TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, January 21, 2016

Oei Presents The Tax Lives Of Uber Drivers Today At Indiana

OeiShuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine four research questions: (1) the substantive tax concerns facing forum participants, (2) how taxes factor into driving and profitability decisions, (3) forum participants’ understandings of and attitudes towards worker classification issues (i.e., independent contractor vs. employee), and (4) user sophistication, attitudes towards compliance, and other cultural features of the forums.

We find that while forum participants displayed generally accurate understandings regarding tax filing and income inclusion obligations, their approaches to expenses and deductions were less accurate and more varied in terms of sophistication and willingness to comply with tax law. Forum participants also engaged in frequent discussions about whether driving was ultimately profitable and exhibited a range of awareness of how taxes affected such profitability. They also displayed heterogeneous understandings and preferences regarding worker classification questions (i.e., independent contractors versus employees). Finally, while the forums contained a surprising degree of sophisticated and accurate tax advice, they also contained a good amount of inaccurate, confusing, or misleading information. It is thus uncertain whether forum readers are able to successfully distinguish between accurate and inaccurate advice dispensed in the forums. 

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January 21, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Wilson Presents Corporate Inversions Update Today At Colorado

Wilson_John_John R. Wilson (Denver) presents  Corporate Inversions Update at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

The presentation examines the evolution of inversions from the single-company transactions of the 1990’s to the real business combinations of today. It considers the various legislative and regulatory moves that have been designed to make such transactions less appealing, and why such measures haven’t succeeded. The presentation concludes with an examination of the current state of play and possible further legislative, treaty and regulatory responses that could be undertaken short of fundamental international tax reform.

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January 21, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hackney:  Charitable Organization Oversight — Rules v. Standards

Philip Hackney (LSU), Charitable Organization Oversight: Rules v. Standards, 13 Pitt. Tax Rev. ___ (2015):

Congress has traditionally utilized standards as a means of communicating charitable tax law in the Code. In the past fifteen years, however, Congress has increasingly turned to rules to stop fraud and abuse in the charitable sector. I review the rules versus standards debate to evaluate this trend. Are Congressional rules the best method for regulating the charitable sector?

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January 21, 2016 in Scholarship, Tax | Permalink | Comments (0)

Lloyd:  Raising The Bar, Razing Langdell

WakeHarold Lloyd (Wake Forest), Raising the Bar, Razing Langdell, 49 Wake Forest L. Rev. 1213 (2014):

As an introduction to the Wake Forest Law Review’s symposium edition on Revisiting Langdell: Legal Education Reform and the Lawyer’s Craft, this article highlights longstanding, substantial damage Christopher Columbus Langdell has inflicted on law schools and legal education. Much of this damage stems from three of Langdell’s wrong and counterintuitive notions: (1) law is a science of principles and doctrines known with certainty and primarily traced through case law; (2) studying redacted appellate cases is “much the shortest and best, if not the only way” of learning such law, and (3) despite Langdell’s own roughly fifteen years of practice experience, practice experience taints one’s ability to teach law. This article highlights problems with, and harms resulting from, each of these wrong notions.

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January 21, 2016 in Legal Education, Scholarship | Permalink | Comments (8)

Bar Exam Carnage Likely Will Worsen In 2016, 2017, And 2018

Following up on my recent posts on the widespread declines in bar exam pass rates (links below):  Jerry Organ (St. Thomas), Changes in Composition of the LSAT Profiles of Matriculants and Law Schools Between 2010 and 2015:

Given that the LSAT profiles of matriculants and of law schools for fall 2013, fall 2014 and fall 2015 are less robust than those for fall 2011 and fall 2012 (the classes that graduated in 2014 and 2015, respectively), one can anticipate that the declines in median MBE scaled scores and corresponding bar passage rates in 2014 and 2015 will continue in July 2016, 2017 and 2018 absent increases in attrition (I discussed attrition rates in a blog posting in October), significant improvement in academic support programs at law schools, or improved bar preparation efforts on the part of graduates.

Organ

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January 21, 2016 in Legal Education | Permalink | Comments (9)

Walker:  Reconsidering Realization-Based Accounting For Equity Compensation

David I. Walker (Boston University), Reconsidering Realization-Based Accounting for Equity Compensation:

The U.S. equity compensation landscape continues to evolve. Recent innovations have improved the linkage between pay and firm-specific performance, but have added complexity. Against that backdrop, this Article urges reconsideration of the accounting rules for equity pay. Under current rules, most equity pay awards are expensed based on grant date valuation with no updating for changes in value post grant. This Article advocates the adoption of a mark-to-market or realization-based approach under which the expense recorded for all equity pay awards would ultimately be trued to the value received by employees.

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January 21, 2016 in Scholarship, Tax | Permalink | Comments (0)

Profit Shifting Of U.S. Multinationals

Tim Dowd, Paul Landefeld & Anne Moore (Joint Committee on Taxation), Profit Shifting of U.S. Multinationals:

We analyze the profit shifting behavior of U.S. multinational firms using a unique panel data set of U.S. tax returns over the period 2002-2012. Prior research has found significant effects of tax rates in affiliate and parent countries on the profit shifting behavior of multinational entities, with semi-elasticities ranging from close to zero to well above one. We build on this prior work by allowing more heterogeneity in response across the distribution of tax rates and by including affiliates located in tax havens around the world. Our findings suggest that elasticities based on a log-linear specification may severely understate the sensitivity of profits to tax in low-tax jurisdictions while simultaneously overstating this elasticity in high-tax jurisdictions. Accounting for this type of nonlinearity appears crucial in considering how the global allocation of firm profits might change in response to tax rate changes.

2010

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January 21, 2016 in Gov't Reports, Scholarship, Tax | Permalink | Comments (0)

Miller & Stroud:  Medicaid Planning For Long Term Care — California Style

John A. Miller (Idaho) & Vanessa S. Stroud (Law Office of Vanessa Stroud, Petaluma, CA), Medicaid Planning for Long Term Care: California Style:

California’s Medicaid program, “Medi-Cal”, differs significantly from programs in other states. This article sets out the major distinctions between California's program and other state programs as applied to long term care for disabled seniors. It illustrates the major planning techniques that are employed throughout the country and also those techniques that are available only in California.

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January 21, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 987

IRS Logo 2Americans for Tax Reform, IRS Erases Hard Drive Despite Court Order:

The IRS erased a hard drive belonging to a former top employee involved in the agency’s controversial, taxpayer-funded hiring of elite trial law firm Quinn Emanuel.

Although there was a court preservation order on all documents related to the IRS hiring of the outside firm, the hard drive was erased anyway. The order was borne of a Freedom of Information Act (FOIA) request submitted by Microsoft.

Even though the white shoe law firm has zero experience handling sensitive tax data, taxpayers have been footing bills of over $1,000 per hour for its services.

The deleted hard drive belonged to the agency’s former director of transfer pricing operations at the IRS Large Business and International Division, likely a key employee involved in the controversy. It is not known if there is any way to recover documents belonging to the employee. ...

This is not the first time the agency has failed to preserve key information. The IRS also “accidentally” destroyed the hard drive belonging to Lois Lerner during investigations into the targeting of conservative groups. As many as 24,000 emails were lost forever when 422 backup tapes were wiped clean despite an agency-wide preservation order and congressional subpoena.

In the Lerner case, the IRS failed to take simple steps to ensure compliance with the order, according to a report by the House Oversight Committee.

Now, it appears that important information has once again disappeared because of IRS corruption, incompetence, or both.

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January 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, January 20, 2016

Pepperdine Tax Policy Workshop Series (Spring 2016)

Here is the schedule for my Spring 2016 Pepperdine Tax Policy Workshop Series:

  • Jan. 25    Omri Marian (UC-Irvine), The State Administration of International Tax Avoidance
  • Feb. 8     Adam Chodorow (Arizona State), Bitcoin, Foreign Currency, and the Case for Basis Pooling
  • Feb. 22   John Brooks (Georgetown), Quasi-Public Spending
  • Mar. 7    Ellen Aprill (Loyola-L.A.),  The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation
  • Mar. 28  Shuyi Oei (Tulane), The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums
  • Apr. 11   Jason Oh (UCLA), How the Rich Drive Progressive Tax Rates
  • Apr. 25   Lily Kahng (Seattle), Who Owns Human Capital?

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

Pepperdine Law School (2016)

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January 20, 2016 in Colloquia, Legal Education, Scholarship, Tax | Permalink | Comments (1)

President Obama Blames Male Legislators For The ‘Tampon Tax’ In 40 States

Time, President Obama Doesn’t Understand the ‘Tampon Tax’ Either:

President Obama said the existence of a “luxury goods” tax placed on feminine sanitary products like tampons and pads is likely due to the fact that men wrote the laws in an interview on Friday.

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January 20, 2016 | Permalink | Comments (6)

Chodorow & Hackney:  Post-Graduate Legal Training — The Case For Tax-Exempt Programs

ASUAdam Chodorow (Arizona State) & Philip Hackney (LSU), Post-Graduate Legal Training: The Case for Tax-Exempt Programs, 65 J. Legal Educ. ___ (2016):

The challenging job market for recent law school graduates has highlighted a fact well known to those familiar with legal education: A significant gap exists between what students learn in law school and what they need to be practice-ready lawyers. Legal employers historically assumed the task of providing real-world training, but they have become much less willing to do so. At the same time, a large numbers of Americans — and not just those living at or below the poverty line — are simply unable to afford lawyers. In this Article, we argue that post-graduate legal training, similar to post-graduate medical training, is a good way to address these market failures and reduce the gap in both skills and legal services.

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January 20, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Washburn Unveils Faculty Retirement Incentive Plan

Washburn LogoThe Topeka Capital-Journal reports that Washburn has unveiled a retirement incentive program for faculty and staff age 62 or older with at least ten years of service: a lump sum payment equal to the lesser of 100% of salary or $125,000, plus continued coverage in the university's group health insurance plan until the age of 65. 

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January 20, 2016 in Legal Education | Permalink | Comments (0)

Tax Shelters Or Efficient Tax Planning? A Theory Of The Firm Perspective On The Economic Substance Doctrine

T. Christopher Borek (Analysis Group, Inc.) & Angelo Frattarelli (U.S. Department of Justice) & Oliver Hart (Harvard University, Department of Economics), Tax Shelters or Efficient Tax Planning? A Theory of the Firm Perspective on the Economic Substance Doctrine, 57 J.L. & Econ. 975 (2014):

Courts have articulated a number of legal tests to distinguish corporate transactions that have a legitimate business or economic purpose from those carried out largely, if not solely, for favorable tax treatment. We outline an approach to analyzing the economic substance of corporate transactions based on the property rights theory of the firm, and describe its application in two recent tax cases.

January 20, 2016 in Scholarship, Tax | Permalink | Comments (0)

The 25 Most Influential People In Legal Education

MIPThe 25 Most Influential People in Legal Education (2015), The National Jurist (Jan. 2016):

These key players continue to be major forces in shaping legal education.  Many have pushed for more practical training, lowering law school debt, maintaining standards in the face of dropping application numbers and better employment outcomes. ... As in years past, in creating our list, we sought nominations from the nation's law schools and added our own nominees.  We then narrowed the list to 48 and asked every law school dean and one professor from each school to rate them.  Here are the top 25:

  1. Bill Henderson (Professor, Indiana)
  2. Erwin Chemerinsky (Dean, UC-Irvine)
  3. Paul Caron (Professor, Pepperdine)
  4. Brian Leiter (Professor, Chicago)
  5. Blake Morant (Dean. George Washington; Immediate Past-President, AALS)
  6. Kellye Testy (Dean, University of Washington; President, AALS)
  7. David Yellen (Dean, Loyola-Chicago)
  8. Martin Katz (Dean, Denver)
  9. Frank Wu (Former Dean, UC-Hastings) 
  10. Michael Simkovic (Professor, Seton Hall)

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January 20, 2016 in Legal Education | Permalink | Comments (5)

The Ten Most Downloaded Tax Papers In 2015

  1. SSRN Logo[4620 Downloads]  Some Reflections on the OECD and the Sources of International Tax Principles (2013), by Hugh Ault (Boston College)
  2. [2858 Downloads]  Are We Heading Towards a Corporate Tax System Fit for the 21st Century? (2014), by Michael Devereux (Oxford) & John Vella (Oxford)
  3. [2500 Downloads]  Measuring Income Tax Evasion using Bank Credit: Evidence from Greece (2015), by Nikolaos Artavanis (UMass), Adair Morse (UC-Berkeley) & Margarita Tsoutsoura (Chicago)
  4. [1427 Downloads]  iTax: Apple's International Tax Structure and the Double Non-Taxation Issue (2014), by Antony Ting (Sydney)
  5. [1405 Downloads]  What Do We Know About Base Erosion and Profit Shifting? A Review of the Empirical Literature (2014), by Dhammika Dharmapala (Chicago)
  6. [1329 Downloads]  Top Marginal Effective Tax Rates by State and by Source of Income, 2012 Tax Law vs. 2013 Tax Law (As Enacted in ATRA) (2013), by Gerald Prante (Lynchburg) & Austin John (Lynchburg)
  7. [1189 Downloads]  Taxing Multinationals in Europe (2012), by Wolfgang Schoen (Max Planck)
  8. [1028 Downloads]  The Nature and Practice of Capital Tax Competition (2015), by Kimberly Clausing (Reed)
  9. [903 Downloads]  Double Tax Treaties: An Introduction (2007), by Reuven Avi-Yonah (Michigan)
  10. [831 Downloads]  David Foster Wallace on Tax Policy: How to Be an Adult, and Other Mysteries of the Universe (2015), by Arthur Cockfield (Queen's)

January 20, 2016 in Scholarship, Tax | Permalink | Comments (0)

Bainbridge:  Louisville Exposes An Ugly Law School Secret: 'A Leftist Hegemony Pervades American Legal Education'

LouisvilleFollowing up on my previous posts (links below):  Stephen Bainbridge (UCLA), The University of Louisville Pulled Back the Curtain to Expose an Ugly Law School Secret:

Apparently the University of Louisville law school has decided to meet declining enrollments and dwindling funds not by upping their game, but by "branding" itself as a "progressive" institution committed to "social justice." ...

U of L's interim dean has filed trumped up charges against someone who limply objected to the project by encouraging his students to think [for] themselves. Which is obviously heresy in the left-liberal reeducation camp U of L has become.

The real tragedy, however, is that what's happening at U of L is just an express embracing of the leftist hegemony that pervades American legal education. Conservatives, libertarians, people of faith ... heck, anybody to the right of Hillary Clinton are hugely underrepresented in the legal academy and our students who profess such values have learned to hide their light under a bushel lest they be sent off to the Vice Chancellor for Diversity, Tolerance, and Goodness (higher education's version of the Ministry of Love).

Ultimately, of course, this is why U of L's branding effort will fail miserably. Virtually every other law school the country--with very few honorable exceptions--has precisely the same identity, they just don't advertise it. And why should they when everybody knows the dirty little secret, except the parents and state legislators who fund this cuckoo in their nest.

Ann Althouse (Wisconsin), "Apparently the University of Louisville law school has decided to meet declining enrollments and dwindling funds not by upping their game, but by 'branding' itself as a 'progressive' institution committed to 'social justice':

Are "compassion" and "social justice" neutral terms? Are they starkly, intentionally leftist? Maybe it's something in between: They feel neutral to those who are living within a left-wing environment, like fish in water. It's that third option that occurred to me when I read Marcosson's words: "I do not believe it ever occurred to anyone who proposed this at the law school or voted for it that it had any ideological or partisan content at all."

Althouse Poll

Louisville Courier-Journal, U of L Law School Adopts 'Compassion' Decree:

After a fierce and sometimes emotional debate, the faculty of University of Louisville’s Brandeis School of Law on Tuesday voted 26-2 to “champion the cause of compassion.” ...

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January 20, 2016 in Legal Education | Permalink | Comments (6)

Hillary Clinton’s Caymans Tax Dodge Hypocrisy

Hillary 2016New York Post editorial, Hillary Clinton’s Caymans-Tax-Dodge Hypocrisy:

Hillary Clinton last week lunged into her most flagrant fit of hypocrisy yet.

With Bernie Sanders surging, she took new aim at the rich — including their use of tax dodges.

She told MSNBC: “We can go after some of these schemes … the kind of misclassifying of income, trying to make it look like it’s a capital gain, when it’s really ordinary income, going ahead and routing income through the Bahamas or the Cayman Islands or wherever.”

Huh. Bloomberg News reported in 2014 on the Clintons’ use of a prime tax dodge: They put their Chappaqua home into a “residence trust” in 2010. Such trusts can save hundreds of thousands of dollars in estate taxes.

Meanwhile, the Clintons’ family wealth has grown big-time thanks to firms with significant holdings in places like . . . the Caymans.

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January 20, 2016 in Political News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 986

IRS Logo 2Legal Insurrection, Tea Party Class Action Against IRS Abuse May Proceed:

Tea Party groups won a major victory last week, when Judge Susan J. Dlott of the United States District Court for the Southern District of Ohio certified a class of Tea Party organizations that allege the IRS intentionally delayed their applications for preferential tax treatment based on their political viewpoints. ...

Having survived the hazardous class certification step, the Plaintiffs will now get substantive discovery from the IRS and from third parties. ...

Ms. Lerner’s deposition, assuming Plaintiffs are able to take it, will be a blockbuster.  Ms. Lerner, of course, was the senior-most identified IRS official with knowledge and apparent participation in slow-rolling IRS applications.  She would be entitled to assert her 5th Amendment right against self-incrimination, but only for questions that could lead to criminal penalties against her.

A subpoena to appear for deposition can also include a request for documents.  This is called a subpoena duces tecum.  In a very limited set of circumstances, production of documents can raise Fifth Amendment issues, but it is rare and not obviously applicable here.  This means that any email correspondence to or from Ms. Lerner regarding Tea Party groups should be discoverable.

In addition, a jury is entitled to make a negative inference against a party asserting his or her Fifth Amendment rights in a civil suit.  That is, Ms. Lerner or anyone else appearing on behalf of the IRS could assert his or her Fifth Amendment rights, but the jury would be entitled to assume he or she is doing so because the answer would be incriminating.  If the IRS refused to answer the question “did you delay Tea Party applications?” the jury would be entitled to infer that the deponent or witness is refusing to answer the question because the IRS did in fact delay Tea Party applications.

In a criminal case, the jury is forbidden from drawing any negative inference from a witness’s assertion of his or her Fifth Amendment rights.

In short, Ms. Lerner can repeat her despicable performance before Congress, and continue to stonewall the search for what exactly happened at the IRS, why, and on who’s orders, but she may well suffer personal repercussions now that she was able to evade in Congress’s hearings (with the assistance of a complacent and complicit Department of Justice).

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January 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 19, 2016

Talley Presents Corporate Inversions And The Unbundling Of Regulatory Competition Today At NYU

Talley (2016)Eric L. Talley (Columbia) presents Corporate Inversions and the Unbundling of Regulatory Competition, 101 Va. L. Rev. 1649 (2015), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

A sizable number of US public companies have recently executed “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. When appropriately structured, inversions replace American with foreign tax treatment of extraterritorial earnings, often at far lower effective rates. Regulators and politicians have reacted with alarm to the “inversionitis” pandemic, with many championing radical tax reforms. This paper questions the prudence of such extreme reactions, both on practical and on conceptual grounds. Practically, I argue that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally (or with only modest tax reforms). Conceptually, I assess the inversion trend through the lens of regulatory competition theory, in which jurisdictions compete not only in tax policy, but also along other dimensions, such as the quality of their corporate law and governance rules.

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January 19, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oxfam:  Wealth Inequality Is Soaring, Due To Tax Havens

Oxfam, An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can be Stopped:

The global inequality crisis is reaching new extremes. The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. A global network of tax havens further enables the richest individuals to hide $7.6 trillion. The fight against poverty will not be won until the inequality crisis is tackled.

Oxfam 2

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January 19, 2016 in Tax | Permalink | Comments (3)

Hemel Reviews The Hidden Wealth Of Nations

WealthDaniel Hemel (Chicago), What’s the Matter with Luxembourg? (reviewing Gabriel Zucman (UC-Berkeley), Hidden Wealth of Nations: The Scourge of Tax Havens (University of Chicago Press, 2015)):

The Grand Duchy of Luxembourg is rarely the subject of international attention, much less the target of international opprobrium. With fewer than 600,000 inhabitants, it is less populous than the City of Milwaukee. With an area of under 1,000 square miles, it is smaller than the State of Rhode Island. Conquered twice by Germany and thrice by France, it is much more accustomed to the role of victim than villain. In the words of one New York Times writer, “Luxembourg is about as cuddly as countries come.”

But in the view of economist Gabriel Zucman, Luxembourg is the enfant terrible of the European Union. “If we wish to prevent the Irish and Cypriot catastrophes from happening again,” Zucman writes near the end of his new book, “it is essential that Luxembourg go backward” (p. 91). Back to where is not clear, but what is clear is that Zucman wants Luxembourg to change its ways. And if the tiny state refuses to cooperate, Zucman says, Luxembourg should be excluded from the EU and blockaded by its neighbors.

Why does Zucman place so much blame on little Luxembourg? The answer has to do with a statistical quirk—an inconsistency in international economic data. As Zucman notes, Luxembourg’s official statistics show that shares of mutual funds domiciled in the Grand Duchy are worth $3.5 trillion. But when Zucman looks at official data from other countries on their international investment positions, he can account for only $2 trillion of Luxembourgish mutual fund shares recorded as assets. To whom does the remaining $1.5 trillion belong? We don’t know. “This,” says Zucman, “is a big problem” (p. 38).

The big problem has a name: tax evasion. And thanks to Zucman, we can now have a better sense of just how big a problem it is. In 2014, according to Zucman, liabilities on national balance sheets exceeded assets by $6.1 trillion. In other words, $6.1 trillion of the world’s wealth has gone missing. Zucman hypothesizes that this missing $6.1 trillion has been stashed in offshore bank accounts, hiding out of tax authorities’ sight. And while we can’t be sure that’s the case, Zucman persuasively argues that the $6.1 trillion figure is “a reasonable estimate of the amount of offshore portfolios owned by households all over the world” (p. 39). ...

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January 19, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Krugman:  Is Vast Inequality Necessary?

InequalityNew York Times op-ed:  Is Vast Inequality Necessary?, by Paul Krugman:

How rich do we need the rich to be?

That’s not an idle question. It is, arguably, what U.S. politics are substantively about. Liberals want to raise taxes on high incomes and use the proceeds to strengthen the social safety net; conservatives want to do the reverse, claiming that tax-the-rich policies hurt everyone by reducing the incentives to create wealth. ...

Is there, however, a longer-term case in favor of vast inequality? It won’t surprise you to hear that many members of the economic elite believe that there is. It also won’t surprise you to learn that I disagree, that I believe that the economy can flourish with much less concentration of income and wealth at the very top. ...

[T]he real question, in any case, is whether we can redistribute some of the income currently going to the elite few to other purposes without crippling economic progress.

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January 19, 2016 in Tax | Permalink | Comments (3)

Ayres Data On 1L Enrollment Changes, 2011 To 2014

Following up on yesterday's post, Ayres: The U.S. News Rankings Keep Dozens Of Weak Law Schools Afloat, Preventing A 'Culling Of Legal Education's Herd':  Ian has asked me to post this spreadsheet with the underlying data.  Here is a chart of the law schools (ranked and unranked) with the largest percentage contraction in their first-year class from 2011 to 2014:

Ayres

January 19, 2016 in Law School Rankings, Legal Education | Permalink | Comments (2)

Senate Finance Committee Urges Treasury To Use Section 891 To Combat EU Investigations Of American Companies

Senate LogoSenate Finance Committee, Finance Committee Members Push for Fairness in EU State Aid Investigations:

In a letter to Treasury Secretary Jack Lew today, Senate Finance Committee Chairman Orrin Hatch (R-Utah), Ranking Member Ron Wyden (D-Ore.), and Committee members Rob Portman (R-Ohio) and Chuck Schumer (D-N.Y.) warned the European Union’s (EU) state aid investigations could lead to retroactive taxation on multinational enterprises and have an adverse impact on U.S.-based companies.

In recent years, the EU has launched a series of formal investigations into its member countries’ tax treatment of various multinational companies.

The Senate Finance Committee has examined the potential impact these investigation could have on U.S. firms. Today, the Senators urged Secretary Lew to increase efforts to caution the EU Commission to avoid imposing retroactive results that are inconsistent with international tax standards.

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January 19, 2016 in Tax | Permalink | Comments (1)

Borman:  Tenure-Track, 405(c) And Legal Writing Faculty — Promotion Standards, Security Of Position, And Gender

Deborah Borman (Northwestern), The Inifinte Loop (Returning to AALS):

[L]aw faculty members who are employed on an ABA 405(c) contract have increasingly been subject to requirements for promotion that rival those of a tenured faculty member. In other words, the obligations for teaching, service, and scholarship are relatively equivalent for tenure track and 405(c) track faculty. As a result, ABA accreditation standard 405(c) rewards these faculty members with “tenure-like” security of position.

Notwithstanding the above, many non-tenure track/contract faculty members have found their positions to be unstable. Some faculty members have been released from positions that are defined as “tenure-like,” after receiving a contract that is "presumptively-renewable." Others have had contractual provisions changed or teaching obligations increased significantly with no additional compensation. As a result, faculty members who have served for many years and earned security of position by satisfying tenure-like standards are denied the proposed reassurance of their contractual provisions. Even more disturbingly, the majority of law faculty members who hold these positions are female.

Screenshot 2016-01-15 10.19.02

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January 19, 2016 in Legal Education | Permalink | Comments (1)

Merritt:  'There’s Something Deeply Sad' About The AALS Hiring Unpaid Law Student Interns

AALS (2017)Deborah Jones Merritt (Ohio State), AALS Internships:

The Association of American Law Schools wants to employ several law students, who will “work on research and writing projects related to [the Association’s] mission of improving legal education.” In particular, students will have the opportunity to work on projects related to “the value of a U.S. legal education” and “financial aid for law students.” There’s just one catch: These are unpaid internships.

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January 19, 2016 in Legal Education | Permalink | Comments (7)

Federal Judge Dismisses Texas Wesleyan Law Grads' Lawsuit Against Texas A&M Over Their Alumni Status

Texas A&M Law Logo (2016)Following up on my previous posts (links below):  Courthouse News Service, Texas A&M Doesn't Owe Law Grads Recognition:

Law school graduates claiming they were disavowed as alumni after Texas A&M bought their alma mater didn't show that their rights were violated, a federal judge ruled.

On Thursday, U.S. District Judge John McBryde dismissed a proposed class action lawsuit filed by lead plaintiff Kristin Brown, a graduate of Texas Wesleyan University School of Law, or TWU Law [Order; Final Judgment].

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January 19, 2016 in Legal Education | Permalink | Comments (0)

Pepperdine Dean Deanell Tacha To Be Feted As 2015 Legal Person Of The Year

Tacha (2015)Deanell Reece Tacha, Dean of Pepperdine Law School, has been named one of three 2015 Persons of the Year by the Metropolitan News-Enterprise, a Los Angeles daily legal newspaper.  She will be feted at the 28th annual black-tie dinner at the California Club on Jan. 29.  Check out the wonderful profile published by the newspaper, From Kansas to Malibu, Federal Judge-Turned-Law School Dean Has ‘Done It All’:

It’s 1,241.8 miles from Goodland, Kansas to Malibu.

But distance alone hardly describes the route Deanell Reece Tacha has taken. The prairie native—she still has a home in Kansas—has probably had as varied a career as any lawyer in America.

Can you name anyone else who has been a small-town sole practitioner, an associate at one of the country’s largest firms, a law professor and dean, and a federal appellate judge in between those two?

Not to mention being a 2015 MetNews Person of the Year.

It’s a story of determination, drive, and good timing. And like many such stories, it begins in a small town in the American Midwest.

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January 19, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 985

IRS Logo 2Investor's Business Daily editorial, IRS Scandal: It's The Tax Collector's Turn To Be A Defendant:

Justice:  It's not often that the victims of IRS abuse find satisfaction, but the Tea Party groups mistreated by the tax collector will get a shot. Maybe next will be an audit of the IRS — which apparently hasn't changed its ways.

On Tuesday, Day 978 of the unresolved IRS scandal, a federal judge granted class-action status to as many as 300 conservative groups that have been affected by the agency's practice of unduly scrutinizing small-government organizations that sought tax-exempt status but which the IRS saw as dangerous dissidents.

U.S. District Court Judge Susan Dlott's ruling also opens the door for other groups who believe they have been harmed by the IRS to join the suit. We hope the piling on is heavy.

Maybe legal trouble from the suit will teach the IRS, because it sure seems it hasn't learned so far. Americans for Tax Reform, citing Government Accountability Office reports, suggested Wednesday that the "IRS may still be targeting conservative groups."

Seems the culture that allowed the IRS to target right-of-center groups for political reasons — effectively rendering them inoperative — has never been fixed, despite promises from the president himself.

"The control deficiencies increase the risk of selecting organizations for audit in an unfair manner — for example, based on an organization's religious, educational, political or other views," says the GAO.

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January 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Holiday Weekend Roundup

Monday, January 18, 2016

Ayres:  The U.S. News Rankings Keep Dozens Of Weak Law Schools Afloat, Preventing A 'Culling Of Legal Education's Herd'

2016 U.S. News RankingsIan Ayres (Yale), Lower-Ranked Law Schools Should Be Thanking U.S. News:

Law professors love to hate on the U.S. News law school rankings. Lower-ranked schools in particular find it very difficult competing for an important segment of applicants who are intent on simply going to the highest ranked school possible.

But these rankings may have been responsible for keeping dozens of lower and unranked law schools in business. ...

The top 50 schools with the highest U.S. News rankings saw their enrollments drop by about 8%. Why wouldn’t highly ranked schools be willing to reduce their admission standards to keep their classes filled?

One important reason is the fear of falling in future U.S. News rankings. A school that dramatically reduced its admission standards would fall in the rankings and have a harder time recruiting applicants in future years (and might have poor bar results which would lead to a further fall in the rankings). ... [A]ny school dropping credentials in order to boost class size would have to worry that its peers would instead invest (by running a deficit) in maintaining students’ entering credentials – and as a result would shoot by them in the U.S. News rankings. ...

If the top 150 ranked schools had maintained their 2011 enrollment class size there would have likely been 5828 fewer students for the 53 unranked law schools to admit. This would have forced the unranked schools as a group to shrink their first year classes by 57.4%. The unranked schools had already seen their first-year enrollment drop by 29.5% (4255) so the loss of 5828 more students would have counterfactually meant a total contraction of 70%. ...

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January 18, 2016 in Law School Rankings, Legal Education | Permalink | Comments (4)

Martin Luther King, Jr. And The IRS

In honor of Martin Luther King, Jr. Day:  Tallahassee Democrat, Dr. Martin Luther King Jr. and the IRS:

This past year, much ado was made about the so-called “IRS-Gate” and concerns that the Obama administration may have used the agency to target Tea Party and other right wing groups. ... [W]hat often is not stated during the Martin Luther King Holiday weekend is that King, early in his leadership of the Southern Christian Leadership Conference (SCLC), was routinely subjected to IRS audits of his individual accounts, SCLC accounts as well as accounts of his lawyers, first starting during the administration of President Dwight Eisenhower and continuing through the Kennedy administration. ...

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January 18, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Louisville Prof:  Law School Has Embraced A 'Partisan Liberal Agenda', With Conservatives Treated As 'Outsiders'

LouisvilleFollowing up on yesterday's post, Louisville Prof, Student Call Criticism Of 'Nation's First Compassionate Law School' Brand A 'Tired Cliché':  Louisville Courier-Journal op-eds:

U of L Law Professor: 'Veered to Partisan Agenda', by Russell Weaver (Louisville):

In a recent commentary, one of my colleagues attempted to portray the law school’s decision to embrace “social justice” and “compassion” as benign, and having nothing to do with a “liberal agenda.” He viewed these concepts as essential in a modern society.

I agree with the idea that compassion is a worthwhile and understandable objective. Indeed, it is an essential part of life. If the movement toward a “compassionate organization” were nothing more than that, who could object? However, to suggest that the law school has not adopted a partisan social agenda, and that it has not labeled non-liberals “outsiders,” is (at the very least) wrong and misleading.

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January 18, 2016 in Legal Education | Permalink | Comments (3)

NY Times:  Should Harvard Be Free?

Harvard (2016)New York Times, How Some Would Level the Playing Field: Free Harvard Degrees:

Should Harvard be free?

That is the provocative question posed by a slate of candidates running for the Board of Overseers at Harvard, which helps set strategy for the university. They say Harvard makes so much money from its $37.6 billion endowment that it should stop charging tuition to undergraduates.

But they have tied the notion to another, equally provocative question: Does Harvard shortchange Asian-Americans in admissions?

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January 18, 2016 in Legal Education | Permalink | Comments (10)

The IRS Scandal, Day 984

IRS Logo 2From reader Henry Schaffer:

I was going to suggest capping it at 1,000 days.

Until I read Day 983.

Regardless of how the suit turns out, covering it, and similar ones, provides relevant material I'm unlikely to get from other sources. Since legal procedures advance slowly — it certainly will be well over 1,000 days till there is nothing more to report. 10,000 days?

For more on my continuation of coverage of the IRS Scandal, see here, here, here, and here.

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January 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, January 17, 2016

Louisville Prof, Student Call Criticism Of 'Nation's First Compassionate Law School' Brand A 'Tired Cliché'

LouisvilleFollowing up on last week's post, Louisville Prof: 'Nation's First Compassionate Law School' Brand Betrays Brandeis’s Nonpartisan Vision:  Louisville Courier-Journal op-eds: 

Samuel A, Marcosson (Louisville), Defending U of L Law School's Compassion Project:

As I approach the end of my 20th year as a law teacher, I should no longer be surprised that law professors can find a way to complain about things as seemingly pleasant and uncontroversial as blue skies and children’s laughter.  Or, in this instance, compassion.

Nevertheless, I found myself not only surprised, but deeply disappointed and frankly embarrassed that my colleague, Professor Luke Milligan, wrote a misleading opinion column in this space on Jan. 13, objecting to the proposal to have the Brandeis School of Law partner with the city, and many of our leading corporate and civic institutions, as part of the Compassionate Louisville campaign.  The views Professor Milligan expressed completely misrepresented both the nature of the Compassionate Louisville campaign and the law school’s commitment to it.

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January 17, 2016 in Legal Education | Permalink | Comments (1)

The Top 5 Tax Paper Downloads

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

  1. [319 Downloads]  The Three Causes of Inversions: Reflections on Pfizer/Allergan and Notice 2015-79, by Reuven Avi-Yonah (Michigan)
  2. [266 Downloads]  Conservation Easements and the Valuation Conundrum, by Nancy McLaughlin (Utah)
  3. [162 Downloads]  Transfer Pricing Challenges in the Cloud, by Orly Mazur (SMU)
  4. [125 Downloads]  Are Corporate Inversions Good for Shareholders?, by Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin)
  5. [111 Downloads]  Inversions and Competitiveness: Reflections in the Wake of Pfizer/Allergan, by Reuven Avi-Yonah (Michigan) & Omri Marian (UC-Irvine)

January 17, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

How Studying Judaism Fits Into A Christian University

Jewish Journal, How Studying Judaism Fits Into a Christian University:

HelfandThe first thing any visitor to Pepperdine University’s Malibu campus is likely to see is a prominent, thin, 125-foot stucco tower inlaid with a cross. Probably not surprising for a school founded in the tradition of the Church of Christ.

Jews make up less than half a percent of undergraduates there, so when Michael Helfand, an Orthodox Jew, took a job on the law school faculty in 2010, he didn’t expect his religion to become part of his job description. Then Helfand became associate director of the Diane and Guilford Glazer Institute for Jewish Studies.

“One of the most exciting things I get to do at Pepperdine is trying to think about how you introduce a primarily Christian campus to the Jewish story,” he told the Journal. “I would say that’s really, if you want to boil it down, what the Glazer Institute is about.”

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January 17, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 983

IRS Logo 2Press Release, U.S. District Court Certifies Class Action Against the IRS by Tea Party Groups:

Graves Garrett LLC is pleased to announce that the U.S. District Court for the Southern District of Ohio has certified the class action brought by their clients against the Internal Revenue Service. The plaintiff Tea Party groups sued the IRS for violating their First Amendment rights by discriminating and retaliating against them during the tax-exempt application process. The groups also seek damages against the IRS for violating a taxpayer privacy statute. With certification of the class, the representative groups now assert claims on behalf of at least 200 other groups that the IRS targeted.

“This decision represents a significant step forward for obtaining relief for Tea Party groups that were identified, segregated, and harassed by the IRS solely because of their viewpoints,” said Edward Greim, who with Todd Graves and Dane Martin served as counsel. “It is also the culmination of nearly two years of class discovery into the scope and harm of the IRS’s conduct, including ten sworn depositions of the IRS and its agents in Washington, D.C. and Cincinnati, Ohio, and the IRS’s production of thousands of pages of documents.” In briefs, the Tea Party groups cited to evidence showing that the IRS’s conduct was not benign, but instead an orchestrated effort designed to hinder the effectiveness of Tea Party groups, prevent their access to the courts, and forcefully disclose their private donor information.

The lawsuit, NorCal Tea Party Patriots v. Internal Revenue Service, was the first lawsuit filed against the IRS relating to its handling of applications for tax-exemption by Tea Party groups. The case will now proceed to merits discovery and trial concerning liability and damages.

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January 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, January 16, 2016

This Week's Ten Most Popular TaxProf Blog Posts

IRS Releases Final 2015 Filing Season Statistics

The IRS has released final 2015 filing season statistics:

IRS

January 16, 2016 in IRS News, Tax | Permalink | Comments (1)

Law School Parody Ad Causes YouTube Sensation

Australasian Lawyer, Law School Parody Ad Causes YouTube Sensation:

The [real] ad tells the remarkable story of Deng Adut is Sudanese refugee who was taken from his mother and forced to fight with Ethiopian rebels, escaped to Western Sydney, taught himself English and lived in a car, eventually managing to complete a UWS law degree, before becoming a refugee lawyer.  

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January 16, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 982

IRS Logo 2IRS Statement:

The IRS stresses that audits of tax returns are based on the information contained on the taxpayer’s return and the underlying tax law – nothing else. Politics play no factor in audit selection. There is nothing in the GAO reports that contradict that statement. GAO did not identify any instances where the selection of a case was considered inappropriate or unfair. The audit process is handled by career, non-partisan civil servants, and we have processes in place to safeguard the exam process.

We generally agree with the recommendations in the GAO report and will take a number of steps to further improve our processes. The IRS has procedures in place that adhere to internal control standards, which help ensure fairness and integrity in the return selection process. No individual can control which tax returns are selected for audit. As required by law, we have a number of safeguards in place to restrict access to our systems to only authorized users. We emphasize the importance of fairness and integrity to fulfilling our responsibilities as the nation’s revenue agency.

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January 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, January 15, 2016

Apple May Owe $8 Billion In European Taxes From Use Of Irish Subsidiaries To Shelter Profits

Apple LogoBloomberg, Apple May Be on Hook for $8 Billion in Taxes in Europe Probe:

Apple may be facing a hefty tax bill in Europe.

The world’s largest company could owe more than $8 billion in back taxes as a result of a European Commission investigation into its tax policies, according to an analysis by Matt Larson of Bloomberg Intelligence. Apple, which has said it will appeal an adverse ruling, is being scrutinized by regulators who have accused the iPhone maker of using subsidiaries in Ireland to avoid paying taxes on revenue generated outside the U.S.

The probe dates back to 2014 and a decision could come as soon as March.

The European Commission contends that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favorable accounting methods. Apple calculates its tax bill using low operating costs, a move that dramatically decreases what the company pays to the Irish government. While Apple generates about 55 percent of its revenue outside the U.S., its foreign tax rate is about 1.8 percent. If the Commission decides to enforce a tougher accounting standard, Apple may owe taxes at a 12.5 percent rate, on $64.1 billion in profit generated from 2004 to 2012, according to Larson, a litigation analyst for Bloomberg Intelligence.

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January 15, 2016 in Tax | Permalink | Comments (2)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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January 15, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Cumberland Seeks To Hire A Visiting Tax Prof

CumberlandSamford University Cumberland School of Law seeks to hire a visiting tax professor for the 2016-17 academic year:

We are seeking candidates with practice or teaching experience in the area of tax law. All applicants must have a strong academic record and be committed to outstanding teaching. We particularly welcome applications from persons of diverse background. Salary and rank are negotiable based on qualifications.

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January 15, 2016 in Legal Education | Permalink | Comments (0)