Fox: Does Capital Bear The U.S. Corporate Tax After All?

Edward G. Fox (Michigan), Does Capital Bear the U.S. Corporate Tax After All? New Evidence from Corporate Tax Returns, 17 J. Empirical Legal Stud. 71 (2020):

This Article uses U.S. corporate tax return data to assess how government revenue would have changed if, over the period 1957-2013, corporations had been subject to a hypothetical corporate cash flow tax — i.e., a tax allowing for the immediate deduction of investments in long-lived assets like equipment and structures — rather than the corporate tax regime actually in effect. Holding taxpayer behavior fixed, the data indicate actual corporate tax revenue over the most recent period (1995-2013) differed little from that under the hypothetical cash flow tax.

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Tax Policy Center Hosts The 11th Annual IRS/TPC Joint Research Conference On Tax Administration Virtually Today

The Tax Policy Center hosts the 11th Annual IRS/TPC Joint Research Conference On Tax Administration today at 9:00 a.m. - 4:30 p.m. EDT (registration): 

The Internal Revenue Service (IRS) and the Urban-Brookings Tax Policy Center invite you to virtually attend the only annual conference focused exclusively on tax administration research. Researchers from the IRS, other government agencies, academia, and private organizations will discuss some of the latest analyses seeking to make tax administration as effective as possible.

Opening

• Eric Toder (Codirector, Urban-Brookings Tax Policy Center)
• Barry Johnson (Acting Chief Analytics Officer, IRS, RAAS)
• Charles Rettig (Commissioner of Internal Revenue)

Session 1: Improving Individual Taxpayer Compliance

• Robert McClelland (Urban-Brookings Tax Policy Center; Google Scholar) (moderator)
• Ellen Badgley (MITRE), Kyle Furlong (MITRE) (presenting), Lucia Lykke (MITRE), Abby Ng (MITRE), Leigh Nicholl (MITRE), & Alan Plumley (IRS, RAAS), Audit Contagion? Investigating the General Indirect Effect of Audits Through Tax Preparer Networks
• Paul R. Organ (Michigan) (presenting), Joel Slemrod (Michigan; Google Scholar), Alex Ruda (IRS, RAAS), & Alex Turk (IRS, RAAS), Do Collateral Sanctions Work? Evidence from the IRS’ Passport Certification and Revocation Process 
• Emily Y. Lin (Office of Tax Analysis, U.S. Department of the Treasury), Ankur Patel (Office of Tax Analysis, U.S. Department of the Treasury), & Alexander Yuskavage (Office of Tax Analysis, U.S. Department of the Treasury) (presenting), EITC Noncompliance: Examining the Roles of the Dynamics of EITC Claims and Paid Preparer Use
• Tatiana Homonoff (NYU; Google Scholar) (discussant)

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Perceptions Of Online Learning And COVID-19 Countermeasures Among Law Students In A One Year Follow Up Study

Victoria Sutton (Texas Tech; Google Scholar), Perceptions of Online Learning and COVID-19 Countermeasures Among Law Students in a One-year Followup Study:

This is a one-year follow-up study to a May 2020 study, conducted May 2021 about perceptions of law students about the transition to online learning as well as government required pandemic public health measures and their effect on returning to face to face classes.

The trend in preference for online courses is increasing by 17%, despite the fear that burnout or frustration from the COVID-19 transition to online learning for law schools would create a general dislike for online courses. There are still a significant number of students who have difficulty with online learning of as many as 25%. About 72% of the respondents feel safe returning to class with no pandemic precautions, but accommodations should be considered early in the planning stages for the semester for those 15% who still do not feel safe enough to return to the classroom.

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Getting Down To Brass Tax: Why Courts Should Use Equitable Tolling To Help Taxpayer-Petitioners Impacted By COVID-19

Hannah Fisher (Chicago), Getting Down to Brass Tax: Why Courts Should Use Equitable Tolling to Help Taxpayer-Petitioners Impacted by COVID-19:

The COVID-19 pandemic caused some of the sharpest rises in American unemployment and poverty seen in a generation. This left people with less money in their pockets, but also less time and access to resources to diligently pursue their legal rights and remedies. Congress responded by providing some financial aid via stimulus packages. But without accompanying procedural relief from various filing deadlines, many will face financial liabilities to the government they otherwise might not, particularly in the tax context. 

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Taxing The Top 100: U.S. Estimates Of Winners And Losers From Pillar One Amount A

Lorraine Eden (Texas A&M), Taxing the Top 100: U.S. Estimates of Winners and Losers From Pillar One Amount A:

The October 2020 Pillar One proposal by the OECD/Inclusive Framework (IF) is designed to shift some portion of the global pre-tax profits of multinational enterprises (MNEs) in automated digital services (ADS) and consumer-facing businesses (CFB) to Market jurisdictions where ADS and CFB revenues are generated. In April 2021, the U.S. government proposed that the OECD/IF reframe Amount A, broadening its industry scope from ADS and CFB to all industries and limiting the number of in-scope businesses to the world’s 100 largest and most profitable MNEs. How would changing the scope of Amount A from ADS and CFB to the top 100 global MNEs affect the likely winner and loser status of MNEs, industries and tax jurisdictions from Amount A?

To address this question, I first use Fortune Global 500 data to examine the top 200 MNEs by industry and home country. My results suggest several issues and concerns about how the U.S. proposal to tax the top 100 would work in practice.

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Foreign Commerce Clause Discrimination: Revisiting Kraft After Wayfair

Michael T. Fatale (Massachusetts Department of Revenue), Foreign Commerce Clause Discrimination: Revisiting Kraft After Wayfair, 72 Baylor L. Rev. 47 (2020):

This article considers two major developments impacting state taxation that occurred within seven months’ time in 2017-2018. Those developments were the overruling of the Supreme Court’s physical presence sales/use tax nexus standard by South Dakota v. Wayfair, Inc., 138 S. Ct. 138 (2018), and the 2017 enactment of the Tax Cuts and Jobs Act (TCJA) – the latter of which impacted the states because their income tax laws generally conform to the Internal Revenue Code. Each development harked back to a 1992 Supreme Court case decided that broadly construed the dormant Commerce Clause to infringe upon state sovereignty. Those cases were Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which construed the dormant interstate Commerce Clause, and Kraft General Foods, Inc., v. Iowa Department of Revenue and Finance, 505 U.S. 71 (1992), which construed the dormant foreign Commerce Clause. Wayfair overruled Quill, whereas tax practitioners have recently claimed that Kraft poses a significant bar with respect to the states’ conforming to several international provisions of the TCJA – in particular with respect to taxing mandatory deemed repatriation income and global intangible low-taxed income or GILTI.

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The 'Intellectual Diversity' Crisis That Isn't: Liberal Faculties, Conservative Victims, And The Cynical Effort To Undermine Higher Education For Political Gain

Sean Kammer (South Dakota; Google Scholar), The 'Intellectual Diversity' Crisis that Isn't: Liberal Faculties, Conservative Victims, and the Cynical Effort to Undermine Higher Education for Political Gain, 39 Quinnipiac L. Rev. 149 (2021):

The heated political climate of the past decade has placed higher education squarely under attack at the front lines of the ideological culture wars. Amidst claims that public universities are disproportionately populated by left-leaning faculty with a purported agenda to “indoctrinate” students with liberal thoughts and ideas, several states have considered, and in some cases passed, legislation purportedly aimed at enhancing the “intellectual diversity” of college campuses, including among faculties. Part II of this article places these efforts within a wider historical context, one in which conservatives (and some non-conservatives) have successfully framed universities as failing to foster a robust “marketplace of ideas” in contravention of their core mission, thereby leaving universities and their faculties vulnerable to recent political efforts to undermine academic freedom.

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#Fortheculture: Generation Z And The Future Of Legal Education

Tiffany Atkins (Elon), #Fortheculture: Generation Z and the Future of Legal Education, 26 Mich. J. Race & L.  ___ (2021):

Generation Z, with a birth year between 1995 and 2010, is the most diverse generational cohort in U.S. history and is the largest segment of our population. Gen Zers hold progressive views on social issues and expect diversity and minority representation where they live, work, and learn. American law schools, however, are not known for their diversity, or for being inclusive environments representative of the world around us. This culture of exclusion has led to an unequal legal profession and academy, where less than 10 percent of the population is non-white. As Gen Zers bring their demands for inclusion, and for a legal education that will prepare them to tackle social justice issues head on, they will encounter an entirely different culture—one that is completely at odds with their expectations. This paper adds depth and perspective to the existing literature on Generation Z in legal education by focusing on their social needs and expectations, recognizing them as critical drivers of legal education and reform. To provide Gen Z students with a legal education that will enable them to make a difference for others—a need deeply connected to their motivators and beliefs—law school culture must shift. Reimagining, reconstituting, and reconfiguring legal education to create a culture of inclusion and activism will be essential and necessary. 

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Is There Age Bias In Lateral Tax Faculty Hiring?

Brian Leiter recently asked:  Is the age bias in law school hiring a thing of the past?  He noted a shift in law school lateral faculty hiring in recent years:  "When I started in law teaching in the early 1990s, ... most lateral moves occurred 5-15 years into a teaching career, with lateral moves by faculty in their 50s, let alone 60s, almost unheard of, except for administrative appointments. Yet just in the last couple of years, we've seen multiple lateral moves to peer or stronger schools by faculty age 55 and older."  There similarly have been multiple lateral tax moves by faculty age 55 and older over the past decade:

Of the 47 lateral tax moves over the past decade, seven (17%) were 55 or older (Howard Abrams (Emory to San Diego), Neil Buchanan (George Washington to Florida), Karen Burke (San Diego to Florida), Paul Caron (Cincinnati to Pepperdine), David Hasen (Colorado to Florida), Marjorie Kornhauser (Tulane to Arizona State), Grayson McCouch (San Diego to Florida). and Richard Winchester (Thomas Jefferson to Seton Hall)). Four (Abrams, Buchanan, Burke, Kornhauser) were 60 or older. The average age of the 47 lateral moves was 45.

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ProPublica: Leading Manhattan DA Candidate/Hedge Fund Mogul Has Repeatedly Paid No Federal Income Taxes

Following up on my recent posts (links below):  ProPublica, Leading Manhattan DA Candidate Has Repeatedly Paid Virtually No Federal Income Taxes:

The leading candidate to take over the investigation relating to former President Donald Trump’s taxes paid virtually no federal income taxes in four of six recent years.

Tali Farhadian Weinstein, who is married to hedge fund manager Boaz Weinstein, is running for Manhattan district attorney in the Democratic primary, in which early voting has already begun. She and her husband reported income as high as $107 million in 2011, and she recently donated $8.2 million to her campaign — more than her seven Democratic rivals have raised in total.

But in 2017, according to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax. In 2015 and 2013, they also paid no federal income tax. In 2014, she and her husband paid $6,584. ...

The Weinsteins are among thousands of wealthy people whose tax return data ProPublica has obtained. Last week, ProPublica published its first article using the IRS data, which revealed that the 25 richest Americans paid little or no federal income taxes compared to their immense gains in wealth in recent years. This story was not on our initial list of coverage of the IRS data but a ProPublica reporter came across Farhadian Weinstein’s information as part of his ongoing research. With the primary election a week away and the outsized spending by Farhadian Weinstein continuing to draw attention, ProPublica concluded the public interest would be served by letting voters and other taxpayers see her tax history.

New York Times DealBook, A Rare Look Inside a Hedge Fund Mogul’s Tax Returns:

If rich people lose money, should they pay tax?
The article about the Weinsteins may leave some readers thinking there is something off about their taxes. Our reporting says otherwise. For those who have covered Mr. Weinstein’s up-and-down career, as DealBook has, it’s well known that he genuinely and repeatedly lost money for a good stretch of the last decade. His fund, Saba Capital Management, had as much as $5.6 billion in assets under management in 2012 — but so many investors withdrew their money because of poor performance that at one point it fell to $1.3 billion.

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Reducing Debt And Increasing Access To The Profession: An Empirical Study Of Graduate Debt At U.S. Law Schools

Scott F. Norberg (Florida Int'l; Google Scholar) & Stephanie J. Garcia (Florida Int'l), Reducing Debt and Increasing Access to the Profession: An Empirical Study of Graduate Debt at U.S. Law Schools: 69 J. Legal Educ. __ (2021):

Legal education in the United States is in crisis because it is so costly and the number of law school graduates has consistently exceeded the number of entry-level law jobs by a wide margin, while starting salaries are low in comparison to student loan debt for most graduates. This article contributes to the work of addressing the current challenges by reporting the results of an empirical study of the nature and scope of law graduate debt across U.S. law schools.

We focus on findings in two areas. First, the data indicate that the legal education system places a greater financial burden on minority and women students than on non-Hispanic white male students. The cost of attendance, average amount borrowed, percentage of the class that borrowed, and percentage of students paying full tuition are all higher at schools with lower LSAT/UGPA medians and larger percentages of minority and women graduates. Moreover, these schools also report weaker employment outcomes for their graduates.

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New Taxes For COVID-19 Measures And The Role Of Trust

Erick Lachapelle (Montreal; Google Scholar), Thomas Bergeron (Toronto & Montreal, Google Scholar), Richard Nadeau (Montreal; Google Scholar), Jean-François Daoust (Edinburgh; Google Scholar), Ruth Dassonneville (Montreal; Google Scholar), & Eric Belanger (McGill; Google Scholar), Citizens' Willingness to Support New Taxes for COVID-19 Measures and the Role of Trust:

The COVID-19 public health pandemic saw governments spend trillions of dollars to limit the spread of the COVID-19 virus as well as to soften the economic blow from the shutting down of national economies. Subsequent budget shortfalls raise the question of how governments will pay for the direct and indirect costs associated with the COVID-19 pandemic. In this paper, we study the public’s willingness to contribute through paying a new tax. We find that both generalized social and political trust are associated with a greater willingness to support a COVID-related tax and that generalized social trust in particular attenuates the negative effect of an experimentally manipulated, specified level of tax burden on policy support. 

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Racial Disparities Persist In Bar Exam Pass Rates: White: 88%, Asian: 80%, Hispanic: 76%, Black: 66%

Following up on my previous post:  Racial Disparities Persist In California Bar Exam Pass Rates: White: 72%, Asian: 66%, Hispanic: 61%, Black: 31%: 

Press Release, ABA Section of Legal Education Releases First-Time Report on Bar Passage Data:

The Managing Director’s Office of the American Bar Association Section of Legal Education and Admissions to the Bar released today a new set of bar passage data outcomes for ABA-approved law schools that provides national “ultimate” and first-time pass rates based on race, ethnicity and gender. ...

Under 2019 revisions to the bar passage rule known as Standard 316, ABA-approved law schools must have 75% of their graduates who take the bar examination pass within two years of graduation or face the potential of being found out of compliance. The section maintains both percentage pass rates for first-time takers and the two-year aggregate figure, known as the “ultimate” pass rate.

“During discussions about the amendments to Standard 316, commenters expressed concern about the lack of national data on bar passage by members of different racial and ethnic groups,” said Bill Adams, ABA managing director of accreditation and legal education. “We promised to collect and publish such aggregate data and consider whether the requirements of the standard needed to be reconsidered in light of what we collected. This report is consistent with that promise and will be further evaluated in the months to come.”

ABA Section on Legal Education and Admission to the Bar, Summary Bar Pass Data: Race Ethnicity, and Gender (2020 and 2021 Bar Passage Questionnaire):

The following charts present the performance of the various racial and ethnic groups based on data submitted in the 2020 and 2021 Bar Passage Questionnaire (the “BPQ”). The left column reports the Ultimate Pass Rate for the graduating classes after two years. The middle column reports the Ultimate Pass Rate for the graduating classes in that year after one year. The right column reports the First Time Pass Rate for that year’s graduating classes. The reported information does not depict differences in bar passage rates based on any other background variables.

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Pittsburgh Tax Review Publishes New Issue

The Pittsburgh Tax Review has published Vol. 18, No. 2 (2021):

• Yariv Brauner (Florida; Google Scholar), Thinking Like a Source State in a Digital Economy, 18 Pitt. Tax Rev. 225 (2021)
• Diane Ring (Boston College; Google Scholar), The 2021 Corporate Transparency Act: The Next Frontier of U.S. Tax Transparency and Data Debates, 18 Pitt. Tax Rev. 249 (2021)
• Susan C. Morse (Texas; Google Scholar), The Quasi-Global GILTI Tax, 18 Pitt. Tax Rev. 273 (2021)
• Tracy A. Kaye (Seton Hall) & Michel De Wolf (UCLouvain & ULiège), Corporate Tax: Renewed Fiscal Federalism in the USA, the EU, and Globally for the 21st Century, 18 Pitt. Tax Rev. 301 (2021)

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The All Events Tests In An Era Of Self-Regulation

Glenn Walberg (Vermont), The All Events Tests in an Era of Self-Regulation, 12 Wm. & Mary Bus. L. Rev. 329 (2021):

Accrual-method taxpayers must use the all events tests to account for rights and liabilities under contracts for sales of goods and services. These longstanding tests evolved from transactions that involved relatively straightforward exchanges of goods or services for payments, and the tests currently reflect an expectation that a taxpayer will usually make an accrual when a seller’s performance fixes the contracting parties’ respective right to and liability for payment. Business practices have changed such that many sales now occur in relationships where contracting parties assume, monitor, and enforce process-related obligations, including adoptions of codes of conduct by members of global supply chains.

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Moving Toward A Competency-Based Model For Fostering Law Students' Relational Skills

Susan L. Brooks (Drexel), Marjorie A. Silver (Touro), Sarah Fishel (Drexel) & Kellie Wiltsie (Drexel), Moving Toward a Competency-Based Model for Fostering Law Students' Relational Skills, 28 Clinical L. Rev. __ (2022):

Legal education has long been criticized for failing to provide adequate professional training to prepare graduates for legal practice realities. Many sources have lamented the lack of sufficient attention to the range of competencies necessary for law graduates to be effective practitioners and develop a positive professional identity, including those that are intra-personal, such as self-awareness, critical self-reflection, and self-directedness; those that are interpersonal, such as deep and reflective listening, empathy, compassion, cross-cultural communication, and dialogue; and those that engage with the social/systemic dimension of lawyering, such as appreciating the role of multiple identities, implicit bias, privilege and power, and structural racism. For this article, we refer to this entire set of competencies as relational competencies. One notable exception to this sustained critique of legal education has been the field of clinical legal education, including law school clinics and externships.

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Jordan Barry Leaves San Diego For USC

Jordan Barry (San Diego; Google Scholar) has accepted a lateral offer from USC. (Ariel Jurow Kleiman also is leaving San Diego for Loyola-L.A.). Jordan's recent publications include:

• Collusion in Markets with Syndication, 128 J. Pol. Economy 3779 (2020)
• Taxation and Innovation: The Sharing Economy as a Case Study, in The Cambridge Handbook on Law and Regulation of the Sharing Economy (Nestor Davidson, Michèle Finck & John Infranca eds., Cambridge University Press 2018) (reviewed by Orly Mazur (SMU) here)
• Regulatory Entrepreneurship, 90 S. Cal. L. Rev. 383 (2017) (with Elizabeth Pollman (Loyola-L.A.))
• Tax Regulation, Transportation Innovation, and the Sharing Economy, 82 U. Chi. L. Rev. Dialogue 69 (2015) (with Paul L Caron (Pepperdine))
• The Emerging Consensus for Cutting the Corporate Income Tax Rate (solicited piece), 18 Chap. L. Rev. 19 (2014)
• On Derivatives Markets and Social Welfare: A Theory of Empty Voting and Hidden Ownership, 99 Va. L. Rev. 1103 (2013) (with John Hatfield (Texas) & Scott Kominers (Chicago))
• Is the Individual Mandate Really Mandatory?, 135 Tax Notes 1633 (2012) (with Bryan Camp (Texas Tech))
• Pills and Partisans: Understanding Takeover Defenses, 160 U. Pa. L. Rev. 633 (2012) (with John Hatfield (Texas))
• Prosecuting the Exonerated: Actual Innocence and the Double Jeopardy Clause, 64 Stanford Law Review 535 (2012)

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NY Times: U.S. May Lift The Veil On Art Sales

Update:  New York Times, Quotation of the Day:

“The only ones who know are you, the art gallery and God.”
KHRISTA McCARDEN, a professor at Tulane Law School who specializes in the tax code, on the secretive finances of art sales.

New York Times, As Money Launderers Buy Dalís, U.S. Looks at Lifting the Veil on Art Sales:

Billions of dollars of art changes hands every year with little or no public scrutiny. Buyers typically have no idea where the work they are purchasing is coming from. Sellers are similarly in the dark about where a work is going. And none of the purchasing requires the filing of paperwork that would allow regulators to easily track art sales or profits, a distinct difference from the way the government can review the transfer of other substantial assets, like stocks or real estate. ...

In January, Congress extended federal anti-money laundering regulations, designed to govern the banking industry, to antiquities dealers. The legislation required the Department of the Treasury to join with other agencies to study whether the stricter regulations should be imposed on the wider art market as well. The U.S. effort follows laws recently adopted in Europe, where dealers and auction houses must now determine the identity of their clients and check the source of their wealth. ...

To art world veterans, who associate anonymity with discretion, tradition and class, not duplicity, this siege on secrecy is an overreaction that will damage the market. They worry about alienating customers with probing questions when they say there is scant evidence of abuse. ...

[T]here is no question the art market has exploded in value and scope from the sleepy days when its customs were created. Paintings routinely sell for $10 million, $20 million, often as much as the penthouses in which they hang. Though the profits from art sales are subject to the robust capital gains tax on luxury goods of 28 percent, the I.R.S.’s ability to track who is accurately reporting windfalls is something of a struggle. Even figuring out who sold what is a hurdle. Half the purchases are in private, not at public auction, so many prices never become public.

Recent studies have projected substantial tax evasion by the richest Americans, which led to President Biden’s plan to boost audits. While there is no evidence of widespread cheating involving art, experts say it’s clear the secrecy of the market creates vulnerabilities for an enforcement system that rarely conducts audits and relies heavily on the willingness of collectors to make plain their profits.

“The only ones who know,” said Khrista McCarden, a professor at Tulane Law School who specializes in the tax code, “are you, the art gallery and God.” ...

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Wellness And Law: Reforming Legal Education To Support Student Wellness

Janet Thompson Jackson (Washburn), Wellness and Law: Reforming Legal Education to Support Student Wellness, 65 How. L. J. __ (2021):

No one goes to law school with the expectation that their mental health and overall well-being will be significantly compromised during those three years. But, for a substantial number of law students, it is. It does not have to be this way.

This is not a typical law review article. It cannot afford to be. Most law students begin law school as reasonably happy and well-adjusted people. We must ask, what is it about law school that contributes to the disproportionate decline in student wellness? The answer to that question is complex because many of the very factors that make good lawyers also contribute to their mental health challenges.

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Inequality Of Wealth Ownership And The Problem Of Perpetuities Repeal

Kent D. Schenkel (New England), Inequality of Wealth Ownership and the Problem of Perpetuities Repeal: A Review of Eric Kades, of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond), 60 B.C. L. Rev. 145 (2019):

Thanks in part to the French economist Thomas Piketty, it is no longer a secret that wealth ownership globally, and in the United States perhaps most strikingly, is highly skewed, with a very small number of persons owning the vast majority of capital. The findings set out by Piketty in his enormously popular book, Capital in the Twenty-First Century, are of particular interest. In his blockbuster tome, Piketty pointed out that when the rate of return to capital exceeds the rate of economic growth, capital becomes dominant. Further predicting that rates of growth are very likely to be less than returns to capital going forward, Piketty concluded that inheritance, not work, will largely determine who gets what in the future. In light of Piketty’s findings and predictions, can we afford to be sanguine about jurisdictions eliminating their Rules Against Perpetuities?

Eric Kades, in his article entitled Of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond), answers this question with a resounding “no.” Rather, writes Kades, “we should mourn the RAP’s death.”

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Hasen Presents Forget (Arguing About) Redistribution Virtually Today At Florida

David Hasen (Florida; Google Scholar) presents Forget (Arguing About) Redistribution virtually at Florida today as part of its Summer Virtual Workshop Series:

Reformers often argue that the benefits of ameliorating inequality are worth the cost in reduced economic efficiency that supposedly results from redistributive social policy. This paper suggests that these arguments are mostly misplaced. Focusing solely on the marginal benefit of government- versus private-sector spending, there is ample reason to conclude that many governmental expenditures directed to reducing inequality are independently justifiable on the basis that they increase efficiency, even as they also reduce inequality. Because the efficiency argument directly addresses concerns that might otherwise counsel restraint in redistributive programs, treating the reduction of inequality as a worthwhile tradeoff against efficiency is mostly counterproductive from a social policy perspective. Reformers instead should engage proponents of economic efficiency on their own terms. In making this argument, the paper develops the concept of “budget policy endogeneity,” or the idea that the affordability or not of various programs must take into account the allocative and distributional effects of current spending on the future allocation of wealth, since revenue for current projects may be raised in the future.

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Designing Nonrecognition Rules Under The Internal Revenue Code

Fred B. Brown (Baltimore), Designing Nonrecognition Rules Under the Internal Revenue Code, 24 Fla. Tax Rev __ (2021):

Nonrecognition rules are a prominent feature of the income tax laws and are a source of considerable complexity and tax planning. Included among the nonrecognition rules contained in the Internal Revenue Code are provisions applying to like kind exchanges, corporate formations, corporate reorganizations, parent-subsidiary liquidations, and partnership formations and distributions.

The policies that arguably support the nonrecognition rules include the familiar trio of tax policy concerns—efficiency, equity, and tax administration. None of these policies, however, provide a strong basis for most of the nonrecognition rules as currently formulated. The efficiency case generally lacks evidentiary support. The equity case is complicated by the fact that the rules operate in a second-best world where the tax base deviates from economic income. And the tax administration argument for the rules, while plausible in theory, is compromised because nonrecognition frequently occurs where there are no valuation and liquidity concerns as a result of the receipt of publicly traded property or the presence of related cash sales.

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Unentitled: The Power Of Designation In The Legal Academy

Rachel Lopez (Drexel; Google Scholar), Unentitled: The Power of Designation in the Legal Academy, 73 Rutgers L. Rev. 101 (2021):

Last December, the Wall Street Journal published an op-ed that questioned whether Dr. Jill Biden should more appropriately be addressed as Madame First Lady, Mrs. Biden, Jill, or even kiddo, characterizing her desire to be called doctor “fraudulent” and a “touch comic.” Many were understandably outraged by the lack of respect afforded to Dr. Biden, which had a distinctly gendered dimension. More recently, after a controversial decision by the University of North Carolina’s board of trustees to deny her tenure, Nikole Hannah-Jones, a Pulitzer Prize and MacArthur “genius grant” winner, was instead appointed as a “Professor of Practice” on a five year fixed term contract. These high-profile examples put in sharp focus what many women of color in the legal academy already know all too well: labels have an innate power to confer or diminish status. This Essay explores the role that titles play in the legal academy and, in particular, their often depreciative consequences for women of color. Drawing from my story, those relayed to me by others, and other empirical evidence, I will show how titles perpetuate stereotypes and entrench existing racial and gender hierarchies in the legal academy, although they appear race- and gender- neutral.

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Using Exam Wrappers To Foster Self-Assessment Skills In Law Students

Sarah Schendel (Suffolk), What You Don't Know (Can Hurt You): Using Exam Wrappers to Foster Self-Assessment Skills in Law Students, 40 Pace L. Rev. 154 (2019):

“Where did I go wrong?”

When we fail it’s tempting to forget it and move on. However, reflecting on poor performance and figuring out how to proceed is critical to being a successful student and lawyer. Unfortunately, when students receive a disappointing grade they often lack the ability to understand what went wrong and how to change.

Creating self-regulated learners who can identify what they don't know and make a plan to improve is key to helping students succeed. In order to do so – and in order to produce ethical, productive lawyers – law schools should place a greater emphasis on fostering the skill of self-assessment among students.

I propose exam wrappers as an effective and adaptable tool to strengthen law students’ self-assessment skills.

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Lesson From The Tax Court: A Lesson Of Interest

We worked through Spring and Winter, through Summer and through Fall,
But the mortgage worked the hardest and the steadiest of us all.
It worked on nights and Sundays, it worked each holiday,
Settled down among us and it never went away.

-Ry Cooder, “The Taxes on The Farmer Feeds Us All,” Into The Purple Valley (1972)

Today’s lesson is the taxpayer version of that famous Depression-era song: the accumulation of interest on tax liabilities is relentless, and difficult to reverse.  In Kannarkat P. Verghese et al. v. Commissioner, T.C. Memo. 2021-70 (June 7, 2021) (Judge Gustafson), the taxpayers were assessed a deficiency in 2014 for their tax years 1997 and 1998, as a result of over 13 years of audit and litigation between the IRS and three partnerships in which the taxpayers held an interest.  The taxpayers promptly asked for most of the accumulated interest to be abated per §6404.  They diligently pursued that request through 7 years of administrative and judicial proceedings.  Finally, last week, the Tax Court largely upheld the IRS’s refusal to abate the interest, teaching us our lesson.  The lesson cost these taxpayers over $80,000 in accrued interest (on liabilities of $54,000).  Not to mention attorneys fees.  But you can learn this lesson for free.  Just click on "continue reading..." 

Oh, and we also get a bonus lesson on §6603.  Apparently no one told these taxpayers they could suspend the running of interest by making a deposit in the nature of a cash bond.  Whoops.

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The New Yorker: What Is Going On At Yale Law School?

Following up on my previous posts:

• New York Times, Gripped By ‘Dinner Party-gate,’ Yale Law School Confronts A Venomous Divide
• New York Magazine, The Tiger Mom and the Hornet’s Nest

The New Yorker, What Is Going On at Yale Law School?:

The prestigious institution has tied itself in knots over a dispute involving one of its most popular—and controversial—professors, Amy Chua.

A decade ago, back when we talked about things besides new coronavirus strains and vaccination rates, there was a weeks-long media frenzy over a parenting memoir called Battle Hymn of the Tiger Mother. In that book, Amy Chua, an American daughter of Chinese immigrants, described her efforts to raise her children the “Chinese” way. For her, that meant dispensing with squishy Western conventions like “child-led learning” and participation trophies, and ruthlessly driving her two young daughters to master their classical instruments and maintain perfect grades. The book provoked a fierce backlash, much of which centered on Chua’s tactics, which ranged from threatening to burn her older daughter’s stuffed animals to rejecting a hand-scrawled birthday card that demonstrated insufficient effort. Chua’s younger daughter “rebelled” at the age of thirteen, choosing competitive tennis over concert-level violin, but, for the most part, Chua’s system worked. Her daughters became musical prodigies and successful athletes, who attended Harvard and Yale. The phrase “tiger mom” entered the cultural lexicon and spawned a Singaporean TV show, “Tiger Mum,” and a show in Hong Kong, “Tiger Mom Blues.”

That was the last time many of us heard about Amy Chua—unless you’ve been following the news out of Yale Law School, where Chua is a professor. If so, you know that the discussion kept going. Over the past few months, Chua has been at the center of a campus-wide fracas that, nominally, concerns the question of whether she hosted drunken dinner parties at her home this past winter. The controversy began in April, when the Yale Daily News reported that the law-school administration was punishing Chua for the alleged offense by removing her from the list of professors leading a special first-year law class called a “small group.”

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Lederman & Christians: An Overview Of U.S. Federal Tax Controversies

This video provides a general overview of the common paths of a U.S. federal tax controversy involving a tax deficiency or refund, from audit through potential litigation. It includes discussion of the administrative IRS Appeals process, the multiple trial-level courts available, where appeal lies, which precedent applies, and some factors that may arise in choosing a tax litigation forum. 

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TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• Deo: nvestigating Pandemic Effects On Legal Academia
• Monroe: Improvisation And Forgotten Taxpayers In Partnership Tax
• Gender And Institutional Bias In The Publication Process

Sunday:

• How An Autistic Man With Cerebral Palsy Found His Faith
• IRS Denies Tax-Exempt Status To Organization That Encourages Christians To 'Pray, Vote, Engage' Because '[B]ible Teachings Are Typically Affiliated With The [Republican] Party'
• Getting To Know 0Ls
• The Top Five New Tax Papers

How An Autistic Man With Cerebral Palsy Found His Faith

Wall Street Journal op-ed:  The Faith of an Autistic Man, by Jory Fleming (Rhodes Scholar, Oxford University; Author, How to Be Human: An Autistic Man’s Guide to Life (2021)):

It was an unlikely connection. A literal, logical person, challenged by basic verbal communication, and an unseen spirit, who communicates through the Word. Yet I reached out to God, and he reached out to me. We both answered the other’s call.

As an autistic person, I struggle to make connections. I did not communicate much as a young child and only barely as an adolescent. Even now, my thoughts exist independent of language. My mind undergoes a vast translation process, back and forth, to relate to the human world.

Yet the Christian faith spoke to me through one word: love. I often feel as if, by relying on only a single word, God designed this message for people like me. There is no complicated work to interpret that message. You are loved by your Creator. You are commanded to love others and also to love yourself.

It frequently surprises people that my faith is based entirely on logic and reason. It has no emotional base. Many may wonder how that squares with the message of love. But to me, it comes down to the principle of mutual recognition: If you believe in a Creator, then you believe that the Creator knows his own handiwork. You believe that each of us has a place, has equal value, and fully belongs in this world. There is not one correct path to life or to God. Mine may be unusual, but it can still be strong.

I first contemplated the Christian faith when I was in high school and began engaging more with the outside world. Beyond autism, I have a metabolic condition and cerebral palsy. The limits placed on me by my disabilities were a daily reminder of my own brokenness. The only part of my body that was not negatively impacted was my mind. And I used it to come to a fuller understanding of God. ...

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IRS Denies Tax-Exempt Status To Organization That Encourages Christians To 'Pray, Vote, Engage' Because '[B]ible Teachings Are Typically Affiliated With The [Republican] Party'

• Christians Engaged IRS Determination Letter (May 18, 2021)
• Christians Engaged IRS Appeal Letter (June 16, 2021)

Newsweek, First Liberty Appeals Denial of Tax Exemption for Group Alleged to Have Republican Ties:

Christian legal organization First Liberty Institute is appealing the recent denial by the IRS to grant tax exemption status to a Texas Christian group that the federal agency alleges supports the Republican Party.

In May the IRS denied 501(c)(3) status to the Texas-based prayer group Christians Engaged because it encourages its members to vote for state and national leaders. The federal agency specifically noted in its rejection that the group supports Republican candidates.

In its letter, IRS Director of Exempt Organizations Stephen A. Martin concluded the group does not qualify as an organization described in IRS Section 501(c)(3) because it is not operated exclusively for religious and educational purposes. Specifically Martin noted, "You are engaged in prohibited political campaign invention" and "You are also not operated exclusively for one or more exempt purposes...because you operate for a substantial non-exempt private purpose and for the private interest of the 'D party.'" The "D party" is a reference to the Republican Party, according to a "legend" provided at the top of Martin's letter to the religious group.

Press Release, IRS Denies Religious Group Tax Exempt Status; States “Bible Teachings” Are “Affiliated With the Republican Party”:

Today, First Liberty Institute appealed an IRS determination denying tax exempt status to Christians Engaged, a nonprofit organization that exists to educate and empower Christians to pray for our nation and elected officials, vote, and be civically engaged. In a letter issued in May, the IRS argued that Christians Engaged was not eligible for 501(c)(3) status in part because “[B]ible teachings are typically affiliated with the [Republican] party and candidates.” ...

“The IRS states in an official letter that Biblical values are exclusively Republican.  That might be news to President Biden, who is often described as basing his political ideology on his religious beliefs,” said Lea Patterson, Counsel for First Liberty Institute. “Only a politicized IRS could see Americans who pray for their nation, vote in every election, and work to engage others in the political process as a threat. The IRS violated its own regulations in denying tax exempt status because Christians Engaged teaches biblical values.”

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Getting To Know 0Ls

My wife Courtney and I just completed hosting our fifth annual round of meetings with Pepperdine Caruso Law's incoming 1L students. Last year, due to the pandemic, we replaced our usual Dinner With The Dean in our home with a virtual Coffee With The Carons.  This year, as California emerges from the pandemic, we offered both formats and hosted eight outdoor dinners in our yard for vaccinated students and six virtual coffees for unvaccinated and out-of-state students. 

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The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #5:

1. [490 Downloads]  International Effective Minimum Taxation — Analysis of GloBE (Pillar Two), by Joachim Englisch (University of Muenster)
2. [304 Downloads]  International Tax Law and its Influence on National Tax Systems, by Craig Elliffe (University of Auckland; Google Scholar)
3. [292 Downloads]  Can Blockchain Revolutionize Tax Administration?, by Orly Mazur (SMU; Google Scholar) (reviewed by Sloan Speck (Colorado; Google Scholar) here)
4. [287 Downloads]  The Allocation of Taxing Rights under Pillar One of the OECD Proposal, by Aitor Navarro (Universidad Carlos III de Madrid; Google Scholar)
5. [256 Downloads]  Winners and Losers: U.S. Country and Industry Estimates of Pillar One Amount A, by Lorraine Eden (Texas A&M; Google Scholar)

This Week's Ten Most Popular TaxProf Blog Posts

1. Wall Street Journal op-ed (R.R. Reno), Why I Stopped Hiring Ivy League Graduates
2. New York Post, Kim Kardashian Fails California Baby Bar Exam For A Second Time; Her Score Dropped From 474 To 463 (560 Is Passing)
3. Nightbirde, It's Okay: God Is On The Bathroom Floor
4. Bloomberg Law, White Male Prof Sues Denver Law School For Gender Bias
5. Bryan Camp (Texas Tech), Lesson From The Tax Court: Accounting For Attorney Malpractice Settlements
6. Miami Herald, Miami Searches For Interim Dean After Controversial Firing Of Tony Varona, Who Sought To Reduce Overhead Tax Law School Pays To University
7. U.S. News & World Report, The Ten Most Expensive Law Schools
8. New York Times, Law Schools Scramble To Get Incoming 1Ls To Defer; Columbia Offers $30k, Duke Offers $5K
9. New York Times, Washington & Lee University Board Votes 22-6 To Keep Lee’s Name (Faculty Had Voted 188-51 To Remove It)
10. Victor Thuronyi (Former Lead Tax Counsel, IMF), The Internal Revenue Code Should Be Be Redrafted

Deo: Investigating Pandemic Effects On Legal Academia

The University of Utah S.J. Quinney College of Law hosts a free online program on Pandemic Effects on Legal Academia: A Discussion With Law School Faculty on Wednesday. June 23 at noon - 3:00 P.M. MDT: 

The session will begin with a presentation by Meera E. Deo on her new national empirical study of law faculty, Pandemic Effects on Legal Academia (PELA) followed by a panel of deans responding with their own personal and institutional experiences. Participants will then have the opportunity to break out into working groups organized around specific topics to brainstorm challenges and potential solutions to the obstacles presented by the earlier presentations.

Preliminary analyses of the PELA study reveal troubling patterns of how the effects of COVID-19 exacerbate previously existing raceXgender barriers documented in Southwestern Law School Professor Meera Deo’s book, Unequal Profession: Race and Gender in Legal Academia. Challenges—which are felt most acutely by mothers and other caregivers, junior scholars, untenured faculty, and women of color—include a lack of time and bandwidth to produce scholarship, the blending of home life with work life, an inability to prioritize one’s own well-being, and significant negative mental health effects. This session provides an opportunity for faculty to learn from the data and brainstorm solutions.

Meera E. Deo (Southwestern), Investigating Pandemic Effects on Legal Academia, 89 Fordham L. Rev. 2467 (2021):

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Monroe: Improvisation And Forgotten Taxpayers In Partnership Tax

Andrea Monroe (Temple), Making Tax Law Work: Improvisation and Forgotten Taxpayers in Partnership Tax, 54 U. Mich. J.L. Reform  ___ (2021):

The most troublesome provisions of partnership tax are also its most fundamental, namely the allocation rules that regulate how partners share a partnership’s taxable items.

Complexity is a universal problem faced by partnerships at all levels of wealth, status and sophistication, and the vast majority of taxpayers respond with improvisational tax compliance. In remarkably diverse contexts, improvisation has replaced technical compliance as the norm in partnership allocations. Wealthy partnerships make a strategic choice to improvise, using “target allocations,” while poorer partnerships improvise because they have no other choice, routinely following “intuitive” tax law and hoping for the best.

Reframing this complexity problem as a shared experience of all partnerships exposes the technical and cultural fractures of partnership tax in a new and different light.

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Gender And Institutional Bias In The Publication Process

Fulya Y. Ersoy (Loyola Marymount) & Jennifer Pate (Loyola Marymount), Invisible Hurdles: Gender and Institutional Bias in the Publication Process in Economics:

Tenure decisions in economics are strongly tied to the quantity and quality of publications in peer-reviewed journals. We examine whether female economists and economists at lower- ranked institutions face discrimination in the publication process. To do so, we conduct an experiment with the editors of top 100 journals in economics. Editors were tasked with evaluating the quality of abstracts for various solo-authored papers. The papers vary along the dimensions of gender and institution rank of the author. The experimental variation is whether editors observe name and/or institution of the author. We find that there is positive institutional bias for economists in the top institutions. However, once the name of the author is visible in addition to the institution information, this positive institutional bias only applies to male authors. Hence, institution serves as a signal for quality of work for men, but not for women.

Inside Higher Ed, Gender, Institutions and Bias:

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Weekly SSRN Tax Article Review And Roundup: Layser Reviews Woodcock's Antimonopolism As A Symptom Of American Political Dysfunction

This week, Michelle Layser (Illinois; Google Scholar) reviews Ramsi A. Woodcock (Kentucky; Google Scholar), Antimonopolism as a Symptom of American Political Dysfunction.

One of the biggest news stories of the year has focused on antitrust cases and bills targeting tech giants Amazon, Apple, Facebook and Google. Outside the academy, liberal progressives increasingly point to monopoly power held by BigTech as a source of growing income and wealth inequality (see here, here, and here).  Newly appointed chair of the Federal Trade Commission and Columbia Law Professor Lina Khan made a splash in 2016 with her Yale student note, which made a legal case for breaking up Amazon, inspiring a “‘hipster antitrust’ movement among young scholars who want to expand existing antitrust law to better target issues like corporate concentration and income inequality” (Vox).

But is antitrust law really a promising tool for redistributing income and wealth? Professor Ramsi A.Woodcock doesn’t think so.

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Tax Policy In The Biden Administration

• Bloomberg, Dreams of Working From a Beach Risk Turning Into a Tax Nightmare
• Neil Buchanan (Florida), "True Tax Rates" Are Real and True, and They Are Now a Thing 
• Neil Buchanan (Florida), How the Ultra-Wealthy Get Away With It (Paying Ultra-Low Taxes): In Part, Because It Is Truly Complicated 
• Center on Budget and Policy Priorities, State Taxes on Capital Gains
• Chuck Collins, Dynasty Trusts: A Tool for Billionaire Tax Avoidance
• Chuck Collins, The Rich Got Richer While Millions Lost Their Livelihoods. It's Time For a Wealth Tax

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Weekly Legal Education Roundup

• AccessLex & Gallup, Law School in a Pandemic: Student Perspectives on Distance Learning and Lessons for the Future
• Bloomberg Law, White Male Prof Sues Denver Law School For Gender Bias
• Gregory Camilli (LSAC), Kimberly Dustman (LSAC), & Ann Gallagher (LSAC), LSAT Takers and Khan Academy Preparation
• Adam Chilton (Chicago), Justin Driver (Yale), Jonathan Masur (Chicago) & Kyle Rozema (Washington University), Assessing Affirmative Action's Diversity Rationale
• Michael Thomas Colatrella Jr. (Pacific), What I Learned About Teaching Law By Being An Art Student
• Jon M. Garon (Nova), Law Professor’s Desk Reference: A Handbook for Work and Life in the Legal Academy (2021)

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Next Week's Virtual Tax Workshops

Monday, June 21: David Hasen (Florida; Google Scholar) will present Forget (Arguing About) Redistribution virtually at Florida as part of its Summer Virtual Workshop Series. If you would like to attend, please contact Charlene Luke.

Friday, June 18: Stefan Hammerl (Graz) & Lily Zechner (Graz) will present Taxing Profit and Consumption in Market Jurisdictions: Equity and Administrability in the Digital Era virtually as part of the Indiana|Leeds Summer Zoom Tax Workshop Series. If you would like to attend, please contact Leandra Lederman or Leopoldo Parada.

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Liscow Presents The Psychology Of Taxing Capital Income Today At The Indiana|Leeds Summer Zoom Tax Workshop Series

Zachary Liscow (Yale; Google Scholar) presents The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule) (with Edward Fox (Michigan; Google Scholar)) (reviewed by David Elkins (Netanya) here) virtually today as part of the Indiana|Leeds Summer Zoom Tax Workshop Series hosted by Leandra Lederman (Indiana) and Leopoldo Parada (Leeds):

How to tax capital income is a critical issue today. The realization rule—requiring that property usually must be sold before gains are taxed—is central to taxing capital income, but often decreases the efficiency, equity, and simplicity of the tax system. Estimates suggest that the realization rule costs the government over $2 trillion over 10 years. Given these problems, it is unclear why the rule exists for assets that are easy to value and sell. Scholars have long speculated about the role of the public’s views here, but little is known empirically about them. We conduct the first survey experiment to understand the psychology of the realization rule, which has broad implications for the taxation of capital income. We have three main findings.

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White Male Prof Sues Denver Law School For Gender Bias

Bloomberg Law, Male Law School Trial Advocacy Director Sues Alleging Bias:

The director of the Center for Advocacy at the University of Denver’s Sturm College of Law says in a new suit in federal court that, because of his gender, debunked allegations of sex discrimination were wrongly used against him to delay consideration of the renewal of his teaching contract.

David Schott says the sex discrimination ensued after Viva Moffat, the associate dean of Academic Affairs, told him in 2016 that she didn’t “want to see white men teaching anymore in the Center for Advocacy,” a comment he immediately reported to Bruce Smith, the dean of the law school.

Schott, who is White, says “he felt pressure not to hire white men to teach” at the center, even when they were the most qualified applicants.

He was also soon “the target of a steady barrage of adverse actions and false statements that have damaged his reputation and violated the terms of his employment contract” that were “largely orchestrated by Moffat, but with at least the tacit support of Smith,” the suit filed Wednesday in the U.S. District Court for the District of Colorado alleges.

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What I Learned About Teaching Law By Being An Art Student

Michael Thomas Colatrella Jr. (Pacific), What I Learned about Teaching Law by Being an Art Student:

This article relates lessons that I learned about teaching law from my time as an art student in an atelier system that are supported by science-based pedagogical best practices. 

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Getting Down To Brass Tax: Why Courts Should Use Equitable Tolling To Help Taxpayer-Petitioners Impacted By COVID-19

Hannah Fisher (J.D. 2021, Chicago), Getting Down to Brass Tax: Why Courts Should Use Equitable Tolling to Help Taxpayer-Petitioners Impacted by COVID-19, 2021 U. Chi. Legal F. ___:

The COVID-19 pandemic caused some of the sharpest rises in American unemployment and poverty seen in a generation. This left people with less money in their pockets, but also less time and access to resources to diligently pursue their legal rights and remedies. Congress responded by providing some financial aid via stimulus packages. But without accompanying procedural relief from various filing deadlines, many will face financial liabilities to the government they otherwise might not, particularly in the tax context. This Comment advocates for greater flexibility when taxpayer-petitioners miss filing deadlines due to COVID-19-related hardships.

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