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Thursday, June 12, 2014

Law School Rankings: Judicial Clerkships

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

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


School (US News Rank)

Fed. Clerkship %

School (US News Rank)

St. & Local Clerkship %


Yale (1)


Rutgers-Camden (81)



Stanford (3)





Harvard (2)


Seton Hall (68)



Chicago (4)


Hawaii (100)



Duke (10)


South Dakota (145)



Vanderbilt (16)


UNLV (83)



Virginia (8)


South Carolina (93)



Notre Dame (26)


Colorado (43)



Pennsylvania (7)


Oregon (100)



Georgia (29)


Howard (135)


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

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

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

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 Many states that have repealed the rule against perpetuities have also abolished income taxation of trusts and their beneficiaries.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

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

Professionals' Contribution to the Legislative Process

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

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

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

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

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

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

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

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

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

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

Tax Implications of $1,500 Waffle House Tip

(Hat Tip: Darryll Jones, Leandra Lederman)

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

Gerzog: The Façade Easement Charitable Deduction

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

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

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

Yesterday's Tax Reports

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

The IRS Scandal, Day 399

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

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

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

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

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

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

Wednesday, June 11, 2014

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

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

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

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

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

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

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

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

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

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

EU Investigates Tax Planning by Apple, Starbucks

Dave Chappelle Makes the Case for High Marginal Tax Rates

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Gift Tax Treatment of Donations to Social Welfare Organizations

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

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

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

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

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

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

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

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

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

The IRS Scandal, Day 398

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

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

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

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

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

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

Tuesday, June 10, 2014

Zelenak: The Taxation of Frequent Flyer Benefits in the U.S., Canada, and Australia

Lawrence Zelenak (Duke), Up in the Air Over Taxing Frequent Flyer Benefits: The American, Canadian, and Australian Experiences:

Since frequent flyer programs first appeared in the early 1980s, the agencies charged with the administration of their nations' income tax laws have struggled with the question of whether -- and if so, how -- to tax employees who earn frequent flyer points (or "miles") on employer-paid business trips, and who eventually redeem those points for personal travel rewards (or other personal consumption services or goods). This article describes and evaluates the ways in which three agencies -- the Internal Revenue Service (IRS) in the United States, the Canada Revenue Agency (CRA) and the Australian Taxation Office (ATO) -- have responded to the tax administration challenge presented by frequent flyer programs. The rather disheartening end of the story (in all three countries) is that no significant amount of tax is being collected on frequent flyer benefits, even though the benefits are clearly taxable in theory (at least in the United States and Canada), and that respect for the rule of law (on the part of both taxpayers and the agencies themselves) has been eroded. The article analyzes what features of frequent flyer programs are responsible for the tax agencies' difficulties, and explains that taxing benefits involves serious problems of timing, valuation, enforcement, and public acceptance. Finally, the article considers how, in light of those problems, an agency (or legislature) could go about designing an effective system for taxing frequent flyer benefits. The task is not easy, but it is also not impossible.

June 10, 2014 in Scholarship, Tax | Permalink | Comments (3)

Rodriguez: Anxiety and Ambition in the Law School Trenches

Dan Rodriguez (Dean, Northwestern), Anxiety and Ambition in the Trenches:

A benefit of my temporary role as AALS president is the opportunity to meet with faculty and administrators at their law schools, mainly in order to listen to their concerns and advice and hopefully draw upon this wisdom to improve the service of the organization in this time of disruptive change.

The atmosphere of these visits reveals a high level of concern (of course) with the impact of the changing admissions structure and what it portends for law school benefits generally and faculty well-being particularly.  Yet, what is remarkably encouraging, when taking these high-anxiety conversations as a whole, is this:

First, faculty members truly get that the core dilemma is how best to provide a high-quality education to the group of students, even as they come in often at smaller numbers, and, moreover, how to inculcate in them the value of a manifestly comprehensive, creative set of skills -- theoretical and experiential -- in a fluid marketplace, the future contours of which none of us can predict exactly. That the infrastructure of student learning is at the heart of what we do as faculty members comes up in these discussions reliably and eloquently.  And, further, that the key threat from the war on law schools is that directed at the students who are investing, and the young alumni who have invested, in legal education is very much on the minds of our member school faculties.

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June 10, 2014 in Legal Education | Permalink | Comments (2)

IRS Adopts Taxpayer Bill of Rights


The IRS today announced (IR-2014-72) the adoption of a Taxpayer Bill of Rights in updated Publication 1:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System  


Taxpayer Advocate Service, Taxpayer Bill of Rights:

Since assuming her position in 2001, National Taxpayer Advocate Nina E. Olson has emphasized the protection of taxpayer rights in tax administration. In her 2007 Annual Report to Congress, and in later reports, she proposed a new Taxpayer Bill of Rights. On June 10, 2014, the IRS formally adopted the Advocate’s proposal, to renew the focus on protecting the rights of taxpayers in all of their dealings with the IRS.  

This document groups the dozens of existing rights in the Internal Revenue Code into ten fundamental rights, and makes these rights clear, understandable, and accessible for taxpayers and IRS employees alike.

Taxpayer Advocate Service, What the Taxpayer Bill of Rights Means for You


June 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Lucas: How Opportunity Cost Neglect Undermines Democracy

Gary Lucas, Jr. (Texas A&M), Out of Sight, Out of Mind: How Opportunity Cost Neglect Undermines Democracy, 9 N.Y.U. J.L. & Liberty ___ (2014):

Every government program has an opportunity cost, which consists of the private and public goods that society must forgo to make the program possible. In evaluating government programs, rational voters would take opportunity costs into account. Unfortunately, opportunity costs are usually implicit, and psychologists have shown that decision makers tend to irrationally ignore implicit information while giving too much weight to explicit information. This Article presents evidence that the bias against implicit information causes voters to neglect the opportunity costs of government programs. The Article also explains for the first time the implications of opportunity cost neglect for democracy.

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June 10, 2014 in Scholarship, Tax | Permalink | Comments (0)

Back in San Diego

Usd_photoI have made the considerably shorter trek from Malibu to San Diego for my eleventh summer teaching Tax I at the University of San Diego School of Law, my sixth as the Herzog Summer Visiting Professor in Taxation.  San Diego is truly America's Finest City, with spectacular weather, natural beauty, and a dizzying array of things to do. But what is even more enjoyable is renewing acquaintances with the many friends we have made over the years here (not to mention partaking in the world's best pizza and hamburgers).

June 10, 2014 in Legal Education, Tax | Permalink | Comments (2)

ABA: Law Schools Can Admit 10% of Students Without LSAT, Must Do Annual Audit of Placement Data, Can't Give Academic Credit for Paid Externships

ABA Journal, Legal Ed Section’s Council Wraps Standards Review, Keeps Ban on Academic Credit For Paid Externships:

ABA Logo 2The governing council of the ABA Section of Legal Education and Admissions to the Bar has wrapped up its comprehensive review of the law school accreditation standards.

The council, which met Friday in Cleveland, approved five of the six remaining proposed changes in the standards, including one that would permit schools to admit up to 10 percent of their entering class with students who haven’t taken the LSAT and one that would limit the number of transfer credits a school can grant for prior law study not taken as a JD-degree student at an ABA-approved school.

It also approved new rules of procedure, a new set of definitions, a new protocol for auditing reported law school employment outcomes beginning with the graduating class of 2015, and the deletion of a chapter of standards whose provisions have been moved elsewhere in the standards.

In fact, the only proposed change in the standards the council didn’t approve was one that would have eliminated the current prohibition against granting academic credit to a student for participating in a field placement program for which the student receives compensation. ...

All of the proposed changes in the standards—along with a host of others approved by the council in March—will be reviewed by the ABA House of Delegates at the association’s 2014 annual meeting in Boston in August.

Update:  National Law Journal, ABA Council Says No to Paid Law Student Externships

June 10, 2014 in ABA Tax Section, Legal Education | Permalink | Comments (8)

Rodriguez: More on the Technology-Fueled Decline of Lawyers (and Law Schools)

Following up on last week's post, John McGinnis: The Five Ways Computers are Revolutionizing Legal Practice (and Legal Education):  Dan Rodriguez (Dean, Northwestern), Decline of Lawyers? Law Schools Quo Vadis?:

My Northwestern colleague, John McGinnis, has written a fascinating essay in City Journal on "Machines v. Lawyers."  An essential claim in the article is that the decline of traditional lawyers will impact the business model of law schools -- and, indeed, will put largely out of business those schools who aspire to become junior-varsity Yales, that is, who don't prepare their students for a marketplace in which machine learning and big data pushes traditional legal services to the curb and, with it, thousands of newly-minted lawyers.

Bracketing the enormously complex predictions about the restructuring of the legal market in the shadow of Moore's Law and the rise of computational power, let's focus on the connection between these developments and the modern law school. ...

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June 10, 2014 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 397

IRS Logo 2Wall Street Journal, IRS Sent FBI Database on Nonprofit Groups in 2010, GOP Lawmakers Say:

The IRS transmitted a 1.1 million-page database of information concerning tax-exempt organizations to the Federal Bureau of Investigation in the run-up to the 2010 election, including confidential taxpayer information that should not have been shared, according to House GOP lawmakers investigating the IRS.

The information was to be used in investigations of nonprofit groups' political activity, the lawmakers say, citing internal emails from the agencies.

The Justice Department turned over the database to the House Oversight and Government Reform Committee this month in response to a subpoena, officials said on Monday.

"We were extremely troubled by this new information, and by the fact that the IRS has withheld it from the committee for over a year," wrote Reps. Darrell Issa (R., Calif.) and Jim Jordan (R., Ohio) in a letter to IRS Commissioner John Koskinen. "We were astonished to learn days ago from the Justice Department that these 21 disks contained confidential taxpayer information protected by federal law."

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June 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, June 9, 2014

Wake Forest Dean Blake Morant Named Dean at George Washington

BlakePress Release:

The George Washington University announced the selection of Blake D. Morant as the next dean of the GW Law School and Robert Kramer Research Professor of Law. He will assume the deanship on Sept. 1 after having served seven years as dean of the Wake Forest University School of Law.

“Blake Morant is not only a seasoned dean but also a national leader in legal education,” said GW President Steven Knapp. “He brings to this important position a proven record of accomplishments, and his extensive leadership experience will make him an extremely valuable addition to our law school and the entire university.” ...

Following many years of deep involvement at the committee level, Mr. Morant was elected to serve as president-elect of the Association of American Law Schools for 2014 and president in 2015.

(Hat Tip: Greg McNeal.)


June 9, 2014 in Legal Education | Permalink | Comments (3)

Doonesbury: Laptops in the Classroom

DoonesburyHere.  (Hat Tip: Francine Lipman, Jeffrey Kahn.)

June 9, 2014 in Legal Education | Permalink | Comments (0)

Douthat: Family-Friendly Tax Reform and the Poor

New York Times:  Family-Friendly Tax Reform and the Poor, by Ross Douthat:

Having promised them some time ago, before a week of travel left me behind on blog posts, I hope to have responses up next week to some of the recent macro-level liberal takes on “reform conservatism” — from E.J. DionneWilliam Galston, and my colleague Tom Edsall, among others.

For now, though, let me direct you elsewhere for more general thoughts on our quasi-movement, and dip a toe into the waters with some comments on one of the specific reformist ideas closest to my heart: A family-friendly tax reform along the lines suggested by Ramesh Ponnuru and Robert Stein, and proposed in legislative form by Utah Senator Mike Lee. A case for that reform (penned by Stein) fills one of the chapters in “Room to Grow,” the recent book of essays that tries to distill reformist thinking on a number of issues, and it inspired a sharply worded attack from Matt Bruenig over at Salon, who dismissed the Lee plan as a “horror show” — an idea that’s “grotesque, vicious and cruel,” he wrote, because it “leaves poor families totally out in the cold.”

Patrick Brennan then defended the proposal for National Review, and Bruenig followed up with a more restrained version of his original critique: In a nutshell, he argues that it doesn’t make sense to have a child tax credit that (because it’s only refundable against payroll taxes) delivers somewhat larger benefits to middle class and rich families than to very poor ones, and that instead pro-family policymakers should favor a flat “child allowance” that gives every family or parent the same per-child benefit regardless of their income.

It’s an interesting argument, so here are few thoughts in response:

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June 9, 2014 in Tax | Permalink | Comments (0)

Thimmesch: The Tax Hangover -- Trailing Nexus

Adam B. Thimmesch (Nebraska), The Tax Hangover: Trailing Nexus, 33 Va Tax Rev. 497 (2014):

Discussions regarding the scope of state taxing power over nonresident persons have generally focused on one issue — the conditions under which a state can tax such a person without violating the Dormant Commerce Clause. That issue has resulted in significant debate regarding whether physical or economic presences are required to create state power. Unfortunately, however, the discussion has ignored an equally important question — when state power, once it is created, terminates. Notwithstanding the lack of academic or judicial analysis of this issue, many states currently apply “trailing nexus” policies that extend their authority past the cessation of taxpayers’ nexus-creating activities. That concept challenges traditional views of the nexus requirement and seems to directly conflict with the Court’s physical-presence rule. This article analyzes the permissibility and scope of trailing nexus under both physical-presence and economic-nexus paradigms and finds that a disaggregated view of the nexus requirement supports its validity. The article also critiques state’s current trailing-nexus formulations and proposes an economic-latency approach that better comports with the Court’s Dormant Commerce Clause jurisprudence.

June 9, 2014 in Scholarship, Tax | Permalink | Comments (0)

WSJ: Jury Imposes $2.2m Penalty on $1.5m Account in Tax Case

Wall Street Journal Tax Report:  The IRS Wins a Big Offshore Case, by Laura Saunders:

Offshore account holders take note: In what experts call a big win for the IRS, a Miami jury has found that a millionaire could owe penalties of $2.2 million on a secret Swiss bank account that held about $1.5 million.

Experts say the decision in U.S.A. v. Zwerner, a civil case that concluded in May, could encourage the IRS to assess outsize fines in similar cases. ...

Mr. Zwerner's case is the first to become public in which offshore-account penalties exceeded the account balance, experts say. Under a 2004 law, taxpayers can owe up to 50% of an offshore account's highest balance for each year they "willfully" fail to file an annual Foreign Bank Account Report—or Fbar—disclosing accounts totaling $10,000 or more.

June 9, 2014 in Tax | Permalink | Comments (0)

President Obama Nominates Cary Douglas Pugh to be U.S. Tax Court Judge

PughWhite House Press Release: (June 6, 2014):

President Obama announced today his intent to nominate Cary Douglas Pugh as a Judge to the U.S. Tax Court. “Cary has demonstrated unwavering integrity and a firm commitment to public service throughout her career,” said President Obama. “I am proud to nominate her to serve on the United States Tax Court.”

Cary Douglas Pugh is currently Counsel in the tax department at Skadden, Arps, Slate, Meagher & Flom, L.L.P., a position she has held since 2005. From 2002 to 2005, Ms. Pugh was the Special Counsel to the Chief Counsel of the Internal Revenue Service. From 1999 to 2002, Ms. Pugh served as Tax Counsel for the Senate Committee on Finance, where she was responsible for advising committee members on individual and corporate tax issues. Ms. Pugh was an associate at Vinson & Elkins, L.L.P. from 1995 to 1999 and Judicial Clerk to the Honorable Jackson L. Kiser on the U.S. District Court for the Western District of Virginia from 1994 to 1995. Ms. Pugh received a B.A. from Duke University, an M.A. from Stanford University, and a J.D. from the University of Virginia School of Law.

June 9, 2014 in Tax | Permalink | Comments (0)

Tax Reform's Hobbit

New York Times:  Congress Versus Hobbit, by Gail Collins:

Hobbit[Dave] Camp has been on a quest to make the tax system cleaner and simpler. In this matter we might think of him as a Hobbit, facing great danger in his search for the golden W-2 form. ...

Congress 2014 was definitely not up to a 1986-style effort. Reform went nowhere. So how do you think Dave Camp responded?

He marched into a committee meeting and took up $300 billion worth of temporary tax breaks that were due to expire. Most were things he had proposed eliminating or cutting back on in his principled tax plan.

Camp then asked that all of them be made permanent.

This made no sense at all. The biggest of the temporary breaks allows businesses to get half the depreciation write-off on the cost of new equipment right away. Some people believe that during recessions, this helps jump-start the economy.

Many experts doubt it really works. Either way, you obviously destroy the incentive to speed up purchases if the fire sale lasts forever.

“This is not failure of tax reform,” Camp told the committee. “This is incremental progress on tax reform.” ...

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June 9, 2014 in Tax | Permalink | Comments (0)

Treasury Department Employee Firing Rate Is 4th Lowest Among Federal Agencies

Cato Institute, Federal Firing Rate by Department:

Treasury - IRSThe VA scandal has prompted a debate about whether it should be easier to fire federal workers. I’ve argued that the firing rate for poor performance should be increased.

However, there can be no debate that the current firing rate is very low. In 2013 just 9,244 workers out of a civilian federal workforce of 1.87 million were fired for poor performance or misconduct, according to OPM data underlying this article by Eric Katz. That is a rate of just 0.49 percent, or 1 in 200 a year. Most federal firings are for misconduct, with a smaller share for poor performance.

The analysis found that firing rates by type of employee vary dramatically. Blue collar and lower GS levels (1-10) are many times more likely to be fired than higher GS levels (11-15) and those in the Senior Executive Service (SES). The GS 11-15 firing rate was just 0.14 percent, while the SES rate was just 0.09 percent. Just 7 out 7,940 SES employees got fired in 2013.

The rate of firing of GS 11-15 Treasury Department employees in 2013 was 0.11% (1 in 900), the fourth smallest rate among 18 federal agencies: 


June 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

The IRS Scandal, Day 396

TaxProf Blog Weekend Roundup

Sunday, June 8, 2014

Graduation Day

Jayne Caron, B.A. English, Phi Beta Kappa, Dartmouth College:

Grad 2

For more on my journey with my daughter, see:

Update:  Dartmouth Commencement Address by Shonda Rhimes '91

June 8, 2014 in Legal Education, Tax | Permalink | Comments (0)

Blue State Policies Increase Income Inequality

Wall Street Journal op-ed: The Blue-State Path to Inequality, by Stephen Moore (Heritage Foundation) & Richard Vedder (Ohio University):

For those in Washington obsessed with reducing income inequality, the standard prescription involves raising taxes on the well-to-do, increasing the minimum wage, and generally expanding government benefits—the policies characterizing liberal, blue-state governance. If only America took a more "progressive" approach, the thinking goes, leaving behind conservative, red-state priorities like keeping taxes low and encouraging business, fairness would sprout across the land.

Among the problems with that view, one is particularly surprising: The income gap between rich and poor tends to be wider in blue states than in red states. Our state-by-state analysis finds that the more liberal states whose policies are supposed to promote fairness have a bigger gap between higher and lower incomes than do states that have more conservative, pro-growth policies.

The Gini coefficient, a standard measure of income inequality, calculates the ratio of income at the top of the income scale relative to the income of those at the bottom. The higher the ratio, the more inequality. A Gini coefficient of zero means perfect equality of income and a Gini coefficient of one represents perfect inequality, such as if one person has all the income. ...

According to 2012 Census Bureau data (the latest available figures), the District of Columbia, New York, Connecticut, Mississippi and Louisiana have the highest measure of income inequality of all the states; Wyoming, Alaska, Utah, Hawaii and New Hampshire have the lowest Gini coefficients. The three places that are most unequal—Washington, D.C., New York and Connecticut—are dominated by liberal policies and politicians. Four of the five states with the lowest Gini coefficients—Wyoming, Alaska, Utah and New Hampshire—are generally red states.

In the Northeast, the state with the lowest Gini coefficient is New Hampshire (.430), which has no income tax and a lower overall state tax burden than that of its much more liberal neighbors Massachusetts (Gini coefficient .480) and Vermont (.439). Texas is often regarded as an unregulated Wild West of winner-take-all-capitalism, while California is held up as the model of progressive government. Yet Texas has a lower Gini coefficient (.477) and a lower poverty rate (20.5%) than California (Gini coefficient .482, poverty rate 25.8%). ...

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June 8, 2014 in Tax | Permalink | Comments (7)

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 on SSRN, with a new paper debuting on the list at #5:

  1. [317 Downloads]  The New Flat Tax: A Modest Proposal for a Constitutionally Apportioned Wealth Tax, by John Thomas Plecnik (Cleveland State)
  2. [303 Downloads]  Just Say No: Corporate Taxation and Corporate Social Responsibility, by Reuven Avi-Yonah (Michigan)
  3. [207 Downloads]  Carried Interest for the Common Man, by Richard Winchester (Thomas Jefferson)
  4. [198 Downloads]  The Real Problem with Carried Interests, by Heather Field (UC-Hastings)
  5. [158 Downloads]  A State Tax Approach to Regulating Greenhouse Gases Under the Clean Air Act, by Samuel Eisenberg (Stanford), Michael Wara (Stanford), Adele Morris (Brookings Institution), Marta Darby (Stanford) & Joel Minor (Stanford)

June 8, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 395

Saturday, June 7, 2014

9th Annual Junior Tax Scholars Workshop Concludes Today at American

American Logo (2014)Panel #6:  Administration and Procedure

Andrew Blair-Stanek (Maryland), Injunctions in Tax
Commentators:  Jake Brooks (Georgetown), Andy Grewal (Iowa)

Emily Cauble (DePaul), Relying on the IRS
Commentators:  David Herzig (Valparaiso), David Kamin (NYU)

Andy Grewal (Iowa), The Un-Precedented Tax Court
Commentators:  Itai Grinberg (Georgetown), Tracey Roberts (Seattle)

Leigh Osofsky (Miami), Announcing Tax Enforcement Priorities
Commentators:  Micah Burch (Sydney), Erin Scharff (NYU)

Susie Morse (Texas), A Theory of Safe Harbor Rules
Commentators:  Emily Cauble (DePaul), Khrista Johnson (Pepperdine)

Panel #7:  Business

Mirit Eyal-Cohen (Alabama), Urban Mavericks
Commentators:  Rebecca Morrow (Wake Forest), Erin Scharff (NYU)

Emily Satterthwaite (Toronto), Entity Choices of New Firms: Preliminary Findings
Commentators:  Andrew Hayashi (Virginia), Leigh Osofsky (Miami)

Panel #8:  Charity

Phil Hackney (LSU), Taxing the Unheavenly Chorus: Why Section 501(c)(6) Trade Associations are Thoroughly Undeserving of Tax-Exemption
Commentators:  Michah Burch (Sydney), Tessa Davis (Tulane)

Khrista Johnson (Pepperdine), The Charitable Deduction Games III: Building a More Efficient Charitable Market
Commentators:  Mirit Eyal-Cohen (Pittsburgh), Ben Leff (American)

Panel #9:  Power to Tax

Tracey Roberts (Seattle), Beyond Cost: A Qualitative Examination of Tax Subsidies for the Energy Industry
Commentators:  Phil Hackney (LSU), Omri Marian (Florida)

Erin Scharff (NYU), Powerful Cities, Efficient Revenues: Limits on Municipal Taxing Authority and What to Do About Them
Commentators:  David Gamage (UC-Berkeley), Randle Pollard (Indiana, Kelley School of Business)

Prior Junior Tax Scholars Workshops:

June 7, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The Use of Offshore Tax Havens by Fortune 500 Companies

New York Times:  The Islands Treasured by Offshore Tax Avoiders, by Floyd Norris:

NYTDid you know that United States companies earned $129 billion in 2010 in three small groups of islands?

That is what they told the IRS they earned in Bermuda, the Cayman Islands and the British Virgin Islands. ...

Assuming you believe those figures, the productivity of workers in those countries is amazing. On average, United States companies had profits of $873,611 per person living in those islands.

By contrast, those same companies reported earning $12.6 billion in China, a country with 1.36 billion people. On a per capita basis, that comes to a little more than $9 a person.

Of course, those numbers are nonsense. The United States income tax laws allow companies to claim they earned profits in countries where they actually had few, if any, operations, but where taxes are extremely low.

A report this week by two groups upset about the low effective income tax rate for corporations, the U.S. Public Interest Research Group Education Fund and Citizens for Tax Justice, said that 372 of the companies in the Fortune 500 — generally the 500 United States companies with the highest revenues — reported a total of 7,827 subsidiaries in countries that the groups view as tax havens [Offshore Shell Games 2014:The Use of Offshore Tax Havens by Fortune 500 Companies].

(Hat Tip: Mike Talbert.)

June 7, 2014 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (1)

UC-Irvine Granted Full ABA Accreditation

UC-Irvine (2014)UC-Irvine Granted Full ABA Accreditation:

The University of California, Irvine School of Law has been granted full accreditation by the American Bar Association, effective immediately. “From the outset, our goal has been to build a top law school that emphasizes preparing students for the practice of law at the highest levels of the profession,” said Dean Erwin Chemerinsky. “I am very proud that the decision by the ABA is at the earliest possible time under the ABA rules.”

Brian Leiter (Chicago):  "Not a surprise, of course, given all that's been accomplished in a remarkably short time, but this also means that UC Irvine will be subjected to U.S. ranking next year. The lawyer/judge reputation survey results are very hard to predict; it will be interesting to see how the academic reputation survey comes out (UCI ought to get a top 20 score there, but we'll see if that happens)."

June 7, 2014 in Law School Rankings, Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 394

IRS Logo 2The Jersualem Post editorial:   Z Street and the IRS:

The Z Street case may be what forces the IRS to pull aside its carefully constructed curtain and reveal how it made decisions regarding organizations deemed out of step with the current US administration

Last spring, the US media were filled with accusations that the IRS was using its power over nonprofits to stifle opposition to the Obama administration.

While congressional efforts to investigate the alleged wrongdoings have been stymied, a decision by a federal judge in Washington may force the IRS to disclose whether a small, staunchly pro-Israel group was victimized.

Judge Ketanji Brown Jackson of the US District Court for the District of Columbia threw out every legal defense the IRS raised in Z Street v. Koskinen, IRS Commissioner. She ordered the IRS to provide a substantive answer to Z Street’s complaint by June 26.

Z Street brought its lawsuit for viewpoint discrimination after, it alleges, the IRS agent to whom the organization’s file had been assigned said Z Street’s application for tax exemption might take a long time to process because the IRS “has to give special scrutiny to organizations connected to Israel,” and that the files of some of those applicants “will be sent to a special unit in Washington to determine whether the activities of the organization contradict the public policies of the administration.”

If borne out by the evidence, this would be an astounding violation of free speech rights.

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June 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, June 6, 2014

AALS Midyear Meeting on Sexual Orientation and Gender Identity Issues: Estate Taxes, Income Taxes, and the IRS

AALSAALS Midyear Meeting on Sexual Orientation and Gender Identity Issues today in Washington, D.C.:

Estate Taxes, Income Taxes, and the IRS:

June 6, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

June 6, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

June 6, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

June 6, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

9th Annual Junior Tax Scholars Workshop Kicks Off Today at American

American Logo (2014)Panel #1:  Financial Innovation

Randle Pollard (Indiana, Kelley School of Business), Feeling Insecure – A State View of Whether Investors in Municipal General Obligation Bonds Have a Mere Promise to Pay or a Binding Obligation
Commentators:  Phil Hackney (LSU), Susan Morse (Texas)

Omri Marian (Florida), Designing a Regulatory System for Bitcoin Era
Commentators:  Andrew Blair-Stanek (Maryland), Jason Oh (UCLA)

Ben Leff (American), Income-Based Repayment Swap
Commentators:  Emily Cauble (DePaul), David Kamin (NYU)

Panel #2:  Uncertainty and Time

Jake Brooks (Georgetown), The Case for Incrementalism in Tax Reform
Commentators: Andy Grewal (Iowa), Leigh Osofsky (Miami)

David Kamin (NYU), Fiscal Policy in an Uncertain World
Commentators:  Andrew Blair-Stanek (Maryland), David Gamage (UC-Berkeley)

Rebecca Morrow (Wake Forest), Keep them Guessing: A Defense of Impermanent, Automatically-Expiring and Short-Term Tax Policies
Commentators:  Mirit Eyal-Cohen (Alabama), Itai Grinberg (Georgetown)

Jason Oh (UCLA), Estimating Uncertainty and the Politics of Tax Law
Commentators: Andrew Hayashi (Virginia), Tracey Roberts (Seattle)

Panel #3:  Optimal Tax

Andrew Hayashi (Virginia), Cash Taxes and Consumption Commitments
Commentators:  Susan Morse (Texas), Jason Oh (UCLA)

David Gamage (UC-Berkeley), Optimal Tax II
Commentators: Jake Brooks (NYU), Emily Satterthwaite (Toronto)

Panel #4:  International Tax

Micah Burch (Sydney), Extranational Income
Commentators:  Omri Marian (Florida), Rebecca Morrow (Wake Forest)

Itai Grinberg (Georgetown), Putting International Tax in Its International Economic Law Context
Commentators: David Herzig (Valparaiso), Emily Satterthwaite (Toronto)

Panel #5:  Marriage and Family

Tessa Davis (Tulane), Taxing Modern Families: Mapping the Families of Tax
Commentators: Ben Leff (American), Randle Pollard (Indiana, Kelley School of Business)

David Herzig (Valparaiso), Marriage Pluralism: Taxing Marriage After Windsor
Commentators: Tessa Davis (Tulane), Khrista Johnson (Pepperdine)

Prior Junior Tax Scholars Workshops:

June 6, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Virginia Inadvertently Reveals Grades, Class Ranks of All Judicial Clerkship Applicants

Virginia LogoVirginia yesterday inadvertently emailed to 160 student in a judicial clerkship email discussion group a spreadsheet containing confidential information about 155 clerkship applicants, including GPAs and class ranks (Virginia does not otherwise reveal the class rank of its students).  The data show rampant grade inflation at Virginia:

Top 5%:    3.792
Top 10%:  3.717
Top 20%:  3.620
Top 25%:  3.595
Top 50%:  3.405

June 6, 2014 in Legal Education | Permalink | Comments (6)