TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, January 27, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by Michael Doran (Virginia), Uncapping Executive Pay, 90 S. Cal. L. Rev. (forthcoming 2017).

HemelMichael Doran’s scholarship on the taxation of executive pay is consistently insightful, and his latest article on section 162(m) is no exception. That provision, enacted in 1993, disallows a deduction for amounts paid to CEOs and other top officers of publicly traded corporations in excess of $1 million unless such compensation is “performance-based.” Doran convincingly argues that section 162(m) has done little to stem the rise of CEO compensation and that it has not caused corporations to tie pay to performance in a meaningful way. And while I am less sure than Doran that section 162(m) should be scrapped, Doran certainly makes a strong case for getting rid of the provision.

According to Doran, section 162(m) has proven to be a failure for at least three reasons. First, firms can skirt the $1 million limit by paying CEOs in stock options or by tying compensation to performance goals that are easily met. Second, the provision applies only to current employees—and so does not impose any constraints on nonqualified deferred compensation paid out to former CEOs. And third, corporations can ignore the cap, pay their CEOs more than $1 million outright, and simply forgo the deduction for amounts over $1 million paid. Indeed, more than a quarter of publicly traded corporations in 2013 blew through the cap and gave up the deduction.

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January 27, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Will Donald Trump Finally End The 100 Year War Over The Estate Tax?

Estate Tax LogoThe Hill op-ed: Trump vs. the Democrats: Is This the End of the 100-Year War over the Estate Tax?, by Darren T. Case (Tiffany & Bosco, Phoenix):

[The] 45th President of the United States will soon embark upon his descent into the battlefield on Capitol Hill to potentially end a century long war regarding the estate tax. Standing in opposition to Donald Trump’s political army, presently in firm control of the Executive and Legislative branches, is a Democratic Party that was severely wounded by the 2016 election. With the morale amongst Democrats arguably being at an all-time low, many may assume that the white flag will be raised in regard to the so-called “death tax.”

However, considering what is at stake while we’re in the midst of the greatest wealth transfer in human history, with over $30 trillion dollars set to transfer over the next few decades, and with the estate tax believed by some to be one of the most quintessential weapons against the growing wealth inequality in the United States, it would be foolish to assume that the Democrats will not attempt to go down fighting with vigor and valor. For a nation essentially founded upon a war over taxation, ultimately ending in 1776, perhaps this final battle over the estate tax should come as no surprise. ...

Throughout its 100 year history, liberal economists and academics have published considerable amounts of analysis arguing in favor of the estate tax, especially in regard to the economic principle of inequality.  Economic inequality, generally defined as the difference found in various measures of economic well-being, is believed by liberal schools of thought to be one of the greatest economic ills plaguing fairness in American society.  A recent work on the topic of the estate tax and inequality is that of Pepperdine University School of Law Professor and Editor of the most popular tax law blog on the Internet, Paul L. Caron, and Boston College Law School Professor James Repetti.

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January 27, 2017 in Scholarship, Tax | Permalink | Comments (4)

The Charlotte Law School Tapes: Dean Drops F-Bombs, Calls Faculty 'Delusional' About Their Power

Charlotte Logo (2016)Following up on Wednesday's post, Charlotte Law School Reopens: 33% Of Students Have Transferred, Prof Says 42% Bar Pass Rate Would Have Been In 20s But For Payments To Students Not To Take Bar:  Charlotte Observer, Recordings Shed Light on Charlotte School of Law’s Methods to Boost Bar Passage:

Last week, WFAE reported that the troubled Charlotte School of Law paid graduates deemed at-risk to delay taking the bar and enroll in a bar preparation course. This program came about a few years ago as it had become the state’s largest law school with the poorest record of graduates passing the bar.

Today, WFAE’s Lisa Worf reports on secret recordings of a law school official that shed light on how much the deferral program inflated bar passage statistics.

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January 27, 2017 in Legal Education | Permalink | Comments (2)

Columbia Journal Of Tax Law Publishes New Tax Matters:  Country By Country Reporting And Corporate Privacy

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published a new issue of its Tax Matters feature, with three short pieces by tax practitioners responding to a specific cutting-edge tax law issue posed by a tax academic. Reuven S. Avi-Yonah (Michigan), Country by Country Reporting and Corporate Privacy: Some Unanswered Questions , 8 Colum. J. Tax L. Tax Matters 1 (2016):

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January 27, 2017 in Scholarship, Tax | Permalink | Comments (0)

Harvard Law Students Demand Greater Role In Dean Search Process

Harvard Law School (2016)Following up on my previous post, Martha Minow To Step Down As Harvard Law School Dean: Harvard Law School Record, Student Groups Seek Role in Law School Dean Search:

Just weeks after University President Drew G. Faust launched the search for the next Dean of Harvard Law School, student groups at the school have started organizing to make themselves “an indispensable part of the process.”

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January 27, 2017 in Legal Education | Permalink | Comments (1)

Thursday, January 26, 2017

Mehrotra Presents Japanese And U.S. Resistance To The VAT Today At Duke

Mehrotra (2017)Ajay Mehrotra (American Bar Foundation & Northwestern) presents The VAT Laggards: A Comparative History of Japanese and U.S. Resistance to the Value-Added Tax (with Hiroyasu Nomura (Dokkyo University, Japan)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Since 1945 the fiscal histories of Japan and the United States have had a great deal in common. Not only have these two advanced industrial nations relied for decades on progressive income taxes as their main source of national revenue; in the process, both countries resisted for many years the global trend towards broad-based consumption taxes. Indeed, until the 1980s, Japan and the United States were among a very small group of highly developed and industrialized nations that avoided the worldwide embrace of the value-added tax (VAT) — one of the most popular forms of broad-based consumption taxes. The Japanese resistance to the VAT ended in 1989. In that year, Japan enacted a VAT and participated in the third and perhaps most widespread phase of VAT adoption across the globe. Yet, the United States has continued to resist this global trend.

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January 26, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

The Law School That Crumbled: Triumph Or Tragedy?

Charlotte Logo (2016)The Atlantic, The For-Profit Law School That Crumbled:

The Charlotte School of Law may not be able to outrun the latest—and most damning—chapter of its at-times-scandalous existence. For years, the for-profit school was targeted by critics for its increasingly negative student outcomes: median LSAT scores in the low 140s, state bar-passage rates that hovered around 45 percent, high student indebtedness, and lackluster employment figures. In 2014, a routine re-accreditation site visit by officials from the American Bar Association led to closer scrutiny of the school’s admissions and teaching practices. That same year, it appears the school began offering $11,200 grants to students who delayed taking the bar. During October of last year, the school was placed on probation by the American Bar Association.

Then came the most damaging news: in mid-December, the Department of Education denied the law school’s application for recertification under Title IV of the Higher Education Act. This decision prevented Charlotte’s students from receiving federal loan money—an unprecedented decision for a law school that remains accredited, for-profit or otherwise. Now without a significant source of revenue, the school saw no choice but to fire up to two-thirds of its faculty and close several of its legal-aid clinics.

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January 26, 2017 in Legal Education | Permalink | Comments (0)

ABA Section of Legal Education And Admissions To The Bar 2015-2016 Annual Report

ABAABA Section of Legal Education and Admissions to the Bar, 2015-2016 Annual Report:

We invite you to read about the work of the Section over the past year including reports from the Section's leadership, law school approvals and site visits, enrollment statistics, the work of the Accreditation and Standards Review Committees, and information regarding the Section's most recent conferences and programs, membership and publications.

Barry A. Currier, From the Managing Director:

The year 2015-2016 was not “best of times and the worst of times.” But, there is much good to report while recognizing that fundamental challenges remain....

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January 26, 2017 in Legal Education | Permalink | Comments (0)

Section 1043 + Estate Tax Repeal = Hundreds Of Millions In Tax Savings To Trump Appointees (Including Jared + Ivanka)

TrumpWashington Post, For Trump’s Wealthy Appointees, Death May Be Certain But Taxes Aren’t:

There are times when two seemingly unrelated tax policies intersect to create windfalls for fortunate people who are in the right place at the right time.

That is likely to be the case when it comes to calculating the tax benefits that will go to the billionaires and other very rich people joining the Trump administration. Among those who stand to benefit but haven’t been identified until now is Donald Trump’s son-in-law, Jared Kushner, even though he’s not taking a formal government job.

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January 26, 2017 in Tax | Permalink | Comments (1)

Using Altmetrics To Measure The Impact Of Faculty Scholarship

AltmetricsThe 2017 RHSU Edu-Scholar Public Influence Scoring Rubric:

Tomorrow I’ll be posting the 2017 Rick Hess Straight Up (RHSU) Edu-Scholar Public Influence Rankings in this space, honoring the 200 university-based education scholars who had the biggest influence on the nation’s education discourse last year. Today, I want to run through the scoring rubric for those rankings. The Edu-Scholar rankings employ metrics that are publicly available, readily comparable, and replicable by third parties. This obviously limits the nuance and sophistication of the measures, but such is life. ...

Each scholar was scored in nine categories, yielding a maximum possible score of 200—although only a handful of scholars actually cracked 100. Scores are calculated as follows:

  • Google Scholar Score:  This figure gauges the number of articles, books, or papers a scholar has authored that are widely cited. ...  Points were capped at 50. This measure offers a quick way to gauge the expanse and influence of a scholar’s work.

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January 26, 2017 | Permalink | Comments (0)

Morse:  Important Developments In Federal Income Taxation

Edward A. Morse (Creighton), Important Developments in Federal Income Taxation (80 pages):

This outline covers significant developments in federal income taxation along with a few other interesting or noteworthy tax topics. It offers a selective treatment of items likely to interest practitioners and advisors within a broad range of professional practices and is not intended to provide comprehensive coverage.

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January 26, 2017 in Scholarship, Tax | Permalink | Comments (1)

Walker:  The Stages Of Tax Exceptionalism

The Surly Subgroup:  The Stages of Administrative Law Exceptionalism, by Christopher J. Walker (Ohio State):

At the American Bar Association’s annual Administrative Law Conference in December, I had the privilege of moderating a panel entitled Your Agency Is Not That Special: The Decline of Administrative Law Exceptionalism. The panel consisted of leading experts on administrative law exceptionalism from three distinct regulatory fields: Jill Family for immigration, Kristin Hickman for tax, and Melissa Wasserman for patent law. ...

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January 26, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1358: More Reflections On The End Of My Daily Coverage

IRS Logo 2

William Jacobson (Cornell), TaxProf Ends Daily Coverage of IRS Scandals:

After 1352 days, thank you for your service, Sir.

Pepperdine Law Professor Paul Caron, also known as TaxProf at the TaxProf blog, started daily coverage of the IRS scandal(s) several years ago. The College Fix has some good background on the endeavor.

TaxProf probably didn’t think it would last this long. But once you start to cover something daily, it’s hard to stop.

After 1352 days, Tax Prof stopped daily coverage. ...

Thank you for your service, Sir.

Mark Meckler, the man behind the Convention of States movement, writes that monitoring the IRS can’t stop, TaxProfBlog stops daily blog about IRS harassment of conservative groups, so now we need to do this:

Just because Donald Trump is now in office doesn’t mean conservatives can take their eyes off the federal government.

On this blog, I’ve written extensively about the IRS’s targeting of Tea Party groups and have often linked to Paul Caron who has kept a daily update on the scandal at the TaxProfBlog. Unfortunately, his coverage has come to an end ….

…. thank you for the amazing service you provided. But in the meantime, we can’t let up and allow this corruption to go unpunished and allow the tax agency to walk away free from its responsibility. Trump vowed to remove corruption from Washington, and we look forward to watching him make good on his promise.

I agree with Glenn Reynolds at Instapundit who wrote, “There hasn’t been sufficient accountability for the IRS’s gross misbehavior here, but I think that Caron has done a tremendous service by keeping the issue alive for so long. I remain deeply disappointed at how many of his fellow tax professors criticized him for doing so, because they didn’t want Obama and the Democrats to look bad.”

We must stay the fight.

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January 26, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, January 25, 2017

Chodorow Presents The Parsonage Exemption Today At Pepperdine

Chodorow (2014)Adam Chodorow (Arizona State) presents The Parsonage Exemption at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

The parsonage exemption allows “ministers of the gospel” to exclude the value of housing benefits from income, whether received in-kind or as a cash allowance. Critics argue that the provision is unconstitutional, and the dispute is likely to make it to the Supreme Court. This Article fills an important gap in the debate over the parsonage exemption by offering a nuanced explanation of how it and other housing provisions function within the tax code. Placing the parsonage exemption in its proper tax context makes clear that (1) other tax-free housing provisions and exemptions for religious organizations cannot provide the parsonage exemption constitutional cover; (2) the parsonage exemption involves significantly more entanglement than would the generally applicable housing provision; (3) permitting ministers to receive tax-free housing violates the core tax principles of horizontal and vertical equity; and (4) other exemptions for religious organizations cannot justify the parsonage exemption.

January 25, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Stewart Presents Transnational Tax Law And The Future Of The Tax State Today At Toronto

StewartMiranda Stewart (Australian National University & University of Melbourne) presents Transnational Tax Law and the Future of the Tax State at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

There is a growing contemporary literature about transnational law. Until recently this has not been a concept adopted in the tax law context, although there is a substantial literature on international tax law, including in bilateral and multilateral treaties and even suggested as international customary law (Avi-Yonah 2006). Tax law has been a bastion and expression of national sovereignty, funding public goods in the nation state, which developed through the 20th century in many countries as a "tax state". Recently, Genschel and Rixen (2015) proposed and analysed the strengths and limitations of a “transnational legal order” of international tax. This paper asks whether transnational tax law really exists and if so, what does it mean for the tax state? What is the authority and legitimacy of transnational tax law? Who are its legislators, subjects, agents, interpreters and enforcers in national or international spheres?

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January 25, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Field:  Fostering Ethical Professional Identity In Tax

Heather M. Field (UC-Hastings), Fostering Ethical Professional Identity in Tax: Using the Traditional Tax Classroom, 8 Colum. J. Tax. L. ___ (2017):

Will a tax lawyer in private practice help taxpayers comply or help taxpayers cheat? Will a government tax lawyer respect or abuse taxpayer rights? Answers to these questions turn, at least in large part, on the lawyer’s ethical professional identity—the lawyer’s philosophy of lawyering, which reflects her values, her sense of responsibility to others, and her self-concept of who she is (and wants to be) as a member of the legal profession. According to recent reports on legal education reform, commentators, and the ABA, law schools must do more to help students develop their ethical professional identities. This is particularly important in tax law, where lawyers’ ethical professional identities can affect compliance and revenue collection, tax morale and taxpayer rights, and the reputation of the tax profession.

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January 25, 2017 in Scholarship, Tax | Permalink | Comments (1)

Speck:  The Social Boundaries Of Corporate Taxation

Sloan G Speck (Colorado), The Social Boundaries of Corporate Taxation, 84 Fordham L. Rev. 2583 (2016):

Historically, the tax law distinction between corporate and conduit treatment drew primarily on doctrinal understandings, treating state-law corporations as corporate for tax purposes and classifying unincorporated legal entities based on their resemblance to conventional state-law corporations. More recently, commentators and Treasury have abandoned these doctrinal touchstones in favor of efficiency, broadly construed, as the guiding principle in determining an entity’s tax classification. This Article argues that, while important, efficiency considerations should not function as the sole arbiter of the boundary between corporate and conduit tax treatment.

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January 25, 2017 in Scholarship, Tax | Permalink | Comments (0)

2017 SoFi Return on Education Law School Rankings

SoFiSoFi, 2017 Law School Rankings: Return on Education:

By analyzing more than 60,000 student loan refinancing applications over a 3-year period from Janu-ary 2014 to December 2016, SoFi has updated its Return on Education (ROED) Law School Rankings grounded in verified income and debt — not just reported figures. This represents the most objective, factually accurate and defensible data that can't be found or replicated anywhere else.

Graduating from law school can have a positive impact on lifetime earnings, but given the high cost of tuition and steep interest rates on graduate student loans, the ROED can vary significantly by school. Through SoFi's analysis, find out how the top JD programs — and those with the worst payoff — stack up when it comes to average salary and student debt load for graduates who are 3 years out of school.

Quartz, Charted: The American Law Schools Most—And Least—Worth Your Money:

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January 25, 2017 in Law School Rankings, Legal Education | Permalink | Comments (4)

CBO Projects Federal Debt To Grow 50% ($10 Trillion) Over Next Decade

New York Times, Federal Debt Projected to Grow by Nearly $10 Trillion Over Next Decade:

After seven years of fitful declines, the federal budget deficit is projected to begin swelling again, adding nearly $10 trillion to the federal debt over the next 10 years, according to projections from the nonpartisan Congressional Budget Office that reveal the strain that government debt will have on the economy as President Trump embarks on plans to slash taxes and ramp up spending.

Congressional Budget Office, The Budget and Economic Outlook: 2017 to 2027:

Table 1

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January 25, 2017 in Congressional News, Tax | Permalink | Comments (1)

Charlotte Law School Reopens: 33% Of Students Have Transferred, Prof Says 42% Bar Pass Rate Would Have Been In 20s But For Payments To Students Not To Take Bar

Charlotte Logo (2016)Charlotte Business Journal, Charlotte Law President Talks Enrollment, Layoffs — And the Future:

Charlotte Law President Chidi Ogene said in an interview with the Charlotte Business Journal that the education department’s decision was a “precipitous and extreme step” given that numerous schools have been placed on probation but not had funding pulled by the education department. He notes Charlotte Law is taking steps to address the ABA’s concerns regarding compliance with first-time bar passage rates and admission indicators. “We don’t have an answer to suggest why Charlotte is being treated in a way that’s very, very different than any other higher-education systems,” Ogene adds.

The loss of federal funds has forced Charlotte Law to make difficult choices, Ogene says.

Final enrollment figures for the spring semester won’t be available until later this week. But initial reports show that roughly 230 students have transferred — a 33% drop — from the about 700 students taking classes last fall. ...

WFAE, Law School Official: Bar Passage Would Have Been in 20s If Not For Paying Students Not To Take Exam:

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January 25, 2017 in Legal Education | Permalink | Comments (1)

Louisville Dean Finalists Include 5-Year Interim Dean And Associate Dean With Experience Addressing 50% Enrollment Decline

LouisvilleFollowing up on my previous posts on the troubles at Louisville Law School (links below):  The Provost at the University of Louisville has announced the four finalists for the law school deanship.  Two things jumped out at me:

First, one of the candidates is the Interim Dean, who has been in that position for five years.  I am not aware of any other interim dean that has served so long in that capacity in light of ABA Accreditation Standard 203 and Interpretation 203-3.  (Earlier this month, I blogged the selection of Rachel Janutis as Dean Of Capital University Law School following three years of service as interim dean.)  Not coincidentally, Louisville is scheduled for its seven-year ABA accreditation visit in Fall 2017, by which time presumably a permanent dean will be in place.

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January 25, 2017 in Legal Education | Permalink | Comments (2)

Tuesday, January 24, 2017

Batchelder Presents Accounting For Behavioral Biases In Business Tax Reform At NYU

BatchelderLily Batchelder (NYU) presented Accounting for Behavioral Biases in Business Tax Reform: The Case of Expensing at NYU yesterday as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler:

One of the fundamental questions in business tax reform is whether to allow firms to immediately expense investments or require economic cost recovery. The conventional view is that expensing would generate stronger growth effects holding revenues constant. This view is rooted in traditional models of corporate finance that assume firms look at the net present value of expected tax payments when incorporating taxes into investment decisions. But this traditional view ignores the possibility that firms focus on more salient measures of taxes as well. If so, they may respond less to expensing than this theory suggests because expensing does not lower their financial accounting tax liability and, all else equal, requires a higher statutory rate.

This paper considers whether firms undervalue expensing due to a focus on these non-economic tax metrics and, if so, what this implies about business tax reform if the goal is to increase US investment. It develops a framework for what cost recovery rules are optimal, and then uses new and existing data to parameterize this framework, holding constant long-run revenues and the relative tax treatment of debt and equity. 

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January 24, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Speck Presents Expertise And International Tax Norms Today At Georgetown

SpeckSloan Speck (Colorado) presents Expertise and International Tax Norms at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

This paper explores how a particular framework for understanding international taxation — a framework driven by so-called international tax neutrality norms — developed among economists and legal academics in the 1960s and subsequently became entrenched among public-sector policymakers. The neutrality norm framework marks a turn from the instrumental use of international taxation in the 1950s toward an efficiency-oriented approach towards international taxation. Although some scholars question the usefulness of this turn towards efficiency, the neutrality norm framework continues to dominate discussions about international tax policy today. This paper traces the intellectual history of the neutrality norm framework: how it emerged in the late 1950s, and how it became a durable framework for understanding international tax policy.

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January 24, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tax Havens And The Transparency Wave Of International Tax Legislation

Robert T. Kudrle (Minnesota), Tax Havens and the Transparency Wave of International Tax Legislation, 37 U. Pa. J. Int'l L. 1153 (2016):

Tax havens have posed an increasingly important challenge to the world economy, yet they receive little attention in the international economic law and policy literature. This relative neglect springs largely from taxation’s tangential connection with the major structures of international economic governance. But a highly developed treaty regime has been in place for decades. The first wave of legalization aimed at relief from double taxation grew from an influential template for bilateral tax treaties promulgated by the League of Nations and the OECD. Developments outside that regime, particularly the growth of tax havens, generated the need for a second wave that began with a 1998 OECD report proposing cooperative action to combat both tax avoidance and evasion.

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January 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

Speck:  Tax Planning And Policy Drift

Sloan G. Speck (Colorado), Tax Planning and Policy Drift, 69 Tax L. Rev. 549 (2016):

This Article proposes a framework for analyzing how private-sector legal interpretations influence public policy. Political scientists and legal scholars use the terms “bureaucratic drift” and “legislative drift” to describe how administrative agencies and future legislative coalitions affect public policy enacted by Congress. This Article identifies a third category of policy drift: “planning drift.” Planning drift describes deviations from an enacting legislature’s policy preferences that result from private experts’ interpretations of existing law. After Congress enacts a statute, the first people to interpret and apply the new legislation generally are not regulators or judges, but instead are private experts, such as lawyers, acting in the service of their clients. Although these experts’ interpretations do not have legal authority in a formal sense, this Article elaborates mechanisms through which these interpretations shape the course of public policy. Specifically, these interpretations give private experts a first-mover advantage in the interpretation of new legislation and affect the substance of subsequent legislative and bureaucratic interventions. Where private experts’ legal interpretations distort legislative policy preferences, Congress may have an incentive to limit planning drift. From Congress’s perspective, however, planning drift is not always undesirable.

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January 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

Columbia Journal Of Tax Law Publishes New Issue

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published Vol. 8, No. 1:

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January 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

The U.K.'s Threat To Weaponize Tax Is No Bluff

Bloomberg View:  The U.K.'s Threat to Weaponize Tax Is No Bluff, by Mark Gilbert:

The U.K. government is threatening to give its post-Brexit economy a shot in the arm by reducing corporate taxes to become a sort of "Singapore-on-Thames," a tax haven on the perimeter of the European Union. EU officials are dismissive of the idea; but they may be whistling past a graveyard.

At a rate of 20 percent, the U.K. currently ranks in the 11th lowest tax bracket in the EU, level with Finland and Estonia, lower than France or Germany but higher than Ireland, Poland and the Czech Republic:

Bloomberg

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January 24, 2017 in Tax | Permalink | Comments (3)

California Bar Exam Carnage Extends To Out-Of-State Law Schools

California (2016)Following up on my previous posts (links below): Daily Record, How Out-of-State Schools Fared on California Bar Exam:

Newly released data for California’s July 2016 bar exam reveal a strong performance from graduates of most top-tier, out-of-state law schools, while pass rates for students from other programs fell behind.

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January 24, 2017 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1356: Reflections On The End Of My Daily Coverage

IRS Logo 2

Peter J. Reilly (Forbes), TaxProf Calls An End To Day By Day IRS Scandal Coverage:

Paul Caron, the TaxProf, dean of the tax blogosphere has called the end of an era.  We were all distracted with the inauguration, an admittedly important even, but given the number of peaceful transitions of power we have had since 1800, well 1860 anyway, not really that remarkable.  Professor Caron declared that he was ending daily coverage of the IRS scandal with Day 1352.

His announcement is particularly meaningful to me. Check out the lead paragraph:

In response to inquiries from Peter J. Reilly (Forbes) and Brian Leiter (University of Chicago Law School), I previously discussed when I would stop my daily coverage of the IRS Scandal.

Professor Caron explained

My answer is the same as it has been throughout the scandal: I will stop when the daily commentary in the press and blogosphere on the scandal (from both the right and the left) ends. At several points in the scandal, as I was running out of content, a new chapter would unfold and my daily coverage would continue.

At any rate, his mention of me in this context gives me a sense of having really arrived in the tax blogosphere after over seven years since my very first post. ...

I remain the last IRS scandal agnostic. Frankly, I don't think you needed a big conspiracy to account for the IRS getting its works gummed with exempt applications from groups calling themselves a party but claiming they were mostly not political.  On the other hand, both Joe Kristan and George Will think there is a scandal and that is a tough pair to be dismissive of. ...

In October 2015 I wrote two posts in which I indicated that the quality of the TaxProf's series was being diluted, by the addition of extraneous matter. ... The core scandal had been about difficulties processing applications for exempt status. Conservative groups were not getting their exempt status revoked for single statements.

There were quite a few strands of stories that were legitimately connected to the core scandal. Lois Lerner's emails, the congressional investigations, emails lost on servers, how quickly Koskinen moved the investigation on are examples. But extraneous material started creeping in. ...

It seems that the IRS Scandal even more than usual is something that is viewed through ideological glasses. ...

I reached out for some comments on the closing of the day by day scandal coverage.  Joe Kristan refereed me to his post, which ironically became Day 1353.

Thanks to TaxProf Paul Caron for staying on this undercovered story. The IRS and Lois Lerner admitted the targeting on Day 1. People have been trying to walk that back ever since, either by moving the goal posts (“the President was never implicated”) or by pretending the targeting never happened. The tax agency taking on itself the task of targeting political organizations is scarier than it doing so at the bidding of the White House.

Now we wait to see whether the new President will disarm the IRS, or wield it.

Robert Flach, the Wandering Tax Pro wrote me:

I did not follow the professor's coverage. I agreed with you that he "jumped the shark" way back. I felt he was truly beating a dead horse.

I personally strongly oppose the Tea Party and the religious right - but I am also no fan of the Commissioner and felt he mismanaged the IRS. ...

Paul Streckfus of the EO Tax Journal wrote me:

It's probably time, even if Lois Lerner is the gift that keeps on giving. What's interesting is whether Trump wants to keep the scandal alive. The wild card is the House Freedom Caucus. They probably expect Sessions to open another investigation of Lois Lerner. If so, Caron may have stopped his countdown too soon!

The scandal has really devastated the IRS exempt function.  The groundwork for the next scandal has been laid in this one. The next scandal will be about how nobody is watching exempt organizations creating a playground for scoundrels.

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January 24, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 23, 2017

A 'Snow Day' In Malibu

Snow DayAfter a weekend of historic rains in Southern California, Pepperdine cancelled classes today, throwing a monkey wrench into the planned inaugural presentation by Adam Chodorow in our 2017 Tax Policy Workshop Series.  Since my wife and I had already purchased the food for the post-presentation lunch, we opened up our home for lunch with hardy students who ventured to campus and faculty who live on campus.  We ended up having a delightful break in our workdays, reminiscent of the glorious "snow" days of a boy growing up in Boston and of a father raising two children in Cincinnati.  I previously blogged how the wonder of snow days gives way as we grow older, captured by my amazing daughter in this touching article for her high school newspaper:

I almost wish I didn't have these snow days off school.  It was depressing sitting in my house all day, working away to meet adult-like goals rather than simply enjoying the unexpected free time to play in the snow or sled like I did when I was younger. ...

And so the sleds lay dormant in our garage.  Each member of the family worked quietly and separately in different rooms.  Our driveway even lacked the telltale crunched-in snow footprints left by excited children running around in the snow.  Now, the snow seems more of a nuisance than an actual blessing. ...

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January 23, 2017 in About This Blog, Legal Education, Tax | Permalink | Comments (1)

Trump Won't Release Tax Returns, Despite Online Petition With Over 275,000 Signatures; WikiLeaks Hopes To Acquire And Publish Them

Holderness Presents The Unexpected Role Of Tax Salience In State Competition For Businesses At Washington U.

Holderness (2017)Hayes Holderness (Illinois VAP, moving to Richmond) presented The Unexpected Role of Tax Salience in State Competition for Businesses, 84 U. Chi. L. Rev. ___ (2017), at Washington University last week as part of its Faculty Workshop Series:

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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January 23, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? Today At Florida

LedermanLeandra Lederman (Indiana-Bloomington) presents To What Extent Does Enforcement Crowd Out Voluntary Tax Compliance? at Florida today as part of its Tax Policy Colloquium Series:

Tax collectors generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This article analyzes the existing evidence to determine if and when this occurs. Field studies suggest that enforcement tools, such as audits, are effective deterrents, generally greatly increasing tax collections.

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January 23, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Pepperdine Tax Policy Workshop Series (Spring 2017)

Here is the schedule for my Spring 2017 Pepperdine Tax Policy Workshop Series:

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) — just let me know.

Pepperdine Law School (2016)

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January 23, 2017 in Colloquia, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Charlotte Law School Rejects Feds' Demand That It Close Immediately And Let Teach-Out Partner Florida Coastal Take Over Classes; Hopes For 'Fairer Hearing' From Trump Administration

Charlotte DOECharlotte Observer, Details Emerge in Nasty Fight Between Feds and Charlotte School of Law:

Charlotte School of Law said this week it rejected a government agreement that would have restored millions of dollars in federal loans because the terms betrayed its students’ futures.

On the same day of that statement, a group of students filed the third class-action lawsuit accusing the school of already doing similar damage.

The contradictory allegations add to the deepening uncertainty swirling around the uptown school as it prepares to reopen Monday. No one knows for sure how many students will show up. ...

On Wednesday, the education department accused the school of reneging on a deal that would have restored some of the lost student loans. ...

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January 23, 2017 in Legal Education | Permalink | Comments (0)

Tulane Seeks To Hire A Tax Visitor

Tulane (2015)Tulane Law School invites applications for a one-semester tax visiting position in Fall 2017:

Our specific needs for the Fall 2017 semester include basic income tax and corporate tax. Applicants must possess a J.D. from an ABA-accredited law school, strong academic credentials, and at least three years of relevant law-related experience; prior teaching experience is strongly preferred. Applicants should submit a letter of interest, CV, and the names and contact information of three references through Interfolio. For additional information, please contact Onnig Dombalagian.

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January 23, 2017 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, January 22, 2017

It's Time For A New Law School In Charlotte: University Of North Carolina-Charlotte Or Wake Forest

UNCWFFollowing up on my previous posts (links below): Charlotte Agenda, Charlotte Needs a Law School. It’s Time to Start a New One (Or Recruit One):

Our city needs to have a law school. And with Charlotte School of Law on the ropes, it’s time to get going on starting a new one. ... It’s time to start building a new law school — or recruiting an existing one to move to Charlotte. Here are two options. One’s likely, the other is more of a long shot.

UNC Charlotte opens up a law school

This isn’t a new idea. The university explored opening a school of law back in 2008. Of course, the economy promptly tanked, and demand for law school and lawyers along with it. That’s still fairly true — law school applications remain near historic lows.

But there are still plenty of people here in Charlotte who are looking to move up in their careers, find a new job and boost their earning power through law school without uprooting their families to do it. Major Charlotte employers are still hungry for talent with law backgrounds. These are the populations a UNC Charlotte law school could serve.

UNC Charlotte doesn’t need to build a flagship, nationally competitive law school flying students in from around the world to be effective. And the university already knows how to fill this niche. Their Professional MBA program ranks among the country’s best by U.S. News.

Wake Forest moves its law school to Charlotte

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January 22, 2017 in Legal Education | Permalink | Comments (3)

President Obama's Lack Of Scholarly Chops Prevents Him From Being Hired As Law Prof At Columbia, Kansas; But 'Professor Of Practice' Is A Possibility

Obama

Chronicle of Higher Education, Prof. Barack Obama Needs a New Job, So We Sent Around His Academic Résumé:

It can be tough out there for an academic who’s been out of the game for so long, and Mr. Obama probably hasn’t updated his curriculum vitae in a while. So we did it for him.

We’ve noticed the former senior lecturer at the University of Chicago Law School padding his academic résumé in the waning days of his presidency. Mr. Obama went on a bit of a spree in the final weeks, publishing articles in Science, The New England Journal of Medicine, and his old grad-school haunt, the Harvard Law Review.

Mr. Obama is no fool. He remembers that publication is the coin of the realm. Since he didn’t put his name to any scholarly articles during his earlier academic career — minding his political ambitions, he played his cards close to the vest back then — he needed to make up for lost time.

But we didn’t just update Mr. Obama’s résumé for him. We also sent it around to a handful of law professors who have served on appointment committees, and asked them to provide feedback. Set aside the specific benefits of having a former president on the faculty, we said, and focus on the his merits as a once and future academic. ...

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January 22, 2017 in Legal Education | Permalink | Comments (9)

This Week's Ten Most Popular TaxProf Blog Posts

Pastor Calls For Church Transparency With IRS Form 990

StopPeter J. Reilly (Forbes), Pastor Calls For Church Transparency With IRS Form 990:

Reverend Frank B Jones is taking aim at the lack of financial transparency in churches. He has started a petition drive to require churches to play by the same rules as other not-for-profits and file Form 990 with the IRS every year. The title of the petition Expose The Prosperity Preachers give you a pretty good sense of what his agenda is:

American citizens are being financially deceived with governmental approval. When the U.S. government allows churches and religious organizations to operate without giving full financial disclosure, those churches and organizations can, and many do, exploit and deceive their members. The government has demanded full disclosure from all other charities, but has allowed churches and other religious organizations to operate in absolute financial secrecy. It is time for the United States congress to pass laws requiring all churches and religious organizations to file the annual IRS Form 990. ...

In his book Stop The Prosperity Preachers Reverend Jones goes on at some length about how the exemption from 990 filing facilitates clergy con artists:

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January 22, 2017 in Tax | Permalink | Comments (1)

The Top 5 Tax Paper Downloads

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

  1. [1,345 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [367 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  3. [190 Downloads]  Destination-Based Cash-Flow Taxation: A Critical Appraisal, by Wei Cui (British Columbia)
  4. [175 Downloads]  The Right Tax at the Right Time, by Edward Kleinbard (USC)
  5. [133 Downloads]  The Other Eighty Percent: Private Investment Funds, International Tax Avoidance, and Tax-Exempt Investors, by Omri Marian (UC-Irvine)

January 22, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, January 21, 2017

Deans Boise & Morriss:  Why We Still Support The ABA's Proposed 75% Bar Passage Requirement

Boise Morriss PhotoTaxProf Blog op-ed:  Why We Still Support The ABA's Proposed 75% Bar Passage Requirement, by Craig M. Boise (Dean, Syracuse) & Andrew P. Morriss (Dean, Texas A&M):

Indiana Law Dean Austen Parrish recently responded to our TaxProf Blog response to his column on the ABA’s proposed 75% bar passage rule. While we don’t want to suggest deans spend their days writing op-eds, we do think a bit of further comment is merited.

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January 21, 2017 in Legal Education | Permalink | Comments (6)

Tax Policy In The Trump Administration

Pratt:  The IRS's Startling Arguments In O’Donnabhain

Katherine Pratt (Loyola-L.A.), The Tax Definition of “Medical Care:” A Critique of the Startling IRS Arguments in O’Donnabhain v. Commissioner, 23 Mich. J. Gender & L. 313 (2016):

This Article critiques the startling arguments made by the Internal Revenue Service (“IRS”) in O’Donnabhain v. Commissioner, a case in which the issue was whether a person diagnosed with gender identity disorder (“GID”) could take a federal tax deduction for the costs of male-to-female medical transition, including hormone treatment, genital surgery, and breast augmentation.

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January 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Midyear Meeting

ABAThe ABA Tax Section Midyear meeting concludes today in Orlando. The full program is here.  Tax Profs with speaking roles include:

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January 21, 2017 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1353: Will The Trump IRS End, Or Embrace, Targeting Of Disfavored Groups?

IRS Logo 2

Joe Kristan (Tax Update Blog), Obama’s Tax Policy: How Much Will Survive?:

Obama tax policy was a sharp break from the Bush years. The Trump years, in turn, will likely veer off the Obama path in many areas. Here’s my list of the big developments in tax policy during the Obama years, and my guesses as to how they will fare under Trump. ...

IRS Scandal.  IRS exempt organizations official Lois Lerner blew open the Tea Party scandal by planting a staged question at a May 2013 conference. The modified limited hangout failed to contain the scandal, which still is working through courtrooms 1351 days later. Commissioner Koskinen’s apathetic and clumsy response to the admission that right-leaning organizations were targeted for special scrutiny on their exemption applications (and remember, this was admitted at the start, only to be walked back later) sowed distrust, and appropriations reductions, that cripple the agency still.

I would be surprised if Koskinen stays in office much past tomorrow. The real question is whether the new administration reverses the weaponization of the IRS, or just adopts it.

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January 21, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, January 20, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) describes how the Tax Court's treatment of a plastic surgeon's claim that his interest in a surgery center was a passive activity, distinct from his medical practice.

KristanPlastic surgeon gets his passive loss reconstructed

Losing for Winning.  A plastic surgeon convinced the Tax Court that his interest in a surgery center was “passive,” defeating an IRS attempt to group it with his medical practice. But the IRS got a partial win out of the deal.

The surgeon, who we will refer to as Dr. H., performed much of his surgery on an outpatient basis. He could not perform surgery requiring general anesthesia in his office. Hospital surgery space was scarce so he began plans to build a surgery center to accommodate patients needing anesthesia, but not an overnight hospital stay.

He dropped the plans when he was approached by a group of other surgeons asking him to invest in a surgery center, MBJ, that they were building. He ended up with a 1/8 interest in it. Tax Court Judge Buch explains how that works:

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January 20, 2017 in New Cases, Tax, Weekly Tax Roundup | Permalink | Comments (0)