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Saturday, August 25, 2012

The Five Keys to Faculty Job Satisfaction

Cathy A. Trower Tenure(Harvard University, Graduate School of Education), Success on the Tenure Track: Five Keys to Faculty Job Satisfaction (2012):

Landing a tenure-track position is no easy task. Achieving tenure is even more difficult. Under what policies and practices do faculty find greater clarity about tenure and experience higher levels of job satisfaction? And what makes an institution a great place to work?

In 2005–2006, the Collaborative on Academic Careers in Higher Education (COACHE) at the Harvard Graduate School of Education surveyed more than 15,000 tenure-track faculty at 200 participating institutions to assess their job satisfaction. The survey was designed around five key themes for faculty satisfaction:

  1. Tenure Clarity
  2. Work-Life Balance
  3. Support for Research
  4. Collegiality
  5. Leadership.

Success on the Tenure Track positions the survey data in the context of actual colleges and universities and real faculty and administrators who talk about what works and why. Best practices at the highest-rated institutions in the survey—Auburn, Ohio State, North Carolina State, Illinois at Urbana-Champaign, Iowa, Kansas, and North Carolina at Pembroke—give administrators practical, proven advice on how to increase their employee satisfaction. Additional chapters discuss faculty demographics, trends in employment practices, what leaders can do to create and sustain a great workplace for faculty, and what the future might hold for tenure.

(Hat Tip: Derek Muller.)

Update: Glenn Reynolds (Tennessee) adds a sixth key to faculty job satisfaction:

I’ll add one more: Outside income. When I first got tenure, I talked to the older guys who seemed happy in their positions to try to figure out what worked, and all of them mentioned that. It doesn’t have to be a lot — a few thousand bucks a year is enough, really — the key is to feel sufficiently independent that you don’t become one of those people who obsess over whether this year’s raise is two percent or two-and-a-half. And yes, such people exist. They’re not among the happy faculty, though. . . .

August 25, 2012 in Book Club, Legal Education | Permalink | Comments (6) | TrackBack (0)

Taxpayers as Victims: Taxpayer Harm & Criminalization

Brenner M. Fissell (J.D. 2013, Georgetown), Taxpayers as Victims: Taxpayer Harm & Criminalization, 6 N.Y.U. J. L. & Liberty ___ (2012):

Criminal statutes are least objectionable when they are justified by the notion that the conduct being prohibited is harmful to others. Over the past few decades, a new argument has arisen that makes this very easy to do. This argument appeals to the reality that often when one’s conduct causes or risks physical injury to one’s self, governmental services (e.g. rescue, police, healthcare) will be provided, and that the cost of these services is an unfair burden imposed upon taxpayers. This argument understands the taxpayers to be victims, and the self-harming conduct to therefore be harmful to others, and justifiably criminalized. This Article unearths this so far un-assessed argument from various legal sources, and analyzes it with the tools of criminal law theory to see whether or not it can hold water. Ultimately, the conclusion is “no,” and an alternative solution is advanced: civil liability.

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

Friday, August 24, 2012

Best Value Law School Rankings

Best ValueThe National Jurist today released its 6th Annual Best Value Law School Rankings:

Our Best Value Rankings ... is designed to find the law schools where graduates have the best chance of passing the bar and getting a legal job, without taking on a ton of debt.

This study does not attempt to assess a school's reputation and academic selectivity or focus on any metrics that would encourage schools to engage in wasteful spending. Instead, it is designed to assist the majority of students who will practice at small- or mid-sized law firms or in public service.

To identify the law schools that provide the best value, The National Jurist looks at the most important exit numbers:

  • Weighted Employment Rate (35%)
  • Tuition (25%)
  • Average Debt Load (15%)
  • 2-Year Bar Passage Average (15%)
  • Cost of Living (10%)

Here are the Top 20 Best Value Law Schools:

The National Jurist also gave A- value grades to 15 schools and B+ value grades to 12 schools. But as Above the Law points out, the National Jurist used flawed student debt data in compiling the rankings, as several schools (including Barry, Kansas, and Rutgers-Camden) have been busted for underreporting their average student debt loads.

August 24, 2012 in Law School Rankings, Legal Education | Permalink | Comments (3) | TrackBack (0)

Chemerinsky Dismisses Tamanaha's Call for High-Quality, $20,000 Per Year Law Schools

Following up on last month's post, Chemerinsky: You Get What You Pay for in Legal Education:  ABA Journal: Law Prof’s Ideal, Affordable Law School Not Possible in Reality, Chemerinsky Says:

“If you are not going to law school ... what is your alternative path?” asks Erwin Chemerinsky, founding dean of the University of California, Irvine School of Law. “And in purely economic terms, is it better than law school? ... It’s not just monetary ... There are all sorts of exciting things you can do with a law degree.”

Asked about his own economic terms, the highly paid constitutional scholar says, “I wouldn’t have come at half the price. No one is going to take a 50% pay cut, no matter how beautiful Orange County is, and no matter how wonderful it is to be part of a new school.”

The two quotes may seem at odds—the ideal of a career bringing more than financial gain, the reality of getting the paycheck now. But they represent the two thorny sides of the debate of law school and its value.

One can hardly blame Chemerinsky for protecting his own. He had a posh teaching gig at Duke University School of Law and a family with four children to support. Still, his blunt statement represents the stark reality to the idealistic aims of law professor Brian Z. Tamanaha, author of Failing Law Schools, which calls for an innovative, top-quality, public-service-minded and affordable (i,.e. less than $20,000 a year) institution as the ideal 21st-century law school.

Tamanaha chastised Chemerinsky for failing to sell a vision of affordable excellence. Chemerinsky challenges Tamanaha’s budget skills. “I don’t know a way in which we possibly could have done what we are doing at the kind of amount [he] was discussing,” Chemerinsky said in an ABA Journal interview in response to a National Law Journal op-ed on the issue. ...

As for the possibility of less expensive legal training, what Tamanaha calls for as a new paradigm, Chemerinsky sees as low cost law schools with “a lot of students, small faculty, a lot of adjuncts ... Not a law school I want to be associated with. [Tamanaha] looks at the value of a law degree in too much of monetary concerns,” Chemerinsky told me. But it’s the monetary concerns that concern me, observers of the law school bubble and the young people considering entry into the legal profession.

August 24, 2012 in Legal Education | Permalink | Comments (12) | TrackBack (0)

Rosenzweig: Thinking Outside the (Tax) Treaty

Adam H. Rosenzweig (Washington U.), Thinking Outside the (Tax) Treaty, 2012 Wis. L. Rev. 717 (2012):

While the legal literature contains numerous discussions on how to increase cooperation and resolve disputes in trade, investment, environment, intellectual property, and other areas, there has been remarkably little written on how to utilize these mechanisms to increase multinational cooperation for tax purposes. Rather, the debate has tended to devolve into two competing and irreconcilable camps: those supporting worldwide harmonization based on the network of bilateral tax treaties and those invoking the right to tax sovereignty to oppose any efforts at harmonization or cooperation. The primary thesis of this Article is that the fundamental problem with cooperation in the modern international tax regime is that it builds on the tax treaty model, thus effectively excluding countries which have not entered into tax treaties — mostly small, poorer countries. Reconsidering international tax in this light leads to a potentially surprising conclusion: that the move towards institutionalizing the web of bilateral tax treaties — which has dominated the modern international tax debate — may actually be counter to its stated goal of encouraging broader worldwide tax cooperation across all nations of the world. Instead, this Article proposes the creation of a tax cooperation mechanism specifically geared towards non-treaty member countries, conceding certain disputes in exchange for increased cooperation more generally. Such an approach could effectively replicate some of the benefits of a tax treaty, but with non-treaty member countries, without needing to overcome the obstacles which have prevented full treaties from being entered among such countries to date. Building a tax cooperation mechanism specifically around the premise of incentivizing cooperation of the least cooperative states in this manner could harness the same forces that led to the emergence of the modern international tax regime in the early twentieth century to address the fiscal crisis facing the early twenty-first century.

August 24, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Borden & David: The Tax Treatment of Sales of Church Real Property to Parishioners

Bradley T. Borden (Brooklyn) & Katherine E. David (Strasburger & Price, San Antonio), Sales of Church Real Property to Parishioners, 24 Tax’n Exempts 3 (July/Aug. 2012):

This Article examines the rules that govern the taxation of sales of property from a tax-exempt entity to its members. The case law and rulings in this area focus on transfers from churches to parishioners, so the article adopts the focus as well. It reveals that if the sales do not make the tax-exempt entity a dealer in real property, any gain the tax-exempt entity recognizes should be excluded from unrelated business taxable income. If the tax-exempt entity is a dealer in real property, the sales may still be excluded from UBTI if the sales are related to the entity’s exempt purpose. Because the rules governing dealer classification do not provide a bright-line demarcation, the Article recommends that Tax-exempt entities that contemplate selling real property may consider a belt and suspender approach and, when possible, structure the sales to satisfy both exclusions.

August 24, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

NLJ: Law Porn Doesn't Boost U.S. News Ranking

Following up on yesterday's post, The Impact of Law Porn on the U.S. News Rankings:  National Law Journal, 'Law School Porn' — It's Probably Not Worth the Expense, Research Suggests:

Legal educators love to complain about so-called "law school porn" — the postcards, letters and glossy magazines that schools send out each fall touting their achievements in hopes of boosting their U.S. News & World Report rankings.

It turns out that all that moaning may be valid. A study of the materials' influence on U.S. News found little correlation between the amount and content of mailings and improved rankings.

"Most of this stuff is not making a difference, year-to-year," said Larry Cunningham, associate dean for student services at St. John's University School of Law in Jamaica, N.Y., and the author of the report, The Effect of Law School Marketing Materials on 'U.S. News & World Report' Rankings. "Whether or not a school sends out this stuff might tell you where they are in the pecking order, but there's not much impact as far as rankings." ...

"I hope this at least leads to a discussion at law schools about what they hope to gain from law porn," Cunningham said. "We have to be good stewards of students' tuition dollars."

Update: WSJ Law Blog, Law School Promotional Materials Not Worth the Expense – Study

August 24, 2012 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Confidential Bain Financial Documents Released on Romney Family Trust Investments

New York Times, Documents Show Details on Romney Family Trusts:

Hundreds of pages of confidential internal documents from the private equity firm Bain Capital published online Thursday provided new details on investments held by the Romney family’s trusts, as well as aggressive strategies that Bain appears to have used to minimize its investors’ and partners’ tax liabilities.

The documents include annual financial statements and investor letters circulated to limited partners in more than 20 Bain and related funds where Mitt Romney’s financial advisers have at times invested large parts of his personal fortune, estimated at more than $250 million.

The documents, obtained and published by Gawker.com, do not specify the stakes held in the funds by the Romney family trusts or by other investors. But they highlight the range and complexity of Mr. Romney’s investments at a time when those very qualities have been the subject of the Obama campaign’s main attacks against him, including demands that Mr. Romney release his tax returns to clear up any suggestion that he might be benefiting financially from legal loopholes or tax shelters.

Many documents disclose information that, while routinely provided to Bain’s investors, is not typically disclosed to the public: the dollar value of Bain investments in specific companies, fees charged by Bain and other investment managers, and the value of different Bain funds in some years....

Bain private equity funds in which the Romney family’s trusts are invested appear to have used an aggressive tax approach, which some tax lawyers believe is not legal, to save Bain partners more than $200 million in income taxes and more than $20 million in Midicare taxes.

Annual reports for four Bain Capital funds indicate that the funds converted $1.05 billion in accumulated fees that otherwise would have been ordinary income for Bain partners into capital gains, which are taxed at a much lower rate.

Although some tax experts have criticized the approach, the Internal Revenue Service is not known to have challenged any such arrangements.

In a blog post Thursday, Victor Fleischer, a law professor at the University of Colorado, said that there was some disagreement among lawyers, but that he believed: “If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income.”...

In an article that appeared in the journal Tax Notes in 2009, Gregg D. Polsky, a tax law professor at the University of North Carolina School of Law, called the tax strategy “extremely aggressive” and said it was “subject to serious challenge by the IRS.”

August 24, 2012 in Political News, Tax | Permalink | Comments (1) | TrackBack (0)

Mayer: Fee-for-Service Charity and the Limits of Autonomy

Lloyd H. Mayer (Notre Dame), The ‘Independent’ Sector: Fee-for-Service Charity and the Limits of Autonomy, 65 Vand. L. Rev. 51 (2012):

Although numerous scholars have attempted to explain and justify the benefits provided to charities, none has been completely successful. Their theories share, however, two required characteristics for charities. First, charities must be distinct from other types of entities in society, including governmental bodies, businesses, other types of nonprofit organizations, and informal entities such as families. Second, charities must provide some form of public benefit. Given these defining characteristics, the principal role for the laws governing charities is to protect charities from influences that could potentially undermine these traits. This Article is the first to recognize fully the importance of this approach, which I term the autonomy perspective. Applying this new perspective to the law governing charities reveals that while existing law generally protects charity autonomy, it fails to do so in one major respect. Current law does not directly address the growing and often negative influence of consumers who purchase services from charities primarily for the consumer’s own benefit and with little if any regard to the public benefit charities must provide. This Article then considers under what market conditions the influence of these consumers, whether patients, students, retirement community residents, or others, is likely to be detrimental to a charity’s pursuit of public benefit, and what options exist for addressing this influence. It concludes with suggestions for further research that would help lawmakers target this influence and so better address questionable behavior by charities.

August 24, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Fleming: The Rationale Underlying the U.S. Treasury's Anti-Treaty Shopping Policy

J. Clifton Fleming Jr. (BYU), Searching for the Uncertain Rationale Underlying the US Treasury's Anti-Treaty Shopping Policy:

The US Treasury Department regards treaty shopping as an abuse of its bilateral income tax treaty network and has developed a model anti-treaty shopping article which it insists on including in all of its income tax treaties. Treasury has explained that its position is based on the rationale that treaty shopping inappropriately benefits residents of countries that have not "paid" for treaty advantages by making reciprocal concessions to the United States and that successful treaty shopping lessens the incentive for other countries to enter into treaty negotiations with United States. This article examines the exceptions to the US anti-treaty shopping article and finds that, because these exceptions are significantly inconsistent with Treasury's announced anti-treaty shopping rationale, Treasury's true rationale is uncertain and its model anti-treaty shopping article is, in fact, vulnerable to substantial treaty shopping behavior.

August 24, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

A Proposed Framework for Resolving the Transfer Pricing Problem

Glen Rectenwald (J.D. 2012, Duke), Note, A Proposed Framework for Resolving the Transfer Pricing Problem: Allocating the Tax Base of Multi-National Entities Based on Real Economic Indicators of Benefit and Burden, 22 Duke J. Comp. & Int'l L. 425 (2012)

Part I of this paper details the transfer pricing problem in the context of taxing multinational entities and the prevailing legal mechanism for setting transfer prices, the arms-length standard. Part II details the deficiency of [the arm's length standard ("ALS")] as a legal standard that misrepresents the economics of intra-firm transfers and accordingly fails as a mechanism for allocating the global corporate tax base. Part III considers alternatives and reforms to ALS, evaluating existing unilateral and multilateral reform proposals in terms of their ability to index proportional taxability of MNE income to burdens and benefits in particular jurisdictions using real, readily ascertainable economic factors.

August 24, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Thursday, August 23, 2012

More on Law School Applications and Tuition

Following up on last week's post, Law Schools Jack Up Tuition 4%-6% Despite 14% Decline in Applicants:  The Law School Tuition Bubble: Every Day Is Halloween for Law Schools, by Matt Leichter:

2011 and beyond is not the first time law schools have seen a drop in applications and raised tuition nonetheless.

To make this more intelligible, here’re the annualized growth rates from trough to peak and peak to trough over the years.

[D]o not be surprised that average law school tuition is increasing even though applicants are not. It would take an unusual set of circumstances for any one law school to voluntarily cut its tuition and still expect to survive.

Update:  WSJ Law Blog, Law School Costs Keep Rising, Despite Decreased Demand

August 23, 2012 in Legal Education | Permalink | Comments (5) | TrackBack (0)

Virginia Tax Review Publishes New Issue

Virginia Tax Review The Virginia Tax Review has published Vol. 31, No. 4 (Spring 2012):

August 23, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Sex and God at Yale

Sex Sexand God at Yale: Porn, Political Correctness, and a Good Education Gone Bad (St. Martin's Press, Aug. 21, 2012), by Nathan Harden (B.A. 2009, Yale):

To glimpse America’s future, one needs to look no further than its college campuses. Of those institutions, none holds more clout than Yale University, the hallowed “cradle of presidents.” In Sex and God at Yale, recent graduate Nathan Harden undresses perversity among the Ivy and ideology gone wild as the upper echelon of academia is mired in nothing less than a full-fledged moral crisis.

Three generations ago, William F. Buckley’s classic God and Man at Yale, a critique of enforced liberalism at his alma mater, became a rallying cry of the conservative movement. Today Harden reveals how a loss of purpose, borne of extreme agendas and single-minded political correctness shielded under labels of “academic freedom,” subverts the goals of higher education.

Harden’s provocative narrative highlights the implications of the controversial Sex Week on campus and the social elitism of the Yale “naked party” phenomenon. Going beyond mere sexual expose, Sex and God at Yale pulls the sheets off of institutional licentiousness and examines how his alma mater got to a point where:

  • During “Sex Week” at Yale, porn producers were allowed onto campus property to give demonstrations on sexual technique—and give out samples of their products.
  • An art student received departmental approval—before the ensuing media attention alerted the public and Yale alumni—for an art project in which she claimed to have used the blood and tissue from repeated self-induced miscarriages.
  • The university became the subject of a federal investigation for allegedly creating a hostile environment for women.

Much more than this, Harden examines the inherent contradictions in the partisan politicizing of higher education. What does it say when Yale seeks to distance itself from its Divinity School roots while at the same time it hires a Muslim imam with no academic credentials to instruct students? When the same school that would not allow ROTC on its campus for decades invites a former Taliban spokesperson to study at the university?

August 23, 2012 in Book Club, Legal Education | Permalink | Comments (3) | TrackBack (0)

WSJ: The 2013 Tax Cliff

Tax CliffWall Street Journal editorial:  The Cliff the Keynesians Built:

The nearby table compares current tax rates with those that arrive next year with the tax cliff, as well as Mr. Obama's budget proposals and Mitt Romney's tax reform plans. Mr. Romney is proposing an across-the-board rate cut, while Mr. Obama would keep rates the same only for those earning less than $250,000. Everyone else would see a huge tax increase, one of the largest in history.

Republicans are pointing to the CBO report as proof of Mr. Obama's policy failure, and it is. But rather than gawking at the potential for another recession, they ought to explain the folly of "temporary, targeted" tax and spending stimulus. The fleeting tax elixir does little to change incentives to work or invest because everyone knows its impact is temporary. It also creates tremendous uncertainty as expiration nears, which can also harm incentives and growth.

The problem is political, but more important it is intellectual. The Keynesians and their allies who have dominated tax policy for most of the last decade (the 2003 bill excepted) need to be exiled back to Harvard, Princeton and Wall Street. And the Romney-Ryan Republicans need to understand and not repeat the Bush mistakes of 2001 and 2008.

Instead of "timely, targeted and temporary," tax policy should include lower rates (and fewer loopholes) that are applied as broadly as possible and are permanent. These were the principles that guided the Reagan policy of the 1980s, and they need to be revived.

August 23, 2012 in Tax | Permalink | Comments (3) | TrackBack (0)

Cain: The New York Marriage Equality Act and the Income Tax

Patricia A. Cain (Santa Clara), The New York Marriage Equality Act and the Income Tax, 5 Alb. Gov't L. Rev. 634 (2012):

So long as DOMA remains effective, same-sex spouses in New York will find themselves applying a more confusing set of rules for state income tax purposes that opposite-sex spouses apply. The Marriage Equality Act was intended to create tax equality at the state level. But, given the interplay of federal and state tax rules, real tax equality is not possible.

The burden of trying to conform to DOMA at the federal level and yet create equality at the state level is particularly apparent in tax law because the state law is so dependent on the federal law. The burden will not just be on the individual taxpayers. It will also be a burden on the state that has to come up with effective rules to get around the full brunt of DOMA at the state level. This phenomenon is likely to make the state of New York and its citizens even more aware of the ways in which DOMA is unfair. As a result, some have suggested that tax law has a special role to play in the path toward true equality for same-sex couples.

August 23, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Gamage & Heckman: Vendor Compensation as an Approach for State ‘Amazon’ Laws

Tax Analysts David S. Gamage (UC-Berkeley) & Devin J. Heckman (Simpson Thacher, New York):

These articles are adapted from A Better Way Forward for State Taxation of E-Commerce, 92 B.U. L. Rev. 483 (2012).

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

August 23, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Cunningham: The Impact of Law Porn on the U.S. News Rankings

Larry Cunningham (St. John's), The Effect of Law School Marketing Materials on U.S. News and World Report Rankings:

In the last few years, law schools have inundated each other with glossy brochures, postcards, magazines, and other marketing materials in an attempt to influence their “peer assessment scores” in the annual U.S. News and World Report rankings. This article describes a study that attempted to determine whether law schools’ print marketing efforts to one another have an impact on their U.S. News rankings data. From June to December 2011, the author’s school collected and coded all of the materials it had received from schools, including materials that it itself had sent to others. In total, 427 unique pieces of marketing were received from 125 of the 191 schools that were the subjects of this study. They varied considerably in size, format, content, and audience. A number of statistical tests were conducted to compare a school’s marketing efforts with its overall rank, overall score, peer assessment score, and tier, along with any change in those variables from the 2011 rankings to the 2012 ones. The results showed that there was some correlation between a school’s marketing efforts and its U.S. News data. Schools that sent marketing materials had, on average, higher tier placement and peer assessment scores; however, there was not a significant change in year-to-year rankings variables. The number of pieces a school sent during the study period was, for the most part, not significant. On the other hand, the number of pages in its materials was correlated with a number of U.S. News variables. Schools that sent longer, magazine-type publications geared towards a specific audience had higher U.S. News scores and also showed a slight improvement in their overall score between the two years of rankings data in this study. However, it is possible that a co-variate, such as institutional financial resources, may be causing the results. Additional study is needed to determine whether marketing materials have a longer-term effect on U.S. News ranking variables that cannot be captured in a one year study.

August 23, 2012 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 22, 2012

The Impact of Tax Rates on Economic Productivity and Fairness

Manhattan Institute:  The U.S. Tax System: Who Really Pays?, by Stephen Moore (Wall Street Journal):

“It is a paradoxical truth that tax rates are too high today, and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the tax rates…. [A]n economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits.” —John F. Kennedy, 1963

Even if most policymakers and members of the public instinctively understand the wisdom of President Kennedy’s words, tax rates are set to go way up, not down, next year because of the scheduled expiration of the Bush tax cuts at the beginning of 2013. The Obamacare law also raises tax rates on wealthy individuals by an additional 3.8 percentage points next year. President Obama and others in Congress argue that these higher tax rates are justified because of the growing consensus that the rich don’t pay their fair share of taxes. Unless we do something to spread the burden more equitably, the argument goes, American society will become more unfair and the economy more unsustainable with each passing year.

At first glance, the tax rate issue seems inseparable from the tax fairness issue, since higher taxes are expected to shift society’s wealth from the private sector to the public sector, where, broadly speaking, it is redistributed to lower-wage earners and the needy. In reality, the people at the bottom of the scale have benefited directly and indirectly from every tax rate reduction dating back to Kennedy’s rate reductions in the early 1960s and through the tax cuts adopted early in the administration of George W. Bush. If those lower rates, along with the Alternative Minimum Tax fix, are allowed to expire, the poor will be burdened even more than the wealthy because the whole economic pie will shrink. ...

Below are a series of statements reflecting popular conceptions and misconceptions about the impact of tax rates on economic productivity and fairness. We’ll address these statements (and debunk attendant myths) one at a time.

1. To become fairer, the tax code needs to tax the rich more heavily.

Figure 1

Figure 2

2. The rich are paying less in income taxes than they have in the past 50 years.

Figure 3

3. When all the other taxes are counted, the rich get off easy.

Figure 4

4. Tax cuts are just Robin Hood in reverse, taking from the poor to give to the rich.

Figure 5

5. Lower tax rates can make the tax burden fairer.

Figure 6

6. All those tax cuts created deficits that have mortgaged our children’s future.

Figure 7

7. Ordinary Americans pay more than their fair share of taxes.

Figure 11

8. The 15 percent tax on investment income, which is well below the income-tax rate that most salaried workers pay, is a gift to the wealthy.

9. A higher capital-gains rate would just level the playing field.

10. The "wealthy" are likely to be the people next door.

11. It is increasingly harder to climb the economic ladder, and changing the tax code will help.

August 22, 2012 in Tax, Think Tank Reports | Permalink | Comments (9) | TrackBack (0)

Chronicle of Philanthropy: Red States Are More Charitable Than Blue States

Politico:  Study: Red States More Charitable:

Red states give more money to charity than blue states, according to a new study on Monday. The eight states with residents who gave the highest share of their income to charity supported Sen. John McCain in 2008, while the seven states with the least generous residents went for President Barack Obama, the Chronicle of Philanthropy found in its new survey of tax data from the IRS for 2008.

The eight states whose residents gave the highest share of their income — Utah, Mississippi, Alabama, Tennessee, South Carolina, Idaho, Arkansas and Georgia — all backed McCain in 2008. Utah leads charitable giving, with 10.6% of income given.

And the least generous states — Wisconsin, Connecticut, Rhode Island, Massachusetts, Vermont, Maine and New Hampshire — were Obama supporters in the last presidential race. New Hampshire residents gave the least share of their income, the Chronicle stated, with 2.5%.

Generosity

“The reasons for the discrepancies among states, cities, neighborhoods are rooted in part in each area’s political philosophy about the role of government versus charity,” the study’s authors noted.

But it’s not just about politics — “religion has a big influence on giving patterns.” “Regions of the country that are deeply religious are more generous than those that are not. Two of the top nine states—Utah and Idaho—have high numbers of Mormon residents, who have a tradition of tithing at least 10 percent of their income to the church,” the study states. “The remaining states in the top nine are all in the Bible Belt.”

Boston Globe op-ed: Stingy Liberals, by Jeff Jacoby:

There are 366 major metropolitan areas in the United States, and a comprehensive new study by the Chronicle of Philanthropy ranks them on the basis of generosity — the percentage of income the median household in each city gives to charity. According to the Chronicle, the most generous city in America is Provo, Utah, where residents typically give away 13.9% of their discretionary income. Boston, by contrast, ranks No. 358: In New England’s leading city, the median household donates just 2.9% of its income to charity. ...

Liberals, popular stereotypes notwithstanding, are not more generous and compassionate than conservatives. To an outsider it might seem plausible that Americans whose political rhetoric emphasizes “fairness” and “social justice” would be more charitably inclined than those who stress economic liberty and individual autonomy. But reams of evidence contradict that presumption, as Syracuse University professor Arthur Brooks demonstrated in his landmark 2006 book, Who Really Cares.

However durable the myth, wrote Brooks (who now heads the American Enterprise Institute, a Washington think tank), there is no getting around the data. For years, academic research and national studies have confirmed that Americans who lean to the left politically tend to be much less charitable than those who tilt rightward. The Chronicle of Philanthropy’s new report is only the latest in a long series of studies corroborating that fact. ...

In parts of the country where conservative values dominate, charity tends to be high. Where liberalism holds sway, charity falls. “Red states are more generous than blue states,” the Chronicle concludes. The eight states that ranked the highest in charitable giving all voted for John McCain in 2008. The seven lowest-ranking states supported Barack Obama.

Of course this doesn’t mean that there aren’t generous philanthropists in New England. It doesn’t mean selfishness is unknown on the right. What it does mean is that where people are encouraged to think that solving society’s ills is primarily a job for government, charity tends to evaporate. The politics of “compassion” isn’t the same as compassionate behavior. America’s generosity divide separates those who understand the difference from those who don’t.

August 22, 2012 in Tax | Permalink | Comments (13) | TrackBack (0)

Niall Ferguson’s Laughable Tax Lie

NewsweekSalon op-ed: Niall’s Most Laughable Lie, by Paul Campos (Colorado):

Of all the wrongheaded claims in Niall Ferguson’s much-mocked effusion of trite right-wing talking points, this is my favorite:

Welcome to Obama’s America: nearly half the population is not represented on a taxable return—almost exactly the same proportion that lives in a household where at least one member receives some type of government benefit. We are becoming the 50–50 nation—half of us paying the taxes, the other half receiving the benefits.

In fact, America has a barely progressive tax system, in which rich, poor and middle-class people all pay roughly comparable percentages of their income in taxes.  As this study illustrates, last year people who had an average income of nearly $1.4 million (the blessed 1%) paid almost the same percentage of their income in taxes as the bottom 99% of the population. ...

[W]hat can be done to combat the constant barrage of nonsense people like Ferguson emit on the subject of taxes? I have a modest proposal, which draws on insights from what in behavioral economics is known as prospect theory. Prospect theory reveals that people are far more averse to giving up what they think of as something they already own than they are to not getting something they think of as not yet theirs. This is known as the “endowment effect.” ...

[W]e should have a system in which, to the extent possible, Americans pay no “taxes” at all; instead, our wages should simply be lower, while a portion of what we previously thought of (rather absurdly) as “our” money goes directly to the government.

August 22, 2012 in Tax | Permalink | Comments (11) | TrackBack (0)

Deborah Jones Merritt: The Scholarship Smokescreen

Deborah Jones Merritt (Ohio State), Smokescreen:

Anders Walker, an Associate Dean at the Saint Louis University School of Law, has posted a scathing -- and somewhat personal -- indictment of Brian Tamanaha's book, Failing Law Schools.  Tamanaha has already responded to the personal element of Walker's attack, and Walker has fired back.  (Hat tip to TaxProf on all three posts)

Here, I want to focus on a different element of Walker's posts:  The way he uses scholarship as a smokescreen to avoid talking directly about the problem of law school tuition. ... We don't need to save legal history or rescue legal scholarship.  I learned from great legal scholars in the 1970s, and my school offered several legal history electives, all at a fraction of today's tuition costs.  I'm confident we can cut tuition while preserving plenty of scholarship and interdisciplinary courses; surely we're as talented, frugal, and hard working as professors of earlier generations.  We can also have long, interesting discussions with practitioners about the relative proportions of doctrinal, interdisciplinary, and practice-oriented courses we should offer students.

But first we have to confront the economic crisis saddling our graduates:  Ignoring that crisis has been irresponsible.  We have already graduated years of students with too much debt and too few job prospects.  Save our students first; then we can worry about legal history.

August 22, 2012 in Legal Education | Permalink | Comments (20) | TrackBack (0)

Goolsbee: Mitt Romney's Tax Plan and the Middle Class

Wall Street Journal op-ed:  Mitt Romney's Tax Plan and the Middle Class, by Austan Goolsbee (University of Chicago, Booth School of Business):

Researchers for the Tax Policy Center, a project of Brookings and the Urban Institute, found that Romney's plan would cut taxes for individuals by about $4 trillion over the next 10 years, on top of the costs of extending the Bush tax cuts, by cutting rates by 20%, abolishing the estate tax, and abolishing the Alternative Minimum Tax, among other things.

For high-income people, that lost revenue exceeds the value of all the relevant deductions and exemptions in the tax code combined—charitable giving, mortgage interest, state and local taxes, health insurance not counting as taxable income, etc. So to keep the deficit from increasing, middle-class tax increases are inevitable.

Mr. Romney declared the study "garbage." This editorial page condemned it for leaving out other exemptions that Mr. Romney could, theoretically, try to eliminate.

Many economists on the left were upset that the study wasn't tougher on Mr. Romney's plan. You couldn't completely abolish every single deduction and exemption for high-income people, and any realistic plan to limit them generates so much less revenue that the Romney tax plan could impose a trillion-dollar tax increase on the middle class while still managing to increase the deficit by an additional $2 trillion.

In the wake of the study, the Romney camp would not disclose the details of what they would do. Instead, they just reiterated that their plan was a variation on the December 2010 plan of the Bowles-Simpson commission....

As we approach the election in November, let us hope that whoever wins will negotiate an agreement that helps us avoid the so-called fiscal cliff at the end of the year when hundreds of billions of dollars of tax cuts expire and huge automatic spending cuts kick in. Let us hope they will avoid a debilitating showdown over government default; that they will invest in the country's growth potential; and will address the fiscal imbalance we have known about for 40 years and not solved....

The Bowles-Simpson plan was designed to facilitate such a deal. Mr. Romney's plan was designed to wreck it.

August 22, 2012 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Exiled From Vanderbilt: How Colleges Are Driving Religious Groups Off Campus

From Robert George (Princeton) and Carol Swain (Vanderbilt)::

August 22, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

NLJ: Judge Skeptical About Graduates' Fraud Claim Against Brooklyn Law School

Brooklyn LogoNational Law Journal:  Judge Skeptical About Graduates' Claim that Brooklyn Law School Committed Fraud:

The fraud class action brought by graduates of Brooklyn Law School against their alma mater appears to be turning into an uphill battle.

Attorneys for both sides spent three hours before Kings County, N.Y., Supreme Court Justice David Schmidt on August 21 debating the law school's motion to dismiss. Schmidt asked pointed questions both of plaintiffs attorney Frank Raimond and defense attorney Russell Jackson regarding allegations that the school misrepresented graduate employment and salary data to lure students.

But Schmidt seemed deeply skeptical about the claims that the manner in which the law school reported its jobs data constituted fraud — or that the plaintiffs have shown enough evidence of manipulated job numbers to survive the motion to dismiss. "Where is the basis for a fraud argument?" Schmidt asked Raimond. "You have generalized industry statistics. Where do you see that they have deceived the public?" A similar complaint could be leveled against any law school in the country, Schmidt said. ...

Most of the hearing centered on Brooklyn Law School's claim that 91.3% of the class of 2009 was employed nine months after graduation. The plaintiffs allege that this figure was deceptive because it included students in any type of job, not just those in legal jobs, plus graduates in temporary or volunteer positions. The school knew how many graduates were in fulltime jobs that require or prefer a J.D., but chose not to report those figures — committing fraud by omission, Raimond said.

Jackson countered that Brooklyn Law School was simply following the reporting standards set forth by the ABA and NALP. That has been a common defense among the targeted law schools.

August 22, 2012 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Brunson: Mutual Funds, Fairness, and the Income Gap

Samuel D. Brunson (Loyola-Chicago), Mutual Funds, Fairness, and the Income Gap:

The rich, it turns out, are different from the rest of us. The wealthy, for example, can assemble a diversified portfolio of securities, or can invest through hedge and private equity funds. When the rest of us invest, we do so largely through mutual funds. Nearly half of American households own mutual funds, and mutual funds represented a significant portion of the financial assets held by U.S. households.

The tax rules governing mutual funds create an investment vehicle with significantly worse tax treatment than investments available to the wealthy. In particular, the tax rules governing mutual funds force shareholders to pay taxes on “forced realization income,” even though such income does not increase their wealth.

Because mutual fund investors must pay taxes on non-existent gains, while the wealthy can use alternative investment strategies to avoid such taxes, the taxation of mutual funds violates the tax policy objective of vertical equity. To correct the inequities faced by mutual fund investors, the tax law needs to permit low- and middle-income taxpayers to exclude from their income 10% of the capital gain dividends they receive each year.

August 22, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Sixteen States Have Marriage Penalties

Tax Foundation:  Does Your State Have a Marriage Penalty?:

In a progressive tax system, higher incomes are taxed at higher rates, and in states where the same tax brackets apply to both single and married filers, the effective tax rate on the combined income of two earners can be significantly more than if the two incomes were taxed separately. In 2011, sixteen states had some form of marriage penalty in their income tax system.

Tax Foundation

August 22, 2012 in Tax, Think Tank Reports | Permalink | Comments (3) | TrackBack (0)

Mayer: Charities and Lobbying After Citizens United

Lloyd H. Mayer (Notre Dame), Charities and Lobbying: Institutional Rights in the Wake of Citizens United, 10 Election L.J. 407 (2011):

One of the many aftershocks of the Supreme Court’s landmark decision in Citizens United v. FEC is that the decision may raise constitutional questions for the long-standing limits on speech by charities. There has been much scholarly attention both before and after that decision on the limit for election-related speech by charities, but much less attention has been paid to the relating lobbying speech limit. This article seeks to close that gap by exploring that latter limit and its continued viability in the wake of Citizens United. I conclude that while Citizens United by itself does not undermine the limit on lobbying by charities, the decision does reinforce the constitutional requirement that the government allow charities to easily form a non-tax favored alternative for engaging in unlimited lobbying. Some post-Citizens United proposals for regulating speech-related activity may in fact run afoul of this requirement. More importantly, the intersection of Citizens United and this tax-based limit on charity speech may be a catalyst for renewed consideration of whether the unconstitutional conditions doctrine could be successfully refined in the subsidy context through an approach that considers the purpose of the subsidy and how important the speech-related limit is to the accomplishment of that purpose.

August 22, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 21, 2012

NYU Tax Law Review Publishes New Issue

The Tax Law Review has published a new issue (Vol. 65, No. 2 (Winter 2012)):

August 21, 2012 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Six Policies Economists Love (And Politicians Hate)

NPR LogoNPR, Six Policies Economists Love (And Politicians Hate): 

  1. Eliminate the mortgage tax deduction. ...
  2. End the tax deduction companies get for providing health-care to employees. ...
  3. Eliminate the corporate income tax. ...
  4. Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.
  5. Tax carbon emissions. ...
  6. Legalize marijuana. ...

(Hat Tip: The Volokh Cospiracy.)

August 21, 2012 in Tax, Think Tank Reports | Permalink | Comments (2) | TrackBack (0)

Bartlett: Exploring Mitt Romney’s Taxes and Tax Plan

New York Times:  Exploring Mitt Romney’s Taxes and Tax Plan, by Bruce Bartlett:

An examination of the two years of tax returns that the Republican presidential nominee Mitt Romney has made public sheds light on some fundamental concepts of taxation that illuminate his proposed tax cut. These include the meaning of “taxes” and “income.”

For most people, income is simple: it means wages or perhaps a pension or Social Security benefits. Income from capital – dividends, interest, rent and capital gains – seldom enters into the calculation. The vast bulk of such income is earned by the ultrawealthy, like Mr. Romney. ...

This is the key reason that Mr. Romney paid a federal income tax rate of 13.9% in 2010 and 15.4% in 2011. By contrast, his running mate, Representative Paul D. Ryan of Wisconsin, paid a rate of 15.9% in 2010 and 20% in 2011, despite an income that was 10% of Mr. Romney’s in 2010 and 15% in 2011. ...

The distribution of income is extremely relevant for Mr. Romney tax plan. He has said that he will close enough tax loopholes so that the wealthy will pay the same share of taxes they are paying now, even though he will cut their income tax rates by 20%. However, he has also said that the current low rates on dividends and capital gains, which expire at year’s end, will be made permanent. Thus Mr. Romney would preserve exactly those provisions of the tax code most responsible for millionaires like himself paying tax rates considerably lower than those with a fraction of his income, like Mr. Ryan. ...

The Tax Policy Center recently concluded that Mr. Romney’s numbers don’t add up. Either he will greatly increase the deficit or he will have to raise taxes on the middle class to maintain revenue neutrality. Even if every deduction, exclusion and credit for the wealthy was abolished, their taxes would still go down under Mr. Romney’s plan. Democrats have said that the Romney tax plan would raise taxes on the middle class. While this is logically consistent with what Mr. Romney has said about his plan, I do not believe that is his intention or what will happen if he is elected president. Rather, I think he and his advisers simply made up a proposal that was everything to everybody without bothering to check for internal consistency.

For someone who has made his business acumen and expertise with finance a cornerstone of his presidential run, that Mr. Romney’s signature campaign proposal doesn’t add up may be the most telling fact voters need to know about him. 

August 21, 2012 in Political News, Tax | Permalink | Comments (3) | TrackBack (0)

CBPP: Where Do Federal Tax Revenues Come From?

Center on Budget and Policy Priorities, Where Do Federal Tax Revenues Come From?:

In fiscal year 2011, the federal government spent $3.6 trillion on the services it provides, such as national defense, health care programs like Medicare and Medicaid, Social Security benefits for the elderly and disabled, and investments in infrastructure and education, in addition to interest on the debt. ... Of that $3.6 trillion, $2.2 trillion was financed by federal tax revenues and $83 billion by excess profits on assets held by the Federal Reserve.  (The remaining $1.3 trillion was financed by borrowing.) ... The three main sources of federal tax revenue are individual income taxes, payroll taxes, and corporate income taxes; other sources of tax revenue include excise taxes, the estate tax, and other taxes and fees.

CBPP

August 21, 2012 in Tax, Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

Does Flavor Flav Have a $900k Tax Problem? Yeah Boy!

Flavor FavRap singer (Public Enemy) and reality TV (The Surreal Life, Strange Love, Flavor of Love) star Flavor Flav owes over $900,000 in unpaid taxes to the IRS for 2004, 2005, and 2006.

(Hat Tip: Bob Kamman.)

August 21, 2012 in Celebrity Tax Lore, Tax | Permalink | Comments (0) | TrackBack (0)

Kleinbard: Paul Ryan's Tax Roadmap to Inequality

Edward D. Kleinbard (USC), Paul Ryan's Roadmap to Inequality:

The purest articulation of Paul Ryan’s fiscal belief system is his 2010 Roadmap for America’s Future. The tax provisions of this extensive proposal would convert the current personal and corporate income taxes into two consumption taxes, and repeal the gift and estate tax.

This report explains how the Roadmap, like Herman Cain’s 9-9-9 Plan, would operate in practice like a large new payroll tax. The Roadmap would directly immunize the highest labor income earners from this tax through a large reduction in the top rate of the Roadmap’s labor earnings tax, compared with current law or policy. Unlike the 9-9-9 Plan the Roadmap further would largely immunize “old” capital from the efficient (if arguably unfair) imposition of consumption tax when that capital was consumed, by providing a write-off of existing depreciable basis. And finally the Roadmap would reduce the tax burdens on the most affluent capital owners further by eliminating the gift and estate tax.

For these reasons, it is not surprising that the Roadmap contemplates an extraordinarily large redistribution of tax burdens from the affluent to middle-class and lower income Americans. For middle-class families, tax burdens would increase on the order of 50 percent. At the same time, the Roadmap’s reprioritization of government spending also would be regressive in its impact. Proponents of the Roadmap or plans like it must explain how any projected increase in economic growth will compensate the majority of Americans for shouldering more tax burdens while receiving smaller government benefits.

August 21, 2012 in Political News, Tax | Permalink | Comments (0) | TrackBack (0)

Golden Gate Seeks to Hire Tax Prof & Grad Tax Program Director

Golden GateGolden Gate University School of Law seeks to hire a Tax Prof and Director of its Graduate Tax Program beginning in Fall 2013:

Golden Gate University’s LL.M. Program in Taxation is one of the preeminent graduate tax law programs in the West, and it is the only program available to students in the San Francisco Bay Area. ... The Director of the LL.M. Tax Program should be able to teach LL.M.-level courses such as Characterization of Income and Expenditures, Corporate Tax, Federal Tax Procedure, Professional Responsibility for Tax Practitioners, Tax Timing, and other related courses. The Director may also be asked to teach J.D. required and elective courses as the need arises.

The Director will be responsible for performing administrative duties, including, but not limited to, marketing and recruitment of students, determining curriculum and scheduling courses, supervising J.D. and LL.M. outplacement programs, hiring and evaluating adjuncts, administrating Golden Gate’s Pro Bono Tax Clinic, and conducting effective outreach to the tax practitioner bar.

Qualifications: Candidates must have a J.D. degree and an LL.M. in taxation from an ABA accredited law school. Practical or academic experience in Estate Planning, International Taxation, and Business Entity Taxation are helpful. Applicants should have a distinguished academic background, significant practical experience, and should be able to demonstrate the ability to work collegially with students in an advising capacity both academically and professionally. ... Interested persons should submit a vitae and other relevant materials to ... Professor Laura A. Cisneros, Chair, Faculty Appointments Committee. ... Applications received by October 1, 2012 are assured consideration. 

August 21, 2012 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0) | TrackBack (0)

State Taxation of Cloud Computing

Tax Analysts Timothy P. Noonan (Hodgson Russ, Buffalo), Nuts-and-Bolts Answers on Cloud Computing, 65 State Tax Notes 527 (Aug. 20, 2012):

In Noonan's Notes on Tax Practice, Timothy P. Noonan of Hodgson Russ LLP, Buffalo and New York City, discusses various states' guidance on taxation of cloud computing.

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

August 21, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (1) | TrackBack (0)

Chen: The Mathematics of Law School Merit Scholarships

ChenJim Chen (Former Dean, Louisville), Scholarships at Risk: The Mathematics of Merit Stipulations in Law School Financial Aid:

Many law schools in the United States condition financial aid grants on the recipients’ maintenance of a certain grade point average. These merit stipulations require students to meet or exceed minimum academic standards in order to keep all or part of their financial aid. Law students should take merit stipulations into account when they decide whether to accept an offer of admission paired with a conditional grant of financial aid. By all accounts, they do not. Law schools should transparently disclose the likely effect of merit stipulations on their financial aid awards. By all accounts, law schools do no such thing. Absent external coercion, they are unlikely to change their current practices. In the absence of industry-wide standards counseling full disclosure of financial aid practices, this article will try to equip law school applicants with the mathematical tools to assess the real impact of merit stipulations on their financial well being.

This article first presents very simple models for discounting financial aid awards for the risk of failure to uphold a merit stipulation. It outlines a simple methodology for calculating the expected value of a financial aid award subject to a merit stipulation. The article also evaluates one extraordinary circumstance in which a law school has implicitly revealed its break-even point — the amount of aid that the school would award if it did not impose any merit stipulations.

Building upon those foundations, this article performs a comprehensive analysis of law school grades and merit stipulations as artifacts of the standard normal distribution. It performs three distinct tasks. This article defines standard scores and explains how law school grading is based on the relationship between the standard score of each student’s raw score and the mean and standard deviation of of the distribution as a whole. This article then describes the risk of failure to satisfy a merit stipulation in terms of the normal distribution’s cumulative distribution function. For those instances in which the risk of failure to satisfy a particular school’s merit stipulation is known, this article demonstrates how to use the inverse cumulative distribution function to estimate the mean and standard deviation of a school’s grade distribution. As a bonus, this final exercise provides an introduction to value-at-risk analysis, a leading tool for assessing risk in global capital markets.

August 21, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Isenbergh: Cliff Schmiff

Joseph Isenbergh (Chicago), Cliff Schmiff:

Dread of the “fiscal cliff,” widely apparent in public discourse on tax and fiscal policy, rests largely on an illusion: that the contractionary effect of unwinding public debt can be substantially avoided if it is carried out more gradually. In fact, the possibility of fiscal drag inheres in all reduction of public debt. The question is whether it can be mitigated by stepping away from the fiscal cliff and following some other path to public solvency. While a less painful resolution of our fiscal situation may be possible in theory, the policies floated of late in public pronouncements across the ideological spectrum are more harmful over time than simply falling off the cliff.

August 21, 2012 in Poll, Tax | Permalink | Comments (2) | TrackBack (0)

Monday, August 20, 2012

NY Times: Paul Ryan and Tax Policy

New York Times op-ed:  Paul Ryan and Tax Policy, by Ross Douthat:

Scott Galupo, the former Capitol Hill staffer turned blogger for the American Conservative, responds to my last post on Paul Ryan’s policy record, mixing some praise for Ryan with the following critique:

My problem with Ryan isn’t on the entitlement reform side; it’s on the revenue side. His assumption that another round of supply-side tax cuts will spark growth and unleash pent-up consumer demand strikes me as just as wooly-headed as the Tea Party freshmen’s knowledge of the federal budget.

And it’s this outmoded Kemp-ism that undermines his best idea, i.e., premium support. If Ryan and the GOP would have agreed to a sensible compromise on new revenue — which can be accomplished without the higher marginal tax rates that Obama calls for — then a deal on Medicare would have been far more likely.

I agree with Galupo’s first point; I’m more doubtful about the second one. Ryan’s supply-side zeal is probably his most significant weakness as a policy entrepreneur: Like most Reaganites, he has a Kemp-ian belief in the growth-unleashing power of lower marginal tax rates, but he’s operating in an era when (thanks to Kemp and Reagan) those rates are already low enough that there’s a lot less to be gained from slashing them even further. This doesn’t mean that some kind of rate-lowering, base-broadening tax reform isn’t still a good idea — it is, and Ryan’s right to champion it. But it isn’t the only good idea in the world, and the disappointing returns to the Bush-era tax cuts strongly suggest that the interests of the investor class are not always identical to the interests of middle-income Americans, and that the goal of lower rates needs to be balanced against other policy objectives.

Hence my persistent argument that the right needs to embrace a kind of small-government egalitarianism, which focuses on means-testing entitlements and ending corporate welfare and capping upper-income tax breaks (all ideas that Ryan supports) but then plows some of the savings into payroll tax cuts or a family-friendly tax reform or an expanded earned income tax credit, rather than just using them to keep (ahem) Mitt Romney’s taxes as low as possible. This has always been my biggest problem with the Ryan budget: In an age of stagnating incomes in the middle and reduced mobility at the bottom, its proposed reform of the welfare state doesn’t do enough to foster equality of opportunity.

August 20, 2012 in Political News, Tax | Permalink | Comments (3) | TrackBack (0)

Brian Tamanaha's Revenge: 'Guilty as Charged'

FailingFollowing up on this morning's post, Brian Tamanaha's Revenge:  Balkinization: I'm the Villain:

Thus far I have refrained from responding to critiques of my book, but this one is too personal to leave unanswered.

First let me make clear that I have had no contact of any kind with SLU's new dean and have no plans to "lunch" with him; nor will I meet with him if he reaches out to me. ...

Walker's second cheap shot -- "How convenient" -- also misses the mark. I have been arguing for years -- long before I moved to Wash. U. -- that non-elite law schools should not emulate the academic model set by elite law schools. ...

As for reform, I believe every law school (from Thomas Jefferson to Harvard, to SLU and Wash. U.) should carefully examine tuition, debt, and the allocation of resources, and every faculty should strive to find ways to operate in a more cost efficient fashion. If that's "Tamanaha's revenge," then I'm guilty as charged, and legal educators across the country can throw darts at me.

Update:  Anders Walker (Associate Dean for Research and Faculty Development, St. Louis), Tamanaha's Response:

Tamanaha does not seem to notice the contradiction in praising our junior faculty, most of whom have interdisciplinary degrees, meanwhile arguing that "non-elite law schools should not emulate the academic model set by elite schools." ... Why not make non-elite law schools even more dynamic sources of talent by introducing post-tenure review ...

Tamanaha has written an incendiary book that WILL be read by university presidents, trustees, and others eager to cut cost, strip faculty resources, and stick it to law professors. Even if Tamanaha doesn't want to lunch with these people, it doesn't matter. He will be the topic of conversation.

August 20, 2012 in Legal Education | Permalink | Comments (41) | TrackBack (0)

Bloomberg: Tax Whistleblower Suits on the Rise

August 20, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Law Class of 2015 Will Have Six-Figure [Taxable] Income ... in 2035

The Law School Tuition Bubble:  Class of 2015 Law Grads Will Have Six-Figure Earnings After All, by Matt Leichter:

Certainly that’s what the IRS will tell them in 2035 when ED cancels their loan balances on IBR. Of course it won’t be real income; it’s non-negative income that they’ll never see but will have to pay income tax on nonetheless. Don’t worry though, after they wipe out their savings and take second mortgages on their houses (they will own houses, right?) they will learn the true value of higher education, to say nothing of the Social Security system they will depend on into their dotage.

This joke popped into my mind when the powers that be at the Federal Reserve opened their ecclesiastic doors and told us that six-figure student loan debt isn’t a problem and certainly not a national crisis.

August 20, 2012 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Bloomberg: Taxman Coming for Online Shoppers

August 20, 2012 in Tax | Permalink | Comments (0) | TrackBack (0)

Willens: IRS Moves to Curtail Tax-Free Repatriation of Foreign Earnings

Tax Analysts Robert Willens (Robert Willens LLC, New York), IRS Moves to Curtail Tax-Free Repatriation of Foreign Earnings, 136 Tax Notes 847 (Aug. 20, 2012):

The IRS continues to police schemes that are designed to enable U.S. shareholders of foreign corporations to extract undistributed earnings without U.S. tax consequences. The latest strategy was implemented through an outbound all-cash "D" reorganization in which the transferred property consisted primarily of intangible assets. As was the case with the strategy's predecessor, the "Killer B" transaction, the IRS eliminated the viability of the technique [Notice 2012-39].

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

August 20, 2012 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Brian Tamanaha's Revenge

St. Louis LogoFollowing up on my recent posts (links below) on the turmoil at St. Louis over the abrupt resignation of Dean Annette Clark and the naming of local practitioner Tom Keefe as Interim Dean:  Anders Walker (Associate Dean for Research and Faculty Development, St. Louis), Tamanaha's Revenge:

[O]ur interim dean recently read Failing Law Schoolsand liked it. 

Oh shit.

Brian’s sacred cow killing polemic boasts a new convert … and soon they’ll be lunching. Now what?  For those of us scrambling to keep things afloat here, what began as an ugly dispute between the Dean and the President is now morphing into something very different, a Tamanaha-esque audit of legal education in its current state, including questions about tuition, faculty resources, and the merits of scholarship. ... The solution, argues Tamanaha, is for law schools to adopt a tiered approach, with elite institutions like Wash U continuing along the scholarly model and non-elite schools like SLU adopting a low tuition, practical skills approach.   How convenient. ...

FailingIn 187 concise pages, Tamanaha makes a convincing case that legal education is "failing society."  To his credit, few can deny that US News has distorted incentives, that tuition has grown too fast, and that the ABA has inhibited market innovation.  Yet, the question remains whether faculty scholarship per se is part of the problem.  For example, many of our best scholars at SLU are also our best teachers – as indicated by their student-generated teaching evaluation scores.  One reason for this, I suspect, is that faculty scholarship actually enhances classroom teaching, making it interesting and fresh – very different from classes where faculty continue to use casebooks from 1982.  ... Why not measure faculty productivity by linking scholarship to teaching scores?  

More problematic is Tamanaha’s point about the relationship between faculty salary and tuition.  Here, his data is hard to refute.  Currently, faculty salaries constitute the primary expense at law schools, and a direct obstacle to lowering tuition.  Further, lowering tuition is important, particularly for non-elite schools.  If SLU could lower its tuition by 5 or 10K, for example, we could ease debt burdens for students and successfully out-compete peer institutions, arguably remaining viable even in the worst of market conditions.  However, it is not clear to me that faculty scholars should be the first to go.  Rather than punishing productive faculty who are out-performing in both teaching and scholarship, it seems to me that the primary problem (and cost), are under-performing faculty who have given up on scholarship, lost interest in teaching, and taken up novel writing.  On this point, the mysterious missing topic in Tamanaha’s book is post-tenure review.  Why?  Brian alludes to his frustration with non-productive, absent faculty in his prologue, but then drops the subject.

Prior TaxProf Blog coverage:

August 20, 2012 in Legal Education | Permalink | Comments (4) | TrackBack (0)

How Big Government and Big Business Squeeze Entrepreneurs

Wall Street Journal op-ed:  How Big Government and Big Business Squeeze Entrepreneurs, by Chip Mellor (President, Institute for Justice):

Wisconsin's Elmer Kilian wants the chance to earn an honest living. So do Nevada's Lissette Waugh, Florida's Silvio Membreno and countless other entrepreneurs who have the drive and ability to put themselves and others to work.

Standing in their way are regulations imposed at the federal, state and local levels—regulations designed not to protect the public's health and safety but to protect politically powerful private businesses from new competition. These regulations are in many cases unconstitutional uses of government power, and in all cases they are unwise uses of public resources at a time when unemployment rates have lingered above 8% for 41 straight months, the longest such streak since World War II.

For decades, Elmer Kilian has prepared tax returns for his friends and neighbors on his lace-covered dining room table. He is typical of more than 350,000 American tax preparers who may now be put out of business because of an IRS power grab.

Under new regulations imposed last year—without congressional approval—the IRS now requires all paid tax preparers to become "registered tax return preparers" by paying extra fees, passing a government exam, and taking continuing-education classes annually. (Exempted from the mandate are attorneys, CPAs and politically powerful "enrolled agents.") Big tax-preparation firms such as H&R Block and Jackson Hewitt supported the licensing scheme, as did lobbying groups representing CPAs and others who are exempted from new regulation.

This new regulatory burden falls most heavily on independent tax preparers, who may soon be forced out of business. Compliance, especially for seasonal preparers like Mr. Kilian, is both expensive and time-consuming. Out-of-pocket costs of up to $1,000 for continuing-education courses, plus the travel and time required to take the classes, would make Mr. Kilian's venture unprofitable.

August 20, 2012 in Tax | Permalink | Comments (2) | TrackBack (0)

Sunday, August 19, 2012

TaxProf Blog Weekend Roundup

Fleischer: Romney's Tax Claim Is Bulls***

Following up on Friday's post, Romney Says He Paid 13% in Taxes for the Last 10 Years:  A Taxing Blog: Romney Paid 13% in 2009? I Call BS, by Victor Fleischer (Colorado):

What’s interesting is that Romney’s claim could be literally true but misleading — which means that Romney is full of bullshit, but not a dirty liar.  ... Romney’s claim may be literally true only because our method of tax accounting doesn’t calculate economic gains until those gains are realized through a sale or some other disposition.  Romney may have paid tax at a rate higher than 13% on his 2009 return, but the dollar amount was likely to be embarrassingly small as a percentage of his economic income and wealth.  That’s why he doesn’t want to release his tax returns.  Normal people don’t think like tax lawyers — they would see a tiny amount of tax paid and recognize the injustice.

Even though Romney’s economic income was probably high in 2009 -- the Dow went up about 15% that year -- savvy investors know they can cherry-pick losses to offset realized gains.  The capital loss carry-forward on Romney’s 2010 return suggests that he did just that.

According to Harry Frankfurt, bullshitters, unlike liars, do not deliberately make false claims about what is true. In fact, bullshit need not be untrue at all. Rather, bullshitters convey a favorable impression of themselves while remaining casually indifferent about whether what they say is true.  They quietly change the rules governing their end of the conversation so that claims about truth and falsity are irrelevant.

August 19, 2012 in Political News, Tax | Permalink | Comments (11) | TrackBack (0)

Top 5 Tax Paper Downloads

SSRNThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5:

1.  [1339 Downloads]  Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA, by Jonathan H. Adler (Case Western) & Michael F. Cannon (Cato Institute)

2.  [926 Downloads]  Top Ten Myths of Medicare, by Richard L. Kaplan (Illinois)

3.  [303 Downloads]  Does the Taxing Clause Give Congress Unlimited Power?, by Erik M. Jensen (Case Western)

4.  [194 Downloads]  International Tax Competition and Coordination, by Michael Keen (International Monetary Fund) & Kai A. Konrad (Max Planck Institute for Tax Law and Public Finance)

5.  [172 Downloads]  Gift Tax Completion and Retained Powers, by Bridget J. Crawford (Pace)

August 19, 2012 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Should a Tenured Professor Be Fired For This 'Joke'?

SullivanThe United States Merchant Marine Academy has begun proceedings to fire tenured professor Gregory F. Sullivan for telling this joke before he showed a documentary in his class:

If someone with orange hair appears in the corner of the room, run for the exit.

August 19, 2012 in Legal Education | Permalink | Comments (9) | TrackBack (0)