TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, September 9, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley) reviews a new paper by Dave Owen (UC-Hastings), Water and Taxes, 50 UC Davis L. Rev. ___ (2016):

Gamage (2016)The article begins by reviewing the basics of both water law and tax law, to explain that there are currently only modest interactions.  Water rights are indeed taxed, especially by state and local property tax regimes.  Yet the article explains that the ways in which water rights are currently taxed do not serve to meaningfully address concerns about inadequate water conservation.  The article thus proposes more robustly taxing water rights as a means for achieving better water conservation.

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September 9, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Corporate Inversions Benefit CEOs More Than Shareholders

Cato at Liberty:  Corporate Inversions, by Peter Van Doren:

Among industrialized countries, the United States has the highest official corporate tax rate and one of the highest effective tax rates. To take advantage of lower taxes in other countries, some U.S. firms elect to sell themselves to smaller foreign firms, a process called “inversion.”

For shareholders of those firms, the tax consequences of inversions are complicated. Some are harmed by the move while others benefit. Individual shareholders, who own shares in taxable accounts, are taxed on the increased value of their shares. This can result in different tax outcomes from inversions for shareholders who have held the stock for a long time prior to the inversion and short-term shareholders (including corporate officers exercising company stock options).

In the summer issue of Regulation, I described a new research paper that investigates 73 inversions that occurred from 1983 to 2014 [Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin), Are Corporate Inversions Good for Shareholders?]. For those investors who had owned stock for three years, half of the inversions resulted in a negative return. So if many long-term shareholders lose money on inversions, why do they occur?

The answer appears to be that corporate executives gain from inversions even if shareholders lose.

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September 9, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

More Controversy At Florida Over The Dean Calling Out Male Law Review Editor-in-Chief And Faculty Advisor (A Tax Prof) For Allegedly Sexist Remarks

Florida Logo (GIF)I previously have covered controversies at Florida involving faculty sick-leave payouts and changes in the graduate tax program.  A new controversy has erupted over this passage from Dean Laura Rosenbury's article, Channeling Mary Joe Frug, 50 New Eng. L. Rev. 305, 317 (2016) (Mary Joe Frug Memorial Symposium):

“You look too young to be a dean.” Since becoming a law school dean nine months ago, I have heard those words at least once a week, if not more. The (male) president of our law review also introduced me at a large banquet this fall by saying: “We feel so lucky to have such a young and vivacious dean.” The law review faculty advisor subsequently came to my office to explain I shouldn’t hold those words against the student because he, the advisor, had described me in that way and he didn’t mean it to be sexist; he sincerely believes a law school dean needs to be “energetic.” When I asked if he would describe another law school dean in that manner —a male dean who is exactly my age—the advisor replied: “But you look so much younger!”

I am 46, two years younger than Frug was at her death. As with my teaching and scholarship, I long to ask Frug how she would respond to such statements. Even more so, I would love to hear her thoughts on what those statements mean about current constructions of law professors, law school deans, and the legal academy as a whole.

Jeff Harrison (Florida), My Take on Young and Vivacious:

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September 9, 2016 | Permalink | Comments (17)

Weekly Legal Education Roundup

Adelson Family Will Not Be Charged In Dan Markel's Murder Despite Circumstantial Evidence Released By Police (Including $1 Million Offer To Allow Children To Move To Miami, Communication And Money Trail To Hit Men)

Adelson FamilyProbable Cause First Degree Murder/Principal First Degree Murder:

Daily Mail, Brother-in-Law Will NOT Be Charged in Murder of FSU Professor Who Was Locked in Vicious Custody Battle With His Sister Despite Years of Police Investigation:

The former brother-in-law of a prominent Florida State University law professor will not be charged in the alleged murder-for-hire plot that led to his death.  Charlie Adelson and his girlfriend Katherine Magbanua have both avoided charges in the murder of Dan Markel, the Tallahassee Police Department have revealed. ...

State Attorney Willie Meggs approved charges against Garcia and Rivera, but did not feel there was sufficient evidence to go forward with cases against Adelson and Magbanua.  Meggs said no additional arrests will be made in the case unless more evidence is found.

Garcia is the father of Magbanua's two children. In the three months before the murder, he called her 2,700 times, according to investigators. ... A number of phone calls also occured between midnight and 1am among Adelson, his mother Donna, Magbanua and Garcia on July 18, the day Markel was murdered. ...

The probable cause affidavit also reveals that in the days and months after the murder Garcia purchased a new car and motorcycle, according to WCTV. Records show Rivera also purchased a motorcycle within 10 days of the murder.

Meanwhile, Magbanua began receiving checks from Adelson and his father's dental practice, the Adelson Institute, from September 2014 to January 2016. In the year prior to Markel's murder, Magbanua was making cash deposits that totaled $15,000. In the months after the murder she was making deposits totaling $44,000, the affidavit states. ...

The probable cause affidavit for Charles Adelson revealed a judge refused to allow Wendi to move her sons to South Florida in June 2013. It states that the family then discussed paying Markel $1million to allow the children to relocate. ...

Wendi Adelson and several of her family members said in a statement earlier this month that speculation they had a role in Markel's murder is 'categorically false'.

Tallahassee Democrat, Documents Detail Potential Links to Markel's In-Laws:

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September 9, 2016 in Legal Education | Permalink | Comments (18)

Case Western Seeks To Hire A Tax Visitor

Case Logo (2014)Case Western Reserve University School of Law invites applications from entry-level or lateral candidates for a visiting assistant professor of law position beginning in the 2017-2018 academic year:

Areas of focus include business law and tax, including Business Associations, Mergers & Acquisitions, Business Planning and Corporate Tax. This is a one-year visiting position with the possibility of a one-year renewal at the end of the contract term based on Law School needs.

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September 9, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (0)

How Amazon Saved Billions In Taxes

Amazon logoNewsweek, How Amazon Saved Billions in Taxes:

In the early 2000s, Amazon embarked on a yearslong mission to save billions by setting up operations in Luxembourg to radically reshape its tax structure. Using a complex patchwork of subsidiaries, the online shopping behemoth managed to shift vast quantities of its profit through a sophisticated mechanism that took external consultants and in-house tax specialists—who reported directly to Amazon CEO Jeff Bezos—years to dream up.

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September 9, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1219

IRS Logo 2Wall Street Journal, House Republicans Weigh Impeaching IRS Commissioner John Koskinen:

House Republicans have no affection for the Internal Revenue Service after three years of mounting frustration about what they see as the tax agency’s slow and incomplete responses to congressional investigations. But many are shying away from the aggressive step urged by some hard-liners: impeaching IRS Commissioner John Koskinen now.

Lawmakers are debating how far to go as they weigh the political risks of irritating some of their most ardent supporters with any vote that even resembles letting Mr. Koskinen off the hook. What is giving them pause about impeachment are conservatives’ push to bypass the Judiciary Committee and the slim chances of removing Mr. Koskinen from office. That would require Senate Republicans to overcome their reluctance and also attract more than 20 Democratic votes—the number needed to get the necessary two-thirds majority in the Senate—making it a clear dead end.

House Republicans’ internal standoff shows the limits of raw politics in the general-election season after years of conservatives rallying against the IRS, a movement that has helped to restrict the agency’s budget and inspired calls from the right to eliminate the IRS entirely. ...

Impeachment backers plan to use a procedural tactic to force a vote on the House floor as soon as next week, and House Republicans will meet behind closed doors beforehand in an effort to hash out the internal disagreement. ...

The bill of particulars against Mr. Koskinen stems from his response to congressional investigations. Under his watch, the agency destroyed backup data that included emails belonging to Lois Lerner, who had led the office that oversaw nonprofit groups. The impeachment resolution says Mr. Koskinen “failed to act with competence and forthrightness” in disclosing the destruction and that the agency didn’t try hard enough to preserve all documents.

Mr. Koskinen has said the destruction was unintentional and that he waited to inform Congress until he had complete information.

Republicans say Mr. Koskinen’s actions prevented them from uncovering the truth about what happened to tea-party groups and why.

Democrats say there is no evidence the agency’s actions were politically motivated. Instead, they say it is clear the IRS was trying—clumsily and slowly—to come up with a rule for judging whether tax-exempt groups met the tax code’s rules that limit political involvement of nonprofits.

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September 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, September 8, 2016

Students, Alleged Victim Of Sexual Harassment By Former UC-Berkeley Law School Dean Protest His Return To Campus

UC Berkeley (2016)Following up on Monday's post, Despite UC President Napolitano’s Previous Ban, Former UC-Berkeley Law Dean Still On Campus:

The Daily Californian, An Open Letter From Sujit Choudhry About Sexual Harassment:

To the students of the UC Berkeley School of Law:

Last week, I went to work in my office on campus. I understand that this has caused some of you confusion or even alarm. I know many of you thought I had been banned from campus. But even in times of controversy, and in fact especially in times of controversy, the facts still matter. The undisputed fact is that I am not and have never been banned from campus. There is not, and has never been, any legal or factual basis for banning me. I have the right to go to work. I am exercising that right, peacefully and unobtrusively.

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September 8, 2016 in Legal Education | Permalink | Comments (0)

Religious Diversity At Pepperdine

Once of the things I love most about Pepperdine is the religious diversity of faculty, staff, and students. Today, to conclude our week-long series of events commemorating Diversity Week, faculty members of four different faith traditions (Sukhsimranjit Singh, Naomi Goodno, Ahmed Taha, and Michael Helfand) participated in a lunchtime conversation about faith moderated by Pepperdine University Chaplain Sara Barton (left) and Dean of Graduate Studies Al Sturgeon (right).

Diversity Week

September 8, 2016 in Legal Education | Permalink | Comments (0)

Kleinbard, Warren And Others On The EU-Apple $14.5 Billion Tax Dispute

Apple EUFollowing up on my previous coverage of the EU-Apple tax dispute (links below):

Financial Times op-ed: The Myths Behind Apple's Manufactured Tax Crisis, by Ed Kleinbard (USC):

The op-ed responds to the spin put on the case by Apple and its allies, by arguing that the controversy is not a tax case at all. To claim otherwise just confuses the core finding (that Ireland delivered subsidies to Apple in exchange for jobs) with the instrument used by Ireland to deliver those subsidies. The piece further debunks the claim that the US is the jurisdiction with the best claim to tax Apple’s pot of essentially tax-free income. Space constraints required that some of the thoughts had to be truncated a bit; had I unlimited room, I would have concluded the piece with something along these lines:

The myths put forward by the Apple spin machine, abetted by the US Treasury, threaten to fracture international tax administration comity when no tax crisis in fact exists. Tax here was just the instrument for delivering state aid. The US Treasury is expert in detecting tax shams used to disadvantage US tax collections, and should have recognized that the EC similarly is making a sham arrangement argument.

The Hill op-ed: Apple’s Ireland Tax Avoidance Should Spur Major Reforms, by Ed Kleinbard (USC):

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September 8, 2016 in Tax | Permalink | Comments (0)

Does Learning To Code Make You A Better Lawyer?

ABA Journal (2014)ABA Journal (Sept. 2016), Hacking the Law: Does Learning to Code Make You a Better Lawyer?:

Learning to code can be portrayed as an essential job skill for all Americans, advocates say. But do lawyers need to learn it?

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September 8, 2016 in Legal Education | Permalink | Comments (0)

LSAT, Law School GPA, Journals, Moot Court, Contracts, Evidence Predict Bar Exam Success; UGPA, Clinics, Con Law, Crim Law, Crim Pro, Property, Torts Do Not

Texas Tech Logo (2016)Katherine A. Austin (Texas Tech), Catherine Martin Christopher (Texas Tech) & Darby Dickerson (Dean, Texas Tech), Will I Pass the Bar Exam?: Predicting Student Success Using LSAT Scores and Law School Performance:

Texas Tech University School of Law has undertaken a statistical analysis of its recent alumni, comparing their performance in law school with their success on the Texas bar exam. The authors conclude that LSAT predicts bar exam success while undergraduate GPA does not. The study also replicates findings in previous literature that both 1L and final law school GPA predict bar exam success.

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September 8, 2016 in Legal Education | Permalink | Comments (3)

Tax Development Journal Publishes New Issue

TDJ4The Tax Development Journal of California State University, Northridge (a double-blind, peer-reviewed journal), has published Volume 6 (Fall 2016):

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September 8, 2016 in Scholarship, Tax | Permalink | Comments (0)

Want To See The Inside Of A Faculty Meeting? Go To A Zoo

Faculty MeetingLawProfBlawg, Want To See The Inside of A Faculty Meeting? Go To A Zoo:

The neat thing about faculty meetings is the chance to see the people around the law school you very rarely see. All in the same room. Thus, it is vitally important you embrace these rare opportunities and be happy about them. Or so I’m told. But beyond all else, it is important to recognize how we really haven’t gotten too far from the animal kingdom. ...

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September 8, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1218

IRS Logo 2The Hill, IRS Chief Makes His Case to GOP Lawmakers:

IRS Commissioner John Koskinen on Wednesday made his case against impeachment to two groups of House Republicans. Koskinen met with members of the moderate Tuesday Group as well as with members of the conservative Republican Study Committee, where some lawmakers support his impeachment. “He just wanted to state his case,” said Tuesday group co-chair Charlie Dent (R-Pa.).

Bloomberg, House Will Hold Vote on Whether to Impeach IRS Chief, Ryan Says:

Speaker Paul Ryan said Wednesday the House will vote on whether to impeach Internal Revenue Service Commissioner John Koskinen, and he indicated members won’t be pressured to vote one way or the other.

Daily Caller, Hatch Insists The Senate Will Never Impeach IRS Commissioner:

Republican Sen. Orrin Hatch says there is not even the “slightest chance” the Senate will impeach IRS Commissioner John Koskinen anytime soon.

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September 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, September 7, 2016

Hackney Presents Labor Unions And Tax Exemption Today At Northwestern

HackneyPhilip Hackney (LSU) presents Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Labor interests are historically politically weak in our US democracy. They face classic collective action problems. Laborers are great in number, do not have strong political skills, and are unlikely to recoup the cost of participating in labor union activity. Without assistance, we should expect labor interests to engage in limited and sporadic organized political efforts. This presents big problems for a modern democratic state that depends upon organized interests to represent the interests of its citizens. This Article examines the impact of our federal income tax system on labor interests in the context of the provision of tax exemption to labor unions and the deduction of labor union dues.

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September 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Harvard Law Review Inducts Most Diverse Class Of Editors In History

HarvardHarvard Crimson, Law Review Inducts Most Diverse Class of Editors in History:

For the first time in the publication’s nearly 130-year history, the Harvard Law Review inducted a group of editors this year whose demographics reflect those of their wider Law School class—including the highest-ever percentages of women and students of color.

The demographic composition of the new editors—who were selected over the summer—reflects the broader makeup of the Law School’s class of 2018, according to numbers provided by Harvard Law Review President Michael L. Zuckerman ’10. Forty-six percent of the incoming editors are women, an increase of about 10 percentage points from an average of the past three years. Forty-one percent are students of color, compared to the same three-year average of 28 percent on the Law Review. Both roughly reflect the corresponding breakdown of the wider Law School class.

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September 7, 2016 in Legal Education | Permalink | Comments (6)

Jocelyn Benson, Youngest Woman To Ever Lead An American Law School, Steps Down From Wayne State To Be CEO Of National Campaign In Sports For Equality

BensonCrain's Detroit Business, Wayne State Law Dean Takes Post as CEO of Ross Initiative:

Wayne State University’s law school dean of nearly four years, Jocelyn Benson, is stepping down to become CEO of the Ross Initiative in Sports for Equality, founded by Wayne Law alumnus and The Related Cos. Chairman Stephen Ross.

Benson, 38, replaced Robert Ackerman as interim dean in December 2012, and became permanent dean in 2014 of the Detroit-based law school with more than 400 students and about 140 employees. She was previously associate director of the law school’s Damon J. Keith Center for Civil Rights, and has been a faculty member since 2005.

The Ross initiative, a nonprofit founded in 2015, is led by representatives of sports organizations including the NFL, NBA and MLB, to improve U.S. race relations. Benson also becomes a special adviser on philanthropic investments to Ross. She is expected to make the transition later this month.

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September 7, 2016 in Legal Education | Permalink | Comments (1)

GAO:  IRS Needs To Clarify Authority Of Published Guidance

GAO (2016)Government Accountability Office, Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance (GAO- 16-720):

The Internal Revenue Service (IRS) uses a variety of documents to communicate its interpretation of tax laws to the public, but only considers Internal Revenue Bulletin (IRB) guidance to be authoritative. IRS information published outside of the IRB can help taxpayers understand tax laws and make informed decisions, but does not always include information clarifying the limitations of its use. IRS has detailed procedures for identifying, prioritizing, and issuing new guidance. However, it lacks procedures for documenting the decision about what type of guidance to issue.

Hierarchy of Authority for IRS Guidance and Other Information Sources

Hierarchy of Authority for IRS Guidance and Other Information Sources

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September 7, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

Bard:  Law Schools As Baskin Robbins? Disentangling Correlation From Causation In Addressing Curriculum Challenges

BRJennifer S. Bard (Dean, Cincinnati), Disentangling Correlation from Causation in Addressing the Contemporary Challenges of the Law School Curriculum:

The disconnect between the actual curriculum of law schools in the United States meeting the ABA Standards for Accreditation and the multiple calls to reform that curriculum in order to create “practice ready” lawyers and increase bar passage is national in its scope and has led to considerable tension both in and out of the academy. I wrote this piece, Not Your Parents' Law School, last February to put the balance of classroom and experiential learning in context, but the on-going calls to increase bar passage, lower costs, cut a year out of the curriculum, and increase hands-on skills instruction continue to create a climate of considerable dissonance. If that wasn't hard enough, we are trying to address these issues in an environment where everyone involved has not just their own opinion, but their own facts. Baskin Robbins wouldn't launch a new flavor based on evidence equal to the paucity of reproducible research that supports either the claims about the scope of legal academe's problems or the proposals for solving them.

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September 7, 2016 in Legal Education | Permalink | Comments (2)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through September 1, 2016) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):







Reuven Avi-Yonah (Mich.)


Reuven Avi-Yonah (Mich.)



Michael Simkovic (S. Hall)


Michael Simkovic (S. Hall)



Paul Caron (Pepperdine)


D. Dharmapala (Chicago)



D. Dharmapala (Chicago)


Paul Caron (Pepperdine)



Louis Kaplow (Harvard)


Richard Ainsworth (BU)



Vic Fleischer (San Diego)


Robert Sitkoff (Harvard)



James Hines (Michigan)


Dan Shaviro (NYU)



Ted Seto (Loyola-L.A.)


Ed Kleinbard (USC)



Richard Kaplan (Illinois)


William Byrnes (Texas A&M)



Ed Kleinbard (USC)


Nancy McLaughlin (Utah)



Katie Pratt (Loyola-L.A.)


Jeff Kwall (Loyola-Chicago)



Richard Ainsworth (BU)


Chris Hoyt (UMKC)



Robert Sitkoff (Harvard)


David Weisbach (Chicago)



Carter Bishop (Suffolk)


Omri Marian (UC-Irvine)



Brad Borden (Brooklyn)


Louis Kaplow (Harvard)



David Weisbach (Chicago)


Vic Fleischer (San Diego)



Jen Kowal (Loyola-L.A.)


Steven Bank (UCLA)



Chris Sanchirico (Penn)


Yariv Brauner (Florida)



Francine Lipman (UNLV)


Jack Manhire (Texas A&M)



Dennis Ventry (UC-Davis)


Brad Borden (Brooklyn)



Bridget Crawford (Pace)


Katie Pratt (Loyola-L.A.)



Dan Shaviro (NYU)


Francine Lipman (UNLV)



David Walker (Boston Univ.)


Richard Kaplan (Illinos)



Steven Bank (UCLA)


Jordan Barry (San Diego)



Herwig Schlunk (Vanderbilt)


Stephen Shay (Harvard)


Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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September 7, 2016 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Did Wayne State Give Donor Too Much Control Over Curriculum, Dean's Salary In $40 Million Gift To B-School?

Wayne State 2Inside Higher Ed, Wayne State Donor Agreement Goes Under the Microscope:

Terms of a pizza-and-sports magnate family’s $40 million gift to build Wayne State University’s business school have come under scrutiny in Detroit, with clauses about donor consultation on curriculum and dean pay catching attention in particular.

But while a donation agreement between Wayne State and Michael and Marian Ilitch reveals intriguing details about the current tricks of the trade in university fund-raising, much of it is actually keeping with current trends. The university maintains that those much-dissected provisions on pay and curriculum aren’t out of the ordinary — even though many continue to worry it could leave open the door for the big-name donors to exert undue influence.

Others say that if anything is out of lockstep with current practices, it’s the length of the naming rights being awarded. The donation agreement calls for the school to be named after Michael Ilitch in perpetuity. But even if many of the conditions — including details on how the donors are to be recognized — are honored, others are raising concerns of faculty members. ...

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September 7, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1217

IRS Logo 2Washington Post editorial, House Conservatives Want to Impeach the IRS Director. That Would be a Big Mistake:

Congress returned from its summer break Tuesday to what may be a brief but contentious pre-election legislative spell. Among the likely arguments: whether Congress should radically change its relationship with the executive branch and hobble the government in the process.

For months, a group of hard-line conservative lawmakers has been pressing to impeach Internal Revenue Service Commissioner John Koskinen, in an effort that may soon come to a head. The context for the campaign against Mr. Koskinen is the continuing GOP obsession with the way the IRS reviewed nonprofit groups’ tax-exempt status, following reports that conservative groups were disproportionately scrutinized. The initial reports turned out not to reflect much of a scandal, which was more about bureaucratic obliviousness than purposeful anti-conservative activity. ...

The Founders designed federal impeachment procedures to be used sparingly, erecting barriers to removing executive officers that did not exist in the English system, Michael J. Gerhardt, a University of North Carolina law professor, told the House Judiciary Committee in June. They also purposely avoided allowing impeachment in cases of mere “maladministration,” raising the bar to the much more serious “high crimes and misdemeanors” standard. “The Founders did not want high-ranking officials in the executive or judicial branches to be subject to impeachment for their mistakes in office,” Mr. Gerhardt testified.

The cumbersome and partisan Senate confirmation process has made it hard enough to fully staff the highest realms of government with competent people. Never-ending, partisan impeachment proceedings against executive officers would make it even harder to keep the essential mechanics of government working. The result would be more bureaucratic bungling, not less.

Politico, Senate GOP Plots Way to Dodge Koskinen Impeachment:

Fighting to hold onto their slim majority, Senate Republicans are planning to wriggle out of considering the impeachment of IRS Commissioner John Koskinen even if the House forces the issue.

It's a two-part plan: First Senate Republicans are attempting to convince their conservative House brethren to avoid the matter entirely. Then, if the House passes an impeachment resolution by a simple majority, Senate Republicans will seek a procedural out to avoid a controversial impeachment trial that would draw attention to a Senate GOP that's tried to portray itself as the stable arm of Congress.

But with House Republicans divided over the Freedom Caucus's charge to impeach Koskinen over his alleged obstruction of a congressional investigation, it's not too late, GOP senators say, to change course and punt on impeachment at least until after the November election.

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September 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, September 6, 2016

The 100 Most Influential People In Tax And Accounting

Accounting Today CoverI am honored to be included on the list of Accounting Today's 100 Most Influential People in Tax and Accounting for the eleventh consecutive year:

A prolific blogger, Caron’s widely read site thoroughly covers the latest developments in the field of tax, particularly with his ongoing coverage of the scandal involving IRS employees’ extra scrutiny of tax-exempt applications from conservative groups. Caron also blogs extensively about issues related to academia.

Accounting Today also mentioned tax bloggers in its discussion of Just a Few More ...:

We need to find a way to cram more people into the Top 100, because new and interesting people keep rising up to change the profession. Until we can get 150 or so people into a 100-person list, however, we offer our annual list of Ones to Watch — men and women whose influence is waxing, and whom we’ll be keeping an eye on. ...

While we’ve long noted the influence of tax blogger Paul Caron, many others are now using the blogosphere to share tax information, analysis, insights and, occasionally, humor. This year we’re going to cite two, both of whom appear on WithumSmith+Brown partner Anthony Nitti (who also writes on taxes for many other outlets, and frequently teaches well-received CPE courses), and Kelly Phillips Erb, a tax lawyer whose Tax Girl blog draws lots of eyeballs. And while we’re on the subject of taxes, you might want to keep an eye on Howard Gleckman, a fellow at the Tax Policy Center think tank, whose thoughts on tax policy are often sought after by the mainstream media.

I am honored to be on the Top 100 list with such high-powered people in the tax and accounting worlds, including:

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September 6, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (3)

Bard:  Not Your Parent's Law School—The Role Of Case Analysis In An Increasingly Skills-Based Curriculum

CBAJennifer S. Bard (Dean, Cincinnati), Reflections on Contemporary Legal Education: The Role of Case Analysis in an Increasingly Skills-Based Curriculum, Cin. Bar Ass'n Rep., Feb. 2016, p. 5:

Anyone who attended law school more than 15 years ago would likely be very surprised at today’s curriculum. The days when law school was a self-contained, threeyear period consisting entirely of 50-minute hours in which a professor might ask a single person questions about an appellate opinion for the entire class period are gone. Today, most professors bring the world of law practice into their rooms through guest lectures, field trips, or problem sets requiring students to apply what they have learned. Beyond what goes on in individual classes, all law students can experience a balance between courses devoted to analyzing cases and learning tools, like drafting and oral advocacy, that allow them to use their knowledge of the law for the benefit of their clients. Finally, today’s law students can get experience representing people with real legal problems, in closely supervised clinics, as well as working with practicing attorneys in work placements.

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September 6, 2016 in Legal Education | Permalink | Comments (0)

Call For Papers:  Iowa-ACTEC Symposium On Wealth Transfer Law In Comparative And International Perspective

IowaACTECThe University of Iowa College of Law and American College of Trust and Estate Counsel have issued a Call for Papers for a symposium on Wealth Transfer Law in Comparative and International Perspective, to be held at the University of Iowa College of Law on Friday, September 8, 2017, with the papers to be published in the Iowa Law Review:

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September 6, 2016 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Rumsfeld Sides With McGonagall Rather Than Snape On Taxes


Following up on this morning's TaxProf Blog op-ed:   McGonagall Replies to Snape on Taxes: 'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had', by Alice G. Abreu (Temple):

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September 6, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Abreu:  McGonagall Replies to Snape on Taxes—'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had'

McGonagalTaxProf Blog op-ed:  McGonagall Replies to Snape on Taxes, by Alice G. Abreu (Temple):

Because Professor Minerva McGonagall is my favorite member of the Hogwarts faculty, particularly as played by the inimitable Dame Maggie Smith, and because she and Severus Snape led rival houses, here’s how I think she would reply to Adam Chodorow’s reimagined Snape, who as a TaxProf warns his students on the first day of class that because there is “little foolish argument by analogy here, many of you will hardly believe this is law.”

Humph . . . It’s high time you learned to be proud of the tax law you’ve got, rather than the one you think you ought to have.

Our rival houses are the House of Tax Exceptionalism and the House of Tax as Everylaw. Snape as a TaxProf may wish that the tax law were exceptional, different from other fields of law in such fundamental ways that it is perhaps not law at all, but that is not the tax law we actually have.

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September 6, 2016 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0)

Perdue:  Law Schools, Universities, And The Challenge Of Moving A Graveyard

Rethinking 2Wendy Collins Perdue (Dean, Richmond), Law, Universities, and the Challenge of Moving a Graveyard, 50 U. Rich. L. Rev. Online 3 (2015) (reviewing Carel Stolker, Rethinking the Law School: Education, Research, Outreach and Governance (Cambridge University Press 2015)):

The last five years have been difficult ones for American legal education. With applications to law schools declining 40% nationally, many schools are struggling to maintain quality in the face of significant budgetary pressures. But one component of the legal-education world has been robust: there is a boom market in books, articles, reports, websites, and blogs filled with criticism and even anger at the current state of legal education. There are many villains in these narratives—greedy universities that suck resources, self-absorbed faculty who are indifferent to their students, and dishonest deans willing to misrepresent their current reality—and many victims—duped college graduates and lawyers leading miserable lives of tedium, long hours, and depression.

Against this dark narrative genre, Carel Stolker’s new book, Rethinking the Law School, stands in sharp contrast. Having been both a law school dean and university president at Leiden University in The Netherlands, Stolker brings the perspective of a dean who has sought to innovate, and of a university president who has dealt with the political, academic, financial, and managerial complications of a modern university. The book offers a broad look at legal education around the world, along with a thoughtful exposition of the challenges facing law schools and law deans. Stolker is no cheerleader for the current state of legal education, but recognizing that “the nature, content and quality of legal education is a subject that flares up frequently and dies down again,” he approaches the issues without the shrillness and anger that characterize some of the current commentary. He also leavens his realism with some welcomed humor, noting, for example that “changing a university is like moving a graveyard, you get no help from the people inside.” ...

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September 6, 2016 in Book Club, Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 1216

IRS Logo 2Charlotte Observer editorial, Should IRS Chief Be Impeached?:

Congress returns to work Tuesday, and at the top of several members’ to-do list is impeaching IRS Commissioner John Koskinen. ...

It’s hard, we know, to gin up much sympathy among Americans for the chief tax collector. It’s even harder when the Internal Revenue Service has made so many missteps in recent years. The extent of Koskinen’s imperfections, though, is debatable; they almost surely fall far short of the “high crimes and misdemeanors” that impeachment requires. ...

It’s possible his performance has been sporadic and his commitment to transparency inconsistent. That would, unfortunately, make him a Washington regular, but not a criminal traitor.

At a minimum, he deserves an exhaustive hearing and opportunity to defend himself in front of the House Judiciary Committee before such an extraordinary — and politically motivated — action is taken.

That’s not what Freedom Caucus members like North Carolina’s Rep. Mark Meadows envision. They are willing to take Koskinen’s fate to the House floor for an up-or-down vote with no due process. That would violate tradition and establish an ominous precedent.

Koskinen (a Duke grad and former chair of Duke’s board of trustees) took over in December 2013, charged with cleaning up the mess made by Lois Lerner. Lerner was at the center of a scandal prior to Koskinen’s arrival in which the IRS mostly targeted conservative political groups in their applications for nonprofit tax-exempt status.

Congress issued a subpoena to Koskinen seeking all of Lerner’s emails. Weeks later, IRS employees in West Virginia erased 422 backup tapes that contained as many as 24,000 of Lerner’s emails.

There is no evidence that Koskinen was personally involved in the deletion. The Republican-appointed inspector general investigating Lerner’s actions said the erasure was an accident stemming from a miscommunication.

The rest of the resolution to impeach Koskinen is flimsy. It accuses him of making “false and misleading statements” to Congress. Koskinen says he testified to what he thought was true at the time, even if some of it later turned out not to be accurate. ...

Lerner’s actions were unacceptable, and the IRS’s failure to retain vital documents in the case is disturbing. So Congress is right to continue to pursue questions. Impeachment, though, is almost certainly using a bazooka to kill a roach. At the least, Koskinen, who has offered a lifetime of public service and ethical behavior, deserves a chance to fully tell his side of the story.

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September 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

TaxProf Blog Holiday Weekend Roundup

Monday, September 5, 2016

IRS Issues Final Regulations Redefining Marriage For Tax Purposes To Include Same-Sex Couples

ObergefellNational Law Journal, New IRS Rules Reflect Supreme Court's Same-Sex Marriage Decisions:

If the only certainties in life are death and taxes, then two U.S. Supreme Court decisions involving same-sex marriages are now certain—effective today. The Internal Revenue Service on Friday formally put into place amendments to regulations that define who is married for tax purposes.

The Supreme Court in 2013 in United States v. Windsor struck down the definition of marriage as only between a man and a woman in the federal Defense of Marriage Act. Two years later, the high court in Obergefell v. Hodges made same-sex marriages legal throughout the nation.

The Windsor case stemmed from a tax dispute. Edie Windsor sought to claim the federal estate tax exemption for surviving spouses after her spouse, Thea Spyer, left her entire estate to Windsor. She paid nearly $400,000 in estate taxes. The IRS denied Windsor a refund.

The IRS regulations, published in the federal register and effective Sept. 2, reflect the holdings of those two high court decisions and define terms in the Internal Revenue Code describing the marital status of taxpayers.

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September 5, 2016 in IRS News, Tax | Permalink | Comments (0)

Labor Day And The Tax Burden On Labor

Kyle Pomerleau & Kevin Adams (Tax Foundation), A Comparison of the Tax Burden on Labor in the OECD, 2016:

Although the United States and most OECD countries are known for having progressive tax systems that tax high-income earners more than low- or moderate-income earners, a large portion of the tax burden still falls on the average worker. Even here in the United States, which has a lower tax burden than most other OECD countries, average workers end up paying nearly one-third of their incomes in taxes. It is true that governments in the OECD, especially European countries, provide more government programs. However, their workers end up paying a much higher price for them.

Tax Foundation 1

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September 5, 2016 in Tax, Think Tank Reports | Permalink | Comments (1)

Labor Day, The Minimum Wage, And The Earned Income Tax Credit

Labor Day 2Joe Kristan (Tax Update Blog), Labor Day and the Earned Income Tax Credit:

[Y]ou may want to ponder the hot “labor” issue of the moment — the minimum wage and its alternatives. ... Many economists argue that an increased Earned Income Tax Credit is a better way to support the working poor.   For example, in The minimum wage versus the earned income tax credit for reducing poverty, Cornell University economist Richard V. Burkhauser states:

Introducing or increasing a minimum wage is a common policy measure aimed at reducing poverty. But the minimum wage is unlikely to achieve this goal. While a minimum wage hike will increase the wage earnings of some poor families and lift them out of poverty, some workers will lose their jobs, pushing their families into poverty. In contrast, improving the earned income tax credit can provide the same income transfers to the working poor at far lower cost. Earned income tax credits effectively raise the hourly wages only of workers in low- and moderate-income families, while increasing labor force participation and employment in those families.

The argument for a perfect earned income tax credit is compelling, but the credit is far from perfect. It is estimated that around 25% of the Earned Income tax credit paid out is paid improperly, including billions in fraud. Earned income tax credit fraud is a big part of the business of corrupt preparers. Many other taxpayers who could properly claim it fail to because of its complexity.

Even if the waste and fraud problem could be solved or overlooked, a properly-functioning EITC is still a poverty trap. The credit phases out as incomes rise, creating a high effective marginal tax rate on each additional dollar earned by a low-income family. It provides help at low income levels, but it discourages improving those income levels.

Implicit 2

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September 5, 2016 in Tax | Permalink | Comments (3)

Despite UC President Napolitano’s Previous Ban, Former UC-Berkeley Law Dean Still On Campus

UC Berkeley (2016)Following up on my previous posts (links below):  Daily Californian, Despite Napolitano’s Previous Ban, Former Berkeley Law Dean Still on Campus:

Former UC Berkeley School of Law dean Sujit Choudhry will be on campus this semester working in his office, according to an email sent Thursday by interim Berkeley Law dean Melissa Murray to law faculty, staff and students.

Earlier this year, UC President Janet Napolitano asked Chancellor Nicholas Dirks to ban Choudhry from campus for the remainder of the spring semester after a former employee sued him for sexual harassment.According to Choudhry’s lawyer William Taylor, however, the ban was never implemented by Dirks, and Choudhry retained access to campus for that time.

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September 5, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1215

IRS Logo 2The Hill, House GOP Braces For Spending, IRS Fights:

House GOP leaders are preparing their members for fights over government funding and whether to impeach the commissioner of the Internal Revenue Service when Congress returns from its long summer recess. ...

Freedom Caucus members are pushing to vote on a resolution to impeach Koskinen, who they allege wasn't forthcoming with documents regarding the IRS's scrutiny of conservative nonprofits.

Reps. John Fleming (R-La.) and Tim Huelskamp (R-Kan.) introduced a "privileged" resolution on the House's last day of session before the recess to force a vote on impeachment. It's unclear if members of the Freedom Caucus would have to re-file the resolution, given that House rules state that privileged measures must be acted on within two legislative days.

GOP leaders have been wary of staging an impeachment vote, given that the House has only voted one other time in history to impeach a Cabinet official: Secretary of War William Belknap in 1876.

House Republicans' first conference meeting upon returning the day after Labor Day is expected to focus on strategy for the spending bill, with another on the IRS the following week.

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September 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, September 4, 2016

Schiller:  Today’s Inequality Could Become Tomorrow’s Catastrophe Without Redistributive Tax Policies

Taxing the RichNew York Times: Today’s Inequality Could Easily Become Tomorrow’s Catastrophe, by Robert Schiller (Yale):

Economic inequality is already a concern, but it could become a nightmare in the decades ahead, and I fear that we are not well equipped to deal with it.

Truly extreme gaps in income and wealth could arise from many causes. Consider just a few: Innovations in robotics and artificial intelligence, which are already making many jobs uncompetitive, could lead us into a world in which basic work with decent pay becomes impossible to find. An environmental disaster like global warming, pollution or disease could sharply reduce the ability of people of ordinary means to live in specific regions or entire countries.

Future wars using ever more highly destructive technology, including chemical, biological, radiological or nuclear weapons, could devastate vast populations. And it’s not out of the question that dire political changes, like the rise of racist or otherwise exclusionary social structures, could have terribly damaging consequences for less privileged people.

Of course, I dearly hope none of these things ever happen. But even if they are unlikely, as part of our progress to a better world, we should be thinking now of how we might address them. ...

One way to judge the likely outcome is to look at what has happened in the past. In their new book Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton 2016), Kenneth Scheve of Stanford and David Stasavage of New York University looked at 20 countries over two centuries to see how societies have responded to the less fortunate [more here and here]. Their primary finding may seem disheartening: Taxes on the rich generally have not gone up when inequality and economic hardship have increased.

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September 4, 2016 in Tax | Permalink | Comments (9)

IRS Releases Summer 2016 SOI Bulletin, 2014 Tax Return Data

The Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's, with some reshuffling of the order of the papers within the Top 5:

  1. [491 Downloads]  Dark Pools, High-Frequency Trading, and the Financial Transaction Tax: A Solution or Complication?, by Doron Narotzki (Akron)
  2. [398 Downloads]  The True Economic Effects of Corporate Inversions, by Doron Narotzki (Akron)
  3. [320 Downloads]  Property Is Another Name for Monopoly Facilitating Efficient Bargaining with Partial Common Ownership of Spectrum, Corporations, and Land, by Eric A. Posner (Chicago) & E. Glen Weyl (Yale)
  4. [306 Downloads]  Executive Pay: What Worked? , by Steven A. Bank (UCLA), Brian R. Cheffins (Cambridge) & Harwell Wells (Temple)
  5. [244 Downloads]  The Trojan Horse of Corporate Integration, by Edward D. Kleinbard (USC)

September 4, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Fired Medical School Professor Shoots Dean

MountInside Higher Ed, Police: Dean Shot by Fired Professor:

Authorities have charged Hengjun Chao, a former assistant professor at the Mount Sinai School of Medicine, with attempted murder for shooting the school's dean and another man Monday morning at a deli in Chappaqua, N.Y. Chao is being held in jail. ...

[R]evenge is believed to be a motive in the shooting of Dennis Charney, who is being treated for non-life-threatening injuries. The other man who was shot was treated at a hospital and released.

Mount Sinai officials confirmed that Chao was dismissed in 2010. He then sued Mount Sinai in federal court and lost at the district court level and in a ruling by the U.S. Court of Appeals for the Second Circuit. 

In the latter ruling, the appeals court rejected Chao's claims that the medical school and its officials -- including Charney -- defamed him and denied him his rights in finding that he engaged in research misconduct. The appeals court found that Mount Sinai officials had been "presented with substantial evidence indicating that Chao had committed research misconduct." The case involved alleged data fraud, which Chao denied.

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September 4, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1214

IRS Logo 2Newsmax, IRS Chief Faces Likely Impeachment Vote in US House:

U.S. House conservatives are set to re-launch ... their effort to impeach Internal Revenue Service Commissioner John Koskinen, with or without Speaker Paul Ryan’s go-ahead.

Representative John Fleming says he and other conservatives are prepared to unilaterally force an impeachment vote within days after Congress returns to session on Sept. 6. “The only thing up in the air is whether it will be the first or second week we’re back,” the Louisiana Republican said in an interview.

Any action would be largely symbolic, because the effort would get blocked in the Senate if it passes the House. But Republicans remain angry at Koskinen, who they accuse of impeding an investigation into whether the tax agency improperly targeted conservative non-profits. Their allegations include failing to prevent the IRS from destroying evidence and providing false and misleading information to Congress.

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September 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, September 3, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Horwitz:  Another Upside of Being A Law Professor—Chronic Illness

Paul Horwitz (Alabama), Another Upside of Being an Academic: Chronic Illness:

I have been generally sick the past two years and had ankle replacement surgery this summer—a pleasant bookend to my last summer, which featured fusion surgery on my other ankle. I will say as a quick side-note that although it's relatively early, both surgeries appear to have gone very well and I'm looking forward to brighter days. 

Chronically-ill-academic pieces are kind of a genre at this point [e.g., here, here, here, and here], and I've written here before on living with chronic pain and illness. ... [G]iven that my skill set as a blogger, such as it is, involves saying professionally imprudent things, but at such length that no one notices, I thought I'd add two points—one mildly contrarian, the other mildly "rude"—that I haven't seen made much of in the law professor posts I've seen on the subject of academics and chronic pain or illness [e.g., here, here, and here].

The first is that, all things considered, one has to be counted as damned lucky to be an academic if one has to be chronically ill. The usual narrative and counter-narrative about law professors, certainly post-2008 but before then too, involves claims on the one side that law professors, like many other academics, wallow in free time and light duties, and extravagant claims on the other about 80-hour weeks and how much harder one works as a legal academic than one did in private practice. Both are exaggerated and both obscure the single greatest academic privilege concerning the use of one's time: flexibility. With few exceptions, law professors and other academics (although we are probably even better situated) have incredibly few fixed time commitments. Sure, we sometimes work long hours (though not as much or as often as the defenders assert). But for the most part we choose whether and when to do so. And, apart from classes and some service obligations, long pauses between major professional activities are easily—no doubt too—available. ...

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September 3, 2016 in Legal Education | Permalink | Comments (3)

NY Times:  If Trump Gets His Way, Real Estate Will Get Even More Tax Breaks

Trump (2016-2)New York Times: If Trump Gets His Way, Real Estate Will Get Even More Tax Breaks, by James B. Stewart:

It’s hard to imagine a tax code more favorable to real estate developers than the one we already have.

Donald Trump has come up with one.

Thanks to some major loopholes in the existing tax code that treat real estate developers as a special privileged class, it’s entirely possible (even likely) that Mr. Trump pays little or no federal income tax.

But Mr. Trump’s new tax proposal doesn’t just preserve those breaks, it piles on new ones for real estate developers like Mr. Trump himself — at an estimated cost of more than $1 trillion in tax revenue over a decade.

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September 3, 2016 in Political News, Tax | Permalink | Comments (0)

LSAT Takers By State, 2010-2016

Keith Lee, LSAT: Don’t Call It A Comeback:

The number of LSAT takers have been on the decline since 2009. This continual downward trend put immense pressure on law schools to shrink class sizes, admit less qualified students, and focus on employment outcomes for graduates. ... It appears that LSAT takers bottomed out last year. In 2014, there were 69,448 LSAT takers. In 2015, there were 71,492 takers, a 2.94% increase.


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September 3, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1213

IRS Logo 2Government Executive, IRS Chief Affirms That Agency Ended ‘Be on the Lookout’ Lists:

In the latest wrinkle in the controversy over the Internal Revenue Service’s alleged targeting of conservative groups, the tax agency’s chief has written to Congress [letter here] to assure lawmakers that its Exempt Organization’s division long ago discontinued use of so-called “Be on the Lookout” lists to sift through applications from nonprofits.

Earlier this month, a federal appeals court handling an ongoing case from the conservative group True the Vote zeroed in on the IRS’s use of the term “suspended” to describe the practice of flagging groups based on their names, overruling a lower court and restoring the suit against the agency.

On Aug. 18, Internal Revenue Commissioner John Koskinen sought to set the record straight in a letter to the chairman and ranking member of the Senate Finance Committee harking back several years to the multiple investigations of IRS’s allegedly biased processing of applications for tax-exempt status from groups claiming to be social welfare organizations.

“I want to be clear that no matter how you say it -- whether it's suspended, eliminated or ended -- the IRS stopped this practice long ago and is committed to never using such a list or process ever again,” Koskinen wrote, citing his own repeated testimony to Congress, his speeches and the reports from the Treasury Inspector General for Tax Administration saying the BOLO lists ended three years ago.

“The IRS and its leadership team have been, and remain, absolutely committed to avoiding any selection and further review of potential political cases based on names and policy positions,” he added. “There should be no doubt on this point, or regarding the continued, ongoing commitment by the IRS to be guided by the tax law and nothing else.”

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September 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (11)

Friday, September 2, 2016

Networks Are More Responsible For Career Success Of Young Lawyers (And Everyone) Than Achievements

Keith Lee, Social Behavior More Indicative of Career Success Than Achievements:

Many freshly minted lawyers (and law students) are concerned about their career opportunities. Things have never really been the same since 2007. Law firms continue to shed excess lawyers and defer the start of new associates. Or they just don’t hire new lawyers at all. Here’s a chart I made in 2015 if you need a visualization.


In this environment, new lawyers are doing everything they can to get hired and then stay hired. They’re working harder, better, faster, stronger. Many new lawyers likely focus on their achievements to display their competence when it comes to their work. Yet evidence suggests defining success by “achievement” and “competence” might actually be detrimental to career success. ... [P]eople who are able to emphasize social relationships and adaptability are more likely to find career success in an organization than those who exclusively pursue work achievements. ...

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September 2, 2016 in Legal Education | Permalink | Comments (2)

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new paper by Daniel Hemel (Chicago) and Kyle Rozema (Northwestern), Inequality and the Mortgage Interest Deduction, forthcoming in the Tax Law Review:

Glogower (2016)Hemel and Rozema ask a question that we thought was well settled: What are the distributional consequences of repealing the mortgage interest deduction (“MID”)? Their conclusion (spoiler alert): It depends.

The article is important in two respects. First, it introduces a more sophisticated analysis of the distributional consequences from repealing (or limiting) the MID and other tax preferences. Through this exercise, the article also adds empirical perspective to the choices for measuring progressivity in tax reforms.

Building on David Kamin’s work on progressivity in tax reforms, the article begins with a result we’ll call the “Tax Burden Paradox”: Repealing a tax preference that provides a larger benefit to high-income taxpayers in dollar terms may in fact decrease those taxpayers’ share of society’s total tax burden.  Consider the article’s example of a two-household society, one rich with pretax income of $100, and one poor with pretax income of $50, and progressive rates that tax the first $50 of income at 20%, and additional income at 40%.  The rich and poor households pay $12 and $9, respectively, in mortgage interest. With the MID, the rich household pays $25.20 in taxes, or 75.4% of the society’s total $33.40 tax burden. If the MID is repealed, the rich household pays $30 in taxes, for a reduced 75% share of the society’s total $40 tax burden.

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September 2, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup