TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Tuesday, June 17, 2014

Law Prof Lip Sync Battle


Check out this video of en epic lip sync battle with New Mexico 3L Thomas "Ty" Wood and law profs George Bach, Alex Ritchie, and Kevin Tu:

 

Note to Jimmy Fallon:  book these guys.  (Hat Tip:  Phil Bohl.)

June 17, 2014 in Legal Education | Permalink | Comments (2)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 67, No. 3 (Spring 2014):

June 17, 2014 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Shaviro: Capital Levies: A Solution for the Sovereign Debt Problem?

Tax Analysys Logo (2013)Daniel Shaviro (NYU), Capital Levies: A Solution for the Sovereign Debt Problem?, 74 Tax Notes Int'l 1027 (June 16, 2014):

The following speech was delivered as the University of Luxembourg's "Distinguished Lecture" on May 15, 2014.

June 17, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Lipshaw: 'Retire and Teach' Amidst the Great Law School Retrenchment

Jeffrey M. Lipshaw (Suffolk), "Retire and Teach" Six Years On, 41 N. Ky. L. Rev. 67 (2014):

RetirementThis is a follow up to a 2007 essay I wrote about what it might take for a well-seasoned practitioner to join a law school faculty as a tenure track professor. Having now wended my way up (or down) that track for six years plus, my intended audience this time includes the original one, those seasoned veterans of the law practice trenches who may think but should never utter out loud the words “I would like to retire and teach,” but now also my colleagues in academia who are facing what looks to be the greatest reshuffling of the system in our generation. Much of what I said in the earlier essay still holds. This essay, however, includes (a) a more nuanced look at the strange hybrid creature that is the scholarly output of academic lawyers; (b) a more respectful appreciation of what it takes to become a good teacher, with some notes about what worked for me, and (c) an attempt to reconcile the interests in scholarship and the interest in teaching after the “Great Retrenchment” of the legal profession and legal education, with some brief thoughts about the opportunities that may bring for the aging but not ossifying academic aspirant.

June 17, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

Law School Kills Brain Cells

Debra S. Austin (Denver), Killing Them Softly: Neuroscience Reveals How Brain Cells Die from Law School Stress and How Neural Self-Hacking Can Optimize Cognitive Performance, 59 Loy. L. Rev. 791 (2013):

BrainLaw is a cognitive profession and the legendary stressors in legal education and the practice of law can take a tremendous toll on cognitive capacity. Lawyers suffer from depression at triple the rate of non-lawyers. This article provides a groundbreaking synthesis on the neuroscience of achieving optimal cognitive fitness for all law students, law professors, and lawyers.

A number of innovative companies have instituted programs designed to enhance the bottom line. Research shows that perks such as onsite gyms, stress management classes, and mindfulness training produce vibrant workplaces and thriving employees. Forward-looking law schools have created wellness programs designed to relieve law student stress and improve well-being. This article explains the neurobiological reasons these programs enhance employee performance and improve student achievement.

Continue reading

June 17, 2014 in Legal Education, Scholarship | Permalink | Comments (1)

The IRS Scandal, Day 404

IRS Logo 2Wall Street Journal:  A Tale of Two Scandals, by Peggy Noonan:

[T]he Obama administration is experiencing what appears to be its own Eighteen-and-a-Half Minute moment. In a truly stunning development in the Internal Revenue Service scandal, the agency last week informed Congress that more than two years’ of Lois Lerner’s email communications with those outside that agency—from 2009 to 2011, meaning the key years at the heart of the targeting-of-conservatives scandal—have gone missing. Quite strangely. The IRS says it cannot locate them. The reason is that Lerner’s computer crashed....

I haven’t ever met a reporter or producer who wasn’t a conservative who didn’t believe the IRS scandal was the result of the bureaucratic confusion and incompetence of some office workers in Cincinnati who made a mistake.

But the IRS scandal is a scandal, and if you can’t see the relation between a strangely destroyed key piece of evidence in an ongoing scandal and what happened 41 years ago with a strangely destroyed key piece of evidence in an ongoing scandal, something is wrong not with the story but with your news judgment. (We won’t even go into the second story last week, that the IRS sent a big database full of confidential taxpayer information to the FBI.) ...

The mischief of the Nixon administration was specific to it, to its personnel. When Chuck Colson left, he left. All the figures in that drama failed to permanently disfigure the edifice of government. They got caught, and their particular brand of mischief ended.

But the IRS scandal is different, because if it isn’t stopped—if it isn’t fully uncovered, exposed, and its instigators held accountable—it will suggest an acceptance of the politicization of the IRS, and an expected and assumed partisanship within its future actions. That will be terrible not only for citizens but for the government itself.

And the IRS scandal will also have disfigured government in a new and killing way. IRS scandals in the past were about the powerful (Richard Nixon) abusing the powerful (Edward Bennett Williams). This scandal is about the powerful (Lois Lerner, et a.) abusing the not-powerful (normal, on-the-ground Americans such as rural tea-party groups). If it comes to be understood that this kind of thing is how the government now does business, it will be terrible for the spirit and reality of the country.

So many of those who decide what is news cannot, on this issue, see the good faith and honest concern of the many who make this warning. And really, that is tragic.

What are the implications of this claim? It means no one can see any emails Lerner sent to or received from other agencies and individuals, including the White House and members of Congress.

And what is amazing—not surprising, but amazing—is that if my experience of normal human conversation the past few days is any guide, very few people are talking about it and almost no one cares.

Continue reading

June 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, June 16, 2014

Leiter's Top Ten Law Faculty (By Area) In Scholarly Impact, 2009-2013

Following up on Friday's post, The 10 Most-Cited Tax Faculty:  Brian Leiter (Chicago) has relased on his Law School Rankings website (a member of our Law Professor Blogs Network) an updated ranking of the 10 Most-Cited U.S. Law Faculty in 11 areas of specialization, as measured by citations during the past five years (2009-2013).

Interestingly, the 14 Tax Profs listed in the 10-Most Cited Tax Faculty and the related Highly Cited Scholars Who Work Partly in Tax lists are younger than their counterparts in the 10 other areas of specializations:  in tax, four are in their 40s, nine are in their 50s, and only one is in his 60s. 

Rank

Tax Prof

Citations

Age

1

Michael Graetz (Columbia)

400

69

 

David Weisbach (Chicago)

400

50

3

Reuven Avi-Yonah (Michigan)

350

56

4

Daniel Shaviro (NYU)

340

56

5

Leandra Lederman (Indiana)

290

47

 

Larry Zelenak (Duke)

290

58

7

Victor Fleischer (San Diego)

280

42

8

Edward Zelinsky (Cardozo)

270

58

9

Joseph Bankman (Stanford)

250

58

 

Edward McCaffery (USC)

250

55

 

Highly Cited Scholars Who Work Partly in Tax

 

 

 

Louis Kaplow (Harvard)

1100

57

 

Brian Galle (Boston College)

310

43

 

Kristin Hickman (Minnesota)

310

43

 

Mark Gergen (UC-Berkeley)

270

57

Prior TaxProf Blog coverage:

Continue reading

June 16, 2014 in Law School Rankings, Legal Education | Permalink | Comments (1)

President Obama Tells College Students Not to Go to Law School

The American Interest, Lawyer-in-Chief Warns Against Law School:

Potential lawyers take note: President Obama wants you to reconsider your career choice. We’ve seen lawyers and law professors warn off potential colleagues, and we’ve seen students start to take note of the dismal job market and back away from the profession. But Tuesday may be the biggest blow to the law school bubble we’ve seen yet, as Obama spoke candidly about the field’s prospects in a Tuesday chat with the founder of tumblr. WaPo reports:

"We have enough lawyers, although it’s a fine profession,” he told the crowd. “I can say that because I’m a lawyer."

When the President of the United States is telling 20 somethings not to enter his own profession, you know it’s in for a radical downsizing. Luckily, it seems law schools themselves are adjusting to this new reality. Some are cutting their class sizes, others are exploring reducing or eliminating the third year of law school. But these are only small starts, and only a small number of schools are considering them. Law schools need to do more to get in front of the market collapse and make radical changes before the changes are forced on them in a more painful way. If the President himself coming down against more lawyers doesn’t motivate them, we don’t know what will.

(Hat Tip: Glenn Reynolds.)

June 16, 2014 in Legal Education | Permalink | Comments (7)

NY Times: Piketty Protégé: $7.6 Trillion of World's Wealth Is Stashed in Tax Havens, Evading $200 Billion Taxes/Year

New York Times op-ed:  The True Cost of Hidden Money: A Piketty Protégé’s Theory on Tax Havens, by Jacques Leslie:

Gabriel Zucman is a 27-year-old French economist who decided to solve a puzzle: Why do international balance sheets each year show more liabilities than assets, as if the world is in debt to itself?

Over the last couple of decades, the few international economists who have addressed this question have offered a simple explanation: tax evasion. Money that, say, leaves the United States for an offshore tax shelter is recorded as a liability here, but it is listed nowhere as an asset — its mission, after all, is disappearance. But until now the economists lacked hard numbers to confirm their suspicions. By analyzing data released in recent years by central banks in Switzerland and Luxembourg on foreigners’ bank holdings, then extrapolating to other tax havens, Mr. Zucman has put creditable numbers on tax evasion, showing that it’s rampant — and a major driver of wealth inequality.

Mr. Zucman estimates — conservatively, in his view — that $7.6 trillion — 8 percent of the world’s personal financial wealth — is stashed in tax havens. If all of this illegally hidden money were properly recorded and taxed, global tax revenues would grow by more than $200 billion a year, he believes. And these numbers do not include much larger corporate tax avoidance, which usually follows the letter but hardly the spirit of the law. According to Mr. Zucman’s calculations, 20 percent of all corporate profits in the United States are shifted offshore, and tax avoidance deprives the government of a third of corporate tax revenues. Corporate tax avoidance has become so widespread that from the late 1980s until now, the effective corporate tax rate in the United States has dropped from 30 percent to 15 percent, Mr. Zucman found, even though the tax rate hasn’t changed.

Mr. Zucman, an assistant economics professor at the London School of Economics, is part of a wave of data-focused economists led by his mentor, Thomas Piketty, of the Paris School of Economics. Mr. Zucman’s short book on tax evasion, The Missing Wealth of Nations, was a best seller in France last year.

Mr. Zucman’s tax evasion numbers are big enough to upend common assumptions, like the notion that China has become the world’s “owner” while Europe and America have become large debtors. The idea of the rich world’s indebtedness is “an illusion caused by tax havens,” Mr. Zucman wrote in a paper published last year [The Missing Wealth of Nations:  Are Europe and the U.S. Net Debtors or Net Creditors?]. In fact, if offshore assets were properly measured, Europe would be a net creditor, and American indebtedness would fall from 18 percent of gross domestic product to 9 percent.

[T]here is no economic, political or moral justification for tax evasion — it exists only because of the political influence that wealth buys. A society that fails to fight widespread tax evasion proclaims its own corruption.

Gabriel Zucman (London School of Economics), Tax Evasion on Offshore Profits and Wealth:

This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. In the United States, corporations book 20% of their profits in tax havens -- a tenfold increase since the 1980s -- and tax avoidance reduces corporate tax revenues by up to a third. Globally, 8% of the world’s personal financial wealth is held offshore, costing more than $200bn to governments annually. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.

Figure 3

Figure 4

Figure 6

(Hat Tip: Francine Lipman, Mike Talbert.)

June 16, 2014 in Tax | Permalink | Comments (1)

Dean Ferruolo Criticizes Justice Scalia's Prescription for Law School Reform

Los Angeles Daily Journal Op-Ed:  Dean Reacts to Scalia on Law School, by Stephen C. Ferruolo (Dean, San Diego):

FerruoloIn his commencement speech at William & Mary Law School in May, Justice Antonin Scalia rejected the increasingly popular view (at least outside the legal academy) that law school should be cut to two years and spoke eloquently about the legal profession (the "learned in the law") but contributed little of substance to the debate of what should, and realistically can, be done to improve legal education.

Although I have been the dean of a law school for three years, my perspective on what is wrong with, and should be done about, legal education is informed by more than 20 years I spent in practice as a business attorney and partner in major national law firms. This experience of the business and economics of legal practice gives me a perspective different from legal academics or, with due deference, the justice (or, for that matter, the president, the lead advocate for reducing law school to two years). ...

Scalia proposes cutting costs by shrinking faculties, increasing teaching loads and reducing faculty salaries. These are not the easy fixes they may seem to be. And I say so as a business lawyer who spent years helping to manage national law firms, not as someone who has a vested interest in preserving academic privileges. ...

Unfortunately, Scalia does not address the impact of excessive regulation on the legal education system, as one might expect. Although he chides the January 2014 report of the ABA Task Force on the Future of Legal Education for its passing reference to the law-school-in-two-years proposal, he does not comment on any of the actual recommendations made by the Task Force to reform legal education and lower its costs. These recommendations include a welcome call for the repeal or substantial moderation of the restrictive accreditation standards, like those related to faculty status, that "increase costs without conferring commensurate v=benefits." Without such reforms, shrinking law school faculties might well become a disaster for the quality and relevance of legal education, as well as for efforts to expand access to legal education and increase the diversity of the legal profession.

Continue reading

June 16, 2014 in Legal Education | Permalink | Comments (0)

Reviews of Ajay Mehrotra's Law, Politics, and the Rise of Progressive Taxation

Bill Adams Named Deputy Managing Director of ABA Section of Legal Education

ABA Press Release, William Adams is New Deputy Managing Director:

AdamsWilliam Adams, dean and vice chancellor at Western State College of Law is joining the ABA Section of Legal Education and Admissions to the Bar as deputy managing director. He replaces Scott Norberg, who held the position for the last three years and is returning to his faculty position at Florida International University College of Law at the end of the summer.  ...

Barry Currier, Managing Director for Accreditation and Legal Education, said, “We are very pleased that Bill Adams will join our staff.  He will carry on the good work done by Scott Norberg and others who have served in the Deputy Managing Director or Deputy Consultant role.  Beyond a deep general unders tanding of legal education and law schools garnered over his academic career, Bill brings to the position particular knowledge in a number of areas that are important to the work of our office right now and going forward, including non-J.D. degree programs; collaborative programs between U.S. and international law schools; experiential and clinical education programs; academic support programs and bar passage matters; diversity; career services and job placement; and learning outcomes and assessment. His perspective is also informed by his years in practice as a legal services lawyer. ”

June 16, 2014 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 403

IRS Logo 2National Journal:  Did The IRS Really Lose Lois Lerner's Emails? Let a Special Prosecutor Find Them, by Ron Fournier:

A sloppy mistake, the government calls it, but you couldn't blame a person for suspecting a cover-up -- the loss of an untold number of emails to and from the central figure in the IRS tea party controversy. And, because the public's trust is a fragile gift that the White House has frittered away in a series of second-term missteps, President Obama needs to act.

If the IRS can't find the emails, maybe a special prosecutor can. ...

The White House is stonewalling the IRS investigation. The most benign  explanation is that Obama's team is politically expedient and arrogant, which makes them desperate to change the subject, and convinced of their institutional innocence. That's bad enough. But without a fiercely independent investigation, we shouldn't assume the explanation is benign.

Roger Kimball, 18 1/2 Minutes vs. 2 Years: Which Is Worse?:

WoodsWriting yesterday about the IRS’s amazing loss of more than two years of Lois Lerner’s emails (“Where’d they go? They were here just a minute ago!”), I wondered in passing how the Extended White House Public Relations Office, e.g., the New York Times, MSNBC, et al. would handle the news. The Nixon White House, you’ll recall, found quite a lot of the morning’s scrambled on its collective countenance when 18 and 1/2 minutes of audio tape somehow went missing as the Watergate scandal unfolded around the president.

What a godsend to the guardians of our “Right to Know” Watergate was! Day after day, week after week, month after month, the front pages and editorial pages of our former Paper of Record were full of stern admonitions about that egregious abuse of executive power. You could not look at the paper without a synesthetic shudder: Reading it, you could almost hear them licking their chops as their prey—the dastardly Richard Nixon—came ever closer to his doom.

So how does the New York Times handle this extraordinary loss of two years’ worth of Lois Lerner’s emails? ... This will amaze you, I know, but it is true: the New York Times today devotes zero words to the story. Take a look at the front page here: Nothing. ... [A]bout the missing emails in one of the most disgusting political scandals in recent times, the deployment of the IRS with its virtually unlimited powers, against political opponents of the administration? Nothing. Nada. Rien.

Continue reading

June 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 15, 2014

ABA Releases Revised Law School Accreditation Standards, Protocol for Reporting Placement Data

ABA Logo 2Following up on Monday's post, ABA: Law Schools Can Admit 10% of Students Without LSAT, Must Do Annual Audit of Placement Data, Can't Give Academic Credit for Paid Externships

ABA Section of Legal Education and Admission to the Bar Standards Review Committee, Final Revisions to the ABA Standards and Rules of Procedure for Approval of Law Schools:

At its meeting in March 2014, the Council approved the vast majority of the revisions that had been circulated for Notice and Comment. In addition, the Council approved several additional matters for Notice and Comment. After reviewing the comments received on the matters circulated for comment in March 2014, the Council made final determinations on the recommendations at its meeting on June 6, 2014.

The complete set of revisions is scheduled to be reviewed by the ABA House of Delegates in August 2014 in accordance with House Rule 45.9. The House may either concur with the Council’s decisions or refer a proposed change back to the Council for further consideration. Any reference back to the Council must include a statement setting forth the reasons for the referral. A decision by the Council is subject to a maximum of two referrals back to the Council by the House. The decision by the Council following the second referral is final.

The Standards and Rules will become effective immediately upon concurrence by the House of Delegates in August. Although the Standards will be effective in August, there will be a phase-in period for some Standards and a delay in implementation. A timeline and more detailed information about the implementation of the revised Standards and Rules of Procedure will be available this fall.

ABA Section of Legal Education and Admissions to the Bar, Protocol for Reviewing Law Graduate Employment Data, and Statement of Procedures for Collecting, Maintaining, and Reporting Law Graduate Employment Data (June 9, 2014):

I. Protocol for Reviewing Law Graduate Employment Data.
This Protocol addresses the review of law graduate employment data reported to the ABA or presented to the public. There will be four types of reviews:
(A) Standard 509 Website Compliance Review: All law schools accredited by the ABA will be subject to this type of review.
(B) Random School Review: At least 10 law schools each year will be selected at random for this type of review.
(C) Random Graduate Review: Random reviews will be conducted on a statistically sound sample of graduates drawn from the population of all graduates of ABA accredited law schools.
(D) “Red Flag” Review: Red Flag Reviews will be conducted of schools as provided in paragraph D below. ...

II. Statement of Procedures for Collecting, Maintaining and Reporting Law Graduate Employment Data.
This Statement sets forth instructions and guidelines for law schools in collecting, maintaining, reporting, and publishing graduate employment data. In order for the ABA to effectively review reported graduate employment outcomes data, law schools must maintain accurate, contemporaneous, and verifiable documentation that supports them.

III.  Timetable for Section Graduate Employment Data Reviews.

Continue reading

June 15, 2014 in Legal Education | Permalink | Comments (4)

Walgreens' Planned Move From Illinois to Switzerland Would Save $4 Billion in Taxes

Americans for Tax Fairness, Offshoring America’s Drugstore Walgreens May Move its Corporate Address to a Tax Haven to Avoid Paying Billions in U.S. Taxes:

WalgreensWalgreens could cost taxpayers $4 billion in lost revenue over five years should the company decide to renounce its American corporate legal status and move its official address to Switzerland, a tax haven. The company is widely reported to be considering this move and says it will announce its intentions as soon as this summer. Walgreens is the nation’s largest pharmacy retailer with 8,200 stores and locations in all 50 states.

June 15, 2014 in Tax, Think Tank Reports | Permalink | Comments (10)

Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads on SSRN is the same as last week's list:

  1. [326 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [321 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven Avi-Yonah (Michigan)
  3. [227 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  4. [208 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  5. [181 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)

June 15, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 402

IRS Logo 2Wall Street Journal editorial:  The IRS Loses Lerner's Emails (And Other News That the Beltway Press Corps Won't Cover):

The IRS—remember those jaunty folks?—announced Friday that it can't find two years of emails from Lois Lerner to the Departments of Justice or Treasury. And none to the White House or Democrats on Capitol Hill. An agency spokesman blames a computer crash.

Never underestimate government incompetence, but how convenient. The former IRS Director of Exempt Organizations was at the center of the IRS targeting of conservative groups and still won't testify before Congress. Now we'll never know whose orders she was following, or what directions she was giving. If the Reagan White House had ever offered up this excuse, John Dingell would have held the entire government in contempt.

The suspicion that this is willful obstruction of Congress is all the more warranted because this week we also learned that the IRS, days before the 2010 election, shipped a 1.1 million page database about tax-exempt groups to the FBI. ...

New IRS Commissioner John Koskinen promised to cooperate with Congress. But either he is being undermined by his staff, or he's aiding the agency's stonewalling. And now that we know that Justice was canoodling with Ms. Lerner, its own dilatory investigation becomes easier to understand. Or maybe that was a computer crash too.&

Continue reading

June 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, June 14, 2014

Hanlon: The Lose-Lose Tax Policy Driving Away U.S. Business

Wall Street Journal op-ed:  The Lose-Lose Tax Policy Driving Away U.S. Business, by Michelle Hanlon (MIT):

Apple issued $12 billion of U.S. debt in April, which gave the company a domestic cash infusion that allowed it to keep more earnings overseas. Last month Pfizer attempted to acquire AstraZeneca, a transaction that would have made Pfizer a subsidiary of the U.K.-based company. These were useful examples in the taxation classes I teach at MIT's business school, but the real-world implications of these decisions are troubling. Even worse, legislators have responded with proposals that seek to prevent companies from escaping the U.S. tax system.

The U.S. corporate statutory tax rate is one of the highest in the world at 35%. In addition, the U.S. has a world-wide tax system under which profits earned abroad face U.S. taxation when brought back to America. The other G-7 countries, however, all have some form of a territorial tax system that imposes little or no tax on repatriated earnings.

To compete with foreign-based companies that have lower tax burdens, U.S. corporations have developed do-it-yourself territorial tax strategies. They accumulate foreign earnings rather than repatriate the earnings and pay the U.S. taxes. This lowers a company's tax burden, but it imposes other costs. ...

In short, our international tax policy encourages U.S. multinational corporations to keep cash abroad, borrow more in the U.S. and invest more in foreign locations than they otherwise would. Everyone loses: The U.S. government gets little if any tax revenue from the foreign earnings, and shareholders and the U.S. economy are deprived of valuable resources. ...

Continue reading

June 14, 2014 in Tax | Permalink | Comments (0)

Brauner Presents Prospects of U.S. Corporate Tax Reform in Switzerland

BraunerYariv Brauner (Florida) presented Prospects of Corporate Tax Reform in the United States yesterday at the Université de Lausanne (Switzerland):

At the time that the international tax community focuses on the BEPS initiative, the US is distancing itself from the project that it's MNEs behavior triggered and to which it heavily contributed at first. Instead a large number of corporate tax reform proposals have been promoted over the last few years with what seems to be zero chance of being passed. The political climate stifles progress despite a surprising consensus among the parties over the tax policy that they would be able to implement under current conditions. In any event, any feasible tax reform is unlikely to affect the prospects of any likely Swiss corporate tax reform.

June 14, 2014 in Colloquia, Tax | Permalink | Comments (0)

The Good Lawyer: Seeking Quality in the Practice of Law

Good LawyerDouglas Linder (UMKC) & Nancy Levit (UMKC), The Good Lawyer: Seeking Quality in the Practice of Law (Oxford University Press, 2014), reviewed by David Lat (Above the Law), Over a Third of All Law-School Graduates Can't Find Work Requiring Bar Passage. It's Worth Asking: What Does a Good Lawyer Look Like?, Wall Street Journal:

What does it mean to be a good lawyer? One is tempted to respond by quoting Justice Potter Stewart's famous quip about pornography: "I know it when I see it." But that wouldn't be terribly
illuminating, particularly during a period of such turmoil and transformation for the legal profession, with lawyers chasing after scarce jobs and firms fighting for limited clients. As Douglas Linder and Nancy Levit note in their new book, over a third of all law-school graduates cannot find work requiring bar passage, and median starting salaries for lawyers fell by 15% from 2009 to 2012.

Continue reading

June 14, 2014 in Book Club, Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 401

IRS Logo 2House Ways & Means Committee Press Release:  IRS Claims to Have Lost Over 2 Years of Lerner Emails (June 13, 2014):

Today, Ways and Means Committee Chairman Dave Camp (R-MI) issued the following statement regarding the Internal Revenue Service informing the Committee that they have lost Lois Lerner emails from a period of January 2009 – April 2011.  Due to a supposed computer crash, the agency only has Lerner emails to and from other IRS employees during this time frame.  The IRS claims it cannot produce emails written only to or from Lerner and outside agencies or groups, such as the White House, Treasury, Department of Justice, FEC, or Democrat offices.

“The fact that I am just learning about this, over a year into the investigation, is completely unacceptable and now calls into question the credibility of the IRS’s response to Congressional inquiries.  There needs to be an immediate investigation and forensic audit by Department of Justice as well as the Inspector General.

“Just a short time ago, Commissioner Koskinen promised to produce all Lerner documents.  It appears now that was an empty promise.  Frankly, these are the critical years of the targeting of conservative groups that could explain who knew what when, and what, if any, coordination there was between agencies.  Instead, because of this loss of documents, we are conveniently left to believe that Lois Lerner acted alone.  This failure of the IRS requires the White House, which promised to get to the bottom of this, to do an Administration-wide search and production of any emails to or from Lois Lerner.  The Administration has repeatedly referred us back to the IRS for production of materials.  It is clear that is wholly insufficient when it comes to determining the full scope of the violation of taxpayer rights.”

Oversight Subcommittee Chairman Charles Boustany Jr., M.D. (R-LA) added, "In the course of the Committee's investigation, the Administration repeatedly claimed we were getting access to all relevant IRS documents. Only now - thirteen months into the investigation - the IRS reveals that key emails from the time of the targeting have been lost.  And they bury that fact deep in an unrelated letter on a Friday afternoon.  In that same letter, they urge Congress to end the investigations into IRS wrongdoing. This is not the transparency promised to the American people.  If there is no smidgeon of corruption what is the Administration hiding?"

IRS Statement (June 13, 2014):

At the request of the Senate Finance Committee, the IRS today provided a summary of its production of email and materials to the Committee related to the processing and review of applications for tax-exempt status, as described in the May 2013 report by the Treasury Inspector General for Tax Administration. The IRS has made unprecedented efforts in connection with this effort, producing more than 750,000 pages of documents to help complete the investigations. In total, the IRS’s efforts to respond to Congress have involved more than 250 IRS employees working more than 120,000 hours at a direct cost of nearly $10 million.

As we advised the committee three months ago, we have completed the production of materials related to the investigation, including 11,000 emails sent or received by Lois Lerner.

Since then, at the request of other Congressional committees, the IRS has been working on the identification and production of other Lois Lerner emails. The additional emails do not relate to the Finance Committee’s investigation. As part of this additional search, the IRS collected emails from 83 individuals. Congressional investigators have – or will soon have – a total of 67,000 emails sent or received by Ms. Lerner. In the course of collecting and producing Ms. Lerner’s additional emails, the IRS determined her hard drive crashed in 2011. At the time, Ms. Lerner asked IRS IT professionals to restore her hard drive, but they were unable to do so. Nonetheless, the IRS has or will produce 24,000 Lerner emails from this 2009-2011 time period, largely from the files of the other 82 individuals. The IRS’s production to Congress of the 67,000 Lerner emails is nearly complete.

The IRS is committed to working with Congress. The IRS has remained focused on being thorough and responding as quickly as possible to the wide-ranging requests from Congress while taking steps to protect underlying taxpayer information.

IRS Letter to Senate Finance Committee (June 13, 2014):

I am writing to provide an update on IRS document productions to Congress. As of mid-March 2014, the Senate Finance Committee and the House Ways & Means Committee had received the documents the IRS identified as related to the processing and review of applications for tax-exempt status as described in the May 2013 report by the Treasury Inspector General for Tax Administration. See Enclosure 1. As my August 29, 2013 letter to you described, in order to produce those documents, we ran agreed search terms on many (then 77, now 83) custodians’ electronic materials, reviewed the resulting materials for responsive documents, and produced them. See Enclosure 2. Production of those materials identified as responsive from the agreed custodians and search terms was completed three months ago. See Enclosure 1.

The IRS hopes that your investigation can be concluded and the Senate Finance Committee’s report issued in the very near future so that the IRS can then take further corrective action to address issues, where necessary. Congressional reports are important to learn from, address, and move beyond the problems and concerns identified. Your committee’s conclusions and recommendations will be a critically important step in that process.

More than 250 IRS employees have spent over 120,000 hours working on compliance with several investigations stemming from last May’s report related to the processing and review of applications for tax-exempt status by the Treasury Inspector General for Tax Administration. We have responded to hundreds of Congressional requests for information. In so doing, the IRS has incurred a direct cost of nearly $10 million. We have spent an additional $6-8 million to optimize existing information technology systems and ensure a stable infrastructure for the production and required redactions to protect taxpayer information. I have attached a document describing some of the challenges and limitations that the IRS faced in its production process. See Enclosure 3.

Since mid-March, in response to Chairman Dave Camp’s request and Chairman Darrell Issa’s subpoena, the IRS has been reviewing and producing all remaining email for which Lois Lerner was a custodian – regardless of search terms, relevance, or subject matter. In other words, these Lerner documents are beyond and in addition to the already-produced Lerner materials the IRS identified as related to the processing and review of applications for tax-exempt status, which your Committee had received by mid-March. In addition, as described in Enclosure 3, when unavailable from Ms. Lerner’s custodial account, we are producing Lerner-related email (i.e., email on which Ms. Lerner was an author or recipient) from other custodians regardless of subject matter. In certain instances, such as personal conversations between Ms. Lerner and her family regarding health issues, we expect to make the materials available here at the IRS for interested Congressional staff to come review. In all, the IRS has produced or will produce or make available approximately 67,000 emails in which Ms. Lerner was an author or a recipient. As per your staff’s request, we will continue to include your committee in our productions until or unless you instruct us otherwise.

Description of IRS Email Collection and Production (June 13, 2014):

Over the past year, the Internal Revenue Service made a massive document production in response to Congressional and other inquiries. This activity has been challenging since processing email for production to third parties is a more complex process for the IRS than it is for many private or public organizations. Below we analyze why it is so complicated for the agency to respond to what otherwise in this modern day seem like straightforward requests, including an assessment of what is and is not currently possible. Sophisticated IRS information technology systems are designed to facilitate tax administration, cost-effective use of resources, and preserve confidential taxpayer information, not to facilitate matters related to document preservation, collection, processing, and review. The IRS faces unique challenges in producing email to third parties because of how its email is stored, the security required for IRS email, and the laws protecting confidential taxpayer information from disclosure.

Continue reading

June 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, June 13, 2014

The 10 Most-Cited Tax Faculty

Brian Leiter (Chicago) has announced that he will be releasing an updated ranking of the Ten Most-Cited U.S. Law Faculty in 11 areas of specialization, as measured by citations during the past five years (2009-2013).  He previewed the ranking today by releasing the ten most-cited tax faculty:

Rank

Tax Prof

Citations

Age

1

Michael Graetz (Columbia)

400

69

 

David Weisbach (Chicago)

400

50

3

Reuven Avi-Yonah (Michigan)

350

56

4

Daniel Shaviro (NYU)

340

56

5

Leandra Lederman (Indiana)

290

47

 

Larry Zelenak (Duke)

290

58

7

Victor Fleischer (San Diego)

280

42

8

Edward Zelinsky (Cardozo)

270

58

9

Joseph Bankman (Stanford)

250

58

 

Edward McCaffery (USC)

250

55

Leiter also lists four highly-cited scholars who work partly in tax.

In our article, Pursuing a Tax LLM Degree: Where?, Jennifer M. Kowal (Loyola-L.A.), Katherine Pratt (Loyola-L.A.), Theodore P. Seto (Loyola-L.A.) and I used a variation of Leiter's methodology in conducting a citation count study of the faculty in thirteen highly rated graduate tax programs  (pp. 28-29):

Rank

Graduate Tax Program Faculty

Citations

1

NYU

1917

2

Florida

1181

3

Georgetown

861

4

Miami

799

5

Northwestern

667

6

Boston University

614

7

Loyola-L.A.

475

8

San Diego

377

9

Villanova

177

10

SMU

139

11

Chapman

112

12

U. Washington

75

13

Denver

42

Prior TaxProf Blog coverage:

In our article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83, 120-22 (2006), Bernie Black (Northwestern) and I examined the Top 25 tax faculty as measured by SSRN downloads, a practice I update monthly on TaxProf Blog.

June 13, 2014 in Tax, Tax Faculty Rankings, Tax Prof Rankings | Permalink | Comments (2)

Weekly Tax Roundup

 Weekly Roundup

June 13, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

June 13, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Legal Education Roundup

June 13, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

June 13, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

LL.M. Degrees Help Prepare Law Students for a More Specialized Future

LLMLawyer & Stateman (June 2014):

A More Specialized Future:  Law schools are busy launching LL.M. programs in an effort to keep up with the need to deliver more specialized education.  The job market is tight and law firms are looking for attorneys with specialized training. Enter the LL.M., a graduate degree that was once exclusive to tax lawyers and a few select others.  The degree, however, has grown in popularity in recent years, and law schools are responding with even more specialized offerings for attorneys.

The Online LL.M.; Is It the Right Option for You?  The online option is becoming increasingly popular as technology improves and attorneys find that the degree offers the flexibility they need.  No matter where they live or work, they can get an advanced degree in programs like, taxation, health law, business transactions, wealth management or risk management.  Whereas students were cautious a few years ago, the experience has improved to the point where most now say they have ample opportunities to interact with fellow students and professors.

A Consumer Guide to LL.M. Programs

June 13, 2014 in Legal Education | Permalink | Comments (4)

President Obama Requests 10.5% Budget Increase for IRS, Despite IRS's Failure to Perform Basic Budget Planning

GAO LogoThe Government Accountability Office has released IRS 2015 Budget: Long-Term Strategy and Return on Investment Data Needed to Better Manage Budget Uncertainty and Set Priorities (GAO-14-605):

Since fiscal year 2010, the Internal Revenue Service (IRS) budget has declined by about $900 million. As a result, funding is below fiscal year 2009 levels.

IRS Appropriations FY 2009 - 2014 and FY 2015 Requested Appropriation

IRS Appropriations Fiscal Years 2009 through 2014 and Fiscal Year 2015 Requested Appropriation

Staffing has also declined by about 10,000 full-time equivalents since fiscal year 2010, and performance has been uneven. ...

IRS does not calculate actual ROI or use it for resource decisions. These limitations are important, which is why GAO recommended in 2012 that IRS explore developing such estimates. ... GAO recommends that IRS (1) develop a long-term strategy to manage uncertain budgets, and (2) calculate actual ROI for implemented initiatives, compare actual ROI to projected ROI, and use the data to inform resource decisions.

June 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (5)

Orszag: Toward a Progressive Tax Policy: The Case for a Consumption Tax and an Inheritance Tax

Bloomberg View:  Toward a Progressive Tax Policy, by Peter R. Orszag:

In the hoopla over whether Thomas Piketty’s data on growing global inequality are correct, an important question about how to address the problem has been obscured. Piketty describes his own global wealth tax idea as more of a “useful utopia” than a practical policy suggestion. Is there anything more plausible that can be done?

Two suggestions come to mind, at least for U.S. policy makers.

The first is a progressive consumption tax. This kind of tax is already embraced by many conservative thought leaders because it is, compared with other types of taxes, economically efficient. But it is efficient in no small part because it imposes a tax on wealth. People have no way to convert their money into anything they consume without paying the tax. ...

Continue reading

June 13, 2014 in Tax | Permalink | Comments (3)

Jocelyn Benson Named Dean at Wayne State, Youngest Woman Dean in American Law School History

Wayne State press release, Jocelyn Benson Appointed Wayne Law's 11th Dean:

BensonJocelyn Benson, who has served as interim dean of Wayne State University Law School since December 2012, has been appointed permanent dean.

At age 36, Benson becomes the youngest woman ever to lead a U.S. law school.

WSU Provost and Senior Vice President for Academic Affairs Margaret E. Winters announced the appointment, which is effective Monday, June 16. “While serving as the law school’s interim dean since December 2012, Dean Benson has improved bar passage rates, increased the law school’s ranking with U.S. News & World Report and added hands-on learning opportunities for students,” Winters said. “I’m excited to see her future accomplishments in the years ahead.”

Benson, who joined the Wayne Law faculty in 2005, was selected for the permanent deanship after a national search. [The other finalists were Danielle Conway (Hawaii), Kary Moss (ACLU of Michigan), and Christopher Peters (Baltimore).]

(Hat Tip: Law Deans on Legal Education Blog.)

June 13, 2014 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 400

IRS Logo 2Power Line Blog, Bill Henck: Inside the IRS, Part 3:

William Henck has worked inside the IRS Office of the Chief Counsel as an attorney for over 26 years. We posted his personal account, including his testimony to a retaliatory audit conducted by the IRS against him, this past February in “Inside the IRS” and followed up with Inside the IRS, part 2″ in May. ... Henck’s experience illuminates a deeply sinister aspect of the current controversy over the agency’s illegal activities.

American Spectator:  Mickelson Targeted Like Tea Partiers?:

Here's how it sounds to me: Famous rich athlete complains about the negative incentives caused by high taxes. Government usees especially aggressive tactics to try to find him guilty of securities violations, not least perhaps intentionally leaking the existence of an investigation, a story which the Obama-cheerleading, tax-loving NY Times is only too happy to cover. The Times then reports that "Mr. Mickelson’s ties to the investigation are weaker than previously reported." But of course much of the damage to Mickelson is done, harming his reputation as well as distracting him from his profession and the rest of his life.

Continue reading

June 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, June 12, 2014

Fleischer: President Obama Should Unilaterally Raise the Tax Rate on Carried Interest Earned by Hedge Fund Managers

New York Times Deal Book:  How Obama Can Increase Taxes on Carried Interest, by Victor Fleischer (San Diego):

NY Times Dealbook (2013)President Obama could change the tax treatment of carried interest with a phone call to the Treasury Department. But the White House will need a precise understanding of the regulatory landscape to make a change that is fair, easy to administer, and will hold up in court.

The administration has increasingly relied on executive branch rule-making authority to make policy without waiting for a gridlocked Congress to act. The White House has made significant changes to education policy, immigration policy, environmental standards and climate change policy, and, most recently, student loans. And it has the legal authority to unilaterally change the tax treatment of carried interest. ...

A recent article by David Lebedoff called on the White House to act unilaterally, as it has done in other areas. The article identifies a 1993 revenue procedure as the source of the problem under current law. Mr. Lebedoff, who is a respected author and lawyer but not a tax expert, misses the mark a bit in his legal analysis. But he is dead right in suggesting that the administration may consider unilateral action. ...

Continue reading

June 12, 2014 in Tax | Permalink | Comments (1)

Law School Rankings: Judicial Clerkships

Robert Morse (Director of Data Research, U.S. News & World Report), Grads of These Law Schools Get the Most Judicial Clerkships:

U.S. News has just published two exclusive clerkship lists of law schools using data from our 2015 Best Law Schools rankings for the 2012 J.D. graduating class. The first list shows which ranked law schools have the largest proportion of their employed 2012 graduates working at judicial clerkships with federal judges. The second list shows which ranked law schools have the largest proportion of their employed 2012 graduates working at clerkships with judges at the state and local levels.

 

School (US News Rank)

Fed. Clerkship %

School (US News Rank)

St. & Local Clerkship %

1

Yale (1)

36.3%

Rutgers-Camden (81)

42.0%

2

Stanford (3)

29.1%

Rutgers-Newark

33.2%

3

Harvard (2)

18.5%

Seton Hall (68)

33.1%

4

Chicago (4)

15.0%

Hawaii (100)

28.0%

5

Duke (10)

14.3%

South Dakota (145)

20.6%

6

Vanderbilt (16)

12.6%

UNLV (83)

19.5%

7

Virginia (8)

12.6%

South Carolina (93)

19.4%

8

Notre Dame (26)

11.0%

Colorado (43)

19.0%

9

Pennsylvania (7)

10.6%

Oregon (100)

17.7%

10

Georgia (29)

10.3%

Howard (135)

17.6%

June 12, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

Crawford Reviews McCouch's Who Killed the Rule Against Perpetuities?

JotwellBridget Crawford (Pace), A Lawyer With a Candlestick in the Conservatory: The Perpetuities Whodunit (Jotwell), reviewing Grayson M.P. McCouch (Florida), Who Killed the Rule Against Perpetuities?, 40 Pepp. L. Rev. 1291 (2013) (Symposium on Tax Reform in a Time of Crisis):

For readers who are interested in the relationship between and among tax law, legal reform and professional culture and change, this article provides much food for thought. Many states that have repealed the rule against perpetuities have also abolished income taxation of trusts and their beneficiaries. For that reason, even states with a booming trust business may not receive any direct tax revenue from it. But the ancillary effects of increased trust business—more jobs created in that state—should not be underestimated. It may be that some lawyers and bankers have benefited handsomely from perpetuities reform, but so has that same reform given rise to a new cadre of supporting professionals who pay taxes and spend their paychecks in those states. McCouch’s article undoubtedly will serve as the inspiration for additional scholarship in this area.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Professionals' Contribution to the Legislative Process

Adam S. Hofri-Winogradow (Hebrew University of Jerusalem, Faculty of Law), Professionals' Contribution to the Legislative Process: Between Self, Client, and the Public, 39 Law & Soc. Inquiry 96 (2014):

How may professionals be made to contribute to legislative processes so that their expertise redounds to the public interest, despite the legislative product being likely to have a negative impact on their clients' wealth? Drawing on a case study of the legislative process that gave birth to Israel's recent (2002–2008) trusts taxation regime, based on five years of participant observation among the trust professional community, I find that to obtain the benefit of private-sector professionals' expertise under such circumstances, government should have legislation drafted in a dispassionate, exclusive environment of experts rather than in the political arena; it should build professionals' trust in government by adopting an explicitly collegial approach; it should focus reform efforts on elements of the existing law so clearly inequitable as to make a refusal to contribute difficult to justify; and take care that the new regime creates a compliance practice lucrative enough to compensate for any loss to professionals consequent on its enactment. Once professionals' interests are suitably safeguarded, their loyalty to clients appears surprisingly brittle and government can successfully combine with them in the public interest.

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Citing His Own Law School Debt, President Obama Expands Student Loan Relief

ABA Journal, Citing His Own Law School Debt, Obama Expands Repayment Caps on Student Loans:

President Barack Obama has signed an executive order expanding a 2010 law that capped student-loan repayments for newer government-backed loans at 10 percent of the borrower’s monthly income.

Obama announced his action on Monday, citing his own experience with law school loans paid off just 10 years ago. The goal is to implement the expansion in December 2015, after new rules are drafted. The New York Times and Politico have reports.

Currently the 10 percent cap, part of the Pay as You Earn program, is not available to those with older loans, according to a fact sheet. Monthly payments are based on a sliding scale, and any remaining balance is forgiven after 20 years of payments, or 10 years for those in public service jobs.

Obama’s order would expand Pay as You Earn to include nearly 5 million additional federal direct student loan borrowers. Pay as You Earn is more generous in its loan caps than a different Income Based Repayment program that currently applies to all borrowers with federal student loans, according to Bloomberg Business Week. IBR caps payments at 15 percent of discretionary income.

Continue reading

June 12, 2014 in Legal Education | Permalink | Comments (1)

Tax Implications of $1,500 Waffle House Tip

(Hat Tip: Darryll Jones, Leandra Lederman)

June 12, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Gerzog: The Façade Easement Charitable Deduction

Wendy C. Gerzog (Baltimore), Alms to the Rich: The Façade Easement Deduction:

This article presents the case for repeal of the façade easement deduction. Proponents of this benefit argue that the deduction encourages historic preservation by reimbursing property owners for relinquishing their right to alter the façade of their property in a way inconsistent with that conservation goal; however, this article shows that there are many reasons to urge its repeal: the revenue loss, the small number of beneficiaries, the financial demographics of that group of beneficiaries; the dubious industries that are supported by the deduction; and the continual marked overvaluation and abuse despite Congressional, court, and administrative review and expense.

Continue reading

June 12, 2014 in Scholarship, Tax | Permalink | Comments (0)

Yesterday's Tax Reports

June 12, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 399

IRS Logo 2Wall Street Journal:  FBI Returns Taxpayer Information It Got From IRS:

The FBI has returned a large database of taxpayer information it received from the IRS, amid an investigation into possible political targeting of conservative groups, the FBI's director said on Wednesday.

Testifying before the House Judiciary Committee, James Comey said FBI investigators didn't examine the database, which included private taxpayer information that isn't supposed to be shared without a judge's order. "The only thing that was done, (was) analysts looked at the table of contents,'' Mr. Comey said.

In January, The Wall Street Journal reported that law-enforcement officials don't expect to file criminal charges as a result of the probe into how the IRS scrutinized conservative tax-exempt groups.

Congressional Republicans are incensed that the IRS transmitted a 1.1 million-page database of information concerning tax-exempt organizations to the FBI shortly before the 2010 election.

Continue reading

June 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, June 11, 2014

Marian Presents Designing a Regulatory System for the Bitcoin Era Today in Albuquerque

MarianOmri Marian (Florida) presents Designing a Regulatory System for the Bitcoin Era at the annual meeting of the National Association of Consumer Credit Administrators (NACCA) today in Albuquerque:

Abstract: Bitcoin is now touted as revolutionary as the Internet in the early 1990s. The potential of Bitcoin and other cryptocurrencies is hardly limited to being a medium of exchange. At its core, Bitcoin is a protocol that allows for the verification of transactions without the need for a trusted third party. As such, Bitcoin holds great positive potential. However, Bitcoin is also uniquely suited to facilitate harmful behaviors. Traditional regulatory models rely heavily on intermediaries that are optimally positioned to identify and disrupt misconduct, but Bitcoin has the potential to eliminate intermediaries without eliminating the underlying conduct. How can policymakers address the challenges that Bitcoin presents to traditional regulatory models, without hindering Bitcoin’s generative potential? This is the question the Article seeks to answer. The Article advances two main arguments: First, intermediary-based regulation will persist to a significant extent even in a Bitcoin-dominated environment. Many intermediaries are market-created, not government-created constructs. Such intermediaries can be regulated under traditional intermediary-liability models. Second, where intermediaries are eliminated, the article proposes a different theoretical model of regulatory framework – “passive crowd participation”. Under a passive crowd participation model, actors who use Bitcoin for legitimate purposes are incentivized to act in a manner that makes the Bitcoin ecosystem less attractive for illicit users. I use tax evasion to explain how such model might work in practice. I propose a model of “surrogate presumptive collection” tax, by which merchants accepting bitcoins collect gross tax that serves as a proxy for the consumer’s income tax liability. The surrogate tax is waived if the consumer identifies itself to the merchant or to a trusted bitcoin clearing service.

June 11, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Suffolk Freezes Faculty and Staff Salaries in Wake of Declining Law School Enrollment

Boston Globe:  Suffolk University Freezing Salaries for Year; University Cites Drop in Revenue, Enrollment:

Sufolk Law SchoolSuffolk University, facing a $11 million drop in budgeted revenue and a dip in enrollment, will freeze employee salaries for the next fiscal year. ...

“We continue to build for the future; therefore this budget was created with an emphasis on investing in our students while containing costs to minimize tuition increases,” university president James McCarthy wrote in a message to employees last week. ... The budget sought to address a “challenging enrollment environment,” McCarthy wrote. Administrators expect a smaller-than-anticipated law school class, a slight decline in the ranks of new undergraduates, and flat graduate enrollment. ... Nationally, law school enrollment has also suffered in recent years, with the number of first-year students dropping 24 percent since the fall of 2010, according to the ABA.

First year enrollment fell 15% in 2013 (457) compared to 2012 (535).

June 11, 2014 in Legal Education | Permalink | Comments (1)

EU Investigates Tax Planning by Apple, Starbucks

Dave Chappelle Makes the Case for High Marginal Tax Rates

New York Times:  Dave Chappelle Makes the Case for High Marginal Tax Rates, by Neil Irwin:

Dave Chappelle, the comedian who walked away from a wildly successful TV show named for him a decade ago, made his first talk show appearance in ages Tuesday night. He probably wasn’t intending to make an argument about maximizing the efficiency of the tax system in his appearance on the “Late Show With David Letterman,” but that’s what he ended up doing.

Mr. Chappelle discussed the reported $50 million contract he walked away from when he abruptly ended “The Chappelle Show.” Does the loss of all that money haunt him?

“So I look at it like this,” Mr. Chappelle said. “I’m at a restaurant with my wife. It’s a nice restaurant. We’re eating dinner. I look across the room and I say: ‘You see this guy, over here across the room? He has $100 million. And we’re eating the same entree. So, O.K., fine, I don’t have the $50 million or whatever it was, but say I have $10 million in the bank.’ The difference in lifestyle is minuscule.”

His point is about the diminishing marginal utility of rising wealth. If you are flat broke and somebody gives you $1 million, that money significantly increases your quality of life. Going from $1 million to $10 million makes you better off, though probably not 10 times better off. And similarly, going from $10 million to $50 million in net worth creates far less improvement in your quality of life than those early steps of going from broke to $1 million or $1 million to $10 million. ...

That’s a reason advocates of higher marginal income tax rates on the highest earners would argue there is little loss of human welfare by enacting very high rates on the highest income brackets. The difference in quality of life between “very wealthy” and “extraordinary wealthy” is not that great, which should make it a relatively painless way to raise tax revenue.

Continue reading

June 11, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Shanske: State-Level Carbon Taxes and the Dormant Commerce Clause

Darien Shanske (UC-Davis), State-Level Carbon Taxes and the Dormant Commerce Clause: Can Formulary Apportionment Save the World?, 19 Chapman L. Rev. ___ (2015):

This short Article, a contribution to a symposium, outlines some possible design responses to the primary legal issue raised by the implementation of a state-level carbon tax. There are at least two reasons for states to consider a carbon tax. First, somewhat prosaically, the Environmental Protection Agency just released draft rules requiring states to reduce carbon emissions; these rules appear to permit states to achieve at least some of the required reduction through carbon taxes. Second, and more importantly, economists offer strong arguments for preferring carbon taxes as a method of greenhouse gas mitigation. Accordingly, even before the new EPA rules were proposed, a carbon tax was already being considered in some U.S. states, such as Oregon, and a carbon tax is in place in one Canadian province, British Columbia.

The primary legal issue with a state-level tax in the United States is the following: a carbon tax imposed in only one state will presumably make goods and services produced in that state more expensive. The direct response would be to impose a complementary carbon tax on imports. Yet it would appear that the dormant Commerce Clause, and particularly the Supreme Court’s narrow interpretation of the complementary tax doctrine, bars the way to such border adjustments. This Article argues that appearances might be deceiving and that border adjustments might be possible. Alternatively, this Article argues that formulary apportionment could take the place of border adjustments. 

June 11, 2014 in Scholarship, Tax | Permalink | Comments (1)

CRS: Tax Issues in Corporate Expatriation, Inversions, and Mergers

CRS LogoDonald J. Marples & Jane G. Gravelle, Corporate Expatriation, Inversions, and Mergers: Tax Issues, Cong. Res. Serv. (R43568) (May 27, 2014):

News reports in the late 1990s and early 2000s drew attention to a phenomenon sometimes called corporate “inversions” or “expatriations”: instances where U.S. firms reorganize their structure so that the “parent” element of the group is a foreign corporation rather than a corporation chartered in the United States in order to reduce the effect of the U.S. corporate income tax. These corporate inversions apparently involved few, if any, shifts in actual economic activity from the U.S. abroad, at least in the near term. Bermuda and the Cayman Islands—countries with no corporate income tax—were the location of many of the newly created parent corporations, and tax savings were the principal objective.

These types of inversions largely ended with the enactment of the American Jobs Creation Act of 2004 (JOBS Act, P.L. 108-357), which denied the tax benefits of an inversion if the original U.S. stockholders owned 80% or more of the new firm. The Act effectively ended shifts to tax havens where no real business activity took place.

However, two avenues for inverting remained. The Act allowed a firm to invert if it has substantial business operations in the country where the new parent was to be located; the regulations at one point set a 10% level of these business operations. Several inversions using the business activity test resulted in Treasury regulations in 2012 that increased the activity requirement to 25%, effectively closing off this method. Firms could also invert by merging with a foreign company if the original U.S. stockholders owned less than 80% of the new firm.

Two features made a country an attractive destination: a low corporate tax rate and a territorial tax system that did not tax foreign source income. Recently, the UK joined countries such as Ireland, Switzerland, and Canada as targets for inverting when it adopted a territorial tax. At the same time the UK also lowered its rate (from 25% to 20% by 2015).

Recently, several high profile companies have indicated an interest in merging or plans to merge with a non-U.S. headquartered company, including Pfizer and Chiquita. Pfizer, for example, was interested in merging with a smaller British firm, AstraZeneca, and moving headquarters to the UK. For Pfizer, which has accumulated substantial profits in subsidiaries in low tax foreign countries that would be taxed if paid to the U.S. parent, the territorial tax system is likely the most important tax benefit from such a merger. This “second wave” of inversions again raises concerns about an erosion of the U.S. tax base.

Continue reading

June 11, 2014 in Congressional News, Tax | Permalink | Comments (1)

The Gift Tax Treatment of Donations to Social Welfare Organizations

Matthew A. Melone (Lehigh), Gift Taxes on Donations to Social Welfare Organizations: De-politicizing Social Welfare Organizations or Politicizing the IRS?, 12 DePaul Bus. & Com. L.J. 51 (2013):

Part III of this Article provides an analysis of the gift tax in general and its application to contributions to section 501(c)(4) organizations. Despite the dearth of case law on this issue, it appears that taxing contributions to these organizations has ample statutory support, and the current regulations interpreting the statute should survive the deferential standard of review to which they are subject. Moreover, enforcement of the tax against donors to section 501(c)(4) organizations does not do violence to the First Amendment. However, notwithstanding the legal justification for enforcement of the tax, Part IV argues that the enforcement of the tax is unwarranted from a policy standpoint. Enforcement of the gift tax with respect to contributions to section 501(c)(4) organizations will not reduce politically motivated giving because such giving will be diverted to vehicles to which donations are exempt from the gift tax. Moreover, large corporations, for all practical purposes, will be unaffected by the gift tax thereby raising the possibility that section 501(c)(4) organizations will remain a significant political force but one dominated by corporate donors. Perhaps the most salient objection to enforcement of the tax is the risk that the public comes to perceive enforcement of the tax as selective and politically motivated. The IRS recently has taken actions that, to its critics, were politically motivated, and, for the most part, taxpayers are powerless to challenge such actions. A tax system already suffering from a lack of public respect can do without accusations of political meddling.

June 11, 2014 in Scholarship, Tax | Permalink | Comments (0)

Northwestern Dean Rodriguez: Never Let a Good Crisis go to Waste

FortuneFortune:  Northwestern Law Dean: Never Let a Good Crisis Go to Waste, by Maya Itah:

Dean Daniel Rodriguez discusses the opportunities in the highly challenging times for law schools today.

Between its accelerated JD program and its insistence on interviewing every single one of its applicants, Northwestern University School of Law is known for doing things differently. Nevertheless, Dean Daniel B. Rodriguez wants to make it absolutely clear that innovating isn’t a matter of survival for the school, which, at No. 12 in the U.S. News ranking, has long been a member of the hallowed Top 14.

“We don’t have to do anything differently,” he asserts. “We’re greatly, greatly blessed by having an extraordinarily strong reputation, and have had that reputation for a century-and-a-half and counting, so I just want to quibble with the description of having to do things differently.” Point taken. ...

Continue reading

June 11, 2014 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 398

IRS Logo 2Wall Street Journal, Another IRS Abuse: Lois Lerner's Office Sent Confidential Taxpayer Data to the FBI:

In a Monday letter to IRS Commissioner John Koskinen, Reps. Darrell Issa (R., Calif.) and Jim Jordan (R., Ohio) of the House Oversight Committee reveal still another IRS abuse of conservatives. In October of 2010, apparently without a court order, the IRS sent 21 computer disks containing 1.1 million pages of tax-return documents to the Federal Bureau of Investigation. According to the Justice Department, the massive data dump included public returns from non-profit groups but also taxpayer information that by law the IRS is required to keep confidential. Reps. Issa and Jordan ask in their letter for information relating to the preparation and transmittal of the data.

How did these documents wind up at the FBI? In September of 2010, IRS officials including Lois Lerner and Sarah Hall Ingram helped the New York Times prepare a story about non-profit policy groups which "heavily favored Republicans" in their purchases of issue advertising. 

The day after the article appeared, Justice Department Public Integrity Section Chief Jack Smith noted the story in an email to colleagues and asked whether they could charge the groups with conspiracy to violate U.S. laws. Mr. Smith also suggested scheduling a meeting with Ms. Ingram, who like Ms. Lerner was a senior official overseeing tax-exempt organizations at the IRS. ...

Last month, 26 House Democrats joined with Republicans in voting to urge Attorney General Eric Holder "to appoint a special counsel to investigate the targeting of conservative nonprofit groups by the Internal Revenue Service." The new revelations of taxpayer abuse ensure that Congressional pressure for a more thorough investigation will continue.

Continue reading

June 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)