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Sunday, May 24, 2015

The Atlantic: Why It Pays To Be A Jerk

The JerkThe Atlantic, Why It Pays to Be a Jerk: New Research Confirms What They Say About Nice Guys:

Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.

Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.

Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?

Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team?—it’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?

We have some well-worn aphorisms to steer us one way or the other, courtesy of Machiavelli (“It is far better to be feared than loved”), Dale Carnegie (“Begin with praise and honest appreciation”), and Leo Durocher (who may or may not have actually said “Nice guys finish last”). More recently, books like The Power of Nice and The Upside of Your Dark Side have continued in the same vein: long on certainty, short on proof.

So it was a breath of fresh air when, in 2013, there appeared a book that brought data into the debate. The author, Adam Grant, is a 33-year-old Wharton professor, and his best-selling book, Give and Take: Why Helping Others Drives Our Success, offers evidence that “givers”—people who share their time, contacts, or know-how without expectation of payback—dominate the top of their fields. “This pattern holds up across the board,” Grant wrote—from engineers in California to salespeople in North Carolina to medical students in Belgium. Salted with anecdotes of selfless acts that, following a Horatio Alger plot, just happen to have been repaid with personal advancement, the book appears to have swung the tide of business opinion toward the happier, nice-guys-finish-first scenario.

And yet suspicions to the contrary remain—fueled, in part, by another book: Steve Jobs, by Walter Isaacson. The average business reader, worried Tom McNichol in an online article for The Atlantic soon after the book’s publication, might come away thinking: “See! Steve Jobs was an asshole and he was one of the most successful businessmen on the planet. Maybe if I become an even bigger asshole I’ll be successful like Steve.”

McNichol is not alone. Since Steve Jobs was published in 2011, “I think I’ve had 10 conversations where CEOs have looked at me and said, ‘Don’t you think I should be more of an asshole?’ ” says Robert Sutton, a professor of management at Stanford, whose book, The No Asshole Rule, nonetheless includes a chapter titled “The Virtues of Assholes.” ...

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May 24, 2015 in Legal Education, Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #2:

  1. [271 Downloads]  The Historical Origins of the Debt-Equity Distinction, by Camden Hutchison (Wisconsin)
  2. [223 Downloads]  Taxation of E-Commerce, by Orkhan Abdulkarimli (Baku State)
  3. [201 Downloads]  Scholarship Against Desire, by Shari Motro (Richmond)
  4. [170 Downloads]  Tax Compliance as a Wicked System, by J. T. Manhire (U.S Treasury Department)
  5. [127 Downloads]  Believing in Life After Loving: IRS Regulation of Tax Preparers, by Alex H Levy (NYU)

May 24, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Charleston Law School Lays Off Seven Additional Faculty, Announces Plans To Enroll Students For The Fall

Charleston LogoPost and Courier, Charleston School of Law to Enroll Students for the Fall:

The Charleston School of Law announced Friday that the school will accept new students in the fall for the 2015-16 academic year.

Students were taking final exams May 5 when George Kosko and Robert Carr, the remaining owners of the troubled law school, said they might not enroll a new class of students next year.

The school also laid off seven faculty Friday, one of a number of cost-cutting moves that is allowing the school to continue to enroll students, a news release said.

The seven faculty members join 24 staff members and four other faculty members bought out or laid off since May 1, 2014, according to the release:

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May 24, 2015 in Legal Education | Permalink | Comments (14)

The IRS Scandal, Day 745

IRS Logo 2New York Times, I.R.S. Seeks to Define Political Activity for Nonprofits:

The Internal Revenue Service could issue as early as next month new draft regulations governing political activity by tax-exempt organizations, according to a notice issued on Thursday. But it remains unlikely that the new rules would be in place before the 2016 election.

The effort comes as nonprofit organizations prepare to spend hundreds of millions of dollars on presidential and congressional races, much of it devoted to thinly disguised campaign ads that the organizations say are merely intended to raise awareness of policy issues.

Many wealthy donors, particularly on the conservative side, prefer giving to nonprofits rather than “super PACs,” because the former are not required to disclose the identities of donors. Roughly half of all the political advertising aired during last year’s midterm elections came from groups that keep their donors a secret.

The proposed rules would amount to a mulligan: The agency’s first effort, in 2013, drew widespread criticism from liberal and conservative groups. Some of the groups’ members said the draft encompassed too much activity, and some argued that the proposed limits would not go far enough.

Current regulations provide no clear test for what constitutes election activity or for how much of their revenue tax-exempt groups can spend to try to influence elections. ...

I.R.S. officials, still reeling from revelations that conservative tax-exempt groups were subjected to paperwork delays and overzealous investigation during the 2012 election cycle, are wary of appearing to try to shape the course of the coming campaign.

This year, John Koskinen, the I.R.S. commissioner, said that the agency’s timetable was uncertain and that “my only focus on 2016 is to make sure that whatever we do, it doesn’t look like we’re trying to influence the 2016 election.”

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May 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Saturday, May 23, 2015

This Week's Ten Most Popular TaxProf Blog Posts

WSJ: Tax Court OKs Use Of Crummey Trust To Give $1.6 Million Tax-Free To 60 Beneficiaries, Despite No-Contest Clause

Tax Court Logo 2Following up on last week's post, Tax Court Approves Crummey Trust With 60 Beneficiaries, Despite Religious Arbitration Clause:  Wall Street Journal Tax Report, A Way to Make Big Gifts to Family Without Tax: The Tax Court Cleared a Couple’s Use of Crummey Trusts to Give $1.6 million Free of U.S. Gift or Estate Tax:

In Mikel v. Commissioner, [T.C. Memo. 2015-64 (2015),] the court ruled against the Internal Revenue Service and allowed a New York couple to use Crummey trusts—named after a Methodist minister who was the plaintiff in a 1968 case—to make tax-free transfers of $1.6 million without dipping into their lifetime gift-tax exemptions.

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May 23, 2015 in New Cases, Tax | Permalink | Comments (0)

Robert De Niro to NYU Grads: ‘You’re F—ked'

De NiroNew York Post Page Six, Robert De Niro to NYU Grads: ‘You’re F—ked’:

Hollywood heavyweight Robert De Niro delivered a heavy dose of reality to graduates of New York University’s Tisch School of the Arts — telling them, “You made it. And, you’re f–ked.”  ...

Other NYU grads had brighter prospects, he added.

“The school of medicine graduates, each will get a job,” he said. Law school grads will too, he said, adding that if they don’t, “Who cares? They’re lawyers!”

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May 23, 2015 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 744

IRS Logo 2Federal News Radio,  Why Koskinen Says the IRS Won't Cause Another Scandal:

The IRS has gotten rid of bad policies, created new ones and stepped up oversight since a political scandal thrust its tax-exempt group into the spotlight two years ago.  

recent report by the Treasury Inspector General for Tax Administration confirmed the agency had made significant progress since the watchdog office sounded the alarm in May 2013.

But going forward, it's the IRS' people, rather than its rules, who will keep the agency out of trouble, Commissioner John Koskinen said in an interview on In Depth with Francis Rose.

"Every employee should view themselves as a risk manager and if they see a problem--see something not going the way it ought to or not in the way we expected--then they should feel empowered to raise their hand and make sure somebody knows about that," he said. "I really do think that bad news is good news. As I tell employees, the only problem we can't fix — can't solve — is one that we don't know about." 

Since taking office in December 2013, Koskinen said he had met personally with 14,000 IRS employees to encourage them to speak up if they spy trouble. He acknowledged that employees worry about retribution from their supervisors.

"As I tell the employees, we don't shoot the messenger. We reward the messenger. It's important for them to feel comfortable with that," he said. "I've tried to reassure managers if there's a problem in their area and someone's made a mistake, then we're

While the new IG report lends credence to Koskinen's claims that the IRS has changed, conservatives remain wary. Since the IRS was accused of unfairly scrutinizing tea-party groups' applications for tax-exempt status, Republicans have led Congress in cutting the agency's budget dramatically.

Now Koskinen is asking for an 18-percent increase to restore the budget to a level he describes as steady and sustainable, but Republicans have described as "astronomical" and "massive".

"There's a lot of focus in the appropriations process on things that have happened in the past and I've tried to get them to understand that we have fixed those problems," he said. 

The IRS has cut convention spending by 80 percent. Koskinen personally authorizes any training or events that cost more than $20,000, he said. Expensive videos— a Star Trek parody had been a source of ridicule a few years ago — are relics of the past, he said. The agency now has a video review board. It also no longer offers performance awards to employees who have had past performance issues or problems with their taxes.

"It's a new day at the IRS in the context of most of the discussion people have had about prior problems," he said. "They need to understand we took those prior problems seriously and we fixed them."

But is that enough to convince Congress? 

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May 23, 2015 in IRS News, IRS Scandal | Permalink | Comments (3)

Friday, May 22, 2015

Fleischer: Yahoo's Tricky Plan for Tax-Free Spinoff of Alibaba Stock

NY Times Dealbook (2013)New York Times Deal Book:  Yahoo's Tricky Plan for Tax-Free Spinoff of Alibaba Stock, by Victor Fleischer (San Diego):

I bet Marissa Mayer wishes she had minored in corporate taxes.

Ms. Mayer, Yahoo’s chief executive, studied computer science at Stanford, specializing in artificial intelligence. If only there was an algorithm to devise a tax-efficient corporate restructuring. Machine learning cannot sort through an infinite number of strategic tax options and choose the best one. Nor can machines reliably predict how the human beings at the I.R.S. will apply uncertain law to a complex area like corporate tax.

And the tax code, not computer code, is what Yahoo’s shareholders care about.

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May 22, 2015 in Tax | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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May 22, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Weekly RoundupConor Clarke (J.D. 2015, Yale) & Edward Fox (J.D. 2015, Yale), Note, Perceptions of Tax Expenditures and Direct Spending: A Survey Experiment, 124 Yale L.J. 1252 (2015):

This paper presents the results of an original survey experiment on whether the public prefers “tax expenditures” to “direct outlays” — that is, whether members of the public are more likely to support government spending that takes the form of a tax credit rather than a check or cash. Using a survey that spans a wide variety of policy areas — and with important variations in wording and information — we show that the public strongly prefers tax expenditures even when the “economic substance” of the proposed policies is identical. We also show that the public views tax expenditures as less costly than equivalent direct outlays. These results support a longstanding but largely unstudied hypothesis that tax expenditures “hide” the costs of government spending, and have implications for why tax expenditures have continued to grow in size and complexity.

May 22, 2015 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Yelp Law School Rankings

YelpChicagoInno,  Yelp Launches First TV and Digital Ads, Pointing Out You Can Rate Law Schools:

Would you ever use Yelp to choose a law school?

Whether you would or not, Yelp wants you to know you can.

The San Francisco, Calif.-based reviews company has long been known for its star ratings and customer review features. Mostly it has been used as a tool to find quick info about a local business-- hours, location, BYOB-- and largely restaurant and bar focused. Now Yelp is launching its first round of TV and digital ads, which specifically point out the site can help you choose a university (as well as where to get the best margarita to celebrate your degree).

An ad currently playing on Pandora lays out this new push:

"Let's say you're hungry for justice, want to study to become a lawyer and don't mind paying off hundreds of thousands of dollars of student loans," said a man in the ad. "We know just the place."

A search for "law schools" near "Chicago, IL" showed that all the major law schools in the area have Yelp pages and a handful of reviews. University of Chicago's Law School has a perfect 5 star rating (from three reviews) while John Marshall College of Law averages three stars (with a total of eight reviews).

A search for "law schools" near "Los Angeles, CA"  yields these result:

5Pepperdine (2 reviews), UCLA (6 reviews)

 

4.5UC-Irvine (3 reviews), USC (5 reviews)

 

4Loyola-L.A. (11 reviews)

 

3.5Western State (15 reviews), Whittier (15 reviews)

 

3Southwestern (22 reviews)

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May 22, 2015 in Law School Rankings, Legal Education | Permalink | Comments (1)

IRS To Give Loving Refunds

RTRPIRS, Registered Tax Return Preparer Test Fee Refunds (May 21, 2015):

The IRS is refunding the fees that return preparers paid for the Registered Tax Return Preparer test. Letters will be mailed to refund recipients on May 28 and checks will be mailed on June 2. Return preparers took the test between November 2011 and January 2013 and paid a fee of $116. About 89,000 tests were paid for and taken, with some preparers taking the test more than once.

The refunds are being made because the federal courts determined in Loving v. IRS [742 F.3d 1013 (D.C. Cir. 2014)] that the IRS lacked authority to mandate testing.

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May 22, 2015 in IRS News, Tax | Permalink | Comments (1)

<4% Chance That Lawyer, Professor Jobs Will Be Replaced By Technology

NPR LogoNPR, Will Your Job Be Done By A Machine?:

Machines can do some surprising things. But what you really want to know is this: Will your job be around in the future?

We have the "definitive" guide.

Researchers took a shot at estimating how technology will affect the job market in 20 years. Find your job below to see what the data say about your future.

Lawyers

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May 22, 2015 in Legal Education | Permalink | Comments (2)

Brennan & McDonald: Deconstructing the Taxation of Packaged Financial Strategies

Thomas Brennan (Harvard) & Robert McDonald (Northwestern), Deconstructing the Taxation of Packaged Financial Strategies:

Financial claims are often taxed according to the way in which they are nominally “packaged” rather than according to their economic characteristics. We deconstruct financial taxation by viewing any financial strategy as a dynamic portfolio of pure debt and pure equity. Given the taxation of these building blocks, there is a unique consistent equivalent tax treatment for any strategy, and this transparent tax is a benchmark against which burdens or subsidies due to packaging can be measured. We quantify tax effects in present value terms in the context of a partial equilibrium model. We apply our methodology to common hybrid securities, such as convertible bonds and reverse convertible bonds. We find tax-induced discrepancies of up to about up to about 6% of value (i.e., 20 basis points per year) for typical 30-year convertible bonds. With unfunded securities, such as puts and calls, the discrepancy becomes much larger in percentage terms. Because these unfunded positions are levered, however, investors do not buy as many of them, and the discrepancy in aggregate absolute terms is therefore likely not so much greater. In our framework, the discrepancy can be eliminated either by taxation based on an ongoing determination of building block equivalents or else by eliminating distinctions in taxation among the building blocks. In particular, this would require eliminating the tax distinction between debt and equity.

May 22, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 743

IRS Logo 2Government Executive, Advocacy Group: IRS' Problems 'Won't Be Cured by Removing Lois Lerner':

Following months of Freedom of Information Act requests, a team of conservative lawyers has sought to rewrite the narrative of the targeting controversy that has plagued the Internal Revenue Service for two years.

In a report leaked to National Review, the nonprofit legal group Cause of Action concluded that employees who mishandled applications for tax-exempt status were following the official agency manual as much as they were their allegedly politicized bosses. The unreleased 35-page report challenges the explanations for the mishandling of applications offered by the congressional Republicans, the White House and the Treasury Inspector General for Tax Administration. ...

Cause of Action’s 35-page report is said to conclude that the Internal Revenue Manual must be fundamentally reformed in order to prevent future targeting. “While there are certainly complex or new issues that would warrant or even require an employee to elevate the issue to a manager, the IRS’ desire to be portrayed in a positive light by the media is certainly not one of those issues.”

Reached by Government Executive, Cause of Action leader Daniel Epstein said his group’s “findings, to-date, indicate that the IRS has exercised discretion in ways that incentivize staff to engage in misinterpretations of the law and, in some cases, misconduct.  We believe congressional oversight is crucial on these and other IRS-related matters Cause of Action has examined and agree with the claims of many that a special counsel is appropriate.”

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May 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, May 21, 2015

NYU Symposium: Tax And Corporate Social Responsibility

NYUSymposium, Tax and Corporate Social Responsibility, 11 N.Y.U. J.L. & Bus. 1-189 (2014):

Articles

Proceedings

Panel 1:  Should Corporations Pay Tax?,  11 N.Y.U. J.L. & Bus. 125 (2014)

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May 21, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Merritt: Compliance Jobs And Law School Reform

Compliance 2Deborah Jones Merritt (Ohio State), Campbell on Compliance:

Compliance is one of the 'hot" alternative jobs that law schools are promoting for their graduates. Much of this discussion, unfortunately, pays little heed to the nature of compliance jobs and whether legal education really prepares students to do this work well. The two seem to fit. After all, compliance is all about obeying the law, and JDs know a lot of law. The equation, though, isn’t that simple.

Ray Worthy Campbell explores these issues as one part of a rewarding new paper, The End of Law Schools. Although the title is provocative, and Campbell warns law schools of continued upheaval in the profession, the paper’s thesis is forward looking and upbeat. Campbell urges law schools to reinvent themselves as “schools of the legal professions.”

As part of that analysis, Campbell offers the best discussion I’ve seen of the difference between compliance and traditional law practice. His insights parallel those I’ve heard from contemporary general counsels, which is not surprising since Campbell has extensive practice experience. Educators who are contemplating the addition of compliance courses to the law school curriculum, or who just want to understand this area, should read Campbell’s exposition carefully.

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May 21, 2015 in Legal Education | Permalink | Comments (0)

Todres: Tax Shelters And Tax Malpractice

Jacob L. Todres (St. John's), Bad Tax Shelters -- Accountability or the Lack Thereof: Ten Years of Tax Malpractice, 66 Baylor L. Rev. 602 (2014):

In the 1990’s and early 2000’s the tax landscape in the United States was overrun by an epidemic of tax shelters that was unprecedented. The shelters were designed and sold by seemingly reputable large accounting and law firms. The same shelters were sold to many taxpayers. They became generic, off-the-shelf, products. However, the tax shelters had no business substance. The shelters were eventually found to be invalid by the courts. In light of the invalidity of the shelters, the large fees paid for the shelters and the large damages caused by participating in the invalid shelters, there were predictions that many malpractice suits against the sellers of the shelters would ensue.

For this article I attempted to determine whether the predicted wave of tax malpractice suits occurred and what impact, if any, resulted in the area of tax malpractice litigation.

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May 21, 2015 in Scholarship, Tax | Permalink | Comments (0)

New University Of Texas President Rejects 'Vulgar' Salary Slurped Up By His Counterparts At Other Colleges

Texas LogoNew York Times op-ed:  Platinum Pay in Ivory Towers, by Frank Bruni:

Gregory Fenves recently got a big promotion, from provost to president of the University of Texas at Austin. A raise came with it. Instead of his current base of about $425,000, he was offered $1 million.

And he rejected it — as too much. ... He suggested, and agreed to, $750,000.

That’s hardly chump change. But in the context of the shockingly lucrative deals that have become almost commonplace among college presidents, the sum — or, more precisely, the sentiment behind it — is worthy of note and praise.

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May 21, 2015 in Legal Education | Permalink | Comments (10)

Sugin: Strengthening Charity Law With Advance Rulings

Linda Sugin (Fordham), Strengthening Charity Law: Replacing Media Oversight with Advance Rulings for Nonprofit Fiduciaries, 89 Tul. L. Rev. ___ (2015):

This Article considers three urgent challenges facing the charitable community and its state regulators: too little fiduciary duty law for nonprofits, the rise of media enforcement of wrongdoing in charities, and an inherent tension in the state’s dual role as enforcer and protector of the nonprofit sector. It analyzes whether the scarcity of law is really a problem by comparing nonprofit organizations with business organizations and concludes that charities lack the self-enforcement mechanisms of businesses and therefore need more government guidance. It evaluates whether the media has made governmental supervision obsolete and expresses skepticism about the press displacing state oversight. The solution presented, an advance-ruling procedure for fiduciary duty questions, proposes that states shift their focus from better enforcement against wrongdoers ex post to better charity governance ex ante by devoting more attention and resources to assisting well-meaning charity directors in carrying out their fiduciary obligations.

May 21, 2015 in Scholarship, Tax | Permalink | Comments (0)

Brunson: Will Supreme Court's Same-Sex Marriage Decision Cost BYU Its Tax Exemption?

BYU (2015)By Common Consent:  Obergefell and BYU’s Tax Exemption, by Samuel Brunson (Loyola-Chicago):

On April 28, the Supreme Court heard arguments in Obergefell v. Hodges, which challenged both the constitutionality of state bans on same-sex marriage and of states’ nonrecognition of same-sex marriages performed in other states.

By the end of June, the Justices will have decided and we’ll know the constitutional status of same-sex marriage bans in the United States. But that doesn’t mean all questions will be resolved; in fact, an exchange between Chief Justice Roberts, Justice Alito, and Solicitor General Verrilli piqued the interest of a lot of people, especially those invested in religious educational institutions. 

During the course of oral arguments, Chief Justice Roberts said to General Verrilli:

We have a concession from your friend that clergy will not be required to perform same-sex marriage, but there are going to be harder questions. Would a religious school that has married housing be required to afford such housing to same-sex couples?

A little later, Justice Alito followed up with this:

Well, in the Bob Jones case, the Court held that a college was not entitled to tax-exempt status if it opposed interracial marriage or interracial dating. So would the same apply to a university or a college if it opposed same-sex marriage?

General Verrilli responded,

You know, I—I don’t think I can answer that question without knowing more specifics, but it’s certainly going to be an issue. I—I don’t deny that. I don’t deny that, Justice Alito. It is—it is going to be an issue.

So is General Verrilli right? At least some corners of the media seem to think he is, that a ruling in favor of same-sex marriage will mark the end of religious schools’ tax exemption, if not of religious schools as we know them.

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May 21, 2015 in Tax | Permalink | Comments (2)

Brunson & Herzig: The NFL Should Not Be Able To Give Up Its Tax-Exempt Status Without Paying An Exit Tax

NFLForbes:  Penalty For Holding: Why The NFL Should Be Forced To Keep Its Tax Exemption, by Samuel Brunson (Loyola-Chicago) & David Herzig (Valparaiso):

Many people think there are too many tax-exempt entities.  Every time news breaks that there are tax-exemptions for fraternities, golf clubs, and social clubs there seems to be general outrage. So most people welcomed the National Football League’s announcement that it was giving up its tax-exempt status, seeing the announcement as the end of an unnecessary taxpayer subsidy. It turns out, though, that it is not that simple. Either the NFL was not providing a public good and should not have been granted the status in the first place, or if the NFL wants to be for profit, then the benefits of the tax exemption should be recaptured, e.g., with an exit tax.

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May 21, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Five Law Schools Drop The LSAT For Top Applicants

LSATBloomberg, More Law Schools Drop the LSAT for Top Applicants:

The piecemeal retreat from the Law School Admission Test is gaining momentum.

The University of Hawaii said this month it would drop the LSAT for some applicants, joining a growing number of law schools around the country trying to make it simpler for high-achieving students to enroll. The schools are taking advantage of new rules issued in August by the ABA that let law schools fill 10 percent of their classes with people who have not taken the LSAT but have done very well in college and on other standardized tests, such as the SAT. ...

All five of the schools that have dropped the exam for some applicants [Drake, Hawaii, Iowa, SUNY-Buffalo, St. John's] have seen their enrollments plunge in recent years.

Bloomberg

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May 21, 2015 in Legal Education | Permalink | Comments (3)

Grewal: Yet Another Example Of The IRS Disregarding The Plain Text of ObamaCare

Yale Journal on Regulation Blog:  More Unlawful ACA Premium Tax Credits, by Andy Grewal (Iowa):

I might be accused of picking at low-hanging fruit, but I’d nonetheless like to devote another blog post to more IRS regulations that expand and contradict Section 36B. My prior blog posts, which I’ve adapted into an essay upcoming in Bloomberg BNA, discuss regulations that improperly extend ACA premium tax credits to persons in the Medicare coverage gap and to some unlawful aliens. In this post, I want to highlight regulations that improperly penalize employers and that give credits to taxpayers already enrolled in employer-sponsored minimum essential coverage. ...

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May 21, 2015 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 742

IRS Logo 2American Center for Law and Justice, State Department Takes a Page from IRS Playbook on Clinton Emails:

Yesterday’s revelation that the State Department is processing (read: stonewalling) 50,000 emails from then-Secretary of State Hillary Clinton but that none of those emails will be ready for public consumption until sometime in January 2016 is unsurprising. Those emails cover everything from the Benghazi disaster to numerous foreign policy failures.

The State Department is taking a page directly from the IRS’s playbook.

First, you destroy incriminating emails, but don’t tell anyone.  Former Top IRS official Lois Lerner and the IRS perfected this as thousands of her emails mysteriously disappeared.  Clinton played that part well, destroying emails on her own private server instead of using the government server, while State Department staffers blocked attempts by the public to obtain public information.

Second, you wait years until the public discovers what you done.

Third, you deny anything happened to the emails.

Fourth, you cover up.

When that is no longer feasible, you delay, stonewall, obfuscate, and otherwise drag out the process of turning over said emails.

The IRS has been doing this for years, giving excuse after excuse for why it cannot turn over Lois Lerner’s and other’s emails to congressional investigators and public watchdog groups alike.

More than two years into the IRS scandal, we still don’t have all of Lois Lerner’s emails.

The State Department is attempting the same ridiculous tactics with Hillary Clinton’s emails. ... If past is prologue, the State Department will find a way to further delay or cherry pick which emails it releases, as the IRS has successfully done.

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May 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, May 20, 2015

Chorvat Presents Expectations And Expatriations: A Long-Run Event Study Today at Oxford

Chorvat (Elizabeth) (2015)Elizabeth Chorvat (Illinois) presents Expectations and Expatriations: A Long-Run Event Study at the Oxford University Centre for Business Taxation today as part of its Research Seminar Series:

This paper represents the first event study of corporate expatriations since Desai and Hines (2002), and is the first study to link corporate expatriation behavior to intangibles. Utilizing a bootstrap methodology, the paper demonstrates that corporate expatriations – whether naked inversions or redomiciliations in the context of business combinations – generate statistically and economically significant excess returns on the order of 225% above market returns in the years following the inversion. Moreover, notwithstanding the public nature of the inversion announcement, which should be a signal of extraordinary future profits, there has historically been no price response to the signal. Because the tax cost of the inversion transaction is based on market price, their inability to send a credible signal of future profits provides corporate managers the opportunity to reorganize outside the U.S. at a reduced tax cost, if they believe that the benefits to expatriation outweigh the cost.

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May 20, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

London Conference on Tax Citizenship and Income Shifting

Max Planck Institute for Tax Law and Public Finance, Norwegian Center of Taxation, and University of Notre Dame host a two day multi-disciplinary international taxation conference on Tax Citizenship and Income Shifting at Notre Dame's London Global Gateway. Among the interesting tax papers are:

May 20, 2015 in Conferences, Tax | Permalink | Comments (0)

Shaviro: Recent International Tax Policy Developments

Daniel Shaviro (NYU), The Crossroads Versus the Seesaw: Getting a 'Fix' on Recent International Tax Policy Developments:

FixingU.S. international tax policy is at a crossroads, say those who urge the United States to adopt what common parlance would call a territorial system. They argue that one of the two ways forward they identify – trying to fortify the current U.S. system – would lead to ever-costlier outlier status for our tax system, and ever-declining competitiveness for U.S. multinationals. They therefore urge U.S. policymakers to embrace what they identify as the other way forward: conforming to global norms by adopting a territorial system.

An alternative metaphor to that of the crossroads, more likely to appeal to proponents of addressing stateless income than to pro-territorialists, is that of the seesaw. Under this view, while policymakers in OECD countries may long have deliberately tolerated profit-shifting by multinationals – perhaps as an informal way of lowering effective tax rates for these often highly mobile taxpayers – at some point they became convinced that it had gone too far. Thus, proponents of restricting stateless income want to tip the balance somewhat (but not too far) back in the other direction. For example, they may want to ensure that each increment of a multinational’s global income will be subject to tax somewhere – but just once, rather than either zero times or twice, under what has been called the “single tax principle.”

In my 2014 book Fixing U.S. International Taxation, I tried to offer a better analytical framework for international tax policy than either of the above. The concepts that I hoped to sideline or even banish included not only the single tax principle, along with the “worldwide versus territorial” framework – which I disparaged as conflating multiple margins, even leaving aside countries’ hybridity in practice – but also normative reliance on the whole rancid “alphabet soup” of single-margin neutrality benchmarks such as capital export neutrality (CEN), capital import neutrality (CIN), and capital ownership neutrality (CON).

A number of important things have happened in international tax policy since Fixing went to press. For example:

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May 20, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Leff: Preventing Private Inurement In Tranched Social Enterprises

Benjamin M. Leff (American), Preventing Private Inurement in Tranched Social Enterprises, 41 Seton Hall L. Rev. 1 (2015):

Social Enterprises are organizations that are operated for the dual purpose of engaging in profit-making activity and furthering a social good. Because of their “hybrid” nature, social enterprises are perceived to be stymied by a legal system that is overly devoted to defining organizations as either businesses or nonprofits. Legal academics and legislatures have been hard at work trying to make room for social enterprises by experimenting with modifications the laws that constrain both businesses and nonprofits. One significant sector of this reform movement is devoted to making it easier for social enterprises to receive funding from both for-profit investors and charitable non-profits. They argue that social enterprises will not flourish until charitable non-profits are permitted make below-market investments in social enterprises for the purpose of subsidizing the return expected by for-profit investors. This combination of below-market charitable investments and market-rate for-profit investments is generally called a “tranched investment structure.” It is not impossible under current law, but reformers argue that it is unnecessarily difficult, primarily because of federal laws restricting nonprofit activities.

This article addresses the specific legal issues raised by a tranched investment structure. Previous scholarship (and legislative reform) has focused on specific rules that apply only to “private foundations,” a subcategory of § 501(c)(3) organizations, the general federal classification of charities. But, surprisingly, commentators have largely ignored the laws that apply to tranched investment structures involving any § 501(c)(3) organization. This article fills that gap.

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May 20, 2015 in Scholarship, Tax | Permalink | Comments (0)

Welcome To The Blogosphere: Al Sturgeon's Starting To Look Up — Inspiring Positive Change

AlAl Sturgeon, Dean of Students at Pepperdine and one of my favorite people in this business, has launched a new blog, Starting to Look Up — Inspiring Positive Change:

Everything can be taken from a man but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way.
Viktor E. Frankl, Man’s Search for Meaning

I fully believe in the wise counsel of Holocaust survivor and Jewish psychiatrist, Viktor Frankl, who taught us that nobody can steal our collective ability to choose an attitude in any set of circumstances. If you are skeptical, imagine trying his circumstances on for size.

The law students I serve have this dilemma in spades. They have the tremendous opportunity to study law in Malibu and pursue a most noble profession that offers power and influence. They also work like crazy with looming fears of failure, bar exams, debt, and difficult job prospects.

This blog is my attempt to help all of us, law students along with anyone else in the neighborhood, to work on the attitude choice in our given sets of circumstances.

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May 20, 2015 in Legal Education | Permalink | Comments (0)

Law School Entry-Level Faculty Hiring Down Only 4%

Sarah Lawsky (UC-Irvine), Spring Self-Reported Entry Level Hiring Report 2015:

Lawsky

For a list of the entry level tax hires, see here.

May 20, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (3)

IRS Rule Change May Doom Yahoo's Alibaba Stock Spinoff

Corporate Inversions Increase U.S. Tax Revenues

Rita Nevada (Northwestern) & Thomas Z. Lys (Northwestern), The Paradoxical Impact of Corporate Inversions on US Tax Revenue:

Do corporate inversions cost the US Treasury billions of dollars in tax revenue, justifying legislative responses and even strong-arming corporations from moving their tax domicile abroad? We show that corporate inversions not only do not appear to reduce, but, paradoxically, are even likely to increase tax collections by the US Treasury.

May 20, 2015 in Scholarship, Tax | Permalink | Comments (0)

WSJ: Anti-Inversion Rules Fail To Rein In Tax-Driven Takeovers

EndoWall Street Journal, Rules Fail To Rein In Tax-Driven Takeovers:

Endo International PLC agreed to buy rival drug maker Par Pharmaceutical Holdings Inc. for $8 billion, the latest in a string of cross-border mergers steering tax revenue away from the U.S., despite Washington’s efforts.

Endo, which relocated from Pennsylvania to Ireland last year, is one of several drug companies lately using their lower-tax foreign addresses as springboards for acquisitions in the U.S., which has one of the world’s highest corporate tax rates.

The deals come as the U.S. Treasury last year moved to curb tax-revenue-draining deals known as “inversions” in which U.S. companies buy foreign ones and then move their legal home elsewhere to help lower U.S. tax bills. In doing so, experts say, Washington effectively locked in an advantage for those companies that already had redomiciled overseas, which can now apply their lower tax rates to U.S. assets they buy.

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May 20, 2015 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 741

IRS Logo 2National Review, Conservative Group Uncovers New Roots of IRS Scandal:

A group of lawyers who have been investigating the origins of the IRS scandal for the past year-and-a-half say they’ve uncovered the real roots of the IRS scandal — and they’ll surprise both liberals and conservatives alike. The group, Cause of Action, which has subpoenaed thousands of pages of documents from the agency and is still embroiled in litigation with it, says the targeting of conservative groups resulted as much from IRS personnel merely following the instructions laid out in their employee handbook, the Internal Revenue Manual, as from any political bias at the top.

When the scandal broke nearly two years ago, the IRS and the Obama administration pointed the finger at a few bad apples in the agency’s Cincinnati office. The agency’s inspector general blamed the inappropriate targeting of tea-party groups on the “ineffective management” of top bureaucrats. Many reporters, particularly on the right, including here at National Review, concluded that top D.C. official Lois Lerner and her colleagues in the IRS’s Exempt Organizations office had orchestrated events from the outset.

Dan Epstein, executive director of Cause of Action, is a former attorney and investigator for the House Oversight Committee. He and his team, a group of 13 attorneys funded by the Koch brothers’ sprawling network of donors, say none of these stories fully explain what happened at the IRS between 2010 and 2014 and that, in fact, the targeting was baked in the cake. That is, the Internal Revenue Manual, the handbook by which IRS employees are required to abide, mandates the sort of scrutiny that delayed the processing of the applications of hundreds of conservative nonprofit organizations. Cause of Action has laid out its case in a confidential, 35-page memo obtained by National Review. They concluded that many of the IRS officials involved in the scandal were just following the rules. ...

Epstein’s team at Cause of Action is adamant that most of the IRS personnel involved in the scandal executed their duties properly. “Clearly, Jack Koester, John Shafer, and Cindy Thomas executed their employee obligations precisely,” their report says. “Indeed, in the course of merely two business days, the employees in the Exempt Organizations group accurately elevated this Tea Party issue as ‘newsworthy’ or having the ‘potential to become newsworthy.’”

The team’s conclusion: The Internal Revenue Manual must be fundamentally reformed in order to prevent future targeting. “While there are certainly complex or new issues that would warrant or even require an employee to elevate the issue to a manager, the IRS’s desire to be portrayed in a positive light by the media is certainly not one of those issues,” they say.

Tax-law experts agree. Craig Engle, the founder of the bipartisan political-law group at the Washington law firm Arent Fox, says that allowing IRS personnel, ultimately at the national level, to determine what issues are newsworthy creates a sort of self-fulfilling prophecy. The Internal Revenue Manual as it stands now virtually “requires the national office to do something” about cases it deems newsworthy, Engle says. As a result, he says, the IRS “created a task for itself that it would be impossible to administer evenhandedly, let alone on a bipartisan basis. It’s no wonder they got caught.”

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May 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, May 19, 2015

Mason Presents Citizenship Taxation Today At Oxford

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation, 88 S. Cal. L. Rev. ___ (2015), at the Oxford University Centre for Business Taxation today as part of its Research Seminar Series:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrants. 

Citizenship taxation was originally designed to punish “economic benedict Arnolds” who fled the United States during the Civil War to avoid Civil War taxes and the draft. In the modern era, migrating from the United States is not the disloyal act of a wealthy few. Our global economy and our increasingly interconnected world create professional and personal opportunities that Americans can only claim by moving abroad. Concerns about a few high-profile, rich tax defectors who can be sanctioned with targeted anti-abuse regimes should not drive tax policy governing seven million Americans who reside abroad.

May 19, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Professor Marks 100th Birthday At Brooklyn Law School

CreaSeattle Times, Professor Marks 100th Birthday at Brooklyn Law School:

Professor Joseph Crea ... marked a milestone — his 100th birthday — with a gathering of colleagues and friends Monday at the law school where he’s been a student, librarian and professor since 1944. Crea, whose birthday was last month, taught until September and still advises faculty members, sits on the admissions committee and attends faculty meetings. ...

Crea taught some 22 different classes over the years but came to focus on banking and corporations law. ... Another highlight, he told the school magazine, was teaching tax law in the 1950s to a class full of accountants and treasury agents. Professor and students learned from each other as they debated whether expenses were tax-deductible: “Deduct!” ”Disallow!” ...

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Supreme Court Denies Cert. In Case Challenging President's Authority To Remove A Tax Court Judge

Supreme Court (2014)Following up on my previous posts (links below):  the Supreme Court yesterday denied the taxpayers'  cert. petition arguing that the President’s authority under 26 U.S.C. §  7443(f) to remove Tax Court judges violates the Constitution’s separation of powers. Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014).

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May 19, 2015 in New Cases, Tax | Permalink | Comments (0)

Denver Law School Blazes New Trail, Scores World's First Pot Professorship From Marijuana Law Firm

Marijuana (2015)Chronicle of Higher Education, U. of Denver Law School Scores a Marijuana Professorship:

The University of Denver’s law school is blazing a new trail in the professoriate.

Thanks to a $45,000 donation from Vicente Sederberg LLC, a self-described “full-service marijuana law firm” based in Denver, the Sturm College of Law has established what the firm says is the first professorship of marijuana law in the world.

The three-year professorship will be held first by Sam Kamin, a professor and director of the school’s Constitutional Rights and Remedies Program, the firm said in a news release.

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Kwall & Wilbur: The Outer Limits of Realization

Florida Tax ReviewJeffrey L. Kwall (Loyola-Chicago) & Katie K. Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 17 Fla. Tax Rev. 47 (2015):

The Supreme Court’s 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation (“Oldco”) transferred its business to a new corporation (“Newco”) in a transaction where the Oldco shareholders surrendered all their stock for 50% of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100% to 50%. Because the Oldco shareholders surrendered control of the enterprise, the 50% interest they received in Newco was fundamentally different from the 100% interest they had owned in Oldco. Nevertheless, the Court held that the receipt of the Newco shares was not a taxable event (a “realization event”) to the Oldco shareholders. The Court reached this result by ignoring the dilution that occurred in the case.

In 1991, the Supreme Court resurrected the Weiss v. Stearn decision in the Cottage Savings case. There, the Court relied on Weiss v. Stearn to establish that the exchange of property triggers a realization event only if the property received is “materially different” from the property surrendered. Once again, the Court ignored the dilution that occurred in Weiss v. Stearn. As a result, Supreme Court jurisprudence sheds no light on the question of whether corporate dilution can trigger realization.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Two William Mitchell Law Profs Drop Lawsuit Over Abrogation Of Tenure In Merger With Hamline After Four Faculty Accept Buyouts, Part Time Status

MitchellFollowing up on my previous post, Two William Mitchell Law Profs Sue Over Abrogation of Tenure in Merger With Hamline Law School:  Minneapolis Star-Tribune, Professors Drop Lawsuit Against William Mitchell in Tenure Fight:

Two William Mitchell College of Law professors are dropping their lawsuit against the school, ending an ugly public fight about its merger with another law school.

MoyRadsanProfessors John Radsan and Carl Moy filed a voluntary dismissal this week to end the suit “without prejudice and without an award of fees or costs to any party.”

An order for dismissal was signed Thursday by Ramsey County District Judge William Leary.

Radsan and Moy filed the suit in April, alleging that their employer, in an effort to cut faculty numbers as it prepares to merge by fall with Hamline University School of Law, tried to change its tenure code. The code currently allows the dismissal of tenured faculty if they refuse or fail to perform their job, or in the event of a financial crisis. Radsan and Moy alleged that the school wanted the ability to terminate tenured faculty “without adequate cause.”

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May 19, 2015 in Legal Education | Permalink | Comments (0)

Rosenzweig: Defining A Country's 'Fair Share' Of Taxes

Adam H. Rosenzweig (Washington University), Defining a Country's 'Fair Share' of Taxes, 42 Fla. St. U. L. Rev. 373 (2015):

The international tax regime is facing a defining moment. As stories of multinational companies expatriating and shifting income around the world with seeming impunity continue to emerge, the question of how to divide the international tax base among the countries of the world increasingly draws attention from policy-makers and academics. To date, however, the debate has tended to devolve into one over the two traditional tools used to divide worldwide tax base — transfer pricing and formulary apportionment. This Article demonstrates that such focus is misplaced on the instruments of dividing the worldwide tax base rather than on first principles. Instead, this Article will adopt the first principle of maximizing the efficiency of the worldwide tax regime under two key, but realistic, assumptions: first, that the presence of multiple states in the world is efficient and, second, that there is a declining marginal utility to public goods. Under these assumptions, dividing worldwide tax base efficiently requires balancing the goals of maximizing the neutrality of tax laws and the provision of public goods across all countries.

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May 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

Rise Of The Robots: How 'The Job-Eating Maw Of Technology Threatens Even The Nimblest And Most Expensively Educated,' Including Lawyers

New York Times Sunday Book Review, ‘Rise of the Robots’ and ‘Shadow Work’:

RiseIn the late 20th century, while the blue-collar working class gave way to the forces of globalization and automation, the educated elite looked on with benign condescension. Too bad for those people whose jobs were mindless enough to be taken over by third world teenagers or, more humiliatingly, machines. The solution, pretty much agreed upon across the political spectrum, was education. Americans had to become intellectually nimble enough to keep ahead of the job-destroying trends unleashed by technology, both robotization and the telecommunication systems that make outsourcing possible. Anyone who wanted a spot in the middle class would have to possess a college degree — as well as flexibility, creativity and a continually upgraded skill set.

But, as Martin Ford documents in Rise of the Robots: Technology and the Threat of a Jobless Future, the job-eating maw of technology now threatens even the nimblest and most expensively educated. Lawyers, radiologists and software designers, among others, have seen their work evaporate to India or China. Tasks that would seem to require a distinctively human capacity for nuance are increasingly assigned to algorithms, like the ones currently being introduced to grade essays on college exams. Particularly terrifying to me, computer programs can now write clear, publishable articles, and, as Ford reports, Wired magazine quotes an expert’s prediction that within about a decade 90 percent of news articles will be computer-­generated. ...

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May 19, 2015 in Book Club, Legal Education | Permalink | Comments (2)

Land Taxes And Inequality

ProgressSlate, The Land Taxers of Fairhope:

More than a century ago, Henry George proposed a property tax he hoped would remedy inequality. Here’s what happened to a town that tried it.

In 1879 the American political economist Henry George proposed a policy to address economic inequality: Tax land—not what’s built on top of it. Tax a parking lot, a seven-story building, and a skyscraper based solely on the value of their footprints. Tax landowners that way, George reasoned in Progress and Poverty, and they couldn’t afford not to develop their holdings. The “single tax” on land would create a strong incentive for bigger buildings, more offices, and more apartments, lowering costs for businesses, shops, and residential tenants. It would remedy the regressive advantage of the urban landowner, to whom George wrote: “[W]ithout doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich!"

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May 19, 2015 in Book Club, Tax | Permalink | Comments (1)

The IRS Scandal, Day 740

IRS Logo 2The Federalist, The 5 Biggest Lies, Myths, And Debunked Claims Of The IRS Scandal:

Remember the Lois Lerner emails the Internal Revenue Service said were lost? Thousands of them were just uncovered, and according to one investigator, they were “right where you would expect them to be.” It was just the latest iteration of a recurring trend in the IRS targeting scandal: investigators debunking attempts by the agency and its apologists to excuse, downplay, or cover up IRS’s abuse of conservative and tea-party groups.

Two years after it was first publicly exposed, here are the five biggest lies, myths, and debunked claims about the IRS scandal.

  1. There Is ‘Absolutely No Targeting’ Program
  2. Agents in Cincinnati Were to Blame
  3. The IRS’s Actions Were Politically Neutral
  4. The IRS Proposed New Rules to Solve the Problem
  5. The E-mails Were Lost

Either through ignorance or dishonesty, the IRS and its defenders have consistently misrepresented the facts of the scandal. Two years after the public was first outraged, it’s clearer than ever that the IRS cannot be trusted to play the role of speech cop.

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May 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, May 18, 2015

NLJ: Law Schools Special Report — This Is The Moment For Clinics

NLJNational Law Journal, Law Schools Special Report: This Is The Moment — For Clinics:

Law school clinics are having a moment. They have become an increasingly important part of the law school curriculum during the past five years, as schools faced pressure to provide students with practical, hands-on experience. In this special report, we highlight six law school clinics taking new approaches to student learning, breaking into new areas of the law or that have impressive track records of success.

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May 18, 2015 in Legal Education | Permalink | Comments (0)

Survey Of Law Firm Managing Partners: There Are Too Many Lawyers; BigLaw Is Running Out Of Work

Bloomberg, There Are Too Many Lawyers, Say Law Firms; Big Law Is Running Out of Work:

Work-life balance has traditionally been an unfamiliar concept at big law firms, but that might be changing. A majority of managers at firms say they employ too many lawyers and those lawyers are not busy enough, according to a survey released Tuesday by consultancy Altman Weil. 

Among the 320 managing partners and chairmen Altman Weil polled, 60 percent reported that overcapacity was making their firms less profitable. At large firms—more than 250 attorneys—the problem was even worse: 74 percent of leaders said idleness was hurting profit.

Bloomberg

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May 18, 2015 in Legal Education | Permalink | Comments (3)