Sunday, November 30, 2008
There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a paper returning to the list at #5:
1. [528 Downloads] A Brief Analysis of Governor Palin's Tax Returns for 2006 and 2007, by Bryan Camp (Texas Tech) [blogged here]
3. [169 Downloads] What Should Society Expect from Heirs? A Proposal for a Comprehensive Inheritance Tax, by Lily L. Batchelder (NYU) [blogged here]
5. [133 Downloads] A Malthusian Analysis of the So-Called Dynasty Trust, by William Turnier (North Carolina) & Jeffrey Lynch Harrison (Florida) [blogged here]
Kathleen K. Wright (Director, Graduate Tax Program, California State University, Fullerton) has published California's Version of the Federal Rescue for Homeowners, 50 State Tax Notes 519 (Nov. 24, 2008). Here is the Introduction:
Although the news lately has been focused on the escalating involvement of the federal government in the credit markets and the bailouts of the likes of Fannie Mae and Freddie Mac, the federal government has also enacted legislation aimed at rescuing individual consumers. Although the dollars allocated to bailing out individuals have not come close to the dollars poured into the financial industry, Congress has taken some modest steps aimed at helping taxpayers caught up in the maelstrom caused by an upside-down housing market. This article summarizes recent federal changes that are directed toward helping consumers caught up in the meltdown of the subprime mortgage market and further analyzes what the states (specifically California) have done to keep up with the federal bailout efforts. The short answer is not much. Most of those programs are expensive, and Gov. Arnold Schwarzenegger (R) has just called the State Legislature back into session to deal with an unanticipated budget deficit that came to light shortly after the original budget for fiscal 2009 was signed. Now reports show that already that budget is approximately $10 billion in the hole. It will be difficult for California to consider bailing out individual homeowners when it is searching for a bailout package to save itself. To be fair, the Legislature did take one small step to help individuals caught up in foreclosure, which may add more confusion than benefit but is better than nothing.
Johnson Presents The Effective Tax Ratio and the Undertaxation of Intangible Investments at Northwestern
Calvin H. Johnson (Texas) presented The Effective Tax Rate Ratio and the Problem of Intangibles at Northwestern on Wednesday as part of its Graduate Tax Program Speakers Series. Here is the abstract:
Effective tax rate in economics measures how much tax reduces internal rate of return. The presentation proves an an “effective tax rate ratio” that can be estimated from available accounting data, which is that the firm-wide effective tax rate is the marginal tax rate multiplied by a ratio, the adjusted basis for the firm’s assets divided by the fair market value of the assets in absence of tax. The ratio shows that the effective corporate tax rate is very modest for products like Google, and games like Grand Theft Auto IV, Doom III and Guitar Hero. The effective tax rate is above statutory tax rates, however, e.g. for Macy’s. The articles calls either for fixing the problem of intangibles by capitalization of intangible investment or for abandoning accounting-based definitions of income as a tax base.
Posted by Neil H. Buchanan
In "UBS Finds Limited Tax Fraud Involving Wealthy Americans," Julia Werdigier of The New York Times reports that "UBS has discovered only a small number of tax-fraud cases as part of an investigation into whether the Swiss bank helped clients dodge American taxes, the bank’s chairman, Peter Kurer, said Thursday." The actual quote from Mr. Kurer, however, says only that "[o]ur investigations have uncovered a limited number of cases of tax fraud under both U.S. and Swiss law." Later in the article, Ms Wedigier writes:
A bank chairman describes his internal investigation's results in vague terms that could mean anything, and this is translated by the reporter as "only a small number of tax-fraud cases" and put on the first page of the Business section. Cynicism, sloppiness, or naivete?
San Francisco Chronicle: Tax-Exempt Benefit Disputed in Prop. 8 Campaign, by Matthai Kuruvila:
In the wake of Proposition 8's passage, opponents are railing that churches that supported the ballot measure violated their tax-exempt status.
It's a common accusation at the now-weekly protests, gaining enough traction that Geoff Kors, a member of the No on 8 executive committee, said lawyers are investigating the issue. "The Mormon church overstepped its boundaries by being a tax-exempt organization," said Sharone Negev, 54, of San Francisco, who has gone to protests in San Francisco and the Mormon temple in Oakland. "They clearly are not supposed to be involved in political activities."
But interviews with experts and activists on the issue say Prop. 8 opponents should look elsewhere for reasons to criticize the measure's supporters. "They almost certainly have not violated their tax exemption," said Barry Lynn, executive director of Americans United for the Separation of Church and State, the leading advocacy organization on the issue. "While the tax code has a zero tolerance for endorsements of candidates, the tax code gives wide latitude for churches to engage in discussions of policy matters and moral questions, including when posed as initiatives."
(Hat Tip: How Appealing.) See also Cain: CA Churches Will Not Lose Tax Exemptions for Performing Same-Sex Marriages If Prop 8 Fails (10/23/08).
Update: See also Nonprofit Law Prof Blog: LDS Church, Proposition 8, and the Lobbying Limitation, by John Colombo (Illinois)
Christian E. Weller (University of Massachusetts, Boston) & Manita Rao have posted Can Progressive Taxation Contribute to Economic Development? on SSRN. Here is the abstract:
Financial instability has increased for many economies in the face of greater capital mobility. Eliminating capital flows, especially portfolio investment flows, may reduce volatility, but it could also result in domestic capital constraints. To overcome this dilemma, policymakers may consider alternatives, such as progressive income taxation, that could raise domestic funds. In this paper, the authors combine several macroeconomic data sources to test the link between progressive taxation and economic stability, economic growth, inequality and fiscal policy. Based on data from 1981 to 2002, they find that progressive taxation provides policymakers with the ability to conduct countercyclical fiscal policies, which in turn contributes significantly to economic stability. They find no evidence that progressive taxation adversely affects economic stability by reducing growth.
The authors do find that the possibility of raising progressivity is constrained by capital mobility and by the level of government spending. And policymakers, who may consider consumption taxes such as the value added taxes (VAT), when tax enforcement is ineffective, would see no additional gains in terms of economic stability from the implementation of a VAT in combination with progressive income taxation.
Kathleen Macaulay (LL.M. (Tax) 2009, Houston) has posted Take the Money and Run - The Impact of the HEART Act on the Ultimate Estate Plan: Expatriation to Avoid U.S. Income, Estate and Gift Tax on SSRN. Here is the abstract:
Internal Revenue Code Sections 877A and 2801 were created by the HEART Act to impose a mark-to-market exit tax on citizens wishing to expatriate, and to impose a wealth transfer tax upon U.S. gift recipients of an expatriate's wealth. The idea is for expatriating citizens to pay their taxes, take their money, and run. However, the new provisions imposed by the HEART Act do not make things that simple. The prior expatriate tax regime applies to U.S. citizens or residents expatriating prior to June 16, 2008, while the new exit tax regime applies to U.S. citizens or residents effecting their expatriation after June 16, 2008. Any person expatriating from the United States must carefully consider the applicable tax provisions.
This paper discusses the impact of the HEART Act provisions on what has been called the "ultimate estate plan," expatriation to minimize or avoid U.S. income, estate, and gift tax. Initially, I will discuss why citizens or permanent residents choose to expatriate, the federal tax burdens considered, and examples of high profile American expatriates. Second, this paper will explain the former tax regime under I.R.C. Section 877 for expatriates and its tax effects. Third, I will explain the HEART Act and the application of current internal revenue code sections 877A and 2801 to expatriates, followed by an analysis of the administration and workability of an exit tax. Finally, this paper will look at planning considerations and options for those currently seeking to expatriate from the United States.
Saturday, November 29, 2008
Robert Willens (Robert Willens LLC, New York; Adjunct Professor, Columbia) has published Analyzing OfficeMax's Tax Profile, 121 Tax Notes 977 (Nov. 24, 2008). Here is the abstract:
OfficeMax Inc. (OMX) is paying cash taxes each year yet at the same time is reporting a substantial amount of credit forwards that seemingly should operate to offset any tax liability that it might incur. However, that OMX is paying taxes while concurrently possessing tax credits well in excess of its tax liabilities can be explained by the fact that the credits are not the type that can be used to offset the particular tax liabilities it is generating. In short, the anomaly of a corporation paying taxes despite the existence of substantial tax credits can be explained by examining the nature of the credits that it has amassed.
Edward A. Zelinsky (Cardozo) has posted Employer Mandates and ERISA Preemption: A Critique of Golden Gate Restaurant Association v. San Francisco, 47 State Tax Notes 603 (Feb. 25, 2008), on SSRN. Here is the abstract:
The Ninth Circuit's recent decision in Golden Gate Restaurant Association v. San Francisco saves the employer mandate of the San Francisco ordinance from ERISA preemption by slighting the language of the statute and by misapplying the U.S. Supreme Court's existing case law under ERISA Section 514(a). If (as is likely) the Supreme Court rules upon the ERISA status of employer mandates like San Francisco's by adhering to its past decisions, the Court will strike such mandates as ERISA-preempted. Under current law, the Ninth Circuit's opinion in Golden Gate II is not sustainable.
Lucinda Jesson (Hamline) & Myron L. Frans (Faegre & Benson, Minneapolis) have posted What Qualifies as a Public Charity? Minnesota Enters the National Debate on SSRN. Here is the abstract:
Set against the national backdrop of increased scrutiny of nonprofit governance and community benefit, this article examines two new Minnesota Supreme Court decisions which address a subset of tax exempt nonprofits considered "purely public charities" and the benefits that accrue to the community in lieu of foregone tax revenue to the federal, state, and local governments. Through the examination of Under the Rainbow Child Care Center, Inc. v. County of Goodhue , the authors conclude that the Minnesota Supreme Court changed the landscape for public charities that charge for their services. Today, the fundamental definition of a charity in Minnesota is not the nature of what is provided but whether what is provided is a gift. This shift in the law leaves many questions which explored by the authors, only a few of which are answered in the second case, Afton Historical Society Press v. County of Washington. In Afton, the Court held that incidental commercial undertaking by institutions does not erode their status as a pure public charity; in other words, charities can engage in commercial activities so long as they are incidental to the mission.
In conclusion, the authors outline considerations for Boards of Directors of public charities to review the provision of benefits offered by their organizations in context of the standards set by the Minnesota Supreme Court. These include assessing the level of goods or services provided free or at discounted rates; making the charity policy of the organization public; tracking bad debt levels and collection policies that meet guidelines; cataloging donations and tabulating the value of volunteer work; and accounting for negative returns and commercial income.
Friday, November 28, 2008
Daniel N. Shaviro (NYU) has posted The Long-Term U.S. Fiscal Gap: Is the Main Problem Generational Inequity?, 76 Geo. Wash. L. Rev. ___ (2008), on SSRN. Here is the abstract:
Current U.S. budget policy is unsustainable because it violates the intertemporal budget constraint. While the resulting fiscal gap will eventually be eliminated whether we like it or not, the big issue in current budget debate is whether the ultimately unavoidable course corrections should start now or be left for later. This paper argues that concerns of generational equity, which often are relied on by those demanding a prompt course correction, do not convincingly settle the issue, given empirical uncertainties about future generations' circumstances. However, efficiency issues create powerful grounds for urging a course correction sooner rather than later, on three main grounds: to eliminate the risk of a catastrophic fiscal collapse, achieve the advantages of tax smoothing, and smooth adjustments to the consumption made possible by various government outlays. Political economy considerations suggest that the risk of a catastrophic fiscal collapse may be significant even though in principle it could easily be avoided.
That's the Ticket, by Sue Reisinger (p. 16):
The story of how an impeccably times traffic ticket helped transform a shy Russian chemist into one of the nation's leading tax scholars. ...
The role that chance has played in the life of Columbia Law School Professor Alex Raskolnikov is, in his word, incredible. Asked why he decided to give up a career in chemistry to study law, Raskolnikov credits luck as much as conscious planning. ...
Raskolnikov graduated with highest honors from Moscow's Mendeleev University of Chemical technology in 1988. Three years later, at age 25, he left Russia to join his father, who had immigrated to Michigan. There he worked as a metallurgist until a minor fender-bender changed his life. Facing a $160 traffic ticket -- "a very large fine by my standards at the time" -- Raskolnikov asked the police office how he could fight the citation.
The officer told him about traffic court, and the rest, as they say, is history. "This is a great country," Raskolnikov says, recalling the hearing. "I got to thinking about what I could say, and how I would convince the judge. And I thought, 'My God, this is kind of fun!'" The ticket was dismissed, and a future lawyer was born.
Raskolnikov, who at the time wasn't confident in his social skills, went to Yale Law School, and sought a field where "substantive expertise is more important than interpersonal skills." He settled on tax law.
- Tax Man, by Daniel Gross (pp. 20-27):
Columbia Law School's newest faculty member, Michael Graetz, has decided to make the move from New Haven to Morningside Heights. Now if he could just convince the nation that its tax code needs an overhaul. ...
Graetz's curriculum vitae is stocked with the usual accoutrements of a distinguished academic: degrees from Emory University and the University of Virginia, authorship of several books and textbooks, articles that number in the three digits, and stints in two presidential adminstrations. "If you wanted to list the three best tax professors in the country, he's in that group," say Alex Rasknolnikov, professor of law at Columbia.
Posted by Neil H. Buchanan
Last month, Paul Caron posted (here) my annual call for papers for the Law & Society Association's annual meeting, which will be held next May in Denver, Colorado. The deadline for responding to my call is coming up in three days: Monday, December 1. Please take note.
Many long-time practitioners muse about what it might be like to retire and teach, not realizing there is no more galvanizing phrase to their counterparts who have long toiled in the academy, nor one less likely to enhance the prospects of the unfortunate seasoned applicant who utters the phrase. I intend this essay not for law professors (though it may either amuse or irritate them), but for those in the practice who aspire, after all these years, to return to the academy. With a good deal of humility acquired along the way, I offer some realistic advice to job seekers, concluding that wistful phrase is precisely the opposite of the true sine qua non of success: demonstrating the capability of, and commitment to, being a productive scholar.
Posted by Neil H. Buchanan
Much of the discussion about a possible rescue of the Big Three automakers has been colored by the claim that blue collar workers at those companies earn $70/hour. The original (or, at least, the most prominent) source of this claim seems to have been a recent column in The New York Times by Andrew Ross Sorkin: "At G.M., as of 2007, the average worker was paid about $70 an hour, including health care and pension costs."
If this claim were true, it would mean that a 40-hour-per-week, 50-week-per-year worker earns $140,000 in annual gross income. In a column in The New Republic, Jonathan Cohn asks rhetorically: "Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers--many of whom make far less--finance a plan to bail them out?" Cohn quickly answers his own question: "Well, here's one reason: The figure is wildly misleading." He shows that GM's workers earned $28/hour in wages in 2007, plus about $10 in benefits. He continues:
Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted friday, the claim that workers are getting $70 an hour in compensation is just "not true."
Cohn concludes his article as follows:
Make no mistake: The argument over a proposed rescue package is complicated, in no small part because over the years both management and labor made some truly awful decisions while postponing the inevitable reckoning with economic reality. And even if the government does provide money, it's a tough call whether restructuring should proceed with or without a formal bankruptcy filing. Either way, yet more downsizing is inevitable.
But the next time you hear somebody say the unions have to make serious salary and benefit concessions, keep in mind that they already have--enough to keep the companies competitive, if only they can survive this crisis.
Personally, I take great interest in the auto industry. I grew up in Toledo, Ohio, one of the many small cities that rises and falls with Detroit's fortunes. The best policy response to the current crisis is, as Cohn says, a tough call. As tax professors know better than most, however, getting the right answers is impossible if you are working with the wrong numbers (or if you don't understand the numbers you're working with).
The November 2008 issue of the Wealth Strategies Journal is now available online, with the following tax-related articles:
- The IRS Continues to Attack Poorly Designed Family Limited Partnership: Estate of Concetta H. Rector, by Jeff Bae & Craig Stephanson
- Planning Through Economic Turmoil, by Martin M. Shenkman
- Choices: “Recent Tax Guidance on Private Trust Companies, Family Co-Trustees and Distribution Committees: Notice 2008-63,” by Donald Kozusko
- IRS Announces That Substituion Power Does Not Cause Inclusion of Trust Property In Estate, by Jeanne L. Newlon
- Tax and Asset Protection Motivations for Acquiring a Florida Domicile, by David Pratt & Lisa Stern
- Selling a CRT Income Interest, Keep the Pros, Eliminate the Cons, by Roger D. Silk & Evan D. Unzelman
- The IOLI, SPINLIFE, STOLI Transaction, What Is It And Is It Good For Your Client?, by David A. Wexler
Topic: Compare and contrast the client privileges with respect to communications with an attorney and with a CPA: (a) under federal tax law; (b) in your state; and (c) in one other state from among CA, FL, NY or TX.
Length: 20 pages (including footnotes or endnotes), typed, double-spaced.
Posted by Neil H. Buchanan
Wednesday's New York Times included a very good article by David Leonhardt about President-Elect Obama's selection of Lawrence Summers to be the Director of the National Economic Council. For those who (like me) find Summers endlessly fascinating, frustrating, and impossible to categorize, it is a must-read. Although Leonhardt takes a (very slightly) more optimistic view of Summers' potential impact than I would take, he certainly lays out the enigma that is Larry Summers. Do you like provocation? Try this:
It goes like this: To undo the rise in income inequality since the late ’70s, every household in the top 1 percent of the distribution, which makes $1.7 million on average, would need to write a check for $800,000. This money could then be pooled and used to send out a $10,000 check to every household in the bottom 80 percent of the distribution, those making less than $120,000. Only then would the country be as economically equal as it was three decades ago.
Thursday, November 27, 2008
Grant H. Morris (San Diego) has published Preparing Law Students for Disappointing Exam Results: Lessons from Casey at the Bat, 45 San Diego L. Rev. 441 (2008). Here is the abstract:
It is a statistical fact of life that two-thirds of the law students who enter law school will not graduate in the upper one-third of their law school class. Typically, those students are disappointed in their examination grade results and in their class standing. Nowhere does this disappointment manifest itself more than in their attitude toward their classes. In the fall semester of their first year, students are eager, excited, and willing to participate in class discussion. But after they receive their first semester grade results, many students withdraw from the learning process-they are depressed and disengaged. They suffer a significant loss of self-esteem. This article considers whether law professors should prepare their students for the disappointing results-the poor grades-that many are certain to receive. I assert that professors do indeed have a role to play-in fact, a duty to their students-to confront this problem. I offer a strategy by which professors can acknowledge students' pre-examination anxiety and deal constructively with their impending disappointment. There are lessons to be learned from Casey at the Bat, Ernest Lawrence Thayer's immortal poem about failure.
- Focus on Pro Bono:
- Time Is of the Essence: Seize the Opportunity for Fulfillment in 2009, by Francine Lipman (Chapman Law School) (pp. 1, 10-11)
- Michigan State University Law Students Tackle Hurricane Katrina Victims' Tax Problems, by Drew M. Taylor (Michigan Department of Attorney General) (pp. 10-11)
- Ninth Circuit Allows Late Challenges to Partnership Allocations by Bankrupt Partners -- Does This Open the Door to TEFRA Abuse?, by Gregory Germain (Syracuse Law School) (pp. 13-14)
- Year-End Actions by Plan Administrations, by David Pratt (Albany Law School) (pp. 15-16)
Michael Waggoner (Colorado) has published IRC Section 71 May Impoverish Children, Endanger Ex-Wives, and Disrupt Federalism, 46 Fam. Ct. Rev. 574 (2008). Here is the abstract:
The Internal Revenue Code provides that alimony will be deductible to the payor and taxable to the payee. Although this treatment may seem contrary to the payee's interest, compared to making the payments non-deductible and nontaxable, it can increase the payee's after-tax income. The payor's deduction will allow larger payments at no after-tax cost increase; if the payee is in a lower tax bracket, then even after paying taxes the payee will have more resources. Because this favorable treatment of alimony does not apply to child support, children of divorce are poorer. Nor does the favorable treatment apply to lump-sum payments, making this option less generous, even though many states have phased down the grant of alimony. Because the definition of alimony requires that it end with the payee's death - to protect the treatment provided for lump sums - the tax system is on the wrong side of the issue of violence against ex-spouses (typically the ex-wife). The article proposes extending to other similar payments the favorable tax treatment now provided for alimony.
Wednesday, November 26, 2008
Beverly I. Moran (Vanderbilt) has published Capitalism and the Tax System: A Search for Social Justice, 61 SMU L. Rev. 337 (2008). Here is the abstract:
America is a country founded on ideas. The Enlightenment was one set of ideas that attended our birth and one Enlightenment belief as strong today as during the revolution is our faith in capitalism and the protection of private property. Yet, the United States tax system manages to violate fundamental capitalist principles as outlined in the extensive writings of Adam Smith - the father of capitalism. Comparing Smith's vision to the current United States tax system reveals many important inconsistencies, particularly the current penchant for simultaneously taxing wages while exempting (or delaying) taxes on wealth and wealth appreciation. The article proposes more closely aligning the U.S. tax system with Smith's capitalist vision by introducing a combined wealth and consumption tax each with significant exemption amounts. The expected result of a combined wealth and consumption tax system is the release of a considerable portion of the population from tax liability. Less expected rewards of a tax system that more closely resembles Smith's capitalist ideal include: (a) support for a living wage; (b) class based affirmative action; and, (c) reparations for slavery.
Posted by Victor Fleischer
I see from Paul's posting below that Professor Postlewaite has entered the carried interest debate with "Fifteen and Thirty Five: Class Warfare in Subchapter K of the Internal Revenue Code." Professor Postlewaite is hardly generous in how he reads my work. Instead, he offers readers a cartoon version of Two and Twenty that is neither fair nor descriptively accurate.
I probably shouldn't complain about rhetorical excess; I've also been known to employ an artful phrase to make a point. Postlewaite makes some arguments that deferral and conversion are hard-wired into the Code's treatment of human capital, and while I disagree about the normative implications that follow from his descriptive claims, Postlewaite's article is surely worth a read.
But I do hope that readers will also go back and read Two and Twenty, and not rely solely on Postlewaite's takedown for an understanding of the other side of the debate. Or one might read one of the many other recent contributions, e.g. Cunningham & Engler, Gergen, Bankman, Schler, Abrams, Abrams (Tax Notes), Weisbach, Knoll, Sanchirico (Tax Notes), Sanchirico (Chi L Rev).
I'm confident that many law schools do value teaching, but I'm equally confident that its value, in practice, doesn't suit that rhetoric. That is, I no longer believe what I was told -- that teaching is first among equals at law schools,,, in the context of the three traditional tenets of higher education: teaching, research and service. Indeed, it seems that teaching has assumed redheaded stepchild status, behind the favorite child: scholarship.
[A]bsent an economic incentive [for good teaching], teaching will remain a distant second to scholarship, in light of the pressures created by scholarship-heavy P&T criteria and the pressures created by the rankings.
The legal academe cannot continue to incentivize faculty to be better than bad, but not necessarily to be good; to take its cues from the rankings; and overall to marginalize the importance of teaching.
It should go without saying, students deserve better than that.
Philip Postlewaite (Northwestern) has posted Fifteen and Thirty Five -- Class Warfare in Subchapter K of the Internal Revenue Code: The Taxation of Human Capital Upon the Receipt of a Proprietary Interest in a Business Enterprise, 28 Va. Tax Rev. ___ (2009), on SSRN. Here is the abstract:
Service providers (aka executives) to partnerships and to corporations confront a number of choices as to how their compensatory arrangement may be structured and the tax consequences thereof. In the simplest case, an individual may render services to an enterprise in return for cash payments over the period of service. In this non-equity setting, the issue is straightforward and non-controversial. The service provider is treated as receiving ordinary income for services rendered. The return on his or her expenditure of human capital is taxed at progressive rates.
Chris William Sanchirico (Penn) has published The Tax Advantage to Paying Private Equity Fund Managers with Profit Shares: What Is It? Why Is It Bad?, 75 U. Chi. L. Rev. 1071 (2008). Here is the abstract:
Private equity is very much in the public eye. The prototypical private equity fund purchases, restructures, and resells ailing companies. The managers of such funds are typically paid with a share of the fund's profits. Over the last several months, the favorable income tax treatment of these compensatory profits interests has been the subject of an ever swelling stream of headlines, editorials, and Congressional hearings. But despite the attention the issue has received, the tax advantage of compensatory profit shares is not well understood, and the reasons for reform are, accordingly, not well developed. This article clarifies the nature of the tax advantage and, with that understanding in mind, critically assesses some of the chief arguments for and against the current tax treatment.
Tuesday, November 25, 2008
Posted by Victor Fleischer
Private equity professionals will no doubt be thrilled to hear that I was recently audited. At issue: a few thousand dollars in traveling expenses "while away from home in pursuit of a trade or business" (section 162) when I visited Georgetown for a semester in the Fall of 2005. So while the private equity titans spent last summer successfully defending their million dollar tax breaks, I was busy holding on to my meager deduction (a deduction already made smaller by the AMT!). After some frustrating interactions with a local office, I filed a petition with the tax court, and a settlement followed promptly and without fuss.
Nothing would make me happier than retiring as a tax litigator with a perfect 1-0 record.
Posted by Victor Fleischer
Important changes in the tax law don't always make their way through the usual legislative process. Some significant changes come in the form of a Notice, Revenue Procedure, or Revenue Ruling. Notices and Revenue Procedures are sometimes used to give taxpayers a safe harbor -- some certainty for planning purposes -- in areas which are otherwise subject to unpredictable facts and circumstances analysis. But sometimes they go too far. For example, as I noted earlier this week, Notice 2008-83 substantially changed the tax law relating to loss carryovers in bank mergers. Revenue Procedures 93-27 and 2001-43 gave taxpayers confidence that the "Two and Twenty" carried interest structure would not give rise to taxable income on the date of grant -- an element that is critical to the tax benefits of the structure. Revenue Ruling 2003-97 moved the dividing line between debt and equity, allowing issuers to deduct payments on note+forward "units" that are treated as equity securities by rating agencies and bank regulators.
What happens if the Treasury or IRS, in an effort to implement the tax code fairly, goes too far and "gives away the store"? Ordinary citizens do not have standing, merely by our status as taxpayers, to challenge taxpayer-favorable rulings. Nor is a lawsuit necessarily the best approach. Under current law, the most important check on giving away the store is the media -- folks like Lee Sheppard at Tax Notes, Jesse Drucker at the Journal, and Ryan Donmoyer at Bloomberg. But I worry about developments that may slip by under the radar.
Congress might consider establishing a staff position designed to help the tax writing committees keep an eye on taxpayer-favorable lawmaking activity at Treasury and the IRS. One place to house this job could be at the office of the Treasury Inspector General, although for institutional reasons it might make more sense to house this position within the Joint Committee on Taxation, or independently. This person could serve as a watchdog, reviewing new developments and reporting back to the committee staffs.
Who could serve in this role? There are certainly many tax lawyers in New York that I know from my days in practice who would be great at the job, and some might be willing to take a break from practice for a year or two to serve. Many tax law professors have substantial practice experience and would also be terrific.
Does such a position already exist? Does anyone know? If so, what has that person been up to?
Charles E. McLure, Jr. (Hoover Institution, Stanford University) has published Legislative, Judicial, Soft Law, and Cooperative Approaches to Harmonizing Corporate Income Taxes in the US and the EU, 14 Colum. J. Eur. L. 377 (2008). Here is the abstract:
The Member States of the European Community have systems of taxing corporate income that are more appropriate for nations than for members of an economic union. This paper describes the problems of the present system, which is based on separate accounting and arm’s length pricing, the advantages of one based on consolidation and formula apportionment, such as those employed by the US states and Canadian provinces, and the desirable characteristics of such a system. The European Court of Justice outlaws practices inconsistent with a single market. But judicial harmonization cannot achieve a fully harmonized system. Since the required legislative harmonization is stymied by the requirement in the EC Treaty that tax provisions be adopted unanimously, the European Commission has proposed that “enhanced cooperation” between as few as eight Member States be employed to initiate harmonization. The paper examines judicial, legislative, and cooperative approaches to corporate tax harmonization in the EC and the US.
The Legal Education Committee of the American College of Trust and Estate Counsel (ACTEC) is sponsoring the 2009 Law Student Writing Competition:
Purpose: This competition was created by ACTEC’s Legal Education Committee, which consists of law school professors who teach in the area of trusts and estates and practitioners who teach as adjuncts in the trusts and estates field. The competition honors the late Mary Moers Wenig, a member of ACTEC’s Legal Education Committee, who was a law school professor for over 30 years.
Consistent with ACTEC’s purposes, the American College of Trust and Estate Counsel Mary Moers Wenig Student Writing Competition was created to encourage and reward scholarly works in the area of trusts and estates. ACTEC’s purposes are to maintain an association of lawyers, international in scope, skilled and experienced in the preparation of wills and trusts; estate planning; probate procedure and administration of trusts and estates of decedents, minors and incompetents; to improve and reform probate, trust and tax laws, procedures, and professional responsibility, to bring together qualified lawyers whose character and ability will contribute to the achievement of the purposes of the College; and to cooperate with bar associations and other organizations with similar purposes.
Eligibility: This competition is open to any alw student in good standing (full-time or part-time) who is currently enrolled as a J.D. or LL.M. candidate in an ABA-accredited law school within the United States or its possessions.
Subjects: The paper must relate to the area of trusts and estates, broadly defined to include:
- Business Planning
- Charitable Planning
- Elder Law
- Employee Benefits
- Fiduciary Administration
- Fiduciary Income Taxation
- Fiduciary Litigation
- Estate Planning and Drafting
- Professional Responsibility
- Substantive Laws for the Gratuitous Transmission of Property
- Wealth Transfer Taxation (Estate, Gift and GST Tax)
- 1st Prize: $5,000 and publication in the ACTEC Journal
- 2d Prize: $3,000 and online publication on ACTEC’s website
- 3d Prize: $1,000 and online publication on ACTEC’s website
Deadline: June 1, 2009
For more information:
Abraham Bell (Bar Ilan, visiting at UConn) presented Private Takings at Connecticut Monday. In this provocative paper, delivered in the land of Kelo, Bell argues that private parties should be able to invoke a power like that of eminent domain in order to force land sales, at least in cases where: (1) the taker would be a superior owner of the property, (2) strategic barriers (holdouts, bilateral monopoly, asymmetric information) block voluntary transfers to the superior owner, and (3) the taker “properly compensates” the owner (by paying the owner’s true reserve price).
Bell does not fully specify how to determine when taker would be a superior owner or how to determine the price. However, he argues that requiring the taker to compensate the owner will help minimize excessive takings, and it could make private takings more efficient than some forms of public takings. For example, Bell identifies “government-mediated private takings,” in which the government acts as a “middleman” for a private party that wishes to seize property from an unwilling owner. Current law may result in too much government-mediated private taking, since the government, not the private party, bears the cost of “just compensation.” Bell offers the example of the City of Detroit, which, in an attempt to entice GM to remain in the jurisdiction, seized private property at a cost of $200 million and transferred it to GM for only $5 million. If GM had been required to spend $200 million, perhaps the taking would never have occurred.
Bell notes the fuzzy lines separating takings by eminent domain, takings by regulation, and taxation. It seemed to me that the appropriate tax analog to his proposal for private takings might be endowment taxation--taxation according to income-earning capacity, rather than actual income. Private takings and endowment taxation are similar at least insofar as both would encourage assets (human and real) to be put to their most productive use. Additionally, both endowment taxation and private takings would tend to minimize the extent to which people could retain economic gains attributable to brute luck (talents; finding one’s property coveted by a developer). Of course, the arguments for endowment taxation usually begin from the question of how to fairly distribute the tax burden across the members of society, not from the question of how to maximize the productivity of human capital.
The liberal egalitarian objection to endowment taxation--that it unjustly constrains life decisions--would not apply with the same force to private takings, although private takings would constrain land owners’ choices regarding when to alienate their property. Like endowment taxation, private takings face difficult measurement questions. Just as we cannot accurately measure people’s endowment, private takings would raise difficult questions about who is a superior owner of land, and how much a private taker should be required to pay to a current owner unwilling to sell in a private market transaction.
Walter Hellerstein (Georgia) & Eugene W. Harper Jr. (Squire Sanders, New York) have posted Private Capital and Public Purposes: Discriminatory State Taxation of "Private Activity Bond" Income After Davis on SSRN. Here is the abstract:
In its 2008 decision in Department of Revenue v. Davis, the U.S. Supreme Court dismissed Commerce Clause objections to the states' widespread practice of exempting interest from in-state -- but not out-of-state -- municipal bonds. However, it left "for another day" consideration of "any claim that differential treatment of interest on private-activity bonds should be evaluated differently from the treatment of municipal bond interest generally." This article argues that the day for judicial evaluation of the constitutionality of private activity bonds in light of Davis should never come.
Part I of the article briefly reviews Davis. Part II describes the universe of municipal bonds in general and private activity bonds in particular. Specifically, it provides an historical overview of the municipal bond market and the federal tax exemption for such bonds; it offers an economic perspective on the municipal bond market, focusing on the market failures to which municipal bond financing often responds; and it examines the federal statutory framework governing exemption of private activity bond income. Part III considers the challenges courts will face when, as, and if they are compelled to apply post-Davis doctrine to private activity bonds in an effort to determine their constitutionality. It concludes that this judicial inquiry is a virtually hopeless task for both conceptual and factual reasons. Part IV explores nonjudicial alternatives to the resolution of the constitutionality of state tax discrimination in favor of states' own private activity bonds that would avoid the legal uncertainty that will otherwise hover over the existing state tax treatment of this multibillion dollar market for years to come.
Ann Mumford (University of London, Queen Mary) has published Towards a Fiscal Sociology of Tax Credits and the Fathers' Rights Movement, 17 Social & Legal Studies 217 (2008). Here is the abstract:
The case of Hockenjos v Secretary of State (2004) held that a father who was denied the childcare element of Jobseekers' Allowance (a benefit which now has been repealed) had been 'discriminated against'. The case was litigated by a fathers' rights activist, and has been hailed both as an important victory for the wider 'movement', and as a step towards obtaining child tax credits for fathers who live separately from their children. This article argues that efforts by the UK fathers' rights movement to obtain child tax credits, in particular, reflect an attempt to use the tax system to force an allocation of rights. This thesis is advanced through a fiscal sociological analysis, largely because the insights into the role of class in the functioning of economies that are offered by a Marxian analysis are made accessible to tax scholars through fiscal sociology. These perspectives are particularly important in an analysis of tax credits, given that the architects of these 'Third Way' initiatives very much had class mobility in mind.
Monday, November 24, 2008
Last Tuesday, Rita de la Feria (Centre for Business Taxation, Oxford) presented The Pitfalls of Accepted VAT Wisdom: Lessons from the EU Experience at Connecticut as part of its Tax Lecture Series. Rather than addressing whether the United States should adopt a value-added tax, de la Feria focused on what the United States could learn from the European experience.
VAT is the world’s fastest growing tax, with 130 countries applying it in some form. De la Feria noted the irony that although the United States is the only major industrialized country without a VAT, Michigan was the first jurisdiction to apply a VAT. While de la Feria noted that the allures of VAT include simplicity, ease of assessment and collection, and effectiveness in raising revenue, she cautioned that certain aspects of the European implementation of VAT have reduced these benefits. Among other recommendations, de la Feria warned that VAT exemptions and rate differentials designed to achieve progressivity or encourage consumption of merit goods have lead to extensive tax planning and difficult line-drawing problems in Europe.
Two cases decided in the British courts illustrate her point. In Jaffa Cakes, the court had to decide whether the popular British confection was a cookie or a cake. If a cake, it would fall under the VAT exemption for food, whereas cookies were subject to the standard rate of 17.5%. With a healthy dose of humor, de la Feria described the case as well as the court’s standard of review. The court declared that the distinction between cookies and cakes could be drawn by reference to what happens when they go stale: cakes go hard; cookies go soft. In another case, relying in part on the fact that Pringles only contain 40% potato, a court found that Pringles should not be subject to the higher rate of VAT applicable to (unhealthy) “potato crisps.” De la Feria noted the perverse effect of the Pringles ruling: the more filler in the chip, the more likely the exemption!
Kristin E. Hickman (Minnesota) has published A Problem of Remedy: Responding to Treasury's (Lack of) Compliance with Administrative Procedure Act Rulemaking Requirements, 76 Geo. Wash. L. Rev. 1153 (2008). Here is the abstract:
In earlier work, I found that more than 40% of Treasury regulations studied are susceptible to legal challenge for their failure to satisfy Administrative Procedure Act rulemaking requirements. Given this finding, why is it that taxpayers rarely raise such claims? The article explores this question and focuses particularly on statutory and doctrinal limitations on pre-enforcement judicial review in the tax context and their role in further limiting post-enforcement challenges. Although the article proposes ways in which the courts could relax the limitations on pre-enforcement judicial review in tax cases, the article also acknowledges that the courts are unlikely to change course and that congressional action may be necessary.
Since taxes have different purposes, the concept of tax fairness is inescapably plural, assuming different forms according to the purpose of the tax that is subject to investigation. This paper has considered three purposes for taxation – to collect revenues to finance publicly-provided goods and services, to regulate social and economic behaviour, and to shape the distribution of economic resources – and examined principles of tax fairness applicable to each. Where taxes are collected in order to finance government expenditures on goods and services, the traditional benefit and ability-to-pay approaches provide useful principles of tax fairness. Where taxes serve a regulatory purpose, the fairness of the tax or tax incentive depends on the fairness of the regulatory objective, the relationship between the tax measure and the regulatory goal, and the distributional implications of the tax or incentive. The use of taxes for distributive purposes depends on the underlying concept of distributive justice, as a consequence of which the concept of tax fairness dissolves into broader questions of distributive justice.
Anne L. Alstott (Harvard) has posted Family Values, Inheritance Law, and Inheritance Taxation, 62 Tax L. Rev. ___ (2009), on SSRN. Here is the abstract:
This symposium paper, originally presented at the September 19, 2008 NYU Tax Law Review Symposium on inheritance taxation, begins to examine what it might mean for the law to protect a "right to use one's resources to benefit one's family." The paper draws on historical debates over inheritance law to identify and examine three rather different ideals of the family that have recurred in various debates over time.
The analysis shows that, while one can interpret values associated with family life in such a way as to oppose the taxation of inheritance, there are equally plausible interpretations according to which the family can co-exist peaceably with the taxation of inheritance, at least in some form. And this basic point holds whether one conceives of the family in liberal terms, in conventional terms, or in functional terms. But although each vision of the family might co-exist with inheritance taxation, the three ideals do have markedly different implications for the terms of inheritance law and inheritance taxation.
Diane M. Ring (Boston College) has published What's at Stake in the Sovereignty Debate?: International Tax and the Nation-State, 49 Va. J. Int'l L. 155 (2008). Here is the abstract:
The international tax problems of today are typically beyond the scope of a single nation to solve. However, the prospect of multinational problem solving, often under the auspices of an international organization, unleashes objections grounded in sovereignty. Despite widespread reliance on sovereignty arguments, little attention has been directed at what precisely is meant by sovereignty and what place it has in international tax policy. This article contends that a loss of sovereignty undermines both significant functional roles played by a nation-state (revenue and fiscal policy) and important normative governance values (accountability and democratic legitimacy). Whether these limitations are severe enough to demand that a sovereign state recall its taxing powers from an international body (or not surrender them initially) depends on the nature of the powers in question and the necessity for a coordinated global response.
Part I develops the basic nexus between sovereignty and taxation. Part II examines the use of sovereignty in the debates and analyses surrounding three international tax case studies. Drawing upon the case studies, Part III considers how sovereignty claims are manipulated in tax debates, how states think about sovereignty in taxation, and what their decisions, in turn, suggest about the future of international tax and the prospects for international cooperation.
Theodore P. Seto (Loyola-L.A.) has posted Operationalizing Optimal Tax Theory: The Case of Multinationals on SSRN. Here is the abstract:
This Article explores how the principles of optimal taxation may be operationalized nonmathematically and applied to general problems of tax system design. Part I offers a taxonomy of tax avoidance, breaking avoidance into four categories, the most problematic of which - lawful sheltering - results in both behavioral distortion and revenue loss. Part II proposes four nonmathematical principles which, if applied at the design stage, should minimize both behavioral distortion and revenue loss. To illustrate how these principles might operate in practice, Part III then applies them to the design of a system for taxing multinational corporations. Behavioral distortion and revenue loss will be minimized, it concludes, if multinationals are taxed on book income, computed on a consolidated basis and allocated to the jurisdiction imposing the tax using a single factor formula based on sales adjusted by industry average profit-to-sales ratios. Any deviation from this base is likely to increase both economic distortion and compliance problems.
Sunday, November 23, 2008
Posted by Victor Fleischer
As Paul has already highlighted, tax lawyers are scratching their heads over the Treasury's legal authority to issue Notice 2008-83, which allows banks (but no one else) to avoid the usual application of Section 382's limitation on built-in losses following a change in control. Apparently the staffs of the tax-writing committees were not consulted, and Senator Grassley wants to know why.
I've heard that the Treasury has pointed to two sources of authority (1) its authority to promulgate regulations under 382 and (2) its authority under the TARP bill. Neither seems adequate.
Under section 382, the Secretary of the Treasury has the authority to promulgate regulations implementing that legislation. But there is no ambiguity in the language of 382 that the Notice is intended to cure -- there is no reasonable argument that "losses on loans" are somehow not "losses" for purposes of 382. Rather, the Notice carves out a new exception that was not included in the original legislation. There is no coherent argument that Congress delegated lawmaking authority to the Treasury to make new exception to the statutory language. Administrative law principles do provide somewhat broader latitude for regulations that go through the notice and comment procedure, but that hasn't happened here.
Nor does the TARP bill provide adequate authority. The TARP bill gives the Treasury broad authority to purchase assets and securities, but it does not grant authority to re-write tax legislation in whatever manner promotes bank mergers. There is some tax relief in the bill for companies that would otherwise be stuck with short-term capital losses on Fannie and Freddie preferred stock, but the scope of that section is quite limited. If Congress wanted to give Treasury the authority to fiddle with 382, it clearly could have done so. It did not.
Instead, the Treasury, on its own, determined that a change in 382 would make good policy, and it implemented the change on its own. The Treasury, in this instance, adopted the view that it has the legal authority to do whatever it can get away with -- the only limitations are political, not legal. No one has legal standing to block the change in law; taxpayers don't normally have standing to sue merely because a Notice has administrative defects. And by the time Congress takes any legislative action, we'll have a new administration running the Treasury department. While it is possible that Congress or new officials at Treasury could reverse the change, no one seems eager to do so, as a change would upset some bank mergers that are already in the works.
What bothers me about this isn't the underlying policy --- 382 is not a well-designed statute, and creating $100 billion in tax assets to fuel bank mergers probably helps stabilize the financial system -- but the unsupervised, non-transparent, unaccountable exercise of lawmaking. The Treasury gave away $100 billion of our money without so much as a courtesy call to Congress. Nor does the $100 billion count against the $700 billion which Congress did authorize under TARP. I don't think that anyone at Treasury was doing this to help out a friend, or for any reason other than to promote the public interest. But the absence of malice does not justify an end run around Congress.
There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5:
1. [502 Downloads] A Brief Analysis of Governor Palin's Tax Returns for 2006 and 2007, by Bryan Camp (Texas Tech) [blogged here]
3. [159 Downloads] The Use and Interpretation of Tax Treaties in the Emerging World: Theory and Implications, by Eduardo A. Baistrocchi (Universidad Torcuato Di Tella) [blogged here]
4. [149 Downloads] What Should Society Expect from Heirs? A Proposal for a Comprehensive Inheritance Tax, by Lily L. Batchelder (NYU) [blogged here]
Chris Sanchirico (Penn) has published Progressivity and Potential Income: Measuring the Effect of Changing Work Patterns on Income Tax Progressivity, 108 Colum. L. Rev. 1551 (2008). Here is the abstract:
The income tax taxes the proceeds from market work, but not the proceeds from time otherwise allocated - whether enjoyed as self-provided goods and services or leisure time per se. A two-earner couple that out-sources household and child care services, for instance, pays for these services with after tax earnings, while a single-earner couple that self-provides such services pays no tax on their provision. This article uses data from the Panel Study of Income Dynamics to measure the distributive impact of the implicit exclusion for non-market activity. Viewing the exclusion as a kind of tax benefit, it asks: how is such tax benefit distributed across the income spectrum? The article finds that variation across income levels in the labor-income realization ratio - the portion of potential labor income that is realized as actual labor income -- has played a decisive role in shaping the real progressivity of the Federal income tax. On paper, the Federal income tax became more progressive during the 1990s. When average tax rates are measured in terms of potential rather than actual income, however, the income tax shows a decline in progressivity during that decade. The discrepancy arises from a change in work patterns. At the start of the decade, tax units with higher income were realizing a greater proportion of their potential earnings than were tax units with lower income. By the end of the decade, the realization ratio was greater at the lower end of the potential income spectrum. This reversal in labor income realization patterns was substantial enough to overpower the increase in statutory progressivity.
Knoll: Taxation of Private Equity Carried Interests: The Revenue Effects of Taxing Profit Interests as Ordinary Income
Michael S. Knoll (Penn) has published The Taxation of Private Equity Carried Interests: Estimating the Revenue Effects of Taxing Profit Interests as Ordinary Income, 50 Wm. & Mary L. Rev. 115 (2008). Here is the abstract:
In this Article, I estimate the tax revenue effects of taxing private equity carried interests as ordinary income rather than as long-term capital gain as under current law. Under reasonable assumptions, I conclude that the expected present value of additional tax collections would be between 1% and 1.5% of capital invested in private equity funds, or between $2 billion and $3 billion a year. That estimate, however, makes no allowance for changes in the structure of such funds or the composition of the partnerships, which might substantially reduce tax revenues below those estimates.
Saturday, November 22, 2008
The Supreme Court 2007 Term -- Leading Cases (Department of Revenue of Kentucky v. Davis, 128 S. Ct. 1801 (2008)), 122 Harv. L. Rev. 276 (2008):
Last Term, in Department of Revenue of Kentucky v. Davis, the Court held that Kentucky’s differential bond tax scheme, which exempts interest on bonds issued by Kentucky or its political subdivisions from state income tax but does not exempt the interest of bonds issued by other states, does not violate the dormant commerce clause. The Court rightly relied on its United Haulers holding to validate Kentucky’s tax scheme, and in turn provide a much-needed signal of stability to the debt markets. Although some members of the business community praised Davis as a victory for the municipal debt markets, the Davis ruling is only a hollow victory for them because it does not rule on the tax treatment of an important form of municipal debt issuance — private activity bonds. Until the Court is presented with a case that enables it to rule on the tax treatment of private activity bonds, uncertainty on this issue will continue to affect the municipal bond market.
The three-day National Tax Association 101st Annual Conference on Taxation concludes today in Philadelphia. Today's Law School Tax Prof speakers include:
- Kirk Stark (UCLA), Rethinking the Equalization Component of Medicaid Grants
- Roberta Mann (Widener) (discussant)
For the complete list of speakers and their topics, see here.
Lily L. Batchelder (NYU) & Surachai Khitatrakun (ERS Group) have posted Dead or Alive: An Investigation of the Incidence of Estate and Inheritance Taxes on SSRN. Here is the abstract:
This paper considers three questions: (1) the relative burden of wealth transfer taxes on heirs versus donors in a partial equilibrium context, (2) the distributional effects of the estate tax if its burdens are assigned to heirs, and (3) whether the incidence of a wealth transfer tax fundamentally differs depending on whether it is based on the amount transferred (an estate tax) or the amount received (an inheritance tax). The estimates presented are derived by adapting the Urban-Brookings Tax Policy Center Estate Tax Microsimulation Model to incorporate heirs' inherited and non-inherited income based on data from the Survey of Consumer Finance and tabulations from restricted IRS data matching estate tax returns to beneficiaries' income tax returns. This paper argues, contrary to existing practice, that it is more accurate to allocate wealth transfer tax burdens to heirs as a rough first approximation. It then presents the first estimates of the distribution of federal wealth transfer tax burdens based on this assumption. It finds that the 2009 federal estate tax is highly progressive by various measures of economic income if its burdens are assigned to heirs. It also finds that the estate tax contributes importantly to the progressivity of the tax system overall by partially offsetting the exclusion of inheritances from the income tax base among high-income heirs. The paper then compares the 2009 estate tax to an inheritance tax designed to have roughly the same revenue and distributional effects. It finds that their distributional effects differ at an individual level to a surprisingly large degree. The estimated correlation between the average tax rate on an inheritance under the two approaches is only 0.71 when weighted by inheritance size. Moreover, modifying the 2009 estate tax to account for the number of children of the donor does not narrow these differences. Estate and inheritance taxes thus appear to impose fundamentally different burdens that are robust to our best efforts to eliminate them.
Friday, November 21, 2008
- Academic Peer Review (40%)
- Employer Review (10%)
- Student/Faculty Ratio (20%)
- Citations per Faculty Member (20%)
- Proportion of International Faculty (5%)
- Proportion of International Students (5%)
Here are the Top 25 schools:
- Harvard (U.S.)
- Yale (U.S.)
- Cambridge (U.K.)
- Oxford (U.K.)
- Cal Tech (U.S.)
- Imperial College London (U.K.)
- University College London (U.K.)
- Chicago (U.S.)
- MIT (U.S.)
- Columbia (U.S.)
- Penn (U.S.)
- Princeton (U.S.)
- Duke (U.S.)
- Johns Hopkins (U.S.)
- Cornell (U.S.)
- Australian National University (Australia)
- Stanford (U.S.)
- Michigan (U.S.)
- Tokyo (Japan)
- McGill (Canada)
- Caenegie Mellon (U.S.)
- King's College London (U.K.)
- Edinburgh (U.K.)
- ETH Zurich (Switzerland)
- Kyoto (Japan)
For the third time in 4 1/2 years, I am taking a week-long respite from blogging, as I leave tomorrow on a family mission trip with my wife and two kids to Monterrey, Mexico. SInce I will be without Internet access for the week (shudder!), through the magic of TypePad's software I have written a couple dozen posts timed to publish on the blog while I am gone. (As the song says, How Can I Miss You If You Won't Go Away?) In addition, three Tax Profs have graciously agreed to guest blog in my absence:
Professor Karen C. Burke explains the operation of the § 1(h)(6)(B) limitation on gain taxed at 25% when a partner's only capital gain for the year consists of unrecaptured § 1250 gain on sale of a partnership interest.