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Wednesday, November 19, 2014

NY Times: Al Sharpton's Influence Grows, As Do His Unpaid Taxes

SharptonNew York Times, Questions About Sharpton’s Finances Accompany His Rise in Influence:

Mr. Sharpton’s influence and visibility have reached new heights this year, fueled by his close relationships with the mayor and the president. Obscured in his ascent, however, has been his troubling financial past, which continues to shadow his present. 

Mr. Sharpton has regularly sidestepped the sorts of obligations most people see as inevitable, like taxes, rent and other bills. Records reviewed by The New York Times show more than $4.5 million in current state and federal tax liens against him and his for-profit businesses. And though he said in recent interviews that he was paying both down, his balance with the state, at least, has actually grown in recent years. His National Action Network appears to have been sustained for years by not paying federal payroll taxes on its employees.

With the tax liability outstanding, Mr. Sharpton traveled first class and collected a sizable salary, the kind of practice by nonprofit groups that the United States Treasury’s inspector general for tax administration recently characterized as “abusive,” or “potentially criminal” if the failure to turn over or collect taxes is willful.

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November 19, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Seto: New BLS Data Project More Lawyer Jobs Than Law Grads in 2016

Seto (2014)Following up on yesterday's post, Government's Data Collection Change Will 'Solve' the Law School Crisis:  TaxProf Blog op-ed:  The Proposed New BLS Lawyer Replacement Projections, by Theodore P. Seto (Loyola-L.A.):

Commentators who believe that the end of the world is near for legal education often point to Bureau of Labor Statistics estimates of replacement needs in the legal profession and compare those estimates to the number of projected law school graduates.

On May 16, 2014, the BLS issued a notice proposing a new method for measuring what it calls “occupational separations” – that is, workers leaving a particular occupation who need to be replaced. The BLS explains that the current method indirectly measures leavers by measuring employment change by age group, relying on an assumption that workers enter at a young age, work in their field until they are old, and then retire, creating opportunities for the next generation of young workers. In this framework, occupation is fixed throughout a worker’s career. The BLS notes: “However true this may have been in the past, it does not apply to many workers today.”

The new method, by contrast, directly measures workers who leave an occupation, "taking advantage of the longitudinal aspects of the CPS monthly survey and supplements."

BLS states that it believes that the current method fails to capture a large number of separations that result in openings for new entrants and that the new method is a more accurate measure. Specifically, the current method undercounts openings because it only accurately measures workers who follow a traditional career path—entering an occupation at a young age, working in the same occupation for many years, then retiring—which is not the case for many workers in most occupations.

It has tested the relative validity of the two methods against historical data from selected professions – among them, lawyers. As to projected lawyer replacement rates, the notice states:

External data is available on historical new entrants for lawyers. Not all law school graduates become lawyers, but the American Bar Association (ABA) conducts a census of employment outcomes for all law school graduates in order to count the number who find employment in positions that require bar passage (effectively, lawyers). Since ABA began collecting this data in 2011, the number of graduates finding employment in such positions has averaged 29,000 per year. Because some graduates who don’t immediately find such positions may become lawyers later in their career (for example, many graduates become law clerks, a position that does not require bar passage, for a few years before becoming lawyers), this number should be less than the total number of new entrants into the occupation.

Under the current method, BLS projects an average of 19,650 job openings per year, while the new method projects 41,460 openings per year. Again, no direct comparison between the ABA number and the BLS numbers is possible due to conceptual differences, but the results under the current method are significantly below the actual number of new graduates finding work in the occupation. (emphasis supplied) The new method projects a higher number of openings, which allows for additional entrants not immediately after completion of a law degree.

Based on 2012 and 2013 matriculation rates and historical drop-out rates, we should expect 40,082 ABA-accredited law school graduates in 2015 and 35,954 in 2016. If the new BLS projections are accurate, we should see demand and supply in relative equilibrium in 2015 and a significant excess of demand over supply beginning in 2016. (These estimates only take into account JD-required jobs. Demand from JD-advantage employers is not included.)

Update:  ABA Journal, Are 2016 Law Grads in Luck? New Stats Say Lawyer Jobs Will Exceed Graduates That Year

November 19, 2014 in Legal Education | Permalink | Comments (5)

The Tax Consequences of the Lincoln Center's Naming Rights

NYCForbes:  What's In A Name? Should Naming Rights Reduce Charitable Deductions?, by Peter J. Reilly:

When Avery Fisher gave Lincoln Center $10.5 million in 1973 to renovate Philharmonic Hall it was agreed that the hall be called Fisher Hall in perpetuity. Perpetuity turns out to be measured in decades rather than centuries or millennia. Lincoln Center wants to renovate or raze and rebuild now and is hoping to auction off naming rights. According to this story in the New York Times, objections by the Fisher family have been assuaged by “essentially paying ” them $15 million. I’d really like to dig into what is meant by “ essentially paying”, but dammit Jim, I’m just a tax blogger, not an investigative reporter. I’m going to take “essentially paying” to mean paying and what was paid for was some amorphous right that the Fisher family had to keep its name plastered on a building.

The story raises the question of whether you should be able to take a full charitable deduction for a donation if, as a legally binding condition of the donation, you get to have a landmark building named after you. It is worth noting that the Fisher family actually ended up making a profit, although rather a modest one on the whole deal. I computed the pre-tax return to the family as being roughly 0.85%, which is really anemic, unless you compare it to what is being paid on contemporary deposit balances. If you assume that Mr. Fisher took a charitable deduction with a 70% benefit in 1973 and the family paid capital gain tax on the Lincoln Center payoff, the after tax return comes to 3.88%, which is not great, but still better than getting poked in the eye with a sharp stick.

I’m not sure where I might have went with this, so I have to say – Thank God for law professors – and not just because the Tax Prof gives me plug now and again. Professor William Drennan of Southern Illinois University has written an article titled Where Generosity And Pride Abide: Charitable Naming Rights [80 U. Cin. L. Rev. 45 (2011)].

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November 19, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Cost of College Crosses $260,000 Threshold

Chronicle of Higher Education, New Data on Tuition and Fees for Thousands of Colleges:

College

November 19, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 559

Tuesday, November 18, 2014

Hanlon Presents Tax Rates and Corporate Decision Making Today at Columbia

HanlonMichelle Hanlon (MIT) presents Tax Rates and Corporate Decision Making (with John Graham (Duke), Terry Shevlin (UC-Irvine) & Nemit Shroff (MIT)) at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

We analyze survey responses from 500 corporate tax executives to better understand which tax rate firms use to incorporate taxes into their decision making. Prior research assumes that managers use the marginal tax rate (MTR) to evaluate incremental corporate decisions. However, we find that approximately 45% of tax executives surveyed state that their firms use some form of effective tax rate (ETR) as the tax rate input into capital structure, capital expenditure, and acquisition decisions, whereas less than 13% state that their firms use the MTR. We then examine the determinants and consequences of managers’ tax rate choice. We find that public firms and firms with greater analyst following are more likely to incorporate the GAAP ETR as the tax rate input into their decisions, whereas larger firms and firms with high R&D intensity are less likely to do so. Finally, we find that firms using GAAP ETRs as the tax rate input for investment decisions are less responsive to their growth opportunities and have lower acquisition announcement returns when the difference between the firm’s GAAP ETR and MTR is large. Further, we find that these firms adopt an aggressive (conservative) debt policy when the GAAP ETR is greater (less) than MTR. These results suggest that the use of GAAP ETRs instead of the theoretically suggested MTR as the tax rate input for decision making leads to inefficient corporate decisions.

November 18, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Repetti Presents The Role of Economic Efficiency in Formulating Tax Policy Today at Loyola-Chicago

Repetti (2014)James R. Repetti (Boston College) presents What is the Appropriate Role for Economic Efficiency in Formulating Tax Policy? at Loyola-Chicago today:

Traditionally, the great democracies of the western world assigned equal weight to distributive justice and economic efficiency in designing a tax system. In the past few decades, however, economic efficiency has dominated the debate about the best design of a tax system in politics and analysis by legal academics. For example, many advocate low tax rates on capital gains to reduce the efficiency effects of taxing capital income despite the fact that a capital gains preference reduces progressivity and significantly complicates our tax system. Similarly, discussions of progressive tax rates often focus on the adverse efficiency effects of high rates while ignoring benefits arising from a progressive rate structure’s reduced burden on lower income individuals. In addition, many have proposed replacing the income tax with a consumption tax in order to eliminate the tax burden on investment income even though a consumption tax, regardless of its design, would increase the tax burden for many lower income taxpayers.

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November 18, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Top 1% v. the Top .01%: The Haves vs. the Have-Mores

New York Times:  Another Widening Gap: The Haves vs. the Have-Mores, by Robert Frank (Cornell):

The wealthy now have a wealth gap of their own, as economic gains become more highly concentrated at the very top. As the top one-hundredth of the 1 percent pulls away from the rest of that group, the superrich are leaving the merely very rich behind. That has created two markets in the upper reaches of the economy: one for the haves and one for the have-mores.

Whether the product is yachts, diamonds, art, wine or even handbags, the strongest growth and biggest profits are now coming from billionaires and nine-figure millionaires, rather than mere millionaires.

According to a recent paper by the economists Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics, almost all of the increase in American inequality over the last 30 years is attributable to the “rise of the share of wealth owned by the 0.1 percent richest families.” And much of that rise is driven by the top 0.01 percent.

Top 1%

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November 18, 2014 in Tax | Permalink | Comments (2)

Inequality, Unbelievably, Gets Worse

New York Times:  Inequality, Unbelievably, Gets Worse, by Steven Rattner:

The Democrats’ drubbing in the midterm elections was unfortunate on many levels, but particularly because the prospect of addressing income inequality grows dimmer, even as the problem worsens.

To only modest notice, during the campaign the Federal Reserve put forth more sobering news about income inequality: Inflation-adjusted earnings of the bottom 90 percent of Americans fell between 2010 and 2013, with those near the bottom dropping the most. Meanwhile, incomes in the top decile rose.

NYT 1

Before the impact of tax and spending policies is taken into account, income inequality in the United States is no worse than in most developed countries and is even a bit below levels in Britain and, by some measures, Germany. However, once the effect of government programs is included in the calculations, the United States emerges on top of the inequality heap.

NYT 2

That’s because our taxes, while progressive, are low by international standards and our social welfare programs — ranging from unemployment benefits to disability insurance to retirement payments — are consequently less generous.

Conservatives may bemoan the size of our government; in reality, according to the Organization for Economic Cooperation and Development, total tax revenues in the United States this year will be smaller on a relative basis than those of any other member country.

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November 18, 2014 in Tax | Permalink | Comments (1)

More on the CBO's Distribution of Household Income and Federal Taxes

Following up on last week's post, CBO: The Distribution of Household Income and Federal Taxes, 2011:

American Enterprise Institute:  New CBO Study Shows That ‘the Rich’ Don’t Just Pay Their ‘Fair Share,’ They Pay Almost Everybody’s Share:

AEI 1

The CBO just released its annual report on The Distribution of Household Income and Federal Taxes analyzing data through 2011 on American household’s: a) average “market income” (a comprehensive measure that includes labor income, business income, and income from capital gains), b) average household transfer payments (payments and benefits from federal, state and local governments including Social Security, Medicare and unemployment insurance), and c) average federal taxes paid by households (including income, payroll, corporate, and excise taxes). Some of the key findings of the CBO analysis are displayed in the table above, with the data organized by household income quintiles. The data in the first five rows above appear in the CBO report (from Tables 1 and 4), and rows 6-8 above have been calculated separately based on data from the first four rows in the table. ...

Some additional analysis and commentary will be provided here that reveal a yet-to-be discussed major implication of the CBO report – almost the entire burden: a) of all transfer payments made to American households and b) of all non-financed government spending, falls on just one group of Americans – the top one-fifth of US households by income. That’s correct, the CBO study shows that the bottom three income quintiles representing 60% of US households are “net recipients” (they receive more in transfer payments than they pay in federal taxes), the second-highest income quintile pays just slightly more in federal taxes ($14,800) than it receives in government transfer payments ($14,100), while the top 20% of American “net payer” households finance 100% of the transfer payments to the bottom 60%, as well as almost 100% of the tax revenue collected to run the federal government. Here are the details of that analysis.

AEI 2

The CBO study released this week provides ample evidence that the richest Americans are paying their “fair share” of federal taxes. In fact, the richest 20% of Americans by income aren’t just paying a share of federal taxes that would be considered “fair” — it goes way beyond “fair” — they’re shouldering almost 100% of the entire federal tax burden of transfer payments and all other non-financed government spending. What’s probably not so fair is that the bottom 60% isn’t just getting off with a small tax burden or no tax burden – the bottom 60% are net recipients of transfer payments from the top 20% to the tune of about $10,000 per household in 2011. So maybe what the CBO report shows is that we should be asking whether or not the bottom 60% are paying their fair share when they’re not paying anything – they’re net recipients of transfer payments that come from “the richest” 20% of American households. When the top 20% of US households are financing almost 100% of the transfer payments to the bottom 60% and financing almost the entire non-financed operating budget of the federal government, I’d say “the rich” are paying beyond their fair share of the total tax burden, and we might want to start asking if the bottom 60% of “net recipient” households are really paying their fair share.

Washington Post Wonkblog, Tax Rates Are Finally on the Rise for the Top 1 Percent, CBO Says:

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November 18, 2014 in Tax | Permalink | Comments (0)

Bankman & Caron: Tax Scholarship in a Time of Fiscal Crisis

Joseph Bankman (Stanford) & Paul L. Caron (Pepperdine), California Dreamin': Tax Scholarship in a Time of Fiscal Crisis, 48 U.C. Davis L. Rev. 405 (2014):

This essay makes three claims about the current state of tax law and academic tax scholarship in America: (1) the federal budget imbalance, caused by the failure of both political parties to raise the tax revenues needed to fund the nation’s spending priorities, is unsustainable and threatens our nation’s future; (2) tax scholars need to shift our focus from technocratic work to systemic solutions to the existential threat posed by this fiscal gap; and (3) California’s response to its seemingly intractable budget problems provides a template for resolving the federal budget stalemate in Washington, D.C.

Two years ago, both California and the nation were imperiled by long-term, structural, budget imbalances. California has reduced that peril by raising (already high) personal tax rates on the wealthy. The political success of that approach suggests that at the national level, Americans might be willing to support higher rates to maintain government services and move toward fiscal solvency.

The fiscal crisis highlights a problem with the dominant conception of legal tax scholarship. Under that conception, scholarship is (or should be) apolitical and confined to subjects about which the writer can demonstrate mastery. Unfortunately, the most pressing problem in the field is inescapably political and requires the scholar to address some issues about which no one can master. If we hew to a restrictive definition of scholarship, we limit our voice on a subject about which we have much to say.

November 18, 2014 in Scholarship, Tax | Permalink | Comments (2)

Government's Data Collection Change Will 'Solve' the Law School Crisis

BLS (2015)Matt Leichter, How the Transparency Movement Reinflated the Law School Bubble:

[T]he Bureau of Labor Statistics is changing its employment projections methodology, specifically its measure of how many workers will be replaced in occupations in its 10-year projection periods—as opposed to the number of positions that the economy will create. ...

The BLS’s employment projections have long been a go-to source for law school critics. The ~24,000 projected annual lawyer job growth rates they showed every two years contrasted excellently with the ~40,000 law graduates each year (and the even greater number of bar admits). No longer. ... It writes ...

Not all law school graduates become lawyers, but the ABA conducts a census of employment outcomes for all law school graduates in order to count the number who find employment in positions that require bar passage (effectively, lawyers). Since ABA began collecting this data in 2011, the number of graduates finding employment in such positions has averaged 29,000 per year. Because some graduates who don’t immediately find such positions may become lawyers later in their career (for example, many graduate become law clerks, a position that does not require bar passage, for a few years before becoming lawyers), this number should be less than the total number of new entrants into the occupation.

Under the current method, BLS projects an average of 19,650 job openings per year, while the new method projects 41,460 openings per year. Again, no direct comparison between the ABA number and the BLS numbers is possible due to conceptual differences, but the results under the current method are significantly below the actual number of new graduates finding work in the occupation. The new method projects a higher number of openings, which allows for additional entrants not immediately after completion of a law degree.

Okay, data on law graduate unemployment has actually been around for many years, e.g. the NALP and the Official Guide, crude though it was. I’ve written about the strong correlation between falling proportions of graduates finding bar-passage-required jobs and graduates taking JD-advantage jobs or not finding any work. This is evidence of a saturated lawyer market, even if it’s caused in part by slack aggregate demand.

Percent Employed by Status (NALP)

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November 18, 2014 in Legal Education | Permalink | Comments (2)

The Forever Professors: Academics Who Don’t Retire Are Greedy, Selfish, and Bad For Students

RetireChronicle of Higher Education:  The Forever Professors: Academics Who Don’t Retire Are Greedy, Selfish, and Bad For Students, by Laurie Fendrich (Hofstra):

The 1994 law ending mandatory retirement at age 70 for university professors substantially mitigated the problem of age discrimination within universities. But out of this law a vexing new problem has emerged—a graying—yea, whitening—professoriate. The law, which allows tenured faculty members to teach as long as they want—well past 70, or until they’re carried out of the classroom on a gurney—means professors are increasingly delaying retirement past age 70 or even choosing not to retire at all. ...

Professors approaching 70 who are still enamored with hanging out with students and colleagues, or even fretting about money, have an ethical obligation to step back and think seriously about quitting. If they do remain on the job, they should at least openly acknowledge they’re doing it mostly for themselves. ...

The average age for all tenured professors nationwide is now approaching 55 and creeping upward; the number of professors 65 and older more than doubled between 2000 and 2011. In spite of those numbers, according to a Fidelity Investments study conducted about a year ago, three-quarters of professors between 49 and 67 say they will either delay retirement past age 65 or—gasp!—never retire at all. They ignore, or are oblivious to, the larger implications for their students, their departments, and their colleges. ...

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November 18, 2014 in Legal Education | Permalink | Comments (12)

Dershowitz Wins Acquittal in Spitzer's Prosecution of Biblical Abraham for Attempted Murder of Isaac

AbrahamNew York Times,  At Educational Event, a Modern Legal Interpretation of a Biblical Story:

The facts were undeniable: The defendant, one Abraham (no known surname), had teetered on the brink of stabbing his son Isaac to death, only to be stopped by divine intervention.

Luckily he had a lawyer with a thirst for tough cases, not to mention a jury pool consisting exclusively of people who proudly claim to be descended from the accused.

The setting, too, seemed at least mildly favorable: the soaring Fifth Avenue sanctuary of Temple Emanu-El, with twin menorahs on either side of the courtroom.

But who could begrudge him? When the defendant in question is the father of the Jewish people, it seems only right that the trial — even if it is only a mock trial done for educational purposes — should take place in one of the country’s most eminent Reform synagogues, with two of New York’s most prominent Jews sparring over his fate.

For the prosecution:  Eliot Spitzer, a former governor and attorney general of New York. For the defense:  Alan M. Dershowitz, the Harvard Law School professor who was one of Mr. Spitzer’s former professors but is perhaps better known for defending O. J. Simpson and other notorious clients. ...

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November 18, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 558

IRS Logo 2Town Hall, The IRS Hatchetmen:

[W]hen the Joint Committee on Taxation was started, it was a temporary committee and that was founded because the IRS (then called the BIR) was engaged in the same type of political bullying and illegality that conservatives have used against the Tea Party since 2010.

Senator James Couzens of Michigan, who helped found the JTC, was the Larry Ellison of his day. Like Ellison, who co-founded Oracle, Couzens made his money as the number two guy and management genius behind Henry Ford and Ford Motors. ... As a Republican from Michigan he was considered a progressive and opposed tax cuts, supported the graduated income tax and–like another rich guy, Warren Buffet—acted as the self appointed popular voice against rich corporations, railing against favorable tax treatment for companies.

At the time Secretary of the Treasury, Andrew Mellon, himself one of the richest men in America was advocating a scientific basis for taxation, “the use of economic theory to identify the tax rates that would maximize revenue yet burden productive capital as little as possible,” according to George K. Yin at the University of Virginia Law School. In short he was proposing an infant Laffer curve.

Mellon noted that tax policy was distorting the distribution of capital with companies less willing to pay dividends to shareholders because of the hostile tax treatment dividends received. He also noted that wealthy people were more inclined to invest in tax-free municipal securities because of the different tax treatment that cities and states had versus corporations.

As a progressive Republican Couzens argued against Mellon, using his own status as a rich man to make his point. His argument—in a preview of Warren Buffet’s own stupidity—was that tax treatment made little difference in what types of investments rich people made. ...

By inviting scrutiny of his tax situation, however, Couzen challenged Mellon publicly and also admitted that the tax treatment of investments changed his behavior. The result eventually was an examination in 1925 of Couzen’s tax liability for the sale of his Ford Motor stock in 1913, according to Yin, which was supposed to amount to 73 percent of the gains from the stock, a tax that Couzen said he supported.

The affair became unseemly with both sides using private tax records as weapons against the other. And when Couzens made the affair public in the Senate, the Senate was outraged that a sitting Senator would be subject to retaliation by an adinistration.

Thus was born the Joint Committee on Taxation whose expressed aim was to "investigate and report upon the operation, effects, and administration of the Federal system of income and other internal revenue taxes and upon any proposals or measures which in the judgment of the Commission may be employed to simplify or improve the operation or administration of such systems of taxes,” according to the JTC’s website.

In reality however it was there to stop internal revenue from being used as a political weapon.

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November 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, November 17, 2014

Cauble Presents Relying on the IRS Today at Chicago

Cauble (2014)Emily Cauble (DePaul) presents Relying on the IRS at Chicago today as part of its Legal Scholarship Workshop Series hosted by Lisa Bernstein:

The IRS issues different types of guidance to taxpayers, and the extent to which taxpayers can rely on IRS guidance depends on the form in which it was offered. For instance, taxpayers generally cannot rely on oral advice provided over the phone but can rely on more formal types of advice. The current state of the law harms unsophisticated taxpayers who disproportionately obtain informal advice -- the least reliable type of IRS guidance.

Existing literature lacks a thorough discussion of why, as a policy matter, we allow taxpayers to rely on some forms of IRS guidance more than others. This Article fills that gap by suggesting and critically evaluating potential justifications for this practice.

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November 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Dietsch Presents Catching Capital: The Ethics of Tax Competition Today at McGill

DietschPeter Dietsch (Université de Montréal) presents Catching Capital: The Ethics of Tax Competition (Oxford University Press) at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

When individuals stash away their wealth in offshore bank accounts and multinational corporations shift their profits or their actual production to low-tax jurisdictions, this undermines the fiscal autonomy of political communities and contributes to rising inequalities in income and wealth. These practices are fuelled by tax competition, with countries strategically designing fiscal policy to attract capital from abroad.

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November 17, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Bird-Pollan Presents Utilitarianism and Wealth Transfer Taxation Today at Loyola-L.A.

Bird-PollanJennifer Bird-Pollan (Kentucky) presents Utilitarianism and Wealth Transfer Taxation at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

This Article is the third in a series examining the continued relevance and philosophical legitimacy of the United States wealth transfer tax system. The earlier two Articles used the frameworks of Nozickian libertarianism [Death, Taxes, and Property (Rights): Nozick, Libertarianism, and the Estate Tax, 66 Maine L. Rev. 1 (2013)] and Rawlsian equality of opportunity [Unseating Privilege: Rawls, Equality of Opportunity, and Wealth Transfer Taxation, 59 Wayne L. Rev. 713 (2014)], concluding that the taxation of wealth transfers is consistent with both theoretical approaches. This Article examines the utilitarianism of John Stuart Mill and his philosophical progeny, distinguishing the philosophical approach of utilitarianism from contemporary welfare economics. The Article first identifies the current state of wealth transfer taxation in the United States. Next, the Article explicates the fundamental elements of utilitarianism, starting with Jeremy Bentham’s hedonistic approach, identifying utility with pleasure, and then moving to Mill’s more sophisticated definition of utility, distinguishing between “higher” and “lower” pleasures. After exploring classical utilitarianism, the Article compares the philosophical theory to its more contemporary interpretation in the form of welfare economics. Finally, the Article concludes that heavily redistributive wealth transfer taxation is consistent with the ethical imperatives of classical utilitarianism.

Miranda Perry Fleischer (San Diego) is the commentator.

November 17, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kleinbard Presents We Are Better Than This: How Government Should Spend Our Money at Loyola Marymount

We Are Better Than This (2014)Edward Kleinbard (USC) presents We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, 2014) at Loyola Marymount tomorrow as part of its Center for Accounting Ethics, Governance, and the Public Interest Speaker Series:

We Are Better Than This fundamentally reframes budget debates in the United States. Author Edward D. Kleinbard explains how the public's preoccupation with tax policy alone has obscured any understanding of government's ability to complement the private sector through investment and insurance programs that enhance the general welfare and prosperity of our society at large.

He argues that when we choose how government should spend and tax, we open a window into our "fiscal soul," because those choices are the means by which we express the values we cherish and the regard in which we hold our fellow citizens. Though these values are being diminished by short-sighted decisions to starve government, strategic government spending can directly make citizens happier, healthier, and even wealthier.

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November 17, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (5)

James Poterba Awarded Daniel Holland Medal

PoterbaMIT Press Release, MIT Economist James Poterba Awarded the Holland Medal:

MIT Economics Professor James M. Poterba has been chosen to receive the Daniel M. Holland Medal from the National Tax Association in honor of his outstanding contributions to the study and practice of public finance. ...

The Mitsui Professor of Economics, Poterba is the first MIT faculty member to receive the Holland Medal, which was established in 1993 to honor Holland, a nearly 30-year MIT Sloan faculty member who was an expert on taxation and public finance. Holland served as president of National Tax Association in 1989 and edited the National Tax Journal from 1996 until his death in 1991....

Poterba, who joined the MIT faculty in 1983, teaches a graduate course on the economics of taxation. His recent work has emphasized the effect of taxation on the financial behavior of households, particularly their saving and portfolio decisions. He has been especially interested in analysing the impact of 401(k) plans and IRAs on the level and adequacy of retirement saving.

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November 17, 2014 | Permalink | Comments (0)

Law School Tuition v. Bar Exam Success

Huffington Post, Comparing Law School Tuition With How Many Grads Pass The Bar On The First Try:

Paying more money in tuition for law school does not necessarily boost your chance of passing the bar on the first try, but it doesn't seem to hurt either, according to a chart by FindTheBest. [Click on bubbles to see results for individual law schools.]

November 17, 2014 in Law School Rankings, Legal Education | Permalink | Comments (5)

Idea for the New Congress: End the Carried Interest Tax Break for the Elite

New York Times:  Idea for New Congress: End a Tax Break for the Elite, by James B. Stewart:

Now that Republicans control both houses of Congress, they need to show they can accomplish something, and President Obama has just two years to burnish his legacy. So the search is on for bipartisan consensus.

I have two suggestions: “tax reform” and “carried interest.” ... [S]ix years into the Obama administration, and more than seven since legislation was introduced to end the favorable treatment of carried interest, it seems astonishing that it lives on as a multibillion-dollar tax windfall for an elite group of super wealthy hedge fund, venture capital and private equity managers.

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November 17, 2014 in Tax | Permalink | Comments (0)

How to Distort Income Inequality

Wall Street Journal op-ed:  How to Distort Income Inequality, by Phil Gramm (American Enterprise Institute) & Michael Solon (US Policy Metrics):

What the hockey-stick portrayal of global temperatures did in bringing a sense of crisis to the issue of global warming is now being replicated in the controversy over income inequality, thanks to a now-famous study by Thomas Piketty and Emmanuel Saez, professors of economics at the Paris School of Economics and the University of California, Berkeley, respectively. Whether the issue is climate change or income inequality, however, problems with the underlying data significantly distort the debate. ...

The Piketty-Saez study looked only at pretax cash market income. It did not take into account taxes. It left out noncash compensation such as employer-provided health insurance and pension contributions. It left out Social Security payments, Medicare and Medicaid benefits, and more than 100 other means-tested government programs. Realized capital gains were included, but not the first $500,000 from the sale of one’s home, which is tax-exempt. IRAs and 401(k)s were counted only when the money is taken out in retirement. Finally, the Piketty-Saez data are based on individual tax returns, which ignore, for any given household, the presence of multiple earners.

And now, thanks to a new studyin the Southern Economic Journal, we know what the picture looks like when the missing data are filled in [Levels and Trends in U.S. Income and its Distribution: A Crosswalk from Market Income towards a Comprehensive Haig-Simons Income Approach]. Economists Philip Armour and Richard V. Burkhauser of Cornell University and Jeff Larrimore of Congress’s Joint Committee on Taxation expanded the Piketty-Saez income measure using census data to account for all public and private in-kind benefits, taxes, Social Security payments and household size.

The result is dramatic. The bottom quintile of Americans experienced a 31% increase in income from 1979 to 2007 instead of a 33% decline that is found using a Piketty-Saez market-income measure alone. The income of the second quintile, often referred to as the working class, rose by 32%, not 0.7%. The income of the middle quintile, America’s middle class, increased by 37%, not 2.2%.

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November 17, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 557

TaxProf Blog Weekend Roundup

Sunday, November 16, 2014

Projected Lawyer Surpluses Worsen: 3 New Lawyers for Every Law Job in 2022

The American Lawyer:  States' Projected Lawyer Surpluses Deteriorate for 2022, by Matt Leichter:

[G]overnment employment projections can provide more insight into the number of future lawyer positions that will be available for prospective law students. In fact, estimates on lawyer employment in 2022 by state are now available, making it possible to update the calculations for the law graduate and lawyer surpluses.

The “law graduate surplus” measures the ratio of ABA law school graduates in each state in 2013 to the estimated annual lawyer job growth rate for the 2012-22 projection period. The “lawyer surplus” makes the same calculation but subs out law school graduates with the number of bar admits in all states and under all circumstances (including those entering on motion).

The law graduate surplus is useful because it uses a discrete number of individuals, but it includes people who never become lawyers while excluding people who join the bar without going to an ABA law school (for instance, by attending a foreign law school). By contrast, the lawyer surplus directly measures people who obtain a law license, except it duplicates many who seek bar admission in multiple states—a phenomenon that is likely to increase in the future as more jurisdictions adopt the Uniform Bar Exam. However, the lawyer surplus does provide information on the large number of lawyers who motion into the District of Columbia bar without attending a local law school or taking its bar exam.

State governments provide estimates of lawyer employment in 2012 and 2022 along with the projected annual growth rate. The following table breaks them down by state (which includes the District of Columbia and Puerto Rico) and region as delineated by the Bureau of Economic Analysis. ...

Here is a table of the law graduate and lawyer surpluses by state and region, ranked ... by the lawyer surplus for 2013 and compared against 2011.

States with the biggest lawyer surplus:

#

STATE/BEA REGION

NO. ABA LAW SCHOOL GRADS

NO. BAR ADMITS

RATIO ABA GRADS TO ANNUAL LAWYER JOBS

RATIO BAR ADMITS TO ANNUAL LAWYER JOBS

2011

2013

2011

2013

2011

2013

2011

2013

1

North Dakota

81

75

195

267

2.03

1.88

4.88

6.68

2

Alaska

0

0

106

130

0.00

0.00

5.30

6.50

3

New Jersey

783

859

2,844

3,386

1.04

1.41

3.79

5.55

4

Wyoming

73

78

112

157

0.91

2.60

1.40

5.23

5

New York

4,703

5,007

9,855

10,251

2.92

2.55

6.12

5.23

6

New Hampshire

147

107

296

250

2.45

2.14

4.93

5.00

7

District of Columbia

2,116

2,181

3,164

3,120

1.48

3.16

2.21

4.52

8

Maryland

594

600

1,653

1,742

1.49

1.54

4.13

4.47

9

Massachusetts

2,288

2,391

2,416

2,411

3.27

4.27

3.45

4.31

10

Hawaii

101

108

208

206

1.68

2.16

3.47

4.12

States with the lowest lawyer surplus:

40

Texas

2,343

2,323

3,476

3,836

1.44

1.29

2.13

2.13

41

Arizona

490

640

689

906

1.09

1.49

1.53

2.11

42

Colorado

462

437

1,256

1,217

1.36

0.73

3.69

2.03

43

Georgia

896

1,085

1,288

1,377

1.30

1.60

1.87

2.03

44

Washington

657

654

1,148

1,353

1.43

0.98

2.50

2.02

45

Utah

285

292

606

499

1.36

1.17

2.89

2.00

46

Louisiana

797

936

744

533

2.95

3.47

2.76

1.97

47

Oklahoma

462

468

465

463

1.71

1.87

1.72

1.85

48

Delaware

252

279

122

148

4.20

3.49

2.03

1.85

49

Florida

2,998

3,190

3,646

3,476

1.53

1.65

1.86

1.80

Here are the totals for all fifty states:

US (State Data)

43,345

43,591

61,292

63,237

2.04

2.09

2.89

3.03

US (BLS Data)

43,817

46,101

62,113

64,960

2.07

2.35

2.93

3.31

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November 16, 2014 in Legal Education | Permalink | Comments (2)

Undergraduate Prestige Affects Earnings Premium From Elite Graduate Programs

Wall Street Journal, Graduates of Elite Colleges See a Payoff:

Sure, it’s nice to have a graduate degree from Yale, but a new study finds that attending an elite undergraduate institution counts for an awful lot when it comes to lifelong earnings. A researcher at the Vanderbilt University Law School found that people with advanced degrees from elite schools and undergraduate diplomas from less-selective institutions earn less than people who attended elite schools for both their graduate and undergraduate degrees. The results hold up across a broad swath of graduate programs, from law degrees to M.B.A.s. And those who attended less elite undergraduate institutions are unlikely to ever close the salary gap, according to the study.

Joni Hersch of Vanderbilt Law School said the survey results came as somewhat of a surprise, but suggests that it’s not really undergraduate education driving the pay disparity, but instead the social status of graduates of elite colleges. ...

Among those who attended top-tier graduate institutions, the pay gap between graduates of top-tier and lower-tier undergraduate schools was considerable.

Chart

Joni Hersch (Vanderbilt), Catching Up Is Hard to Do: Undergraduate Prestige, Elite Graduate Programs, and the Earnings Premium:

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November 16, 2014 in Legal Education | Permalink | Comments (0)

Top 5 Tax Paper Downloads

The IRS Scandal, Day 556

Saturday, November 15, 2014

Federalist Society Panel: Is Higher Education Run for the Benefit of Students, Faculty or Administrators?

Federalist SocietyAt today's 2014 National Lawyers Convention: Millennials, Equity and the Rule of Law:

Showcase Panel III:  Higher Education: Run for the Benefit of Students or Faculty or Administrators?:

Success in today’s global economy virtually requires a college or post graduate degree, but colleges and law schools have raised tuition enormously. The government subsidizes students to take huge loans to pay for college and law schools, loans which inflict an increasing burden on students, including law students in a troubled economy. Do these loans pay as much for faculty research and administrators as for direct student education? Are faculties producing research that justifies these costs? Are students getting a good deal now? Could or will on line education provide students with similar education at a fraction of the cost? Is it time to ask some hard questions about higher education? Does education policy benefit average and below average students or does it merely benefit the top of the class? This panel will focus to a significant degree on law schools.

  • Paul F. Campos (Colorado)
  • Daniel Polsby (Dean, George Mason)
  • Richard Kent Vedder (Ohio University)
  • Thomas D. Morgan (George Washington) (moderator)

November 15, 2014 in Conferences, Legal Education | Permalink | Comments (7)

NTA 107th Annual Conference on Taxation

NTA CoverThe National Tax Association 107th Annual Conference on Taxation concludes today in Santa Fe. Tax Prof speakers include:

The Philosophy of Taxation:
Session Chair:  Brian Galle (Boston College)
Papers:

Discussants:  Brian Galle (Boston College), Linda Sugin (Fordham)

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November 15, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

WSJ: California State Bar in Turmoil After Shake-up Triggers Whistleblower Claim

California State Bar (2014)Wall Street Journal, California State Bar in Turmoil After Shake-up Triggers Whistleblower Claim:

The California State Bar was thrown into turmoil this week after its ousted executive director struck back with retaliation claims alleging that he was fired for complaining about ethical breaches inside the organization.

Joseph Dunn, a Democratic former California state senator, claims in a whistleblower lawsuit filed in California state court Thursday that the state bar fired him from his job last week after he accused the bar’s top disciplinary officer of lying about the organization’s handling of attorney misconduct complaints.

The bar’s leadership won’t say what was behind the shake-up, and Mr. Dunn says he wasn’t given an explanation when the bar notified him of his termination when was in San Francisco giving a speech on Nov. 7.

The bar put out a statement Thursday saying that it had terminated Mr. Dunn and that the bar’s president, Craig Holden, and a deputy executive director would be assuming Mr. Dunn’s duties on a temporary basis. It did not have an immediate comment on Friday.

The bar, an arm of the California Supreme Court, is the state’s legal gatekeeper, overseeing bar admissions and managing the state’s attorney discipline system for its 181,000 active members.

Mr. Dunn alleges that the bar’s chief trial counsel, Jayne Kim, who oversees investigations into complaints about attorneys, “unlawfully removed” backlog cases from official reports. “This was done to benefit Ms. Kim in her upcoming evaluation and to fraudulently inflate the productivity of her office,” the complaint says.

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November 15, 2014 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 555

IRS Logo 2Yahoo! Finance:  Politicization of the IRS: Full Disclosure Network Special Video Report:

Watch this 8 minute FDN Video where it is revealed that Obama Administration officials were directing the IRS campaign against political groups critical of the President's policies according to the documents obtained by Paul Orfanedes, Director of Litigation for the public interest law firm Judicial Watch. Orfanedes reveals the tactics used by IRS Director Lois Lerner that deceived the media by where public documents had been withheld from Freedom of Information Act Requests (FOIA) filed by Judicial Watch. He also explains why Judicial Watch is determined to find all the missing Lois Lerner emails and how the IRS was able to shut down Patriot and Tea Party organizations by denying them Tax Exempt Status. 

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November 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, November 14, 2014

Weekly Tax Roundup

November 14, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Arctic Blast Sweeps the Nation; Californians Break Out Their Winter Clothes

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

November 14, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Student Tax Note Roundup

November 14, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Class Crits VII Conference Kicks Off Today at UC-Davis

Class CritsThe two-day Class Crits VII Conference on Poverty, Precarity, & Work: Struggle & Solidarity in an Era of Permanent(?) Crisis kicks off today at UC-Davis.  Tax Prof speakers include:

Debt & Taxes:

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November 14, 2014 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (2)

NTA 107th Annual Conference on Taxation

NTA CoverThe National Tax Association 107th Annual Conference on Taxation continues today in Santa Fe. Tax Prof speakers include:

Conceptualizing the Social and Regulatory Nature of Taxation:

Session Chair:  David Gamage (UC-Berkeley)
Papers:

  • David Hasen (Colorado), Income Taxation and Risk-Taking
  • Tracey Roberts (UC-Hastings), Law,  The Taxing Power as a Check on Private Property Rights and a Source of Regulatory Authority
  • Theodore Seto (Loyola-L.A.), Some Implications of Preference-Shifting for Optimal Tax Theory

Discussants: David Gamage (UC-Berkeley), Leandra Lederman (Indiana)

Hitting the Target: Public and Private Savings:
Session Chair:  Travis St. Clair (Maryland)
Papers:

Discussants:  Elizabeth Chorvat (Illinois), Jason Seligman (Ohio State), Travis St. Clair (Maryland)

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November 14, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Buffett to Buy Duracell from P&G in Cash-Rich Split-Off, Save $1 Billion in Taxes

Bloomberg, Buffett Set to Save More Than $1 Billion on Taxes in Swap:

DuracellWarren Buffett is again showing how to use the U.S. tax code to his advantage. For the third time in a year, the billionaire chairman of Berkshire Hathaway has structured a deal in which he buys businesses in exchange for stock that has appreciated. The transactions, called cash-rich split-offs, allow him to avoid capital gains taxes that would be incurred if he sold the shares in the open market.

Berkshire announced today that it would turn over about $4.7 billion in Procter & Gamble stock in exchange for P&G’s Duracell battery business, which will be infused with about $1.7 billion in cash. Since Buffett’s cost basis on the shares was about $336 million, and corporate capital gains are typically taxed at 35 percent, structuring the deal in this way could save Berkshire more than $1 billion. P&G also stands to reduce its tax liability on the sale. ...

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November 14, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Innovation, Ingenuity and Leadership in American Law Schools

David Barnhizer (Cleveland State), Innovation, Ingenuity and Leadership: ‘De-Accrediting’ the ABA, Nationalizing Bar Admission and Redefining the Right to Practice Some Forms of Law:

In a system such as is represented by US law schools even its failures and inadequacies were insufficient stimuli to drive honest self-assessment. This was because until the recent dramatic plunge in applicants law schools were not in any way accountable for their failure to be self-aware in mission, teaching, scholarly activity or cost in ways that compelled faculty to seek to understand the true nature of what they were doing both individually and collectively. Over the past three to four decades many law schools became such self-contained institutions that they were increasingly disconnected from the needs of the legal profession and the judiciary. After all, the practice of law was sort of morally “dirty”, anti-intellectual and mundane.

Law schools are now trumpeting that they really are concerned with educating students to become effective lawyers. The schools are releasing press release after release announcing how they have (finally) seen the light and are innovatively committed to the mission of educating lawyers. The problem with the PR is that innovation doesn’t just happen. It requires a unique combination of special leadership working with a critical mass of people who want to innovate. Even that is not enough.   The “innovators” must possess the insights and skills needed to “invent new forms” and those “inventions” will often require that they and others change the nature and focus of what they have long been doing and adapt. The willingness to transform oneself in that way is not a common feature in American law schools. To innovate effectively the Body comprised of a law school dean and faculty need to understand the existing system sufficiently well that they know how to preserve its strengths while eliminating the barriers created by our human tendency to consider what we have always done as the only (or best) way to do things.

This is particularly difficult to achieve in the amorphous system of American legal education. The problems have several elements. One of the most critical is that no one in a law school has sufficient power to compel faculty to act cohesively. This is exacerbated by the fact that members of law faculties are master “word smiths” capable of manipulating and blurring the reality of any situation with elevated rhetoric. They are also traditionalists locked into the existing hierarchy and ways of doing things who are far closer to being entitled feudal lords with individual fiefdoms rather than employees.

Significant innovation becomes close to impossible when it is dependent on the decisions of an atomistic collection of “uber-individuals” empowered by lifetime employment guarantees that cannot be altered without great expense and for very significant cause. Virtually no one can actually tell an American law professor what to do and this creates very high barriers to innovation. Nonetheless there are several approaches that can trigger systemic innovation with significant impacts on legal education and the profession.

In my judgment there are three steps that are needed to “crack open” the current monopoly over legal education and the right to provide law-related services that are operating as barriers to innovation and to the best ways to provide legal services to those in need.

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November 14, 2014 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 554

IRS Logo 2Breitbart, The IRS-Benghazi Congress:

Benghazi and the IRS dominated the news this year thanks to Judicial Watch’s work in exposing smoking gun documents in both scandals – work that left Congress and much of the other media looking feeble. JW’s work can change history. Our intent is to get the truth, and we spared neither party from criticism. But voters were outraged at our findings and the scandals were a major factor in the election. 

Almost half, 49 percent, said the results of the 2012 presidential election would have been different if the public knew the facts then that it knows now about the Obama administration’s initial, misleading story about what happened in Benghazi and the targeting of conservative groups through the IRS. 

In no small way, this new Congress is the Benghazi-IRS Congress. The expanded House majority, which has a historic number of Republican members, and the massive wave that led to the Republican takeover of the Senate were the result of voter concerns about Obama’s IRS abuse and the Benghazi deaths and cover-up. 48 percent of voters said the IRS scandal influenced their vote, and of those concerned Americans, 71 percent voted for Republicans to take over the Senate. The numbers are similar for Benghazi; 39 percent said the scandal influenced their vote and 64 percent who were concerned about the terrorist attack this president lied about to get reelected say they voted for Republicans in the Senate. ...

The new Congress has a strong mandate to pursue Obama’s abuse of power in the IRS scandal, hold him accountable for the Benghazi lies, protect our borders, close the door on amnesty, end Obamacare, confront government secrecy, and ensure the integrity of our elections. Judicial Watch has been happy to do the job of Congress, the establishment media, and the Justice Department for six years. Again, this election shows that Americans want Congress to follow our lead and get Washington back under the rule of law.

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November 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, November 13, 2014

7th Circuit Rejects Constitutional Challenge to § 107 Housing Allowance for 'Ministers of the Gospel' on Standing Grounds

Freedom From Religion Foundation v. Lew, No. 14-1152 (7th Cir. Nov. 13, 2014):

Housing AllowanceThe Freedom from Religion Foundation and its two co-presidents (collectively “the plaintiffs”) filed this suit to challenge the constitutionality of § 107 of the Internal Revenue Code, also known as the parsonage exemption. The exemption excludes the value of employer-provided housing benefits from the gross income of any “minister of the gospel.” 26 U.S.C. § 107. The plaintiffs conceded in the district court that they did not have standing to challenge § 107(1), which applies to in-kind housing provided to a minister, but argued that they did have standing to challenge § 107(2), which applies to rental allowances paid to ministers. The district court agreed that the plaintiffs had standing to challenge § 107(2), and held that the subsection is an unconstitutional establishment of religion under the First Amendment.

We conclude that the plaintiffs lack standing to challenge § 107(2). We therefore do not reach the issue of the constitutionality of the parsonage exemption. ...

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November 13, 2014 in Tax | Permalink | Comments (0)

Forget the 1%: It Is the 0.01% Who Are Really Getting Ahead in America

The Economist, Forget the 1%: It Is the 0.01% Who Are Really Getting Ahead in America:

Among the most controversial of Thomas Piketty’s arguments in his bestselling analysis of inequality, Capital in the Twenty-First Century, is that wealth is increasingly concentrated in the hands of the very rich. Rising wealth inequality could presage the return of an 18th century inheritance society, in which marrying an heir is a surer route to riches than starting a company. Critics question the premise: Chris Giles, the economics editor of the Financial Times, argued earlier this year that Mr Piketty’s data were both thin and faulty. Yet a new paper suggests that, in America at least, inequality in wealth is approaching record levels.

Earlier studies of American wealth have tended to show only small increases in inequality in recent decades. A 2004 study of estate-tax data by Wojciech Kopczuk of Columbia University and Emmanuel Saez of the University of California, Berkeley, found an almost imperceptible rise in the share of wealth held by the top 1% of families, from about 19% in 1976 to 21% in 2000 [Top Wealth Shares in the United States, 1916-2000: Evidence From Estate Tax Returns]. A more recent investigation of the Federal Reserve’s data on consumer finances, by Edward Wolff of New York University showed a continued but gentle increase in inequality into the 2000s [Recent Trends in Household Wealth in the United States: Rising Debt and the Middle Class Squeeze — An Update to 2007]. Mr Piketty’s book, which drew on this previous work, showed similarly modest rises in wealth inequality in America.

A new paper by [Emmanuel Saez & Gabriel Zucman, Wealth Inequality in the United States Since 1913: Evidence From Capitalized Income Tax Data] reckons past estimates badly underestimated the share of wealth belonging to the very rich. ... The results are enough to make Mr Piketty blush.

Economist

The outsize fortunes of the few would not be too worrying were they largely the product of entrepreneurial activity: riches amassed by hardworking billionaires who are as likely as not to give their bounty away through philanthropy. Messrs Saez and Zucman find some evidence for this dynamic. Wealthy families are younger than they were a generation or two ago, and they earn a larger share of the country’s income from labour: 3.1% in 2012 versus less than 0.5% prior to 1970.

Yet one should not yet rule out the return of Mr Piketty’s “patrimonial capitalism”. The club of young rich includes not only Mark Zuckerbergs, the authors argue, but also Paris Hiltons: young heirs to previously accumulated fortunes. What’s more, the share of labour income earned by the top 0.1% appears to have peaked in 2000. In recent years the proportion of the wealth of the very rich held in the form of shares has levelled off, while that held in bonds has risen. Since the fortunes of most entrepreneurs are tied up in the stock of the firms that they found, these shifts hint that America’s biggest fortunes may be starting to have less to do with building businesses, just as Mr Piketty warned.

November 13, 2014 in Tax | Permalink | Comments (0)

Fleming & Peroni: A Hitchhiker's Guide to International Tax Reform

J. Clifton Fleming Jr. (BYU) & Robert J. Peroni (Texas), A Hitchhiker's Guide to Outbound International Tax Reform, 18 Chapman L. Rev. 133 (2014):

In this article, we argue that although some U.S. international income tax reforms, such as limitations on earnings stripping, can be handled by targeted legislative action, broad reform of the U.S. international income tax system should take place only as part of a general revision of the U.S. corporate income tax. We further argue that U.S. international income tax reform should not lose revenue, should take fairness issues into account, and should discount the competitiveness and complexity arguments. We also explain that broad U.S. international income tax restructuring should eschew both an explicit territorial system and formulary apportionment (although either would be better than the current U.S. regime) and, instead, should revise the current, badly flawed, U.S. worldwide system into a real worldwide system by abolishing deferral and severely limiting cross-crediting. We recommend strengthening this real worldwide system by correcting flaws in the source rules, limiting earnings stripping, repealing the Section 911 exclusion, and expanding the Section 904(j) de minimis rule and making it mandatory.

November 13, 2014 in Scholarship, Tax | Permalink | Comments (0)

Time: The Real Student Debt Problem No One is Talking About

Time (2014)Time:  The Real Student Debt Problem No One is Talking About, by Jon Marcus:

Graduate students make up just 14% of university enrollment, but account for nearly 40% of student debt

Much of the concern about ballooning student debt has focused on undergrads taking out steep loans to pay for the rising cost of college. Largely overlooked are a principal source of the problem: graduate students ... who are less likely to have support from parents or other sources, and who face almost no limits on how much they borrow.

Graduate students now collectively owe as much as 40 percent of the estimated $1.2 trillion in outstanding student debt, according to the New America Foundation, even though they make up only 14 percent of all university enrollment.

GradStudentDebt

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November 13, 2014 in Legal Education | Permalink | Comments (2)

GAO: IRS Lacks Adequate Internal Controls

GAOGovernment Accountability Office, IRS's Fiscal Years 2014 and 2013 Financial Statements (GAO-15-173):

In GAO's opinion, the Internal Revenue Service's (IRS) fiscal years 2014 and 2013 financial statements are fairly presented in all material respects. However, in GAO's opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2014, because of a continuing material weakness in internal control over unpaid tax assessments. ...

During fiscal year 2014, IRS continued to make important progress in addressing deficiencies in internal control over its financial reporting systems. However, GAO identified new and continuing deficiencies in internal control over information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security, that constituted a significant deficiency in IRS's internal control over financial reporting systems. Until IRS fully addresses existing control deficiencies over its financial reporting systems, there is an increased risk that its financial and taxpayer data will remain vulnerable to inappropriate and undetected use, modification, or disclosure.

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November 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The National Jurist's 25 Most Influential People in Legal Education

National JuristNational Jurist, 4 New Faces Join list of Most Influential People in Legal Education:

The National Jurist’s list of the Most influential People in Legal Education will include four new names when it is unveiled in its entirety in January, the publication announced.

Paul Caron, Professor at Pepperdine University, Eric Janus, Dean at William Mitchell School of Law, Michael Hunter Schwartz, Dean at University of Arkansas at Little Rock and Maureen A. O’Rourke, Dean at Boston University School of Law all made the list for the first time. Philip J. Weiser, Dean at University of Colorado Law School will return to the list after a one-year absence.

Janus made news late last year as the dean of the first school to get ABA approval for a distance-learning program for J.D. students. Michael Hunter Schwartz and Maureen A. O’Rourke have each spearheaded legal education reforms at their schools. ... Caron, who is new to the list, is an editor of a popular blog that covers legal education in addition to tax law issues.

The National Jurist seeks nominations from every law school and then narrows the list down to 50 nominees. Law school deans, the magazine’s editors and other influencers in legal education then vote.

Twenty honorees return to the list. They are listed below in alphabetical order:

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November 13, 2014 in Legal Education | Permalink | Comments (4)

NTA 107th Annual Conference on Taxation

NTA CoverThe National Tax Association 107th Annual Conference on Taxation kicks off today in Santa Fe. Tax Prof speakers include:

Tax Enforcement and Collections Discretion:
Session Chair:  Leigh Osofsky (Miami)
Papers:

  • Joshua Blank (NYU), Reconsidering Corporate Tax Privacy
  • Andrew Hayashi (Virginia), An Economic Analysis of Taxpayer Liquidity
  • Shu-Yi Oei (Tulane), What is Fair Tax Administration?
  • Leigh Osofsky (Miami),  Announcing Enforcement Priorities

Discussants:  Leandra Lederman (Indiana), Diane Ring (Boston College)

Municipal, Local, and Global Tax Incentives:
Session Chair:  Neil Buchanan (George Washington)
Papers:

  • Mirit Eyal-Cohen (Alabama), Urban Mavericks
  • Omri Marian (Florida), Corporate Inversions, Tax Residence, and Real Economic Effects: A Case Study Approach
  • Agustin Leon-Moreta (New Mexico), Tax-Expenditure Limitations and Special District Finance in the United States
  • Erin Scharff (Arizona State), Powerful Cities, Efficient Revenues: Limits on Municipal Taxing Authority and What to do About it

Discussant:  Neil Buchanan (George Washington)

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November 13, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)