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Tuesday, February 4, 2014

Syverud: There Is No Law School Crisis, Just a Management Challenge

New York Law Journal, No Easy Answers for Challenges Facing Law Schools:

SyverudSyracuse University's new chancellor offered a hopeful assessment Wednesday for the future of law schools, despite the sinking applications, enrollments and revenues that have cast a pall on many institutions.

"We do not have a crisis in legal education," Kent Syverud told more than 400 lawyers attending the presidential summit at the New York State Bar Association's annual meeting at the New York Hilton Midtown in Manhattan.

Rather, Syverud said law schools experiencing a 20 percent average increase in expenses versus revenues face what he called a "management challenge" that should be embraced as an chance to produce better and more practice-ready graduates.

"It is not even an unusual management challenge," said Syverud, who was dean of Washington University School of Law before recently taking over at Syracuse last month. "The fact that it's unusual for American law schools to see this great a swing is interesting, but in almost every other sector of our economy, including legal services, it's a management challenge that's quite familiar."

He said many schools are "embracing" their financial troubles as an "opportunity to get better" and to take on "calcified practices" that have been hard to change in the past. "Those that don't adjust are going to fail," he said. "That's a good thing, too. This is America. There is no constitutional right for you institution to continue forever without changing or evolving."

February 4, 2014 in Legal Education | Permalink | Comments (2)

IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide

IBM 2Bloomberg:  IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide, by Jesse Drucker:

IBM has reduced its tax rate to a two-decade low with help from a tax strategy that sends profits through a Dutch subsidiary. The approach, which involves routing almost all sales in Europe, the Middle East, Africa, Asia and some of the Americas through the Netherlands unit, helped IBM as it gradually reduced its tax rate over 20 years at the same time pretax income quadrupled. Then last year, the rate slid to the lowest level since at least 1994, lifting earnings above analysts’ estimates.  ...

Attracted by the Netherlands’ policies and extensive network of tax treaties, IBM joins companies such as Yahoo! Inc., Google Inc. and Cisco Systems Inc. that have used Dutch subsidiaries to cut taxes.

Offshore tax strategies like the one used by IBM are coming under increased scrutiny. In the past year, the tax-avoidance techniques of companies including Apple Inc., Google and Inc. have been the subject of U.S. Senate and U.K. Parliament hearings. Meanwhile, the Organization for Economic Cooperation and Development, a government-funded think tank, is developing a plan to fight so-called profit-shifting at the direction of the Group of 20 nations.

(Hat Tip: Bruce Bartlett.)

February 4, 2014 in Tax | Permalink | Comments (0)

IRS Releases Smartphone App IRS2Go Version 4.0

IRS App IR-2014-11 (Feb. 4, 2014), IRS Smartphone App IRS2Go Version 4.0 Now Available:

The IRS today announced the release of IRS2Go 4.0, an update to its smartphone application featuring new added features available in both English and Spanish. The redesigned IRS2Go provides new features for taxpayers to access the latest information to help them in the preparation of their tax returns. ...

There have been about 3.5 million downloads of IRS2Go since its inception in 2011. iPhone and iPod Touch users can update or download the free IRS2Go application by visiting the iTunes App Store. Android users can visit Google Play to download the free IRS2Go app. The newest version of the free mobile app offers a number of safe and secure ways for taxpayers to access other popular tools and the most up-to-date tax information, including: 

  • Refund Status
  • Free Tax Prep Providers
  • Tax Records
  • Stay Connected (Twitter, YouTube, Email)

For more information on IRS2Go, products and services through social media channels and other media products, visit

February 4, 2014 in IRS News, Tax | Permalink | Comments (0)

Survival Strategies for 'Ordinary' Law Schools

David Barnhizer (Cleveland State), Survival Strategies for "Ordinary" Law Schools:

This analysis is focused on approaches and actions that involve “ordinary” American law schools located in the middle range of competition that are not insulated from the worst of the trends. It is important to understand that for those “ordinary” law schools there is no single choice that could be effective in their struggle to adapt to the changing environment. The specific conditions for creating and implementing effective strategies vary depending on the particular law school, and the applicant and employment markets to which the school has access. These are further influenced positively or negatively by reputational and programmatic realities and opportunities, by sources and scope of funding and by the degree of competition with other law schools in the specific markets served by the law school.

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February 4, 2014 in Legal Education | Permalink | Comments (4)

Northeastern Seeks to Hire a Tax VAP

NortheasternNortheastern seeks to hire a tax VAP:

Northeastern University School of Law is seeking applicants for a two-year appointment as visiting assistant professor in the tax area. We are seeking candidates who would teach introductory tax and corporate tax, as well as an additional course in the tax field. We are interested in candidates who will be working on a scholarly agenda and who will participate actively in the intellectual life of the law school, including presenting a paper to a faculty colloquium at some point during the visit. Interested candidates should submit a letter of interest and a cv to Professor Peter Enrich.

February 4, 2014 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Best Lawyer Ad. Ever.

OMB: EITC Is 4th Most Error-Prone Federal Program, With 22.7% Error Rate

Conversable Economist:  Improper Federal Payments of $100 Billion Annually:

To its credit, the U.S. Office of Management and Budget keeps a list of "High-Error Programs," which is roughly defined programs that pay out $750 million or more improperly. Here's the list for 2012.


While I'm a fan of the Earned Income Tax Credit, the 22.4% rate of improper payments is nonetheless striking and disheartening. As I discussed here, the problem seems to be a mixture of people whose economic and family lives are often in flux and who often have no particular facility for filling out detailed paperwork and records, combined with a complex set of government rules. Throw some opportunistic fraud into the mixture as well, and the overpayment rate gets high.

(Hat Tip: Linda Galler, Ed Kleinbard, Francine Lipman, Walter Schwidetzky.)

February 4, 2014 in Tax | Permalink | Comments (1)

WSJ: 15 Common Tax-Filing Errors

Wall Street Journal Tax Report:  Don't Make These Tax Mistakes: Fifteen Common Tax-Filing Errors That Can Cost You Dearly, by Laura Saunders:

WSJThe IRS opened its filing season Friday, and by midnight on April 15 the agency expects to hear from individual taxpayers filing nearly 150 million returns for 2013. Thanks to the growing complexity of the tax code, that is 150 million opportunities for U.S. taxpayers to shortchange either themselves or Uncle Sam by making multiple errors. ... Last year's "fiscal cliff" revisions brought the total number of tax changes since 2001 to 4,838, or more than one a day, says Mark Luscombe, principal analyst at tax publisher CCH, a division of Wolters Kluwer.

All that complexity exacts a steep price. According to Ms. Olson's latest data, individuals and businesses spend more than six billion hours a year complying with income-tax filing requirements. In 2010 that came to about $168 billion, or 15% of total revenue collected....

No matter how you tackle your taxes, here are errors to watch out for.

  1. Claiming the wrong number of dependents
  2. Failing to itemize deductions
  3. Overstating charitable gifts
  4. Forgetting to claim charitable gifts made through payroll deductions or with IRA assets
  5. Reporting incorrect net-investment-income tax
  6. Overlooking medical expenses
  7. Double-dipping on education or dependent-care benefit
  8. Deducting points on a home refinancing
  9. Not paying the penalty on an early retirement-plan withdrawal
  10. Reporting an erroneous cost basis
  11. Not checking income reports for mistakes
  12. Overpaying tax on a sale of employer stock
  13. Mishandling the previous year's state tax refund
  14. Not disclosing a foreign account
  15. Not signing the return

February 4, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 271

Continue reading

February 4, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Monday, February 3, 2014

WSJ: Private Equity Firms Save Millions in Taxes by Treating Dividends as 'Monitoring Fees,' Says Polsky

Wall Street Journal:  Private-Equity Firms' Fees Get a Closer Look: Industry May Be Underpaying Taxes by Misrepresenting Payments, by Mark Maremont:

ImageGregg D. Polsky, a tax-law professor, has long been a thorn in the side of the private-equity industry. Now he is at it again.

In 2009, Mr. Polsky wrote an article criticizing a strategy that allowed many fund executives to save on taxes by converting ordinary fee income into capital gains taxed at substantially lower rates. [Private Equity Management Fee Conversions, 122 Tax Notes 743 (Feb. 9, 2009).] The IRS later started examining the propriety of the practice, called a management-fee waiver, and recently said it plans to issue new guidance on it.

In a new article published over the weekend, Mr. Polsky takes aim at the tax treatment of another revenue stream for private-equity firms, called monitoring fees. [The Untold Story of Sun Capital: Disguised Dividends, 142 Tax Notes 556 (Feb. 3, 2014)]  He claims the industry may be underpaying federal corporate taxes by hundreds of millions of dollars a year by mischaracterizing these fees.

Continue reading

February 3, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Winchester Presents Carried Interest for the Common Man Today at Pepperdine

WinchesterRichard Winchester (Thomas Jefferson) presents Carried Interest for the Common Man at Pepperdine today as part of our Tax Policy Colloquium Series:

In recent years, the public has become increasingly aware of the compensation arrangement known as carried interest, which permits private equity fund managers to pay tax at obscenely low rates on obscenely high earnings for their work. The publicity has led Congress to consider no fewer than eight separate pieces of legislation since 2007 to increase the tax on carried interest. Much of the energy behind this movement seems to be grounded in a concern that the tax system currently allows certain rich individuals to gain an advantage that is not available to anyone else. However, that is not entirely accurate. For years, huge numbers of ordinary self-employed people have been able to limit the tax on their earnings when they conduct their business through a formal business entity instead of as a sole proprietor. These business structures produce the same objectionable results as a carried interest arrangement. They just happen to be utilized by the common man. It is long past time for Congress to address this inequity in a comprehensive way with the same energy that it is devoting to addressing the taxation of carried interest.

Update:  Post-presentation lunch:



February 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Hickman Presents Administering the Tax System We Have Today at St. Thomas

Hickman 2014 2Kristin E. Hickman (Minnesota) presents Administering the Tax System We Have, 63 Duke L.J. ___ (2014), at the University of St. Thomas School of Law today as part of its Faculty Workshop Series:

In Mayo Foundation for Medical Education and Research v. United States, the Supreme Court rejected tax exceptionalism from administrative law doctrines and requirements as a general rule. Yet, many tax administrative practices do not comport precisely with general administrative law norms. Courts and commentators often invoke the importance of revenue raising in explaining or defending tax exceptionalism from administrative law norms. But the government’s reliance on tax collections notwithstanding, it does not necessarily follow that revenue raising is the only or even the primary focus of the contemporary U.S. tax system and those charged with administering it. Congress may perceive the non-revenue raising aspects of the tax code to be minor and peripheral to the IRC’s revenue raising function. But what if that perception is no longer accurate? The IRC now contains hundreds of tax expenditure items representing more than a trillion dollars annually of indirect government spending aimed at a variety of social welfare and regulatory goals. Treasury and the IRS share responsibility for administering the Affordable Care Act and ERISA. The IRS dedicates an entire division (out of four) to monitoring the activities of 1.6 million tax exempt organizations. If the efforts of tax administrators are increasingly focused on programs, purposes, and functions other than revenue raising, then what ought to be the implications for instances of tax exceptionalism in administration that are premised on the revenue raising function?

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February 3, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Van Cleave: The Courage of Law Students

CourageRachel A. Van Cleave (Dean, Golden Gate), The Courage of Law Students:

Current students and recent graduates are exceptionally brave and optimistic. They are coming to law school because they really want a legal education. In the face of a difficult job market, a profession that is in a period of dramatic transformation, and even with the prospect of incurring significant debt, they want to study law, become lawyers, and have fulfilling careers. They are going against the grain, against the advice of commentators, some pre-law advisors, and probably friends and family. That takes a lot of courage, real courage. Amelia Earhart said, "The most difficult thing is to act, the rest is merely tenacity ... You can act to change and control your life, and the procedure, the process is its own reward." The decision to act also takes optimism. Do those of us in legal education have that kind of courage? What must we do to honor that kind of courage and optimism?

We must consider ourselves privileged to be trusted with the brave decisions of our students by discovering the most effective ways to engage, coach, mentor and teach them from before orientation, through graduation and into their careers. We can achieve this by prioritizing the following three strategies: (1) teach our students that life-long learning and continuing professional development is critical; (2) coach them in the range of skills necessary for professional success; and (3) support their cultivation of characteristics and values essential for their success and well-being.

(Hat Tip: Cynthia Fountaine.)

February 3, 2014 in Legal Education | Permalink | Comments (3)

The Ascendancy of the Agile Attorney

Legal RebelsABA Journal Legal Rebels:  The Agile Lawyer Will Rise as Permanent, Full-Time, Salaried Employment Vanishes, by Jordan Furlong:

Lawyer jobs are disappearing. Every day, law firms across the country reduce their ranks of associates and partners, removing more and more table settings as their revenue pie keeps shrinking. Over the past few years, only about 55 percent of law school graduates have been finding full-time, law-related work nine months after graduation. Would-be lawyers have taken the hint, and first-year enrollment in U.S. law schools has dropped to its lowest level since the 1970s.

Is this the end of lawyers? Hardly. (And that’s not really what Richard Susskind was saying, anyway.) But I do think we’re seeing the probably irreversible decline of the traditional “lawyer job,” which performs a range of tasks with defined responsibilities in a single location during specified hours at an agreed salary. In its place, we should expect to see the rise of agile “lawyer employment”—the multidimensional, customized application of a lawyer’s skills and talents to provide client value when and where it’s required. ...

We need to make our way through this transitional chaos towards a modern, functional, fair system for the application of lawyers’ skills to provide value for clients as appropriate opportunities arise. We need to create platforms that gather and organize good legal talent, align and match it with client opportunities, and facilitate the delivery of legal services in ways that serve the needs, schedules and budgets of both the client and the lawyer. ...

The coming legal market will still require competent, ethical, hard-working lawyers to solve problems and create value for clients. But lawyer employment is going to acquire some new characteristics. It will be:

  • Agile, requiring flexible availability and multiple short-term engagements.
  • Technology-enabled, using tools that automate or streamline repetitive processes.
  • Multidisciplinary, delivered in conjunction with other professionals and trades.
  • Creative, invoking rarely used skills and talents that, as it turns out, we actually have in abundance.

Lawyers who can meet these criteria, and the firms and clients that seek them out, will be the first winners in this rapidly evolving legal labor market. It won’t be easy, and it won’t always be pretty, but the sooner we adjust our settings to this new environment, the better.

February 3, 2014 in Legal Education | Permalink | Comments (0)

TPC & USC Conference: Growing Income Inequality: Is Tax Policy the Cause, the Cure or Irrelevant?


The Tax Policy Center and USC Gould School of Law host a conference on Growing Income Inequality: Is Tax Policy the Cause, the Cure or Irrelevant? (flyer) this Friday, February 7, 2014:

Panel #1:  Measuring Inequality

  • Moderator:  Paul Caron (Pepperdine)
  • Emmanuel Saez (UC-Berkeley), Income Concentration and Top Income Tax Rates
  • Scott Winship (Manhattan Institute), Has Income Inequality Risen, and If Yes, Between Whom?

Panel #2:  How The Tax System Fosters Inequality

  • Moderator:  Todd Molz (Managing Director and General Counsel, Oaktree Capital)
  • Leonard Burman & Eric Toder (Tax Policy Center), The Role of Capital Gains Tax Preferences in Generating Wealth and Income Inequality
  • Victor Fleischer (San Diego) & Steven Rosenthal (Tax Policy Center), How the Rich Get Richer through the Income Tax

Luncheon Keynote Address:  Ron Wyden (U.S. Senator, Oregon)

Panel #3:  Tax Policy or Fiscal Policy

  • Moderator:  Eric Zolt (UCLA)
  • Edward Kleinbard (USC), From Progressive Tax to Progressive Fiscal Systems
  • Donald Marron (Tax Policy Center), Can Distributional Analyses Combine Taxes and Spending?

Panel #4:  The Income Tax as an Anti-Poverty Tool

  • Moderator:  Ellen Aprill (Loyola-L.A.)
  • Miles Corak (University of Ottawa), Intergenerational Mobility: What Makes America Different?
  • John Colombo (Illinois), Using the Charitable Deduction to Stimulate Social Change 

February 3, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (1)

TurboTax's Super Bowl Commercials

I remain partial to the winner of TurboTax's 2007 tax rap contest:

But my heart remains with the entry from my former colleague (and current Seton Hall Law Prof) Adam Steinman:

February 3, 2014 in Tax | Permalink | Comments (0)

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February 3, 2014 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 270

TaxProf Blog Weekend Roundup

Sunday, February 2, 2014

Super Bowl Tax Tale of the Tape

Forbes:  Super Bowl Tax Tale of the Tape: Who Ya' Got?, by Anthony J. Nitti (WithumSmith & Brown, Aspen, CO):

I’ve put together this handy comparison that summarizes the salient issues that you, the sports fan-tax geek — need to know before deciding who deserves your love on Sunday night.  Think of the table as one of the Tax Court’s “factor tests,” while the Broncos may win the preponderance of the factors, you may weigh the factors based on your personal ideology and reach a different overall conclusion.

Superbowl Nitti2

February 2, 2014 in Tax | Permalink | Comments (0)

New Jersey Taxes Could Eat Up All of Peyton Manning's Super Bowl Earnings

Forbes:  New Jersey Taxes Could Eat Up All of Peyton Manning's Super Bowl Earnings:

Super BowlPeyton Manning has the opportunity to pull a John Elway and ride off into the sunset as a Denver Bronco after winning his second ring, not that he wants to retire. His career will hinge upon an offseason exam on his surgically-repaired neck, according to ESPN ’s Chris Mortensen. Obviously, the most important implication of the exam will be Manning’s health. But whether his career continues will have an effect on how much tax New Jersey can collect from him for his appearance in the Super Bowl XLVIII.

Should the Broncos beat the Seahawks, Manning—and the rest of his teammates—will earn $92,000. The loser’s share in the Super Bowl is $46,000. So why does Manning’s future beyond February 2 matter to New Jersey? It would seem logical that the Garden State would apply its tax rates on the $92,000 or $46,000 Manning earns for his week in East Rutherford. Unfortunately, we are dealing with tax laws, not logic.

February 2, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

  1. [204 Downloads]  Important Developments in Federal Income Taxation, by Edward A. Morse (Creighton)
  2. [200 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature, by Dhammika Dharmapala (Illinos)
  3. [164 Downloads]  Is the Tax Tide Turning Against the Rich?, by Bruce Bartlett
  4. [149 Downloads]  Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach, by Brian D. Galle (Boston College) & David I. Walker (Boston University)
  5. [127 Downloads]  Understanding Income Tax Deferral, by Daniel I. Halperin (Harvard) & Alvin C. Warren (Harvard)

February 2, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 269

Saturday, February 1, 2014

Tenured Faculty Layoffs Coming at Albany Law School?

Albany logoTax Prof Bridget Crawford (Pace) reports on the news that Albany Law School's "administration and governing board have announced that, because of serious financial difficulties, notifications of faculty layoffs will be issued shortly." 

Albany's bonds have been downgraded in recent months, and its 1L enrollment has declined 27% over the past five years:

2009:  255
2010:  236
2011:  235
2012:  196
2013:  187

The AAUP has pushed back, based on a detailed financial analysis:

The Chapter maintains that there is no showing of a bona fide institutional financial exigency or of individual faculty incompetence. Accordingly, no justification for faculty terminations exists. Since no faculty terminations are justified, the Chapter takes no position on what the order of layoffs would be if terminations were warranted under a state of financial exigency. In the absence of evidence of anything remotely resembling a bona fide financial exigency, firing any faculty member would depart from nationally accepted standards of law school governance.


February 1, 2014 in Legal Education | Permalink | Comments (8)

The Perks of Being a Tax Whistleblower

NewsweekNewsweek:  The Perks of Being a Whistle-blower, by Lynnley Browning:

High-level whistle-blowers are the newest players in the vastly rich world of offshore tax evasion. The tax gap - the amount by which U.S. corporations underpay their federal income taxes - is $385 billion, according to the most recent IRS estimates in 2006. But deep inside multinational financial services, technology and pharmaceutical corporations, and at smaller family-run companies in everything from manufacturing to real estate, high-level insiders are stealthily exposing them.

Nailing these cheaters is a nascent game fraught with risk and disappointment, but carrying the promise of astronomical payouts. ... There's now a clutch of lawyers taking clients on a contingency-fee basis and charging up to 40 percent of the rewards for corporate tax tipsters. "We have clients with whistle-blower claims for billions of dollars in unpaid taxes," not including penalties and interest, says Eric Havian, a lawyer at Phillips & Cohen in San Francisco. "The multinationals with offshore operations are the ones where you see some of the biggest tax scams." [Gregory] Lynam says Ferraro represents more than 100 whistle-blowers with claims alleging $120 billion in tax dodging.

These tax-code whistle-blowers are often motivated by moral outrage, but many are angry at cash-rich employers who have stiffed them on bonuses, passed them over for promotions or branded them "wimps" for refusing to participate in the subterfuge. Most of all, they covet the same thing their tax-evading companies do: money, and lots of it. ... . "Some people are going to become very wealthy through this process," says Bryan Skarlatos, a tax lawyer at Kostelanetz & Fink in New York with around three dozen bounty-hunting clients with claims totaling tens of billions of dollars.

February 1, 2014 in Tax | Permalink | Comments (0)

IRS Kicks Off 2014 Tax Season, Apologizes in Advance for Clogged Phone Lines

IRS Logo 2IR-2014-9 (Jan. 31, 2014), IRS Kicks Off 2014 Tax Season:

The Internal Revenue Service today opened the 2014 filing season by highlighting a growing array of online services and encouraging taxpayers to check out a variety of tax benefits, such as the often-overlooked Earned Income Tax Credit.

Taxpayers have until Tuesday, April 15, 2014, to file their 2013 tax returns and pay any tax due. The IRS expects to receive more than 148 million individual tax returns this year, and more than four out of five returns are now filed electronically.

BloombergBusinessweek, IRS Apologizes in Advance for Clogged Phones as Tax Season Opens:

The IRS won’t be able to answer millions of phone calls from taxpayers this year, Commissioner John Koskinen said today.

The IRS said it answered 61 percent of calls that came in to customer service lines last year. Koskinen, who became commissioner in December, said he hoped the agency could reach 70 percent this year. “I apologize for the public that we can’t do more,” Koskinen said on the first day of the U.S. individual tax filing season, which lasts until April 15. “I personally just find it unacceptable.”

Forbes:  IRS: Don't Call Us, Look It Up On IRS.Gov, by Janet Novack:

As the Internal Revenue Service begins  processing an expected 148 million individual income tax returns for 2013, IRS Commissioner John Koskinen  is apologizing to taxpayers for the sorry state of telephone and walk-in service and  urging them to use instead.

Last year, only 60.5% of taxpayers who called the IRS’ toll-free assistance line got through to a human being and then only after an average of 17.6 minutes on hold.  In a tax season kick-off press conference today, Koskinen said the IRS had been hoping to answer 78% to 80% of calls this year. But after the 2014 budget deal failed to restore the budget sequester cuts imposed on the IRS, the agency is setting its sights lower. “We don’t expect that our customer service is going to be able to improve very much,’’ Koskinen said, adding “we would love” to get as high as 70% of calls answered during this filing season. ...

Along with phone service, the IRS has cut back services at its walk in Taxpayer Assistance Centers, where lines can be long. This year, workers in those centers will no longer answer “complex” tax law questions, only “basic” ones, and will no longer prepare tax returns for low-income and elderly taxpayers.

February 1, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 268

Friday, January 31, 2014

Morrow Presents Tax Valuation in Light of Uncertainty Today at Kentucky

MorrowRebecca Morrow (Wake Forest) presents Valuation in Light of Uncertainty at Kentucky today as part of its Faculty Brown Bag Workshop Series hosted by Jennifer Bird-Pollan:

Buyers and sellers of business interests, IRS officials, and courts have long faced a serious problem: they must frequently determine the present value of a future tax liability without knowing when that liability will be incurred. For example, when a corporation exists primarily to hold assets for the benefit of its owners, its value depends on the net value of the assets it holds. Such corporations are extremely common and often hold highly appreciated assets. The tax liability on the appreciation is not incurred upon the transfer of stock in the corporation; rather, it is incurred when the corporation sells its appreciated assets. Since the appreciation experienced prior to the stock transfer (referred to as “built-in gain”) will cause a future tax liability, it reduces the value of the company and therefore the value of the stock. Unfortunately, at the time when the stock is transferred, it is generally unknown when the appreciated assets will be sold. Thus, buyers and sellers attempting to arrive at appropriate stock prices and taxpayers, IRS officials, and courts attempting to calculate the estate or gift taxes due on gratuitous stock transfers must calculate the present values of future tax liabilities without knowing when those liabilities will be incurred. Courts and scholars have struggled with this problem, alternately assuming away uncertainty regarding timing or denying its importance. The result has been doctrinal inconsistency, taxpayer uncertainty, and opportunistic behavior.

This Article proposes a new valuation methodology to calculate the present value of a future tax liability when it is uncertain when that future tax liability will be incurred. Instead of ignoring uncertainties regarding timing, market participants, IRS officials, and courts can and should value future tax liabilities in a way that accounts for them by using weighted probabilities of multiple likely outcomes. This Article’s key insight is to adapt stock option valuation techniques, which account for similar uncertainties, to this problem. The resulting approach is both theoretically satisfying and eminently workable by parties, the IRS, and courts.

January 31, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

January 31, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

January 31, 2014 in Scholarship, Tax | Permalink | Comments (0)

Weekly Student Tax Note Roundup

January 31, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Journal of Taxation of Investments Publishes New Issue

Capture 2 The Journal of Taxation of Investments has published its Winter 2014 issue (Vol. 31, No. 2), with these articles:

January 31, 2014 in Scholarship, Tax | Permalink | Comments (0)

Call for Speakers: CALI Conference at Harvard Law School -- The Next Wave

CALI 2CALI has issued a call for speakers for law faculty, librarians, and IT staff (April 4 deadline) at its 24th Annual Conference for Law School Computing to be held Thursday, June 19 through Saturday June 21 at Harvard Law School. The theme of this year's conference is "The Next Wave":

CALI has been around for over 30 years. In that time, it has pioneered technology in legal education and in applications that improve access to justice and has worked with the innovators and early adopters in those fields. And now, excitingly, the next wave is here. Technology isn’t just something for hard core Teknoids. It’s become accessible and accepted in the law school and legal environments.

We know that you need to be looking out for the next wave. Much like waves constantly coming into shore, waves of change are constantly hitting legal education. How you approach them matters. To some people they may feel like tsunamis that are going to destroy everything and their inclination is to run and hide from them. Some people are going to hold fast and then be gradually eroded away and altered by the constant wave action. And some people are going to want to swim out to meet the waves and ride in on them on a surf board.

For 24 years, the CALI Conference has organized its schedule at nearly the last minute in order to bring the most relevant and up-to-date presentations to attendees. This year is no different and we are looking for law school faculty, librarians, and technologists with strong opinions, great ideas, interesting projects and useful advice. Come and share and be challenged. If you are willing and able to speak, your conference registration fee is just $95!

(Disclosure:  I am President of the CALI Board of Directors.)

January 31, 2014 in Conferences, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 267

IRS Logo 2Wall Street Journal op-ed:  Meanwhile, Back in America . . . The Growing Distance Between Washington and the Public It Dominates, by Peggy Noonan:

The State of the Union was a spectacle of delusion and self-congratulation in which a Congress nobody likes rose to cheer a president nobody really likes. It marked the continued degeneration of a great and useful tradition. Viewership was down, to the lowest level since 2000. ...

Meanwhile, back in America, conservatives targeted and harassed by the Internal Revenue Service still await answers on their years-long requests for tax exempt status. When news of the IRS targeting broke last spring, agency officials lied about it, and one took the Fifth. The president said he was outraged, had no idea, read about it in the papers, boy was he going to get to the bottom of it. An investigation was announced but somehow never quite materialized. Victims of the targeting waited to be contacted by the FBI to be asked about their experience. Now the Justice Department has made clear its investigation won't be spearheaded by the FBI but by a department lawyer who is a campaign contributor to the president and the Democratic Party. Sometimes you feel they are just laughing at you, and going too far.

In the past five years many Americans have come to understand that an agency that maintained a pretty impressive record for a very long time has been turned, at least in part, into a political operation. Now the IRS has proposed new and tougher rules for grassroots groups. Cleta Mitchell, longtime attorney for many who've been targeted, says the IRS is no longer used in line with its mission: "They're supposed to be collecting revenues, not snooping and trampling on the First Amendment rights of the citizens. We are not subjects of a king, we are permitted to engage in First Amendment activities without reporting those activities to the IRS."

All these things ... have the effect of breaking bonds of trust between government and the people. They make citizens see Washington as an alien and hostile power.

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January 31, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Zolt: Inequality in America: Challenges for Tax and Spending Policies

Eric M. Zolt (UCLA), Inequality in America: Challenges for Tax and Spending Policies, 66 Tax L. Rev. 1101 (2013):

The goal of this article is to provide a guide to addressing tax and spending policies in an era of increasing inequality of income and wealth. This is challenging because it requires a good understanding of inequality and economic mobility, the changing role of taxes and government social spending, the constraints on policy options, and the possible misconceptions that may influence tax and spending policies.

Inequality in the United States has increased dramatically over the last 30 years. Perhaps even more troubling than the rise in inequality may be the persistence of high levels of poverty and the decline in economic mobility. The same thirty-year period during which inequality has increased, poverty levels have not declined, and economic mobility has decreased has seen major changes in fiscal policy. Tax law changes have altered the relative tax rates, the relative revenue contributions from different tax instruments, and the tax burdens of different income groups. Government spending on social programs has increased substantially, but perhaps not in ways one might expect. The United States likely has a smaller percentage of government social spending going to the needy than other developed countries. In recent decades, an increasingly larger percentage of social spending has been directed to the elderly (without regard to need) and to the upper-half of the income distribution through tax subsidies for healthcare, education, housing, and retirement savings.

The essential first step in shaping fiscal policy is to identify clearly the relative priorities among reducing inequality, reducing poverty, and increasing economic mobility. Tax and spending policies will differ depending on the weight given each of these objectives, and especially in a world of relatively limited resources, the government needs to make difficult choices. Perhaps the most significant implication of this reality is that it may be time to stop thinking about increasing the income tax burden on the wealthy as the only, or perhaps even the primary, way to increase funding for social spending programs. The United States may need less progressive (or even regressive) taxes to fund more progressive spending programs.

January 31, 2014 in Scholarship, Tax | Permalink | Comments (0)

Exelron's $1 Billion § 1031 Case May Roil Like-Kind Exchange Industry

1031Reuters:  Exelon Quarrel With IRS Could Threaten Tax-Free Exchange Deals:

If Exelon loses its case against the IRS in U.S. Tax Court, tax-free property exchange deals, even smaller ones, could be at risk of more often being labeled "abusive tax shelters," by the agency, tax lawyers said this week. ... Exelon is defending two tax-free property exchanges worth more than $1 billion combined. They were carried out by one of its units in 1999, according to a Tax Court filing. ...

In the Exelon case, the IRS is arguing that the company "did not acquire and retain significant and genuine attributes of a traditional owner," to satisfy the like-kind exchange rules, according to court documents.

The case traces back to 1999 when an Exelon subsidiary sold some of its fossil fuel power plants to comply with new regulations. With the sale proceeds, the subsidiary acquired three power plants in Georgia and Texas in what the company said it structured as a tax-free exchange. The Exelon subsidiary then leased the Georgia and Texas properties back to the local governments that operated them. The governments paid advance rent to the Exelon unit totaling more than $1 billion, according to court filings.

The rent payments were part of a "sale in, lease out," or SILO, deal that was integral to the tax-free exchange.

The IRS contends that by leasing the properties, the Exelon unit did not take proper possession of the plants it got in the exchange. The IRS views some SILO deals as tax shelters and has won SILO disputes in court, including an unrelated one against Exelon last year in a federal appellate court.

"SILOs are old tax shelters and courts have ruled against them numerous times," said Bradley Borden, a Brooklyn Law School tax professor. He added that if the SILO portion of the power plants exchange does not hold up in court, Exelon could lose and its case could have "a chilling effect" on similar deals. "Exelon is going to have a hard time winning," Borden said.

However, in court fights over like-kind exchanges, "the IRS has a pretty bad track record," said David Shechtman, a lawyer with Drinker Biddle & Reath LLP who is not involved in the case.

Exelon's transaction was not a typical SILO and that might help the company prove it was playing by the rules, he said.

The case is Exelron Corp., as successor by merger to Unicom Corp and Subsidiaries v. Commissioner of Internal Revenue; Tax Court docket No. 29183-13.

January 31, 2014 in Tax | Permalink | Comments (1)

Muller: Which Law Schools Have the Highest Non-JD Enrollment?

Derek Muller (Pepperdine), Which Law Schools Have the Highest Non-JD Enrollment?:

I've discussed the trend of increased non-JD enrollment in law schools. Thanks to new ABA data, we now have the JD and non-JD enrollment data for each school in 2013. It turns out that the original figures I used were underinclusive in one respect: the ABA reports "non-JD enrollment" as the sum of post-JD enrollment and post-baccalaureate enrollment (including "non law," usually including "master level programs aimed at non-lawyer professionals"). But it excludes the 1677 "non-JD online" enrollment.

I sorted the schools by the total non-JD enrollment--including post-JD, post-baccalaureate, and non-JD online--as a percentage of total enrollment (the denominator being those categories, plus full-time and part-time JD enrollment). These schools had the highest percentage of non-JD enrollment.

  1. Vermont: 38.5%
  2. NYU: 33.3%
  3. Loyola Chicago: 32.2%
  4. Boston University: 30.7%
  5. Temple: 26.6%
  6. Georgetown: 25.4%
  7. Alabama: 24.5%
  8. Washington:  24.4%
  9. UC-Berkeley:  23.2%
  10. USC: 22.0%

January 31, 2014 in Law School Rankings, Legal Education | Permalink | Comments (4)

Thursday, January 30, 2014

Marian Presents Rethinking Tax Disclosure in Registered Offerings Today at Northwestern

MarianOmri Marian (Florida) presents Consult Your Own Tax Advisor: Rethinking Tax Disclosure in Registered Offerings at Northwestern today as part of its Tax Colloquium Series hosted by by Herbert Beller, Charlotte CraneDavid Cameron, Philip Postlewaite, Jeffrey Sheffield, and Robert Wootton:

Issuers in registered securities offerings are required to disclose, among other tax matters, the expected tax consequences to investors that result from investing in the offered securities (“nonfinancial tax disclosure”). I advance three arguments in this regard. First, current nonfinancial tax disclosure practice, as sanctioned by the SEC, performs little regulatory function. Nonfinancial tax disclosures provide irrelevant information, sometimes fail to provide material information, create unnecessary transactions costs, and divert valuable regulatory resources to the enforcement of largely-meaningless requirements. Second, I suggest the practical reason behind this regulatory failure is a failed attempt by tax practitioners and the SEC to address investors’ heterogeneous tax preferences. Nonfinancial tax disclosure practice assumes the existence of a “reasonable investor” that is also an “average taxpayer”, and tax disclosures are drafted for the benefit of such average taxpayer. I demonstrate, however, that the concept of the “average taxpayer” is not conceptually or empirically defensible. Third, the theoretical reason for the dysfunctionality of the regulatory regime is a misguided reliance on mandatory disclosure theory in the tax context. I argue that given the special nature of tax laws, mandatory disclosure theory—even if accepted at face value—does not support the current regulatory framework of nonfinancial tax disclosure. To remedy this failure, I describe the types of tax-related disclosures that would be supported by mandatory disclosure theory. Under my suggested regulatory reform, nonfinancial tax disclosure will only include issuer-level tax items, (namely, items at the company level not otherwise disclosed in the financial statements), that affect how “reasonable investors” calculate their own individual tax liabilities. Under such a regime, there is no need to rely on the “average taxpayer” construct.

January 30, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Osofsky Presents Beyond Worst-First Tax Enforcement Today at Indiana

Osofsky 3Leigh Osofsky (Miami) presents Beyond Worst-First Tax Enforcement at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

When enforcement resources are limited, how should the scarce enforcement resources be allocated to maximize compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, “worst-first” methods suffer some underappreciated weaknesses. While “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits in existing theory, I draw on work from across different disciplines to develop a new layer of analysis regarding the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call microdeterrence. After setting forth the theoretical case for microdeterrence, I examine how it might apply in the cash business tax sector, a setting that presents particular challenges for “worst-first” methods. I conclude that microdeterrence may increase compliance, meriting its application and empirical evaluation. More fundamentally, this Article underscores the importance of the allocation of scarce enforcement resources, some of the deficits in existing theory, and the potential benefits of integrating additional layers of analysis.

January 30, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Rosenthal Presents Local Public School Finance in a Time of Institutional Change Today at UCLA

RosentahlHoward Rosenthal (NYU, Department of Politics) presents The Twilight of the Setter? Local Public School Finance in a Time of Institutional Change (with Sean Corcoran (NYU, School of Culture, Education, and Human Development) & Thomas Romer (Princeton, Woodrow Wilson School of Public and International Affairs)) at UCLA today as part of its Tax Policy and Public Finance Colloquium hosted by Jason Oh, Kirk Stark, and Alexander Wu:

The operation and financing of primary and secondary public schools in the US is highly decentralized. Most of the budget of each of the 13,000+ school districts comes from a combination of local and state revenues. State constitutions and statutes determine the degree of local district autonomy and scope of taxing power.

As part of an ongoing project on the political economy of education finance, this paper reports on some developments in school spending in one state during a time when some of the state’s constitutional rules governing local school district taxing powers changed. In part, the paper provides a replication of tests of a model of bureaucratic agenda-setting in the financing of elementary and secondary public education.

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January 30, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lipton Presents Tribune, Canal Corp., and the New Proposed Partnership Tax Regs Today at Temple

LiptonRichard M. Lipton (Baker & McKenzie, Chicago) presents Leveraged Partnerships Under Fire? IRS Attacks Tribune's Transactions, 119 J. Tax'n 73 (Aug. 2013), and Tax Court Drains Canal Corporation's Leveraged Partnership Transaction, 113 J. Tax'n 340 (Dec. 2010), at Temple today as part of its Tax Policy & Administration Colloquium Series hosted by Alice Abreu & Andrea Monroe:


An internal IRS document indicates the manner in which the Service will argue against the results sought by a structured partnership transaction. Some of the Service's arguments, however, do not withstand scrutiny. It can be anticipated that this determination will not be accepted by the taxpayer involved. In CCA 201324013, the IRS set forth the reasons that it planned to attack a ‘leveraged partnership‘ transaction that was quickly identified as the Tribune Company's disposition of Newsday to Cablevision in 2010. The IRS based its attack on the reasoning in the Tax Court's decision in Canal Corporation, 135 TC 199 (2010), as well as the Service's view of the substance of the Tribune transaction.

The publication of the CCA immediately sparked a discussion in the popular press about how the Tribune could owe millions in tax, penalties, and interest as a result of this transaction and a related transaction involving the Chicago Cubs.  On a close review, however, it is far from clear that the Service's analysis in the CCA is the better view of the applicable law or the application of that law to the facts in the transaction. Indeed, the Service's contention that the transaction should be viewed as a disguised sale appears to be more wishful thinking than a sound consideration of what occurred. 

Canal Corp.:

The IRS has finally prevailed in its latest challenge to a leveraged partnership transaction, in Canal Corporation, 135 TC 199 (2010). The somewhat surprising (and arguably incorrect) holding in Canal was that the taxpayer's indemnification obligation of another partner's guarantee to the creditor of the partnership should be completely disregarded under the anti-abuse rule in Reg. 1.752-2(j) . Even more questionable was the Tax Court's decision to apply the accuracy-related penalty under Sections 6662(a) and (b)(2) for a substantial understatement of income tax. 

REG-119305-11, 79 Fed. Reg. 4826-4839 (Jan. 30, 2014):

This document contains proposed regulations under section 707 of the Internal Revenue Code (Code) relating to disguised sales of property to or by a partnership and under section 752 relating to the treatment of partnership liabilities. The proposed regulations address certain deficiencies and technical ambiguities in the section 707 regulations and certain issues in determining partners’ shares of liabilities under section 752. The proposed regulations affect partnerships and their partners.  

January 30, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Journal of Taxation of Investments Publishes New Issue

Capture 2 The Journal of Taxation of Investments has published its Fall 2013 issue (Vol. 31, No. 1), with these articles:

January 30, 2014 in Scholarship, Tax | Permalink | Comments (0)

Staudt Presents Guns and Taxes at Duke

StaudtNancy Staudt (USC) presented Guns and Taxes (with Thomas Griffith (USC)) at Duke as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

The federal and state governments have long taxed commodities, such as alcohol, gas, cigarettes, guns and ammunition. Firearms, however, have recently taken on a unique status in the lexicon of taxable goods given the Supreme Court case, District of Columbia v. Heller, 554 U.S. 570 (2008), which held the 2nd Amendment protects an individual’s right to own a handgun in the home. For purposes of this paper, we assume that Heller does not create an outright bar to taxing weaponry, but does require clearly articulated economic and policy justifications to pass constitutional muster. Accordingly, we examine three possible rationales and uncover strong arguments both for and against taxation. Ultimately, we conclude that policymakers should operate much like insurers: they should subsidize the safe use of guns and tax high-risk users.

January 30, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Zelinsky: The First Amendment and the § 107 Parsonage Allowance

Tax Analysys Logo (2013)Edward A. Zelinsky (Cardozo),  The First Amendment and the Parsonage Allowance, 142 Tax Notes 413 (Jan. 27, 2014):

In this report, Zelinsky criticizes the recent district court decision in Freedom From Religion Foundation Inc. v. Lew, declaring section 107(2) unconstitutional on First Amendment grounds. The provision excludes from gross income cash housing allowances furnished to ministers. Zelinsky details three interrelated reasons why the district court’s opinion is unpersuasive.

Prior TaxProf Blog coverage:

January 30, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

CRS: Overview of the Federal Tax System

CRS LogoCongressional Research Service, Overview of the Federal Tax System (RL32808) (Jan. 23, 2014):

The major sources of federal tax revenue are individual income taxes, Social Security and other payroll taxes, corporate income taxes, excise taxes, and estate and gift taxes. This report describes the federal tax structure, provides some statistics on the tax system as a whole, and presents analysis of selected tax concepts.

(Hat Tip: Bruce Bartlett.)

January 30, 2014 in Congressional News, Tax | Permalink | Comments (0)

5th Circuit Nixes Tax Shelter Used by 3 Attorneys to Keep More of $600M Legal Fee Award

ABA Journal, 5th Circuit Nixes Tax Shelter Used by 3 Attorneys to Keep More of $600M Legal Fee Award:

After winning a $600 million attorney fee award in 1998 for representing the state of Texas in litigation against big tobacco companies, three law firm partners sought to reduce the tax bite. But their efforts only made the situation worse: A federal appeals court last week ruled that the tax shelter deployed by the partners of Nix, Patterson & Roach was abusive, imposing a 40 percent gross valuation misstatement penalty as well as other penalties for underpaying income tax.  [NPR Investments LLC v. United States, No. 10-41219 (5th Cir. Jan. 23, 2014)]

January 30, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 266

Wednesday, January 29, 2014

Doran Presents Tax Legislation in the Contemporary U.S. Congress Today at Duke

DoranMichael Doran (Georgetown; moving to Virginia) presents Tax Legislation in the Contemporary U.S. Congress, 67 Tax L. Rev. ___ (2013), at Duke today as part of its Tax Policy Seminar hosted by Lawrence Zelenak:

This paper identifies and analyzes a recent trend toward “clean” federal tax legislation. Existing explanations of the tax-legislative process account for the regular, highly particularistic tax legislation prevalent during the 1980s and the early 1990s using legislator-motivation and traditional policy models. But a new tax-legislative process, characterized by alternating periods of tax gridlock and strikingly non-particularistic tax legislation, emerged during the late 1990s. This paper argues that tax gridlock and non-particularistic tax legislation are best understood as companion phenomena, and it examines three general determinants of recent tax-legislative outcomes. First, exogenous events, particularly macro-economic and macro-political developments, typically provide the central policy objective for any item of major tax legislation. Second, the voting behavior of individual legislators on tax legislation corresponds closely to generally accepted understandings of legislator motivations. Third and most importantly, several legislative-organizational developments within Congress – specifically, the emergence of sharp coalitional polarization and strong coalitional cohesion, the re-establishment of centralized chamber management, and the relaxation of restrictions on the federal budget – combined to produce the new tax-legislative process during the late 1990s and the 2000s. This paper does not offer a positive theory of the tax-legislative process or make predictions about tax-legislative outcomes. Rather, it builds on existing accounts to provide an updated and more nuanced explanation of the tax-legislative process in the contemporary Congress.

January 29, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wooley Presents The Taxation of Families in Canada Today at Toronto

WooleyFrances Woolley (Carleton University, Department of Economics) presents It's Just Not Fair! Canada's On-Going Debate Over the Taxation of Families at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The aim of this paper is to re-examine the Carter Commission’s stance on the taxation of married couples, and use it to illuminate current debates over the tax treatment of Canadian families. I argue that the Carter Commission’s fairness arguments for income splitting were neither well developed nor empirically grounded. I suggest there is an alternative, more pragmatic explanation of the Carter Commission’s advocacy of joint taxation: a desire to bring Canada’s tax treatment of families in line with the treatment south of the border. The issue was not so much the fairness of Canada’s tax treatment, but envy of American tax treatment. I then argue that a parallel dynamic of envy exists today. When the Carter Commission reported, a man’s standard of living was primarily determined by his own earnings. Two income professional couples were rare. Today, the two-income couple is the norm, and a professional man with a stay-at-home spouse can expect to enjoy a lower standard of living than his contemporaries in dual-career relationships. This, I argue, leads single-earner families to envy dual-earner ones’ greater affluence. While this envy is understandable, it is not the job of the income tax system to remedy it.

January 29, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Elkins Presents The Normative Underpinnings of Source-Country Taxation Today at Touro

Elkins (2014)David Elkins (Netanya College School of Law) presents The Normative Underpinnings of Source-Country Taxation at Touro today:

Taxpayers are subject to income tax imposed by the country to which they have a sufficient personal nexus (home-country taxation) and by the country from which they derive their income (source-country taxation). Home country taxation is ordinarily understood as an application of the principle of ability-to-pay. Source-country taxation is ordinarily understood as a function of benefit theory.

This paper challenges the conventional wisdom and argues that ability-to-pay offers a better normative justification for source-country taxation then does benefit theory. First, it shows that benefit theory cannot satisfactorily explain source-country taxation. Second, it examines current trends in social philosophy and demonstrates that source-country taxation flows from the same principles that support the imposition of income tax by the home country.

January 29, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)