TaxProf Blog

Senate Releases Tax Reform Option Paper on Business Investment and Innovation

The Senate Finance Committee yesterday released its second Tax Reform Option Paper, Business Investment and Innovation:

This document is the second in a series of papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. The options described below represent a non-exhaustive list of prominent tax reform options suggested by witnesses at the Committee’s 30 hearings on tax reform to date, bipartisan commissions, tax policy experts, and members of Congress. For the sake of brevity, the list does not include options that retain current law. The options listed are not necessarily endorsed by either the Chairman or the Ranking Member.

Members of the Committee have different views about how much revenue the tax system should raise and how tax burdens should be distributed. In particular, Committee members differ on the question of whether any revenues raised by tax reform should be used to lower tax rates, reduce deficits, or some combination of the two. In an effort to facilitate discussion, this document sets this question aside.

Fleischer Presents The Supercharged IPO Today at Indiana

Victor Fleischer (Colorado; moving to San Diego) presents The Supercharged IPO, 66 Vand. L. Rev. ___ (2013) (with Nancy Staudt (USC)), at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

A new innovation on the IPO landscape has emerged in the last two decades, allowing owner-founders to extract billions of dollars from newly-public companies. These IPOs—labeled supercharged IPOs—have been the subject of widespread debate and controversy: lawyers, financial experts, journalists, and Members of Congress have all weighed in on the topic. Some have argued that supercharged IPOs are a “brilliant, just brilliant,” while others have argued they are “underhanded” and “bizarre.”

In this article, we explore the supercharged IPO and explain how and why this new deal structure differs from the more traditional IPO. We then outline various theories of financial innovation and note that the extant literature provides useful explanations for why supercharged IPOs emerged and spread so quickly across industries and geographic areas. The literature also provides support for both legitimate and opportunistic uses of the supercharged IPO.

With the help of a large-N quantitative study—the first of its kind—we investigate the adoption and diffusion of this new innovation. We find that the reason parties have begun to supercharge their IPO is not linked to a desire to steal from naive investors, but rather for tax planning purposes. Supercharged IPOs enable both owner-founders and public investors to save substantial amounts of money in federal and state taxes. With respect to the spread of the innovation, we find that elite lawyers, especially those located in New York City, are largely responsible for the changes that we observe on the IPO landscape. We conclude our study by demonstrating how our empirical findings can be used to 1) advance the literature on innovation, 2) assist firms going public in the future, and 3) shape legal reform down the road. 

HEC Paris Seeks to Hire a Tax Prof

The HEC Paris (France) Department of Law and Taxation invites applications for Tenure-track faculty positions to begin in 2014:

HEC Paris is the leading Business School in France and one of the leading Business Schools in Europe. ...

The position's opening is in International Taxation and related fields. A strong track record in both research and teaching is required. Support for research is excellent, including grants from HEC. During their first three years at HEC, assistant professors benefit from a reduced number of teaching hours, simplified access to research funds and an exemption of administrative duties. Applicants are required to have (or be about to complete) a Ph.D. degree. ...

While HEC Paris is a bilingual school (English/French), the ability to teach in French is not mandatory. Iterested applicants should send a cover letter, vitae, and selected research papers, to Elizabeth Hautefeuille by May 10, 2013.

Tax Lawyers Who Charge $1,150 Per Hour

Following up on my previous post, G-Men: Tax Lawyers Who Charge $1,000 Per Hour:  Wall Street Journal, On Sale: The $1,150-Per-Hour Lawyer:

Top partners at leading U.S. law firms are charging more than ever before, yet those hourly rates aren't all they appear to be.

Having blown past the once-shocking price tag of $1,000 an hour, some sought-after deal, tax and trial lawyers are commanding hourly fees of $1,150 or more, according to an analysis of billing rates compiled from public filings.

But, as law firms boost their standard rates, many are softening the blow with widespread discounts and write-offs, meaning fewer clients are paying full freight. As a result, law firms on average are actually collecting fewer cents on the dollar, compared with their standard, or "rack," rates, than they have in years. ...

Star lawyers still can fetch a premium, and some of them won't budge on price. The number of partners billing $1,150-plus an hour has more than doubled since this time last year, according to Valeo Partners, a consulting firm that maintains a database of legal rates pulled from court filings and other publicly disclosed information. More than 320 lawyers in the firm's database billed at that level in the first quarter of 2013, up from 158 a year earlier.

That gilded circle includes tax experts such as Christopher Roman of King & Spalding and Todd Maynes of Kirkland & Ellis.

More on the Tax Provisions in President Obama's FY2014 Budget

Following up on this morning's post, Tax Provisions in President Obama's FY2014 Budget:

• American Enterprise Institute, Overhauling the Tax Code: The Devil Is in the Transition
• Bloomberg, Lew Keeps Door Open To Tax Rewrite While Noting Disputes
• Bloomberg, Obama Budget Shows $1 Trillion Tax Gap With Republicans
• Bloomberg, Obama Squeeze on Savings of Wealthy Muddles Estate Plans
• Center on Budget and Policy Priorities, President Obama’s Deficit-Reduction Package and Other Proposals in the 2014 Budget
• Citizens for Tax Justice, President Obama's Tax Proposals in his Fiscal 2014 Budget Plan
• Fox News, Obama Budget Proposes More Than $1 Trillion in Taxes, Fees
• David Cay Johnston (Syracuse), Promises, Promises
• Politico, Obama Offers Some Guidance on Retooling Tax Code
• Reuters, Obama Tax Blueprint Opening Gambit in Potential Tax Rewrite
• Tax Foundation, President Obama's 2014 Budget Takes another Whack at Savers
• Tax Policy Center, Taxing Millionaires: Obama’s Buffett Rule
• Time, Obama’s Budget Would Cap Tax-Advantaged Savings 
• Wall Street Journal, Plan Sees Extensive Tax-Code Overhaul
• Washington Times, Obama Budget Resurrects the Estate Tax

ACLU: IRS Says It Can Read Taxpayer Email Without a Warrant

ACLU, IRS New Documents Suggest IRS Reads Emails Without a Warrant:

Everyone knows the IRS is our nation’s tax collector, but it is also a law enforcement organization tasked with investigating criminal violations of the tax laws. New documents released to the ACLU under the Freedom of Information Act reveal that the IRS Criminal Tax Division has long taken the position that the IRS can read your emails without a warrant—a practice that one appeals court has said violates the Fourth Amendment (and we think most Americans would agree).

Last year, the ACLU sent a FOIA request to the IRS seeking records regarding whether it gets a warrant before reading people’s email, text messages and other private electronic communications. The IRS has now responded by sending us 247 pages of records describing the policies and practices of its criminal investigative arm when seeking the contents of emails and other electronic communications.

So does the IRS always get a warrant? Unfortunately, while the documents we have obtained do not answer this question point blank, they suggest otherwise.... Let’s hope you never end up on the wrong end of an IRS criminal tax investigation. But if you do, you should be able to trust that the IRS will obey the Fourth Amendment when it seeks the contents of your private emails. Until now, that hasn’t been the case.

• Accounting Today, IRS Reads Taxpayer Emails Without a Warrant
• CNet, IRS Claims it Can Read Your E-mail Without a Warrant
• The Hill, IRS: We Can Read Emails Without Warrant
• Human Events, IRS: We Can Read Your Emails Without a Warrant
• Info World, What Could be Worse Than the IRS's Grubby Hands? Its Spying Eyes
• New York Daily News, ACLU Accuses the IRS of Reading Americans’ Private Email Without a Search Warrant
• Slate, The IRS Doesn’t Think “Reasonable Expectation of Privacy” Applies to Your Emails
• Washington Times, IRS to Taxpayers: We Don’t Need a Warrant for Email Snooping, GPS Tracking

(Hat Tip: David J. Herzig.)

Tax Provisions in President Obama's FY2014 Budget

President Obama yesterday released his Fiscal Year 2014 Budget (tax provisions here). The Treasury Department released the 256-page Green Book (General Explanations of the Administration’s Fiscal Year 2014 Revenue Proposals) (revenue tables here).  Here are the biggest tax increases and tax cuts in the President's budget:

• Reduce the value of certain tax expenditures to 28% for the top three tax brackets ($529.3 billion tax increase over 10 years)
• Reform the U.S. international tax system ($157.4 billion tax increase)
• Replace the current Consumer Price Index (CPI) with the chained CPI for indexed tax provisions. ($100.0 billion tax increase) 
• Repeal the Last-in, First-out (LIFO) accounting method ($80.0 billion tax increase)
• Increase tobacco taxes and index them to inflation ($78.1 billion tax increase)
• Raise the estate tax rate to 45% and reduce the exclusion to $3.5 million ($71.7 billion tax increase)
• Enact a financial crisis responsibility fee ($59.3 billion)
• Enact a "Buffet Rule" 30% minimum tax on individuals with AGI above $500,000 ($53.4 billion tax increase)
• Expand the Federal Unemployment Tax Act base ($51.5 billion tax increase)
• Implement a program integrity statutory cap adjustment for tax administration ($46.5 billion tax increase)
• Repeal oil & gas tax preferences ($40.7 billion tax increase)
• Mark-to-market financial derivatives ($18.9 billion tax increase)
• Tax carried interest as ordinary income ($15.1 billion tax increase)
• Enact life insurance tax increases ($11.6 billion tax increase)
• Index all tax renalties to inflation ($10.8 billion tax increase)
• Impose $3 million cap on retirement accounts ($9.3 billion tax increase)
• Reclassify more workers as employees rather than as independent contracts ($9.1 billion tax increase)
• Make the R&D Tax Credit permanent ($99.4 billion tax cut)
• Permanently extend the American Opportunity Tax Credit ($92.4 billion tax cut)
• Extend increased expensing for small businesses ($68.7 billion tax cut)
• Permanently extend increased refundability of the child tax credit ($51.5 billion tax cut)
• Enact temporary 10% small business tax cut for new jobs/wage increases ($25.8 billion tax cut)
• Enact green energy tax incentives ($23.7 billion tax cut)
• Permanently extend the Earned Income Tax Credit expansion ($17.8 billion tax cut)
• Enact automatic enrolling in IRAs  ($17.6 billion tax cut)
• Enact incentives for investment in infrastructure ($17.4 billion tax cut)

Howard Abrams Leaves Emory for San Diego

Howard Abrams is leaving Emory Law School after thirty years to become Warren Distinguished Professor of Law and Director of Tax Programs at San Diego in August 2014:

Howard Abrams is a renowned expert in the areas of partnership taxation and corporate taxation.  A professor at Emory Law School since 1983, he has been a visiting professor at Cornell, Berkeley and Yale law schools and, most recently, USD School of Law in fall 2012. ... [Dean Stephen C. Ferruolo said] “I am particularly pleased that Howard Abrams will be assuming the directorship of our tax programs, and will continue to build on the achievements of Professor-in-Residence John Forry, who has directed the tax programs since 2011.”

Howard is perhaps best known for his book, Federal Income Taxation of Corporations and Partnerships (Aspen, 4th ed. 2008) (with Richard Doernberg (Emory) & Don Leatherman (Tennessee)). He was a finalist in Emory's 2012 dean search and caused quite a stir with his remarkable decanal application statement. 

This is quite a coup for San Diego and its nationally ranked tax program, especially in conjunction with the previously announced move of Victor Fleischer and Miranda Perry Fleischer from Colorado to San Diego:

“These appointments are not only major additions to our distinguished law faculty, but reflect the success of our efforts to re-establish our graduate tax program as one of the strongest in the country,” said Dean Ferruolo. ...

“These appointments are like hitting the trifecta,” said Frank Partnoy, George E. Barrett Professor of Law and Finance and director of USD’s Center for Corporate and Securities Law. “All three are prominent teachers and scholars, not only in tax, but in business law generally."

Galle Presents Regulation from the Inside Out at NYU

Brian Galle (Boston College) presented Regulation from the Inside Out: Nudges and Price Instrument Theory for Internalities and Externalities at NYU on Tuesday as part of its Colloquium Series on Tax Policy and Public Finance convened by Daniel Shaviro (NYU) and William Gale (Tax Policy Center; visiting at NYU):

This Article compares for the first time the relative merits of “nudges” and other forms of behaviorally-inspired regulation against more common policy alternatives, such as taxes, subsidies, or traditional quantity regulation. Environmental economists and some legal commentators have dismissed nudge-type interventions out of hand for their failure to match the revenues taxes can provide. Similarly, writers in the law and economics tradition argue that fines are generally superior to non-pecuniary punishments. Drawing on prior work in the choice-ofinstruments literature, and contrary to this popular wisdom, I show that nudges may out-perform fines, other Pigouvian taxes, or subsidies in some contexts. I also add to the existing literature by extending choice-of-instrument theory to the regulation of internalities---instances where individuals do harm to their own future selves. I then apply these lessons to a set of contemporary policy controversies, such as New York City’s cap on beverage portion sizes, cigarette labeling, retirement savings, and charitable contributions. 

Dan Shaviro blogs the workshop here.

2013 Tannenwald Tax Writing Competition

For students who wrote tax seminar papers this semester:  the Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship and American College of Tax Counsel are sponsoring the 2013 Tannenwald Tax Writing Competition:

Named for the late Tax Court Judge Theodore Tannenwald, Jr., and designed to perpetuate his dedication to legal scholarship of the highest quality, the Tannenwald Writing Competition is open to all full- or part-time law school students, undergraduate or graduate. Papers on any federal or state tax-related topic may be submitted in accordance with the Competition Rules.

Prizes:

• 1st Place:  $5,000, free trip to the 2014 ABA Tax Section Mid-Year Meeting and publication in the Florida Tax Review
• 2nd Place:  $2,500
• 3rd Place:  $1,500

Deadline:  July 1, 2013. Mail papers to: Tannenwald Foundation, Ste. 200, 1275 Pennsylvania Ave., N.W., Washington, D.C. 20004, Attn: Melnie Moore.

For more information, contact Nancy Abramowitz.

For a list of participating law schools, see here. For a list of winners from prior years, and their tax faculty sponsors, see here.

Death of Joe Feller

Joseph M. Feller, a 59-year old environmental law professor at Arizona State, was killed when he was struck by a car when jogging on Monday. From Arizona State Dean Douglas Sylvester:

Joe cared deeply about the environment and about environmental justice, and during his 25-plus years at ASU, he trained a generation of environmental lawyers in Arizona. He taught water law and natural resources law, and often led teams of students onto public lands and waterways across Northern Arizona, adding meaning to what they’d learned in the classroom.

Joe had a dazzling resume, having earned an undergraduate degree in physics and a law degree, magna cum laude, from Harvard, where he was editor of the Harvard Law Review. He also had a Ph.D. in physics from the University of California, Berkeley. But Joe’s warm personality and easy manner outshone his academic pedigree. ...

Services are pending. Please check back for more information.

Larry Solum has more here. (Hat Tip: Shelley Saxer.)

Shu-Yi Oei: Risk, Redistribution, and the Collection of Delinquent Taxes

Shu-Yi Oei (Tulane), Who Wins When Uncle Sam Loses? Risk, Redistribution, and the Collection of Delinquent Taxes, 46 UC Davis L. Rev. 421 (2012):

Small-scale tax collections policies have large-scale distributive consequences. The central philosophical question addressed in this Article is whether the government can ever be justified in deliberately not collecting a tax owed, given the problematic distributive consequences that may result from non-collection. In brief, the government’s decision not to pursue full collection of a delinquent tax debt may give rise to three problematic distributive outcomes: (1) capture of the benefits of non-collection by the forgiven taxpayer’s other creditors; (2) imposition of the costs of non-collection upon compliant taxpayers through higher taxes; and (3) imposition of the costs of non-collection upon the public through decreased government provision. This Article argues that a social insurance framework, which conceptualizes tax non-collection as a transfer of the risk of financial distress from the taxpayer to the government in exchange for an insurance premium, may justify all three of these seemingly problematic outcomes and may hence justify tax non-collection. However, further research is required to determine the extent to which tax non-collection should be used to deliver social insurance, particularly given the existence of other social insurance delivery methods.

NY Times: How the Location of Colleges Hurts the Economy

New York Times:  How the Location of Colleges Hurts the Economy, by David Leonhardt:

Some of the nation’s most important companies did not exist a generation ago, and many of the most important – Amazon.com, Google, Apple, Costco, Home Depot, Microsoft, FedEx – did not exist 50 years ago. The federal government has also been transformed over the last century, with the creation of Social Security, Medicare, the Securities and Exchange Commission, the modern Federal Reserve and dozens of other agencies and programs.

The roster of major American universities, on the other hand, is largely unchanged. ... One problem that stems from the relatively unchanged nature of higher education is its geography. The country looks very different from the way it did 100 years ago, but the distribution of our leading universities still has 19th-century echoes.

 

The country’s most selective 236 colleges – colleges that tend to have more resources and much higher graduation rates than others – are especially concentrated in New England and, to a lesser extent, the mid-Atlantic. The Midwest, Southeast and California have fewer such colleges than the Northeast, but still noticeably more than Florida and Texas. The Mountain West has just a handful. ...

This pattern has real consequences for teenagers. All else equal, students who live near a college are more likely to attend college, research by David Card of the University of California, Berkeley, has found. And students who live near a selective college are more likely to attend a selective college.

Because students who attend a selective college are more likely to graduate than similar students who attend a community college or nonselective four-year college, the geographic dispersion of colleges creates winners and losers. Students who live near selective colleges benefit -- and those who do not pay a price.

The economy also pays a price, because so many talented teenagers, many of them in smaller metropolitan areas in the Sun Belt and Mountain West, fall far short of their potential.

The Top 25 law schools are located in 17 states:

• California (4)
• New York (3)
• District of Columbia, Illinois, Indiana (2)
• Alabama, Connecticut, Georgia, Massachusetts, Michigan, Minnesota, Missouri, North Carolina, Pennsylvania, Tennessee, Texas, Virginia (1)

The Top 52 law schools are located in 27 states:

• California (6)
• New York, Virginia (4)
• Illinois, Massachusetts, North Carolina, Texas (3)
• Arizona, District of Columbia, Florida, Georgia, Indiana, Utah (2)
• Alabama, Colorado, Connecticut, Iowa, Louisiana, Maryland, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee. Washington, Wisconsin (1)

Seto: Four Principles of Optimal Tax System Design

Theodore P. Seto (Loyola-L.A.), Four Principles of Optimal Tax System Design:

Although optimal tax theory dominates both tax economics and tax law scholarship in the upper academic ranks, legal academics make remarkably little use of it in their day-to-day work. This is unfortunate. Although I am unwilling to accord efficiency the primacy that optimal tax theory gives it, the behaviorally distortive effects of tax rules should be of concern regardless of one’s normative perspective. Distortive effects are not merely inefficient; they affect fairness and administrability as well. We know, for example, that if the relevant supply or demand curve of a nominal taxpayer is elastic, she is unlikely to bear the ultimate burden of a tax or rule. If so, the burden of a tax or rule that is supposed to be borne by one group may in fact be shifted to another. Tax shelters and the administrative problems they create similarly cannot be understood without taking into account the behaviorally distortive effects of the rules on which they rely.

Continue reading "Seto: Four Principles of Optimal Tax System Design"

Parks & Recreation's Ron Swanson on President Obama's Budget

(Hat Tip: Ben Leff.)

Is the IRS Stalking You on Facebook, Twitter?

RT, IRS to Monitor Facebook, Twitter for Tax Cheats:

Is the IRS about to get too close for comfort? New reports brought to light by one privacy and data security expert suggest that this tax filing season the Internal Revenue Service may be monitoring social media for any clues of tax cheats.

According to Kristen Mathews, a partner attorney at law firm Proskauer Rose LLP who specializes in privacy and data security, there are reports that the IRS will be checking into individual Facebook and Twitter accounts for improprieties.

Though the agency says that it will only conduct such monitoring if a tax form raises a red flag, it is somewhat unclear to what extent it will be capable of delving into social media accounts.

• Fox Business, Is the IRS Stalking You on Social Media?
• The Hill, IRS: We Can Read Emails Without Warrant
• Social News Daily, IRS Social Media Audits? Feds Aren’t Stalking You On Facebook
• U.S. News & World Report, IRS Tracks Your Digital Footprint

Foundation Press Publishes Criminal Law Stories (35th Book in the Law Stories Series)

Foundation Press has published Criminal Law Stories (2013), by Donna K. Coker (Miami) & Robert Weisberg (Stanford):

This collection of case stories illustrates the balance, continuity, and evolution in substantive criminal law doctrine in light of the social and political contexts in which those doctrines are perennially tested. These stories focus on the pre-litigation behavior of defendants, raising important moral and cultural questions about human nature and human society and how social norms get translated into workable legal doctrines. They survey the typical variety of doctrines addressed in a standard criminal law course, elucidating the classic themes of common law jurisprudence.

Other titles in the Law Stories Series (for which I serve as Series Editor) are:

• Administrative Law Stories (2006), edited by Peter L. Strauss (Columbia)
• Antitrust Stories (2007), edited by Eleanor M. Fox (NYU) & Daniel A. Crane (Cardozo)
• Bankruptcy Law Stories (2007), edited by Robert Rasmussen (Dean, USC)
• Business Tax Stories (2005), edited by Steven A. Bank (UCLA) & Kirk J. Stark (UCLA) 
• Civil Procedure Stories (2d ed. 2008), edited by Kevin M. Clermont (Cornell)
• Civil Rights Stories (2008), edited by Myriam Gilles (Cardozo) & Risa Goluboff (Virginia)
• Constitutional Law Stories (2d ed. 2009), edited by Michael C. Dorf (Cornell)
• Contracts Stories (2006), edited by Douglas G. Baird (Chicago)
• Corporate Law Stories (2009), edited by J. Mark Ramseyer (Harvard)
• Criminal Procedure Stories (2006), edited by Carol S. Steiker (Harvard)
• Death Penalty Stories (2009), edited by John H. Blum (Cornell) & Jordan M. Steiker (Texas)
• Education Law Stories (2008), edited by Michael A. Olivas (Houston) & Ronna Greff Schneider (Cincinnati)
• Employment Discrimination Stories (2006), edited by Joel William Friedman (Tulane)
• Employment Law Stories (2007), edited by Samuel Estreicher (NYU) & Gillian Lester (UC-Berkeley)
• Environmental Law Stories (2005), edited by Richard J. Lazarus (Harvard) & Oliver A. Houck (Tulane)
• Evidence Stories (2006), edited by Richard O. Lempert (Michigan)
• Family Law Stories (2008), edited by Carol Sanger (Columbia)
• Federal Courts Stories (2010), edited by Vicki C. Jackson (Georgetown) & Judith Resnik (Yale)
• First Amendment Stories (2011), edited by Richard W Garnett (Notre Dame) & Andrew Koppelman (Northwestern)
• Human Rights Advocacy Stories (2008), edited by Deena R. Hurwitz (Virginia) & Margaret L. Satterthwaite (NYU), with Doug Ford (Virginia)
• Immigration Stories (2005), edited by David A. Martin (Virginia) & Peter H. Schuck (Yale)
• Indian Law Stories (2011), edited by Carole E. Goldberg (UCLA), Kevin K. Washburn (Dean, New Mexico) & Philip P. Frickey (UC-Berkeley)
• Intellectual Property Stories (2005), edited by Jane C. Ginsburg (Columbia) & Rochelle Cooper Dreyfuss (NYU)
• International Law Stories (2007), edited by John Noyes (California Western), Mark Janis (Connecticut) & Laura Dickinson (Connecticut)
• Labor Law Stories (2005), edited by Laura J. Cooper (Minnesota) & Catherine L. Fisk (Duke)
• Legal Ethics Stories (2005), edited by Deborah L. Rhode (Stanford) & David Luban (Georgetown)
• Presidential Power Stories (2008), edited by Christopher H. Schroeder (Duke) & Curtis A. Bradley (Duke)
• Property Stories (2d ed. 2009), edited by Gerald Korngold (New York Law School) & Andrew P. Morriss (Alabama)
• Race Law Stories (2008), edited by by Rachel F. Moran (Dean, UCLA) & Devon Carbado (UCLA)
• Statutory Interpretation Stories (2011), edited by William N. Eskridge, Jr. (Yale), Philip P. Frickey (UC-Berkeley) & Elizabeth Garrett (USC)
• Tax Stories (2d ed. 2009), edited by Paul L. Caron (Cincinnati & Pepperdine)
• Torts Stories (2003), edited by Robert L. Rabin (Stanford) & Stephen D. Sugarman (UC-Berkeley)
• Trial Stories (2008), edited by Michael E. Tigar (American) & Angela J. Davis (American)
• Women and the Law Stories (2011), edited by Elizabeth M. Schneider (Brooklyn) & Stephanie M. Wildman (Santa Clara)

McCaffery: Mark Zuckerberg May Never Pay Taxes Again

CNN op-ed:  Zuck Never Has to Pay Taxes Again, by Edward J. McCaffery (USC):

So, you think you have it bad this tax season. Have you heard that Facebook founder Mark Zuckerberg will pay between $1 billion and $2 billion in taxes? That sounds like a tough pill for anyone to swallow.

But it is premature to start a pity party for Zuckerberg. The twenty-something billionaire reaped large financial gains from exercising the stock options that triggered his tax bill, and he has benefited from favorable tax rules along the way. Even better, Zuckerberg will survive his encounter with the tax man in a position to never have to pay taxes again for the rest of his life. ...

The truly rich do not have to pay any tax once they have their fortunes in hand. They can follow the simple tax planning advice to buy/borrow/die: Buy assets that appreciate in value without producing cash (like shares of Internet stocks), borrow to finance lifestyle, and die to pass on a "stepped up" basis to heirs wherein the tax gain miraculously disappears.

Zuckerberg now has $11 billion or more with which to play this game. He can live off money borrowed against that huge sum (rest assured, he can get good interest rates), never having to sell any asset at a gain, and never having to get an "ordinary" salary again.

(Hat Tip: Ann Murphy.)  For more, see Edward J.  McCaffery (USC), Distracted from Distraction by Distraction: Reimagining Estate Tax Reform, 40 Pepp. L. Rev. ___ (2013).

Debating Return-Free Tax Filing

Following up on my prior post, How Maker of TurboTax Fought Free, Simple Tax Filing:

• Joseph Bankman (Stanford) & Dennis Ventry (UC-Davis), The Case For Easy, Free Tax Filing
• Arlene Holen (Technology Policy Institute), Five Fallacies About Return-Free Tax Filing
• Janet Novack (Forbes), Return Free Tax Filing? Sure, With An Insanity Free Tax Code

Is Georgetown's Desire to Hire the 'Pick of the Litter' of Faculty Proof of Discrimination Against Older Applicants?

Following up on my prior posts (links below): Blog of the Legal Times, Georgetown Law Argues for Dismissal of Age Discrimination Lawsuit:

A Washington federal judge heard arguments Monday on whether the use of words such as "young" or "pick of the litter" in discussing law professor applicants was evidence of discrimination against older applicants in Georgetown University Law Center's hiring process.

Former North Dakota Attorney General Nicholas Spaeth sued Georgetown and five other schools after he failed to get an interview through the AALS faculty recruitment conference in 2010.

Georgetown moved for summary judgment, arguing that they had non-discriminatory reasons for rejecting Spaeth, in particular his lack of expressed interest in legal scholarship. U.S. District Judge Ellen Segal Huvelle heard arguments yesterday afternoon.

In briefs, Spaeth's lawyers pointed to an internal university memorandum discussing the need to hire "promising young scholars" and praising the "young cohorts" at peer institutions as an example of bias against older candidates. Hogan Lovells civil litigation partner William Nussbaum, lead counsel for Georgetown, argued today that the word "young" was used as a synonym for "new" and wasn't proof that Georgetown was against hiring older candidates.

Nussbaum added that Spaeth's lawyers engaged in "linguistics acrobats" to show that other phrases they identified in evidence related to the school's hiring process were proof of discrimination in favor of younger candidates, from "pick of the litter" to "enthusiastic."

Lynn Bernabei of Washington's Bernabei & Wachtel, a lead attorney for Spaeth, countered that the language was a clear indication of "structural discrimination" at Georgetown. She said that even absent statements that referred specifically to Spaeth, the U.S. Court of Appeals for the D.C. Circuit and U.S. Supreme Court had held that evidence of a discriminatory atmosphere was relevant. ...

Sapeth's lawsuits against five other law schools were transferred to their home state jurisdictions, at which point Spaeth withdrew most of his claims. Besides the Georgetown case, Spaeth is still pursuing similar claims against the University of Missouri School of Law in a Missouri state court.

Prior TaxProf Blog posts:

• Former AG Sues Michigan State, Files EEOC Complaints Against 100 Law Schools, for Age Discrimination in Hiring (July 20, 2011)
• At Law Schools, Age Bias Co-exists with Outdated Practices (Aug. 29, 2011)
• Former AG Sues Five Additional Law Schools for Age Discrimination in Faculty Hiring (Nov. 27, 2011)
• Iowa Prevails in First of Three Faculty Hiring Discrimination Lawsuits (Feb. 28, 2012)
• Georgetown Refused to Hire 62-Year Faculty Candidate Due to Lack of Scholarship, Unwillingness to Teach Tax (Feb 2, 2013)

Dean & Reiser: A Hybrid Financial Instrument for Social Enterprise

Steven Dean (Brooklyn) & Dana Brakman Reiser (Brooklyn), Hunting Stag with FLY Paper: A Hybrid Financial Instrument for Social Enterprise, 55 B.C. L. Rev. ___ (2013):

Social entrepreneurs and socially motivated investors share a belief in the power of social enterprise, ventures that pursue a “double bottom line” of profit and social good. Unfortunately, they also share a deep mutual suspicion. Recognizing that social ventures — just like traditional for- and nonprofit enterprises — need capital to flourish, this Article offers a financing tool to transform that skepticism into commitment. Unlike the array of new entities that have emerged in recent years — including L3Cs, benefit corporations and flexible purpose corporations — the hybrid financial instrument it describes provides a robust and transparent solution to the puzzle that lies at the heart of every social enterprise: how to blend a profit motive with a social mission. Recognizing their shared dilemma as an example of what economists call a stag hunt, FLY Paper strikes that elusive balance by allowing investors and entrepreneurs to credibly signal a reciprocal commitment to the pursuit of a dual bottom line.

TRAC: IRS to Reduce Audits of Big Businesses by 18%

The Transactional Records Access Clearinghouse at Syracuse University has released a report, IRS Audits Slump, Staff Down Long-term Impact Uncertain:

The IRS plans to expend 18% percent less effort auditing businesses with assets of $10 million or more compared with just two years ago, according to a very timely IRS planning document.  

For the same period, the IRS also projects a 14% drop in the amount of available time for the specialized revenue agents it needs to conduct these audits in FY 2013 — the year ending on September 30 — compared to what it was in FY 2011.  

These declines — neither of which take into account the probable impact of the sequestration cuts in the months ahead — were described in a special agency report now being made available to the Transactional Records Access Clearinghouse (TRAC) on a monthly basis. This series of internal IRS management reports — the last one covers the period ending in January 2013 — are provided by the IRS thanks to a court order granted TRAC as a result of a suit filed under the Freedom of Information Act.

IRS Large Business and International Division Direct Examination Staff Years

	FY 2011	FY 2012	FY 2013	Change 2013 v. 2011
	Annual Plan
Total	3,567	3,320	2,935	-18%
Individual	189	173	306	62%
Corporations	1,103	1,043	807	-27%
Partnership	191	196	159	-17%
Subchapter S Corp	184	180	115	-37%
Coordinated Industry Cases	1,083	1,081	1,011	-7%
Other	816	647	537	-34%
	Actual Revenue Agent Years
Total	3,319	3,155	2,852	-14%
Individual	258	214	283	9%
Corporations	864	912	762	-12%
Partnership	211	215	179	-15%
Subchapter S Corp	185	225	205	11%
Coordinated Industry Cases	1,011	952	865	-14%
Other	790	637	559	-29%

Grubert & Altshuler: Alternative Proposals for International Tax Reform

Harry Grubert (U.S. Treasury Department, Office of Tax Analysis) & Rosanne Altshuler (Rutgers University, Department of Economics), Fixing the System: An Analysis of Alternative Proposals for the Reform of International Tax (NYU workshop here):

We evaluate proposals for the reform of the U.S. system of taxing cross-border income including dividend exemption, full current inclusion, a Japanese type version of dividend exemption with an effective tax rate test subject to an exception for an active business, dividend exemption combined with a minimum tax, and repeal of check-the-box. We consider two versions of dividend exemption with a minimum tax: one in which the minimum tax is imposed on a country by country basis and another in which the minimum tax is based on overall foreign income. In addition we evaluate versions of minimum taxes that allow current deductions for tangible investment against the minimum tax base.

To compare these schemes with current law, we reevaluate the efficiency cost of the dividend repatriation tax using evidence from the response to the 2005 repatriation tax holiday. We find that the burden of avoiding repatriations is higher than found in previous estimates, particularly for high tech profitable foreign businesses, and rises as deferrals accumulate. We simulate the effect of the various alternatives on effective tax rates for investment in high and low tax countries with inclusion of the importance of parent developed intangibles and their role in shifting income from the United States.

Our analysis demonstrates that it is possible to make improvements to the system across many dimensions including the lockout effect, income shifting, the choice of location and complexity. The goals are not necessarily in conflict. Compared to the other schemes, we find the per country minimum tax with expensing for real investment has many advantages with respect to these margins. The per country minimum tax offsets (at least in part) the increased incentives for income shifting under pure dividend exemption and is better than full inclusion in tailoring companies’ effective tax rates to their competitive position abroad. No U.S. tax burden will fall on companies that earn just a normal return abroad. The minimum tax is basically a tax on large excess returns in low tax locations, cases in which the company probably has less intense foreign competition. The investment will still be made. Unlike the Japanese type dividend exemption alternative considered, there is no cliff in which the income is subject to the full home country rate if it fails the minimum effective tax rate and active business test. Under the minimum tax with no cliff the company has more of an incentive to lower foreign taxes and will often prefer paying the U.S. minimum tax to paying a higher foreign tax. Finally, the minimum tax with expensing is more effective in discouraging income shifting than repeal of check-the-box. In summary, the per country minimum tax with expensing combines the advantages of the extreme alternatives, dividend exemption and full inclusion, and reduces their shortcomings.

Our comparison of the overall and per country minimum tax suggests that the overall version deserves serious consideration. While it is not as thorough as the per country minimum tax in targeting tax haven income, it is a substantial move in that direction and is much simpler.

Call for Papers: University of North Carolina Tax Symposium

The University of North Carolina Kenan-Flagler School of Business has issued a call for papers for its Seveneenth Annual Tax Symposium to be held January 17-18, 2014. The symposium "is designed to bring together leading tax scholars from economics, accounting, finance, law, political science, and related fields." The deadline for the call for papers is October 31, 2013:

Papers should be well developed, but at a stage where they can still benefit from the group's discussion. The symposium will include six to seven papers. Travel and lodging expenses for presenters will be reimbursed up to $500.

You can submit a paper here. Paper selection will be finalized by November 18, 2013.

U.S. Is Third Least-Taxed OECD Country

Citizens for Tax Justice, The U.S. Continues to Be One of the Least Taxed of the Developed Countries:

The U.S. was the third least taxed country in the Organization for Economic Cooperation and Development (OECD) in 2010, the most recent year for which OECD has complete data.

Of all the OECD countries, which are essentially the countries the U.S. trades with and competes with, only Chile and Mexico collect less taxes as a percentage of their overall economy (as a percentage of gross domestic product, or GDP).

This sharply contradicts the widely held view among many members of Congress that taxes are already high enough in the U.S. and that any efforts to reduce the federal deficit should therefore take the form of cuts in government spending.

As the graph to the right illustrates, in 2010, the total (federal, state and local) tax revenue collected in the U.S. was equal to 24.8 percent of the U.S.’s GDP.

The total taxes collected by other OECD countries that year was equal to 33.4 percent of combined GDP of those countries....

In 1979, the U.S. had the 16^th highest taxes as a percentage of GDP, out of 24 countries at that time.

In 2010, the U.S. had the 32^nd highest taxes as a percentage of GDP, out of 34 OECD countries.

2012-13 College Faculty Salaries

Inside Higher Ed, On Pace With Inflation:

The average salary of a full-time faculty member increased by 1.7% in 2012-13, roughly keeping pace with inflation, according to a report being released today by the American Association of University Professors. While the average increase was a bit larger last year (1.8%), a drop in the inflation rate from 3.0% to 1.7% means that this year's modest raises will add to spending power for many faculty members, while last year's did not.

Top Private Universities in Faculty Salaries for Full Professors, 2012-13

University	Average Salary
1. Columbia University (U.S. News #4)	$212,300
2. Stanford University (#6)	$207,300
3. University of Chicago (#4)	$203,600
4. Harvard University (#1)	$203,000
5. Princeton University (#1)	$200,000
6. New York University (#32)	$187,600
7.University of Pennsylvania (#8)	$187,000
8. Yale University (#3)	$186,300
9. Duke University (#8)	$180,200
10. California Institute of Technology (#10)	$179,200

Top Public Universities in Pay for Full Professors, 2012-13

University	Average Salary
1. University of California at Los Angeles (U.S. News #24)	$167,000
2. New Jersey Institute of Technology (#139)	$166,700
3. University of California at Berkeley (#21)	$158,900
4. Rutgers University at Newark (#115)	$154,700
5. Rutgers University at New Brunswick (#68)	$151,000
6. University of Michigan at Ann Arbor (#29)	$148,700
7. Rutgers University at Camden (regional ranking)	$145,000
8. University of Texas at Austin (#46)	$144,000
9. University of Virginia (#24)	$143,200
10. University of Texas at Dallas (#151)	$143,100

Top Liberal Arts Colleges in Pay for Full Professors, 2012-13

College	Average Salary
1. Wellesley College (U.S. News #6)	$152,300
2. Claremont McKenna College (#10)	$145,400
3. Barnard College (#28)	$143,000
4. Pomona College (#4)	$142,800
5. Harvey Mudd College (#12)	$139,200
6. Swarthmore College (#3)	$137,900
7. Amherst College (#2)	$137,700
8. Williams College (#1)	$137,200
9. Wesleyan University (#17)	$133,700
10. Colgate University (#18)	$133,000

Colinvaux: Rationale and Changing the Charitable Deduction

Roger Colinvaux (Catholic), Rationale and Changing the Charitable Deduction, 139 Tax Notes 1453 (Mar. 23, 2013):

There are two principal rationales for the charitable deduction. Depending upon choice of rationale, some tax reform changes are suggested and others are not. A base measurement rationale suggests eliminating the deduction for unrealized appreciation, keeping the benefit as a deduction and not a credit, not adopting caps or a nonitemizer deduction, and protecting the tax base by narrowing the class of organizations eligible to receive deductible contributions. A subsidy rationale, depending upon which strand is emphasized, might favor a more equitable tax benefit in the form of a credit or through caps or a nonitemizer deduction, and could lead to preferring some organizations over others. Both rationales are consistent with placing a floor under the deduction, and narrowing its scope. Present law presents a confusing mix of policies and priorities. Tax reform presents an opportunity to reconsider the role of the charitable deduction in the tax system and to act accordingly.  

All Tax Analysts content is available through the LexisNexis® services.

Low Income Taxpayer Clinic Program Report

IR-2013-39 (Apr. 8, 2013), Low Income Taxpayer Clinic Program Reports on Activities:

The IRS’s Low Income Taxpayer Clinic (LITC) Program Office has issued its first report showing how LITCs provide pro bono legal services to help thousands of low income taxpayers nationwide resolve disputes with the IRS and learn about their taxpayer rights and responsibilities.

“Although the LITC Program has been operating and helping taxpayers since 1999, this is the first time we have compiled a report describing the program’s activities and accomplishments. We are proud to provide this synopsis and to demonstrate how the pro bono representation, education, and advocacy efforts of clinics assist low income taxpayers,” said Nina E. Olson, National Taxpayer Advocate.

“During the first half of 2012, LITCs helped taxpayers secure more than $3.2 million in tax refunds and to eliminate nearly $16.5 million in tax liabilities, penalties and interest,” said William P. Nelson, LITC Program Director.

The LITCs provide free or low-cost assistance to low income taxpayers who have a tax controversy with the IRS, such as an audit or collection matter, and conduct outreach and education to taxpayers who speak English as a second language (ESL). The report provides an overview and history of the LITC Program, discusses the type of work the LITCs perform, and explains how their work helps ensure the fairness and integrity of the tax system.

Although LITCs receive partial funding from the IRS, LITCs, their employees, and their volunteers operate independently from the IRS. The grant program is administered by the Office of the Taxpayer Advocate at the IRS, led by the National Taxpayer Advocate. The program awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand, or maintain a low income taxpayer clinic.

ACTEC Sponsors 2013 Law Student Writing Competition

The Legal Education Committee of the American College of Trust and Estate Counsel (ACTEC) is sponsoring the 2013 Law Student Writing Competition:

Purpose:  Consistent with ACTEC’s purposes, the American College of Trust and Estate Counsel Mary Moers Wenig Student Writing Competition was created to encourage and reward scholarly works in the area of trusts and estates. ACTEC’s purposes are to maintain an association of lawyers, international in scope, skilled and experienced in the preparation of wills and trusts; estate planning; probate procedure and administration of trusts and estates of decedents, minors and incompetents; to improve and reform probate, trust and tax laws, procedures, and professional responsibility, to bring together qualified lawyers whose character and ability will contribute to the achievement of the purposes of the College; and to cooperate with bar associations and other organizations with similar purposes.

Eligibility:  This competition is open to any law student in good standing (full-time or part-time) who is currently enrolled as a J.D. or LL.M. candidate in an ABA-accredited law school within the United States or its possessions.

Subjects: The paper must relate to the area of trusts and estates, broadly defined to include:

• Business Planning
• Charitable Planning
• Elder Law
• Employee Benefits
• Fiduciary Administration
• Fiduciary Income Taxation
• Fiduciary Litigation
• Estate Planning and Drafting
• Professional Responsibility
• Substantive Laws for the Gratuitous Transmission of Property
• Wealth Transfer Taxation (Estate, Gift and GST Tax)

Prizes:

• 1st Prize: $5,000 and publication in the ACTEC Journal
• 2d Prize:  $3,000 and online publication on ACTEC’s website
• 3d Prize:  $1,000 and online publication on ACTEC’s website

Deadline:  June 14, 2013

For more information:

• Prior Winners
• Official Rules
• Entry Form (Single Author)
• Entry Form (Joint Submission)

Schultz & Becker: Why We Support a Revenue-Neutral Carbon Tax

Wall Street Journal op-ed:  Why We Support a Revenue-Neutral Carbon Tax, by George P. Schultz (Former Treasury Secretary and Secretary of State) & Gary Becker (University of Chicago, Department of Economics):

[W]e should seek out the many forms of subsidy that run through the entire energy enterprise and eliminate them. In their place we propose a measure that could go a long way toward leveling the playing field: a revenue-neutral tax on carbon, a major pollutant. A carbon tax would encourage producers and consumers to shift toward energy sources that emit less carbon—such as toward gas-fired power plants and away from coal-fired plants—and generate greater demand for electric and flex-fuel cars and lesser demand for conventional gasoline-powered cars.

We argue for revenue neutrality on the grounds that this tax should be exclusively for the purpose of leveling the playing field, not for financing some other government programs or for expanding the government sector. And revenue neutrality means that it will not have fiscal drag on economic growth.

The imposition of such a tax raises questions about how it should be levied and what measures should be used to see that the revenues collected are refunded to the public so that the tax is clearly revenue-neutral.

The tax might be imposed at a variety of stages in the production and distribution of energy. You can make an argument for imposing it at the point most visible to the population at large, which would be the point of consumption such as gasoline stations and electricity bills. An administratively more efficient way of imposing the tax, however, would be to collect it at the level of production, which would reduce greatly

Revenue neutrality comes from distribution of the proceeds, which could be done in many ways. On the grounds of ease of administration and visibility, we advocate having the tax collected and distributed by an existing unit of government, either the IRS or the Social Security Administration. In either case, we think the principle of transparency should be observed. Funds collected should go into an identified fund and the amounts flowing in and out should be clearly visible. This flow of funds should not be included in the unified budget, so as to keep the money from being spent on general government purposes, as happened to the earlier excess of inflows over outflows in the Social Security system. In the case of administration by the IRS, an annual distribution could be made to every taxpayer and recipient of the Earned Income Tax Credit.

Property Tax Delinquency as a Revenue Source

Michelle Z. Marchiony (J.D. 2013, Emory), Comment, Making Debt Pay: Examining the Use of Property Tax Delinquency as a Revenue Source, 62 Emory L.J. 217 (2012):

In tough economic times, everyone looks for ways to do more with less. Local governments, however, face the challenge of doing more with money they do not have. With the recent shrinking of their budgets, it is critical that governments use their limited funding and opportunities for future funding wisely. One such opportunity for future revenue, the payment of delinquent property tax obligations, is critical to providing basic public services, such as education and emergency services. However, government officials may not be maximizing this resource and there is a risk that governments’ financial needs are being exploited.

In an effort to generate revenue and overcome budgetary shortfalls, many local governments sell the right to collect delinquent taxes, along with interest and penalties applied to the amount owed, through the sale of property tax liens. The liens are sold, often for less than the amount of total debt, to private investors who are able to use the government’s enforcement tools—including property foreclosure—to collect the debt owed. Although this $20 billion market generates short-term funds, it obscures the amount of revenue that is forgone in exchange.

This Comment examines the strategies available for managing delinquent tax digests in search of a method that maximizes the return received by local governments while preserving political accountability, protecting consumers, and minimizing aggregate social costs. It analyzes the risks posed by tax lien sales to these objectives and suggests that delinquent tax anticipation notes and contracted lien servicing, or a combination of the two alternatives, best enable governments to maximize revenue, meet policy objectives, and serve taxpayer interests.

NLJ: Which Law Schools Are Tops for Jobs?

National Law Journal:  Which Law Schools Are Tops for Jobs?:

During the past two years, the ABA has significantly increased the amount and detail of information it requires law schools to report about job placement. It also has worked to get the information to the public much faster — the better to guide law school applicants. The organization breaks down the types of jobs graduates have landed and whether they are full-time, long-term or short-term positions, and identifies the three states where graduates of each law school were most likely to find work. The key takeaway is that the job market for new lawyers improved not much at all in 2012.

Read This If You Want a Legal Job
George Washington sent nearly 23% its class of 2012 into jobs paid for by the school itself. Rutgers–Camden sent the largest percentage of its class to state court clerkships. Those are among the thousands of nuggets of information contained in a data trove released recently by the ABA.

Where the Jobs Are
These 20 law schools placed the highest percentage of their 2012 graduates in full-time, long-term jobs that require bar passage.

Large-Firm Jobs
Want to work in Big Law? These law schools sent the highest percentages of their class of 2012 into permanent, full-time jobs at law firms of 100 or more lawyers.

Unemployed
These law schools had the highest percentage of their class of 2012 who were seeking jobs but had not secured any employment nine months after graduation.

Falling short of the Dream
Unemployment figures alone don’t offer a complete picture of law grads struggling the most on the job market because they exclude graduates in temporary or part-time work, or graduates in nonprofessional jobs.

School-Funded Jobs
These law schools had the highest percentage of 2012 graduates in jobs that were financed by the school itself.

Government and Public Interest
These law schools sent the highest percentage of their class of 2012 into either government jobs, such as prosecutors, or public interest jobs, such as public defenders or nonprofit attorneys.

Federal Clerkships
These schools sent the largest percentage of their class of 2012 into clerkships with federal judges.

State Clerkships
These schools sent the largest percentage of their class of 2012 into clerkships with state judges.

Who'll Tax the Rain? Maryland

Maryland Gazette:  The ‘Rain Tax’:

if you thought they ran out of ways to tax us you badly misjudged our lawmakers’ creativity. Get ready for their newest invention, the rain tax. Here’s what’s going on:

In 2010 the Obama administration’s Environmental Protection Agency ordered Maryland to reduce stormwater runoff into the Chesapeake Bay so that nitrogen levels fall 22 percent and phosphorus falls 15 percent from current amounts. The price tag: $14.8 billion.

And where do we get the $14.8 billion? By taxing so-called “impervious surfaces,” anything that prevents rain water from seeping into the earth (roofs, driveways, patios, sidewalks, etc.) thereby causing stormwater run off. In other words, a rain tax.

Faced with the EPA’s orders, the state has required its 10 largest counties — Montgomery, Prince George’s, Howard, Anne Arundel, Carroll, Harford, Charles, Frederick, Baltimore counties and Baltimore city — to raise the revenue. Rain taxes are to take effect in these areas by July 1.

Celine Dion, Rain, Tax (It's Inevitable):

Like rain, tax
After lightning the thunder cracks
(It's inevitable)
Sooner or later it had to come true
Like rain, tax
Weeds grow up through the pavement cracks
(It's inevitable)
You see what I want
What I want is you

 

I also like Fark's headline: "Residents Wonder What Precipitated the Decision"

Jack Bogdanski Challenges Constitutionality of Portland Arts Tax

Blue Oregon:  Jack Bogdanski Files Constitutional Lawsuit Against Portland Arts Tax:

Last year, 62% of Portland voters approved the city arts tax -- a new $35-per-person fee that goes to fund arts organizations and arts for local schools.

That, despite the fact that it was one of the more controversial issues among BlueOregon readers - with strong arguments made both in favor and against.

Among the key arguments against? That the $35 tax is regressive, applying to nearly everyone regardless of income level.

And now, blogger and tax law professor Jack Bogdanski [Lewis & Clark] is taking the argument to another level. As reported by WW's Aaron Mesh, in a one-page lawsuit filed earlier this month with the Oregon Tax Court, Bogdanski alleges that the arts tax violates Article IX, section 1a, of the Oregon Constitution.

Jack also has announced that he has put his hugely popular blog (Jack Bog's Blog) on hiatus for at least a year as he undertakes a major tax writing project.

WSJ: Taxing Lunch at Google and Facebook?

Wall Street Journal:  Silicon Valley's Tax-Free Free Lunch, by Mark Maremont:

Debate Emerges Over Whether Daily Fringe-Benefit Meals Are Taxable; Issue Is Now on IRS's Radar

When outsiders visit Silicon Valley, the first thing they often notice is the food: Cafeterias brimming with free gourmet meals and snacks offered to employees of Google, Facebook, and other technology firms.

But not all is as it seems in the buffet line. There is growing controversy among tax experts about how to treat these coveted freebies. The IRS also has been focusing on the topic, according to attorneys who practice in the area, examining whether the free food is a fringe benefit on which employees should pay additional tax.

Tax rules around fringe benefits are complex, but in general they categorize meals regularly provided by an employer as a taxable perk, similar to personal use of a company car. That leads several tax experts to wonder if some companies providing free food may be skirting the rules.

"I clearly think it ought to be taxable income," said Martin J. McMahon, Jr., a tax-law professor at the University of Florida, who argues that in most cases the meals are really part of a compensation package. 

Other lawyers point to an exception that allows meals to remain untaxed if they are served for a "noncompensatory" reason for the "convenience of the employer." The exception generally has been applied to workers in remote locations or in professions where reasonable lunch breaks aren't feasible. But these lawyers argue that some technology firms could qualify, in part because free food encourages longer work hours and is a crucial part of Silicon Valley's collaborative culture. ...

Google has more than 120 cafes world-wide serving over 50,000 meals a day, according to its website, which says the aim is to foster collaboration and healthy eating. A spokeswoman declined to comment on the tax treatment of employee meals. Several former employees who recently left Google said the company didn't include the value of the meals in their paystubs or in W-2 tax statements. ...

"I buy my lunch with after-tax dollars," said Mr. McMahon, the University of Florida professor. "And I have to pay taxes to support free meals for those Google employees."

Still, an IRS crackdown could raise hackles in the influential technology industry, and generate concerns that the federal government is interfering—for relative pocket change—with a culture that has made Silicon Valley a world leader. "There are real benefits for knowledge workers in having unplanned, face to face interaction," and free food helps facilitate that, said Victor Fleischer, a tax-law professor at the University of Colorado, who argues that aggressive enforcement of tax laws might be poor public policy in this case....

What would a food tax on Google's meals look like for the average employee? Assuming a fair-market value of between $8 and $10 per meal, a Googler chowing down two squares a day could get dinged for taxes on an extra $4,000 to $5,000 a year.

Wall Street Journal:  Is Your Lunch a Taxable Event?, by Mark Maremont:

The legal debate over whether employers can provide tax-free meals centers on a long-standing exception allowing the practice if the food is served for the "convenience of the employer."

In written materials, the IRS defines that as an unusual circumstance that generally applies only when employees can't reasonably buy outside food. Among the examples the agency has given: Workers at an offshore oil rig; hospital emergency personnel; and bank tellers with a short window for lunch during the busiest time of day. Meals provided primarily for a compensatory reason, such as to promote morale or attract prospective employees, are taxable, the IRS has said. ...

[T]he government conceded a court dispute involving sharply discounted meals provided to employees at a New Jersey office campus. The employer argued that traffic and other factors made it impractical for staffers to get outside lunches, according to attorneys involved in the case.

Some lawyers say today's Silicon Valley firms also could qualify for the exception. They argue that there are insufficient nearby eating spots given the number of employees, and that many staffers lack cars, limiting choices to those within walking distance. It is also for the convenience of the employer, they argue, if workers collaborate more, take less time to eat, and consume healthy food rather than the surrounding fast-food options.

"My sense is, for someplace located on an isolated campus, you could make the argument with respect to lunch," said Lawrence A. Zelenak, a tax-law professor at Duke University. He said employers taking that position are "being pretty aggressive, but the law isn't as clear as it should be." Mr. Zelenak added that meals provided outside normal work hours, such as free breakfasts and dinners, probably should be subject to tax

(Hat Tip: Gregg Polsky.)

Tax Reform and the Mortgage Interest Deduction

• Bloomberg, Middle-Class Mortgage Break Tough to Curb in Debt Talks, by Richard Rubin & Dan Levy
• Center on Budget and Policy Priorities, It’s Time to Fix the Broken Mortgage Interest Tax Break, by Will Fischer
• Center on Budget and Policy Priorities, Mortgage Interest Deduction Is Ripe for Reform Conversion to Tax Credit Could Raise Revenue and Make Subsidy More Effective and Fairer, by Will Fischer & Chye-Ching Huang
• Citizens for Tax Justice, Who Loses Which Tax Breaks Under President Obama's Proposed Limit on Tax Expenditures? 
• Miller & Chevalier Tax Appellate Blog, Briefing Complete in Sophy on Treatment of Mortgage Interest Deduction for Non-Married Couples
• Tax Policy Center, How Would Reforming the Mortgage Interest Deduction Affect the Housing Market?, by Margery Austin Turner, Eric Toder, Rolf Pendall & Claudia Sharygin

Johnston: The Tax Police Budget Shrinks

David Cay Johnston (Syracuse),  The Tax Police Budget Shrinks, 139 Tax Notes 211 (Apr. 8, 2013):

With the cuts under the budget sequestration, the IRS budget is down sharply from 2002 and is much too small to ensure the revenue collection necessary to sustain our democracy. 

IRS Budget Change Per Capita (in 2012 dollars)

All Tax Analysts content is available through the LexisNexis® services.

Women at Harvard Law School: Shatter the Ceiling and Canaries in the Coal Mine

Harvard Women's Law Association, Shatter the Ceiling Short Film and Solidarity Letter [video]

Harvard Law Record op-ed:  Do You Accept the Status Quo? It’s About Time to Shatter the Ceiling, by Lena Silver:

The Shatter the Ceiling coalition is an initiative calling attention to systemic gender disparities at Harvard Law School.

Shatter the Ceiling started with a rumor: “Did you hear that not one woman got Magna Cum Laude last year?” my friend asked me over winter break. With a few minutes of research, this rumor proved untrue, but its origin was easily explainable. In 2011, approximately 30 percent of magna cum laude recipients were women. In 2012, the number remained unchanged.

A little more research led me to Adam Neufeld’s 2004 Study, “Study on Women’s Experiences at Harvard Law School,” on the HLS website. Adam Neufeld had access to 1L grades, other statistics and freedom to observe classrooms. He found male students were 50 percent more likely than women to speak voluntarily at least once in class; 40 percent of men ranked themselves in the top quintile in quantitative skills versus 11 percent of women, and; from 1999-2003, 14.4 percent of men were awarded magna cum laude versus 8.4 percent of women. ...

We have uncovered more statistics that highlight the gender disparities across the board at HLS. Women comprise(d)

• 9 out of 44 of this year’s incoming Harvard Law Review members (which has prompted a change in HLR application policies);
• 29 percent of the Supreme Court clerkships from Harvard alum over the past six years;
• 18 out of 60 of the magna cum laude honors recipients in 2012;
• 7 out of 24 semi-rounds finalist in Ames 2013, and;
• 18 women out of 92 current professors and assistant professors.

We feel these interrelated disparities in achievement reflect a patent injustice, as well as signal that the educational environment and system at HLS negatively affects the quality of life and education for all members of the law school community, especially minority groups. We cannot forget the historical dimension at issue -- HLS excluded women until 1953, and women did not attend in significant numbers until the 1990s. The doors have opened, but we still have a long way to go to achieve parity.

For an alternative perspective, see Wall Street Journal:  The Crimson Canaries: Does the Socratic Method Keep Women Down?, by James Taranto:

So I think what I would say to you is probably captured by the miners' canary metaphor--that the women in law school are the canary in the coal mines. So they're more vulnerable when the atmosphere in the coal mines gets toxic. The canary, because of its different respiratory system, is more likely to start gasping for air, and that's a sign that the atmosphere is toxic not just for the canary but for the miners as well. So it's a signal to evacuate. -- Lani Guinier

The video's subject is "systemic gender disparities," which in ordinary English means that female Harvard Law students perform poorly by comparison with their male counterparts. ... According to U.S. News & World Report, the student body at Harvard Law is 47.2% female. So there's no disputing that these numbers, possibly excepting the proportion of cum laude grads, are skewed. Why? The WLA's hypothesis is discrimination against women. Our hypothesis is discrimination in favor of women. We suspect that in an effort to maintain a near-even sex ratio, Harvard Law holds female applicants to lower standards than male ones.

That would be analogous to the experience with racial preferences. Racial and ethnic minority students who are admitted for "diversity" value despite lower scores and grades tend to struggle in school and be likelier to drop out.

There's a problem with that analogy. Racial disparities in academic performance are observed in a wide variety of educational settings. Harvard Law's sex disparity, by contrast, is unusual. Indeed, today in most educational settings it is female students who outperform male ones, as Laura Rosenbury, a Harvard grad who is now Sullivan & Cromwell Visiting Professor of Law, says in the video:

I've been teaching at Washington University in St. Louis, and we don't have this problem. In fact, women outperform their male colleagues, both in terms of grades and in terms of law-review competition. And so what makes Harvard different?

Here is a possible answer: What makes Harvard different is its status as one of the most elite of the elite institutions of legal education. Among 194 accredited law schools, U.S. News ranks it second only to Yale.

The LSAT ... is a test of abstract reasoning skills, essentially an IQ test. "Most psychometricians conclude that men and women have the same mean IQ," as Charles Murray noted in a 2005 Commentary article. But "men consistently exhibit higher variance ... meaning that there are proportionally more men than women at both ends of the bell curve."

The right end of the bell curve represents a small portion of the population, but one that is enormously important in a culture and economy that increasingly value cognitive ability. The higher male variance means that the subpopulation of extremely intelligent outliers includes substantially more men than women. If admissions were purely meritocratic, the most elite schools would be the ones with the highest sex ratios. But the law school at Washington University, which U.S. News ranks only No. 19, has a higher ratio than Harvard's: 57% male to 43% female.

Of course, we could be wrong, to paraphrase one thinker. We haven't proved our hypothesis, merely set it forth and made an argument for why it is plausible. ...

In its way, this video is an excellent advertisement for Harvard Law School. If you were on trial for your life, you'd want a lawyer who'd gone through such rigorous training. You'd want a Harvard man.

Or a Harvard woman. With the video, the WLA does a grave injustice to those female Harvard Law students who are up to the challenge, who are able to compete with the fellows, who do make law review or graduate magna cum laude on the merits.

Not all women at Harvard Law are canaries. The Socratic method doesn't seem to have kept Elena Kagan down.

Update:  Ann Althouse (Wisconsin), A Hostile Environment Toward Women at Harvard Law School?

NY Times: Former Baucus Staffers Cash in as Finance Committee Tees Up Tax Reform

New York Times:  Tax Lobby Builds Ties to Chairman of Finance Panel:

Restaurant chains like McDonald’s want to keep their lucrative tax credit for hiring veterans. Altria, the tobacco giant, wants to cut the corporate tax rate. And Sapphire Energy, a small alternative energy company, is determined to protect a tax incentive it believes could turn algae into a popular motor fuel.

To make their case as Congress prepares to debate a rewrite of the nation’s tax code, this diverse set of businesses has at least one strategy in common: they have retained firms that employ lobbyists who are former aides to Max Baucus, the chairman of the Senate Finance Committee, which will have a crucial role in shaping any legislation.

No other lawmaker on Capitol Hill has such a sizable constellation of former aides working as tax lobbyists, representing blue-chip clients that include telecommunications businesses, oil companies, retailers and financial firms, according to an analysis by LegiStorm, an online database that tracks Congressional staff members and lobbying. At least 28 aides who have worked for Mr. Baucus, Democrat of Montana, since he became the committee chairman in 2001 have lobbied on tax issues during the Obama administration — more than any other current member of Congress, according to the analysis of lobbying filings performed for The New York Times....

In recent interviews, four former aides to Mr. Baucus said that their ties to him heightened their appeal to potential clients. The link also helped justify their salaries, in some cases $500,000 or higher, more than double or triple their Capitol Hill paychecks. ...

Mr. Baucus’s office points out that the former aides who now work as tax lobbyists are a small fraction of those whose who have worked for him over the years. Still, several colleagues who have served more than two decades on the finance panel — including Orrin G. Hatch, Republican of Utah, and Charles E. Grassley, Republican of Iowa, both as ranking Republican or chairman — have much smaller networks of former aides who are tax lobbyists.

(Hat Tip: Ann Murphy.)

My Promise to My Dying Husband

My Promise to My Dying Husband:

Ryan Scott Prudhomme, I promise to you that I will cherish your memory as long as I live. Your character, your integrity, your heart for the Lord, and your unshakable faith in Him are all reasons that I, along with many others, will continue to regard you as a most extraordinary person. I admire you more than you could imagine.

Ryan, I promise to you that your son will know you as he grows. Any creative way that I can devise to ensure that he grows up feeling close to you—I plan to do it. Any person that can tell him about your jokes, your idiosyncrasies, your personality traits—I will ensure those people have an avenue to tell your son about his beloved daddy. Regardless of whether you get to parent him for two or twenty or seventy years, I pledge to you my commitment to raise him to know his dad.

I promise to you I will not despair, I will not be broken, and I will somehow, someday, some way again feel joy and peace. During the last two years, I know your first thoughts are usually of me—not of yourself—and you have been far more worried about me and Colton. Your love for me has never been more evident and has helped gird me through some very difficult times. I could never have done this without your faithful prayer and your encouragement, but I’m entering into a new phase where I won’t have the luxury of your nearness. Despite that, I know deep down that I am a person that can shoulder anything, as long as the Lord stands behind me. And He will. I will, with His grace, stand tall and will endure whatever tomorrow brings. Don't you worry. 

(Hat Tip: Derek Muller.)

TaxProf Blog Weekend Roundup

Saturday:

• WSJ:  More Than 50% of Law Graduates Aren’t Making a Living
• Obama Won't Take Charitable Deduction for Contribution of $20,000 of His Salary to Feds
• Obama Budget to Limit IRAs to $3 Million
• Dartmouth Grad:  Find a Man Today, Graduate Tomorrow

Sunday:

• Posner:  The Real Problem With Law Schools (They Train Too Many Lawyers)
• Top 5 Tax Paper Downloads
• The Guardian:  Law Students Face Uncertain Future With Jobs Scarce and Debt High
• 12th Annual Conducting Empirical Legal Scholarship Workshop

Posner: The Real Problem With Law Schools (They Train Too Many Lawyers)

Slate:  The Real Problem With Law Schools: They Train Too Many Lawyers, by Eric Posner (Chicago):

A crisis is looming in legal education. Last month, a notable group of legal educators who call themselves the Coalition of Concerned Colleagues released a letter declaring that law schools have spewed forth more graduates than the legal market can absorb, resulting in rising unemployment among young lawyers, who cannot pay off colossal student loans. As the New York Times recently reported, applications are plummeting, and a movement is on to reduce law school educations from three to two years—advocated in the New York Times by law professor Samuel Estreicher and law dean Daniel Rodriguez. The CCC letter similarly argues that legal education should be less expensive and less uniform, which sounds fine in the abstract. But in the details, the proposed fixes will make the crisis worse than ever.

The figures are grim, and the human cost is real. Ninety-two percent of 2007 law school graduates found jobs after graduation, with 77 percent employed in a position requiring them to pass the bar. For the class of 2011 (the latest class for which there are data), the employment figure is 86 percent—with only 65 percent employed in a position that required bar passage. Preliminary employment figures for the class of 2012 are even worse. The median starting salary has declined from $72,000 in 2009 to $60,000 in 2012. A while back, the Bureau of Labor Statistics estimated that 218,800 new legal jobs would be created between 2010 and 2020. As law professor Paul Campos points out, because law schools graduate more than 40,000 students per year, those jobs should be snapped up by 2015—leaving only normal attrition and retirement spots left for the classes of 2016 to 2020. Meanwhile, tuition has increased dramatically over the last several decades. Students who graduate from law school today with $100,000 or more in debt will default on their loans if they cannot get high-paying work in the law.

The crisis could have been predicted. Demand for legal services boomed in the 1990s and 2000s. College graduates, drawn by skyrocketing pay and subsidized by government-guaranteed loans, flocked to law school in ever greater numbers. Law schools, rational market actors that they are, hiked tuition. The higher prices people were willing to pay for legal education encouraged universities to enlarge classes and open additional law schools. Not surprisingly, supply overtook demand. The mismatch is now exacerbated by the development of technological substitutes for some legal work, including online services that enable people to fill out legal forms, and a weak economy. ...

The “crisis,” then, is just part of the normal cycle of the economy—familiar to anyone who has held a job as construction worker, software engineer, salesman, or journalist. And the market is reacting in a predictable way. Fewer people are applying to law schools; class sizes are shrinking; some law schools may shut down. The excess supply of lawyers will reduce the price of legal services—a boon for everyone outside the legal sector—and so some lawyers will leave the profession for early retirement or more lucrative pursuits. (We seem to have forgotten the usual complaint about lawyers that they charge too much, not too little.) Demand and supply will eventually equilibrate, and the legal services market will look something like it did 10 or 15 years ago.

None of the proposals for reform advocated by CCC make sense in light of the group’s diagnosis of the problems lawyers face. ...

[Y]ou can’t blame government subsidies for the plight of young lawyers. Government guarantees lower the cost for lawyers to obtain training. If the subsidies create a larger supply of lawyers, it should also create a greater demand for their services, by reducing the costs that they pass on to clients. Depriving students of government-guaranteed loans is hardly a solution to the problem that legal education is too expensive. ...

The only realistic way to help lawyers today is to increase the demand for legal services—somehow convincing governments, for example, to pay for adequate representation of indigent defendants—but in the long term, greater demand will create the expectation of yet more job growth, and that could lead to another bust. The critics seem to think the legal profession can escape the logic of the market. It can’t.

Matt Leichter, "The Real Problem With Law Schools” Real Problem Is Poor Research, Flawed Reasoning:

Posner believes that the group of law school professors from mostly prestigious universities who sent a letter to the ABA calling themselves the “Coalition of Concerned Colleagues” “will make the crisis worse than ever.”

If you think that handing vouchers to everyone 18 years and up to attend law school at full cost to the government plus living expenses would be the only way things could get worse than ever (if people still even bother to apply at that), you obviously don’t know economics. ... The worst thing anyone can say about the “Coalition of Concerned Colleagues’” letter to the ABA is that it was too cautious re. the Direct Loan Program, which isn’t even worth a comment on a scamblog. Rather, Posner’s argumentum ad econ one-o-oneum is the only kind of logic we really need to escape from.

Top 5 Tax Paper Downloads

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week. The #1 paper is #407 in all-time downloads among 9065 tax papers:

1.  [520 Downloads]  Wealth Transfer Tax Planning for 2013 and Beyond, by John A. Miller (Idaho) & Jeffrey A. Maine (Maine)

2.  [396 Downloads]   Fundamentals of Gift Tax, by Mark Powell (Chapman) & Andrea Kushner Ross (Karlin & Peebles, Beverly Hills, CA)

3.  [386 Downloads]  Federal Tax Crimes, by John A. Townsend (Houston)

4.  [267 Downloads]   Do Capital Income Taxes Hinder Growth?, by Chris William Sanchirico (Pennsylvania)

5.  [249 Downloads]  Dirt Lawyers, Dirty REMICs, by Bradley T. Borden (Brooklyn) & David J. Reiss (Brooklyn)

The Guardian: Law Students Face Uncertain Future With Jobs Scarce and Debt High

The Guardian:  Law Students Face Uncertain Future With Jobs Scarce and Debt High:

The law profession is facing a crisis, and a juris doctor is no longer a generalist's degree; it's not all courtrooms and arguing any more. Computers can do much of the same work as a law clerk, and schools are having to adjust. ...

There is less focus on how the change in the legal profession will affect students. Law schools are adapting, but graduates don't have it so easy. Many feel locked into legal careers because of the crushing debt they have accumulated; fewer people are running to law school hoping it will save them from the economy. Applications to law school have dropped by 20% compared with those posted by this time in 2012, according to a March report from the Law School Admissions Council. ...

Permanent jobs with high-paying salaries are a thing of the past for many graduates, and a handful of attorneys are suing against what they feel were misleading job success rates posted by their law schools. The Los Angeles Times reported Monday that 18 law schools around the country are being sued by graduates who claim they choose their schools because of high graduate placement, a figure commonly used to rank the quality of the school. At least five of those lawsuits were filed in California. ...

Massive debt and fewer prospects mean the era of law degrees as a route into the job market could be coming to an end. Law schools are meeting lower demand for graduates with generalist degrees by shifting law school curriculums into more specialized areas. "Private sector demand for smart but financially illiterate law graduates with a general professional degree and no particular industry expertise is, to say the least, dwindling," Victor Fleischer wrote in the New York Times last October.

But it's too little too late for some.

"I never really thought about whether I would actually like being a lawyer, which seems absurd to me now," Manhattan-based lawyer Emily, 28, told the Guardian, "but is extremely common among young people applying to law school." Emily's debt after graduating with a degree from Fordham Law is $139,000 – average Fordham debt: $134,319 – and though her salary of $170,000 at a Manhattan law firm is enough to pay off the bill in 10 years, she's locked into a career she doesn't enjoy at least until then. Her loan payment: $1,700 per month. "I haven't enjoyed my career so far, and I honestly don't think I will," Emily said. "I am tied to working at a big law firm if I want any chance at repaying my loans in a reasonable time and it is not a good job. And I'm one of the lucky ones because I'm employed!" ...

As thousands of students apply for law school this spring – less than before, but still thousands – they're inevitably asking themselves: is the debt worth it?

(Hat Tip: David Finkel.)

12th Annual Conducting Empirical Legal Scholarship Workshop

The 12th Annual Conducting Empirical Legal Scholarship Workshop will take place at the USC Gould School of Law on May 22 - 24, 2013:

The workshop is for law school faculty, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. Leading empirical scholars Lee Epstein and Andrew Martin will teach the workshop, which provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data. Participants need no background or knowledge of statistics to enroll in the workshop.

For more information or to register, see here.

WSJ: More Than 50% of Law Graduates Aren’t Making a Living

Wall Street Journal:  More than 50% of Graduates Aren’t Making a Living -- Study:

More than 50% of law school graduates from the 2011 class aren’t earning enough to buy a house, according to a new study [Jerry Organ (St. Thomas), Reflections on the Decreasing Affordability of Legal Education, 41 Wash. U. J.L. & Pol'y ___ (2013)]. ...

Mr. Organ took a formula for measuring a law school graduate’s economic viability developed by University of Louisville Law Professor Jim Chen [A Degree of Practical Wisdom: The Ratio of Educational Debt to Income as a Basic Measurement of Law School Graduates’ Economic Viability, 38 Wm. Mitchell L. Rev. 1185 (2012)] and applied it to employment outcome data published on a per school basis by the ABA for the class of 2011.

Graduates need to be earning an annual income that’s at least two times their annual tuition — or an income that’s at least two-thirds of their law school debt — to reach “marginal financial viability,” according to the formula. Those below the threshold can’t afford to buy a $100,000 house and struggle to retire their debt. ...

He concludes:  Across all law schools and after accounting for scholarships in the manner described above, the estimated percentage of graduates from the Class of 2011 who have marginal financial viability increased from roughly 33% to roughly 46.5%, while the estimated percentage of such graduates who have less than marginal financial viability declined from roughly 67% to roughly 53.5%.

Those facing the bleakest prospects are graduates with lower LSAT scores and grade point averages who are more likely to pay full tutition, and those who went to school in places where legal education is more expensive, like California, Illinois, Massachusetts, and New York.

“Law schools are going to find themselves with fewer students to fill their seats unless costs come down or the job market improves significantly,” Mr. Organ told Law Blog by email.

See also Above the Law, If You Want to Own a Home, Don’t Borrow Money to Go to Law School

From Jim's article:

To offer good financial viability, defined as a ratio of education debt to annual income no greater than 0.5, post-law school salary must exceed annual tuition by a factor of 6 to 1. Adequate financial viability is realized when annual salary matches or exceeds three years of law school tuition. A marginal, arguably minimally acceptable level of financial viability requires a salary that is equal to two years’ tuition. The following table compares some tuition benchmarks with the salary needed to ensure the good, adequate, and marginal levels of financial viability identified in this article:

Obama Won't Take Charitable Deduction for Contribution of $20,000 of His Salary to Feds

Wall Street Journal:  Obama Won’t Deduct Returned Pay, by Laura Saunders:

President Barack Obama’s gesture of solidarity with furloughed federal workers will cost him about $8,000 out of pocket, according to tax specialists.

On Wednesday, the White House announced that the president plans to return 5%, or about $20,000, of his $400,000 salary this year to the Treasury in sympathy with federal workers facing reduced pay because of the automatic spending cuts known as the “sequester.” A White House aide said the president plans to write a check to the Treasury every month for a portion of his pay. He will write the first check this month. ...

In January, Congress raised the top tax rate on ordinary income to 39.6%, and a new payroll tax of 0.9% also took effect for high earners. The Obamas are expected to be subject to both, giving them a total tax rate of at least 40.5% on the $20,000 they donate, or about $8,100. ...

Of course, the president could treat the $20,000 as a charitable gift to Uncle Sam. Such contributions are typically deductible, according to IRS Publication 526. If he did, says [Jay] Starkman, “his net out-of-pocket would only be about $11,900.”

On Thursday a White House aide said the president will not take a charitable deduction for the $20,000.

Obama Budget to Limit IRAs to $3 Million

• Bloomberg, Obama’s Budget Would Cap Romney-Sized Retirement Accounts
• Business Insider, Barack Obama's Budget Will Contain a Massive 'Screw You' to Mitt Romney
• The Hill, Obama Budget to Take Aim at Wealthy IRAs
• Greg Mankiw (Harvard), The President's Latest Bad Idea

Prior TaxProf Blog ocoverage:

• The Tax Pros and Cons of Mitt Romney's $100 Million IRA (Jan. 19, 2012)
• WSJ: The Story Behind Mitt Romney's $100 Million IRA (Mar. 29, 2012)
• WaPo: Mitt Romney Exited Bain Capital With Rare Tax Benefits in Retirement (Sept. 3, 2012)
• The Atlantic: What's Really Going on With Mitt Romney's $102 Million IRA (Sept. 12, 2012)

Dartmouth Grad: Find a Man Today, Graduate Tomorrow

Followiing up on Tuesday's post, Advice for the Women of Princeton: Wall Street Journal op-ed:  Find a Man Today, Graduate Tomorrow, by Emily Esfahani Smith:

In 2008, when I was a college junior, I went home to New Jersey one weekend to visit my family—and almost immediately regretted it. My mother seemed more interested in my romantic life than my academic life: "Have you found a boyfriend yet?"

I rolled my eyes and said no. With a healthy dose of young-adult arrogance, I explained that I was too busy studying, working on the college review, and helping out at my sorority. No time for men. My mother nodded, acknowledging that there was a lot going on.

Then she said calmly but forcefully: "You're in college. You're at Dartmouth. There will never be a better time to meet someone. I'm sure there are many interesting boys around. If you don't find one before you graduate, you might not find one at all—so start looking."

Fast forward to today. A woman named Susan Patton is being pilloried online and elsewhere for giving young women the same advice that my mother gave to me. Late last week, she wrote a letter to the Daily Princetonian newspaper advising the school's female students: "You will never again have this concentration of men who are worthy of you. . . . Find a husband on campus before you graduate."

Feminist attacks on Ms. Patton began immediately—the paper's website was swamped with complaints, the Twitter crowd was livid, and writers lit into her at Slate, New York magazine and beyond. ...

[M]y mother's advice five years ago stopped me in my tracks. If she, a strong, career-oriented feminist—who, with my dad, sacrificed a great deal for me to go to college—was telling me to pay more attention to my romantic life, then what did she know that I didn't?

A lot. She knew what few, if any, feminists would tell young women today: There is far more to happiness than career success. ... In a boardroom somewhere, Sheryl "Lean In" Sandberg's heart is sinking.

Career success and relationships are both undoubtedly important to women's happiness, but many young and ambitious women value their personal lives more than their career aspirations. And that feeling intensifies over time.

In a 2009 study in the Journal of Personality and Social Psychology, David Lubinski and his team at Vanderbilt found that in a sample of academically gifted young adults, women became less career-oriented than men over time. As they approached middle age, women also placed more value than men on spending time with family, community and friends. These differences became more pronounced with parenthood.

My mother's advice—Susan Patton's advice—may not be right for every woman, but it was right for me. In the fall of my senior year, I started dating a brilliant man and we're still together. If I were unattached today, I'm not sure what I would do. The post-college dating scene can be rough: Getting to know someone often means shouting across a noisy bar or scrolling through Internet dating profiles. Finding a partner in college is easier.

Mom was right.

Reports Detail Tax Avoidance Through Offshore Bank Accounts

Two reports released yesterday detail the explosion of tax avoidance through offshore bank accounts:

• International Consortium of Investigative Journalists, Secrecy for Sale: Inside the Global Offshore Money Maze
• U.S. Public Interest Research Group, Picking up the Tab: Average Citizens and Small Businesses Pay the Price for Offshore Tax Havens

Press and blogosphere coverage:

• New York Times, Data Leak Shakes Notion of Secret Offshore Havens and, Possibly, Nerves
• Slate, The Secret World of Tax Havens Just Got a Whole Lot Less Secret
• Tax Justice Network, Offshore Secrets: Time Is Ripe for a European FATCA
• Washington Post, 2.5 Million Leaked Files Reveal Stunning Extent of Global Tax Havens
• Washington Post, Piercing the Secrecy of Offshore Tax Havens
• Washington Post, Tax Haven Data Leak Names Names, Raises Questions About Future of Offshore Bank Accounts