February 29, 2012
Yin Presents Origins of the Joint Committee on Taxation Today at Duke
This paper describes the origins of the U.S. Joint Committee on Taxation (JCT) and its staff. The JCT was created in 1926 to help address weaknesses in the nation’s fledgling income tax that were exposed during World War I. One of the House’s responses to the problems was to propose formation of a temporary “Joint Commission on Taxation,” consisting of members of Congress and the public, whose principal responsibility would be to provide simplification recommendations. This proposal was reshaped by the Senate following a bitter, public feud between Senator James Couzens (R.-Mich.) and Treasury Secretary Andrew Mellon that led to a controversial (and ultimately revealing) investigation by the Senate of the Bureau of Internal Revenue (predecessor to the modern-day IRS). In the process, the JCT proposal became intertwined with two of the most contentious tax issues of the day — the publicity of tax return information and the percentage depletion allowance for oil and gas production. In a final section, the paper considers whether the proposed creation of the JCT was a serious legislative initiative or a sham.
Poll: 70% of Likely Voters Support Lower Individual, Corporate Tax Rates
Three-quarters of likely voters believe the nation’s top earners should pay lower, not higher, tax rates, according to a new poll for The Hill.
The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75% said the right level for top earners was 30% or below.
The current rate for top earners is 35%. Only 4% thought it was appropriate to take 40%, which is approximately the level that President Obama is seeking from January 2013 onward.
The Hill Poll also found that 73% of likely voters believe corporations should pay a lower rate than the current 35%, as both the White House and Republicans push plans to lower rates.
The new data seem to run counter to several polls that have found support for raising taxes on high-income earners. In an Associated Press-GfK poll released Friday, 65% said they favored President Obama’s “Buffett Rule” that millionaires should pay at least 30% of their income. And a Pew poll conducted in June found 66% of adults favored raising taxes on those making more than $250,000 as a way to tackle the deficit.
But The Hill poll found that a dramatically different picture emerges when voters are asked to specify the “most appropriate” rates. ... The data could indicate a challenge to Obama’s push to increase taxes on the wealthy. ...
Republicans were more likely than Democrats to support lower tax rates for the wealthy, but voters in both parties solidly supported lower rates compared to current law. Eighty-one percent of Republicans favored tax rates below current levels, compared to 70% of Democrats.
CTJ: GE Paid 2.3% Tax Rate on $81 Billion of Profits Over Past Ten Years
Citizens for Tax Justice, Press Release: General Electric's Ten Year Tax Rate Only 2.3 Percent:
General Electric’s annual SEC 10-K filing for 2011 (filed February 24, 2012) reveals that the company paid at most 2.3% of its $81.2 billion in U.S. pretax profits in federal income taxes over the last 10 years.
- Huffington Post, GE Breaks Law, Avoids Taxes. Gets Billions From Gov't, Avoids Taxes. Gets White House Post -- Ah, You Know The Rest
- Huffington Post, General Electric Tax Rate 2.3 Percent Over Decade, Report Finds
- Reuters, GE Had 11.3% Effective Tax Rate in 2011
- Wall Street Journal, Spat Between Tax Group, GE Highlights Hurdles to Tax Overhaul
WSJ: The $45 Billion Tax Bailout of GM
Following up on yesterday's post, NY Times: Treasury Bent NOL Rules to Provide $26 Billion to AIG: Wall Street Journal editorial, The Other GM Bailout: The $18 Billion Tax Gift Obama Didn't Mention:
Corporations in the red, as GM was for years, are allowed to carry forward net operating losses that reduce their future tax liability when they are making money. GM had accumulated about $45 billion in such profit-shielding chits by 2008, with a book value of about $18 billion. When companies enter bankruptcy, carry-forwards disappear or are greatly limited under § 382, which kicks in when ownership changes by more than 50% points.
The point is to prevent companies from buying assets solely for tax arbitrage or tax avoidance. But starting in 2009, Treasury began to issue regulatory "notices" that suspend this law when it comes to Treasury-owned stock. The provisions also apply to AIG and Citigroup.
So when GM entered bankruptcy in June 2009, the government swapped the debt the auto maker owed it as a creditor for 61% of "new GM," while handing another chunk to the United Auto Workers. But new GM also inherited the accumulated net operating losses that would have turned into a pumpkin in normal bankruptcy.
In a 2011 working paper, J. Mark Ramseyer of Harvard and Eric Rasmusen of Indiana University argue that by manipulating corporate tax rules by fiat, "Treasury gave the firm (and its owners, including the UAW) $18 billion more in assets." Thus a Democratic Administration gave "a massive tax benefit to one of the party's biggest supporters." The other problem is that the move put Ford and GM's other competitors at a disadvantage, as bailouts always do.
Mr. Obama crowed yesterday about GM's "highest profits in its 100-year history." We'd be interested to hear how its effective tax rate compares with Warren Buffett's secretary's.
Video: The Value of a J.D., Student Loans, and Bankruptcy
Federal Circuit Denies Patent Protection for § 1031 Like-Kind Exchange Strategy
Fort Properties, Inc. v. American Master Lease, LLC (No. 2009-1242) (Fed. Cir. Feb. 27, 2012):
The investment tool disclosed in the '788 patent is designed to invoke the benefits of § 1031. In particular, the claims require the aggregation of a number of properties into a "real estate portfolio." The property interests in this portfolio are then divided into shares and sold to investors much in the same way that a company sells stock. These divided property interests are called "deedshares." Each deedshare can be encumbered by its own mortgage debt, which provides flexibility to real estate investors attempting to structure their debts in a way that complies with § 1031.
We view the present case as similar to Bilski. Specifically, like the invention in Bilski, claims 1-31 of the '788 patent disclose an investment tool, particularly a real estate investment tool designed to enable tax-free exchanges of property. This is an abstract concept. Under Bilski, this abstract concept cannot be transformed into patentable subject matter merely because of connections to the physical world through deeds, contracts, and real property.
Dear 16-Year Old Me: Don't Go to Law School
(Hat Tip: Ann Murphy.)
Should We Abolish the Corporate Income Tax?
Bloomberg, Should We Abolish the Corporate Income Tax?, by Peter Coy:
No. Bad idea.
OK, sorry, that was a little blunt. After all, there are a lot of smart people who think President Barack Obama didn’t go far enough in his recent proposal to cut the corporate income tax rate to 28 percent from 35 percent. They would like to see it go all the way to zero. They say trying to tax corporations is a waste of time because they aren’t like people—ultimately they just pass along the cost of the tax to their shareholders, workers, and (to a small extent) customers.
The abolitionists aren’t all conservatives, either. The Atlantic‘s Megan McArdle has said the corporate income tax “may be the stupidest tax we have.” Even a liberal like blogger Matt Yglesias asked on Feb. 24 why the U.S. doesn’t just ditch the corporate income tax. (He decided that getting rid of it now and replacing the revenue in a fair way is politically unrealistic.)
But this just might be a case in which the policy elites of both left and right are wrong—and ordinary Americans, who kind of like the corporate income tax, are right. The strongest argument for the corporate income tax is one that is rarely heard anymore but was widely used at its inception in 1909—namely, that the tax is a brake on excessive corporate power.
The person who has pressed this argument is Reuven Avi-Yonah, a professor at the University of Michigan Law School. Avi-Yonah is well-credentialed, with both a PhD in history from Harvard University and a JD from Harvard Law and consulting work for the U.S. Department of the Treasury and the Organization for Economic Co-operation and Development. His 2004 paper, Corporations, Society and the State: A Defense of the Corporate Tax, is a classic
The Atlantic, Why I Still Think We Should Eliminate the Corporate Income Tax, by Megan McCardle:
One of the first blog posts I ever wrote was on why we should eliminate the corporate income tax. This is not because I just looooooooove corporations, or wish to put more money into the hands of rich people--on the contrary, I want to pair an elimination of the tax with an end to the special low tax rates for dividends and capital gains, and maybe even an increase in rates for higher brackets if that's necessary to keep the thing revenue neutral. Which would actually be considerably more progressive than the current system.
Rather, I think the thing's horribly inefficient--companies and rich people spend an exorbitant amount of time arranging their affairs to be lower-taxed, rather than more productive. Taxing capital once, when it hits a person, as ordinary income, would in one fell swoop eliminate most of the tax-avoidance activity that goes on in this country. It's also not necessarily as progressive as its proponents think, and well, you can read all my other reasons for disliking it here.
Peter Coy, the economics editor of BusinessWeek, thinks I'm wrong. He argues that eliminating the corporate income tax isn't first-best policy, not even close. He channels Reuven Avi-Yonah, a law professor at Michigan, to argue that the corporate income tax is necessary to rein in the power of corporate managers. ...
It's an intriguing argument, but I'm not convinced. I feel like we have all sorts of vehicles for "supervisory control of corporations", and the IRS is probably not the most efficient. Moreover, it's far from clear to me that the taxing power has ever been very good at reining in the power of corporate executives. ... [T]the corporate income tax is largely expressive--we like policies which penalize corporations, particularly big ones, regardless of their actual effect on corporate power.
Law Review Circulation Continues to Plummet (2011)
Ross E. Davies (George Mason), Law Review Circulation 2011: More Change, More Same, 2 J. Legal Metrics 179 (2012):
In 2011, for the first time since the U.S. Postal Service began requiring law reviews to track and report their circulation numbers, no major law review had more than 2,000 paying subscribers. The Harvard Law Review remains the top journal, but its paid circulation has declined from more than 10,000 during much of the 1960s and ’70s to about 5,000 in the 1990s to 1,896 last year.
- Law Review Circulation Continues to Plummet (2008)
- Law Review Circulation Continues to Plummet (2009)
- Law Review Circulation Continues to Plummet (2010)
31% Law School 'Tax' at Baltimore Is More Than Twice What University Claimed
National Law Journal, Law School 'Tax' at Baltimore More Than Twice What University Claimed:
When Phillip Closius was forced out as dean of the University of Baltimore School of Law in July, he publicly accused university officials of raiding law school funds to subsidize other academic programs.
University President Robert Bogomolny denied the charges, claiming that the broader campus took just 14% of the revenue generated by the law school during the 2010-11 academic year — not the 45% Closius claimed.
Now an analysis prepared by the Maryland Department of Legislative Services has discovered that Baltimore's law school indeed has been something of a cash cow for the university.
The law school in 2010 sent $8.8 million, nearly 31% of its revenue, into the general university budget, according to the analysis. By comparison, the University of Maryland Francis King Carey School of Law — the state's only other public law school — sent slightly more than 11% of its revenue back to the larger university, at $2.8 million. ... [T]he percentage of law school tuition money going to the university grew in 2011, when a tuition increase generated an additional $1.45 million in revenue — only about $80,000 of which went back to the law school.
February 28, 2012
NY Times: Treasury Bent NOL Rules to Provide $26 Billion to AIG
New York Times Deal Book, Bending the Tax Code, and Lifting AIG’s Profit, by Andrew Ross Sorkin:
Last week, AIG reported a whopping $19.8 billion profit for its fourth quarter. It was a quite a feat for a company that was on its death bed just a little over three years ago, so sick that it needed a huge taxpayer bailout.
But if you dug into the numbers, it quickly became clear that $17.7 billion of that profit was pure fantasy — a tax benefit, er, gift, from the United States government. The company made only $1.6 billion during the quarter from actual operations. Yet AIG not only received a tax benefit, it is unlikely to pay a cent of taxes this year, nor by some estimates, for at least a decade.
The tax benefit is notable for more than simply its size. It is the result of a rule that the Treasury unilaterally bent for AIG and several other hobbled companies in 2008 that has largely been overlooked.
This rule-twisting could deprive the government of tens of billions of dollars, assuming the firm remains profitable. The tax dodge, and let’s be honest, that’s what it is, also will most likely help goose the bonuses of AIG's employees, some who helped create many of the problems that led to its role in the financial crisis.
“We suggest that Congress give its members standing to challenge such manipulation in court,” J. Mark Ramseyer, a Harvard professor, and Eric B. Rasmusen, a professor at Indiana, wrote in a paper last year. The paper provocatively asked: Can the Treasury Exempt Its Own Companies From Tax?.
Here’s the back story: AIG’s tax benefit comes in large part from its immense “net operating losses” during its depths of despair in 2008 before its rescue. The government had to dump $182 billion into the company after it was crippled by bad bets it had made insuring mortgage-backed securities.
The tax benefit comes in the form of something called net operating losses — NOLs in Wall Street parlance — that could be worth more than $25 billion, possibly more. Those losses can be very valuable, in part because companies can spread them over many years to lower or wipe out their income tax bills.
However, according to longstanding tax laws, if a company files for bankruptcy or is taken over, it loses the ability to use its net operating losses. AIG would fit that profile perfectly: on the verge of bankruptcy, the federal government took control of AIG, exchanging its bailout billions for shares in the company. The government — taxpayers — still own 77% of the company, down from 92% three years ago.
Still, the Treasury issued “Notices” exempting AIG from losing its right to make use of its NOLs. In total, the insurer estimated those losses were worth $26.2 billion as of 2009, and it claimed almost $9 billion in other “unrealized loss on investments.” ...
All of this brings us to the inevitable questions: How did this happen? Why would Treasury exempt AIG from the law? [S]enior Treasury officials said privately that they had exempted AIG because they did not consider the rescue to be a traditional takeover. The original law preventing companies from using the losses after a takeover were intended to prevent corporations from buying failing companies with lots of losses simply for the tax benefits. ...
Prior TaxProf Blog coverage:
- GM's Tax Shelter Not Available to Other Car Makers (or Other Taxpayers) (Aug. 1, 2009)
- GM's Special $45 Billion NOL Provides Lucrative Tax Shelter (Nov. 3, 2010)
- GM's Sweetheart Tax Deal (Feb. 25, 2011)
- AIG Adopts Poison Pill to Preserve $65 Billion NOL (Mar. 23, 2011)
- Ramseyer & Rasmusen: IRS Had No Authority to Waive NOL Rules for GM (June 17, 2011)
(Hat Tip: Rebecca Kysar.)
Fleischer Presents Consequentialism and Charitable Giving Today at Toronto
Consequentialism – the moral theory that legal policies should be judged by their ex post effects – play a starring role in most current tax policy debates (such as the debate over increasing marginal rates). Its influence on charitable giving policy, however, is often hidden. Because many scholars of the charitable tax subsidies seek to avoid thorny moral issues of justice, much scholarship on the subsidies focuses on the seemingly value-neutral ideals of efficiency and pluralism. But such ideals are not value neutral after all. Consider efficiency: by focusing on preference satisfaction, many discussions of efficiency are implicitly welfarist. The same is true of the pluralism-focused scholarship; by celebrating the ability of a wide variety of individuals to satisfy their preferences for public goods, it too is often implicitly welfarist. Further, many recurring critiques of the charitable tax subsidies hint at consequentialist notions of distributive justice (such as the criticism that “too much” charitable giving to groups such as the opera benefits the middle- and upper-classes of society, doing “too little” to help the poor).
Consequentialist ideals thus permeate current discussions of the charitable tax subsidies. To that end, this Article will mine the nuances of consequentialist moral theories to see what light, if any, can be shed on the subsidies. Applying a narrow conception of traditional utilitarianism (which measures utility in terms of wealth and income and assumes the declining marginal utility thereof) suggests that donations to organizations which as a general matter benefit those less well-off than the donors merit a subsidy – regardless of where on the income spectrum that redistribution occurs. This suggests that common criticisms of the subsidies for not doing enough to help the “poor” are unfounded. Such criticisms are also unfounded if one rejects the the assumption of declining marginal utility, or if one applies a happiness-maximizing version of utilitarianism. This latter version, however, raises complicated issues concerning the disutility of non-donors who are opposed to a given charity’s mission. On the other hand, adopting a leximin theory of justice does lend weight to the common criticism that the charitable tax subsidies do not do enough to benefit the less-fortunate.
Shaviro Presents Financial Transactions Tax v. Financial Activities Tax Today at NYU
Daniel Shaviro (NYU) presents The Financial Transactions Tax Versus the Financial Activities Tax at NYU today as part of its Colloquium Series on Tax Policy and Public Finance:
The 2008 financial crisis has provoked widespread interest in developing new taxes to apply to the financial sector. In particular, the Staff of the International Monetary Fund has suggested enactment of a financial activities tax (FAT), while the European Commission has proposed a financial transactions tax (FTT). This article discusses the FAT and FTT models that have featured in historical and more recent discussion, and evaluates them in light of the objectives stated by the European Commission, along with broader tax policy considerations. It concludes that there is a strong case for enacting an FAT, and that two alternative versions of this tax have competing pluses and minuses. With respect to the FTT, it concludes that the rationales advanced by the European Commission are unpersuasive, but that an argument could perhaps made for the tax – subject to concern about its clear inefficiency at certain margins – based on the goal of discouraging the socially excessive pursuit of trading profits (or if better instruments for raising revenue and increasing progressivity are politically unavailable).
Iowa Prevails in First of Three Faculty Hiring Discrimination Lawsuits
The University of Iowa College of Law has prevailed in the first of three faculty hiring discrimination lawsuits: a jury last week found that the law school had not unlawfully discriminated against Donald Dobkin (age 55), a professor at Central Michigan University and a partner in a Troy Michigan immigration law boutique law firm, in declining to interview him for a tenure-track position teaching administrative law and immigration law.
The other two faculty hiring lawsuits are:
- Nicholas Spaeth (age 61), former North Dakota Attorney General and visiting professor at University of Missouri School of Law, claims that Iowa (and five other law schools) for refused to interview him for a tenure-track position because of his age.
- Teresa Wagner, Associate Director of Iowa's Writing Resource Center, claims that she was twice rejected for a legal writing faculty position because of her conservative political views.
CBPP: Six Tests for Corporate Tax Reform Reform
Center on Budget and Policy Priorities, Six Tests for Corporate Tax Reform Reform:
Congress may consider major changes to the corporate tax code this year. In light of the nation's significant economic and budgetary challenges, a well-designed corporate tax reform proposal should:
- Contribute to long-term deficit reduction. Corporate tax revenues are now at historical lows as a share of the economy, at a time when the nation faces deficits and debt that are expected to grow to unsustainable levels. Although the top statutory corporate tax rate is high, the average tax rate — that is, the share of profits that companies actually pay in taxes — is substantially lower because of the tax code's many preferences (deductions, credits and other write-offs that corporations can take to reduce their taxes). Moreover, when measured as a share of the economy, U.S. corporate tax receipts are actually low compared to other developed countries. All parts of the budget and the tax code, including corporate taxes, should contribute to deficit reduction. Well-designed corporate tax reform can improve economic efficiency and help on the deficit-reduction front at the same time.
- Reduce the tax code's bias toward overseas investments. U.S. multinationals pay much lower taxes on profits from their overseas investments than on profits from their domestic investments. That gives corporations a strong incentive to shift economic activity and income from the United States to other countries. Policymakers should address the features of the corporate tax code that allow so much business activity to escape taxation and that favor foreign investments over domestic ones.
- Improve economic efficiency by reducing special preferences. The corporate tax code taxes different kinds of corporate investments at very different rates. This "unlevel playing field" encourages businesses to choose among investments in substantial part based on their tax benefits, instead of making those decisions based entirely on investments' real economic value. Policymakers should level the playing field through corporate tax reform.
- Provide more neutral treatment of corporate and non-corporate businesses. Over time, various policy changes have made it easier for companies to enjoy the benefits of corporate status without being subject to the corporate income tax. Reform should reflect the guiding principle that firms engaging in similar activities and enjoying similar legal benefits should be taxed at similar rates.
- Reduce the tax code's bias towards debt financing. The current corporate tax code encourages corporations to finance their investments with debt (e.g., by issuing bonds) rather than equity (e.g., by selling stock). This encourages corporations to rely excessively on debt, which, as the recent financial crisis demonstrated, poses risks for both the firms and the broader economy. The tax code should be more even-handed in treating these two types of financing.
- Take specific steps to discourage tax sheltering. If policymakers lower the statutory corporate tax rate to well below the top individual tax rate, they should also establish safeguards to prevent high-income individuals from sheltering their income in corporations in order to pay taxes at a lower rate.
(Hat Tip: Ed Kleinbard.)
President Obama Proposes Elimination of Charitable Deductions for Golf Course Easements
Several years ago the IRS suffered a major defeat when the Tax Court blessed a $28.6 million charitable income tax deduction for the donation of a conservation easement encumbering the Kiva Dunes golf course, which is located on the gulf coast in Baldwin County, Alabama. Kiva Dunes Conservation, LLC v. Comm’r, T.C. Memo. 2009-145. ... [E]limination of the charitable deduction for contributions of conservation easements on golf courses is included in the Obama administration’s fiscal 2013 revenue proposals [page 140].
Law School Rankings by BigLaw Partners
Law schools that saw the most alumni promoted to partner [in the 250 largest law firms] in 2011.
Here are the Top 20 (out of the 60 schools ranked), along with each school's U.S. News ranking:
Associates Promoted to Partner
U.S. News Rank
10 Schools Tied
See also Theodore Seto (Loyola-L.A.), Law School Rankings by BigLaw Partners.
The Questionable Legality of New York City's Proposed UBT Audit Position
Cara Griffith (Tax Analysts), The Questionable Legality of New York City's Proposed UBT Audit Position, 63 State Tax Notes 713 (Feb. 27, 2012):
The New York City Department of Finance is facing a conundrum. It wants to subject carried interest to tax in one form or another. But doing so requires a legislative change, and making that sort of change has proven difficult (at the local, state, and federal levels). The proposed new UBT audit position may be the department’s solution to gleaning some additional revenue from private investment funds without needing a legislative change. Nonetheless, although the department can make changes to its audit positions without any public fanfare, taxpayers should closely examine what the department asserts as its legal basis for the change. Taxpayers should also challenge the department if it appears to have overstepped its bounds. Taxpayers can and should force the department to go through the appropriate legislative channels to make any significant changes to its enforcement of the city’s administrative tax code.
All Tax Analysts content is available through the LexisNexis® services.
Media Matters Boss Paid Former Domestic Partner $850k 'Blackmail' Settlement After Threat to Inform IRS
Media Matters chief David Brock paid a former domestic partner $850,000 after being threatened with damaging information involving the organization’s donors and the IRS – a deal that Brock later characterized as a blackmail payment, according to legal documents obtained by FoxNews.com.
In an acrimonious lawsuit settled at the end of last year, Brock accused William Grey of making repeated threats to expose him to the "scorn or ridicule of his employees, donors and the press in demanding money and property." Brock claimed in legal papers that he sold a Rehoboth Beach, Del., home he once shared with Grey in order to meet Grey’s demands, which he called "blackmail" in the lawsuit.
Brock, 49, heads the non-profit Media Matters for America, which bills itself as a watchdog of the conservative media but has recently come under fire for allegedly coordinating with Democrats in what could be a violation of its tax-exempt status.
(Hat Tip: Glenn Reynolds.)
A Brief History of the U.S. Income Tax
Energy Tax Breaks Wiki
Michael Livermore (NYU), Walter Wang (San Diego), Tracey Roberts (Louisville) and several University of Louisville law students have developed an Energy Tax Breaks Wiki to aggregate information on subsidies to the energy industry.
February 27, 2012
Law School Rankings by BigLaw Jobs
National Law Journal, It's Tough Out There:
The U.S. economy began to rebound in 2011, but that was not enough to convince law firms to ramp up associate hiring. Most law schools sent smaller percentages of their 2011 classes into first-year associate jobs at the nation's largest 250 law firms than they did in 2010. Among the 50 schools most popular with hiring firms, 22% of 2011 graduates landed associate jobs — down from 27% in 2010 [and 30.3% in 2009].
We've ranked the top 50 law schools by the percentage of 2011 juris doctor graduates who took jobs at NLJ 250 firms, the nation's largest by headcount as identified by The National Law Journal's annual survey.
Here are the Top 25 (along with each school's U.S. News ranking):
- Pennsylvania (56.9%) (U.S. News #7)
- Northwestern (52.1%) (#12)
- Columbia (51.7%) (#4)
- Harvard (48.9%) (#2)
- Stanford (48.1%) (#3)
- UC-Berkeley (45.9%) (#9)
- Chicago (45.3%) (#5)
- Duke (40.1%) (#11)
- NYU (40.0%) (#6)
- Virginia (39.8%) (#9)
- Cornell (38.3%) (#13)
- USC (32.9%) (#18)
- Michigan (31.5%) (#7)
- Georgetown (31.1%) (#14)
- Yale (30.8%) (#1)
- UCLA (22.7%) (#16)
- Vanderbilt (22.1%) (#16)
- Boston College (21.8%) (#27)
- Texas (21.5%) (#14)
- Fordham (19.6%) (#30)
- Boston University (17.8%) (#22)
- George Washington (17.8%) (#20)
- Notre Dame (13.7%) (#23)
- Washington U. (13.3%) (#18)
- Washington & Lee (12.7%) (#30)
National Law Journal, The Go-To Law Schools: Biggest Bang for the Buck?:
The 2010-11 academic year represented a milestone of sorts for law schools: Annual tuition at seven schools topped $50,000.
With no end in sight to tuition increases, The National Law Journal looked at which schools offer the biggest bang for their tuition buck when it comes to landing a job at a large law firm. We identified the schools sending the highest percentage of their class of 2011 to associate jobs at NLJ 250 firms for the lowest tuition price.
The best value this year goes to Pennsylvania, which sent a higher percentage of its most recent graduating class to NLJ 250 firms — 57% — than any other school. At $48,362, Pennsylvania's annual tuition is the 10th highest, meaning that nine other schools charged more but had lower placement rates at the country's largest law firms. Stanford, Harvard, and Northwestern also landed near the top of the list in the cost-benefit analysis. ... The most expensive school on the 50 Go-To Law Schools list was the University of California, Berkeley with an annual tuition of $52,245. The school with the lowest tuition was BYU at $20,560.
National Law Journal, Firm Favorites of 2011:
The schools that NLJ Top 250 relied upon the most to supply first-year associates. Here are some highlights:
- Skadden had the largest first-year associate class.
- As it did last year, Jones Day recruited from the most schools.
- Harvard made a strong showing. with nine of the firms on our list taking the largest number of new associates from there.
National Law Journal, Elite Firms Seem to Have Lost Their Appetites:
Four years after the onset of a painful recession, the first-year associate hiring picture at large law firms looks much different than during the glory days of 2007.
The most prestigious law schools still dominate when it comes to placing graduates. But the percentage of 2011 law grads at the nation's elite firms continued a decline that began in 2009. It seems that large firms have yet to regain their appetite for robust first-year associate classes.
The 20 law schools most popular with hiring firms in 2007 sent a combined 55% of their graduates to NLJ 250 firms — the nation's largest by attorney headcount. For the class of 2011, that percentage was 36.
National Law Journal, Straight From the Hiring Partner's Mouth:
The National Law Journal queried hiring partners at four NLJ 250 firms about their summer-associate hiring outlook and what qualities they seek in new lawyers. The partners spoke on condition of anonymity in order to be as candid as possible about their internal hiring processes.
For more, see Paul Campos (Colorado), Class of 2011 Big Law Employment Stats.
For prior years Law School Rankings by BigLaw jobs, see:
- Above the Law, Best Law Schools for Getting a Biglaw Job (2012)
- TaxProf Blog, Law School Rankings by BigLaw Partners
Cloud & Shepherd: Law Deans May Go to Jail for Submitting False Data to U.S. News
A most unlikely collection of suspects -- law schools, their deans, U.S. News & World Report and its employees -- may have committed felonies by publishing false information as part of U.S. News' ranking of law schools. The possible federal felonies include mail and wire fraud, conspiracy, racketeering, and making false statements. Employees of law schools and U.S. News who committed these crimes can be punished as individuals, and under federal law the schools and U.S. News would likely be criminally liable for their agents' crimes.
Some law schools and their deans submitted false information about the schools' expenditures and their students' undergraduate grades and LSAT scores. Others submitted information that may have been literally true but was misleading. Examples include misleading statistics about recent graduates' employment rates and students' undergraduate grades and LSAT scores.
U.S. News itself may have committed mail and wire fraud. It has republished, and sold for profit, data submitted by law schools without verifying the data's accuracy, despite being aware that at least some schools were submitting false and misleading data. U.S. News refused to correct incorrect data and rankings errors and continued to sell that information even after individual schools confessed that they had submitted false information. In addition, U.S. News marketed its surveys and rankings as valid although they were riddled with fundamental methodological errors.
Buchanan Presents Will the U.S. Ever Again Have a Functioning Budgetary System? Today at U. of Hong Kong
Neil H. Buchanan (George Washington) presents Will the United States Government Ever Again Have a Functioning Budgetary System? at the University of Hong Kong Faculty of Law today as part of its Taxation Law Research Programme, Asian Institute of International Finance Law:
The government of the United States is currently borrowing larger-than-usual sums of money, in large part because of the depth and length of the crisis-induced economic downturn. Even before the current crisis began, a large number of American politicians were convinced that the federal government should commit either to running balanced annual budgets or even to paying down the entire balance of its debt. These views, even though they lack serious evidentiary or theoretical support, have been embraced for strategic reasons by an emerging political movement in the United States. Newly energized anti-government activists have eagerly created a fiscal logjam, in order to force cuts in the size of government. This profound fiscal logjam, and the contractionary policies to which it has led, is bad news for the U.S. economy - which means that it is not good for China or Hong Kong. This lecture will discuss the background of the U.S. budget situation, the emergence of the radical anti-government movement that has created the political gridlock surrounding government budgeting, and the prospects for overcoming the political roadblocks that are preventing the United States government from setting forth on a sensible path for long-term economic prosperity and budgetary stability.
Bartlett: Obama, Romney Sweep Real Tax Reform Under the Rug
I think both the Romney and Obama tax plans are remiss in not addressing the central tax problem this country has, which is not enough revenue to fund the government under any realistic scenario. In my opinion, we can’t afford more tax cuts. While we need tax reform, it must be honest reform, with the sugar of rates cuts combined with the medicine of loophole closing.
Sims: Economic Depreciation, Invariant Valuation, and the Samuelson Theorem
I elaborate on Samuelson’s (1964) result that a tax on capital income will leave asset values unaffected by the marginal rates of their holders if “economic” depreciation is allowed as a deduction in computing taxable income, extended by Fane (1987) to an economy with state-contingent securities, and by Lyon (1990) to the case of time-varying marginal rates. Those papers leave unexplained why, with economic depreciation, economic agents in a taxable environment should act as if they were (in Lyon’s words) discounting all pre-tax “cash receipts . . . at the pre-tax interest rate.” In discrete time, I formulate a constructive proof of Samuelson’s result, which, drawing on the insight that economic depreciation induces pure accrual taxation, shows that the impact of income taxation on the accrual of value and on discounting exactly offset one another in every period. That is why taxpayers behave as though they were discounting pre-tax cash flows.
Brown Posts Tax Papers on SSRN
Eleanor Weston Brown (Regent):
- A Common Morality: Toward a Framework for Designing Fiscal Instruments to Respond to Global Climate Change, 15 Widener L. Rev.391 (2010)
- Healing Healthcare Through Tax Reform, 2 Regent J. L. & Pub. Pol'y 63 (2010)
Sullivan: A Grown-Up Conversation About Corporate Tax
It's time for the United States to adopt a 21st-century tax system. More than anything else, that will mean minimizing the role of the corporate tax. It does not mean that liberals have to abandon their core objectives, just the traditional tactics for achieving them.
All Tax Analysts content is available through the LexisNexis® services.
CBO: Choices for Federal Spending and Taxes
By the end of the coming decade, unless we cut federal spending apart from Social Security and the major health care programs below the unusually low share of GDP it is already projected to reach, stabilizing federal debt relative to GDP will require us to cut spending on Social Security and federal health care programs by about one-quarter, raise taxes by about one-sixth, or do some combination of those approaches. That’s the fundamental choice we face.
Joint Tax Committee: Overview of the Federal Tax System
Joint Committee on Taxation, Overview of the Federal Tax System as in Effect for 2012 (JCX-18-12):
This document ... provides a summary of the present-law Federal tax system as in effect for 2012. The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a “regular” income tax and an alternative minimum tax); (2) payroll taxes on wages (and corresponding taxes on self-employment income) to finance certain social insurance programs; (3) estate, gift, and generation-skipping taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements.
TaxProf Blog Weekend Roundup
- The Economist: Tax Reform -- The Devil's in the Details (and the Politics)
- Barack Obama and Mitt Romney: Tax Emperors With No Clothes
- Poll: Public Favors Obama's Millionaire's Tax, Spending Cuts over Tax Hikes to Cut Deficit
- 62 Colleges Meet 100% of Students' Financial Need
- Taxing the Oscars
- Forbes: Estate Planning Issues in The Descendants
- Forbes: Estate Planning for Illegal Assets
- Top 5 Tax Paper Downloads
February 26, 2012
Taxing the Oscars
- TaxProf Blog, Oscar Swag Bags to Result in $100k Income to Celebrity Presenters
- TaxProf Blog, The Tax Treatment of Oscars
- Forbes, Biggest Winner At Oscars? IRS, by Robert W. Wood
Forbes: Estate Planning Issues in The Descendants
Forbes, George Clooney Makes Estate Planning Sexy, by Deborah Jacobs:
Estate planning doesn’t often make it to the Academy Awards. But that’s happened this year, with The Descendants nominated for Oscars in five categories, including best picture, best actor (George Cloney) and best director (Alexander Payne).
Based on the novel by Kaui Hart Hemmings (see related story here), it’s a multi-layered story about Matt King (played by Clooney), a rich trial lawyer in the throes of a midlife crisis and personal tragedy. ... [T]he movie title refers to the fact that King is the descendant of a wealthy white banker and a Hawaiian princess. They left valuable real estate on Kauai in a trust. With that trust about to end, King must decide whether to sell the land to a developer, enriching himself and his greedy cousins.
To most viewers, estate planning themes are secondary to the film’s other dramas. But it turns out that the legal issues were painstakingly developed and fact-checked. On location in Hawaii in March, 2010 to get the lay of the land and soak up its culture, Alexander Payne, the director, consulted Randall Roth, a professor at the University of Hawaii School of Law and a nationally known trusts and estates expert.
Roth, who hails from Kansas, is a 30-year resident of Hawaii and happens to be an authority on land trusts in the state. He’s the co-author of Broken Trust, a book about the mismanagement and political manipulation of America’s largest charitable trust. With private land trusts, he says, there’s often a tension, as there was in The Descendants, about whether to pave paradise and convert a land-rich/cash-poor trust to a highly profitable venture. ... Roth says he spent about six hours — not counting the time it took to read the book — making notes, talking and exchanging e-mails with Payne. He says he wasn’t paid for these efforts, but “thoroughly enjoyed the experience and was thrilled” when Payne gave him a screen credit. ...
Forbes talked with [Roth] about the estate planning themes that thread through the movie:
- Unearned wealth causes conflicts
- Express your final wishes
- There are legal limits to how long a trust can last
- Joint ownership of land can be “a train wreck”
- Long-term trusts pose special challenges
- A trustee must be objective
Forbes: Estate Planning for Illegal Assets
Forbes, Even Rich Heirs Deserve A Fair Shake From The IRS, by Janet Novack:
[A]rt dealer Ileana Sonnabend ... died in 2007 at the age of 92. As I report in a story here that appears in the March 12th issue of Forbes, Sonnabend’s heirs sold off works by Jeff Koons, Roy Lichtenstein, Andy Warhol and Cy Twombly to pay estate taxes of $331 million to Uncle Sam and $140 million to New York State. But they couldn’t even consider selling what might have been the most famous piece in her collection — “Canyon” by Robert Rauschenberg [right] — because the collage contains a stuffed bald eagle and selling it would be a criminal offense, punishable by a year in federal pen.
Given that restriction, the Sonnabend estate tax return (and three different appraisers the estate hired) valued the work at $0. The IRS says it is worth $65 million and is demanding an additional $29 million in tax and an $11.7 million “gross valuation misstatement” penalty from the estate. ...
California art law attorney Joy Berus says she’s not surprised by the IRS’ position in this case. The government has long asserted (with some support from case law) that contraband items in an estate (drugs, stolen art, stolen jewels or a purchased artwork that turns out to be a protected antiquity, say belonging to foreign government or a Native American tribe) can be valued for estate tax purposes at their black or “illicit market” value. ...
How to deal with this Catch-22? Berus, who lectures widely on the subject, tells her shocked audiences that collectors in possession of a verboten item should “get rid of it before they die” by giving it to a rightful owner—for example, a Native American museum authorized to hold a Native American artifact. The giver won’t qualify for an income tax deduction, but at least his or her heirs won’t be stuck paying tax on a supposed black market value they can’t (legally) realize. ...
I’m no lawyer and no art expert. Still, the IRS’ position in this case offends both my common sense and my sense of fairness
Top 5 Tax Paper Downloads
This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:
1. [358 Downloads] Scriveners’ Errors, Drafting Errors, Operational Failures, Retroactive Amendments, Reformations, ERISA, and the Tax Qualification of Pension Plan Trusts, Part I, by Albert Feuer (Law Offices of Albert Feuer, Forest Hills, NY)
2. [282 Downloads] Scriveners’ Errors, Drafting Errors, Operational Failures, Retroactive Amendments, Reformations, ERISA, and the Tax Qualification of Pension Plan Trusts, Part II, by Albert Feuer (Law Offices of Albert Feuer, Forest Hills, NY)
3. [236 Downloads] Important Developments in Federal Income Tax (2010-11), by Edward A. Morse (Creighton)
4. [212 Downloads] From Here to Eternity: The Folly of Perpetual Trusts, by Lawrence W. Waggoner (Michigan)
5. [210 Downloads] Accepting the Limits of Tax Law and Economics, by Alex Raskolnikov (Columbia)
February 25, 2012
The Economist: Tax Reform -- The Devil's in the Details (and the Politics)
The Economist, Tax Reform: The Devil's in the Details (and the Politics):
Like the weather, American politicians talk a lot about tax reform but do nothing about it. Which is a pity, because while Americans have been talking, other countries have been doing; since the late 1980s, top corporate tax rates around the world have dropped to a point that America’s, once below the international average, is now well above.
As this has happened, American-based multinational companies have shifted more activity offshore; their foreign employment steadily rose over the last decade as domestic employment fell. This is mostly because of the appeal of cheap labour and growing markets in the emerging world, but business groups and many economists think America’s tax rate is also to blame. Liberal analysts blame the tax code for a different reason: it allows multinationals to stash income in foreign havens and indefinitely defer taxes on it, encouraging the outsourcing of jobs.
Barack Obama claims to be ready to do something about it. ... Mr Obama’s proposal is better than what America already has, but not by much. His well-intentioned goal of broadening the tax base is betrayed by the preferences he insists on maintaining for manufacturing and “green” energy whose economic merits have been questioned, even by former members of his own administration. By maintaining many of the current tax breaks but apportioning them more variably, the tax code would become more complex rather than less so.
Barack Obama and Mitt Romney: Tax Emperors With No Clothes
After a frantic day of listening to rival briefings and addressing reporters’ questions on the new tax reform plans unveiled by President Obama and Governor Romney, an old tale stuck in my mind. It was the famous Hans Christian Anderson fable of the emperor and his new clothes. ...In one sense, [the Obama tax plan and the Romney tax plan are] very different, as one would expect from two candidates with diverse philosophies and constituencies. ... But beneath the deep differences, there were striking similarities. Both men promised a 20% marginal tax rate cut – Obama in the corporate income tax rate, Romney in individual income tax rates. Both promised to pay for the rate cuts by closing loopholes. And, although Obama has advanced some proposals to end corporate preferences, both refused to identify fully (or, in Romney’s case at all) the specific measures needed to pay for the rate cuts.
All that is missing is a little child who will point out the obvious.
Poll: Public Favors Obama's Millionaire's Tax, Spending Cuts over Tax Hikes to Cut Deficit
Most people like President Barack Obama’s proposal to make millionaires pay a significant share of their incomes in taxes. Yet they’d still rather cut spending than boost taxes to balance the federal budget, an Associated Press-GfK poll shows, giving Republicans an edge over Democrats in their core ideological dispute over the nation’s fiscal ills. ...
Sixty-five percent of the people in the AP-GfK poll favor Obama’s plan to require people making $1 million or more pay taxes equal to at least 30% of their income. Just 26% opposed Obama’s idea. Yet by 56% to 31%, more embraced cuts in government services than higher taxes as the best medicine for the budget.
62 Colleges Meet 100% of Students' Financial Need
U.S. News & World Report, Colleges That Claim to Meet Full Financial Need:
Among 1,171 institutions that reported the statistic to U.S. News, 62 colleges claim to have met, on average, 100% of their admitted full-time undergraduate students' financial need for fall 2010:
|School||State||U.S. News Rank, Category|
|Amherst College||MA||2, National Liberal Arts Colleges|
|Barnard College||NY||33, National Liberal Arts Colleges|
|Bates College||ME||21, National Liberal Arts Colleges|
|Blessing-Rieman College of Nursing||IL||Unranked|
|Boston College||MA||31, National Universities|
|Bowdoin College||ME||6, National Liberal Arts Colleges|
|Brown University||RI||15, National Universities|
|Bryn Mawr College||PA||25, National Liberal Arts Colleges|
|California Institute of Technology||CA||5, National Universities|
|Carleton College||MN||6, National Liberal Arts Colleges|
|Claremont McKenna College||CA||9, National Liberal Arts Colleges|
|Colby College||ME||21, National Liberal Arts Colleges|
|Colgate University||NY||21, National Liberal Arts Colleges|
|College of the Holy Cross||MA||29, National Liberal Arts Colleges|
|Columbia University||NY||4, National Universities|
|Cornell University||NY||15, National Universities|
|Dartmouth College||NH||11, National Universities|
|Davidson College||NC||11, National Liberal Arts Colleges|
|Duke University||NC||10, National Universities|
|Emory University||GA||20, National Universities|
|Franklin W. Olin College of Engineering||MA||Unranked|
|Georgetown University||DC||21, National Universities|
|Gettysburg College||PA||47, National Liberal Arts Colleges|
|Grinnell College||IA||19, National Liberal Arts Colleges|
|Hamilton College||NY||17, National Liberal Arts Colleges|
|Harvard University||MA||1, National Universities|
|Harvey Mudd College||CA||18, National Liberal Arts Colleges|
|Haverford College||PA||10, National Liberal Arts Colleges|
|Macalester College||MN||25, National Liberal Arts Colleges|
|Massachusetts Institute of Technology||MA||5, National Universities|
|Middlebury College||VT||5, National Liberal Arts Colleges|
|Mount Holyoke College||MA||29, National Liberal Arts Colleges|
|Northwestern University||IL||12, National Universities|
|Oberlin College||OH||24, National Liberal Arts Colleges|
|Occidental College||CA||37, National Liberal Arts Colleges|
|Pitzer College||CA||42, National Liberal Arts Colleges|
|Pomona College||CA||4, National Liberal Arts Colleges|
|Princeton University||NJ||1, National Universities|
|Rice University||TX||17, National Universities|
|Scripps College||CA||29, National Liberal Arts Colleges|
|Smith College||MA||19, National Liberal Arts Colleges|
|Southern Arkansas University||AR||RNP, Regional Universities (South)|
|St. Olaf College||MN||53, National Liberal Arts Colleges|
|Stanford University||CA||5, National Universities|
|Swarthmore College||PA||3, National Liberal Arts Colleges|
|Thomas Aquinas College||CA||71, National Liberal Arts Colleges|
|Trinity College||CT||37, National Liberal Arts Colleges|
|Tufts University||MA||29, National Universities|
|Vanderbilt University||TN||17, National Universities|
|University of Chicago||IL||5, National Universities|
|University of North Carolina—Chapel Hill||NC||29, National Universities|
|University of Pennsylvania||PA||5, National Universities|
|University of Richmond||VA||27, National Liberal Arts Colleges|
|University of Southern California||CA||23, National Universities|
|University of Virginia||VA||25, National Universities|
|Vassar College||NY||14, National Liberal Arts Colleges|
|Washington and Lee University||VA||12, National Liberal Arts Colleges|
|Washington University in St. Louis||MO||14, National Universities|
|Wellesley College||MA||6, National Liberal Arts Colleges|
|Wesleyan University||CT||12, National Liberal Arts Colleges|
|Williams College||MA||1, National Liberal Arts Colleges|
|Yale University||CT||3, National Universities|
February 24, 2012
Howard Abrams' Application to be Dean of Emory Law School
I do not want to be the next dean of the Emory Law School. And that may be my strongest qualification.
I believe two things concerning administration of the Emory Law School: (1) the faculty should run the Law School; and (2) the Law School should be run for the benefit of the students. Currently, neither of those is true though not out of deliberated decision nor meanness of spirit. Rather, the law school has acceded to a series of deans who (out of the best of intentions) have expanded their role at the expense of the faculty. And the goals of the Law School have never been identified with sufficient precision.
I believe the goal of the Emory Law School should be to help our students lead happy and productive lives and to contribute to their local communities and to the greater society. To do this, we need to give them the tools to succeed after law school however they define success, we must maximize the opportunities for them to realize their dreams, and we must find new ways of supporting our students whose dreams take longer to realize.
I have some thoughts on how those goals can be achieved, and so do others. I believe that the wisdom of a group far exceeds the wisdom of its individual members, and for that reason it must be a united faculty that leads the law school forward. While our past deans and their most trusted associates have sought success for our students, they lack the experience and collective judgment that the faculty as a body can offer. And by reengaging the full faculty in primary decision-making, those members of the faculty who have been marginalized will become invigorated. Accordingly, I would have the faculty chose a Committee of Committees, and this CoC would then determine the membership of all other law school committees. Committees would select their own chairpersons. Endowed chairs should be awarded by existing holders of endowed chairs; teaching award recipients should be selected by past honorees.
For too long, the Emory Law School has emphasized appearance over substance. I understand this emphasis: we have been told that a dean’s tenure is tied to the US News and World Report rankings, and so a dean who believes he can improve the school must first ensure he remains in a position to do so. One advantage of shifting from a bureaucratic model of administration to a faculty-run model is to prevent decanal retention policy from driving law school strategy.
We need to have a faculty more in touch with the general legal community. That means, I think, less teaching by adjunct faculty and more teaching with adjunct faculty. We need to have more team teaching by law school faculty with other law school faculty and more team teaching with other members of the University, especially members of the Business School and Medical School faculties.
This will also help us increase – and we need to dramatically increase – the entrepreneurial atmosphere of the law school. Regardless of what our students do and who they may advise, the world now requires an entrepreneurial approach in all aspects of commerce. We need to develop that spirit in ourselves; we need to help foster it in our students. We need a small business clinic. We need to better understand what our students do after graduation, and then we need to help them do it.
We need to teach more. Law faculties have used the US News and World Report rankings as justification for moving significant resources out of classrooms and into faculty offices: only faculty scholarship, we are told, will increase our peer reputational ranking. But as we all know, while the best legal scholarship really is very good, most legal scholarship (because publication decisions and editing are done by second-year students) is not good and rarely is read. Producing innovative courses and teaching methods likely will improve our reputation as much as the publication of one or two or three journal articles that are of interest only to other academics and often not even to them. Innovation in the classroom certainly will benefit our students. I would return to a four course annual teaching package, though with more team teaching as part of those packages.
And I think we need to change our financial aid program dramatically. I would shift most or all financial aid into student loans with interest deferred until graduation and with reduction of interest and principal payments for up to five years depending on post-graduation income. That is, those of our students who seek and achieve immediate financial success can afford to bear the full cost of their legal education. But those students who have other goals or whose goals cannot immediately be achieved should have the burden of their debt reduced for a reasonable period. This has the added benefit of tying the Law School’s economic interest to that of its students: if the students cannot find jobs, the school does not get paid.
There are very many things about running a law school that I do not know. I do not know why we have had the same number of students since I arrived 30 years ago but the number of administrators has increased dramatically. I do not know why we are unable to replace members of the faculty who have retired or passed away. I do not know why the Provost has asked that dean candidates describe their vision for the law school in no more than three pages. Perhaps most importantly, I do not know why Robert Howell Hall Professor of Law Richard D. Freer will not be our next dean: he is our best teacher, one of our very best scholars, and he has the strongest relationship of any member of the faculty with the bench and bar. But I do know that we need new leadership and new vision. If we cannot get the most obvious candidate, perhaps it should be me.
Johnson Presents How to Raise $1 Trillion Without a VAT or a Tax Rate Increase Today at Florida
Calvin H. Johnson (Texas) presents The Shelf Project: How to Raise a Trillion Without a VAT or Tax Rate Increase at Florida today as part of its Graduate Tax Program Enrichment Speaker Series:
Since 2007, the Shelf Project has generated sixty-three proposals, many of which focus on protecting the tax base by reducing or eliminating exemptions, loopholes and shelters-collectively known as tax expenditures. Much of Johnson's scholarship over the years has examined how these tax expenditures introduce inefficiencies. Professor Johnson describes his project as follows:
We should be able to raise at least a trillion dollars a year more revenue within the current income tax system, without a rate hike or a Value Added Tax, largely by making our tax accounting better reflect economic income. Our current system has too many tax pits, which absorb revenue and distort investment decisions. We allow deductions for fictitious losses. 'Taxable income' under our tax accounting does not reach and describe high-class consumption as well as it needs to. Moving toward a more comprehensive income tax base to make it less easily avoided would improve both the fairness and efficiency of the income tax.
Johnston: You’re Paying a Lower Tax Rate Than You Think
If you make more than about $33,500 a year, your federal income tax burden is probably lighter than you think. The portion of your income that you pay in taxes is your “effective tax rate.” But when politicians and pundits talk about effective tax rates, the data they typically use relies on an incomplete measure for income. Use an incomplete measure for income and your tax rate calculation comes out high.
In a new analysis the Tax Policy Center, a nonpartisan Washington research organization, used a wider measure of income to calculate effective tax rates. The rates are much lower using this broader measure of income. ...
The incomplete measure is called “adjusted gross income,” or AGI. This is the number on the last line of the front page of the standard tax return. To get a fuller picture, the Tax Policy Center used what it called “cash income” to calculate effective tax rates. This included municipal bond interest, government benefits and many of the other items that are excluded from AGI. Use this fuller measure of income and the share of income that goes to taxes falls. ...
For most of us – those in the middle class and above – our effective tax rate is lower than politicians say. So smile a bit today. The cost of civilization is not as high as you’ve been told.
Senate Candidate Calls for Investigation of IRS 'Assault' on Tea Party
Virginia Republican U.S. Senate candidate Jamie Radtke has asked the Chairman of the House Committee on Oversight and Government Reform to launch a formal investigation into abusive actions by the IRS toward Tea Party and Patriot organizations:
On Friday, Radtke sent a letter to Congressman Darrell Issa describing IRS actions toward conservative organizations currently seeking IRS non-profit status as “an assault by the Internal Revenue Service on Tea Party and Patriot groups.” As an example, Radtke mentioned the plight of Richmond Tea Party, which applied for 501(c)(4) non-profit status more than two years ago. After waiting two and a half years for approval, the IRS recently communicated a new set of overly-burdensome and invasive demands for information that exceed the scope of the IRS code.
- The Daily Caller, Congressional Investigations Sought Over IRS ‘Assault’ on Tea Party Groups
- Washington Examiner, Radtke Calls for IRS Investigation Over Tea Party “Assault”
- Richmond Tea Party Press Release
- IRS Letter to Richmond Tea Party (Sept. 17, 2010)
- IRS Letter to Richmond Tea Party (Jan. 9, 2012)
- Ohio Liberty Council Press Release
- IRS Letter to Ohio Liberty Council (Jan. 30, 2012)
U.K.'s 25% Tax Hike on the 'Rich' Produces Less Revenue
The Telegraph, 50p Tax Rate 'Failing to Boost Revenues’:
The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.
Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.
The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.
As taxes assume a leading role in U.S. policy debate ... the first receipts on a new wealth tax in the U.K. have brought disappointing results to British Treasury officials.... [S]ome observers, political conservatives among them, are taking the recent experience in the U.K., which last year raised its top rate on high income earners from 40% to 50%, as a demonstration of the ineffectiveness of a tax-the-rich policy.
Britain’s Telegraph newspaper reported that the U.K. Treasury–in the first test of the wealth tax policy introduced last year–received 509 million pounds less for January than the same month in 2011. The Treasury had projected that monthly revenues would actually increase by more than 1 billion pounds. ...
The disappointing results could move Chancellor of the Exchequer George Osborne to drop the tax after an official analysis is completed next month, but the Tory official’s Liberal Democrat coalition partners remain strongly committed to higher rates for Britain’s highest earners.
Wall Street Journal editorial, David Cameron's Tax Lesson: A 50% Tax Rate Yields Less Revenue Than Advertised:
Speaking of higher taxes (and President Obama always does), there's news from once fair Britannia.
Preliminary figures out this week show that Britain's 50% top marginal income-tax rate may have reduced tax revenue from top earners by as much as 5%, compared to the old 40% top rate. Tax revenue from those filing self-assessments due January 31 was down some £500 million versus last year. ...
What this week's numbers teach, however, is that Britain's richest taxpayers are simply shifting their incomes, or themselves, offshore, or deferring income, or otherwise arranging their affairs to avoid the confiscatory new top tax rate. Maybe that's unfair, too—the rich are usually better at protecting their assets—but it's the predictable consequence of a tax rate whose animating purposes are envy and spite.
There's a lesson here for the Obama Administration, not that it is likely to heed it any more than Mr. Cameron.
(Hat Tip: Chaz Perin.)
GAO Seeks to Hire Director of Tax Policy and Administration
This individual will be responsible for leading GAO reviews of tax policy and tax administration, specifically analyzing whether specific provisions of the tax code are achieving their purpose and whether those involved in tax administration are efficiently meeting their responsibilities. To qualify, you must have:
- A broad knowledge of federal tax policy and tax administration, including tax legislation and IRS processes/operations
- The ability to leverage knowledge of tax policy and administration to produce reports and testimonies that assist Congress in its decision-making
- M.S. Taxation and/or Ph.D. in Economics/Public Finance is preferred
Compensation: To $174,000 + bonus eligibility (Senior Executive Service)
Deadline: To be considered, application packages (resume/CV and responses to the PTQs and ECQs) must be received by midnight, March 15, 2012.
Anti-War Activist Cindy Sheehan Refuses to Pay Taxes
Anti-war activist Cindy Sheehan, who is being sued in California by the federal government, said she has a duty to not pay taxes because her son died in what she called an "immoral" war.
An IRS officer, in a federal filing Tuesday in Sacramento, said Sheehan has refused to provide financial information for the 2005 and 2006 tax years. The filing asks the court to order Sheehan to comply.
Sheehan, of Vacaville, told CNN affiliate KXTV she has not paid federal incomes taxes since 2004 -- and has not disguised the fact.
"I feel like I gave my son to this country in an illegal and immoral war. I'll never get him back," Sheehan said. "And, so, if they can give me my son back, then I'll pay my taxes. And that's not going to happen."
Sheehan drew national attention when she camped outside then-President George W. Bush's home in Crawford, Texas, throughout August 2005 to demand a meeting with the president over her son's death.
Casey Sheehan, a 24-year-old Army specialist, was killed in an April 2004 battle in Baghdad. His death prompted his mother to found Gold Star Families for Peace.
In 2011, Sheehan raised questions about whether U.S. special forces had indeed killed al Qaeda leader Osama bin Laden.
"It's not that I don't believe (President Barack) Obama about Osama because he's Obama, I don't believe him because he is just one in along (sic) line of butt-naked emperors," Sheehan wrote on a blog.
From Ms. Sheehan's blog:
It’s not a secret, and hasn’t been one for about 8 years now, that I am a conscientious tax objector. It’s also no secret that the IRS has been on my case about it recently. ... I made a moral decision to refuse to fund the Empire’s crimes, tortures and wars. I have not been hiding from anybody and am fully accessible and easy to find. ...
I consider that my debt to this country was paid in full when my son, Casey, was recklessly with no regard for his safety (remember the rush to war with the “Army you have” which was not properly trained or equipped?) murdered for the lies of a regime, whose members (Bush, Cheney, Rice, Rumsfeld, Yoo, Wolfowitz, Perle, etc.) roam around the world free and unfettered by threatening prosecutions or persecutions after committing war crimes, crimes against humanity, crimes against the peace, and high crimes and misdemeanors against our own Constitution.
Ms Sheehan requests tax deductible donations here.
National Jurist: The Law School System Is Broken
A Broken System, National Jurist, Feb. 2012, at 18:
It's a troubling trend. The total amount of debt that has been used to pay for legal education has risen to $3.6 billion, up from less than $2 billion just ten years prior. And if the current trends continue, that figure could reach $7 billion by 2020.
It's not a problem that has gone unnoticed. Legal education observers are worried, recent graduates are frantic and law schools are looking at their options. ...
[T]here is no easy or simple answer to the problem. ... The reason for the debt is easier to understand: law school tuition continues to outpace inflation. It increased by 74% from 1998 to 2008.
Why does tuition continue to grow? Most agree it is related to the number of law professors walking around law school campuses nowadays. Faculty salaries make up a majority of a law school's budget. And law schools increased their faculty size by 40% from 1998 to 2008, according to a National Jurist report. That meant almost 5,000 law professors were added in 10 years, with the average student-to-faculty ratio dropping from 18.5-to-1 in 1998 to 14.9-to-1.
And why did law schools expand their faculties so rapidly? Law has become more complex and specialized. Law schools today offer far more course than ever before, and specializations. But critics point out that the race to do better in the U.S. News & World Report annual rankings has also fueled the growth.
American Taxation Association Midyear Meeting
The two-day American Taxation Association 2012 Midyear Meeting kicks off today in New Orleans (program here):
- 18th Annual Journal of the American Taxation Association Conference
- Journal of Legal Tax Research Conference
- New Faculty/Doctoral Student Research Session
- ATA Research-In-Process Session
- 8th Annual ATA Doctoral Consortium
North Carolina Law Prof Asks Students to Pump Up His Rate My Professor Ranking
Rating sites apparently even have the power to bring a well-known UNC Law professor to his electronic knees. It’s not every day that a torts professor sends his former students a “rather embarrassing request” to repair his online reputation. It’s also certainly not every day that the students respond en masse….
On Tuesday, Professor Michael Corrado sent the following email to 2Ls who took his torts class last year, basically pleading for their help. ...
I have a rather embarrassing request of you. An undergraduate brought something to my attention that needs to be fixed. It seems that there is a website, something like Rate My Professors, where my rating is so bad that he was uncertain about whether to take my course or not. I was puzzled, because my evaluations are generally not bad. It turns out that there are just a couple of responses on the site, and they are apparently from people who have a real grievance against me for some reason.
They are certainly entitled to their opinions, but it isn’t really a fair reflection of my teaching (I hope).
What I would like to ask of you is whether, if you are so inclined, you would go onto that site and write your own review of my teaching. I’m not asking you to write a favorable review, just to write an honest review. I think that overall I would get much better ratings if a number of people did this and just gave their honest views.
February 23, 2012
Crawford Presents Our Bodies, Our Tax Selves Today at Indiana
This Article considers important consequences of the commodification of human reproduction. Anyone who has opened a campus newspaper has seen advertisements seeking to match an infertile couple with a young woman who will “donate” her egg (in return for a fee). Some college-age men earn thousands of dollars through regular visits to a sperm bank. The characterization of human ova and sperm cells as transferrable “property” is the very foundation upon which the entire fertility industry rests. But the law of donative transfers has largely ignored the commercial market for human reproductive material. This Article considers how courts and the Internal Revenue Service -- unevenly and incompletely -- treat transfers of human bodily material. The Article reveals how classifying human eggs or sperm as descendible and devisable property could have far-reaching and even absurd consequences for human sexual relations. Property-related laws should never be the primary lens for considering complex questions regarding human reproduction, but the particular failure of tax law to address these transfers may create a de facto tax preference for work that many people may find objectionable or immoral.