Monday, September 24, 2012
Update: Paul Campos (Colorado), Bad DealBook
Law schools have come under fire during these tough economic times, with critics saying that they leave too many graduates in debt, chasing too few employment opportunities. ...
There may be valid criticism about lower-ranked law schools, particularly those U.S. News places in the third and fourth tier. Such private schools often charge significant tuition but do not obtain the same employment outcomes. The question is whether changes can be made to lower their costs, and whether this will lead to better opportunities for their graduates.
The problem of law school is one that is ubiquitous to higher education — the current model is inherently expensive but even today, lower-priced alternatives don’t seem to meet the standards or be desired by many students.
It is here where revolutionary technologies like online learning may come into play. If it becomes accepted that many basics like contracts law can be easily taught by one professor online to thousands of students, then a law school can charge a lot less. But this is still mostly a theoretical change embraced by those outside academia that has yet to sweep universities. Even with one online course, some local presence will be needed to facilitate learning, particularly if there is skills training involved.
It may not be simple enough to just pin the blame on the costs of law school education. For 2011 law school graduates, as of nine months after graduation, only 65.4% were employed in jobs requiring passage of the bar. And law schools should learn to be more innovative, as other types of graduate programs are doing.
Law schools have also hurt themselves badly by failing to fully disclose certain statistics, including their employment rates. It is clear that the number of lawyers in the United States will fall as fewer people apply to law school. But this trend will probably shrink enrollment, not decrease the number of schools over all.
In the longer term, the question is whether there will be a recovery in law jobs as the economy heals. There is hope that will be the case. One study has found that the average lawyer will earn about $4 million — or twice as much as someone with a bachelor’s degree — over their lifetime of employment. In addition, law school provides a general education that is useful in other areas. Both presidential candidates have law degrees, as do the chief executives of a substantial number of companies in the Standard & Poor’s 500-stock index.
A hard look at reform appears to be a worthy goal, but any changes should consider whether they will actually reduce costs, and provide something students want. The problem of law school is thus the problem that all schools of higher education, even veterinary school, face.
We examine the tax rules for ownership of fungible securities in light of three recent cases addressing this issue, Samueli, Calloway, and Anschutz. We argue that ownership has no economic basis under an income tax because under a pure income tax ownership would not be needed to measure income. Rather than acting as a bedrock principle based in economics, ownership in a realization based income tax acts as a default rule for assigning tax characteristics to positions. For example, ownership determine characteristics such as holding periods, eligibility for special tax benefits such as the dividends received deduction, counting toward control or as qualifying consideration for various purposes, and so forth. Each of these characteristics, which we label tax attributes, is motivated by different policy considerations. Given the wide variety of policies behind the various tax attributes, no single concept of ownership can be expected to be appropriate in all cases. Therefore, tax rules for each characteristic start with the default rule of ownership but modify the assignment of the attribute based on the relevant policy considerations. Viewing ownership, as a mere default for assigning tax attributes, we propose a simple and clear rule for ownership of fungible securities which produces results similar to those of current law and yet which avoid the problems created by the recent court decisions on ownership of fungible securities.
Tax elections are prevalent. They include: elections that determine how certain business entities are classified; elections by individual taxpayers to either claim the standard deduction or itemize deductions; an election that determines the tax treatment of alimony payments; an election by divorced parents to determine which parent claims a child as a dependent; and elections that affect the tax consequences of certain corporate transactions; just to name a few.
Tax elections produce unfairness given that sophisticated, well-advised taxpayers will be most able to make favorable elections. Tax law is, by no means, alone in terms of benefiting sophisticated individuals. In many areas of law and of life, people who acquire relevant information and plan ahead of time will fare better than those who do not. However, despite the prevalence of societal advantages for the informed, the existence of such preferences in tax law is especially problematic. Objections to the advantages that are bestowed upon sophisticated individuals by other areas of law are often met with the response that redistribution should be relegated to the tax system. For example, those arguing for rules that facilitate economically efficient outcomes in contractual relationships will often contend that the manner in which the benefit of a contract is divided between the parties need not be addressed by contract law because any desired redistribution should be accomplished through the tax system. Because other areas of law dodge criticisms of bias against unsophisticated individuals in this manner, tax law must be less tolerant of bias against ill-informed, unsophisticated individuals. To further the aim of reducing such bias, this paper discusses how to design tax elections to mitigate the unfairness and other harms that they cause.
Heather M. Field (UC-Hastings) is the commenter.
Jason J. Fichtner & Jacob M. Feldman (both of George Mason University, Mercatus Center), Taxing Marriage: Microeconomic Behavioral Responses to the Marriage Penalty and Reforms for the 21st Century:
Politicians often stress that marriage is a key institution that promotes family values. However, many aspects of the federal tax code do not promote marriage and may in fact provide disincentives and penalize marriage. As an alternative to marriage, cohabitation is a common choice for low-income couples facing significant fiscal penalization from the joint income filing requirement, particularly when qualifying for the Earned Income Tax Credit (EITC). In part because of the additional tax liability associated with joint tax filing, many middle-income and upper-income people are forgoing marriage as well. As more women enter the labor force and female wages rise, the marriage penalty becomes increasingly important to horizontal tax equity concerns and for economic growth. Today, the United States is one of only seven Organisation for Economic Co-operation and Development (OECD) countries to employ joint taxation for married couples.
Itai Grinberg (Georgetown) testified today in the Finance Committee of the German Bundestag against ratification of an anonymous withholding agreement entered into between Germany and Switzerland. He reports that the the agreement has become a major political football in Germany, and also has important consequences for the future of FATCA. The title of the testimony is Anonymous Withholding Agreements and the Future of International Cooperation in Taxing Foreign Financial Accounts:
Chairwoman Reinemund and members of the Finance Committee, this testimony will make three key points:
• Automatic information exchange is superior to anonymous withholding for the purpose of combating tax evasion involving the use of foreign financial accounts.
• German ratification of the Swiss-German anonymous tax withholding agreement would stifle the emergence of a multilateral automatic information exchange system. As a result, Germany would be less able to address its own concerns with tax evasion through foreign accounts over the medium term. By ratifying this agreement, Germany would also slow the development of a multilateral system that would allow many other countries around the world to effectively address their concerns with tax evasion through foreign accounts.
• Switzerland has in effect agreed to automatic information exchange with the United States. Germany could pressure Switzerland unilaterally, multilaterally, and through the EU for a similar agreement.
Eric Solomon (Ernst & Young, Washington, D.C.), Corporate Inversions: A Symptom of Larger Tax System Problems 67 Tax Notes Int'l 1203 (Sept. 23, 2012):
The enactment of § 7874 in 2004 substantially curtailed inversion activity by U.S. corporations. Nevertheless, some U.S. corporations have inverted and other corporations have considered inverting, although recent temporary regulations have made avoiding the application of § 7874 more difficult. This article examines why U.S. corporations engage in inversions and continue to consider them. Inversion activity is a symptom of problems in the U.S. international tax system that need to be addressed.
All Tax Analysts content is available through the LexisNexis® services.
The Colloquium will focus on analytical and normative legal philosophy as applied to income tax law, examining judicial reasoning in income tax cases. Seminars will examine such questions as: do legal philosophers’ expositions of the nature of law adequately explain the nature of income tax law? What light do theories of jurisprudence that have not traditionally examined income tax law shed on this question? What is the relationship between law and morality in the context of income tax?
Here are today's papers (abstracts are available here):
- John Prebble (Victoria University of Wellington, Faculty of Law), Jurisprudential Perspectives of Taxation Law: an Introduction
- William B. Barker (Penn State), Private Law as the Cause of Ectopia in Tax Law
- W. Bradley Wendel (Cornell), Anti-Avoidance Rules as Inclusive Positivism: A Comment on John Prebble’s Ectopia and Morality-of-Avoidance Claims
- Henk Vording & Sjoerd Douma (both of Leiden University), The Purpose of the Tax Law – A Comparative Analysis of Discourses on Tax Expenditures, on Fiscal State Aid, and on Abuse of Law: A Study of Ectopia
- Craig Elliffe (University of Auckland), Thin Capitalisation Rules, Treaties, and Ectopia: Does the Ratio in the New Zealand Thin Capitalisation Rules Contravene New Zealand’s Tax Treaty Obligations?
- Catherine Brown (University of Calgary) & Art Cockfield (Queen’s University), Rectifying Tax Mistakes versus Retroactive Tax Laws: Reconciling Competing Visions of the Rule of Law
- Maria Amparo Grau Ruiz (University Complutense Madrid), The Autopoietic Interaction Between International and Domestic Tax Legal Orders Through the Lens of Judgments in Selected Spanish Cases, With an Introduction to the Theory of Autopoiesis by John Prebble
- Fiona Martin (University of New South Wales), Charities Carrying on Business: A Legal Fiction or an Example of the Dominance of the Market Economy Over the Gift Economy
- Patricia A. Brown (Miami), Searching for “The Real Party in Interest”: Publicly-traded Companies in U.S. Limitation on Benefits Provisions
- Jennifer Bird-Pollan (Kentucky), Nozick, Libertarianism and the Estate Tax
Yale Law Library New Exhibit: The Comic Art of Joseph Hémard:
It would take a genius to illustrate one of the most boring books imaginable, a code of tax laws, and create a comic tour-de-force. That genius was Joseph Hémard (1880-1961), who in his lifetime was probably France's most prolific book illustrator. His illustrations are the focus of the latest exhibit in the Yale Law Library, And then I drew for books: The Comic Art of Joseph Hémard.
The exhibit, on display until December 15, is curated by Farley P. Katz and Michael Widener. Katz, a tax attorney from San Antonio, has built one of the world's finest collections of Hémard's works. Widener is the Rare Book Librarian at the Lillian Goldman Law Library.
Hémard's illustrations have a distinctly French character, usually comic, and often mildly erotic. Many of his illustrations were executed in pochoir, a hand stenciling process producing intense, gorgeous colors still vibrant after three-quarters of a century.
The exhibit showcases eight of the 183 illustrations in Hémard's Tax Code, donated to the Yale Law Library by Katz, along with two of the other three law books on display from the library's Rare Book Collection.
(Hat Tip: Charlotte Crane.)
Tax codes are notoriously dull reading. They are devoid of interest to anyone but professionals trained in the arcane language of the tax laws who, even then, never actually consult them except when required by a specific task at hand. The idea of a lengthy, commercially published tax code, profusely illustrated with humorous cartoon-like drawings full of puns and whimsy, with illustrations beautifully hand printed in color, seems almost unimaginable. But such an incredible book exists! Add to this the facts that the book was printed in occupied Paris near the end of World War II and that it contains numerous risqué and decidedly antiauthoritarian images, and one begins to appreciate how truly fantastic this book is.
In a brief preface to the Code, Hémard observed that, given “the complexity of the tax system,”22 it is understandable that some must rely on qualified persons to comply with their tax obligations, and that others, although essentially blind to the tax laws, choose to handle their tax obligations themselves, “strengthened by the illusion that a dark night does not offer more perfidious obstacles to the blind man than to the perceptive one.” He then expressed his hope—which must be taken as purely artistic in context—that “the especially arid matters covered by the general Code of direct taxes would receive some useful light through the art of the illustrator.” Hémard brilliantly achieved his goal; his illustrations bring the sterile world of the tax code to a vibrant and wonderful life, filled with humor and populated with peasants and shopkeepers, children and relatives, lovers and crooks, wealthy businessmen and vagabonds, all being squeezed for their last sous by the relentless and merciless tax collector.
This paper will argue that tax policy is one of the keys to a sustainable future. Specifically, this paper will look at a variety of existing ways federal income tax is currently equipped to promote sustainability. The paper will also identify strengths, weaknesses, and suggested improvements associated with each of the identified current ways federal income taxation promotes sustainability. Finally, this paper will suggest additions to the Internal Revenue Code to further encourage sustainability.
- Carnage in 1L Law School Enrollments
- WSJ: Obama's 100% Capital Gains Tax Increase Won't Raise Revenue, But Will Hurt Economy, Jobs & Wages
- 2012 Corporate Tax Competitiveness Rankings
- FactCheck.org: Do Five Economic Studies Support Romney's Tax Plan?
- Johnson & Waggoner: Congress Should Curb Perpetual Trusts
- Top 5 Tax Paper Downloads
- The Double Irish Sandwich: Reforming Overseas Tax Havens
- Measures of R&D Tax Incentives for OECD Countries
Sunday, September 23, 2012
Calvin H. Johnson (Texas) & Lawrence W. Waggoner (Michigan), 'Perpetual Trusts: The Walking Dead' and 'Congress Should Effectively Curb GST Exemption for Perpetual Trusts', 136 Tax Notes 1215 (Sept. 3, 2012):
In separate but complementary letters to the editor of Tax Notes, Calvin Johnson and Lawrence Waggoner respond to an article by Dennis Belcher and seven other practicing attorneys that defend the GST exemption for perpetual trusts. In Federal Tax Rules Should Not Be Used to Limit Trust Duration, 136 Tax Notes 832 (Aug 13, 2012), the attorneys argue that the duration of a trust is a state law issue. Their article is actually a response to a Shelf Project article: Lawrence W. Waggoner, Effectively Curbing the GST Exemption for Perpetual Trusts, 135 Tax Notes 1267 (June 4, 2012).
In Perpetual Trusts: The Walking Dead, 136 Tax Notes 1215 (Sept. 3, 2012), Johnson argues that the harm to the national wealth done by perpetual trusts is a federal responsibility. Trusts reduce the value of wealth, and settlors could figure that out if they were not seduced by the tax exemption. Specific settlor instructions get out of date and become an impediment after a generation. Delegating to trustees accountable to no one means trusts are managed primarily for the benefit of the trustees. Perpetual trusts become monsters, the walking dead. The federal exemption is motivating the harm; federal law is responsible for the harm that perpetual trusts cause.
In Congress Should Effectively Curb the GST Exemption for Perpetual Trusts, 136 Tax Notes 1216 (Sept. 3, 2012), Waggoner reaffirms his Shelf Project proposal and his criticism of the Treasury Department’s proposal for dealing with perpetual trusts. The Treasury Department’s proposal would leave many trusts and much wealth GST exempt for much longer than Congress originally intended. The Waggoner proposal, if enacted, would be much more effective. Belcher and the other attorneys argue that Congress should do nothing (a position refuted by Johnson), but if Congress is to do something, the attorneys essentially embrace the Treasury proposal.
All Tax Analysts content is available through the LexisNexis® services.
There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #3, #4, and #5:
1. [312 Downloads] Paul Ryan's Roadmap to Inequality, by Edward D. Kleinbard (USC)
Stephen C. Loomis (J.D. 2012, St. Mary's), Recent Development, The Double Irish Sandwich: Reforming Overseas Tax Havens, 43 St. Mary's L.J. 825 (2012):
This Recent Development will analyze the current international taxation regime along with the Double Irish arrangement and then offer possible solutions to close the loopholes. Part II will introduce and explain some basic international taxation rules, as a foundation for the analysis. The mechanics of the Double Irish will be examined in Part III. Part IV then investigates the congressional intent behind the Internal Revenue Code provisions that allow for the Double Irish, and looks at some of the consequences of allowing the Double Irish scheme to continue existing. Possible solutions to close the loopholes and harmonize the taxation of domestic and international corporations will be discussed in Part V, and Part VI will provide some concluding thoughts.
This paper outlines tax policy details from 26 OECD countries between 1980 and 2006 and provides a summary quantitative measures of their relative generosity. Separate measures for the after-tax cost of labour, other current expenditure, machinery equipment and buildings and structures are presented and also a measure of tax policy applicable to multinational subsidiaries undertaking R&D on behalf of the parent firm. The purpose of this working paper is to make this data available for other researchers.
Saturday, September 22, 2012
Paul Campos (Colorado) blogs preliminary Fall 2012 enrollment statistics from 40 law schools. Here are the law schools with declining 1L enrollments, ranked by the percentage decline from 2011:
Charleston -34.4% Hamline -33.0% Wake Forest -31.4% Valapraiso -25.2% Gonzaga -25.0% Penn State -22.7% George Mason -21.0% Arizona -20.9% Texas -20.0% UC-Hastings -20.0% Oregon -19.7% William Mitchell -19.1% Houston -18.2% Wayne State -18.2% Case Western -17.9% Connecticut -16.6% Washington U. -16.1% Georgia -16.0% Indiana -15.8% Geo. Washington -15.6% Albany -14.0% Boston U. -12.8% Seattle -11.1% Vanderbilt -10.4% Minnesota -10.2% William & Mary -9.7% Columbia -7.3% Colorado -6.7% Alabama -6.1% USC -5.5% Michigan -3.9% Michigan State -2.9% Notre Dame -2.7% Yale -1.0% UC-Davis -0.5% St. Thomas -0.0%
Update: The chart below includes additional schools added by Paul Campos and corrects the data for Charleston (provided by Dean Andrew Abrams):
Hamline -33.0% Wake Forest -31.4% Hawaii -25.9% Valapraiso -25.2% Gonzaga -25.0% Penn State -22.7% Seton Hall -22.6% Charleston -21.1% George Mason -21.0% Arizona -20.9% Texas -20.0% UC-Hastings -20.0% Oregon -19.7% William Mitchell -19.1% Houston -18.2% Wayne State -18.2% Case Western -17.9% Connecticut -16.6% Washington U. -16.1% Georgia -16.0% Indiana -15.8% Geo. Washington -15.6% Santa Clara -15.3% Albany -14.0% Hofstra -13.6% Boston U. -12.8% Stetson -12.8% Oklahoma City -11.9% Seattle -11.1% Vanderbilt -10.4% Minnesota -10.2% William & Mary -9.7% St. John's -9.6% Columbia -7.3% Colorado -6.7% Florida State -6.5% Alabama -6.1% USC -5.5% Michigan -3.9% Michigan State -2.9% Notre Dame -2.7% Yale -1.0% UC-Davis -0.5% St. Thomas -0.0%
WSJ: Obama's 100% Capital Gains Tax Increase Won't Raise Revenue, But Will Hurt Economy, Jobs & Wages
Wall Street Journal editorial: A Capital Gains Primer: Why a Tax Rate Differential Is Fair and Helps the Economy:
On Thursday the House Ways and Means and Senate Finance committees held a rare joint hearing on taxing capital gains in the context of tax reform. The timing couldn't be better because President Obama recently restated his support for lifting the top capital gains tax rate next year on those with earnings above $250,000 to 23.8%, or almost 60% above today's 15% rate. If Mr. Obama's Buffett Rule is also adopted, the rate would rise to 30% for those earning $1 million—the highest rate since the late 1970s.
The question is to what purpose? This won't raise much if any revenue for the government (see Obama's Revenue Soup, April 9, 2012). But it will impose a big cost on the economy. ...
The current Democratic obsession with raising the capital gains tax comes from a mistaken belief that the preferential rate applied to the sale of a family business, farm or financial asset is a "loophole" that mainly benefits the rich.
But that ignores the vital link between tax rates and capital investment. The lower the tax, the greater the incentive to take risks. ...Thanks to rate reductions in 1978, 1981, 1997 and 2003 (see chart), the statutory capital gains tax has fallen to 15% from about 40%. These rate cuts unleashed historic levels of venture-capital funding for business start-ups. ...
Far from being a loophole, the low tax rate applied to capital gains is beneficial and fair for several reasons.
First, under current tax rules, all gains from investments are fully taxed, but all losses are not fully deductible. This asymmetry is a disincentive to take risks. A lower tax rate helps to compensate for not being able to write-off capital losses.
Second, capital gains aren't adjusted for inflation, so the gains from a dollar invested in an enterprise over a long period of time are partly real and partly inflationary. It's therefore possible for investors to pay a tax on "gains" that are illusory, which is another reason for the lower tax rate.
Third, since the U.S. also taxes businesses on profits when they are earned, the tax on the sale of a stock or a business is a double tax on the income of that business. ...
The main reason to tax capital investment at low rates is to encourage saving and investment. Many economists believe that the economically optimal tax on capital gains is zero. ... Almost all economists agree—or at least used to agree—that keeping taxes low on investment is critical to economic growth, rising wages and job creation. ...
Democrats who argue for higher taxes on capital are advocating less investment and dooming workers to fewer jobs at lower wages.
Corporate income tax reform is receiving serious consideration in Washington. The Obama administration has suggested reducing the federal corporate tax rate from 35% to 28% while broadening the tax base. Presidential candidate Mitt Romney has said that he would cut the corporate tax rate to 25% if elected. ...
This bulletin presents new estimates of marginal effective tax rates (METRs) on corporate investment for 90 countries. We find that the U.S. effective tax rate on new corporate investment is 35.6% in 2012, which is almost twice the average rate for the 90 countries studied, and it is also the highest rate among the major industrial nations. These results underscore the need for U.S. policymakers to tackle corporate tax reform.
Effective Tax Rates for 2012 Figure 1 summarizes our corporate tax rate calculations. The U.S. METR is 35.6% in 2012, or almost twice the 90-country average of 18.2%. The average rate for the 34 Organization for Economic Cooperation and Development (OECD) nations is just 19.4%. While the U.S. corporate tax rate has remained high, the global trend for both statutory and effective corporate tax rates has been downward.
Table 1 on the next page shows METR calculations for 90 countries, including separate figures for the services and manufacturing sectors. The United States has the fourth highest effective tax rate on corporate investment in the world after Argentina, Chad, and Uzbekistan.
The United States has a high METR, a high statutory tax rate, and numerous special preferences in its corporate tax system. This noncompetitive and nonneutral tax structure is harmful to growth, and it results in relatively low government revenues because the high rates induce businesses to shift their investments and profits abroad.
Friday, September 21, 2012
Mitt Romney today released his 2011 tax return (FAQ). Curiously, the 2011 estimated return released in connection with Romney's extension reported $20,901,075 AGI, over $7 million more than the $13,696,951 AGI reported on his 2011 return as filed. $1.75 million of that amount represents a foregone charitable deduction:
- The Romneys donated $4,020,772 to charity in 2011, amounting to nearly 30% of their income.
- The Romneys claimed a deduction for $2.25 million of those charitable contributions.
- The Romneys’ generous charitable donations in 2011 would have significantly reduced their tax obligation for the year. The Romneys thus limited their deduction of charitable contributions to conform to the Governor's statement in August, based upon the January estimate of income, that he paid at least 13% in income taxes in each of the last 10 years.
The campaign also released a statement from PriceWaterhouseCoopers on the Romneys’ tax filings over 20 years, from 1990 – 2009:
- In each year during the entire 20-year period, the Romneys owed both state and federal income taxes.
- Over the entire 20-year period, the average annual effective federal tax rate was 20.20%.
- Over the entire 20-year period, the lowest annual effective federal personal tax rate was 13.66%.
- Over the entire 20-year period, the Romneys gave to charity an average of 13.45% of their adjusted gross income.
- Over the entire 20-year period, the total federal and state taxes owed plus the total charitable donations deducted represented 38.49% of total AGI.
The Romney campaign also released this letter from former IRS Commissioner (and current Skadden partner) Fred Goldberg:
These returns reflect the complexity of our tax laws and the types of investment activity that I would anticipate for persons in their circumstances. There is no indication or suggestion of any tax-motivated or aggressive tax planning activities. In my judgment, they have fully satisfied their responsibilities as taxpayers. They have done so by relying on a highly reputable return preparer and other advisors, who have in turn relied primarily on information provided by third parties to them and to the IRS. The end result of that process has been returns that include a multitude of schedules, IRS forms and accompanying statements that provide appropriate transparency and the proper payment of taxes that Governor and Mrs. Romney owe under current law.
Forbes: There's No Escape: Death, Taxes And Student Loans, by Robert W. Wood.
If a student loan borrower is unable to repay the money because he or she dies, that's the end of the story, not only for the lender but the Internal Revenue Service, too.
If the borrower is the parent of the deceased student, however, that's a different story. And Regina Friend can tell it from personal experience, the Baltimore Sun reports.
After the suicide last year of her son, who was a student at Temple University, both his student loans and the $55,400 she took out in ParentPlus debt were forgiven. But Friend was shocked this year to find out that the IRS expects her to pay a $14,000 tax bill because the forgiven debt is counted as personal income. ...
The U.S. Department of Education reported that it canceled $2.7 billion in student loans in 2011 when borrowers died, became disabled or went bankrupt. While Regina Friend's situation might not be unusual, it is impossible to tell from the data how many other parents are facing similar tax bills.
Kansas Journal of Law & Public Policy, Corporate Tax Reform: Making America Competitive, 21 Kan. J.L. & Pub. Pol'y 347-449 (2012):
- Taylor Calcara, Editor's Letter, 21 Kan. J.L. & Pub. Pol'y vi-vii (2012)
- Joseph J. Thorndike (Director, Tax History Project, Tax Analysts), The Durability of a Dysfunctional Tax: Public Opinion and the Failure of Corporate Tax Reform, 21 Kan. J.L. & Pub. Pol'y 347 (2012)
- David Cay Johnston (Syracuse University, College of Law), Corporate Tax Reform: Making America Competitive, 21 Kan. J.L. & Pub. Pol'y 371 (2012)
- George A. Plesko (University of Connecticut, School of Business) & Erin E. Henry (University of Connecticut, School of Business), Some Devilish Details of Corporate Tax Reform, 21 Kan. J.L. & Pub. Pol'y 382 (2012)
- Rosanne Altshuler (Rutgers University, Department of Economics), The Case for Fundamental Tax Reform, 21 Kan. J.L. & Pub. Pol'y 399 (2012)
- Raquel Alexander (University of Kansas, School of Business) & LeAnn Luna (University of Tennessee, College of Business), Value-Added Taxes: An Ingredient in Corporate Tax Reform, 21 Kan. J.L. & Pub. Pol'y 409 (2012)
This essay explores the ubiquitous law school institution, “The Faculty Workshop,” as an entrée into and manifestation of contemporary American legal thought. The Faculty Workshop is examined both as a regulator and expression of legal thought -- at once governance system and symptom. We close by discussing “Stage 4.”
As business and tax transactions become increasingly more sophisticated and global, federal agencies with limited resources struggle to police these transactions. Whistleblowers, with inside information of wrongdoing and a complex transaction, can provide a critical resource in the investigation of sophisticated transactions. The federal government’s need for whistleblowers to assist in the prosecution of white-collar crimes is greater now than it has ever been. This is certainly true for the Internal Revenue Service (“Service”). Without the intimate details of business transactions and other critical documentation that an employee whistleblower can provide, the Service would likely never uncover many tax shelters or frauds. While an employee whistleblower’s information can be invaluable, the Service’s use of a whistleblower’s information is not always simple.
This paper analyzes the Service’s utilization of employee whistleblowers in its claim investigation and looks to other federal whistleblower programs for possible lessons to apply to the Service’s program. Part One of this article examines the IRS Whistleblower Program’s administration and how the Program accepts whistleblowers’ information. This Part will critically analyze the Service’s prior overly conservative position permitting one-time only contact with employee whistleblowers to obtain information and its more recent guidance authorizing the possibility of subsequent employee whistleblower contact on a case-by-case basis. Part Two analyzes the potential risks of involving the whistleblower in an investigation, and specifically addresses the possibility of deputizing a whistleblower. Part Three explores the success of another federal whistleblower program under the False Claims Act that takes a more proactive approach to leveraging knowledge from whistleblowers and also examines whistleblower utilization under the Dodd-Frank Act and its Securities Whistleblower Incentives and Protection Program. In Part Four, this article discusses the consequences of the Service’s policy for whistleblowers. Finally, in Part Five, the article suggests policy alternatives that could allow the Service to better utilize employee whistleblowers using fewer agency resources and without running afoul of Fourth Amendment limitations.
The Legal Whiteboard: Drop in the Big Law Median Salary is Only Half the Story, by William D. Henderson (Indiana-Bloomington):
NALP just announced that the median salary for first year associates in Big Law has dropped from $160K to $145K. I think that is very significant. We are now back to to the entry level price point of 2007.
But to my mind, there is much bigger story here. In 2011, firms of 500+ attorneys hired 2,856 entry level lawyers. In 2007, that figure was 4,745. So, after five years, Big Law is paying the same wage but hiring 40% few lawyers. Compare 2007 NALP Nat'l Summary with 2011 NALP Nat'l Summary. ...
[T]here is a longterm trendline showing a declining number of private practice jobs -- and that is the economic engine that enables law schools to exist at current tuition levels.
- NALP, Median First-Year Big-Law Associate Salary Slumps to $145,000 in 2012, a Median Last Seen in 2007
- ABA Journal, Think $160K Is the Standard BigLaw Salary? Think Again, NALP Says
- Above the Law, New York to $190K? Keep Dreaming! New NALP Report Says Median Associate Salaries Have Slumped
- Business Insider, First-Year Lawyer Salaries Have Plummeted
- Paul Campos (Colorado), Progress of a Sort
- National Law Journal, The $160,000 Starting Salary at Large Firms Falling Out of Favor
New York Times DealBook: A Strategy of Tattletales at the IRS, by Victor Fleischer (Colorado):
No one likes a tattletale. But tax whistle-blowers sure are getting compensated for the animosity they evoke.
Bradley Birkenfeld, a former UBS banker, was awarded $104 million for bringing information to the IRS about tax evasion strategies at the Swiss bank. The New York attorney general’s investigation into private equity management fee conversions appears to have originated from a whistle-blower claim. Dean Zerbe, a former legislative aide on tax issues, now works at the National Whistleblowers Center, which has claims outstanding on $25 billion of tax underpayments.
Are whistle-blowers the new IRS business model?
Enforcement of tax laws requires finding a fair and effective way to overcome the information asymmetry between taxpayers and the IRS. The government starts off at a disadvantage. While the IRS has broad powers to demand information from taxpayers, it doesn’t always know what to look for. Furthermore, because of privacy laws, private individuals, academics, reporters and public interest organizations cannot effectively serve as watchdogs.
Relying on whistle-blowers is one approach. The ramped-up IRS program is still new. Building on the success of the False Claims Act at rooting out fraudulent Medicare billing practices and similar scams, Congress in 2006 increased the awards to whistle-blowers. They can now receive up to 30 percent of the taxes collected. ...
In my view, whistle-blowers or qui tam actions will remain a small part of the overall tax enforcement strategy. Relying on whistle-blowers means providing bounties to insiders willing to turn against their clients or employers. The strategy relies on bad blood — a crumbling business partnership, office politics, a divorce or some other source of conflict — to bring information to the government’s attention. In many cases, the IRS will have to team up with someone with unclean hands or a hidden agenda. Moreover, whistle-blowers will target black-and-white cases of tax fraud, while many aggressive tax planning techniques reside in the gray.
Meanwhile, changes in corporate governance and accounting have ushered in a quiet revolution in corporate tax compliance. It’s hardly the stuff of headlines, but the changes have proven effective in changing the mind-set of corporate executives. ...
For further reading on tax whistle-blowers, see Dennis J. Ventry Jr., Whistleblowers and Qui Tam for Tax, 61 Tax Lawyer 357 (2007).
For further reading on schedule UTP, see Bret Wells, New Schedule UTP: Uncertain Tax Positions in the Age of Transparency, 63 Baylor Law Review 392 (2011).
Balkinization: Law Schools Suffer Loss in Lawsuits, by Brian Tamanaha (Washington U.):
Of the dozen-plus misrepresentation lawsuits filed against law schools by their former students, in recent months three [DePaul, New York Law School, Thomas Cooley] have been dismissed (several have survived motions to dismiss and are in discovery). The core basis for the dismissal is the same in all three: prospective students cannot reasonably rely upon employment data posted by law schools. ...
These three law schools, and others facing similar suits, undoubtedly count these decisions as victories. But I cannot shake the sense that they mark a deep wound to the standing of law schools. The students we welcome in our doors are being warned by state and federal judges that they cannot take at face value the employment information we supply. For law schools, which have always held themselves out as honorable institutions of learning and professionalism, this is crushing.
Erik M. Jensen (Case Western), Post-NFIB: Does the Taxing Clause Give Congress Unlimited Power?, 136 Tax Notes 1309 (Sept. 10, 2012):
This article discusses the Supreme Court’s decision in National Federation of Independent Business v. Sebelius, which concluded that the penalty in the Obamacare legislation for failure to acquire suitable health insurance will be a tax authorized by the Taxing Clause in the Constitution. The article concludes that the decision is not nearly as broad as some critics have suggested (or supporters have hoped), and that it is unlikely, for a number of legal and political reasons, to lead to a significant expansion of congressional power. The article also discusses what the case had to say about constitutional limitations on the taxing power, particularly the direct-tax apportionment rule. And the article considers a bewildering hypothetical in Chief Justice Roberts’s opinion in NFIB, in which the Chief posited a penalty imposed on homeowners whose houses do not have energy efficient windows.
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The Tax Policy Center hosts a conference today on Fallout from Federal Tax Reform: Implications for State & Local Revenues:
Federal tax reform may put added pressure on state and local governments that already face severe fiscal challenges. Tax-exempt bonds and the deduction for state and local taxes are among the major preferences likely to come under scrutiny in any rewrite of the Revenue Code. In addition, lower income tax rates themselves would limit the market for tax-exempt debt. As a result, tax reform is likely to have significant policy and revenue implications for state and local governments and will raise important questions about federalism.
- John Buckley (Georgetown Law School)
- Harley Duncan (KPMG)
- Howard Gleckman (Tax Policy Center) (moderator)
- Kim Rueben (Tax Policy Center)
- Frank Shafroth (George Mason University)
Thursday, September 20, 2012
David Cay Johnston, The Fine Print: How Big Companies Use "Plain English" to Rob You Blind (Portfolio Hardcover, Sept. 18, 2012):
"No other modern country gives corporations the unfettered power found in America to gouge customers, shortchange workers, and erect barriers to fair play. A big reason is that so little of the news ... addresses the private, government-approved mechanisms by which price gouging is employed to redistribute income upward."
You are being systematically exploited by powerful corporations every day. These companies squeeze their trusting customers for every last cent, risk their retirement funds, and endanger their lives. And they do it all legally. How? It’s all in the fine print.
David Cay Johnston, the bestselling author of Perfectly Legal and Free Lunch, is famous for exposing the perfidies of our biggest institutions. Now he turns his attention to the ways huge corporations hide sneaky stipulations in just about every contract, often with government permission. ...
Johnston shares solutions you can use to fight back against the hundreds of obscure fees and taxes that line the pockets of big corporations, and to help end these devious practices once and for all.
Doug Berman (Ohio State) of our sister Sentencing Law & Policy blog asks What Will be the Real Tax Dynamics If (When?) a State Legalizes Marijuana?:
The question in the title of this post is prompted by this effective new AP piece, which is headlined "Pot Could Be Tax Windfall, but Skeptics Abound." ... I vaguely recall from my 2L tax class that the definition of income for federal tax purposes includes even ill-gotten gains. Thus, those making money currently on medical marijuana sales in various states should already be paying federal income tax even though they are violating federal criminal laws. Consequently, if (when?) a state legalizes all marijuana sales and allows more persons legally to earn income, there ought also be a benefit to the federal tax coffers as well even if federal criminal law does not change anytime soon. (Dare I joke that maybe Mitt Romney will come to endorse pot legalization initiatives with the hope of reducing the percentage of voters who pay no federal income tax?)
Vienna University of Economics and Business and the Institute for Austraian and International Tax Law host Tax Governance -- The Future Role of Tax Administrations in a Networking Society today in Vienna. Tax Profs with speaking roles at the two-day conference include:
- Jim Alm (Tulane), Tax Evasion and Aggressive Tax Planning
- Susan Morse (UC-Hastings), Voluntary Compliance
- Alex Raskolnikov (Columbia), Tax Crime and Sanctions
Stephanie Hunter McMahon (Cincinnati), An Empirical Study of Innocent Spouse Relief: Do Courts Implement Congress’s Legislative Intent?, 12 Fla. Tax Rev. 629 (2012):
Under existing law spouses are jointly and severally liable for their joint tax returns. As a result, the IRS may pursue either spouse for any taxes owed on those returns. Concerned that the IRS was seeking taxes from the “wrong” spouse under the joint and several liability regime, Congress expanded relief for “innocent” spouses in 1998. Many critics of this relief complain that, as it is applied, the statute offers too little relief to spouses, generally wives, who sign returns while being deceived or compelled by their mates. However, there has been no empirical study of whether the current relief is, in fact, what Congress intended. This article fills the void by first evaluating the provision’s legislative history to determine what relief Congress intended to provide when it acted in 1998. The article then examines the 444 cases appealing for relief under this provision in order to evaluate whether judges are deciding cases invoking the provision in ways consistent with that congressional objective. Thus, this article provides an empirical study of the success and failure of the innocent spouse provision from Congress’s perspective.
The Thirty-Eighth Annual Notre Dame Tax & Estate Planning Institute kicked off last night. Tax Profs with speaking roles at the three-day conference include:
- Patricia Brown (Miami), How International Tax Reporting Can Affect U.S. Individuals and Domestic Financial Institutions, and the Impact On U.S. Beneficiaries of Foreign Trusts
- David Herzig (Valparaiso), Communicating Planning Techniques in an Understandable Manner Using Spreadsheets, Comparisons and Short Summaries
- Jeffrey Pennell (Emory), Current Estate, Gift and Income Tax Developments for the Estate Planner
The House Ways & Means Committee and Senate Finance Committee hold a rare Joint Hearing today on Tax Reform and the Tax Treatment of Capital Gains:
The hearing will focus on the taxation of capital gains in the context of comprehensive tax reform. It will explore several tax reform policy issues relating to the treatment of capital gains, including background on capital gains taxation and its history, the impact of the capital gains tax rate on investor behavior, the treatment of capital gains as compared to ordinary income, the revenue-maximizing rate on capital gains, the distribution of capital gains income across taxpayer income levels, and the types of assets eligible for capital gains treatment.
- David H. Brockway (Partner, Bingham McCutchen)
- Leonard E. Burman (Professor, Syracuse University)
- Lawrence B. Lindsey (President & CEO, The Lindsey Group)
- David L. Verrill (Founder and Managing Director, Hub Angels Investment Group)
- William D. Stanfill (Founding Partner, TrailHead Ventures)
In connection with the hearing:
- Joint Committee on Taxation, Present Law and Background Information Related to the Taxation of Capital Gains (JCX-72-12)
- Center on Budget and Policy Priorities, Raising Today’s Low Capital Gains Tax Rates Could Promote Economic Efficiency and Fairness, While Helping Reduce Deficits
- Citizens for Tax Justice, Ending the Capital Gains Tax Preference Would Improve Fairness, Raise Revenue and Simplify the Tax Code
Tax Court Press Release:
Former Judge Russell E. Train, who served on the Tax Court of the United States from August 1, 1957, until July 31, 1965, died on September 17, 2012.
Prior to joining the Tax Court, Judge Train served as an attorney at the Joint Committee on Internal Revenue Taxation, United States Congress, from 1949 to 1953; as Clerk of the House Committee on Ways and Means in 1953 and 1954 and as Minority Clerk in 1955 and 1956; and as Assistant to the Secretary and Head of the Legal Advisory Staff at the Treasury Department in 1956 and 1957.
President Eisenhower appointed Judge Train as a Judge of the Tax Court of the United States on August 1, 1957, where Judge Train served until his resignation on July 31, 1965.
Following his service to the Tax Court, Judge Train was President of the Conservation Foundation from 1965 to 1969. He also served as Undersecretary at the Department of the Interior in 1969, as Chairman of the Council on Environmental Quality from 1970 to 1973, as Administrator of the Environmental Protection Agency from 1973 to 1977. He served as President and Chief Executive Officer of the World Wildlife Fund-U.S. from 1978 to 1985, and as Chairman of its board from 1985 to 1994.
In 1991 President Bush awarded Judge Train the Presidential Medal of Freedom, which is the nation’s highest civilian award, for his groundbreaking conservation and environmental efforts.
New York Times DealBook: Distortion in Tax Code Makes Debt More Attractive to Banks, by Jesse Eisinger (ProPublica):
[B]anks pay taxes, but they pay a lot less thanks to a giant and underappreciated distortion in our nation’s tax code. Moreover, this tax code distortion makes the financial system and the economy more fragile, prone to bankruptcies and runs. Banks profit, and the economy teeters. Great bargain, huh?
It’s the tax code’s favoring of debt over equity.
For businesses, debt interest payments are tax deductible; equity payments, like when a company pays out a dividend, are not. At the margin, this encourages entities to take on more debt than they otherwise would, as Steven M. Davidoff noted in a Deal Professor column earlier this year. More debt not only makes companies more vulnerable to bankruptcy but also makes investors more susceptible to panics, when they withdraw their capital en masse. More equity would make the world more stable.
“The worst thing the tax code can do,” says Victor Fleischer, a tax specialist at the University of Colorado, “is to make it harder to use a sensible capital structure.” Mr. Fleisher, a contributor to The New York Times DealBook, testified in front of Congress last year about this problem.
This distortion is well known. President Obama, in his tax reform proposal, mentioned it, though he didn’t make any specific proposal about what to do about it. The Republican candidate, Mitt Romney, is proposing substantial tax cuts with the loss of revenue made up with the closing of loopholes. He has yet to specify any of those loopholes, but corporate debt interest deductibility hasn’t been in the conversation. ...
Are there solutions to this distortion?
There are two choices: reduce or eliminate interest deductibility or introduce some deduction for equity. Neither seems particularly feasible for some time. ...Mr. Fleischer suggests that one way to limit the distortion would be to eliminate the deduction to the extent a financial institution exceeds a ratio of debt-to-equity of 5 to 1. If a bank has borrowed $6 for every $1 in stock, then it doesn’t get to deduct the interest payments on that extra dollar of debt. That would make debt more expensive and make banks less inclined to borrow as much.
And it would help stop banks from being moochers.
The analysis of this Article yields the following conclusions. First, the courts need to apply a uniform standard of production and persuasion to tax matters. With “vagueness, uncertainty or confusion as to the scope or extent of the burden, we do not have a practical or just legal system. In order to alleviate the tension between innocent taxpayers and noncompliant taxpayers, a new initial determination must take place. The taxpayer, who then meets this new initial burden, would benefit from application of a predictable methodology from the aforementioned list. This new structure would yield a higher compliance rate for this type of underreporting. Part II provides a brief overview of the taxpayer requirements under current law. Part III explores the foundation for the zero-basis rules and the best-guess rules, reconciling the two ideologies through the explanation of the burden of proof. Part IV sets out the new initial burden and alternatives for the court or the Service to implement under a correctly applied burden of proof.
The Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Governmental Affairs holds a hearing today on Offshore Profit Shifting and the U.S. Tax Code:
The Subcommittee will examine the shifting of profits offshore by U.S. multinational corporations and how such activities are affected by the Internal Revenue Code and related regulations.
- Reuven Avi-Yonah (University of Michigan School of Law)
- Jack T. Ciesielski (President, R.G. Associates)
- Stehen E. Shay (Harvard Law School)
- Bill Sample (Corporate Vice President for Worldwide Tax, Microsoft)
- Bett Carr (Partner, International Tax Services, Ernst & Young)
- Lester Ezrati (Senior Vice President and Tax Director. Hewlett-Packard)
- John N. Mullen (Senior Vice President and Treasurer, Hewlett-Packard)
- Susan M. Cosper (Technical Director, Financial Accounting Standards Board)
- Michael Danilack (Deputy Commissioner (International), Large Business and International Division, IRS)
- William J. Wilkins (Chief Counsel, IRS)
- Bloomberg, Microsoft Avoided Billions in U.S. Tax, Senate Memo Says
- Politico, Carl Levin Targets Microsoft, HP Tax Strategies
- Reuters, Microsoft, HP Skirted Taxes Via Offshore Units: Senate Panel
Wednesday, September 19, 2012
Ronald C. Den Otter (California Polytechnic State University, Department of Political Science) reviews the new book by Brian Tamanaha (Washington U.), Failing Law Schools (University of Chicago Press, 2012) in the Law and Politics Book Review:
This book is bound to upset just about everyone: law school deans and other administrators, law professors, and anyone else who has a vested interest in maintaining the status quo. As with any exposé, the author is bound to make plenty of enemies. Those who benefit from the status quo will continue to rationalize their own self-interested behavior by minimizing the aforementioned problems or passing the blame. Or they will complain that Tamanaha has been unfair. If anything, he is too easy on law schools. Many of them are taking advantage of the naivety of their students. If that were not enough, students considering law school also may not be receptive to Tamanaha's message because they would rather follow their dreams than be practical. As long as they continue to make poor judgments about attending law school, co-enabled by federal loans and misleading data produced by law schools, the situation will not improve until, perhaps, the bubble bursts.
In any event, they should not kill the messenger. Tamanaha is a well-respected law professor but does not spare anyone, even himself, who bears at least some responsibility for this disturbing state of affairs. Some will see him as an apostate. Others will see him as exaggerating how bad the situation is. Above all, I admire his courage to reveal the truth. As a J.D. myself and a pre-law advisor, it is hard to be candid with students who want to become a lawyer. Who wants to pour cold water on their professional aspirations? Nevertheless, someone needs to impress upon them the possibility that law school may not be the right choice. If the tone of this review seems indignant, it is designed to be. Law schools still have incentives to paint a rosy picture of legal employment when doing so brings in much-needed revenue. Far too many applicants will continue to put their heads in the sand. Tragically, then, Tamanaha is likely to be our Cassandra after all.
Other reviews of Failing Law Schools:
- Jim Chen (Dean, Louisville)
- Chronicle of Higher Education
- Stanley Fish (Florida International)
- Scott Greenfield (here and here)
- Bill Henderson (Indiana)
- Paul Horwitz (Alabama)
- Orin Kerr (George Washington)
- Brian Leiter (Chicago)
- National Law Journal
- Robert Steinbuch (Arkansas-Little Rock)
- Washington Post
(Hat Tip: Mike Talbert.)
When poor people pay no federal income taxes and get a government refund because of such programs as the earned-income tax credit, Republicans are incensed, implying that if only the poor paid their fair share that the deficit would disappear. They never suggest that corporations like GE pay their fair share, even though the G.E. example is far from unique, according to Citizens for Tax Justice.
The complexity of the corporate income tax makes it easy to evade and avoid American taxes. Edward D. Kleinbard, a professor of tax law at the University of Southern California, points to the easy availability of tax havens, where corporations artificially book their profits and avoid taxation on them. ...
Republicans often point to the statutory corporate tax rate in the United States as evidence that American companies are overtaxed. Indeed, it is true that the United States has the highest statutory central government tax rate among members of the Organization for Economic Cooperation and Development. The combined statutory rate in the United States is 39.2%, including state taxes, compared with an average of 29.6% in the OECD.
However, as a Sept. 13 report from the Congressional Research Service explains, looking only at the statutory rate is highly misleading as an indication of the burden of the corporate tax. That is because it does not take account of the many tax expenditures that reduce the effective tax rate paid by American corporations. In 2011, they reduced corporate tax revenues by $159 billion.
As a consequence, the weighted effective tax rate – taxes as a share of profits – is 27.1% in the United States, which is below the 27.7% average rate of OECD. nations. The weighted average marginal tax rate on corporations – the tax on each additional dollar earned – is 20.2% in the United States, compared with 18.3% in the OECD. ...
The Congressional Research Service report also notes that in the United States corporate taxes as a share of GDP were the third lowest among all OECD. countries in 2009 – 1.7% of GDP (including state taxes), compared with an OECD average of 2.8% of GDP. ...
One driving force for tax reform is a widespread belief, on both sides of the aisle, that the statutory corporate tax rate should be reduced. That is fine as long as the tax base is broadened by eliminating loopholes. But the idea that cutting the tax rate is a magic bullet to jump-start growth is nonsense, because corporate taxes are, in fact, quite low.
Defined value clauses used to value nonmarketable family limited partnership (FLP) interests create valuation distortions and other public policy issues. This paper describes these abuses and proposes the employment of restrictions similar to those applied to pecuniary formula marital deduction clauses. The article explains how pecuniary formula marital deduction provisions created valuation distortions by allowing for undervaluation of the marital share that were remedied by the IRS’s Rev. Proc. 64-19 and the enactment of section 2056(b)(10). The article analyzes recent case law expanding the use of defined value clauses into the FLP area and criticizes the courts for not applying the public policy doctrines of Procter and Robinette to those cases. The article distinguishes defined valuation clauses in the FLP context and shows how all fixed value clauses are not equivalent. Finally, the article proposes solutions to deal with the valuation distortions that these clauses create.
New York Times, Room for Debate: Professors and the Students Who Grade Them:
At the end of each academic term on many U.S. campuses, students complete evaluations of their course instructors. It is a process that has been criticized for years, and yet it shows a very common desire: to find an effective way to weed out the bad apples. High-stakes evaluations are in vogue not only in higher education but also in elementary and high school.
Are college students’ evaluations of their instructors a useful way to assess professors? What might be more effective?
- Scott Carrell (University of California, Davis, Department of Economics) & James West (Baylor University, Department of Economics) (authors of Does Professor Quality Matter? Evidence From Random Assignment of Students to Professors), What We Saw: "Our study showed that students confuse course grades with long-term learning, and reward those professors who hand out the A's."
- Sean Decatur (Dean of the College of Arts and Sciences, Oberlin College), An Insightful Process That Could Be Improved: "Evaluations from former students would be helpful because sometimes the value of a classroom experience becomes more apparent after time has passed."
- Ellen McCulloch-Lovell (President, Marlboro College), As Long As It’s About More Than Scores: "Student voices, when weighed and considered, influence teaching at places where professors understand that effective teaching is highly valued."
- Stuart Rojstaczer (Former Professor, Duke University; Creator, Grade Inflation Web site): "Student evaluations can be useful when they are divorced from tenure, retention and promotion, and performed anonymously without feedback going to higher-ups."
- Jeff Sandefer (Co-founder, Acton School of Business), Our Motto: Give the Customers What They Want: "Universities that don’t listen to their students are unlikely to survive big changes in higher education -- and frankly, they shouldn’t."
(Hat Tip: Ann Murphy.)
On January 1, 2013, the federal estate tax regime in effect from 2001 to 2012 is scheduled to revert to its pre-2001 structure. A 35% rate will soar to a 55% rate. A $5 million exemption will plummet to $1 million. Some deductions and credits enacted in 2001 will disappear while others repealed in that year suddenly will reappear. In fundamental ways, the estate tax in effect on inauguration day will bear little resemblance to the tax as it existed on election day.
Regardless of one’s personal politics, there is little redeeming to be found in such dramatic shifts in tax policy. In the next four years, preferably in the next four months, Congress and the President must work together to implement their own vision for the estate tax, rather than allowing mere inertia to effectuate choices made by their predecessors. I offer this essay as a modest contribution to that effort.
This paper is organized in two major parts. In Part I, I explore the recent history of the federal estate tax, highlighting how changes made in the last dozen years have brought Congress to a moment of crisis. In Part II, I offer a suggestion for permanent reform of two provisions of the current estate tax regime: enacting a permanent estate tax exemption of $3.5 million to $5 million and restoring the state death tax credit.
Gov. Brian Schweitzer called University of Montana President Royce Engstrom last month to complain about study done by a law professor under contract for Cablevison/Bresnan that criticized how the state how the state values certain types of business property.
Engstrom, in turn, said that law Professor Kristen Juras had “apparently” violated some aspects of UM policies and apologized to Schweitzer.
Juras’ written study contained no disclosure saying her conclusions were her own and not the university’s views, nor did she seek prior consent from her dean to use the university name in working as a consultant, Engstrom said. ...
In an interview, Juras said in hindsight she regrets that she didn’t put a footnote in her report that indicated that it contained her views, not those of the university. ... She added, “If he (Schweitzer) wants to shut down professors that prepare reports that are contrary to his views, I believe that interferes with academic freedom. I believe professors ought to be able to criticize the government.”
(Hat Tip: Jim Maule.)
John O. Fox, 10 Tax Questions the Candidates Don't Want You to Ask:
The Ten Tax Questions:
- The McMansion Tax Break
- The Inequitable Home Equity Break
- Poorest Families, Poorest Child Care
- Social Security’s Insecurity
- A Sick Policy on Health Insurance
- The Oh-So-Golden-Years Pension Break
- The Great Pension Robbery
- Higher Education Denied
- Medicare’s Plunge Toward Insolvency
- Single and Paying For It
The Five Common Tax Myths and Misperceptions:
Following up on my previous post, Proposed Post-Tenure Review Policy Adds to Turmoil at St. Louis: St. Louis Post-Dispatch, St. Louis University Withdraws Controversial Tenure Proposal:
St. Louis University on Monday said it is dropping a controversial proposal that would have changed the way the school handled tenured faculty.
The plan would have put all tenured positions through a review every six years, with those faculty members essentially having to reapply for tenure. The proposal was blasted by critics, who said it would have effectively destroyed the school’s tenure system.Monday afternoon, the school released a joint statement to the SLU community by the school’s president, Rev. Lawrence Biondi, faculty senate leaders and a host of vice presidents and deans.
Prior TaxProf Blog coverage:
- St. Louis Law School Dean Resigns Abruptly, Blasts University Administration (Aug. 8, 2012)
- St. Louis President Says He Was Going to Fire Dean, Names PI Lawyer Interim Dean (Aug. 9, 2012)
- More on the St. Louis Fiasco (Aug. 10, 2012)
- St. Louis Prof Addresses Turmoil at Her Law School (Aug. 12, 2012)
- More on the St. Louis Fiasco (Aug. 14, 2012)
- Brian Tamanaha's Revenge (Aug. 20, 2012)
- Brian Tamanaha's Revenge: 'Guilty as Charged' (Aug. 20, 2012)
- Proposed Post-Tenure Review Policy Adds to Turmoil at St. Louis (Aug. 30, 2012)
Tuesday, September 18, 2012
Paul Campos, the University of Colorado Law School professor who writes the incendiary Inside the Law School Scam blog, is back at it, with a new book of advice for would-be law students.
Campos said he was inspired to write Don't Go To Law School (Unless) — an electronic book slated to go on sale on Amazon.com this week — in part because so many prospective law students have asked him for counsel about whether they should enroll.
"I'm trying to make it clear to anybody who is considering going to law school right now that they ought to consider that to be a fairly risky endeavor, and should do that in only a fairly narrow set of circumstances," he said. ... Going to law school because you don't know what else to do with a liberal arts undergraduate degree was never a good idea, Campos writes, but it's a particularly poor choice when the average law student graduates with $150,000 in loan debt and a well-paying job is hardly guaranteed. ...
Ultimately, Campos suggests, paying full tuition makes sense at only a handful of elite schools, and paying a significantly reduced tuition only makes sense at between seven and 10 "truly national law schools." Even accepting a free ride makes sense at only about three dozen "good regional schools," by Campos' estimate.
"The most important thing for any prospective law student to keep in mind is that, at present, the large majority of law graduates — perhaps 80% — end up worse off after going to law school that they were before they enrolled," the book reads.
- Business Insider, Why the 'Law School Bubble' Is Worse Than the Mortgage Crisis
- Mother Jones: Secret Video: Romney Tells Millionaire Donors What He REALLY Thinks of Obama Voters
- Linda Beale (Wayne State): Romney's Tax Views Lead to Blooper Comments Denigrating America's Elderly and Poor
- Kay Bell (Don't Mess With Taxes): 47 Percent Don't Pay Federal Income Taxes, but Do Hand Over Payroll, Other Taxes
- Len Burman (Syracuse), In Mitt's World, My Limo Driver is Not Trying Hard Enough
- Ezra Klein (Washington Post): Mitt Romney Versus the 47 Percent
- Paul Krugman (New York Times): Taxes Over the Life Cycle
- Annie Lowrey (New York Times): The Reasons Behind the ‘People Who Pay No Income Tax’
- Annie Lowrey (New York Times): Who Pays and Who Takes
- Janet Novack (Forbes): Memo to Mitt Romney: The 47% Pay Taxes Too
- Catherine Rampell (New York Times): How Do the 47% Vote?
- Dan Shaviro (NYU): Romney's Erroneous Equation
- Dan Shaviro (NYU): Romney Versus the "47 Percent"
- Dan Shaviro (NYU): Was Romney in the 47 percent (in 2009 or Any Earlier Year)?
- Angry Bear: Who Are the 47%? And the Irony Might be Remarkable
- Bloomberg: Romney’s 47% Paying No Taxes Combines Elderly With Poor Workers
- Center on Budget & Policy Priorities: Misconceptions and Realities About Who Pays Taxes
- The Maddow Blog: Why the '47 Percent' Is So Large
- NPR, The 47 Percent, in One Graphic
- Tax Foundation: How Much do Nonpayers Earn?
- Tax Policy Center: Who Doesn't Pay Federal Taxes
- Tax Update Blog: 47% Frenzy!
- Tax Vox Blog: Why Do People Pay No Federal Income Tax?
- U.S. News & World Report: Romney's 47% Statistic Has Been Used by Conservatives For Years
- Wall Street Journal: The Data Behind Romney’s 47% Comments