TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, November 2, 2016

British Columbia's Highest Court Unanimously Approves Canada's First Christian Law School, Says Religious Freedom To Ban Student Sex Outside Of Heterosexual Marriage Trumps LGBTQ Rights

Trinity WesternFollowing up on my previous posts (links below): Toronto Star, B.C. Christian University Wins Legal Victory in Bid to Open Law School:

Appeal Court of B.C. decided in favour of Trinity Western University, which seeks to ban its students from having sexual relations outside of heterosexual marriage.

A decisive legal victory in British Columbia has put an evangelical Christian university one step closer in its bid to secure recognition for its proposed law school.

The Appeal Court of B.C. released a decision in favour of Trinity Western University on Tuesday, describing efforts by B.C.’s law society to deny accreditation to the school’s future lawyers as “unreasonable.” [Trinity Western University v. The Law Society of British Columbia, 2016 BCCA 423 (Nov. 1, 2016)]

The legal dispute centres around the university’s community covenant that bans its students from having sexual relations outside of heterosexual marriage.

In a unanimous decision, a panel of five judges said the negative impact on Trinity Western’s religious freedoms would be severe and far outweigh the minimal effect accreditation would have on gay and lesbian rights.

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November 2, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1273:  Harry Reid And James Comey

IRS Logo 2American Thinker, Liar Reid Slams Comey:

Chutzpah has a new poster child and his name is Harry Reid. The man who stood idly by as the IRS used its ultimate power to target the Tea Party and other groups in 2012 in order to reelect President Obama, the man who lied on the Senate floor about GOP presidential nominee Mitt Romney, now claims that FBI Director James Comey violated the Hatch Act by fulfilling his obligation to notify Congress regarding new evidence in the Hillary email investigation. ...

Harry Reid wasn’t quite so outraged when another government agency with three letters, the IRS, decided to use its power to target and intimidate Tea Party and other conservative groups. As Politico reports, Reid thought groups that merely exercise their right to bind together in common cause to exercise their free speech rights deserved to be targeted and investigated by a politically motivated IRS:

After accusations that the IRS targeted conservative groups unfairly, Senate Majority Leader Harry Reid argued on Tuesday that some nonprofit organizations are indeed abusing their tax-exempt status.

The Nevada Democrat singled out GOP strategist Karl Rove as an abuser of the system because his tax-exempt group, Crossroads GPS, spent millions on the 2012 election to defeat Democrats….

“His organization, Rove’s organization, [has] one purpose and one purpose only and that’s to defeat Democrats. Anyone who thinks otherwise is being willfully foolish,” Reid said. “Preventing overtly political groups like the ones run by Karl Rove as masquerading as social welfare organizations, is really a critically important tasks.”

Rove’s group was one that several Democrats singled out in 2010, when they asked the IRS to investigate whether they were violating their tax exempt status.

Wasn’t the attempt by Lois Lerner and her cronies, in a scandal that also involved lost or deleted emails, conveniently crashed hard drives, etc. to target conservative groups a political move by government employees to influence an election?

House and Senate Democrats, it has been documented, often sent letters to the IRS asking that particularly successful and annoying groups be investigated. As Investor’s Business Daily noted:

Senate Democrats, including supporters of the Disclose Act, provided the names of groups they wanted targeted in a taxpayer-funded witch hunt overseen by an IRS employee and Obama campaign donor.

Using the Citizens United case as a pretext, retiring Sen. Carl Levin, D-Mich., on July 27, 2012, wrote IRS Commissioner Douglas Shulman to investigate 12 conservative groups he accused of violating their tax-exempt status and engaging in coordinated political activity.

The groups Levin asked to be targeted for special scrutiny were Crossroads Grassroots Policy Strategies, Priorities U.S.A., Americans Elect, American Action Network, Americans for Prosperity, American Future Fund, Americans for Tax Reform, 60 Plus Association, Patriot Majority USA, Club for Growth, Citizens for a Working America Inc. and the Susan B. Anthony List. ...

Democratic Sens. Jeanne Shaheen, New Hampshire; Tom Udall, New Mexico; and Al Franken, Minnesota; sent a similar letter to Shulman in February 2012, asking the IRS to investigate tax-exempt groups they believed were engaged in political activities. So did retiring Sen. Max Baucus, D-Mont., in 2010 and House Democrats in 2012, the Atlantic reported Monday.

And on the House side, Congressional Democrats were hardly reluctant to have the IRS target conservative groups: Coordination by Rep. Elijah Cummings with the IRS to target conservative was also noted by IBD:

Of particular interest to us has been Rep. Elijah Cummings, D-Md., ranking member on Rep. Darrell Issa's House Government Reform and Oversight Committee, who has made every effort to keep the committee from finding out the true extent of IRS corruption and abuse of power in its targeting of conservatives.

As we've noted, emails released by Issa, a California Republican, show that Cummings' Democratic staff had requested information from the IRS' tax-exempt division, the one headed by Lois Lerner, on True the Vote, a conservative group that monitors polling places for voter fraud and supports the use of voter IDs, something that Cummings opposes.

"The IRS and the Oversight Minority made numerous requests for virtually identical information from True the Vote, raising concerns that the IRS improperly shared, protected taxpayer information with Rep. Cummings' staff," the Oversight panel said in a statement.

The hypocritical Democrats doth protest too much. They are the ones who have sanctioned abuse by government agencies to influence elections.

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November 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, November 1, 2016

Walker Presents The Practice And Tax Consequences Of Nonqualified Deferred Compensation Today At Columbia

Walker (2016)David I. Walker (Boston University) presents The Practice and Tax Consequences of Nonqualified Deferred Compensation at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Although nonqualified deferred compensation plans lack explicit tax preferences afforded qualified plans, it is well understood that nonqualified deferred compensation results in a joint tax advantage when employers earn a higher after‐tax return on deferred sums than employees could do on their own. Several commentators have proposed tax reform aimed at leveling the playing field between cash and nonqualified deferred compensation, but reform would not be easy or straightforward. This Article investigates nonqualified deferred compensation practices and shows that joint tax minimization often takes a backseat to accounting priorities and participant diversification concerns.

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November 1, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

50% Of Law Schools Selected For Random ABA Audit Flunked Placement Data Documentation

ABA Section On Legal Education (2016)Inside Higher Ed, Law Schools Flagged for Job Data:

The first audits of the employment data that law schools report about their recent graduates have generated concern among watchdogs, with a series of reviews finding several deficiencies that raise questions about the class of 2015’s reported outcomes.

Most notably, a review of 10 randomly selected schools found that half had missed a compliance benchmark for the documentation they are supposed to keep on file when reporting key metrics like whether their students are employed 10 months after graduation and whether they are working in a position that required them to pass the bar. Schools were flagged for not being able to show documentation to support important parts of reported employment data, or if investigators found evidence key pieces of employment data were incomplete, inaccurate or misleading. Other reviews found issues at a substantially smaller percentage of schools related to handling documentation or posting required information online.

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November 1, 2016 in Legal Education | Permalink | Comments (2)

Marian:  Is Something Rotten In The Grand Duchy Of Luxembourg?

LLOmri Y. Marian (UC-Irvine), Is Something Rotten in the Grand Duchy of Luxembourg?, 84 Tax Notes Int’l 281 (Oct. 17, 2016):

In November 2014 the ICIJ published hundreds of privately negotiated advance tax agreements (ATAs) granted by tax authorities in Luxembourg to MNEs. The documents were leaked by two former employees of the PwC Luxembourg office. The documents revealed that by securing ATAs in Luxembourg, MNEs were able to avoid high tax liability in jurisdictions where they had real activity and instead pay a much smaller amount of tax to Luxembourg, where they had no or little activity. The affair, appropriately coined ‘‘LuxLeaks,’’ caused a major popular uproar. Several official investigations followed the leak. This article argues, however, that the discussion over the past two years missed the worst aspects of the LuxLeaks scandal.

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November 1, 2016 in Scholarship, Tax | Permalink | Comments (1)

NY Times:  Gallery Owner Accuses Alec Baldwin of Dodging Tax in Disputed Art Purchase

BaldwinNew York Times, Gallery Owner Accuses Alec Baldwin of Dodging Tax in Disputed Art Purchase:

The art world feud between the actor Alec Baldwin and the gallery owner Mary Boone took another turn on Thursday when lawyers for Ms. Boone filed a motion in New York State Supreme Court in Manhattan accusing Mr. Baldwin of committing fraud by failing to pay sales tax on a painting he bought from her six years ago.

The filing comes just over a month after Mr. Baldwin sued Ms. Boone, asserting she had defrauded him in 2010 by promising him a painting, “Sea and Mirror,” by the artist Ross Bleckner, for which he had paid $190,000, but supplying him another, similar Bleckner painting, also called “Sea and Mirror.” ...

In the motion to dismiss Mr. Baldwin’s suit, her lawyer said that when Mr. Baldwin bought the Bleckner painting in 2010, the actor left instructions to deliver it directly to his home in California, and then almost immediately after it arrived on the West Coast, had the painting shipped back to his apartment in New York.

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November 1, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

NY Times:  Trump’s Tax Dodge Stretched Law ‘Beyond Recognition’

Trump (2016-2)New York Times, Donald Trump Used Legally Dubious Method to Avoid Paying Taxes:

[N]ewly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.

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November 1, 2016 in Political News, Tax | Permalink | Comments (8)

Mitchell Hamline Welcomes 338 1Ls This Fall, Down 14% From 2015 (42% From 2010)

Mitchell HamlineThe new post-merger Mitchell Hamline School of Law welcomed 338 1Ls this fall, down 14% from the combined totals for the separate Hamline and William Mitchell law schools in 2015 (391) and down 42% from 2010 (584).

Here are the admission data for Hamline and William Mitchell for the prior six years from Law School Transparency:

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November 1, 2016 in Legal Education | Permalink | Comments (2)

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November 1, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

Avi-Yonah & Mazzoni:  The Apple State Aid Ruling

Reuven Avi-Yonah (Michigan, moving to UC-Irvine) & Gianluca Mazzoni (S.J.D. 2017, Michigan), Apple State Aid Ruling: A Wrong Way to Enforce the Benefits Principle?:

Following an in-depth investigation formally launched in June 2014, the European Commission has recently concluded that Ireland granted tax benefits of up to €13 billion to Apple in violation of the State aid rules. As a result, Ireland must now recover the illegal aid. That decision has been sharply criticized by Jack Lew, the U.S. Treasury Secretary, who believes only the Internal Revenue Service has the right to tax Apple’s foreign income, since most of the company’s research and development took place in the US. However, that is not the way the big EU countries, where sales are made, see things. Who is right? To whom does the income belong?

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November 1, 2016 in Scholarship, Tax | Permalink | Comments (0)

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November 1, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1272:  Why The IRS Scandal Still Matters To Republicans And Democrats

IRS Logo 2Commentary: The IRS Scandal Still Matters, by Jonathan S. Tobin:

Years after the Internal Revenue Service scandal broke and long after the media lost interest in the agency’s practice of subjecting conservative groups to special scrutiny and delays, the government is quietly seeking to bury it. A ruling from a federal judge earlier this month demanding that the IRS finally resolve stalled applications for non-profit status has gotten results.

Many of these small groups often affiliated with the Tea Party movement have now been granted the designation they needed to begin fundraising. Among them was Z Street, a pro-Israel group whose tax exemption request dated back to 2010. While the resolution seems to be satisfactory, the result is actually anything but. Rather than a belated triumph for justice, what has happened here is quite the opposite.

Though the Z Street litigation preceded the general outrage about the revelations about the IRS’s discrimination broke in the spring of 2013, it opened a window into the way the supposedly apolitical tax agency operated. IRS personnel didn’t just make Z Street jump through hoops unknown to groups that were not associated with causes opposed by the Obama administration. An IRS agent specifically told Z Street founder Lori Lowenthal Marcus that the government gave “special scrutiny” not only to pro-Israel organizations but also to those that advocated views that “contradict those of the administration’s.”

Though the government fought a long battle to prevent Z Street—which is sympathetic to Israel’s settlement movement—from suing to recover its rights, the courts consistently upheld its right to do so. But thanks to a separate court ruling, the IRS has now waved the white flag on this case and dozens of others that all involved agents opposing or stalling requests from non-profits similarly linked to positions that were not favored by President Obama.

No one should think justice has really been done. After years of being dormant because of its inability to raise money that could be deducted as a charitable donation, Z Street has probably been dead in the water too long to recover. The same is probably true for the other “winners” in this battle. More to the point, whatever influence their educational efforts might have achieved had they been allowed to function effectively has been lost. Considering that most of these groups sought to promote ideas (though not parties or politicians) on which the 2012, 2014, and now the 2016 elections were fought, there’s no denying the fact that they were effectively silenced by a band of officious government bureaucrats pursuing the liberal agenda of the Obama administration.

Though there is still no proof that the IRS agents were acting on direct orders of the White House, their willingness to behave in this matter advanced the president’s political interests in a way that ought to stir bipartisan outrage. Unfortunately, neither Democrats nor the president’s faithful liberal media were able to see past their partisan loyalties to take effective action. Indeed, as we head toward the election of our next president, the IRS scandal has been sent down a memory hole and is largely forgotten. This wasn’t the first time the IRS has been used to advance a partisan agenda, but it isn’t likely to be the last. There is no reason to think that the pattern might not be repeated in the future once the dust settles. ...

This is not an issue on which conservatives and liberals ought to be divided. A government that is allowed to play fast and loose with the basic rules of fairness to disadvantage conservatives or friends of Israel could easily be employed by different people to discriminate against liberals. That’s why the IRS scandal still matters. Let’s hope the courts don’t close the file on this issue before genuine accountability is provided.

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November 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, October 31, 2016

Indiana Tech Law School To Close June 2017 Following $20 Million In Losses

Michael Simkovic Leaves Seton Hall For USC

Simkovic 3Michael Simkovic (Seton Hall) has accepted a lateral offer with tenure from USC. His recent articles include:

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October 31, 2016 in Legal Education, Scholarship, Tax, Tax Prof Moves | Permalink | Comments (0)

Viswanathan Presents Tax Compliance In A Decentralizing Economy Today At Loyola-L.A.

ViswanathanManoj Viswanathan (UC-Hastings) presents Tax Compliance in a Decentralizing Economy at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Tax compliance in the United States depends heavily on centralized institutions acting as intermediaries between taxpayers and the Internal Revenue Service. Income reported on intermediary-provided forms constitutes the overwhelming majority of both reported (and taxed) income. This information reporting is the primary mechanism by which the IRS evaluates taxpayer returns for compliance.

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October 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Pickett Presents The Psychological And Social Costs Of Inequality Today At NYU

PickettKate Pickett (University of York) presents Income Inequality and Health: A Casual Review and The Enemy Between Us: The Psychological and Social Costs of Inequality (both with Richard Wilkinson (University of Nottingham)) at the NYU High-End Inequality Colloquium Series (more here) hosted by Robert Frank (Cornell) and Dan Shaviro (NYU):

Income Inequality and Health: A Casual Review
There is a very large literature examining income inequality in relation to health. Early reviews came to different interpretations of the evidence, though a large majority of studies reported that health tended to be worse in more unequal societies. More recent studies, not included in those reviews, provide substantial new evidence. Our purpose in this paper is to assess whether or not wider income differences play a causal role leading to worse health. We conducted a literature review within an epidemiological causal framework and inferred the likelihood of a causal relationship between income inequality and health (including violence) by considering the evidence as a whole. The body of evidence strongly suggests that income inequality affects population health and wellbeing.

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October 31, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Muller:  Why Is The ABA Still Accrediting Law Schools?

ABA Section On Legal Education (2016)Derek Muller (Pepperdine), Why Is the ABA Still Accrediting Law Schools?:

Perhaps we have legal education [because] we believe that attorneys should be, somehow, perhaps, well-rounded and well-educated individuals, apart from their ability to pass the bar exam? That would seem to be the driving concern—we think (perhaps you don't, but work with the assumption) lawyers shouldn't just be able to pass the bar and practice law; they should have some kind of training and background before they practice law and something that qualifies them apart from the bar exam's test of "minimum competence." ...

But there is a different, perhaps reverse, form of the question: if legal education provides students with three years of sound education and a degree at the end, why is the bar exam even needed? Isn't graduating from a law school after three years of thickly-regulated education sufficient to make one eligible to practice law? Indeed, it's a reason why the state of Wisconsin offers "diploma privilege" to graduates of its two law schools. ...

[W]hy is the ABA still accrediting law schools given its new obsession with the ability of graduates to pass the bar exam? ... There are two principal, and opposing, kinds of responses one could make to my query.

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October 31, 2016 in Legal Education | Permalink | Comments (1)

Halloween #ScaryStoriesIn5Words: You Have To Teach Tax

Scary

October 31, 2016 | Permalink | Comments (1)

Wisconsin Welcomes 149 1Ls, Down 20% From 2015 (39% From 2010)

Wisconsin LogoWisconsin Law School (ranked #33 in U.S. News) welcomed 149 1Ls this Fall, down 20% from 2015 (186) and down 39% from 2010 (246).

Here are Wisconsin's admission data for the prior six years from Law School Transparency:

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October 31, 2016 in Legal Education | Permalink | Comments (0)

EU Releases Corporate Tax Reform Package


European Commission, Corporate Tax Reform Package:

The corporate reform package proposal published on 25th October, 2016 provides three new proposals to provide for a more modern and fairer tax system for business, to close loopholes between EU countries and non-EU countries, and to provide new dispute resolution rules to relieve problems with double taxation for buinesses.

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October 31, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1271: President Obama Lied About The IRS’s Targeting Of Conservatives

New York Post op-ed: Obama Told Us He’s Honorable — But He’s Just Another Liar, by Kyle Smith:

At least President Obama is honest. Or so goes the common perception. He tried, maybe he made mistakes, the other side was mean to him, but through it all, he didn’t lie.

That view got smithereened this week. It was always hard to believe the president’s repeated claim that he didn’t know his own secretary of state was using an off-the-books e-mail server to avoid public scrutiny, in the process virtually guaranteeing that she would commit multiple felonies by taking classified information into the open.

Now we know Obama was lying. His own aides said so, in e-mails uncovered by WikiLeaks and made public this week. ...

Obama lied about the IRS’s targeting of conservatives, even contradicting his own statements that the harassment was “inexcusable” and made him “angry” on May 15, 2013. Less than a year later, when the heat was off, he said there was “not even a smidgen of corruption” and the IRS’s vendetta against right-leaning groups was totally excusable as a bureaucratic snafu.

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October 31, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, October 30, 2016

Chicago Cubs Unite Jews, Christians And Muslims Who Identify With 108-Year Exile

Cubs5Wall Street Journal, The Chicago Cubs Are the Official Team of Jews—Also Christians, Buddhists and Muslims:

Jews, Christians, Muslims see affinity in club’s 108-year exile.

All religions, to some extent, seek to understand the value, meaning and purpose of suffering. That includes everyday plagues, such as enduring a calamitous baseball losing streak. It’s no accident spiritual thinkers make the connection.

“All this attention on the Cubs has me thinking about hope, the most underappreciated Christian virtue,” Michael Laskey, a Yankees-loving National Catholic Reporter columnist, wrote last year. Lauding Cubs fans for braving horrible weather in support of often-terrible teams, Mr. Laskey wrote that “this type of hope—showing up when things are hard—might be exactly the virtue the church most needs right now.”

A rabbi who is a columnist for the Jerusalem Post recently hailed the Cubs as “the Jews of the sports world,” an idea seconded by the Israeli ambassador to the U.S., Ron Dermer, who made a stop at Wrigley Field on a swing through Chicago this month. “The Cubs might be the most Jewish team in America,” said Mr. Dermer. “They’ve experienced a long period of suffering, and now they’re hoping to get to the promised land.”

There are Cubs-themed yarmulkes and caps spelling the team’s name in Hebrew. “What did Jesus say to the Cubs?” says a popular T-shirt in Chicago. “Don’t do nothin’ til I get back.”

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October 30, 2016 in Legal Education, Tax | Permalink | Comments (0)

Tax Reform For Our Century

Room to GrowRyan Ellis (Conservative Reform Network), Tax Reform For Our Century:

In his book as part of the Room To Grow series, Ryan Ellis identifies four fundamental flaws that beset America’s current tax code and offers principled, practical solutions to reform the system.

First, our business tax code is a barrier to growth, replete with tax rates that are among the highest in the developed world, often approaching 50 percent. The code also levies multiple layers of taxation against certain kinds of income and imposes an arbitrary, punitive system that inhibits business investment. To reform the business tax code, Ellis proposes several solutions, including establishing a lower, more competitive tax rate, reducing taxes on capital gains, and allowing businesses to deduct 100 percent of their investments in the year they are made.

Second, the tax code burdens middle-class families, particularly in the form of payroll taxes and a low, per-child tax credit, which hasn’t been increased since 2001. To provide them with much needed relief, Ellis offers several suggestions, including reducing the payroll tax and increasing the per-child tax credit.

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October 30, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #4 and #5. The #1 paper is now #23 in all-time downloads among 12,312 tax papers:

  1. [3,727 Downloads]  Families Facing Tax Increases Under Trump's Latest Tax Plan, by Lily L. Batchelder (NYU)
  2. [214 Downloads]  Taxation and Human Rights: A Delicate Balance, by Reuven Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2017, Michigan)
  3. [207 Downloads]  Law and Macroeconomics: The Law and Economics of Recessions, by Yair Listokin (Yale)
  4. [204 Downloads]  The Up-C Revolution, by Gregg D. Polsky (Georgia) & Adam H. Rosenzweig (Washington University)
  5. [184 Downloads]  Aggressive Tax Planning & the Ethical Tax Lawyer, by Heather M. Field (UC-Hastings)

October 30, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Experts Expect Charlie And Donna Adelson To Be Charged In Dan Markel's Murder

Adelson FamilyVice, ​Who Put the Hit Out on a Florida Criminal Justice Professor?:

In the hours before and after Dan Markel was shot in the head outside his home in Tallahassee, Florida, two years ago, his former brother-in-law Charlie Adelson called a paramour, Katherine "Katie" Magbanua, at least nine times. While the conversations were not recorded, the phone calls are among several key pieces of evidence cops believe connect Adelson and his lover to the two men they've formally accused of actually killing Markel, according to a recent probable cause affidavit charging Magbanua with orchestrating the Florida State professor's murder. ...

"I believe and investigators believe that at one point [Magbanua] called Charlie to tell him the deal is done," Leon County County state attorney William "Willie" Meggs told me recently over the phone. "What proof do we have? None at the moment. It will probably come, but we are not there yet."

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October 30, 2016 in Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 1270: Why The IRS Matters This Election

IRS Logo 2Seattle Times, Why It Matters: IRS:

The Issue:
The Internal Revenue Service touches everyone, not just taxpayers but anyone who receives a government check, drives on roads made possible by tax revenue or sends a child to a school helped by Washington. It’s a touch that can come with a heavy hand, in the eyes of critics who believe the agency’s far-reaching powers are abused and the agency needs to be cut down to size.

Why It Matters: ...
With some 90,000 employees, a massive stockpile of information on citizens and powers to dig deep into the lives of those it decides to investigate, the IRS is in the face of Americans like no other agency. That’s become even more so since it was handed the job of enforcing the mandate that people carry health insurance.

The potential for abusing power is obvious, and it has happened — most vividly at the hands of President Richard Nixon but also in the administrations of John Kennedy, Franklin Roosevelt and more, historians say.

During the Obama administration, the IRS has acknowledged mistreatment of tea party groups by subjecting them to excessive scrutiny in their bid for tax-exempt status. But investigations by the Justice Department and the IRS’ independent inspector general found no evidence that actions against the conservative groups were politically motivated.

Koskinen took over after the IRS actions in question but has not been clear of the controversy. Conservative lawmakers pressed unsuccessfully to impeach him, accusing him of lying to Congress, not answering subpoenas and overseeing an agency that destroyed documents in the tea party case. He denied the accusations and told lawmakers that when he testified in June 2014 that no documents had been destroyed since congressional investigations began, he didn’t know that IRS workers had mistakenly destroyed backup tapes bearing thousands of emails.

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October 30, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, October 29, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Syracuse Dean (And Tax Prof) Craig Boise: 'The Only Harley-Riding, Piano-Playing, Calf-Roping Law Dean In The Country'

SyracuseDaily Orange, College of Law Dean Craig Boise Described as the ‘Most Interesting Man in the World’:

His friends describe him as the closest a real person could come to being James Bond.

Syracuse University College of Law Dean Craig Boise is a man of many talents. When he meets someone for the first time, odds are it’ll take that person a while to discover his collection of talents — he’s a skilled classical pianist, scuba diver, sailor, motorcyclist, corporate international tax law guru, salsa dancer, world traveler and a former SWAT team member whose roots lie in small-town Missouri.

“I don’t think there are many deans who have kicked down doors on drug busts and also played classical piano,” said Andrew Morriss, law school dean at Texas A&M University and Boise’s longtime friend and colleague. “He’s kind of like the most interesting man in the world from the tequila commercials.”

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October 29, 2016 in Legal Education, Tax | Permalink | Comments (4)

IRS Demands $5 Billion From Facebook For Tax Strategy Devised By EY, Approved By Facebook's Auditor (EY)

EYFBloomberg, EY Created Facebook’s Tax Plan. And Lo, It Was Good, Declared EY:

Potential conflict seen in firms’ review of their own tax work.

Facebook is having an argument with the Internal Revenue Service, which the social media giant says could cost it as much as $5 billion. The dispute involves a tax strategy designed by EY, formerly Ernst & Young, that helped Facebook slash billions from its U.S. tax bill since 2010. Part of Facebook’s defense is that the plan was fully reviewed by its outside auditors. The accounting firm that signed off on EY’s tax plan? EY.

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October 29, 2016 in Tax | Permalink | Comments (2)

Chicago Law Profs And The Cubs

CubsNational Law Journal, Chicago Law Profs Don’t Need Lecture on Cubs’ Chances:

Chicagoans are abuzz with excitement over the possibility of a Cubs championship, which would be the first since 1908, and the legal academy is not immune. [David] Rudstein [(Chicago-Kent)] is just one of many professors at the city’s six law schools who are following the team with either sense of unbridled optimism or dread that it could fall apart at any moment. These are the Cubs, after all. ...

Ann Lousin, a professor at The John Marshall Law School in Chicago, had the unenviable task of teaching her three-hour sales transactions class during the first night of the World Series. Students still showed up, but by hour two she noticed pleading looks in their eyes. “You try to teach the Uniform Commercial Code while the World Series is going on,” she said the following morning. “It’s brutal.”

Other Chicago Law Profs quoted in the story:

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October 29, 2016 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1269: The Dark Art Of Political Intimidation

KS

Power Line, FREE KIM STRASSEL!:

YouTube has restricted Kim Strassel’s PragerU short course on The Intimidation Game. It’s almost like they want to prove her point

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October 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, October 28, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (University of Chicago) reviews a new article by Stephen Shay (Harvard), J. Clifton Fleming (BYU), and Robert Peroni (Texas), R&D Tax Incentives: Growth Panacea or Budget Trojan Horse?, 69 Tax Law Review 419 (2016).

HemelFollowers of this blog likely know already that any article by the trio of Shay, Fleming, and Peroni will be well worth reading. And, no surprise, their latest installment very much fits that bill. Here, they present a forceful critique of the various R&D incentives embedded in the Internal Revenue Code, culminating in an ambitious proposal to repeal these incentives and use the resulting revenues to increase direct federal spending on basic research.

One significant contribution that Shay, Fleming, and Peroni make in this article (though far from the only) is to expand our view of R&D tax incentives beyond the section 41 credit for increasing research activities and the section 174 deduction for research and experimental expenditures. 

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October 28, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses Jackson v. Commissioner, T.C. Summ. Op. 2016-69 (Oct. 24, 2016).

KristanSometimes love isn’t all you need. Compensation causes income tax. Gifts don’t. This made all the difference in a Tax Court case this week.

A Florida man, who we will call Mr. J., was pastor of a little church with “approximately 25 to 30 active members.” His wife was a “director” in the church.

Mr. J. made an offer to the congregation, according to Tax Court Judge Guy:

Mr. J… informed the church’s board of directors that he did not want to be paid a salary for his pastoral services but that he would not be opposed to receiving “love offerings”, gifts, or loans from the church.

Mr. J. was in a position to keep the love coming:

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October 28, 2016 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Florida Hosts 12th Annual International Tax Symposium

Florida Logo (GIF)The University of Florida Graduate Tax Program hosts its Twelfth International Taxation Symposium today at 8:15 am–1:00 pm EST (live stream here):

October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NYU Conference On Divergent Country Views Of Base Erosion And Profit Shifting

NYU Law (2016)NYU hosts a Global Tax Conference today on Divergent Country Views of Base Erosion and Profit Shifting:

Panel #1:  European Commission State Aid Cases

  • Dan Shaviro (NYU) (moderator)
  • Itai Grinberg (Georgetown)
  • Hein Vermeulen (University of Amsterdam)
  • Dennis Webber (University of Amsterdam)

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October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Law School Formerly Known As South Texas Agrees To Change Name From Houston College Of Law, Subject To Approval Of University Of Houston

Houston South TexasFollowing up on my previous posts (links below):  Houston Chronicle, Law School in Trademark Fight Will Change its Name Again:

By the end of 2016, the private law school in downtown Houston will have yet another new name, attorneys said on Wednesday.

Houston College of Law, formerly known as South Texas College of Law, has agreed to change its name one more time in the next two weeks to avoid going to trial in a federal trademark lawsuit brought by the University of Houston, which said the new name and red-and-white color scheme was confusing to consumers.

Lynne Liberato, one of the lawyers for the school with a soon-to-be-announced name, said the college has taken down a banner on campus, removed merchandise from its store and plans to have several billboards taken down, possibly as soon as this week.

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October 28, 2016 in Legal Education | Permalink | Comments (0)

42nd Annual Notre Dame Tax And Estate Planning Institute

ND

The 42nd Annual Notre Dame Tax and Estate Planning Institute concludes today.  Tax Profs with speaking roles include:

  • Mitchell Gans (Hofstra), The Most Important Estate and Income Tax Decision No One Knows: The Impact of the 1958 Supreme Court Decision in Fidelity-Philadelphia Trust Co. v. Smith on Installment Sales and Private Annuities 
  • David Herzig (Valparaiso), The Intersection of Business Transactions and Estate Planning: What Every Estate Planner Needs to Know About Business Law in the Context of Tax Planning

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October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1268: Sen. Whitehouse — Republicans Are Using Koskinen Impeachment To Bring IRS To Heel On Dark Money Campaign Financing

IRS Logo 2The Hill op-ed: The Republican Mission to Quell the IRS, by Sen. Sheldon Whitehouse (D-RI):

It looks like any other slick political ad on your TV. There’s ominous music, a dramatic voice-over, a grainy picture of President Obama. But this isn’t just another campaign commercial.

The news broke recently that a Republican mega-donor plans to spend about $1 million a week on ads calling on Congress to impeach John Koskinen, the commissioner of the IRS. It seems like an odd way to spend your millions. While it’s true that the IRS is the right’s favorite whipping boy, why the campaign-style ad blitz?

Well, in my years as a prosecutor, it’s become a habit to consider motive. So it got me thinking: What motive do the Republicans have to impeach the IRS commissioner? Maybe it’s just emotional acting-out against an agency they hate because it collects the taxes they hate. Maybe it’s an outbreak of political madness.

Or maybe there is method to their madness.

Let’s look at the Republican Party and how it is funded. While it raises a healthy amount for its campaign committees, Republicans and their allies depend increasingly on the super PACs and shadowy outside spending groups made possible by the Supreme Court’s 2010 Citizens United decision. ...

An under-funded and harried IRS has been unwilling to police the activities of powerful social welfare groups after an effort to separate out new applicants blew up in its face. In 2013, the IRS signaled it would begin the process of drafting a rule to better enforce our laws limiting dark money in elections. It later put the rulemaking process on hold after an especially loud outcry from conservative groups. The agency also came under heavy fire in the press from conservatives and Republicans in Congress who feared having the hose to their political oxygen crimped. And since Republicans took control of the House of Representatives in 2011, they’ve worked to slash the IRS budget. Funding in 2016 was $11.2 billion, or 17 percent below 2010 levels, adjusted for inflation.

So the dark-money floodgates remain wide open, deluging our politics in special-interest slime.

The GOP’s crusade against Commissioner Koskinen may seem overblown, but it makes a lot of sense when you consider motive: Republicans need dark money, and dark money needs a cowering IRS.

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October 28, 2016 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (5)

Thursday, October 27, 2016

Yale Student Newspapers Risk 501(c)(3) Tax-Exempt Status To Endorse Hillary Clinton; 94% Of Yale Profs' Political Donations Go To Democrats, 95% Of Conservative Students Feel Their Opinions Are Unwelcome At Yale

YHRCDaily Caller, Tax-Exempt Yale Daily News Appears To Violate Law By Endorsing Hillary Clinton:

The Yale Daily News appears to have violated tax laws by endorsing Hillary Clinton on Wednesday, despite being prohibited from doing so as a tax-exempt 501(c)3 organization.

Yale Daily News, News’ View: Hillary Clinton Law ’73 for President:

In 1969, the same year Yale College went coed, a young woman entered Yale Law School. Like many of us, she was an idealist: She took on child abuse cases and provided free legal advice to the poor. Like many of us, she was a go-getter who worked at the Child Study Center and conducted research on migrant labor. Long before she became Secretary of State Hillary Clinton LAW ’73, Hillary Diane Rodham was working to make our country a better place. Almost four decades later, the News is proud to endorse her for president.

We do not endorse Clinton solely because of the disqualifying flaws of her opponent, Donald Trump, whose campaign has disgusted and astonished our board. Indeed, our endorsement of Clinton should come as no surprise: A recent survey conducted by the News found that a vast majority of students support her candidacy. We endorse her because we, as young people, recognize this election is a turning point for our country. And the choice couldn’t be more clear.

Voting for Clinton is our obligation to ourselves and to future generations. ... Like the young woman who arrived in New Haven in 1969, we have the power to realize a different future. That power lies in our vote. Let’s use it to elect Hillary Clinton.

Independent Journal Review, Non-Profit Yale Record Magazine Taunts IRS With Editorial 'Not Endorsing' Hillary Clinton:

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October 27, 2016 in Political News, Tax | Permalink | Comments (8)

BigLaw Moneyball

MoneyballLaw.com, Big Law Moneyball:

Littler Mendelson is the second Am Law 100 firm (after Drinker Biddle & Reath) to follow in the Oakland A’s footsteps by hiring a dedicated head of data analytics. It’s only a matter of time before Brad Pitt and Jonah Hill are playing Big Law partners.

In job interviews with half a dozen law firms last year, Zev Eigen quizzed firm leaders as much as they probed him. They wondered what a data scientist with a Ph.D. from the Massachusetts Institute of Technology could do for them.

He was curious what they would let him do.

Eigen, a Cornell-educated lawyer who was on the faculty at Northwestern University School of Law at the time, developed a test for what he calls “status quo bias” at law firms. He told managing partners that their firms should be teaching and training their own would-be first-year associates in jurisdictions such as California and New York that allow apprentices to sit for the bar exam. The plan would save firms $880,000 in salary per associate over a 10-year timeframe.

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October 27, 2016 in Legal Education | Permalink | Comments (0)

Sales Factor Apportionment Would Eliminate Global Profit-Shifting, Inversions, And Favoring Multinational Over U.S. Companies (And Should Unite Democrats And Republicans)

American Prospect, The Progressive Tax Reform You’ve Never Heard Of:

AP“Profit Shifting” is the biggest lawful tax avoidance strategy in the United States and the world. Tax professor Kimberly Clausing of Reed College estimates that 31 percent of corporate tax revenue was lost due to profit shifting in 2012. In other words, the IRS collected $242 billion in corporate tax revenue that year, but should have collected another $111 billion if profit shifting to foreign jurisdictions did not exist. The problem rapidly accelerated from 2004 to 2012, and continues to increase dramatically. In 2016, it is possible that more than 40 percent of potential corporate tax revenue will be lost.

Some reformers on the Democratic side may be missing the mark when focusing on tax loopholes, tax breaks, and statutory rates while preserving the taxation of U.S. corporations’ worldwide income. Most developed countries tax income generated in their country; this is called a “territorial” income tax system. While the worldwide taxation system we have may, at first, seem like a good idea to progressives who want U.S. multinationals to be taxed properly, our system is having the opposite effect, and it can’t be corrected through tinkering.

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October 27, 2016 in Tax | Permalink | Comments (7)

Florida Seeks To Hire Professor Of Tax Practice

Florida Logo (GIF)The University of Florida Fredric G. Levin College of Law seeks to hire a full-time, non-tenure track Professor of Practice in Taxation to begin no later than the fall 2017 semester:

The Professor of Practice will be expected primarily to teach graduate level tax classes to LL.M. and S.J.D. students as part of the College's highly regarded Graduate Tax Program. Applicants for this position should hold a J.D. or LL.B. degree from an accredited law school and have significant legal experience in the field of taxation, with a national or international record of distinction in non-academic achievement, and have demonstrated applied and practical professional experience in taxation. This position will require ongoing professional engagement in taxation, including maintaining professional credentials, and contributions to teaching, research, and service. Salary will be commensurate with qualifications and experience.

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October 27, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (0)

Holderness:  The Unexpected Role Of Tax Salience In State Competition For Businesses

Hayes R. Holderness Jr. (Illinois),  The Unexpected Role of Tax Salience in State Competition for Businesses, 84 U. Chi. L. Rev. ___ (2017):

Competition among the states for mobile firms and the jobs and infrastructure they can bring is a well-known phenomenon. However, in recent years, a handful of states have added a mysterious new tool to their kit of incentives used in this competition. Unlike more traditional incentives, these new incentives — which this Article brands “customer-based incentives” — offer tax relief to a firm’s customers rather than directly to the firm. The puzzle underling customer-based incentives is that tax relief provided to the firm’s customers would seem more difficult for the firm to capture than relief provided directly to the firm — strange, as a state’s primary goal is to subsidize the firm’s investment in the state.

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October 27, 2016 in Scholarship, Tax | Permalink | Comments (0)

Wendi Adelson's Novel: Art Imitating Life?

AdelsonFollowing up on my previous post, What Wendi Adelson's Novel Reveals About Dan Markel's Murder:  Above the Law, The Dan Markel Case: Insights From Wendi Adelson’s Novel:

Over at Outside the Law School Scam, blogger “dybbuk123” took one for the team and read This Is Our Story, the “criminally lousy” novel written by Dan Markel’s ex-wife, Wendi Adelson. ...

A source of mine who also read This Is Our Story shared additional interesting observations:

The basic premise of Attorney Lily’s life is that she married a professor (Joshua Stone). She says that she married him too quickly, and that at the time she was “absolutely sick and tired of dating” and saw “dating, at its best, as nothing more than a romantic interview. ‘Are you the kind of person who would produce good looking, smart and nice children and never cheat on me and help me clean up the kitchen and love me even when I’m grouchy and not trade me in for a younger model and not join the other team?'”

This is, you may recall, pretty much exactly what Wendi said about Dan in her writing-class podcast — that she married a man she lacked passionate love for because she figured he would be a good father.

Joshua gets a job at North Florida State University in Hiawassee Springs (“the ‘Wassee), a small town in the Florida panhandle. Lily moves there because that’s where his job is, but she hates it. She takes many digs at “the Wassee” throughout the book — making fun of the people, their speech, their clothing, calling the town “irrelevant.”

This is consistent with what sources have described as Wendi’s dislike and disdain for Tallahassee, which she fled in favor of cosmopolitan Miami as soon as she could after Dan’s death.

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October 27, 2016 in Book Club, Legal Education | Permalink | Comments (1)

Yale:  Residential Solar And The Federal Income Tax

Ethan Yale (Virginia), Residential Solar and the Federal Income Tax:

Residential solar systems are becoming commonplace in many regions of the United States. Use of such systems raises issues in tax doctrine and policy that are not well appreciated and have not yet been systematically analyzed. The goals of this article are threefold: (1) to identify the main issues and to organize them into a coherent framework, (2) to analyze the doctrinal and policy ramifications of present law, and (3) to suggest improvements to present law.

October 27, 2016 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1267: Court Orders IRS to Give Account For Targeting Conservatives

IRS Logo 2One News Now, IRS to Give Account for Targeting Conservatives:

A Christian legal group recently scored a legal victory against the IRS, which was ordered to issue outstanding determinations and answer for its political targeting of conservative groups and citizens to whom it unjustly denied tax exemptions for years. ...

The American Center for Law and Justice (ACLJ) was pleased to announce last week its latest victory against the agency many Americans love to hate. “Three years after we filed a lawsuit on their behalf – and for some, nearly seven years after they submitted their applications for tax-exempt status – the grassroots conservative groups that were targeted by the IRS for their political views are finally receiving some of the relief to which they have long been entitled – determinations on those applications.”

After the IRS refused to change its unlawful discriminatory dealings with conservatives by continuing its abuse of the system through punishing those not embracing the administration’s Leftist politics, the lawsuit filed against it pressed forward in the courts.

“In early August, the federal appellate court for the District of Columbia Circuit held that the plaintiffs who filed suit in Linchpins of Liberty, et al. v. United States, et al. in 2013 had set forth allegations sufficient to obtain actual evidence about the IRS’s targeting of conservative tax-exempt applicants based on their names and political positions,” the ACLJ reported. “The D.C. Circuit thus reversed the decision of the district court (which had previously dismissed the claims on the grounds that the IRS had apparently ceased the targeting conduct) and sent the case back to the lower court, explaining that the IRS had failed to demonstrate that either the targeting scheme, or its effects on plaintiffs, had actually ended.”

ACLJ Chief Counsel Jay Sekulow maintains that the court was no longer willing to allow the IRS to drag its feet – ordering it provide information about its alleged shady dealings targeting conservative groups over the years. “[Earlier this month], District Judge Reggie B. Walton held a status conference to resume the lower court proceedings in the case,” Sekulow announced. “While the IRS’s attorney, once again, took the position that most of the claims are moot because most of the plaintiff organizations have received determinations, the court picked up where the D.C. Circuit left off, and ordered that the IRS cease delaying determinations on any outstanding tax-exempt applications of Tea Party groups and other grassroots organizations. He gave the IRS 30 days to comply.”

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October 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, October 26, 2016

Ainsworth Presents Blockchain Technology Might Solve VAT Fraud Today At Pennsylvania

AinsworthRichard T. Ainsworth (Boston University) presents Blockchain Technology Might Solve VAT Fraud, 83 Tax Notes Int'l 1165 (Sept. 26, 2016) (with Andrew B. Shact (Mimecast, Boston)), at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

At the World Economic Forum in Davos, Switzerland, January 20-23, 2016, more than 800 technology executives and observers were asked when they think governments will begin collecting taxes using blockchain, a type of cryptographic software. The average response was 2023, with 73 percent of respondents saying 2025. The survey did not ask respondents to name the tax collected or the jurisdiction that would collect it, so we do not know where they expect blockchain to be used or what they expect it to collect. This article argues that the EU VAT will be an early adopter, if not the earliest adopter, of blockchain, which will bring substantial efficiency to VAT collection and reduce costs and build trust in intergovernmental relationships.

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October 26, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Market Myth And Pay Disparity in Legal Academia: We Should Amend The Equal Pay Act To Prohibit Market Excuses For Pay Differentials

Paula A. Monopoli (Maryland), The Market Myth and Pay Disparity in Legal Academia, 52 Idaho L. Rev. 867 (2016):

The definition of merit in academia is highly subjective, based in large part on the rank of the journal one publishes in and how often one publishes. ... There have been two high profile cases in legal academia in the past several years. ... The first case is that of Professor Lucy Marsh ... of the University of Denver Sturm College of Law. Marsh was the lowest paid faculty member at the school after forty years of teaching. The second case involved the release of documents pursuant to a Texas Public Information Act request by faculty members at the University of Texas School of Law documenting previously undisclosed compensation in the form of six-figure forgivable loans to certain faculty members, very few of whom were women. A discussion of the two cases ... illustrates why market excuses are so pernicious in terms of gender pay disparities in legal academia. ...

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October 26, 2016 in Legal Education, Scholarship | Permalink | Comments (3)