TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, July 18, 2012

Louisville Outspends Financial Aid Budget by 136% to Land 1L Class; School to Eat $2.4m; Admissions Dean Resigns

Louisville LogoThe University of Louisville Louis D. Brandeis School of Law budgeted $550,000 for scholarships to incoming 1Ls, but the school instead offered students $1.3 million. According to a spokesperson, "108 of the 140 incoming students were offered financial aid and two-thirds to three-quarters of them either received an award they shouldn't have gotten or got more than they should have received." The law school has agreed to eat the $2.4 million three-year cost, and the assistant dean for admissions has resigned.

July 18, 2012 in Legal Education | Permalink | Comments (3) | TrackBack (0)

Rosenzweig: The Individual Mandate and the Tax Treatment of Health Insurance

Adam Rosenzweig Rosenzweig(Washington U.), The Individual Mandate and the Tax Treatment of Health Insurance:

The most controversial aspect of the ACA has been the so-called "individual mandate" — or the requirement that all individuals acquire health insurance or face a penalty. ... [F]rom a tax policy standpoint it is interesting to note that there is little substantive difference between an individual mandate and the long-standing treatment of health insurance under the Internal Revenue Code.

Consider the following hypothetical: Erica Chang works for an employer that provides the option to receive $10,000 per year in additional cash compensation or to pay $10,000 in premiums towards health insurance. Section 106 would generally exclude the payment of premiums by the employer from gross income, while the cash would clearly be included in gross income. The power to choose between insurance and cash would typically render the provisions of § 106 inapplicable, but § 125 permits employees to make the choice between health care and cash without endangering the § 106 exclusion. Consequently, if Erica chooses the health insurance, she receives $10,000 in compensation tax free, while if she chooses the $10,000 in cash she has gross income. Assume Erica chooses the cash and pays $3,000 in tax, and then purchases health insurance for $7,000. During the year, Erica needs surgery which costs $15,000. Under either scenario, the health insurance pays the $15,000 and Erica would have no gross income under § 104. By contrast, assume she chooses to receive the $10,000 in cash, pay $3,000 in tax, and then invest $7,000 in stocks rather than purchase health insurance. During the year the stocks appreciate to $15,000, at which time she needs the surgery. Erica sells the stocks to pay for the surgery, resulting in $8,000 of gross income and a tax liability of $1,250.

Notice the consequences. If Erica chooses employer-provided health insurance, she has no tax liability, while if she chooses privately purchased health insurance, she pays a tax "penalty" of $3,000, and if she chooses not to carry health insurance at all she incurs a tax "penalty" of $3,000 plus an additional "penalty" of $1,250 when she does in fact get sick. This is functionally equivalent to an individual mandate to purchase health insurance backed by a tax penalty for failure to do so, calculated in reference to the taxpayer’s income. Thus, §§ 104, 105, and 106 work to substantially replicate the mandate, although in a more implicit manner, for anyone who earns enough salary to pay income taxes. Regardless of the litigation over the ACA’s individual mandate, it seems like a waste of time and energy to endlessly fight over a provision as if it were unprecedented when the basic premise has served as the basis for U.S. tax policy towards health insurance for over fifty years.

July 18, 2012 in Scholarship, Tax | Permalink | Comments (3) | TrackBack (0)

Goodbye Lawyer, Hello Legal Workflow and Process Analyst

Legal Futures:  Goodbye Lawyer, Hello Legal Workflow and Process Analyst:

Innovative legal businesses such as Riverview Law, Co-operative Legal Services and Parabis are demanding a new approach to educating and training new lawyers as they create different roles for them, such as project management and data analysis.

Speaking at last week’s Legal Education and Training Review Symposium in Manchester, Karl Chapman – chief executive of Riverview Law – said he would not employ many lawyers currently available because they do not have the right skills. “They cannot do what’s required in a customer service environment,” he explained.

Riverview is creating a host of new roles – all of which he said need some degree of legal knowledge – such as project managers, scoping and pricing analysts, management information and data analysts, knowledge management specialists and client managers. “Some of best people we’ve got are senior lawyers doing legal workflow and process analysis,” he added. ...

The new roles being created by these businesses are evidence for the predictions of Professor Richard Susskind of how legal jobs will develop in a technology enabled future.

July 18, 2012 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Bloomberg: Law Grad Starting Salaries Are in Free Fall

Gamage & Shanske: The Saga of State 'Amazon' Laws

Tax Analysts David Gamage (UC-Berkeley) & Darien Shanske (UC-Hastings), The Saga of State 'Amazon' Laws: Reflections on the Colorado Decision, 65 State Tax Notes 197 (July 16, 2012):

The battle over states’ attempts to tax remote e-commerce vendors is evolving too rapidly for academic scholarship to keep pace. At any moment, Congress could pass a version of the Marketplace Fairness Act and upend the entire discussion. In the meantime, itself is making a separate peace with many individual states. Nevertheless, this story is far from over. In this column, we comment on an important recent development: the opinion of the Colorado district court in Direct Marketing Association v. Huber, a decision that is now being appealed to the Tenth Circuit.

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

July 18, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

SSRN Tax Professor Download Rankings

SSRNSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through July 1, 2012) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):




All-Time Downloads


Recent Downloads


Reuven Avi-Yonah (Mich.)


Ed Kleinbard (USC)



Paul Caron (Cincinnati)


Reuven Avi-Yonah (Mich.)



Louis Kaplow (Harvard)


Ted Seto (Loyola-LA)



Vic Fleischer (Colorado)


Paul Caron (Cincinnati) 



James Hines (Michigan)


Katie Pratt (Loyola-L.A.)



Ted Seto (Loyola-LA)


Carter Bishop (Suffolk)



Dennis Ventry (UC-Davis)


Louis Kaplow (Harvard)



Richard Kaplan (Illinois)


Jen Kowal (Loyola-LA)



David Walker (Boston U.)


Bridget Crawford (Pace)



Chris Sanchirico (Penn)


Herwig Schlunk (Vand.)



David Weisbach (Chicago)


Brad Borden (Brooklyn)



Carter Bishop (Suffolk)


Christopher Hoyt (UMKC)



Francine Lipman (UNLV)


Wendy Gerzog (Baltimore)



Herwig Schlunk (Vand.)


David Gamage (UCBerkeley)



Katie Pratt (Loyola-LA)


James Hines (Michigan)



Robert Sitkoff (Harvard)


Erik Jensen (Case Western)



Ed McCaffery (USC)


Adam Chodorow (Ariz. St.)



Brad Borden (Brooklyn)


David Weisbach (Chicago)



Jen Kowal (Loyola-L.A.)


Francine Lipman (UNLV)



Bridget Crawford (Pace)


Richard Kaplan (Illinois)



Wendy Gerzog (Baltimore)


Dan Shaviro (NYU)



Steve Bank (UCLA)


Dennis Ventry (UC-Davis)



Dan Shaviro (NYU)


Vic Fleischer (Colorado)



Michael Knoll (Penn)


Marty McMahon (Florida)



Erik Jensen (Case Western)


Heather Field (UC-Hastings)


Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

Continue reading

July 18, 2012 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0) | TrackBack (0)

Adler & Cannon: The Illegal IRS Rule to Expand Tax Credits Under ObamaCare

Following up on my previous post, If ObamaCare Survives, IRS's Authority to Issue Tax Credits to Face Challenge (June 27, 2012):  Jonathan H. Adler (Case Western) & Michael F. Cannon (Cato Institute), Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA, 22 Health Matrix ___ (2012):

The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An IRS rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on employers, the IRS rule is likely to be challenged in court.

Wall Street Journal, Health Law Opponents Challenge Tax Credit:

Two scholars—Michael Cannon of the libertarian Cato Institute think-tank and Jonathan Adler, a law professor at Case Western Reserve University—wrote in a paper published Monday that the IRS rule leaves the agency open to legal action. "The IRS's rule has no basis in law," they wrote. "This supposed fix is actually an effort to rewrite the law and provide for something Congress never enacted."

July 18, 2012 in Scholarship, Tax | Permalink | Comments (3) | TrackBack (0)

Tuesday, July 17, 2012

Death of Tax Court Judge Renato Beghe

Tax Court Logo 2Tax Court Press Release:

Senior Judge Renato Beghe of the U.S. Tax Court died on Saturday, July 7, after a long illness. Judge Beghe has served on the Tax Court since his appointment by President George H. W. Bush on March 26, 1991.

Born in Illinois in 1933, Judge Beghe graduated from the University of Chicago with an A.B. in 1951 and a J.D. in 1954. At the University of Chicago, Judge Beghe was a member of Phi Beta Kappa and the Order of the Coif, and he was co-managing editor of Law Review. Judge Beghe was admitted to the New York Bar in 1955. He practiced law in New York City with Carter, Ledyard and Milburn from 1954 to 1983 and with Morgan, Lewis and Bockius from 1983 to 1989.

July 17, 2012 in Obituaries, Tax | Permalink | Comments (1) | TrackBack (0)

Johnston: Idle Corporate Cash Piles Up

Reuters:  Idle Corporate Cash Piles Up, by David Cay Johnston:

IRS data suggests that, globally, U.S. nonfinancial companies hold at least three times more cash and other liquid assets than the Federal Reserve reports, idle money that could be creating jobs, funding dividends or even paying a stiff federal penalty tax for hoarding corporate cash. ...

July 17, 2012 in Tax | Permalink | Comments (5) | TrackBack (0)

Deborah Jones Merritt: The Risks of Attending Law School

Deborah Jones Merritt (Ohio State), Risky Decisions:

Prospective law students continue to ask:  Should I go to law school?  What law schools are worth attending?  Which ones should I avoid?  Is there a price at which law school offers an acceptable investment? ... I outline here the top five risks that every 0L should consider before attending law school.

  1. The Price Is High
  2. You Buy It, You Keep It
  3. The Legal Job Market Continues to Change
  4. The Law School Admissions Market Is Volatile
  5. You May Not Like Law Practice

If you're considering law school, think about each of these risks as applied to your personal situation. If you have a full-ride scholarship or a lot of money, the price risk may not weigh too heavily for you--although you still need to consider the opportunity costs of attending school for three years. If you've already worked in a law-related organization, and feel comfortable with the profession's downsides as well as its benefits, the risk of disliking practice may be lower for you. But everyone should think through each of these risks, just as you would carefully weigh other life-altering decisions. The law schools will tell you the benefits of attending; it's up to you to identify the risks.

July 17, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Vive France's 75% Tax Rate on the 'Wealthy'

NPR LogoNPR, Vive La France ... And its High Taxes on the Wealthy:

As the French people celebrate their revolution on Saturday, Bastille Day, the founding principles — liberte, egalite and fraternite — seem to be alive and well.

New President Francois Hollande embraced equality on the campaign trail this spring. To reduce the French deficit, he proposed raising taxes on large corporations and the super-rich. ... Hollande's proposal would slap a 75% tax rate on anyone making more than 1 million euros a year, a huge jump from the current top rate of 41%. It would also reinstate some wealth taxes Sarkozy got rid of. ... Polls show 67% of the French say they're ready to pay more taxes to help their country. Chalk that up to the revolutionary spirit of fraternite and egalite.

July 17, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

WSJ: The FATCA Cliff

Wall Street Journal:  Obama's IRS Snoops Abroad, by William McGurn:

Within the United States, almost no American has heard of it. Save for the occasional article, it's gone largely uncovered. And just like ObamaCare, the nastiest, job-killing aspects will not hit until after this November's election.

It's called the Foreign Account Tax Compliance Act, and it's a doozy. With little debate, Fatca was tucked into the Hiring Incentives to Restore Employment Act of 2010—a jobs bill dominated by tax breaks designed to get businesses to hire unemployed Americans.

Fatca was the revenue side of that bill. The theory was that we would pay for the tax breaks by making fat cats hiding money in their overseas accounts pay their "fair share." The reality is that the tax breaks did little to dent unemployment, and the legislation's penalties may end up killing more U.S. jobs than all the call centers in India combined. Delayed once already, Fatca is set to take effect in January 2013.

Strictly speaking, Fatca isn't a new tax—it's a new requirement for reporting overseas financial accounts, backed up by heavy fines. It requires foreign financial banks, investment houses, insurance companies, etc. to identify any Americans among their customers and turn over information about their accounts to the IRS (or to the local government, if that country has a sharing agreement with Uncle Sam). ...

[I]ndeed, in a paper called "Leveling the Playing Field," the White House says "the IRS will hire nearly 800 new employees devoted to international enforcement." It's safe to say that while we will see only a fraction of that $100 billion in revenue, we will bear the full price that a globally empowered IRS can inflict. ...

Whatever the ills of ObamaCare, we are at least now having a debate on the merits. How much better we'd all be if we could say the same about the Foreign Account Tax Compliance Act.

July 17, 2012 in Tax | Permalink | Comments (9) | TrackBack (0)

H&R Block Amends Batman's Tax Return

The 71 Most-Cited Law Faculties

Gregory Sisk, Valerie Aggerbeck, Debby Hackerson & Mary Wells (all of the University of St. Thomas), Scholarly Impact of Law School Faculties in 2012:  Applying Leiter Scores to Rank the Top Third:

This study explores the scholarly impact of law faculties, ranking the top third of ABA-accredited law schools. Refined by Professor Brian Leiter, the “Scholarly Impact Score” for a law faculty is calculated from the mean and the median of total law journal citations over the past five years to the work of tenured members of that law faculty. In addition to a school-by-school ranking, we report the mean, median, and weighted score for each law faculty, along with a listing of the tenured law faculty members at each ranked law school with the highest individual citation counts.

1.   Yale
2.   Harvard
3.   Chicago
4.   Stanford
5.   NYU
6.   Columbia
7.   UC-Irvine
8.   Vanderbilt
9.   Cornell
10.  UC-Berkeley
11.  Pennsylvania, Duke
13.  Northwestern
14.  UCLA
15.  Michigan
16.  Virginia, George Washington
18.  Georgetown
19.  Minnesota, Texas
21.  Boston University, George Mason
23.  UC-Davis
24.  USC, Cardozo
26.  Emory, Washington University
28.  Illinois, Colorado
30.  Ohio State, University of St. Thomas, Washington & Lee
33.  Hofstra, Arizona, Indiana, North Carolina, Florida State
38.  UC-Hastings, Notre Dame, Case Western
41.  Brooklyn, William & Mary
43.  Fordham, Maryland
45.  Houston, UNLV
47.  Utah, American, Alabama, Pittsburgh, Iowa
52.  Hawaii, San Diego, Chicago-Kent, Arizona State, Boston College
57.  New York Law School, BYU, Georgia, Tulane, Florida, Missouri, Temple
64.  Seattle, Wake Forest, Seton Hall, Penn State, Rutgers-Camden, Chapman, Wisconsin, Cincinnati

Here are the 19 Tax Profs among the 10-most cited faculty at the Top 71 law schools:

2.   Harvard:  Louis Kaplow
3.   Chicago:  David Weisbach
19.  Minnesota:  Kristin Hickman
23.  UC-Davis:  Dennis Ventry
24.  USC:  Elizabeth Garrett, Ed McCaffery, Nancy Staudt
24.  Cardozo:  Ed Zelinsky
28.  Colorado: Vic Fleischer
33.  Florida State:  Joseph Dodge
33.  Indiana:  Leandra Lederman
33.  North Carolina:  Greg Polsky
47.  Alabama:  Susan Pace Hamill
52.  Chicago-Kent:  Evelyn Brody
57.  BYU:  Cliff Fleming
57.  Georgia:  Walter Hellerstein
57.  Tulane:  Marjorie Kornhauser
57.  Florida:  Marty McMahon
64.  Cincinnati:  Paul Caron

July 17, 2012 in Law School Rankings, Legal Education, Scholarship, Tax | Permalink | Comments (2) | TrackBack (1)

Shaviro: Why Won't Romney Release His 2009 Tax Return?


Dan Shaviro (NYU), Why Won't Romney Release His 2009 Tax Return?:

Increasingly, everyone (including Republicans such as George Will, Matthew Dowd, and William Kristol) agrees that the reason for Romney's reluctance to release any pre-2010 tax return might be that what it would show is worse than all the heat he is taking for non-disclosure.

But what could that be?  Well, I certainly don't know either, but here are some salient points:

1) We know from the 2010 tax return, in which he had a net capital loss carryforward from 2009, that he zeroed out his net capital gains - including from carried interest Bain income - in 2009.

2) 2009 was the last year in which he received certain Bain payments as the playout of his "retroactive retirement."

3) It's been hard to understand what benefit he thought he was getting from the Swiss bank account, and there was an IRS amnesty program in 2009 for fraudulent nondisclosure of offshore income.  If he had to come clean in 2009, this might be embarrassing, especially given that there was an iron fist inside the IRS leniency offer (i.e., if you held out, they might get you without any amnesty).

From the first two items above, it may be a reasonable guess that Romney had a lot more gross income in 2009 than 2010 and 2011, yet paid less tax or even zero tax.

July 17, 2012 in Political News, Tax | Permalink | Comments (13) | TrackBack (0)

Kahn & Waggoner: A Compromise on Dividend and Capital Gains Tax Rates

Tax AnalystsDouglas A. Kahn (Michigan) & Lawrence W. Waggoner (Michigan), Retirees Beware: Don't Worry About the British -- 2013 is Coming, 136 Tax Notes 107 (July 2, 2012):

[T]he authors propose a compromise for dividends and capital gains taxation. Instead of taxing dividends as ordinary income and most long-term capital gains at a flat 20% rate, their compromise would apply a progressive tax rate schedule to both. They would aggregate all net capital gains and qualified dividends into a single figure.

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

July 17, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Monday, July 16, 2012

ABA to Toughen Bar Passage Accreditation Standard

ABA LogoABA Journal, ABA Committee to Revisit Bar Passage Accreditation Standard:

An ABA committee appears to be having second thoughts about its tentative decision last year not to recommend any changes in the law school accreditation standard dealing with bar passage rates.

What precipitated the collective change of heart? A preliminary analysis of attrition rates for candidates who sat for the multistate bar exam in July 2006 that appears to show how ineffectual the current standard is.

That analysis, performed by staffers at the National Conference of Bar Examiners, found that out of the nearly 31,000 law school graduates it could identify who took the test at that time, less than 1%, or 248 graduates, were still sitting for the bar on its fifth administration, 2½ years later. By its 10th administration, five years later, only 13 graduates who took the test in July 2006 were still sitting for the bar.

Under the current standard, a law school can meet the bar passage requirement in one of three ways:

  • It can demonstrate that 75% of its graduates in the previous five years who took the bar passed.
  • It can demonstrate that in at least three of the past five years, 75% of its graduates who took the bar passed.
  • It can demonstrate that its first-time bar passage rate in at least three of the previous five years was no more than 15 points below the average bar passage rate for ABA-approved law schools in the states where its graduates took the bar.

In the past, the Section of Legal Education and Admissions to the Bar’s Standards Review Committee, which is working on a comprehensive overhaul of the law school accreditation standards, has kicked around the idea of strengthening the bar passage standard either by raising the 75% threshold to 80%, lowering the 15% requirement to 10%, or reducing the five-year time frame to three years.

But the committee had tentatively decided last year not to make any substantive changes in the existing standard, fearing among other things that it might lead law schools to take fewer risks in deciding who to admit and affect their willingness to recruit and enroll minority students because minority test-takers tend to score lower on the bar exam than nonminorities.

That all appeared to change after the committee, which met over the weekend in Chicago, was briefed on the results of the NCBE analysis of test-taker attrition rates by committee member Erica Moeser, its president and CEO, who has called for a tougher bar pass standard.

Committee chair Jeffrey Lewis,a professor and former dean at St. Louis University School of Law, said the NCBE’s figures seemed to render the five-year window for meeting the requirement in the current standard meaningless. “Why have an out for schools that doesn’t represent anything?” he asked.

July 16, 2012 in Legal Education | Permalink | Comments (3) | TrackBack (0)

NY Times: How to Reduce Inequality: Get (and Stay) Married

New York Times:  Economic Inequality and the Changing Family, by Jason DeParle:

[T]he widening in many measures of inequality can be traced in part to changes in marriage patterns, rather than just changes in individual earnings. A number of scholars have looked at the varied dimensions of this thesis — growing inequality, changes in family structure, and the connection between the two. Here is a look at some of their findings....

An interesting pattern over the last four decades is that inequality has grown much faster for households with children than it has for households over all — an indication that changes in family structure (as opposed to wages and employment alone) have increased inequality.

Bruce Western and Tracey Shollenberger of the Harvard sociology department compared households at the 90th percentile and the 10th percentile. In 1970, the top households had 8.9 times the income of the bottom. By 2011 they had nearly 11.7 times as much — inequality between them grew 31%. But among households with children it grew 121%. (The ratio went from 4.8 in 1970 to 10.6 last year.)

Changes in family structure may explain anywhere from 15 to 40 percent of the increased inequality in recent decades.

July 16, 2012 in Tax | Permalink | Comments (19) | TrackBack (0)

Mankiw: Middle Class Receives More in Government Benefits Than They Pay in Taxes

N. Gregory Mankiw (Harvard University, Department of Economics), The Progressivity of Taxes and Transfers:

Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received. For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):

Bottom quintile: -301%
Second quintile: -42%
Middle quintile: -5%
Fourth quintile: 10%
Highest quintile: 22%

Top one percent: 28%

The negative 301% means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.

The most surprising fact to me was that the effective tax rate is negative for the middle quintile.  According to the CBO data, this number was +14 percent in 1979 (when the data begin) and remained positive through 2007.  It was negative 0.5 percent in 2008, and negative 5% in 2009.  That is, the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.

July 16, 2012 in Tax | Permalink | Comments (11) | TrackBack (0)

Fall 2012 Law Review Article Submission Guide

Nancy Levit (UMKC) & Allen Rostron (UMKC) have updated their incredibly useful document, which contains two charts for the Fall 2012 submission season covering 202 law reviews.

The first chart (pp. 1-52) contains information gathered from the journals’ websites on:

  • Methods for submitting an article (such as by e-mail, ExpressO, or regular mail)
  • Any special formatting requirements
  • How to request an expedited review
  • How to withdraw an article after it has been accepted for publication elsewhere

The second chart (pp. 53-59) contains the ranking of the law reviews and their schools under six measures:

  • U.S. News: Overall Rank
  • U.S. News: Peer Reputation Rating
  • U.S. News: Judge/Lawyer Reputation Rating
  • Washington & Lee Citation Ranking
  • Washington & Lee Impact Factor
  • Washington & Lee Combined Rating

They also have posted a list of links to the submissions information on each law journal’s website.

July 16, 2012 in ABA Tax Section, Law School Rankings, Legal Education, Scholarship | Permalink | Comments (0) | TrackBack (0)

TIGTA: IRS Did Not Follow Law in 22% of Seizures of Taxpayers' Property

TIGTA The Treasury Inspector General for Tax Administration today released Fiscal Year 2012 Review of Compliance With Legal Guidelines When Conducting Seizures of Taxpayers’ Property (2012-30-072):

TIGTA reviewed a random sample of 50 of the 747 seizures conducted from July 1, 2010, through June 30, 2011, to determine whether the IRS is complying with legal and internal guidelines when conducting each seizure. In the majority of seizures, the IRS followed all guidelines, and TIGTA did not identify any instances in which the taxpayers were adversely affected. However, in 11 seizures, TIGTA identified 14 instances in which the IRS did not comply with a particular I.R.C. requirement. Specifically, TIGTA found:

  • The sale of the seized property was not properly advertised. (I.R.C. § 6335(b))
  • The amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer. (I.R.C. § 6335(a))
  • Proceeds resulting from the seizure were not properly applied to the taxpayer’s account. (I.R.C. § 6342(a))
  • Information relating to the sale of the seized property was either incorrect or not provided to the taxpayer. (I.R.C. § 6340(c))
When legal and internal guidelines are not followed, it could result in the abuse of taxpayers’ rights.

July 16, 2012 in Gov't Reports, IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

NYC Bar Forms Task Force to Study 'Plight of Young Lawyers'

NYCNew York City Bar Association, Task Force on New Lawyers in a Changing Profession:

The Manhattan and Brooklyn District Attorneys; New York City’s Corporation Counsel; Deans and leaders of Columbia, Harvard, Georgetown, CUNY and Cardozo Law Schools; law firm leaders from Paul Weiss, Simpson Thacher, Skadden Arps and Freshfields; the chief in-house counsel from BNY Mellon, Morgan Stanley, Pfizer, Xerox and Con Ed; and the heads of The Legal Aid Society and Legal Services of New York are among those convening at the New York City Bar Association to address what City Bar President Carey Dunne has described as the “plight of young lawyers.”

Noting that recent ABA statistics show that only 55% of recent law graduates found full-time legal employment and that clients increasingly are unwilling to have new lawyers staffed on their matters, Dunne said, “Too many law graduates face diminished opportunities to launch their careers and fear they will never get on track. Even those who are employed are justifiably worried about their longer-term prospects for a productive and satisfying career in the law. Whether these recent changes are temporary or reflect a more fundamental shift in the structure and operation of the legal profession, the time has come for the leaders of our profession to respond.”

The New York City Bar Association’s “Task Force on New Lawyers in a Changing Profession” will be led by City Bar Vice President Mark Morril, who said, “The group we have assembled has the depth and breadth of experience necessary to assess the problem and the leadership position to be heard on significant recommendations for change if they are warranted.”

Members of the task force, which will convene in September and plans to issue a report next summer, are listed below. The group also expects to add several law students or new lawyers to its ranks.

July 16, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0) Lowest Tax Rates in 30 Years

FactCheck  Tax Facts: Lowest Rates in 30 Years:

Politicians talk about the burden of taxes incessantly. Now comes a rare chance to check the facts. And the fact is that federal tax rates had fallen to the lowest in 30 years when President Barack Obama took office — and fell again in his first year in office.

This news comes from the nonpartisan Congressional Budget Office, which just issued the latest update of its invaluable series on Distribution of Household Income and Federal Taxes ... Much of the decline in 2008 and 2009 was due to the collapsing economy. ... But some of the decline was also due to the tax cuts contained in Obama’s 2009 stimulus package, including a tax credit that benefited nearly all workers. Despite Republican criticisms, and Obama’s own campaign promise to raise taxes on upper-income households, the new president was a tax cutter in 2009.

The CBO figures show rates have declined substantially for all income levels. In fact, the only group for which rates did not reach a 30-year low in 2009 was households in the top 1% of all earners.

... [W]ho are the top 1%? The CBO sorts them out as those with incomes starting at $282,900 for a single person, or $565,800 for a family of four in 2009.

As we’ve noted before, the nation’s current string of trillion-dollar deficits results from historically high spending and historically low revenues. We noted in our June 4 article that President Obama’s spending levels are near the highest level since World War II, measured as a percentage of the nation’s gross domestic product. And we also noted that tax receipts were the lowest since 1950, as a percentage of GDP.

July 16, 2012 in Tax | Permalink | Comments (8) | TrackBack (0)

Henderson: The Shifting Bi-Modal Distribution of Entry-Level Lawyer Salaries

Bill Henderson (Indiana) posted this chart on our sister Legal Whiteboard blog showing the dramatic change in the bi-modal distribution of entry-level lawyer salaries from 2007 to 2011:

See Bill's entire post for his perceptive description of the problem, analysis of the structural changes occurring in large law firms, and long range solutions for law firms and law schools.

Update:  New York Times:  The Toppling of Top-Tier Lawyer Jobs, by Catherine Rampell:

The median salary for graduates of the law school class of 2011 was $60,000, which was 17 percent lower than it had been just two years earlier, according to a new report from the Association for Legal Career Professionals (NALP).

But if you know anything about the bizarre market that is legal hiring, you know that the median salary tells you zilch.

Few people actually earn anywhere near the median (or mean). Instead, for years salaries for newly minted lawyers have been “bimodal,” meaning they’ve generally sorted into two levels: the $160,000 earned by first-year associates at big, white-shoe law firms, and the $40,000-to-$65,000 range earned by lawyers at smaller law firms, government jobs and so on. ...

You’ll also notice that the other cluster of salaries, the one on the left side, has gotten a little larger. In 2009, salaries in the $40,000-to-$65,000 range collectively accounted for 42 percent of reported salaries; in 2010, 48 percent; and in 2011, 52 percent.

The growth in that left-side hump reflects not only fewer $160,000 jobs, but also the creation of new second-tier, non-partner-track jobs. ... If you want to put a positive spin on these trends, you could argue that these new types of jobs are a potential benefit of the implosion in the legal hiring market: law firms, risk-averse as they are, realized that the one-size-fits-all, standard partner-track system was broken, and they have been getting more creative about establishing alternate work arrangements. The “work-life balance” benefits of these new jobs are certainly what the firms themselves emphasize, anyway. New and heavily indebted lawyers may not get the six-figure salaries they expected, but at least more choice in career path may be available to them later on.

July 16, 2012 in Legal Education | Permalink | Comments (2) | TrackBack (0)

NY Times: An Existential Crisis for Law Schools

NY TimesNew York Times op-ed:  An Existential Crisis for Law Schools, by Lincoln Caplan (Editor & President, Legal Affairs):

July is the cruelest month for recent law school graduates. State bar exams next week are make-or-break affairs, determining how many will be allowed to practice law. Those exams once set a graduate on the path to a lifelong career. Not anymore. A huge number of new graduates, if lucky enough to find work, will not be employed in legal jobs that require passing the bar.

Only 55% of 43,735 graduates in 2011 had a law-related job nine months after graduation, said William Henderson of the Indiana University Maurer School of Law, who analyzed recent data from the ABA. 28% were unemployed or underemployed. And at the 20 law schools with the highest employment, 83% of graduates were working as lawyers. At the bottom 20, it was a dismal 31%.

These numbers are far worse than jobs data going back a generation and should be a deep embarrassment to law schools, which have been churning out more graduates than the economy can employ, indulging themselves in copious revenues that higher tuitions and bigger classes bring in. A growing list of deans acknowledge that legal education is facing an existential crisis, but the transformation to a more sustainable model will be difficult and messy. ... Law schools will be crushed if they don’t remake themselves, said Frank Wu, dean of Hastings College of the Law at the University of California in San Francisco. “This is Detroit in the 1970s: change or die.”

Hastings, for example, is reducing the number of its J.D. students by 20% in the next three years. It trimmed staff jobs to cut costs, and it increased the teaching load of each faculty member by 20% to reduce the need for adjunct professors, among other reasons. But Mr. Wu says the school has no plans to cut the size of its full-time faculty or its compensation or tuition -- and tuition is an unavoidable problem.

Brian Tamanaha reports in “Failing Law Schools” that in-state annual tuition at public law schools rose to an average of $18,472 in 2009 from $2,006 in 1985, and tuition at private law schools increased to $35,743 from $7,526. A lot of money went to raising faculty salaries. With salary and summer pay, the average now is likely close to $170,000 -- and some law professors make $350,000 or more.

As tuition has soared, so has student debt. Nearly 9 out of 10 graduates have sizable debt, with $98,500 the average for the class of 2010, or about $1,200 a month in loan payments over 10 years. Most schools and many students have banked on students’ being able to pay back enormous loans with ample salaries, but that flawed model is irretrievably broken.

It will be hard for any school to alter its cost structure without making substantial changes to its faculty and pay. ... The ABA, which accredits law schools, could help by allowing much more experimentation and differentiation among schools -- and by being much more skeptical of diploma mills. ... Law schools need to be pragmatic, ... finding ways to ensure that graduates can afford to take jobs where the salary is less important than the impact.

July 16, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0) Is ObamaCare the Biggest Tax Increase in American History?

FactCheck  Biggest Tax Increase in History?:

Will “Obamacare” be the largest tax hike in US history?

Several readers have asked us about this since Rush Limbaugh made a hugely exaggerated claim that the new health care law is “the biggest tax increase in the history of the world.” ...

is this increase the largest in American history? Perhaps -- as measured by the rather useless yardstick of raw dollars, with no adjustment for inflation. We rely here on recently updated tables from U.S. Treasury Department tax analyst Jerry Tempalski, whose 2006 paper on “Revenue Effects of Major Tax Bills” is the standard reference for making such comparisons. ...

By this measure, the Affordable Care Act’s $76.8 billion in revenue increases tops the $65.9 billion for the highest single year for Bill Clinton’s 1993 deficit reduction bill, which Republicans have for years attacked as the biggest in history. But as we’ve said before, that attack is misleading, and the raw-dollar measure is a poor way to measure the size of a tax increase.

For one thing, that measure doesn’t take account of inflation. Using “constant” dollars -- all adjusted to equal the value of a dollar in 2009 -- the ACA drops to fourth place, and the tax increase signed in 1982 by President Reagan becomes the largest since 1968.

But even this measure takes no account of a population that is steadily rising. Today’s population is 82 million higher than it was at the time of Reagan’s 1982 increase, and 56 million higher than it was when Clinton signed the 1993 increase. So the average tax increases in those years was accordingly higher on a per-person basis than the ACA.

Incomes are also up since those times -- even adjusting for inflation, and despite declines since the economic crisis of 2008. So the effect on the average person’s paycheck would be reduced even further, compared to earlier increases.

So what is the best yardstick for measuring changes in taxation?  “The single best measure for most purposes is probably the revenue effect as a percentage of GDP, because it eliminates the effects of inflation, real economic growth, and the size of total federal receipts,” Tempalski wrote in 2006. We concur, as do most tax experts we know of.

And by that measure, the revenue increases in the ACA are smaller than most of the increases enacted since 1968 -- and less than one-quarter the size of the largest.

July 16, 2012 in Political News, Tax | Permalink | Comments (2) | TrackBack (0)

WSJ: Tax Shelters for the Rest of Us

WSJ ChartWall Street Journal:  You Don't Have to Be Rich to Use These Tax Shelters, by Brett Arends:

Is your portfolio ready for higher taxes?

The Bush-era tax cuts might well be extended again this year, at least for most taxpayers. But the long-term picture is less rosy.

Today's tax rates on investments are low by historical standards, with long-term capital gains and stock dividends taxed at a maximum rate of 15% each, versus 28% and 39.6%, respectively, at one point during the 1990s.

It is hard to see this lasting. Without sharp tax increases, says the Congressional Budget Office, the national debt will quickly skyrocket to unsustainable levels—even after accounting for budget cuts. Meanwhile, two new taxes related to the health-care overhaul will take effect next year on higher-income taxpayers: a 3.8% tax on net investment income and a 0.9% increase in the Medicare tax.

Here are some ways to shelter your assets before new rates kick in.

  • Sell your winners early
  • Buy municipal bonds
  • Buy a home
  • Max out your Roth IRA
  • Check the math on your 401(k)
  • Consider other tax shelters

July 16, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Sunday, July 15, 2012

TaxProf Blog Weekend Roundup

IRS Bogarts Medical Marijuana Pharmacy's Deductions, Drives Founder Into Bankruptcy

Marijuana Following up on my earlier post:  Forbes: Owner of Nation's First Marijuana Pharmacy Now Broke and Fighting IRS, by Janet Novack:

Lynnette M. Shaw, the colorful pot activist who opened the first licensed medical marijuana dispensary in the United States, is fighting an IRS bill for $1.27 million in back income taxes and penalties and has filed for personal bankruptcy, listing $276,000 in state sales taxes among her debts.

Shaw was forced to shut her Marin Alliance for Medical Marijuana in Fairfax, Ca. late last year, after U.S. Attorney for Northern California Melinda Haag wrote a letter to her landlord threatening to seize the building that housed her operation. The letter was part of a coordinated crackdown by four U.S. Attorneys in California on marijuana dispensaries. ...

Shaw’s personal income tax troubles stem from an IRS decision to deny business expense deductions to marijuana dispensaries under a provision Congress passed in 1982 (§ 280E) that disallows deductions for “trafficking in controlled substances” as “prohibited by Federal law or the law of any State in which such trade or business is conducted.” Surprisingly, Shaw never incorporated the dispensary—as either a for-profit or not-for-profit corporation. Instead, she ran it as a sole-proprietorship, reporting its $1 million plus in annual sales and all its expenses on Schedule C of her individual 1040 tax return.

Shaw’s previously unreported lawsuit filed in U.S. Tax Court late last month, shows that rather than reporting profits, she reported losses totaling $186,826 in 2008 and 2009. After denying all her expenses for everything from cannabis to utilities, IRS auditors calculated Shaw had taxable income of $2.83 million for those years. This past March it sent her a bill for $1.27 million n back taxes and penalties, plus an as yet uncalculated amount of interest. Shaw says she owes nothing. (Harborside, which is incorporated, has reportedly been hit with a $2.5 million IRS bill; according to the U.S. Tax Court docket, it filed suit challenging the assessment in December.)

Shaw’s suit argues that the IRS is ignoring state laws legalizing medical marijuana as well as a 2007 U.S. Tax Court decision (Californians Helping To Alleviate Medical Problems, Inc.) that was decided largely in favor of another, now closed, marijuana dispensary. In the CHAMP case, the IRS conceded that 280E doesn’t preclude deducting the cost of goods sold (i.e. the cost of the cannabis). The court also ruled that CHAMP could deduct the cost of providing extensive counseling and caregiving services to its members, although not the cost of actually distributing the marijuana.

The title of this blog post is courtesy of Country Joe and the Fish:

Don't bogart that joint, my friend
Pass it over to me.
Don't bogart that joint, my friend
Pass it over to me.

July 15, 2012 in Celebrity Tax Lore, Tax | Permalink | Comments (12) | 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, with some reshuffling of positions among the Top 5:

1.  [1870 Downloads]  Death and Taxes and Zombies, by Adam Chodorow (Arizona State)

2.  [281 Downloads]  Making Voluntary Disclosures to the IRS, by John A. Townsend (Houston)

3.  [261 Downloads]  How the Affordable Care Act Will Create Perverse Incentives Harming Low and Moderate Income Workers, by David Gamage (UC-Berkeley)

4.  [257 Downloads]  Does the Taxing Clause Give Congress Unlimited Power?, by Erik M. Jensen (Case Western)
5.  [174 Downloads]  The Empire Strikes Out: The IRS & The Ambiguities of Tax Accounting, by Luke R. Hornblower (J.D. 2012, Loyola-L.A.)

July 15, 2012 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Mechanics of President Obama's Proposal to Raise Taxes on the 'Rich'

Saturday, July 14, 2012

Argentine President: Criticize Me, the Taxman Will Punish You

ArgentinaNew York Times:  The Tax Man Cometh, by Daniel Politi:

If you want to publicly criticize Argentina’s government, make sure all your tax filings are in order.

That was the thinly veiled message President Cristina Fernández de Kirchner sent Wednesday near the end of a speech broadcast on all national television and radio stations. Reiterating her standard criticism that media “operations” are depressing Argentinians with gloom-and-doom stories, she derided an article published last Sunday. ... In the story, the owner of a real-estate agency, one of its directors and an employee were quoted complaining that recent government measures essentially blocking the sale of foreign currency to citizens had paralyzed their business.

Kirchner then dropped this bit of information: the firm in question hasn’t filed taxes since 2007 and neither has the director quoted in the story, whom she named.

How did she know? She had called up the head of the tax agency to ask, and this, too, she openly revealed on Wednesday’s broadcast. ... [B]y saying that she had called the taxman out of supposed concern for the real-estate agency, she unabashedly established cause and effect: you criticize me; I punish you. 

July 14, 2012 in Celebrity Tax Lore, Tax | Permalink | Comments (3) | TrackBack (0)

IRS Stops Companies From Evading Repatriation Tax

IRS Logo 2Bloomberg:  IRS Ends Deals That Let Companies Avoid Repatriation Tax, by Richard Rubin:

The IRS will prevent companies from entering into transactions that allow them to tap their offshore cash stockpiles without paying taxes, the government said. “The IRS and the Treasury Department believe that these transactions raise significant policy concerns,” the agencies said in a notice today [Notice 2012-39]. The government plans to write regulations to enforce the change, and those rules will take effect today. “This is what they do when they want to close down a transaction they find objectionable and they don’t know exactly how they want to do it,” said Robert Willens, a corporate tax consultant in New York....

The IRS notice describes two types of transactions it is trying to prevent and says the agency is “aware” that taxpayers are engaging in them. One involves selling a patent from a U.S. company to a foreign subsidiary without triggering an immediate U.S. tax. In the other type of transaction, a company uses its offshore money to purchase a U.S. company and quickly reorganizes to move the purchased company outside the U.S. Willens said the second transaction is likely the way that New Brunswick, New Jersey-based Johnson & Johnson (JNJ) used one of its foreign subsidiaries to purchase Synthes Inc., based in West Chester, Pennsylvania.

July 14, 2012 in IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

CBPP: A Federal Renters’ Tax Credit

Chart 1Center on Budget and Policy Priorities, Renters’ Tax Credit Would Promote Equity and Advance Balanced Housing Policy:

Over the past several decades, the nation’s housing policy has focused predominantly on increasing homeownership.  Most federal housing expenditures now benefit families with relatively little need for assistance.  About 75 percent of federal housing expenditures support homeownership, when both direct spending and tax subsidies are counted.  The bulk of homeownership expenditures go to the top fifth of households by income, who typically could afford to purchase a home without subsidies.  Overall, more than half of federal spending on housing benefits households with incomes above $100,000.

Meanwhile, low-income renters are far more likely than higher-income households to pay a very high share of their income for housing and to face other serious housing-related problems.  Research has shown that rental assistance sharply reduces homelessness and housing instability — conditions that have a major long-term impact on children’s health and development — and generates other important benefits.   Yet, federal rental assistance programs only reach about one in four eligible low-income renters, due to funding limitations. 

The time is right to implement a more balanced housing policy.  Policymakers in both parties have proposed reforms to homeownership tax expenditures that would make them more efficient andraise added revenues to reduce the deficit.  The Bowles-Simpson and Rivlin-Domenici deficit reduction commissions and the Bush Administration’s Advisory Panel on Federal Tax Reform each proposed to convert the mortgage interest deduction to a credit that would increase revenues and reach a broader share of low- and middle-income homeowners.  Congress could further improve the effectiveness and fairness of the nation’s housing expenditures by directing a modest share of the savings from reform of homeownership subsidies to address part of the unmet need for housing assistance among lower income renters, in the form of a federal renters’ tax credit.

July 14, 2012 in Tax, Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

Friday, July 13, 2012

Holy Taxation, Batman! H&R Block Messes Up Bruce Wayne's Taxes

Kay Bell notes that H&R Block's flashy campaign -- Superhero Economics: Bruce Wayne (Batman) v. Peter Parker (Spiderman) -- wrongly asserts that Batman would not be liable for any federal income tax on his $143 million income because of his $279 million of charitable giving:

Batman Spiderman

Section 170(b)(1)(A) limits the charitable deduction to 50% of the taxpayer's adjusted gross income. So Batman would be taxable on roughly $72 million, leaving over $200 million of the charitable contribution deduction to be carried over to future years.


Update:  H&R Block has corrected its mistake:


July 13, 2012 in Celebrity Tax Lore, Tax | Permalink | Comments (9) | TrackBack (1)

Lindgren: Over 30% of President Obama’s 2009-11 Income Came From Foreign Sources

The Volokh Conspiracy:  Over 30% of President Obama’s 2009-2011 Gross Income Came From Foreign Sources, by James Lindgren (Northwestern):

I find it strange that the Obama campaign would be making so much of Romney’s income from foreign sources when Obama’s foreign source income appears to be a much bigger percentage of his income over the last few years. Of course, one can’t tell for sure because Mitt Romney has not released his 2009 tax return.

Yet in the three tax years in which Barack Obama has been President (2009, 2010, and 2011), fully 30.1% of the Obamas’ gross income has come from foreign sources: ($2,711,340 out of a 3-year total gross income of $8,993,449).  In 2009, 26.5% of the Obamas’ gross income came from foreign sources. In 2010 it was a whopping 41.4%, and in 2010 it was 30.2%.

The salary that we taxpayers pay him as President (just under $1.2 million over the 3 years) accounted for less than 13% of the Obamas’ income, a share dwarfed by their 30% from foreign sources over the same period.

From 2009 through 2011, the Obamas paid $87,429 in foreign taxes, which they applied toward a credit to reduce their U.S. tax bill.  The amounts I examined are reported on Form 1116, of which there are two filed along with their 1040 when they had both general and passive foreign income.

Their returns do not disclose which foreign countries are responsible for paying the Obamas the $2.7 million in foreign source income, but the overwhelming bulk of it must come from payments resulting directly or indirectly from book sales.

July 13, 2012 in Political News, Tax | Permalink | Comments (4) | TrackBack (0)

The Rich Are Passing Up Opportunity to Make $10 Million Tax-Free Gifts by Dec. 31

Bloomberg:  Rich Passing Up $10 Million Opportunity to Gift Tax-Free:

John Glass expanded his family business to more than 90 employees from seven workers over four decades. Last year, U.S. tax laws prompted him to gift about $2 million of company stock to his three daughters. Glass, 70, and his wife are debating passing on more of their interest in Illco Inc. ... before the lifetime tax exclusion on gifts of as much as $10.24 million per couple expires Dec. 31. Like the majority of America’s wealthiest families, they’ve yet to take full advantage of an opportunity wealth advisers call unprecedented.

Families can save millions in taxes by making large gifts, said Lisa Featherngill, a managing director at San Francisco-based Wells Fargo & Co.’s Abbot Downing wealth-management unit. Fewer than 10% of clients with at least $10 million have used even part of the exemption or plan to by December, said two-thirds of certified public accountants surveyed by the American Institute of CPAs. The New York-based group collected data from 227 accountants who also are financial planners. ...

About 59% of accountants surveyed said their clients who have or will use the gift-tax exemption are giving $1 million or less, data from the American Institute of CPAs report show. The study is scheduled to be released this month. For families with more than $100 million, deciding to transfer as much as $10 million now may be an easier decision because it’s a much smaller percentage of their net worth. ... Many are setting up irrevocable trusts for children or grandchildren and transferring assets such as second homes that have the potential to appreciate.

July 13, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Reactions to Yale's Ph.D. in Law

Yale LogoFollowing up on Wednesday's post, Yale Launches Nation's First Ph.D. in Law:  here are some law professor reactions:

July 13, 2012 in Legal Education | Permalink | Comments (4) | TrackBack (0)

NPR: Did Steve Nash Sign with the L.A. Lakers for Tax Reasons?

NashNational Public Radio, 'Sports Tax Man' Is a Financial Quarterback:

NPR's Kevin Leahy consulted an accountant who calls himself the Sports Tax Man. ...

KEVIN LEAHY: Last week, point guard Steve Nash was on the market. Nash is Canadian, beloved in his home country. And the Toronto Raptors wanted him badly. ...

RAY RAIOLA: The way I like to look at it, he'll receive 50 cents on a dollar.

LEAHY: That last voice belongs to Robert Raiola, CPA. On Twitter, he's known as Sports Tax Man. Raiola ignored the Prodigal Son storyline and referred to a new Canadian tax law.

RAIOLA: In 2012, the top rate in the province of Ontario is 48%. In 2013, the top rate will be 49.5%.

That means Nash would pay more tax in Toronto than if he signed in, say, California. Suddenly a big offer from the Raptors doesn't look quite as enticing. Raiola doesn't work for Steve Nash, but it's his job to think this way. He calls himself a financial quarterback. ...

As for Steve Nash, the Canadian? He wound up signing with the Los Angeles Lakers. He'll play with Kobe Bryant, soak up the sunshine and avoid those steep Canadian taxes.

(Hat Tip: Nicole Zumwalt.)

July 13, 2012 in Celebrity Tax Lore, Tax | Permalink | Comments (6) | TrackBack (0)

California Public Radio: Do Higher Taxes Cause People to Move?

KpccSouthern California Public Radio, Do Higher Taxes Cause People to Move?:

While most Americans these days feel that any tax is too high, some could be taking such resentment to the next level.

In a Maryland study, researchers found a net loss of 31,000 residents moving elsewhere between 2007 and 2010. This decrease coincided with a “millionaire’s tax” put forth by Governor Martin O’Malley. Change Maryland, the anti-tax group which released the study, claims that the tax, which imposed a 6.25 rate on those with incomes exceeding $1 million, is partly to blame for this exodus. Essentially, critics of such taxes assert that wealthy individuals and families are moving to states with lower income taxes. The group claims that Florida, which has no state income tax, has especially benefited from the fleeing Marylanders.

But others don’t feel this claim has any weight. For instance, people every year all across the country move to Florida for the weather, too. And what about here in California? The marginal rate for the wealthy is already fairly high, and could increase. Will we see an exodus in our state? Due to Maryland’s irregular size and borders, it has easy access to several states with the same basic geography and climate. That can’t exactly be said here. A move would be drastic.

You hear about NBA players avoiding certain teams due to high taxes, but do non-professional athletes have the same luxury of choice? Have you ever moved because of taxes? Would you ever give up the weather of the Southland for, heaven forbid, Arizona?

  • Bill Watkins, Executive Director, Center for Economic Research and Forecasting at Cal Lutheran in Thousand Oaks
  • Kirk Stark, Vice Dean and Professor of Law at the UCLA School of Law and faculty coordinator of the UCLA Colloquium on Tax Policy & Public Finance, an interdisciplinary workshop designed to explore leading research on taxation

July 13, 2012 in Tax | Permalink | Comments (2) | TrackBack (0)

Taxing Humphrey Bogart

BogartPrerna Rao, Note, What Would Humphrey Bogart Do?: An Overview of Federal Taxes as They Apply to the International Community of U.S. Nationals, 25 Quinnipiac Prob. L.J. 298 (2012):

Humphrey Bogart, sometimes known as Rick Blaine, arrives at the Mohammed V. International Airport near Casablanca, Morocco. Humphrey, who recently acquired a graduate degree in business, was assigned to the Moroccan branch of an American-owned company. His employer specializes in information technology, and has decided to expand its business and develop the market in this country. As the average employee deployed overseas for the first time, Humphrey, in his early thirties, has the time and energy to start his career in this new land. Humphrey fits the profile of a typical businessman involved in international trade. He will likely fall in love and marry while working. This Note analyzes the various and common tax liabilities incurred by Americans like Humphrey who travel and live abroad for work.

July 13, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Thursday, July 12, 2012

The Faculty/Student Nonaggression Pact

Washington Times op-ed:  Burst the Higher-Education Bubble, by George Leef (John W. Pope Center for Higher Education Policy):

During the bubble, colleges could get away with offering lots of courses that met a standard that former Indiana University English professor Murray Sperber characterizes as “the faculty/student nonaggression pact.” That is, the professor didn’t demand much of the students and gave high grades; in return, the students didn’t expect much from the professor, who wanted time for academic research projects.

The students were happy: Who complains about courses with high grades but little work? The professors were happy, and the administrators were happy because students getting good grades typically don’t gripe or, more important, drop out.

But courses in which students just go through the motions without learning anything are a waste of time and money.

The good news is that in the new higher-education world, courses like that will be jettisoned. Like dieters giving up doughnuts in favor of more nutritious, low-calorie foods, college consumers will look for affordable courses that lead to demonstrable educational gains.

The housecleaning in higher education also will sweep out lots of courses that exist only because professors like to teach them. Such courses typically focus on narrow, trendy or highly political subjects that interest the professor.

(Hat Tip: Glenn Reynolds.)

July 12, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Sen. Grassley Places Hold on Treasury Nominations Pending Response on IRS Whistleblower Office

Treasury Department SealSenate Finance Committee Ranking Member Charles Grassley has placed a hold on the nominations of Mark J. Mazur (Assistant Secretary of the Treasury for Tax Policy) and Matthew Rutherford (Assistant Secretary of the Treasury for Financial Markets) until the Treasury Department responds to Senator Grassley's questions about the operation of the IRS's whistleblower office.

July 12, 2012 in IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

NALP: Starting Salary for Law Grads Plunges 35% in Two Years

NALP logoNALP today released a four-page report, Median Private Practice Starting Salaries for the Class of 2011 Plunge as Private Practice Jobs Continue to Erode:

The median starting salary for new law school graduates from the Class of 2011 fell 5% from that for 2010 and has fallen nearly 17% just since 2009. The mean salary fell 6.5% compared with 2010, and since 2009 the mean has plunged almost 16% according to new research released today from NALP. The research also reveals that the median starting private practice salary fell over 18% from 2010 and since 2009 has fallen an astonishing 35%. These are among the most dramatic findings that were released this week from NALP’s Employment Report and Salary Survey for the Class of 2011. “This drop in starting salaries, while expected, is surprising in its scope” according to NALP’s Executive Director James Leipold. “Nearly all of the drop can be attributed to the continued erosion of private practice opportunities at the largest law firms.”

Starting Salaries: Classes of 2009, 2010, and 2011

  2009 2010 2011 Decrease 2009-11
Median Salary: $72,000 $63,000 $60,000 17%
Mean Salary: $93,454 $84,111 $78,653 15%
Median Firm Salary: $130,000 $104,000 $85,000 35%
Mean Firm Salary: $115,254 $106,444 $97,821 15%

The adjusted mean for all full-time jobs reported was $73,984 (in contrast to the unadjusted national mean of $78,653), and the adjusted mean for full-time law firm jobs was $87,241 (in contrast to the unadjusted mean of $97,821). ... The median salary for government jobs has remained unchanged since 2009, at $52,000. In a bit of good news, the median salary at public interest organizations, which includes legal services providers and public defenders, rose to $45,000, after being at just under $43,000 for two years. The median salary for judicial clerkships was $52,000, virtually unchanged from 2010, but up from $50,000 in 2009. ...

July 12, 2012 in Legal Education | Permalink | Comments (10) | TrackBack (0)

A Financial Transactions Tax: Inefficient or Needed Systemic Reform?

Ross P. Buckley & Gill North (both of the University of New South Wales, Faculty of Law), A Financial Transactions Tax: Inefficient or Needed Systemic Reform?, 43 Geo. J. Int'l L. 745 (2012):

The European Commission has included a Eurozone financial transaction tax in its longterm budget, as a first step towards a global tax. This move was taken despite negative European Commission and International Monetary Fund staff reports, which concluded that a tax would reduce the efficiency of capital markets, and raise the cost of capital. The efficiency frameworks used in the staff reviews were unduly narrow. Markets work best when there are strong links between market trading and real economic activity. Of late, these links have become increasingly tenuous and latent market and financial system risks are mounting. Carefully calibrated legal and tax responses are required to change market behaviour. Such a tax as part of an integrated policy framework would reduce short-term momentum trading and promote longer-term investment that would better reflect underlying economic fundamentals. So we argue the European Commission is correct in proposing to adopt such a tax.

July 12, 2012 in Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

Transparency and Accountability of Tax Administration in the UK

Osita Mba (Barrister (Nigeria); Solicitor (England and Wales)), Transparency and Accountability of Tax Administration in the UK: The Nature and Scope of Taxpayer Confidentiality, 2 British Tax Rev. 187 (2012):

The recent controversy surrounding HMRC’s refusal to disclose relevant information voluntarily to Parliamentary Committees has the potential to undermine the important principle of taxpayer confidentiality. HMRC’s current policy only asks whether the information requested would identify a specific taxpayer, and has led to the withholding of information such as whether the Department followed their own internal procedures in reaching a specific settlement “for reasons of taxpayer confidentiality”. The Committee of Public Accounts and the Treasury Committee of the House of Commons, both of whom have unqualified power of access to all information and documents held by HMRC in any event, have complained that this approach prevents proper scrutiny of the process for settling tax disputes involving large companies. This article proposes a distinction between tax information that engages a taxpayer’s right to confidentiality under the common law or Human Rights legislation (“taxpayer confidential information”) and other information held by HMRC, including taxpayer identifying information, which does not engage a taxpayer’s right to confidentiality or privacy (“HMRC’s information”) as a principled and pragmatic basis for balancing the rights of individual taxpayers to confidentiality with the wider interest of the general body of taxpayers in the transparency and accountability of tax administration.

July 12, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Akron Tax Journal Publishes New Issue

Akron LogoThe Akron Tax Journal has published Volume 27 (2012):

July 12, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Can You Afford Law School? Law Dean Says Think Twice

Following up on my previous post, Jim Chen: Is Law School Worth It? -- The Ratio of Educational Debt to Income (Dec. 4, 2011):  Can You Afford Law School? Law Dean Says Think Twice:

[Y]oung graduates of the most affordable schools with tuition around $17,000 per year would need to earn more than $50,000 per year, while graduates of more expensive programs at $34,000 each year would need to earn more than $100,000 annually. The highest echelon of programs would require students to earn around $150,000 per year.

July 12, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Karen Lee Hawkins: Untaxed Creativity

ProfilesRachel A. Van Cleave (Golden Gate), Karen Lee Hawkins: Untaxed Creativity, in Profiles in Prominence (Dan & Patricia Angel, eds.) (AvantGarde Publishing, 2008):

This book chapter profiles Golden Gate University School of Law graduate, Karen Hawkins. It describes her journey to become the director of the Office of Professional Responsibility for the Commissioner of the Internal Revenue Service in Washington, D.C. ...

Karen's interest in tax law was sparked during her second year when she took the federal tax course with Professor Alan Cadgene. "Alan Cadgene was phenomenal. He helped me see how tax law permeates everything and his excitement for the material was infectious." She recalls that before the classroom renovations in the '80s, law professors stood on a platform at the front of the classroom. "At least one time each class, Professor Cadgene would fall off the platform while expressing his enthusiasm for what you could do with the tax code."

July 12, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Tax Structure and Entrepreneurship

Mina Baliamoune-Lutz (University of North Florida, Coggin College of Business) & Pierre Garello (Aix-Marseille University), Tax Structure and Entrepreneurship:

Using macro-level panel data, we examine the effects of taxation and tax progressivity on entrepreneurship in a large group of European countries. We address two main objectives. First, we try to explore whether tax increases discourage entrepreneurial activity, focusing on new self-employment (nascent entrepreneurship). Second, we investigate the impact of tax progressivity on entrepreneurship, again focusing on the impact on new self-employment. We find that tax progressivity at higher-than-average incomes has a robust negative effect on nascent entrepreneurship. We discuss the policy implications of our results.

July 12, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)