TaxProf Blog

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

Friday, April 27, 2018

Tax Policy In The Trump Administration

Did Paul Ryan Fire The House Chaplain For Tax Cut Blasphemy?

House ChaplainNew York Magazine, Paul Ryan Allegedly Ousted House Chaplain for Disrespecting His Tax Cuts:

Under the Trump administration, we’ve learned that Paul Ryan is willing to shrug off racist remarks from the president, and has no problem enabling attacks on the rule of law. But one thing that will not be tolerated in Ryan’s House is a man of God suggesting that tax cuts should be fair to all Americans.

When Ryan announced earlier this month that House Chaplain Patrick Conroy would soon step down, he gave no explanation for his exit, and many assumed he was leaving voluntarily. But anger erupted on the Hill in recent days when the Jesuit priest told lawmakers that Ryan was pushing him out, and he didn’t know exactly why. ...

On Thursday Democratic sources pointed to a potential explanation: a prayer Conroy offered on November 6, 2017, when the House was on the verge of passing the GOP tax bill.

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April 27, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Grewal: Scott Pruitt’s Security Detail — A Tax Problem?

Following up on my previous post, Scott Pruitt’s Travel Could Leave Him With A Big Tax Bill:  Andy Grewal (Iowa), Scott Pruitt’s Security Detail–A Tax Problem?:

Over at PostEverything, Professors Daniel Hemel and David Herzig argue that Scott Pruitt, the administrator of the Environmental Protection Agency, “could be in tax trouble on top of his ethical and political problems.” Hemel & Herzig, Scott Pruitt’s travel could leave him with a big tax bill (Apr. 16, 2018). The authors note that Pruitt’s employer (the federal government) provides him with an extensive security detail, and that employees who receive such details must ordinarily recognize income for this fringe benefit. See Section 61(a)(1).

Hemel and Herzig acknowledge that Section 132(a)(3) excludes some working condition fringes from gross income, but they do not believe Pruitt’s security detail so qualifies.[FN1] Under the relevant regulations, employees may exclude security detail services from income only if a “bona fide business-oriented security concern exists,” such as those raised by death or kidnapping threats. See Treas. Reg. §§ 1.132-5(m)(2)(i) & (ii). If that threshold standard is satisfied, then a further “overall security program” requirement applies. According to Hemel and Herzig, this requirement will be satisfied only if the program protects “the employee on a 24-hour basis” and the employer relies on an “independent security study” for an employee. They then posit that “Pruitt has not obtained the independent study required under IRS rules,” and that some portion of his security detail “would appear to be income on which the EPA administrator owes tax.”

The authors misstate the relevant law, however. The security study rules operate as a safe harbor to the “overall security program” requirement, and do not establish an independent test. That is, the provision of an independent study is just one way that a security arrangement may comply with the regulations. Thus, Hemel and Herzig err when they rely on the purported absence of a security study to establish Pruitt’s failure to comply with the regulations. ...

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April 27, 2018 in Tax | Permalink | Comments (5)

Tax Prof Nancy Shurtz To Return To Teach At Oregon Law School In Fall 2018 After Controversy Over Her 2016 Halloween Costume

ShurtzFollowing up on my previous post (links below):  Daily Emerald, Law Professor Nancy Shurtz to Return After Sabbatical:

University of Oregon law professor Nancy Shurtz, who was at the center of controversy in fall 2016 after a photo of her in black makeup at her Halloween party circulated online, will return to campus in July, following her one-year sabbatical in Florida.

Shurtz said after the incident that her costume was inspired by the memoir of a Black doctor dealing with racism in the U.S., and she intended for the costume to “provoke a thoughtful discussion on racism in our society.” Many in the UO community criticized her costume for including blackface makeup; over 1,200 UO students signed a petition calling on her to resign and 23 of Shurtz’s fellow faculty members penned an open letter calling on her to resign as well. ...

Following the incident, the university launched an investigation that found Shurtz guilty of violating UO’s anti-discrimination policies. As a result, Shurtz was placed on administrative leave. Shurtz will return to campus in July and teach classes in the fall.

“My heart is racing,” Shurtz said in an email interview with the Emerald. “Is the question am I ‘excited’ or ‘terrified’? This leave and sabbatical has been a long one, so I have missed being home and am eager to get back to the great Northwest, my home of 38 years.”

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April 27, 2018 in Legal Education, Tax | Permalink | Comments (1)

Finland Ends Basic Income Experiment After Two Years

BasicThe Guardian, Finland to End Basic Income Trial After Two Years:

Europe’s first national government-backed experiment in giving citizens free cash will end next year after Finland decided not to extend its widely publicised basic income trial and to explore alternative welfare schemes instead.

Since January 2017, a random sample of 2,000 unemployed people aged 25 to 58 have been paid a monthly €560 (£475), with no requirement to seek or accept employment. Any recipients who took a job continued to receive the same amount.

The government has turned down a request for extra funding from Kela, the Finnish social security agency, to expand the two-year pilot to a group of employees this year, and said payments to current participants will end next January.

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April 27, 2018 in Tax | Permalink | Comments (0)

Judge Dismisses Most Of Charlotte Law Prof's Whistleblower Lawsuit Because Claims Had Been Publicized On Law Prof Blogs, But Blasts InfiLaw's Business Model

Charlotte Logo (2016)Daily Business Review, For-Profit Law School Whistleblower Suit Survives—Barely:

A federal judge has kept a whistleblower lawsuit against the for-profit law school consortium InfiLaw Corp. alive, albeit on life support.

Judge Roy Dalton Jr. of the U.S. District Court for the Middle District of Florida on Monday granted InfiLaw’s motion to dismiss the qui tam suit filed in 2016 by former Charlotte School of Law professor Barbara Bernier, who alleges the school and its corporate owners defrauded the federal government of more than $285 million by admitting unqualified students in order to pocket their government-issued loans. Dalton ruled that InfiLaw’s myriad problems had already been publicly disclosed in news stories and posts written on law faculty blogs before Bernier file her suit.

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April 27, 2018 in Legal Education | Permalink | Comments (1)

Thursday, April 26, 2018

ABA: Western Michigan-Cooley Law School Is Now In Compliance With Accreditation Standards

Thomas Cooley Logo (2017)Following up on my previous posts (links below):  ABA Journal, Cooley Law Back in Compliance, ABA Accreditation Committee Says:

Western Michigan University Thomas M. Cooley Law School has come into compliance with an admissions standard that requires accredited schools to only admit candidates who appear capable of finishing law school and gaining admission to a state bar, according to public notice recently posted by the ABA’s Section of Legal Education and Admissions to the Bar.

The section’s council in November 2017 affirmed an accreditation committee finding that Cooley was not in compliance with Standard 501(b), which focuses on admissions, and Interpretation 501-1, which discusses factors to consider in admissions.

The school filed a temporary restraining order motion on Nov. 14 to prevent the council from making the letter about the notice public. The motion was rejected in the U.S. District Court for the Eastern District of Michigan. A lawsuit Cooley filed against the ABA, alleging that posting the letter violated the Higher Education Act and common-law due process, is pending. On April 23, U.S. District Court Judge Arthur J. Tarnow set a May 1 status conference for the lawsuit, according to court notices published on PacerPro.

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April 26, 2018 in Legal Education | Permalink | Comments (0)

Rich States, Poor States

RSPSArthur B. Laffer, Stephen Moore & Jonathan Williams, Rich States, Poor States (11th ed. 2018):

The 11th Edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index reveals a pro-growth trend across the nation for 2018.

The 11th edition of Rich States, Poor States is characterized by great movement in state economic performance and outlook as a result of federal tax reform and the resulting actions of certain states. In the past five years alone, 30 states have significantly reduced their tax burdens. Those that fail to adapt to this competitive environment can fall behind by simply standing still. The facts remain clear that pro-growth policies are working and there is a clear trend in favor of market-oriented reforms.

Rich States, Poor States examines the latest trends in state economic growth. The data ranks the 2018 economic outlook of states using 15 equally weighted policy variables, including various tax rates, regulatory burdens and labor policies. The eleventh edition examines trends over the last few decades that have helped or hurt states’ economies.

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April 26, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Concord Law School Dean Seeks Greater Credibility After Acquisition By Purdue University

Concord PurdueFollowing up on my previous post, Purdue Is No Longer The Only Big Ten University Without A Law School:  ABA Journal, Concord Law Dean Sees Benefits With Acquisition by Purdue University:

Purdue University’s transaction to acquire Kaplan University, including Concord Law School, is complete, and Martin Pritikin says that he doesn’t expect any changes in day-to-day operations at his online law school, now known as Concord Law School at Purdue University Global.

But he’d like to get more credibility with the Purdue name. The deal, finalized March 22, brought 30,000 students from Kaplan University, according to a Purdue press release.

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April 26, 2018 in Legal Education | Permalink | Comments (0)

Barker: Tax, Facts, And State Law

William B. Barker (Penn State), The Disconnect Between Tax Concepts and the World of Fact: State Law as the Gatekeeper, 57 Washburn L.J. 129 (2018):

Because private law establishes a system that makes economic enterprise possible, one ordinarily can presume that taxpayers chose a particular legal form in order to achieve fairly well-understood economic effects. Where legislatures decide to impose different tax consequences on the basis of different economic consequences, it is logical that the legislature would often use a shorthand reference to private law categories due to their usual economic consequences. Sometimes, however, private law can be out of sync with important aspects of economic and social conditions that may be critical to the goals of taxation. After all, private law assessment is only one perspective on human activity. On its own, private law can hardly provide comprehensive knowledge of the full richness of human activity which may be necessary for fair and equitable taxation. Tax interpretation has other non-legal sources of knowledge available which can complete the picture more in accord with policies and goals of tax incidence. In part, these differences in private and tax law’s objectives can be seen by observing how the interpretation and application of tax concepts to the facts of the taxpayer’s situation demonstrates that tax law shifts between accurate and inaccurate depictions of economic conditions.

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April 26, 2018 in Scholarship, Tax | Permalink | Comments (1)

GOP Tax Reform Law Continues To Sink In Polls

Real Clear Politics Poll Average, Trump, Republicans' Tax Reform Law:

RCP

April 26, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Oh & Zolt: Wealth Tax Add-Ons — An Alternative To Comprehensive Wealth Taxes

Jason Oh (UCLA) & Eric M. Zolt (UCLA), Wealth Tax Add-Ons: An Alternative to Comprehensive Wealth Taxes, 158 Tax Notes 1613 (Mar. 19, 2018):

Comprehensive wealth taxes offer the possibility of reducing inequality while raising revenue. However, implementing comprehensive wealth taxes can be difficult, especially in emerging economies where administrative and political limitations are often substantial. This Article offers an alternative set of instruments — wealth tax add-ons — that countries can use to achieve many of the goals of a comprehensive wealth tax. Rather than trying to tax all wealth with a new tax instrument, add-ons would target and tax particular forms of wealth and be attached to existing tax systems. This Article focuses on three different types of add-ons: (1) a surtax on real property for the property tax system, (2) a minimum tax for closely-held businesses for the corporate tax system, and (3) a Netherlands-style presumptive tax for financial assets for the personal income tax system. Add-ons can improve the taxation of disparate forms of wealth in ways that are difficult to incorporate into a single instrument. For example, we argue that wealth in the form of closely-held businesses is best taxed at the entity level to avoid the problems of attribution and valuing minority interests — challenges that would face any comprehensive wealth tax applied at the individual level.

This Article presents an analytical framework for how particular countries might pick and tailor these wealth tax add-ons.

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April 26, 2018 in Scholarship, Tax | Permalink | Comments (0)

Boston's Supply Of Lawyers Falls Far Short Of Firms' Heavy Demand

Boston Business Journal, Boston's Supply of Lawyers Falls Far Short of Firms' Heavy Demand:

Demand for legal talent may never have been higher in Boston — and it's far outpacing the number of available attorneys, according to managing partners and legal recruiters.

April 26, 2018 in Legal Education | Permalink | Comments (3)

Liscow: Distributional Impacts From School Finance Litigation

Zachary D. Liscow (Yale), Are Court Orders Sticky? Evidence on Distributional Impacts from School Finance Litigation, 15 J. Empirical Legal Stud. 4 (2018):

Whether welfare analysis of legal rule changes should evaluate distributional outcomes as well as efficiency depends crucially on how much their distributional impacts stick. That is, do court mandates ultimately affect the distribution of taxes and spending or do legislatures offset the distributional consequences of those court orders with other changes? Little is known about this question. To offer insight into it, I use an event study methodology to show how state revenues and expenditures respond to court orders to increase funding for schools.

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April 26, 2018 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, April 25, 2018

Brooks Reviews Tillotson's The Citizen-Taxpayer And The Rise Of Canadian Democracy

Jotwell (Tax) (2016)Kim Brooks (Schulich School of Law), Canadians Can Be Unruly, See For Yourself (JOTWELL) (reviewing Shirley Tillotson (Dalhousie University), Give and Take: The Citizen-Taxpayer and the Rise of Canadian Democracy (2017)):

Some of my favourite tax scholarship steps outside technical detail and speaks to how tax systems promote or are informed by higher-order values. So, I welcome Shirley Tillotson’s magnificent and richly researched new book on the era between the enactment of Canada’s federal income tax law in 1917 and its heady 1960s reform period, which saw taxpayer-citizens actively debating the contours of democracy through the vehicle of tax reform. At its heart, the book is about what we can learn about democracy from our engagement with taxation and how our democracy can be enhanced when we find ourselves talking about taxes over coffee. ...

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April 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

Maynard: The NCAA Infringes On The Freedom Of Families

NCAA LogoGoldburn P. Maynard Jr. (Louisville), They’re Watching You: How the NCAA Infringes on the Freedom of Families, 2018 Wis. L. Rev. Forward 1:

The NCAA’s surveillance of the family and enforcement of its rules amounts to a consumption restraint on the families of talented NCAA athletes. In order to keep its cartel in place, the NCAA must ensure that not only an athlete but anyone in his family does not extract any value from his talent. These rules disproportionately disadvantage poor individuals of color.

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April 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Top Feeder Colleges For Law School Applicants

AccessLex, Law School Applicants by Degrees: A Per Capita Analysis of the Top Feeder Schools:

In this research publication, AccessLex Institute explores "applicant concentration" at the top 240 feeder schools, as published in the Law School Admission Council's (LSAC) Top 240 Feeder Schools for ABA Applicants list. The resulting "per-capita" figures help contextualize the feeder school trends.

Table 2

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April 25, 2018 in Legal Education | Permalink | Comments (1)

Browde: A Consumer Protection Rationale For Regulation Of Tax Return Preparers

Pippa Browde (Montana), A Consumer Protection Rationale for Regulation of Tax Return Preparers, 101 Marq. L. Rev. 527 (2017):

Of the 150 million tax returns filed each year, approximately fifty-six percent are prepared with the help ofa paid preparer. Although state-licensed lawyers and certified public accountants may prepare tax returns for clients, the vast majority ofpaid tax return preparers are completely unregulated. For low-income taxpayers who are eligible for refundable tax credits, these unregulated tax return preparers do more than just fill out tax returns. Return preparers who serve low-income taxpayers often also market consumer credit products, such as refund anticipation loans or checks.

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April 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

Muller: Visualizing Law School Employment Outcomes In California, DC-Maryland-Virginia, Illinois, New York, And Ohio

Following up on my previous post, Visualizing Law School Employment Outcomes In Florida, Pennsylvania, And Texas:  Derek Muller (Pepperdine) has published several additional posts (with great charts and tables) in his annual series visualizing employment outcomes of law school graduates in various states:  CaliforniaDC-Maryland-Virginia, Illinois, New York, and Ohio.

In California, the overall placement rate soared to 72%, with of 20 of the 21 law schools reporting increases (Stanford reported the only decline: -0.1%).  Pepperdine was one of three California law schools with a double-digit (10%) increase:

CA

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April 25, 2018 in Legal Education | Permalink | Comments (0)

Graetz: The 2017 Tax Cuts — How Polarized Politics Produced Precarious Policy

Michael J. Graetz (Columbia), The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy:

In this lecture, Michael Graetz contends that the new tax law is unstable. This is hardly surprising because it was rushed through Congress in record time with only Republican votes and no ability for public comments on its changes. The new rules create significant new differences in tax burdens based on what kind of business is conducted, where goods and services are bought and sold, whether individual workers are employees or independent contractors, and where people live.

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April 25, 2018 in Scholarship, Tax | Permalink | Comments (1)

Why Florida International Dominates The Florida Bar Exam

FIU LogoDaily Business Review, Why FIU Dominates the Florida Bar Exam:

When it comes to earning the top spot for performance on the Florida Bar exam, the secret’s in the hands-on training.

At least that’s how Florida International University acting law dean Tawia B. Ansah explains FIU’s No. 1 ranking, outpacing all others as the school with the highest percentage of first-time candidates succeeding on the bar exam.

“You can take really good bar-prep courses … but if the leadup to that isn’t sufficient, it’s going to show up in the results,” said Ansah, a Columbia University graduate who teaches contracts, international business transactions, conflict of laws, professional responsibility and jurisprudence/legal theory. “I think our students are doing well on the bar because they’re learning how to write well and communicate well, and they’re learning communication skills throughout the program.”

Eighty-five percent of FIU’s first-time test takers passed the February exam, according to the results the Florida Board of Bar Examiners released Monday. Last year, 87.8 percent passed the July exam, which has a much larger pool.

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April 25, 2018 in Legal Education | Permalink | Comments (2)

Recoupling Founders With Their IP: Improving Innovation By Rationalizing I.R.C. Section 351

Mira Ganor (Texas), Recoupling Founders with Their IP – Improving Innovation by Rationalizing IRC Section 351 (Licensing vs. Assignment of Founders’ IP in VC Backed Start-Ups):

This Article questions the conventional wisdom of the U.S. practice of early assignment of founder’s intellectual property to the venture capital backed startup-company. The Article shows that certain U.S. tax rules motivate founders to rush to assign their individually owned intellectual property to the startup-company rather than license it to the company. This tax enhanced distortion of the founders’ choice may have socially inefficient effects that under certain circumstances hinder innovation by decoupling the intellectual property from those who are most apt to exploit it. Thus, this Article offers for consideration, proposals to reform the current tax treatment of intellectual property transfers.

The proposed reform will level the playing field from a tax perspective and prevent distorting the founders’ choice between intellectual property assignment and intellectual property licensing.

April 25, 2018 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 24, 2018

Schön Presents Taxation And Democracy Today At NYU

SchoenWolfgang Schön (Max Planck Institute) presents Taxation and Democracy at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Political economy assumes that taxation and democracy interact beneficially when there exists “congruence” or “equivalence” among those who vote on the tax, those who pay the tax, and those who benefit from the tax. Yet this only holds true when we look at the community of taxpayers as an aggregate, not at the position of the individual taxpayer. Individuals might regard democratic decision-making as a tool for the majority to exploit the minority. They might also perceive powerful special interest groups to extract preferential tax treatment to the detriment of other constituencies.

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April 24, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Slemrod Presents U.S. Enforcement Against Evasive Foreign Accounts Today At Georgetown

Slemrod (2017)Joel Slemrod (Michigan) presents Taxing Hidden Wealth: The Consequences of U.S. Enforcement Initiatives of Evasive Foreign Accounts at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by Lilian Faulhaber and Itai Grinberg:

In 2008, the IRS initiated efforts to curb the use of offshore accounts to evade taxes. This paper uses administrative microdata to examine the impact of the enforcement efforts on taxpayers’ reporting of offshore accounts and income. Enforcement caused approximately 60,000 individuals to disclose offshore accounts with a combined value of around $120 billion. Most disclosures happened outside offshore voluntary disclosure programs by individuals who never admitted prior noncompliance. The disclosed accounts were concentrated in countries whose institutions facilitate tax evasion. The enforcement-driven disclosures increased annual reported capital income by $2.5-$4 billion corresponding to $0.7-$1.0 billion in additional tax revenue.

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April 24, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Mystery Of The Dead Law School Dean

DeadMark S. Silver, Res Ipsa Loquitor: The Mystery of the Dead Law School Dean (2017):

Not everybody is accepted to Yale Law School. David Balfour will attend LUNY Law School where he will have to contend with the oddities of jurisprudence and a harrowing academic load, all the while trying to solve the Mystery of the Dead Law School Dean. David and his law school friends will negotiate a new terrain as 1L students on a journey to become lawyers after passing the bar.

About the author:

I am a New York State Licensed Clinical Social Worker. I have a Combined Specialist Bachelor of Arts degree in History and Political Science from the University of Toronto and a Master of Arts degree in Political Science from the University of Western Ontario. I have also completed a Master of Social Work at the University of Toronto, a post-graduate Certificate Program in Family Therapy at Smith College, and a Doctor of Psychology at the Southern California University for Professional Studies.

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April 24, 2018 in Book Club, Legal Education | Permalink | Comments (1)

Hungerford: History Shows That GOP's Corporate Tax Cuts Are Unlikely To Spur Economic Growth

Thomas L. Hungerford, Latest Tax Cuts: History Belies Promise of Growth:

One provision of The Tax Cuts and Jobs Act (TCJA; P.L. 115–97), enacted on December 22, 2017, dramatically reduces the statutory corporate tax rate from 35 percent to 21 percent. It is projected to cost the U.S. Treasury over $1.3 trillion over the next 10 years. Given widespread Republican concerns about federal budget deficits just eight years ago, it seems odd to call for tax changes that lower rates, reduce tax revenue, and increase deficits. The putative impetus for these calls is the belief that the statutory corporate income tax rate is too high–providing an excessive burden on U.S. corporations that leads to poor economic performance. This article examines corporate income-tax rates between 1946 and 2016 (before TCJA), and the argument linking low corporate tax rates with higher economic growth. This analysis finds no evidence that high corporate tax rates have a negative impact on economic growth. The new lower corporate income-tax rate is unlikely to spur economic growth.

H1

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April 24, 2018 in Scholarship, Tax | Permalink | Comments (0)

Michigan Law Review Tax Book Reviews

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April 24, 2018 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Senate Holds Hearing Today On Early Impressions Of The New Tax Law

Senate LogoThe Senate Finance Committee holds a hearing today on Early Impressions of the New Tax Law (livestream at 2:30 pm EST):

We are just four months into our new, modernized tax system and we have already started to see tax reform’s benefits roll in — companies are investing their savings in America’s workforce, utility bills are dropping, and dollars that were locked out overseas are coming home,” Chairman Hatch said. “But given that this was the largest tax rewrite in more than three decades, we still have work to do to support the new law’s implementation. This hearing will allow Finance Committee members to take a look at early impressions of the new tax code.

Witnesses:

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April 24, 2018 in Congressional News, Tax | Permalink | Comments (0)

The Double Life Of Law Schools

Ian Holloway (Dean, Calgary) & Steven Friedland (Elon), The Double Life of Law Schools, 68 Case W. Res. L. Rev. ___ (2018):

The law school of 2025 will soon appear around the corner. An increasingly asked question is what will legal education look like? Will it look like the Langdellian model of the past 120 years, centered on the coverage of appellate case reports, leavened by a modest degree of experiences and some tweaks? Or will its shape transmogrify, becoming a blend of technology, Carnegie, and a redesigned marketplace?

Our view is that by the year 2025, law school will indeed be dramatically different. But how different depends on who wins the war between the traditional education, tracing back to the days of Langdell in the 1870s, and the repositioned drivers influencing legal education today from inside and out. In a word, we are living in a time of struggle — struggle for control of the soul of legal education.

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April 24, 2018 in Legal Education | Permalink | Comments (1)

Jensen: Graduate Education And The Taxation Of Tuition Reductions

Erik M. Jensen (Case Western), Graduate Education and the Taxation of Tuition Reductions, 158 Tax Notes 1187 (2018):

While the legislation popularly (or unpopularly) known as the Tax Cuts and Jobs Act of 2017 was working its way through Congress, many colleges and universities were afraid that the repeal of Internal Revenue Code section 117(d), as provided in the House version of the bill, would have catastrophic effects on American graduate education. The concern was that, after repeal, graduate teaching and research assistants would be taxed on their tuition reductions, and the measure of the income would be determined using the stated tuition figure — the sticker price — for the academic institution. Section 117(d) survived, but it could come under challenge again and it’s worth considering what difference repeal would really make.

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April 24, 2018 | Permalink | Comments (0)

Monday, April 23, 2018

Michelle Layser To Join Illinois Tax Faculty

LayserMichelle D. Layser (Research Fellow and Adjunct Professor of Law, Georgetown) has accepted a tenure-track tax position at Illinois, beginning in August 2018:

Professor Layser is currently a Research Fellow at Georgetown University Law Center, where she teaches a course on social justice and taxation. Professor Layser's legal scholarship focuses on the intersection of tax law and social policy, touching on such diverse issues as housing and segregation, unequal taxation of same-sex families, the potential role of non-profits in supporting news production, and tax incentives for investment in clean energy technologies. Her most recent paper is forthcoming in 2018 in the Indiana Law Journal (How Federal Tax Law Rewards Housing Segregation). She has also published three articles in the flagship law reviews at Missouri (Improving Tax Incentives for Wind Energy Production: The Case for a Refundable Production Tax Credit), Utah (The Quest to Save Journalism: A Legal Analysis of New Models for Newspapers from Nonprofit Tax-Exempt Organizations to L3Cs), and Hawaii (Tax Justice and Same-Sex Domestic Partner Health Benefits: An Analysis of the Tax Equity for Health Plan Beneficiaries Act).

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April 23, 2018 in Tax, Tax Prof Moves | Permalink | Comments (0)

Howard Leads HBCUs In Law School Grads’ Bar Exam Performance

HBCUWashington Informer, Howard U. Leads HBCUs in Law School Grads’ Bar Exam Performance:

Howard University School of Law’s Class of 2017 led in the percentage of law students at historically Black colleges and universities who passed a bar examination in their first attempt, according to recently released data from the American Bar Association.

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April 23, 2018 in Legal Education | Permalink | Comments (0)

Elkins Presents The Myth Of Corporate Tax Residence Today In China

Elkins (2015)David Elkins (Netanya) presents The Myth of Corporate Tax Residence today at the Academy of International Strategy and Law of Zhejiang University in Hangzhou, China:

The issue of corporate residence has recently attracted a great deal of attention in both the popular press and in academic discourse, primarily because of the phenomenon of corporate inversions. The consensus among commentators is that the root of the problem is a flawed definition of corporate residence, and they have therefore proposed replacing the current definition, which relies upon place of incorporation, with another that relies upon control and management, home office, customer base, source of income, or the residence of shareholders.

The thesis of this article is that the concept of tax residence is inapplicable to corporations. Residence in tax law delineates the boundaries of distributive justice, and whereas corporations cannot be parties to a scheme of distributive justice, corporate residence is a misnomer. The incongruity of corporate residence along with the fact that residence is a fundamental concept in international taxation is one reason that the current international tax regime has proven unviable.

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April 23, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Alexander Hamilton To Receive Posthumous Honorary Degree From Albany Law School

Hamilton (2018)Press Release:

Albany Law School is proud to confer two honorary degrees this year at its 167th Commencement on May 18, 2018. Receiving honorary degrees will be ... and Alexander Hamilton, posthumously, one of the nation's founders. Douglas Hamilton, Hamilton's 5th great-grandson, will accept the degree. ...

Dean Ouellette added, "Alexander Hamilton's ties to the Albany area are significant. Hamilton studied law and practiced law in Albany.  He wrote Federalist #1 while traveling between Albany and New York City.  By conferring this degree, we are acknowledging his impact on the Capital Region and New York's legal community." ...

Alexander Hamilton
Alexander Hamilton was an immigrant, the nation's first Secretary of the Treasury, author of a large portion of the Federalist Papers, and a Colonel to George Washington in the Revolutionary War.

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April 23, 2018 in Legal Education | Permalink | Comments (1)

Lesson From The Tax Court: It's Still An Adversarial Process

Tax Court (2017)Several features of the Tax Court make it a unique institution in U.S. law.  For example, no other court has (or needs) the Golsen rule. Here’s a post where I explain why.  And no other federal court uses the Tax Court’s quasi-en banc process. Kandyce Korotky over at Procedurally Taxing has a nice post here describing how that process sometimes produces opinions where more judges join the concurrence than the opinion of the Court.

But the Tax Court still hews to that greatest feature of the U.S. legal tradition: the adversarial process, where each side takes responsibility for presenting its own case and the Court simply judges between the cases presented. That is the lesson I see in last week’s decision in Aaron Keith Nicholson v. Commissioner, T.C. Summary Opinion 2018-24 where the taxpayer was representing himself and the IRS was represented by not one but FIVE attorneys of record. Really. I think the case should have been a lesson about the hobby loss rules, but it turns into a lesson that tax litigation rests on an adversarial process where the parties’ concessions, no matter how lame they appear, will bind them.   This is true even in the small case procedure. Here, it benefitted the taxpayer.

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April 23, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (0)

Wendi Adelson's Billionaire Boss Says Prosecutors Have Concluded She Had Nothing To Do With Dan Markel's Murder

AdelsonPolitico, Billionaire Immigration Crusader: Employee Innocent in Murder-For-Hire Plot:

Mike Fernandez, a Florida billionaire and former GOP megadonor who crusades for the rights of undocumented immigrants, is rising to the defense of the woman who heads his immigration-reform group by saying she had “nothing to do” with a sensational murder-for-hire plot that killed her ex-husband.

Fernandez emailed his statement of support for Wendi Adelson after NBC’s “Dateline” last week devoted a two-hour investigative special to the Tallahassee murder of her ex, Florida State University law professor Dan Markel, amid a bitter divorce and court fight over their two young boys in 2014.

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April 23, 2018 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1813: Did The IRS Buy Off The Tea-Party?

NorCal (2018)Stu Bassin (Former Tax Partner, Baker & Hostetler, Washington, D.C.; Former Senior Litigation Counsel, U.S. Department of Justice Tax Division), Did the IRS Just Buy Off the Tea-Party?:

You may have missed the small item in the tax press describing the latest embarrassment for the Service arising out of the agency’s handling of applications for tax exempt status submitted by “tea party” organizations. The taxpayers, their supporters in the press, and many in Congress have long contended that the IRS action was politically motivated and evidence of an agency running amok. Meanwhile, the Service bungled its response, adding fuel to the fire. While public discussion of the scandal has subsided in recent months, we learned last week that the Government had settled a class action brought by the Tea-Party organizations with a $3.5 million payment from the Treasury. NorCal Tea Party Patriots v. Internal Revenue Service, No. 13-cv-00341 (Order of April 4, 2018).

For any of you who do not know remember the back story, the underlying dispute began nearly a decade ago with filing of a spate of applications for tax-exempt status by organizations with political agendas, including many organizations associated with the Tea Party movement. The applications attempted to skirt the prohibition against political activities by tax-exempt organizations, although the political focus of the applicants was readily apparent. The exempt organizations specialists within the Service’s National Office, headed by Lois Lerner, eventually transferred the applications to a small office in the Cincinnati Service Center, where they largely languished in inaction. The motive for the Service’s action is a subject of dispute—many have contended that the Service was implementing the political agenda of the Obama administration. The official explanation of what happened provided by senior Service officials kept changing, Ms. Lerner refused to testify at Congressional hearings, the Service “lost” the data from Ms. Lerner’s computer, and IRS Commissioner Koskinen’s appearances before congressional committees only added to fears of political wrongdoing. Years later, several senior Service officials have left office with their reputations damaged, the public standing of the Service has declined even further following congressional hearings, and many of the complaining organizations have quietly received tax-exempt status.

Naturally, the scandal generated a substantial amount of litigation, little of which has gone well for the Government. The Nor-Cal case was brought as a class-action by one of the disappointed applicants for tax-exempt status. According to the plaintiffs, the Service gave increased scrutiny to applications submitted by the taxpayer and other politically conservative groups, delayed action on some of the applications and, in some cases, requested additional and unnecessary information from the applicants to delay review of their applications. Substantively, the plaintiffs’ legal claims asserted violations of the First Amendment and the Section 6103 prohibition against disclosure of taxpayer return information. ...

The settlement is remarkable in part because the taxpayers’ claims appear to have had massive legal and factual holes, even accepting the taxpayers’ allegations regarding the Service’s mis-handling of their exemption applications. ...

Under the circumstances, the Government’s willingness to settle the case by paying damages to the class is remarkable. This blogger’s experience has been that the procedures employed by the Government for reviewing settlement proposals of tax cases involving multi-million dollar payouts from the Treasury would have required formal written review by several officials in the Justice Department’s Tax Division, including the Acting Assistant General. Several Service employees would also have reviewed the proposal, with formal written approval given by someone acting on behalf of the current Acting Chief Counsel. Depending upon application of some nuances in the procedures governing settlements, a review by the Congressional Joint Committee on Taxation may have been required under Section 6405.

So, this blogger asks: What induced these officials to approve the settlement and the multi-million dollar payout? Did the Government’s evaluation of the litigating hazards (likelihood of success multiplied by potential damage award) justify a payment of $3.5 million to the class? Or, was the payment justified by other considerations (e.g., a desire to buy a quiet resolution to embarrassing litigation)? And, if so, is that a proper reason for the government to pay litigants? As much of that process was conducted internally within the government and is privileged, we will all be left to ponder the possibilities.

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April 23, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, April 22, 2018

Brunson: God And The IRS — Accommodating Religious Practice In U.S. Tax Law

BrunsonSamuel D. Brunson (Loyola-Chicago), God and the IRS: Accommodating Religious Practice in United States Tax Law (Cambridge University Press 2018):

Seventy-five percent of Americans claim religious affiliation, which can impact their taxpaying responsibilities. In this illuminating book, Samuel D. Brunson describes the many problems and breakdowns that can occur when tax meets religion in the United States, and shows how the US government has too often responded to these issues in an unprincipled, ad hoc manner. God and the IRS offers a better framework to understand tax and religion. It should be read by scholars of religion and the law, policymakers, and individuals interested in understanding the implications of taxation on their religious practices.

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April 22, 2018 in Book Club, Scholarship, Tax | Permalink | Comments (2)

When Is A Church Not A Church For Tax Purposes?

New York Times op-ed:  When Is a Church Not a Church?, by Katherine Stewart:

Now that tax day is upon us, consider that through the miracle of tax breaks some of your tax dollars will effectively be going to support groups that finance campaigns against same-sex marriage and gun safety. A number of these groups are also entitled to raise money from other sources for political purposes, without filing the disclosures that are required of other individuals and entities. Why? They’ve got God on their side.

Last fall, for example, according to forms filed with the Internal Revenue Service, Focus on the Family, a conservative Christian organization that promotes socially conservative views on matters of public and family policy, declared itself a church.

Focus on the Family doesn’t have a congregation, doesn’t host weddings or funerals and doesn’t hold services. What it does do, with its nearly $90 million annual budget, is deliver radio and other programming that is often political to an estimated audience of 38 million listeners in the United States and beyond. It has funded ads against state legislators who support bills intended to prevent discrimination against L.G.B.T. people and it leads programs to combat what it calls “gay activism” in public schools.

Why would such a group want to call itself a church? Short answer: money. Churches can raise tax-deductible contributions more easily, and with fewer restrictions, than other nonprofits can. They also enjoy additional tax shelters, such as property tax exemptions for clergy members — or was that conservative radio personalities? ...

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April 22, 2018 in IRS News, Tax | Permalink | Comments (0)

Is Catholic University’s Devotion To Its Faith Scaring Off Students?

Catholic 2Chronicle of Higher Education, Is Catholic U.’s Chaste Brand Scaring Off Students?:

A cost-cutting proposal at Catholic University of America, where administrators are seeking to close a $3.5-million operational deficit through layoffs and buyouts of 35 faculty members, has divided the campus and provoked a broader discussion about whether the institution has overplayed its religiosity to the detriment of student recruitment.

It is self-evident that Catholic University, a 131-year old institution founded by American bishops and considered the national university of the Roman Catholic Church in the United States, is inextricably linked to Catholicism. But at a time when many students of traditional college age have eschewed organized religion and come to question the church’s social teachings, Catholic University finds itself in an intensifying dialogue that pits the university’s core identity against market imperatives.

This is not a new debate for Catholic or for religiously affiliated institutions in general. Such colleges have long wrestled with how best to preserve their deepest values while still attracting students who want a vibrant social life and a collegiate experience that is more spiritual than it is strictly religious.

Yet, Catholic University, based in Washington, D.C., is at a particularly critical moment.

The visceral threat of faculty job losses has invited emotional exchanges about whether the bishops’ university — whose leaders have waded into today’s culture wars and tried to discourage college kids from having sex — has scared off some of the very prospective students that it needs most. Changes at the university, which in recent years has done away with co-ed dorms and promoted itself as a cultivator of "Catholic minds," are now being scrutinized by campus critics as the unforced errors of an administration in need of a course correction.

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April 22, 2018 in Legal Education | Permalink | Comments (0)

The Top Five New Tax Papers

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. [778 Downloads]   Evaluating the New US Pass-Through Rules, by Dan Shaviro (NYU)
  2. [331 Downloads]  Taxing Income Where Value Is Created, by Allison Christians (McGill) & Laurens van Apeldoorn (Leiden)
  3. [326 Downloads]  The Impact of the 2017 Act's Tax Rate Changes on Choice of Entity, by Jim Repetti (Boston College)
  4. [312 Downloads]  Explaining Choice-of-Entity Decisions by Silicon Valley Start-Ups, by Gregg Polsky (Georgia)
  5. [298 Downloads]  Taxation of Investments in Bitcoins and Other Virtual Currencies: International Trends and the Brazilian Approach, by Flavio Rubinstein (Fundação Getúlio Vargas) & Gustavo Gonçalves Vettori (University of São Paulo)

April 22, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, April 21, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Barbara Bush: The Power And Grace Of A Mother’s Love

BushNew York Times op-ed:  For Mrs. Bush, by James McBride (NYU):

Mommy’s children were black. Mrs. Bush’s were not. Neither cared about that. They were, ultimately, mothers.

I’ve thought a lot about that since Mrs. Bush died. About that common ground. And about where we all live now.

I do not know enough about American politics to venture informed opinions about power, other than I wake up every day since the last presidential election feeling as if I’m living a nightmare. But Mrs. Bush was beyond politics. She represented a far greater power. She represented the power and grace of a mother’s love.

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April 21, 2018 in Legal Education, Tax | Permalink | Comments (0)

100% Of First-Time Takers From Shuttered Charlotte Law School Failed February NC Bar Exam

Charlotte Logo (2016)Charlotte Observer, Last Class of Charlotte School of Law Faces Bleak Reality After Bar Exam Results:

A chaotic year at Charlotte School of Law has given way to a disastrous performance by its graduates on the most recent bar examination, according to newly released state figures. Eleven recent alumni of the defunct school took the test for the first time in February. All failed.

Among the Charlotte Law graduates who had taken the test before, eight out of 73 passed the most recent exam. Combined, that gives Charlotte Law an overall passing rate of 9.5 percent — by far the lowest of the state's seven law schools.

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April 21, 2018 in Legal Education | Permalink | Comments (1)

Zelinsky: New Section 4968 And Taxing All Charitable Endowments

Edward A. Zelinsky (Cardozo), Section 4968 and Taxing All Charitable Endowments: A Critique and Proposal, 38 Va. Tax Rev. ___ (2018):

Section 4968, recently added to the Internal Revenue Code,imposes a tax on the investment incomes of some college and university endowments. Critics of Section 4968 disparage this new tax as selectively targeting what are widely perceived as wealthy, politically liberal institutions such as Harvard, Yale,Princeton, M.I.T. and Stanford.

There is a strong tax policy argument for taxing the net investment incomes of all charitable endowments including donor-advised funds, community foundations, all educational endowments,and foundations supporting hospitals, museums and other eleemosynary institutions.

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April 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Friday, April 20, 2018

ABA Releases Class Of 2017 Employment Data: FT-LT Bar Passage Required/JD Advantage Jobs Increased To 75.3% (From 72.6%), Due To 6% Decline In Class Size

Press Release, ABA Legal Education Section Releases Employment Data for Graduating Law Class of 2017:

Employment data for the graduating law class of 2017 as reported by American Bar Association-approved law schools to the ABA Section on Legal Education and Admissions to the Bar is now publicly available.  

The aggregate national data on law graduate employment outcome for the class of 2017 and individual schools' post-graduate employment figures can be found online. An online table also provides select national side-by-side comparisons between the classes of 2017 and 2016.

The aggregated school data shows that 75.3 percent of the 2017 graduates of the 204 law schools approved by the ABA to offer the J.D. degree were employed in full-time long-term Bar Passage Required or J.D. Advantage jobs roughly 10 months after graduation. That compares to 72.6 percent of the graduates reporting similar full-time long-term jobs last year.

ABA

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April 20, 2018 in Legal Education | Permalink | Comments (2)

Weekly SSRN Tax Article Review And Roundup: Stevenson Reviews Sugin's Competitive Philanthropy

This week, Ariel Jurow Stevenson (NYU; moving to San Diego) reviews a new work by Linda Sugin (Fordham), Competitive Philanthropy: Charitable Naming Rights, Inequality, and Social Norms, 79 Ohio St. L. J. __ (2018).

StevensonDespite decades of research, experts have not reached a firm conclusion regarding whether and how much the charitable deduction increases giving. As Linda Sugin convincingly argues in her recent article, this uncertainty should not counsel towards abandoning the deduction, but rather embracing it for the key social functions it performs. Shifting the focus away from economic factors, Sugin explains that the charitable deduction is important for signaling the value of communal support and deconcentrating wealth at the top of the income distribution. Sugin’s article offers a timely and vital critique of the charitable deduction literature’s overly narrow focus on economic analysis, and suggests a novel policy solution directed at today’s pressing social problems.

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April 20, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Desai: Tax Reform, Round One

Mihir A. Desai (Harvard), Tax Reform, Round One:

The Trump Administration's successful efforts at tax legislation stand out as the primary achievement of its first year. But the hurried, largely furtive drafting, and rush to passage at the end of 2017, have helped obscure the new tax regime’s real impact. Much of the reporting and debate has focused on the politicking that went into passing the bill, and the purported effect on the federal budget deficit. That has diverted attention from the true significance of the Tax Cuts and Jobs Act (TCJA). Instead of simply changing rates and addressing loopholes, the TCJA represents a structural change to the income tax and, consequently, will lead to major changes in behavior. Teasing out those details reveals that the new law is likely to generate different incentives for economic growth than commonly claimed, unwanted complexities that invite still further gaming of the tax code (which the reforms themselves were intended to minimize), and larger deficits than forecast. If the past is a guide, and we can hope it is, the TCJA will be a precursor to further reforms that correct these shortcomings and address important distributional and fiscal concerns.

In the context of other legislation during the past 40 years, the magnitude of this tax reform is unremarkable when framed relative to gross domestic product. Indeed, the 1981 tax bill reduced federal revenue by an amount equaling more than twice the share of the estimated reduction in the Trump edition. But no reform during the last four decades approximates the scope and depth of the TCJA’s changes to the overall structure of the tax system.

Harvard 1

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April 20, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)