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Saturday, March 7, 2015

Former IRS Commissioner Mark Everson Enters the 2016 Presidential Race

Everson for President

Former IRS Commissioner (2003-2007) Mark Everson has announced in this Letter to America that he is running for President:

Mr. Everson will have to overcome a tawdry sex scandal that resulted in his firing from his position as President and CEO of the American Red Cross:

Press and blogosphere coverage of Mr. Everson's nascent presidential campaign:

(Hat Tip: Evelyn Brody.)

March 7, 2015 in IRS News, Tax | Permalink | Comments (5)

How Men Can Succeed in the Boardroom and the Bedroom: Choreplay

ChoreplayNew York Times:  How Men Can Succeed in the Boardroom and the Bedroom, by Sheryl Sandberg (Facebook) & Adam Grant (Wharton):

It's easy to see how women benefit from equality — more leadership positions, better pay at work and more support at home. Men may fear that as women do better, they will do worse. But the surprising truth is that equality is good for men, too.

If men want to make their work teams successful, one of the best steps they can take is to bring on more women. ...

In a previous article, we highlighted why men ought to share the “office housework” — taking notes, planning meetings and helping others. Doing more actual housework matters, too. Research shows that when men do their share of chores, their partners are happier and less depressed, conflicts are fewer, and divorce rates are lower. They live longer, too; studies demonstrate that there’s a longevity boost for men (and women) who provide care and emotional support to their partners later in life.

If that isn’t exciting enough, try this: Couples who share chores equally have more sex. As the researchers Constance T. Gager and Scott T. Yabiku put it, men and women who work hard play hard. One of us, Sheryl, has advised men that if they want to do something nice for their partners, instead of buying flowers, they should do laundry. A man who heard this was asked by his wife one night to do a load of laundry. He picked up the basket and asked hopefully, “Is this Lean In laundry?” Choreplay is real.

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March 7, 2015 in Legal Education, Tax | Permalink | Comments (3)

The IRS Scandal, Day 667

IRS Logo 2Forbes, Finally, Suing IRS Over All Those Emails, by Robert W. Wood:

Whatever your political views, it is worth reading the press release by Judicial Watch about its latest lawsuit against the IRS. You have to be a kind of Energizer Bunny to keep after the dog-ate-my-homework targeting scandal. Like President Obama, some insist there was not a smidgen of corruption at the IRS. Others aren’t so sure.

The latest Freedom of Information Act lawsuit seeks “any and all records related to the destruction of damaged hard drives from IRS employee computers from January 1, 2010, to the present.” The suit was filed in federal court, Judicial Watch v. Internal Revenue Service. Interestingly, the lawsuit was filed even before the latest Hearings of the Committee on Oversight & Government Reform. On February 26, 2015, the Treasury Inspector General said he is investigating possible criminal activity at the IRS. The most disturbing revelation was that the IRS had not even asked for the backup tapes when the ‘hard drive crash’ excuse was first used. If true, that sounds like a game-changer.

After all, IRS Commissioner John Koskinen testified that recovery efforts had been thorough, and the tapes and emails couldn’t be found. Remember all the millions and millions in taxpayer money spent looking? One report said over 250 IRS employees spend 100,000 hours, costing taxpayers at least $14 million. Mr. Koskinen has been characterized as a political fixer who, unlike most IRS Commissioners, has not had a career in the tax industry.

He may want to explain all the multi-million dollar recovery efforts, particularly if somehow they did not include some simple questions! In the meantime, the IRS statements in briefs in the Judicial Watch case showcase what is hard to see as anything but obstruction. The IRS has said repeatedly that “records that pertain to the destruction of damaged hard drives are not maintained in a searchable manner.” The IRS has denied multiple requests, leading to multiple suits. ...

IRS attorneys said the back-up system would be too onerous to search. Yet in recent testimony, the Treasury Inspector General for Tax Administration said IRS tech employees told them that IRS management never asked for the tapes.

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March 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, March 6, 2015

Kysar Presents Interpreting Tax Treaties Today at Virginia

KysarRebecca Kysar (Brooklyn) presents Interpreting Tax Treaties at Virginia today as part of its Faculty Workshop Series:

The circumstances, if any, that permit a non-uniform, or differentiated, approach to treaty interpretation are difficult to define. Generally, a differentiated approach stands in tension with the Vienna Convention’s rules of interpretation, which apply to all treaties. Yet the notion that some treaties warrant special interpretive rules is also widely accepted by courts, states, and scholars. Thus far, however, efforts to justify differentiated treaty interpretation based on subject matter or treaty purpose have proven inadequate. A more promising avenue is the examination of the objective characteristics shared within a treaty type. One such characteristic, I contend, is the treaty’s degree of completeness. Specifically, all else being equal, standalone instruments call for less reliance upon extrinsic materials; interstitial instruments demand more.

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March 6, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

Number of LSAT Test-Takers, Law School Applicants at 30+ Year Lows

LSAC has announced that it administered 101,689 LSATs in 2014-15, a 3.6% decline from the prior year and the lowest amount in the 27 years that the LSAC has been releasing this information:

LSAC

LSAC also has announced that "as of 2/27/15, there are 247,698 fall 2015 applications submitted by 36,120 applicants. Applicants are down 6.9% and applications are down 8.7% from 2014. Last year at this time, we had 71% of the preliminary final applicant count."

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March 6, 2015 in Legal Education | Permalink | Comments (6)

Sweet Briar College to Close; Who Gets the $80 Million Endowment?

SweetInside Higher Ed, Who Gets the Endowment:

Sweet Briar College’s closure seems all the more stunning given how much money it has socked away: more than $80 million in its endowment.

The women’s college in rural Virginia announced this week it would close at the end of the spring semester. The move seemed designed to preempt the sort of death spiral other small private colleges have fallen into, fighting to stay alive until they default on their debts, falling behind on their bills and having creditors at their door.

Sweet Briar looks like it may go out with such a fight. Yet it still could need a while to sort through its affairs and divvy up what it has left to divvy up, according to financial experts. Because most colleges that close have run out of all of their cash, there is no endowment to divide up. But within hours of Sweet Briar's announcement Tuesday, alumnae and higher education observers started posting comments to social media asking who would get the leftover funds.

Some of the money will have to be used to pay bills, other money may perhaps be given back to donors and yet other funds may be redirected to other charitable causes.

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March 6, 2015 in Legal Education | Permalink | Comments (3)

L.A. Times: Classroom Technology Bans Improve Student Performance

GadgetLos Angeles Times, Classes That Go Off the Grid Help Students Focus:

USC professor Geoffrey Cowan is a scholar of free speech and communication. But Cowan, the former dean of the Annenberg School for Communication and Journalism, insists that students sometimes should be cut off from the social media and websites that are so prevalent in their lives.

Cowan bans the use of laptops, cellphones and wireless devices during the freshman introductory class "The Changing World of Communication and Journalism" that he co-teaches in the fall with current Annenberg Dean Ernest J. Wilson III. Like a growing number of professors nationwide, the USC professors say that electronic equipment, even just for note taking, causes students to mentally disconnect from lectures and distracts them from class discussions.

The sneaky, or sometimes brazen, texting, Web surfing and Facebook browsing disrupts the teaching and learning environment, they say.

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March 6, 2015 in Legal Education, Teaching | Permalink | Comments (0)

Barnhizer: The Declining Scale of the ‘Law School Industry’

David Barnhizer (Cleveland State), The Declining Scale of the ‘Law School Industry’:

Law Professors Are Academia’s 1 Percent!
This analysis is less about law schools than about the trends occurring outside law schools as in the changing conditions of the legal profession, the delivery of legal services and “law knowledge,” and in the economic climate within which lawyers and clients function. These changes have far more to do with the effects of those external conditions and needs on the future of law schools than the very limited steps that can be taken by law schools to mitigate the consequences of the ongoing “crisis” whether those steps relate to individual law schools or the overall “law school industry.” Of course an initial mea culpa is in order because the law schools contributed to the situation by their gross overproduction of new law graduates over the past twenty five years without asking whether there should be limits to the “high pressure stream” of new lawyers they were injecting into the legal profession on levels that that far exceeded the profession’s ability to assimilate the output.

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March 6, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 666

IRS Logo 2The Fiscal Times, Hillary Clinton Is the Republicans’ Newer, Bigger Lois Lerner:

Clinton has morphed into a hybrid of everything Republicans deplore about the Clintons, reminiscent of the conduct of IRS official Lois Lerner.

Many in the conservative movement smelled an administration plot to suppress Republican activists during the 2012 presidential election, and when Lerner famously refused to testify before Congress, she only cemented that perception. But the real reason conservatives have never let go of Lerner is her emails. The IRS claimed that Lerner and six other employees’ official IRS computers suffered hard drive crashes that rendered much of the information on it unrecoverable. It was impossible, therefore, for the IRS to credibly claim that it had turned over all relevant emails involving Lerner to Congressional committees investigating the targeting of non-profit groups. In fact, Lerner emails are still being uncovered.

A similar search for Clinton’s emails was launched Wednesday, when Rep. Trey Gowdy (R-SC), the chairman of the House Select Committee that is investigating the attack on the U.S. diplomatic compound in Benghazi, Libya in September 2012, announced that his committee would subpoena Clinton’s emails. ...

Clinton’s situation is arguably worse that Lerner’s because the wound is completely self-inflicted. At the time Lerner’s computer failed, the agency claimed that the back-up system they did have only kept data for 6 months before overwriting the digital tapes. IRS workers, including Lerner, were expected to identify all the emails they sent or received that could be classified as a “federal record” and to print out hard copies.

In fact, the records were backed up, and investigators were able to recover more than 30,000 emails as well as tapes from servers within two weeks dating back to 2001. As a result, the possibility of criminal activity is being probed by the Treasury Inspector General for Tax Administration.

Nevertheless, the procedure in place at the IRS left open the possibility that an employee guilty of wrongdoing might simply decline to save incriminating emails in hard copy. Taking things a step further – as many conspiracy-minded commentators did – one can imagine a staged hard drive “crash” that permanently eliminates evidence.

There is no evidence to suggest that Lerner was derelict in observing the rules on record retention, and certainly none to suggest that she engineered a fake hard drive crash. But you can’t prove a negative, and the system in place at IRS, making Lerner the arbiter of what was and was not a federal record, left ample room for doubt that there had been a cover up.

While the conditions that created doubt about Lerner’s emails were largely the fault of the IRS’s internal systems, Hillary Clinton has no such defense. She could have used the official email system, which archives messages. Her successor, John Kerry, does just that. But she didn’t.

Putting aside the apparent risk of placing all of her official communications outside the protection of the secure State Department email system (a major issue according to this Bloomberg report), the decision effectively put Clinton in the same position that IRS rules created for Lerner. It made her the arbiter of what emails were and were not considered public records.

  • The American Spectator, If David Petraeus Were Hillary Clinton:  "Think Lois Lerner with a server in her basement and what would have happened if Lerner and Lerner alone had 100% control on who saw her e-mails and which would or would not be erased as investigators closed in."
  • Town Hall, White House Squirms Over Hillary's Email Scandal, Forgets Embrace of Regular Law Breaking:  "Former head of tax exempt groups at the IRS Lois Lerner, who was a key player in targeting conservatives between 2010 and 2012, used a personal email account to conduct official government business. "Through the course of the investigation, we have learned that you sent documents related to your official dendrites from your official IRS e-mail account to an msn.com e-mail account labeled 'Lois Home.' This raises some serious questions concerning your use of a non-official e-mail account to conduct official business. Accordingly, we write to request documents related to your official duties that are housed in non-official e-mail accounts," former Chairman of the House Oversight Committee Darrell Issa and former Subcommittee Chairman Jim Jordan sent in a letter to Lerner last year. "The use of non-official e-mail accounts to conduct official business implicates federal records requirements. Use of a non-official e-mail account to conduct government business raises the prospect that records -- as defined by the Federal Records Act -- are not captured by official government e-mail archiving systems. It also creates difficulties in fulfilling the IRS' obligations under the Freedom of Information Act and other litigation requests. You use of non-official e-mail account also frustrates congressional oversight obligations." Are we really surprised she plead the fifth?"

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March 6, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, March 5, 2015

Prasad Presents Starving the Beast: The 1981 Reagan Tax Cut Today at UCLA

PrasadMonica Prasad (Northwestern) presents Starving the Beast: The 1981 Reagan Tax Cut at UCLA today as part of its Colloquium on Tax Policy and Public Finance hosted by Jason Oh and Alexander Wu:

The debt when Reagan entered office was just over $900 billion, not historically high in constant dollars or as a percent of GDP, but by the time Reagan left office it had almost tripled in nominal terms, and in percent of GDP it had gone from 33.4 percent to 51.9 percent. At the end of his term, the debt stood at $2.6 trillion, with a substantial portion of it contributed by Reagan's own policies: a mountain over 160 miles high in loose or tight bricks.

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March 5, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (4)

Kysar Presents Interpreting Tax Treaties at Harvard

KysarRebecca Kysar (Brooklyn) presented Interpreting Tax Treaties at Harvard yesterday as part of its Tax Law, Policy and Practice Workshop Series hosted by Daniel Halperin and Stephen Shay:

The circumstances, if any, that permit a non-uniform, or differentiated, approach to treaty interpretation are difficult to define. Generally, a differentiated approach stands in tension with the Vienna Convention’s rules of interpretation, which apply to all treaties. Yet the notion that some treaties warrant special interpretive rules is also widely accepted by courts, states, and scholars. Thus far, however, efforts to justify differentiated treaty interpretation based on subject matter or treaty purpose have proven inadequate. A more promising avenue is the examination of the objective characteristics shared within a treaty type. One such characteristic, I contend, is the treaty’s degree of completeness. Specifically, all else being equal, standalone instruments call for less reliance upon extrinsic materials; interstitial instruments demand more.

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March 5, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hickman Presents Treasury's Retroactivity Today at Iowa

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Iowa today as part of its Faculty Workshop Series:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

March 5, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Law School Applicants From Top Colleges Plunge 39%

Associate's Mind has updated its 2013 and 2014 posts and found that law school applicants from graduates of the Ivy league plus Chicago, Duke, and Stanford have plunged 39% since 2008 (click on chart to enlarge):

Top University Students Avoiding Law School 2015 Edition
Change From 2008 to 2014

AM 2

March 5, 2015 in Legal Education | Permalink | Comments (5)

WSJ: Is It Fair to Tax Capital Gains at Lower Rates Than Earned Income?

Wall Street Journal, Is It Fair to Tax Capital Gains at Lower Rates Than Earned Income?:

Capital gains—and how big a bite the government should take out of them—have become a major point of contention in the past couple of months.

In January, President Obama proposed tax changes designed to raise some $320 billion over 10 years, largely through higher levies on high-income Americans. The revenue would be used to cover $235 billion in tax breaks, mostly for moderate-income workers, along with other initiatives.

Among the changes he proposed: boosting the capital-gains rate to 28% for the top 1% of taxpayers, up from the current 23.8%, as well as a new capital-gains tax on many inheritances.

The GOP fired back that taxing investment income would harm economic growth by discouraging business investment and thereby hurt workers’ incomes.

All of which points to a broader question that divides experts: Are capital gains so different from earned income that they should be taxed at a different rate?

Below, two experts tackle that question.

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March 5, 2015 in Tax | Permalink | Comments (2)

NALP: Law Grad Hiring 'Increased Measurably' in 2014

NALP New LogoNALP, Entry-level Law Firm Recruiting Ticks Up:

Six years after the Great Recession, entry-level law firm recruiting activity increased measurably in the summer and fall of 2014. While law firms continue to exercise cautious entry-level hiring, recruiting activity by U.S. law firms on the campuses of U.S. law schools increased during the most recent recruiting season compared with recruiting activity the year before. Over the last five years law firms have gradually increased their entry-level hiring activity after the collapse in entry level hiring reflected by the data from 2008 and 2009. ...

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March 5, 2015 in Legal Education | Permalink | Comments (3)

Georgetown Lateral Hires: Lilian Faulhaber (From BU), Brian Galle (From BC)

Georgetown Law School, Tax Scholars Join Georgetown Law Faculty:

Georgetown University Law Center is pleased to announce that tax scholars Lilian V. Faulhaber and Brian Galle will be joining the Law Center faculty next year. ...

Faulhaber (2016)Faulhaber joins Georgetown Law from Boston University School of Law. Since 2013, she has worked at the Organisation for Economic Co-operation and Development, where she is an adviser to the Base Erosion and Profit Shifting Project. Before joining the Boston University faculty, she was a Climenko Fellow and Lecturer on Law at Harvard Law School. Her research and teaching interests include international tax law, federal income tax law, tax policy, European Union law and international law.  She clerked for Senior Judge Robert E. Keeton and Judge William G. Young, both on the U.S. District Court for the District of Massachusetts, and was an associate at Cleary Gottlieb Steen & Hamilton LLP in New York. A graduate of Harvard College, she received an M.Phil. from Cambridge University and a J.D. from Harvard Law School, where she was editor-in-chief of the Harvard International Law Journal

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March 5, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (1)

Tax Prof Richard Gershon Will Not Seek Another Term as Mississippi Dean

GershonOle Miss Law Dean Richard Gershon Resigns, Deborah Bell Appointed Interim:

After five school years at the helm of the University of Mississippi Law School, dean Richard Gershon will resign later this year.

In a release from Ole Miss, Provost Morris H. Stocks said:

Dean Richard Gershon has informed me that he has decided not to stand for quadrennial review and that his service as dean of the School of Law will conclude on June 30, 2015. I have asked Professor Deborah Bell to assume the role of interim dean of the School of Law in the near future. Dean Gershon and Dean Bell will begin to work out the plans for transition immediately.

March 5, 2015 in Legal Education | Permalink | Comments (1)

Mankiw: Dynamic Scoring in Congress Is Defensible but Slippery

New York Times:  Dynamic Scoring in Congress Is Defensible but Slippery, by N. Gregory Mankiw (Harvard):

Until now, conventional budget analysis has used a process called static scoring, which assumes that the path of gross domestic product remains the same when the government changes taxes or spending. This procedure has the virtues of simplicity and transparency.

Yet the assumption of unchanged G.D.P. also has one notable drawback: It is patently false. Much economic theory and empirical research confirm that fiscal policy influences the course of the economy.

Indeed, having an economic impact is a big part of why policy makers use the tools at their disposal, whether it is the tax cuts of Ronald Reagan and George W. Bush or the stimulus package of Mr. Obama. It seems somehow churlish for Congress’s economists to assume that a policy change won’t accomplish its goal simply to make their jobs easier. ...

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March 5, 2015 in Tax | Permalink | Comments (0)

WSJ: Are Prestigious Private Colleges Worth the Cost?

Wall Street Journal, Are Prestigious Private Colleges Worth the Cost?:

When college-acceptance letters are mailed to high-school seniors this spring, students who get offers from a wide range of schools may find themselves contemplating this question: Are prestigious, private colleges worth the additional cost?

ROI

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March 5, 2015 in Legal Education | Permalink | Comments (8)

The IRS Scandal, Day 665

IRS Logo 2Letter From Orrin G. Hatch (Chair, Senate Finance Committee) & Paul Ryan (Chair, House Ways & Means Committee) to John Koskinen (Commissioner, IRS) (Mar. 4, 2015):

As Chairmen of the Senate Committee on Finance and House Committee on Ways and Means, we have the obligation to conduct oversight of the administration of the Internal Revenue Code. This includes compliance with IRC §6103, which establishes rules governing the use of confidential tax return information and governs the manners in which it may be disclosed. As you know, §6103(g) provides the President of the United States and certain White House officials access to this information in limited circumstances and with certain required procedures. In carrying out our oversight obligations, we are seeking to determine the degree to and manner in which the Internal Revenue Service shares taxpayer information with the Executive Office of the President.

You will recall that former Ways and Means Chairman Dave Camp requested that the IRS provide all communication between the IRS and Executive Office of the President on April 30, 2014. You responded that your agency would be unable to provide the requested communication because of limited resources. In light of your response, our committees sought these records from the White House in two separate letters earlier this year. On February 17, White House officials responded to our requests, refusing to provide the documents and redirecting the request to the Internal Revenue Service. In light of the White House Counsel’s refusal to comply with our request, we ask that you provide the documents – originally requested in April of last year – without delay. This production will include all electronic communication in the agency’s possession from or to an “eop.gov” email address, or regarding White House communication, from January 1, 2010 through the date of this letter.

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March 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, March 4, 2015

Blouin Presents The Role of 'Check-the-Box' on Multinational Tax Planning Today at Penn

Blouin (2015)Jennifer Blouin (Pennsylvania) presents Does Organizational Form Affect Firms' Foreign Operations? The Role of 'Check-the-Box' on Multinational Tax Planning at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Chris William Sanchirico and Reed Shuldiner:

This study investigates the effect of the 1997 check-the-box tax legislation on the current effective income tax rates of U.S. multinational firms. Following the empirical methodology developed in Dyreng and Lindsey (2009), we measure the effect that the change in legislation has on the average worldwide, U.S., and foreign taxes paid on worldwide, federal and foreign pretax book income for a large sample of U.S. multinational firms. We find that on average U.S. multinational firms’ worldwide tax rates declined by 4.3% in the post-1996 period. Further, we find that the effect of the legislation was greater on U.S. multinational firms’ average foreign tax rates as compared to their average U.S. foreign tax rates. Our results also suggest that the effect is concentrated in the U.S. multinational firms that had a greater change in their ownership structures and a greater change in the balance of their intercompany payments in the post-1996 period. Although our results do suggest that the 1997 legislation served to reduce U.S. tax collections, our results imply that the 1997 legislation had a greater effect on firms’ foreign tax burdens.

March 4, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes

Bloomberg, U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes:

Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home.

Microsoft, Apple, Google and five other tech firms now account for more than a fifth of the $2.10 trillion in profits that U.S. companies are holding overseas, according to a Bloomberg News review of the securities filings of 304 corporations. The total amount held outside the U.S. by the companies was up 8 percent from the previous year, though 58 companies reported smaller stockpiles.

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March 4, 2015 in Tax | Permalink | Comments (1)

Kleinbard: A Lower Corporate Tax Rate Would Overcome Resistance to Tax Reform by Encouraging Incorporation of Pass-Through Entities

Bloomberg View:  Take the Odds on Corporate Tax Reform, by Edward D. Kleinbard (USC):

The smart money always wagers against tax reform, but 2015 may be the year that the sucker bet pays off, at least for business taxes. The driver could be the outdated corporate tax system:  The current 35 percent rate is out of step with world norms and holds back investment in the U.S. 

There is general agreement that the corporate tax rate should be in the mid-20s. There is also near-consensus that most tax incentives and subsidies should be thrown out to free up the revenue needed for lower rates. 

Two big hurdles remain. The more intractable one involves so-called pass-through entities. These firms -- sole proprietorships, partnerships, limited liability companies and S corporations -- are often conflated with small businesses and entrepreneurs, even though many of them are well-heeled hedge funds, law firms and private-equity shops. 

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March 4, 2015 in Tax | Permalink | Comments (2)

Jennifer Bard Named Dean at Cincinnati

BardJennifer Bard (Texas Tech) has been named the next Dean of the University of Cincinnati College of Law, effective July 1, 2015. She will replace Louis Bilionis, who is returning to full-time teaching after serving two terms as dean.

A Yale JD who studied at Oxford and graduated from Wellesley, Professor Bard is an expert in public health and bioethics. She has a Masters of Public Health degree and a PhD in higher education. She will hold a secondary faculty appointment in the Department of Internal Medicine in UC's College of Medicine.

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March 4, 2015 | Permalink | Comments (1)

Clausing: Beyond Territorial and Worldwide Systems of International Taxation

Kimberly A. Clausing (Reed College), Beyond Territorial and Worldwide Systems of International Taxation:

The dialogue regarding the international taxation of multinational firms should move beyond the rhetoric of comparing supposedly territorial and worldwide systems of taxation. Among major countries, there are no pure territorial or pure worldwide systems, just systems that lie on a spectrum between these extremes. Once one recognizes the characteristics that determine where on the spectrum particular countries lie, it is far from clear that purportedly worldwide countries are further to the “pure worldwide” end of the spectrum than are many purportedly territorial countries. Still, along the spectrum, tradeoffs between “competitiveness” and efficient capital allocation (with attendant effects on the home country tax base) are inevitable. Thus, I describe international tax system design proposals that might transcend this tradeoff, examining several such options. Finally, I discuss the current efforts of the BEPS process.

March 4, 2015 in Scholarship, Tax | Permalink | Comments (0)

Slate: Admitting Law Students Without LSAT Scores Is An 'Awful Idea'

Slate:  Some Law Schools Will Now Accept Students Who Didn’t Take the LSAT. That’s an Awful Idea., by Jordan Weissmann:

Recently, two law schools announced that they will begin accepting a select number of students who have not taken the LSAT, the much-loathed exam that has traditionally served as the make-or-break measuring stick for J.D. applicants and punctuated the academic career of many an aimless history major. As Bloomberg Business reported last week, "The State University of New York-Buffalo Law School and the University of Iowa College of Law said they would admit students from their respective undergraduate colleges" based on their grades and scores on other standardized tests. They're the first institutions to pounce on a major rule change by the American Bar Association that will let law schools start filling 10 percent of their classes with non-LSAT takers who meet other academic requirements. But chances are that other schools will follow suit.

Mostly, this is yet another example of just how desperate law schools are to fill their classroom seats. Enrollments have plunged—Buffalo's first-year class has shrunk 18.3 percent since 2011, while Iowa's is down 21.7 percent—and that has created financial stress on institutions.

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March 4, 2015 in Legal Education | Permalink | Comments (1)

Should Law Schools Offer Reduced Teaching Loads to Retain Star Faculty?

WisconsinInside Higher Ed, Matching More With Less:

The chancellor of the University of Wisconsin at Madison came under fire last month for publicly admitting to a tactic common among her counterparts at research universities. To keep top faculty members from accepting outside offers, she sometimes will reduce their teaching loads. Critics seized on Chancellor Rebecca Blank’s comments as an example of what’s wrong with higher education, saying that rewarding good professors by reducing their exposure to students was a kind of perverse incentive -- and an expensive one, to boot. But how fair is the criticism, and just how common and how bad -- if at all -- is the practice? It depends on whom you ask.

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March 4, 2015 in Legal Education | Permalink | Comments (23)

Merrill Lynch Hires Tax Expert Lewis Steinberg From Credit Suisse

SteinbergNew York Times Deal Book, Merrill Lynch Hires Tax Expert From Credit Suisse:

Bank of America Merrill Lynch has hired Lewis Steinberg, a senior banker from Credit Suisse, to serve as its in-house tax expert, the firm announced in an internal memorandum on Monday.

He will join in May as head of structured solutions for the American operations of the mergers business and will report to the co-heads of the unit, Patrick Ramsey and Jack MacDonald, according to the memo, which was reviewed by DealBook.

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March 4, 2015 in Tax | Permalink | Comments (1)

Death of Jerome Kurtz, Former IRS Commissioner

New York Times, Jerome Kurtz, 83, Dies; Headed I.R.S. in Carter Administration:

Jerome Kurtz, who as commissioner of the Internal Revenue Service during the Carter administration was known for cracking down on tax shelters and other tax advantages for the wealthy, died on Friday in Manhattan. He was 83. The cause was complications of surgery, his family said. ...

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March 4, 2015 in Obituaries, Tax | Permalink | Comments (0)

Senate Report Blames Tax Pros for Unfair Tax Code

Senate LogoFollowing up on yesterday's post, Senate Holds Hearing Today on Fairness in Taxation:  Democratic Staff, Senate Finance Committee, How Tax Pros Make the Code Less Fair and Efficient: Several New Strategies and Solutions:

Have you ever heard of a collar? Or a basket option? Or a wash sale? Most people haven’t. But many taxpayers use these sophisticated transactions to cut the taxes they could owe in half, often paying effective rates far lower than people who earn a regular paycheck.

This report describes each of these little known tax avoidance strategies identified for Senator Wyden by the nonpartisan staff of the Joint Committee on Taxation (JCT) and outside independent experts, relying on memoranda, examples, and descriptions. A preliminary analysis indicates that reforms to rein in some of these strategies could reduce the amount of taxes avoided by tens of billions of dollars over the next decade while making the tax code fairer and simpler overall.

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March 4, 2015 in Congressional News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 664

IRS Logo 2George Will, Stopping the IRS:

Rep. Peter Roskam is now chairman of the Ways and Means subcommittee whose jurisdiction includes oversight of the Internal Revenue Service, and hence of Lois Lerner's legacy. He knows how interesting her career was before she, as head of the IRS exempt-organizations division, directed the suppression of conservative advocacy groups by delaying and denying them the tax exempt status that was swiftly given to comparable liberal groups.

In 2013, Roskam, in a televised committee hearing, told the story of Al Salvi, who in 1996 was the Republican's Senate candidate against then congressman, now senator, Dick Durbin. Democrats filed charges with the Federal Election Commission against Salvi's campaign, charges that threatened to dominate the campaign's final weeks. Salvi telephoned the head of the FEC's Enforcement Division, who he says told him: "Promise me you will never run for office again, and we'll drop this case." So said Lois Lerner. After Salvi lost, FBI agents visited his elderly mother, demanding to know, concerning her $2,000 contribution to her son's campaign, where she got "that kind of money." When a federal court held that the charges against Salvi were spurious, the FEC's losing lawyer was Lois Lerner.

Roskam's telling of Salvi's story elicited no denial from Lerner. Neither did the retelling of it in this column (June 13, 2013). No wonder: The story had not been deemed newsworthy by the three broadcast networks' evening news programs, by The New York Times or The Washington Post. With most of the media uninterested in the use of government institutions to handicap conservatives, stonewalling would work.

It still is working through dilatory and incomplete responses to subpoenas, and unresponsive answers to congressional questions. Lerner's name now has an indelible Nixonian stain, but there probably will be no prosecution. If the administration's stonewalling continues as the statute of limitations' clock ticks, Roskam says, "She will get away with it."

Now in his fifth House term, Roskam, 53, says, "The advantage in this town is always with the entity that doesn't want to do anything." Many thousands of Lerner's emails that supposedly were irretrievably lost have been found, but not released. The Justice Department's investigation, which was entrusted to a political appointee who was a generous contributor to Barack Obama's campaign, is a stone in the stone wall.

Roskam says the task now is "to see that Lois Lerner 2.0 is impossible." One place to begin is with the evidence -- anecdotal but, in the context of proven IRS corruption, convincing -- of other possibly punitive IRS behavior toward Republican contributors and other conservative activists. This justifies examining the IRS' audit selection process. This would produce interesting hearings for most of the media to ignore.

Next, there should be hearings into the illegal disclosure of taxpayer information about conservative individuals and groups to the media and to liberal officials and groups. Cleta Mitchell, a lawyer for some groups abused by the IRS (and for this columnist on different matters), also suggests prohibiting IRS employees from joining a union.

The National Treasury Employees Union,” she says, “provides no protection to IRS employees that federal statutes and the civil service system do not already provide. It already takes an act of God to hold an IRS employee accountable for his or her actions. But it is worse than merely redundant for IRS employees to belong to the NTEU. Because it adds nothing to its members’ protections, it is a purely political organization. In 2014, fully 95 percent of its contributions went to Democrats, including 11 Democratic members of the House Committee on Oversight and Government Reform. So, the IRS employees’ union dues finance the election of people who are supposed to scrutinize IRS’ behavior.

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March 4, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, March 3, 2015

Mason Presents Citizenship Taxation Today at NYU

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrants.

March 3, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weinzierl Presents Revisiting the Classical View of Benefit-Based Taxation Today at Georgetown

Weinzierl (2016)Matthew Weinzierl (Harvard Business School) presents Revisiting the Classical View of Benefit-Based Taxation at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John BrooksItai Grinberg, and David Schizer:

This paper explores how the persistently popular "classical" logic of benefit-based taxation, in which an individual's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory. If Lindahl's methods are applied to that view of benefits, first-best optimal policy can be characterized analytically as depending on a few potentially estimable statistics, in particular the coefficient of complementarity between public goods and innate talent. Constrained optimal policy with a Pareto-efficient objective that strikes a balance–controlled by a single parameter– between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those that match well several features of existing policies. To the extent that such an objective reflects the mixed normative reasoning behind prevailing policies, this model may offer a useful approach to a positive optimal tax theory.

March 3, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

WaPo: The Role of Tax Lawyers, Tax Profs, and the Tax Press in the Fate of ObamaCare at the Supreme Court

ObamaCareWashington Post, Six Words Might Decide the Fate of Obamacare at the Supreme Court:

When the Supreme Court takes up the latest challenge to President Obama’s health-care law this week, how the justices interpret a six-word phrase in the bill could determine its fate.

The law, adopted in 2010, says the federal government can pay subsidies to help people afford insurance bought through “an Exchange established by the state.”

But two-thirds of the states have opted against setting up their own exchanges, and as a result, more Americans have been buying insurance through the federal insurance marketplace. Now, opponents of the law will make their case to the high court that Americans who are not using the state exchanges are ineligible for subsidies. And if they win, insurance premiums could skyrocket and many people might drop their coverage — possibly undermining the whole health-care program.

And as the justices weigh whether the health-care law in fact has a fatal glitch, one of the key questions is this: Why did the Obama administration rule-writing officials in the Internal Revenue Service and its parent agency, the Treasury Department, ultimately interpret the language the way they did?

It had never occurred to the Treasury Department official responsible for making the changes in the tax code required by the law that there was more than one way to read the phrase — until she happened across an article in a trade journal.

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March 3, 2015 in Tax | Permalink | Comments (6)

NY Times: Britain’s Elite Still Enjoying a Tax Break 100 Years Old

NY Times Dealbook (2013)New York Times Deal Book, Britain’s Elite Still Enjoying a Tax Break 100 Years Old:

They are among the British moneyed elite: the head of the nation’s largest bank, a billionaire hedge fund manager and the owner of some of London’s most luxurious nightclubs.

Yet for tax purposes, they are not entirely British.

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March 3, 2015 in Tax | Permalink | Comments (0)

Senate Holds Hearing Today on Fairness in Taxation

Senate LogoThe Senate Finance Committee holds a hearing today on Fairness in Taxation (links to statements and testimony below):

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March 3, 2015 in Congressional News, Tax | Permalink | Comments (0)

President Obama Is 'Very Interested' in Raising Taxes Through 'Executive Action'

Sen. Bernie Sanders (D-VT) on Friday sent this letter to President Obama calling on him to use unilateral executive action to raise over $100 billion in taxes by closing six "loopholes":

  1. The Check the Box Loophole
  2. The Hewlett-Packard Loophole
  3. The REIT Loophole
  4. The Corporate Inversion Loophole
  5. The Carried Interest Loophole
  6. The Valuation Discount Loophole

There are undoubtedly more loopholes that the Administration could close on its own. This list is not intended to be exhaustive but rather to illustrate that if Congress fails to act, the Administration can act to resolve some of the problems with our tax code.

White House Press Secretary Josh Earnest on Monday stated that President Obama is "very interested" in the idea of raising taxes through unilateral executive action.

Press and blogosphere coverage:

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March 3, 2015 in Tax | Permalink | Comments (18)

WSJ: IRS Confirms Illegal Immigrants Under Obama’s Executive Action on Immigration to Receive Tax Refunds For Prior Years

Wall Street Journal, IRS Confirms Illegal Immigrant Tax-Refund Ruling, Sparking GOP Outcry:

The Internal Revenue Service on Monday confirmed it would allow illegal immigrants benefiting from President Barack Obama’s recent executive action to file for tax refunds for prior years, fueling an outcry from Republicans.

The IRS explanation came in a letter from Commissioner John Koskinen to a veteran GOP lawmaker, Sen. Charles Grassley (R., Iowa). The letter confirmed and expanded on previous public comments by agency officials. In response, Mr. Grassley vowed to push legislation to overturn the policy.

The November executive action offers some four million illegal immigrants who qualify the chance to apply for “deferred action,” which gives a temporary reprieve from deportation and the ability to apply for work permits.

Because of Mr. Obama’s executive action and the IRS interpretation, “these individuals will be eligible to claim billions of dollars in tax benefits based on earnings from unauthorized work in the United States,” Mr. Grassley said. “The tax code shouldn’t reward those who broke our immigration laws,” he added.

Other Republican lawmakers have charged that the payments would amount to an “amnesty bonus” under Mr. Obama’s action.

March 3, 2015 in Tax | Permalink | Comments (3)

From 3L to In-house at HP

HP LogoCorporate Counsel,  From 3L to In-house:

Hewlett-Packard's general counsel says he's really pleased with his department's program to hire and train young lawyers. So why is he hoping he loses one?

Nearly five years ago, Hewlett-Packard Co.'s law department began hiring and training lawyers right out of law school. The tech giant has lured top talent from some of the nation's best law schools. The new recruits have impressed their colleagues, and they also seem pleased with the match. The lawyer who oversees the program touts an 85 percent retention rate. Not many companies have embraced this model, but HP seems very happy with the results.

But the company's general counsel says he'd like to see that number dip just a bit. His fondest wish for the program, says John Schultz, is that a big law firm hires away one of his budding young stars. "That's what I wait and hope for," he says.

Say what? It sounds like Schultz is issuing a nice guy's version of Dirty Harry's throw-down: "Go ahead, make my day." But he isn't kidding, and he's not saying this to be provocative. His company's ambition is to create a training program the equal of any law firm's, and he'll know they've succeeded when a law firm hires away someone who's been through it. ...

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March 3, 2015 | Permalink | Comments (1)

IRS Releases Winter 2015 SOI Bulletin

IRS Logo 2The IRS's Statistics of Income Division has released (IR-2015-35) the Winter 2015 SOI Bulletin (Vol. 35, No. 2), with these articles:

March 3, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 663

IRS Logo 2Wall Street Journal, Best of the Web, by James Taranto:

Still Suppressing Speech
The IRS scandal continues: “Nearly two years after the IRS was exposed for improperly sidetracking requests for tax exemptions from tea party groups, Politico has learned that at least a half-dozen conservative applicants are still waiting for an answer.”

One of them is Karl Rove’s Crossroads GPS, which managed to spend tens of millions last year. But most “are mom-and-pop outfits from New Mexico to New Jersey, run by volunteers out of their own houses and operating at a fraction of Crossroads’ budget”:

The years-long delay has gutted these groups’ membership, choked their ability to raise funds, forced them to reserve pots of money for possible back taxes and driven them into debt to pay legal bills.

IRS’ website says it has closed 95 percent of “priority” groups that had been pulled for extra scrutiny.

The agency said it cannot comment on specific cases, but it deflected blame, in part, to the Justice Department. When an applicant is suing the IRS, Justice also has a say in whether to issue a final ruling during litigation. Almost all the groups in limbo have taken the IRS to court.

The IRS reports that in May 2013, when the scandal broke, the IRS “released a list of 176 political nonprofits it said it had approved already, many of them groups it once labeled ‘inflammatory,’ ‘anti-Obama’ and engaging in ‘propaganda.’ ”

Those that were still on hold were offered “immediate approval if they pledged to spend less than 40 percent of their time and resources on political campaigns”—a lower threshold than the usual 51%. “Several of the groups dismissed that option on principle, calling it unfair because it was a stricter standard than other 501(c)(4)s had to abide by.”

So the IRS admittedly denied tax-exempt status improperly to at least 176 groups, tried to apply extralegal restrictions to others, and is still delaying approval for those groups that have gone to court in an effort to vindicate their rights. It’s been over a year since President Obama himself said, in answer to a question from Fox News’s Bill O’Reilly, that there was “not even a smidgen of corruption.” Maybe it’s time somebody put the question to him again.

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March 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, March 2, 2015

Oei Presents Can Sharing Be Taxed? Today at Pepperdine

OeiShu-Yi Oei (Tulane) presents Can Sharing Be Taxed? (with Diane M. Ring (Boston College)) at Pepperdine today as part of our Tax Policy Colloquium Series:

The past few years have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via the Internet or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

In this Article, we explore those questions in the context of taxation. We argue that, contrary to the claims of some commentators, the application of substantive tax law to sharing is mostly (though not completely) clear, because current law generally contains the concepts and categories necessary to tax sharing. However, tax enforcement and compliance may present challenges, as a result of two distinctive features of sharing. First, some sharing businesses tend to opportunistically pick the more favorable regulatory interpretation if there is ambiguity regarding which rule applies or whether a rule applies. This leads to compliance and enforcement gaps. Second, the “microbusiness” nature of sharing raises unique compliance and enforcement concerns. We suggest strategies for addressing these dual challenges, including lower information reporting thresholds, safe harbors and advance rulings to simplify tax reporting, and targeted enforcement efforts.

Jordan M. Barry (San Diego) is the commentator.  For more, see Jordan M. Barry & Paul L. Caron, Tax Regulation, Transportation Innovation, and the Sharing Economy, 82 U. Chi. L. Rev. Dialogue ___ (2015).

Update:  Post-presentation lunch:

Lunch

 

March 2, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Optimist's Case For Tax Reform

CLubForbes:  Hey, It Could Happen! The Optimist's Case For Tax Reform, by Joseph Thorndike (Tax Analysts):

It’s easy to be cynical about tax reform. Politicians tell us that fixing the tax system is imperative and essential. But comprehensive reform is unusual and durable changes rarer still. That’s not exactly a recipe for optimism.

Ed Kleinbard, USC law professor and former chief of staff for the Joint Committee on Taxation, is ... feeling hopeful. “A rough framework is emerging that could stun pundits by actually becoming the basis of corporate tax reform legislation,” he contends in a recent essay [Why Corporate Tax Reform Can Happen]. “In short, and contrary to many claims, corporate-only tax reform, properly constructed, is feasible.” ... 

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March 2, 2015 in Tax | Permalink | Comments (1)

Avi-Yonah: The Obama Budget Proposals and BEPS

Reuven S. Avi-Yonah (Michigan), All or Nothing? The Obama Budget Proposals and BEPS:

There is a wide bipartisan consensus that the US international tax regime is broken. We have the highest corporate tax in the OECD, which at 35% imposes a real burden on corporations earning mostly US source income. At the same time, US based multinationals pay very low effective tax rates on foreign source income earned through their subsidiaries, leading to a strong incentive to shift profits out of the US. Finally, the US is among the few countries to fully tax dividends paid by foreign subsidiaries to their domestic parents, leading to the “trapped income” phenomenon in which $2 trillion of low-taxed earnings of those subsidiaries cannot be repatriated because of the tax on repatriations, and have to be declared as “permanently reinvested” overseas despite increasing difficulties to find something to do with this pile of money.

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March 2, 2015 in Scholarship, Tax | Permalink | Comments (0)

Joint Tax Committee: The Top 1% Receives 19% Of All Income, Pays 49% Of All Income Taxes

Joint Tax CommitteeThe Joint Committee on Taxation has released Fairness and Tax Policy (JCX-48-15):

The Senate Committee on Finance has scheduled a public hearing on March 3, 2015, titled “Fairness in Taxation.” This document ... describes concepts of tax equity and provides data related to the current and historical distribution of income and taxes. ...

For 2015, the top 10 percent (in terms of income) of all tax returns receive 45 percent of all income and pay 82 percent of all income taxes. The top five percent of all tax returns receive 34 percent of all income and pay 71 percent of all income taxes. The top one percent of all tax returns receives 19 percent of all income and pay 49 percent of all income taxes. 

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March 2, 2015 in Congressional News, Gov't Reports, Tax | Permalink | Comments (14)

IRS Releases Fall 2014 SOI Bulletin

IRS Logo 2The IRS Statistics of Income Division has released the Fall 2014 SOI Bulletin (Vol. 34, No. 1), with these articles:

March 2, 2015 in IRS News, Tax | Permalink | Comments (0)