition to a Consumption Tax

Daniel S. Goldberg (Maryland) has published The Aches and Pains of Transition to a Consumption Tax:  Can We Get There From Here?, 26 Va. Tax Rev. 447 (2007).  Here is the abstract:

This article discusses probably the most significant obstacle to the adoption of a consumption tax: the negative effects on existing wealth that the transition from the income tax to most forms of a consumption tax would have. The Congressional Budget Office in its 1997 study posed the question, “How to Get There from Here.” The difficulty with transition and the changes in the tax law since the CBO study, however, prompt the more basic question: “Can we get there from here?” This article deals with this question by examining the effects of transition on existing wealth under a variety of consumption tax systems and the likely responses of transition relief under each of the systems. The consumption tax proposals considered and analyzed include direct consumption taxes (like a consumed income tax and yield exemption tax), indirect consumption taxes (like a retail sales tax and various forms of value added taxes), and combinations of the two (like the Flat Tax, X Tax, and E Tax proposals), which involve a two-tier tax structure.

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June 27, 2007 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Independent Sector Releases Analysis of Draft Form 990

Independent Sector has relased a 10-page analysis of the IRS's Draft Form 990 (blogged here).

June 27, 2007 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

"You're Only as Good as Your Last Class"

Sobering teaching thought of the day from Dan Shaviro (NYU):  you're only as good as your last class.

June 27, 2007 in Teaching | Permalink | Comments (0) | TrackBack (0)

SSRN Tax Professor Rankings

SSRN has updated its new monthly rankings of 432 American and international law school faculties and 1,500 law professors by (among other things) the number of paper downloads from the SSRN data base.  Here is the new list (through June 1, 2007) of the Top 25 Tax Professors in two of the SSRN categories: all-time downloads and new downloads (within the past 12 months) [click on chart to enlarge]:

Ssrn_top_25_tax_faculty_607

Here are the biggest upward moves in each category from the May 1, 2007 ranking [click on chart to enlarge]:

Ssrn_biggest_moves_607

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June 27, 2007 in Tax Prof Rankings | Permalink | Comments (0) | TrackBack (0)

Senate Holds Hearing on AMT Today

The Senate Finance Committee holds a hearing today on The Stealth Tax that’s No Longer a Wealth Tax: How to Stop the AMT from Sneaking Up on Unsuspecting Taxpayers.  Here are the witnesses scheduled to testify:

  • Frank Degen (National Association of Enrolled Agents)
  • Leonard Burman (Director, Tax Policy Center)
  • Kevin Hassett (Director of Economic Policy Studies, American Enterprise Institute for Policy Research)
  • Michael J. Graetz (Justus S. Hotchkiss Professor of Law, Yale Law School)

The hearing takes place at 10:00 a.m. in 215 Dirksen Senate Office Building.

In connection with the hearing, the Joint Committee on Taxation has released Present Law and Background Relating to the Individual Alternative Minimum Tax (JCX-38-07).

June 27, 2007 in Congressional News | Permalink | Comments (0) | TrackBack (0)

NLJ: Law Schools Unlikely to Join Boycott of U.S. News Rankings

Interesting article in this week's National Law Journal:  Law Schools Unlikely to Boycott Magazine Rankings; Fallout from Liberal Arts Boycott Minimal — So Far, by Leigh Jones:

Despite law schools' widespread criticism of the rankings by U.S. News & World Report, it seems unlikely — at least for now — that they will band together in a boycott that would follow the lead set by a group of liberal arts colleges. ... . At most, a "handful" of law schools may follow suit, said Saul Levmore, dean of University of Chicago Law School and a board member of the Association of American Law Deans.

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June 27, 2007 in News | Permalink | Comments (0) | TrackBack (0)

ABA Tax Section Offers Teleconference & Webcast Today on FIN 48

The ABA Tax Section offers a teleconference and webcast today on FIN 48: Latest Guidance and Disclosures from 1:00 - 2:30 p.m. EST:

In May 2007, the first round of FIN 48 tax contingency disclosures surfaced for public companies, and now the real FIN 48 work is truly beginning. Questions raised include:

  • How will FIN 48 affect a company's decision on how to structure and document transactions?
  • How and when should a company disclose changes to tax contingencies as it navigates the IRS audit process or enters into new transactions?
  • How should companies respond to the IRS' questions about their public FIN 48 disclosures?
  • Should companies be concerned about the SEC and investor groups asking for more information?

This panel will address these topics and use the insight gained from the first round of disclosures, combined with the panel's own FIN 48 experience, to move beyond the mechanics and discuss the practical implications of FIN 48.

Faculty:

  • Patrice Mano (Deloitte Tax, Washington, D.C.)
  • Danielle Rolfes (Ivins, Phillips & Barker, Washington. D.C.)
  • Steven Schneider (Miller & Chevalier, Washington, D.C.)

June 27, 2007 in ABA Tax Section, Conferences | Permalink | Comments (0) | TrackBack (0)

Tax Foundation: Comparing Popular Tax Deductions to the Bush Tax Cuts

The Tax Foundation has published Comparing Popular Tax Deductions to the Bush Tax Cuts, by Gerald Prante.  Here is the Conclusion:

It is a myth that middle-class Americans are the primary beneficiaries of our income tax code's biggest tax preferences. Instead, the truth is that most of the tax savings from the exemption of municipal bond interest and the three deductions for state-local taxes, charitable gifts and interest paid flow to people at the top end of the earnings spectrum.

Though all four of these tax preferences are popular among lawmakers, and the charitable deduction is unassailably popular among individual taxpayers, none of them is fundamental to sound tax policy, and they all cause tax rates to be higher.

Politicians can call taxpayers in the top ten percent "rich" and denounce the Bush tax cuts for flowing mostly to this group, but if they do, they must also acknowledge that the other popular tax preferences discussed here also flow to "the rich." On the other hand, if they call the people in the top ten percent "middle-class," then they can defend both the Bush tax cuts and these four other tax preferences as "benefiting the middle class." But they can't have it both ways.

June 27, 2007 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 26, 2007

Queen's University Seeks to Hire Tax Prof

The Queen's University Faculty of Law is seeking to hire a Tax Prof to begin July 1, 2008:

Queen's University Faculty of Law invites applications for up to three tenure-track or tenured appointments, particularly at the Assistant or Associate Professor level, to begin July 1, 2008. The Faculty is seeking candidates who will contribute actively to the life of the academic community at Queen's and beyond. The main criterion is academic excellence, or a demonstrated potential for excellence, as reflected in the candidate’s scholarly and teaching record. Applicants must have completed, or be close to completing, graduate studies in law or a related field. The Faculty welcomes applicants from all areas of legal study and is particularly interested in applicants with expertise in Business Law, Tax Law, International Law, Intellectual Property Law, and Labour Law.

June 26, 2007 in Tax Prof Jobs | Permalink | Comments (0) | TrackBack (0)

Avi-Yonah Co-Chairs Conference on New Developments in Sino-U.S. Corporate Tax Law at Peking University

Reuven Avi-Yonah (Michigan) recently co-chaired a conference on New Developments in Sino-U.S. Corporate Tax Law at Peking University’s Law School.  The Conference was convened by the Joint Center for China – U.S. Law & Policy Studies of Peking University, the Fiscal Law Research Center of Peking University, and the University of Michigan Law School. Speakers included leading Chinese academics and tax officials, U.S. Tax Court Judge David Laro, and Associate Dean Kyle D. Logue (Michigan).

June 26, 2007 in Conferences | Permalink | Comments (0) | TrackBack (0)

Tax News Roundup

NLJ: The Changing Work Habits of Young Lawyers

Interesting article in this week's National law Journal:  Gen Y at Work: The Changing Landscape, by Amy J. McMaster:

The ability to multitask is only one of many skills that seem inherent to young lawyers. Largely desensitized to virtual distractions, it is not uncommon to witness a young lawyer working diligently on a brief, streaming online music, and running an IM program in the background, all at the same time.

Law firms, and at least one federal judge I am aware of, who attempt to reduce these perceived distractions — by blocking access to websites, IM programs and the like — send an ill-received "Big Brother"-type message, and simply encourage some 15-year-old computer genius out in California to design a better program. After all, there's a reason that the term Generation Y is used interchangeably with The Internet Generation.

In talking with our summer associates about their experiences so far, my fellow coordinator and I inquired whether they were using their secretaries to type letters, make edits to briefs, enter time, etc. The response we got was not unexpected. Why would they give work to somebody else when they could do it just as fast, if not faster, themselves? The reduction in support staff at many firms and businesses throughout America is a testament to the fact that new lawyers are increasingly easing the workload of secretaries, paralegals and onsite I.T., not to mention decreasing lost time in transitioning projects back and forth. They stay abreast of the latest changes in computer technology and online resources, which often leads to increased job efficiency. Who knew that there was a $50 website subscription that could alleviate most, if not all of a lawyer's blue-booking woes?

While young lawyers cannot continuously expect feedback or seek reassurances from those around them in order to validate their sense of self, increasing awareness among supervisors and managers of the need for periodic, constructive feedback is also not beyond the pale.

June 26, 2007 in News | Permalink | Comments (0) | TrackBack (0)

Should Law Schools Emulate Voluntary System of Accountability?

Interesting article in today's Chronicle of Higher Education:  Public Colleges Release Accountability Plan to Measure Their Performance, by Karin Fischer:

The two associations that represent the nation's public colleges are likely to vote this fall on a voluntary accountability system that would allow the public to compare similar institutions. The National Association of State Universities and Land-Grant Colleges and the American Association of State Colleges and Universities released on Monday a template that participating colleges will use to report their data online. Each university's page will consist of a common set of measures, including college cost, transfer and graduation rates, and student satisfaction. The Voluntary System of Accountability Program also will include an assessment of student learning. Under the proposed design, each institution will post selected results from one of three tests: the Collegiate Assessment of Academic Proficiency, the Collegiate Learning Assessment, or the Measure of Academic Proficiency and Progress.

See also Inside Higher Ed:  Campus Accountability Proposals Evolve, by Doug Lederman.

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

WSJ on Law School Rankings

Interesting article in today's Wall Street Journal:  Law Schools Also Ranked by Blogs Now, by Amir Efrati:

Since they first began appearing annually in 1990, U.S. News's law-school rankings have been the go-to list for students venturing into the field. While the magazine's business-school rankings face competition from the likes of BusinessWeek and The Wall Street Journal, the magazine has essentially had a monopoly in the law-school realm. But its list has also been heavily criticized by deans and in scores of law-journal articles. Among the complaints from prospective students: In terms of employment, the survey focuses on whether grads are employed but not where they are employed. Flipping burgers would count. In the last two years, at least a dozen upstart Web sites, academic papers and blogs have stepped in with surveys of their own to feed the hunger for information on everything from the quality of the faculty to what a school's diploma might be worth to future employers.

The WSJ article links to nine alternatives to the U.S. News law school rankings, including the article I co-authored with Bernie Black, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006), and the web site I publish with Brian Leiter and Joe Hodnicki, Leiter's Law School Rankings.  The WSJ article contains this nifty chart comparing the Top 10 law schools under these various metrics [click on chart to enlarge]:

Wsj_rankings_2

Update:  WSJ's Law Blog:   The Alternative Law-School Ranking Scene, by Peter Lattman.

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

Supreme Court Grants Cert to Decide Whether Trust's Deduction of Investment Advisory Fees Is Subject to 2% Floor

The Supreme Court yesterday granted certiorari in Knight v. Commissioner, No. 06-1286 (6/25/07).  The Tax Court (124 T.C. No. 19 (2005)) and Second Circuit (467 F.3d 149 (2d Cir. 2006)) both agreed with the Service's position that a trustee's payment of fees to an investment adviser are subject to the 2% floor of § 67.

June 26, 2007 in New Cases | Permalink | Comments (0) | TrackBack (1)

Nominate Your Favorite Tax Book for the Coif Award

The AALS is seeking nominations for the prestigious Coif Book Award to be given to the best book published in the field of law in 2005-06.  The book must "evidence creative talent of the highest order" and have been published between January 1, 2005 and December 31, 2006.  Nominations can be sent to Chris Brooks Whitman (Michigan), Chair, Coif Book Award Committee.  For a list of the previous winners, see here.

June 26, 2007 in Book Club, Law School, Scholarship | Permalink | Comments (0) | TrackBack (0)

Lowman on Federal Taxpayer Grievances Challenging Executive Action

Following up on yesterday's decision by the Supreme Court in Hein v. Freedom From Religion Foundation Inc., No. 06-157 (6/25/07) (blogged here): Debra L Lowman (St. John's) has published A Call for Judicial Restraint: Federal Taxpayer Grievances Challenging Executive Action, 30 Seattle U. L. Rev. 651 (2007).  Here is the abstract:

This article offers a critique of the interesting case of Freedom From Religion Foundation, Inc. v. Chao, 433 F.3d 989 (7th Cir. 2006), which is on appeal before the United States Supreme Court. In that case, the Court of Appeals for the Seventh Circuit held that the plaintiffs qua taxpayers had standing under Article III of the Constitution to challenge the constitutionality of the Executive Branch's dedication of federal funds to President Bush's Faith Based and Community Initiatives program. The majority opinion, written by Judge Posner, spawned a vigorous dissenting opinion by Judge Ripple, who on denial of defendants' petition for rehearing, was joined by three more judges. Two more judges, Chief Judge Flaum and Judge Easterbrook, concurred in the denial of rehearing because they viewed the matter as one for the resolution by the Supreme Court. It is the author's position that the Freedom court's notion of taxpayer standing is not only irreconcilable with Supreme Court taxpayer standing case law, but is also untenable as a matter of general standing doctrine. The author calls upon the federal Judiciary to stay its hand in taxpayer grievances concerning purely executive action.

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

Monday, June 25, 2007

Joint Tax Committee Releases Report on Individual AMT

Supreme Court: Taxpayers Lack Standing to Challenge President Bush's Faith-Based Program

In a 5-4 decision, the U.S. Supreme Court today held that a taxpayer group lacked standing to challenge President Bush's faith-based program.  Hein v. Freedom From Religion Foundation Inc., No. 06-157 (6/25/07).  Justice Alito stated in the plurality opinion (joined by Chief Justice Roberts and Justice Kennedy) that "if every federal taxpayer could sue to challenge any government expenditure, the federal courts would cease to function as courts of law and would be cast in the role of general complaint bureaus."  Justice Kennedy filed a separate concurring opinion, and Justice Scalia filed a concurring opinion in which Justice Thomas joined.  Justice Souter filed a dissenting opinion in which Justices Stevens, Ginsburg, and Breyer joined.

Press and blogosphere commentary:

June 25, 2007 in New Cases | Permalink | Comments (0) | TrackBack (1)

IRS: Space Needs of Blended Family Constitutes "Unforseen Circumstances" Permitting Exclusion of Gain on Sale of Home Owned < 2 Years

The Service has ruled that accommodating the space needs of a blended family constitutes sufficiently "unforseen circumstances" under § 121(c) to permit a taxpayer to exclude a porion of the gain from the sale of his home used as his principal residence for less than two years.  Priv. Ltr. Rul. 2007-25-018 (3/15/07):

On Date 1, Taxpayer A purchased Residence 1. On Date 2, Taxpayer B purchased Residence 2. After the purchase of these residences, Taxpayer A and Taxpayer B met and later married on Date 3. Taxpayer A and Taxpayer B purchased Residence 3 on Date 4 shortly after their marriage. About a month later, Taxpayer A sold residence 1 on Date 5, and Taxpayer B sold Residence 2 on Date 6. Taxpayer B held Residence 2 less than two years, about X months.

Residence 1 and Residence 2 each had three bedrooms. Residence 3 has four bedrooms. Taxpayer A has three children from a previous marriage, and Taxpayer B has two children from a previous marriage. Residence 3 allows Taxpayers A and B to provide suitable bedroom arrangements for their blended family, which includes adolescent children of the opposite sex. ...

Section 1.121-3(e)(1) provides that a sale is by reason of unforeseen circumstances if the primary reason for the sale is the occurrence of an event that the taxpayer could not reasonably have anticipated before purchasing and occupying the residence. Section 1.121-3(e)(3) states that the Commissioner may issue rulings addressed to specific taxpayers identifying events or situations as unforeseen circumstances with regard to those taxpayers.

In the present case, based on the facts, representations, and the relevant law, we conclude that the occurrence of unforeseen circumstances was the primary reason for the sale of Residence 2 by Taxpayer B on Date 6. When Taxpayer B purchased and began using Residence 2 as his principal residence, he had not met Taxpayer A. He met and married Taxpayer A during the period of his ownership and use of Residence 2. As a consequence of the marriage, the suitability of Residence 2 as B’s principal residence materially changed. Taxpayer A and Taxpayer B needed a larger home with more bedrooms to suitably accommodate their blended family. The occurrence of Taxpayer B’s marriage to Taxpayer A and the need to suitably accommodate their blended family were unforeseen circumstances. The occurrence of these unforeseen circumstances was the primary reason for the sale of Residence 2 by Taxpayer B.

Accordingly, the gain on the sale of Residence 2, which Taxpayer B owned and used as a principal residence for less than two of the preceding five years, may be excluded under the reduced maximum exclusion of gain in section 121(c).

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

Tax News Roundup

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

Judge Rules for Dry Cleaners in $64 Million Lawsuit Over Missing Pants

Washington, D.C. Superior Judge Judith Bartnoff entered judgment today in favor of the dry cleaners sued by Administrative Law Judge Roy Pearson for $65 million over $10 of alterations to his pants.  From the 23-page opinion:

With regard to the alleged missing pants, the plaintiff has not met his burden of proving that the pants the defendants attempted to return to him were not the pants he brought in for alterations. At best, the evidence on that subject is in equipoise. The Court agrees with the plaintiff that the pants in the defendants' possession do not appear to match the jacket to his burgundy and blue pinstriped suit. The Court also will accept that Mr. Pearson does not like cuffs on his pants. ...

The plaintiff's claims regarding the "Satisfaction Guaranteed" sign are premised on his interpretation that the sign is an unconditional and unlimited warranty of satisfaction to the customer, as determined solely by the customer, without regard to the facts or to any notion of reasonableness. The plaintiff confirmed at trial that in his view, if a customer brings in an item of clothing to be dry cleaned, and the dry cleaner remembers the item, and the customer then claims that the item is not his when the dry cleaner presents it back to the customer after it has been cleaned, the cleaner must pay the customer whatever the customer claims the item is worth if there is a "Satisfaction Guaranteed" sign in the store, even if the dry cleaner knows the customer is mistaken or lying. Nothing in the law supports that position.

The judge also awarded the dry cleaners their court costs and stated that "[t]he issue of the defendants' claim for attorney's fees against the plaintiff will be addressed after the defendant's motions for sanctions and for attorney's fees have been filed and briefed by the parties."  See also the Judgment entered today by the judge.

Press and blogosphere coverage:

Prior TaxProf Blog coverage:

June 25, 2007 in Celebrity Tax Lore | Permalink | Comments (1) | TrackBack (0)

KPMG Prosecutors Ask Judge to Dismiss Tax Shelter Indictments

Federal prosecutors have filed a motion requesting that U.S. District Judge Lewis A. Kaplan dismiss indictments against a dozen former KPMG partners on charges that they sold illegal tax shelters:

June 25, 2007 in New Cases, News | Permalink | Comments (0) | TrackBack (0)