TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, November 11, 2017

This Week's Ten Most Popular TaxProf Blog Posts

NTA 110th Annual Conference On Taxation

National Tax Association (2016)The three-day National Tax Association 110th Annual Conference on Taxation concludes today in Philadelphia.  Today's highlights include:

Session #70: Capital Gains and Wealth Taxation

Session Organizer:  David Kamin (NYU)
Session Chair:  Jon Bakija (Williams College)

Tim Dowd (Joint Committee on Taxation), Robert McClelland (Urban Institute) & Jacob Mortenson (Joint Committee on Taxation), Do Tax Elasticities Change Over the Business Cycle? Evidence From the Sale of Capital Assets
Discussant:  Jon Bakija (Williams College)

Ari Glogower (Ohio State), Taxing Income and Wealth
Discussant:  William Gentry (Williams College)

David Kamin (NYU) & Jason Oh (UCLA), The Effects of Capital Gains Rate Uncertainty on Realization
Discussant:  Jon Bakija (Williams College)

David Miller (Proskauer Rose, New York), A Comprehensive Mark-to-Market Tax
Discussant:  William Gentry (Williams College)

Session #78:  Tax Law and Finance

Session Organizer:  David Kamin (NYU) 
Session Chair & Discussant:  Brian Galle (Georgetown)

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November 11, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Oei & Ring: The Senate Tax Bill And The Battles Over Worker Classification

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), The Senate Tax Bill and the Battles over Worker Classification:

Senate Republicans released their version of tax reform legislation on Thursday, November 9. The legislative language is not available yet, but the Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation) suggests that one of the key provisions in the bill will clarify the treatment of workers as independent contractors by providing a safe harbor that guarantees such treatment. The JCT-prepared description tracks the contents of the so-called “NEW GIG Act” proposed legislations introduced by Congressman Tom Rice (R-S.C.) in the House and Senator John Thune (R-S.D.) in the Senate in October and July 2017, respectively. “NEW GIG” is short for the “New Economy Works to Guarantee Independence and Growth (NEW GIG) Act.” But notably, and as we further discuss below, the legislation is not limited in its application to gig or sharing economy workers.

Assuming the Senate Bill adopts the basic parameters of the NEW GIG proposed legislation — which looks to be the case based on the JCT-prepared description — we have some concerns. In brief, this legislation purports to simply “clarify” the treatment of workers as independent contractors and to make life easier for workers by introducing a new 1099 reporting threshold and a new withholding obligation. But the legislation carries potentially important ramifications for broader fights over worker classification that are raging in the labor and employment law area. Despite possibly alleviating tax-related confusion and reducing the likelihood of under-withholding, we worry that there are quite a few underappreciated non-tax hazards for workers if these provisions go through.

Summary of the Legislation

The legislation (assuming the Senate Bill more or less tracks the NEW GIG Act language) purports to achieve such “clarification” of worker classification status by doing the following:

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November 11, 2017 in Congressional News, News, Political News, Shuyi Oei, Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Veterans Day At Pepperdine

My wife and I were delighted to host a dinner for law school veterans last night:

Vets 1A

Vets 2

November 11, 2017 | Permalink | Comments (2)

Friday, November 10, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Orly Mazur (SMU) reviews a new work by Anthony Polito (Suffolk), Mandatory Passthrough Taxation for Non-Publicly Traded Businesses?, 36 Va. Tax Rev. 449 (2017).

Mazur (2017-2)Anthony Polito’s timely new work considers whether passthrough taxation should be made available to all non-publicly traded businesses, without regard to form of business entity, and whether such tax treatment should be mandatory. 

Currently, most closely held businesses (except for those organized in the corporate form) may elect to benefit from a single level of taxation, whereas corporate business entities and most publicly traded entities are taxed as C corporations and subject to double taxation. As a result, newly-formed, non-publicly traded entities are only subject to subchapter C by choice. So when would an entity voluntarily subject itself to the double taxation regime? As the Article explains, a business would elect corporate taxation over passthrough taxation when an “insider shelter” tax strategy is available: namely, when the tax burden on a taxable corporate entity is less than on a passthrough entity. 

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November 10, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

2d Circuit Dismisses SUNY-Buffalo LRW Prof's Wrongful Termination Claim; Former Dean Claims 'Unequivocal Vindication' And Blames 'Small Cabal Of Racist Law Faculty Who Had Trouble Accepting A Black Man Running The Law School'

Mutua 2Buffalo News, Federal Case That Roiled UB Law School Now Over:

An eight-year legal battle that helped expose deep strife within the University at Buffalo Law School is finally over.

The U.S. Court of Appeals for the Second Circuit affirmed a federal district court decision in favor of Makau W. Mutua, the law school's former dean [Malkan v. Mutua, Nos. 17-38, 17-228 (2d Cir. Oct. 30, 2017)]. The ruling marks the end of the legal process for a former professor, Jeffrey Malkan, who sued Mutua and the university claiming he was wrongfully terminated. ...

Mutua resigned as dean in 2014 amid criticism of his management and remains on the UB Law School faculty. He described the court's decision as a "total, unequivocal vindication. I had no doubt that Jeff Malkan’s claims against me and UB were malicious, unfounded and frivolous. He lost in every single forum where he sued — PERB, state courts, U.S. District Court for the Western District of New York, and now finally in the U.S. Court of Appeals for the Second Circuit," Mutua said in an email to The News.

Malkan, 63, had taught legal research and writing since 2000 at UB. He claimed Mutua wrongfully terminated him in 2008 and then lied twice under oath about it.

The case laid bare a rift at the law school between several highly regarded senior faculty members and Mutua, a world renowned human rights activist. The turmoil occurred as the school was suffering through steep enrollment declines. Faculty produced a scathing evaluation of Mutua's leadership and nearly took a vote of no-confidence in him. In addition, nine senior law professors went on record in court papers supporting Malkan's account of a tenure and promotion vote that was the crux of the professor's lawsuit. ...

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November 10, 2017 in Legal Education | Permalink | Comments (3)

NTA 110th Annual Conference On Taxation

National Tax Association (2016)The three-day National Tax Association 110th Annual Conference on Taxation continues today in Philadelphia.  Today's highlights include:

Session 45:  Taxing the Future

Session Organizer:  David Kamin (NYU)
Session Chair & Discussant:  David Herzig (Valparaiso)

Other Tax Prof presentations today include:

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November 10, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NY Times: Columbia, Dartmouth, Duke, Stanford, Texas & USC Are Among Colleges Using 'Blocker Corporations' To Avoid Taxes On Endowment Income

New York Times, Endowments Boom as Colleges Bury Earnings Overseas: American Universities Are Using Offshore Strategies to Swell Their Coffers, Skirt Taxes and Obscure Investments That Could Spark Campus Protests:

A trove of millions of leaked documents from a Bermuda-based law firm, Appleby, reflects some of the tax wizardry used by American colleges and universities. Schools have increasingly turned to secretive offshore investments, the files show, which let them swell their endowments with blocker corporations, and avoid scrutiny of ventures involving fossil fuels or other issues that could set off campus controversy.

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November 10, 2017 in Legal Education, Tax | Permalink | Comments (8)

Jim Hines Receives 2017 Holland Medal

Hines (2017)James R. Hines Jr., Richard A. Musgrave Collegiate Professor of Economics and L. Hart Wright Collegiate Professor of Law at the University of Michigan, receives the 2017 Holland Medal for lifetime achievement in the study of the theory and practice of public finance today at the National Tax Association 110th Annual Conference on Taxation in Philadelphia.  He is the second youngest person ever to receive the Holland Medal (Jim Poterba (MIT) was the youngest).

The Holland Medal was created in 1993 in the memory of Dan Holland (MIT).  Recent winners include:

  • 2016  Alvin C. Warren, Jr. (Harvard)
  • 2015  William D. Andrews (Harvard)
  • 2014  James Poterba (MIT)
  • 2013  Michael Graetz (Columbia)
  • 2012  Joel Slemrod (Michigan)
  • 2011  Alan Auerbach (UC-Berkeley)
  • 2010  Henry Aaron (Brookings)

Session Organizer & Chair:  Rosanne Altshuler (Rutgers)

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November 10, 2017 in Legal Education, Tax | Permalink | Comments (0)

Thursday, November 9, 2017

NTA 110th Annual Conference On Taxation

National Tax Association (2016)The three-day National Tax Association 110th Annual Conference on Taxation kicks off today in Philadelphia.  Today's highlights include:

Session #5:  Redistribution

Session Organizer: David Kamin (NYU)
Session Chair & Discussant: Jeremy Bearer-Friend (NYU)

Session #14:  Tax Expenditures

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November 9, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Barry Presents Collusion In Markets With Syndication Today At Pepperdine

Barry (2017)Jordan Barry presents Collusion in Markets With Syndication (with John Hatfield (Texas), Scott Kominers (Harvard) & Richard Lowery (Texas)) at Pepperdine today as part of our Faculty Workshop Series hosted by Babette Boliek:

Many markets, including the markets for IPOs and debt issuances, are syndicated, in that a bidder who wins a contract will often invite competitors to join a syndicate that will fulfill the contract. We model syndicated markets as a repeated extensive form game, and show that standard intuitions from industrial organization can be reversed: Collusion may become easier as market concentration falls, and market entry may in fact facilitate collusion. In particular, price collusion can be sustained by a strategy in which firms refuse to join the syndicate of any firm that deviates from the collusive price, thereby raising total production costs. Our results can thus rationalize the apparently contradictory empirical facts that the market for IPO underwriting exhibits seemingly collusive pricing despite its low level of market concentration.

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November 9, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Ivory Tower Tax Haven

HaasUC-Berkeley Haas Institute for a Fair and Inclusive Society, The Ivory Tower Tax Haven: The State, Financialization, and the Growth of Wealthy College Endowments:

Popular anxiety about economic inequality has been compounded by the lavish consumption of the super-rich. In the domain of higher education, there are parallel signs of growing popular resentment towards perceived excesses at the wealthiest private colleges. Consistent with these public perceptions, I argue that private colleges with substantial endowment wealth have increasingly become ivory tower tax havens. I use new college-level data going back to 1976 to show that endowment growth at these colleges has been supported by a three-part federal tax expenditure that I estimate as averaging $19.6 billion per year in 2012. The growth of benefiting endowments contributed to new organizational inequalities in U.S. undergraduate enrolling institutions.

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November 9, 2017 in Legal Education | Permalink | Comments (0)

Ohio Bar Exam Results: Case Western #1

Ohio State BarHere are the results of the July 2017 Ohio Bar Exam for first-time test-takers by law school, along with each school's U.S. News ranking:

  1. Case Western:  93.4% (#62 in U.S. News)
  2. Ohio State:  86.9%  (#30)
  3. Ohio Northern:  86.7% (Tier 2)
  4. Cincinnati:  82.5% (#72)
  5. Cleveland State:  80.0% (#127)
  6. Akron:  73.7% (#134)
  7. Toledo:  73.5% (#132)
  8. Capital:  67.9% (Tier 2)
  9. Dayton:  62.5% (Tier 2)

November 9, 2017 in Legal Education | Permalink | Comments (0)

IRS Power Is Challenged In Marijuana Dispensary's Supreme Court Petition

National Law Journal, IRS Power Is Challenged in Marijuana Dispensary's Supreme Court Petition:

The IRS has no authority to declare that a taxpayer has violated federal anti-drug laws, a Colorado marijuana dispensary tells the U.S. Supreme Court in a new petition that takes the justices into a dispute over state legalization schemes and federal taxation.

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November 9, 2017 in New Cases, Tax | Permalink | Comments (1)

The House GOP Tax Bill's Disparate Treatment Of State And Local Taxes Paid By Employees And Pass Through Entities

Law School Innovation Rankings, Think Your Law School is 'Innovative'? This Professor Has a Ranking System:

If you ask Daniel Linna, professor of law at Michigan State University College of Law, what changes he’d like to see in legal education around technology, he probably won’t share a list of programs and curricular offerings he’s helped put together. Nor is he likely to tell you offhand what changes some of his colleagues at other schools have instituted. Instead, he’ll tell you to check the data.

“We need to become more data-driven in this industry. We can’t just talk about innovation, we can’t just talk about technology. We’ve got to describe what it is, and then we’ve got to measure it,” Linna said.

Linna is director of MSU Law’s LegalRnD program, which trains students in leveraging technology and nontraditional workflows for what its website refers to as “leaner, more effective legal-service delivery.” In August, Linna and a group of students launched the Legal Services Innovation Index, a data collection of law firms’ use of technology and “innovative” workflows.

Recently, he and Jordan Galvin, LegalRnD innovation counsel, expanded the index to measure law schools’ work around innovation and technology. The index now outlines how many different legal technology disciplines 40 different law schools offer.


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November 9, 2017 in Law School Rankings, Legal Education | Permalink | Comments (2)

House GOP Bill Reduces Number Of Colleges Impacted By Proposed 1.4% Endowment Tax From 140 To 70

Tax Cuts And Jobs ActFollowing up on Friday's post, List Of 140 Colleges With Endowments Greater Than $100,000 Per Student That Would Be Subject To GOP's Proposed 1.4% Tax On Investment Income:  Washington Post, House GOP Trims Total of Colleges Targeted For New Endowment Tax:

House Republicans have slashed the number of colleges they are targeting for a new tax on endowment income.

The GOP majority on the Ways and Means Committee voted Monday night to modify a tax bill that includes several provisions affecting higher education. Among them is a proposal that makes college presidents blanch: an excise tax on endowment income for certain private colleges.

Under the first version of the bill, made public last week, private colleges would have been subject to a 1.4 percent tax on net investment income if they had 500 or more students and an endowment of at least $100,000 per full-time student. A Chronicle of Higher Education analysis found that about 140 schools would have been affected. The American Council on Education estimated the number affected as 155.

Now the total of targeted schools has been cut by more than half.

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November 9, 2017 in Tax | Permalink | Comments (4)

New State Street CEO Withdrew From Vanderbilt Law School After Admitting To Plagiarism As Law Review Editor-In-Chief

VandyBoston Globe, State Street CEO-Designate Says Law School Plagiarism Was a ‘Very Big Mistake’:

In a career spanning more than three decades, Ronald P. O’Hanley 3d has climbed up the ranks of several prestigious financial firms, and this week he capped that ascent when he was named the next chief executive of State Street Corp., a Boston investment and banking giant that oversees trillions of dollars in retirement funds.

While his resume is familiar to many in the business world, one piece of it is not.

In 1983, O’Hanley withdrew from Vanderbilt University Law School after admitting to plagiarism as editor-in-chief of the Vanderbilt Law Review in his third year. It was a mistake O’Hanley, 60, now says he deeply regrets. ...

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November 9, 2017 in Legal Education | Permalink | Comments (2)

Wednesday, November 8, 2017

Cardozo Hosts Book Launch Today For Zelinsky's Taxing The Church

Taxing the churchCardozo is hosting a panel discussion with Miranda Perry Fleischer (San Diego), Brian Galle (Georgetown), and Daniel Hemel (Chicago) to discuss the new book by Edward A. Zelinsky (Cardozo), Taxing the Church: Religion, Exemptions, Entanglement, and the Constitution (Oxford University Press 2017):

  • Explores the taxation and exemption of churches and other religious institutions, both empirically and normatively
  • Reveals that churches and other religious institutions are treated diversely by the federal and state tax systems
  • Focuses on church-state entanglements with respect to taxing or exempting churches and other sectarian entities
  • Discusses improvements that can be made in legal and tax policy trade-offs, such as the protection of internal church communications and the expansion of the churches' sales tax liabilities
  • A clear, balanced, and comprehensive treatment of the topic that is broadly accessible to tax policymakers, lawyers, nonlawyers, judges, tax specialists, and even those with no background in the subject

Peter J. Reilly has an extensive review on Forbes.  Other reviews:

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November 8, 2017 in Book Club, Conferences, Scholarship, Tax | Permalink | Comments (1)

Viard Presents Taxes, Transfers, Progressivity, And Redistribution Today At Penn

Viard (2016)Alan D. Viard (American Enterprise Institute) presents Taxes, Transfers, Progressivity, And Redistribution, Part 1, 140 Tax Notes 1437 (Sept. 5, 2016) and Part 2, 140 Tax Notes 1879 (Sept. 26, 2017) (with Sita N. Slavov (George Mason)), at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

In Part 1, Slavov and Viard explain how to measure the extent of redistribution induced by a tax transfer system, the impact of the size and progressivity of taxes and transfers, and the proper comparison of the effects of taxes and transfers. In Part 2, Slavov and Viard discuss the policy issues regarding the choice of a fiscal system’s size and progressivity.

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November 8, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Shobe: The GOP Gets A Big Part Of Its Tax Plan Backward: State, But Not Local, Taxes Should Be Deductible

Tax Cuts And Jobs ActWashington Post op-ed:  The GOP Gets a Big Part Of Its Tax Plan Backward, by Gladriel Shobe (BYU):

The House Republican tax plan proposes repealing much of the state and local tax deduction, allowing individuals to deduct up to $10,000 of local property taxes but eliminating the rest of the deduction. This gets sound tax policy precisely backward. Smart tax reform would allow taxpayers to deduct what they pay to states — and would end the deduction for local taxes.

The treatment of the state and local tax deduction is one of the central points of contention in the tax-reform debate. President Trump and most Republicans want to repeal or modify the deduction, which could raise more than $1 trillion over the next decade. Republican and Democratic members of Congress from high-tax states are protesting any repeal because it would disproportionately harm their constituents.

But the reality of the distribution of benefits and costs of the state and local tax deduction is more complicated than high-tax (mostly blue) states vs. low-tax (mostly red) states. As the House Republican tax plan implicitly acknowledges, the state and local tax deduction in fact combines two very different deductions: a state deduction for state income taxes (or, much more infrequently, sales taxes) and a local deduction for property taxes. When looked at this way, the issue is both a high-tax state vs. low-tax state issue and a rich-locality vs. poor-locality issue, with the federal government providing a disproportionate subsidy to high-tax states and high-tax localities. ...

[S]mart tax policy would allow taxpayers to deduct the cost of state income taxes while eliminating the deduction for local property taxes. As it happens, because local taxes account for approximately half the overall deduction, this change would raise approximately $500 billion over the next decade.

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November 8, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

IRS Seeks To Tax Disabled Vet's Forgiven Law School Loans

USA Today, Wounded Army Vet Wins the Battle But Loses the Tax War:

The federal government forgave wounded veteran Will Milzarski’s sizable student debt but, in an ironic twist, the IRS wants him to pay $62,000 in income taxes on the loan cancellation.

Retired 1st Lt. Milzarski, 47, is a lawyer from Bath Township who specialized in disability rights. At 40, he took a leave from his state job to return to the Army to attend Officer Candidate School.

His two tours of duty in Afghanistan left him with a traumatic brain injury, post traumatic stress disorder and hearing loss. The Department of Veterans Affairs considers him totally and permanently disabled, leading to a cancellation of nearly a quarter-million in student loans.

Joshua Wease, a clinical associate professor of law who directs Michigan State University’s low-income tax clinic, said the tax in this case is not logical. "If an individual has been deemed disabled and unable to pay their student loans, it seems incredible that they wouldn’t also be deemed unable to pay the taxes on the forgiveness of those same student loans,” he said. ...

Milzarski led soldiers on 244 combat missions and 43 engagements with the enemy. Six soldiers under his command died, and a ricocheted bullet hit him in the face during combat in Afghanistan. Among his 18 awards are Purple Heart and Meritorious Service medals.

Milzarski's high student debt was largely attributed to his law degree, which he earned in 2002 from Cooley Law School.

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November 8, 2017 in Legal Education, Tax | Permalink | Comments (2)

Testy: Good Law School Outcomes Come From Good Inputs

TestyThe Justice Pipeline: Good Outcomes Come From Good Inputs

A Q&A With Dean Paul Caron (Pepperdine) and Dean Emerita Kellye Testy (Washington), the new president of LSAC

PAUL:  Kellye, tell us how your transition has been to LSAC after 15 years of serving as a dean at two schools, and particularly now as the ABA is considering significant changes to the Accreditation Standards on admission?

Kellye:  It’s certainly been busy and interesting, Paul.  After winding up 8 years leading University of Washington Law, I had planned a sabbatical, but was called to step up for this opportunity to work nationally to advance legal education at a time of significant change.  I am devoted to advancing access to justice, and the justice pipeline depends upon attracting outstanding (including diverse) candidates to our nation’s law schools.  In this new role, I am marveling at how much I had to learn even though I’d been a dean for a long while and active in many of legal education’s allied organizations, including AALS and the ABA.

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November 8, 2017 in Legal Education | Permalink | Comments (0)

Satterthwaite: Can Audits Encourage Tax Evasion?

Florida Tax Review  (2015)Emily Ann Satterthwaite (Toronto), Can Audits Encourage Tax Evasion?: An Experimental Assessment, 20 Fla. Tax Rev. 1 (2016):

Governments and tax administrators around the world rely on the premise that random audits can be used to reduce tax evasion through two channels of deterrence: first, the ex ante indirect threat of audit will induce taxpayers to truthfully report their income and, second, that the lived experience of audit will deter audited taxpayers from cheating in the future (“direct deterrence,” Alm et al. 2009). This paper provides original experimental evidence of the failure of the direct deterrence channel. Contrary to the predictions of the standard economic model of tax compliance, I find that random audits are ineffective in fostering higher post-audit levels of compliance. Surprisingly, they induce experiment participants to cheat more in the tax periods after the audit (the “bomb crater” effect).

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November 8, 2017 in Scholarship, Tax | Permalink | Comments (2)

Texas Bar Exam Results: Baylor #1

Texas BarHere are the results of the July 2017 Texas Bar Exam for first-time test-takers by law school, along with each school's U.S. News ranking:

  1. Baylor:  92.92% (#51 in U.S. News)
  2. Texas:  91.60%  (#14)
  3. Texas Tech:  87.12% (#118)
  4. Houston:  86.14% (#54)
  5. SMU:  84.95% (#46)
  6. Texas A&M:  83.45% (#92)
  7. St. Mary's:  73.89% (Tier 2)
  8. South Texas Houston:  66.32% (Tier 2)
  9. Texas Southern:  63.64% (Tier 2)
  10. North Texas:  59.32% (n/r)

November 8, 2017 in Legal Education | Permalink | Comments (0)

The Tax Bill As A Payoff To The Idle Rich?

Tax Cuts And Jobs ActCatherine Rampell has a snarky but sound op-ed explaining some perverse incentives created by the Tax Bill.   She writes:

Consider a hypothetical, similar to one New York University School of Law’s Lily Batchelder suggested to me recently: A family business has been passed down to several siblings with varying levels of industriousness and IQ.

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November 8, 2017 in Legal Education | Permalink | Comments (3)

Tuesday, November 7, 2017

Now Is A Great Time To Go To Law School: Your Nation Needs You op-ed:  Why Go to Law School?, by Paula Franzese (Seton Hall):

This is an important moment for lawyers and law students. In the midst of rollbacks to civil liberties, lawyers are uniquely trained to safeguard and champion the promise of equal access to justice. We are equipped with a particular skill set that assures access to the legal system and all three branches of government. We are vested with the fiduciary duty to use that access to vindicate the rights of those who have been left out and left behind.

Reinhold Niebuhr was correct when he observed, “Love is the motive, justice is the instrument.” Lawyers are justice’s emissaries. Our work can be the antidote to hopelessness and can restore agency to communities and constituencies that have been marginalized and worse. The pernicious effects of de jure and de facto discrimination continue to be felt. There is a growing chasm between what is and what ought to be in contexts that include safe and affordable housing, the environment, criminal justice, education, immigration, privacy rights, freedom of expression and more. Law school provides the training and professional and social capital to do the work to narrow that gap.

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November 7, 2017 in Legal Education | Permalink | Comments (7)

Death Of Regis Campfield (SMU)

CampfieldDallas Morning News:

Regis William Campfield, a man of faith and family, was born on January 8, 1942, in Pittsburgh, PA, and died on October 27, 2017, in Dallas, TX.

He is survived by his loving wife of 51 years, Mary Tarpley Campfield, and their two daughters and sons-in-law: Allison and Mike Taten; Claire and John Storino; six adoring and adored grandchildren: Matthew, Laura and Jane Taten; Mary, Anne Elise, and Catherine Storino; brother-in-law Charles Tarpley and his wife, Mary Ellen. Regis was the much beloved only child of Regis P. and Katherine A. Campfield of Rillton, PA.

Of the 93 graduates of his high school class, he was one of three to go to college. He graduated summa cum laude from the University of Notre Dame. His Notre Dame experience was foundational for his life. While at University of Virginia School of Law, he met and in 1966 married the love of his life, Mary Tarpley, a U.Va. Ph.D candidate from Dallas.

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November 7, 2017 in Legal Education, Obituaries, Tax | Permalink | Comments (0)

A 1st Pique At The Tax Bill: Passive Voice On Mortgage Interest

Tax Cuts And Jobs ActThis is the first of what I hope to be a series of small posts about small annoyances in the Tax Cuts and Jobs Act.  Thus the pun.  So if you think these posts resemble an Andy Rooney whine or a Seinfeldian rant please remember that I’m just a simple tax professor from West Texas, and a proceduralist to boot.

My first pique is with the proposed mortgage interest reform.  It completely ignores a great opportunity to fix a problem in the current statute.  The problem is with how the debt limit applies.  Current law uses the passive voice to limit the size of the loans that can generate the mortgage interest deduction.  For example, the $1,000,000 limit for acquisition indebtedness is written like this:  “The aggregate amount treated as acquisition indebtedness for any period shall not exceed $1,000,000 ($500,000 in the case of a married individual filing a separate return)” § 163(h)(3)(B)(ii).  The language limiting home equity indebtedness is similar.    

The problem with the passive voice is that you cannot tell whether the limit applies to each qualified residence or to each taxpayer.  In Voss v. Commissioner, 796 F.3d 1051 (9th Cir. 2015), the 9th Circuit complained that “Discerning an answer ... requires considerable effort on our part because the statute is silent as to how the debt limits should apply in co-owner situations.”  When Andy Rooney says it, it’s a whine, but when the 9th Circuit says it, it’s a problem.

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November 7, 2017 in Bryan Camp, News, Tax | Permalink | Comments (13)

Tax Rates Of S&P 100

WalletHub, Corporate Tax Rate Report:

WalletHub analyzed annual reports for the S&P 100 — the largest and most established companies on the stock market — in order to determine the federal, state and international tax rates they paid in 2016. You can find the results, our detailed methodology and additional expert commentary below.


Ask the Experts: Should Corporations Pay Less than Consumers?

For insight into the country’s current corporate tax system as well as its potential fixes, we turned to experts [including Mark Gergen (UC-Berkeley), Jose Gabilondo (Florida International), and Ann Murphy (Gonzaga) in the fields of accounting and tax law for their thoughts on the following key questions:

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November 7, 2017 in Tax | Permalink | Comments (3)

Muller: Online Non-JD Enrollment Has Doubled Since 2014, Led By Loyola-Chicago (332), Alabama (249) & Washington University (200)

Derek Muller (Pepperdine), Recent Trends In Non-JD Legal Education:

I've blogged before about the rise of non-JD legal education. Law schools increasingly rely on non-JD sources of revenue (now, 1 in 9 students enrolled in a law school are not a part of the JD program, up sharply over the last few years). I've also expressed some concern about the value proposition of some of those degrees, particularly given the high failure rate of LLM graduates on the bar exam. ...

[B]reaking down traditional versus online non-JD enrollment in the last few years, online non-JD enrollment is up significantly, and traditional non-JD enrollment has flattened. Much of the most recent growth, then, has come from online non-JD degrees. While online non-JD degrees had enrollment of just 1590 in 2014, it nearly doubled to 2971 in 2016--and I expect is still larger for Fall 2017.

Only 38 schools had online non-JD programs in Fall 2016, but even that figure is deceiving. An eclectic crop of eight schools accounted for about half of all non-JD enrollment in 2016.

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November 7, 2017 in Legal Education | Permalink | Comments (0)

Aprill: The Tax Consequences Of Legal Defense Funds

LDFEllen Aprill (Loyola-L.A.), Tax Consequences of Legal Defense Funds:

President Trump and a number of his associates have established legal defense funds (LDFs) in connection with various Congressional investigations, the investigation by Special Counsel Mueller, and in anticipation of possible legal action.  Legal defense funds for government officials have a long history.  The U.S. Senate and the House have detailed rules regarding LDFs for their members.  The most famous LDFs were the two Clinton LDFs.  Over the years, the Office of Government Ethics (OGE) has given some guidance on LDFs for members of the executive branch, particularly with regard to the solicitation and receipt of gifts. For example, it informed President Clinton that, although he was not subject as president to rules limiting the acceptance of gifts, because he and his wife established his first LDF, he and his agents were subject to laws forbidding executive branch official from soliciting gifts for that LDF.  OGE guidance regarding LDFs is far less complete than the Senate and House rules.  Recently, OGE issued an advisorythat an LDF must prohibit contributions from anonymous sources. 

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November 7, 2017 in Scholarship, Tax | Permalink | Comments (0)

U.S. News Annual Peer Assessment of Law School Tax Programs

U.S. NewsThe 2019 U.S. News Tax Rankings ballots are due on Friday (the 2018 rankings are here)  As in prior years, the survey is intended "to identify the law schools having the top programs in tax law."  The survey is sent "to a selection  of faculty members involved in tax law programs. Law schools supplied names of these faculty members to U.S. News in summer 2017."  Recipients are asked "to [i]dentify up to fifteen (15) schools that have the highest-quality tax law courses or programs. In making your choices consider all elements that contribute to a program's academic excellence, for example, the depth and breadth of the program, faculty research and publication record, etc."

As Donald Tobin (Dean, Maryland) has noted, it is more than strange that NYU has finished ahead of Florida and Georgetown each year that U.S. News has conducted the survey.  Because the survey ranks the schools by how often they appear on the respondents' "Top 15" lists, this means that some folks list NYU, but not Florida and Georgetown, among the Top 15 tax programs.

In filling out your ballot, you may want to consult our forthcoming book, Pursuing a Tax LLM Degree, which compiles information about 13 highly ranked tax LLM programs: (1) NYU; (2) Florida; (3) Georgetown; (4) Northwestern; (5) Miami; (6) Boston University; (7) San Diego; (8) Loyola-L.A./LMU; (9) SMU; (10) Denver; (11) University of Washington; (12) Villanova; and (13) Chapman. The topics on which information is reported in the book include:

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November 7, 2017 in Law School Rankings, Legal Education, Tax | Permalink | Comments (2)

New 'Paradise Papers' Data Leak

Paradise PapersA new investigative report from the International Consortium of Investigative Journalists (ICIJ) and its media partners broke on Sunday. (ICIJ is the investigative journalist consortium that brought us last year's Panama Papers investigation, for which they won a Pulitzer for Explanatory Reporting.)

ICIJ: Offshore Trove Exposes Trump-Russia Links And Piggy Banks Of The Wealthiest 1 Percent:

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November 7, 2017 in Political News, Shuyi Oei, Tax, Think Tank Reports | Permalink | Comments (1)

Monday, November 6, 2017

Tillotson Presents Give and Take: The Citizen-Taxpayer And The Rise Of Canadian Democracy Today At McGill

Give and TakeShirley Tillotson (Dalhousie University) presents Give and Take: The Citizen-Taxpayer and the Rise of Canadian Democracy (University of British Columbia Press Nov. 15, 2017) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series convened by Allison Christians:

Can a book about tax history be a page-turner? You wouldn’t think so. But Give and Take is full of surprises. A Canadian millionaire who embraced the new federal income tax in 1917. A socialist hero, J.S. Woodsworth, who deplored the burden of big government. Most surprising of all, Give and Take reveals that taxes deliver something more than armies and schools. They build democracy.

Tillotson launches her story with the 1917 war income tax, takes us through the tumultuous tax fights of the interwar years, proceeds to the remaking of income taxation in the 1940s and onwards, and finishes by offering a fresh angle on the fierce conflicts surrounding tax reform in the 1960s.

Taxes show us the power of the state, and Canadians often resisted that power, disproving the myth that we have all been good loyalists. But Give and Take is neither a simple tale of tax rebels nor a tirade against the taxman. Canadians also made real contributions to democracy when they taxed wisely and paid willingly.

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November 6, 2017 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Haufler Presents Bonus Taxes And International Competition For Bank Managers Today At UC-Berkeley

HauflerAndreas Haufler (University of Munich) presents Bonus Taxes and International Competition for Bank Managers (with Daniel Gietl (University of Munich)) at UC-Berkeley today as part of its  Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

We analyze the competition in bonus taxation when banks compensate their managers by means of fixed and incentive pay and bankers are internationally mobile. Banks choose bonus payments that induce excessive managerial risk-taking to maximize their private benefits of existing government bailout guarantees. In this setting the international competition in bonus taxes may feature a ‘race to the bottom’ or a ‘race to the top’, depending on whether bankers are a source of net positive tax revenue or inflict net fiscal losses on taxpayers as a result of incentive pay.

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November 6, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Clausing Presents Corporate Tax Reform In The Age Of Trump Today At Loyola-L.A.

Clausing (2018)Kimberly Clausing (Reed College) presents Corporate Tax Reform in the Age of Trump at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

After the failure of Ryan/Brady Blueprint, which relied on a destination-based cash flow tax, the Republicans have proposed dramatic changes to corporate taxation in their Unified Framework. This presentation will consider these reform proposals within the context of the larger role of the corporate tax. The corporate tax is an indispensible part of our larger tax system. It is our only comprehensive tool for taxing capital income, it helps protect the individual income tax system, and it plays an essential role in both the efficiency and equity of our tax system. Given the many functions that the corporate tax performs, potential reform proposals should address how they are affecting each of these considerations.

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November 6, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

37 Tax Professors Urge Supreme Court To Overrule Quill v. North Dakota

Debra Greenberg (Emery Celli) filed an amicus brief at the Supreme Court yesterday on behalf of 37 tax professors supporting the petitioner in South Dakota v. Wayfair. The brief calls on the Court to grant South Dakota's petition and overrule its 1992 decision in Quill v. North Dakota, which prohibits states from collecting sales taxes from out-of-state retailers. From the summary of the brief:

While the Supreme Court is rightly reluctant to overrule its own precedents under any circumstances, the force of stare decisis is less powerful in some contexts than in others. Specifically, stare decisis exerts a weaker pull when judicial doctrine in the relevant area is based not on statutory interpretation but on changing competitive circumstances and evolving economic understandings.

Antitrust law is a paradigmatic example of an area in which these conditions are met, but the argument for a flexible application of precedent is similarly strong with respect to dormant Commerce Clause tax cases such as this one. In Quill Corp. v. North Dakota, the Court emphasized that its dormant Commerce Clause analysis was based on “structural concerns about the effect of state regulation on the national economy.” 504 U.S. 298, 312 (1992). The Court was especially concerned about the effect of taxation on the mail-order industry, and it believed that maintaining the physical presence rule would “foster[] investment by businesses and individuals.” Id. at 315-18. It also believed that its rule would reduce compliance costs for businesses and individuals engaged in commerce across state lines. See id. at 313 n.6. For those reasons, the Court reaffirmed the physical presence rule first announced in National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967).

The Court’s decision in Quill was predicated on then-current competitive circumstances and economic understandings. And in the quarter century since Quill, those circumstances and understandings have evolved. While the Quill Court was focused on the mail-order industry, it could not and did not foresee the meteoric rise of online retail, which has magnified the revenue losses that result from the physical presence rule. In the age of online retail, the physical presence rule has become a drag on economic efficiency and a potential impediment to investment across state lines. Meanwhile, the development of tax automation software over the past quarter century has led to a dramatic reduction in sales tax compliance costs for multistate retailers—so much so that overruling Quill would likely reduce aggregate compliance costs for individuals and firms seeking to abide by state tax laws.

Thus, to overrule Quill now based on changed competitive circumstances and evolving economic understandings would be to take it on its “own terms.” See Kimble v. Marvel Entm't, LLC, 135 S. Ct. 2401, 2413 (2015). It would be to acknowledge that — regardless of whether Quill was rightly decided at the time — the factual assumptions upon which it was based do not apply to the Internet age. The Court should grant South Dakota’s petition so it can revisit those assumptions and update its dormant Commerce Clause jurisprudence to a new technological and economic environment.

Tax profs who joined the brief are:

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November 6, 2017 in New Cases, Tax | Permalink | Comments (2)

LSAT Test-Takers Continue To Surge, With 10.7% Increase In Sept/Oct Following June's 19.8%

LSAT 2After a 19.8% surge in the number of LSAT test-takers in June (the first test administration for the 2017-18 admissions cycle), LSAT test-takers rose 10.7% in September/October. The increase in the first two test administrations in this cycle is the largest since 2009-10, when LSAT-test takers hit an all-time high (171,514).  In addition, registrations for the next test administration in December are up 19.8%. We are headed for a third consecutive year of increases in LSAT test-takers (and the largest yearly increase, dwarfing 2015-16's 4.1% and 2016-17's 3.3%), which followed five consecutive years of declines.

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November 6, 2017 in Legal Education | Permalink | Comments (3)

Lesson From The Tax Court: Remember The Alamo

Tax Court (2017)Last week, the Court decided Carlos Alamo v. Commissioner, T.C. Memo. 2017-215 (Oct. 31, 2017).  This is a case worth remembering for at least two reasons. First, it teaches a lesson about how sticking to your guns can get very expensive because of the accumulation of penalties and interest.  No matter how hard to work to contest a tax, penalties and interest work harder. 

In this case Mr. Alamo worked very hard to contest his 2009 taxes.  But his refusal to ever file a 2009 return resulted in some astonishing additions to his basic liability of $86,651 in unpaid taxes for that year.  The Service's levy CDP notice, issued on November 1, 2012, reflected accumulated penalties and interest of $46,474.  That equals 54% of his unpaid taxes.  And who knows what the total looks like now, some five years later.

The lesson, then, can borrow from the great American roots musician Ry Cooder’s classic “The Taxes on The Farmer Feed Us All.”  It might go like this:

We worked through Spring and Winter, through Summer and through Fall
But those penalties and interest worked the hardest of us all
They worked on nights and Sundays, they worked each holiday
They settled down among us and they never went away

The second lesson is about how the Service proves compliance with § 6212 notice requirements.  It appears that Mr. Alamo is a hobbyist, albeit more clever than most.  He tried to play the proof game.  He lost.  Still, his stubborn refusal to concede that the Service had properly sent him a Notice of Deficiency (NOD) is a great lesson in how to attack the adequacy of notice but also a warning that an obdurate refusal to cooperate during the CDP hearing can destroy the last chance to get the correct tax liability.  By insisting on his perceived “right” to make the Service prove compliance with procedure, Mr. Alamo lost this chance to get his tax liability corrected.  For more details on this second lesson, see below the fold:

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November 6, 2017 in Bryan Camp, New Cases, Tax, Tax Practice And Procedure | Permalink | Comments (0)

Florida Coastal Responds To ABA's Finding Of Noncompliance With Accreditation Standards: 'Our 1L Entering Credentials Exceed 23 Other Law Schools'

Florida Coastal (2017)Following up on last week's post, ABA Notices To Law Schools About Potential Non-Compliance With Accreditation Standards:

Letter from ABA Section on Legal Education to Florida Coastal Law School (Oct. 12, 2017):

In accordance with U.S. Department of Education regulations [34 C.F.R. § 602.26 and § 602.27(a)(6) and (a)(7)] applicable to recognized accrediting agencies, the Council of the Section of Legal Education and Admissions to the Bar is required to post a letter describing the basis for an action when the Accreditation Committee concludes that a law school is significantly out of compliance with ABA Standards pursuant to Rule 12(a)(4).

At its September 14-15, 2017 meeting, the Accreditation Committee (the "Committee") considered the status of the Florida Coastal School of Law (the "Law School") and concluded that the Law School is not in compliance with the following Standards:

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November 6, 2017 in Legal Education | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, November 5, 2017

Jayne Caron, Marathon Runner (Nov. 2017), M.D. (May 2020)

My amazing daughter Jayne somehow found the time to train for and run her first marathon today while in medical school

Jayne NYC

Although I could not join my wife at the finish line, I watched Jayne's progress throughout the race thanks to the wonders of technology:

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November 5, 2017 in Legal Education, Tax | Permalink | Comments (1)

ABA Council Tables Tougher Bar Passage Accreditation Standard

ABA Section On Legal Education (2016), GRE or LSAT? ABA Council’s Latest Move Could Nix Tests Altogether:

[T]he legal education council voted to table an agenda item dealing with toughening up an accreditation standard regarding bar exam pass rates.

The current ABA rule gives schools up to five years to reach 75 percent passage, while also providing alternatives if they can’t meet the requirement. The proposal would have shortened the time period from five to two years, and deleted alternatives.

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November 5, 2017 in Legal Education | Permalink | Comments (1)

Tax Profs Among The Top 15 Faculty In Leiter's '24 Law Schools That Might Be In The Top 20'

In Top 20 Law Faculties in Terms of Scholarly Excellence, Brian Leiter lists the Top 15 professors by citations at the "24 Law Schools That Might Be In The Top 20":  Boston University, Chicago, Columbia, Cornell, Duke, Emory, George Washington, Georgetown, Harvard, Michigan, Minnesota, Northwestern, NYU, Pennsylvania, Stanford, Texas, UC-Berkeley, UC-Irvine, UCLA, USC, Vanderbilt, Virginia, Washington University, and Yale.  Nine Tax Profs are among the Top 15 faculty at these schools, including three at USC:

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November 5, 2017 in Legal Education, Tax, Tax Prof Rankings | Permalink | Comments (0)

'It's Okay To Be White' Signs Posted At Harvard Law School, Denounced By Dean

OKHarvard Crimson, 'Okay To Be White' Stickers Crop Up at Harvard, Around Country:

More than a dozen handmade stickers reading “It’s okay to be white” surfaced around Harvard Square Wednesday, prompting Cambridge officials to remove them and a Harvard Law School Dean to denounce the signs as “provocations intended to divide us.”

The stickers appeared to be part of a campaign started on the forum website 4chan, which called upon followers to put up posters with the message in their area on Halloween night. The author of the original post on the site wrote that they hoped the “credibility of far left campuses and media gets nuked” as a result of the incident, adding that they could help achieve a “massive victory for the right in the culture war.”

Similar stickers were spotted in a handful of places around the country Wednesday morning.

“It seems likely that these anonymous postings, made in the middle of the night, were provocations intended to divide us from one another,” Law School Dean of Students Marcia L. Sells wrote in an email sent to Law students Wednesday after the stickers were spotted at Wasserstein and Hastings Halls.

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November 5, 2017 in Legal Education | Permalink | Comments (17)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list, with some re-shuffling of the order within the Top 5. The #1 paper is #21 among 13,081 tax papers in all-time downloads.

  1. [4,818 Downloads]  Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, by Gladriel Shobe (BYU)
  2. [361 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  3. [279 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)
  4. [277 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  5. [176 Downloads]  Slicing and Dicing: The Structural Problems of the Tax Reform Framework, by Reuven Avi-Yonah (Michigan)

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

Saturday, November 4, 2017

This Week's Ten Most Popular TaxProf Blog Posts