TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, March 10, 2017

The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance By Fortune 500 Companies, 2008 To 2015

New York Times, Profitable Companies, No Taxes: Here’s How They Did It:

Complaining that the United States has one of the world’s highest corporate tax levels, President Trump and congressional Republicans have repeatedly vowed to shrink it.

Yet if the level is so high, why have so many companies’ income tax bills added up to zero?

That’s what a new analysis of 258 profitable Fortune 500 companies that earned more than $3.8 trillion in profits showed [The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance by Fortune 500 Companies, 2008 to 2015].

18 CorpsAlthough the top corporate rate is 35 percent, hardly any company actually pays that. The report, by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, found that 100 of them — nearly 40 percent — paid no taxes in at least one year between 2008 and 2015. Eighteen, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates. The institute used the companies’ own regulatory filings to compute their tax rates. ...

How does a billion-dollar company pay no taxes?

Companies take advantage of an array of tax loopholes and aggressive strategies that enable them to legally avoid paying what they owe. The institute’s report cites these examples:

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March 10, 2017 in Tax, Think Tank Reports | Permalink | Comments (6)

Louisville's 5-Year Interim Dean Is Passed Over In Selection Of New Dean; Law School Fires Student Workers And RAs To Address Budget Deficit

LouisvilleFollowing up on my earlier post, Louisville Dean Finalists Include 5-Year Interim Dean And Associate Dean With Experience Addressing 50% Enrollment Decline:  

Lousiville Courier-Journal, Acting U of L Law School Dean Told She Won't Get the Job:

The acting dean of the University of Louisville's Brandeis School of Law for five years was notified this week she won’t get the job permanently.

Susan Duncan gave faculty the news on Thursday that she has been eliminated as a candidate for the position. In an interview, Duncan said she was informed of the decision Tuesday by Provost Dale Billingsley, whom she said didn’t cite any reasons for it. ...

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March 10, 2017 in Legal Education | Permalink | Comments (1)

Low Income Taxpayer Clinic Annual Report

The IRS yesterday released (IR-2017-56) Program Report and 2017 Publication 4134, Low Income Taxpayer Clinic List:

LITC

LITC Program Report
The Internal Revenue Service’s Low Income Taxpayer Clinic (LITC) Program Office has issued its annual program report, which details how LITCs have provided representation, education, and advocacy for taxpayers who are low income or speak English as a second language (ESL).

During 2015, LITCs represented 18,751 taxpayers in disputes with the IRS and provided consultation or advice to an additional 18,810 taxpayers. LITCs helped taxpayers secure more than $4.3 million in tax refunds and eliminate more than $64 million in tax liabilities, penalties, and interest.

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March 10, 2017 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Days 1301-1400

March 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, March 9, 2017

Shay Presents 'A Better Way' Business Tax Reform Today At Duke

Shay (2014)Stephen E. Shay (Harvard) presents “A Better Way” Business Tax Reform: From Theory to Practical Complications (with J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas)) at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

This article critically reviews the House GOP proposal to replace the income tax on corporate and individual business income with a hybrid consumption tax in the form of a subtraction method VAT. The proposal would constitute a radical change to the U.S. federal, state and local tax system, which would, as discussed below, (a) be highly regressive and worsen inequality; (b) be vulnerable to attack under international trade law by U.S. trading competitors (with unprecedented potential penalties), (c) be less advantageous for small and medium businesses than for large businesses, and (d) open substantial opportunities for avoidance.

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March 9, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Lipman Presents (Anti)Poverty Measures Exposed Today At UC-Davis

Lipman (2017)Francine J. Lipman (UNLV) presents (Anti)Poverty Measures Exposed at UC-Davis today as part of its Faculty Intellectual Enrichment Series:

Few economic indicators have the salience and far-reaching financial impact than the poverty rate, yet policymakers, researchers, and advocates struggle to understand its mechanics. This Article will build a bridge from in depth personal portraits of families living in poverty to the resource allocations that failed them by exposing the mechanics underlying the Census Bureau's official (OPM) and supplemental poverty measures (SPM). Too often when we address the problem of poverty the focus is on the plight of the poor, and not on ineffective antipoverty programs. The purpose of poverty measures should be to measure and expose the effectiveness or failure of antipoverty programs.

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

Lawmakers Ask Calif. Chief Justice To Cut State Bar Exam Score

California Bar ExamThe Recorder, Lawmakers Ask Calif. Chief Justice to Cut State Bar Exam Score:

Democratic members of the Assembly Judiciary Committee asked the California Supreme Court on Thursday to temporarily reduce the required passing score on the state bar exam.

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March 9, 2017 in Legal Education | Permalink | Comments (6)

Fleischer:  Subsidizing Charity Liberally

Miranda Perry Fleischer (San Diego), Subsidizing Charity Liberally:

Our Constitution enshrines two bedrock principles of Western liberal democracies: limited government and equal opportunity. This Chapter explores the extent to which the charitable tax subsidies reflect these principles, as expressed in the two theories of distributive justice respectively associated with them, libertarianism and resource egalitarianism. This analysis shows that the subsidies’ current structure is much broader than necessary to reflect libertarian ideals, even under the more permissive classical liberal theories.

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

Seto:  Associates Promoted To Partner in 2016 — The Top California Schools

Seto (2014)TaxProf Blog op-ed:  Associates Promoted to Partner in 2016: Top California Schools, by Theodore P. Seto (Loyola-L.A.):

According to the National Law Journal, the top 50 US law schools, ranked by the number of law firm associates promoted to partner nationally in 2016, included eight California schools:

Rank

School

Number

15

UCLA

20

22

UC-Hastings

16

22

USC

16

30

Santa Clara

14

30

UC-Berkeley

14

34

Loyola-L.A.

13

36

Pepperdine

12

42

Southwestern

11

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

CBO:  International Comparisons Of Corporate Income Tax Rates

Congressional Budget Office, International Comparisons of Corporate Income Tax Rates:

In the United States, the top federal statutory corporate income tax rate (the rate set by law that applies to the highest corporate income tax bracket) has been 35 percent since 1993. Most corporate income is taxed at that rate. With state taxes added in, the top statutory rate is even higher; on average, that combined rate was 39.1 percent in 2012, among the highest in the world.

The statutory corporate tax rate is one of many features of the tax system that influence corporate behavior. Companies are likely also to consider other provisions of the tax system—including tax preferences, surtaxes, and noncorporate taxes— that affect the amount of taxes they owe. Among the alternative measures of tax rates that account for some of those provisions are the average and effective marginal corporate tax rates.

CBO1

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March 9, 2017 in Congressional News, Tax | Permalink | Comments (0)

Harvard Is Second Law School To Admit 1Ls Based On GRE Rather Than LSAT

GREHLSPress Release, In Pilot Program, Harvard Law Will Accept GRE for Admission:

Accepting the GRE is part of an HLS strategy to expand access to legal education.

Starting in the fall of 2017, Harvard Law School will allow applicants to submit either the Graduate Record Examination (GRE) or the Law School Admissions Test (LSAT) to be considered for admission to its three-year J.D. program.

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March 9, 2017 in Legal Education | Permalink | Comments (8)

Repetti:  Taft v. Bowers — The Foundation For Non-Recognition Provisions In The Income Tax

James R. Repetti (Boston College), Taft v. Bowers: The Foundation for Non-Recognition Provisions in the Income Tax, 42 ACTEC L.J. 23 (2016):

Taft v. Bowers is a Supreme Court decision that is rarely studied in law schools or discussed by scholars. Yet, it is a case of vast significance. In the Taft decision, the Supreme Court confirmed that Congress may create non-recognition exceptions to the income tax that merely defer the recognition of income, rather than permanently exclude it.

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

Wednesday, March 8, 2017

Meet The 'Blog Emperor,' Pepperdine Law's New Dean

Pepperdine Law School (2016)The Recorder, Meet the 'Blog Emperor,' Pepperdine Law's New Dean:

Pepperdine University School of Law has chosen its next dean, and the name will sound familiar to anyone who keeps up with the legal blogosphere.

Paul Caron, founder of the popular TaxProf Blog and the Law Professor Blog, will take the reins of the Malibu law school on June 1. Caron has been on the Pepperdine faculty since 2013 and currently serves as the associate dean for research and faculty development. The tax law expert taught at the University of Cincinnati College of Law for 23 years before moving to Pepperdine.

Caron replaces former dean and Judge Deanell Tacha of the U.S. Court of Appeals for the Tenth Circuit, who [is retiring June 1].

We caught up with Caron to discuss his goals for the law school, Pepperdine's recent dip in the U.S. News & World Report rankings, and what will become of his blog. His answers have been edited for length and clarity.

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

Reuven Avi-Yonah Cancels Lateral Move To UC-Irvine, Stays At Michigan

Michigan Law Logo (2015)Following up on my previous post, Reuven Avi-Yonah Leaves Michigan For UC-Irvine (Sept. 1, 2016):

Brian Leiter reports (and I have independently confirmed) that Reuven Avi-Yonah has changed his mind and has decided to remain at Michigan and will not be making a lateral move to UC-Irvine.

March 8, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (4)

Fleming, Peroni & Shay:  Defending Worldwide Taxation

Clifton Fleming Jr. (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Defending Worldwide Taxation with a ShareholderBased Definition of Corporate Residence, 2016 BYU L. Rev. 1681:

This Article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The Article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows:

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

'Full Citizenship Project For All Law Faculty' Launched To Correct Gender Disparities Among Law Profs

My Dean 3Press Release, On International Women's Day, Advocacy Groups Launch “Full Citizenship Project for Law Faculty”:

Professional associations unite to support full institutional citizenshipan effort to correct gender and related disparities among law faculty

The Legal Writing Institute (LWI) and the Association of Legal Writing Directors (ALWD) announce the launch of a new initiative aimed at correcting gender and related disparities among U.S. law faculty.  Organizers chose International Women’s Day (March 8) to launch the “Full Citizenship Project for All Law Faculty” because of the professional status challenges that continue to plague skills-based and academic support law faculty, who are predominantly women.

As law faculty status and salaries decrease, the percentage of women faculty increases. Based on available data, roughly—and only—36 percent of tenured or tenure track faculty are female, whereas 63 percent of clinical faculty and 70 percent of legal writing faculty are female. This disparity is due to faculty teaching in skills-based areas often being denied the opportunity to earn the same security of position and academic freedom that traditional law faculty enjoy. Yet security of position and academic freedom are needed for a robust classroom and innovative teaching in all areas of law.

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March 8, 2017 | Permalink | Comments (20)

NY Times:  Dartmouth Prof Accuses Caterpillar Of Tax Fraud In Report Commissioned By Federal Investigators

RobinsonFollowing up on Saturday's post, U.S. Agents Raid Caterpillar Over Offshore Tax Practices:  New York Times, Caterpillar Is Accused in Report to Federal Investigators of Tax Fraud:

For years, federal investigators have been scrutinizing Caterpillar’s overseas tax affairs with no resolution to the examinations of the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries.

Now, a report commissioned by the government and reviewed by The New York Times accuses the heavy-equipment maker of carrying out tax and accounting fraud. It is extremely rare to accuse a big multinational company of tax fraud, which could result in high penalties.

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” wrote Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

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March 8, 2017 in Tax | Permalink | Comments (3)

Horwitz:  Some Suggestions For Dean Emperor Caron And The Buzzworthy New Regime At Pepperdine

Paul Horwitz (Alabama), Some Suggestions for Dean Emperor Caron and the Buzzworthy New Regime at Pepperdine:

As Brian Leiter enthusiastically announces, tax-law-blogger and blog-impresario Paul Caron, nicknamed in Frank Herbert fashion "Blog Emperor Caron," is about to become "Dean Emperor Caron" at Pepperdine Law School. Before taking a puckish turn with this post, let me say that of course I add my congratulations. I have found Paul lovely to talk with in person and via the occasional email and such. Among his many posts at TaxProf Blog over the years, a great number of them have evidenced his warm and caring relationship with his students and his abiding concern for them. I don't doubt he'll bring that same sensibility to his job as dean. Best wishes, Paul! 

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

Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax

Robert W. Wood (Forbes), Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax:

California doesn't like Trump, but sure does like tax increases. At around the same time as President Trump was being elected, California was increasing state income taxes again. The state's high 13.3% California tax are only temporary though, just through 2030! Of course, that was back in November. It must be time for another tax hike. The latest is a move by the Golden State to tax estates, even if the feds do not.

If the federal estate tax law is repealed by President Trump and Congress, estates in California will still pay. A bill was introduced by state Sen. Scott Wiener (D-San Francisco), asking voters to keep the estate tax after all. The proposal would have to go to voters. ...

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March 8, 2017 in Tax | Permalink | Comments (2)

Independent Law Schools And The Last Buggy Whip Manufacturer

Buggy WhipLawProfBlawg & TempDean, Independent Law Schools And The Last Buggy Whip Manufacturer:

LawProfBlawg and TempDean are both somewhat surprised that none of the recent closures have involved freestanding law schools. Freestanding law schools have been an important feature of the legal education landscape for the past century. ...

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

Tuesday, March 7, 2017

The Future Of TaxProf Blog

Pepperdine Law School (2016)ABA Journal, Popular Blogger and Scholar Tapped as Pepperdine Law Dean; He Plans to Keep Blogging:

Paul L. Caron, a professor at Pepperdine School of Law, has been selected as its new dean. The tax law scholar also blogs at TaxProf Blog, and owns and publishes the Law Professor Blogs Network.

Besides tax matters, the Tax Prof Blog also has many posts on various challenges in legal education. In 2016, National Jurist named Caron the third most influential person in legal education.

Caron has not shied away from posting about controversial topics in legal education, including bar passage rates in California and elsewhere. When asked if he plans to continue blogging as dean, Caron said yes.

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March 7, 2017 in About This Blog, Legal Education, Tax | Permalink | Comments (14)

Fleischer Presents Tax Reform: The State of Play Today At Georgetown

Fleischer (2016)Victor Fleischer (San Diego; Co-Chief Tax Counsel, Senate Finance Committee Democrats) presents Tax Reform: The State of Play at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg.  Vic's talk will discuss several aspects of the House Republicans' tax reform blueprint, A Better Way for Tax Reform:

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March 7, 2017 in Colloquia, Tax | Permalink | Comments (0)

New York:  A Tax Haven For Art Collectors?

NYFollowing up on my previous posts (links below):  Wall Street Journal, A New Tax-Free Way to Store Art:

New York could become the latest tax haven for art collectors.

A pair of art shippers who for years watched collectors buy works in the city—only to store them tax-free in warehouses in Delaware or Switzerland—have won the right to turn a former parking lot in Harlem into a foreign-trade zone.

The shippers, Tom Sapienza and Kevin Lay, plan to open a 110,000-square-foot facility, called Arcis, that can store as much as $2.5 billion worth of art duty-free. Collectors will be able to buy art in New York, or anywhere in the world, and store it in Arcis’s four-story warehouse indefinitely without having to pay local or state taxes—although taxes will be due once the art leaves the site. Moving new purchases into storage can give collectors and dealers time to save up to pay the taxes later rather than right away—or time to resell the work while it’s in storage and thereby pass on the sales tax to someone else. Collectors can also choose to ship their work internationally and avoid paying local taxes altogether.

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March 7, 2017 in Tax | Permalink | Comments (0)

Seto:  Does The Income Tax Cause Parents To Spend Too Much Time With Their Children?

Theodore Seto (Loyola-L.A.), Does the Income Tax Cause Parents to Spend Too Much Time with Their Children?: Rethinking Mirrlees:

In 1971, James Mirrlees published An Exploration in the Theory of Optimum Income Taxation, one of the most influential tax papers ever written. Unpacked, Mirrlees’ claim can be restated as follows: Assume that our undistorted decisions about how to allocate our time between paid and unpaid activities are welfare-maximizing. If so, any distortion of those decisions by the tax system is welfare-reducing. Unless the supply of labor is inelastic or income effects predominate, taxing income from labor will cause taxpayers to spend less time engaged in paid activities and more time in unpaid activities than would be welfare-maximizing. Because of the declining marginal utility of money, redistribution from high-income to low-income individuals is generally welfare-enhancing. Nevertheless, at some point the welfare losses from taxing labor income to effect redistribution outweigh the welfare gains produced by redistribution. This, in turn, (1) limits the overall amount of welfare-enhancing redistribution we can effect by taxing income from labor and (2) requires flat or declining marginal tax rates on such income.

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March 7, 2017 in Scholarship, Tax | Permalink | Comments (2)

NLJ:  Law School Rankings By Graduates In BigLaw Jobs

2017National Law Journal, The 2017 Go-To Law Schools:

New associate hiring ticked up slightly in 2016, with the country’s largest 100 law firms bringing on 3,521 new law school graduates. Among the 50 law schools most popular with those employers, 24 percent of last year’s graduates landed associate jobs—up one percent over the previous year.

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March 7, 2017 in Law School Rankings, Legal Education | Permalink | Comments (4)

Auerbach & Devereux:  The Case For A Border-Adjusted Tax

New York Times op-ed: The Case for a Border-Adjusted Tax, by Alan Auerbach (UC-Berkeley) & Michael Devereux (Oxford):

The American corporate tax system is broken. Faced with one of the highest tax rates in the world, many multinational corporations in the United States move their operations and reported profits offshore or undertake “inversions” to relinquish their American tax nationality. Elaborate regulatory and enforcement measures have been unable to stop this. Vilifying companies for their behavior hasn’t worked, either.

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March 7, 2017 in Tax | Permalink | Comments (0)

Kahng's The Taxation Of Women In Same-Sex Marriages Wins UCLA Dukeminier Award

The article by Lily Kahng (Seattle), The Not-So-Merry Wives of Windsor: The Taxation of Women in Same Sex Marriages, 101 Cornell L. Rev. 325 (2016), has been selected for UCLA Law School’s Dukeminier Award, which each year recognizes the best sexual orientation and gender identity legal scholarship published during previous year.

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March 7, 2017 in Scholarship, Tax | Permalink | Comments (1)

New Pepperdine Law School Dean Is 'Just A Mundane Tax Guy'

My News L.A., Presidential Sex Scandal Prosecutor Long Gone From Pepperdine: New Dean’s Just a Tax Law Guy:

While Pepperdine University announced Monday that a tax law expert has been named dean of its law school, it was a far more mundane selection this time around than when the Malibu campus hired an earlier dean who had been Bill Clinton’s special prosecutor involving presidential sex scandals.

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March 7, 2017 in Legal Education, Tax | Permalink | Comments (2)

Monday, March 6, 2017

Paul Caron Named Dean Of Pepperdine Law School

Caron (2014)Press Release, Paul L. Caron Announced as Duane and Kelly Roberts Dean of the School of Law:

Paul L. Caron has been named the Duane and Kelly Roberts Dean of the Pepperdine School of Law. Caron, currently associate dean for research and faculty development and professor of law, will formally begin his responsibilities as dean on June 1, 2017.

“Since his first days as a distinguished visiting scholar through his selection as a tenured professor and now his candid and strategic participation in this search process, I have admired Professor Caron for his keen intellect, generous outreach to others, and his sterling reputation within the national legal community,” says Pepperdine president Andrew K. Benton. “It will be a privilege to work side-by-side with him to advance the Pepperdine School of Law, an entity we both hold in high esteem. He will be, I believe, a remarkable law dean.”

Caron came to the School of Law in 2010 as the D & L Straus Distinguished Visiting Professor of Law. He joined the School of Law tenured faculty in 2013 as professor of law and assumed the role of associate dean for research and faculty development in 2015. Previously Caron served as the associate dean of faculty and the Charles Hartsock Professor of Law at the University of Cincinnati College of Law.

“Paul Caron is a highly regarded scholar and wonderful mentor to our law school students,” says Pepperdine provost Rick R. Marrs. “He has a comprehensive knowledge of legal education in our country and a compelling vision for the place of our law school in that landscape. I eagerly anticipate working with him as he helps us achieve our goal to move the law school toward national prominence, providing our students with the highest educational experience and empowering them to become leaders in their communities.”

A widely respected expert in tax law, Caron has written over 50 books and scholarly articles and is the publisher and editor of Tax Prof Blog, the most popular tax blog on the Internet. He is also the owner and publisher of the Law Professor Blogs Network of more than 50 blogs in other areas of law edited by law professors around the country. He was named the third most influential person in legal education by the National Jurist in 2016 and has been listed as one of the 100 most influential people in tax and accounting every year since 2006 by Accounting Today.

"I am honored to be chosen as the next dean of this great law school at this important point in its history, following in the footsteps of Deanell Tacha, Ken Starr, Richard Lynn, and Ron Phillips," shares Caron. "I look forward to building on their work to advance Pepperdine's unique position in legal education by combining academic and research excellence with a deep-rooted commitment to our Christian mission that welcomes people of all faiths and backgrounds."

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March 6, 2017 in Legal Education, Tax, Tax Profs | Permalink | Comments (29)

Scharff Presents Hyper Preemption Today At Pepperdine

Scharff (2017)Erin Scharf (Arizona State) presents Hyper Preemption: A Reordering of the State-Local Relationship at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

The role of cities in our federalist system is once again in the news.  President Donald Trump’s executive order purporting to cut federal funding for “sanctuary cities” was a newspaper headline across the country.  However, this federal-municipal showdown is part of a much larger story about the changing regulatory role of cities.  Even as cities cast themselves as defiant against conservative federal policies, many are finding themselves in a much weaker position with respect to state policymaking.

Already, state legislators across the country are introducing bills that would cut state funding to local governments implementing “sanctuary city” policies. Such efforts are among the many preemption bills pending in statehouses across the country. Local governments, as creature of state law, are required to conform to state law, and legislatures have used this power to block municipal regulatory policies. 

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

Dyreng Presents Trade-offs In The Repatriation Of Foreign Earnings Today At NYU

DyrengScott D. Dyreng (Duke) presents Trade-offs in the Repatriation of Foreign Earnings (with Kevin S. Markle (Iowa) & Jon C. Medrano (Iowa)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler:

We examine repatriations of foreign earnings that have been designated as indefinitely reinvested. U.S. firms can repatriate foreign earnings without an immediate tax cost when there is a domestic loss, which frees the earnings to be used domestically. But using the domestic loss to offset repatriation taxes reduces financial accounting income, and removes a real option to tax deferral. We show that firms are more likely to repatriate indefinitely reinvested foreign earnings in domestic loss years, but they are less likely to repatriate when financial reporting incentives are strong.

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

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? Today At Northwestern

LedermanLeandra Lederman (Indiana-Bloomington) presents To What Extent Does Enforcement Crowd Out Voluntary Tax Compliance? at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Tax collectors generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This article analyzes the existing evidence to determine if and when this occurs. Field studies suggest that enforcement tools, such as audits, are effective deterrents, generally greatly increasing tax collections.

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

Black Law Prof Files Discrimination Complaint Over Tenure Denial: 'When Dr. King Called Sunday At 11 A.M. The Most Segregated Hour In America, He Could Have Just As Easily Referred To Law Faculty Meetings 50 Years Later'

JonesDiverse Issues in Higher Education, Renowned Black Law Professor Files Complaint Against Campbell University for Discrimination:

A Black law professor who gained national exposure for having predicted Donald J. Trump’s election victory in an eight-month series of 2016 television appearances and Harvard Law Record articles, has filed federal civil rights charges against Campbell University.

In documents obtained by Diverse, associate professor of law Amos Jones alleges a pattern of discrimination and retaliation in hiring and promotion amid a Whites-dominated tenure pattern at the 40-year-old, Raleigh, North Carolina, school historically related to the Baptist State Convention of North Carolina.

“I was punished because, on February 20, I approached Dean [J. Rich] Leonard and his Associate Dean Timothy Zinnecker with a respectful written request that they enter my classrooms and restore order among the students per our School’s code of conduct and the ethics of our profession — that is, to condemn the racial discrimination that several students had expressly written into my Fall 2016 evaluations by derogating me for being Black and being involved with a Black church,” Jones alleged in a U.S. Equal Employment Opportunity Commission (EEOC) filing.

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

Yin:  Congressional Authority To Obtain And Release Tax Returns

Trump Tax ReturnsFollowing up on my previous posts (links below):  George K. Yin (Virginia), Congressional Authority to Obtain And Release Tax Returns, 154 Tax Notes 1013 (Feb. 20, 2017):

President Trump’s continuing refusal to release his tax returns despite the contrary common practice of presidents over the last 40 years has spurred interest in finding alternative ways to obtain the information. This article describes the authority of Congress, under section 6103(f)(1) and (4)(A), to obtain, inspect, and disclose the confidential tax information of any taxpayer, including the president, without the taxpayer’s consent. The authority may be exercised by any one of three tax committees: the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation.2

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March 6, 2017 in Scholarship, Tax | Permalink | Comments (1)

University Of Houston, South Texas Law Schools Settle Naming Rights Dispute

HST

Following up on my previous post, Law School Naming Rights Settlement Falls Apart, As University Of Houston, South Texas Head To Mediation:

Houston Chronicle, Houston's Rival Law Schools Reach Agreement in Naming Dispute:

Dueling Houston law schools reached a settlement Thursday in a federal trademark spat over the name and branding at the older institution.

After hitting an impasse in settlement talks earlier this year, the University of Houston and South Texas College of Law Houston hammered out a draft agreement after two days of mediation this week before U.S. Magistrate Judge Dena Hanovice Palermo.

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March 6, 2017 | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 5, 2017

Brunson:  Taxing Utopia

UtopiaSamuel D. Brunson (Loyola-Chicago), Taxing Utopia, 47 Seton Hall L. Rev. 137 (2017): 

Nineteenth-century American religious movements challenged many aspects of American society. Although their challenges to mainstream America’s vision of sex and marriage remain the best-known aspects of many of these groups, their challenges to traditional American economics are just as important. Eschewing individual ownership of property, many of these new Christian movements followed the New Testament model of a body of believers that held all property in common.

In the early twentieth century, these religious communal groups had to contend with something new: an income tax. Communalism did not fit into the individualistic economic system envisioned by the drafters of the income tax. So Congress designed a special tax regime, now codified in section 501(d) of the Internal Revenue Code, which exempts religious communal holding companies from tax, while imputing the holding companies’ income to the members of the group. Section 501(d) provides communitarian groups with flexibility to reflect their unusual economics.

There exist, however, a number of problems with the design and implementation of section 501(d). This Article will survey the three principal problems.

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March 5, 2017 in Scholarship, Tax | Permalink | Comments (0)

State May Ban UNC Center For Civil Rights From Engaging In Litigation

North Carolina LogoIn 2015, over faculty opposition (more here), the state defunded the University of North Carolina Law School's Center on Poverty, Work and Opportunity, which Gene Nichol quickly re-launched as the North Carolina Poverty Research Fund with private donations. The state now is considering banning the law school's Center for Civil Rights and other academic centers from providing legal representation to clients in litigation:

The Herald Sun, Proposal Would Bar UNC Schools From Providing Legal Representation:

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March 5, 2017 | Permalink | Comments (11)

PwC’s Other Debacle: A Tax Boondoggle That Has Ballooned Out Of Control

PWCO199Huffington Post, PwC’s Other Debacle: A Tax Boondoggle That Has Ballooned Out Of Control:

If I mention the Oscars, will people read this long story on tax policy run amok? Let’s find out.

On Sunday night at the Oscars, PricewaterhouseCoopers had one job: hand the correct card to presenters who would go on stage and announce the winner of the category.

When it comes to the line of work it is most known for, the company’s objective is equally simple: make sure the client pays the lowest tax bill possible. On that front, PwC tends to be a bit better at its job. But if House Speaker Paul Ryan (R-Wis.) and the Trump administration have anything to say about it, one of the more ludicrous ways the company meets its numbers will no longer be available.

With the help of PwC, one of the Big Four accounting firms, a growing number of U.S. corporations have taken advantage of a tax break called the “domestic production deduction.” The obscure provision is meant to encourage U.S. manufacturing, except for the most part these companies aren’t actually manufacturing anything. They are instead relying on a poorly worded ― or brilliantly worded, depending on your perspective ― 2004 law, known as Section 199, that created what is now an out-of-control tax break. It was written by a PwC partner.

Companies are not required to disclose if they have used a particular tax break except under rare circumstances, but the IRS, in some of its public filings and court documents, has revealed the general nature of some of those claims. Others have been included in public documents when the tax break has led to a big enough windfall that investors need to know about it, and still others have emerged in unrelated court filings. The picture that emerges from interviews and a review of the paper trail is one of a loophole that has grown so large that it is barely recognizable as anything other than a giveaway to companies that can afford the sophisticated tax prep that companies like PwC can provide. ...

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March 5, 2017 in Tax | Permalink | Comments (4)

Two Harvard Law School Administrators Charged With Embezzling Over $100k Intended For Students With Disabilities To Purchase Personal items, Including Sex Toys

Harvard Law School (2016)Harvard Crimson, Former Law School Employees Accused of Stealing More Than $100,000:

Two former Harvard Law School administrators face felony charges after allegedly stealing funds from a Law School account while employees there several years ago. The defendants, Margaret DeMarco and Darris Saylors, have both been charged with two counts of larceny over $250.

DeMarco worked as the Director of Student Affairs at the Law School between 2008 and 2013, and now works as the Associate Director of the Center for Women's Entrepreneurial Leadership at Babson College. Saylors worked as a manager of student programs at the Law School and now works as the Assistant Director of the University of Chattanooga Honors College.

Daily Mail, Harvard Administrators Are Accused of Embezzling $110,000 Meant For Disabled Students and Spending It on Luxuries Including Sex Toys:

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March 5, 2017 in Legal Education | Permalink | Comments (3)

The Top 5 Tax Paper Downloads

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

  1. [1,440 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  2. [764 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  3. [412 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)
  4. [382 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  5. [297 Downloads]  Predicting Stock Market Prices with Physical Laws, by Jack Manhire (Texas A&M)

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

Saturday, March 4, 2017

This Week's Ten Most Popular TaxProf Blog Posts

NY Times:  U.S. Agents Raid Caterpillar Over Offshore Tax Practices

CaterpillarNew York Times, U.S. Agents Raid Caterpillar Over Offshore Tax Practices:

Federal agents raided three Caterpillar buildings near its Illinois headquarters on Thursday, company and law enforcement officials said, in an escalation of an inquiry into the heavy equipment manufacturer’s offshore tax practices.

Caterpillar has been dogged by accusations that it slashed its domestic tax bill by shifting corporate profits from the United States to a subsidiary in Switzerland. A 2014 congressional investigation concluded that a scheme to move cash between the company’s American and foreign subsidiaries cut its tax bill in the United States by $2.4 billion over 13 years.

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March 4, 2017 in Tax | Permalink | Comments (0)

AALS Refuses To Address Political Imbalance Of Law School Faculties

AALS (2018)Following up on my previous post, 28 Conservative/Libertarian Law Profs Demand That AALS Address Political Imbalance Of Law School Faculties:  Randy Barnett (Georgetown), AALS Executive Committee Responds to Our Letter Concerning Faculty Diversity:

[A]s we noted in our letter to the Executive Committee, we appreciate the efforts that were made to provide a more balanced program at the AALS Annual Meeting. But we also asked for two specific action items to address the current radical imbalance of law school faculties, neither of which is addressed in the Executive Committee’s response to our letter.

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March 4, 2017 in Legal Education | Permalink | Comments (20)

Colinvaux:  The Importance Of A Participatory Charitable Giving Incentive

Roger Colinvaux (Catholic), The Importance of a Participatory Charitable Giving Incentive, 154 Tax Notes 605 (2017):

Leading tax reform proposals contemplate a charitable deduction claimed by just five percent of taxpayers. Such a limited deduction would fatally undermine the foundations of a giving incentive that has fostered an altruistic and pluralistic society through its broad-based participation and would seriously harm the charitable sector. Section 501(c)(3) would recede in importance as setting the standard for a public benefit organization. More gifts would go to private benefit and political organizations. The article argues that a charitable deduction for the few should be rejected.

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March 4, 2017 in Scholarship, Tax | Permalink | Comments (2)

Trump Should Retain Funding For The Legal Services Corporation

LSCMinneapolis Star Tribune op-ed: The Trump Budget: Keep Civil Legal Aid Off the Chopping Block, by Robert K. Vischer (Dean, St. Thomas (Minnesota)):

Early drafts indicate that the Trump administration’s forthcoming budget may propose the elimination of the primary funding agency for civil legal aid in this country. Far from being a prudent candidate for elimination, legal aid is a government initiative that promotes individual empowerment and self-reliance — two values that loomed large in President Trump’s campaign and still garner support across the partisan divide. A populist focus on American greatness should bring a renewed commitment to remedy our nation’s scandalous failure to provide the working poor with meaningful access to our civil justice system.

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March 4, 2017 in Legal Education | Permalink | Comments (1)

Friday, March 3, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses a Tax Court case illustrating the importance of complying with the technical requirements for deducting gifts of long-term capital gain property to charity. 

KristanAircraft donation fails to clear runway.

Sometimes it’s easier to land an airplane in the fog than to land a charitable deduction.

When you donate appreciated long-term capital gain property to charity, you can get a deduction for the full fair market value, even if your cost is much less than that. You never have to include the appreciation in income. That makes such donations a great tax planning tool. It also gives taxpayers incentive to value such donations aggressively.

To rein in abuses, Congress required donations of property to be carefully documented with appraisals when claimed deductions exceed $5,000. Only publicly-traded securities are excepted from this rule. The appraisal has to meet requirements as to form and appraiser qualifications. The taxpayer has to file Form 8283 with the return claiming the charitable deduction, and the appraiser has to sign it. The taxpayer also has to get a letter from the charity acknowledging the deduction and stating whether goods or services were received for the contribution by the time the return for the contribution year is due.

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March 3, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (Arizona State) reviews a new article by Andrew Hayashi (Virginia) and Daniel Patrick Murphy (Virginia), Savings Externalities in a Second-Best World (Virginia Law and Economics Research Paper No. 2017-03):

Scharff (2017)We live in a brave new world of indefinitely low interest rates.  When I teach my basic tax students classic tax shelter cases, they are often shocked by the interest rates then available to the taxpayer. For many of my students, who began college well after 2008, the idea of significant interest income from a savings account is quite foreign. 

Hayashi and Murphy’s fascinating new paper explores the ways this new world of the Lower Zero Bound might affect our appraisal of savings incentives in the tax code and beyond, and along the way, they make a case for considering macroeconomic consequences of tax policy more broadly, following some recent work by Yair Listokin, among others.

Their paper begins by providing a concise overview of two traditional justifications for tax-induced savings and savings default interventions.  As they write, “private savings are invested by institutions where they are deposited and investment leads to increased economic growth, which is good for everyone.”  The second justification is rooted in the now familiar behavioral economic insight that many of us are grasshoppers, and not ants.  (Those reading carefully might note the paper’s second footnote is a citation to Aesop, which always makes me wonder how classical economic assumptions ruled for so long.) 

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March 3, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration