The Truth About Income Inequality

Wall Street Journal op-ed:  The Truth About Income Inequality, by Phil Gramm & John F. Early:

Never in American history has the debate over income inequality so dominated the public square, with Democratic presidential candidates and congressional leaders calling for massive tax increases and federal expenditures to redistribute the nation’s income. Unfortunately, official measures of income inequality, the numbers being debated, are profoundly distorted by what the Census Bureau chooses to count as household income.

The published census data for 2017 portray the top quintile of households as having almost 17 times as much income as the bottom quintile. But this picture is false. The measure fails to account for the one-third of all household income paid in federal, state and local taxes. Since households in the top income quintile pay almost two-thirds of all taxes, ignoring the earned income lost to taxes substantially overstates inequality.

The Census Bureau also fails to count $1.9 trillion in annual public transfer payments to American households. The bureau ignores transfer payments from some 95 federal programs such as Medicare, Medicaid and food stamps, which make up more than 40% of federal spending, along with dozens of state and local programs. Government transfers provide 89% of all resources available to the bottom income quintile of households and more than half of the total resources available to the second quintile.

In all, leaving out taxes and most transfers overstates inequality by more than 300%, as measured by the ratio of the top quintile’s income to the bottom quintile’s. More than 80% of all taxes are paid by the top two quintiles, and more than 70% of all government transfer payments go to the bottom two quintiles.

America’s system of data collection is among the most sophisticated in the world, but the Census Bureau’s decision not to count taxes as lost income and transfers as gained income grossly distorts its measure of the income distribution. As a result, the raging national debate over income inequality, the outcome of which could alter the foundations of our economic and political system, is based on faulty information.

The average bottom-quintile household earns only $4,908, while the average top-quintile one earns $295,904, or 60 times as much. But using official government data sources on taxes and all transfer payments to compute net income produces the more complete comparison displayed in the nearby chart. ...

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Sisk: Citations — 'A Valid, If Imperfect, Proxy For Faculty Scholarly Impact On A National Scale

Gregory C. Sisk (St. Thomas-Minnesota), Measuring Law Faculty Scholarly Impact by Citations: Reliable and Valid for Collective Faculty Ranking, 60 Jurimetrics J. ___ (2019) (reviewing Paul J. Heald (Illinois) & Ted M. Sichelman (San Diego), Ranking the Academic Impact of 100 American Law Schools, 60 Jurimetrics J. ___ (2019)):

No single metric of faculty scholarly activity can fully capture every individual contribution. For that reason, evaluating a single professor’s scholarly work requires a nuanced, multifaceted, and individually focused assessment. However, for a contemporary sketch of the collective scholarly impact of a law school faculty, citation measurements in the legal literature are both reliable and valid.

The new Heald-Sichelman study of citations in the HeinOnline database confirms the reliability of the multiyear results of the Leiter-Sisk Scholarly Impact Ranking based on the Westlaw journals database. Despite using a different law journal database, counting citations differently, including pre-tenure faculty, and even adding download statistics into the mix, the Heald-Sichelman ranking correlates powerfully at 0.88 with the most recent Leiter-Sisk ranking. An objective citation measurement is time-sensitive and corresponds to informed awareness of law school faculty developments around the country. A citation-based ranking thus is a valid, if imperfect, proxy for faculty scholarly impact on a national scale.

With appropriate qualifications and necessary adjustments, a citation-based ranking should be considered in any evaluation of the overall quality of a law school faculty. For the U.S. News ranking of American law schools, an up-to-date, citation-based ranking would have considerable merit as an objective forward-directed control to the subjective past-looking academic reputation survey. ...

In an ideal world of infinitely elastic resources, the eternity of time, and omniscient observers, every individual law professor and every law school’s faculty would be fully known, sensitively understood, and thoroughly evaluated based on complete, detailed, and nuanced information. A dean or faculty committee conducting an annual evaluation of an individual faculty member may conduct a more focused individualized assessment. Similarly, a candidate for a faculty position at a particular law school may have the opportunity for a more targeted exploration of the scholarly culture and activity and arrive at a more specified assessment of that school’s progress as a scholarly community.

When comparing large numbers of law faculties across the country, however, a generalized assessment approach has considerable merit and the imperfections of a robust proxy for scholarly accomplishment will wash out at the macro level. That is no reason to be insensitive to flaws in a particular method or to resist adjustments that improve the accuracy and meaning of the results, even if at the margins. And honesty demands acknowledging the limitations of any single approach, allowing the reader to avoid ascribing perfect confidence.

With those qualifications in mind, a citation-based measurement of law faculty scholarly impact has proven to be a reliable method and should be recognized as a valid if imperfect proxy for faculty scholarly achievement. Citation ranking has established itself as a worthwhile factor in comparative assessment of law faculty scholarly impact.

Heald & Sichelman: The Top 100 Law School Faculties In Citations (Hein) And Impact (SSRN Downloads)

Paul J. Heald (Illinois) & Ted M. Sichelman (San Diego), Ranking the Academic Impact of 100 American Law Schools, 60 Jurimetrics J. ___ (2019):

U.S. News & World Report and rankings-minded scholars have constructed several measures of faculty impact at U.S. law schools, but each has been limited in a variety of ways. For instance, the U.S. News “peer assessment” rankings rely on the qualitative opinions of a small group of professors and administrators and largely mirror the overall rankings (correlations of 0.96 in 2016). While the scholarly rankings improve upon U.S. News by using the quantitative measure of citation counts, they have relied on the Westlaw database, which has notable limitations. Additionally, these rankings have failed to capture the component of scholarly impact on the broader legal community. We overcome these limitations by offering citation-based rankings using the more comprehensive Hein database and impact rankings based on Social Science Research Network (SSRN) download counts, as well as a combination of the two metrics.

Notably, we find a high correlation with the previous scholarly rankings (about 0.88), but a significantly lower correlation with the U.S. News peer assessment rankings (about 0.63). Specifically, we find that many law schools in dense urban areas with large numbers of other law schools that are highly ranked in the U.S. News survey are underrated in the U.S. News peer assessment rankings relative to our faculty impact metrics. Given the relatively low correlation between our rankings and the U.S. News peer assessment rankings—and the fact the U.S. News peer assessment rankings largely track its overall rankings—we strongly support U.S. News’s plans to rank schools on the basis of citation counts and recommend that U.S. News adopt a quantitative-based metric as a faculty reputation component of its overall rankings. ...

Here, pursuant to our suggested weighting discussed earlier, we combine the SSRN and Hein scores equally. Because SSRN download counts are substantially higher than Hein citation counts, we determine the number of standard deviations (z-score) from each school’s score from the mean for that metric, then average the SSRN and Hein z-scores together for a final score.

Table 3. Ranking by SSRN Download and Hein Citation Metrics

Combined Ranking	School	Total SSRN Score	Hein Total Score	SSRN Z-score	Hein Z-score	Average Z-score
1	Yale	18,753	5223	2.56	5.25	3.91
2	Harvard	23,608	3856	3.60	3.53	3.56
3	Columbia	17,820	3075	2.36	2.55	2.45
4	Chicago	19,103	2414	2.64	1.71	2.17
5	Vanderbilt	21,124	1995	3.07	1.19	2.13
6	Penn	18,340	2364	2.47	1.65	2.06
7	NYU	12,569	3114	1.24	2.60	1.92
8	Stanford	11,336	2837	0.97	2.25	1.61
9	UC-Irvine	15,786	2027	1.93	1.23	1.58
10	Duke	12,194	2029	1.16	1.23	1.19
11	GW	14,037	1617	1.55	0.71	1.13
12	Northwestern	11,648	1939	1.04	1.12	1.08
13	Cornell	10,942	1970	0.89	1.15	1.02
14	UCLA	11,956	1782	1.11	0.92	1.01
15	G. Mason	15,120	1150	1.78	0.12	0.95
16	Georgetown	9906	1758	0.67	0.89	0.78
17	Virginia	9325	1702	0.54	0.82	0.68
18	UC-Berkeley	9781	1609	0.64	0.70	0.67
19	Michigan	10,305	1519	0.75	0.59	0.67
20	Minnesota	10,315	1462	0.75	0.52	0.63
21	St. Thomas	11,487	1155	1.00	0.13	0.57
22	Illinois	10,927	1159	0.88	0.13	0.51
23	Texas	6611	1873	-0.04	1.03	0.50
24	UC-Davis	10,805	1098	0.86	0.06	0.46
25	Arizona	9696	1058	0.62	0.01	0.31

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Lesson From The Tax Court: One Year At A Time

I do not teach much tax accounting in my basic tax class.  I do, however, teach the general rule in §441(a) that each tax year stands alone.  Last week’s case of Roger G. Maki and Lilane J. Gervais v. Commissioner, T.C. Summary Op. 2019-34 (Nov. 4, 2019) (Judge Gerber), illustrates that general rule.  In Maki, the taxpayers won a §162 deduction for Mr. Maki’s travel away from home.  What makes this case fun is that these are the same retired taxpayers I blogged about last year in “Where Is A Retiree’s Tax Home.”  In both cases they won the issue, albeit for a smaller amount than they had claimed.  The lesson here is that a win in the first case did not guarantee the win in the next.  Details below the fold.

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Borden: Sec. 1031 Exchanges Within Qualified Opportunity Funds

Bradley T. Borden (Brooklyn), Wrapped Nonrecognition: Code Sec. 1031 Exchanges Within Qualified Opportunity Funds, 22 J. Passthrough Entities 37 (2019):

This article is about section 1031 exchanges wrapped in qualified opportunity funds (QOFs). QOFs are new, so they are in the process of buying property, but eventually some QOFs will think about selling their property. To qualify for the full benefit of the QOF regime, a QOF must hold property for at least 10 years. Prior to the end of that 10-year period, some QOF investors may get antsy and want to sell the QOF’s property. If they sell the property for gain, they will lose some or all of the QOF benefits. This article considers whether a QOF can sell property and use the proceeds to acquire like-kind replacement property and defer gain on that transaction under section 1031. If so, a QOF could sell its original property, defer gain on that sale, and remain eligible for the QOF exclusion. The article illustrates that although in concept wrapped nonrecognition is possible, it is not without its challenges.

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TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• NY Times: Should You Try Dopamine Fasting — The Latest Silicon Valley Fad — For A Better, Saner Life?
• Penn Receives $125 Million Naming Gift, Largest Gift Ever To A Law School
• Is The Tax Cuts And Jobs Act GILTI Of Anti-Simplification?

Sunday:

• Bloomberg Tax Podcast With Sam Brunson: When Religion Tangles With Tax Law
• Ambassador Scott Brown Named New England Law School Dean, Replacing Nation's Longest Serving (And Perhaps Highest Paid) Dean
• Secretary Of State Mike Pompeo: Being A Christian Leader
• The Top Five New Tax Papers

Bloomberg Tax Podcast With Sam Brunson: When Religion Tangles With Tax Law

Bloomberg Tax Podcast: When Religion Tangles With Tax Law: Things to Consider:

In the U.S., religious practices have an unclear relationship to the tax code. Sam Brunson, a professor at Loyola University Chicago School of Law, has an idea to give some structure to the way policy makers deal with that relationship.

Congress historically writes religious accommodations into the tax code on a case-by-case basis: A group of people appears with a specific tax problem, and lawmakers decide whether to write a fix.

But what if there were a framework that would help them consider the problems consistently and fairly? Brunson proposes such a framework in his book, God and the IRS: Accommodating Religious Practice in United States Tax Law.

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Ambassador Scott Brown Named New England Law School Dean, Replacing Nation's Longest Serving (And Perhaps Highest Paid) Dean

Boston Globe, After New Zealand, Here’s What Scott Brown (Yes, That One) Is Doing Next:

Scott Brown, the Wrentham selectman turned state representative turned state senator turned US senator turned US ambassador to New Zealand and Samoa, will have a new title at the end of next year: law school dean.

Brown and New England Law Boston announced Friday that Brown will become president and dean of the law school in December 2020 after completing his time as ambassador.

“It’s an exciting opportunity, something new and interesting,” he said in a telephone interview from New Zealand, where he’s been the top American diplomat since 2017. “I was a law student. I was a solo practitioner. I’ve been in JAG (judge advocate general). I’ve written laws as state rep, state senator, US senator.”

Brown, 60, said he is looking forward to working collaboratively with faculty, staff, and students. He said he is also excited for the public-facing part of the job, from fund-raising to boosting the profile of the downtown Boston school in the region and beyond.

Brown replaces John O'Brien, who is America's longest serving dean (32.5 years when Brown takes over in December 2020). O'Brien's $867,000 salary drew scrutiny from The Boston Globe in 2013 amidst soaring tuition and declining job prospects for New England Law Boston graduates. The Globe reported at the time that O'Brien's salary was higher than other law school deans. According to the most recent information available (2017), O'Brien's compensation is $800,000. Salary.com reports that the average law school dean salary is $291,952 and a typical range of $254,086 - $341,151. 

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Secretary Of State Mike Pompeo: Being A Christian Leader

Secretary of State Michael R. Pompeo, Being a Christian Leader:

SECRETARY POMPEO:  Good morning, everyone.  (Cheers.)  Good morning.  Good morning, thank you.  Thank you.  Good morning.  Good morning, everyone.  Thank you, Dr. Clinton, for that kind introduction.  It’s great to be with you and your wife, Julie.  It’s a real privilege to be with you, and it’s a heck of a deal to be out of Washington today.  (Laughter.)  I was going to give you some wisdom, said maybe you’ll hold your conference there next year, but I thought about it and that’d be a bad idea.  (Laughter.)  But Washington could use your spirit and your love.

And I want, too, to take just a moment to pass along – I spoke to the President yesterday, and I told him I was coming down here.  He reminded me that Tennessee won the country.  (Laughter.)  I told him I knew that.  But he said to send his regards and his love and his appreciation for what you do taking care of people all around the world.

I did want to talk to you about why I’m here.  I’m the Secretary of State.  I spend most of my time traveling around the world, but I wanted to come here because I have a profound appreciation for your mission.  And when I had a chance to talk to Tim about the opportunity to come speak with you, I was thrilled to get the chance.

Look, we share some things in common.  We talk to people through hard times.  We find ourselves in the middle of disputes and we seek to mediate them and try and identify their root causes.  We try to keep conflict minimized, at bay.  And when you think about those missions, the missions that you all have, it sounds a lot like the diplomacy that me at the State Department and my team engage in every day.

We’re both in very people-intensive lines of work, and we’re both appealing to the hearts and minds to change behaviors.  As believers, we draw on the wisdom of God to help us get it right, to be a force for good in the life of human beings.

Now, I know that even having just said that, I know some people in the media will break out the pitchforks when they hear that I ask God for direction in my work.  (Applause.)  But you should know, as much as I’d like to claim originality, it is not a new idea.  (Laughter.)  I love this quote from President Lincoln.  He said that he – he said, quote, “I have been driven many times upon my knees by the overwhelming conviction that I had nowhere else to go.”  (Laughter.)

And so with that in mind, I want to use my time today to think about what it means to be a Christian leader, a Christian leader in three areas:

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The Top Five New Tax Papers

There 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 #3. The #1 paper is #88 among 14,703 tax papers in all-time downloads:

1. [2,309 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
2. [268 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
3. [233 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
4. [198 Downloads]  Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, by Ruth Mason (Virginia)
5. [195 Downloads]  Digital Service Taxes and the Broader Shift From Determining the Source of Income to Taxing Location-Specific Rents, by Daniel Shaviro (NYU) (reviewed by Young Ran (Christine) Kim (Utah) here)

This Week's Ten Most Popular TaxProf Blog Posts

1. Paul Caron (Dean, Pepperdine), Latest Developments In The Dan Markel Murder Case
2. Bryan Camp (Texas Tech), Lesson From The Tax Court: No Jurisdiction Over Ambiguous NOD
3. Pepperdine University, The Borderline Shooting And Woolsey Fire: One Year Later
4. Chronicle of Higher Education, University Of Maryland To Restructure, Terminate Contracts Of 100 Faculty Who Can 'Recompete' For Their Jobs
5. Paul Caron (Dean, Pepperdine), Kimberly Clausing Leaves Reed College For UCLA Law School
6. Minna Kotkin (Brooklyn), Clinical Legal Education And The Replication Of Hierarchy
7. Princeton Review, Best 167 Law Schools (2020 Edition)
8. Wyatt Wells (Auburn), Strategic Plans Are A Fraud
9. Karen Sloan (Law.com), Five Law Schools With Top Bar Pass Rates Share Their Secrets
10. Kat Allen (Wykowski Law, San Francisco), Federal Taxation of Cannabis

NY Times: Should You Try Dopamine Fasting — The Latest Silicon Valley Fad — For A Better, Saner Life?

New York Times, How to Feel Nothing Now, in Order to Feel More Later: A Day of Dopamine Fasting in San Francisco:

Everything was going really well for the men of Tennessee Street. Women wanted to talk to them, investors wanted to invest, their new site got traffic, phones were buzzing, their Magic: The Gathering cards were appreciating. This all was exactly the problem.

They tried to tamp the pleasure. They would not eat for days (intermittent fasting). They would eschew screens (digital detox). It was not enough. Life was still so good and pleasurable.

And so they came to the root of it: dopamine, a neurotransmitter that is involved in how we feel pleasure. The three of them — all in their mid-20s and founders of SleepWell, a sleep analysis start-up — needed to go on a dopamine fast.

“We’re addicted to dopamine,” said James Sinka, who of the three fellows is the most exuberant about their new practice. “And because we’re getting so much of it all the time, we end up just wanting more and more, so activities that used to be pleasurable now aren’t. Frequent stimulation of dopamine gets the brain’s baseline higher.”

There is a growing dopamine-avoidance community in town and the concept has quickly captivated the media.

Dr. Cameron Sepah is a start-up investor, professor at UCSF Medical School and dopamine faster. He uses the fasting as a technique in clinical practice with his clients, especially, he said, tech workers and venture capitalists. ...

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Penn Receives $125 Million Naming Gift, Largest Gift Ever To A Law School

Law.com, Penn Law, With Record-Breaking Donation, Gets New Name:

The University of Pennsylvania Law School has received the single largest donation to a law campus on record and is changing its name in honor of the donor.

The school will now be called the University of Pennsylvania Carey Law School after receiving $125 million from the W.P. Carey Foundation. That tops the $115 million gift James E. Rogers made to the University of Arizona’s law school in 1998 and the $100 million donation from the Pritzker family to Northwestern University Pritzker School of Law in 2015. ...

Naming rights have become an increasingly important avenue for fundraising in legal education. Last month, Pepperdine University’s law school was renamed the Pepperdine University Rick J. Caruso School of Law after it received $50 million from its namesake, who is a Los Angeles-area real estate developer.

The $125 million gift will be spent on these six priorities:

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Is The Tax Cuts And Jobs Act GILTI Of Anti-Simplification?

Christine Davis (S.J.D. (Tax) 2020, Florida), Is the Tax Cuts and Jobs Act GILTI of Anti-Simplification?, 38 Va. Tax Rev. 315 (2019):

In December 2017, Congress enacted tax reform legislation, commonly referred to as the “Tax Cuts and Jobs Act” or “TCJA,” which fundamentally changed the United States’ international corporate taxation system. The TCJA was enacted quickly; the bill was signed into law less than 2 months after the House of Representatives introduced it. Since that time, tax professionals across the United States and around the world have worked overtime to try to understand the new tax laws. Now that the U.S. Treasury Department is releasing and requesting comments on proposed tax regulations, practitioners must have a thorough understanding of the TCJA. This paper attempts to reduce the complexity of the TCJA’s international tax provisions by examining global intangible low-taxed income (“GILTI”) and its interaction with other provisions that implement income taxation of cross border corporations.

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Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Listokin's Posner on Tax: The Independent Investor Test

This week, David Elkins (Netanya) reviews a new work by Yair Listokin (Yale), Posner on Tax: The Independent Investor Test, 86 U. Chi. L. Rev. 1159 (2019):

Richard Posner is one of the most influential legal scholars of recent generations. He is perhaps best known as a leading figure in the school of Law and Economics. Complimenting his academic work, he served as a judge on the Seventh Circuit Court of Appeals for 36 years before retiring in 2017. In the field of taxation, one of his more memorable decisions was Exacto Springs Corp. v. Commissioner, 196 F3d 833 (7th Cir. 1999), which concerns the characterization of payments from closely held corporations to individuals who are both shareholders and employees: is the payment properly classified as a salary or as a distribution?

The question of how to characterize payments to shareholders arises whenever shareholders provide services or sell property to the corporation that they control. If a shareholder leases property to a corporation, is the payment that the parties describe as rent truly rent or is it only partly rent and partly a distribution? The issue of classification is particularly significant in the field of international taxation. For example, if a corporation operating in Country A pays what it describes as a royalty to a parent (or otherwise related) corporation in Country B, is the payment actually a deductible royalty or is it a nondeductible distribution? The answer to that question may determine whether Country A can collect tax from the economic activity in its territory.

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Weekly Legal Education Roundup

• Above the Law, The Law Schools With The Highest Student Loan Default Rates
• Akron Law, Akron Law introduces innovative Blended Online J.D. Program
• Deborah L. Borman & Catherine Haras, Something Borrowed: Interdisciplinary Strategies for Legal Education
• Scott Fruehwald (Legal Skills Prof Blog), Commentary on Something Borrowed: Interdisciplinary Strategies for Legal Education
• Inside Higher Ed, After First Rejection, Florida Coastal Law School Makes Another Bid To Go Nonprofit

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Tax Policy In The Trump Administration

• Bloomberg News, Democrats Worried Over Wealth Tax Design Other Plans to Tax the Rich
• Bloomberg News, IRS Auditors are Watching Companies That Owe Offshore Profit Tax
• Bloomberg News, Taxing the Ultra-Wealthy Forces Democrats to Get Creative
• Bloomberg News, Warren’s Wealth Tax Could Drive Billionaires to Funds She Hates
• Bloomberg Opinion (Brian Chappatta), Could Canceling Student Loans Be a Tax Cut 2.0?

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Trump's Taxes And Tax Returns

• Bloomberg News, Trump Can’t Block New York District Attorney’s Tax Subpoena
• Bloomberg Opinion (Noah Feldman (Harvard)), Trump Tax Return Case Hinges on John Roberts
• Bloomberg Tax, California Fight For Trump Tax Returns Goes to State High Court
• The Hill, Judge Hints at Letting House Lawsuit Over Trump Tax Returns Proceed
• Los Angeles Times, California Justices Skeptical of Law Requiring Trump to Release Tax Returns For Primary 

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Kim Presents The Digital Services Tax: A Cross-Border Variation Of The Consumption Tax Debate? At BYU

Young Ran (Christine) Kim (Utah) presented The Digital Services Tax: A Crossborder Variation of Consumption Tax Debate at BYU yesterday as part of its Faculty Workshop Series:

As highly digitalized business models, such as Google, Amazon, and Facebook, have been mainstreamed in the economy, the traditional profit allocation and nexus rules of taxation are further strained. Traditionally, profit is allocated to market countries when the business has physical presence there. However, highly digitalized business models can generate profits in market countries without physical presence. Thus, market countries, especially the EU, have started imposing a digital services tax (“DST”) on the gross revenue generated in jurisdictions with highly digital business models, which has ignited heated debate across the globe.

DST is criticized as “ring-fencing,” or segregating, certain digital business models, because it arguably imposes a disguised corporate income tax on the profits of only certain digital firms, which discriminates against American tech giants. However, while DST is politically driven, the criticism is largely based on practical concerns and focused on the imminent impact, such as who is the winner and loser in the short term, rather than considering DST theoretically. More importantly, there is little discussion of the consumption tax aspect of the DST. DST is a turnover tax, which is a subcategory of consumption tax levied on the gross revenue of a firm. However, strangely, there is little discussion of the theoretical value of DST as a consumption tax.

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Five Law Schools With Top Bar Pass Rates Share Their Secrets

Law.com, How'd They Do It? Law Schools With Top Bar Pass Rates Share Their Secrets:

We’ve asked five law schools with the highest July pass rate in their respective jurisdictions to tell us about their secrets to bar exam success, and why their graduates tend to do so well on the licensing exam.

Most jurisdictions have released the results of the July 2019 bar exam, and the news is largely positive. Pass rates went up in most states, though closely watched California likely won’t release results for another week or so.

Here are the top performers in their states: Florida International University College of Law (overall pass rate of 96%); Baylor University School of Law (93% first-time pass rate); the University of Georgia School of Law (94% first-time pass rate); the University of Pennsylvania Law School (88% overall pass rate); and Ohio Northern University Pettit College of Law (100% first-time pass rate.) ...

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Hemel & Kysar: The Warren/Sanders Wealth Taxes Would Raise Zero Revenue Because They Are Unconstitutional

New York Times op-ed:  The Big Problem With Wealth Taxes, by Daniel Hemel (Chicago) & Rebecca Kysar (Fordham):

Senator Elizabeth Warren unveiled a new wealth tax proposal last week that she says will raise — along with her previously announced wealth tax plan — $3.75 trillion over the next decade. Senator Bernie Sanders says his wealth tax will yield $4.35 trillion over the same period.

We fear these figures are vast overestimates. The likeliest outcome is that a wealth tax will raise exactly zero dollars. The problem, alas, is the Constitution. The Warren and Sanders plans run headlong into more than two centuries of precedent that cast doubt on the constitutionality of wealth taxation.

We are tax law professors who identify as liberal Democrats, donate to Democratic candidates, publicly opposed the Trump tax cuts and strongly support higher taxes on the affluent. We are heartened that prominent Democratic presidential candidates are taking the problem of wealth inequality very seriously. We are worried, though, that leading figures in our party are coalescing around an idea whose constitutionality is doubtful at best.

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Pepperdine Remembers The Borderline Shooting And Woolsey Fire

 

One year ago our campus community was forever changed by the events of the Borderline Shooting and Woolsey Fire. In what felt like a mere instant, countless members of our precious Waves family suffered unspeakable loss as we had just begun to grieve a senseless shooting rampage, the loss of one of our students, and destruction from flames more powerful than our community had ever seen. But even amidst unthinkable tragedy, the generous hearts and united spirit of our Pepperdine family prevailed, and today, one year later, we continue to selflessly serve one another as we rebuild, renew, and hope forward—together. This week we remember those who were lost, and we carry in our hearts those whose lives were changed by these tragedies as they demonstrate each day not only their love for each other, but their unyielding strength to carry on.

Posted by Pepperdine University on Thursday, November 7, 2019

Prior TaxProf Blog coverage:

• Malibu Burning (Nov. 9, 2018)
• Fires Cause Massive Destruction In Malibu, But Pepperdine Is Safe (Nov. 10, 2018)
• The Pepperdine Disaster Relief Clinic And The Woolsey Fire (Nov. 14, 2018)
• A Clinic Rises From The Ashes (Nov. 20, 2018)
• Why Pepperdine Stays Put When Wildfires Rage (Nov. 21, 2018)
• Pepperdine Law Rises From The Ashes: Better, Stronger, United (Nov. 28, 2018)
• Pepperdine AALS Reception To Thank Legal Ed For Its Support In The Aftermath Of The Fire (Dec. 20, 2018)
• Pepperdine Law Reception At #AALS2019 (Jan. 5, 2019)
• Tragedy Brings Out The Best In People (And Law Schools) (Jan. 8, 2019)

Columbia Journal Of Tax Law Publishes New Issue

The Columbia Journal of Tax Law has published Vol. 10, No. 2:

• Meredith R. Conway (Suffolk), And You May Ask Yourself, What Is That Beautiful House: How Tax Laws Distort Behavior Through the Lens of Architecture, 10 Colum. J. Tax L. 165 (2019)
• Kartikeya Singh (PricewaterhouseCoopers, Washington D.C.) & Aparna Mathur (American Enterprise Institute), The Impact of GILTI and FDII on the Investment Location Choice of U.S. Multinationals, 10 Colum. J. Tax L. 199 (2019)

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UNH Law Dean: School's Deficit Is Part Of Long-Term Strategy To Break Even In 2023-24

Following up on my previous post, UNH Law School Budget Deficit Exceeds 100% Of Revenues:  New Hampshire Public Radio, UNH Law Dean: School's Deficit Is Part Of Long-Term Strategy: 

Law schools across the country have struggled in the last decade with declining enrollment.

In that time, the University of New Hampshire’s Franklin Pierce School of Law has seen many changes. It’s no longer a private school and it’s seen growing deficits.

The school spent more than double its operating budget last fiscal year, but university officials say these losses are an investment in the law school’s long-term success and things are starting to look up.

NHPR’s Morning Edition Rick Ganley spoke with the dean of UNH Law, Megan Carpenter. ..

I understand you've got a long term strategy, of course, to increase enrollment. Numbers have gone up. But ideally, you should be breaking even at some point. I imagine that's the long term goal here. When does the school projected a financial return on all of this long term investment?

In higher education, we see an ebb and flow over time. Sometimes, you know, STEM is up and liberal arts is down. Sometimes liberal arts is up and STEM is down. That's why we really think of higher education in a holistic way. Higher education is not sort of designed to be a profit center. However, we project a breakeven point at 2023-2024. ...

What is your argument to an average resident in New Hampshire about why spending that much money to keep the law school afloat is worth it?

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Carried Interest Warning From Court May Be Trouble For Treasury

Bloomberg Tax, Carried Interest Warning From Court May Be Trouble for Treasury:

A recent court case meant to clarify the definition of a corporation intensifies questions about the tax treatment of carried interest, a prized perk for private equity and hedge fund managers [Charleston Area Medical Ctr. v. United States (Fed. Cl. Oct. 17, 2019)].

The IRS argued for a broad definition of the term “corporation” in the case. But the legal issue that could come up in the future is whether it’s reasonable for Treasury regulations to interpret the term more narrowly in the carried interest context, affecting who can qualify for the treatment.

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WSJ: More Women Pursue MBAs As Elite Schools Step Up Recruiting

Wall Street Journal, More Women Pursue M.B.A. as Elite Schools Step Up Recruiting:

As applications to American business schools decline, the percentage of women enrolled in full-time M.B.A. programs continues to rise, climbing this fall to an average of 39% at more than 50 of the top programs in the U.S., Canada and Europe, new data show.

Washington University in St. Louis Olin Business School came closest to an even split between male and female students, with 49% women enrolled this fall, according to data collected by the Forté Foundation, a nonprofit focused on advancing women into leadership roles through access to business education. Others with high percentages of female students include the Wharton School of the University of Pennsylvania and the University of Michigan’s Ross School of Business, which each had 45% or more women enrolled.

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NY Times: Trump Tax Return Case Confronts Supreme Court With A Momentous Choice

New York Times, Trump Tax Return Case Confronts Supreme Court With a Momentous Choice:

Richard M. Nixon and Bill Clinton sustained unanimous losses when they sought to withhold evidence, suggesting that President Trump may face an uphill fight.

In a matter of days, President Trump will ask the Supreme Court to rule on his bold claim that he is absolutely immune from criminal investigation while he remains in office. If the court agrees to hear the case, its decision is likely to produce a major statement on the limits of presidential power — and to test the independence of the court itself.

Mr. Trump has been the subject of countless investigations and lawsuits since he took office, including a 22-month inquiry by Robert S. Mueller III, the special counsel appointed to look into his campaign’s ties to Russia. But the new case, concerning an investigation by Manhattan prosecutors into hush-money payments to two women who said they had affairs with Mr. Trump, will be the Supreme Court’s first chance to consider the president’s arguments that he is beyond the reach of the justice system.

The case concerns a subpoena to Mr. Trump’s accounting firm, Mazars USA, from the office of the Manhattan district attorney, Cyrus R. Vance Jr., a Democrat. On Monday, the federal appeals court in Manhattan rejected Mr. Trump’s request to block the subpoena, which seeks eight years of his personal and corporate tax returns.

The appeals court’s ruling was narrow and modest, hewing closely to the circumstances of the dispute before it. If the Supreme Court adopted the lower court’s reasoning, it would answer only the question of whether state prosecutors may require third parties to turn over a sitting president’s financial records for use in a grand jury investigation.

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Does A Professor Violate Copyright Law By Posting His Published Work On His Website?

Inside Higher Ed, What Happened When a Professor Was Accused of Sharing His Own Work On His Website?:

Like many academics, William Cunningham, professor of psychology at the University of Toronto, shares his own articles — published and soon-to-be — on his website. And like most academics, he does so in the interest of science, not personal profit.

So Cunningham and hundreds of his colleagues were recently irked by a takedown notice he received from the American Psychological Association, telling him that the articles he had published through the organization and then posted on his website were in violation of copyright law. The notice triggered a chain of responses — including a warning from his website platform, WordPress, that multiple such violations put the future of his entire website at risk. And because the APA had previously issued similar takedown notices, the threat of losing his website seemed real to Cunningham.

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Matching Tax With Economics In Subchapter K

Zhiyuan Zuo (Cleary Gottlieb, New York), A Gain Must Lie Where It Falls: Matching Tax with Economics in Subchapter K, 11 Colum. J. Tax L. ___ (2019):

Society suffers efficiency costs when tax and economics are mismatched. This principle is illustrated by the tax neutrality doctrines that are the cornerstone of the U.S. international tax system and by the BEPS’s efforts to combat arbitrary income shifting. While society has an interest in maximizing pre-tax income from all economic activities, self-interested taxpayers seek only to maximize their after-tax income. A good, non-arbitrary tax policy must thus incentivize taxpayers to maximize both their pre-tax and after-tax income. This note provides a novel efficiency analysis of the rules under Subchapter K and reveals the efficiency costs that arise when arbitrary tax liabilities sever the positive connection between pre-tax and after-tax income. It applies the insight gained from the efficiency analysis to the Treasury’s various flawed efforts under Subchapter K to match tax with economics, including the Substantial Economic Effect (SEE) safe harbor and doctrines under section 704(c). The Article then explores alternatives to the Treasury’s “one-size-fits-all” solution, focusing on a detailed analysis of the economic effect equivalence (EEE) test and so-called target allocations

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Financial Transactions Tax: If Not Now, When?

Doron Narotzki (Akron), Financial Transactions Tax – If Not Now, When?, 165 Tax Notes 47 (Oct. 7, 2019):

In this article, Narotzki discusses the short history of the financial transaction tax in the United States and why now is the perfect time to adopt it.

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Kysar Presents Unravelling The Tax Treaty Today At Pennsylvania

Rebecca Kysar (Fordham) presents Unravelling the Tax Treaty, 103 Minn. L. Rev. ___ (2019), at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

Coordination among nations over the taxation of international transactions rests on a network of some 2,000 bilateral double tax treaties. The double tax treaty is, in many ways, the roots of the international system of taxation. That system, however, is in upheaval in the face of globalization, technological advances, taxpayer abuse, and shifting political tides. In the academic literature, however, scrutiny of tax treaties is largely confined to the albeit important question of whether tax treaties are beneficial for developing countries. Surprisingly little consideration has been paid to whether developed countries, like the United States, should continue to sign tax treaties with one another, and no formal revenue or economic analyses of the treaties has been undertaken by the United States government. In fact, little evidence or theory exists to support entrance into tax treaties by the United States, and examination of investment flows indicates the treaties may even lose U.S. revenues. Problematically, the treaties also thwart reforms of the antiquated and broken international tax system. The trajectory of the recent U.S. tax legislation illustrates this phenomenon.

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Professor's WSJ Op-Ed: 'Strategic Plans Are A Fraud'

Wall Street Journal op-ed:  Why ‘Strategic Plans’ Are Rarely Strategic—or Effective, by Wyatt Wells (Auburn University):

Auburn University at Montgomery, where I teach, recently completed a common organizational ritual: It drafted a strategic plan. The process took months and entailed work by a variety of committees, at considerable expense. When it was completed, faculty and staff applauded. Then most, on returning to their offices, promptly consigned the new document to the trash. In the majority of organizations, workers respond to strategic plans with the same cynicism, nodding and smiling in public while sighing and rolling their eyes in private.

The typical strategic plan begins with an anodyne statement of principles, lists several general goals, and finally recounts a series of initiatives that the institution will undertake to realize these objectives. In its statement of principles, AUM’s plan asserts that the university seeks to “provide quality and diverse educational opportunities,” offering a “student-centered experience” with “excellence as our standard.” These are more specific than Google’s old mantra, “Don’t be evil,” but not much. Presumably every institution of higher learning shares these goals—none would boast that “adequacy is our standard.” ...

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Federal Taxation Of Cannabis

Kat Allen (Wykowski Law, San Francisco), Federal Taxation of Cannabis, Parts I - III:

• Part I: The Tax Law's War on Drugs, 164 Tax Notes 855 (Aug. 5, 2019): "In the first of a three-part series on the
  taxation of cannabis, Allen provides a framework for debate regarding the tax code’s treatment of illegal activities or payments.
• Part II: Timing Is Everything, 164 Tax Notes 1041 (Aug. 12, 2019):  "In this second installment of a three-part series, Allen examines the code’s timing rules for state-regulated cannabis businesses."

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Listokin: Posner on Tax — The Independent Investor Test

Yair Listokin (Yale), Posner on Tax: The Independent Investor Test, 86 U. Chi. L. Rev. 1159 (2019):

This paper, written in honor of Judge Richard Posner’s retirement from the federal judiciary, uses his opinion in Exacto Spring v. Commissioner [196 F.3d 833 (7th Cir. 1999)] as a lens into his tax law jurisprudence more generally. In Exacto Spring, Posner delivers a devastating rejection of the muddled multifactor test then in effect to distinguish reasonable salaries, which are deductible from corporate income, from disguised dividends, which aren’t. Posner replaces the multifactor test with the independent investor test, which focuses the judicial inquiry on the substance of the transaction. I critique Posner’s application of the independent investor test to the problem of salary disguised as dividends, showing that it yields perverse outcomes by treating equity as a fixed claim, rather than a residual claim. But I show that, when applied to dividends disguised as debt, the independent investor test offers great promise.

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Princeton Review's Best 167 Law Schools (2020 Edition)

The Princeton Review has published the 2020 edition of The Best 167 Law Schools (press release) (FAQs) (methodology):

The ranking lists, reported in 14 categories, each name the top 10 law schools. The education services company tallied the lists based on its surveys of 19,000 students attending 167 law schools [an average of 114 per school] in the U.S., and of administrators at those schools. The Princeton Review's 80-question student survey for this project asked students to rate their law schools on dozens of topics and report on their school experiences. The survey of law school administrators, which numbered more than 200 questions, covered topics from academic offerings and admission requirements to data about currently enrolled students as well as graduates' employment. Six of the 14 ranking lists were tallied using both student and administrator-reported data, five solely from student data, and three solely from administrator data.

Best Professors:  Based on student answers to survey questions concerning how good their professors are as teachers and how accessible they are outside the classroom.

1. Virginia
2. Duke
3. Chicago
4. Washington & Lee
5. Stanford
6. Notre Dame
7. Boston College
8. Boston University
9. Michigan
10. Northwestern

Best Quality of Life:  Based on student answers to survey questions on: whether there is a strong sense of community at the school, whether differing opinions are tolerated in the classroom, the location of the school, the quality of social life at the school, the school's research resources (library, computer and database resources).

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WSJ: Tax Cuts For The Wealthy Make Inequality Worse

Wall Street Journal op-ed:  Tax Cuts for the Wealthy Make Inequality Worse, by Alan S. Binder (Princeton):

Here’s a short test of your value judgments. (There’s no right answer.) If free markets start dishing out increasingly unequal pretax incomes, should the government ignore it, mitigate it by making the tax system more progressive, or exacerbate it by making the tax system less progressive?

The question isn’t hypothetical. And you may be surprised to learn that the U.S. political system has given a clear answer: Exacerbate it. ...

[I]ncome inequality in America now stands at, or just a tad below, its all-time high. The essential fact is that inequality has been rising for almost 40 years.

What about tax progressivity? Two economists at the University of California, Berkeley, Emmanuel Saez and Gabriel Zucman, just published an important new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay. Perhaps the most stunning finding: “For the first time in the past hundred years, the working class today pays higher tax rates than billionaires.”

Chew on that for a moment. You may remember Warren Buffett bemoaning that he paid a lower average tax rate than his secretary. Apparently, he wasn’t alone. ...

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Professors' Slow, Steady Acceptance Of Online Learning

Inside Higher Ed, Professors' Slow, Steady Acceptance of Online Learning: A Survey:

Inside Higher Ed's 2019 Survey of Faculty Attitudes on Technology, conducted with Gallup and published today, shows a continuing uptick in the proportion of faculty members who have taught an online course, to 46 percent from 44 percent last year. That figure stood at 30 percent in 2013, meaning that the number has increased by half in six years.

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Call For Student Tax Papers: 2020 Chris Bergin Award for Excellence In Writing

Christopher E. Bergin Award for Excellence in Writing:

The Christopher E. Bergin Award for Excellence in Writing recognizes superior student writing on unsettled questions in tax law or policy. It is named in honor of the late Christopher E. Bergin, former president and publisher of Tax Analysts and longtime editor of Tax Notes Federal. The award, given annually, epitomizes the qualities that Chris championed.

No one cared more than he did about clear, precise writing about taxation, and he instilled that passion in our whole staff.
Cara Griffith, Tax Analysts President and CEO

To learn more about Christopher E. Bergin, click here.

Eligibility: Must be enrolled in an accredited undergraduate or graduate program during the academic year.
Topic: Submissions should focus on an unsettled question in federal, state, or international tax law or policy.
Evaluation: Our editorial staff blindly evaluates entries on originality, readability, organization, reasoning, and overall quality of content.
Due Date: June 30, 2020

Click here for competition guidelines.

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Fleurbaey Presents Optimal Income Taxation Theory And Principles Of Fairness Today At NYU

Marc Fleurbaey (Princeton) presents Optimal Income Taxation Theory and Principles of Fairness at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

The achievements and limitations of the classical theory of optimal labor-income taxation based on social welfare functions are now well known. Even though utilitarianism still dominates public economics, recent interest has arisen for broadening the normative approach and making room for fairness principles such as desert or responsibility. Fairness principles sometimes provide immediate recommendations about the relative weights to assign to various income ranges, but in general require a careful choice of utility representations embodying the relevant interpersonal comparisons. The main message of this paper is that the traditional tool of welfare economics, the social welfare function framework, is flexible enough to incorporate many approaches, from egalitarianism to libertarianism.

Glogower Presents Progressive Tax Procedure Today At UC-Hastings

Ari Glogower (Ohio State) presents Progressive Tax Procedure (with Joshua Blank (UC-Irvine)) at UC-Hastings today as part of its Tax Speakers Series hosted by Heather Field and Manoj Viswanathan:

Discussions of progressive taxation in the United States—and of whether the rich pay enough in taxes—generally focus on the structure of the substantive tax law, such as the marginal rates, income brackets, deductions, and credits under the federal income tax. Despite recent reports of tax avoidance and noncompliance by high-income taxpayers, these discussions have not focused on the structure of the tax procedure rules, which govern the Internal Revenue Service’s administrative responsibilities and taxpayers’ compliance obligations.

This Article presents the case for a new system of “progressive tax procedure.” Currently, tax procedure rules—such as tax penalties and the statute of limitations—typically apply in a uniform manner to all taxpayers, irrespective of their income. Under progressive tax procedure, in contrast, these rules would vary depending on the taxpayer’s income. For example, a high-income taxpayer would face higher tax penalty rates or longer periods where the IRS could assess tax deficiencies.

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