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Thursday, February 28, 2013

Mann Presents Economists are from Mars, Lawyers are from Venus Today at UCLA

MannRoberta F. Mann (Oregon) presents Economists are from Mars, Lawyers are from Venus: The Tax Policy Implications of Communication Failure at UCLA today as part of its Tax Policy and Public Finance Colloquium hosted by Jason Oh and Kirk Stark:

This article will first explore the development of the relationship between lawyers and economists by briefly examining the “law and economics” movement. The next section will contrast the training of economists with the training of lawyers. The following section will focus on the income tax system and the role economists and lawyers play in its development and implementation, including options for tax reform and its effect on in equality. Finally, the article will delve into behavioral research and the psychology of “numbers,” and the implications for the tax and fiscal systems.

February 28, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

Rutgers-Camden and Rutgers-Newark Law Schools to Merge

RutgersAmidst reports of declining applications and ethically questionable recruiting of students, Rutgers-Camden today announced plans to merge with Rutgers-Newark and form a single law school named Rutgers School of Law, effective Fall 2014.

Update:

February 28, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Barry & Darnell: Explanation of Issues in PPL v. Commissioner

Jordan M. Barry (San Diego) & Janelle N. Darnell (J.D. 2013, San Diego), Explanation of Issues in PPL v. Commissioner, ABA Preview of U.S. Supreme Court Cases, Vol. 40, Issue 5, pp. 201-04, 2013:

This short article briefly summarizes the chief arguments of PPL corporation and the IRS as to whether the United Kingdom's Windfall Tax qualifies for a United States foreign income tax credit under § 901. PPL argues that the Windfall Tax is a tax on income and that PPL is therefore entitled to a foreign tax credit that will greatly reduce its federal income tax liability. The IRS argues that the Windfall Tax is a tax on value and, accordingly, that PPL is not entitled to a foreign tax credit. This case could have major implications for U.S. corporations, which claim over $100 billion in foreign tax credits each year.  

Prior TaxProf Blog coverage:

February 28, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

NLJ Releases School-by-School Data Behind its Rankings by BigLaw Jobs

Go-ToThe National Law Journal has released the data behind its Go-To Law Schools Rankings based on the percentage of graduates in BigLaw jobs:

For the first time ever, we are making all of the hiring data from our annual Go-To Law Schools special report available online. Search by law school (listed alphabetically by state) to find out which NLJ 250 firms hired their 2012 graduates. Search by firm to see where new associate hires were educated. And don’t miss the cost benefit analysis below.

See the complete Go-To Law Schools package for the ranking of our top 50 go-to schools, as well as schools ranked by firm favorites, tuition and associates promoted to partner, and a comparison to the U.S. News rankings.

Our rankings are based on survey responses from 190 of the largest 250 firms in the country by headcount, as well as additional data gathered from law firm websites. The full methodology is available here. Data was updated on Feb. 27.

February 28, 2013 in Law School Rankings, Legal Education | Permalink | Comments (2) | TrackBack (0)

Head-to-Head College Rankings: Harvard #1, Caltech #2, Yale #3

BracketChristopher N. Avery (Harvard University, Kennedy School), Mark E. Glickman (Boston University, School of Public Health), Caroline M. Hoxby (Stanford University, Department of Economics) & Andrew Metrick (Yale University, School of Management), A Revealed Preference Ranking of U.S. Colleges and Universities:

We present a method of ranking U.S. undergraduate programs based on students’ revealed preferences. When a student chooses a college among those that have admitted him, that college “wins” his “tournament.” Our method efficiently integrates the information from thousands of such tournaments. We implement the method using data from a national sample of high-achieving students. We demonstrate that this ranking method has strong theoretical properties, eliminating incentives for colleges to adopt strategic, inefficient admissions policies to improve their rankings. We also show empirically that our ranking is (1) not vulnerable to strategic manipulation; (2) similar regardless of whether we control for variables, such as net cost, that vary among a college’s admits; (3) similar regardless of whether we account for students selecting where to apply, including Early Decision. We exemplify multiple rankings for different types of students who have preferences that vary systematically.


Revealed Preference Rank    
Harvard 1    
Caltech 2    
Yale 3    
MIT 4    
Stanford 5    
Princeton 6    
Brown 7    
Columbia 8    
Amherst 9    
Dartmouth 10    
Wellesley 11    
Penn 12    
Notre Dame 13    
Swarthmore 14    
Cornell 15    
Georgetown 16    
Rice 17    
Williams 18    
Duke 19    
Virginia 20    

(Hat Tip: Freakonomics.)

February 28, 2013 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Death of Christine Brunswick

BrunswickChristine Ann Brunswick, Executive Director of the ABA Tax Section for over 25 years, died on Monday at the age of 60. She was Vice President and a Member of the Board of Directors of the National Breast Cancer Coalition:

A longtime breast cancer advocate, Chris was part of the National Breast Cancer Coalition since its inception in 1991. She was a leader at every level, and among her many other volunteer efforts for NBCC, she testified before Congress and regulatory agencies, often appeared on television and in print media on behalf of NBCC, represented the coalition on various national committees and panels, and spoke around the world to advocates and researchers. She served on the NBCC Executive Committee and was one of the founders and advocates for NBCC’s international work, participating in various international conferences, including the 4th United Nation’s World Conference on Women in Beijing, China in 1995. Chris acted as a mentor for new NBCC board members and for participants in our Emerging Leaders network. ...

A memorial service will be held for Chris on Friday, March 1, from 12 noon until 3 p.m. at the National Women's Democratic Club, 1526 New Hampshire Ave., NW. The service is open to all ABA Tax Section members. Her family has asked that donations be made to The Chris Brunswick Fund at National Breast Cancer Coalition, 1101 17th Street, NW, Suite 1300, Washington, DC, 20036.

February 28, 2013 in ABA Tax Section, Obituaries, Tax | Permalink | Comments (0) | TrackBack (0)

Call for Submissions: Intertax

IntertaxIntertax is inviting United States, as well as all other, tax scholars to submit articles, essays, reviews and comments for publication with the journal:

Intertax publishes both editorial board and peer-reviewed articles. Intertax employs a so-called blind peer review track for authors who are interested in such option. For additional details, visit the journal’s author guidelines.

Authors are welcome to contact Editor-in-Chief Fred C. de Hosson or editors Prof. Dr. Alexander Rust, Prof. Dr. Philip Baker OBE, Prof. Dr. Pasquale Pistone, Prof. Dr. Ana Paula Dourado, or Prof. Dr. Yariv Brauner.

February 28, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Dodge: Income Tax Simplification Proposals

Joseph M. Dodge (Florida State), Income Tax Simplification Proposals:

This paper proposes various moves for simplification of the task of computing the tax base under the individual income tax, with a principal view of making the income tax capable of compliance by “ordinary” individuals without the aid of tax preparation software or outside assistance. Another aim of simplification is to render taxpayers’ perception of it as being internally coherent, and not as a Christmas tree showering an array of goodies (and baddies) to the highest (and lowest) bidders. Simplification is offered here as a “good government” project.

Some of the proposals are tied to commonly-circulated “tax reform” proposals, and others are not. The proposals are too numerous to list in this abstract, but include the following: (1) simplifying the computation of taxable income, (2) reconstituting low-income tax credits, (3) eliminating various personal deductions while also eliminating various back-handed itemized deduction cut-down rules, (4) adding various rules for the purpose of eliminating fact-intensive controversies, (5) simplifying accounting for residence-related income production (mainly by eliminating depreciation), (6) eliminating spurious COD income, (7) eliminating the distinction between alimony and child support, (8) simplifying (cash) accounting for small business, (9) mandating GAAP accounting for C corporations, (10) simplifying the income taxation of certain estates, (11) treating all inter vivos trusts as grantor trusts, (12) proposing a portfolio approach to publicly traded investments, (13) proposing a single-rate system for all individual taxpayers, (14) noting various ways of simplifying the capital gains apparatus, (15) taxing all personal injury recoveries, (16) simplifying and rationalizing the law relating to deferred compensation, (17) requiring pass-through taxation of nonpublic business entities, (18) disallowing the interest deduction for C corporations, (19) repealing the E & P apparatus, and (20) eliminating § 911, as well as proposing numerous items of a more technical nature.

February 28, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

TPC Hosts Program Today on The Charitable Deduction

Tax Policy Center LogoThe Tax Policy Center hosts a program today on The Charitable Deduction: A View from the Other Side of the Cliff (free webcast here):

As the vehicle of state leaned over one fiscal cliff, Congress pulled it back but kept the motor running. In this session, we will examine the recent debate over tax changes, the resulting effect on charities, and the likely forthcoming debate in early 2013. Panelists will discuss how federal fiscal policy and proposed changes to tax law, in particular the charitable deduction, may affect charitable giving and the political scene for nonprofits going forward into an uncertain future.

Looking Back at the Cliff
This panel will take a look back at the debate leading up to the “fiscal cliff.” The panelists will discuss the various proposals that would have affected the charitable deduction, the response of the nonprofit sector, and the effect of the ultimate deal that was reached. 

      Moderator: Eugene Steuerle, Urban Institute
          Diana Aviv, Independent Sector
          Jon Bakija, Williams College
          Rick Cohen, Nonprofit Quarterly 
          Joseph Rosenberg, Urban-Brookings Tax Policy Center

The Road Forward
This panel will discuss what lies ahead for the charitable deduction in an environment of continued budget pressure. The speakers will describe various proposed reforms to the charitable deduction and discuss how these reforms may affect nonprofits, for better or for worse. 

      Moderator: Elizabeth Boris, Urban Institute
          Joseph Cordes, George Washington University 
          Tim Delaney, National Council of Nonprofits
          Brian Flahaven, Council for Advancement and Support of Education
          Jane Gravelle, Congressional Research Service

February 28, 2013 in Conferences, Tax, Think Tank Reports | Permalink | Comments (1) | TrackBack (0)

U.S. PIRG: Congress Should Clamp Down on Offshore Tax Havens

PIRGU.S. PIRG, Who’s Afraid of Inversion? Congress Can Clamp Down on Offshore Tax Havens:

With Washington gearing up for additional high-stakes budget battles over the next few months, Congress has continued to ignore a solution worth about $90 billion annually: closing loopholes that allow corporations to avoid taxes by pretending their profits are earned in offshore tax havens. Corporate lobbyists often claim that closing these loopholes would drive companies to flee the U.S. and re-register themselves in low-tax countries. U.S. PIRG’s new analysis explains why this is not the case.

February 28, 2013 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 27, 2013

Blank Presents Collateral Compliance Today at Boston College

BlankJoshua D. Blank presents Collateral Compliance, 162 U. Pa. L. Rev. ___ (2013), at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti and Diane Ring:

As most of us are aware, the failure to comply with the tax law can lead to civil and criminal tax penalties. But tax noncompliance has other consequences as well. Collateral sanctions for tax noncompliance, which are imposed on top of tax penalties and are often administered by agencies other than the taxing authority, increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States. Criminal law scholars have written dozens of articles on the collateral consequences of convictions. Yet tax scholars have virtually ignored collateral tax sanctions, even though their use by the federal and state governments is growing.

Continue reading

February 27, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Zolt Presents Inequality in America: Challenges for Tax and Spending Policies Today at Duke

ZoltEric M. Zolt (UCLA) presents Inequality in America: Challenges for Tax and Spending Policies at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

This article examines some basic issues related to taxing and spending policies and how different distributions of income or wealth in a society may influence these basic choices. It seeks to provide a guide to addressing tax and spending policies in an era of increasing inequality. This is challenging because it requires a good understanding of inequality and economic mobility, the changing role of taxes and government social spending, the constraints on policy options, and the possible misconceptions that may influence tax and spending policies.

Inequality in the United States has increased dramatically over the last 30 years, whether measured before or after government tax and transfer policies. Perhaps even more troubling than the rise in inequality may be the decline in economic mobility. The American dream of working hard to get ahead may be more fiction than fact.

Continue reading

February 27, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Miller & Maine: The Fundamentals of Wealth Transfer Tax Planning: 2013 and Beyond

John A. Miller (Idaho) & Jeffrey A. Maine (Maine), The Fundamentals of Wealth Transfer Tax Planning: 2013 and Beyond:

On January 1, 2013 Congress avoided the tax part of the so called “fiscal cliff” when it passed the American Taxpayer Relief Act of 2012 (ATRA). Among its many impacts this law prevented the application of a number of sunset provisions that would have dramatically altered the operation of the federal wealth transfer taxes. Instead Congress made permanent two significant transfer tax provisions introduced as temporary measures in 2010: the indexed basic exclusion amount and the deceased spousal unused exclusion amount. The latter provisions are sometimes referred to as the portability rules. ATRA also introduced a new maximum transfer tax rate of 40%. In addition ATRA made permanent a deduction for state death taxes and prevented the return of the state death tax credit. Thus, the main transfer tax emphasis of the actions taken by Congress in ATRA was to stabilize the wealth transfer tax system in a fashion that eliminates or reduces its planning impact on most taxpayers while also permanently establishing a significant new planning tool for the wealthy, the deceased spousal unused exclusion (DSUE) amount.

In this article we summarize the operation of the federal wealth transfer taxes in the wake of ATRA and describe the basic tax planning techniques for wealth transmission. In doing so, we offer a thorough analysis of the operation of the portability rules and discuss their planning virtues and drawbacks. The overall design of this article is to bring the general practitioner into the current wealth transfer tax planning picture while providing references to more detailed treatments of particular topics within this broad field.

February 27, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Aprill: Reforming the Charitable Contribution Substantiation Rules

Florida Tax ReviewEllen P. Aprill (Loyola-L.A.), Reforming the Charitable Contribution Substantiation Rules, 14 Fla. Tax Rev. ___ (2013):

In May 2012, the Tax Court issued two decisions denying income tax deductions for gifts to charitable organizations because they failed to meet the requirements for a qualified appraisal [Mohamed Sr. v. Commissioner, T.C. Memo. 2012-152; Durden v. Commissioner, T.C. Memo. 2012-140]. These cases lit a firestorm of outrage in various circles, raising questions of how strictly substation rules should be applied. This article begins by reviewing two reasons why the charitable contribution substantiation rules applicable to the income tax merit consideration. First, the charitable contribution deduction is important for both its size and its distribution, and the substantiation rules work to safeguard its integrity. Second, in the case of the charitable contribution, unlike many other income tax provisions, the Treasury and the IRS cannot look to third parties with self-interested incentives that help ensure compliance. The substantiation rules substitute for third party corroboration. Part II of the paper sets out, as briefly as possible, the complicated regime regarding the substantiation of charitable contributions, including the legislative history and applicable regulations. Part III examines applicable case law. Review of legislation, regulations, and case law suggests strongly that we make an effort to reform the current scheme, and Part IV presents a number of possible reforms. These suggestions include inflation adjustments, regulatory changes, and making greater use of technology, with the government working with providers of computer software and those involved in texting of charitable donation. Finding approaches that appropriately balance the need to control overvaluation with the need to encourage legitimate charitable contributions is a difficult but important challenge.

February 27, 2013 in Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Paul Campos Ends Inside the Law School Scam Blog

Paul Campos (Colorado), Goodbye Is Too Good a Word:

19 months and 499 posts later, it turns out that the core message of this blog – that legal academia is operating on the basis of an unsustainable economic model, which requires most law students to borrow more money to get law degrees than it makes sense for them to borrow, given their career prospects, and that for many years law schools worked hard, wittingly or unwittingly, to hide this increasingly inconvenient truth from both themselves and their potential matriculants – has evolved from a horrible heresy to something close to conventional wisdom.

That enrolling in law school has become a very dangerous proposition for most people who consider enrolling in one is now, if not a truth universally acknowledged, something that legal academia can no longer hide, either from ourselves, or – far more important – from anyone who doesn’t go out of his or her way to avoid contact with the relevant information.

ITLSS has played a role in what can be without exaggeration called a fundamental shift in the cultural conversation. How big of a role it’s not for me to judge. Within legal academia, the pioneering work of Bill Henderson on the economics of legal education, and Brian Tamanaha’s writing and research culminating in his book Failing Law Schools, were both critical contributions to that shift. Others inside law schools – Jim Chen, Deborah Rhode, Herwig Schlunk, Akhil Amar, Ian Ayers, Paul Caron, Ben Trachtenberg, Orin Kerr, and Jeffery Harrison to name a few – have moved the conversation forward in various ways. And of course Deborah Merritt has lent her name and talents to this blog for nearly a year now as a co-author, greatly enhancing both its intellectual and stylistic range.

Outside the legal academy, a diverse group of voices, ranging from the scam blogs that had such a strong effect on at least Tamanaha and me, to Above the Law and JD Underground, to the tireless unpaid labor of Kyle McEntee, Patrick Lynch, and Derek Tokaz, aka Law School Transparency, found their way into the pages of the New York Times and the Wall Street Journal, and onto the CBS Evening News. A movement that begun on the margins of the legal world, through the work of people like Loyola 2L, and Scott Bullock of Big Debt/Small Law, and Nando of Third Tier Reality, has gone mainstream.

This blog is now the length of about four typical academic books. Anyone who wants to browse through it will find posts touching on just about every topic related to legal education and the legal profession regarding which I have something to say. Readers looking for a more concise statement can buy or borrow a copy of my book Don’t Go to Law School (Unless), either in paperback or e-book form.

All of which is to say that I’ve said what I have to say, at least in this format. I’ll continue to write on this topic, both in academic venues, in the popular media, and even from time to time in blog form, at Lawyers, Guns and Money. But the time has come to move on from here. ... I would wish everyone good luck but I won’t. It sounds terrible when you think about it.

February 27, 2013 in Legal Education | Permalink | Comments (12) | TrackBack (0)

2012 Tax Journal Rankings: Virginia #1, NYU #2

Here are the Washington & Lee tax law review rankings, based on citations to articles published in 2005-2012:

Here are the Top 25 tax journals (out of 48 ranked tax journals):

Rank

Tax Journal

Combined

Impact

Law Reviews

Cases

Currency

1

Virginia Tax Review

100.0

0.72

595

5

1.20

2

Tax Law Review

80.2

0.66

382

1

0.92

3

Elder Law Journal

66.1

0.58

279

8

0.55

4

Florida Tax Review

62.0

0.58

217

0

0.96

5

Tax Notes

54.5

0.01

762

15

0.02

6

Pittsburgh Tax Review

40.5

0.43

81

2

0.25

6

Tax Lawyer

40.5

0.21

335

14

0.14

8

Houston Bus. & Tax J.

39.7

0.34

170

5

0.14

9

Akron Tax Journal

28.9

0.30

71

3

0.38

10

Heckerling Inst. Est. Plan.

26.4

0.21

132

0

0.48

11

Marquette Elder's Advisor

24.8

0.20

124

1

0.14

12

National Tax Journal

23.1

0.11

206

2

0.19

13

Journal of Taxation

17.4

0.03

215

6

0.05

14

New Zealand J. Tax' Law

14.0

0.11

73

0

0.10

15

Estate Planning

13.2

0.04

148

1

0.19

16

Tax Notes International

10.7

0.00

151

0

0.00

17

Exempt Org. Tax Review

5.0

0.00

75

0

0.01

17

Taxes  Magazine

5.0

0.01

55

0

0.04

19

British Tax Review

4.1

0.01

42

0

0.02

19

Tax Management Mem.

4.1

0.01

48

1

0.05

19

Taxation of Exempts

4.1

0.02

40

0

0.10

22

Canadian Tax Journal

3.3

0.02

30

0

0.02

23

eJournal of Tax Research

2.5

0.02

11

0

0.06

23

J. Australasian Tax Ass'n

2.5

0.02

13

0

0.02

23

Tax Management Int'l J.

2.5

0.01

27

0

0.03

Tax Notes is #1 by a wide margin in citations in law reviews (762 v. #2's Virginia Tax Review's 595), but fairs relatively poorly (.001, ranked #20) in the Impact Factor category (citations/number of articles published).  My guess is that W&L counted as "articles" all of the advance sheet material in Tax Notes. (Note:  I omitted the NYU Journal of Law and Business from the above chart because it is not a tax journal.)

Prior W&L Tax Journal Rankings:

(Hat Tip: Omri Marian,)

February 27, 2013 in Law Review Rankings, Legal Education, Scholarship, Tax, W&L Tax Journal Rankings | Permalink | Comments (1) | TrackBack (0)

Morse: ObamaCare and Lower-Income Workers

JotwellSusan C. Morse (UC-Hastings), ObamaCare and Lower-Income Workers (Jotwell) (reviewing David Gamage (UC-Berkeley), Perverse Incentives Arising From the Tax Provisions of Healthcare Reform: Why Further Reforms Are Needed to Prevent Avoidable Costs to Low- and Moderate-Income Workers, 65 Tax L. Rev. 669 (2013)):

What if Obamacare changes the patterns of lower-income work?  Murmurs in the news suggest that this is happening, for example through increased use of part-time schedules.  In his forthcoming article, David Gamage explains the powerful incentives that the Affordable Care Act (ACA) presents to employers to ensure that lower-income workers will be insured through public exchanges rather than employer-provided health insurance.  These incentives to differentiate apply for a huge number of employees, as they apply until households have income of between 2.25 and 3.5 times the poverty level.

Gamage supports the ACA, but argues that it presents lower-income workers and their employers with a catch-22.  If employers provide health insurance, workers will overpay for it.  But if employers do not provide health insurance, workers cannot access traditional full-time-with-benefits jobs. ...

[H]e focuses on the question of how to rehabilitate the health insurance market by removing the perverse incentive wedges created by the combination of the ACA and the employer-provided health insurance exclusion.  He supports repeal of the income exclusion and enactment of refundable tax credits commensurate with exchange subsidies.  The proposal would not eliminate higher marginal tax rates caused by the ACA because of the phaseout of exchange subsidy benefits.  But it would leave employer-provided health insurance with only the non-tax risk-pooling and intermediation advantages that Gamage observes at the top of his paper.  It would thus create a fair playing field, sans perverse-incentive tax expenditures that favor one approach over the other, for the government and employers to compete to be the most efficient provider of health insurance.

February 27, 2013 in Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

McMahon: What Innocent Spouse Relief Says about Women and the Rest of Us

Stephanie Hunter McMahon (Cincinnati), What Innocent Spouse Relief Says about Women and the Rest of Us:

Every time spouses sign joint returns, they knowingly or not accept joint and several liability. Therefore, either spouse may be held liable for all of the tax due on the joint return. Joint and several liability’s more efficient tax collection procedure may conflict with a spouse’s equitable claims to have innocently signed the return while being lied to, abused, or manipulated. The question for Congress is how to balance these competing demands. Innocent spouse relief provides some tax relief for spouses Congress does not believe should be jointly and severally liable. Innocent spouse relief also offers an opportunity to explore how the government views married women, as wives have always composed the lion share of seekers and recipients of innocent spouse relief. The relief currently provided is both over- and under-inclusive by not offering relief to all spouses or former spouses who are unable to assess the validity of their returns but offering relief to some who both knew and helped orchestrate the tax evasion. This paper argues that, instead of existing innocent spouse relief, the IRS should respect joint filers’ agency when signing joint returns and grant relief only when a joint filer was unable to exercise that agency. In the event that a spouse is coerced into signing the return, relief needs to be speedier and less burdensome in application than under today’s law to increase the equity of the tax system and reduce the administrative costs on both the taxpayer and the government.

February 27, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Crane: How the 100-Year Old Income Tax Unleashed the Modern U.S. Economy

The Atlantic op-ed:  How the 100-Year Old Income Tax Unleashed the Modern U.S. Economy, by Charlotte Crane (Northwestern):

The capitalist's case for the income tax: The widely despised and thoroughly misunderstood levy helped the United States move toward a more open economy.

One hundred years ago today, Secretary of State Philander Knox certified to Congress that the Sixteenth Amendment had been ratified by Delaware and Wyoming, clinching the required 36 states. Congress was free, once again -- this time without the threat of obstruction from the Supreme Court -- to do something that has changed the scope of government for the next century. Washington could tax incomes. ...

Many political observers rue this day in history. To them, the income tax embodies all that is wrong with the modern federal government. By encouraging some economic activity more than others, they say that the income tax, like much federal regulation, dampens economic growth and stifles entrepreneurial creativity.

Far worse, in their eyes, is that the income tax makes the federal government possible. It funds bloated services and enables all sorts of social and economic meddling in the sacred workings of the free market. But what would the past 100 years have looked like without the Sixteenth Amendment? Certainly not much like a free market--unless something else had come along to get rid of tariffs and tariff politics, which had been restraining the economy. ...

[T]he Sixteenth Amendment created a new political and economic environment. It freed us from the shackles of tariff politics, lowered living costs for many Americans, allowed the federal government to raise enough money to build roads, mount the world's greatest army, provide income security to the poor, and transform ourselves into the dominant country in the 20th century. In other words, the income tax not only enabled the modern federal government. It enabled the modern US economy.

February 27, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Mehrotra: How the Income Tax Created the Modern Fiscal State

Bloomberg op-ed:  How the Income Tax Created the Modern Fiscal State, by Ajay K. Mehrotra (Indiana):

Before the income tax, the two main sources of federal revenue were tariffs and excise taxes, both of which fell disproportionately on the backs of ordinary Americans, and neither of which could meet the growing demand for government revenue. Reformers embraced a progressive income tax because it solved both these problems. ...

As we commemorate the centennial of the 16th Amendment and look ahead to looming budgetary battles, we ought to keep in mind that the foundations of our modern fiscal state are rooted not in efforts to radically redistribute wealth, but in attempts to balance fiscal duties and civic responsibilities. The progressives who bequeathed this state to us certainly knew the difference.

February 27, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 26, 2013

Hines Presents Rational Intestacy and Probate Reform Today at Chicago

HinesJames R. Hines, Jr. (Michigan) presents Rational Intestacy and Probate Reform at Chicago today as part of its Law & Economics Workshop Series:

Many people die intestate (without wills), leaving property to be allocated by law among potential heirs. Probate reforms that more closely align intestacy allocations with preferences are designed to make property pass at death in a manner that better approximates what decedents intended. This goal is frustrated by the voluntary nature of intestacy. If individuals are rational, probate reforms that better match intestacy allocations to decedent intent encourage greater numbers of individuals to do without wills. This economizes on costs, and improves efficiency, but generally reduces the extent to which property dispositions correspond to intentions. With rare exceptions, it is impossible for the following three conditions simultaneously to hold: that individuals act rationally, an intestacy regime is efficient, and an intestacy regime supports the closest possible match between property dispositions and decedent intent. Indeed, there exists an important range of conditions under which the most efficient intestacy regime supports the worst possible match between property dispositions and decedent intentions. Consequently, if individuals behave rationally then it will generally be necessary to choose between reforms that promote efficiency and those that make property pass in a manner that corresponds to decedent intent. The goal of supporting efficient outcomes by adhering to decedent intent requires that individuals have rational preferences that they express in wills, but also requires that they make irrational or uninformed decisions about whether or not to have wills.

February 26, 2013 in Colloquia, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Are Assholes More Successful in Academia?

No_asshole Following up on my prior posts (links below):  Inside High Ed, Academic Jerks:

It’s a discussion that started over beer and chips and grew into a blog post now grabbing attention in higher education circles: Do asses do better in academe than their more tactful peers?

“All of us had a story or two to tell about academic colleagues who had been rude, dismissive, passive aggressive or even outright hostile to us in the workplace,” Inger Mewburn, director of research training at Australian National University, wrote in a recent post called Academic Assholes and the Circle of Niceness for her popular blog, The Thesis Whisperer. “As we talked we started to wonder: Do you get further in academe if you are a jerk?”

She continues: “I assume people act like jerks because they think they have something to gain, and maybe they are right…. Cleverness is a form of currency in academia; or ‘cultural capital’ if you like. If other academics think you are clever they will listen to you more; you will be invited to speak at other institutions, to sit on panels and join important committees and boards. Appearing clever is a route to power and promotion. If performing like an asshole in a public forum creates the perverse impression that you are more clever than others who do not, there is a clear incentive to behave this way.”

Mewburn, whose 2-year-old blog is dedicated to minimizing attrition among Ph.D. students, said in an e-mail interview that she was inspired to write the piece in part by reading The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't by Bob Sutton, a professor of management science and engineering at Stanford University. ...

The idea is resonating with academics across the Internet; the post has generated more than 100 comments and has been shared thousands of times on Facebook, Twitter and other blogs. Ph.D. students in particular have responded to Mewburn’s observation that faculty jerks can use research critiques more as an opportunity to display their own academic prowess to each other – sometimes cruelly – than to examine the candidate’s work. ...

Mewburn, who's been working at Australian for three weeks, also cites research supporting the idea that mean guys finish first, including Teresa Amabile’s famous 1983 publication, “Brilliant but Cruel: Perceptions of Negative Evaluators."  In that study, negative evaluators of books were perceived as more intelligent, competent and expert than positive evaluators, even when the content of the positive review was independently judged as being of higher quality. ...

Although Mewburn spends much of the post describing how nasty behavior can advance one’s academic career, she argues that, in the end, the phenomenon hurts institutions because talented but polite people leave. “Ultimately we are all diminished when clever people walk away from academia,” she wrote. “So what can we do? It’s tempting to point the finger at senior academics for creating a poor workplace culture, but I’ve experienced this behavior from people at all levels of the academic hierarchy. We need to work together to break the circle of nastiness.”

Amabile agreed that the cycle needs to be broken, for other reasons. “Although it’s important to have high standards in academia, I think that the negativity bias can have a chilling effect on creativity," she said. "All new ideas seem odd and lack grounding when they are first put forward. If people fear getting slammed when they come out with something truly new, they can become very conservative.”

Sutton, author of The No Asshole Rule, said he wasn’t sure if higher education was any more rife with assholes than any other profession. ... But, he said, there are certainly structural and personality factors that contribute to cruelty in academe. Scholars -- many of whom enjoy working independently and can be “socially inept” to begin with -- work "in a reward system in which we’re selected and rewarded and promoted and glorified and given raises for doing completely selfish things.” ...

To correct this, Sutton said, institutions can adopt their own, sometimes literal “no asshole rules” and reward systems that encourage scholars to consider others' needs, along with their own. Such moves benefit the organization as a whole, he said, as negative attitudes are contagious and the “rotten apple” effect lowers productivity. Of course, he added, it's important to be able to distinguish when peers are attacking an idea to advance it versus when they're attacking a colleague for their own ends.

The idea that bad attitudes can be "contagious" is why Mewburn thinks her post has been so popular. "It chimes with our experience of everyday academic life," she said. "A lot academic posturing is performance art. A colleague can be a shit to you in a seminar and then be perfectly nice at a party," and no one is immune from such behavior.

"Most people think of themselves as nice, so the temptation is to relate to the article as victims," she said, "but I was trying to point out that we all have the potential to catch the asshole virus and must be ever-vigilant."

Prior TaxProf Blog Posts:

February 26, 2013 in Legal Education | Permalink | Comments (5) | TrackBack (0)

Brooks: Obama Should Embrace Graetz's 100 Million Unnecessary Returns Tax Reform Plan

100 Million Unnecessary ReturnsNew York Times op-ed:  Our Second Adolescence, by David Brooks:

My main complaint with Obama is that he promised to move us beyond these stale debates, but he’s, instead, become a participant in them....My dream Obama would take advantage of the fact that only the president can fundamentally shift the terms. ... My dream Obama would abandon the big government versus small government argument. ... My dream Obama would nurture investment in three ways.

First, he would take spending that currently goes to the affluent elderly and redirect it to the young and the struggling. ...

Second, Obama could nurture investment by starting a debate on the sort of consumption tax plan Michael Graetz describes in his book 100 Million Unnecessary Returns: Enact a value-added tax, use money from that tax to finance an income tax exemption of $100,000, cut the corporate tax rate to 15%, replace the earned-income tax credit with payroll tax relief and debit cards. This is a heavy lift politically, but it achieves Obama’s fairness goals while boosting growth.

Third, Obama could talk obsessively about family structure and social repair. ...

My dream Obama wouldn’t be just one gladiator in the zero-sum budget wars. He’d transform the sequester fight by changing the categories that undergird it. He’d possess the primary ingredient of political greatness: imagination. The great presidents, like Teddy Roosevelt, see situations differently. They ask different questions. History pivots around their terms.

February 26, 2013 in Book Club, Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

A Dean's View: Only Law Schools That Tackle Costs, Graduate Client-Centered Lawyers Will Survive

Legal RebelsABA Journal Legal Rebels:  Only Law Schools That Tackle Costs, Graduate Client-Centered Lawyers Will Survive—A Dean’s View, by Jeremy Paul (Dean, Northeastern):

As calls for reform of legal education continue to suggest a variety of directions, one thing is certain. Law schools will be expected to do more with less. We often hear legal educators highlight tensions within the loud criticisms aimed at today’s law schools. Critics tell us that costs are too high compared to the expected earnings of many law school graduates. They are. Critics also say that law schools are insufficiently sensitive to the realities of contemporary law practice in which lawyers must be fast as well as smart, client-centered as well as thorough, and business-savvy as well as legally sophisticated. How, our colleagues often wonder, are law schools supposed to provide additional professional instruction while simultaneously slowing tuition increases? We don’t pretend to have all the answers, but we are sure of one thing. Only those law schools that tackle this challenge directly are likely to thrive.

February 26, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

NY Times: Britain Names and Shames Accused Tax Scofflaws

UKNew York Times:  Britain Names and Shames Accused Tax Scofflaws:

A hairdresser in Liverpool and a knitwear manufacturer in Nottingham were among the first nine people and companies publicly branded tax scofflaws by the British authorities as part of a government “name and shame” campaign.

On its Web site, Her Majesty’s Revenue & Customs on Thursday published the names and addresses of accused tax cheats, along with the amount the department says they owe. The individuals and small businesses owe a combined £1.8 million, or $2.7 million, in fines and unpaid taxes. The department said the list would be updated every three months.

The campaign is intended to encourage Britons to pay their taxes in full and put pressure on tax dodgers to come forward, the government said, but some lawmakers and pressure groups argued that it failed to address the real problem in Britain: tax avoidance strategies used by large corporations.

“The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes — the vast majority — that there are consequences for those who refuse to tell Her Majesty’s Revenue & Customs about their full liability,” David Gauke, exchequer secretary to the Treasury, said in a statement.

(Hat Tip: Mike Talbert.)

February 26, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Alstott: Marriage, the Income Tax, and Social Security in the Age of the New Individualism

Anne L. Alstott (Yale), Updating the Welfare State: Marriage, the Income Tax, and Social Security in the Age of the New Individualism, 65 Tax L. Rev. ___ (2013)

Marriage is no longer what it once was. Since the 1970s, and accelerating in recent decades, the link between formal marriage and family life has weakened dramatically. Nearly half of American adults are now unmarried at any given time, and two of five children are born to unmarried parents. At the same time, delayed marriage, divorce and remarriage, and changing gender roles have transformed the content of marriage itself. Despite these changes, the federal income tax and the Social Security system continue to define “family” based on formal marriage, and our casebooks teach students that the economic vulnerability of the married woman is the central problem of gender in welfare-state design.

February 26, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

The Legal Profession and Legal Education: Is It Time to Burn the Ships?

2013-report coverGeorgetown Center for the Study of the Legal Profession, Report on the State of the Legal Market:

Introduction – Time to Burn the Ships? 

As we enter 2013, the legal market continues in the fifth year of an unprecedented economic downturn that began in the third quarter of 2008. At this point, it is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways and that, even as we work our way out of the economic doldrums, the practice of law going forward is likely to be starkly different than in the pre-2008 period. The challenge for lawyers and law firms is to understand the ways in which the legal market has shifted and to adjust their own strategies, expectations, and ways of working to conform to the new market realities. While there is certainly evidence that some firms and lawyers have begun to make these adjustments, many others seem to be in denial, believing (or perhaps hoping) that the world will go "back to normal" as soon as demand for legal services begins to grow again.

Legend has it that in 1519, when he and his cohort of some 500 soldiers and 100 sailors landed on the shores of the Yucatan intent on conquering the large and powerful Aztec empire, Spanish conquistador Hernando Cortez promptly ordered his men to "burn the ships." Cortez knew that, unless more tempting alternatives were removed, it would be difficult to motivate his men to take on an empire with a large army that had been in power for more than six centuries. Hence, his bold and decisive order.

The legal market today is an increasingly difficult and challenging environment, one that calls for clear thinking, strategic focus, and flexibility in addressing rapidly changing realities. To an unfortunate extent, however, many lawyers and law firms seem stuck in old models – traditional ways of thinking about law firm economics and structure, legal work processes, talent management, and client relationships – that are no longer well suited to the market environment in which they compete. Perhaps it's time for us, like Cortez, to burn the ships – to force ourselves to think outside our traditional models and, however uncomfortable it might be, to imagine new and creative ways to deliver legal services more efficiently and build more sustainable models of law firm practice.

Deborah Jones Merrit (Ohio State), Inside Report:

Law firms do find one bright spot in today's legal market: it is the oversupply of lawyers. The Georgetown report recognizes this quite candidly: "While excess capacity in the market is certainly not good news for young lawyers or, for that matter, law schools, it provides an environment in which law firms should have the flexibility to redesign their staffing models to respond to client demands. By embracing alternative approaches to staffing--including increased use of staff attorneys and non-partner track associates, contract lawyers, and part-time attorneys--firms can create more efficient and cost effective ways to deliver legal services." (p. 17)

It's hard to find a more brutal statement of market reality than that one: the glut of lawyers created by law schools is allowing law firms to hire those graduates on increasingly contingent and unattractive terms. These new jobs are not designed to train new lawyers in skills they can take to other job sites. Once you have worked two years as a back-office document reviewer, what professional skills do you have--other than reviewing documents? These jobs will serve the economic interest of law firms.

And before any legal educators get all huffy about how law firms should recognize their professional obligations rather than simply operating as businesses: How many law faculty are voluntarily taking pay cuts to reduce tuition? How many are contributing substantial amounts to loan-repayment assistance plans? How many are voluntarily changing what they teach, or the time they devote to research, in order to lower the cost of legal education? How many devote 40 hours a year (one week) to serving low-income clients directly? How many spend that time training or supervising other lawyers in providing that service?

There are some professors who do these things, just as there are some law firm partners who forego income to mentor new lawyers. But there aren't very many. Law schools, just like law firms, have become full-bore businesses. The controlling members of these businesses, equity partners and tenured professors, serve their own interests and maximize their take-home pay.

In a market system, there's nothing wrong with businesses maximizing profit. The problem, with both law firms and law schools, is that we clothe ourselves in the rhetoric and privileges of a profession while pursuing market goals. As clients have gained the information they need to assert their interests--and new businesses have emerged to serve those interests--it's our students and new lawyers who pay the price for our duplicity.

February 26, 2013 in Legal Education | Permalink | Comments (8) | TrackBack (0)

Hamilton Project Hosts Program Today on Entitlements, Taxation, and Revenues in the Federal Budget

Hamilton ProjectThe Hamilton Project hosts a program today on Real Specifics: 15 Ways to Rethink the Federal Budget—Part II: Addressing Entitlements, Taxation, and Revenues:

Budget battles continue in Washington even after the White House and Congress cut a last-minute deal to avert the so-called “fiscal cliff.”  With the imminent threat of default removed for now, the next potential challenge to the economy could come from sequestration, set to go into effect on March 1.

The Hamilton Project asked experts from a variety of backgrounds—the policy world, academia, and the private sector—and from both sides of the political aisle, to provide innovative, pragmatic proposals for lowering the deficit by reducing expenditures or raising revenues, and that take into account impacts to the economy at large. 

The resulting 13 proposals range across budget groups, and include options to reduce mandatory and discretionary programs, to improve economic efficiency, and touch on topics as wide ranging as immigration, transportation, healthcare, and mortgage interest.  This diverse group of authors will convene in at a forum today in Washington, D.C. to discuss their ideas in a series of roundtable discussions.

Here are the tax-related panels:

Panel #2:  Innovative Approaches to Tax Reform:

Robert Greenstein (Center on Budget and Policy Priorities) (moderator)

  • Joseph E. Aldy (John F. Kennedy School of Government, Harvard University), Eliminating Fossil Fuel Subsidies:  "This paper looks at how limiting subsidies for fossil fuels could raise revenue for the federal government and while also benefiting the environment. It proposes the elimination of twelve tax provisions that subsidize the production of fossil fuels in the United States."
  • Karen Dynan (The Brookings Institution), Better Ways to Promote Saving through the Tax System:  "Government programs and tax provisions aimed at encouraging people to save are essential to promoting economic security, but can subsidize savings that would have occurred anyway. This paper examines the design of better savings programs, outlining how one could reform savingsrelated programs to increase security but lower budgetary cost."
  • Diane Lim (Pew Charitable Trusts), Limiting Individual Income Tax Expenditures: "This paper takes another approach to individual income tax expenditures, proposing an across-the-board reduction in deductions and exclusions rather than targeting specific provisions."
  • Alan Viard (American Enterprise Institute), Replacing the Home Mortgage Interest Deduction: "Tax reform discussions often end up calling for a broader base—eliminating or limiting tax exclusions and deductions that can distort taxpayer decisions. This paper addresses replacing the mortgage interest deduction with a refundable credit to raise revenue and improve the efficiency of the tax code."

Panel #3:  New Sources of Revenue and Efficiency:

Michael Greenstone (The Hamilton Project, The Brookings Institution) (moderator)

  • Tyler Duvall (McKinsey & Company), User Fees for Transportation Infrastructure:  "Investments in infrastructure are essential for a vital economy, but much of U.S. transportation infrastructure is in disrepair and overly congested. This paper looks to user fees as a way to raise revenues while also encouraging smarter use of infrastructure."
  • Bill Gale (The Brookings Institution) & Ben Harris (The Urban Institute), Creating an American Value-Added Tax:  "Creating a value-added tax (VAT) in the United States could help raise revenue in a manner that does not distort saving and investment choices, that makes our system more consistent with the rest of the world’s, and that has been proven to be feasible administratively. This paper considers how a VAT could contribute to a fiscal solution and discusses its design."
  • Adele Morris (The Brookings Institution), The Many Benefits of a Carbon Tax:  "A carbon tax could provide a new source of revenue while also addressing climate change more efficiently than many current regulations in place. This paper lays out a plan to implement a carbon tax while consolidating and limiting other regulations targeting climate change."
  • Pia Orrenius (Federal Reserve Bank of Dallas), Overhauling the Temporary Work Visa System:  "A simplified immigration system designed to meet the needs of the economy would allow the United States to maximize the many benefits of immigration. This paper explores how reforms to the employment-based immigration system could increase the economic benefits of immigration while also raising revenue by auctioning visas."
  • Phillip Swagel (School of Public Policy, University of Maryland), Increasing the Role of the Private Sector in Housing Finance:  "Government support for housing has allowed Americans to get mortgages and refinance at low interest rates, but it also leave taxpayers exposed to an immense amount of risk. This paper presents an overview of how changes in housing policies and reform of government-sponsored enterprises could contribute to budget savings as well as improve the distributional consequences and efficiency of federal housing policy."

February 26, 2013 in Conferences, Scholarship, Tax | Permalink | Comments (1) | TrackBack (0)

Joint Tax Committee: Explanation of Tax Legislation Enacted in the 112th Congress

Joint Tax CommitteeThe Joint Committee on Taxation yesterday released General Explanation of Tax Legislation Enacted in the 112th Congress (JCS-2-13):

This document ... provides an explanation of tax legislation enacted in the 112th Congress. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included. In some instances, provisions included in legislation enacted in the 112th Congress were not reported out of committee before enactment. For example, in some cases, the provisions enacted were included in bills that went directly to the House and Senate floors. As a result, the legislative history of such provisions does not include the reasons for change normally included in a committee report. In the case of such provisions, no reasons for change are included with the explanation of the provision in this document.

February 26, 2013 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

3d Circuit Denies CARDS Tax Shelter

Crispin v. Commissioner, No. 12-2275 (3d Cir. Feb. 25, 2013):

Neal D. Crispin appeals the decision of the United States Tax Court that he was not entitled to an ordinary loss deduction for his participation in a Custom Adjustable Rate Debt Structure (“CARDS”) transaction and that he is liable for an accuracy-related penalty under § 6662 of the Internal Revenue Code. The Tax Court disallowed the claimed loss on the grounds that Crispin‟s CARDS transaction lacked economic substance and held that he could not avoid the penalty because he had not relied reasonably or in good faith on the advice of an independent and qualified tax professional [T.C. Memo. 2012-70]. For the following reasons, we will affirm.

February 26, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Monday, February 25, 2013

GW Law Faculty Launched 'Near Coup' to Oust Dean Paul Berman

BermanThe George Washington Hatchet, Law Faculty Plotted to Oust Dean:

Faculty say they launched a near coup to remove the former dean of the GW Law School, who unexpectedly announced last fall he would resign after holding the position for just 18 months. 

Paul Schiff Berman stepped down in January and moved to a new vice provost position after professors drafted a petition to reject his leadership, citing staff tensions and poor decision-making about how to restore a reeling legal education system, The Hatchet has learned.

Professors said they could have held the first successful vote of no confidence in GW history. But University President Steven Knapp and Provost Steven Lerman plucked him out of the No. 20-ranked law school before a formal vote could take place, according to interviews with more than a half dozen professors who spoke on the condition of anonymity.  

The accounts of the law school friction reveal a different story than the one initially told when Berman stepped down from one of GW’s top programs.

Professors described a fall semester of private email chains and contentious meetings about Berman’s intense leadership style.

“I kept thinking of that old proverb, ‘If you go after the king, you better make sure you take the king out,’ ” one full-time law professor said. “We didn’t take the king out, but the king took himself out.”

Faculty presented a 17-page document to the former dean which outlined, corroborated and footnoted complaints during Berman’s tenure. About a dozen professors contributed to the document created in mid-October and viewed by The Hatchet.

Some of the most senior professors campaigned against Berman, resenting him for allegedly subverting faculty governance rules and verbally mistreating staff.

February 25, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Could Taxing Violent Video Games Actually Save Lives?

The Atlantic:  Could Taxing Violent Video Games Actually Save Lives?, by Jacoba Urist:

Guns, troubled young men, and violent video games. Together, they form a tragically familiar background story to America's recent shooting massacres in Columbine, Aurora, and Newtown. But the Constitution protects guns, and mental health is expensive and complicated to treat. So some lawmakers are responding to the latest tragedy by going after the third -- and possibly least consequential -- variable in this murky equation. There is a new push to tax violent video games. ...

Adam Hoffer, an economics professor at the University of Wisconsin-La Crosse, is one of three co-authors of a new working paper examining the creation and growth of the "sindustry"--and why sin taxes often aren't the magic remedy lawmakers hope they'll be [Sin Taxes: Size, Growth, and Creation of the Sindustry]. "Video games [are] the vice right now, what's next down the road?" he said. "Are we going to tax violent movies? TV shows? Hey, why not an HBO tax?"...

The problem is, even in a perfect world, where placing a sin tax on certain video games reduces exposure to violent imagery and the money is used for a series of public service announcements about anti-social behavior, there's still no clear evidence that this would do anything to protect kids from gun violence or from another school shooting. Even more dangerous, lawmakers may fool us all into thinking we've solved the problem of gun violence by slapping a 10% price hike on "Grand Theft Auto," when in fact, the only problem they've solved is the hole in their own budget. In the meantime, we will have done nothing to reduce gun violence.

February 25, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Medical Marijuana Providers Face 75% Federal Tax Rate

Marijuana CNN:   Marijuana Dealers Get Slammed by Taxes:

Thanks to a decades-old law targeting drug runners, entrepreneurs in the nascent medical marijuana industry face a unique burden: an effective federal income tax rate that can soar as high as 75%.

The hefty levy is the result of a 1982 provision to the tax code, known as 280E, that stemmed from a successful attempt by a convicted drug trafficker to claim his yacht, weapons and bribes as businesses expenses, according to 280E Reform, a group working to overturn the statute.

Enacted in the wake of that PR debacle, the rule bars those selling illegal substances from deducting related expenses on their federal income taxes.

It may have been effective against cocaine dealers and smugglers of other hard drugs, but the law now means purveyors of medical marijuana in the 18 states that have legalized the drug can't can't take typical things like rent or payroll as a business expense. That's taking a heavy toll on this new field.

February 25, 2013 in Tax | Permalink | Comments (1) | TrackBack (0)

TIGTA to Investigate Whether IRS Improperly Steered $500 Million in Contracts to Computer Company

TIGTA The Treasury Inspector General for Tax Administration has agreed to investigate whether an IRS employee improperly steered more than $500 million in government contracts to Signet Computers, after receiving this letter from House Committee on Oversight and Government Reform Chair Darrell Issa.

Washington Post, House Committee Investigating $500 Million in Contracts Between IRS, Computer Company:

“At best, this is a conflict of interest that runs afoul of ... Federal Acquisition Regulation,” Issa writes. “At worst, the IRS may have a situation in which a contracting official is awarding sole source contracts based on false justifications, or receiving kickbacks in exchange for government contracts.” ... The IRS’ contracts with Signet Computers also may have been tailored so that Signet was the only company that could win them in open bidding, Issa writes.

February 25, 2013 in Congressional News, Gov't Reports, Tax | Permalink | Comments (0) | TrackBack (0)

Rothschild: It is Time to End the Carried Interest Loophole

New York Times op-ed:  A Costly and Unjust Perk for Financiers, by Lynn Forester de Rothschild (CEO, E. L. Rothschild):

Of the many injustices that permeate America’s byzantine tax code, few are as outrageous as the tax rate on “carried interest” — the profits made by private equity and hedge fund managers, as well as venture capitalists and partners in real estate investment trusts. This huge tax benefit enriches an already privileged sliver of financiers and violates basic standards of fairness and common sense.

President Obama recently suggested that he would ask Congress to close this loophole. Eliminating the carried-interest tax rate should be an easy sell. It should play to Republicans’ supposed hatred of government handouts and to Democrats’ commitment to social justice.

But because of the financial lobby’s clout, the loophole most likely won’t be closed. If it isn’t, shame on both parties for giving us another reason to distrust our democracy and our capitalist system.

While the tax legislation passed on Jan. 1 increased the top individual-income tax rate to 39.6% from 35% for couples making more than $450,000 and individuals making more than $400,000, it left carried-interest income taxed at just 20% ...

No other affluent Americans enjoy this benefit. A brain surgeon, stockbroker, corporate lawyer or actor will have to pay the new top marginal rate percent, while a general partner who manages other people’s money pays, on carried-interest income, only the 20% rate on long-term capital gains. ...

This state of affairs denies our Treasury much-needed revenue; fuels public cynicism in government; and is evidence of the “crony capitalism” that favors some economic sectors over others. When plutocrats join with both parties to protect their own vested interests, the result is a corrosion of confidence in the free-market system.

The carried-interest loophole may seem small compared with this year’s projected $900 billion deficit, but ending it would be a major signal that Washington is ready to put an end to business as usual.

February 25, 2013 in Tax | Permalink | Comments (3) | TrackBack (0)

NLJ: Law School Rankings by Graduates in BigLaw Jobs

Go-ToNational Law Journal:  The Go-To Law Schools: A Special Report:

This annual special report focuses on what, for many law students, is the bottom line: ­whether they stand any chance in hell of landing a coveted ­associateship at a major law firm. We found that the picture was marginally brighter — but that isn’t saying much. 

The National Law Journal ranked the Top 50 law schools by the percentage of their 2012 graduates that found positions at NLJ Top 250 law firms.  Here are the Top 25:

  1. Pennsylvania (60.4%)
  2. Chicago (55.1%)
  3. Columbia (53.1%)
  4. NYU (52.9%)
  5. Northwestern (51.4%)
  6. Harvard (50.3%)
  7. Duke (48.4%)
  8. Stanford (47.3%)
  9. UC-Berkeley (45.3%)
  10. Cornell (44.3%)
  11. Virginia (42.3%)
  12. Michigan (38.4%)
  13. Georgetown (31.3%)
  14. Yale (30.6%)
  15. UCLA (29.1%)
  16. USC (28.6%)
  17. Vanderbilt (26.3%)
  18. Texas (25.8%)
  19. Fordham (23.4%)
  20. UC-Irvine (23.2%)
  21. George Washington (22.5%)
  22. Boston University (21.3%)
  23. Boston College (21.1%)
  24. Illinois (18.8%)
  25. Washington University (16.3%)

The National Law Journal also lists the 17 law schools that most outperformed their U.S. News ranking. Here are the Top 10:

  1. Howard (+88)
  2. Villanova (+59)
  3. Rutgers-Camden (+51)
  4. Santa Clara (+50)
  5. Seton Hall (+32)
  6. Houston (+28)
  7. Kentucky (+24)
  8. SMU (+24)
  9. Tennessee (+19)
  10. Loyola-Chicago (+18)

The National Law Journal also lists the 54 law schools that saw the most graduates promoted to partner in the NLJ Top 250 in 2012. Here are the Top 10:

  1. Harvard (66)
  2. Georgetown (39)
  3. Virginia (36)
  4. NYU (33)
  5. Michigan (31)
  6. George Washington (29)
  7. Chicago (27)
  8. Columbia (27)
  9. Northwestern (21)
  10. Boston College (20) & Texas (20)

Prior National Law Journal Rankings by Graduates in BigLaw Jobs:

February 25, 2013 in Law School Rankings, Legal Education | Permalink | Comments (14) | TrackBack (0)

Johnston: Income Inequality: 1 Inch to 5 Miles

Tax Analysts David Cay Johnston (Syracuse), Income Inequality: 1 Inch to 5 Miles, 138 Tax Notes 1007 (Feb. 25, 2013):

The average increase in real income reported by the bottom 90% of earners in 2011, compared with 1996, if measured at one inch, would extend almost five miles for the top 1% of the top 1%.

138TN1007_Page_2

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

February 25, 2013 in Scholarship, Tax, Tax Analysts | Permalink | Comments (8) | TrackBack (0)

Google Law Review Rankings

Google Scholar LogoMy friend and colleague Rob Anderson (Pepperdine) has expanded his Google Law Review Rankings to cover 216 law reviews based on articles published in 2007-2011 (with links to the most-cited articles for each journal).  Here are the Top 25, along with each journal's ranking in the Washington & Lee law review rankings:

Rank

Law Review

Google h5-Index

Google h5-Median

W&L Rank

1

Harvard

44

71

1

2

Stanford

44

67

4

3

Columbia

43

70

2

4

Pennsylvania

41

70

8

5

Michigan

38

65

6

6

UCLA

38

59

7

7

Texas

38

55

9

8

Yale

38

53

3

9

Georgetown

36

63

5

10

Virginia

36

55

10

11

California

35

45

12

12

Minnesota

33

53

18

13

Duke

33

52

21

14

Chicago

33

44

24

15

Northwestern

32

49

16

16

Illinois

32

45

27

17

Iowa

31

54

17

18

Cornell

31

50

15

19

J. Law & Econ.

30

51

382

20

Notre Dame

30

45

13

21

UC-Davis

30

39

29

22

NYU

29

54

14

23

Am. J. Int'l Law

29

51

56

24

Vanderbilt

28

49

20

25

Boston University

28

42

22

February 25, 2013 in Law Review Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

FOIA Request Seeks Affirmative Action Data From UC-Berkeley, UC-Davis Law Reviews

LogosFollowing up on last week's post, Should Law Reviews Take Race, Gender, and Sexual Orientation of Authors Into Account When Selecting Articles?:  Pacific Legal Foundation, PLF Seeking Information from Davis and Berkeley:

Last week, a number of friends, colleagues, and outside attorneys emailed me this post from Josh Blackman.   It seems that both UC Davis and UC Berkeley are requiring law review authors to disclose their race and sex when submitting articles for publication.   This raises a number of very troubling questions:  Why do these two law reviews need to know the race and sex of submitting authors?  What are they doing with this information?  Are they granting preferential treatment to individuals from certain races?  In order to find out the answers to these questions, I sent Public Records Act requests to both law schools.  Those schools received our requests yesterday.  [UC Davis PRA request; UC Berkeley PRA request.]

(Hat Tip: Josh Blackman, Greg McNeal.)

February 25, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

TaxProf Blog Weekend Roundup

Sunday, February 24, 2013

Reynolds: The Hollywood Tax Story They Won't Tell at the Oscars

Oscar_4Wall Street Journal op-ed;  The Hollywood Tax Story They Won't Tell at the Oscars, by Glenn Harlan Reynolds (Tennessee):

It's easy to demand higher levies on the 'rich' when your own industry gets $1.5 billion in government handouts.

At the Democratic National Convention last year, actress Eva Longoria called for higher taxes on America's rich. Her take: "The Eva Longoria who worked at Wendy's flipping burgers—she needed a tax break. But the Eva Longoria who works on movie sets does not."

Actually, nowadays an Eva Longoria who flipped burgers would probably qualify for the Earned Income Tax Credit and get a check from the government rather than pay taxes. It's the movie set where she works these days that may well be getting the tax break.

With campaign season over, you're not likely to hear stars bringing up taxes at this weekend's Academy Awards show. But the tax man ought to come out and take a bow anyway. Of the nine "Best Picture" nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives. ...

Such state incentives are widespread, and often substantial, but they don't do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities [State Film Subsidies: Not Much Bang For Too Many Bucks]. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University's Adam Thierer has called this "a growing cronyism fiasco" and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.

February 24, 2013 in Celebrity Tax Lore, Tax | Permalink | Comments (2) | 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 on SSRN, with a new paper debuting on the list at #3:

1.  [344 Downloads]  Why Tax Revenues Must Rise, by Edward D. Kleinbard (USC)
2.  [259 Downloads]  Occupy the Tax Code: Using the Estate Tax to Reduce Inequality, by Paul L. Caron (Cincinnati & Pepperdine) & James R. Repetti (Boston College)
3.  [237 Downloads]  Federal Tax Crimes, by John A. Townsend (Houston)
4.  [188 Downloads]  Seven Ways to Strengthen and Improve the L3C, by Cass Brewer (Georgia State)
5.  [184 Downloads]  Dirt Lawyers, Dirty REMICs, by Bradley T. Borden (Brooklyn) & David J. Reiss (Brooklyn)

February 24, 2013 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Law Prof: I May File Law School Ethics Charges

Following up on my previous post, Subjecting Law School Officials to Professional Discipline for Deceitful Marketing to Prospective Students (Dec. 26, 2012):

 

Ben Trachtenberg, an associate professor at University of Missouri School of Law who has written about law schools misrepresenting incoming student GPAs, LSAT scores and graduate employment data [Law School Marketing and Legal Ethics, 92 Neb. L. Rev. ___ (2013)], says he may file legal ethics complaints with state bars against those who allegedly published the bogus data.

"Almost every day when I get up, I have to wonder is today the day I'm going to break down and file a complaint" with state bar ethics panels, he tells Bloomberg Law's Lee Pacchia. Trachtenberg would prefer ethics charges be filed by the schools that employed those who published the bogus data. "It's getting to be a little nuts that the folks who really know what's going on aren't doing anything about it," he says. He may file charges, if no one else has, once his article in the June 2013 issue of the Nebraska Law Review is published, he says.

February 24, 2013 in Legal Education | Permalink | Comments (5) | TrackBack (0)

Harry Reid Hires G.E. Lawyer as Chief Tax Adviser

NY Times DealBookNew York Times DealBook:  A Revolving Door in Washington With Spin, but Less Visibility, by Jesse Eisinger (ProPublica):

Obsess all you’d like about President Obama’s nomination of Mary Jo White to head the Securities and Exchange Commission. Who heads the agency is vital, but important fights in Washington are happening in quiet rooms, away from the media gaze. ...

Take what happened late last month as Washington geared up for more fights about the taxing, spending and the deficit. The Senate majority leader, Harry Reid, Democrat of Nevada, decided to bolster his staff’s expertise on taxes.

So on Jan. 25, Mr. Reid’s office announced that he had appointed Cathy Koch as chief adviser to the majority leader for tax and economic policy. The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.”

It’s funny, though. The notice left something out. Because immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation.

Not just any corporation, but quite possibly the most influential company in America, and one that arguably stands to lose the most if there were any serious tax reform that closed corporate loopholes. Ms. Koch arrives at the senator’s office by way of General Electric.

Yes, General Electric, the company that paid almost no taxes in 2010. Just as the tax reform debate is heating up, Mr. Reid has put in place a person who is extraordinarily positioned to torpedo any tax reform that might draw a dollar out of G.E. — and, by extension, any big corporation.

Omitting her last job from the announcement must have merely been an oversight. By the way, no rules prevent Ms. Koch from meeting with G.E. or working on issues that would affect the company.

The senator’s office, which declined to make Ms. Koch available for an interview, says that she will support the majority leader in his efforts to close corporate tax loopholes. His office said in a statement that the senator considered her knowledge of the private sector to be an asset and that she complied with “all relevant Senate ethics rules and disclosures.”

In a statement, the senator’s spokesman said, “The impulse in some quarters to reflexively cast suspicion on private sector experience is part of what makes qualified individuals reluctant to enter public service.”

February 24, 2013 in Congressional News, Tax | Permalink | Comments (4) | TrackBack (0)

Saturday, February 23, 2013

American Taxation Association Midyear Meeting

Dean Calls for Charter Law Schools

The Faculty Lounge:  Loosening the ABA's Grip on Law Schools, by David Yellen (Dean, Loyola-Chicago):

The ABA Standards and Rules of Procedure for Approval of Law Schools establish the basic framework within which almost all law schools operate.  Many aspects of the Standards are appropriate and unobjectionable.  However, in too many respects the Standards operate as a significant impediment to the kind of experimentation and change that is needed in legal education. ...

One problem is that the Standards are too law faculty-centric.  They reflect too much of what deans and professors think legal education should be, rather than what is truly necessary to ensure quality.  To some extent, this is probably an inevitable consequence of self-regulation.  However, the Standards are more protective of faculty prerogatives than the rules of any other accreditor.   

For example, the Standards require that full time faculty teach substantially all of the first-year curriculum and a "major portion" of the entire curriculum.  Although the language of the rules is murky, there is an expectation that a large percentage of the faculty will be on tenure-track or have long term contracts.  Every school must have a scholarly mission and devote resources to that undertaking.  To give you one of my favorite examples, when I was on the Standards Review Committee, I was thoroughly rebuffed in my effort to have removed from a draft standard a requirement that each full time faculty member have an individual office.  Office sharing exists throughout the economy today.  Do law professors really have a right to insist on an individual office as a precondition for a school's existence? ...

Another path to reform might be drawn from the charter school movement.  Charter schools receive significant relief from regulatory rules in exchange for being closely evaluated based upon a set of agreed-upon goals.   The ABA Standards have an infrequently used (and nontransparent) variance mechanism.  The Section should consider allowing a small number of existing or newly created schools to propose a detailed plan for operating a quality law school without being governed by many of the more onerous Standards.  The success or failure of these schools could be monitored and studied, and sensible reforms to the Standards could emerge.

February 23, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Ex-Dean: The Problem With Legal Education: The ABA

ABA Logo 2Wall Street Journal op-ed:  Perverse Incentives of the Lawyers Guild: While Law School Enrollment Drops, ABA Rules Bust the Budgets, by James L. Huffman (Dean Emeritus, Lewis & Clark):

Law schools are in trouble. Applications are down almost 50% to an estimated 54,000 this year from 100,000 in 2004. Little wonder. According to the National Association for Law Placement, barely 65% of 2011 graduates had landed law-related employment within nine months of graduation, the lowest rate since NALP began reporting in 1985. Even the 65% number is suspect, given the powerful, rankings-driven incentives schools have to cook the figures. Meanwhile, many of the unemployed graduates have law-school debt exceeding $100,000.

It is a true crisis, and law schools are scrambling to figure out how to manage with fewer tuition-paying students. Law-school budgets have soared for several decades as faculties multiplied, salaries rose and facilities became ever grander. With annual tuition approaching or even exceeding $40,000 at most schools, even a dozen fewer students a year blows a $500,000 hole in the budget.

Riding to the rescue is the ABA's Task Force on the Future of Legal Education. The task force's assignment is to study and make recommendations addressing the economics, delivery and regulation of legal education.

The ABA should start by looking within: The organization is a major source of the problem. Those large law-school faculties with some of the highest salaries in the academy, the palatial facilities, a persistent emphasis on theory instead of practical-skills training, and a limited reliance on online instruction have all been encouraged, if not mandated, by ABA regulations and the accreditation process. As often happens with regulatory systems, whether governmental or professional, the ABA accreditation process was long ago captured by legal education's most influential stakeholders. ...

The ABA's influence over the accreditation process has come at a significant cost to legal educators. In return for the gift of better facilities, greater job security and a job description of their own design, they have had to accept an inevitable proliferation of rules limiting their ability to experiment, innovate and respond to the changing realities of 21st century law practice.

There is a way out. Instead of the one-size-fits-all approach the ABA has taken for decades, what is needed is some creative competition for the declining pool of prospective students.

The ABA should free law schools from most of the existing standards and encourage them to draw on the enormous intellectual power of their faculties to design and test innovative approaches—and let a thousand flowers bloom. The ABA's role should be limited to assuring that prospective students and legal employers get full and honest information about what could become a bonanza of legal education alternatives.

February 23, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

ABA May Pull Florida A&M's Accreditation

Florida AM LogoDiverse Issues in Higher Education: Florida A&M Law School Warned It Is Not Meeting Standards:

Embattled Florida A&M University has been warned that its decade-old law school is not meeting the standards it needs to maintain its accreditation. ... The ABA this week sent a letter to FAMU officials detailing problems it found with the law school based in Orlando.

The accreditation committee questioned whether FAMU was doing enough to prepare students for the exam needed to get a law license. The 31-page report points out that 30% of the students admitted either do not graduate the school or do not pass the bar exam. University officials have been asked to submit a report by May that shows the university is complying with accreditation standards.

February 23, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Friday, February 22, 2013

Call for Book Reviews: Michigan Law Review

Michigan The Michigan Law Review has asked me to post its solicitation of book reviews for its 2014 Survey of Books Related to the Law:

The Michigan Law Review publishes an Annual Survey of Books dedicated to book reviews. Book reviews are not included in any other issue of the Michigan Law Review. The Survey includes reviews of books published in the current year and the past two years. So, for example, the 2014 Survey, which will be published in April 2014, will include reviews of books published in 2012, 2013, and 2014.

The 2014 Survey of Books is currently accepting submissions for the 2014 Review. The Book Review Office welcomes unsolicited submissions. Proposal guidelines can be downloaded here. Manuscripts and draft sections to accompany the proposal are appreciated. Please note that all Book Review proposals, drafts, and manuscripts must be submitted via email to [email protected]. Decisions for the upcoming year's issue are generally made between March and May.

Please note that we require that finished drafts be no more than 8,500 words, including footnotes.

February 22, 2013 in Book Club, Legal Education, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Tulane Hosts Tax Roundtable Today in New Orleans

Tulane LogoTulane hosts its annual Tax Roundtable today:

The Tulane Tax Roundtable brings together tax scholars from around the country, resident Tulane Faculty, and Tulane students for discussion and debate about important tax policy issues of our time. The roundtable showcases the drafts and works-in-progress of its participants and subjects these works to rigorous analysis in a discussant-driven workshop format.

James Alm (Tulane) & Jay Soled (Rutgers Business School), The Internal Revenue Code and Automobiles: A Case Study of Taxpayer Noncompliance
DiscussantPhilip Hackney (LSU)

Terrence Chorvat (George Mason), The Failure of the Facebook IPO and a Justification for Debt-Equity Tax Distinction
DiscussantSteven Sheffrin (Tulane)

Tessa Davis (Tulane), Two Households Both Alike in Dignity: Family as Status and Family as Contract in the Tax Code
DiscussantLori McMillan (Washburn)

Lori McMillan (Washburn), Noncharitable Nonprofit Organizations in Canada: An Empirical Examination
DiscussantJames Alm (Tulane)

Ajay Mehrotra (Indiana), Sharing the Burden: Law, Politics, and the Making of the Modern American Fiscal State, 1880-1930
DiscussantMarjorie Kornhauser (Tulane)

Shu-Yi Oei (Tulane), Taxing in the Shadow of Bankruptcy Law: The Collections Case for Tax Priority
DiscussantAjay Mehrotra (Indiana)

Steven Sheffrin (Tulane), What Role Can Desert Play in Designing Tax Policies?
DiscussantNancy Staudt (USC)

Nancy Staudt (USC) & Victor Fleischer (Colorado), The Supercharged IPO
DiscussantTerrence Chorvat (George Mason)

February 22, 2013 in Conferences, Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)