Friday, May 31, 2013
After Google's car-borne cameras were driven through the Vilnius area last year, the tax men in this small Baltic nation got busy. They have spent months combing through footage looking for unreported taxable wealth. "We were very impressed," said Modestas Kaseliauskas, head of the State Tax Authority. "We realized that we could do more with less and in shorter time."
More than 100 people have been identified so far after investigators compared Street View images of about 500 properties with state property registries looking for undeclared construction. Two recent cases netted $130,000 in taxes and penalties after investigators found houses photographed by Google that weren't on official maps. ...
From aerial surveillance to dedicated iPhone apps, cash-strapped governments across Europe are employing increasingly unconventional measures against tax cheats to raise revenue.
Robert Morse (Director of Data Research, U.S. News & World Report), Which Highly Ranked Law Schools Operate Most Efficiently?:
U.S. News has developed a new, exclusive list showing which law schools are able to produce the highest educational quality, as determined by their place in our Best Law Schools rankings, but spend relatively less money to achieve that quality. ...
U.S. News measures financial resources in part by taking into account how much a law school spends per student on instruction, including faculty and staff salaries, library, supporting services and other expenditures, such as financial aid. The financial resources ranking factor is a direct measure of the size of each law school's yearly budget expenditures per student compared with other law schools, and it has an 11.25 percent weight in the Best Law Schools rankings methodology.
The new list is based on the concept of operating efficiency, defined as a law school's total budget expenditures per student divided by its overall score – which U.S. News uses to determine its overall numerical rank – in the 2014 Best Law Schools rankings. This calculation reveals how much each law school is spending for each point in its overall score and thus, its position in the rankings.
The less a law school spends relative to other schools as correlated to its overall U.S. News rank, the more efficient it is in producing a quality education compared with other schools. ...
Only schools that were numerically ranked in the top 100 in the Best Law Schools 2014 rankings were included in this analysis. The table below shows the 25 law schools that scored the highest on the operating efficiency measure, sorted by those that spent less per student to achieve a relatively high rank.
US News Rank
Spending per Student
Spending per Student for Each Point in US News Overall Score
Louisville 68 $28,151 $654.67 Rutgers-C. 91 $26,858 $688.67 G. Mason 41 $38,684 $703.35 Wisconsin 33 $42,415 $731.29 Rutgers-N. 86 $30,236 $755.90 Wm. & Mary 33 $44,104 $760.41 N. Carolina 31 $45,232 $766.64 Tennessee 61 $34,792 $773.16 Nebraska 61 $35,228 $782.84 Kentucky 58 $36,407 $791.46 Georgia St. 54 $38,099 $793.73 Houston 48 $39,761 $795.22 Hawaii 80 $33,025 $805.49 Alabama 21 $53,469 $810.14 G. Wash. 21 $53,495 $810.53 Arkansas 68 $35,041 $814.91 Missouri 76 $34,437 $819.93 Virginia 7 $69,704 $820.05 LSU 76 $34,909 $831.17 Utah 41 $46,512 $845.67 Florida 46 $45,654 $861.40 Georgetown 14 $64,734 $863.12 Wake Forest 36 $49,318 $865.23 Emory 23 $57,323 $881.89 Ohio State 36 $50,269 $881.91
(Hat Tip: Francine Lipman.)
New York Times DealBook: Reducing the Corporate Tax Rate Could Stabilize Banks, by Victor Fleischer (Colorado; moving to San Diego):
Republicans and Democrats have both expressed a desire to reduce the corporate tax rate from 35 percent to something in the neighborhood of 25 percent, which would be more in line with our major trading partners. The recent attention to the legal loopholes employed by Apple, Google, Starbucks and other multinational corporations to reduce their taxes could threaten the prospects of reducing the corporate rate.
While lowering the corporate rate remains good public policy, the optics have changed. It feels a bit like putting up a yield sign because cars keep running the stop sign.
But the importance of the corporate tax rate goes beyond offshore tax games. A draft paper by Thomas Hemmelgarn and Daniel Teichmann [Tax Reforms and the Capital Structure of Banks] highlights the relationship between corporate tax rates and bank stability. Our tax code, like that of many countries, has a bias for debt over equity: interest payments to bondholders are deductible to the corporation, but dividend payments to shareholders are not. ...
If a corporate tax rate change is indeed on the horizon, analysts should watch banks’ balance sheets carefully. The paper confirms findings from previous research suggesting that banks will accelerate the recognition of tax losses before the rate change by increasing loan loss reserves before the change, effectively shifting corporate income forward to the lower-taxed period.
The aggressive gamesmanship by multinational corporations like Apple is disappointing, but it is not enough to simply say that we should close loopholes and keep the corporate rate high. The goal of bank stability should inform our decision-making about the design of the corporate tax, including the rate structure.
Leyla Ates (Namik Kemal University (Turkey)), Domestic Political Legitimacy of Tax Reform in Developing Countries: A Case Study of Turkey, 30 Wis. Int'l L.J. 706 (2012):
The influence of developed countries, intergovernmental organizations, and international tax experts on the domestic tax reform agendas of developing countries has increased since the end of World War II. The increasing influence of external actors constrains the sovereignty of developing countries in taxation. Thus, causing concern about legitimacy in tax reform. While much scholarly attention is devoted to assessing the effectiveness of tax reforms that have been implemented in developing countries, relatively little is paid to questioning legitimacy of tax reform. This paper argues for domestic political legitimacy of tax reform, focusing on whether the good governance condition that often came with development assistance after the 1990s is able to produce domestic political legitimacy of tax reform. This paper analyzes the recent tax reform efforts in Turkey, which considered public participation in the decision making procedure as part of good governance. It concludes that even though public participation in the tax policy and lawmaking process began with a concern for efficiency, public participation might become a basis for democratic taxation.
Dustin A. Zacks (King, Nieves & Zacks, West Palm Beach, FL), Avoiding Insult to Injury: Extending and Expanding Cancellation of Indebtedness Income Tax Exemptions for Homeowners, 66 Ark. L. Rev. 317 (2013):
This article offers a critical analysis of anti-homeowner arguments that have arisen in the wake of the enactment of the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA), which excludes forgiven principal residence indebtedness from generating federal income tax liability. Some argue that forgiveness encourages housing speculation and overconsumption or benefits wealthy homeowners more than homeowners of moderate means, while others suggest that forgiveness is not fair to homeowners who paid such taxes prior to Congress’s exemption being enacted.
The University of Alabama School of Law seeks to hire entry level and lateral faculty in a variety of subject areas, including tax "basic federal income tax and upper level tax electives, including, but not limited to, corporate and partnership tax, international tax, taxation of nonprofits, tax policy, and the taxation of trusts, estates, and gifts." Interested candidates should apply online. For more information, contact Andrew P. Morriss.
New York Times Room for Debate: Getting a Fair Share From Multinationals:
Congressional investigators reported once again the extent to which multinational companies, like Apple, have avoided U.S. taxes by shifting corporate assets to tax havens. The Treasury loses billions of dollars every year because of this legal maneuvering.
How can the United States government get its fair share of revenue from multinationals while allowing them to stay competitive?
- Rosanne Altshuler (Rutgers), Create Minimum Rate and Exempt Dividends: "If companies continued to route income to tax havens, at least the United States would collect some revenue."
- Alan J. Auerbach (UC-Berkeley), Tax Earnings Where Products Are Sold: "Where a company is based and where assets or production are located are obsolete concepts in a global intellectual market."
- Reuven S. Avi-Yonah (Michigan), Tax All Profits of Companies Based in the U.S.: "Other nations will follow suit and current law prohibits double taxation by deducting foreign taxes from U.S. tax liability."
- Mihir A. Desai (Harvard), Tax Only the Income Earned in the U.S.: "If only the U.S. assesses worldwide income, our corporations are at a disadvantage. Harming global success is counterproductive."
- Chye-Ching Huang (Center on Budget and Policy Priorities), Corporate Suggestions Are More of the Same: "A 'territorial' tax on profits at their source would easily be gamed so companies would pay nothing, or close to nothing. "
- Edward Kleinbard (USC), Transparency Is an Essential First Step: "Authorities could identify patterns of inappropriate income shifting and make better use of limited audit resources."
Matt Leichter has updated the data in his two ongoing research projects:
This page tracks law graduate overproduction as of 2011 by contrasting state government lawyer job creation projections with ABA graduate data from the Law School Admissions Council. ... Here’s a chart of the results, the numbers in parentheses are the number of ABA-accredited law schools operating in 2011. ...
# State Annual Job Openings ABA Grads Annual Surplus Grads Per Opening 1 Mississippi (2) 30 316 286 10.53 2 Puerto Rico (3) 100 678 578 6.78 3 Michigan (5) 320 2,072 1,752 6.48 4 Delaware (1) 60 252 192 4.20 5 Nebraska (2) 70 283 213 4.04 6 Vermont (1) 50 175 125 3.50 7 Mass. (7) 700 2,288 1,588 3.27 8 Indiana (4) 270 818 548 3.03 9 Oregon (3) 180 537 357 2.98 10 Louisiana (4) 270 797 527 2.95
This page uses the number of attorneys “active and resident” according to the “ABA’s National Lawyer Population by State” count (NLPS) and population figures by state from the U.S. Census Bureau via FRED (Puerto Rico’s is from one year earlier from the World Bank). The NLPS does not tell us the number of inactive or nonresident attorneys, but the Lawyer Statistical Report calculates those at 4.8 percent and 6.1 percent, respectively. To give you a comparison: for the 1.2 million attorneys on the rolls in 2012, between 1970 and 2011 the ABA conferred just over 1.5 million law degrees, though only about 728,200 people were employed as lawyers in 2010. ...
Number of Active & Resident Lawyers Per Capita (2012)
The District of Columbia and Puerto Rico are counted as states.
# State Population Lawyers Lawyers Per 10,000 Residents 1 D.C. 632,323 51,271 810.84 2 New York 19,570,261 163,798 83.70 3 Mass. 6,646,144 42,483 63.92 4 Connecticut 3,590,347 20,842 58.05 5 Illinois 12,875,255 60,069 46.65 6 New Jersey 8,864,590 40,997 46.25 7 Minnesota 5,379,139 23,774 44.20 8 California 38,041,430 159,824 42.01 9 Missouri 6,021,988 24,276 40.31 10 Colorado 5,187,582 20,768 40.03
Update: From Mississippi dean (and Tax Prof) I. Richard Gershon:
Recently, information regarding the legal job market in Mississippi was published by American Lawyer magazine. Though we appreciate their effort to report candidly our state’s employment situation, the statistics reported are not accurate. You referred to this data on TaxProf.
The source the author used to compile the article’s chart, Career One Stop, lists only 30 new lawyer jobs annually for Mississippi. Career One Stop cites the Mississippi Department of Employment Security for this number, who, upon closer inspection, actually lists 165 annual legal job openings in Mississippi:This is much more representative of our situation, even though it does not include judges, hearing officers, arbitrators, judicial law clerks and others in the legal profession.
In addition, if you re-calculate our number based on the Mississippi Department of Employment Security’s correct information, we have a ratio of 1.92 graduates to job openings, which is equivalent to other states’ job opening rates across the Southeast, and is an even better rate than states of similar size.
In light of this, we’d like to kindly ask for this information to be clarified and corrected. The data published currently is uncharacteristic of the opportunities we have here for students and legal professionals, and we’d like to continue to promote our sound legal education and job environment. Today, the Law School Tuition Bubble even published a semi-retraction.
- Bloomberg: Four IRS Employees Set to Be Interviewed in Congressional Probe
- CBS News: House Investigators to Question Cincinnati IRS Employees
- Daily Beast: Boy, the Head of the IRS Went to the White House a Lot, by Megan McArdle
- Daily Caller op-ed: The IRS Targeting Was Wrong, Even If Some of the Targeted Groups Did Break Law, by Jim Huffman
- The Hill: House Questioning IRS Staffers in Ohio
- The Hill: WWJD About the IRS?
- Human Events: IRS Commish Had a Close Relationship With White House
- Investor's Business Daily: 157 Shulman WH Visits: IRS Fish Rots From the Head
- L.A. Times: The Right Way to Investigate the IRS
- McClatchy: IRS May Have Targeted Conservatives More Broadly
- Dick Morris: Full Dimensions of IRS Scandal Emerge
- New York Post: Chief of IRS During Targeting of Tea Party Visited White House 157 Times
- Bill O'Reilly: Is There Now a Smoking Gun in the IRS Scandal?
- Politico: Cincinnati IRS to Face House Panels
- Reuters: Embattled IRS Staff Remain in Jobs Despite U.S. Tax Review Scandal
- Time: One Nation, Tax Exempt
- U.S. News & World Report: Economic Intelligence A Big IRS Job and Fewer People to Do It
- U.S. News & World Report: Lois Lerner: Career Government Employee Under Fire
- U.S. News & World Report: One-Third of Tax-Exempt Groups Scrutinized by IRS Were Not Conservative
- USA Today op-ed: IRS Commits Political Sabotage, by John Eastman
- Wall Street Journal op-ed: An Antidote to Cynicism Poisoning: Restoring Public Faith Will Require a Full Investigation of the IRS's Politicization, by Peggy Noonan
- Wall Street Journal: A Tax-Exempt IRS Primer: Breaking Down the Liberal Excuse for Selective Tax Enforcement
- Washington Examiner: Tea Party Groups Sue IRS, Claim Targeting Was Widespread
- Washington Monthly: Lois Lerner: Totalitarian Menace
- Washington Post: White House: No Special Prosecutor for IRS Scandal
- Washington Post: Who Handles Hot Potatoes Like the IRS Probe? A Look at 4 Types of Washington Investigations
- Weekly Standard: Goolsbee's Mysterious Tweet About the Koch Brothers' Taxes
- Weekly Standard: 'Pro-Israel Groups Felt Wrath of Obama IRS'
Prior TaxProf Blog coverage:
Wendy C. Gerzog (Baltimore), Valuing Fractional Interests in Art for Estate Tax Purposes, 139 Tax Notes 1073 (May 27, 2013):
It is difficult to value fractional interests in art because there is virtually no market in those interests. Nevertheless, the Tax Court in Estate of Elkins [140 T.C. No. 5 (2013)] valued the decedent’s fractional interests in multiple artworks, which the decedent and his children highly cherished. First, the court addressed the restricted agreements under § 2703 and then the court determined the value of decedent’s interests in the art.
All Tax Analysts content is available through the LexisNexis® services.
Thursday, May 30, 2013
Congressional Budget Office, The Distribution of Major Tax Expenditures in the Individual Income Tax System:
A number of exclusions, deductions, preferential rates, and credits in the federal tax system cause revenues to be much lower than they would be otherwise for any given structure of tax rates. Some of those provisions—in both the individual and corporate income tax systems—are termed “tax expenditures” because they resemble federal spending by providing financial assistance to specific activities, entities, or groups of people. Tax expenditures, like traditional forms of federal spending, contribute to the federal budget deficit; influence how people work, save, and invest; and affect the distribution of income.
This report examines how 10 of the largest tax expenditures in the individual income tax system in 2013 are distributed among households with different amounts of income. Those expenditures are grouped into four categories:
- Exclusions from taxable income—
- Employer-sponsored health insurance,
- Net pension contributions and earnings,
- Capital gains on assets transferred at death, and
- A portion of Social Security and Railroad Retirement benefits;
- Itemized deductions—
- Certain taxes paid to state and local governments,
- Mortgage interest payments, and
- Charitable contributions;
- Preferential tax rates on capital gains and dividends; and
- Tax credits—
- The earned income tax credit, and
- The child tax credit.
- Accounting Today, Congressional Report Finds Tax Expenditures Skewed Toward Wealthy
- Bloomberg, Income Extremes Reap Most Benefit From Tax Breaks: CBO
- Bloomberg, Tax Reformers Must Kill Subsidies for the Rich
- Fox News, CBO: Tax Breaks Cost $1.2 Trillion Over Decade
- L.A. Times, How 10 Major Tax Breaks Benefit the Rich -- and the Poor
- L.A. Times, Tax Breaks Benefit Rich Households the Most, Report Says
- Mother Jones, Tax Expenditures Favor the Rich—But Probably by Less Than CBO Says
- Wall Street Journal, CBO: More Than Half of Biggest Tax Breaks Go to Top Quintile of Households
- Washington Post, CBO Study: Wealthy Win Lion’s Share of Major Tax Breaks Like Mortgage Interest Deduction
- Wall Street Journal, Give Us a Break: The Congressional Budget Office's Misleading Report on "Tax Expenditures"
The IRS announced today (IR-2013-57) that it is accepting grant applications for Low Income Taxpayer Clinics for the 2014 grant cycle (Jan. 1 - Dec. 31, 2014). Applications will be accepted through July 12, 2013. The LITC program awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand, or maintain a low income taxpayer clinic. The IRS will award a total of up to $6,000,000.
The IRS welcomes all applications and will ensure that each application receives full consideration. The IRS is particularly interested in receiving applications from organizations that will operate in areas that are currently underserved.
Currently underserved areas are as follows:
Identified States for New or Existing Clinics CONTROVERSY ESL Alaska, Alabama, Kansas, North Dakota, South Dakota Alabama, Colorado, Connecticut, Georgia, Louisiana, Montana, New Mexico, North Dakota, South Dakota Identified Metropolitan Areas for New Clinic Applications Los Angeles, California, including the following counties: Los Angeles, Kern, Riverside, Ventura Sacramento, California, including the following counties: El Dorado, Placer, Sacramento, San Joaquin, Stanislaus Philadelphia, Pennsylvania, including the following counties: Berks, Delaware, Philadelphia St. Louis, Missouri, including the following counties: Cape Girardeau, Jefferson, St. Francois, St. Louis
- Low Income Taxpayer clinic Program Report
- Application Package and Guidelines
- Publication 3319: Low Income Taxpayer Clinic Grant Application
- Publication 4134: Low Income Taxpayer Clinic List
- Publication 4671: VITA Grant 2013 Program Overview and Application Package
- Publication 4680: TCE & VITA Grant Programs
- Publication 4883: Grant Programs Resource Guide
Georgetown Center on Education and the Workforce, Hard Times: College Majors, Unemployment and Earnings (press release):
In the past, a college degree all but assured job seekers employment and high earnings, but today, what you make depends on what you take. In Hard Times 2013, we show differences in unemployment and earnings based on major for BA and graduate degree holders. We show that STEM — Science, Technology, Engineering, and Mathematics — majors typically offer the best opportunities for employment and earnings, while unemployment is higher for graduates with non-technical degrees. Here are some of our major findings:
- Even as the housing bubble seems to be dissipating, unemployment rates for recent architecture graduates have remained high (12.8%). Graduate degrees and work experience did not shield these graduates from a sector-specific shock; graduates with experience in the field have the same jobless rates as the economy overall (9.3%).
- Unemployment is generally higher for non-technical majors, such as the arts (9.8%) or law and public policy (9.2%).
- People who make technology are still better off than people who use technology. Unemployment rates for recent graduates in information systems, concentrated in clerical functions, is high (14.7%) compared with mathematics (5.9%) and computer science (8.7%).
- Unemployment rates are relatively low for recent graduates in education (5.0%), engineering (7.0%), health and the sciences (4.8%) because they are tied to stable or growing industry sectors and occupations.
- 5. Graduates in psychology and social work also have relatively low rates (8.8%) because almost half of them work in healthcare or education sectors.
The three-day annual meeting of the European Association of Tax Law Professors kicks off today in Lisbon, Portugal. Henry M. Ordower (St. Louis) presents Tax Neutrality Between CIT and Non-CIT Subjects: How to Improve our Systems?:
This brief thematic report argues that a wholly transparent income tax system would improve existing CIT systems and establish tax neutrality between CIT and non-CIT subjects. Full transparency is consistent with international treaty obligations and simultaneously eliminates many international tax arbitrage opportunities. Business needs rather than tax benefits would drive choice of business form. If accompanied by a robust system of international apportionment of business income, a fully transparent corporate income tax would eliminate most income allocation arbitrage as well as tax system structure arbitrage opportunities.
Prospective lawyers should have the option of taking the bar exam upon completing an undergraduate major in law and serving a year's apprenticeship. This undergraduate option would substantially decrease the cost of legal education and thus in the long run reduce the costs of legal services, particularly to poor and middle class. Experience abroad suggests that this option would not unduly diminish the quality of lawyers. The undergraduate option would also provide other substantial benefits. For instance, it would increase the diversity in the legal profession and offer a greater variety of career choices for lawyers.
Update: Matt Leichter: The Cost of Law School Does NOT Influence the Cost of Legal Services
- Anisa Afshar (J.D. 2012, Georgetown), Comment, Statute of Limitations for the TEFRA Partnership Proceedings: The Interplay Between Section 6229 and Section 6501, 64 Tax Law. 701 (2011)
- Heather M. Field (UC-Hastings), The Return-Reducing Ripple Effects of the "Carried Interest" Tax Proposal, 13 Fla. Tax Rev. 1 (2012)
- Thomas D. Greenaway (KPMG, Boston) & Michelle L. Marion (KPMG, Boston), A Simpler Debt-Equity Test, 66 Tax Law. 73 (2012)
- David Hasen (Santa Clara), Partnership Special Allocations Revisited, 13 Fla. Tax Rev. 349 (2012)
- James Howard (J.D. 2011, Baylor), Where Do We Go From Here? A Survey of Series LLCs in Texas in Light of the Proposed Federal Tax Classification for the Organization, 63 Baylor L. Rev. 850 (2011)
- Hendrick Jacobsen (Baden-Württemberg Cooperative State University, Germany), The Taxation of Partnership Terminations in the U.S., the U.K., and Germany — Same Issues, Different Solutions, 65 Tax Law. 15 (2011)
- Tom King (J.D. 2012, Georgetown), Note, The Tax Court Capsizes a Leveraged Partnership in Canal Corp., 65 Tax Law. 713 (2012)
- Martin J. McMahon Jr. (Florida), Now You See It, Now You Don’t: The Comings and Goings of Disregarded Entities, 65 Tax Law. 259 (2012)
- David S. Miller (Cadwalader, Wickersham & Taft, New York) & Jean Bertrand (Cadwalader, Wickersham & Taft, New York), Federal Income Tax Treatment of Hedge Funds, Their Investors, and Their Managers, 65 Tax Law. 309 (2012)
- Andrea Monroe (Ohio State), Integrity in Taxation: Rethinking Partnership Tax, 64 Ala. L. Rev. 289 (2012)
- Jason A. Sacks (J.D. 2012, Washington University), Note, Effective Taxation of Carried Interest: A Comprehensive Pass-Through Approach, 89 Wash. U. L. Rev. 449 (2011)
- John B. Truskowski (Locke & Lord, Chicago), Cross Species Conversions and Mergers, 65 Tax Law. 591 (2012)
All Tax Analysts content is available through the LexisNexis® services.
Forbes: NFL Linebacker James Harrison Spends More On Massage Than You Did On Your House. But Can He Deduct It?, by Anthony J. Nitti (WithumSmith & Brown, Aspen, CO):
NFL Linebacker and terrifying human being James Harrison, he of the striped helmet and checkered past, made news yesterday during his introductory press conference with the Cincinnati Bengals when he disclosed that he spends upwards of $500,000 annually on training, massage, and other body work.
“My body is what helps me to make money,” Harrison said. “Whatever there is that I need to do to try and make myself better or get myself healthy, I’m going to do it. It wouldn’t be unreasonable to say that I spend anywhere between $400,000-$600,000 on body work, as far as taking care of my body, year-in and year-out.” ...
Just because Harrison’s massage bills are steep, however, doesn’t mean they’re not necessary, particularly for someone who makes his living putting his body through the equivalent of a car crash approximately 60 times per game, 16 games per year. This all leads to a logical question: can Harrison deduct his $500,000 of annual body work costs on his tax return? ... [D]o training, massage, and body work costs represent ordinary and necessary business expenses to someone in the business of playing NFL football? ...
[T]he biggest hurdle facing Harrison in claiming deductions for his condition work, however, is one of substantiation. In the three hockey cases cited above – Stemkowski, Hanna, and Bailey – the Tax Court, while agreeing that off-season condition costs would be deductible, ultimately denied the deductions because the taxpayers failed to keep accurate records. So here’s to hoping Harrison kept his receipts.
(Hat Tip: Chaz Perin.)
PrawfsBlawg: Bill Henderson Is Burning Through His Reputational Capital, by Matt Bodie (St. Louis):
As the person who brought the bimodal salary distribution to the legal masses, Bill Henderson has earned a substantial amount of respect from academics, practicing attorneys, and law students. His early warnings about the dire job market and its effect on law schools, students, and recent alums have proven correct. His academic research on the future of law firms, the plight of junior associates, and the use of LSAT scores has moved the ball forward in these areas and has often challenged the conventional wisdom. Henderson is not afraid of being a prophet, even when the people reject the prophecy. ... This year, however, Henderson's tone has begun to change. ...
Henderson has taken a "double-down" strategy to his predictions of institutional collapse. In an op-ed published by the National Law Journal, he argues that massive layoffs would not be nearly enough -- instead, schools need to close. Framing his piece as a "letter" to a hypothetical university president, Henderson essentially argues that law schools have two choices: close or adopt a radical new pedagogical agenda. ...
Henderson, like other reformers ("rebels"), has a strong perspective not only on the problems faced by legal education but also on the proper solutions. His solution to the law school crisis -- one that involves a substantial and largely unexplored change to legal pedagogy -- may be the answer to the field's longer-term problems. But I fear that instead of reporting on the crisis, Henderson is now using it to try to leverage a few shocked university presidents into adopting his methods. In the process of drumming up panic with wild-eyed claims and the specter of closures, Henderson risks squandering a pile of reputational capital that only a few legal academics have managed to achieve in the first place.
The Legal Whiteboard: A Serious Debate over the Problems Facing Law Schools, by Bill Henderson (Indiana):
I grew up in Cleveland, Ohio during the 60s, 70s, 80s and witnessed the slowness of the region to accept that its industrial glory days were behind it. All people, including really smart people, have a hard time accepting large-scale institutional change--emotion obscures a reasoned analysis of the facts. This is why Who Moved by Cheese, My Iceberg is Melting, and other change management classics are written as fables. And yes, I see the same slowness to respond within the legal academy. That slowness has costs. ..
Truth be told, I probably did risk some reputational capital writing the "Calculus of University President." But I am deeply worried about the future of legal education, and using the history of other industries as a guide, we are likely to underestimate the realities of the emerging legal landscape. See Richard Susskind, Tomorrow's Lawyers (discusing this future in intricate detail). So why not risk some of my reputational capital? I will make some people, like Matt, angry, but I might spur others to actions sooner rather than later. So be it. The purpose of tenure is to facilitate these judgment calls. I can live with that.
- ataxingmatter: The Real IRS Scandal, by Linda Beale (Wayne State)
- Bloomberg: Special IRS Prosecutor Favored as Obama Support Drops
- CBS News: What's Going on Between the IRS and True the Vote?
- CNN: Poll: Americans Say IRS the 'Most Important' Controversy
- Daily Caller: Walter Williams: ‘Americans Deserve the IRS’
- Daily Caller: IRS’s Shulman Had More Public White House Visits Than Any Cabinet Member
- Daily Caller: White House May be Satisfied With IRS Non-answers, but Targeted Americans Aren’t
- Fox News op-ed: Fighting Back Against the Abusive, Partisan IRS, by Jay Sekulow
- Fox News: Tea Party Groups File Lawsuit Over IRS Targeting
- The Hill: Poll: 76 Percent Want Special Prosecutor to Investigate IRS Scandal
- NBC News: IRS Higher-Ups Requested Info on Conservative Groups, Letters Show
- On the Record: Confessions of a Former IRS Commissioner
- Politico op-ed: The Lois Lerner State, by Rich Lowry
- Politico: "How High Up Did It Go?"
- Reason: Obama: IRS Behavior ‘Inexcusable.’ Obamaite Journalists: It’s a ‘So-Called Scandal’
- Town Hall: IRS Actions Taken Against Americans Parallel Obama Labor Board’s Agenda
- Wall Street Journal op-ed: Dick Durbin, the IRS, and Me, by Karl Rove
- Washington Post: Congressional Committees Plan More IRS Hearings
- Washington Post: Examining the IRS Role in ObamaCare
- Washington Post: The IRS Scandal Is About Targeting, by Ezra Klein
- Washington Post: McConnell Discusses IRS, Obamacare and 2014
- Washington Post: New IRS Boss Headed to Capitol Hill
- Washington Post: Ohio GOP Senator, Congressman Tell Tea Party Activists the Question on IRS Is ‘How High Up?’
- Washington Times: Conservative Groups Sue IRS, Eric Holder for ‘Unlawful Targeting’ of Tax Forms
- Weekly Standard: Another IRS Target
- Weekly Standard: Lerner, Other IRS Officials Signed Letters Inquiring About Conservative Groups
- Weekly Standard: White House: We're Satisfied With the Responsiveness of the IRS
Prior TaxProf Blog coverage:
New York Times DealBook: Switzerland to Allow Its Banks to Disclose Hidden Client Accounts, by Lynnley Browning:
The Swiss government said on Wednesday that it would allow its banks to disclose information on American clients with hidden accounts, a watershed move intended to help resolve a long-running dispute with the United States over tax evasion.
The decision, which comes amid widening scrutiny in Europe of tax havens, is a turning point in what has been an escalating conflict between Switzerland and the United States.
Eveline Widmer-Schlumpf, Switzerland’s finance minister, said the move would enable Swiss banks to accept an offer by the United States government to hand over broad client details and pay fines in exchange for a promise by United States authorities not to indict any banks.
- Wall Street Journal: Swiss Bow to Pressure for More Bank Data, by Laura Saunders & John Letzing
Wednesday, May 29, 2013
Tax Prof Sarah Lawsky (UC-Irvine) slices and dices the data on law school hiring of entry level faculty. Interestingly, only three of the 117 entry level tax hires are Tax Profs -- all from NYU. As Sarah admits, her data are incomplete as they are limited to self-reported hires. I listed a fourth entry level tax hire in my post on Tax Prof Moves, 2013-14.
Here are the U.S. law school data on entry level and lateral tax hires for the ten years I have been reporting on Tax Prof Moves:
Brian Leiter (Chicago) has more here.
Update: Lawrence Cunningham (George Washington), Prawfs Entry Level Hiring Down
Jeremy Paul (Dean, Northeastern): NUSL Mourns the Loss of Professor Daniel Schaffer (June 7, 1938 - May 8, 2013):
It is with a heavy heart that I report the unexpected passing of our colleague, Dan Schaffer, who died Wednesday night of as yet unidentified causes.
Professor Schaffer joined the Northeastern law faculty in 1970 and was named Professor of Law in 1974. After more than 40 years of dedicated teaching and research primarily in the tax field, his many contributions are well known to our community. Virtually every graduate of the law school who studied tax while here had the benefit of Dan's clear, well-organized and rigorous teaching style.
A magna cum laude graduate of both Harvard College and Harvard Law School, Professor Schaffer spent six years practicing law at the law firm of Fried, Frank, Harris, Shriver and Jacobsen before finding his true calling in the legal academy. His scholarly focus covered many areas of tax law, including health care, child care credits, intercorporate dividends, ERISA and tax treatment of disabilities. Above all, he was a gentle soul committed to the advancement of knowledge, one student at a time.
Daniel C.Schaffer, of Brookline, MA passed away on Wednesday, May 8, 2013 as a result of complications following surgery. He was the loving husband of Sally Bould and of the late Judith (Wolch) Schaffer, the devoted father of Noah Schaffer, the son of the late Leo & Rae Schaffer and the brother of Jerome Schaffer.
Daniel's family remembers him as a kind and warm father and husband who always there in times of need. "He always encouraged us to follow our passions the way that he had," said his son Noah. "There was only one topic that I never felt comfortable discussing with him, and that was whether he would someday retire. And, as it turns out, he never did."
In lieu of flowers, donations may be made to the Daniel C. Schaffer Scholarship Fund at Northeastern University School of Law, 400 Huntington Ave., Boston, MA 02115.
"Because there is a dad in Oklahoma who would give all he has to be able to throw a baseball to his son," Williams said. He stopped, took a step to the side of the podium, and threw a baseball to his son in the crowd.
"Here's the deal ... When you get home, you return the bargain by throwing that back into my mitt, which is the mitt you learned to pitch into, and then we will be whole again," Williams said. "Because all of this has us thinking about time."
(Hat Tip: Ann Murphy.)
- CNN: It's Time for Tax Reform, by Fareed Zakaria
- Fox News: Lawmakers Look to IRS Scandal for Momentum on Tax Code Overhaul
- The Hill: Tax-Writers Say Case for Tax Reform Grows
- Huffington Post: IRS Scandal Could Boost Case For Tax Reform
- National Review: Fix, Don’t Flatten, the Tax Code
- New York Times: Getting to Tax Reform, by Bruce Bartlett
- Washington Post: Any Closer to Tax Reform?
- Washington Post: Lawmakers See IRS Scandal as Possible Jump-Starter for Efforts to Rewrite, Simplify Tax Laws
- Assembly: Apple, Outsourcing and Tax Law
- Cnet: Tim Cook: 'We Don't Use Tax Gimmicks'
- Daily Beast: Is Apple Too Clever by Half? Maybe Corporate America Finally Got Too Greedy for its Own Good
- Forbes: Apple's Profits, Apple's Taxes, Are Near Irrelevant: A Response to Robert Reich
- Forbes: Did Apple Cheat On Its Taxes?
- Forbes: How Does Apple Avoid Taxes?, by Lee Sheppard (Tax Analysts)
- Forbes: Robert Reich's Extremely Strange Views On Apple's Tax Bill
- Huffington Post: Beware Capitalist Tools, by Robert Reich (UC-Berkeley)
- L.A. Times: Apple's Tax Tricks Give Rise to Lousy Reform Ideas
- New York Times: The Trouble With Taxing Corporations, by Eduardo Porter
- The Unofficial Apple Weblog: Former US Senator John Sununu Defends Apple's Tax Practices
- USA Today: Apple's Tax Tactics: Shameful or Smart?
- Washington Post: Apple’s U.S. Revenue Should be Taxed
Prior TaxProf Blog coverage:
- Senate Holds Hearing Today on Apple's Tax Avoidance:(May 21, 2013)
- More on Apple's Tax Planning (May 22, 2013)
- Victor Fleischer (Colorado), Dear Apple (May 22, 2013)
- More on Apple's Tax Planning/Tax Evasion (May 24, 2013)
- NY Times on Corporate Tax Planning/Tax Avoidance (May 26, 2013)
Law Professor Blogs LLC
May 24, 2013
Law Professor Blogs LLC announces today that co-founder Paul L. Caron has purchased the 50% interest of co-founder Joseph A. Hodnicki and now owns 100% of the company.
Paul Caron: "I will always be grateful to Joe for partnering with me nine years ago to launch TaxProf Blog and shortly thereafter the Law Professor Blogs Network. TaxProf Blog and the Law Professor Blogs Network would not exist today had Joe not partnered with me in their conception, design, and operation. I am delighted that Joe will continue to serve as the Co-Editor of Law Librarian Blog, one of the most influential law librarian blogs in the country."
Joe Hodnicki: "When Paul and I first ventured into this web publishing space we had no idea where it might take us. It certainly has been an interesting experience for both of us as we worked to develop the Law Professor Blogs Network. The legal blogosphere has matured over the years. It is now recognized as an acceptable communications medium for law professors, something it was not when we launched the Network. While I must scale back my involvement in the Network’s affairs, by selling my interest to Paul I am confident the blogs we have published will continue to be some of the best law-related blogosphere destinations for news, analysis and commentary on the topics they address. I look forward to forthcoming Network developments under Paul’s leadership."
Law Professor Blogs LLC is the nation's only network of legal blogs edited primarily by law professors. Law Professor Blogs LLC owns and operates over 40 legal blogs, edited by over 100 law professors, law librarians and practitioners. Editors include leading scholars and educators who are committed to providing the web destination for law professors, practitioners, government and nonprofit lawyers, legal information professionals and students in their respective fields.
Johnson argues that a VAT will increase the harm that taxes do by shifting the tax burden from high-income earners to low-income earners and will require a whole new and complicated administrative apparatus in Washington and every business. A cash flow consumption tax entails less added administration and allows easier adjustment to progressive tax rates. Johnson argues that the case for any consumption tax is weak, because taxpayers either do not save more when tax on capital goes down or they save less. He says that to increase revenue, Congress must repair the income tax base — for instance, with Shelf Project proposals.
All Tax Analysts content is available through the LexisNexis® services.
For more details and the program, see here and here.
Tax Justice Round Table:
Allison Christians (McGill) (moderator)
John Christensen (Director, Tax Justice Network (United Kingdom))
Alain Deneault (Founder, Tax Justice Network (Quebec)
Diana Gibson (President, Canadians for Tax Fairness)
James Henry (Chair, Coordinating Committee, Global Alliance for Tax Justice (USA))
Frédéric Zalac (Investigative Reporter, Radio-Canada)
Tax Justice Research Symposium:
The Tax Justice Research Symposium aims to bring together academic researchers and graduate students, investigative journalists and campaigners to exchange information on tax justice research being done, identify research needs and gaps and develop strategies to facilitate research and collaboration between researchers and campaigners.
- Making corporations pay their fair share of taxes
- Taxing inequality
- Provincial and municipal fiscal challenges and solutions
- Tax reform and closing tax loopholes
- Tackling tax evasion and avoidance
- Taxing to save the environment
- Exploring the tax justice research gaps
Following up on my previous posts (links below): Yahoo! Sports, The U.S. Senate May — and Should — Review the NFL’s Tax-Exempt Status:
Recently, you may have heard that the IRS came under some considerable fire or targeting certain groups seeking tax-exempt status while green-lighting others (such as one run by the brother of President Obama), but did you know that the National Football League, an organization that currently rakes in about $10 billion per year in revenue, is also a non-profit organization in the eyes of the government? While you're trying to figure that one out, we've got another one for you. Did you know that the league has been a non-profit organization since 1966, when the NFL merged with the American Football League, and then-commissioner Pete Rozelle folded in the request for an exemption with the request for an anti-trust exemption?
Yes, it's all true. Technically, the NFL is a 501(c)(6) non-profit organization. That part of the Internal Revenue Code "provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual."
- New Jersey Morning-Ledger, The U.S. Senate Is Going After NFL's Non-Profit Status, and It's About Time
- USA Today, To Tax or Not? The NFL's Relationship with the IRS
(Hat Tip: Chaz Perin.) Prior TaxProf Blog coverage:
- Sen. Coburn's Bill Would Strip NFL, NHL & PGA of Tax-Exempt Status (Apr. 29, 2013)
- Does the NFL Deserve its Tax-Exempt Status? (Oct. 25, 2012)
- The NFL's Undeserved Tax-Exempt Status (July 4, 2010)
- ABC News: Republicans Hope IRS Scandal Taints Democrats
- Accounting Today: IRS Appoints Executive to Restore Integrity After Controversy
- BET: IRS Intimidation Scandal Is a Civil Rights Violation
- Daily Beast: Anatomy of a Scandal: The Still-Unraveling Mess of the IRS Debacle
- Daily Beast: The White House and the IRS: A Carteresque Fiasco
- Ed Driscoll: Obama and the IRS: Worse Than Watergate
- The Hill: Dershowitz: IRS Official Lerner 'Can be Held in Contempt' of Congress
- The Hill: New IRS Chief Taps Risk Officer
- Huffington Post: What Do Bengazi, IRS, and Social Security Have in Common?
- Investor's Business Daily: IRS Chief's 118 White House Visits Must Be Explained
- L.A. Times op-ed: The Real IRS Scandal, by Glenn Hubbard (Dean, Columbia Business School(, ) & Tim Kane (Chief Economist, Hudson Institute)
- National Review: IRS Locking Down All Data
- Politico: IRS Moves to Manage Scandal
- U.S. News & World Report: GOP Thinks They Have Election Gold With Health Care and IRS Scandal
- Wall Street Journal editorial: Curious IRS Timing: Did the Tax Agency Also Target Groups That Support Israel?
- Wall Street Journal editorial: No IRS Special Prosecutor: Indictments Are Less Important Than Political Accountability
- Wall Street Journal: IRS Adds Lawyer To Advise on Scandal Response
- Wall Street Journal: New IRS Chief Taps GAO’s Fisher as Senior Adviser
- Washington Examiner: Obamacare + IRS = Gangster Government, by Michael Barone
- Washington Post: GOP Stoking Fire of IRS Scandal With Eye Toward 2014
- Washington Post: The IRS’ Approval Ratings Are Free Fallin’
- Washington Post: IRS Names New Chief Risk Officer, Saying It Wants to Restore Agency's Integrity
- Washington Times: Will Benghazi and the IRS Controversy Define Obama’s Legacy?
- The Week: The Root of All (IRS) Evil
Prior TaxProf Blog coverage:
Tuesday, May 28, 2013
Kansas City Business Journal: KU Law Targets Smaller Classes Now and In Future:
The University of Kansas School of Law will have a significantly smaller incoming class this fall — and in future years for the foreseeable future.
Faced with dwindling applications, law schools across the country either are slashing class sizes or admitting students with inferior credentials. Dean [and Tax Prof] Stephen Mazza said KU set a target of 120 students this year and may end up a bit below that.
By contrast, there are 175 students graduating this year and about 140 each in the first-year and second-year classes.
there are several unique aspects to KU's announcement that make it especially noteworthy.
First, the reduction as a percentage of enrollment in prior years is large: from 175 students graduating this year to a target of 120 students for the 2013 entering class and those that follow.
Equally significant, it appears that KU didn’t have to take this laudable step. The dean said that applications were down only about 10%—far less than at many other schools. Moreover, an impressive 82% of 2012 graduates secured long-term jobs where a J.D. was required or preferred—a figure far above the national average.
As an added bonus, a KU legal education is a relative bargain when compared to what many other schools offer: $18,600 tuition for full-time students who are state residents; $31,500 for those who hail from outside Kansas. ...
[K]udos to dean Stephen Mazza and the University of Kansas School of Law. He’s been dean only since April 2011, but he’s already making a profound difference in the way that matters most—one person at a time.
I actually sat through many graduations. When I was siting where you guys were sitting, the speaker was Bill Cosby—funny man Bill Cosby, he was very funny and he was very brief, and I thanked him for that. He gave us a message that I really took with me, that a lot of us never forgot, about changing the world. He said, “you’re not going to change the world, so don’t try.”
That was it. He didn’t buy that back at all. And then he complained about buying his daughter a car and we left. I remember thinking, “I think I can do better. I think I can be a little more inspiring than that.”
And so, what I’d like to say to all of you is that you are all going to die.
This is a good commencement speech because I’m figuring it’s only going to go up from here. It can only get better, so this is good. It can’t get more depressing. You have, in fact, already begun to die. You look great. Don’t get me wrong. And you are youth and beauty. You are at the physical peak. Your bodies have just gotten off the ski slope on the peak of growth, potential, and now comes the black diamond mogul run to the grave. And the weird thing is your body wants to die. On a cellular level, that’s what it wants. And that’s probably not what you want.
I’m confronted by a great deal of grand and worthy ambition from this student body. You want to be a politician, a social worker. You want to be an artist. Your body’s ambition: Mulch. Your body wants to make some babies and then go in the ground and fertilize things. That’s it. And that seems like a bit of a contradiction. It doesn’t seem fair. For one thing, we’re telling you, “Go out into the world!” exactly when your body is saying, “Hey, let’s bring it down a notch. Let’s take it down.”
And it is a contradiction. And that’s actually what I’d like to talk to you about. The contradiction between your body and your mind, between your mind and itself. I believe these contradictions and these tensions are the greatest gift that we have, and hopefully, I can explain that.
- Inside Higher Ed, Wesleyan Commencement Speaker: "You Are All Going to Die"
- i09, "You Are All Going to Die" Joss Whedon's Wesleyan Commencement Speech
- Think Progress, The Three Best Pieces of Advice Joss Whedon Gave to the Wesleyan Class of 2013
Minnesota's move to raise $2.1 billion in new taxes, largely from the wealthy, to fund government programs puts it among a handful of states controlled by Democrats that are adopting more liberal fiscal policies at a time when many Republican-dominated statehouses are pushing to cut taxes....
The measures contrast starkly with initiatives to cut or eliminate taxes on individual and corporate incomes that have dominated the discussion in much of the country, thanks to Republican control of nearly half the statehouses. ...
Other blue states are taking similar steps, betting that new spending on education and infrastructure funded by tax increases can produce sustained economic growth that reaches a broad swath of the population. Massachusetts Gov. Deval Patrick and fellow Democrats who control the legislature are debating proposals to raise taxes on income and gasoline to fund new investments.
In Colorado, Democratic Gov. John Hickenlooper signed legislation this week that would require an additional $925 million in taxes to boost education spending. Raising income taxes would still need to pass in a statewide vote, which is necessary to raise the income and other taxes in Colorado. Those efforts follow income-tax increases approved last year in Democratic strongholds such as Maryland and California.
Republican governors in states such as Ohio, Nebraska and Louisiana argue income taxes impede economic growth and discourage businesses from locating in their states. Proposals from the GOP have achieved limited success, as support for cutting income taxes is balanced by opposition even within the Republican Party to making up for lost revenue by broadening the sales tax and eliminating exemptions. ...
"You have got these two theories being played out of what creates economic growth," said David Madland, director of the American Worker Project at the liberal think tank Center for American Progress.
After more than a decade of litigation, the Ninth Circuit on Wednesday that Michael Hedlund (B.A. 1992, University of Oregon; J.D. 1997, Willamette University College of Law), currently a juvenile probation officer and head coach of the women's soccer team at Oregon Institute of Technology, could discharge $53,000 of his $85,000 student loan debt under 11 U.S.C. § 523(a)(8). Hedlund v. Educational Resources Institute, No. 12-35258 (9th Cir. May 22, 2013). His legal career nosedived after a difficult beginning:
After law school, Hedlund took a bar preparation course for the Oregon bar and then took the bar examination in July 1997. While awaiting the results, he worked as an intern for the Klamath County District Attorney. He failed the exam, re-sat in February 1998, and failed again. He lost his job at the District Attorney’s office for failure to pass the bar exam on his second try. He then obtained full-time employment as a Juvenile Counselor with the Klamath County Juvenile Department. While employed full time as a Juvenile Counselor, he enrolled in another bar preparation course and took two months off to study. En route to the exam, however, when he stopped for coffee, he inadvertently locked his keys in his car. He missed the exam.
- Above the Law, In Showing Undue Hardship, Court Is Not Allowed To Come Into Your House and Repurpose Your Wife
- The Oregonian, Oregon Law School Graduate Beats Back $50,000 in Student Loans
- Wall Street Journal, Luckless Law Grad Gets Loan Relief. . . 10 Years Later
Following up on Friday's post, A Proposal for Handling Digital Assets After Death: New York Times: Leaving Behind the Digital Keys to Financial Lives:
In its annual Wealth and Worth study, released this week, U.S. Trust said 45% of the high-net-worth people it polled had not organized passwords and account information for their digital lives in a place where heirs or an executor would find them. (By contrast, the bank said that 87 percent knew the location of important documents and most had a will.)
Much has been written about how family members struggle to get access to the e-mail and social network accounts of loved ones who have died. They have sentimental value much the way photo albums and personal letters do. But far less attention has been paid to the logins, passwords and answers to security questions that will give access to an online financial life.
In an era when far fewer records are kept on paper, spouses and children may not even know that some accounts exist. Think of savings accounts that are only online, or a rollover retirement account that hasn’t been touched in years....
Sharing the combination of letters or numbers that give access to a person’s most important financial details is turning out to be a lot harder than telling loved ones that everything they need to know is in a safe deposit box. What can people do?
There are many Web sites and tools that allow people to upload their accounts and passwords in so-called digital vaults. They promise security and a one-stop shop for disparate digital lives. But they often go unused — just as there are a lot of lawyers around but not everyone has an estate plan.
People need to record their account information and passwords just as they need to make an appointment to draw up a will. And that seems to be the problem. ...
For people who are not highly organized and pragmatic about their estate plans — and that is most people — it seems that short of a crisis they need a persistent adviser to push them.... This is where wealthier people have a leg up: someone else to do the kind of boring data entry that few of us want to do.
(Hat Tip: Ann Murphy.)
PrawfsBlawg: FSU Law Is Hiring, 2013 Edition, by Dan Markel (Florida State):
Florida State University's appointments committee for the College of Law will be gearing up over the summer and we are looking (principally) for laterals in the following areas: Environmental Law, Torts/Products, Trusts and Estates, Tax, Health Law and ADR. If you or someone you know is a possibly good fit for FSU’s virtues (ie., extraordinary scholarly culture, good weather, great cookies, among other things), please feel free to (have them) send Wayne Logan (and/or me) a CV and statement of interest. The Fall 2013 committee includes Wayne (Chair), Hannah Wiseman, Manuel Utset, Courtney Cahill, and myself. (If you are outside our targeted area of interest, but still keen on FSU, please don't hesitate to send us your materials as needs and interests evolve.) As always, FSU seeks a diverse pool of applicants from a wide range of backgrounds and interests.
- Accounting Today: Attacking the IRS: Ignorance or Stupidity?
- Associated Press: Ohio Activists Go to DC as IRS Probe Unfolds
- CBS News: Could the IRS Scandal Affect Next Year's Midterms?
- CNN: Fix Our Tax Headaches
- Commentary: A Frequent Visitor to the White House
- Daily Caller: Washington Launches Four Different Investigations Into IRS Scandal
- Forbes: The IRS Fiasco Is Only the Tip of the Iceberg
- Heritage Foundation: The IRS, Obamacare, and You: The Taxes
- Huffington Post: Character and the IRS
- The Hill: House Lawmakers Press on With IRS Investigation Over Recess
- New York Times: Groups Targeted by IRS Tested Rules on Politics
- Politico: 8 Key Players in IRS Scandal Story
- Real Clear Politics: In Congress, Mixed Feelings on IRS Special Counsel
- Reason: IRS Scandal Highlights the Dangers of Big Government
- The Right Scoop: Tea Party Member Wants to Know Why His Name Became Part of IRS Questionnaire to Other Tea Party Groups
- San Diego Union-Tribune: News Site Says IRS Slow-Walked Application
- Wall Street Journal: For Baer, IRS Request May Be Minor Distraction
- Wall Street Journal: NY Weekly Newspaper Owner Sues FBI, IRS
- Washington Post: The IRS’s Unworkable Policy on Nonprofits
Prior TaxProf Blog coverage:
Congressional Budget Office, Effects of a Carbon Tax on the Economy and the Environment:
Lawmakers could increase federal revenues and encourage reductions in emissions of carbon dioxide (CO2) by establishing a carbon tax, which would either tax those emissions directly or tax fuels that release CO2 when they are burned (fossil fuels, such as coal, oil, and natural gas). Emissions of CO2 and other greenhouse gases accumulate in the atmosphere and contribute to climate change—a long-term and potentially very costly global problem.
The effects of a carbon tax on the U.S. economy would depend on how the revenues from the tax were used. Options include using the revenues to reduce budget deficits, to decrease existing marginal tax rates (the rates on an additional dollar of income), or to offset the costs that a carbon tax would impose on certain groups of people. This study examines how a carbon tax, combined with those alternative uses of the revenues, might affect the economy and the environment.
Brian M. Balduzzi (J.D. 2013, Boston University), Note, A Taxing Divorce: A Solution to DOMA's Tax Inequities in Same-Sex Divorce, 22 B.U. Pub. Int. L.J. 201 (2013):
This Note proposes possible legislation to correct the horizontal tax inequity between same-sex and opposite-sex couples, and to establish an equitable division of assets following both a same-sex and opposite-sex divorce.
First, Section II explains DOMA's advent and continued influence over federal law, most notably the Code. Second, Section II then describes the recently updated divorce laws in Massachusetts, one of the first states to allow persons in a same-sex partnership to marry and to adjudicate the dissolution of same-sex marriages. Massachusetts divorce laws illustrate the intersection between state domestic relations laws and federal taxation laws. Third, Section II also explores the income, gift, and estate tax implications of the division of assets between former same-sex spouses upon dissolution of their marriage. A survey of some of the relevant federal tax provisions, including transfers and gifts, establishment of trusts, and alimony payments provides an illustration. Fourth, Section II examines DOMA's exacerbation of the inequities between same-sex and opposite-sex couples, and same-sex and opposite-sex divorces under the Code.
Next, Section III considers DOMA's lack of justifications and rationales for the tax inequities imposed on similarly situated same-sex and opposite couples during and following a divorce. Finally, this Note posits two possible solutions to the parity concerns under the Code. First, Congress should repeal Section 3 of DOMA, broadening the definitions of “marriage” and “spouse” to bring federal tax law in cohesion with state domestic relations law. In the alternative, the IRS should revise the Code's definition of the term “spouse” and “marriage” to be more inclusive of the diverse couples in the United States for federal income, estate, and gift tax purposes. As this Note discusses, DOMA is unconstitutional because it promulgates an inequitable tax scheme. Legislative action to amend the Code's application to same-sex couples may best solve the tax inequity caused by DOMA. In fact, the IRS has resolved tax inequities for opposite-sex couples through legislative action in the past. The IRS should amend the Code to correct the tax inequity between same-sex and opposite-sex couples, and to further align the Code with fundamental tax policy.
- Jason Jones on the IRS Scandal
- Pittsburgh Dean Discusses His School's Decline From #69 to #91 in the U.S. News Rankings
- The IRS Scandal, Day 16
- BigLaw Flunks Tech Audit
- NY Times on Corporate Tax Planning/Tax Avoidance
- Late Surge in Law School Applications May Result in Fall 2013 Enrollment Decline of 15% (Rather Than 24%)
- The IRS Scandal, Day 17
- Top 5 Tax Paper Downloads
- Memorial Day Tax Resources for U.S. Armed Forces (and Their Families, Employers)
- Law Prof Leaves Academia for Acupuncture
- Supreme Court in PPL Endorsed Position of Econ Profs, Not Tax Profs
- The IRS Scandal, Day 18
Monday, May 27, 2013
Continuing a TaxProf Blog Memorial Day tradition, I want to pass along links to the Tax Information for Members of the U.S. Armed Forces material maintained on the IRS web site:
The tax laws provide some special benefits for active members of the U.S. Armed Forces, including those serving in combat zones. For federal tax purposes, the U.S. Armed Forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross. However, these and other support personnel may qualify for certain tax deadline extensions because of their service in a combat zone.
For dozens of links to military tax resources, see below the fold.
Robin Parker lay on the massage-style table as the acupuncturist took her hand and felt her pulse. Parker, 53, has allergies, and her throat was itchy. She’d been here before, for sessions that had relieved her stress and stopped an incipient cold.
Parker has never liked needles, but she didn’t seem to mind the tiny ones that were being inserted above her waist. After treatment, she reported that her sinuses and throat were symptom-free.
“I know I’m in healing hands here,’’ said Parker, who lives in Cambridge.
Those hands belong to Clare Dalton, who made a name nationally when she sued Harvard in 1987 for sex discrimination in denying her tenure at the law school. Usually such suits are aimed at gaining tenure, but Dalton had no intention of returning to Harvard. In 1988, she went across the Charles River to Northeastern University Law School and used her settlement money to start a domestic violence institute devoted to research, education, and service on behalf of victims. She oversaw law students who represent battered women in court, and she has received numerous awards for her work in domestic violence law and feminist legal thought.
Dalton — who since 2005 has been legally separated from her husband, Robert Reich, the US secretary of labor in the Clinton administration — says their two sons have had different reactions to her metamorphosis.
Adam Reich, 30, a doctoral student in sociology at the University of California Berkeley, says he was able to adjust to his mother’s transition because it was gradual. “That being said, the first time she started talking about her chi was something of a surprise,’’ he says. “But at this point, I’m completely on board, and have had the pleasure of being treated myself.’’
Dalton says that her younger son views her leaving academia as a vindication of his similar decision.
“I dropped out of high school when I was 16 in order to pursue show business,’’ says Sam Reich, 26, who is head of original content for CollegeHumor.com. “I’d like to think that I inspired her to be braver, but she’s always been brave. I mean, this woman sued Harvard. Maybe I just inspired her to be more reckless.’’ At her graduation from acupuncture school, Sam says, he got teary-eyed “in a weird child-parent pride reversal.’’
Dalton also gets emotional when talking about her new gig. “I love it,’’ she repeats, each time placing her hand on her chest. “I love working one on one with people who are heroic in the ways they are putting their lives together in the wake of difficulties and pain.’’
Does she miss law?
“What I miss is teaching,’’ she says. “But I felt it was time to hand that work on to a new generation and that I had made my contribution.’’
Lois Kanter, whom Dalton hired 20 years ago to help develop the domestic violence institute, knew of Dalton’s growing interest in the healing arts, so she wasn’t too surprised about her career change. Still, she did ask: Why acupuncture?
“Her answer made perfect sense, and was so consistent with my view of her as a person rather than a legal colleague,’’ says Kanter, director of the domestic violence institute. “She said that she has always wanted to be a ‘hands-on’ healer, and this change in career would provide her with the opportunity to work directly with individuals in ways that she believed could really make a change in their lives.’’
Dalton certainly has changed her own life, and she believes many workers in her generation are doing the same. For some, it may be volunteering, or working part time, or freelancing.
“But for others it may be as it has been for me — an opportunity to walk back to an earlier fork in the road and set off down a path not taken,’’ she says.
(Hat Tip: Paul Horwitz.)
The Supreme Court's unanimous decision in favor the taxpayers in PPL Corp. v. Commissioner, No. 12-43 (U.S. May 20, 2013), endorsed the argument made in an amicus brief filed by a number of leading economics professors (Rosanne Altshuler (Rutgers), Richard Bird (Toronto), Malcom Gillis (Rice), Arnold Harberger (UCLA), Gary Hufbauer (Georgetown), Charles McLure (Stanford), Jack Mintz (Calgary), and George Zodorow (Rice)) and rejected the position in an amicus brief filed by a number of leading tax professors (Anne Alstott (Yale), Marvin Chirelstein (Columbia), Mihir Desai (Harvard), Michael Graetz (Columbia), Daniel Halperin (Harvard), Mitchell Kane (NYU), Lawrence Lokken (Florida), Robert Peroni (Texas), and Alvin Warren (Harvard)). For commentary on the decision by Reuven Avi-Yonah (Michigan) and Allison Christians (McGill), see here.
- Canada Free Press: The GOP Is Missing the Boat on the IRS Scandal
- Chicago Tribune: There's a Fly in the IRS's Soup
- Daily Caller: IRS Witch Hunt Targeted Ohio Educator and Bystander
- The Hill: Dems Want More Time Before Weighing Need for IRS Special Prosecutor
- The Hill: Durbin: No Regrets Calling out Crossroads to the IRS
- The Hill: Graham Calls for Special Prosecutor to Investigate IRS, Fox News Cases
- The Hill: Rand Paul: IRS Scandal Threatens Obama's ‘Moral Authority to Lead’
- L.A. Times: Showing the IRS Some Love After Witch Hunt
- National Review: Gingrich: IRS Scandal is ‘Major Educational Moment’
- Politico: IRS News Poised to Slow — Leaving Questions Of What’s Next
- Townhall: Hiltzik's Misbegotten Defense of the IRS
- Washington Examiner: Republican Lawmakers Get a 'Slew' of Complaints of IRS Abuse
- Washington Post: Lindsey Graham Calls for Special Counsel Probe of IRS and Justice Dept. Scandals
Prior TaxProf Blog coverage:
Sunday, May 26, 2013
New York Times: Who Will Crack the Code?, by David Leonhardt:
Ireland and Singapore have no natural resources that make them obvious places to manufacture the concentrate used in soda, nor have they developed innovative new soda-making techniques. Yet they have nonetheless become global capitals for making soft-drink concentrate.
In Singapore, Coca-Cola recently opened a plant with the capacity to produce the underlying ingredient for 18 billion cans of soda a year. In Cork, Ireland, PepsiCo has located its “worldwide concentrate headquarters,” which until 2007 had been in New York. More than half of all PepsiCo soda sold around the world starts, as concentrate, in Ireland.
What Ireland and Singapore share is a low corporate tax rate. And because soda is such a simple product, with so much of its financial value stemming from the concentrate, Coke and Pepsi can reduce their overall tax rates by manufacturing it in low-tax countries.
Partly as a result, the industry paid a combined corporate income tax rate — spanning federal, state, local and foreign taxes — of only 19.2% over the past six years, according to an analysis for The New York Times by the financial research group S&P Capital IQ. The average rate for the companies in the Standard & Poor 500 was 29.1%.
The soda industry’s success at legally avoiding taxes shows why so many economists and tax experts believe the United States corporate-tax code is terribly flawed. It includes a notoriously high statutory rate that causes companies to devote resources to avoiding taxes. But it has so many loopholes that the effective corporate tax rate in the United States is slightly lower than the average for rich countries.
The decline in corporate-tax collection in recent decades has contributed to budget deficits. It has also aggravated income inequality: a company’s shareholders ultimately pay its taxes, and with a smaller tax bill, shareholders, who tend to be much more affluent than the average American, see their wealth increase.
“It’s clearly a broken system,” said Michelle Hanlon, an accounting professor at M.I.T.
Corporate taxes burst into the spotlight last week, with the release of a Senate committee report on Apple's tactics to reduce its tax payments. More quietly, but perhaps more significantly, the House Ways and Means Committee has begun work on a potential overhaul of the tax code. Edward D. Kleinbard, a tax expert and former Democratic Congressional aide, said he had been impressed so far by the seriousness of the committee’s work.
The effort has a long way to go, but if it succeeds, both liberal and conservative tax experts hope it will reduce the statutory rate while also eliminating tax breaks. The net effect could be to close the gap between companies that pay relatively little in taxes and those that pay much more. The market, rather than the tax code, would then play a bigger role in determining companies’ success and failure.
New York Times: Across U.S. Companies, Tax Rates Vary Greatly:
Last week, in a Congressional hearing, Apple got grilled for its low-tax strategy. But not every business can copy that approach. Here is a look at what S&P 500 companies paid in corporate income taxes — federal, state, local and foreign — from 2007 to 2012 [chart here].
New York Times editorial: ‘A’ Is for Avoidance:
Even before last week’s Senate hearing on Apple, it was clear that the aggressive use of tax havens and other tax avoidance tactics had become standard operating procedure for global American companies.
Microsoft and Hewlett-Packard were the focus of a similar Senate hearing last September, while Google, Amazon and Starbucks have drawn recent scrutiny in Europe. And, of course, there is General Electric, which achieved a perfect zero on its United States tax bill in 2010. In fact, G.E. was reputed to have the world’s best tax avoidance department until Apple came along with tactics to stash some $100 billion in Ireland without paying taxes on much of it anywhere in the world and, apparently, without breaking any law.
And that is the problem. Rampant corporate tax avoidance may not be illegal, but that doesn’t make it right or fair. ...
[I]t is not clear that lawmakers are committed to stopping widespread tax avoidance. Instead, they may further entrench the system, or even make it worse. The most immediate issue involves a tax repatriation holiday. Under the law, American corporations can defer paying tax on their profits as long as the money is held abroad. Apple is one of nearly two dozen major corporations pushing for a tax holiday, which would permit corporations to bring their foreign-held profits to the United States over the course of a year at a discounted tax rate. ...
Global corporations present difficult issues for which there are no easy answers, but it is clear what we should not do. And there are steps that can be taken in the short run to curb abusive tax avoidance. Corporations should be barred from deducting expenses against foreign-held profits on which taxes are deferred, as is currently allowed. Congress also needs to end a practice known as “check the box,” which allows companies to easily create the requisite corporate structures to shift profits offshore. Tax rules and enforcement must be tightened to ensure that profits attributable to patents, design, marketing and other intangibles developed in the United States are indeed taxed in the United States. A more permanent fix would end tax deferral of foreign-held profits, imposing American taxes on profits when they are made.
The revelations in the hearings on Apple and other companies have given Congress all the evidence it needs to justify new corporate taxes. But there are no signs yet that it has the courage to impose them.
Prior TaxProf Blog coverage:
- Senate Holds Hearing Today on Apple's Tax Avoidance:(May 21, 2013)
- More on Apple's Tax Planning (May 22, 2013)
- Victor Fleischer (Colorado), Dear Apple (May 22, 2013)
- More on Apple's Tax Planning/Tax Evasion (May 24, 2013)
Late Surge in Law School Applications May Result in Fall 2013 Enrollment Decline of 15% (Rather Than 24%)
The Faculty Lounge: Is The Moment Ripe? Notable Increase In Law School Applications, by Dan Filler (Drexel):
The newest LSAC volume summary is out and there is good news for those working in law school admissions offices: applications are up. Of course, they're not actually up compared to last year. Total numbers are still down, and dramatically. But they're down by a lower margin that they were a few weeks ago. Back on January 10, we reported that applicants were down 22.1% compared to last year. Based on that number, LSAC was projecting something around 52,000 total applicants this year. Four months later, and the news is a bit different. Now, as of the May 17, 2013 report, the total number of applicants is down 13.4% and the projected total number of applicants is looking like it'll be around 58,700. That's a big dip from the 68,000 last year...but a dip of 10,000 is signficantly different than a dip of 16,500.
The Careerist: Law School Applications Are Up (But Down), by Vivia Chen:
Applications are up. Sort of—that is, they're not quite as down as they were projected earlier in the year. ... So why should you care? Well, as we've been telling you, it's still a good time to squeeze into a better law school than you might have gotten into a few years ago.
Lawyers, Guns & Money: Peak Law School, by Paul Campos (Colorado):
First year enrollment at ABA schools:2010: 52,500
This fall the 2010 matrics will be replaced by a new entering class. We can roughly estimate its size, because typically 95% of applicants have applied by mid-May. Since last fall law schools have been frantically soliciting applicants, when it appeared the applicant pool might be as small as 52,000-53,000. It now appears it will be around 58,500. If 75% of applicants are accepted to at least one school (this would be a historic high), and 87% of these people — the typical percentage — matriculate, that will produce an entering class of about 38,000 1Ls.
The following charts report ABA applicants and applications for each of the past three falls.
As of 05/17/13, there are 374,002 Fall 2013 applications submitted by 55,764 applicants. Applicants are down 13.4% and applications are down 18.8% from 2012.
Last year at this time, we had 95% of the preliminary final applicant count.
- American Spectator: Ben Stein on the IRS Scandal
- American Thinker: Cincinnati IRS Office Has a History of Aggressive Scrutiny
- American Thinker: Dear IRS: Concerning the Content of My Prayers
- American Thinker: Lying to Congress -- the IRS vs. BP
- Center for Public Integrity: Conservative Nonprofit Seeks to Oust IRS Official
- Cincinnati Enquirer: IRS Tweaked but Didn't Transform Cincinnati Office
- Cincinnati Enquirer: Rob Portman Demands Answers in IRS Targeting
- Daily Caller: Lois Lerner Takes Five
- Forbes: Creation Science Hall of Fame Granted 501(c)(3) Status
- Fox News: Pat Buchanan: IRS Is a "Rogue Agency'
- The Hill: GOP: Energy High on IRS
- The Hill: Republican Lawmakers Hear Complaints About Wider Abuses from IRS
- Late Night Laughs:
- Jay Leno: “This week marks the 40th anniversary of the Watergate hearings. For those of you too young to remember, back then the administration had an enemies list. They were spying on reporters, and they used the IRS to harass groups they didn’t like. Thank God those days are gone forever.”
- Jay Leno: “This week will mark the 37th time House Republicans have tried to repeal Obamacare. If Republicans really wanted to do away with Obamacare, they should just endorse it as a conservative non-profit and let the IRS take it down.”
- Jay Leno: "White House officials insist that President Obama knew nothing about the IRS scandal until we all heard about it in the news last week. They said because there was an investigation under way, it would have been inappropriate to tell him. And besides, he was too busy not knowing anything about Benghazi."
- Seth Meyers: “President Obama this week denied that he knew about the inspector general’s report detailing the IRS’s increased scrutiny of conservative groups. So nothing to worry about, America, there’s just a bunch of stuff happening that the president doesn’t know about.”
- Conan O'Brien: "President Obama is in a lot of hot water lately. Despite the scandals, 53 percent of Americans say they approve of the job he's doing. The other 47 percent are being audited."
- Conan O'Brien: "A new report just came out. It says someone close to the president knew about the IRS scandal and kept his mouth shut. In other words, we can rule out Joe Biden."
- Amy Poehler: "Really, Tea Party? Really? You're surprised that you're targeted by the IRS? You named yourself after a group of people who proudly and historically violated tax laws! Look, if I had a vanity license plate that said 'Weed 420,' I might expect to get pulled over now and then."
- North Coast Times Standard: The IRS: A Political Tool Since the Start
- Philadelphia Inquirer: Lawmakers Take Audit of IRS Leadership
- Rush Limbaugh: The IRS Suppressed the Romney Vote
- Real Clear Politics: The IRS Had the Right Idea
- Washington Times: The Real Source of Blame for the IRS Scandal
- WizBang: New York Times: IRS Scandal Ignored Because of Rush Limbaugh
Prior TaxProf Blog coverage:
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 #4 and #5:
1. [345 Downloads] Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand, by Frederic Alain Behrens (J.D. 2013, Wisconsin)
2. [314 Downloads] The Supercharged IPO, by Victor Fleischer (Colorado; moving to San Diego) & Nancy Staudt (USC)
3. [251 Downloads] Was Blackstone's Initial Public Offering Too Good to Be True?: A Case Study in Closing Loopholes in the Partnership Tax Allocation Rules, by Emily Cauble (DePaul)
4. [209 Downloads] Through a Latte, Darkly: Starbucks' Window into Stateless Income Tax Planning, by Edward D. Kleinbard (USC)
5. [173 Downloads] Corporate Governance, Incentives, and Tax Avoidance, by Chris Armstrong (University of Pennsylvania, Wharton School), Jennifer L. Blouin (University of Pennsylvania, Wharton School), Alan D. Jagolinzer (University of Colorado, Leeds School of Business) & David F. Larcker (Stanford University, Graduate School of Business)
Saturday, May 25, 2013