Tuesday, July 31, 2007
Dennis J. Ventry, Jr. (American) has posted Welfare by Any Other Name: Tax Transfers and the EITC, 56 Am. U. L. Rev. ___ (2007), on SSRN. Here is the abstract:
Tax credits, particularly refundable tax credits, are viewed increasingly as a social policymaking magic bullet. Indeed, the tax instrument can be a particularly effective and efficient mechanism for delivering social welfare benefits. However, deploying uniform refundable credits or universal tax subsidies will not solve all anti-poverty woes. In particular, over-reliance on the tax instrument blinds policymakers to a more fundamental conundrum that has plagued government transfers for over thirty years: What exactly is the government trying to accomplish by delivering social welfare benefits through the tax system? The Article explores this systemic question, and poses two further questions. First, what and who are policymakers targeting when they advocate tax-transfer programs like the EITC? And second, are current tax-transfer efforts effectively assisting the targeted beneficiaries? In addition, the Article examines the current political and administrative state of the EITC, and recommends several ways the program can further expand its reach and efficacy. In the process, it offers a sharp rebuttal to recent scholarship suggesting that the EITC is in political danger.
My MoneyLaw co-blogger Tom Bell (Chapman) assesses the impact of the changes made by U.S. News to its placement variable by computing the effect it would have had on this year's overall scores and overall ranking of the Top 100 law schools. According to Tom's model, here are the schools most impacted by the change in the overall ranking (click on chart to enlarge]:
In addition, Mississippi would rise to #99 from Tier 3, Santa Clara and UNLV would fall to Tier 3 from, respectively, #91 and #100.
From a NALP press release:
The vast majority of Class of 2006 law school graduates — 90.7% of those for whom employment status was known — were employed as of February 15, 2007. This rate increased for the second year in a row and topped 90% for the first time since 2000. In the past decade, the employment market for new law graduates has remained relatively strong and remarkably stable, standing close to or above an 89% employment rate since 1997. It is also clear, however, that a strong employment market does not mean that every new graduate started work at a large firm at one of the much publicized $135,000 or $145,000 salaries. In fact, just 14% of salaries were either $135,000 or $145,000. Far more, 42%, were $55,000 or less. Far more graduates started work in small firms of 50 or fewer lawyers or in non-firm settings (71% of those employed) than at firms of more than 100 lawyers (just 20% of those employed).
These are among the findings reported in NALP’s newly released Jobs & JD’s: Employment and Salaries of New Law Graduates — Class of 2006, the only comprehensive study available on the employment experiences of recent law graduates. This 33rd consecutive report reflects a total of 182 ABA-accredited law schools participating in the study, providing employment information on 92% of all graduates of the Class of 2006.
See also Leigh Jones, Jobs Aplenty, But Not Many Pay the Big Bucks, Nat'l L. J. (7/31/07).
Dan Solove (George Washington) has updated his census of law professor bloggers (here and here). He notes that there are now 365 law professor bloggers (up from 309 in October 2006). The gender breakdown of the 365 law professor bloggers is 74% male and 26% female.
77 (21%) of the bloggers are part of our Law Professor Blogs Network. Our network is more diverse than the general law prof blogosphere: 66% male and 34% female.
There are now eleven tax professor bloggers (73% male and 27% female):
- Linda Beale (Wayne State): ataxingmatter
- Donna Byrne (William Mitchell): Food Law Prof Blog
- Neil Buchanan (George Washington): Left2Right & Dorf on Law
- Paul Caron (Cincinnati): TaxProf Blog
- Jack Bogdanski (Lewis & Clark): Jack Bog's Blog
- Victor Fleischer (Illinois): Conglomerate
- Michael Livingston (Rutgers-Camden): From Milan to Mumbai
- Eric Lustig (New England): Adjunct Law Prof Blog
- Jim Maule (Villanova): Mauled Again
- Gail Richmond (Nova): Adjunct Law Prof Blog
- Dan Shaviro (NYU): Start Making Sense
10:15 a.m. - 12:00 p.m.: United States Supreme Court and Legislative Preview: Tax, Corporations, and Business Regulation. This panel focuses on important business, tax, corporate and regulatory cases that will be heard by the United States Supreme Court during its coming term, or that are pending in the lower federal courts. It also focuses on major pieces of legislation in this area that are pending or have been introduced in the United States Congress or in state legislatures.
- Moderator: Gail Richmond (Nova)
- Thomas Plank (Tennessee)
- David Millon (Washington & Lee)
- Mitchell Crusto (Loyola-New Orleans)
In addition, this nontax panel may be of interest:
- Charles Kingson (Professor, University of Pennsylvania Law School)
- Adam Ifshin (President, DLC Management Corp., New York)
- Joseph Bankman (Professor, Stanford Law School)
- John B. Frank (Managing Principal, Oaktree Capital Management, Los Angeles)
- Bruce Rosenblum (Managing Director, The Carlyle Group, Washington, D.C.)
- Bill Stanfill (Partner, Silver Creek Technology Investors, Denver)
- Darryll Jones (Professor, Stetson University College of Law)
See the testimony from the July 11 Senate Finance Committee hearing on Carried Interest, Part 1, blogged here. In connection with that hearing, the Joint Committee on Taxation released Present Law and Analysis Relating to Tax Treatment of Partnership Carried Interests (JCX-41-07).
ABC is reporting that possible Republican presidential candidate Fred Thompson has pledged to sign the Fair Tax bill if enacted by Congress. (For the video, see here.) The Fair Tax would replace all federal taxes with a 23% retail sales tax. Five declared Republican presidential candidates have pledged to support the Fair Tax bill: John McCain, Tommy Thompson, Tom Tancredo, Duncan Hunter, and Mike Huckabee.
Monday, July 30, 2007
David Weisbach (Chicago) has submitted a 17-page research report, The Taxation of Carried Interests In Private Equity Partnerships, to members of Congress. The study was funded by the Private Equity Council. Here is the Executive Summary:
Holders of carried interests in private equity partnerships (as well as all other partnerships) are taxed on their share of partnership income. If the partnership has long-term capital gain, holders of carried interests are taxed on their shares of the long-term capital gain. Some have raised the argument that this “pass-through” treatment of capital gains income from carried interests creates an anomaly because the sponsors of private equity funds perform services for the partnership, and most service income is taxed as ordinary income. They have, therefore, proposed taxing income from carried interests in private equity partnerships as ordinary income.
These proposals are not consistent with basic principles of the tax law, including how capital gains are defined and how partnerships are taxed. They are misplaced for two reasons.
I previously blogged the changes made by U.S. News to bring its law student placement ranking in line with the ABA data (links below). In a two-part series, my MoneyLaw co-blogger Tom Bell (Chapman) addresses six aspects of the change:
- Why does that classification strategy benefit law schools?
- Which law schools pursue that strategy?
- How much do they benefit from it?
- Is that ethical?
- How did we get into the mess?
- How do we get out of it?
- U.S. News Data v. ABA Data: Employed at 9 Months (7/27/07)
- Law Schools Most Hurt by U.S. News' Change to Placement Component of Rankings (7/18/07)
- U.S. News Changes Placement Component of Rankings "to Reduce Gamesmanship by Law Schools" (7/16/07)
In June, I bought you the news (here and here) of the death of Tax Prof John T. Gaubatz. The University of Miami School of Law has posted on its web site a report of John's death, as well as links to:
- Miami Herald obituary
- Slide presentation shown at John's retirement party (4/24/07)
- Remarks Hilarie Bass (Miami J.D., 1981), made at the memorial service
- Citizens for Tax Justice: Burman: End Capital Gains Tax Breaks
- Marginal Revolution: Equalizing the Rate of Tax on Income and Capital Gains?, by Tyler Cowen
- New York Times: In Opposing Tax Plan, Schumer Breaks With Party, by Raymond Hernanedez & Stephen Labaton
- Washington Post: End the Break on Capital Gains (op-ed), by Leonard E. Burman
- Wall Street Journal:
Brown on Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior
Dorothy A. Brown (Washington & Lee) has published Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior, 11 Lewis & Clark L. Rev. 385 (2007). Here is the abstract:
Defined contribution plans have greatly expanded over the last two decades. Defined contribution plans place the investment risk on employees. Employee investment decision making should be examined to determine whether those decisions are influenced by race, ethnicity and/or class.
Empirical data show that investor behavior is greatly influenced by race, ethnicity and/or class. Blacks and Hispanics are far less likely to invest in the stock market than whites. Low income whites are far more likely to invest in the stock market than higher income blacks or Hispanics. As a result, retirement account balances are the greatest for many white households and the least for black, Hispanic, and certain white households. This Article explores those issues and suggests solutions that will allow employees to overcome their built-in biases and make wiser investment choices.
Jay Brown (Denver) has posted Blogs, Law School Rankings, and the Race to the Bottom on SSRN. The paper examines the Top 200 law blogs as ranked by Justia on June 25, 2007. (The ranking is based on the number of visits to law blogs from the law blog search engine on Justia.) Of the Top 200 law blogs by this measure, 37 are run by law professors. Here are the Top 25 law professor blogs (including overall ranking among Top 200 law blogs):
- TaxProf Blog (8)
- Religion Clause (10)
- PrawfsBlawg (15)
- Sentencing Law and Policy (16)
- Workplace Prof Blog (17)
- Conglomerate (18)
- Wills, Trusts & Estates Prof Blog (33)
- Legal Theory Blog (47)
- Federal Civil Practice Bulletin (50)
- While Collar Crime Prof Blog (52)
- Mirror of Justice (53)
- The Volokh Conspiracy (55)
- Truth on the Market (57)
- Technology & Marketing Law Blog (61)
- 43(B)log (65)
- Balkinization (75)
- Concurring Opinions (87)
- CrimProf Blog (99)
- ImmigrationProf Blog (107)
- Ideoblog (114)
- Family Law Prof Blog (118)
- ProfessorBainbridge.com (124)
- Leonard Link (130)
- PropertyProf Blog (141)
- Legal Profession Blog (147)
I am, of course, proud that TaxProf Blog is rated the #1 law blog by Justia, and that five of the Top 10 law blogs (and ten of the Top 25 law blogs) are members of our Law Professor Blogs Network.
Here is the abstract of the paper:
Blogs are changing legal scholarship. Although not a substitute for the detailed, often intricately researched analysis contained in law reviews and other scholarly publications, they fill an important gap in the scholarly continuum. Blog posts can generate ideas and discussion that can be transformed into more a systematic and thorough paper or scholarly article. At the same time, blogs provide a forum for testing ideas once they are published in more traditional venues.
While over time, a blog presence will likely become de rigueur for top scholars and law reviews, top tier schools as a group have not yet targeted blogs as a necessary component of scholarly activity. In the short term, therefore, blogs provide unique opportunities for faculty and law schools outside the top tier to enhance their reputational rankings. Blogs can enhance reputation by allowing faculty to route around some of the biases in law review placements and SSRN rankings that favor those at the top tier schools. Blogs also represent a cost effective mechanism for advertising scholarly activity.
The paper discusses the evidence that blogs enhance reputation and surveys the way that scholars at law schools outside the top tier are already harnessing blogs to enhance their reputations. The paper also discusses what it takes to create a successful blog, from the search for content to the benefits of advertising. The paper finishes with a brief history of The Race to the Bottom, a corporate governance blog.
In Giuliani's Tax Puffery, the non-partisan FactCheck.org assails the former New York City mayor for taking credit for too many tax cuts:
A new radio ad boasts that Rudy Giuliani "cut or eliminated 23 taxes" while mayor of New York City, a boast he and his supporters have repeated many times on the campaign trail. We find that to be an overstatement. Giuliani can properly claim credit for initiating only 15 of those cuts. In fact, he strongly opposed one of the largest cuts for which he claims credit, reversing himself only after a five-month standoff with the city council. In addition, the ad's claim that Giuliani turned the budget deficit he inherited into a surplus, while true enough, ignores the fact that he also left a multibillion-dollar deficit for his successor, not including costs associated with 9/11.
Bridget J. Crawford (Pace) has published Tax Practice in a Circular Revolution: A Review of PLI's Circular 230 Deskbook, 41 Real Prop., Prob. & Tr. J. 213 (2007). Here is the abstract:
This short review essay evaluates the Practicing Law Institute's Circular 230 Deskbook by Jonathan G. Blattmachr, Mitchell M. Gans and Damien Rios. For attorneys, accountants and others who "practice" before the IRS, the Circular 230 Deskbook is a masterful analysis and an important guide to the Internal Revenue Service's labyrinthine rules and regulations governing tax penalties, reportable transactions and the conduct of tax practitioners.
Sunday, July 29, 2007
- Law Professor Blog Rankings
- Tax Prof Profile: Karen Green
- Tax Panels at Today's Law & Society Annual Meeting
- Weekend Tax News Roundup
- Top 5 Tax Paper Downloads
- Advice for Aspiring Tax Profs
- Tax Panel at Today's SEALS Annual Meeting
- Stiff Named Acting Commissioner of IRS
- New York Times:
- The Hedge Fund Class and the French Revolution, by Ben Stein
- For Keogh Plans, a Technicality Could Crack a Nest Egg, by Jan M. Rosen
- The Under-Taxed Kings of Private Equity, by Alan S. Blinder
- Angry Bear: On the Inefficiency of Preferential Treatment of Capital Gains
- Economist's View: Alan Blinder: Low Capital Gains Taxes Cause Distortions
- Wall Street Journal:
- Big Change to Teachers' Funds; Clearer Rules, New Options Are Coming in 403(b) Plans, by Jilian Mince
- House Passes Big Farm Bill; Pelosi Holds Together Democratic Coalition; Sticky Tax Provisions, by David Rogers
- How Keogh Retirement Accounts Can Be "Dinosaurs"
- Tax Advantages of Dumping a Losing Stock, by Tom Herman
- Washington Post: House Passes Massive Farm Bill; Tax Issue Prompts GOP Opposition, by Dan Morgan
This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:
1. [288 Downloads] Municipal Bonds and the Dormant Commerce Clause After United Haulers, by Ethan Yale (Georgetown) & Brian D. Galle (Florida State) [blogged here]
2. [215 Downloads] What Does Happiness Research Tell Us about Happiness?, by David A. Weisbach (Chicago) [blogged here]
3. [183 Downloads] The Tax Advantage to Paying Private Equity Fund Managers with Profit Shares: What is it? Why is it Bad?, by Chris William Sanchirico (Penn) [blogged here]
5. [151 Downloads] Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax, by Lily L. Batchelder (NYU) [blogged here]
In light of the impending August 3 deadline for submitting Faculty Appointments Register forms to be included in the all-important first distribution to law schools in advance of the October 25-27 AALS Faculty Recruitment Conference, aspiring Tax Profs may want to check out the wonderful Program on Careers in Law Teaching web site maintained by Columbia Law Profs Mike Dorf and Carol Sanger. Although the site focuses on the array of services offered to Columbia grads interested in entering legal academia, the site has a wealth of information for all law prof wannabes. Mike also inaugurates today a series of posts on his blog, So You Want to Be a Law Professor, with Part 1: Writing. For further resources see:
- Teaching Fellowships for Aspiring Law Professors (2/27/07)
- Advice for the Aspiring Tax Prof (7/10/07)
12:30 p.m. - 2:35 p.m.: United States Supreme Court and Legislative Update: Tax, Corporations and Business Regulation. This part of the concurrent session focuses on tax, corporate and business decisions from the United States Supreme Court’s recently-completed term, as well as congressional legislation.
- Moderator: Dean Peter Alexander (Southern Illinois)
- William Carney (Emory)
- Christopher Pietruszkiewicz (LSU)
- Kenneth Rosen (Alabama)
- Janice McClendon (Stetson)
In addition, Tax Prof Francine Lipman (Chapman) presents Tenemos Sesenta y Quatro Anos: Latinos/as and Retirement at a Roundtable Discussion of Immigration Issues at 3:00 p.m.
The IRS has announced that Linda Stiff, currently Deputy Commissioner for Operations Support, will become Acting Commissioner of the IRS upon Kevin M. Brown's departure to become COO of the American Red Cross (blogged here). Replacing Stiff as Deputy Commissioner for Operations Support will be Richard Spires, who currently serves as IRS Chief Information Officer.
Saturday, July 28, 2007
Over on Concurring Opinions, Dave Hoffman (Temple) updates the law professor blog ranking project launched in March 2006 by Roger Alford (Pepperdine) on Opinio Juris (and blogged here). He ranks the Top 40 law professor blogs based on traffic (average daily visits as calculated by The Truth Laid Bear). The ranking includes only blogs that have at least one law professor as a regular blogger, and excludes blogs that focus entirely on politics or current events, and blogs that are not tracked by The Truth Laid Bear. (An accompanying spreadsheet extends the rankings to the Top 50 law professor blogs). Here are the Top 10, with the average daily visits:
- Volokh Conspiracy (23,084)
- Althouse (12,204)
- Sentencing Law and Policy (4,066)
- Balkinization (3,727)
- Tax Prof Blog (3,619)
- Concurring Opinions (2,737)
- Brian Leiter’s Law School Reports (1,826)
- Prawfsblawg (1,785)
- Professor Bainbridge (1,683)
- Sports Law Blog (1,107)
Karen Green (Mississippi)
- B.S. 1971, Mississippi
- J.D. 1974, Mississippi
- LL.M. (Tax) 1976, NYU
I began my education as a math major at the University of Mississippi in the late 60s. When I graduated in 1971, I had two job offers -- one in the corporate trust division of a Memphis bank and one as a systems analyst for IBM. Somewhat oddly, considering my love of math and computer programming, I chose the bank job and became interested in becoming a securities lawyer. I returned to Mississippi to attend law school, where I discovered that I enjoyed all things tax -- corporate, partnership, individual, etc. Upon graduation from law school, I immediately entered the graduate tax program at NYU, which was a wonderful academic experience for me.
Law, Society, and Taxation VI: Doctrinal Aspects of Current Tax Controversies (10:15 a.m. - 12:00 p.m.):
The papers in this session offer new insights on a range of classic issues in tax doctrine, including transfer pricing issues, tax aspects of insuring against major disasters, special property exchanges, and taxation of compensation payments.
Chair/Discussant: Tracy Kaye (Seton Hall)
- Transfer Pricing Theory: Inconsistent Applications in Direct and Indirect Taxation, by Richard T. Ainsworth (Boston University):
There are three spheres of transfer pricing analysis – income tax, customs and VAT – and the rules among these spheres are not harmonized. Because these rules intersect far more in practice than in theory businesses frequently face inconsistent treatment among these taxes, a three-way, potentially no-win situation whenever they structure cross-border related party transactions. The world’s largest multinational enterprises transfer goods, services and intangible properties in cross-border related party transactions on a daily basis. Although income tax, customs and VAT authorities each demand an accurate valuation of these supplies, the reality is (with very few exceptions) that the applicable transfer pricing rules are not harmonized among the tax types within jurisdictions (vertical harmonization). There is however, considerable harmonization of transfer pricing norms within a single tax type across multiple jurisdictions (horizontal harmonization). Horizontal harmonies are largely attributable to the influence of supra-national standard setting organizations: the Organization for Economic Cooperation and Development (OECD) in income tax, the World Trade Organization (WTO) in customs, and various regional economic unions, like the European Union (EU) in VAT. The time has come for a concerted effort to be made in the vertical harmonization of transfer pricing regimes, one that maintains the horizontal linkages of the current system. In other words, what is needed is a single global transfer pricing standard. This paper considers the barriers to international trade caused by the partial harmonization of transfer pricing rules.
- In Defense of Section 1031, by Brad Borden (Washburn):
This papere will discuss the policy justifications for section 1031 and why it remains a part of the U.S. tax law after being criticized severely for the past twenty-five years.
- Tax Policy, Statutory Interpretation, and the “In Lieu of” Theory, by Tamara Lynn Larre (University of Saskatchewan):
This paper will discuss the use of the “in lieu of” theory as a tax policy tool and as an interpretive device. The “in lieu of” theory is employed by tax academics and courts to argue that the tax treatment of a compensation payment should depend on the tax treatment of the thing lost. The theory, however, is usually applied without justification or explanation. This paper will explore the ideas that may underlie the “in lieu of” theory and, in light of this analysis, will examine the extent to which the theory should be used in tax policy debates. As the “in lieu of” theory is also used by the courts to interpret income tax law, this paper will examine the appropriateness of this reasoning.
Law, Society, and Taxation VII: Administrative and Political Aspects of Taxes (12:30 p.m. - 2:15 p.m.):
The papers in this session will explore the judicial and administrative enforcement of tax laws, looking in particular at the enforcement of consumption taxes in Australia and the United States.
Chair/Discussant: Karen Brown (George Washington)
- Carousel Fraud: Proposal for a Certified Technology Solution, by Richard T. Ainsworth (Boston University):
Missing trader intra-community (MTIC) fraud threatens the structure and the stability of the European value added tax (VAT). Germany and the United Kingdom have taken the lead in providing empirical measures of the fiscal impact of MTIC fraud. At present good figures for the whole E.U. are merely extrapolations from country-specific reports. Thus, in the U.K. VAT losses are estimated to be between 2.98 billion and 4.47 billion euros this year, leading to “best estimates” of the annual VAT losses to MTIC fraud for the E.U. as a whole to be about 23 billion euro. MTIC fraud, also known as carousel fraud, takes advantage of an imperfect compromise worked out among the Member States in 1991 to facilitate lowering the fiscal frontiers. The compromise was implemented on January 1, 1993, and immediately afterwards an exponential growth in MTIC fraud was observable. The connection between the explosion of MTIC fraud and opening of the single market is more than coincidental. The U.K. Office for National Statistics (ONS) has convincingly documented the relationship. By examining the import and export asymmetries in E.U. – U.K. trade, the ONS has demonstrated that MTIC fraud expanded on the opening of the single market. This paper proposes a technology intensive solution. It argues that a technological approach is preferable in large measure because (unlike the German and U.K. solutions) it retains the fractional payment system, and because it automates the administrative cooperation solution (but does so immediately rather than through the delayed exchanges encouraged by the Commission).
- The Politics of Tax Reform: The Introduction of a Goods and Services Tax, by Kathryn A James (Monash University):
As one of the most pervasive global tax instruments, the goods and services tax (or value-added tax) offers an archetypal example of ‘policy transfer’ or ‘policy convergence’ whereby policy instruments are becoming progressively similar across the developed and developing world. Despite consumption tax reform dominating the Australian political agenda from the 1970s and despite repeated bipartisan attempts to introduce a consumption tax, by 1999 Australia was one of only two OECD countries who had not introduced a goods and services tax. However, on 8 July 1999, the Australian Parliament enacted the A New Tax System (Goods and Services) Act 1999 (Cth), which heralded the introduction of a goods and services tax into the Australian tax system after more than 25 years of failed reform efforts. In light of Australia’s controversial and prolonged resistance to the global trend towards consumption tax reform, the introduction of the Australian goods and services tax provides fertile ground for testing political theory. The paper adopts a framework for analysis which encompasses the major normative approaches across a range of political, legal and social science disciplines. The approaches broadly converge on five principal themes: environment; power; institutions; ideas and processes. In applying this inter-disciplinary and multi-factorial approach to analysing the politics of an Australian goods and services tax, the analysis will enable: 1. The opportunity to test broad and divergent theoretical approaches to a controversial case study in a national context; 2. The induction of broader political theoretical insights from the Australian case study; 3. The detection of broader trends in national and international fiscal policy.
- Tax Reform and Political Reform in Hong Kong, by Tor Krever (University of Cambridge) & Richard Cullen (University of Hong Kong):
There is open agreement that tax reform in Hong Kong is now a matter of when rather than if. The Hong Kong Government itself acknowledges that Hong Kong’s revenue law is out-dated. The expected keystone of the reform process is the introduction of Hong Kong’s first ever general consumption tax, in the form of a Goods and Services Tax. The introduction of a GST will represent the most radical tax reform in Hong Kong since 1947 when the jurisdiction's first income tax system was introduced. The Hong Kong Special Administrative Region of the PRC is also notable for retaining a comparatively outmoded political system. Given that Hong Kong is by most measures a first-world, city-state and has been so for some time, this conjunction of attenuated development in two fundamental public policy regimes raises several questions. First, how has this come to pass? Second, what relationship, if any, lies between the development and maintenance of the tax and political regimes? Third, if major tax reform is to come, is this bound to add significant impetus to the calls for increased democracy in Hong Kong?
- The Culture of Tax Avoidance in Europe and the U.S., by Henry Ordower (St. Louis):
The paper explores the cultural context that contributes or drives decisions to avoid payment of taxes through both permissible means such as tax shelters and impermissible means like unreported income. The paper seeks to understand what societal conditions contribute to increase and decrease in tax avoidance. Examples may include the failure of the legislature to adjust tax rules to changing cultural expectations.
Law, Society, and Taxation VIII: Culture, Family, and Taxes (2:30 p.m. - 4:15 p.m.):
The papers in this panel will explore the development of cultural origins of tax rules as well as specific aspects of how family norms and forms are treated in the tax laws of Canada and the United States.
Chair/Discussant: Anthony C. Infanti (Pittsburgh)
- Tax Regulation of Intimacy by Contract: Transfer Tax Aspects of Powers of Attorney, by Bridget J. Crawford (Pace):
Powers of attorney may be among the most common and the most abused of all estate planning devises. Under a typical durable general power of attorney, the attorney-in-fact typically has the ability to act on behalf of the principal on almost all affairs. Neither the creation nor exercise of such a power usually gives rise to taxable transfer for U.S. federal estate and gift tax consequences. These wealth transfer tax outcomes hinge in large part on the recognition of the fiduciary limitation on an attorney-in-fact’s powers, a limitation that has been rejected by the Internal Revenue Service in other contexts. This paper explores and interprets proposals to commodify the principal/attorney-in-fact relationship against the backdrop of other U.S. cultural practices of outsourcing work that a person cannot find willing and able family members to do, but the person cannot (or will not) do himself or herself.
- Methodology for Analysis of Cultural Origins of Taxation Rules, by Henry Ordower (Saint Louis):
While tax systems in developed economies tend to converge, they are not identical. Dissimilarities in systems generate significant challenges for unification of tax systems and administrations within free trade and proposed free trade blocks. Some differences among systems may yield to a leveling effort, but others may be closely linked to cultural differences that are much more difficult to reconcile. Toward a better understanding of such cultural differences, this paper seeks to develop a methodology for analysis of the cultural origins of taxation elements.
- Just Helping Out: How Should Tax Law Deal with Informal Family Workers?, by Lisa Philipps (York University):
Business owners and employees often incorporate family members into their production processes. How should income tax law conceptualize the work done, for example, by corporate wives, children working in the family restaurant, or relatives helping out in a small service enterprise? The paper elaborates feminist theories of unpaid work to argue that income earning in many contexts is more a collective than an individual undertaking. This insight has implications for the way tax law assigns income, expenses and losses to different taxpayers.
Friday, July 27, 2007
I was hoping to fly under the radar with this, but I have been outed by some of my blogosphere friends (Adjunct Law Prof Blog, Administrative Law Prof Blog, Antitrust & Competition Policy Blog, Brian Leiter's Law School Reports, Food Law Prof Blog, Health Law Prof Blog, ImmigrationProf Blog, Jack Bog's Blog, Legal Profession Blog, M&A Law Prof Blog, MoneyLaw, Poverty Law Prof Blog, PrawfsBlawg, Reproductive Rights Prof Blog, Roth & Co., Securities Law Prof Blog, TortsProf Blog, White Collar Crime Prof Blog, Workplace Prof Blog):
Today I joined Dan Shaviro in the 50-year old club. Like Dan, "I weigh the same and am in better aerobic shape than when I was a college or law student" -- indeed, I bragged to my wife last night that I am one of the few men who can still fit into his wedding suit, but she reminded me that I am one of the even fewer men that still wears a 22-year old suit!
Today culminates a year of transition for me, as I said farewell to my father and family dog, passed through bittersweet milestones (here and here) with my son (here and here) and daughter (here and here), survived a medical rite of passage for folks my age, and re-committed to Cincinnati with a great new job. As I look out on the other side of 50, It is hard to believe that it was only three years ago that I was a finalist for the coveted "Law Prof Hunk" Award (here and here)!
- Associated Press: Treasury Secretary: Corporate Tax System Drags on Companies
- Bloomberg: U.K. Couple Wins Case Over Family Firms' Tax Bills
- CNet News: Net Access Tax Compromise: A Short Extension?
- National Law Journal: Firm Resolves Dispute in KPMG Tax Probe, by Amanda Bronstad
- New York Post: Yanks' Traveling Secretary Takes Leave During Tax Probe
- New York Times: Edwards Proposes Raising Capital gains Tax, by Leslie Wayne
- Register: HMRC Loses Landmark Tax Ruling
- TMC: When Tax Loopholes Attack! (op-ed), by Dana Chasin
- Wall Street Journal:
- The Corporate Tax Myth (op-ed), by R. Glenn Hubbard
- Greenspan Warns of High U.S. Tax Rates
- Paulson Convinced Business Taxes Cause Disadvantages
- Private Equity and Public Good (op-ed), by Wilfried Prewo
My MoneyLaw co-blogger Tom Bell (Chapman) unmasks the 21 schools whose employment at 9 months data reported to U.S. News & World Report differ from the data reported to the ABA (the data account for 14% of the overalll U.S. News law school ranking). Here are the seven schools with the largest positive discrepancy between their U.S. News' employment data and their ABA employment data (along with their 2008 ranking):
- Ohio Northern (Tier 4): 7.9% (90.1% v. 82.2%)
- Florida International (Tier 3): 7.2% (96.0% v. 88.8%)
- Franklin Pierce (Tier 3): 2.9% (94.1% v. 91.2%)
- Northeastern (#85): 2.6% (96.0% v. 93.4%)
- SUNY-Buffalo (#77): 1.7% (97.8% v. 96.1%)
- Appalachian State (Tier 4): 1.7% (71.9% v. 70.2%)
- Marquette (#97): 1.1% (94.9% v. 93.8%)
For folks struggling through the bar exam this week (and the people who love them): check out the trailer for A Lawyer Walks Into a Bar, scheduled for DVD release in September:
A Lawyer Walks Into a Bar is a lurid tale of lawyers and lawsuits and America's fascination with both. ... The documentary explores the influence of the law and its practitioners on American culture, while following six characters as they do whatever it takes to become lawyers themselves.
- ABA Journal:
- Wall Street Journal: Bar Exam, The Movie!, by Nathan Koppel
Commentators have written many books, articles, and research papers concerning court involvement in the school finance controversy. But few studies have attempted a comprehensive, state-by-state measure of the long-term fiscal impact of court education mandates and none have presented a state-by-state estimate of the cost of legislation approved to comply with court education mandates. How much more are states spending on education as a result of these mandates? Have lawmakers increased taxes to comply with the mandates, and if so, how much? Has compliance with court mandates led to long-term increases in per-pupil spending? This study—the first in a new series called Appropriation by Litigation—will answer these questions.
From the press release:
A new, first-of-its-kind study by the Tax Foundation reveals that lawsuits targeting "inequitable" or "inadequate" school funding have failed to produce long-term increases in school spending, but many have produced long-term tax increases. "Lawsuits may be able to build schools, but they haven't proven effective at teaching kids," said study author Chris Atkins. "Higher tax rates appear to be the only enduring result of these school finance lawsuits. This research questions the conventional wisdom that you can sue your way to a better school."
Thursday, July 26, 2007
The IRS announced yesterday that Acting Commissioner Kevin M. Brown will leave in mid-September to become chief operating officer of the American Red Cross, following former IRS Commissioner Mark Everson who left on May 29 to become president and chief executive officer of the American Red Cross. For press coverage, see Associated Press.
Interesting article in the Houston Chronicle: Salary Reality: Many Lawyers Don't Earn Big Bucks, by Maty Flood:
People have a false impression about lawyers — that they all make six-figure salaries. With at least three big law firms in Houston announcing this month that they're raising starting pay to $160,000, there's reason for the confusion. But the reality is that first-year graduates from the three Houston law schools make as little as $30,000 a year and have a median salary of around $70,000. ...
A lot of law students, seduced by publicity about high-end salaries and some wishful thinking, aren't grounded about legal salaries either. "Every student thinks they are going to be in the top 5 percent of the class and make $150,000. The reality is they are not. If the grades are not there, the money does not follow," said Andreaus Boise, career service coordinator for the Thurgood Marshall School of Law at Texas Southern University. ...
The law students who go to the top-tier firms will make $120,000 to $165,000 annually, but that will be the top 10 percent or less, according to the local law school career offices. Those in midsize firms will make roughly $55,000 to $80,000. At small firms or government jobs, they get $40,000 to $60,000. Solo practitioners may make $30,000 or even live off loans when they start out. Certainly with experience, these lawyers should increase their income and eventually most of them will get past $100,000, but not that far past it. The median income or 50th percentile, for all attorneys in Texas was $113,300 in 2005, the last time the State Bar of Texas conducted its survey.
Louisiana attorney Tommy K. Cryer was acquitted on two counts of tax evasion in a jury trial in the federal district court in Louisiana. For a detailed account of the trial, see here. See the original DOJ press release (Local Attorney Indicted on Tax Evasion Charges (10/26/06)). Press and blogosphere coverage:
- IRS Loses Challenge to Prove Tax Liability (NewsByUs)
- IRS Loses Challenge to Prove Tax Liability; Lawyer Is Acquitted After Arguing Income Levy Lacks Legal Foundation (WorldNetDaily)
- Local Attorney Acquitted on Federal Income Tax Charges; Cryer Stopped Filing Income Taxes More Than 10 Years Ago (Shreveport Times)
- Man Dodges Taxes for 10 Years, Wins in Federal District Court (The Consumerist)
- NOT GUILTY! Tom Cryer and Becraft Best the DOJ (LibertyPost)
- Tom Cryer Acquitted on 2 Counts of Tax Fraud (aka Income Tax) (NewsBusters)
For Mr. Cryer's theories on why Americans are not subject to the income tax, see his 109-page memorandum filed in the district court, summarized in this four-part YouTube series from the Lie-Free Zone:
For the IRS's detailed critique of tax protestor arguments, see The Truth About Frivolous Tax Arguments (11/30/06). (Hat Tip: Al Golbert.)
- Law Prof on the Loose: Tax Protestor Gets Off!
- Tax Girl: Cryer Wins One ... Sort Of
- Roth & Co.: "Not Guilty" Doesn't mean "Not Taxable"
- Taxalicious: Man Dodges Taxes For 10 Years, Wins in Federal District Court
Dan Shaviro has a detailed post on Hedge Funds/Carried Interests:
While I feel strongly impelled to comment on publicly prominent tax issues like this one, I do have an "art for art's sake" side that prefers issues to be intellectually interesting rather than publicly prominent (albeit that actual social importance counts heavily in my metric as well). But I am starting to think that the issues here are indeed pretty interesting for their own sake, on the conceptual as well as the practical design level.
John Edwards Releases Tax Plan: Raise Capital Gains Tax from 15% to 28%, Provide Tax Cuts for Middle & Lower Classes
Democratic presidential candidate John Edwards today released his tax plan (Form 1), which will:
- Create three new tax breaks to honor and strengthen three pillars of America's middle class: savings, work, and families
- Require a fair contribution from the wealth of high-income Americans, reversing the shift of the tax code onto middle class wages
- End special tax breaks for insiders
From the press release:
Edwards will help regular families save and get ahead by:
- Creating a Get Ahead Credit, which will expand the Savers Credit to match savings up to $500 a year, providing as much as an additional dollar for every dollar of savings.
- Boosting low-income families' savings with work bonds, which will supplement the Earned Income Tax Credit to match the savings of low-income workers up to $500 per year.
- Exempting from taxes each family's first $250 in interest, capital gains, and dividends.
- Allowing families to deposit part or all of their child tax credit into a tax-free savings account.
- Expanding the Child and Dependent Care Tax Credit to pay up to 50 percent of child care expenses up to $5,000 and make it partially refundable to benefit low-income working families.
- Tripling the EITC for 4 million adults without children and cutting the marriage penalty for 3 million families.
In the past six years, President Bush has cut taxes on capital gains and dividends and started to eliminate taxes on inheritances completely. As a result of his regressive tax policies, the federal tax burden has been pushed onto the backs of working Americans. As president, Edwards will reverse President Bush's "War on Work" by:
- Raising the top tax rate on long-term capital gains to 28%, the same rate signed into law by President Reagan. The 28% rate will ensure that high-income investors will pay taxes on their investment income at a similar rate to what regular families pay on their earned income.
- Repealing the Bush tax cuts for the most fortunate families, who make more than $200,000 a year.
- Ending the abuse of foreign tax havens.
- Closing the hedge fund and private equity loopholes.
- Capping executive pensions.
For more details, see the fact sheet. Press coverage:
Yet more on the tax consequences of ABC's TV show, Extreme Makeover: Home Edition -- this time, a press report on an Idaho resident: Stockdales Get "Makeover" House Tax-Free, But Their Property Tax Will Likely Rise:
Some call it a questionable loophole. Others just call it a good idea. The producers of ABC's "Extreme Makeover: Home Edition" use a section of the Internal Revenue Code to keep families they help, like that of Ryan and Karia Stockdale of Middleton, from getting hit with a big tax bill when construction crews pack up and the dust settles. ...
According to IRS code, if a taxpayer rents a home to someone else for less than 15 days, the rental payments he or she receives don't count as income. So producers of the show can rent properties for up to 14 days while a host of volunteers tear down and rebuild The "rent" the show pays is actually the furniture, appliances and other niceties used in the rebuild. While most tenants don't rebuild rental properties from the ground up and equip them with state-of-the-art heating, cooling and sprinkler systems, those improvements and others are tax-free for the owner if their tenant happens to do so. ...
It's all legal but has apparently raised enough eyebrows across the country that Newsweek ran an article on the practice in 2004, calling it questionable. Brian Hirsch wrote a defense of the show's strategy in the University of Cincinnati Law Review in 2005, adding that the IRS would face public relations problems should it start cracking down on families helped by television shows like "Extreme Makeover." Still, recipients of free home makeovers will face increases in local property taxes.
(Hat Tip: Gregg Benson.) Prior TaxProf Blog coverage:
- Property Tax Consequences of Extreme Makeover, Home Edition (1/23/07)
- Tax Consequences of Extreme Makeover, Home Edition (12/17/06)
- IRS on Tax Consequences of Extreme Makeover: Home Edition Reality TV Show (4/23/06)
- More Scholarship on Tax Consequences of Extreme Makeover: Home Edition (12/4/05)
- Student Note on Extreme Makeover (10/13/05)
- More on Extreme Makeover: Taxpayer Edition (2/2/05)
- Extreme Makeover: Taxpayer Edition (7/5/04)
- Yet More on Extreme Makeover = Extreme Taxes (5/14/04)
- More on Extreme Makeover = Extreme Taxes (5/12/04)
- Extreme Makeover = Extreme Taxes? Tax Consequences of Home-Makeover TV Shows (5/10/04)
From the Minneapolis City Pages: Minnesota Lawyer Magazine: Law School Rankings Are Idiotic:
Over at Minnesota Lawyer (subscription required), Editor Mark Cohen recently slammed the way U.S. News & World Report ranks law schools. Cohen says that despite the disparity in the rankings of the four Minnesota law schools—the U of M ranks 20th in the country, while Billy Mitchell and St. Thomas are listed as "Tier 3" and Hamline is relegated to lowly "Tier 4" status—graduates of these schools are indistinguishable from each other.
(Hat Tip: JD2B.)
Over the past decade there has been a decline in the fraction of papers in top economics journals written by economists from the highest-ranked economics departments. This paper documents this fact and uses additional data on publications and citations to assess various potential explanations. Several observations are consistent with the hypothesis that the Internet improves the ability of high-profile authors to disseminate their research without going through the traditional peer-review process.
From today's inside Higher Ed: Peer Review in Peril?, by Elizabeth Redden:
Ellison argues that the peer-reviewed journals, traditionally relevant for their quality control and dissemination functions, have become less important for well-known economists in the Internet age. When papers can be posted on personal home pages, conference Web sites and online databases, an article written by a professor who has already established a reputation can immediately “be read by thousands.”
Professors in the top five economics departments, as ranked by the National Research Council — Harvard University, the University of Chicago, MIT, Stanford and Princeton Universities – published 86.4 papers in 13 high-profile journals in economics subfields from 1990-93, compared to 71.2 from 2000-3. That 18% drop happened even as many journals were “substantially” increasing the number of papers they published, Ellison writes, with the share of papers contributed by scholars in top departments dropping from 4% in the early 1990s to 2.7% in 2000-3. Meanwhile, Ellison said, scholars in the top departments seem to be writing as much as they ever were, and citations of Harvard scholars are increasing even as their number of peer-reviewed publications has declined. ...
A 2006 study by scholars from the Universities of Chicago and Michigan, Are Elite Universities Losing Their Competitive Edge [blogged here], found that elite universities have lost their edge when it comes to research productivity — in part because of changes brought about by the advent of the Internet.
Treasury Secretary Henry M. Paulson, Jr. hosts a conference today in Washington, D.C. on Business Taxation and Global Competitiveness from 9:00 a.m. - 12:30 p.m. A webcast is available here. See the schedule of speakers below the fold. For the Treasury Department's background paper released in advance of the conference, see here.
Law, Society, and Taxation II: Encouraging Development in Poorer Countries through Tax Policies (8:15 a.m. - 10:00 a.m.):
The papers in this session all explore ways in which richer countries can change their tax regimes to enhance the possiblities for growth and development in poorer countries.
Chair/Discussant: Lisa Philipps (York University)
- Denying Tax Sparing Provisions: Another Way for High-Income Countries to Dictate the Tax Policy of Low-Income Countries?, by Kim Brooks (University of British Columbia):
High-income countries' willingness to support the use of tax sparing provisions in tax treaties to preserve the tax incentives offered by low-income countries has varied over the years, but the willingness to incorporate tax sparing appears to have diminished. Is this good tax policy, or another sign of high-income countries ignoring the needs of their low-income country neighbours?
- Development and the Caribbean Experience, by Karen Brown (George Washington University):
Wealthier nations have used tax agreements and implemented tax policies that have the effect of protecting their own revenue while limiting the ability of nations in the Caribbean region to tap new revenue sources. This paper examines possible development strategies and the prospects for a role for Caribbean countries in implementing them.
- Access and Capture in Development-Centered Tax Systems, by Allison Christians (Wisconsin):
This paper explores who has access to tax system design in developing countries, how that access impacts the ultimate distribution of tax burdens among social, political, and economic groups, and how globalization and the increasing interchange and interdependence between and among countries and international groups shapes and constrains tax policy choices.
- Taxes and Competitiveness, by Michael Knoll (Pennsylvania):
Around the world, the tax laws are shaped by concerns with competitiveness. This paper provides a general theory of how taxes impact competitiveness. As part of that theory, this paper also introduces the concept of tax-based competitiveness neutrality. A tax system is competitively neutral when taxes do not cause competitors to change their relative valuations of any investments. This paper then uses that theory to evaluate tax policy in two high profile and important areas. The paper begins by describing two models of competitiveness, called the conduit or new money model and the investor or old money model. The central difference between the models is whether the competition is between conduit entities that must compete for funds or is between the ultimate investors themselves. When the competition is between conduits that raise the funds to invest, competitiveness neutrality requires that the tax cost of the investment be the same across entities. In contrast, when the competition is between investors who invest their own money, then neutrality does not require that the tax cost be equal across the investors. Instead, when investors are investing their own money, competitiveness neutrality requires only that tax incentives have the same dollar value for all competitors. This paper then uses the theory of competitiveness neutrality to analyze two sets of laws that were heavily influenced by concerns with competitiveness. They are the unrelated business income tax (UBIT) and the tax treatment of cross-border transactions. In both areas, the failure to recognize the nature of the competition has caused policymakers and scholars to rely on the incorrect model in designing and evaluating tax policy.
Law, Society, and Taxation III: International and Comparative Tax Issues (10:15 a.m. - 12:00 p.m.):
The papers in this session explore tax competition within and between the EU and the US, United States international tax issues, and the presence of certain types of US business entities in Germany.
Chair/Discussant: Allison Christians (Wisconsin)
- Rethinking Tax Expenditure Analysis and What It Tells Us about the U.S. International Income Tax Regime, by J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas):
This paper exams both old and recent criticisms of tax expenditure analysis, concludes that tax expenditure analysis stands up to the critiques and continues to be a robust and useful tax policy tool, and then applies tax expenditure analysis to key features of the U.S. international income tax regime ( deferral, cross crediting and the export sale source rule).
- Unfair Tax Competition in the U.S. and the EU, by Tracy Kaye (Seton Hall):
This article will study the EU’s policy towards state aid in the form of tax incentives and provide an effective comparison of the U.S. and EU approaches to such "state aid". With such different approaches, I am interested in the ability of the American States and the European Union Member States to provide state aid through tax policy and the consequences of the actual policies.
- Harmful Tax Competition, OECD Effort to Prevent, Role of Banking Practices, by Richard Schmalbeck (Duke):
Certain banking practices, particularly refusal to reveal identifying information regarding depositors to the tax collection agencies having personal jurisdiction over the depositor, obviously facilitate international tax avoidance and even evasion. This in turn aids harmful tax competition by adding to the pressure to keep income tax rates as low as possible, and to grant exemptions generously. This paper will discuss some of the means that the US IRS uses in its efforts to surrmount these obstacles.
- German Law Classification of the U.S. Limited Liabilty Company ("LLC") Doing Business in Germany, by Walter Schwidetzky (Baltimore):
The US Limited Liability Company ("LLC") has become an increasingly popular business entity. LLCs have begun doing business overseas, including in Germany. The German Bundesministerium der Finanzen (roughly equivalent to the US Treasury Department) has come out with an opinion on the classification of US LLCs in Germany. The classification can vary. Depending on the totality of its characteristics, generally a US LLC can be classified as a German corporation (“Körperschaft”) or partnership (“Personengesellschaft”). Significant tax ramifications accompany the classification. The paper will analyze and discuss the US and German classification rules for LLCs, and the relevant tax consequences, with emphasis on the opinion of the Bundesministerium der Finanzen.
Law, Society, and Taxation IV: Justice, Religion, and Tax Policy (12:30 p.m. - 2:15 p.m.):
The papers in this session look broadly at the concepts of morality and justice in tax policy, investigating the nature of social obligations in theory and also describing the tax treatment of religious institutions in light of different countries' attitudes about religion in public life.
Chair/Discussant: Kathryn A. James (Monash University)
- Churches, Politics, and 501(c)(3): Tax Exempt Status, by Keith Blair (Baltimore):
This paper will examine the loss of tax exempt status of churches when they engage in partisan political speech. Churches play a unique role in society. Some churches feel that part of their mission is to speak out on issues, even if that means the speech falls into the realm of partisan politics. The Internal Revenue Service must make determinations whether such speech is political. This paper will examine these issues and whether Section 501(c)(3) of the Internal Revenue Code should be amended.
- What Do We Owe Future Generations?, by Neil H. Buchanan (George Washington):
It is common in fiscal policy analysis to argue that current generations should not do anything which would decrease the economic prosperity that would otherwise be enjoyed by future generations. This paper explores the philosophical basis for that belief and asks whether there are any principled means by which we can balance the interests of current and future generations.
- The Constitutional Validity of Federal Taxes in the United States, by Joseph M. Dodge (Florida State):
This paper considers the role and content of the Sixteenth Amendment and the Direct Tax Apportionment Requirement in Assessing federal taxes and provisions thereof.
- Taxation as Subsidization of Religion in the United States and Germany, by Stephanie R. Hoffer (Northwestern):
This paper seeks to compare the federal tax subsidization of religious organizations in the United States and Germany. Although the countries' governing principles regarding the interaction of church and state are quite different, both countries forego revenue in favor of funding religion. A comparison of the two systems reveals key differences in conceptions of religion's role in a democratic society.
This essay suggests - usually politely - that the American legal academy has been overdoing its push for globalization, and, as a result, education in the basics has suffered. That's a pity because law school graduates need to know the basics to be successful not only in Smalltown USA, but also on a world stage.
Interesting op-ed in next week's National Law Journal: Women in the Profession: Move to the "Mommy Train," Maxine H. Neuhauser:
As was recently reported in The National Law Journal, women have been increasingly leaving large law firms and "opting different": accepting contract positions or moving to smaller firms, in-house jobs, government posts and legal aid careers so that they can reclaim more control of their careers and family lives. "Exit Women" [NLJ, June 18]. It doesn't have to be this way. ...
How often have we mothers who work at law firms heard, read or complained about, the so-called "mommy track?" Motherhood thus becomes a switching station, where women move from "partnership track," "executive track" or "tenure track" to the "mommy track." Often, this is a track leading out the law firm door — with the loss of valuable investment on both sides.
It's time more law firms allow for the new paradigm to the mommy track, which might be called "the mommy train." The mommy train may travel a bit more slowly than conventional career trains, and makes more stops, but it eventually leads to the same professional destination of career success and fulfillment. It would be wise for law firms to realize they will more likely retain talented women by allowing them to ride the mommy train — giving them scheduling flexibility, for instance — than by forcing them to "opt different" or to take the mommy track and opt out altogether. After many years of articles, discussions and publicity about women's obstacles in the legal field, more law firms should by now be willing to embrace a new career shape for women lawyers.
Wednesday, July 25, 2007
From next week's National Law Journal: Nepotism Allegations Dog Cooley Law School, by Leigh Jones:
Although the nation's largest law school saw the end to one protracted legal battle earlier this year, it now has another court fight on its hands that alleges nepotism involving a Michigan appeals court judge who sits on its board of directors.
A former associate dean at Thomas M. Cooley Law School charges that the school fired her because she would not agree to hire the husband of Michigan Court of Appeals Judge Jane E. Markey. The plaintiff in the case, Lynn Branham, said that she and other faculty members refused to approve the appointment of Markey's husband, who is now a tenure-track professor at Cooley.
The lawsuit and correspondence among board members, administrators and faculty obtained by The National Law Journal indicate a fierce power play at the school regarding the hiring of Markey's husband, Curt Benson.
The Tax Foundation yesterday released a new study, U.S. Still Lagging Behind OECD Corporate Tax Trends, showing that the United States has the second-highest corporate tax rate in the OECD and is one of only two countries that have not reduced their rates since 1994 [click on chart to enlarge]:
Last week, I blogged the background of a Tax Court case raising the issue of whether male-to-female gender reassignment surgery qualifies as a deductible medical expense under § 213. The trial began yesterday in Boston. For press and blogosphere reports, see:
- 365gay.com: Transsexual's Landmark Lawsuit Against IRS Begins
- Gay Business World: Trans Tax Challenge Trial Begins
- Reuters: Woman Seeks Tax Deduction for Sex Change
Interesting article in today's Wall Street Journal: The Big Catch Could Have A Big Catch, by Tom Herman:
As San Francisco Giants slugger Barry Bonds closes in on Hank Aaron's career home-run record, a thorny question looms: If you're the lucky fan who catches the record-breaking home run ball, what are the tax consequences?
The short answer: Find a very smart accountant -- and if you don't like the answer, try someone else. "Everyone's sure they know the right answer, but there's very little agreement" on what it is, says Phillip Mann, a tax lawyer at Miller & Chevalier in Washington and a former head of the American Bar Association tax section.
Common sense might suggest the answer is simple: The lucky fan who catches the historic ball shouldn't owe tax until he or she sells it. But relying on common sense to interpret tax laws can often lead to trouble. Asked whether any fan who has ever caught a valuable home-run ball has had to pay tax on it before selling it, an IRS official declines comment. Some professors, such as Alice Abreu of Temple Law School, feel strongly the answer is clear. "It's taxable income" to the fan the instant that person catches the ball, Prof. Abreu replies. How come? "It's accession to wealth," and nothing in the tax code specifically exempts from taxation a Barry Bonds-propelled baseball. Lawyers say this view logically stems from cases saying that someone who finds a "treasure trove" owes tax on it right away.
But other lawyers disagree. They also say it's highly unlikely that the IRS would be willing to risk the wrath of a baseball-loving nation by taxing the fan right away. Yale Law School Prof. Michael Graetz, a former Treasury Department official and co-author of a leading course book on federal income taxation, says that the Bonds issue "would make a great law-school exam question." Actually, there's way more than one question. Will the Internal Revenue Service require the fan to pay tax immediately, based upon the ball's estimated fair-market value? Or only after the fan sells the ball? Will the fan have to pay tax based on regular federal income-tax rates, which range up to 35%? Or, if the fan waits to sell the ball for more than a year after catching it, would any profit qualify as a long-term capital gain taxed at the maximum rate of 28% on collectibles?
For more, see:
- Joseph M. Dodge, Accessions to Wealth, Realization of Gross Income, and Dominion and Control: Applying the "Claim of Right Doctrine" to Found Objects, Including Record-Setting Baseballs, 4 Fla. Tax Rev. 685 (2000)
- Lawrence M. Zelenak & Martin J. McMahon, Jr., Taxing Baseballs and Other Found Property, 84 Tax Notes 1299 (1999)
Update: Wall Street Journal Law Blog: Tax Law Final Exam Question: Barry Bonds’s Ball.
Robert Morse, Director of Data Research at U.S. News & World Report, blogs about his recent discussion about law school rankings with Northwestern Dean David E. Van Zandt:
[Van Zandt] visited me recently to discuss the law school rankings. Van Zandt is among a small minority of law school deans who think the law school rankings provide useful consumer information to prospective students. He says it's time to stop arguing against the rankings because they aren't going away. ...
[A]round 175 law school deans, out of the 195 ABA accredited schools, have signed an antiranking letter that is posted on the LSAC's website. .... The letter, which has been circulated for several years, strongly urges law school applicants to ignore the U.S. News rankings and use other sources of information in order to determine where to go. Van Zandt says that this letter, which he didn't sign, is counterproductive and patronizing. He says prospective students are smart enough to understand a variety of sources of information about legal education, and he doesn't think students slavishly follow the U.S. News rankings. ... Dean Van Zandt is right. Prospective students need all the information they can get before they decide to commit to a law school.
Law, Society, and Taxation I: Competing Concepts of Equity (2:30 p.m. - 4:15 p.m.):
Discussions of justice in tax analysis have traditionally revolved around competing notions of horizontal and vertical equity. The papers in this panel critique and expand upon these concepts, analyzing anew the ability-to-pay criterion, applying critical theory to tax equity, and questioning the usefulness of horizontal equity in tax analysis.
Chair/Discussant: Richard Schmalbeck (Duke)
- The Foundation and Application of the Ability-to-Pay Principle, by Joseph Dodge (Florida State):
This paper discusses the normative basis of the ability-to-pay principle and describes the implications thereof for the design and content of the income tax.
- An Ability-to-Pay-Based Defense of Tax Expenditure Analysis, by J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas):
This presentation examines both old and recent criticisms of tax expenditure analysis and concludes that tax expenditure analysis stands up to the critiques and continues to be a robust and useful tax policy tool. The presentation is drawn from the paper entitled Rethinking Tax Expenditure Analysis and What It Tells Us about the U.S. International Income Tax Regime, part of which I will present at Law, Society, and Taxation III: International and Comparative Tax Issues.
- Fairness and Federalism in Taxation, by Brian D Galle (Florida State):
This paper posits that, at least in a tax system in which the concept of income is defined with relation to welfare (as opposed to ability to pay) it is likely impossible to make strong horizontal equity claims about the relative tax treatment of otherwise similar taxpayers in different states or different nations. For example, the internal-to-tax rationale for section 164 of the U.S. Tax Code (the deduction for state and local taxes) is that deductibility is required to treat fairly taxpayers with similar incomes but different tax burdens. Relatedly, the internal-to-tax logic of the U.S. foreign tax credit appears to be that taxpayers who have given part of their income to another sovereign are less well off than other taxpayers who have not. These claims, I argue, cannot be substantiated. Among other problems, an accurate assessment of taxpayer "welfare" would demand that the taxing jurisdiction make an evaluation of the beneficial effects taxpayers realize from the system of taxation imposed by the other sovereign, including a judgment about how and when to evaluate transfer payments. Thus, any effort to assess horizontal equity runs up against the view (admittedly, external to tax) that such an evaluation is inconsistent with the premise of sovereignty and self-determination for each state. I conclude by observing that by setting aside horizontal equity, we can focus more closely on other, in my view more significant, considerations for setting tax policies that influence the relations between sovereigns. For example, there might be serious vertical equity implications of an international tax regime in which mutual tax crediting exists, not as a matter of internal tax policy, but as the result of bargaining.
- Tax Equity, by Anthony C. Infanti (Pittsburgh):
This paper, which is currently at a very early stage, will consider the concepts of horizontal and vertical equity from a critical perspective. In particular, it will argue that critical tax scholars should be chary of framing their arguments in terms of horizontal and vertical equity because these concepts assume homogeneity along all lines except income and, therefore, effectively exclude any other considerations (e.g., race, gender, or sexual orientation) from playing a legitimate role in determining a just or fair allocation of tax burdens.
Interesting post on the ABA Journal: Judge: No Release from KPMG Defense, by Martha Neil:
Lawyers for a defendant in the KPMG tax shelter fraud case signed on and can't now sign off until the case reaches a final conclusion, a federal court judge says. Although he was initially paid $400,000 by the Big Four accountant, attorney Robert Fink is concerned the ongoing representation of former KPMG partner Richard Smith in the high-profile criminal case is going to cost him a fortune, now that KPMG has stopped paying defense costs, as ABAJournal.com discussed last week. But U.S. District Judge Lewis A. Kaplan says Kostelanetz & Fink has no choice but to continue, New York Lawyer reports today, reprinting a New York Law Journal story. "Having signed on for the voyage, they are on for the voyage unless relieved by the court," Kaplan said at a conference yesterday on United States v. Stein, 05 Crim. 888.