TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, May 16, 2016

The IRS Scandal, Day 1103

IRS Logo 2Wall Street Journal: Donald Trump’s Amazon Adventure, by Holman W. Jenkins, Jr.:

You might get some argument about exactly how illegal it is for politicians to use their law-enforcement powers to punish their political opponents.

But at least when Nixon sought to, he felt obliged to do so by secret memorandum. As keeper of the enemies list John Dean wrote, “This memorandum addresses the matter of how we can maximize the fact of our incumbency in dealing with persons known to be active in their opposition to our Administration; stated a bit more bluntly—how we can use the available federal machinery to screw our political enemies.”

As it happened, however, the IRS commissioner at the time, Donald Alexander, refused orders to carry out tax audits of the Nixon White House’s political enemies.

Today, nobody, not even his worst critics, expects to find a memo from President Obama instructing Lois Lerner at IRS to stonewall applications from conservative political groups for tax-exempt status.

His critics probably don’t even expect Mr. Obama to have muttered under his breath that such a thing would be desirable. Rather, Ms. Lerner, all on her own, seemingly decided as a loyal Democratic and ideological warrior that it would be a good thing to use her agency to hamper the president’s partisan antagonists. ...

Donald Trump, an innovator in all things, is now in the process of changing the rules in America with his threat to bring legal action against Amazon on antitrust grounds and, if we hear him correctly, on tax grounds as well.

Mr. Trump couldn’t have been clearer about his motivation. He complained about Washington Post reporters calling up and “asking ridiculous questions,” “all false stuff,” apparently related to Mr. Trump’s tax returns, which in defiance of all tradition he has refused to release, as well as Mr. Trump’s real-estate dealings.

Mr. Trump says the Post was purchased as “a toy” by Amazon founder Jeff Bezos (who bought the paper with his personal funds in 2013). Mr. Trump says the paper now is being used to attack Mr. Trump in order to protect Amazon’s alleged tax-dodging practices even though Amazon, after long resistance, has begun in recent years to collect state sales tax.

All this seems to arise because the Post, the dominant newspaper in the nation’s capital, has assigned reporters to investigate the business career of the candidate who champions his credibility to be president by referring to his business career. ...

Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government’s law-enforcement powers to attack news reporters and political opponents just isn’t done.

Maybe he thinks he can get away with it. Maybe he’s trying to figure out how to disqualify himself for the presidency in a way that wouldn’t embarrass his fans or blow back on the business career that he always imagined he’d be returning to after the Republican convention at the latest. After all, one way to throw an election is to scare off donors (he needs about a billion dollars) by flaunting his inner Nixon.

Or maybe he really does want to be the American caudillo who flings American democratic and legal norms out the window and ushers in a new age of populist authoritarianism.

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

TaxProf Blog Weekend Roundup

Sunday, May 15, 2016

Why Are There So Few Conservative/Libertarian Law Profs, Even Though They Are More Productive Scholars Than Liberal Law Profs?

James Cleith Phillips (Ph.D. Candidate, UC-Berkeley), Why are There So Few Conservatives and Libertarians in Legal Academia? An Empirical Exploration of Three Hypotheses, 39 Harv. J.L. & Pub. Pol'y 153 (2016):

There are few conservatives and libertarians in legal academia.

Graph 3

Why? Three explanations are usually provided: the Brainpower, Interest, and Greed Hypotheses. Alternatively, it could be because of Discrimination. This paper explores these possibilities by looking at citation and publication rates by law professors at the 16 highest-ranked law schools in the country. Using regression analysis, propensity score matching, propensity score reweighting, nearest neighbor matching, and coarsened exact matching, this paper finds that after taking into account traditional correlates of scholarly ability, conservative and libertarian law professors are cited more and publish more than their peers.

 

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May 15, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

Larry Summers, Robert Rubin And The President's Authority To Tax Carried Interest As Ordinary Income

Following up on yesterday's post, The President's Authority To Unilaterally Raise Taxes

Business Insider, Larry Summers Just Threw Epic Shade About Tax Breaks Right in a Private-Equity CEO's Face:

On Wednesday morning, at the SkyBridge Alternatives hedge fund conference, Carlyle Group co-CEO David Rubenstein interviewed [former Treasury Secretary Larry] Summers alongside his Clinton administration colleague, Robert Rubin.

But at one point, Summers turned the tables on Rubenstein, with an assist from Rubin.

The interviewees noted that Rubenstein could teach the audience some lessons on influencing government, given his surprisingly successful record of fighting to retain the "carried interest" tax loophole, which gives private-equity and hedge fund managers a tax preference on their performance fees.

"Rarely has a policy existed so long with such weak arguments in its favor," said Summers, in backhanded praise of Rubenstein's lobbying skill. "It's the First Amendment, the Second Amendment, and carried interest, right?"

"Not necessarily in that order," Rubin added.

Rubenstein replied that, if Summers and Rubin thought the tax preference for carried interest was such bad policy, then they could have used executive action to eliminate it when they served in the Treasury Department.

"Not sure it works like that," Rubin replied.

He's right: You would need legislation to close the loophole, and that legislation has been stalled by private-equity-friendly members of Congress.

David Hemel (Chicago), Two-and-Twenty and Fifty-Fifty:

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May 15, 2016 in Tax | Permalink | Comments (1)

When You Are Called To Your Life's Work

Oxford 4Wall Street Journal, When You’re Called to Your Life’s Work:

Callings come in many ways, some unexpected. ... A chance encounter with an elderly homeless man led physician Lara Weinstein to her work treating marginal populations. “It was almost like a transcendental experience,” says Dr. Weinstein, a family doctor in Philadelphia.

Such events are more prevalent than one might expect. A 2006 Gallup poll of 1,004 adults, the most recent it has done on the subject, found that 33% of Americans said the following statement “applies completely” to them: “I have had a profound religious experience or awakening that changed the direction of my life.”

The experiences vary. A revelation, directive or message comes unexpectedly. A series of unlikely synchronistic events occur. Some people sense a divine presence, and others feel deeply connected to something larger than themselves, be it nature or others around them, and pursue more altruistic work.

People of all ages and faiths, agnostics and atheists, have such experiences, yet they rarely talk about them. They’re concerned others will dismiss them as delusional or won’t take them seriously. Sometimes words fall short of conveying the intensity of what they felt.

Some scientists and scholars are beginning to pay attention, says Lisa Miller, director of clinical psychology at Columbia University and editor of The Oxford Handbook of Psychology and Spirituality, published in 2012, which includes chapters written by quantum physicists and other scientists.

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May 15, 2016 in Book Club, Legal Education | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

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

  1. [863 Downloads]  Lexisnexis® Guide to FATCA Compliance: Chapter 1, by Willliam Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  2. [352 Downloads]  Ownership of the Means of Production, by E. Glen Weyl (Chicago) & Anthony Lee Zhang (Stanford)
  3. [319 Downloads]  The Panama Papers and Tax Morality, by Usman W. Chohan (University of New South Wales)
  4. [205 Downloads]  Google's 'Alphabet Soup' in Delaware, by Bret Bogenschneider (Vienna) & Ruth Heilmeier (Cologne)
  5. [157 Downloads]  New Prominence Of Tax Basis In Estate Planning, by Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers)

May 15, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Big Law Women Talk About Abortion (Their Own)

PhotoAmerican Lawyer, Big Law Women Talk About Abortion (Their Own):

Most lawyers I know are a bit uptight. They don't usually reveal too much information, particularly  if it might cast them in a negative or controversial light. They don't even like to admit to having a cold, lest their professional armor appears tarnished.

Why, then, would lawyers working at major law firms, the epitome of corporate discretion, go public about their own abortions? Weren't they worried about the reaction of clients and colleagues? Did their firms try to stop them? Or is abortion not a controversial subject in the world of elite law firms?

I've been curious about those questions since Tony Mauro of The National Law Journal reported that some 113 female lawyers signed an amicus brief to the Supreme Court challenging Texas's restrictions on abortion clinics. (The high court is expected to rule on the case this summer.) The brief was powerful, both as narrative and symbol. There were personal anecdotes about the women's abortions, though they were not identified with the individual signers. 

I tracked down three of the signers from Big Law to see what possessed them to go public about such a private matter, and how it's affected their career thus far.

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May 15, 2016 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1102

IRS Logo 2Erick Erickson, House GOP to Consider Impeaching IRS Commissioner. Trump Complicates Things.:

House Republicans are going to consider impeaching the IRS Commissioner, Commissioner John Koskinen. The IRS is accused of targeting conservative groups for harassment. Likewise, the IRS is accused of dragging its feet on giving non-profit status to conservative groups. Based on an inspector general investigation into the IRS and subsequent congressional hearings, the accusations appear legitimate.

Koskinen, as head of the IRS, has not seemed interested in actually dealing with the IRS’s stalling and apparent cover up as the investigations continued. He deserves to be impeached.

Donald Trump, however, neutralizes the GOP’s talking point on the IRS. Just the other day he threatened Jeff Bezos and Amazon, suggesting Trump would support internet taxation to hurt Amazon, among other things, because of the Washington Post’s investigative reporters looking into Trump.

If the GOP has a candidate who implies or directly suggests he might use the government against his opponents, it will be really hard for them to distinguish what the IRS did from what their own Presidential nominee wants to do.

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May 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Saturday, May 14, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Lindgren:  The Most Under-Represented Groups In Law Teaching Are Whites, Christians, Republicans, Males

James Lindgren (Northwestern), Measuring Diversity: Law Faculties in 1997 and 2013, 39 Harv. J.L. & Pub. Pol'y 89 (2016):

This article is the first careful look at the demographic makeup of law faculties compared to the larger pools of lawyers and the general public. It examines which racial, gender, religious, and political groups were the most under- and overrepresented in 1997 and in 2013 compared to persons of similar ages in larger pools, including the U.S. full-time working population and the U.S. lawyer population.

The data show that in 1997 women and minorities were underrepresented compared to some populations, but Republicans and Christians were usually more underrepresented. For example, by the late 1990s, the proportion of the U.S. population that was neither Republican nor Christian was only 9%, but the majority of law professors (51%) was drawn from that small minority. Further, though women were strongly underrepresented compared to the full-time working population, all of that underrepresentation was among Republican women, who were—and are—almost missing from law teaching.

Table 13
Table 13B

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May 14, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

Hemel & Galle:  The President's Authority To Unilaterally Raise Taxes

Following up on Monday's post, Taxing Carried Interest As Ordinary Income Through Executive Action:

Daniel Hemel (Chicago), The President’s Power To Tax Doesn’t Stop at Carried Interest:

No one can predict with complete confidence whether a court would uphold as-yet-unwritten Treasury regulations addressing carried interest, but I agree with Morgenson (and with the tax experts she cites) that such regulations — if written carefully and finalized after notice and comment — quite likely would pass judicial muster. What Morgenson doesn’t mention, though, is that when it comes to tax reform measures that the Obama administration could implement on its own, carried interest is just the tip of the iceberg. President Obama might not be able to make much of a dent in income inequality without legislative action, but he could raise billions of dollars in revenue while addressing some of the most objectionable tax avoidance strategies employed by U.S. corporations and high-net-worth individuals.

In a forthcoming Cornell Law Review article, The President’s Power To Tax, I set out a list of tax reform measures that the Obama administration could accomplish without an act of Congress.

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May 14, 2016 in Scholarship, Tax | Permalink | Comments (2)

Harrison:  Law Professor Divas

DivaJeffrey Harrison (Florida), The Diva Tax: Insufferable Diva, BUT He Writes:

I mean he and she divas although I know that is technically incorrect but cut me some slack on this one.

I wrote about this general idea some time ago. The context was whether "character" should be consider a plus among law professors so that it off-sets a lack of productivity. The converse question is harder -- should a low character law professor be cut extra slack if he or she writes or at least is perceived as being productive. ...

Here, I think, would be the conventional thinking. If you do not write enough you will pay for character issues or being a pain in the ass. On the other hand, if you write enough, you pay no price. ... [I]n law school rankings, the bottom line, along with student qualifications and placement, there is image which is often based on writing. So, in a sense, law school administrators do not and should not care about divas unless it affects the writings of others.

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May 14, 2016 in Legal Education, Scholarship | Permalink | Comments (2)

Law Firm Revenues Surged In First Quarter

American Lawyer LogoAmerican Lawyer, Citi Report: Law Firm Revenues Surged in First Quarter:

Challenging market conditions belied the strong results, on average, that the legal industry reported in the first quarter of 2016. In the first quarter, revenue grew 5.8 percent, driven by increases in demand and billing rates, as well as a strong collections effort. Further, the industry saw revenue growth outpace expense growth, while inventory growth was solid. Both are positive signs heading into the second quarter. Has the legal industry broken from the pattern of modest growth that defined the post-recession years of 2009-13? Or were the results from the first quarter of 2016 simply fueled by fourth-quarter activity and buoyed by a comparison to the slow start of 2015?   These results are based on a sample of 176 firms (79 Am Law 100 firms, 45 Second Hundred firms and 52 niche/boutique firms). ...

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May 14, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1101

IRS Logo 2Press Release, House Judiciary Committee to Examine Misconduct by IRS Commissioner:

The House Judiciary Committee today announced that it will hold two full committee hearings to examine misconduct by the Internal Revenue Service (IRS) Commissioner John Koskinen.

At the first hearing, which will take place on Tuesday, May 24 at 10:00 a.m., members of the House Judiciary Committee will hear from a witness panel presenting the findings of the House Oversight and Government Reform Committee’s investigation of IRS Commissioner Koskinen. The House Judiciary Committee will also invite IRS Commissioner Koskinen to testify. The House Oversight and Government Reform Committee has investigated the targeting of conservative groups for several years and many of the Committee’s members have found that Commissioner Koskinen failed to comply with a congressional subpoena which resulted in destruction of key evidence, made false statements during his sworn congressional testimony, and did not notify Congress that Lois Lerner’s emails were missing.

At the second hearing, which will take place in June, members of the House Judiciary Committee will invite outside experts to comment on the findings presented in the first hearing and whether further congressional action is warranted. Witnesses for both hearings will be announced at a later date.

House Judiciary Committee Chairman Bob Goodlatte (R-Va.) issued the statement below on the Committee’s upcoming hearings:

The fact that officials at the IRS wielded their power to target certain Americans for their political views is both outrageous and contrary to our nation’s values. Our government is supposed to work for all Americans, not for a particular partisan agenda. As a result of the IRS’ targeting, conservative groups were singled out across the nation, resulting in lengthy paperwork requirements, overly burdensome information requests, and lengthy, unwarranted delays in their applications.

Despite repeated congressional efforts to get to the bottom of this matter, Obama Administration officials, including the IRS Commissioner, have consistently undermined the investigation. Over the coming weeks, the House Judiciary Committee will closely examine Commissioner Koskinen’s misconduct and the implications of his actions.

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May 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, May 13, 2016

66 Year Old Law Firm Partner/Lifeguard Wins Age Discrimination Appeal Challenging Requirement That Swim Test Be Taken Wearing A Speedo

LifeguardNew York Law Journal, Lawyer's Age Bias Suit Over Lifeguard Swimwear Is Revived:

A Long Island bankruptcy attorney who lost his job as a summer weekend lifeguard after refusing to sport a Speedo [top photo] for his recertification test will be able to take his age discrimination suit to trial, an appeals court ruled.

Roy Lester [J.D., University of San Diego], 66, the principal at Lester & Associates in Garden City, has worked for decades at Jones Beach State Park, one of the more than 100 beaches supervised by the New York State Office of Parks, Recreation and Historic Preservation.

The state office requires lifeguards to take an annual exam that includes a timed swimming component. Lester said he prefers wearing a "jammer" [bottom photo] a bicycle-short style bathing suit that extends to just above the knees, to get a better time on the test.

But before the start of the 2007 season, the parks office prohibited Lester from taking the test while wearing a jammer rather than a Speedo, which is the state-issued uniform for lifeguards. He was not hired for the season.

Prior to 2007, the parks office did not have restrictions on the type of swimsuit applicants wore to take the test, according to court papers. Lester filed an age discrimination complaint with the Human Rights Division, which was dismissed for lack of evidence.

In 2008, he attempted to take the test for new hires while wearing a jammer, once again refusing to don a Speedo or wear state-approved boxers, briefs or board shorts. He was barred from the test.

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May 13, 2016 in Legal Education | Permalink | Comments (3)

Pepperdine 3Ls Receive Two of The Eight Available Merit Scholarships To Attend NYU Graduate Tax Program

PeppNYUCongratulations to Pepperdine 3Ls Brady Cox and David Khanjyan, who will be attending the #1 ranked NYU Graduate Tax Program in 2016-17.  They received two of the eight 50% merit scholarships available from NYU and will be serving as Graduate Editors of the Tax Law Review.  I was fortunate to have both Brady and David in my tax classes, and I can personally attest to their bright tax futures.  I am proud to be part of the tax faculty at Pepperdine that offers a robust tax curriculum to prepare our students for exciting tax careers. 

May 13, 2016 in Legal Education, Tax | Permalink | Comments (1)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

NY Times:  Amidst 33% Enrollment Decline (From 260 1Ls To 174), University Of Minnesota Funds $16 Million Law School Operating Deficit

Minnesota LogoFollowing up on my previous post:  New York Times, Minnesota Law School, Facing Waning Interest, Cuts Admissions:

Resisting the temptation to admit more students to bolster tuition receipts, the University of Minnesota, which has one of the nation’s highly ranked law schools, has gone in the opposite direction. It decided to shrink enrollment, and take in less tuition income, to preserve its national standing as a top law school. It did this even as some argued for broader inclusion of students who would fall outside the school’s admissions parameters.

During Mr. Wippman’s tenure, Minnesota has gradually admitted fewer students, shrinking its first-year class to only 174 in the 2015 academic year from more than 250 a few years ago. It offset the sharp loss in tuition income with more public subsidies, which in Minnesota are decided by a Board of Regents.

Minnesota’s law school has closed its deficits with university money — expected to total $16.1 million through 2018 — according to university officials. ...

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May 13, 2016 in Legal Education | Permalink | Comments (20)

NTA 46th Annual Spring Symposium:  Tax Policy At The Crossroads

NTA 2The 46th Annual Spring Symposium on Tax Policy at the Crossroads: What Direction Next? hosted by the National Tax Association and American Tax Policy Institute concludes today in Washington, D.C.:

Panel #1:  Base Erosion and Profit Shifting (BEPS) Project

  • Stephen Shay (Harvard) (organizer & moderator)
  • Kimberly Clausing (Reed)
  • Ruth Mason (Virginia)
  • Victoria Perry (IMF)
  • Robert Stack (U.S. Treasury Department)

Panel #2:  The Economic Consequences of Taxing the Rich

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May 13, 2016 in Conferences | Permalink | Comments (1)

George Mason Law Faculty Unanimously Supports Naming Law School After Justice Scalia For $30 Million

Scalia 2The tenured and tenured-track faculty of George Mason University School of Law voted unanimously in favor of a resolution yesterday to support renaming the school after the late Justice Antonin Scalia:

  • Full support by the law school faculty of the renaming of the law school.
  • Recognition of the confidentiality that is normally connected to major gifts.
  • Finds appropriate the minimal conditions placed on the two gifts connected to the renaming of the law school.
  • Condemns ill-informed criticisms of educational programs of the Law & Economics Center by faculty unaffiliated with the Law School.
  • Highlights criticism by the George Mason Faculty Senate as baseless and ideological.
  • Expresses regrets over criticisms to the Scalia family.
  • Praises gratitude to Law School Dean Henry Butler, President Angel Cabrera, the Board of Visitors, and others who were instrumental in bringing these transformative gifts to the Law School as well as to the donors of the two gifts to the Law School.

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May 13, 2016 in Legal Education | Permalink | Comments (3)

Pew:  America’s Shrinking Middle Class

Pew Research Center, America’s Shrinking Middle Class: A Close Look at Changes Within Metropolitan Areas:

The American middle class is losing ground in metropolitan areas across the country, affecting communities from Boston to Seattle and from Dallas to Milwaukee. From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined in a new Pew Research Center analysis of government data. ...

Pew 2A

Pew 1A

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May 13, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

Why Law Students Need The Humanities

HumanitiesChronicle of Higher Education op-ed:  Why Law Students Need the Humanities, by Peter Brooks (Professor of Comparative Literature, Princeton):

News that law schools are in crisis has been around for a while now, but the crisis itself persists — though maybe not where it is usually thought to lie. It is couched mainly in terms of jobs and debt: There are too many students finishing law school with crushing debts and poor job prospects. The legal profession itself has been changing as more and more routine work goes offshore, or onto the Internet, and even large firms hire fewer new associates. Most of all, firms that are hiring insist that the newly minted J.D.s be "practice ready."

Inevitably, this has led to calls — from lawyers, from bar associations, even from President Obama — for a more vocationally oriented law school, one that offers more hands-on legal experience, possibly reduced to two years in order to cut costs. As a report of the Illinois Bar Association put it: "It is no longer sufficient for law school graduates to merely think like lawyers; they must be able to perform the basic tasks central to legal practice." The final recommendations voted by that bar included: "Law schools should cut back on courses such as ‘Law and Literature’ that focus exclusively on the academic study of law, with no practical application."

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May 13, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Days 1001-1100

May 13, 2016 in IRS Scandal | Permalink | Comments (0)

The IRS Scandal, Day 1100

IRS Logo 2National Review, Re: Trump’s Time Bomb:

John Fund’s column today is, no matter what comes in the next few days, the most important column of the week, as it explains why Donald Trump’s weasel-like refusal to release his tax returns is a mortal danger to Republicans and conservatives nationwide — and suggests what should be done about it. John is absolutely right: Republicans, especially delegates, have every right not just to ask for, but to demand, the release of the returns before the convention. With a crew of Lois Lerners running the IRS, those returns surely will leak right after the nomination is made formal.

Mother Jones:  Corrupt IRS Spells Doom For Donald Trump Later This Year, by Kevin Drum:

That's right. The IRS is such a beehive of Democratic Party corruption that Hillary Clinton will have no trouble getting one of her moles to hand over the entire Trump record. Hell, she's probably done it already and is just waiting for the right time to start dribbling out explosive revelations. It's just the kind of things she'd do. Amirite or amirite.

Between left and right, I feel like I'm almost entirely enveloped by bizarre paranoia these days. Can we all just settle down and return to planet Earth for a while?

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May 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, May 12, 2016

Brooks:  The Moral Foundation Of 'Grit'

GritFollowing up on Tuesday's post on Angela Duckworth (University of Pennsylvania), Grit: The Power of Passion and Perseverance (May 3, 2016)):  New York Times:  Putting Grit in Its Place, by David Brooks:

We all know why it exists, but the grade-point average is one of the more destructive elements in American education.

Success is about being passionately good at one or two things, but students who want to get close to that 4.0 have to be prudentially balanced about every subject. In life we want independent thinking and risk-taking, but the G.P.A. system encourages students to be deferential and risk averse, giving their teachers what they want.

Creative people are good at asking new questions, but the G.P.A. rewards those who can answer other people’s questions. The modern economy rewards those who can think in ways computers can’t, but the G.P.A. rewards people who can grind away at mental tasks they find boring. People are happiest when motivated intrinsically, but the G.P.A. is the mother of all extrinsic motivations.

The G.P.A. ethos takes spirited children and pushes them to be hard working but complaisant. The G.P.A. mentality means tremendous emphasis has now been placed on grit, the ability to trudge through long stretches of difficulty. Influenced by this culture, schools across America are busy teaching their students to be gritty and to have “character” — by which they mean skills like self-discipline and resilience that contribute to career success.

Angela Duckworth of the University of Pennsylvania is the researcher most associated with the study and popularization of grit. And yet what I like about her new book, “Grit,” is the way she is pulling us away from the narrow, joyless intonations of that word, and pointing us beyond the way many schools are now teaching it. ...

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May 12, 2016 in Book Club, Legal Education | Permalink | Comments (0)

CBPP:  State Estate Taxes Are A Key Tool For Broad Prosperity

Center on Budget and Policy Priorities, State Estate Taxes: A Key Tool for Broad Prosperity:

As the income gap between the wealthiest Americans and those at the bottom and middle has widened in recent years, many states have eliminated their estate tax ― a key tool for reducing inequality and building broadly shared prosperity.  States that have eliminated their estate tax should reinstate it and those with an estate tax should keep it and, if needed, improve it.

CBPP

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May 12, 2016 in Tax, Think Tank Reports | Permalink | Comments (1)

Muller:  The Small Uptick In The Quantity And Quality Of The Law School Class Of 2019

Derek Muller (Pepperdine), What We Can Expect About Legal Education and the Class of 2019:

Much has been written about the "bottoming out" of the law school applicant pool, as schools have experienced a small uptick in applicants over last year. It's true. But I'll offer a few visualizations of where things stand this year for the incoming Class of 2019 and where it stands in relation to recent history.

Derek has four great visualizations showing the small uptick the quantity and quality (but not in the 150-54 and 155-59 bands) of LSAT test-takers, applicants, and (likely) matriculants.  Here is one of the visualizations:

Muller

Derek concludes:

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May 12, 2016 in Legal Education | Permalink | Comments (2)

Mitchell:  The Necessary And Valuable Economic Role Of Tax Havens

Daniel J. Mitchell (Cato Institute), The Necessary and Valuable Economic Role of Tax Havens:

Economists certainly don’t speak with one voice, but there’s a general consensus on two principles of public finance that will lead to a more competitive and prosperous economy.

To be sure, some economists will say that high tax rates and more double taxation are nonetheless okay because they believe there is an “equity vs. efficiency” tradeoff and they are willing to sacrifice some prosperity in hopes of achieving more equality.

I disagree, mostly because there’s compelling evidence that this approach ultimately leads to less income for the poor, but this is a fair and honest debate. Both sides agree that lower rates and less double taxation will produce more growth (though they’ll disagree on how much growth) and both sides agree that a low-tax/faster-growth economy will produce more inequality (though they’ll disagree on whether the goal is to reduce inequality or reduce poverty).

Since I’m on the low-tax/faster-growth side of the debate, this is one of the reasons why I’m a big fan of tax competition and tax havens.

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May 12, 2016 in Tax, Think Tank Reports | Permalink | Comments (2)

U.S. News:  Law Schools Offer Loan Assistance Programs To Debt-Burdened Grads

2017 U.S. News LogoU.S. News & World Report, Law Schools Offer Loan Assistance Programs to Debt-Burdened Grads:

Deciding between a law school with a generous scholarship and a school with a well-known loan assistance plan, 30-year-old Michael Kaercher made his choice based on the loan assistance plan provided after graduation.

"I thought that if I ended up at a firm, then I wouldn't miss the $100,000 in scholarships," says Kaercher, who graduated from Harvard Law School in 2010 and works as an attorney adviser at the IRS. "But if ended up going into the public sector and went to Harvard, then I'd qualify for this program."

Roughly half of law schools offer a loan assistance program to their graduates, but it's usually limited it to those in the public sector and has an income cap.

"Harvard has one of the most generous programs that I've seen based on their formula," says the fifth-year attorney, who receives $8,849 in loan assistance every six months from Harvard to pay his $220,000 law school debt. "You don't have to work for a 501(c)(3) or anything like that in order to be eligible. You just have to not make that much money."

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May 12, 2016 in Legal Education | Permalink | Comments (1)

Chodorow:  Bitcoin And The Definition Of Foreign Currency

Florida Tax Review  (2015)Adam Chodorow (Arizona State), Bitcoin and the Definition of Foreign Currency, 19 Fla. Tax Rev. ___ (2016):

The IRS recently dealt a blow to Bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property – and not foreign currency – for income tax purposes. As a result, those who use bitcoins to purchase goods or services must report gain or loss on each transaction if the bitcoins have changed value between the time they were acquired and spent. Treating Bitcoin as a foreign currency would have permitted individuals to take advantage of the personal use exemption, which could facilitate Bitcoin’s adoption, and required taxpayers to adopt a formulaic system for tracking the basis of commingled bitcoins. The IRS’s decision seems correct as a matter of positive law, but laws can always be changed.

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May 12, 2016 in Scholarship, Tax | Permalink | Comments (0)

Law School Entry-Level Faculty Hiring Up 19%

NTA 46th Annual Spring Symposium:  Tax Policy At The Crossroads

The 46th Annual Spring Symposium on Tax Policy at the Crossroads: What Direction Next? hosted by the National Tax Association and American Tax Policy Institute kicks off today in Washington, D.C.  Today's highlight is the presentation of the Davie-Davis Award for Public Service to Leonard Burman (Director, Tax Policy Center; Professor, Syracuse University) by Daniel Shaviro (NYU).

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May 12, 2016 in Conferences, Tax | Permalink | Comments (0)

Trump Won't Release Tax Returns Prior To Election

The 16% Of Americans Earning $100,000+ Pay 80% Of All Federal Income Taxes

Washington Free Beacon, Americans Earning Six Figures or More Pay Nearly 80% of Individual Income Taxes; These Earners Represent Only 16% of Individual Income Tax Filers:

Americans earning six figures or more paid 79.5 percent of the nation’s share in individual income taxes in 2014, according to the latest preliminary data from the Internal Revenue Service.

Americans paid a total of $1,358,093,169,000 to the IRS in individual income taxes in 2014. Americans earning $100,000 or more paid $1,079,392,180,000 to the IRS, or 79.5 percent of the total income tax paid.

While those top earners contributed almost four-fifths of the total amount of individual income taxes, they represented only 16 percent of the total number of individual income tax returns reported to the IRS. ...

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May 12, 2016 in IRS News, Tax | Permalink | Comments (6)

Merritt:  The Real Resistance To Clinical Legal Education

Following up on yesterday's post, Robert Kuehn (Washington University), Clinical Costs — Separating Fact From Opinion:  Deborah Jones Merritt (Ohio State), Prices and Priorities:

We don’t favor LSAT scholarships over need-based ones because budgets force us to do so; we make that choice to pursue higher rankings. Similarly, we don’t cater to the demands of tenured research faculty, rather than expanding clinical education, because our budgets are limited. We make that choice because it suits us (the tenured faculty) and because we hope, once again, that our choice will propel higher rankings.

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May 12, 2016 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1099

IRS Logo 2Paul C. Barton (Tax Notes), Should Political Nonprofits Disclose More Frequently?:

Not only do many politically active nonprofits operate with dark money from undisclosed donors, but they carry out their work behind another shield, some say: the time lag before having to report their spending to the IRS.

Long before the IRS receives a politically oriented nonprofit's Form 990, "Report of Organization Exempt From Income Tax," the election involved will have come and gone. With easily available extensions, a nonprofit exempt under section 501(c)(4) can have up to 10-1/2 months after the end of its fiscal year before filing its return.

In an ideal world, say advocates of campaign finance reform, there would be more frequent and thorough disclosure of nonprofits' political spending. But, they say, that would require a Republican Congress, one already hostile to policing these groups, to change either the tax code, federal election law, or both. Meanwhile, there are some reports they have to file in a more timely fashion. For instance, they must report to the Federal Election Commission, sometimes in as little as 24 hours, after they pay for an ad that advocates the election or defeat of a candidate for federal office. A 24-hour disclosure rule also applies to some television or radio ads purchased within 30 days of a primary election or 60 days of a general election that mention specific candidates in the context of an issue but don't expressly advocate their election or defeat. These are called "electioneering communications."

Within a two-year federal election cycle, however, there could be spending on issue ads that fall outside those time windows, or on other ads easily construed as political, that are not included under political spending on Form 990. John Pomeranz of Harmon, Curran, Spielberg & Eisenberg LLP gave the example of ads that might feature Republican senators up for reelection this fall and that mention their refusal to consider the nomination of D.C. Circuit Chief Judge Merrick B. Garland to the Supreme Court.

As a result, Form 990 totals can fall far short of telling the whole story, complicating the all-important evaluation of whether nonprofits are spending less than half their budget on politics, the requirement for keeping their exempt status."There are things that almost anyone would acknowledge as having a possible impact on an election that the IRS might well agree are not reportable as political activity on the [Form] 990," Pomeranz told Tax Analysts.

Added Notre Dame law professor Lloyd Hitoshi Mayer: "I agree that the annual tax filing system is a poor fit with the frantic pace of electoral activities. By the time the IRS or the public receives the information, the relevant election is long past."

But Cleta Mitchell of Foley & Lardner LLP, who represents several conservative 501(c)(4) organizations, says the reporting on issue ads is done even if the communications are not election related. "These morons on the left act like" that rule has never been implemented, she said. ...

Mayer said neither the IRS nor Treasury is going to stick its neck out to change the system. "Even if in theory Treasury has the necessary authority, it would be subject to withering criticism from Congress and elsewhere if it tried to unilaterally impose additional filing requirements on politically active exempt organizations," he said.

But it's clear that the current system "makes it very hard for the IRS to identify any improper spending until after the election," said Lawrence M. Noble, general counsel for the Campaign Legal Center. ...

But Ellen Aprill, professor at Loyola Law School, cautions in a new article for the Pittsburgh Tax Review that Congress has so intertwined sections 527 and 501(c)(4) that any stepped-up regulation of the latter is going to require looking at the former [The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation, 13 Pitt. Tax Rev. 43 (2015)]. Many activities that are tax exempt for section 527 groups are limited for noncharitable 501(c)s and forbidden for 501(c)(3)s, she writes, adding, "Reconciling political campaign intervention under current law is fraught and difficult."

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May 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, May 11, 2016

More On The 'Grim' ABA Jobs Data For Law School Graduates

LSTKyle McEntee (Law School Transparency), How Law School Job Rates Changed This Year:

Last week, the American Bar Association released the latest law school employment data. The entry-level market for new graduates remains grim.

Nationally, the legal job rate is up slightly from 58% to 59.2% for 2015 graduates. However, the raw number of legal jobs declined to levels not seen since 2011. The number of new entry-level jobs at large firms, on the other hand, remains steady — although the types of jobs offered by large firms continue to diversify.

With fewer students enrolled today, jobs rates in 2016 and beyond should improve, even if the raw number of jobs continues to decline. But given that law schools still face significant financial pressure, administrators will be tempted to increase enrollment to keep the doors open. Current employment rates indicate that, for the vast majority of schools, that is not an equitable idea.

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May 11, 2016 in Legal Education | Permalink | Comments (8)

Sunstein:  Using Increased Chevron Deference To Combat Growing 'Partyism' In America

Cass R. Sunstein (Harvard), Partyism, 2016 U. Chi. Legal F. ___:

“Partyism” is a form of hostility and prejudice that operates across political lines. For example, some Republicans have an immediate aversive reaction to Democrats, and some Democrats have the same aversive reaction to Republicans, so much so that they would discriminate against them in hiring or promotion decisions, or in imposing punishment. If elected officials suffer from partyism – perhaps because their constituents do – they will devalue proposals from the opposing party and refuse to enter into agreements with its members, even if their independent assessment, freed from partyism, would be favorably disposed toward those proposals or agreements. In the United States, partyism has been rapidly growing, and it is quite pronounced – in some ways, more so than racism. It also has a series of adverse effects on governance itself, above all by making it difficult to enact desirable legislation and thus disrupting the system of separation of powers. Under circumstances of severe partyism, relatively broad delegations of authority to the executive branch, and a suitably receptive approach to the Chevron principle, have considerable appeal as ways of allowing significant social problems to be addressed. This conclusion bears on both domestic issues and foreign affairs.

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May 11, 2016 in Scholarship, Tax | Permalink | Comments (2)

Taxing Wealthy Colleges Would Do More Harm Than Good

Bloomberg View editorial, Taxing Wealthy Colleges Would Do More Harm Than Good:

America's universities have become behemoths -- the result of swelling donations, rising tuitions and growing anxiety among parents that their children cannot succeed without college degrees. None are flourishing more than the most elite private schools, eight of which have endowments of $10 billion or more.

These riches have set some members of Congress, state legislators and local residents thinking: Why are these enormous cash piles left untaxed and unregulated? The short answer is that it would undermine the good work that universities do to educate generations of Americans and energize the economy.  ...

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May 11, 2016 in Tax | Permalink | Comments (2)

Joint Tax Committee:  Overview Of The Federal Tax System

The Joint Committee on Taxation has released Overview Of The Federal Tax System As In Effect For 2016 (JCX-43-16):

This document ... provides a summary of the present-law Federal tax system as in effect for 2016. The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a “regular” income tax and an alternative minimum tax); (2) payroll taxes on wages (and corresponding taxes on self-employment income) to finance certain social insurance programs; (3) estate, gift, and generation-skipping taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements.

Joint Tax 1

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May 11, 2016 in Congressional News, Tax | Permalink | Comments (0)

Kwon:  The Criminality Of Tax Planning

Florida Tax Review  (2015)Michelle M. Kwon (Tennessee), The Criminality of Tax Planning, 18 Fla. Tax Rev. 153 (2015):

In recent years, the federal government has adopted an aggressive prosecution policy that targets tax advisors who help their clients evade taxes. Increased prosecutions coupled with the present-day sophistication of tax practice call for a critical examination of the willfulness standard applied to tax advisors who use the Code and Treasury regulations as part of their regular practices. This is something no previous legal scholarship has done.

To establish willfulness, the government must show that a person accused of a tax crime intentionally violated a known legal duty. Because knowledge of illegality is an element of the government's tax evasion case, prosecutors must negate a defendant's claim of ignorance or misunderstanding of the law, which is evaluated subjectively. The mistake of tax law defense and the knowledge of illegality standard are anomalies since ignorance of the law usually is not an excuse. The Supreme Court, however, has said that tax law is special due to the need to protect average citizens from prosecution for innocent mistakes made due to the complexity of the tax laws. The same high standard of willfulness that applies to average citizens also applies to tax professionals.

This Article aims to do two primary things. First, it demonstrates that consideration should be given to broadening the current willfulness standard as it is applied to tax advisors. Second, it evaluates the suitability of Samuel Buell and Lisa Kern Griffin's work on “consciousness of wrongdoing” as one possible approach to consider.

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May 11, 2016 in Scholarship, Tax | Permalink | Comments (0)

Winston Churchill:  'Serial Tax Avoider'

ChurchillThe Telegraph, Churchill a 'Serial Tax Avoider':

Sir Winston Churchill was a serial tax avoider who exploited loopholes and faked his own retirement in collusion with the chairman of Inland Revenue, his biographer has claimed.

David Lough, a historian and author, said Churchill had learned to use Inland Revenue as a "beast who can be tamed and bent" after finding himself in financial difficulties.

Not only did the politician pretend to retire in order to halve his tax bill, the author claimed, he persuaded the Revenue's young chairman to help him figure out a way to save his earnings for himself. ...

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May 11, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Clausing:  Profit Shifting and U.S. Corporate Tax Policy Reform

Clausing
  Kimberly A. Clausing (Reed College), Profit Shifting and U.S. Corporate Tax Policy Reform:

This paper argues that the erosion of the U.S. corporate income tax base is a large policy problem. Profit shifting by U.S. multinational corporations is reducing U.S. government tax revenues by more than $100 billion each year, and other countries are facing similar concerns.

Figure 3

Yet given the starting point of the current U.S. corporate tax system, potential reformers face a dilemma. Reforms that would protect the U.S. corporate tax base may not find support in the multinational business community, which is more concerned with perceived competitiveness problems. But reforms that address competitiveness worries—such as the “toothless territorial” system that many in the multinational business community favor—would make the tax base erosion problem far worse.

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May 11, 2016 in Scholarship, Tax | Permalink | Comments (0)

LoPucki:  Six-Hour Experiential Learning Accreditation Requirement Puts ABA On Collision Course With Ph.D.-Laden Law Faculties

National Law Journal op-ed:  With Ph.D. Hiring Trend, Who'll Help Law Students Find the Courthouse?, by Lynn M. LoPucki (UCLA):

The American Bar Association's adoption two years ago of an accreditation standard requiring law schools to provide students with six credit hours of experiential learning has put the ABA on a collision course with the tenure-track faculties of American law schools.

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May 11, 2016 in Legal Education | Permalink | Comments (6)

Kuehn:  Clinical Costs — Separating Fact From Opinion

Robert Kuehn (Washington University), Clinical Costs: Separating Fact From Opinion:

The late Senator Daniel Patrick Moynihan once observed, “Everyone is entitled to his own opinion, but not his own facts.” When it comes to expanding clinical legal education, the knee-jerk opinion is that it is too expensive for legal education to follow the lead of other professional schools and ensure that every student graduates with a clinical experience through a law clinic or externship. Even the richest law schools couldn’t resist playing the cost card to scare the ABA out of requiring additional professional skills training: “Requiring all law schools to provide 15 experiential credit hours to each student will impose large costs on law schools, costs that would have to be passed on to students. . . . Even a law school with significant financial resources could not afford such an undertaking.”

Yet, the facts show otherwise — every school, from the well-heeled to the impecunious, can provide a clinical experience to each student without increasing tuition.

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May 11, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

IRS Employee Got Unemployment For 5 Years Before Anyone Noticed

IRS Logo 2The Daily Caller, IRS Employee Got Unemployment For 5 Years Before Anyone Noticed:

A former Internal Revenue Service (IRS) employee collected unemployment benefits for five years before anyone caught her, according to the Department of Justice (DOJ).

Yvonne E. Borders recently pleaded guilty to stealing government funds after collecting $18,550 in unemployment benefits from January 2009 through December 2013, while working for the U.S. Department of Treasury in New York.

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May 11, 2016 in IRS News, Tax | Permalink | Comments (0)

Trigger Warnings For Oxford Law Students ‘Distressed’ By Crime In Criminal Law Class

Oxford (2016)HeatStreet, Trigger Warnings for Oxford Law Students ‘Distressed’ by Crime:

Oxford students studying criminal law have been told they can duck of lectures if they find the crimes they cover upsetting.

Aspiring barristers at the prestigious school now have the option of skipping teaching on “potentially distressing” acts if they do not feel up to it.

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May 11, 2016 | Permalink | Comments (13)