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Thursday, September 30, 2010

Chodorow Presents Merging Healthcare and Charitable Giving Tax Incentives Today at San Diego

Chodorow Adam Chodorow (Arizona State) presents Staying Well While Doing Good: A Proposal to Merge Healthcare and Charitable Giving Tax Incentives, 2010 U. Ill. L. Rev. ___, at San Diego today as part of its Tax Speakers Series. Here is the abstract:

This Article considers two unrelated tax provisions – the charitable deduction and the exclusion from income of amounts contributed to Flexible Spending Accounts (FSAs). Significant debate exists regarding the proper characterization of these provisions – either as necessary to the proper definition of income or a tax incentive. However, regardless of the position taken, virtually all agree they are underperforming. Prior attempts to fix these provisions separately have failed. This Article proposes increasing the efficacy of both by combining them and allowing taxpayers to donate unused amounts left in their FSAs at the end of the year to charity.

Amending the law in this way will increase the efficacy of both provisions by increasing the availability and financial incentives for the former and reducing the financial penalty associated with the latter. Perhaps more important, the proposal takes advantage of the “mental accounting” insights discussed in the behavioral economics literature to increase the attractiveness of the incentives without increasing the “rate” implicit in allowing a deduction or exemption. The net result is a more cost effective tax provision. This proposal thus serves as a model for Congress as it considers the design of other tax provisions.

September 30, 2010 in Colloquia, Tax | Permalink | Comments (0) | TrackBack (0)

WSJ: The Ultimate Power Title -- Adjunct Professor

Wall Street Journal, The Ultimate Power Hobby: Bankers, Lawyers, Executives Jockey to Teach a University Class, Play Professor:

Robert S. Cohen, a divorce attorney who has represented Christie Brinkley and James Gandolfini, says his favorite trophy isn't his country home or his soon-to-be-renovated Manhattan apartment. It's the title "professor."

Every Monday in the fall semester, Mr. Cohen rides the 2 pm Amtrak Acela train from New York City to Philadelphia, where he is an adjunct professor at the University of Pennsylvania Law School. Earlier this week, a driver shuttled him the few blocks to Gittis Hall on campus, where he grabbed coffee in the faculty lounge, chit-chatted with students and stopped by the dean's office.

At 4:30, with the jacket of his pinstriped suit off and a microphone clipped to his tie, Mr. Cohen welcomed the 33 students to his class, Anatomy of a Divorce. By 6:30, class had adjourned, and he headed to the White Dog Cafe, where he treated five students to what he called "a tablecloth dinner." He hopped into a waiting town car at 9 and was back in Manhattan by 11.

In a time of inconspicuous consumption, an adjunct-professorship at a prestigious university is a coveted token of success among finance, law and media professionals. ...

The University of Pennsylvania pays Mr. Cohen about $5,000 a semester, but he donates more than that to the law school each year. His travel expenses and the dinner tab set him back $1,000 a week—"but it's less than my hourly rate," he says. ...

A university has much to gain from well-chosen professional adjuncts, including cachet and credibility. And adjuncts also form a potential donor pool.

September 30, 2010 in Legal Education, News | Permalink | Comments (3) | TrackBack (0)

DOJ Tax Division Chief/Adjunct Tax Prof, Former Student Square Off in D.C. Circuit in Telephone Excise Tax Refund Case

The Blog of the Legal Times, Full D.C. Circuit Digs Into IRS Tax Dispute:

A group of taxpayers are trying to revive a suit against the IRS that challenges the procedure the agency set up for the collection of a refund of a tax on phone calls that netted the government billions of dollars.

The full U.S. Court of Appeals for the D.C. Circuit heard argument today in the dispute, which centers on whether federal law bars district judges from issuing injunctions against the IRS.

The plaintiffs’ suit challenging agency procedure was dismissed in March 2008. A divided D.C. Circuit panel revived it and sent it back to the trial court for further hearings under the Administrative Procedures Act. At the Justice Department’s request, the appeals court granted en banc review.

Arguing for the plaintiffs, Akin Gump Strauss Hauer & Feld partner Thomas Goldstein said the suit against the IRS should be allowed to proceed in the U.S. District Court for the District of Columbia. The suit, he said, challenges what he has called a burdensome and unlawful IRS process for taxpayers to receive a refund on long-distance phone calls.

The plaintiffs, Goldstein said, should not be first forced to follow that procedure—which requires filing a tax form and, in some cases, the filing of additional documents—in order to challenge its validity. No class has been certified in the litigation.

Typically, the appeals court hears disputes after there has been “final” agency action. There’s no such agency determination in this case.

Chief Judge David Sentelle questioned whether a ruling in favor of the plaintiffs would open the door to other litigation challenging agency procedure. “That’s a precedent that could have grave implications for the court,” Sentelle said. “We don’t just have the IRS. We have all of the agencies.”

Justice Department lawyer Gilbert Rothenberg, a Tax Division supervisor, opened his argument with a joke about the complexity of the tax system and the simplicity of seeking a refund of the telephone tax. ...

In an interesting twist to the oral argument, Goldstein's opponent was one of his former law professors. Rothenberg taught Goldstein at the American University Washington College of Law. Goldstein and Rothenberg shook hands after the hourlong hearing.

September 30, 2010 in Legal Education, New Cases, News, Tax | Permalink | Comments (0) | TrackBack (0)

IRS Files $500k Tax Lien Against Al Sharpton

Sharpton The IRS on Tuesday filed a $538,652 lien against Al Sharpton with the New York City Register's office for taxes assessed in 2009. Mr. Sharpton and his lawyer disputed the accuracy of the lien, since he was granted an extension of time to October 15 to file his 2009 tax return.  (Detroit News, New York Post)  Mr. Sharpton's civil rights group, National Action Network, also faces serious tax difficulties.

September 30, 2010 in Celebrity Tax Lore, IRS News, News, Tax | Permalink | Comments (15) | TrackBack (1)

Annotated Bibliography of the U.S. News Law School Rankings

Dora R. Bertram (Washington U.) has posted Annotated Bibliography: Ranking of Law Schools by U.S. News & World Report on SSRN. Here is the abstract:

For better or worse, the U.S. News & World Report’s annual ranking of law schools is the most prominent and widely used ranking by all constituencies having an interest in legal education. The rankings have triggered impassioned responses and a significant body of commentary and analysis. This comprehensive annotated bibliography documents the wide variety of literature analyzing the rankings and explaining why the rankings are loved by some and hated by many. A brief history of the ranking of institutions of higher education, including law schools, provides background and puts today’s debate in context. This study was commissioned as part of the work of the ABA Section on Legal Education and Admissions to the Bar, Special Committee on the U.S. News and World Report Rankings.

September 30, 2010 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Smith: Gaps in the 7th Circuit's Innocent Spouse Opinion in Lantz

Tax AnalystsFollowing up on last week's post, Tax Court Refuses to Follow 7th Circuit, Again Invalidates Innocent Spouse Reg (Sept. 23, 2010):  Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.), Gaps in the Seventh Circuit's Reasoning in Lantz128 Tax Notes 1375 (Sept. 27, 2010):

Last year the Tax Court invalidated an IRS regulation [Reg. § 1.6015-5(b)(1)] that imposed a two-year time limit on claims for equitable innocent spouse relief [I.R.C. § 6015(f)], based on the rationale that Congress acted intentionally when it imposed the two-year time limit on other types of innocent spouse relief but not on equitable claims for relief. [Lantz v. Commissioner, 132 T.C. No. 8 (Apr. 7, 2009).]  The Seventh Circuit reversed the Tax Court on this issue. [Lantz v. Commissioner, 607 F.3d 479 (7th Cir. 2010).] Significant gaps in the reasoning of the Seventh Circuit opinion raise serious questions about the correctness of its holding.

All Tax Analysts content is available through the LexisNexis® services.

September 30, 2010 in New Cases, Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

U.S. News World's Best Universities Rankings

US News U.S. News & World Report has released its third annual World's Best Universities rankings, based on the 2010 QS World University Rankings, developed by QS Quacquarelli Symonds. The methodology is:
  • 40%:  academic peer reputation (15,050 responses)
  • 20%:  citations per faculty member
  • 20%:  student-faculty ratio
  • 10%:  employer survey (5007 responses)
  • 5%:    proportion of international faculty
  • 5%:    proportion of international students

Here are the Top 50 World's Best Universities, along with their ranking in the Times Higher Education  seventh annual World University Rankings released earlier this month:

US News Rank

Score

School

THE Rank

1

100

University of Cambridge

6

2

99.2

Harvard University

1

3

98.7

Yale University

10

4

98.5

University College London

22

5

98.0

MIT

3

6

98.2

University of Oxford

6

7

97.8

Imperial College London

9

8

97.5

University of Chicago

12

9

96.5

Cal-Tech

2

10

96.0

Princeton University

5

11

96.0

Columbia University

18

12

96.0

University of Pennsylvania

19

13

93.6

Stanford University

4

14

92.3

Duke University

24

15

92.2

University of Michigan

15

16

90.4

Cornell University

14

17

89.7

Johns Hopkins University

13

18

89.3

McGill University

35

19

89.3

Swiss Institute of Technology

15

20

88.6

Australian  National University

43

21

88.5

Kings College London

n/r

22

88.0

University of Edinburgh

40

23

87.3

University of Hong Kong

21

24

86.8

University of Tokyo

26

25

85.9

Kyoto University

57

26

86.4

Northwestern University

25

27

85.3

University of Bristol

68

28

85.2

University of California, Berkeley

8

29

84.3

University of Toronto

17

30

83.4

University of Manchester

87

31

82.8

National University of Singapore

34

32

82.3

École Polytechnique, Lausanne

48

33

82.1

École Normale Supérieure, Paris

42

34

81.9

Carnegie Mellon University

20

35

81.5

UCLA

11

36

81.3

École Polytechnique, Paris Tech

39

37

81.3

University of Sydney

n/r

38

80.6

University of Melbourne

36

39

80.5

Brown university

55

40

78.7

Hong Kong University of Science

41

41

78.5

New York University

60

42

77.9

Chinese University of Hong Kong

n/r

43

77.6

University of Queensland

81

44

77.4

University of British Columbia

30

45

76.8

University of Copenhagen

177

46

76.7

University of New South Wales

n/r

47

76.4

Peking University

37

48

76.3

University of Wisconsin

43

49

76.2

Osaka University

130

50

76.1

Seoul National University

109

September 30, 2010 in Law School Rankings, Legal Education | Permalink | Comments (1) | TrackBack (0)

Kirsch: The Role of Physical Presence in Taxing Cross-Border Services

Michael S. Kirsch (Notre Dame) has published The Role of Physical Presence in the Taxation of Cross-Border Personal Services, 51 B.C. L. Rev. 893 (2010).  Here is the abstract:

This Article addresses the role of physical presence in the taxation of cross-border personal services. For much of the last century, both U.S. internal law and bilateral treaties have used the service provider’s physical location as the touchstone for determining international taxing jurisdiction. Modern developments — in particular, the significant advances in global communication technology and the increasing mobility of individuals — raise important questions regarding the continued viability of this physical presence standard. These modern developments have already facilitated the offshoring of numerous types of personal services, such as radiology, accounting, and legal services. As communication technology improves, the range of personal services that can be delivered remotely will follow. In order to address the issues raised by these developments, the Article focuses on the recent introduction of telesurgery, which permits surgeons based in one country to perform real-time procedures on patients located in another country. The Article describes the significant problems that arise in attempting to fit these modern developments into an almost century-old framework of internal tax laws and international treaty principles. It then makes the normative case for de-emphasizing physical presence in determining the international tax consequences of cross-border personal services. While the arguments for change are strongest in the context of U.S. internal tax law — in particular, in the application of the foreign earned income exclusion — they also impact the principles underlying bilateral tax treaties.

September 30, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

U.S. News Law School Rankings Methodology, 1990-2010

U.S. News Logo Hyla Bondareff (Washington University Law Library) has posted U.S. News and World Report Ranking Methodology: The Devil is in the Detail on SSRN. Here is the abstract:

This publication outlines the methodological variations in U.S. News and World Report’s annual law school rankings between 1990 and 2010. A law school’s ranking is based upon its overall score on a number of weighted attributes. When comparing school rankings over time, it is therefore useful to understand how the methodology differs from year to year. Not only have the definitions for many of these attributes changed over the years, but also their weight value in the overall scores. This report provides a table of the weight assigned to each attribute each year; a list of each attribute and the changes made to it each year; and a list of all methodology changes in each year. This study was originally published as an appendix to the July 15, 2010 Report of the ABA Special Committee on the U.S. News and World Report Rankings, Section on Legal Education and Admissions to the Bar. [Click on chart to enlarge.]

Chart 

After the report was published, Brian Leiter noted that the chart does not indicate that in 1999 instructional expenditures were adjusted for differences in cost‐of‐living and "faculty resources rank" ceased to be listed. An updated chart with these changes will be posted at a later date.

September 30, 2010 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

The Impact of the Mortgage Interest Deduction on Homeownership Decisions

Christian A. L. Hilber (London School of Economics) & Tracy M. Turner (Kansas State University, Department of Economics) have posted The Mortgage Interest Deduction and its Impact on Homeownership Decisions. Here is the abstract:

This paper examines the impact of the combined U.S. state and federal mortgage interest deduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploiting variation in the subsidy across states, over time and due to inter-state moves. We test whether capitalization of the MID into house prices offsets the positive effect on homeownership. We find that the MID only boosts homeownership attainment of higher income households in less tightly regulated housing markets. In more restrictive places – typically larger coastal cities – an adverse effect exists. The MID is an ineffective policy to promote homeownership and improve social welfare.

September 30, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 29, 2010

Fleischer Presents Taxing Founders' Stock Today at Washington University

Fleischer Victor Fleischer (Colorado) presents Taxing Founders' Stock at Washington University today as part of its Faculty Enrichment Series. Here is the abstract:

Founders of a start-up usually take common stock as a large portion of their compensation for current and future labor efforts. Getting paid in founders’ stock allows entrepreneurs to defer paying tax and—more importantly—allows them to pay tax at the long-term capital gains rate. Politicians, entrepreneurs, and many academics claim that the favorable tax treatment of founders’ stock is an effective method of subsidizing entrepreneurship.

This Article questions the widely-held view that we should tax founders’ stock at a low rate. The economic efficiency case for a tax preference for founders’ stock is weak. Tax policy is an ineffective policy instrument for subsidizing entrepreneurship; tax has an effect on entrepreneurial entry, but the effect is small. Tax is less important than geographic, cultural, and business factors. And tax is less important than other elements of the legal infrastructure, such as immigration policy, employment law, and securities law.

The case for reform is compelling. Taxing founders at a low rate is a conspicuous loophole in the fabric of our progressive income tax system, uniquely undermining our commitment to equal opportunity and distributive justice. Founders’ stock is often bequeathed to heirs who receive a step up in basis, allowing founders to avoid the income tax altogether, leaving a legacy of dynastic wealth subject only to the rather dodgy application of the estate tax.

While it would be desirable to eliminate the tax subsidy and instead tax gains from founders’ stock as labor income, fixing the problem is not easy. I offer a range of possible solutions that policymakers might consider.

September 29, 2010 in Colloquia, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

New Issue of Regulation

Regulation The new issue of Regulation, Vol. 33, No. 3 (Cato Institute Fall 2010) contains these tax articles:
Tax subsidies have grown in importance to a size unimaginable 40 years ago, when tax expenditures first were identified as a budget problem. The current congressional appetite for tax expenditures has distorted not just tax policy, but also the budget process and congressional oversight of the money it spends. The tax-writing committees have employed tax expenditures to extend the committees’ reach and to become, in fact, a Congress within the Congress. They present new spending policies embedded in “revenue neutral” tax legislation in ways that are largely invisible in standard budget presentations. It is time to redirect tax expenditures to those cases where they represent the most appropriate technical delivery mechanism for government spending.

The AMT is, we admit, an unlikely place to find a solution to the problem of state finance in times of crisis. Each of the more obvious candidates, however, has serious flaws. States cannot tax, borrow, or save enough to meet their residents’ needs for social insurance. Other federal supports lead to moral hazard, are wasteful, or are too poorly timed to be effective. Thus, automatic stabilizers assume an important role in smoothing incomes. And, as the data suggest, the amt is a powerful automatic stabilizer. Accordingly, we would resist efforts to repeal or “patch” the amt. Instead, we suggest that greater attention to the details of the amt, and the tax-lawmaking process that surrounds it, can greatly improve state responsiveness to recessions.

We have argued that soda taxes are unlikely to correct for any real or imagined problems related to our nation’s obesity rate. It is not only unclear that soda causes obesity, but even if it did, policymakers have neither the technical expertise nor political courage to set taxes that correct any externality problems. Even if policymakers did have such expertise, soda taxes would likely be regressive, as lower-income households spend a greater share of their income on soda than higher-income households. As such, soda taxes would disproportionately fall on the poor — soda drinkers who may or may not be obese. If non-obese individuals truly pay some of the higher health care costs of the obese, the best solution would be to correct this negative externality through imposing surcharges on health insurance premiums of the obese.

September 29, 2010 in News, Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Forbes 400 Law School Rankings

Forbes 400 37 of the Forbes 400 Richest Americans graduated from law school.  Interestingly, the 37 graduated from 25 different law schools:

No.

Law School

4

Virginia

3

Chicago

 

Northwestern

 

Stanford

2

Columbia

 

Harvard

 

SMU

1

American

 

Brooklyn

 

Cornell

 

DePaul

 

George Washington

 

Kentucky

 

Loyola-L.A.

 

McGill

 

Michigan

 

Missouri

 

New York Law School

 

Texas

 

Tulane

 

San Diego

 

Santa Clara

 

UC-Berkeley

 

UC-Hastings

 

Wayne State

Three of the 37 (Neil Bluhm (Northwestern), Sumner Redstone (Harvard) & Steven Ross (Wayne State)) practiced tax law, and one (Mr. Ross) earned a tax LL.M. from NYU.

September 29, 2010 in Law School Rankings, Legal Education, Tax | Permalink | Comments (2) | TrackBack (0)

Moore: Previously Taxed Property Credit and the § 2035(b) Gross Up

Kelly A. Moore (Toledo) has published Previously Taxed Property Credit and the 2035(b) Gross Up, 34 S. Ill. U. L.J. 275 (2010). Here is the abstract:

The Economic Growth and Tax Relief and Reconciliation Act of 2001 provided for a systematic increase in the exclusion amount of the Estate Tax, with a complete repeal of the tax in the year 2010. The Act, however, did not repeal the Gift Tax. This article explores the connection between these two transfer taxes and their effect for estate planning purposes. Currently, Gift Tax paid on transfers within three years of the transferor’s death is included in the value of the transferor’s gross estate for Estate Tax purposes. This results in a nullification of the benefits of the lifetime gift─reducing the transferor’s property subject to Estate Tax. Similarly, an estate is allowed a credit of the lesser of (1) the amount of the federal estate tax attributable to the transferred property in the transferor’s estate, or (2) the amount of the federal estate tax attributable to the transferred property in the transferee’s estate for Estate Tax paid by a prior estate within ten years. Thus, the estate comprised of property received from a prior estate is granted a tax credit that is unavailable to the estate comprised of property received as a taxable gift. The author proposes changes to the Internal Revenue Code to bring these transfer taxes into agreement so that regardless of whether an estate is subject to the Estate Tax or the Gift Tax, the end result is the same.

September 29, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Best Value Law Schools

Cover The October 2010 issues of the National Jurist and preLaw magazines include a ranking of 59 Best Value Law Schools:

  • Bar passage higher than the state's average
  • Average indebtedness after graduation < $100,000
  • Employment rate 9 months after graduation > 85%

These 59 schools were ranked in four tiers, based on this methodology:

  • 45%:  tuition
  • 45%:  average indebtedness
  • 7%:   employment nine months after graduation
  • 3%:   bar passage rate

 Here are the Top 20 Best Value Law Schools:

  1. Georgia State
  2. BYU
  3. Louisville
  4. Nebraska
  5. Kansas
  6. New Mexico
  7. Mississippi
  8. Florida State
  9. Memphis
  10. Florida International
  11. Tennessee
  12. South Carolina
  13. Northern Illinois
  14. Kentucky
  15. Georgia
  16. Alabama
  17. Texas Tech
  18. LSU
  19. North Dakota
  20. Florida

The other three tiers are:

For more, see:

September 29, 2010 in Law School Rankings, Legal Education | Permalink | Comments (12) | TrackBack (0)

McMahon: Using Federal Taxes to Put the 'Community' in Community Property

Stephanie McMahon (Cincinnati) has published California Women: Trying to Use Federal Taxes to Put the 'Community' in Community Property, 15 Wis. J.L., Gender & Soc. 35 (2010). Here is the abstract:

Community property is thought to be a more equitable marital property regime than the common law because we assume that providing each spouse with an interest in fifty percent of the family’s income also provides a substantial amount of equality between spouses. Historically, however, as the regime operated in the United States, it was not especially favorable to wives. Although the concept implied a partnership between spouses, in practice wives were denied rights a partner would expect to enjoy. This article examines how women lobbied to enlarge the protection California wives enjoyed under the state’s community property regime in the early twentieth century. Women adopted a strategy that does not conform to Progressive Era stereotypes. Women’s groups argued that couples would receive a federal income tax reduction if the state’s property system gave more rights to wives. Women’s use of these anti-tax arguments helped further their goals of equalizing spouses’ rights and obligations until the tacit political alliance of women and wealthy taxpayers unwound.

September 29, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

ABA Tax Section Hosts Webcast Today on Planning for Debt Discharge Income and § 108 Relief

ABA Tax The ABA Tax Section offers a teleconference and webcast today on Planning for Debt Discharge Income and § 108 Relief from 1:00 - 2:30 p.m. EST:

Using a unique problem format, this panel will discuss the tax aspects of the realization of debt discharge for COD income and the planning opportunities available for exclusion or deferral under § 108. Special emphasis will be placed on real estate and partnership debt workouts. The current developments and emerging trends will be identified as well.

September 29, 2010 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 28, 2010

National Research Council Ph.D. Program Rankings

Following up on its 1982 and 1995 rankings, the National Research Council yesterday released updated rankings of 5,000 doctoral programs in 62 academic fields at 212 universities.

September 28, 2010 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Census Bureau Releases Income, Poverty Data

Census The U.S. Census Bureau today released the results of the 2009 American Community Survey. From the press release:

 Median Household Income

  • Real median household income in the United States fell between 2008 and 2009 — decreasing by 2.9 percent from $51,726 to $50,221.
  • Between 2008 and 2009, real median household income decreased in 34 states and increased in one: North Dakota.

 Poverty

  • Thirty-one states saw increases in both the number and percentage of people in poverty between 2008 and 2009.
  • No state had a statistically significant decline in either the number in poverty or the poverty rate.

Reports:

Press and blogosphere coverage:

September 28, 2010 in Gov't Reports, Tax | Permalink | Comments (0) | TrackBack (0)

Benshalom Presents Realization and Progressivity Today at Toronto

Benshalom Ilan Benshalom (Hebrew University of Jerusalem, Faculty of Law) presents Realization and Progressivity of the Ideal Tax Base: A Normative Defense for the Achilles Heel of the Income Tax (with Kendra Stead (J.D. 2010, Northwestern)) at the University of Toronto today as part of the James Hausman Tax Law and Policy Workshop Series. Here is the abstract:

The realization requirement, under which taxes are only imposed when an asset is sold and not when it merely appreciates, is the income tax’s original sin. It is long-standing, yet widely considered the main source of tax complexity, inequity, and economic distortion. Despite its problems, realization is considered a basic and indispensible element of modern income tax regimes. It is explained early in most federal income tax courses as necessitated by problems of asset valuation and taxpayer liquidity. To the dismay of certain professors, this explanation usually generates little class discussion. More worrisome, it is also widely accepted outside the classroom—prompting few political objections or normative academic inquiries.

The goal of this presentation is to provide a normative framework to allow policymakers to better understand the role of the realization requirement. It makes two related arguments. First, with respect to certain emotionally non-fungible (personal) assets, realization is normatively justified because the market price is not a good indication of their value to their owners. Second, contrary to the traditional view of realization as a regressive element, taxing only these personal assets upon realization would promote income tax base progressivity. The key point is that personal assets represent a larger portion of the wealth of low- and, even more so, medium-income taxpayers than of the wealthy.

Our approach provides a heretofore absent basis for developing a more effective and coherent policy with respect to realization. This analysis contributes to the broader tax reform debate and opens a novel theoretical inquiry with respect to the distributive impact of different types of errors.

September 28, 2010 in Colloquia, Tax | Permalink | Comments (3) | TrackBack (0)

How a Prof's Race and Gender Affect the 1L Curriculum

Meera E. Deoa (Thomas Jefferson), Maria Woodruff (UCLA) & Rican Vuedd (UCLA) have published Paint by Number? How the Race and Gender of Law School Faculty Affect the First-Year Curriculum, 29 Chicana/o-Latina/o L. Rev. 1 (2010). Here is the abstract:

While there is a relatively standard first-year curriculum at all ABA-accredited law schools in the U.S., no two classrooms are identical. This article examines how the race and gender of law school faculty affect both what is taught in the first year and how that material is taught. Using focus group data from a national, longitudinal, multi-method study of American law schools, this article reveals that faculty of color and female faculty are more likely to engage in “diversity discussions” -- discussions involving race and gender -- than their white male counterparts. While many students appreciate these discussions and mention numerous ways in which these conversations enhance their legal education, some prefer their exclusion. Additionally, a few professors are so insensitive to diversity issues that they may be creating a hostile learning environment for some students. The Conclusion offers implications and policy suggestions to improve learning outcomes for students, retention rates for both students and faculty, and faculty diversity generally.

September 28, 2010 in Legal Education, Scholarship, Teaching | Permalink | Comments (6) | TrackBack (0)

WaPo: IRS to Stop Mailing Tax Forms

IRS Logo Washington Post, IRS to Stop Mailing Income Tax Forms:

The IRS plans to stop mailing instructions and paper forms for annual income tax returns, saving the agency about $10 million a year as more Americans are filing online.

About 11.5 million people who filed paper tax returns in 2009 received the tax information in the mail, IRS said. The agency normally sends the information at the beginning of the calendar year.

September 28, 2010 in IRS News, News, Tax | Permalink | Comments (4) | TrackBack (0)

The Most Despicable Political Ad. Ever.

The nonpartisan FactCheck.org reports that Florida Rep. Alan Grayson's new ad "manipulates video to make his opponent seem to urge wives to 'submit to' their husbands. He didn't":

In a new ad, Grayson accuses his Republican opponent Daniel Webster of being a religious fanatic and dubs him "Taliban Dan." But to make his case, Grayson manipulates a video clip to make it appear Webster was commanding wives to submit to their husbands, quoting a passage in the Bible. Four times, the ad shows Webster saying wives should submit to their husbands.

Yet FactCheck.org explains that "[i]n fact, Webster was cautioning husbands to avoid taking that passage as their own. The unedited quote is: "Don’t pick the ones [Bible verses] that say, ‘She should submit to me:"

Webster: So, write a journal. Second, find a verse. I have a verse for my wife, I have verses for my wife. Don’t pick the ones that say, ‘She should submit to me.’ That’s in the Bible, but pick the ones that you’re supposed to do. So instead, ‘love your wife, even as Christ loved the Church and gave himself for it’ as opposed to ‘wives submit to your own husbands.’ She can pray that, if she wants to, but don’t you pray it.

Remarkably, the Grayson campaign is standing behind the ad.

(Hat Tip: William Jacobson (Cornell).)

September 28, 2010 in Legal Education, News, Political News, Tax | Permalink | Comments (10) | TrackBack (0)

Moral, Religious and Ethical Perspectives on Estate Planning Symposium

Creighton Law Review The Creighton Law Review has published Symposium on Estate Planning: Moral, Religious and Ethical Perspectives, 43 Creighton L. Rev. 637- (2010):

TePoel Lecture & Keynote Address:

Panel Session:

Articles:

Notes:

September 28, 2010 in Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Johnston: The Failure of the Bush Tax Cuts

Tax AnalystsDavid Cay Johnston has published So How Did the Bush Tax Cuts Work Out for the Economy?, 128 Tax Notes 1409(Sept. 27, 2010):

Analyzing the latest tax data, Johnston finds that average incomes are down since 2000, the number of high-income nontaxpayers is rapidly rising, and the numbers show that the 2001 and 2003 Bush tax cuts failed to produce economic growth as promised.

128TN1409_Page_4 

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September 28, 2010 in Scholarship, Tax, Tax Analysts | Permalink | Comments (8) | TrackBack (0)

Willens: Private Rulings Inadmissible as Evidence

Robert Willens (Robert Willens LLC, New York; Adjunct Professor, Columbia), IRS Ruling Inadmissible as Evidence (CFO.com):

A federal court decision related to contingent liabilities underscores the limited role an IRS private-letter ruling may play in a legal argument.

This month a federal claims court ruled that private-letter rulings (PLRs) issued by the IRS were inadmissible as evidence in a tax case related to contingent liabilities. The case, decided on September 1 by Judge Lynn Bush, focuses on AmerGen Energy Co., a power-generation company that was integrated into its parent Exelon in 2008. The decision sheds new light on the usefulness of an IRS PLR with respect to U.S. courts.

September 28, 2010 in New Cases, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Viard: The Myth of a Return to Clinton-era Taxes

Alan Viard (American Enterprise Institute), The Myth of a Return to Clinton-era Taxes:

Under the president’s proposal, virtually all of top earners’ ordinary income will be taxed at 44.6%, starting in 2013. We’re not just going back to the Clinton-era rates of 40.8% and 43.7%. [For the details, see The High-Income Rate Reductions: The Neglected Stepchild of the Bush Tax Cuts.]

September 28, 2010 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Broughman & Cooter: Charitable Donations Fund Social Goods That the State and Markets Undersupply

Brian Broughman (Indiana-Bloomington) & Robert Cooter (UC-Berkeley) have published Charitable Donations Fund Social Goods That the State and Markets Undersupply, 43 U. Mich. J.L. Reform 871 (2010). Here is the abstract:

Despite widespread belief in the importance of private charity, most Americans donate little or nothing. Experiments in behavioral economics show that anonymity, not human nature, causes low contributions. Anonymity poses a particular challenge for charity because of the special character of the obligation. Charity is a disjunctive social norm, meaning the obligation is owed to "A or B or C or . . . ." Disclosure of each individual's aggregate conduct is necessary for the effectiveness of any disjunctive social norm. To revitalize charity we propose a public registry where each taxpayer can voluntarily disclose the ratio between his charitable giving and income. The registry will clarify the social norm and increase average donations. We extend our analysis to pro bono legal services where a similar registry would encourage attorneys to volunteer.

September 28, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Monday, September 27, 2010

President Obama Signs Small Business Tax Bill

President Obama today signed H.R. 5297, the Small Business Lending Fund Act of 2010. Here is the White House summary of the tax provisions:

  • Eight New Small Business Tax Cuts – Effective Today, Providing Immediate Incentives to Invest: The President had already signed into law eight small business tax cuts, and on Monday, he is signing into law another eight new tax cuts that go into effect immediately.
    • Zero Taxes on Capital Gains from Key Small Business Investments:  Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
    •  Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments:   The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible toimmediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.  This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
    • Extension of 50% Bonus Depreciation:  The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investmentstoday and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
    •   A New Deduction of Health Insurance Costs for Self-Employed:  The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
    • Tax Relief and Simplification for Cell Phone Deductions:  The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
    •  An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:  The bill temporarily increases the amount of start-up expenditures entrepreneurs can deductfrom their taxesfor this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
    • A Five-Year Carryback Of General Business Credits:  The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
    • Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:  The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a disproportionately large penalty on small businesses in certain circumstances – to a percentage of the tax benefits from the transaction.

    Doocuments:

    Press and blogosphere coverage:

  • September 27, 2010 in Congressional News, Tax | Permalink | Comments (1) | TrackBack (2)

    Monahan Presents Taxes and Health Insurance Today at Loyola-L.A.

    Monahan Amy Monahan (Minnesota) presents The Complex Relationship between Taxes and Health Insurance at Loyola-L.A. today as part of its Tax Policy Colloquium Series.   The commentator is Samuel Sessions (UCLA Medical Center). Here is the abstract:

    Our current system of tax preferences for the purchase of health insurance and for unreimbursed medical expenses has few fans, particularly among economists. Economists argue that excluding the cost of health insurance from taxable income leads individuals to purchase more health insurance than they would if they were bearing the full cost of such coverage. The resulting “over insurance” leads to individuals consuming more medical care than they would if they had purchased optimal insurance. This over consumption increases health care costs and therefore health insurance premiums. Similarly, preferencing the consumption of medical goods and services over other goods and services through various tax-advantaged vehicles such as flexible spending accounts distorts decision making and leads individuals to consume more medical care than they would in the absence of a subsidy.

    After examining these efficiency-based arguments against our current tax treatment of health insurance and unreimbursed medical expenses, this paper argues that focusing solely on efficiency concerns in this context fails to take into account the complex relationship between taxes and health insurance. The final section of the paper examines how the Patient Protection and Affordable Care Act impacts the relationship between taxes and health insurance in terms of both efficiency and broader reform goals.

    September 27, 2010 in Colloquia, Tax | Permalink | Comments (0) | TrackBack (0)

    GOP Senators Seek TIGTA Probe of White House Access to, and Disclosure of, Confidential Taxpayer Data

    Following up on last week's post, Barack Milhous Obama -- Did White House Reveal Confidential Tax Information About Political Enemy? (Sept. 21, 2010):  Senate Finance Committee Ranking Member  Chuck Grassley and six other committee Republicans have sent this letter to the Treasury Inspector General for Tax Administration, seeking an investigation of whether Obama Administration officials illegally accessed and disclosed confidential taxpayer information about Koch Industries in violation of § 6103.

    September 27, 2010 in Congressional News, Tax | Permalink | Comments (1) | TrackBack (0)

    NY Times Debate: Abolish the Estate Tax?

    New York Times, Bloggingheads Video Debate: Abolish the Estate Tax?, with Annie Lowrey (Washington Independent) & Reihan Salam (National Review).

    September 27, 2010 in News, Tax | Permalink | Comments (0) | TrackBack (0)

    60% of Economists: Extend Bush Tax Cuts for Everyone

    CNN, Economists: Extend Bush Tax Cuts for Everyone:

    [A] majority of a panel of leading economists surveyed by CNNMoney.com said that the tax cuts should be renewed for everyone.

    CNN 

    September 27, 2010 in News, Tax | Permalink | Comments (10) | TrackBack (0)

    WSJ: The Send Jobs Overseas Act

    Wall Street Journal editorial, The Send Jobs Overseas Act:

    [T]he President's plan reveals how out of touch Democrats are with the real world of tax competition. The U.S. already has one of the most punitive corporate tax regimes in the world and this tax increase would make that competitive disadvantage much worse, accelerating the very outsourcing of jobs that Mr. Obama says he wants to reverse.

    At issue is how the government taxes American firms that make money overseas. Under current tax law, American companies pay the corporate tax rate in the host country where the subsidiary is located and then pay the difference between the U.S. rate (35%) and the foreign rate when they bring profits back to the U.S. This is called deferral—i.e., the U.S. tax is deferred until the money comes back to these shores.

    Most countries do not tax the overseas profits of their domestic companies. Mr. Obama's plan would apply the U.S. corporate tax on overseas profits as soon as they are earned. This is intended to discourage firms from moving operations out of the U.S.

    The real problem is a U.S. corporate tax rate that over the last 15 years has become a huge competitive disadvantage. The only major country with a higher statutory rate is Japan, and even its politicians are debating a reduction. A May 2010 study by University of Calgary economists Duanjie Chen and Jack Mintz for the Cato Institute using World Bank data finds that the effective combined U.S. federal and state tax rate on new capital investment, taking into account all credits and deductions, is 35%. The OECD average is 19.5% and the world average is 18%. ...

    The lesson here is that tax rates matter in a world of global competition and the U.S. tax regime is hurting American companies and workers. Mr. Obama would add to the damage. His election-eve campaign to raise taxes on American companies making money overseas may not be his most dangerous economic idea, but it is right up there.

    September 27, 2010 in News, Tax | Permalink | Comments (1) | TrackBack (0)

    Shaviro Delivers Tillinghast Lecture at NYU on The Rising Tax-Electivity of U.S. Corporate Residence

    Fleischer Presents Taxing Founders' Stock at Florida State

    Fleischer Victor Fleischer (Colorado) presented Taxing Founders' Stock at Florida State last Thursday as part of its Faculty Enrichment Series. Here is the abstract:

    Founders of a start-up usually take common stock as a large portion of their compensation for current and future labor efforts. Getting paid in founders’ stock allows entrepreneurs to defer paying tax and—more importantly—allows them to pay tax at the long-term capital gains rate. Politicians, entrepreneurs, and many academics claim that the favorable tax treatment of founders’ stock is an effective method of subsidizing entrepreneurship.

    This Article questions the widely-held view that we should tax founders’ stock at a low rate. The economic efficiency case for a tax preference for founders’ stock is weak. Tax policy is an ineffective policy instrument for subsidizing entrepreneurship; tax has an effect on entrepreneurial entry, but the effect is small. Tax is less important than geographic, cultural, and business factors. And tax is less important than other elements of the legal infrastructure, such as immigration policy, employment law, and securities law.

    The case for reform is compelling. Taxing founders at a low rate is a conspicuous loophole in the fabric of our progressive income tax system, uniquely undermining our commitment to equal opportunity and distributive justice. Founders’ stock is often bequeathed to heirs who receive a step up in basis, allowing founders to avoid the income tax altogether, leaving a legacy of dynastic wealth subject only to the rather dodgy application of the estate tax.

    While it would be desirable to eliminate the tax subsidy and instead tax gains from founders’ stock as labor income, fixing the problem is not easy. I offer a range of possible solutions that policymakers might consider.

    September 27, 2010 in Colloquia, Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

    Leiter: The Tax LL.M. -- 'The One Advanced Law Degree That Everyone Considers Worth the Candle'

    Brian Leiter (Chicago), The LLM, Under Attack:

    In a more thorough look, Caron, Kawol and Pratt focus on whether to pursue a tax LLM -- the one advanced law degree that everyone considers worth the candle -- and conclude that for the right student, there can be real benefits.  Other LLM's seem to have intrinsic value.  ...  I fear that, with a few limited exceptions, the greatest economic utility of the LLM flows to law schools collecting undiscounted tuition dollars while avoiding damage to their median LSAT.   And because the ABA does not accredit LLM programs, schools work under virtually no regulatory oversight.  There are many reasons why institutions seek this revenue but we're kidding ourselves if we don't concede a common one: LLM programs can subsidize the scholarly enterprise.  A three course load is expensive.

    Update:  Oops -- as Brian notes in the comments, this post on Brian Leiter's Law School Reports was written by Dan Filler (Drexel).

    September 27, 2010 in Legal Education, Tax | Permalink | Comments (3) | TrackBack (0)

    Fact-Checking the Tax Provisions in the 'Pledge to America'

    Pledge FactCheck.org criticizes the several "dubious factual claims" in the Republican Party's Pledge to America, including these tax provisions:

    Pledge, page 14: Unless action is taken, a $3.8 trillion tax hike will go into effect on January 1, 2011 that will unravel these policies. A family of four with a household income of $50,000 a year will have to pay $2,900 more in taxes in 2011.

    Fact: True, but misleading. What the Pledge fails to note is that Obama and Democratic leaders in Congress have consistently promised to extend the Bush tax cuts for all families making less than $250,000 a year, and singles making less than $200,000. It’s true that hasn’t happened yet, but the reason is that several House and Senate Democrats are agitating to extend the cuts for everybody, even those with the highest incomes.

    Congress might yet fail to extend most or all the cuts before they are scheduled to expire next year. As we reported in a Sept. 3 Ask FactCheck itemon this issue, there’s always a possibility that Congress will grind to a halt in a stalemate. And sure enough, on Sept. 23 Senate Democrats announced they would put off any vote on extending the cuts until after the election. A spokesman for Democratic leader Harry Reid of Nevada said, "Democrats believe we must permanently extend tax cuts for the middle-class before they expire at the end of the year, and we will."

    Pledge, page 14: [Obama] also wants to raise taxes on roughly half of small business income in America.

    Fact: This is an exaggeration. Republicans are equating "net positive business income" reported on individual returns with "small business income," which isn’t correct. They rely on a report from the nonpartisan staff of the Joint Committee on Taxation (p. 12), which estimated that about 3% of taxpayers who have any business income on their personal returns would see a tax increase under Obama’s proposal, and that those 750,000 taxpayers account for about half of all the business income reported.

    But some of that income is from big businesses raking in tens of millions of dollars a year. The JCT stated quite clearly that "These figures for net positive business income do not imply that all of the income is from entities that might be considered ’small.’" Some in fact are quite large, and those big businesses account for a good chunk of that income.

    The JCT said: "For example, in 2005, 12,862 S corporations and 6,658 partnerships had receipts of more than $50 million."

    Republicans do have a point here. Many small businesses and some large fraction of small-business income will be adversely impacted by raising the top rate on individual taxpayers.

    The fact is, though, that the JCT couldn’t estimate how much of the total business income was accounted for by "small" businesses, or how many of the 750,000 individuals affected own "small" busineses. What we do know is that a good deal less than half the small business income, and something less than three percent of small business owners, would be subject to higher taxes.

    Pledge, page 28: Roughly 16,500 IRS auditors, agents, and other employees may be needed to collect the hundreds of billions of dollars in new taxes levied on the American people by the new health care law.

    Fact: This is simply not true. As we reported last March, this figure "stems from a partisan analysis based on guesswork and false assumptions, and compounded by outright misrepresentation." For an eye-opening account of how Republican staff members of the House Ways and Means committee came up with this inflated figure, see our Ask FactCheck item posted March 30. Most of what the IRS will do under the law is hand out tax credits, not collect penalties.

    September 27, 2010 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

    Sunday, September 26, 2010

    TaxProf Blog Weekend Roundup

    Top 5 Tax Paper Downloads

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

    1.  [261 Downloads]  The Ethics of Tax Lawyering: An Introduction, by Michael Hatfield (Texas Tech)

    2.  [224 Downloads]  Fifty Years of Utopia: A Half-Century after Louis Kelso’s The Capitalist Manifesto, a Look Back at the Weird History of the ESOP, by Andrew Stumpff (Michigan)

    3.  [205 Downloads]  The Constitutionality of the Taxation Consequences for Renouncing U.S. Citizenship, by William Thomas Worster (The Hague University)

    4.  [176 Downloads]  Tax Lawyers, Tax Defiance, and the Ethics of Casual Conversation, by Michael Hatfield (Texas Tech)

    5.  [159 Downloads]  The Test for Tax Avoidance in New Zealand: A Judicial Sea-Change, by Craig Elliffe (University of Auckland, Faculty of Business & Economics) & Jessica M. Cameron (Chapman Tripp, Auckland, NZ)

    September 26, 2010 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

    100 Pastors to 'Bait' IRS Today on 'Pulpit Freedom Sunday'

    USA Today, Pastors Plan to 'Bait' IRS with Pulpit Politics:
    On Sunday, a group of 100 preachers nationwide will step into the pulpit and say the only words they're forbidden by law from speaking in a church.

    They plan to use the pulpit as a platform for political endorsements, flouting a federal law that threatens churches with the loss of their nonprofit status if they stray too far into partisan politics.

    While other church and nonprofit leaders cringe at the deliberate mix of the secular and the religious, participants in the annual Pulpit Freedom Sunday protest hope this act of deliberate lawbreaking will lead to a change in the law.

    Alliance Defense Fund:

    Following up on yesterday's post, Pastors for ObamaCare?:  Everyday Christian, President Obama Calls Pastors To Preach Healthcare:

    Earlier this week on a conference call, President Obama and his top healthcare officials charged religious leaders across America with spreading a new kind of gospel – the good news of nationalized healthcare. Isn’t it convenient how the pulpit is barred from promoting political opinion, until it is the opinion of the President?  According to Politico, “Obama instructed faith leaders to treat the new law as settled fact and use their perches of power to convey that message to congregants and friends.” ...

    Ironically, or perhaps not, this Sunday September 26 marks the Alliance Defense Fund’s third annual “Pulpit Freedom Sunday,” during which 100 pastors nationwide will exercise their right to free religious expression. Participants will preach sermons related to biblical perspectives on positions of electoral candidates or current government officials. This is despite and in response to an IRS rule that is often used to bully the pulpit into silence.

    Preachers spoke freely from the pulpit until 1954 when Congress passed a tax code amendment that prohibits any speech favoring or opposing a political candidate. According to the ADF, ever since the Johnson Amendment was added to the Federal Tax Code, the IRS has increased its guidance of the law – and its vagueness. The IRS now investigates churches for politically-charged discourse, and threatens many with the loss of tax-exemptions. Such surveillance and intimidation has stifled many pastors in fear.

    ADF Senior Legal Counsel Erik Stanley said, “Rather than risk confrontation, many pastors have self-censored their speech, afraid to apply the teachings of Scripture to specific candidates or elections. As in years past, the participants in Pulpit Freedom Sunday 2010 are taking a stand against being intimidated into sacrificing their First Amendment rights.”

    Stanley added, "ADF is not trying to get politics into the pulpit; we want to get government out of the pulpit.” But “government in the pulpit” seems to be exactly what Obama desires – “government in the pulpit” to censor pastors’ voices, except when they praise the President’s agenda.

    Press and blogosphere coverage:

    September 26, 2010 in News, Tax | Permalink | Comments (22) | TrackBack (0)

    The Reagan Tax Cuts and Revenues

    Wall Street Journal op-ed, Tax Cuts and Revenue: What We Learned in the 1980s, by Richard W. Rahn (Cato Institute):

    Supply-siders never argued that all tax cuts pay for themselves. But the evidence is clear that lower rates on high earners do produce more revenue over time.

    There will be no gain in long-term tax revenue from increasing tax rates on those making more than $200,000 per year, despite claims by President Obama's Office of Management and Budget, and the Congressional Joint Committee on Taxation, which studied the administration's tax proposals. The current debate over the expiring Bush tax cuts is a replay of the debate about the Reagan tax-rate reductions of three decades ago. We know the outcome of that debate. Lower tax rates, particularly on labor and capital, lead to higher levels of employment and economic growth.

    Those of us who argued in the late 1970s and early 1980s for lower tax rates were often characterized as "radical supply-siders" and criticized for claiming that all tax-rate reductions lead to higher tax revenues. This was untrue; none of the principal advocates of Reagan's 1981 tax cuts made this claim.

    The Reagan tax cuts reduced rates for all income classes, even though it was well understood that cutting the lower rates would result in substantial revenue losses. Low tax rates (below 20%) do not cause much of a disincentive for working, saving or investing, and hence there is little supply-side effect. We did argue, however, that reducing the high marginal rates (up to 70% on high-income earners) would cause little, if any, revenue loss, because of the large, positive supply-side effects. Were we right?

    Since most of the Reagan tax cuts applied to lower- and middle-income earners, there was close to a dollar lost in tax revenue for each "dollar" of tax cut for these groups. Still, CBO figures show that total tax revenue only fell from 19.2% of gross domestic product (GDP) in 1982, before most of Reagan's tax-rate reductions were put in place, to 18.4% of GDP in 1989, the year he left office. This happened because the U.S. economy grew by more than one-third in real terms (34.3%), much faster than the 24.3% rate expected even by economists within the Reagan administration. Thus, by the time President Reagan left office, the economy was generating more tax revenue at a maximum 28% rate than many on the left forecast it to generate at a maximum 70% rate.

    Bruce Bartlett notes that the op-ed ignore the eleven major tax increases signed into law by President Reagan in 1982-88:

    Tax Increases

    Billions

    Tax Equity and Fiscal Responsibility Act of 1982

    57.3

    Highway Revenue Act of 1982

    4.9

    Social Security Amendments of 1983

    24.6

    Railroad Retirement Revenue Act of 1983

    1.2

    Deficit Reduction Act of 1984

    25.4

    Consolidated Omnibus Budget Reconciliation Act of 1985

    2.9

    Omnibus Budget Reconciliation Act of 1985

    2.4

    Superfund Amendments and Reauthorization Act of 1986

    0.6

    Continuing Resolution for 1987

    2.8

    Omnibus Budget Reconciliation Act of 1987

    8.6

    Continuing Resolution for 1988

    2.0

    Total Cumulative Tax Increases

    132.7

    September 26, 2010 in News, Tax | Permalink | Comments (2) | TrackBack (0)

    Tax Presentations at CSLSA Annual Meeting

    CSLSA Here are the tax presentations at this weekend's Central States Law Schools Association Annual Meeting at North Dakota:

    • Danshera Cords (Albany), Lien on Me: Virtual Debtors Prisons, The Practical Effects of Tax Liens and Proposals for Reform, 49 Brandeis L.J. ___ (2010):  "This Article explores three specific problems relating to [Notices of Federal Tax Liens ("NFTL")]: first, the manner in which tax liabilities are selected for the filing of a NFTL; second, when taxpayers have the opportunity to obtain withdrawal of a NFTL following payment of the tax liability; and third, how unpaid, unenforceable tax liens are reported on the taxpayer’s credit report. This Article concludes that in none of these areas do the current law or procedures result in optimal results for the tax collection system, as they result in many taxpayers who are less likely to be able to become and remain tax compliant following whatever situation led to the initial noncompliance. The current state of the law and Internal Revenue Service policy is likely to result in reduced benefit to both individual taxpayers and the tax collection system as a whole.

    This Article explores means to change the treatment of tax liens that have become unenforceable or that have been paid to avoid situations that are likely to create situations that, in the long-term, will create a situation that will make it more likely that a taxpayer will be more likely to remain tax noncompliant because of the tax lien. This Article begins in Part I by describing how tax liens arise and are released or withdrawn. Part II describes the history of protections afforded to taxpayers against tax liens that are erroneous or impose an undue hardship on a taxpayer. Part III discusses the effect of a NFTL on an individual’s credit report. Part IV advocates two statutory changes. First, it advocates changes to the manner in which NFTLs are issued. Specifically, NFTL issuance procedures must include a requirement of heightened review prior to issuance of a NFTL to ensure that NFTLs are issued equitably to taxpayers based on facts indicating that the filing of a NFTL will increase the likelihood and amount of tax that will be collected from the taxpayers In addition, the statutes relating to NFTLs should be changed to ensure that following payment of an unpaid tax liability on which a NFTL has been issued and upon request a withdrawal be entered. Second, changes to the Fair Credit Report Act are needed to require the removal of unpaid tax liens from a taxpayer’s credit report when the taxlien becomes unenforceable in the same time and manner as other unenforceable liens. This part discusses the systemic benefits and potential challenges to this proposed resolution. As this Article demonstrates, these changes will improve taxpayer equity, reduce unnecessary hardship on individuals who suffer temporary financial setbacks, and create a greater potential for future tax compliance, without reducing the potential for current tax collection."

    • Michael Hatfield (Texas Tech), Tax Lawyers, Tax Defiance, and the Ethics of Casual Conversation:  "This Essay addresses the increasingly common social situation in which tax lawyers are confronted with tax protester arguments and similar anti-tax system comments. This Essay seeks to place these conversations in a greater context of tax policy and ethical considerations, urging tax lawyers not to walk away from the conversations but rather to engage with hopes of educating the public, improving the law, and protecting the interests of the vast majority of Americans who pay their share of the price of civilization and expect others to do the same."
    • Gary Lucas, Jr. (Texas-Wesleyan), The Use of Cigarette Taxes to Discourage Smoking:  "A large number of states and the federal government have either recently enacted or are currently considering substantial cigarette tax increases. Politicians often justify these tax increases as a way to discourage smoking, particularly among children. Additionally, some economists have recently supported the paternalistic use of cigarette taxes. They argue that many people smoke because of self-control problems, and these smokers would be better off if the government encouraged them to quit via cigarette tax increases.

    This article argues that policy makers should reconsider the use of cigarette taxes as a paternalistic device. Even if cigarette taxes do help certain smokers who have self-control problems, they harm many other smokers, including many low-income smokers. A large percentage of low-income individuals have continued to smoke despite high taxes. Because the poor smoke at a much higher rate than the rich, cigarette taxes are very regressive. Additionally, because adults smoke the vast majority of cigarettes, taxes are a blunt instrument for reducing adolescent smoking. The article suggests that those concerned with reducing smoking should consider less regressive alternatives to cigarette tax increases. These include aggressively enforcing youth access restrictions."

    September 26, 2010 in Conferences, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

    Saturday, September 25, 2010

    Pastors for ObamaCare?

    Wall Street Journal op-ed, Pastors For ObamaCare?, by Jim Towey (Director, White House Office of Faith-Based and Community Initiatives (2002-06):
    If the White House office of faith-based initiatives is going to be used as propaganda unit, it might as well be shut down.

    I was George W. Bush's director of faith-based initiatives. Imagine what would have happened had I proposed that he use that office to urge thousands of religious leaders to become "validators" of the Iraq War?

    I can tell you two things that would have happened immediately. First, President Bush would have fired me—and rightly so—for trying to politicize his faith-based office. Second, the American media would have chased me into the foxhole Saddam Hussein had vacated.

    Yet on Tuesday President Obama and his director of faith-based initiatives convened exactly such a meeting to try to control political damage from the unpopular health-care law. "Get out there and spread the word," Politico.com reported the president as saying on a conference call with leaders of faith-based and community groups. "I think all of you can be really important validators and trusted resources for friends and neighbors, to help explain what's now available to them." Since then, there's been nary a peep from the press.

    Politico, Barack Obama Seeks Divine Intervention on Health Care Reform:

    With nothing else working, President Barack Obama is asking religious leaders to help him sell the public on health care reform.

    POLITICO listened in to an Oval Office conference call Tuesday, where Obama and top administration officials, beseeched thousands of faith-based and community organizations to preach the gospel on new insurance reforms, chiefly the Patients’ Bill of Rights. ...

    Get out there and spread the word,” Obama told leaders from across the religious spectrum on the conference call. ... Obama instructed faith leaders to treat the new law as settled fact and use their perches of power to convey that message to congregants and friends. “The debate in Washington is over, the Affordable Care Act is now law ... I think all of you can be really important validators and trusted resources for friends and neighbors, to help explain what’s now available to them,” he said. ... 

    The White House sees the faith-based community as a key partner in spreading information on health reform issues. "We believe community-based and faith-based can spread the word," an administration official told POLITICO. "They are reaching people every day in churches, synagogues, mosques and secular organizations. They can spread the word about these things."

    IRS resources on political activities by charities and churches:

    September 25, 2010 in News, Tax | Permalink | Comments (12) | TrackBack (0)

    IRS Relaxes Uncertain Tax Position Rules

    IRS Logo The IRS yesterday released several forms of guidance on the reporting of uncertain tax positions:

    Media and blogosphere coverage:

    September 25, 2010 in IRS News, News, Tax | Permalink | Comments (1) | TrackBack (0)

    NYSBA Releases Tax Reports

    The Application of Quill in the Internet Age

    Michael R. Gordon (J.D. 2011, North Carolina) has published Recent Development, Up the Amazon Without a Paddle: Examining Sales Taxes, Entity Isolation, and the Affiliate Tax, 11 N.C. J.L. & Tech. 299 (2010). Here is the abstract:

    As a result of the Supreme Court’s decision in Quill v. North Dakota, unless a retailer has a physical presence in a state, it is not obliged to collect sales taxes in that state. In order to avoid collecting sales taxes, many companies like Amazon.com have set up subsidiary companies in many states to ship goods to customers but not sell them. This tactic is called entity isolation. On the other end of the spectrum, states are creating legislation, commonly but inaccurately called an 'affiliate tax,' which states that if a company makes a certain amount of money through affiliates in the state, it is deemed to have legal physical presence and is required to collect sales taxes. This Recent Development discusses how Quill has reacted to the Internet age, the possibility of states cutting through entity isolation, and the constitutionality of the so-called 'affiliate tax.'

    September 25, 2010 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

    Friday, September 24, 2010

    Democrats Punt on Taxes

    Wall Street Journal, Congress Punts on Taxes: Democrats Put Off Showdown on Bush Cuts Until After November Election:

    Democrats abandoned plans to vote before Election Day on extending Bush-era tax cuts for the middle class while eliminating them for better-off Americans, spooked by protests from vulnerable incumbents and bleak prospects for passage.

    With time running out to plan for 2011, the delay raises uncertainty for small businesses and individual taxpayers over their future liabilities. It also sets up a titanic battle over taxes after the election.

    If returning lawmakers don't pass legislation by Dec. 31, the expiration date of the cuts, tax rates would rise not only on income, but also on estates, capital gains and dividends. Important corporate tax credits and relief from the Alternative Minimum Tax also are up for renewal.

    Democratic leaders and President Barack Obama made the proposal to extend the middle-class tax breaks a centerpiece of their midterm campaign strategy. They now face the possibility their members are vulnerable to Republican charges that they have failed to prevent taxes from rising for almost everyone.

    Chart

    September 24, 2010 in News, Tax | Permalink | Comments (1) | TrackBack (0)

    Tamanaha: Doubts About the New 'Scholarly Impact' Rankings

    Following up on my recent posts:

    In our article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006), we discuss the pros and cons of citation counts (as well as the other rankings measures of reputation surveys, publication counts, and download counts). Brian Tamanaha (Washington University) recently blogged, Doubts About the New "Scholarly Impact" Ranking:

    The authors are not doing something better than US News—they are repeating its error of producing a ranking of dubious validity without heed to its negative consequences. The harm inflicted on law schools by US News will be compounded by an additional set of harms that follow from this new “scholarly impact” ranking. This time, however, the wounds will be self-inflicted because law professors are constructing and promoting the new ranking (lending it a patina of credibility).

    Greg Sisk (St. Thomas), one of the co-authors of the scholarly impact study, responds:

    The pertinent scholarly impact question is whether the work of the present roster of faculty at a law school is percolating among other legal scholars and helping define and contribute to the national scholarly discussion in the legal literature.

    September 24, 2010 in Law School Rankings, Legal Education | Permalink | Comments (3) | TrackBack (0)

    Guitarists and Accountants

    At the 30-second mark:

    (Hat Tip: Beau Baez.)

    September 24, 2010 in Celebrity Tax Lore, Tax | Permalink | Comments (0) | TrackBack (0)