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Monday, April 30, 2012

Kleinbard & Rosenberg: The Better Base Case

Edward D. Kleinbard (USC) & Joseph W. Rosenberg (Tax Policy Center), The Better Base Case:

The most recent Congressional Budget Office forecast for the federal budget estimates that the federal deficit will decline to about 1% of GDP a decade from now. But this essentially rosy forecast is predicated on the expiration of all current temporary tax policies – in particular, the 2001/03 personal income tax cuts – and a reversion to pre-2001 tax law. We argue that revenue collections of the same magnitude as those projected by the CBO are necessary over the medium term. But certain aspects of current tax law are problematic, and the efficiency and equity of current law’s scheduled post-2012 tax system can readily be improved.

We therefore develop an alternative post-2012 personal income tax regime, the “Better Base Case.” This proposal contemplates modifying current law by limiting personal itemized deductions to a 15% tax rate benefit, and then “spending” the resulting incremental revenues to (1) permanently patch the AMT, (2) tax dividends at the same preferential rates as net capital gains, (3) restore the estate tax to 2009 rates and exclusion and (4) restore the child credit to its current levels. Using the Tax Policy Center’s microsimulation model, we demonstrate that this package of reforms is revenue neutral compared with current law, and is slightly more progressive in its distribution of tax burdens. We further consider the political economy implications of the proposal, and conclude that the Better Base Case is a logical and feasible next step in the evolving debate over the size and financing of the federal government.

April 30, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Duke 1L Solicits Answers to Con Law Take-Home Exam Question on Public Discussion Board

Duke Law LogoAbove the Law reports on a Duke 1L who posted a question from his or her Constitutional Law take-home exam, during the exam period, on the Top Law School discussion board seeking "help" in answering this question:

If the government tries to bar a woman from becoming president on textual grounds, what governmental purpose is being served?

April 30, 2012 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Henderson: The Science Behind the Yale Law School Gender Imbalance Report

Following up on last week's post, Yale Law School Battles Gender Imbalance: The Legal Whiteboard, Different Power Rules Apply to Men than to Women, by William D. Henderson (Indiana):

A just released study by the Yale Law Women documents that class participation at Yale Law tends to be disproportionately male. ... Although the report offers prescriptive advice for Yale faculty and students on how to close the gap, it does not offer an empirically grounded explanation for why the gap exists in the first place.  Coincidentally, I recently read another empirical study that appears to offer an answer.

In an article in the 2012 volume of Adminstrative Science Quarterly, Yale School of Management professor Victoria Brescoll provides compelling evidence that different power rules apply to women than men.  Brescoll's article, "Who Takes the Floor and Why: Gender, Power, and Volubility in Organizations," found that when women possess the same objective measures of power as men, they are reluctant to use that power to speak up (i.e., be voluble) in organizational settings. 

Why are powerful women less likely to speak up? Because of fear of backlash.  Further, the fear is justified.  Specifically, holding the objective measures of power constant, Brescoll found that when women were more voluble in meetings, they tended to be viewed as less likeable and deserving--and here is the kicker, less likeable and deserving at roughly the same levels by both male and female peers.  In contrast, when powerful men were more voluble, their peers--both males and females--viewed them as more likeable and more deserving.

April 30, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Johnston: More Companies Pocket Workers' State Income Taxes

Law School Conditional Admission Programs

ConditionalPaul Campos (Colorado) has a stinging critique of the 22 law schools with conditional admission programs:

Once again, we see how in legal academia something that sounds relatively innocuous in theory -- standardized tests have serious drawbacks, some people who score badly on the LSAT can still be competent lawyers, it's important to maintain "access" etc. etc. -- has been perverted into just another way of extracting money, coming and going, from naive, desperate people.

April 30, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Using Appraisal to Protect Net Operating Loss Carryforwards

Peter B. Siegal (J.D. 2012, Northwestern), Note, Using Appraisal to Protect Net Operating Loss Carryforwards, 106 Nw. U. L. Rev. ___ (2012):

The IRS’s net operating loss rules enable corporations to use one year’s losses to offset their tax liability in future years. However, a corporation’s ability to do so depends on its maintaining the same ownership: if enough of a corporation’s stock changes hands, it loses the ability to take advantage of all of its prior losses. In response to the threat of ownership changes, corporations have enacted particularly strict “poison pills,” which are designed to prevent stock from changing hands. However, a side effect of these poison pills is that they ameliorate the threat of hostile takeovers, thereby reducing managers’ incentives to maximize corporate welfare. In this Comment, I suggest using the appraisal mechanism to alleviate the need for poison pills and ownership-change restrictions by enabling corporations to pursue damages against shareholders who trigger the devaluing of their net operating losses. The proposed appraisal regime properly balances the interests of tax law and corporate law by ensuring that net operating losses will not be freely transferred but will also not serve as an excuse for allowing managerial incentives to deviate from the proper goal of shareholder wealth maximization.

April 30, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Critchlow: Models for Law School Success Apart from the U.S. News Rankings

US News (2013)George Critchlow (Gonzaga), Paris Hilton and Kim Kardashian: Models for Law School Success (or Not), 45 Conn. L. Rev. ___ (2013):

This article is a partly satirical and partly serious discussion about the obsessive need for law schools to chase rankings and fame. The article suggests that the stated mission of many law schools is trumped by the real mission -- to become famous (highly ranked) and that this disconnect prevents such law schools from creating important and innovative mission-based education programs that serve the larger public interest. The article explicitly raises the question: is it okay to be a lower ranked law school? The text and footnotes develop issues related to diversity, the historical role of the LSAT, the purpose of law schools, emphasis on faculty scholarship rather than teaching, ABA accreditation standards, etc. The article recommends strategies for schools that might wish to escape the rankings game. It concludes by asserting that many law schools will have a difficult time adapting to modern challenges if they are motivated primarily about what U.S. News & World Report considers to be important.

Ten strategies to escape the tyranny of rankings.  Assuming a law school makes a decision to de-emphasize rankings in favor of more authentic, student-centered and public interest minded missions, the following ten strategies should be considered to optimize success:

  1. Draft and embrace a mission statement that is honest and realistic, consistent with the law school’s history, location and purpose, and that appeals to the desired applicant pool.
  2. Use alternative admissions protocols.
  3. Create strong academic and bar exam support programs together with a campus culture that is culturally welcoming and supportive to students from diverse backgrounds.
  4. Establish a mix of faculty: many will have job descriptions that emphasize teaching specialties and mentoring; some will emphasize scholarship; still others will have a conventional mix of teaching and scholarship responsibilities. Whatever the mix, it should be geared towards meeting the educational goals of the school, and student needs, as opposed to some notion of what happens at “national” law schools.
  5. Make budget decisions that prioritize student success.
  6. Hire adjunct and contract professors to adjust teaching resources to changing curriculum and budget needs.
  7. Choose faculty who are committed to teaching and enhancing student success.
  8. Develop strong relationships with undergraduate schools and other organizations that are willing to work on pipeline programs for diverse students.
  9. Foster strong relationships with local and regional alumni, courts, government agencies, law firms, and bar associations (all of which can promote the school and provide work, externship, mentorship, and pro bono opportunities for students).
  10. Focus recruitment and marketing on geographical areas and demographic groups that make sense.

We cannot know what law schools of the future will look like. But we can be sure that experimentation and innovation will not come easily for those schools slavishly tied to USN ranking criteria as a measure of success. Just as Apple changed history by departing from the conventional expectations of the computer hardware and software industries of the 1980s, some law schools will improve on the model of legal education by committing to new missions and paths. The law schools that will lead us into the future are those that have internal confidence in their mission and compass and are not afraid to be proactive and different; those that are most interested in playing to external media for affirmation will likely be hindered by the status quo, complacency, and fear of change.

The legal profession is of such value and importance to society that training people for the profession requires law school to be more than just another competitive business. Law schools should not exist only to provide jobs for law professors who desire job security and do not want to practice law. Law schools should not pursue recognition solely for the sake of recognition and attracting tuition; rather, they should have a purpose, a mission that is realistically designed to make a difference in the world. They should follow that mission so long as it is practicable and worthwhile -- even if the effort escapes the attention of those who keep lists of the “top” law schools. Who knows -- maybe a law school could become famous by doing the right thing?

April 30, 2012 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Sullivan: If Romney Wins . . .

Tax Analysts Martin A. Sullivan (Tax Analysts), If Romney Wins . . ., 135 Tax Notes 531 (Apr. 30, 2012):

Romney's tax agenda is ambitious. According to his campaign documents, he would extend the Bush tax cuts across the board (if they aren't already extended for him in the lame-duck session). Then he would add tax cuts that include a 20% cut in all individual income tax rates; elimination of all tax on interest, dividends, and capital gains for households with incomes below $200,000; elimination of the estate tax; repeal of the alternative minimum tax; and a reduction of the corporate rate to 25%. Because he would also repeal the Patient Protection and Affordable Care Act, Romney would eliminate that act's 3.8% tax on investment income of high-income individual taxpayers and the 0.9% tax on wages that is scheduled to take effect in 2013. The Romney campaign says eliminating tax benefits will offset the cost of these tax cuts, but it has not specified what tax benefits it intends to cut.

Romney ChartThe price tag for the tax cuts is staggering. According to the Urban-Brookings Tax Policy Center, assuming the extension of the Bush tax cuts is already included in the baseline, the reduction in revenue would be $480 billion for 2015. That's about 3% of GDP.

There would have to be a lot of tax expenditure cuts to pay for that. The individual base broadening would have to be on a much grander scale than anything that was done under the Tax Reform Act of 1986. As noted, Romney needs $480 billion in 2015 alone. Table 1 shows revenue estimates for the largest tax expenditures Romney might conceivably consider (that is, excluding tax expenditures for investment income).

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

April 30, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (4) | TrackBack (0)

California Bar Weighs Law Schools Skills Mandate

California State BarNational Law Journal, State Bar Wants to Call the Tune: California Weighs Law Schools Skills Mandate, by Karen Sloan:

Law schools have caught plenty of flak in recent years from critics who charge that they routinely produce graduates who can write a law review article but cannot draft a contract or interview a client. Now the State Bar of California is mulling whether to impose a practical skills training requirement on lawyers applying for admission — a move some legal academics say is unnecessary and could stifle innovation.

"My personal judgment is that we don't need this right now," said Stanford Law School Dean Larry Kramer, noting that many law schools have been moving to add clinics and other skills-based courses. "I think they're being a little too quick without recognizing what's already going on."

A state bar task force will soon begin examining whether new attorneys must attain a certain level of hands-on training before being admitted to practice in California. The discussion is still in the early stages, but ideas being kicked around include requiring an internship or mentorship program; a set number of skills-training hours; or a year-long course for 3Ls that covers real-world lawyering skills.

The Task Force on Admissions Regula­tion Reform is scheduled to issue its recommendations in December 2013. Whatever it decides, the repercussions could be major. California's bar is the largest in the nation, so the ripple effects would reach law schools and bar associations outside the state.

"This is not a new issue," said State Bar of California Executive Director Joseph Dunn. "The debate about practical skills training has been long-standing within legal academia. But because of their paralysis, in the last few years the debate has started to seep into the regulatory bodies at the state level that govern the admission to the practice of law."

The state bar lacks authority to mandate law school curricula, Dunn noted, but schools in California would have little choice but to adjust should the bar go in that direction. Dunn predicted that law schools will push back, as they have in previous years when bar regulators have taken up the training issue. "We're probably going to hear the usual opposition that has been in play for decades from legal academia, which is, 'We already offer robust options, clinics, internships, etc. There is no need to convert this into a mandatory requirement that would force us to amend our curriculum, which might impact our ranking on U.S. News & World Report,' " Dunn said.

The idea of a bar-mandated practical skills training requirement doesn't sit well with Erwin Chemerinsky, dean of the University of California, Irvine School of Law. He is a vocal proponent of practical skills training — Irvine was founded in 2009 with a focus on real-world training and is the first California law school to require students to complete a clinic in order to graduate — but Chemerinsky is uncomfortable with the bar making rules that would influence law school curriculum. "I have very mixed feelings," he said. "On the one hand, I stringently support skills training in law school. On the other hand, I don't like the idea of the state bar saying, 'This is what you should be teaching.'…Law schools should decide what they teach. Not the bar." ...

California bar president Jon Streeter suggested the matter is more important than ever, given that so many recent graduates have been unable to find jobs at law firms and instead have hung out shingles of their own. As solo practitioners, those new attorneys miss out on the mentoring and learning opportunities that law firms provide, he said. ...

Not all law school administrators in California would oppose a mandate. Chapman University School of Law Dean Tom Campbell said it wouldn't be a particular burden, since his school is already heading toward a much more skills-intensive curriculum. For example, the faculty is considering pairing traditional classroom courses such as real estate and labor law with courses in which students put that classroom knowledge to use in simulations or real-world projects. "Of course, there will be some schools that feel curriculum is their exclusive prerogative," Campbell said. "But I wouldn't agree with that, because law is a profession and we're a professional school." ...

Among the issues the task force will examine is how to handle the admission of lawyers from other states. It could impose some sort of a mentorship requirement for those individuals, or grant waivers to attorneys with a certain number of years' experience, Dunn said. The panel will also debate what practical skills should be required and how to evaluate courses. The cost to the bar of overseeing such a requirement is another matter the task force will consider. ...

Streeter plans to name the members of the task force during the next several weeks. The panel will include three legal academics, five current or former members of the bar's board of trustees, three current or former members of the committee of bar examiners, two state judges, two general counsel, three practicing attorneys and two members of the public, in addition to a chair.

In a second phase, the task force will look at whether to end the practice of allowing graduates of unaccredited law schools to sit for the California bar exam — or whether to impose additional regulations on those schools.

"We're only at the very beginning of the examination of this issue," Streeter said. "Since it came out that we are looking at this, my mail has been running 80 percent enthusiastically in favor of this idea, including from many academics."

April 30, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Cui Posts Tax Papers on SSRN

Wei Cui (China University of Political Science and Law) has posted two tax papers on SSRN:

April 30, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

TaxProf Blog Weekend Roundup

Sunday, April 29, 2012

NY Times: How Apple Sidesteps Billions in Global Taxes

Apple LogoNew York Times: How Apple Sidesteps Billions in Global Taxes, by Charles Duhigg & David Kocieniewski:

Apple, the world’s most profitable technology company, doesn’t design iPhones here. It doesn’t run AppleCare customer service from this city. And it doesn’t manufacture MacBooks or iPads anywhere nearby. Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.

Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.

California’s corporate tax rate is 8.84%. Nevada’s? Zero.

Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.

Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high. Wall Street analysts predict Apple could earn up to $45.6 billion in its current fiscal year — which would be a record for any American business.

Apple 1
Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy. Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft derive not from physical goods but from royalties on intellectual property, like the patents on software that makes devices work. Other times, the products themselves are digital, like downloaded songs. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers. A downloaded application, unlike a car, can be sold from anywhere.

The growing digital economy presents a conundrum for lawmakers overseeing corporate taxation: although technology is now one of the nation’s largest and most valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’. (Cash taxes may include payments for multiple years.)

Even among tech companies, Apple’s rates are low. And while the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.

Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.

Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. (Apple does not disclose what portion of those payments was in the United States, or what portion is assigned to previous or future years.)

By comparison, Wal-Mart Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.

Apple’s domestic tax bill has piqued particular curiosity among corporate tax experts because although the company is based in the United States, its profits — on paper, at least — are largely foreign. While Apple contracts out much of the manufacturing and assembly of its products to other companies overseas, the majority of Apple’s executives, product designers, marketers, employees, research and development, and retail stores are in the United States. Tax experts say it is therefore reasonable to expect that most of Apple’s profits would be American as well. The nation’s tax code is based on the concept that a company “earns” income where value is created, rather than where products are sold.

However, Apple’s accountants have found legal ways to allocate about 70 percent of its profits overseas, where tax rates are often much lower, according to corporate filings. ...

Every second of every hour, millions of times each day, in living rooms and at cash registers, consumers click the “Buy” button on iTunes or hand over payment for an Apple product.

And with that, an international financial engine kicks into gear, moving money across continents in the blink of an eye. While Apple’s Reno office helps the company avoid state taxes, its international subsidiaries — particularly the company’s assignment of sales and patent royalties to other nations — help reduce taxes owed to the American and other governments.

(Hat Tip: Bob Kamman, Francine Lipman, Ann Murphy.)

April 29, 2012 in Tax | Permalink | Comments (1) | TrackBack (0)

WSJ: Tax Court Blesses Tax-Free Technique for Parents to Transfer Family Business, Wealth to Their Children

Tax Court Logo 2Following up on last month's post, Defined Value Clauses and FMV: Wall Street Journal Tax Report, Shielding the Family Business, by Laura Saunders:

Small-business owners often complain of feeling caught in the cross hairs of the tax code. For a change, here's good news.

The Tax Court has just blessed a new technique that owners of closely held businesses—and wealthy families—can use to pass assets to heirs with a minimum of taxes and complications. The ruling in the case, Wandry v. Commissioner, [T.C. Memo. 2012-88 (Mar. 26, 2012)], is stirring up excitement among experts.

David Kautter, a director of American University's Kogod Tax Center, calls the ruling a "landmark decision, because it allows tax-free ownership transfers from one generation to another with certainty and in an orderly manner."

Here is why Wandry matters. Our current system imposes a gift tax of up to 35% when taxpaye\rs give assets away, with exceptions. Individuals now get one $5.12 million lifetime exemption, and they can also give up to $13,000 of assets a year to an unlimited number of recipients. (Next year the lifetime break is scheduled to drop to $1 million and the top rate to rise to 55%.) This means an owner who wants to give a business to children or others, such as employees, can use these exemptions to transfer ownership tax-free. He can even use the $13,000 annual exclusion to transfer value bit by bit.

That is what happened in the Wandry case. Dean and Joanne Wandry, a Colorado couple, each gave units in a family-owned limited-liability company worth $1,099,000 to their heirs in 2004. To avoid paying tax, they specified the gifts should equal the dollar amount of their exemptions -- a key point. (At the time, the lifetime exemption was $1 million and the annual exclusion $11,000.)

The hitch in Wandry and other cases is that the givers have to get a professional appraisal if -- as is common -- the company is hard to value. Often values are lowballed a bit in order to maximize the gift. But the IRS can contest the appraisal after the gift -- and often does. In Wandry, the value rose about 20%.

That brings up an important issue: If values rise after an IRS challenge, must the giver write a big check for tax on the amounts above the exemption? According to the Wandry decision, no. The judge held the couple intended to make a gift equal to their exemptions, so the excess was never actually given by them. No tax was due. ...

The IRS must feel like this decision stacks the deck in taxpayers' favor, because they don't risk writing a check if they lowball the value of a gift.

According to attorney John Porter of Baker Botts in Houston, Wandry is the latest in a line of related cases lost by the IRS. Absent the Wandry decision, often the best outcome is for a family to designate a charity to receive the excess. No tax is due, but the family gives up some control.

The Wandry case is a boon not only for business owners but also wealthy families with "family limited partnerships" or entities holding publicly traded stocks. Even though the stocks' value is easy to determine, submerging them in a nontraded company provides valuable discounts when units are transferred to heirs. ...

[I]t may be important to act soon. The decision is so advantageous for taxpayers that it could inspire a response from Congress or the IRS.

April 29, 2012 in Tax | Permalink | Comments (4) | TrackBack (0)

Johnston: Tax Preparers, Not Working Poor, Defraud EITC Program

Reuters: Abusing a Tax Loophole Meant to Aid the Poor, by David Cay Johnston:

Each year the IRS receives tax returns that show more income than was actually earned, in some cases twice the actual earnings. That seems bizarre at first blush. After all, why would anyone tell the tax man they made more than they did?

The answer is that Congress has created an incentive for the poorest of the working poor to report more than their actual incomes. Doing so can be worth more than $3,000 to impoverished working parents under a form of negative income tax known as the Earned Income Tax Credit that sends government money to the working poor.

But it is not the working poor themselves who make up phony numbers. The problem is with unscrupulous income tax preparers, the IRS Taxpayer Advocate, Nina E. Olson, and others who work with the poor tell me. Ginning up nonexistent income lets dishonest tax preparers charge larger fees and helps attract new clients as word spreads of their success at getting big refunds. ...

Here are four ways Congress and the IRS can fix this:

  • Congress should lower the threshold for securing the maximum credit for families with children from $12,800 to the average wage of the bottom third of workers, currently about $6,000.
  • Congress should pay for the prosecution of as many corrupt tax return preparers as it takes to stop this fraud, including $3,000 rewards to taxpayers who turn in corrupt preparers. Any action by the IRS, not just convictions, should generate a reward check. The reward I propose equals the maximum fraud loss from a single case, making it cost-efficient provided Congress requires the IRS to be generous, not stingy, in rewarding whistleblowers.
  • Congress should delay tax credit refunds for 45 days after a tax return is filed. Olson, the IRS taxpayer advocate, told me that speeding refunds encourages fraud. The United States is unusual in trying to refund money instantly, instead of taking time to make sure payments are proper before cutting checks.
  • For the next few years the 40% of IRS correspondence audits that now deal with the Earned Income Tax Credit should concentrate on faked Schedule Cs that inflate incomes.

April 29, 2012 in Tax | Permalink | Comments (4) | TrackBack (0)

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, with the #1 paper #35 in all-time downloads among 8305 tax papers:

1.  [1517 Downloads}  There’s No There There: Low Tax Rates and Economic Growth, by Filip Spagnoli (National Bank of Belgium)

2.  [708 Downloads]  Giving Useful Tax Planning Advice, by Heather M. Field (UC-Hastings)

3.  [420 Downloads]  Retirement Assets to a Surviving Spouse – Rollovers and Portability are Your First Choice, by Christopher R. Hoyt (UMKC)

4.  [279 Downloads]  2011 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)

5.  [161 Downloads]  Recent Developments in Federal Income Taxation: The Year 2011, by Martin J. McMahon, Jr. (Florida), Ira B. Shepard (Houston) & Daniel L. Simmons (UC-Davis)

April 29, 2012 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Saturday, April 28, 2012

Lawyer Dog

ABA Journal, Lawyer Dog Goes Viral:

A photo of a Welsh Corgi in a business suit has gone viral after creative captions portrayed the dog as a lawyer.

Someone posted the photo on Tumblr last year, but it got more Internet play last week after two captions on Reddit described the dog as a lawyer, Bloomberg Law reports in a video report.

Lawyer Dog

April 28, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Income Inequality and Leisure Inequality: Do the 1% Work Harder Than the 99%?

Wall Street Journal Wealth Report, Do the Wealthy Work Harder Than the Rest?, by Robert Frank:

One of the most controversial issues surrounding inequality is work effort.  Some on the right argue that top earners are successful in part because they work harder than others. Many on the left argue that the middle class and poor work just as hard – maybe even harder, with multiple jobs — but that the economic deck is stacked against them.

A new study [below] offers evidence that higher-educated (and therefore higher-earning)  Americans do indeed spend more time working and less time on leisure than poorer income groups. In fact, while income inequality may be growing, “leisure inequality” – time spent on enjoyment – is growing as a mirror image, with the low earners gaining leisure and the high earners losing.

The more surprising discovery, however, is a corresponding leisure gap has opened up between the highly-educated and less-educated.  Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours.  ... A similar pattern emerged for women. Low-educated women saw their leisure time grow to 35.2 hours a week from 35 hours. High-educated women saw their leisure time decrease to 30.3 hours from 32.2 hours. ... (The study defines leisure as time spend watching TV, socializing, playing games, talking on the phone, reading personal email, enjoying entertainment and hobbies and other activities.) ...

While the study doesn’t seek to prove that the high earners work harder “that story would be consistent with the data,” said Mr. Hurst.

Orazio Attanasio (University College London, Department of Economics), Erik Hurst (University of Chicago, Booth School of Business) & Luigi Pistaferri (Stanford University, Department of Economics), The Evolution of Income, Consumption, and Leisure Inequality in the US, 1980-2010 (NBER):

Recent research has documented that income inequality in the United States has increased dramatically over the prior three decades. There has been less of a consensus, however, on whether the increase in income inequality was matched by an equally large increase in consumption inequality. Most researchers have studied this question using data from the Consumer Expenditure Survey (CE) and some studies have suggested that the increase in consumption inequality has been modest. Unfortunately ,there is now mounting evidence that the CE is plagued by serious non-classical measurement error, which hinders the extent to which definitive conclusions can be made about the extent to which consumption inequality has evolved over the last three decades.

In this paper, we use a variety of different techniques to overcome the measurement error problems with the CE. First, we use data from the diary component of the CE, focusing on categories where measurement error has been found to be less of an issue. Second, we explore inequality measures within the CE using the value of vehicles owned, a consumption component that is considered to be measured well. Third, we try to account directly for the non-classical measurement error of the CE by comparing the spending on luxuries (entertainment) relative to necessities (food). This is similar to the recent approach taken by Browning and Crossley (2009) and Aguiar and Bils (2011). Finally, we use expenditure data from the Panel Study of Income Dynamics to explore the dynamics of alternative measures of consumption inequality. All of our different methods yield similar results. We find that consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality.

April 28, 2012 | Permalink | Comments (3) | TrackBack (0)

Delgado: The Happy Lawyer -- Making a Good Life in the Law

The Happy LawyerRichard Delgado (Seattle), Recent Writing on Law and Happiness, 97 Iowa L. Rev. 913 (2012) (reviewing Nancy Levit & Douglas O. Linder (both of Missouri-Kansas City), The Happy Lawyer: Making a Good Life in the Law (Oxford University Press, 2010)):

Are lawyers happy? If not, what can they do about it? Is unhappiness an inherent risk in the practice of law—at least as carried out today?

Lately, these questions and ones like them have been very much in the public eye. A 2011 Gallup Poll asked Americans if they were happy and ranked the results state-by-state on a numerical scale. Perhaps sensing a scoop, the New York Times displayed Gallup's information in the form of a map of the entire country showing happy states in a cheerful orange, middling-happy states in pale yellow, and glum or miserable ones in gray or black. An accompanying article identified America's happiest man: a five-foot-ten, sixty-nine-year-old, Chinese-American, Kosher-observing Jew, married with children, and living in Honolulu.

Drawing on a different set of studies, another New York Times writer concluded that those who waited longest to have sex and took the smallest number of partners were happier than their precocious or bed-hopping counterparts, while a third analyzed whether Internet searching made one happy or unhappy. (Answer: It depends.) On the other side of the Atlantic, England's Prime Minister David Cameron announced the creation of a national happiness index that would provide quarterly measures of how his countrymen were feeling about their lives.

Not to be outdone, a number of legal writers, including Deborah Rhode, Mary Ann Glendon, and Anthony Kronman, have weighed in with books on happiness and its opposite in the legal profession. Perhaps sobered by some of their findings, students at one top law school took things into their own hands and signed a pledge refusing to work for law firms that overwork associates and make them miserable. As though sensing a trend, the ABA Journal devoted several pages of a recent issue to the “happiness movement,” while two sections of the AALS weighed in with a joint session at its 2011 annual meeting on this very subject, drawing an overflow crowd.

In short, people are talking about happiness and its opposite. The Happy Lawyer: Making a Good Life in the Law ... thus arrives at a propitious moment when many lawyers, as well as ordinary citizens, are considering the hedonic quality of their work lives and what can be done to improve them.

Part II of this essay outlines the Levit and Linder book, paying particular attention to its treatment of topics that other books on the subject rarely cover, including the social-scientific and neurological foundation of happiness, as well as prescriptions for a happy life in the law. Part III critiques the book, while Part IV puts forward my own analysis of what the debate on lawyers’ happiness needs to include in order to secure lasting gains.

April 28, 2012 in Book Club, Legal Education | Permalink | Comments (1) | TrackBack (0)

State Inheritance and Estate Tax Rates and Exemptions

Friday, April 27, 2012

Fleischer Presents Consequentialism and Charitable Giving Today at Texas

Perry FleischerMiranda Fleischer (Colorado) presents Consequentialism and Charitable Giving at Texas today as part of its Faculty Colloquia Series:

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.

April 27, 2012 in Colloquia, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

UC-Hastings Reduces Incoming Class by 20%, Cuts 27 Staff Positions

UC Hastings LogoUC-Hastings has announced a permanent 20% reduction in the size of its incoming class, resulting in a $2.1 million budget cut which it is absorbing by staff reductions (10 laid off, 10 full-time reduced to part-time, and 7 voluntary severances). Tuition for California residents will be $46,500 in 2012-13 (up from  $20,900 in 2004-05).  For more on the grim details, see:

April 27, 2012 in Legal Education | Permalink | Comments (3) | TrackBack (0)

Reaganomics: A Report Card

Tax Analysts H. Nelson Yu (J.D. 2012, Oregon), Reaganomics: A Report Card, 134 Tax Notes 1649 (Mar. 26, 2012):

This report analyzes the economic effects of the significant changes in tax and regulatory policy that have occurred since the election of Ronald Reagan in 1980. Reagan's conservative policies, which have mostly been followed since, contrasted sharply with those that were in place for nearly five decades following the election of Franklin Roosevelt in 1932. The report looks at empirical results to see which party's political philosophy may be best for America. The economic results demonstrate that Reaganomics works poorly as an economic or regulatory philosophy if the country's goal is general and sustainable economic prosperity.

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

April 27, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (6) | TrackBack (0)

Kant and the Graduated Federal Income Tax

Alexandra Pryor (J.D. 2012, Georgetown), Note, Ought There to Be a Graduated Federal Income Tax?: Is Robin Hood Justice, Justice At All?, 9 Geo. J.L. & Pub. Pol'y 543 (2011):

In the sections that follow, I will evaluate the justice of progressive taxation by adopting a Kantian framework, applying Kant's Categorical Imperative to a progressive income tax, arguing that our system of progressive taxation is violative of Kant's ethical framework, and suggesting that a Kantian perspective ought to be seriously considered by our nation's lawmakers. In Section I, I will discuss ethical theory's role in the debate for and against a progressive income tax and argue that those who oppose the progressive income tax fail to make compelling ethical arguments. I then suggest that Immanuel Kant's categorical imperative, extolled by many philosophers but ignored by policymakers and politicians, offers those who disfavor a progressive income tax a compelling ethical argument to support their case. In Section II, I introduce Kant's Categorical Imperative in its three primary formulations, and then in Section III, I evaluate the progressive income tax through the lenses of each of the formulations. Finally, in Section IV, I argue that a flat income tax is a good alternative to a progressive income tax not only for its economic benefits, but also because it does not violate the categorical imperative the way a progressive income tax does.

April 27, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

U.S. Tax Incentives for Foreign Shipping Companies

Richard D. Lamb III (J.D. 2012, Loyola-New Orleans), Comment. Keeping U.S. Trade and International Shipping Afloat While the Global Economy Sinks: U.S. Tax Incentives and Procedure Concerning Foreign Shipping Companies, 10 Loy. Mar. L.J. 91 (2011):

Under § 883, the United States “grants an exemption from all income taxes for international ship-owners and operators.” This includes activities that are considered incidental to the international operation of ships. This comment explains the § 883 exemption, in particular Reg. § 1.883-1(g) and the procedures necessary to conform with U.S. tax laws are examined. Part II of this comment describes the shipping industry, its significance, and its current state in the global economy. Part III provides a history of § 883 in a context at explains the scope and intended purpose of the exemption. The history of the exemption is followed by an overview of § 883 in its modern day form, including the detailed rules for who may claim the exemption. Part IV thoroughly explains the modern day § 883 and breaks the section down into specific elements under the guidance of Treasury regulations, while also enveloping guidance from other IRS sources. Part V of this comment provides guidance to the procedures that must be used by foreign shipping companies to comply with Reg. § 1.883-1(g) so that a company's income is considered incidental to the international operation of ships and therefore eligible for the exemption. Part VI of this comment contains an explanation of the pertinent procedural aspects of the exemption and the shortcomings of these procedures as they pertain to Reg. § 1.883-1(g). This comment concludes with the proposal of some urgently needed improvements for efficient tax administration that will facilitate U.S. trade.

April 27, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Christians: The Arbitration Option in the New U.N. Model Tax Convention

Tax AnalystsAllison Christians (Wisconsin), Putting Arbitration on the MAP: Thoughts on the New U.N. Model Tax Convention, 66 Tax Notes Int'l 351 (Apr. 23, 2012):

The U.N.'s tax committee last month released its latest version of the U.N. model tax convention, designed for use between developed and developing countries. The big news in the 2011 update consists of the addition of "arbitration" as an option in the mutual agreement provision (MAP), the expansion of the information exchange provisions, and the addition of an assistance in collection provision. This column focuses on the first of those revisions.

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April 27, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

What Were These People Thinking?

Is Law School Worth It?

FailingBaltimore Sun, Is Law School Worth It?:

With a hefty price tag and a shrinking number of jobs, is law school worth all the effort? The verdict's still out.

Infamously grueling, law school has long been perceived as a route to steady employment and high income. In the past four years, the paradigm has shifted. Lower employment rates, rising tuition and intense job hunts prompt the question: Is law school worth it? ...

"Some of us, I feel, were sold a pipe dream," said Sabrina Turner, a 2010 University of Maryland Francis King Carey School of Law grad. Turner, 30, currently has a document review stint with a Baltimore company that provides staffing for firms. Technically, her position requires a J.D. Practically, not so much. "I draw black boxes on documents," she said. "You have to have an active license because you're assisting in litigation, but it doesn't require anything I learned in law school." ...

Brian Tamanaha, author of Failing Law Schools, a forthcoming book, evaluates law school's worth with a simple formula: "It's a function of how much debt you think you'll have and your chances of landing a job that will allow you to pay that debt." ...

UMd Law's full-time, in-state tuition is $23,744; UB Law's is $26,156. According to Tamanaha's findings, 76% of UMd Law's class of 2010 is in debt, with the average debt amounting to $109,000. The average debt of a UB Law student is $105,000, he calculated, and 89% of the class reported being in debt. ... "Once you cross the six-figure mark, you think, what's a few thousand dollars more?" said Katherine Bagley, a third-year student at UB and a Maryland native.

According to Tamanaha, 45,000 new law graduates hit the market each year nationwide; however, recruiters project only 25,000 job openings each year through 2018.

(Hat Tip: Glenn Reynolds.)

April 27, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

The Case for Tradable Tax Credits

Clint Wallace (J.D. 2012, NYU), Note, The Case for Tradable Tax Credits, 8 N.Y.U. J. L. & Bus. 227 (2012):

This note argues that tradable tax credits offer advantages as compared to other mechanisms the federal government can use to affect social and economic policy. Policymakers should consider the tradable tax credit as a potentially desirable form of tax incentive, rather than a necessity of political compromise as was the case in the enactment of existing tradable credits. First, the note establishes that tradable tax credits can be the economic equivalent of direct spending programs and of refundable tax credits. Next, the note examines a limited but significant set of circumstances in which the tradable tax credit can offer efficiency and political benefits as compared to refundable tax credits or direct subsidies. The note creates a simplified example that illuminates how tradable tax credits can be beneficial, considering various forms of government intervention to prompt private building owners to retrofit buildings to be energy efficient. The tradable tax credit mechanism can give rise to positive externalities, above and beyond the positive externality that prompts policymakers to implement a tax incentive, that are created solely because of the tradable mechanism by which the incentive is delivered. The resulting welfare gain distinguishes tradable tax credits from refundable tax credits or direct subsidies. Additionally, the form of the tradable tax credit may help create strong coalitions behind a policy proposal by uniting direct beneficiaries of the social or economic policy with investors and other interested outside parties. The tradable mechanism also provides significant equity benefits, similar to refundable tax credits, and potentially reduces enforcement costs as compared to government interventions that do not make use of third party expertise. Tradable tax credits therefore constitute a viable and potentially useful form of tax incentive in ways not previously recognized.

April 27, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Rethinking § 501(c)(3)'s Prohibition on Politicking

Jennifer Rigterink (J.D. 2012, Tulane), Comment, I'll Believe It When I "C" It: Rethinking Section 501(c)(3)'s Prohibition on Politicking, 86 Tul. L. Rev. 493 (2011):

The U.S. Supreme Court's decision in Citizens United v. FEC challenged fundamental notions of free speech jurisprudence. While many commentators have focused on the decision's implications for corporate speech, this Comment examines whether the new First Amendment paradigm announced in Citizens United will challenge current speech restrictions on churches and other entities organized under § 501(c)(3). Not only does this Comment propose that such restrictions could potentially be invalidated based on the Court's reasoning in Citizens United, but also that practical factors relating to compliance and enforcement problems inherent in § 501(c)(3) indicate the ban should be amended. This Comment concludes by offering a proposed change to § 501(c)(3)'s politicking ban that would allow a § 501(c)(3) organization to engage in “some” amount of politicking, as long as it was not a substantial part of the organization's overall charitable activity.

April 27, 2012 in Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Thursday, April 26, 2012

Crawford: The Tax Perils of Jointly Held General Powers of Appointment

Tax AnalystsBridget J. Crawford (Pace), The Perils of Jointly Held General Powers of Appointment, 135 Tax Notes 497 (Apr. 23, 2012):

This article provides an overview of the estate tax consequences of jointly-held general powers of appointment. To avoid triggering estate tax inclusion, a general power should be held with either the creator of the power or a person having a 'substantial' and 'adverse' interest in the exercise of the power. The determination that an interest is substantially adverse to the powerholder’s requires careful reference to the regulations. Jointly-held general powers of appointment are so complicated that they rarely are the most efficient drafting choice.

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

April 26, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Tax-Exempt School Gives President a Lavish Life

NGSThe Boston Globe, Tax-Exempt School Gives President a Lavish Life:

It is a tiny school, with an enrollment the size of a modest elementary school. There is no campus, just a small office building. Its 400 part-time students are invisible here, attending classes at off-site facilities across the country. Yet the National Graduate School of Quality Management awarded its president, Robert J. Gee, $732,891 in compensation two years ago. ...

Gee has champagne tastes. In 2009, he persuaded the Massachusetts Development Finance Agency to authorize $2.64 million in low-interest bonds. That made possible his school’s purchase of a $3.25 million waterfront compound on Oyster Pond with spectacular views of Martha’s Vineyard, especially from the six-bedroom house earmarked to be Gee’s presidential residence.

Five months later, the school, which focuses on a particular field of business management, purchased new automobiles to fit the estate setting: a silver Mercedes-Benz S550 sedan for Gee and a silver Mercedes-Benz station wagon for his wife, Aileen Waters Gee. The cost: $130,638, or about 2% of the school’s revenues that year. ...

For years, the school’s revenues have financed a lavish lifestyle for Gee and for his wife, who has been paid at least $100,000 a year since 2003. And they have vacationed together at school expense: The school owns a deluxe winter getaway in the US Virgin Islands for their use, part of a 17-year employment contract that expires in 2023, when Gee will be 79.

Gee, after ignoring the Globe’s calls and e-mails for more than a month, issued a statement Wednesday asserting that his compensation and perks are warranted. He said that they are comparable with those given to leaders of similar institutions, but did not identify any.

Attorney General Martha Coakley, who oversees public charities, said Gee’s “compensation, employment contract, and other benefits . . . seem excessive.’’ After reviewing the reports at the Globe’s request, Coakley’s office sent a letter to the school Wednesday demanding information from board members. ...

Gee’s extraordinary compensation was discovered as part of a Globe analysis, conducted by Northeastern University investigative reporting students, of data culled from publicly available tax returns filed by more than 22,000 nonprofits in Massachusetts. ... Gee’s salary and perquisites are so excessive that the IRS might levy substantial excise tax assessments against the school and Gee. If the IRS finds the violations extreme ... the school could be stripped of its tax-exempt status.

(Hat Tip: Eric Lustig.)

April 26, 2012 in Tax | Permalink | Comments (2) | TrackBack (0)

Cartoon: Where Tax Auditors Come From

Here. (Hat Tip: Andy Morriss.)

April 26, 2012 in Tax | Permalink | Comments (1) | TrackBack (0)

Newton: An Empirical Analysis of the Supreme Court's Use of Legal Scholarship

Following up on Tuesday's post, Schwartz & Petherbridge: An Empirical Study of the Use of Legal Scholarship by the Supreme CourtBrent E. Newton (Adjunct Professor, Georgetown; Deputy Staff Director, U.S. Sentencing Commission), Law Review Scholarship in the Eyes of the Twenty-First Century Supreme Court Justices: An Empirical Analysis, 4  Drexel L. Rev. 399 (2012):

An analysis of the twenty-first century Justices’ citations of law review scholarship — how often they cite articles, the professional identities of authors of the cited articles, and the rankings of the law reviews in which the cited articles appear — provides an excellent prism through which to assess today’s law reviews. In addition to having had varied and rich legal careers as practitioners, policy-makers, and lower court judges, the majority of the current Justices were, at earlier points in their careers, full-time law professors. Presumably, the Justices are able to separate the wheat from the chaff in the law reviews. The present study examined whether something meaningful can be gleaned from an analysis of the modern Justices’ practice of citing law review articles.

This article describes the results of an empirical study of the nearly two thousand “signed” opinions authored by the Justices -- majority opinions, plurality opinions, concurring opinions, and dissenting opinions issued after oral arguments -- dated between January 1, 2001, and December 31, 2011, which cited at least one American law review article. Opinions were coded to determine the following: (1) whether one or more law review articles (including law student “notes” or “comments”) were cited in the opinions; (2) which Justices wrote the opinions citing law review articles; (3) the professional status of the articles’ authors at the time that the cited articles were published (as a full-time law professor, legal practitioner, judge, law student, or “other”); and (4) the ranking of the law reviews that published the cited articles according to Washington and Lee University School of Law’s “combined score” ranking system (the “W&L” system). The results of this coding project are contained in a lengthy appendix to this Article, which lists all 1,023 cited articles in the 1,961 opinions issued in 792 cases.

The present study demonstrates that the Justices in the twenty-first century have cited law review articles less frequently than their predecessors did in the 1970s and 1980s, when at least one Justice’s opinion in approximately half of the Court’s cases cited one or more law review articles (with an average of 0.87 articles cited per opinion). During the first decade of the twenty-first century, one or more Justices cited at least one article in 37.1% of the Court’s cases (with an average of 0.52 articles cited per opinion). In 21.3% of the Court’s cases, one or more law review articles were cited in the majority opinion. Justices considered “liberal” in their judicial philosophies cited law review articles in their opinions much more frequently than did Justices considered judicial “conservatives.”

Of the cited articles in opinions issued between 2001 and 2011, 62.3% of authors were full-time law professors, while 37.7% were law students, legal practitioners, judges, or persons who were not primarily associated with the bench, bar, or legal academy (including researchers with think-tanks and full-time professors from departments in a university other than a law school, such as economists, historians, and political scientists). An examination of the authors who were not full-time law professors revealed that the four sub-groups each constituted roughly one quarter of the total.

With respect to ranking of the law reviews in which the cited articles were published, the mean W&L ranking of the cited articles is 91; the median is 21; and the mode is 1. The mode ranking means that the top-ranked law review, Harvard Law Review, was cited the most times (102 times, or 10.1%) among the 1,023 total citations. Although “elite” law reviews were cited in disproportionate numbers -- articles in the top-ten law reviews were cited 384 times (or 37.5% of the 1,023 citations) -- the Justices cited over 100 articles appearing in law reviews ranked at 300 or below. Data from an earlier study of cited law review articles in the 1970s through 1990s, when compared with data from the present study, show that the Justices have cited articles published in “elite” law reviews at a steadily declining rate since 1970 and have cited articles in lower-rank reviews at a much greater rate, particularly in the last decade.

In sum, the current Justices have cited law review articles with less frequency than their predecessors did in the three decades before, which suggests that the current Justices may view current law review scholarship as generally less useful than the members of the Court did a generation ago. Nearly four out of ten of the authors of the cited articles were not full-time members of the legal academy. Considering that writing law review articles is the primary activity of America’s ten thousand-plus full time law professors, the fact that the Justices cite so many articles written by other authors permits the inference that much of the professiorate’s scholarship does not have value or relevance to the Justices (or to the bench and bar generally). The Justices also have cited articles from the full gamut of law reviews in the rankings, including many law reviews that are not deemed “tenure-worthy,” at least from the perspective of the hiring and promotion committees at many “elite” law schools.

Chart

April 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Tax Prof Moves, 2012-13

VAP Hires

  • Yolanda Jameson (Carlton Fields, Tampa) to Florida
  • Robert Morrow (Private Practice, Orange, CA) to Chapman
  • Erin Scharff (Law Clerk, William A. Fletcher, U.S. Court of Appeals for the 9th Circuit) to NYU

Entry Level Hires

  • Andrew Blair-Stanek (McDermott Will & Emery, Washington, D.C.) to Maryland
  • Caroline Chen (IRS Office of Chief Counsel) to Santa Clara Low-Income Taxpayer Clinic
  • David Kamin (Special Assistant to the President for Economic Policy) to NYU
  • Allen Madison (Wyoming VAP) to South Dakota
  • Omri Marian (Sullivan & Cromwell, New York) to Florida
  • Rebecca Morrow (Private Practice, Seattle) to Wake Forest
  • Jason Oh (NYU VAP) to UCLA
  • James Puckett (Seattle VAP) to Penn State
  • Mark Snider (Florida VAP) to Baylor
  • Adam Thimmesch (Faegre & Benson, Minneapolis) to Nebraska
  • Elaine Wilson (Quarles & Brady, Chicago) to West Virginia

Lateral Moves

  • Allison Christians (Wisconsin) to McGill
  • Sam Donaldson (U. Washington) to Georgia State
  • Brant Hellwig (South Carolina) to Washington & Lee
  • Marjorie Kornhauser (Arizona State) to Tulane
  • Francine Lipman (Chapman) to UNLV
  • Shannon Weeks McCormack (UC-Davis) to U. Washington
  • Nicholas Mirkay (Widener) to Creighton
  • Randle Pollard (Widener) to Indiana University Kelley School of Business
  • Peter Prescott (Indiana-Indianapolis) to Butler University College of Business

Promotions, Tenures, Chairs, and Professorships

  • Beau Baez (Charlotte) to Professor of Law with Tenure
  • Brian Galle (Boston College) to Associate Professor of Law with Tenure
  • Kristin Gutting (Charleston) to Associate Pprofessor with Tenure
  • Victoria Haneman (La Verne) to Professor of Law with Tenure
  • Ed Kleinbard (USC) to Professor of Law with Tenure
  • Sarah Lawsky (UC-Irvine) to Professor of Law with Tenure
  • Adam Rosenzweig (Washington U.) to Professor of Law with Tenure
  • Keeva Terry (Roger Williams) to Professor of Law with Tenure

Administrative Appointments

  • Chris Pietruszkiewicz (LSU) to Stetson, Dean

Retirements

  • Dan Simmons (UC-Davis)
  • Michael Waggoner (Colorado)

Visits

  • Steve Black (New Hampshire) to Texas Tech (2012-14)
  • Karen Burke (San Diego) to Florida (2012-13)
  • Paul Caron (Cincinnati) to Pepperdine (Spring 2013), San Diego (Summer 2013)
  • Emily Cauble (Michigan State) to DePaul (2012-13)
  • Victoria Haneman (La Verne) to UNLV (2012-13)
  • Michael Hatfield (Texas Tech) to U. Washington (2012-13)
  • Kristin Hickman (Minnesota) to Harvard (2012-13)
  • Mona Hymel (Arizona) to Alabama (Spring and Summer 2013)
  • Tracy Kaye (Seton Hall) to University of Vienna (Summer 2013)
  • Grayson McCouch (San Diego) to Florida (2012-13)
  • Beverly Moran (Vanderbilt) to Kentucky (Fall 2012)
  • Chris Sanchirico (Pennsylvania) to Tax Policy Center (2012-13)
  • Keeva Terry (Roger Williams) to Howard (2012-13)
  • Michael Yu (California-Western) to Pittsburgh (Fall 2012)

For prior years' Tax Prof Moves, see:

April 26, 2012 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0) | TrackBack (0)

Shaviro: The Financial Transactions Tax vs. the Financial Activities Tax

Tax Analysts Daniel N. Shaviro (NYU), The Financial Transactions Tax vs. the Financial Activities Tax, 135 Tax Notes 453 (Apr. 23, 2012):

In both Europe and the United States, there has been much recent debate regarding whether, in response to the 2008 financial crisis, one should enact a financial transactions tax (FTT) or a financial activities tax (FAT) – commonly viewed as mutually exclusive alternatives. This article evaluates these two alternative instruments, focusing on recent proposals by the European Commission and the International Monetary Fund. It concludes that the case for enacting an FAT is considerably stronger than that for an FTT, mainly because the FAT focuses on a broad “net” measure, rather than a narrow “gross” measure, of financial sector activity.

The article further concludes that a rationale for the FTT not emphasized by the European Commission – its addressing wasteful over-investment in the activity of seeking trading gains at the expense of other traders – could conceivably support its enactment, though it is uncertain that the social benefits would exceed the costs. The issues raised by this alternative rationale are independent of whether or not an FAT has been enacted. Finally, the desirability of enacting an FTT may be affected by broader political economy constraints on revenue-raising and on the pursuit of greater tax progressivity by alternative (including clearly superior) means.

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

April 26, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

House Holds Hearing Today on Expiring Tax Provisions

House LogoThe Subcommittee on Select Revenue Measures of the House Ways & Means Committee holds a hearing today on Expiring Tax Provisions:

The hearing provides Members of Congress the opportunity to speak on behalf of specific tax proposals they have introduced or cosponsored in the 112th Congress related to the extension, modification, or termination of one or more tax extenders. The hearing will evaluate how these proposals would measure against key metrics such as cost, effectiveness, and job creation.

In connection with the hearing:

April 26, 2012 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

Senate Holds Hearing Today on Improving the Tax Filing Experience

Senate LogoThe Senate Finance Committee holds a hearing today on Tax Filing Season: Improving the Taxpayer Experience:

  • James White (Government Accountability Office)
  • Troy Lewis (Lewis & Associates, CPAs, Draper, UT)
  • Beth Tucker (Deputy Commissioner, IRS)
  • Teresa Thompson (Taxpayer Advocate for Montana)

April 26, 2012 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

Former Dean Rapoport: 'I Expect Some Law Schools to Close'

Wednesday, April 25, 2012

School's Out for Summer!

I taught my last classes of the academic year today -- thanks to my students in Federal Income Tax and Federal Estate & Gift Tax for a wonderful semester!

Well we got no choice
All the girls and boys
Makin' all that noise
'Cause they found new toys
Well we can't salute ya
Can't find a flag
If that don't suit ya
That's a drag

School's out for summer
School's out forever
School's been blown to pieces

No more pencils
No more books
No more teacher's dirty looks

Well we got no class
And we got no principles (principals)
We ain't got no innocence
We can't even think of a word that rhymes

School's out for summer
School's out forever
My school's been blown to pieces

No more pencils
No more books
No more teacher's dirty looks

Out for summer
Out 'til fall
We might not come back at all

School's out forever
School's out for summer
School's out with fever
School's out completely

April 25, 2012 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0) | TrackBack (0)

Kristin Hickman & Steve Johnson: Initial Observations on Today's Supreme Court Decision in Home Concrete

At my invitation, the two leading scholars on the intersection of tax and administrative law offer their initial  observations on today's important 5-4 Supreme Court decision in United States v. Home Concrete & Supply, LLC, No. 11-139 (Apr. 25, 2012):

HickmanKristin E. Hickman (Minnesota), The Taxpayer Wins, and the Court Avoids the Hard Questions:

For those who followed coverage of January’s oral argument, the Supreme Court’s decision this morning in United States v. Home Concrete & Supply, LLC will come as no surprise.  In a 5-4 decision, with Justice Breyer writing for the majority, the Court affirmed the Fourth Circuit’s invalidation of Treas. Reg. § 301.6501(e)-1, holding that the Court’s earlier decision in Colony, Inc. v. Comm’r, 357 U.S. 28 (1958), “determines the outcome of this case” and that language in IRC § 6501(e)(1)(A) extending the limitations period for IRS deficiency assessments “does not apply to an overstatement of basis.”  The dissent, written by Justice Kennedy, contended that the 1954 amendments to IRC § 6501(e) were meaningful, that Colony did not consider the 1954 amendments and thus does not control the outcome in Home Concrete, and that “there was room for the Treasury Department to interpret the new provision in” the manner that it did.

From there, the Court split three ways.  Justice Breyer, joined by Chief Justice Roberts and Justices Thomas and Alito, spoke at some length regarding the relationship between Chevron deference and stare decisis – a.k.a., the Brand X question.  For this plurality of the Court, the outcome of this case is determined at Chevron step one:  Congress’s intent with § 6501(e) was clear at the time of Colony and continues to be clear now, at least in the Chevron sense of what it means for Congress’s intent to be clear.  Brand X only authorized an agency to adopt regulations contrary to a judicial decision when a statute’s silence or ambiguity represents a congressional delegation of gap-filling authority to the agency.  As a result, there was no need to resolve whether the Court ought to extend Brand X to Supreme Court decisions, although the plurality opinion seemed open to the idea.  Likewise the four dissenters:  By concluding that Colony did not apply at all, the dissenters were able to find § 6501(e) ambiguous and resolve the case at Chevron step two without actually deciding whether Brand X extends to Supreme Court decisions.  Nevertheless, the dissenting opinion speaks of a “continuing dialogue among the three branches of Government on questions of statutory interpretation and application,” thus suggesting the theoretical possibility of extending Brand X.  Finally, Justice Scalia writing in concurrence continued his outright rejection of the “ugly and improbable structure” created by Mead and Brand X.  In short, while the Court offered plenty of rhetoric for administrative law aficionados to chew on, the Court went no further toward actually resolving the applicability of Brand X to its own opinions.

Meanwhile, none of the opinions said a word about the procedural question raised by the case: whether Treasury’s initial promulgation of Treas. Reg. § 301.6501(e)-1 as a temporary regulation with only post-promulgation notice and comment violates Administrative Procedure Act requirements or affects the applicability of Chevron deference.  Judges Halpern and Holmes of the U.S. Tax Court concluded unequivocally in their Intermountain concurrence that temporary Treasury regulations violate the APA.  The circuit courts in turn disagreed on the significance of the temporary origins of Treas. Reg. § 301.6501(e)-1:  the Fifth Circuit submitted that post-promulgation notice and comment is inadequate and that Treasury regulations issued initially in temporary form would be ineligible for Chevron deference; the Seventh Circuit tentatively suggested the opposite; and the D.C. and Federal Circuits concluded that post-promulgation notice and comment cured or left moot any alleged procedural problems caused by Treasury’s use of temporary regulations.  Thus, the procedural validity of temporary Treasury regulations and the final regulations that replace them remains up in the air, with hints of a developing circuit split and no guidance from the Supreme Court. 

In sum, the Court resolved Home Concrete on the narrowest possible grounds.  The Court is often wise in pursuing a minimalist approach.  But the unresolved issues pose real problems for tax administration.  Given the extensive attention the Brand X and APA questions received in the briefs and in several circuit court opinions, Home Concrete represents something of a missed opportunity for the Court to address these issues clearly and unequivocally.

JohnsonSteve R. Johnson (Florida State), Initial Reflections on Home Concrete:

On April 25, 2012, the Supreme Court handed down its long awaited decision in United States v. Home Concrete & Supply, LLC ("HC"), resolving a circuit split as to Treasury's attempt to apply the § 6501(e) 6-year assessment limitations period to tax understatements attributable to overstatement of basis. The Court held for the taxpayer but was sharply divided: the plurality opinion written by Justice Breyer commanded four votes, Justice Scalia concurred, and four justices dissented in an opinion penned by Justice Kennedy.

Here are some thoughts about the decision. References to pages in the plurality opinion are noted as (P#), in the concurrence as (C#), and in the dissent as (D#).

First:  Many had been concerned that the Court's 2011 decision in Mayo, especially when combined with other deferential rules, could fundamentally unbalance tax litigation, making Treasury regs nearly impervious to challenge. Those of this view should find some comfort in the fact that the Treasury regulation at issue in HC was invalidated. However, that relief should be mixed with caution. The government came within one vote of, via a regulation, overthrowing a prior Supreme Court decision (Colony) which had interpreted the statute. Will the courts be more receptive to regs in situations not involving Supreme Court precedent? The basis for such administrative efforts is the Court's 2005 Brand X decision. Only one justice (Scalia) showed a disposition to dispense with Brand X.

Continue reading

April 25, 2012 in Tax | Permalink | Comments (5) | TrackBack (0)

Do Fewer Americans Support Taxing the Rich?

From a new Gallup Poll:

A slightly higher percentage of Americans today than in 2010 believe upper-income people pay too little in taxes, but the current 62% is still lower than the levels seen for much of the period from 1992 through 2007.

Gallup

April 25, 2012 in Tax | Permalink | Comments (1) | TrackBack (0)

Americans Renunciating Their Citizenship: Canaries in the Tax Coal Mine?

WSJ ChartWall Street Journal: What's U.S. Citizenship Worth?, by William McGurn:

Last year, nearly 1,800 American expatriates renounced their citizenship, according to Treasury Department figures.What gives?

The cheap answer is to blame Barack Obama. After all, during his tenure, the number of Americans renouncing citizenship has taken a sharp upward turn, from an average of 482 per year under George W. Bush to 742 in 2009, to 1,534 in 2010 and to 1,788 in 2011. At the least, his calls for hiking taxes on the wealthy can't be doing anything to discourage this trend.

The other cheap answer is to blame the ever unpopular IRS—instead of the tax code itself. ... [W]hen it comes to the global inefficiencies of our tax code, these 1,800 ex-Americans are canaries in the coal mine.

Our tax code—and especially the onerous reporting requirements that come with it—is turning U.S. citizens into economic lepers. Many foreign banks refuse us as customers; some investment ventures no longer want us as partners; and some business opportunities that would have benefited Americans now benefit others. For successful foreigners, our global tax regime tells them this: Avoid entanglements with America.

April 25, 2012 in Tax | Permalink | Comments (1) | TrackBack (0)

Hubbard: Obama's Budget Means 11% Tax Increase on Those Earning < $200,000

Wall Street Journal op-ed, Obama's Budget Means a Tax Increase on Everyone, by Glenn Hubbard (Dean, Columbia Business School):

Maintaining the president's higher spending levels will require raising taxes for all Americans, including an 11% increase on those earning less than $200,000.

President Obama's budget proposes to continue elevated levels of federal spending relative to GDP. So how does the president propose to pay for this?

We are told that the answer is to raise taxes on upper-income workers. Let's put aside that tax-reform advocates, including the Bowles-Simpson Deficit Commission appointed by President Obama, argue for reducing marginal tax rates, making up lost revenue by broadening the tax base. Let's focus on the arithmetic of the president's tax strategy—the Buffett Rule, plus tax increases on dividends and capital gains, plus raising the top income-tax rate to its pre-2001 level.

The Buffett Rule—designed to impose a minimum effective tax rate of up to 30% on taxpayers with annual income exceeding $1 million—would not affect many upper-income taxpayers who already pay a marginal tax rate of 35%. In its official revenue estimate, the Joint Committee on Taxation says the tax would raise about $47 billion over 10 years, or less than $5 billion per year. Maintaining the higher spending suggested by the president totals about $500 billion per year.

Now we come to the higher taxes on dividends and capital gains. The president proposes to increase the tax rate on capital gains by one-third, to 20% from 15%. He proposes to raise dividend taxes to 39.6% from 15%. The Treasury's revenue estimate from taxes on dividends and capital gains is about $242 billion over 10 years.

Next, the president wants to restore the pre-2001 tax rates for high-income individuals, including increasing the top marginal income-tax rate to 39.6% from 35%. Treasury expects this tax increase to net $442 billion over 10 years.

The president's budget also calls for phasing out exemptions and lower-bracket tax rates for higher-income taxpayers. This will raise marginal tax rates for those individuals even higher than the 39.6% described earlier. These two provisions will net $165 billion over the next decade, or some $16.5 billion a year.

Finally, the president would limit certain tax deductions for individuals with incomes over $200,000. This would net $584 billion over the next decade.

Now let's review the math. All these tax increases on upper-income taxpayers are projected to raise $148 billion per year. Viewed next to proposed additional spending of roughly $500 billion per year, or this year's federal budget deficit of $1.3 trillion, the president's budget faces an arithmetic challenge.

How big is that challenge? Maintaining the president's higher spending will require raising taxes for all Americans. Assuming the president favors raising marginal tax rates over broadening the tax base (consistent with his failure to consider the tax proposals from Bowles-Simpson), an across-the-board tax increase of 11% for taxpayers with incomes under $200,000 would be required to raise the money the president proposes to spend.

April 25, 2012 in Tax | Permalink | Comments (7) | TrackBack (0)

Bucky Askew to Step Down as ABA Consultant on Legal Education

AskewHulett "Bucky" Askew (right) is stepping down as the ABA Consultant on Legal Education at the end of August after six years in the position.  From the ABA press release:

The association noted that he has been a highly effective leader, fostering positive interactions among committees of the Section of Legal Education and Admissions to the Bar and restoring a collaborative working atmosphere for the section staff. He has been especially effective in strengthening relationships with the leadership of the law schools that the council accredits and serving as a calming influence during a period of uncertainly in legal education.

Barry Currier, a legal educator and higher education executive with experience in a variety of teaching and leadership roles, will join the ABA staff on June 4 as an interim consultant on legal education. Subsequently, there will be a search for Askew’s permanent successor.

April 25, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0)

2011 Law Prof Blog Traffic Rankings

Below are the updated quarterly traffic rankings (page views and visitors) of the Top 35 blogs edited by law professors with publicly available SiteMeters for 2011, as well as the percentage change in traffic from 2010:

 

Blog

Page Views

Change

1

Althouse

18,086,251

+27.4%

2

Volokh Conspiracy

12,246,705

-13.7%

3

Legal Insurrection

7,915,974

+65.0%

4

Leiter Reports: Philosophy

5,735,061

+19.9%

5

Hugh Hewitt

5,245,150

-21.7%

6

Patently-O

3,625,378

+2.7%

7

TaxProf Blog

3,558,335

-6.9%

8

Jack Bog's Blog

2,893,365

+5.9%

9

PrawfsBlawg

1,629,939

13.8%

10

Sentencing Law & Policy

1,497,044

-6.9%

11

Concurring Opinions

1,212,451

-20.3%

12

The Faculty Lounge

1,188,599

+26.8%

13

Leiter's Law School Reports

1,074,154

-1.6%

14

Professor Bainbridge

1,046,349

n/a

15

Balkinization

1,041,924

-9.6%

16

The Incidental Economist

960,938

 n/a

17

Opinio Juris

831,259

1.1%

18

Harvard Law  Corp Gov

805,320

49.1%

19

Wills, Tr. & Est. Prof Blog

493,330

16.2%

20

Turtle Talk

481,437

 n/a

21

Lawfare

464,848

n/a

22

Election Law Blog

436,079

+65.6%

23

Mirror of Justice

400,536

+7.2%

24

Conglomerate

399,182

-33.7%

25

Truth on the Market

375,558

-32.0%

26

IntLawGrrls

369,096

+41.8%

27

ImmigrationProf Blog

368,650

-7.0%

28

Religion Clause

361,953

-4.5%

29

Workplace Prof Blog

340,129

-13.8%

30

Antitrust & Comp. Pol’y Blog

337,154

+18.9%

31

Sports Law Blog

333,991

-10.8%

32

The Right Coast

332,576

-35.9%

33

Legal History Blog

326,285

-8.4%

34

White Collar Crime Prof Blog

300,854

-1.0%

35

Constitutional Law Prof Blog

295,042

-24.5%

 

 

Blog

Visitors

Change

1

Althouse

11,086,906

+27.5%

2

Volokh Conspiracy

8,797,178

-15.5%

3

Legal Insurrection

5,714,374

+49.2%

4

Hugh Hewitt

4,115,133

-20.9%

5

Leiter Reports: Philosophy

3,776,465

22.8%

6

TaxProf Blog

2,715,487

-7.5%

7

Patently-O

1,987,499

+7.6%

8

Jack Bog's Blog

1,237,984

+7.5%

9

Sentencing Law & Policy

888,016

-6.4%

10

PrawfsBlawg

840,547

+11.1%

11

Concurring Opinions

791,992

-21.6%

12

Leiter's Law School Reports

740,072

-0.7%

13

Professor Bainbridge

736,836

n/a

14

Balkinization

692,791

-7.4%

15

The Faculty Lounge

672,504

+21.9%

16

The Incidental Economist

614,294

 n/a

17

Opinio Juris

511,234

+3.9%

18

Harvard Law  Corp Gov

491,624

+56.6%

19

Wills, Tr. & Est. Prof Blog

320,596

+14.6%

20

Turtle Talk

307,538

 n/a

21

Truth on the Market

300,363

-25.2%

22

Lawfare

299,758

n/a

23

Conglomerate

272,415

-33.6%

24

Mirror of Justice

241,232

+9.2%

25

Election Law Blog

239,778

+43.5%

26

ImmigrationProf Blog

236,603

-10.9%

27

Sports Law Blog

231,627

-7.9%

28

IntLawGrrls

230,081

+46.8%

29

Workplace Prof Blog

228,400

-14.6%

30

Religion Clause

226,185

-7.6%

31

The Right Coast

221,826

-35.9%

32

Legal History Blog

209,674

-7.9%

33

Constitutional Law Prof Blog

206,907

-26.8%

34

Antitrust & Comp. Pol’y Blog

200,758

+17.8%

35

White Collar Crime Prof Blog

197,949

-5.6%

  • These Law Prof Blog Rankings are drawn from Dan Solove's Law Professor Blogger Census, as updated by Colin Miller' Legal Educator Blog Census.  They include all blogs edited by law professors -- both law-related and non law-related.
  • Please email me the names of any Law Prof Blogs with traffic over the past twelve months that would qualify for inclusion on the lists (295,043 page views and/or 198,950 visitors).  If necessary, I will re-publish the list to include all qualifying blogs.
  • Several popular Law Prof Blogs do not have publicly available SiteMeters and thus are not included on the list:  e.g., California Appellate Report, Credit Slips, The Deal Professor, Dorf on Law, Feminist Law Professors, InstaPundit, Legal Theory, Point of Law. 
  • These rankings cover only those blogs edited by law professors.  Other law-related blogs edited by practitioners, librarians, non-law school academics, and journalists are not included on this list:  e.g., Above the Law, How Appealing, Law Librarian Blog, Wall Street Journal Law Blog.
  • Members of our Law Professor Blogs Network comprise, by both page views and visitors, two of the Top 10, four of the Top 25, and nine of the Top 35 blogs.

April 25, 2012 in Blog Rankings, Legal Education, Tax | Permalink | Comments (0) | TrackBack (0)

Gamage & Shanske: On Tax Increase Limitations

Tax Analysts David Gamage (UC-Berkeley) & Darien Shanske (UC-Hastings), On Tax Increase Limitations: Part II — Evasion and Transcendence, 64 State Tax Notes 245 (Apr. 23, 2012):

In our previous column in this series we argued that tax increase limitations (TILs) are analytically incoherent. [On Tax Increase Limitations: Part I — A Costly Incoherence, 62 State Tax Notes 813 (Dec. 19, 2011).] We further suggested that this incoherence contributes to the observed ineffectiveness of TIL regimes. In this, our second column, we analyze the implications of the incoherent nature of TILs. In particular, we argue that because of their incoherent nature, TILs can be effectively evaded by a legislative majority wanting to do so.

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

April 25, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Senate Holds Hearing Today on What Tax Reform Means for State and Local Tax and Fiscal Policy

Senate LogoThe Senate Finance Committee holds a hearing today on Tax Reform: What It Means for State and Local Tax and Fiscal Policy:

  • Walter Hellerstein (University of Georgia School of Law)
  • Joseph Henchman (Tax Foundation)
  • Kim Rueben (Urban-Brookings Tax Policy Center)
  • Frank Sammartino (Congressional Budget Office)
  • Sanford Zinman (Zinman Accounting, White Plains, NY)

In connection with the hearing, the Joint Committee on Taxation has released Present Law and Background Information Related to State and Local Government Finance (JCX-36-12):

This document ... summarizes tax-exempt and tax-credit bond provisions, the provisions allowing a deduction for certain State and local taxes, and provides select background data relating to State and local bonds and revenues.

April 25, 2012 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

Diamond & Saez: High Tax Rates Won't Slow Growth

Wall Street Journal op-ed, High Tax Rates Won't Slow Growth, by Peter Diamond (MIT, Department of Economics) & Emmanuel Saez (UC-Berkeley, Department of Economics):

The share of pre-tax income accruing to the top 1% of earners in the U.S. has more than doubled to about 20% in 2010 from less than 10% in the 1970s. At the same time, the average federal income tax rate on top earners has declined significantly. Given the large current and projected deficits, should the top 1% be taxed more? Because U.S. income concentration is now so high, the potential tax revenue at stake is large.

But will taxable incomes of the top 1% respond to a tax increase by declining so much that revenue rises very little or even drops? In other words, are we already near or beyond the peak of the famous Laffer Curve, the revenue-maximizing tax rate?

The Laffer Curve is used to illustrate the concept of taxable income "elasticity,"—i.e., that taxable income will change in response to a change in the rate of taxation. Top earners can, of course, move taxable income between years to subject them to lower tax rates, for example, by changing the timing of charitable donations and realized capital gains. And some can convert earned income into capital gains, and avoid higher taxes in other ways. But existing studies do not show much change in actual work being done.

According to our analysis of current tax rates and their elasticity, the revenue-maximizing top federal marginal income tax rate would be in or near the range of 50%-70% (taking into account that individuals face additional taxes from Medicare and state and local taxes). Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s. To reduce tax avoidance opportunities, tax rates on capital gains and dividends should increase along with the basic rate. Closing loopholes and stepping up enforcement would further limit tax avoidance and evasion.

But will raising top tax rates significantly lower economic growth? In the postwar U.S., higher top tax rates tend to go with higher economic growth—not lower. In the postwar U.S., higher top tax rates tend to go with higher economic growth—not lower. Indeed, according to the U.S. Department of Commerce's Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.

April 25, 2012 in Tax | Permalink | Comments (1) | TrackBack (0)

Joint Tax Committee Releases IRS Disclosures of Tax Return Information, 2011

The Joint Committee on Taxation has released Disclosure Report for Public Inspection Pursuant to Internal Revenue Code Section 6103(p)(3)(C) for Calendar Year 2011 (JCX-38-12):

Section 6103(p)(3)(C) provides that the Secretary of the Treasury shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation for disclosure to the public a report which provides, with respect to each Federal agency and certain other entities, the number of: (1) requests for disclosure of returns and return information (as such terms are defined in § 6103(b)); (2) instances in which returns and return information were disclosed pursuant to such requests or otherwise; and (3) taxpayers whose returns, or return information with respect to whom, were disclosed pursuant to such requests. In addition, the report must describe the general purposes for which such requests were made.

Pursuant to § 6103(p)(3)(C), the IRS prepared a disclosure report for public inspection covering calendar year 2011. This document sets forth the report of the IRS.

The report reveals that the IRS made 9 billion (up from 7.1 billion in 2010) disclosures of tax return information to federal and state agencies. Here are the Top 5 recipients of taxpayer information:

  1. States: 6.9 billion disclosures (up from 4.2 billion in 2010)
  2. Bureau of Census: 1.3 billion disclosures
  3. Congressional Committees: 700 million disclosures
  4. Medicare Premium Subsidy Adjustment: 41.0 million disclosures
  5. Child Support Enforcement Agencies: 11.3 million disclosures

April 25, 2012 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

LSAC Responds to Criticism

LSACFollowing up on my prior posts:

The LSAC has issued this response:

Recently, bloggers have posted confusing and out-of-context information about the LSAC. Much of it is exaggerated, and some is flatly wrong. I am writing to make sure you have better information about the organization when you form your views.

  • It is true that fees for the LSAT are scheduled to go up by about 15% next year and the total cost of the test and admissions reports for an applicant who applies to six schools will be about $450. Considered against the total cost of a legal education, this is a very modest sum – about 0.3% of total law school costs. This percentage has been going down over the past decade and, at the same time, the LSAC has expanded its efforts to enable low-income students to avoid the costs entirely (see below). Compared to other professional graduate tests, the cost of the LSAT is quite low – 66% of the cost of the tests for students planning to attend business or medical school.
  • It is also true that the LSAC has a large reserve. Years ago, the Board tried to estimate the number of students who would take the test each year and adjust its price accordingly – lower if we expected lots of students and higher if we expected fewer students. This resulted in large year-to-year swings in our prices (and it turned out to be very difficult to predict how many students would take the test each year). Then, about 20 years ago, we decided to implement a policy of steadier increases which would permit us to build up a reserve when lots of students happened to be applying to law school and to call on that reserve when the numbers went down. (We are an organization with large fixed costs; for example, the cost to produce the test is about the same whether 1,000 or 100,000 students take the test.) Then, for several years (especially in later years up to 2009-2010), many students took the test and we ran surpluses. Now fewer students are taking the test. Next year, we project a deficit in our annual operating budget of about $7.5 million and it looks like we’ll see deficits for several years to come. So we’re now calling on the reserve we’ve prudently built up during the flush years instead of hitting students with huge price spikes.
  • The operating budget deficit is the product of the many things the LSAC does for law students and law schools. More than half of the deficit last year – $3.4 million of it – was caused by the LSAC’s fee waiver program. To do its part to help law schools become more diversified socioeconomically, the LSAC waived its test and application-processing fees for over 9,000 low-income students last year. When the recession hit, the LSAC also increased its direct subsidies to schools to help them weather the storm; for example, the LSAC began to pay more of the costs for admissions staff to attend candidate forums and the annual professional meeting. Finally, the LSAC provides generous support for a variety of diversity initiatives. For example, it probably provides more support than anyone in legal education for diversity pipeline efforts.
  • Some bloggers complain that the compensation for certain LSAC employees is too high. Our employees are well-compensated, but they are not excessively compensated, especially in view of the difficulty and technical complexity of their work. The LSAC Board scrutinizes salaries very closely and regularly commissions professional salary surveys to assess the fairness of our compensation structure. What we pay is fair in the market – not too much or too little.
  • Some bloggers claim that the LSAC spends $1 million per year on lobbying expenses. That is just plain wrong. Over the last three years (which were typical), the LSAC’s lobbying expenses have been less than $25,000 per year.
  • There are those who think the LSAC should confirm each school’s reported LSAT and UGPA scores, and who claim it would be easy to do. The LSAC is in discussions with the ABA to see if it can do this. But it is very wrong to think it will be an easy task. It turns out that the LSAC is missing a crucial piece of information to do this – it doesn’t know which students go to which schools until well after the reporting period and, even then, the LSAC knows only what the schools report. It also turns out that an unknown number of schools – those with variances from ABA Standard 503 – have an unknown number of students who are completely off the LSAC’s radar screen. And many students can legitimately be counted as attending more than one school under current ABA standards. Yes, the LSAC should try to help make this reporting more reliable; the LSAC has already said it will do that if it can solve these problems and do the task well. We’re working on it, but it is a very complicated task.

The LSAC is successful because it provides great value to law students and law schools. Think about what would happen without the LSAC. A student who applies to six law schools would have to pay for six original transcripts and arrange to have them sent to six different places, each of his two or three reference letters would also have to be sent separately to each school, and he might have to take different admissions tests, each of which would involve fees and which wouldn’t be nearly as good as the LSAT at predicting law school success. From the law school side, each school would have to receive, open and organize all these transcripts and reference letters, they’d have to develop software to distribute it within their schools or do it manually, they wouldn’t have information about the grading practices of undergraduate schools, they’d either have no standardized test or a less reliable and valid one, etc., etc. The LSAC does well because it provides great value and great efficiency to both law students and law schools.

The LSAC is by no means perfect. It relies on the hard work and insights of its outstanding staff and of hundreds of volunteers from its member schools who all do their very best to make the LSAC a valuable and responsive organization. It’s a tough environment right now for law schools and affiliated organizations like the LSAC, AALS, and ABA. There is great value in constructive criticism and new ideas, and we welcome them from any and all sources. On the other hand, poorly considered and uninformed complaints are not helpful to the LSAC, law students, or law schools.

Steve Willborn
Chair, LSAC Board of Directors

Brian Tamanaha (Washington U.) responds here.

April 25, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0)