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Thursday, December 31, 2009

The Top 10 Tax Stories of the Decade

Last Day to Vote for ABA Blawg 100

WSJ: Starting Friday, Many Surviving Spouses Will Inherit $0

Wall Street Journal, Repeal of Estate Tax Creates Planning Dilemmas, by Martin Vaughan:

Spouses of those wealthy who die next year might find themselves with nothing if the wills aren't revised, another wrinkle of the impending repeal of the federal estate tax Friday.

Starting Jan. 1, estate taxes will be repealed for 2010 only. That means unless Congress acts otherwise, there is no limit to the wealth that can be passed on to heirs without incurring estate taxes through the end of that year.

Often, wills have been written with an expectation the estate tax structure that has been in place for years would continue, estate planners say. The wills typically direct that assets that aren't subject to estate tax be passed on to children -- for 2009, up to $3.5 million -- and that the rest go to the spouse.

"You could be in a situation now where everything would go into a trust downstream to the kids and nothing is left to the spouse," said Greg Rosica, a tax partner at Ernst and Young. "There is a need to revisit the basic estate planning documents to make sure that what you intend to have happen really does happen."

December 31, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (0)

WSJ: Are Taxes the Root of Unhappiness?

Wall Street Journal op-ed, Are Taxes the Root of Unhappiness? States with the Highest Taxes Also Rank as the Unhappiest, by Allysia Finley (Assistant Editor, opinionjournal.com):

Does living in a blue state make people blue? It seems so, according to a new study in Science magazine that ranks states according to their happiness. [Andrew J. Oswald (University of Warwick, Department of Economics) & Stephen Wu (Hamilton College, Department of Economics), Objective Confirmation of Subjective Measures of Human Well-Being: Evidence from the U.S.A., Science, Dec. 18, 2009.]  The study finds that New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second, followed by Michigan, Indiana, New Jersey, California, and Illinois. And the happiest states? Drum roll, please…Louisiana, Hawaii, Florida, Tennessee, and Arizona.

Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state. ...

[H]igh taxes seem to be a big reason---ostensibly an even bigger reason than weather given that California is one of the unhappiest states and inclement Louisiana is the happiest. ...  According to the Tax Foundation 2008 analysis, three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and Arizona—are among the states with the lowest state-local tax burdens. True, correlation doesn't prove causation, and high taxes alone don't always make people miserable, but there's something going on here.

In states with high property, income, and sales taxes like New York, people have less money to spend on other things that make them happy. They have less money to spend on vacations, hobbies, home improvements, eating out and child care. Another problem may be that people receive a low return on their tax dollars. The study's authors note that people are least happy in states that impose high taxes but don't provide matching public benefits (e.g. good highways to relieve congestion and reduce commute times). It's in states where taxes disproportionately subsidize public employee pensions and entitlement programs, but don't much improve the general public's quality of life, that people are most unhappy.

This intuitively makes sense. If you're paying more than a third of your income in taxes, as many New Yorkers do, then you expect to realize the benefits from your hard-earned tax dollars. You expect quality schools, good roads, low crime rates, and quick commutes. You expect your local and state governments to be responsive to your needs, not to the cash flows of entrenched public employee unions and other special interests.

Here is a 50-state ranking (and the District of Columbia) of the happiest and least-taxed states, along with each state's vote in the 2008 presidential election (blue for Obama, red for McCain):

Happiness Rank

State

Tax Rank

1

Louisiana

2

2

Hawaii

37

3

Florida

24

4

Tennessee

15

5

Arizona

28

6

Mississippi

3

7

Montana

9

8

South Carolina

13

9

Alabama

7

10

Maine

18

11

Alaska

1

12

North Carolina

24

13

Wyoming

16

14

Idaho

33

15

South Dakota

4

16

Texas

19

17

Arkansas

14

18

Vermont

32

19

Georgia

34

20

Oklahoma

11

21

Colorado

35

22

Delaware

31

23

Utah

38

24

New Mexico

8

25

North Dakota

5

26

Minnesota

43

27

New Hampshire

29

28

Virginia

46

29

Wisconsin

39

30

Oregon

25

31

Iowa

12

32

Kansas

21

33

Nebraska

20

34

West Virginia

6

35

Kentucky

10

36

Washington

44

37

D.C.

40

38

Missouri

17

39

Nevada

22

40

Maryland

17

41

Pennsylvania

41

42

Rhode Island

42

43

Massachusetts

45

44

Ohio

30

45

Illinois

36

46

California

48

47

Indiana

23

48

Michigan

27

49

New Jersey

50

50

Connecticut

51

51

New York

49

December 31, 2009 in News, Tax | Permalink | Comments (2) | TrackBack (0)

ABA Proposal to Include Student Learning Outcomes in Accreditation Standards

The Standards Review Committee of the ABA Section of Legal Education and Admissions to the Bar has proposed revising accreditation standard chapter 3 (Program of Legal Education) to incorporate "Student Learning Outcomes."  The committee will discuss the proposed standards as part of the AALS Annual Meeting Program on Friday January 8, 2010, from 4:00 p.m. - 5:45 p.m. in the Napoleon Ballroom on the third floor of the Hilton New Orleans Riverside.

Update:  The Volokh Conspiracy, More ABA Mischief?, by David Berstein (George Mason)

December 31, 2009 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Related Party Like-Kind Exchanges After Teruya Brothers

Kelly E. Alton (Nationwide Exchange Services), Bradley T. Borden (Washburn) & Alan S. Lederman (Akerman, Senterfitt) have published Related Party Like-Kind Exchanges: Teruya Brothers and Beyond, 111 J. Tax'n 324 (Dec. 2009).  Here is the abstract:

The Ninth Circuit recently held that the non-tax-avoidance exception of Section 1031(f) generally will be unavailable where the taxpayer defers tax through a related-party exchange and cannot establish that the related party will incur a higher "tax price." [Teruya Brothers, Ltd v. Commissioner, No. 05-73779 (9th Cir. Sept. 11, 2009)]  This article examines this new addition to the body of law governing related-party exchanges and discusses planning approaches that exist after the ruling.

December 31, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 30, 2009

The Give Blog Raises $92,000 for Charity

Kudos to Illinois Law Prof Suja Thomas and her husband Scott Bahr, who raised $92,000 for five wonderful charities throgh their Give Blog Matching Gift Challenge (blogged here and here).

December 30, 2009 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Mistake in Today's WSJ Front-Page Estate Tax Article

Front page article in today's Wall Street Journal, Rich Cling to Life to Beat Tax Man:

Nothing's certain except death and taxes -- but a temporary lapse in the estate tax is causing a few wealthy Americans to try to bend those rules.

Starting Jan. 1, the estate tax -- which can erase nearly half of a wealthy person's estate -- goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life's most trying episodes only more complex.

"I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days," says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. "Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?"

Currently, the tax applies to about 5,500 taxpayers a year. So, on average, at least 15 people die every day whose estates would benefit from the the tax's lapse. ...

To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. "We have done this at least a dozen times, and have gotten more calls recently," says Andrew Katzenstein, a lawyer with Proskauer Rose LLP in Los Angeles. ...

Estate-tax experts didn't expect Congress to allow the tax to lapse, and are flabbergasted that it is actually happening. ...  "If Congress couldn't do it this year, why will they be able to do it next year?" says Prof. Michael Graetz of Columbia University, who worked both at Treasury and for Congress. He calls the lapse "congressional malpractice."  ...

The looming lapse of the estate tax is presenting some families with unprecedented ethical quandaries. "I've been practicing for more than 30 years, and never has the timing of death made such a financial difference," says Dennis Belcher, president of the American College of Trust and Estate Counsel. "People have a hard enough time talking about death and addressing estate planning without this." ...

The situation is causing at least one person to add the prospect of euthanasia to his estate-planning mix, according to Mr. Katzenstein of Proskauer Rose. An elderly, infirm client of his recently asked whether undergoing euthanasia next year in Holland, where it's legal, might allow his estate to dodge the tax.

His answer: Yes.

The otherwise excellent article contains this serious misstatement of the law:

[E]state planning in 2010 will be complicated by a new twist: a complex tax on capital gains, levied at death, that will affect a broader swath of taxpayers.

Of course, there is no Canadian-style capital gains tax at death.  Instead, during the period of estate tax repeal (if the estate tax is not retroactively reinstated), the heirs will take a carryover basis in any inherited property, with any capital gains tax deferred until the property is sold by the heirs.  (Hat Tip: Scott Meyer.) 

Update:  The Wall Street Journal today printed a "Correction & Amplification":

Estate planning in 2010 will be complicated by a capital-gains tax that replaces the estate tax. A Wednesday front-page article about a temporary lapse in the estate tax incorrectly stated that the gains tax would be levied at death.

(Hat Tip: Hani Sarji.)

December 30, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (1)

Buchanan: Tax Wall Street's Huge Bonuses

CNN Opinion, Tax Wall Street's Huge Bonuses, by Neil H. Buchanan (George Washington):

France and Britain have recently enacted new taxes on bankers' bonuses, taxes that will be paid in addition to the standard income taxes that the bankers pay in those countries.

the historically unparalleled -- and growing -- concentrations of income and wealth in the United States, and given that so much of that inequity is a result of our out-of-control financial sector, our leaders should quickly adopt a similar tax on financiers' bonuses here.

Proposals for a "bonus tax" in the United States have elicited the usual denunciations of taxes of any sort, but discussion among more sophisticated analysts has been mixed. Some opponents of the tax suggest -- and even some proponents seem to concede -- that a tax on bonuses might drive "the best and the brightest" from the field of finance. That will not happen.

December 30, 2009 in News, Tax | Permalink | Comments (5) | TrackBack (0)

TurboTax, Geithner Edition

Following up on my January post, Geithner Blames Turbo Tax For His Tax Troubles:

Treasury Secretary nominee Timothy Geithner implied at his confirmation hearing that the mistakes in his tax returns were caused by his use of the TurboTax software program. Of course, as any tax professional knows, TurboTax (and any of the other leading software programs) easily calculates self-employment tax (as well as the disallowance of a dependent care deduction for the cost of your kids' overnight camps). The errors here were entirely Geithner's, not TurboTax's.

Mary O'Keeffe (Union College) provides screenshots showing that TurboTax has changed its tax preparation software for 2009 to prompt those working for an international organization like the IMF to report their self-employment income and pay self-employment taxes:

TurboTax Used by Geithner

2008 TurboTax

2009 TurboTax

2009 TurboTax  

Clicking on the "Explain This" link generates this explanation:

2009 TurboTax Explanation   

(Hat Tip: Joe Kristan.)

December 30, 2009 in News, Political News, Tax | Permalink | Comments (8) | TrackBack (1)

Whistleblower in UBS Tax Shelter Case Seeks Postponement and Reduction of Sentence

Bradley Birkenfeld, the tax whistleblower in the UBS tax shelter case who is scheduled to begin serving his 40-month prison sentence on Jan. 8, has filed a motion seeking to postpone and reduce the sentence so he can cooperate more with the U.S. government to uncover more tax cheats. 

December 30, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (0)

Dave Barry: Obama Blames Bush Administration for Tax Code

Dave Barry's Year in Review 2009:

JANUARY . . . The No. 1 item on the agenda is fixing the economy, so the new administration immediately sets about the daunting task of trying to nominate somebody -- anybody -- to a high-level government post who actually remembered to pay his or her taxes. Among those who forgot this pesky chore is Obama's nominee for Treasury secretary, Timothy Geithner, who sheepishly admits that he failed to pay $35,000 in federal self-employment taxes. He says that the error was a result of his using TurboTax, which he also blames for his involvement in an eight-state spree of bank robberies. He is confirmed after the Obama administration explains that it inherited the U.S. Tax Code from the Bush administration.

(Hat Tip:  Christopher Hoyt.)

December 30, 2009 in Celebrity Tax Lore, News, Tax | Permalink | Comments (7) | TrackBack (0)

Tax Treatment of International Civil Servants

Servants Rutsel Silvestre J. Martha (General Counsel, International Fund for Agricultural Development) has published Tax Treatment of International Civil Servants (Martinus Nijhoff Publishers 2010).  Here is the abstract:

What sets the tax treatment of the international civil servants apart are the legal considerations derived from public international law. Often the matter is approached from the perspective of privileges and immunities. However, when regarded as a concern with the equal pay for equal work it boils down to employment conditions that need to be satisfied by international organisations due to the peculiar legal setting in which international civil servants discharge their duties. By adding a perspective from the jurisprudence of international (administrative) tribunals to the current scholarship, the present study – the first of its kind - purports to contribute to a better understanding of the matter of taxation of the salary, emoluments and pensions of employees of international organizations.

(Hat Tip: Jacob Cogan.)

December 30, 2009 in Book Club, Books, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Kahn Posts Tax Papers on SSRN

Douglas A. Kahn (Michigan) has posted a third batch (first and second batches) of his tax papers on SSRN:

UpdateRobert W. Wood (Wood & Porter, San Francisco) responds to Alimony Treatment for a Single Payment, 125 Tax Notes 1211 (Dec. 14, 2009), in Wood Comments on Alimony Treatment Article, 126 Tax Notes 401 (Jan. 18, 2010).

December 30, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

ABA Submits Comment Letter on Foreign Account Tax Compliance Act

ABA Tax Section The ABA Tax Section has submitted a comment letter on the Foreign Account Tax Compliance Act of 2009 (H.R. 3933, S. 1934):

We set forth below a summary of our recommendations, followed by the discussion of the respective provisions of the Bill. Part I of the discussion addresses section 101 of the Bill. Section 101 provides for new information reporting rules for foreign financial and non-financial entities, backed up by new withholding provisions, and is outlined in section A of Part I. Part II describes section 102 of the Bill, which would result in a repeal of the exception to the registration requirement for foreign targeted bearer bonds. In Part III of this report, we address Title III of the Bill, which imposes a new reporting obligation on certain advisors. In Part IV we describe and comment on Title IV of the Bill, the rules with respect to trusts, and Part V addresses Title V of the Bill, which contains a new sourcing rule for certain equity-based swaps and other notional principal contracts.

December 30, 2009 in ABA Tax Section, Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 29, 2009

USA Today: Estate Tax Set to Expire Thursday

USA Today, Estate Tax Set to Expire Thursday, by Kevin McCoy:

Benjamin Franklin's maxim that "nothing is certain but death and taxes" remains true. But a congressional stalemate has left the federal estate tax, the levy on assets left to heirs, in doubt for at least part of 2010.

The tax is poised to expire Thursday, though the House and Senate are expected to pass a reauthorization, possibly retroactive to Jan. 1, next year.

In the meantime, what might seem like a potential tax savings has become a guessing game for taxpayers, accountants, estate planners and tax lawyers. The impasse also could mean capital gains taxes on more inheritances. ...

During the time the tax is not in effect, it would be replaced by a 15% capital gains levy on inherited property that's sold. That could be a deep bite, said Michael Halloran, president of the National Association of Estate Planners and Councils. ...  But estates would be allowed to use current values to save at least $1.3 million of assets from capital gains, said Mitchell Gans, a Hofstra University law professor. ...

Halloran said any move to make a new estate tax retroactive would likely prompt lawsuits. But Paul Caron, associate dean at the University of Cincinnati law school and editor of the TaxProf Blog, said a 1994 Supreme Court ruling upheld the constitutionality of a retroactive tax law so long as it has a rational purpose, is not arbitrary and is enacted without excessive delay.

December 29, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (0)

Tax Accountants to Get Biggest 2010 Raise

Fortune, 10 Jobs That Will Get a Raise in 2010:

[W]ho is in the best position now to get a raise? The short answer: People whose skills are in demand because they serve a particular strategic purpose. ... In a recent look at the IT and finance industries, Robert Half researchers identified 10 fields where pay overall is steady or rising, and starting salaries in 2010 will be more generous than average. They are:

1. Tax accountant. For tax accountants with two to three years of big-company experience, and a track record of achieving sizable tax savings, starting salaries average $46,500 to $61,500.

(Hat Tip: Francine Lipman.)

December 29, 2009 in News, Tax | Permalink | Comments (1) | TrackBack (0)

NY Times: Senate Bill's Tax on Cadillac Health Plans Is 'Dishonest'

New York Times op-ed, A Less Than Honest Policy, by Bob Herbert:

There is a middle-class tax time bomb ticking in the Senate’s version of President Obama’s effort to reform health care.

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

Which is exactly what the tax is designed to do. ...

The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich, and it makes a mockery of President Obama’s repeated pledge that if you like the health coverage you have now, you can keep it.

Those who believe this is a good idea should at least have the courage to be straight about it with the American people. 

William A. Jacobson (Cornell) notes that "Herbert should have just said, 'You lie!'"  (Hat Tip: Ann Murphy.)

December 29, 2009 in News, Tax | Permalink | Comments (2) | TrackBack (0)

Dodge: What Federal Taxes Are Subject to Apportionment?

Joseph M. Dodge (Florida State) has published What Federal Taxes Are Subject to the Rule of Apportionment Under the Constitution?, 11 U. Pa. J. Const. L. 839 (2009). Here is the abstract:

Under the U.S. Constitution as amended by the Sixteenth Amendment, any federal tax that is a "direct tax" (which is not an "income tax") must be apportioned among the states in accordance with the respective populations of the various states. The purpose of this Article to solve the riddle of what is a "direct tax" that is subject to the apportionment requirement. Since the apportionment requirement can only apply inequitably across the nation, the correct labeling of any federal tax (other than an income tax) as a "direct tax" amounts to the proverbial "kiss of death," as no such tax will be enacted.

Recent commentary has staked out positions on this issue that I consider to be incorrect. Bruce Ackerman argues that that the Thirteenth Amendment (abolishing slavery) effectively repealed the apportionment-of-direct-tax clauses. Calvin Johnson argues that "direct tax" means only a tax capable (without effort) of being fairly apportioned among the states in accordance with population, namely, a capitation tax or a tax on the states (a requisition). At the other end of the spectrum, Erik Jensen argues that "direct tax" means any personal tax other than an income tax. I argue, on the basis of constitutional text, the formation of the constitution, post-ratification history, function, historical evolution, and judicial doctrine that "direct tax" encompasses only (1) capitation (head) taxes, (2) requisitions, and (3) taxes on tangible property (real and personal). The apportionment requirement made "political" sense in the framing period by linking the representation of states with the taxation of states, and also appeared to serve some narrow instrumental concerns. However, the theory is skewed, mainly because states are not really taxed as states, and states (as states) are only tenuously represented in Congress. Also, apportionment didn't really effectively deal with any instrumental concern (with the possible exception of a slave tax). I conclude that (apart from requisitions and head taxes), apportionment makes sense only with respect to taxes on tangible property, which is the only subject that can be allocated among the states by reason of geographical location. This limitation of "direct tax" also happens to be compatible with a mild federalism position. I also conclude that property taxes cannot be bootstrapped into validity as an "income tax." Finally, it is doubtful that the federal government can lay unapportioned taxes on imputed income from property and on human-capital endowments.

December 29, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

'Girls Gone Wild' Founder Joe Francis Sues IRS for Retaliatory Tax Lien

Francis

Web CPA reports this morning that Girls Gone Wild founder Joe Francis has filed a lawsuit against the IRS for illegal collection activities:

[S]hortly after the judge accepted his plea deal [he pleaded guilty to two misdemeanor counts of filing false tax returns and was sentenced to the nearly year in prison that he had already served and required to pay $250,000 in back taxes, interest, and penalties], the IRS filed a lien for $33,819,087.14 for three years of back taxes, from 2001 to 2003.

Francis claims in his lawsuit that the IRS moved to freeze his assets within three hours after he left the courtroom, according to TMZ.com. He claims that the only circumstances under which assets can be frozen are if the taxpayer is preparing to flee the country, if the taxpayer is attempting to move assets out of the reach of the IRS, or if the taxpayer appears to be going bankrupt.

Francis contends that the only reason the IRS would be trying to freeze his assets is revenge and he is asking the judge to unfreeze his bank account.

The Tax Lawyer's Blog picks apart Mr. Francis's argument.  In unrelated news, Mr. Francis has threatened to sue Gawker for bestowing on him its "Douche of the Decade" award.

Prior TaxProf Blog coverage:

Continue reading

December 29, 2009 in Celebrity Tax Lore, Tax | Permalink | Comments (2) | TrackBack (0)

SSRN Tax Professor Rankings

SSRN

SSRN has updated its monthly rankings of 631 American and international law school faculties and 1,500 law professors by (among other things) the number of paper downloads from the SSRN data base.  Here is the new list (through December 18, 2009) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months:

 

 

All-Time Downloads

 

Recent Downloads

1

Louis Kaplow (Harvard)

14,327

Reuven Avi-Yonah (Michigan)

4075

2

Reuven Avi-Yonah(Michigan)

13,249

Dennis Ventry (UC-Davis)

3175

3

Vic Fleischer (Illinois)

12,871

Richard Kaplan (Illinois)

2383

4

James Hines (Michigan)

11,943

James Hines (Michigan)

2243

5

Chris Sanchirico (Penn)

9124

Wendy Gerzog (Baltimore)

1835

6

Dennis Ventry (UC-Davis)

8847

David Weisbach (Chicago)

1697

7

David Walker (BU)

8541

David Walker (BU)

1621

8

David Weisbach (Chicago)

8357

Bradley Borden (Washburn)

1619

9

Ed McCaffery (USC)

8199

Bridget Crawford (Pace)

1616

10

Paul Caron (Cincinnati)

8020

Louis Kaplow (Harvard)

1561

11

Richard Kaplan (Illinois)

7644

Vic Fleischer (Illinois)

1529

12

Robert Sitkoff (Harvard)

7391

Ruth Mason (Connecticut)

1512

13

Ted Seto (Loyola-L.A.)

 7162

Francine Lipman (Chapman)

1386

14

Steven Bank (UCLA)

6381

Karen Burke (San Diego)

1349

15

Bradley Borden (Washburn)

5867

Carter Bishop (Suffolk)

1275

16

Francine Lipman (Chapman)

5824

Paul Caron (Cincinnati)

1255

17

David Schizer (Columbia)

5815

Ed McCaffery (USC)

1240

18

Michael Knoll (Penn)

5445

Allison Christians (Wisconsin)

1220

19

Wendy Gerzog (Baltimore)

5364

Erik Jensen (Case Western)

1188

20

Daniel Shaviro (NYU)

5106

Michael Knoll (Penn)

1175

21

Terrence Chorvat (G. Mason)

4585

Lawrence Lokken (Florida)

1166

22

Bridget Crawford (Pace)

4565

Thomas Brennan (Northwestern)

1162

23

Ruth Mason (Connecticut)

4310

Daniel Simmons (UC-Davis)

1118

24

Leandra Lederman (Indiana)

4223

Steven Bank (UCLA)

1116

25

Erik Jensen (Case Western)

4040

Chris Sanchirico (Penn)

1082

Continue reading

December 29, 2009 in Legal Education, Tax, Tax Prof Rankings | Permalink | Comments (0) | TrackBack (0)

U.S. Ranks 20th in Tax Support for R&D

Canada's Department of Finance has released a study of the tax support for corporate research and development provided by various foreign countries, An International Comparison of Tax Assistance for Investment in Research and Development.  The U.S. ranks only 20th among the 36 countries:

Rank

Country

Subsidy Rate

1

France

40.2%

2

Spain

34.5%

3

Canada

30.2%

4

India

29.7%

5

Brazil

29.6%

6

Hungary

26.2%

7

Ireland

26.2%

8

Turkey

24.0%

9

Czech Republic

22.5%

10

United Kingdom

21.4%

11

Japan

18.9%

12

China

17.7%

13

Norway

17.4%

14

Australia

14.4%

15

Singapore

12.7%

16

Korea

12.4%

17

Belgium

11.0%

18

Austria

11.0%

19

Netherlands

10.3%

20

United States

9.2%

21

Italy

7.0%

22

Greece

3.4%

23

Finland

3.1%

24

Mexico

2.8%

25

New Zealand

2.6%

26

Luxembourg

2.5%

27

Denmark

2.4%

28

Sweden

2.3%

29

Slovak Republic

2.2%

30

Germany

1.9%

31

Hong Kong

1.9%

32

Portugal

1.8%

33

Poland

1.6%

34

Iceland

1.3%

35

Switzerland

0.8%

36

Russian Federation

0.3%

 

Unweighted average

12.7%

 

Median

10.7%

December 29, 2009 in Tax | Permalink | Comments (16) | TrackBack (0)

Arizona Tuition Tax Credit Program May Violate Federal Tax Law

Arizona Republic, Ariz. Tuition-Credit Practices May Violate Federal Tax Laws:

This month, as the tax year nears an end, thousands of Arizonans are expected to donate money to private-school tuition groups and claim a tax credit that reduces what they owe the state.

Many taxpayers will recommend that their money go to specific students as scholarships; many tuition groups will honor those wishes.

But these taxpayers, and the school tuition organizations that give out the scholarships, may be running afoul of federal tax law.

The legal do's and don'ts are not entirely clear because the IRS has not ruled specifically on tax-credit donations targeted to particular students. But disputes run deep among private-school and tuition-group operators and tax experts over the legality of recommending that specific students get the scholarships.

A typical scenario illustrates how such legal concerns arise:

  • A married couple decide to make a maximum $1,000 donation using the tax credit. They send a check to a tuition group and indicate they want the money to go to the husband's nephew.
  • The tuition organization honors the recommendation and allocates a roughly $1,000 tuition scholarship to the nephew.
  • Come tax time, the couple file an Arizona income-tax return claiming the $1,000 tax credit. Their tax bill is reduced by that amount. At the same time, they claim a $1,000 charitable deduction on their federal tax return because the donation went to a non-profit, tax-exempt tuition group. Their taxable income is reduced by $1,000. Without that deduction, the couple's federal tax bill would increase because the donated $1,000 would still be considered taxable income.
  • In a common variation, the couple also have a child in private school. State law bars them from making a donation to a tuition organization to directly benefit their own child. But the couple have friends whose child attends the same school. The two couples strike a deal to make $1,000 tax-credit donations for each other's children, a practice called "swapping." Both claim the state tax credit and the federal deduction.

Tax preparers and attorneys say this scenario raises three key legal questions:

  1. Are taxpayers allowed to claim a charitable deduction on their federal tax forms for a donation intended for a specific student?
  2. Is it legal for taxpayers to claim that same deduction when they swap donations with other parents?
  3. Are non-profit tuition organizations, which are 501(c)(3) charities under tax law, allowed to accept and honor requests from donors that the money go to particular students?
(Hat Tip: Joel Michael.)

December 29, 2009 in News, Tax | Permalink | Comments (1) | TrackBack (0)

2009 Annual Survey of Virginia Law -- Taxation

Craig D. Bell (McGuireWoods, Richmond, VA) has published 2009 Annual Survey of Virginia Law -- Taxation, 44 U. Rich. L. Rev. 599 (2009).  Here is the Introduction:

This article reviews significant recent developments in the law affecting Virginia taxation. Each section covers legislative changes, judicial decisions, and selected opinions or pronouncements from the Virginia Department of Taxation and the Attorney General of Virginia over the past year. Part One of this article discusses legal developments regarding taxes imposed and administered by the Commonwealth. Section II addresses changes made to Virginia corporate and individual tax law, Section III covers legal changes pertaining to retail sales and use taxes, and Section IV covers changes to state tax administration. Part Two of this article documents legal developments of local government taxes. Sections V and VI address changes to the law regarding Virginia real and personal property taxes, respectively. Section VII discuses a judicial decision regarding Virginia’s business professional occupation license tax. The final section, Section VIII, addresses a variety of miscellaneous local taxes and tax administration applicable to local government taxing authorities.

The overall purpose of this article is to provide Virginia tax and general practitioners with a concise overview of the recent developments in Virginia taxation that will most likely impact their practices. This article does not, however, discuss many of the numerous technical legislative changes to title 58.1 of the Virginia Code, which covers taxation.

December 29, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Monday, December 28, 2009

TaxProf Blog Named Best Law Professor Blog of 2009

Dennis Kennedy has published his 6th annual law-related blogging awards (the Blawggies) in 12 categories.  I am proud that TaxProf Blog was named the Best Law Professor Blog:

Best Law Professor Blog – Paul Caron's The TaxProf Blog

The Blawggies have always had a spot for the best law professor blawg. In part, it’s my little effort to bring closer (unsuccessfully, as of yet) the great divide between practicing lawyers and law professors (although realizing that a favorable mention of a law professor's blog outside academia might be disastrous for his or her tenure chances, I try to be careful). When I find an interesting post in Google Reader, I star it. I’m not sure any law-related blog has gotten more starred posts than Paul Caron's The TaxProf Blog, although my early background in tax law has something to do with that. Paul covers not just tax issues, but the economic turmoil, law school topics and more.

Runner-up - Tie: Jim Maule's Mauled Again is another great tax law blog with a broader scope and very interesting posts. Eric Goldman's Technology & Marketing Law Blog has great coverage of cyberlaw and intellectual property law issues.

December 28, 2009 in About This Blog, Legal Education, Tax | Permalink | Comments (8) | TrackBack (1)

Akers, Blattmachr & Boyle: Creating Intentional Grantor Trusts

Stephen R. Akers (Bessemer Trust Co., Dallas), Jonathan G. Blattmachr (Milbank, New York) & F. Ladson Boyle (South Carolina) have published Creating Intentional Grantor Trusts, 44 Real Prop. Trust & Estate L. 208 (2009). Here is the abstract:

The changes in the progressive tax structure over the past decades have greatly reduced the tax incentive to divert income from a taxpayer with substantial income to a trust or its beneficiaries. As a result, although grantor trusts were once avoided, the "intentional grantor trust" has become a viable option that can, if properly structured, produce significant tax savings for many taxpayers. In this Article, the authors present an overview of the mechanics of a grantor trust and provide guidance on how to structure an intentional grantor trust to produce tax savings and avoid the potential hazards that may arise.

December 28, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Two NYC Partners Suspended for Tax Evasion

John J.P. Howley (former partner, Kaye Scholer) (In re Howley, 2009 N.Y. Slip. Op. 09410 (N.Y. App. Div. 1st Dep't, Dec. 17, 2009)) and Ronald A. Goldman (former partner, Manning Raab Dealy & Sturm) (In re  Goldman, (2009 N.Y. Slip. Op. 09409 (N.Y. App. Div. 1st Dep't, Dec. 17, 2009)) were suspended by the New York Appellate Division for nonpayment of taxes. (Mr. Howley failed to file New York nonresident tax returns for ten years, and federal and New Jersey resident tax returns for nine years.  Mr. Goldman failed to file federal and New York tax returns for seven years.)  From the New York Law Journal:

On the negative side of the ledger, the panel noted that Howley had disregarded his tax obligations while "enjoying a lavish life style." Specifically, the panel cited his purchase of a five-bedroom house in New Jersey and a four-bedroom house in Florida, as well as three luxury automobiles, including a BMW sports utility vehicle. ...

While receiving $300,000 in annual compensation from his firm, the panel wrote, Goldman had invested substantial sums in a restaurant and gambled on horses for more than 10 years.

December 28, 2009 in New Cases, News, Tax | Permalink | Comments (1) | TrackBack (0)

The Optimal Minimum Wage-EITC Combination

Miki Malul (Ben Gurion University, Department of Publuc Policy and Administration) & Israel Luski (Ben-Gurion University, Department of Economics) have published The Optimal Policy Combination of the Minimum Wage and the Earned Income Tax Credit, The B.E. Journal of Economic Analysis & Policy: Vol. 9: Iss. 1 (Contributions), Article 51.   Here is the abstract:

This paper evaluates the consequences of minimum wage (MW) and earned income tax credit (EITC) in a model with heterogeneous costs of investment in human capital. Our model studies the effects of a MW and an EITC on employment, productivity, and total output for two types of groups: those with a low cost of acquiring human capital and a long horizon of earnings (Type Ys); and those with a high cost of acquiring human capital and a short horizon of earnings (Type Os). We assume that Type Ys consider investing in human capital while Type Os have a certain predetermined level of human capital and do not consider changing it. Our model suggests that a government might consider imposing a MW exclusively for Type Y individuals and an EITC exclusively for Type O individuals. Some of the best effects of each policy would therefore be obtained and some of the worst consequences would be avoided.

(Hat Tip: Francine Lipman.)

December 28, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

The 10 Worst Tax Ideas of 2009

Howard Gleckman (Urban Institue) has a great post on The Ten Worst Tax Ideas of 2009.  My favorites:

10.  The Roth Rollover. Let’s see, allowing people to turn their tax-deferred retirement savings into fully tax-free investments starting on Jan. 1 will be a long-term fiscal catastrophe. And in the short run, the up-front taxes people must pay to roll into a Roth could depress the stock market and damage the shaky recovery. What’s not to like? ...

6. The Estate Tax. Now you see it. Now you don’t. Wait, there it is again. So what if nobody has any idea how to do estate planning anymore. On the other hand, Congress has had only eight years to fix this mess.  ...

3. The homebuyer credit. Congress started the year by giving away $8,000 in subsidies to "first-time" homebuyers, as many as 74,000 of whom, it turned out, never quite got around to buying a house. Then, it extended the boondoggle to current owners who buy up. Bottom line: People who were already going to buy will get billions of dollars in government subsides. But you gotta make those real estate agents happy. 

2. The Obama Tax Reform Panel. Not only will it fail to propose an improved tax code, it missed its own deadline. Nothing beats being both disappointing and late. “After the holidays,” the Obama people say. Does anybody care? 

December 28, 2009 in Tax, Think Tank Reports | Permalink | Comments (3) | TrackBack (1)

Hot (T&E) and Cold (Tax) Areas of Practice

The ABA has published Robert Denney’s report on What's Hot Report and What's Not in the Legal Profession:

  • Hot areas of practice:  Intellectual Property, Environmental, Government Relations/Lobbying, Bankruptcy/Reorganization, Litigation, Alternate Dispute Resolution, Public Finance, White Collar Crime, Labor & Employment, Regulatory, Anti-Trust, Prepaid Legal Service, Consumer Protection, Collections, Estates & Trusts, Elder Law, Entertainment Law, Commodity Work, as well as the following Industries: Financial Services, Telecommunications, Insurance, Health Care, Energy & Alternate Energy, Automobile, and Pharmaceutical.
  • Cold:  Immigration, IPOs, Tax, M&A, and Real Estate

December 28, 2009 in ABA Tax Section, Legal Education, Tax | Permalink | Comments (2) | TrackBack (0)

NY Times: Tax Planning for 2010 -- Roth IRAs & Estate Tax Planning

New York Times, Thinking Hard About Retirement and Death, by Paul Sullivan:

With 2010 a few days away, there are several tax matters that wealthy investors need to consider next year. The two at the top of the list are whether they should convert their taxable retirement account to a tax-free Roth individual retirement account and how to deal with the uncertainty over the estate tax.

December 28, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (0)

How Law Grads Can Survive the Legal Recession

Cover story in the Jan. 2010 ABA Journal, When the Detour Becomes the Destination: How 5 Grads Survived a Recession—And How You Can Too:

The economic downturn lasted only eight months, from July 1990 to March 1991, but it triggered a severe legal recession that lingers in many memories.

Employment rates for new grads, after peaking in the late 1980s, did not begin to rise again until 1994, three years after the recession ended. Employment nine months after graduation hit highs and lows not achieved since then, falling by nearly 9 percentage points from a peak of 92.2% in 1987 to 83.4% in 1993, according to NALP’s data through 2008. ...

Year Employed Legal Full Time Not Working Jobs in Law Firms
1985 81.6% 7.0% 60.6%
1986 81.8 7.2 62.3
1987 84.1 6.6 63.5
1988 84.5 6.9 64.3
1989 82.7 7.9 62.4
1990 82.1 8.2 62.9
1991 76.1 12.6 60.8
1992 72.5 14.5 59
1993 70.3 14.6 57.1
1994 69.6 13.1 55
1995 70.7 11.2 56.1

The period leading up to the current recession, now well into its second year, was not unlike the boom years of the late 1980s. Employment rates for new law grads hit 91.9% in 2007, near a 20-year peak, and students enjoyed an extraordinary recruiting season. ...

Each year 50 to 60 percent of new grads go into private practice, according to NALP data since the 1970s. During recessions, fewer go into large firms and more start solo practices.

December 28, 2009 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Sunday, December 27, 2009

TaxProf Blog Holiday Weekend Roundup

Textron Files Cert. Petition in Tax Work Papers Case

On Christmas Eve, Williams & Connolly filed this 161-page cert. petition on behalf of Textron, asking the Supreme Court to review the First Circuit's 3-2 en banc decision (United States v. Textron, No. 07-2631 (1st Cir. Aug. 13, 2009)) holding that Textron's tax accrual work papers were not protected under the work product doctrine and thus had to be turned over to the IRS in its tax shelter investigation.  Here is how the cert. petition frames the question presented:

Whether the work-product privilege in federal rule if Civil Procedure 26(b)(3), which protects documents that are “prepared in anticipation of litigation or for trial,” is limited to documents that are prepared for use in litigation.

Updateataxingmatter.

Prior TaxProf Blog coverage:

Continue reading

December 27, 2009 in New Cases, News, Tax | Permalink | Comments (0) | TrackBack (0)

Top 5 Tax Paper Downloads

SSRN This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

1.  [463 Downloads]  2009 Federal Tax Update, by Samuel A. Donaldson (U. Washington)

2.  [270 Downloads]  The Accidental Deduction: A History and Critique of the Tax Subsidy for Mortgage Interest, by Dennis J. Ventry, Jr. (UC-Davis)

3.  [178 Downloads]  Taxing Unreasonable Compensation: § 162(a)(1) and Managerial Power, by Aaron Zelinsky (J.D. 2010, Yale)

4.  [177 Downloads]  Through the Looking Glass: The Politics of Estate Tax Reform, by Edward J. McCaffery (USC)

5.  [162 Downloads]  Taxation of Credit Derivatives, by Lawrence Lokken (Florida)

December 27, 2009 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Tax Court: § 2035(b) Applies to Gift Tax on Deemed Gift of QTIP Remainder

The Tax Court on Monday held that the amount of gift tax paid by the doness of deemed gifts of a remainder interest in QTIP property is includable in the decedent's gross estate under § 2035(b). Estate of Morgens v. Commissioner, 133 T.C. No. 17 (Dec. 21, 2009):

Creating an exception from § 2035(b) for gift tax paid with respect to deemed transfers of QTIP, as the estate invites us to do, would frustrate the purpose of § 2035(b). ...

Congress enacted § 2035(b) to eliminate an incentive for deathbed gifts. Because of § 2035(b), the donor’s estate must include in the estate tax base the gift tax paid by the donor with respect to gifts made within 3 years of death. An exception from § 2035(b) for gift tax paid on QTIP transfers would encourage transfers of QTIP in contemplation of the surviving spouse’s death, which is inconsistent with the goal of § 2035(b). For example, if the surviving spouse held QTIP until death, the entire QTIP would be included in her estate tax base. § 2044. However, as in the net gift context, if § 2035(b) did not apply, by triggering a disposition of QTIP inter vivos, the surviving spouse could permanently remove the gift tax due on the transfer of QTIP from her transfer tax base. This is inconsistent with Congress’ goal of treating alike transfers at death and transfers in contemplation of death. Interpreting § 2035(b) as inapplicable to gift tax paid by donees of QTIP in satisfaction of the surviving spouse’s liability would completely undermine the purpose of § 2035(b) in the context of QTIP because the literal reading of § 2035(b) would allow the surviving spouse to easily circumvent the purpose of § 2035(b).

We recognize the limited economic nature of the interest in QTIP held by the surviving spouse. Nevertheless, the QTIP election that the executor of the estate of the first spouse to die may make carries both benefits and burdens for both spouses and their estates. Inclusion of the gift tax paid with respect to a § 2519 transfer in the surviving spouse’s gross estate is one such burden if the transfer occurs within 3 years of his or her death. Without a clear legislative mandate to except gift tax liability of the surviving spouse on § 2519 transfers from the application of § 2035(b), we shall not infer such an exception.

December 27, 2009 in New Cases, Tax | Permalink | Comments (0) | TrackBack (0)

Viard: The Case Against the Millionaire Surtax

Alan D. Viard (American Enterprise Institute) has published The Case Against the Millionaire Surtax, 125 Tax Notes 1355 (Dec. 21, 2009).  Here is the abstract:

By increasing marginal tax rates at high income levels, the millionaire surtax in the House health care reform bill would promote tax avoidance and impede savings and investment, reducing wages throughout the economy. Taxing a mere 0.3% of the population is not a sustainable way to pay for health care reform.

December 27, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

IRS Files $1m Tax Lien Against Denny McLain

Denny McLain The Detroit News reports that the IRS has filed a $1,019,998 tax lien against former Detroit Tigers' pitcher Denny McLain, the major leagues' last 30-game winner:

The tax trouble represents lingering fallout from an embezzlement, money laundering, mail fraud and conspiracy conviction tied to the theft of millions in pension funds from the Peet Packing Co. in Chesaning. The 65-year-old Brighton resident spent six years in prison and was released in 2003.

December 27, 2009 in Celebrity Tax Lore, Tax | Permalink | Comments (0) | TrackBack (0)

Saturday, December 26, 2009

The Secret for a Merry Christmas

Yesterday, Don't Mess With Taxes discovered the secret for a Merry Christmas.  It also works for New Years.

December 26, 2009 in Legal Education, Tax | Permalink | Comments (0) | TrackBack (0)

IRS Releases 10-Year Enforcement Data: Business Audits Down, Individual Audits Up

The IRS has released its Fiscal Year 2009 Enforcement Results, with ten years worth of data.  Among the trends:

  • Enforcement revenue up 50% from 2000
  • Individual audit rate up 100% from 2000
  • A millionaire is six times more likely to be audited than someone earning less than $200,000
  • Business audit rate down 15% from 2000
  • The only businesses with a higher audit rate in 2009 than 2000 are small businesses (< $10m assets).  The audit rate of larger businesses (including those with over $250m of assets) is lower in 2009 than in 2000

 

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Enforcement $

$33.8b

$33.8b

$34.1b

$37.6b

$43.1b

$47.3b

$48.7b

$59.2b

$56.4b

$48.9b

Audit Rate

 

 

 

 

 

 

 

 

 

 

  Individuals

0.49%

0.58%

0.57%

0.65%

0.77%

0.93%

0.97%

1.03%

1.01%

1.03%

    < $200k

 

 

 

 

 

 

0.93%

0.98%

0.95%

0.96%

    > $200k

 

 

 

 

 

 

2.57%

2.68%

2.94%

2.89%

    > $1m

 

 

 

 

5.03%

6.10%

5.25%

6.84%

5.57%

6.42%

  Businesses

0.69%

0.55%

0.53%

0.49%

0.36%

0.57%

0.60%

0.66%

0.63%

0.58%

    < $10m

0.77%

0.60%

0.63%

0.58%

0.32%

0.79%

0.80%

0.92%

0.95%

0.85%

    $10m-$50m

11.7%

9.7%

7.8%

6.2%

9.4%

12.3%

14.2%

15.0%

11.7%

10.1%

    $50m-$100m

14.7%

12.3%

10.7%

9.8%

12.9%

16.4%

13.8%

11.4%

11.7%

14.3%

    $100m-$250m

17.4%

17.6%

16.0%

12.9%

16.9%

17.5%

14.0%

12.1%

12.8%

13.6%

    >$250m

31.4%

32.1%

34.4%

29.8%

39.8%

44.1%

35.2%

27.2%

27.4%

25.7%

  Exempt Orgs

0.89%

0.61%

0.67%

0.71%

0.67%

0.58%

0.83%

0.87%

0.88%

1.24%

December 26, 2009 in IRS News, Tax | Permalink | Comments (6) | TrackBack (0)

CCH Summary of 2010 Estate Tax Quandary

CCH has published a 4-page special briefing on the 2010 Estate Tax Quandary:

  • Estate Tax
  • Carryover Basis
  • Gift Tax
  • Generation-Skipping Transfer Tax
  • Retained EGTRRA Changes

December 26, 2009 in Tax | Permalink | Comments (0) | TrackBack (0)

NYC Congestion Charge: A User Fee, Not a Tax Covered by Diplomatic Immunity

Leslie A. Powell (J.D. 2010, Emory) has published Comment, User Fee or Tax: Does Diplomatic Immunity From Taxation Extend to New York City's Proposed Congestion Charge?, 23 Emory Int'l L. Rev. 231 (2009).  Here is the Conclusion:

Congestion pricing is simply a user fee charged to motorists. Congestion charges attempt to internalize the costs motorists place on society for inefficient road usage. A congestion charge that is a fee is primarily concerned with traffic restraint and road funding, unlike the motorway tolls that are in place for raising general revenue. The congestion charge proposed by both the Traffic Commission and Mayor Bloomberg is directly aimed at decreasing congestion in Manhattan’s CBD. While one purpose of the charge is to raise revenue, that revenue would be kept separate from the general revenue fund and used to increase the efficiency of transit in and around New York City. Consequently, the revenue-raising purpose does not transform the fee into a tax under New York law.

The VCDR provides diplomatic immunity from taxation but will not protect diplomats from paying New York City’s congestion charge. The VCDR’s exceptions, as well as reciprocity agreements and other bilateral and multi-lateral treaties, limit the extent of that immunity. In this case, diplomatic immunity would not relieve diplomats of the obligation to pay the congestion charge because an exception to immunity would apply. The congestion charge is for a specific service, for which diplomats are obligated to pay pursuant to Article 34(e) of the VCDR. The proposed congestion charge would fall within this explicit exception to immunity. Applying the factors articulated by several New York courts, the congestion charge constitutes a fee and not a tax: it provides a benefit; it is not compulsory; it is proportional to and reasonably associated with the benefit conferred; and the revenues raised are not used for general government purposes.

While Article 34 of the VCDR presents immunity from taxation, other language in the VCDR could prove problematic for New York City. Article 22 presents a practical problem because it protects the mission property from being attached if New York City were to obtain a judgment against a foreign state for non-payment. Article 26 limits a host state’s ability to restrict a diplomat’s movement. Together, these two articles provide additional challenges for New York City in imposing congestion charges on the resident diplomatic population.

Mayor Bloomberg’s congestion pricing experienced a setback when the New York Assembly declined to vote on the Traffic Commission’s proposal. Many deemed it an overly ambitious campaign by Mayor Bloomberg; however, the concept of congestion pricing had traction in the legislature and support from both citizens and politicians. Should the opportunity present itself again, the Assembly should move forward with the modified congestion pricing scheme proposed by the Traffic Commission. If such a plan is implemented, the details will determine diplomatic liability. The plan should require the allocation of all monies raised into a special fund separate from the general revenue fund and dedicated solely to congestion-related expenses. Maintaining separate and targeted funds will strengthen any argument that the charge is a fee, not a tax.

December 26, 2009 in Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Chang: Immigration Restriction as Redistributive Taxation

Howard F. Chang (Pennsylvania) has published Immigration Restriction as Redistributive Taxation: Working Women and the Costs of Protectionism in the Labor Market, 5 J.L. Econ. & Pol'y 1 (2009). Here is the abstract:

In this paper, I argue that tax and transfer policies are more efficient than immigration restrictions as instruments for raising the after-tax incomes of the least skilled native workers. Policies to protect these native workers from immigrant competition in the labor market do no better at promoting distributive justice and are likely to impose a greater economic burden on natives in the country of immigration than the tax alternative. These immigration restrictions are especially costly given the disproportionate burden that they place on households with working women, which discourages female participation in the labor force. This burden runs contrary to the teachings of optimal tax theory and introduces excessive distortions in the labor market because the supply of female labor is more elastic than the supply of male labor. Thus, the best response to concerns about the effect of immigration on the distribution of income among natives is to increase the progressivity of the tax system.

December 26, 2009 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Friday, December 25, 2009

Our Christmas Dog

Sandy Long-time readers of this blog will recall the family trauma we endured 3 1/2 years ago when we had to put down our beloved family dog Sandy:

Sandy soon became enmeshed in the daily rhythms of our family life. She came with me when I coached my kids' sports teams ...  As time passed and we all grew older, my coaching career ended and Sandy sat with me on the soccer sidelines for countless games through the years. At her last game this season, she could no longer walk across the field and I had to carry her back to the car. ...

It has been three days since we put her down, and we are filled with grief, guilt and gratitude. Grief because our home and our lives are emptier now without her. Guilt because the decision to put her down was a difficult one, driven we fear more by our needs than hers (although she suffered with Cushing's disease, became so incontinent that we kept her locked in the bathroom when we were away, and dropped nearly 40% of her body weight (from 40 to 25 pounds)). Gratitude because she was everything one could want in a family dog.

Being the rational guy that I am, I issued a decree:  no more dogs.  Because our two kids would leave for college in Fall 2009 and Fall 2010, my wife and I did not want to be saddled with a dog in our empty nest years.  My daughter Jayne took the news particularly hard, as she has a special love for dogs.

Christmas About a month ago, the senior pastor of our church gave a great message on the parent-child relationship, and he talked about how he was trying to make his high school senior's last year at home special (by taking his son on a road trip on Harleys).  After watching a hokey Hallmark Hall of Fame TV movie, A Dog Named Christmas, in which a family provides a foster home over Christmas for a dog from a local shelter, I thought that would be a great thing to do for Jayne.  Following up on the movie, animal shelters nationwide are sponsoring a Foster a Lonley Pet for the Holidays Promotion, and I found a wonderful participating local shelter -- Recycled Doggies, run by a Cincinnati lawyer out of her home.  I told Jayne that we wanted to make this last Christmas at home a memorable one for her by fostering a dog over the holidays.  I made her sign a contract promising that the dog would go back to the shelter on Dec. 26 -- no exceptions, and no fuss.

Josie Jayne chose the dog, and we opened our home (and our hearts) to Josie, a mutt with a lot of Rhodesian Ridgeback in her.  She has filled our home with love, as she wants nothing more out of life than to spend it with us.  She moves from room to room, checking out where everyone is, before settling in wherever Jayne is.  She sleeps on Jayne's bed, and studies and watches TV with her.  Although friends, family, and neighbors taunted us that we would end up adopting her, I insisted we would not and pulled out the contract:  Josie's time with us would end December 26.  This morning, my wife and I gave Josie's adoption papers to Jayne as a Christmas present -- our empty-nest years will be more complicated, and fuller, now. 

Jayne & Josie (122409)

Update: We have since learned that Josie is a Black Mouth Cur

Prior posts about my special daughter:

I cherish two of Jayne's writings:

 

Continue reading

December 25, 2009 | Permalink | Comments (8) | TrackBack (0)

Thursday, December 24, 2009

In Hoc Anno Domini

The Wall Street Journal has published this wonderful editorial each Christmas since 1949, In Hoc Anno Domini:

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.

Read the rest here.

December 24, 2009 in Tax | Permalink | Comments (1) | TrackBack (0)

Pratt: What I Want for Christmas Is . . .

Tax Prof Katherine Pratt (Loyola-L.A.), What I Want for Christmas Is . . . , L.A. Daily Journal, Dec. 24, 2009:

Nothing. Well, not exactly nothing -- just nothing for me. What I really want for Christmas is for more holiday gift-givers to honor their family, friends and business contacts by making charitable contributions on their behalf instead of buying them material gifts. Members of my family recently exchanged the names of our favorite charities and agreed to make charitable contributions this year, in lieu of our usual Christmas gifts. Now I have started to think about how this could happen on a much larger scale. ...

Societal norms currently favor material gifts over charitable contributions to honor someone. A gift-giver often has no way of knowing whether friends, family, and business contacts would prefer a material gift or a charitable gift in their honor. Also, a gift-giver might be concerned about appearing cheap and selfish if she substitutes a tax deductible donation for a non-deductible material gift. When in doubt, gift-givers make the "safe" gift choice and give material presents. On the gift recipient's side, there typically is no easy, socially acceptable way of communicating to gift-givers a preference for a charitable contribution. This is especially true with respect to gifts for business associates, clients and professionals such as doctors.

The solution to these obstacles is an online charitable donation gift registry on which individuals and businesses could express their desire for donations to their preferred charities, in lieu of material gifts, by registering on the website. The registry would maintain a searchable list of the parties who have registered, with their preferred charities, and a list of charities, organized alphabetically by name and subject area and searchable by name or keyword. Gift-givers could search the registry to make donations honoring their friends, family, and business contacts. A fitting name for the registry would be the Gifts for Good Registry.

When I asked my colleague, tax exempt organizations expert Ellen Aprill, whether such a registry already exists, she directed me to JustGive, ... an online charity that maintains a searchable list of 1.5 million charities and allows a person to create a Charity Registry. The Charity Registry functions like my imagined Gifts for Good Registry, but lacks some features I envisioned, such as an e-card acknowledgement, to notify the honoree of the donation and allow for an online thank-you, and an option to buy stickers for holiday cards or a tasteful placard for display in a business office, announcing registration on the site. Also, JustGive charges a fee for each donation from the Charity Registry.

December 24, 2009 in News, Tax | Permalink | Comments (0) | TrackBack (0)

'Twas the Night Before Christmas, Legal Version

Check out the original and legal versions of the classic poem, 'Twas the Night Before Christmas [click on chart to enlarge]:

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December 24, 2009 in Legal Education, Miscellaneous, Tax | Permalink | Comments (9) | TrackBack (0)

WSJ: Four Treasury Dept Nominees Left Hanging As Senate Leaves Town

Wall Street Journal, Four Treasury Dept Nominees Left Hanging As Senate Leaves Town:

The U.S. Senate adjourned Thursday, leaving four Treasury Dept. nominees that have been awaiting confirmation in limbo until at least Jan. 20. Those nominees include Lael Brainard, the White House's pick for Treasury under-secretary for international affairs, whose nomination had been delayed for months as Senate Finance Committee staff scrutinized her tax returns. [Another nomination in limbo is Michael Mundaca (Assistant Secretary of the Treasury for Tax Policy).] The Finance Committee approved the nominations of Brainard and the other three Treasury officials Wednesday, but the nominations did not clear the full Senate because of an objection from at least one senator. At press time the source of the objection could not be learned.

Prior TaxProf Blog coverage:

December 24, 2009 in Congressional News, News, Tax | Permalink | Comments (0) | TrackBack (0)

Faherty Student Tax Writing Competition -- $3,000 First Prize

Faherty_Competition_Flyer_2009

The Center for Tax Law and Employee Benefits at The John Marshall Law School Chicago sponsors the Paul Faherty Tax Law Writing Competition:

Scope:  The scope of permissible topics for the writing competition is broad -- any aspect of Tax Law is acceptable: ... a paper on a public policy issue, a critique of a leading case or doctrine, a comment on a statute, or the need for statutory modification, or a comment on a common law doctrine.

Eligibility:  Any currently enrolled law school student attending an ABA-accredited law school.

Prizes:  A grand prize of $3,000 plus two honorable mentions of $1,000 will be awarded. The winner's paper will also be posted on the program's website.

Rules:  See here.

Deadline for Submissions:  April 15, 2010.

James Lynch, a partner at the law firm of Winston & Strawn, has graciously endowed the competition to honor Paul Faherty, former director of the Center for Tax Law and Employee Benefits.  For prior years' winners, see:

December 24, 2009 in Legal Education, Scholarship, Tax, Teaching | Permalink | Comments (0) | TrackBack (0)

Exam Fiasco at Minnesota

CribariFollowing up on exam fiascos at NYU and Oregon, Above the Law reports on the problems with Stephen J. Cribari's Evidence exam at Minnesota:

Evidence Students -

It seems that thirty of the seventy short answer questions on the Evidence exam are, through no student’s fault, compromised. After consultation with Dean Wippman and Associate Dean McDonnell, we agree that those questions should and will be eliminated. The 70 points originally assigned to seventy questions will now be assigned to forty questions. I realized only after a student alerted me that some of the questions on the exam had been previously released to past students. I very much regret this and will make certain to avoid such problems in the future.

Prof. Stephen Cribari
University of Minnesota Law School

December 24, 2009 in Legal Education | Permalink | Comments (0) | TrackBack (0)