TaxProf Blog

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

Thursday, May 31, 2018

The 9.9 Percent Is The New American Aristocracy

AtlanticThe Atlantic, The 9.9 Percent Is the New American Aristocracy:

1.  The Aristocracy Is Dead …
I’ve joined a new aristocracy now, even if we still call ourselves meritocratic winners. If you are a typical reader of The Atlantic, you may well be a member too. (And if you’re not a member, my hope is that you will find the story of this new class even more interesting—if also more alarming.) To be sure, there is a lot to admire about my new group, which I’ll call—for reasons you’ll soon see—the 9.9 percent. We’ve dropped the old dress codes, put our faith in facts, and are (somewhat) more varied in skin tone and ethnicity. People like me, who have waning memories of life in an earlier ruling caste, are the exception, not the rule.

By any sociological or financial measure, it’s good to be us. It’s even better to be our kids. In our health, family life, friendship networks, and level of education, not to mention money, we are crushing the competition below. But we do have a blind spot, and it is located right in the center of the mirror: We seem to be the last to notice just how rapidly we’ve morphed, or what we’ve morphed into.

The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children. We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy. Our delusions of merit now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims of our success are just the people excluded from the club. But history shows quite clearly that, in the kind of game we’re playing, everybody loses badly in the end. ...

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May 31, 2018 | Permalink | Comments (10)

Gary: Restricted Charitable Gifts — Public Benefit, Public Voice

Susan N. Gary (Oregon), Restricted Charitable Gifts: Public Benefit, Public Voice, 81 Albany L. Rev. 565 (2018):

Donor restrictions on gifts to charities can raise difficult issues over time, if changes in social or economic circumstances create the need for modifications to those restrictions. Often the analysis of whether to permit a modification focuses on the charity’s interests or the donor’s interests, and ignores the interests of the public. This article brings the public into the discussion, considering where and how the public’s voice can be heard.

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May 31, 2018 in Scholarship, Tax | Permalink | Comments (0)

Chemerinsky: Rethinking The First-Year Curriculum

The PracticeRethinking the First-Year Curriculum, in Finding the Lawyer Identity (Vol. 4, Iss. 4, The Practice, Harvard Law School, May 2018):

Erwin Chemerinsky is the Dean of UC Berkeley School of Law and the Jesse H. Choper Distinguished Professor of Law. He joined John Bliss, a fellow at the Harvard Law School Center on the Legal Profession, for a conversation on professional identity formation and the role of law schools in preparing students for their careers as lawyers.

John Bliss: My research suggests that law students often feel unprepared to navigate legal career options and struggle to connect their identities and public-interest values with their upcoming positions as lawyers. Some law schools have been innovating around these issues, but probably the most robust approach is what you accomplished as the founding dean of the UC Irvine School of Law by creating a required first-year course on the profession. Can you talk a bit about how that course came about?

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May 31, 2018 in Legal Education | Permalink | Comments (1)

WSJ: Companies Strategize To Avoid New Curbs On Interest Deductions

WSJ 4Wall Street Journal, With Curbs on Interest Deduction, Companies Strategize on Debt:

Last year’s tax-code overhaul slashed the rates companies pay, but limited an important break-—the deductibility of interest payments. Now, companies are exploring ways to sidestep that change and billions of dollars in tax each year.

Before the new law, corporate interest payments were generally deductible. Starting this year, companies can only deduct interest payments up to 30% of their adjusted income.

In response, some companies are taking or considering steps that would keep interest payments within the cap. These include shifting some borrowing overseas; moving to alternative forms of financing that carry lower interest payments like convertible notes; or avoiding interest payments entirely through the use of tools such as supply-chain financing or sale-leaseback arrangements.

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May 31, 2018 | Permalink | Comments (0)

Kysar: Tax Law And The Eroding Budget Process

Rebecca M. Kysar (Brooklyn), Tax Law and the Eroding Budget Process, 81 Law & Contemp. Probs. 61 (2018):

Increasingly, political pressures to enact tax legislation impact the budget process, with enduring consequences that sometimes reach beyond tax law. Most recently, partisan conflict over the 2017 tax legislation challenged fundamental aspects of the budget process — such as the length of budget windows, the construction of budget baselines, even the independence of the estimators — in order to fit the law through the requirements of the budget reconciliation process. Ultimately, lawmakers adhered to many of the budget process rules in a formal sense, which could be viewed as demonstrating the resiliency of the process. There is reason, however, to not be so optimistic. The budgetary disputes heavily shaped the contours of the legislation, exacerbating the tendency of lawmakers to disregard long-term fiscal concerns and contributing to revenue losses of $1.9 trillion in the new law’s first ten years. Additionally, the extent to which the 2017 tax legislation challenged the budget process likely has eroded important budget norms, casting doubt upon their staying power going forward. Over time, tax law has impacted budget policy by encouraging the ill-conceived use of reconciliation to ease the passage of revenue-losing legislation, while also creating pressure for Congress to unshackle itself from the budget process.

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May 31, 2018 in Scholarship, Tax | Permalink | Comments (0)

Horwitz: Diversifying Academic Panels And Conferences

Paul Horwitz (Alabama), On Diversifying Academic Panels and Conferences:

This is an evergreen issue, but in response to a tweet by the twitter feed of the Feminist Law Professors blog, Mike Dorf has put up some thoughts on the question of diversity on academic panels and conferences, including but not limited to gender and racial diversity. ... I'd like to offer some thoughts of my own here.

As a preface, I should add a note by way of confession, since the tweet that sparked Mike's post suggested that men should refuse to appear on a panel if there is not at least one woman on the panel. I'm not sure that plea, if one agrees with it, should stop at gender, and a person interested in gender, race, class, and intersectionality might ask why the suggestion stopped there. Still, I must confess that I just appeared on a conference panel on which there were five men and one woman, who was "only" the moderator. (She happened to be the most impressive person on the panel, for what it's worth.) I found it striking and surprising.

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May 31, 2018 in Legal Education | Permalink | Comments (0)

Stewart: Transparency, Tax And Human Rights

Miranda Stewart (Melbourne), Transparency, Tax and Human Rights:

Transparency has attracted unprecedented attention in national and global debates about taxation in recent years. It has been adopted as a goal by international organizations, governments, non-government organizations (NGOs), academic commentators, media and citizens across the political spectrum. There has been a particular focus on transparency to enforce taxation of multinational enterprises and high wealth individuals, with a specific goal of addressing avoidance and evasion in tax havens. The pursuit of transparency in taxation is consistent with broader trends, as John Braithwaite and Peter Drahos observed nearly two decades ago that transparency was the most striking emergent principle” in global regulation. However, who is transparent, concerning what data, process, or outcomes, why transparency is the goal and how it is intended to achieve the stated regulatory outcome, differ depending on the context. The paper explores the meaning and uses of transparency in a fiscal context, where it started as transparency of governments and budgets to the people, but more recently has shifted to focus on the transparency of taxpayers to governments, between governments, and even to the public.

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May 31, 2018 in Scholarship, Tax | Permalink | Comments (0)

Loyola 2L Outs Himself To End Law Firm NDAs

Loyola-L.A. Logo (2013)Law.com, ‘Loyola 2L,’ Once Retired, Returns Amid Call to End Law Firm NDAs:

A little more than a decade ago, an anonymous internet commenter using the name “Loyola 2L” grabbed the spotlight by criticizing the ways that so-called second- and third-tier law schools recruited prospective students, many of whom would eventually have trouble finding jobs, partly as a result of the economic downturn a decade ago.

The Wall Street Journal, whose now deceased Law Blog once touted Loyola 2L as its “Lawyer of the Year“ in 2007, and Above the Law covered Loyola 2L’s self-described retirement from the legal blogosphere in January 2008. But recent events in Big Law, particularly a push to end mandatory arbitration and nondisclosure deals in the profession, have motivated Loyola 2L to join the movement and to come forward to answer a longtime question in legal business trivia by unveiling his true identity.

He is Alireza Gharagozlou.

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May 31, 2018 in Legal Education | Permalink | Comments (6)

Wednesday, May 30, 2018

Will These Three Innovations Help Save Law Schools: GRE, UBE, Apprenticeships?

Chris West (Martin Center for Academic Renewal), The Legal Innovations Trying to Save Law School from Itself:

The world of law school and the legal profession is in turmoil. This is because there are not only many market distortions at play, but because the economy is undergoing transitions. ... Three innovations have already made some inroads into legal education and accreditation.

The first is the acceptance of the Graduate Record Exam (GRE) as an admissions test for law school in place of the Law School Admission Test (LSAT). ... [U]sing the GRE gives law schools a wider pool from which to draw applicants.

A second innovation taking hold is the adoption of a Universal Bar Exam (UBE). Currently, in order to ensure that new graduates are capable of practicing law, they are required by their respective states to pass state-specific American Bar Association tests. Passing the UBE, however, allows attorneys to gain entrance to any participating State Bar. Since 2006, 29 states and the District of Columbia have agreed to adopt the UBE, which may lower legal fees to clients by allowing for more competition in a very regulated market. ...

A third innovation addresses the high tuition charged by law schools. A handful of states–Virginia, Vermont, Washington, and California—allow aspiring attorneys to forego law school altogether if they complete approved law apprenticeship programs.  ...

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May 30, 2018 in Legal Education | Permalink | Comments (2)

Duff & Alarie: Legislated Interpretation And Tax Avoidance In Canadian Tax Law

David G. Duff (British Columbia) & Benjamin Alarie (Toronto), Legislated Interpretation and Tax Avoidance in Canadian Income Tax Law:

Predictable statutory interpretation helps ensure the reliable operation of contemporary systems of taxation. Tax liabilities that are not clearly expressed and articulated by legislatures lead to over-reliance on litigation as a means to enforce and clarify legislative intent. For this reason, modern legislatures continually amend and draft new tax provisions, reformulating existing rules and introducing new ones to address ever-changing social and economic environments. Moreover, legislatures also respond with amendments directed at judicial decisions with which they disagree, as well as the transactions and arrangements at issue in these cases. As these amended and new rules are then subject to application and interpretation by revenue departments, taxpayers, tax advisors, and the courts, all of which legislatures may respond to through further subsequent amendments, tax legislation at any given time can be regarded as the recursive product of an ongoing dialogue.

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May 30, 2018 in Scholarship, Tax | Permalink | Comments (0)

Morant: In Praise Of Civility

AtlanticThe Atlantic:  In Praise of Civility, by Blake D. Morant (Dean, George Washington):

Without respectful discourse, free speech isn’t much more than a hostile shouting match.

[I]t’s become quite common, particularly within the political sphere, for all kinds of speech, regardless of how inflammatory it might be, to be expressed openly and sometimes loudly, without consequence. Many people couch this kind of speech in terms of a backlash against “political correctness,” and they view such speech as a right that comes without any responsibility to engage with others respectfully. It also appears that society has become complacent with the tendency of individuals to talk at, rather than to, one another. At its core, this notion of uninhibited, anti-politically correct speech has dimmed the hope of productive dialogue.

At a time when university administrators grapple with debates about free speech on campus and people across the nation witness the consequences of free speech in a polarized political climate, administrators, educators, and civic leaders should promote civility as an important element of constructive conversations. This duty becomes a moral imperative in forums where polemic issues take center stage. As Father John I. Jenkins, president of the University of Notre Dame observes in his book, Conviction and Peril of Our Passionate Beliefs, “Civility is what allows speech to be heard.”

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May 30, 2018 in Legal Education | Permalink | Comments (1)

WSJ: MLP Rollups Cause Massive Tax Headaches For Investors

Wall Street Journal Tax Report, The ‘Tax-Free’ Investment Causing Massive Tax Headaches:

Investors seeking both high income and low taxes poured billions of dollars into publicly traded energy master limited partnerships. Now many have tax headaches—surprisingly big bills from Uncle Sam and return preparers.

Two new MLP deals, from Williams Companies and Enbridge are the latest to trigger these headaches. In these deals, known as roll-ups, the corporation sponsoring an MLP pulls it back into the corporate fold, and MLP investors exchange their units for corporate stock.

These consolidations will provide tax and other benefits to the parent corporations and their shareholders. Williams said that as a result of the deal, it expects not to owe cash taxes through 2024.

But for these MLPs’ investors, the deals are taxable and neither one includes a cash payment to help with their own tax bills.

“In each case, the corporation and its investors will reap tax benefits at the expense of one segment of stakeholders,” says Robert Willens, an independent tax analyst. ...

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May 30, 2018 in Tax | Permalink | Comments (1)

Corporate Tax Cuts Increase Income Inequality

Suresh Nallareddy (Duke), Ethan Rouen (Harvard) & Juan Carlos Suárez Serrato (Duke), Corporate Tax Cuts Increase Income Inequality:

This paper examines corporate tax reform by estimating the causal effect of state corporate tax cuts on top income inequality. Results suggest that, while corporate tax cuts increase investment, the gains from this investment are concentrated on top earners, who may also exploit additional strategies to increase the share of total income that accrues to the top 1 percent.

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May 30, 2018 in Scholarship, Tax | Permalink | Comments (0)

Savannah Law Prof Lawsuit Alleges Her Termination Was Due To Age/Gender/Disability Bias, Not Poor Teaching

SavannahFollowing up on my previous posts (links below):  Law.com, Savannah Law Prof Alleges Age Bias in Suit Against School:

A former professor at the soon-to-be-closed Savannah Law School has sued the institution and its dean and owner, alleging her 2017 termination was based on her age, gender and her cancer treatments.

Maggie Tsavaris filed suit on May 25 in U.S. District Court for the Southern District of Georgia, claiming she was unlawfully fired from her tenure-track position to make way for younger faculty members. She claims that, at 60 years old, she was the oldest women faculty member at Savannah when she was terminated. She alleges that Atlanta’s John Marshall Law School—which operates Savannah as a branch campus—also has a history of employment discrimination against minority women and legal writing instructors. (Tsavaris is white.) ...

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May 30, 2018 | Permalink | Comments (0)

Foreign Investment of US Multinationals: The Effect Of Tax Policy And Agency Conflicts

James F. Albertus (Carnegie Mellon),  Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin), Foreign Investment of US Multinationals: The Effect of Tax Policy and Agency Conflicts:

We study the effect of corporate tax policy on foreign investment and cash holdings using a dynamic model calibrated to confidential data on the foreign operations of US multinationals. Prior to the 2017 Tax Cut and Jobs Act, the US tax code encouraged excess foreign investment by depressing the opportunity cost of capital. The switch to a territorial system following the reform reduces the optimal level of foreign investment by 9.7% for the average US multinational, despite lowering the tax rate on foreign earnings.

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May 30, 2018 in Scholarship, Tax | Permalink | Comments (0)

(Tax) Law Prof Hiring Trends

Tax Prof Sarah Lawsky (Northwestern) has two great posts on law professor hiring trends:

Who Stopped Hiring?:

In 2011, 155 entry-level law professors were hired. In 2018, 76 entry-level law professors were hired. Who stopped hiring? ...  [I]n 2011, schools in the top 30 and above represented 23% of the law schools overall, and did 30% of the hiring. In 2018, those same schools did 45% of the hiring. 

2018 Hiring Report - Subject Areas Over Time:

Jeremy Bearer-Friend commented: "I wonder whether there are certain patterns over time for entry-level hiring by area of law. For example, whether tax hiring is constant even when total number of hires dips. ...

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May 30, 2018 in Legal Education | Permalink | Comments (0)

Tuesday, May 29, 2018

Dayton Is Seventh Law School To Offer Hybrid Online J.D.

Taxes And Mergers: Evidence From Banks During The Financial Crisis

Albert H. Choi (Virginia), Quinn Curtis (Virginia) & Andrew T. Hayashi (Virginia), Taxes and Mergers: Evidence from Banks During the Financial Crisis:

At the peak of the financial crisis the IRS issued Notice 2008-83, administrative guidance that curtailed a tax rule designed to discourage tax-motivated acquisitions. The Notice increased the value to potential acquirors of tax assets of commercial banks that would have otherwise been impaired if the bank changed ownership. We find little evidence that the Notice affected bank merger activity, but we do find that mergers that occurred while the Notice was in effect had lower post-merger income growth. We also find evidence consistent with the strategic recognition of tax losses to exploit the benefits of the Notice.

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May 29, 2018 in Scholarship, Tax | Permalink | Comments (0)

Faculty-Student Dating In The Age Of #MeToo

MeTooInside Higher Ed, Academe Sees a New Wave of Faculty-Student Dating Bans in the Era of Me Too:

A number of colleges and universities banned faculty-undergraduate dating or otherwise shored up their consensual relationship policies after the Education Department published a reminder letter about sexual harassment liability, in 2011. Other institutions had adopted such policies earlier.

Now, in the era of Me Too, another wave of institutions has moved to restrict consensual relationships between students and their professors. And while many involved in or affected by these decisions support them as preventing potential abuse, others remain critical of policing connections between consenting adults.

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May 29, 2018 in Legal Education | Permalink | Comments (2)

Davis: Legal Fictions Within Tax

Tessa Davis (South Carolina), Tax and Social Context: Legal Fictions Within Tax, 4 Savannah L. Rev. 31 (2017):

There is a widely-held and oft-disputed concept of tax exceptionalism—that tax is an area of law apart. The idea may be expressed in the view that tax administrative law is not bound by the same restraints as administrative law more broadly or simply in a vague sense that the study and practice of tax are categorically different than other “traditional” areas of law such as criminal law or contract law. If accepted, this view might suggest that tax law and policy is a poor fit for a symposium on American Legal Fictions. Legal fictions are most often theorized in areas of judicially driven law. Statutory law, by contrast, dominates tax. Perhaps, then, tax law is an area in which legal fictions are less frequent and less relevant.

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May 29, 2018 in Scholarship, Tax | Permalink | Comments (0)

University Of Minnesota Law School Seeks $3.6 Million Increase In Subsidy To Maintain Top 20 Ranking

Minnesota LogoFollowing up on my previous post:  Minnesota Star-Tribune, University of Minnesota Law School Seeks Subsidies to Maintain Top Ranking; Regents Bemoan Repeated Requests After Years of Shrinking Enrollment

For six years, the University of Minnesota law school has been struggling to make ends meet in the face of a historic drop in enrollment.

Now it’s asking the Board of Regents for an extra $3.6 million next year to help cover its red ink. And that has triggered a debate about how much the U is willing to spend to ensure that it remains one of the nation’s top-ranked law schools.

Garry Jenkins, the dean, is quick to point out that things are starting to look up for the law school. Applications are up and tuition dollars are on the rebound for the first time in years, he said. But he and other university leaders say the extra funds are needed to get through a few more lean years and maintain the quality of the law school, which is No. 20 of 194 schools on the influential U.S. News and World Report ranking. ...

But some regents are growing weary of the law school’s repeated requests for help, after pumping in $17 million in subsidies to cover its year-end deficits since 2013.

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May 29, 2018 | Permalink | Comments (3)

Lesson From The Tax Court: A Tax Truism

Tax Court (2017)A truism is a saying that is so commonly accepted as true that it needs no further explanation.  For example: "never get involved in a land war in Asia.”  Today’s lesson shows us a tax truism: never take tax advice from the person selling you the deal.  In RB-1 Investment Partners, Eric Reinhart, Tax Matters Partner v. Commissioner, T.C. Memo. 2018-64 (May 14, 2018), the taxpayer received millions of dollars from the sale of a business and invested in a complex transaction that the promoter promised would magically wipe away the gain with no actual economic loss (except fees).  When the taxpayer got caught, it conceded the merits, but attempted to avoid imposition of a 40% penalty under §6662 by arguing reasonable reliance on an opinion letter from the law firm promoting the scheme. I explain below the fold the taxpayer’s argument, why it failed, and what we can learn.

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May 29, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (0)

Grad With $340k Of Law School Debt Who Failed Bar Exam Three Times Calls Out California Bar

California Bar ExamFollowing up on my previous post, California Bar Exam Pass Rate Sinks To All-Time Low: 27.3%:  Medium, “Go F*ck Yourself” — State Bar of California:

The fact that California has the worst bar exam in the country with consistently the lowest passage rates is, well, a well-known fact. Yet, not one that seems to bother the California State Bar enough. In a statement released May 18th, 2018, (the date the February 2018 results were released at 6 pm), the Executive Director of the State Bar of California, Leah T. Wilson, did not feel the need to mention that the most recent results were the worst passage rates since 1951, with an abysmal 27.3% of test-takers passing the exam. Ms. Wilson did however, “acknowledge a low overall pass rate,” and bring up something called the “Productive Mindset Intervention Program”:

In order to help improve performance on the bar exam, we recently launched the Productive Mindset Intervention Program. Through this program and ongoing study, we hope to better understand the downward trend of bar exam pass rates.

As one of the 3, 418 out of 4, 701 test takers for the February 2018 exam who received the crushing news that we failed on May 18th, I was very interested in the “Productive Mindset Intervention Program” that had been “recently launched.” The same statement continues:

“The Productive Mindset Intervention Program will be available to applicants beginning with the July 2018 Bar Exam. This program is a partnership with researchers at Stanford University, the University of Southern California, and Indiana University. The program is designed to improve exam performance across the board.”

Well, gee. This program sounds really great! You may be wondering, as I was, “How do I sign up?” The answer is: You can’t! Haha!

No, seriously. You can no longer sign up for the program that, according to the Executive Director of the State Bar of California on May 18th, had just been “recently launched” for the July 2018 exam. I found this out by calling the Los Angeles Office of Admissions and asking for information on how to enroll in the program. I was told that the deadline for enrollment was May 14th, 2018. Some might find that an odd date to choose, as it is four days before the Bar Exam results were released. Meaning that anyone who had failed the February administration and would be registering for the July exam had missed the enrollment deadline for a program designed to improve their performance in July. ...

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May 29, 2018 in Legal Education | Permalink | Comments (3)

TaxProf Blog Holiday Weekend Roundup

Monday, May 28, 2018

WSJ: USC Alum Is One Of 101 Grads With $1 Million+ In Student Loans

WSJ 3Wall Street Journal, Mike Meru Has $1 Million in Student Loans. How Did That Happen?:

Mike Meru, a 37-year-old orthodontist, made a big investment in his education. As of Thursday, he owed $1,060,945.42 in student loans.

Mr. Meru pays only $1,589.97 a month—not enough to cover the interest, so his debt from seven years at the University of Southern California grows by $130 a day. In two decades, his loan balance will be $2 million.

He and his wife, Melissa, have become numb to the burden, focused instead on raising their two daughters. “If you thought about it every single day,” Mrs. Meru said, “you’d have a mental breakdown.”

Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.

More could join that group. While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.

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May 28, 2018 in Legal Education | Permalink | Comments (27)

Brooks: The Case For Increasing Student Loan Debt — Expanding College Affordability By Expanding Income-Driven Repayment

John R. Brooks (Georgetown), The Case for More Debt: — Expanding College Affordability by Expanding Income-Driven Repayment, 2018 Utah L. Rev. ___:

Income-Driven Repayment (IDR) for federal student loans is rapidly becoming the primary tool that the federal government uses to provide progressive funding to individuals to pay for college. Under these programs, borrowers can choose to pay back their loans as a percentage of income, with eventual debt forgiveness after 10-25 years. If administered well, these programs can make student loans affordable for everyone, regardless of income. In this symposium essay, I argue that for IDR to meet its goal of providing affordable higher education to everyone, the federal government needs to raise the individual borrowing limits on Direct Loans and issue substantially more debt than it does today. This perhaps counterintuitive proposal — help students by increasing debt — follows from the observation that an IDR student loan is conceptually not at all like traditional debt and is more akin to a tax instrument.

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May 28, 2018 in Legal Education, Scholarship | Permalink | Comments (1)

The ‘Hidden’ Tax Cost Of Executive Compensation

Kobi Kastiel (Tel Aviv University) & Noam Noked (Chinese University of Hong Kong), The ‘Hidden’ Tax Cost of Executive Compensation, 70 Stan. L. Rev. Online 179 (2018):

The sweeping tax reform enacted in December 2017 will significantly increase the tax cost of executive compensation in publicly held corporations where the compensation for each of the top five executives exceeds $1 million. Nonetheless, it is unlikely that these corporations will reduce the executive compensation to offset the increased tax cost, which will likely be shifted to public shareholders.

This Essay shows that this significant tax cost is not transparent to shareholders. Our analysis of a hand-collected dataset of relevant proxy statements that were filed in the first fifty days after the enactment of the tax reform reveals that companies do not provide their shareholders with sufficient information about the tax cost of executive compensation.

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May 28, 2018 | Permalink | Comments (3)

NC Central Law School Replaces Dean, Shrinks 1L Class (By 33%), And Imposes Minimum LSAT (142) And UGPA (2.96) Admissions Requirements To Address ABA's Accreditation Concerns

NCCU LawFollowing up on my previous post, ABA Finds Appalachian, Arizona Summit & North Carolina Central Law Schools Out Of Compliance With Accreditation Standards:  News & Observer, NCCU's Law Dean to Exit as School Tries to Address Compliance Concerns:

N.C. Central University’s law dean will leave her post and the law school's incoming class will shrink by about one-third because of new minimum admissions standards, as the school attempts to satisfy concerns of the American Bar Association.

Phyliss Craig-Taylor, who has been dean since 2012, will remain at the law school as a faculty member. ...

In 2017, of those NCCU law graduates who took the bar exam for the first time in North Carolina, 54 percent passed, compared to 59 percent in 2016, according to a report filed by NCCU with the ABA. The school's attrition rate worsened, with 37.7 percent of first-year students in 2016-17 washing out. ...

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May 28, 2018 in Legal Education | Permalink | Comments (2)

Sunday, May 27, 2018

2018 Grad Decries Political Correctness At Stanford Law School

Stanford Law School Logo (2015)National Review:  Political Correctness at Stanford Law, by Martin  J. Salvucci (J.D. 2018, Stanford):

The undergraduate college regularly boasts the nation’s lowest acceptance rates, and both the graduate business school and the law school likewise rank at the very top of their respective fields.

But all is not well on a campus where many T-shirts bear Stanford’s unofficial mantra that “Life Is Good!” Last year, former provost John Etchemendy warned publicly of a threat from within — a “growing intolerance” that has manifested as a sort of “political one-sidedness.” His admonition was, predictably, politely ignored. However, my experience at Stanford Law School suggests that, if anything, Etchemendy has understated the scope and the scale of the challenge that elite universities now face.

At Stanford Law School, no more than three of approximately 110 full-time faculty publicly identify as conservative or libertarian. (By way of contrast, Stanford Law School touts on its webpage 23 full-time faculty under the inartful rubric of “minority.”) As a consequence, many of my classmates will graduate having never engaged with a law professor whose worldview and convictions track those of nearly half the voting public.

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May 27, 2018 in Legal Education | Permalink | Comments (17)

Hedge Fund Managers Shift Billions Over Carried Interest Concern

Bloomberg, Hedge Fund Managers Shift Billions Over Carried Interest Concern:

Late last year, some hedge fund managers raced to protect their personal fortunes from being carved up by the Republican tax law. 

Their concern? That the vague language of the new rule makes it possible that profits that had already been paid to them, taxed and reinvested back into the fund would be lumped in with other untaxed carried interest — and all subject to the new three-year holding period. So they rushed to separate out those distributed gains.

“The whole statute is an epic screw up and so poorly done,” said Michael Spiro, who chairs the tax group at Finn Dixon & Herling. “Nobody thought through these various policy decisions.”

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May 27, 2018 in Tax | Permalink | Comments (1)

The Case For Co-Presidents Of Colleges And Universities

Inside Higher Education, Why Colleges Should Consider Co-Presidencies:

One of us, Karen Gross, recently wrote an article about how co-presidencies could improve higher education [How Co-Presidents Could Improve Leadership In Higher Education (Aspen Institute 2018)], and it received no shortage of concern and criticism. To be clear, the article didn’t suggest that this type of governance was the ultimate solution for all that ails our educational institutions and their governance. It did not even hint at the idea that co-presidencies are optimal or ever workable for many colleges and universities.

Meanwhile, let’s be honest here.  It is not as if institutional presidents and chancellors are doing such a stellar job that we can avoid changes in governance approaches.  Hardly a week goes by without reading about a leadership kerfuffle on some campus somewhere.  And, the missteps are not minor.  We also know that few want to follow a successful long serving president, making hiring successors difficult.  Perhaps of even greater relevance has been the recent statement from the departing chancellor of the University of Texas system, a former military leader, who stated unabashedly that “the toughest job in the nation is the one of an academic- or health-institution president.”

The most common critiques proffered of the idea of co-presidencies (despite movement toward system consolidation in states which could foster co-leadership) -- whether in writing, emails, other online communications and in conversations galore -- revolve around ego.  College and university presidents are unlikely, so the argument goes, to be able or willing to curb their apparently outsized egos enough to share power. 

This ego problem would lead to several undesirable outcomes: shared decision-making would be difficult if not impossible; employees would be confused as to who the “real” leader is, leading to delays and uncertainty; and bickering between the co-presidents would prevail.  One commenter even contended that co-presidencies resembled all the downsides of a marriage and parenting, including the potential for divorce. 

We respectfully disagree and have begun asking people with experience inside and outside academe to share examples of effective co-presidencies or their equivalents, including among individuals known to have sizable egos.  Those examples proffer a wider lens through which to view co-presidencies in academe. They also serve as a reminder that, within the academy, we sometimes fail to explore options outside our particular sphere or specialty -- and that our siloed approach means that we fail to transport workable ideas into new contexts, even if some tweaks and adjustments are needed.

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May 27, 2018 in Legal Education | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #3 and #5:

  1. [984 Downloads]  Evaluating the New US Pass-Through Rules, by Dan Shaviro (NYU)
  2. [248 Downloads]  The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy, by Michael Graetz (Columbia)
  3. [194 Downloads]  Higher Education Savings and Planning: Tax and Nontax Considerations, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  4. [183 Downloads]  IRC Section 678 and the Beneficiary Deemed Owner Trust (BDOT), by Edwin Morrow
  5. [151 Downloads]  The New U.S. Tax Preference for 'Foreign-Derived Intangible Income', by Chris Sanchirico (Pennsylvania)

May 27, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 26, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Brooklyn Law School Parts Ways With Dean

AllardNew York Law Journal, Brooklyn Law School Parts Ways With Dean:

Nick Allard is out as dean at Brooklyn Law School after six years in the job.

Allard and a law school spokesman on Friday declined to discuss the reason for his departure, but said they planned to make an announcement May 29.

Brooklyn Law School faculty received an email Thursday from the chairman of the board of trustees informing them that Allard was no longer dean, according to a Brooklyn Law professor who spoke on the condition of anonymity because the professor was not authorized to speak on the subject.

The chairman, Stuart Subotnick, did not disclose the reason for Allard’s departure in that email, the source said. A subsequent email from Allard, who was in China at the time, indicated that he was surprised by the move, the professor said. Professor Maryellen Fullerton has been named interim dean.

Allard’s abrupt departure is unusual in legal education, where law deans typically announce their intention to step down months or even a year in advance. Even when law school leaders clash with university officials or faculty, they are typically allowed to plan graceful exits out of the dean’s office. ...

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May 26, 2018 in Legal Education | Permalink | Comments (4)

Borden: Like-Kind Exchanges After The 2017 Tax Act

Bradley T. Borden (Brooklyn), Code Sec. 1031 after the 2017 Tax Act, 21 J. Passthrough Ent. 17 (2018):

The Tax Cuts and Jobs Act of 2017 changed Code Sec. 1031 and other provisions that may affect Code Sec. 1031. This Article examines those changes. Code Sec. 1031 now applies only to real property, so taxpayers must consider whether exchange properties are real property and like kind. Code Sec. 1031 does not have an established definition of real property, so its scope will be uncertain until further guidance emerges. Until then, taxpayers may look to definitions of real property in other provisions of the Code. The Article presents a table comparing the various other definitions of real property, showing that tax law does not have a unified definition of real property.

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May 26, 2018 in Scholarship, Tax | Permalink | Comments (1)

Frustrated Profs Shut Down A Chancellor Search, Leaving President ‘Mortified'

UMassChronicle of Higher Education, Frustrated Professors Shut Down a Chancellor Search, Leaving UMass’s President ‘Mortified’:

The search for a new chancellor of the University of Massachusetts at Boston was shut down on Monday after the three finalists for the job dropped out. The candidates made their decision following faculty criticism of both the finalists and the search process.

That’s an unusual outcome to a very common controversy. The widespread use of search consultants, the decline in shared governance, and the politicization of higher education have all contributed to the marginalization of faculty input in searches.

As a result, you don’t have to look far these days to find a search for a college or university leader in which the faculty feels left out.

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May 26, 2018 in Legal Education | Permalink | Comments (8)

Friday, May 25, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Ring's Silos And First Movers In The Sharing Economy

This week, Orly Mazur (SMU) reviews a new work by Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates.

Mazur (2017-2)Should the workers who make up the sharing economy be classified as employees or independent contractors? This question, which has significant legal ramifications for gig economy workers, has been extensively debated by policymakers, academics, litigators, legislators, business operators, and regulators, among many others. In her new work, Diane Ring brings a new perspective to the debate. She convincingly argues that the worker classification debates are often incomplete due to silos among legal experts. In the sharing economy, the detrimental effects of these legal silos are compounded by first-mover actions, which together create the risk that the outcomes of the worker classification debates have unintended and undesirable collateral effects. 

As Ring explains, when answering the question of how sharing economy workers should be classified, legal experts often focus on the implications of each classification arising from their area of the law or “legal silo,” without a full understanding of the effects of that outcome in other legal contexts. But resolution of this worker classification issue in one legal context is likely to affect a worker’s legal implications in another context. 

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May 25, 2018 in Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Third Law School Represented By Kirkland & Ellis Sues ABA Alleging Arbitrary Enforcement Of Accreditation Standards

Arizona Summit Logo (2015)Press Release, Arizona Summit Law School Sues American Bar Association:

Arizona Summit Law School (Summit) today filed suit in the United States District Court for the District of Arizona against the American Bar Association (ABA), seeking injunctive relief and damages against the ABA for abusing its law school accreditation powers. Summit is represented by former Solicitor General of the United States Paul D. Clement, former Assistant Attorney General of the United States Viet D. Dinh, and H. Christopher Bartolomucci, all of Kirkland & Ellis LLP.

"Today's filing alleges that the ABA has violated due process in applying its accreditation standards," said Kirkland & Ellis' Clement. "The ABA's actions regarding the law school have been arbitrary and capricious and a departure from what is legally expected of those wielding powerful accreditation authority."

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May 25, 2018 in Legal Education | Permalink | Comments (0)

Should Law School Be More Like Chipotle?

Chipotle 4Sacramento Bee, Be More Like Chipotle, Jerry Brown Tells California Universities:

Gov. Jerry Brown, who in his last two terms has pushed, often unsuccessfully, to reshape the state's expansive higher education system, on Wednesday suggested that California universities should be more like Chipotle. ...

"What I like about Chipotle is the limited menu. You stand in the line, get either brown rice or white rice, black beans or pinto beans," Brown said. "You put a little cheese, a little this, a little that, and you're out of there. I think that's a model some of our universities need to follow."

Brown has repeatedly prodded the state's public universities, particularly California State University, to improve their graduation rates. He said Wednesday that if they adopted a "limited-menu concept, everyone would graduate on time."

"They have so damn many courses because all these professors want to teach one of their pet little projects, but then you get thousands and thousands of courses, and then the basic courses aren't available. It takes kids six years instead of four years," Brown said. ...

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May 25, 2018 in Legal Education | Permalink | Comments (12)

Hemel: Two Cheers For IRS Guidance On The New State & Local Tax Cap

Following up on yesterday's post, IRS Warns Taxpayers That Regs Will Prevent States From Circumventing $10k S&L Tax Cap With 'Charitable' Contributions:  Daniel Hemel (Chicago), Two Cheers for IRS Guidance on the New SALT Cap:

Yesterday’s notice by the Treasury Department and the IRS that they plan to propose regulations related to the state and local tax (SALT) and charitable contribution deductions has generated lots of news coverage. ...

Let’s start with what the notice did say. First, it revealed — and this is new news — that Treasury and the IRS “intend to propose regulations addressing the federal income tax treatment of certain payments made by taxpayers for which taxpayers receive a credit against their state and local taxes.” That’s apparently a reference to laws already enacted in New JerseyNew York, and Oregon that allow taxpayers to claim a state tax credit for charitable contributions to certain state-affiliated funds, as well as several similar proposals pending in other state legislatures. Interestingly, Treasury and the IRS signaled no intention to issue regulations addressing New York’s new “Employer Compensation Expense Program,” which allows employees to claim a state tax credit if their employer opts into a new payroll tax regime. Even those who are skeptical of the charitable credit arrangement acknowledge that the payroll tax shift “almost certainly” will pass muster under federal tax law, and nothing in yesterday’s notice suggests otherwise.

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May 25, 2018 in IRS News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Applicants To Law School Versus Medical School

WSJ: Small Businesses Rethink Client Meals & Entertaining After Losing Tax Break

WSJWall Street Journal, Season Tickets? Steak Dinners? Small Firms Rethink Client Events After Losing Tax Break:

A wholesale distributor plans to replace some expense-account lunches with open houses for customers. A marketing firm has stopped reimbursing employees’ commuting expenses and is giving them raises instead. A tax-audit defense firm is giving up its season tickets to Sacramento Kings basketball games.

These are some of the ways small-business owners are responding to changes in the tax law that reduce or eliminate some popular deductions for meals, entertainment and transportation, though many of the fine points are unclear.

For instance, the changes eliminate the deduction for sports tickets, concerts and other client entertainment, and set new limits on deductions for certain employee meals. Among the uncertainties is whether companies will still be able to claim a 50% deduction for business meals with customers or business associates, or whether those expenses will be considered entertainment, which is no longer deductible. “That’s the one that has got everyone jumping up and down,” said Marianna Dyson, of counsel to Covington & Burling.

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May 25, 2018 in Tax | Permalink | Comments (3)

Thursday, May 24, 2018

Ring: Silos And First Movers In The Sharing Economy Debates

Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates:

Over the past few years, a significant global debate has developed over the classification of workers in the sharing economy either as independent contractors or as employees. While Uber and Lyft have dominated the spotlight lately, the worker classification debates extend beyond ridesharing companies and affect workers across a variety of sectors. Classification of a worker as an employee, rather than an independent contractor, can carry a range of implications for worker treatment and protections under labor law, anti-discrimination law, tort law, and tax law, depending on the legal jurisdiction. The debates, at least in the United States, have been incomplete due to the failure of policy makers and advocates to consider the scope and interconnectedness of the worker classification issues across the full sweep of legal arenas. There is time, however, to remedy the incompleteness of these policy conversations before worker classification decisions ossify and path dependence takes hold.

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May 24, 2018 in Scholarship, Tax | Permalink | Comments (0)

UCLA Is 18th Law School To Accept GRE For Admissions

GREUCLA is at least the eighteenth U.S. law school to announce that it will accept the GRE for the 1L admissions (it previously accepted the GRE only for students enrolled in, or applying to, another UCLA graduate program). The other seventeen law schools are Arizona, Brooklyn, BYU, Cardozo, Chicago Kent, Columbia, Florida StateGeorgetown, Harvard, Hawaii, John Marshall (Chicago), Northwestern, Pace, St. John's, Texas A&M, Wake Forest, and Washington University. Two law schools allow the GRE in limited circumstances:  Chicago (admissions committee may grant LSAT waiver) and Georgia (students enrolled in a dual degree program at the university).  (George Washington has rescinded its use of the GRE because it has not done a school-specific validation study.)

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May 24, 2018 in Legal Education | Permalink | Comments (0)

Death Of Larry Jegen

JegenIU McKinney Mourns the Passing of Professor Lawrence A. Jegen III:

Professor Lawrence A. Jegen, III, passed away on May 17, 2018, at his home in Indianapolis. He was 83 years old. He taught at the Indiana University Robert H. McKinney School of Law for 56 years before his retirement in 2018. He joined the faculty in 1962 as an Assistant Professor, was promoted to an Associate Professor two years later, and became a full professor in 1966.

“It is hard to understate the impact that Professor Jegen made on the lives of others during his remarkable 56-year career at our law school," said IU McKinney Dean Andrew R. Klein. "Using the word ‘legend’ might sound like hyperbole, but today it does not. The outpouring of affection that I have heard from generations of McKinney Law alumni is overwhelming. This is a sad day for our law school family, but also a moment to remember the incredible difference that a teacher can make. We will miss Professor Jegen, but never forget him.”

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May 24, 2018 in Legal Education, Obituaries, Tax | Permalink | Comments (0)

Gamage: Charitable Contributions In Lieu Of State & Local Tax Deductions

David Gamage (Indiana), Charitable Contributions in Lieu of SALT Deductions, 87 State Tax Notes 973 (Mar. 12, 2018):

State governments are considering new charitable tax credits designed to circumvent the 2017 federal tax overhaul’s cap on state and local tax deductions. Will these plans work?

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May 24, 2018 in Scholarship, Tax | Permalink | Comments (3)

USC Eliminates Student Evaluations In Faculty Promotion And Tenure Decisions

USC LogoFollowing up on my previous post, Why We Must Stop Relying On Student Evaluations Of Law School Teaching — Like The University Of Oregon Is Doing:  Inside Higher Ed, Teaching Eval Shake-Up:

Research is reviewed in a rigorous manner, by expert peers. Yet teaching is often reviewed only or mostly by pedagogical non-experts: students. There’s also mounting evidence of bias in student evaluations of teaching, or SETs — against female and minority instructors in particular. And teacher ratings aren’t necessarily correlated with learning outcomes.

All that was enough for the University of Southern California to do away with SETs in tenure and promotion decisions this spring. Students will still evaluate their professors, with some adjustments — including a new focus on students’ own engagement in a course. But those ratings will not be used in high-stakes personnel decisions.

The changes took place earlier than the university expected. But study after recent study suggesting that SETs advantage faculty members of certain genders and backgrounds (namely white men) and disadvantage others was enough for Michael Quick, provost, to call it quits, effective immediately. 

“He just said, ‘I’m done. I can’t continue to allow a substantial portion of the faculty to be subject to this kind of bias,” said Ginger Clark, assistant vice provost for academic and faculty affairs and director of USC’s Center for Excellence in Teaching. “We’d already been in the process of developing a peer-review model of evaluation, but we hadn’t expected to pull the Band-Aid off this fast.”

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May 24, 2018 in Legal Education | Permalink | Comments (4)

Colleges May Dodge New Endowment Tax

Bloomberg, Facing First Tax on Endowments, Colleges May Be Set to Dodge It:

Private colleges facing a new endowment tax may “behave strategically” to avoid paying it, according to a study published Thursday by a senior researcher at the Federal Reserve Bank of Cleveland [College Endowments].

Schools may increase enrollment — or give the appearance of doing so by changing the way they measure it — to reduce their endowment-per-student ratio to miss the tax threshold set by Congress, wrote economist Peter Hinrichs. Those colleges with low enrollment may reduce it in order to stay below 500 students to avoid the tax.

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May 24, 2018 in Tax | Permalink | Comments (1)