Faulhaber Presents Excess Returns And The Search For Substantial Activities Virtually Today At NYU

Lilian Faulhaber (Georgetown) presents Lost in Translation: Excess Returns and the Search for Substantial Activities virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Starting in 2010, one international tax reform proposal moved from being a one-page idea in the Obama Treasury’s proposed budget to being one of the OECD’s options for CFC reform to becoming the basis for one of the major international tax reform provisions in the 2017 U.S. tax reform to being considered as part of Pillar Two of the OECD’s current digital tax project. This proposal, for a minimum tax on foreign excess returns, has changed shape with every iteration, and its proponents have justified each version of this differently and defined its various elements differently.

This Article tells the story of the many recent proposals for minimum taxes on foreign excess returns, starting with the Obama Treasury’s brief proposal and ending with the OECD’s current negotiations over digital taxation. This Article highlights the common threads that links all of these rules, and it also shows how differently the drafters of each rule have understood the purpose and design of a minimum tax on foreign excess returns.

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Cooper: Rethinking The Estate Planning Curriculum

Jeffrey A. Cooper (Quinnipiac), Rethinking the Estate Planning Curriculum, 46 ACTEC L.J. (2020):

As a result of recent changes in Federal estate tax law, fewer and fewer clients need sophisticated estate tax planning. Many lawyers are thus spending less time acting as estate tax planners and instead deploying different skills and expertise.

In this brief article, I explore the extent to which law schools are rethinking their curricula as a result.

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Advice To Law Professors Giving Final Exams During COVID-19

LawProfBlawg (Anonymous Professor, Top 100 Law School), Your Compassionate Final Exam:

Some professors are giving short, timed exams while watching their students to assure that they don’t cheat. That means a LOT can go wrong for some students. The shorter the time window, the greater the chances of problems.  Broader and larger windows (more time to work, more flexibility in the time taking the exam) go a long way to mitigate problems. But even that doesn’t eliminate some of the challenges of taking exams in a pandemic.

Some students do not have spaces in which to work, concentrate or think.  They live with parents, family, and roommates. They may not have access to reliable internet. But yeah, you watch the zoom, prof.

Schools are closing for the Thanksgiving break and afterward in anticipation of a (now certain) COVID-19 spike. Great! But, where does one take that incredibly short term final with certain internet? How does one find child care for those definitive three hours? See Law Students In the Age of Coronavirus. It’s not like these problems haven’t been foreseen for a long while. Amazing that there are still discussions about what a final should look like right now. ...

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Acknowledgments As A Window Into Legal Academia

Jonathan I. Tietz (Michigan) & W. Nicholson Price II (Michigan), Acknowledgments as a Window into Legal Academia, 98 Wash. U. L. Rev. 307 (2020):

Legal scholarship in the United States is an oddity—an institution built on student editorship, a lack of peer review, and a dramatically high proportion of solo authorship. It is often argued that this makes legal scholarship fundamentally different from scholarship in other fields, which is largely peer-reviewed by academics. We use acknowledgments in biographical footnotes from law-review articles to probe the nature of legal knowledge co-production and de facto peer review in legal literature. Using a survey of authors and editors and a textual analysis of approximately thirty thousand law-review articles from 2008 to 2017, we examined the nature of knowledge co-production and peer review in U.S. legal academia.

Our results are consistent with the idea that substantial peer-review-like vetting occurs in the field. We also found evidence that both authors and editors use the information in acknowledgment footnotes as a factor in article submission and selection. Further, the characteristics of acknowledgment footnotes in articles in high-ranking law reviews differ dramatically from those in low-ranking law reviews in ways that are not simply due to differences in article quality.

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Vanderbilt's Chris Guthrie Is Sixth Law School Dean To Give At Least $100,000 To Students

Chris Guthrie, Vanderbilt Dean and John Wade-Kent Syverud Professor of Law, and his partner Tracey George, Vice Provost for Faculty Affairs, Charles B. Cox III and Lucy D. Cox Family Chair in Law and Liberty, and Professor of Political Science, have pledged $100,000 to establish a need-based scholarship in honor of the first African-American men and first African-American woman to graduate from Vanderbilt Law School:

The Harris, Porter & Work Scholarship will recognize Janie Greenwood Harris (LLB ’64), Edward Melvin Porter (LLB ’59) and Frederick Taylor Work, Sr. (LLB ’59), and support students with a demonstrated commitment to civil rights. ...

“We have had the privilege of meeting Janie, Melvin and Fred,” Guthrie explained. “We are in awe of their courage, accomplishments and grace. They make us so proud to be a part of the Vanderbilt Law School community, and we are excited and humbled to be able to recognize them with a scholarship named in their honor.”

This is the second need-based scholarship that George and Guthrie have endowed at the law school. “We are committed to doing what we can to ensure that talented students, regardless of need, are able to study at our law school  because we believe in the power of a Vanderbilt legal education to make a difference,” Guthrie said.

George and Guthrie have also made a gift of $25,000 to support current student initiatives to address issues of racial injustice.

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Stark: The Power Not To Tax

Kirk J. Stark (UCLA), The Power Not to Tax, 69 Am. U. L. Rev. 565 (2019):

Among the most controversial changes in federal tax policy in recent years is the new limitation on the deductibility of state and local taxes—or SALT cap. Introduced as part of the Tax Cuts and Jobs Act of 2017, the SALT cap differentially burdens residents of high-tax “blue states,” prompting some lawmakers to characterize the cap as an act of “economic civil war.” In one of the opening salvos of this “war,” a handful of blue states turned to alternative devices for raising revenue through the use of tax credits for charitable donations to state-designated funds. This strategy, modeled on long-standing “red state” tax credits used to fund private school vouchers, is rooted in the government’s “power not to tax,” understood here as the power to conditionally refrain from imposing taxes in exchange for the taxpayer making some legislatively sanctioned outlay. The introduction of the SALT cap has given new significance to this power not to tax, encouraging state and local lawmakers to devise strategies for funding public goods without utilizing formal tax mechanisms. This Article explores and evaluates the structural features of the law that account for this new state of affairs, as well as the ongoing controversy regarding how best to address the basic discontinuity in the law’s treatment of formal taxation versus conditional reductions in taxation.

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Colleges Have Shed 10% Of Their Employees Since The Pandemic Began

Chronicle of Higher Education, Colleges Have Shed a Tenth of Their Employees Since the Pandemic Began:

September, the traditional start of the fall semester, saw the continuation of historic job losses at America’s colleges just as they sought some return to normalcy amid the coronavirus pandemic.

Preliminary estimates suggest that a net 152,000 fewer workers were employed by America’s private (nonprofit and for-profit) and state-controlled institutions of higher education in September, compared with August, according to the U.S. Bureau of Labor Statistics, which calculates industry-specific employee figures. The net number of workers who left the industry from February to September now sits at around 484,000.

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Americans Increasingly Are Leaving High-Tax States For Low-Tax States

Cato Institute, Will High‐​Tax “Superstar Cities” Finally Need to Consider — Gasp! — Their Residents?:

As my Cato colleague Chris Edwards documented here a couple weeks ago, interstate migration data from the U.S. Census Bureau indicate that state tax policy affects where Americans, especially wealthy ones, are choosing to live and work. The following charts ...  confirm Chris’ initial impressions: in 2018 there was a strong, statistically significant (p‐​values < 0.01) relationship between (1) personal state tax burdens — as measured by either the Tax Policy Center or the Tax Foundation — and (2) net interstate migration (ratio of inflows to outflows):

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Cauble: Presumptions of Tax Motivation

Emily Cauble (DePaul), Presumptions of Tax Motivation, 105 Iowa L. Rev. 1995 (2020):

Rebuttable presumptions are scattered throughout the Internal Revenue Code and the Treasury Regulations. In many cases, they are employed in service of determining a taxpayer’s motive or state of mind. They are not, however, always utilized when motive or state of mind must be assessed. In some contexts, courts are called upon to examine all relevant facts and circumstances in order to divine a taxpayer’s state of mind – which facts are relevant and the weight to be accorded to various facts are not specified ahead of time except to the extent set forth in judicial precedent. At the other extreme, in yet another subset of situations in which tax outcome turns on motive or state of mind, tax law provides that a given fact establishes an irrebuttable presumption of a given motive. In between the two extremes, tax law makes use of a variety of tools including rebuttable presumptions. When a rebuttable presumption is at work, the proof of a specified fact is deemed to establish the existence of a given state of mind, unless the party who is disadvantaged by that state of mind determination presents sufficient evidence to overcome it.

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How California's Projected $54 Billion Deficit Turned Into a $26 Billion Surplus

Los Angeles Times, California Could See a $26-Billion Windfall Followed By Growing Deficits, Analysts Say:

California’s state budget faces a dramatic boom-and-bust period over the next four years, analysts said Wednesday, a roller-coaster period that could begin with a $26-billion tax windfall and later plunge to a projected deficit of $17.5 billion by the middle of 2025.

Though the gradual trend toward budget shortfalls was expected when lawmakers and Gov. Gavin Newsom crafted a state budget in June, the large supply of extra cash — equal to almost 20% of all current-year spending out of California’s general fund — is a surprise, Legislative Analyst Gabriel Petek said.

“Many of us thought that the state revenues were headed for a plunge,” Petek said Wednesday of fears over an economic slowdown sparked by the pandemic. “But as it turns out, revenues have proven to be much more resilient than that.”

In essence, the report issued by analysts [The 2021-22 Budget: California's Fiscal Outlook] said that state officials may have over-corrected in trying to limit spending in the budget year that began on July 1. The budget signed by Newsom was designed to erase a projected $54.3-billion deficit and assumed the recession would lead to a sharp decline in tax revenues. As a result, lawmakers agreed to tap the state’s cash reserves and used one-time spending delays in hopes of staving off deep cuts to funding for schools and social services.

Instead, the state’s tax revenues have remained strong — in part, Petek said, because high-income residents have not suffered any notable setbacks and California’s budget relies heavily on those taxpayers.

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Pace Seeks To Hire Entry Level Or Lateral Tax Prof

Elisabeth Haub School of Law Faculty Hiring Announcement:

The Elisabeth Haub School of Law at Pace University invites applications to fill up to two full-time, academic tenure-track/tenured faculty positions at the rank of assistant professor, associate professor, or professor. The positions will begin in August 2021. Applicants must be committed to providing excellent legal training both in person and online, engaging in meaningful service within the law school and in the broader community, and producing excellent scholarship.

Applicants should have teaching and research interests in any of the following areas: environmental law, natural resources law, sustainable business law, energy and climate law, public health law, contracts law, business law, and tax law. Applicants whose interests cover multiple of these areas are particularly encouraged to apply. We welcome applications from candidates interested in doctrinal, experiential, and/or clinical teaching.

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Some Professors Push Stanford To Boot Conservative Hoover Institution And Its $550 Million Endowment

Los Angeles Times:  COVID-19 Falsehoods Lead Stanford to Examine Ties to Right-Wing Hoover Institution, by Michael Hiltzik:

On Monday, Stanford University took a step that might be career-shattering in almost any field except academia: It formally distanced itself from a faculty member.

The faculty member is Scott Atlas, a neuroradiologist who is a senior fellow at Stanford’s Hoover Institution and a former professor at its medical school. At the moment, Atlas is a leading advisor on the COVID-19 pandemic to President Trump.

“Dr. Atlas has expressed views that are inconsistent with the university’s approach in response to the pandemic,” the university said. ...

Stanford’s statement was couched in the neutral terms common in academic disputes. But it points to an increasingly acrimonious discussion on the Palo Alto campus — whether Stanford should formally distance itself from the Hoover Institution, or at least redefine a relationship that has periodically exploded into political controversy.

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Fall 2021 Law School Admissions At The Quarter-Pole: Applicants Are Up 32%, With Biggest Increases Among The Highest LSAT Bands And Applicants Of Color

Following up on my previous posts on the Fall 2021 law school admissions season:

• 6% Through the Season: Applicants Are Up Over 35%, With Biggest Increases Among The Highest LSAT Bands (Oct. 5, 2020)
• 16% Through the Season:  Applicants Are Up Over 35%, With Biggest Increases Among The Highest LSAT Bands And Applicants Of Color (Nov. 2, 2020)

We are now 25% of the way through Fall 2021 law school admissions season. The number of law school applicants are up 31.7%:

Mike Spivey projects that applicants will be up 28% for the full admissions season, but Jeff Thomas cautions that the increase in applicants may be an illusion because first-time LSAT test-takers are down 3% thus far.

Applicants are up the most in the New England (52.5%), Midwest (48.9%), and Northeast (39.1%); and up the least in the Great Lakes (18.8%), South Central (21.9%), Northwest (27.2%).

Applicants' LSAT scores are up 70.4% in the 170-180 band, 32.7% in the 160-169 band, 19.0% in the 150-159 band, and 10.9% in the 120-149 band:

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Lesson From The Tax Court: International Pilot’s Tax Home Argument Does Not Fly

Douglas H. Cutting v. Commissioner, T.C. Memo. 2020-158 (Nov. 19, 2020) (Judge Pugh), teaches a useful lesson about that puzzling concept called “tax home” as it relates to the §911 foreign earned income exclusion.  Taxpayers can claim the §911 exclusion if their tax home is in a foreign country.  Mr. Cutting's wasn’t, even though his personal home — the place he returned to when not flying — was Thailand, where he lived with his wife and step-daughter.  A tax home, however, is not where the heart is.  Details below the fold.

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NY Times: Trump Tax Write-Offs Are Ensnared In 2 New York Fraud Investigations

New York Times, Trump Tax Write-Offs Are Ensnared in 2 New York Fraud Investigations:

Two separate New York State fraud investigations into President Trump and his businesses, one criminal and one civil, have expanded to include tax write-offs on millions of dollars in consulting fees, some of which appear to have gone to Ivanka Trump, according to people with knowledge of the matter.

The inquiries — a criminal investigation by the Manhattan district attorney, Cyrus R. Vance Jr., and a civil one by the state attorney general, Letitia James — are being conducted independently. But both offices issued subpoenas to the Trump Organization in recent weeks for records related to the fees, the people said.

The subpoenas were the latest steps in the two investigations of the Trump Organization, and underscore the legal challenges awaiting the president when he leaves office in January. There is no indication that his daughter is a focus of either inquiry, which the Trump Organization has derided as politically motivated. ...

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TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• October 2020 Florida Bar Exam Results: Florida International Is #1 For 6th Year In A Row
• February California Bar Exam Will Be Online; Committee Recommends Provisional Licensure For July 2015-Feb. 2020 Takers Who Scored 1390-1439
• NTA 113th Annual Conference On Taxation

Sunday:

• Father-Daughter Duo Tackles Law School Together At Syracuse
• Penn Regulatory Review: Reforming Federal Income Tax
• Marquette Faculty Stage Sickout Over Proposed Budget Cuts, Cancel Numerous Classes
• The Top Five New Tax Papers

Father-Daughter Duo Tackles Law School Together At Syracuse

WSYR, Father-Daughter Duo Tackles Law School Together at Syracuse University:

It’s not unusual for someone to attend the same school as their parent or even study the same degree, but how about doing all of that at the exact same time?

It’s been the reality for one father-daughter duo taking on Syracuse University’s College of Law together.

“It’s not embarrassing to go to school with your parent,” said Lauren Deutsch.

For Lauren and her father, Scott, it’s actually pretty cool. ...

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Penn Regulatory Review: Reforming Federal Income Tax

Penn Regulatory Review, Reforming Federal Income Tax:

In this week’s Saturday Seminar, scholars discuss income tax law and proposals to change an imperfect system.

• “America taxes wages, not wealth,” Edward McCaffery of the University of Southern California Gould School of Law writes in the Indiana Law Journal [The Death of the Income Tax (or, The Rise of America’s Universal Wage Tax)] ... McCaffery pushes to replace the current income tax structure with a spending tax that “would tax people on what they spend, whether financed by wages or wealth.”
• A wealth tax would apply to an individual’s entire net worth, including bank accounts, stocks, and luxury goods. Some critics argue that such a tax would be unconstitutional because it is a direct tax. All non-income direct taxes must be apportioned based on state population; the federal government cannot collect them directly from the taxpayer. The University of Texas at Austin School of Law’s Calvin H. Johnson, however, that wealth taxes are not direct taxes and are exempt from the apportionment requirement [A Wealth Tax is Constitutional]. ...
• The tax reform debate focuses too much on economic efficiency and too little on promoting equity, argues James R. Repetti of Boston College Law School in an article published in the Florida Tax Review [The Appropriate Roles for Equity and Efficiency in a Progressive Individual Income Tax]. ...

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Marquette Faculty Stage Sickout Over Proposed Budget Cuts, Cancel Numerous Classes

Following up on my previous post, Marquette May Cut Up To 20% Of Faculty And Staff Due To Budget Shortfall:  Marquette Wire, Faculty and Staff “Sickened” by Proposed Budget Cuts:

Multiple Marquette instructors called in sick Monday after stating they were especially “sickened” by the budget cuts proposed by the university. This lead to multiple online and in-person classes being canceled Monday.

The budget cuts proposed by the university could potentially lead to a large number of faculty and staff being laid off due to the effects of the COVID-19 pandemic. ...

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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 paper returning to the list at #5:

1. [428 Downloads]  State Aid: The General Court Decision in Apple, by Stephen Daly (King's College London) & Ruth Mason (Virginia) (reviewed by Young Ran (Christine) Kim (Utah) here)
2. [289 Downloads]  Federal Tax Procedure (2020 Practitioner Ed.), by John Townsend
3. [260 Downloads]  Intangibles and the Transfer Pricing Reconstruction Rules: A Case Study of Amazon, by Antony Ting (Sydney)
4. [187 Downloads]  An Analysis of Vice President Biden’s Economic Agenda: The Long Run Impacts of Its Regulation, Taxes, and Spending, by Timothy Fitzgerald (Texas Tech), Kevin Hassett (Hoover Institution), Cody Kallen (Wisconsin) & Casey Mulligan (Chicago)
5. [168 Downloads]  Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment, by Zachary Liscow (Yale) & Abigail Pershing (J.D. 2020, Yale)

This Week's Ten Most Popular TaxProf Blog Posts

1. The Texas Lawbook, Texas Federal Judges Release Music Video: 'We'll Be Back'
2. Mike Spivey (Spivey Consulting), Projections For Fall 2021 Law School Applicants: +28% (+53% In 160-180 LSAT Band)
3. Wall Street Journal, College Applications Plummet For Next Year's Freshman Class
4. Washington University Law Review, Responses To Michael McConnell's Use Of The N-Word In His Stanford Class
5. Chronicle of Higher Education, The Faux Righteousness Of Test-Optional Admissions: Increasing U.S. News Rankings, Not Diversity, Is The Motivation
6. Chronicle of Higher Education, As Colleges Plan To Return To In-Person Teaching In The Spring Semester, Faculty Rebel
7. Leonard Baynes (Dean, Houston), 5 Steps Law School Deans Can Take To Improve Diversity And Inclusion
8. Kim Clausing (UCLA), 5 Lessons On Profit Shifting From U.S. Country-By-Country Data
9. Michael Froomkin (Miami), Thoughts On My Colleague's Pro-Trump Tweets
10. Bryan Camp (Texas Tech), Lesson From The Tax Court: Taxpayer Wins CDP Case But Cannot Recover Costs

October 2020 Florida Bar Exam Results: Florida International Is #1 For 6th Year In A Row

The October 2020 Florida bar passage rates by school are out. The overall pass rate for first-time takers is 71.7%, down 2.2 percentage points from last year. For the sixth year in a row, Florida International is #1. Here are the results for the 11 Florida law schools, along with each school's U.S. News ranking (Florida and overall):

Bar Pass Rank (Rate)	School	US News Rank FL (Overall)
1 (89.3%)	Florida Int'l	4 (90)
2 (84.4%)	Florida State	2 (50)
3 (83.9%)	Florida	1 (24)
4 (74.4%)	Stetson	5 (105)
5 (72.56%)	Miami	3 (67)
6 (67.4%)	Nova	Tier 2
7 (66.9%)	St. Thomas	Tier 2
8 (65.9%)	Ave Maria	Tier 2
9 (61.7%)	Florida A&M	Tier 2
10 (61.2%)	Barry	Tier 2
11 (57.6%)	Florida Coastal	Tier 2

For discussion of how Florida International graduates consistently overperform on the bar exam, see:

• Louis Schulze (Florida International), The Science of Learning Law: Academic Support Measures at Florida International University College of Law
• Rory Bahadur (Washburn), High 1L Attrition And 2L Transfer Rates Contribute To Florida International's Over Performance On The Bar Exam
• Rory Bahadur (Washburn), Attrition And Bar Performance

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February California Bar Exam Will Be Online; Committee Recommends Provisional Licensure For July 2015-Feb. 2020 Takers Who Scored 1390-1439

Supreme Court of California:

Court Issues Order for February 2021 Bar Exam to be Administered Online (Nov 19, 2020):
The Supreme Court of California on Thursday issued an order to administer the February 2021 California Bar Examination online. The exam will take place on Feb. 23 and 24, with the State Bar given discretion to grant in-person testing for those needing accommodations. The Supreme Court in July permanently lowered the passing score from 1440 to 1390.

The Recorder, State Bar Committee Endorses Alternative Path to Law License:

A state bar committee on Friday endorsed a path to full licensure for certain recent law school graduates who have taken but not passed California’s bar exam.

The Provisional Licensure Working Group adopted two sets of supervised practice requirements that, if completed, would allow those who scored between 1390 and 1439 on an exam administered between July 2015 and February 2020 to join the bar without having to take the exam again. The change is aimed at about 2,000 applicants who would have passed the exam if the new 1390 cut score, and not the previous 1440 mark, had been in place at the time.

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NTA 113th Annual Conference On Taxation

Highlights of the third day of the National Tax Association's virtual 113th Annual Conference on Taxation (full program here):

Advances in Tax Administration
Session Chair: Elliott Ash (ETH Zurich)

• Jonathan Choi (Minnesota), How Did Mayo Shape Agency Rulemaking? an Empirical Study
• Noam Noked (Chinese University of Hong Kong), Cooperative Compliance Program for Individuals and Trusts: A Proposal for a Compliance Passport
• Young Ran (Christine) Kim (Utah), Blockchain Initiatives for Tax Administration
• Orli Oren-Kolbinger (Villanova), The Error Cost of Marriage
• Discussants: Leandra Lederman (Indiana-Bloom.), Omri Marian (UC-Irvine)

Behavioral Issues in Tax Administration & Retirement Plans
Session Chair: Jason Seligman (Investment Company Institute)

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Weekly SSRN Tax Article Review And Roundup: Speck Reviews Nadler's Tax-Motivated Trading And Price Efficiency

This week, Sloan Speck (Colorado) reviews a new work by Hillel Nadler (Program on International Financial Systems), The Only Sure Alpha: Tax-Motivated Trading and Price Efficiency (Aug. 12, 2020).

In The Only Sure Alpha: Tax-Motivated Trading and Price Efficiency, Hillel Nadler examines tax-motived trading in financial instruments from a novel and compelling perspective: the ways in which tax rules affect the process of price discovery in otherwise well-functioning markets. Nadler argues that tax considerations may drive “noisy trading”—trading that moves prices away from an equilibrium based on non-tax information. Although markets (eventually) should resolve these deviations of price from fundamental value, Nadler notes that the noise itself may have significant and detrimental systemic effects. Transitions to equilibrium matter, and taxation may cause distortions that leave financial markets in a constant state of low-level flux.

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Tax Policy In The Trump Administration

• Sam Brunson (Loyola-Chicago), Project Veritas and Illegality
• Conversable Economist, The Super-rich and How to Tax Them 
• Financial Times, Capital Gains Tax Should Be Fairer and Simpler
• Fortune, Biden’s Corporate Tax Plan Depends on Georgia’s Senate Results
• The Hill, Progressive Tax Reform Should Top Biden's List of Priorities

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Weekly Legal Education Roundup

• Leonard Baynes (Dean, Houston), 5 Steps Law School Deans Can Take to Improve Diversity and Inclusion
• Paul Caron (Dean, Pepperdine), Projections For Fall 2021 Law School Applicants: +28% (+53% In 160-180 LSAT Band)
• Chronicle of Higher Education, The Faux Righteousness Of Test-Optional Admissions: Increasing U.S. News Rankings, Not Diversity, Is The Motivation
• Sabrina DeFabritiis (Suffolk) & Kathleen Elliott Vinson (Suffolk), Under Pressure: How Incorporating Time-Pressured Performance Tests Prepares Students for the Bar Exam and Practice
• Yvonne Dutton (Indiana-Indianapolis) & Margaret Ryznar (Indiana-Indianapolis), Law School Pedagogy Post-Pandemic: Harnessing the Benefits of Online Teaching

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Next Week's Virtual Tax Workshop

Tuesday, November 24: Lilian Faulhaber (Georgetown) will present Lost in Translation: Excess Returns and the Search for Substantial Activities virtually at NYU as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Dan Shaviro.

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Satterthwaite Presents Taxing Domestic Workers Virtually Today At Florida

Emily Satterthwaite (Toronto) presents Taxing Domestic Workers: Trading a Safety Net for a Living Wage? (with Ariel Jurow Kleinman (San Diego)) virtually today at Florida as part of its Tax Colloquium Series:

Paid domestic workers play a central and often intimate role in the day-to-day lives of many North Americans, including the affluent but also other groups. The livelihoods and health of, for example, the elderly, persons with serious disabilities, and women who work outside the home (and their children) may depend on the labor of one or more paid domestic workers. Yet domestic workers and their hirers tend to rely on very different workplace protections and social insurance guarantees. Our project seeks to better understand the role that tax law plays in this troubling status quo by surveying domestic workers about their tax-related experiences. The domestic sector rightly has been called “the original gig economy” because of its structural similarities with higher-technology sectors like ride-sharing. However, existing doctrinal and policy-oriented tax scholarship, including that which attends to the significant tax policy challenges presented by platform service providers and the role of contract work, has largely overlooked the domestic sector.

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As Colleges Plan To Return To In-Person Teaching In The Spring Semester, Faculty Rebel

Chronicle of Higher Education, Colleges Ask Professors to Return to the Classroom. Their Answer? That’s ‘Reckless.’:

When the University of Florida, in Gainesville, announced in July that fall-semester classes would be largely online, the daily new-case rate for Covid-19 was hovering between 60,000 and 70,000 nationwide. This week, daily new cases reached more than twice that number. Health experts warn that the country faces a prolonged surge.

But at Florida and other colleges, leaders have signaled to their professors that, come spring, they will be expected to ramp up their in-person instruction.

The reason?

An on-campus learning experience is critical to their students’ success, these institutions say. That success, colleges know, is important for keeping enrollments up. And in some cases, the move appears to come down to politics and money. In his message to campus, Florida’s president, W. Kent Fuchs, said that offering in-person courses was the “best shared opportunity” to protect the university’s budget and employee jobs.

On the behalf of students and “of those whose jobs will be saved,” Fuchs offered his “deep and heartfelt appreciation.”

But instructors at Florida and other institutions are not feeling that appreciation. They point out that the latest spike in Covid-19 cases has dangerously strained hospitals , and that many students are not sticklers for social-distancing. They say the benefits of in-person teaching are not worth putting employees, their families, and others at risk.

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Open And Closed (Homage To Katy Perry's Hot And Cold) — For Law Professors Teaching Online

Following up on my previous post, I Will Survive (Coronavirus Version For Law Professors Teaching Online):

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Hemel: Beyond The Marriage Tax Trilemma

Daniel Hemel (Chicago), Beyond the Marriage Tax Trilemma, 54 Wake Forest L. Rev. 661 (2019):

For decades, the well-known “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

The overwhelming emphasis on the trilemma is surprising once one recognizes that there is in fact no trilemma at all: we need not choose among couples neutrality, marriage neutrality, and progressivity because we can have all three. The solution — which several scholars have noted, but the tax policy debate has largely ignored — lies in a flat tax rate combined with a refundable per-person tax credit (or “demogrant”), which could be constructed so as to yield a highly progressive average rate structure while maintaining couples neutrality and marriage neutrality. Whatever the merits of the flat tax plus demogrant as a policy matter, it plays a useful role as a thought experiment: If we achieved progressivity through a flat tax and a demogrant, such that we could have couples neutrality and marriage neutrality simultaneously, would we want to deviate from these neutrality norms anyway? If so — if we would want to violate the couples neutrality and marriage neutrality norms even if they were compatible with a progressive tax structure — then the trilemma is not the central challenge in the taxation of singles and couples.

This Essay examines the arguments for couples neutrality and marriage neutrality, concluding that neither norm is an appropriate objective for tax policy.

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Bankman Presents Why It Is So Hard To Get Easy Tax Filing Virtually Today At NYU

Joseph Bankman (Stanford) presents Mr. Smith Gets an Education: Why it is so Hard to get Easy Tax Filing virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Imagine that one day, you get a note in the mail from Visa saying that starting next month, Visa will no longer be sending itemized bills (or indeed, any bills at all) to its cardholders. Instead, it will be the responsibility of every Visa cardholder to keep a record of all purchases, and refunds charged or credited to their account during the month, along with late payments and late fees, interest accruing on unpaid balances, and then tote it all up at the end of the month to figure out how much they owe Visa. If cardholders inadvertently omit some charges and pay Visa too little, you’re informed, Visa will assess interest and penalties on the underpayment.

Why on earth would Visa do such a thing?, you wonder. After all, Visa already has all that information in its computers, which can automatically calculate from that information the net amount you owe. Why should individual cardholders duplicate that effort, at considerable annoyance and expense to themselves, and with the dead certainty of errors?

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Oei & Ring: Tax Law's Workplace Shift

Shu-Yi Oei & Diane M. Ring (Boston College), Tax Law's Workplace Shift, 100 B.U. L. Rev. 651 (2020) (reviewed by Ariel Jurow Kleiman (San Diego) here):

In December 2017, Congress passed major tax reform. The reform included an important new provision that granted independent contractors and other pass-through taxpayers—but not employees or corporations—a potential tax deduction equal to 20% of their qualified business income. Critics have argued that this new deduction (codified at 26 U.S.C. § 199A) could lead to a widespread shift toward independent contractor jobs as workers seek to reduce taxes paid. This shift could cause workers to lose important employee protections and leave them more economically vulnerable.

This Article examines whether this new tax provision will create a large-scale workplace shift and, if it does, how that shift should be normatively evaluated.

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The Faux Righteousness Of Test-Optional Admissions: Increasing U.S. News Rankings, Not Diversity, Is The Motivation

Chronicle of Higher Ed op-ed:  The Faux Righteousness of Test-Optional Admissions, by Stephen Burd (New America):

Standardized testing’s stranglehold over college admissions is breaking. The inability of millions of students to sit for the SAT and ACT exams in the midst of the coronavirus pandemic has pushed hundreds of colleges to stop requiring prospective students to submit their scores. While Harvard, Yale, Princeton, and others have made it clear that this is just a short-term solution, many more colleges are rethinking the value of the tests to their admissions practices for the long term.

College leaders at these institutions are finally acknowledging what critics of standardized testing have been saying for years: That the SAT and ACT don’t provide much predictive value in determining which students will succeed in college; that the tests serve as a barrier to low-income and minority students who tend to score lower than their more wealthy and white peers; and that the exams have created a test-taking frenzy in affluent communities where wealthier families hire high-paid coaches and tutors to help their children learn the tricks of the tests, so they can artificially inflate their scores.

While some brave colleges, such as the California Institute of Technology, Catholic University of America, Dickinson College, some University of California campuses, and the entire California State University system, have chosen not to consider test scores at all, most colleges are taking a middle-ground approach known as “test optional” admissions. Going test optional means it is up to prospective students to decide whether to submit their scores. ...

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Law School vs. Med School: Which Is Harder?

Click on video to view it directly on YouTube to avoid interruption caused by blog's refresh rate

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Is The Projected Large Increase In Fall 2021 Law School Applicants A COVID-19 Illusion? First-Time LSAT Test-Takers Are Down 3%

Following up on this week's posts:

• Projections For Fall 2021 Law School Applicants: +28% (+53% In 160-180 LSAT Band)
• Law School Applicants Are Way Up. Is It A 'Trump Bump' Or An 'RBG Moment'?

Jeff Thomas (Kaplan):

In a year when we’ve been desperate for some good news, it’s heartening to see that the increase in law school applicants is across the board, with almost every ABA-approved law school seeing a jump. And while there are reasons to be optimistic, we’d caution against premature exuberance. While many are speculating about an “RBG Effect,” which to be fair, could be a contributing factor, the increase we are seeing right now is more likely a simple result of timing.

Between last year’s LSAT transition to a digital format, which caused many aspiring attorneys to test later than they normally would, and this year’s COVID situation, which gave many test-takers the opportunity to test earlier than they normally would, we’re simply seeing students apply earlier in the cycle this year compared to last year.

Two data points worth considering:

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NTA 113th Annual Conference On Taxation

Highlights of the first two days of the National Tax Association's virtual 113th Annual Conference on Taxation (full program here):

COVID-19 and Business Tax & Credit Policies
Session Chair: Yilin Hou (Syracuse)

• Mirit Eyal-Cohen (Alabama) & Ana Santos-Rutschman (St. Louis), Tax Policy and Pharmaceutical Innovation
• Joao Granja (Chicago), Christos Makridis (MIT), Constantine Yannelis (Chicago) & Erik Zwick (Chicago), Did the Paycheck Protection Program Hit the Target?
• Byron Lutz (Federal Reserve Board) et al, An Evaluation of the Paycheck Protection Program Using Administrative Payroll Microdata
• Nancy Shurtz (Oregon), A COVID Tale of Two Cities: A Case Study of Business Taxes in the Pacific Northwest
• Discussants: Yilin Hou (Syracuse), Martin Sullivan (Tax Analysts)

Electricity Sector: Policy Design and Outcomes
Session Chair: Agustin Leon-Moreta (New Mexico)

• Anne Kesselring (FAU) & Thiess Buettner (FAU), Banned for Bad Grades: Effects of Minimum Energy Performance Standards in the White Goods Industry
• Michael Ricks (Michigan), When You're Their Biggest Fan: Optimal Subsidies with Multiple Policy Instruments with Application to Wind Power
• Tracey Roberts (Cumberland), Stranded Assets and Efficient Pricing for Regulated Utilities: A Federal Tax Solution, 11 Colum. J. Tax L. 1 (2019)
• Discussants: Thiess Buettner (FAU), Louis Preonas (Maryland) & Tracey Roberts (Cumberland)

Legal Issues in International Taxation
Session Chair: Lilian Faulhaber (Georgetown)

• Reuven Avi-Yonah (Michigan), Constructive Dialogue: BEPS and the TCJA
• Yariv Brauner (Florida), Tax Treaty Negotiations
• Noam Noked (Chinese University of Hong Kong), Defense of Primary Taxing Rights
• Daniel Shaviro (NYU), What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?
• Discussants: Lilian Faulhaber (Georgetown), Fadi Shaheen (Rutgers)

Nonprofit Organizations
Chair: Jeremy Bearer-Friend (George Washington)

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Artificial Intelligence In Law Schools

Emily Janoski-Haehlen (Akron) & Sarah Starnes (Akron), The Ghost in the Machine: Artificial Intelligence in Law Schools, 58 Duq. L. Rev. 3 (2020):

ABA Standard 1.1, Comment 8 is vague but leaves the door wide open for attorneys and law schools to define what it really means to be technologically competent. Law schools have a great opportunity to take advantage of Comment 8, and the state's unique adoption and interpretation of Comment 8, to teach law students about being technologically competent before they graduate and begin to practice. Incorporating legal technology skills and knowledge into the curriculum of law schools is the first step to better prepare students for the future of law practice and legal services. It could also lead to more opportunities for access to justice initiatives including better access to legal services for the underrepresented and easier access to attorneys and the legal system using advancements in technology. In addition, the adoption of new technologies in the legal profession has and will continue to lead to the creation of new jobs for law graduates.

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Polito: Corporate Tax Integration And TCJA

Anthony P. Polito (Suffolk), Corporate Tax Integration and TCJA: How Near the Mark?:

Congress, by the Tax Cuts and Jobs Act of 2017 (hereinafter “TCJA”), made a number of changes to the income tax rates applicable to individuals and profits of businesses conducted both in corporate and non-corporate form. Elsewhere, in an article entitled Advancing to Corporate Tax Integration: A Laissez-Faire Approach, I advanced the case for an Integrationist Norm of business income taxation. In the tax regime of the Integrationist Norm, all business profits would be subject to exactly the same tax burden as if a business were conducted directly by the individual equity holders without an intervening legal fiction of a juridical business entity.

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Fox & Liscow Present The Psychology Of Taxing Capital Income Virtually Today At UC-Irvine

Edward Fox (Michigan) & Zachary Liscow (Yale) present The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule virtually at UC-Irvine today as part of its Tax Policy Colloquium Series hosted by Joshua Blank, Victor Fleischer, and Omri Marian:

The realization rule is central to income tax law, but often decreases the efficiency, equality, and simplicity of the system. Given these problems, it is surprising that we do not have a good explanation for why the rule exists for liquid assets. 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 taxing gains on unsold assets.

In this draft, we present the results of a pilot version of the survey. Though results are very preliminary, we have three main findings. First, respondents are far less supportive of taxing gains in unsold publicly-traded stock than sold stock, with a difference in support of 37 percentage points. This lack of support persists and seems strengthened when looking across a variety of other policy framings. Second, informing people of the arguments on “both sides” of taxing unsold stock considerably decreases support (by 19 percentage points) for taxing unsold stock.

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Roberts Presents Whiskey, Women, And Taxes Virtually Today At Oregon

Tracey M. Roberts (Cumberland) presents Whiskey, Women, and Tax: The Unexpected and Interlocking History of the 16th, 18th, and 19th Amendments virtually at Oregon today as part of its Tax Policy Colloquium Series hosted by Roberta Mann:

Before they became the most famous pair of advocates in the U.S. women’s suffrage movement, Susan B. Anthony and Elizabeth Cady Stanton were temperance activists. Advocating for the prohibition of alcohol in a world in which women lacked both political and property rights, they sought to curb other social ills: family poverty, unemployment, domestic violence, and violent crime. Through the early 20th Century, however, the U.S. relied heavily on excise taxes, including those on liquor, to fund government operations. The passage and ratification of the 16th Amendment, authorizing a federal income tax, was needed before the 18th Amendment, prohibiting alcohol, could be passed. In turn, the 19th Amendment, granting women the right to vote, was ratified, in part, on the strength of the time-honored argument that women should not face taxation without representation. Old enemies die hard, however. The ratification of the Susan B. Anthony Amendment prohibiting discrimination on the basis of sex in access to the ballot required that suffrage activists counter the (then illegal) liquid advocacy of well-known whiskey distillers and brewers.

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An Empirical Study Of Law School Externships

Anahid Gharakhanian (Southwestern), Carolyn Young Larmore (Chapman) & Chelsea Parlett-Pelleriti (Chapman), Achieving Externship Success: An Empirical Study of the All-Important Law School Externship Experience, 45 S. Ill. U. L.J. ___ (2020):

With law school externships more popular than ever, the need for an empirical evaluation of externship success is timely and essential. The promise of getting closer to practice readiness propels many law students to enroll in an externship (also known as field placements). But no study has empirically measured whether and to what extent law students get close to first-year law practice readiness through their externship, and what factors lead to that success. Without such a study, the American Bar Association’s regulation of externships and law schools’ externship design decisions are made without the benefit of critical data. This Article describes the year-long, multi-school Externship Study conducted to concretely measure (1) whether and to what extent externships lead to practice-readiness and (2) which attributes of the law school, the externship placement, or the students themselves are the most important contributors to that success.

In this Article, the authors use statistical models, descriptive summary, and narrative summary to analyze data from hundreds of law students and the lawyers and judges who supervised them in externships. The results reveal a high level of externship success, measured in terms of practice readiness.

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Amid Claims That Online Bar Exam Went Well, Some Test-Takers Have A Different View

ABA Journal, Amid Claims That Online Bar Exam Went Well, Some Test-Takers Have a Different View:

ExamSoft, the company that provided the software for the two-day online bar exam offered earlier this month, maintains that only a small percentage of test-takers experienced problems with their product. But for those who did, many say there should have been no issues and some suspect the hitches were expected by the company.

The online exam, which was composed of materials from the National Conference of Bar Examiners, took place Oct. 5 and Oct. 6. Approximately 30,000 people took the exam, and it’s believed to have been the first professional licensing exam administered remotely, according to Judith Gundersen, president of the NCBE. In an email to the ABA Journal, she said it appears that more than 98% of applicants had no software issues. ...

The five test-takers who were willing to be interviewed on the record by the Journal took the California and New York bar exams. All say they finished the test despite significant software problems. ...

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Law School Applicants Are Way Up. Is It A 'Trump Bump' Or An 'RBG Moment'?

Following up on Monday's post, Projections For Fall 2021 Law School Applicants: +28% (+53% In 160-180 LSAT Band):  Karen Sloan (Law.com), Law School Applicants Are Way Up. Is It an 'RBG Moment'?:

Is law school suddenly a hot ticket? Or are aspiring attorneys submitting their law school applications earlier in the year because they have extra time on their hands thanks to COVID-19?

Admissions officials at law schools across the country are struggling to make sense of an early surge in applications this cycle, as well as what looks to be a notable uptick in the number of applicants with high scores on the Law School Admission Test. As of Monday, the total number of law school applicants was up 32% compared to this time a year ago, and the number of applications submitted thus far is up nearly 57%. Thus, not only are more people applying, but they are also submitting applications at more schools than in the past. Applications are up at 194 of the 199 American Bar Association-accredited law schools, the data from the Law School Admission Council show.

“It has become trite, but 2020 is a unique year,” said Council president Kellye Testy on Tuesday. “We are seeing a real surge in candidates taking the LSAT and applying. There are a lot of factors at work here. But we hear a lot of about motivation from [Ruth Bader Ginsburg]—the RBG moment. We’re been saying our candidates have ‘really big goals.’ They are talking about racism, COVID, economic inequality, political polarization, and climate change. They are inspired to make a difference.”

It’s too soon to know whether these strong numbers will be sustained for the remainder of the admissions cycle. ... The timing of LSAT score releases could also be a factor, noted law school admissions consultant Mike Spivey in a recent blog post.

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Cauble: Superficial Proxies For Simplicity In Tax Law

Emily Cauble (DePaul), Superficial Proxies for Simplicity in Tax Law, 53 U. Rich. L. Rev. 329 (2019):

Simplification of tax law is complicated. Yet, political rhetoric surrounding tax simplification often focuses on simplistic, superficial indicators of complexity in tax law such as word counts, page counts, number of regulations, and similar quantitative metrics. This preoccupation with the volume of enacted law often results in law that is more complex in a real sense. Achieving real simplification—a reduction in costs faced by taxpayers at various stages in the tax planning, tax compliance, and tax enforcement process—often requires enacting more law, not less. In addition, conceptualizing simplicity in simplistic terms can leave the public vulnerable to policies advanced under the guise of simplification that have real aims that are less innocuous. A perennial example involves lawmakers proposing a reduction in the number of tax brackets under the heading of simplifying tax law. In reality, this change does very little, if anything, to simplify law in a meaningful sense, and its truer aim is to reduce progressivity in the tax code.

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New International College Enrollments Plummet 43% Due To COVID-19

Chronicle of Higher Education, Covid-19 Caused International Enrollments to Plummet This Fall:

The number of international students at American colleges plunged this fall, according to a just-released survey by the Institute of International Education, with new enrollments diving 43 percent as tens of thousands of students stuck overseas because of the pandemic deferred their admission or called off their studies altogether.

Although the current drop is without precedent, international enrollments had begun to decline even before Covid-19 struck, according to new data from the institute and the U.S. State Department. According to the annual “Open Doors” report, released on Monday, enrollments decreased nearly 2 percent in the fall of 2019. ...

Some 40,000 students elected to defer their studies. Allan Goodman, IIE’s president, cited that figure as a sign of pent-up demand and a reason for optimism. After past pandemics, when travel became safe again, there were surges of students, he said, noting that this is the 12th time the Open Doors report has been released during a pandemic. “There’s no reason to suspect at the end of this pandemic we won’t see a similar thing.”

Inside Higher Ed, New International Enrollments Drop 43% in the Fall

Pandemics, Paid Sick Leaves, And Tax Institutions

Alex Zhang (J.D. 2021, Yale), Pandemics, Paid Sick Leaves, and Tax Institutions, 52 Loy. U. Chi. L.J. ___ (2021):

The COVID-19 pandemic is currently ravaging the world, and the United States has been largely unsuccessful at containing the coronavirus. One long-standing policy failure stands out as having exacerbated the pandemic in our country: the lack of a national mandate of paid sick leaves, without which workers face financial and workplace-cultural pressures to attend work while sick, thus spreading the virus to their fellow employees and the public at large.

This Article provides the blueprint for a national, subsidized mandate of paid sick leaves and two additional insights about our tax institutions as mechanisms of effectuating broader societal goals.

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Bearer-Friend: Restoring Democracy Through Tax Policy

Jeremy Bearer-Friend (George Washington), Restoring Democracy Through Tax Policy:

In this white paper, commissioned by the Great Democracy Institute, I offer a broad menu of tax tools to help restore our democracy. By undoing current levels of inequality, our tax code can help fulfill the promise of equal political voice and equal opportunity for all. To do this, progressives must be willing to move beyond loophole closers to assert a new, affirmative vision for tax policy. This report offers such a vision — one that puts workers before holders of capital, revives the regulatory potential of tax policy, and treats taxpaying as a civic act.

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Contemptuous Tax Reporting

Israel Klein (Ariel University), Contemptuous Tax Reporting, 2019 Wis. L. Rev. 1161 (reviewed by Mirit Eyal-Cohen (Alabama) here):

The use of self-reporting and self-assessment principles in the collection of corporate income tax means that companies are not subject to administrative tax assessment and ex-ante examination of tax positions taken, but rather to infrequent ex-post examination of tax returns submitted by their managers. Thus, while acting as the government’s agents for the purpose of assessing corporate taxes, managers can engage in contemptuous self-reporting that involves knowingly reporting tax positions that do not conform to the tax code and prevailing tax doctrines.

According to estimates provided by Congress, US companies will enjoy more than 25 billion dollars of R&D incentives in 2019 & 2020. The majority thereof will come from self-reported R&D credits claimed on companies’ tax returns. While being one of the most expensive tax expenditures claimed by corporations in the federal budget, this article argues that R&D tax incentives provide a prominent example of contemptuous tax reporting in which managers knowingly take positions that contradict prevailing tax doctrines.

This article presents a novel conceptualization of contemptuous tax reporting along with empirical findings that point to the tremendous loss of tax revenues resulting from such abusive tax behavior by S&P 500 companies.

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