Paul L. Caron

Wednesday, June 30, 2004

Social Security Loophole Closes Today

Wednesday, June 30, 2004

Fascinating reports in the New York Times and Mauled Again on a social security loophole that closes today. Here's the opening from the New York Times:

Thousands of Texas teachers are rushing to retire before a lucrative loophole in Social Security law closes, but there is one catch: They must first spend a day washing windows or scrubbing floors.
Jim Maule explains in detail on his blog why this is so. (Thanks to reader Ben Cunningham for the tip.)

June 30, 2004 in News | Permalink | Comments (0) | TrackBack (0)

NY Times Article on Former Sidley Austin Partner's Tax Shelter Work

Wednesday, June 30, 2004

Interesting article in today's New York Times about Raymond Ruble, tax partner at mega firm Sidley Austin who was dismissed in October because of his work on various tax shelters. The piece opens a window on the economics of tax shelter opinions by law firms, with Mr. Ruble bringing in $9,000 per hour for his work. (Thanks to reader Steven Sholk for the tip.)

June 30, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Estate Tax Debate in the Blogosphere

Wednesday, June 30, 2004

Interesting debate in the blogosphere among non-tax professors over the the estate tax. Texas law & philosophy prof Brian Leiter offers this Marxist perspective:

In the United States, ... a majority of the population favors abolition of the estate tax—what the ideologues of the ruling class now call a “death tax”—believing that it affects them, and that it results in the loss of family businesses and farms. In fact, only 2% of the population pays the estate tax, and there is no documented case of families losing their farms or businesses as a result of the tax’s operation.
Leiter cites this as one example of how "the ruling ideas in any well-functioning society will be ideas that promote the interests of the ruling class in that society, i.e., the class that is economically dominant."

UCLA corporate law prof Steven Bainbridge thinks Leiter wrongly

converts Marxism into a form of interest group analysis. If so, however, the estate tax seems a puzzling example. After all, repeal of the estate tax was widely opposed by Congressional millionaires like Ted Kennedy and left-liberal billionaires like Warren Buffett, Bill Gates, and George Soros. So what's going on here? In fact, I think Leiter is wrong in his analysis of the estate tax. Compare his interpretation with the following views advanced by Bruce Bartlett:
A man-bites-dog story occurred ... when a group of rich people signed an ad in the New York Times opposing elimination of the estate tax. Since the estate tax only affects those with net assets greater than [$1.5 million today], it is per se a tax only on the "rich." Thus, when those upon whom the tax is levied protest its abolition, it is news. But in reality, it is not at all surprising that some rich people support the estate tax, because they benefit from it in many ways.

The truth of the matter is that those with great wealth pay little in estate taxes now. The bulk of the tax is paid by the modestly wealthy--small businessmen, farmers and long-term investors--who may never have had much income. They often die not even realizing that they were wealthy, but without the elaborate tax shelters of the very rich. Their assets frequently have to be sold to pay the tax collector, making it impossible to keep them in the family.

Thus one consequence of the estate tax is that it makes it very hard for small businesses to become big businesses, and for modest wealth to become great wealth. It is no coincidence that many of the richest families in the U.S.--such as the Du Ponts, Mellons and Rockefellers--are heirs to wealth first created during the 19th century, when there was no federal income or estate tax. Those with such "old money" have always disdained the "nouveau riche" and done what they could to protect their social position against upstarts. The estate tax serves this purpose extremely well. ... Thus we see that for those who are already wealthy, the estate tax is no barrier to the maintenance of family wealth and may even serve a useful purpose in limiting competition.

Personally, I find Bartlett's interest group analysis far more plausible than that offered up by Leiter.
Bainbridge closes by citing "quite liberal law professor" Edward McCaffery, A Voluntary Tax? Revisited, which, as the title suggests, agrees that the estate tax is a "voluntary tax" that the wealthy can easily evade. For a defense of the estate tax on the ground that it furthers democratic principles, see James Repetti, Democracy, Taxes, and Wealth.

June 30, 2004 in News | Permalink | Comments (0) | TrackBack (0)

What Tax Profs Are Reading . . . Maule on The Faith: A History of Christianity

Wednesday, June 30, 2004

This is the sixth installment of What Tax Profs Are Reading. The goal is to share with the broader tax community reviews of both tax-related and nontax-related books recently read by tax professors. We invite tax professors to submit book reviews for publication on TaxProf Blog.

Image of Book CoverJim Maule (Villanova) shares with us his thoughts on Brian Moynahan’s The Faith: A History of Christianity (Doubleday, 2002):

This 730-page heavily noted one-volume reviews the almost 2,000 year development of the variety of denominations and sects that are bundled under the name “Christian.” Resembling more a college history textbook than a mere beginning-to-end tale, Moynahan’s book was, for me, refreshing and educational. I treated the book as a course text, and let myself absorb one or two chapters a week over a six-month period.

“The Faith” was refreshing because Moynahan brings his background as a journalist and reporter to his effort. Instead of a partisan apologetic, plenty of which I’ve read while growing up, the account spares no one in its examination of the good and the bad, the brilliant and the stupid, the genuine and the hypocritical. Moynahan digs into sources not typically the cornerstone of Christian histories, such as documents from Arab caliphates and documents in the archives of governments and libraries far and wide. His approach gave me a sense of detached observer, looking at the growth and spread of Christianity as though watching from an orbiting earth observatory rather then as a child of a particular segment of the movement under study.

This book was educational because it brought to my attention information, events, and personalities about whom I had known little or, in many instances, nothing. For me, surely not deficient in the number of Christian histories and theologies whose words have passed in front of my eyes, this made the many-month trek through the book’s 35 chapters worthwhile. It left me wondering, “So why is this the first time I’ve seen a reference to this event?” If only for expediency, let alone pedagogy, short histories and summary outlines of a two-millenium story must leave a lot of detail by the wayside. That, however, doesn’t explain why most of the other 800-page (or longer) Christian histories omit so many seemingly small but telling (and sometimes important) events, movements, and debates. Moynahan puts a good bit of Christian history in a new light. It would not surprise me that hundreds of millions of Christians would react with disbelief if and when introduced to the information he has woven into the shorter version of the story.

That’s not to say Moynahan has set out to cast Christianity in a bad light or that his work has that effect. Indeed, he includes the stories that explain how Christianity has endured for so long and has found adherents through conviction, persuasion, and inspiration. The good is no less highlighted than the evil. Unlike the Roman-heavy histories that dominated my childhood education, “The Faith” gives thorough examination of the Orthodox churches, the Eastern rites, all sorts of Protestant sects, movements that defy categorization, and an array of heresies ancient and new. Moynahan gives as much attention to the 19th and 20th centuries as he does to the first and the sixteenth, suggesting that he considers (understandably) the developments during the past 70 years of Christianity to be as significant as those of the embryonic church and those of the Reformation and Counter-Reformation.

This is a serious opus. It is not light reading, and it surely requires that the reader set it aside and let it percolate before continuing to the next chapter. It is an important book for those who need or want a thorough, balanced, and interesting study of Christianity without sitting through a multi-volume exploration. It should be of interest to Christians and non-Christians alike; for many of the former it is or should be an eye-opener, and for the latter it demonstrates that insiders need not be so biased that they cannot look at themselves objectively. That’s a lesson that the 21st century sorely and surely needs.

For prior TaxProf Blog book reviews, see here.

June 30, 2004 in Book Club | Permalink | Comments (0) | TrackBack (0)

ABA Teleconference and Webcast Today on Split-Dollar Insurance

Wednesday, June 30, 2004

The ABA Tax Section's "Last Wednesday of the Month" Teleconference and Webcast will be held today from 1:00 - 2:30 pm EST on What Happened to Split Dollar Financed Life Insurance?

June 30, 2004 in ABA Tax Section, Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Brennen on Diversity Rationale for Charitable Tax Exemption

Wednesday, June 30, 2004

David Brennen (Mercer) presented A Normative Rationale for Tax Exemptions for Charities at the Critical Tax Conference at Rutgers-Newark. Here is part of the Introduction:

What is the normative rationale for the federal income tax exemption for nonprofit charitable corporations? Even though this federal statutory exemption dates back to 1894, Congress has provided very little explanation for why it exists. Over the years, many scholars have pondered this normative question. However, the quest for an explanation of the charitable tax exemption has centered almost exclusively on economic efficiency. Thus, the charitable tax exemption is typically justified as an economically efficient means of providing certain goods and services to the public.... But no matter how appealing efficiency might sound, one must not lose sight of the fact that taxation, and more particularly tax law, is about much more than economic efficiency. Tax law is about broader conceptions of justice, fairness, and other aspects of a democratic society that extend beyond economic principles.... This Article explains the charitable tax exemption, in value and market terms, to demonstrate that the principal normative justification for the charitable tax exemption is embedded in the value of diversity - what this Article calls “contextual diversity.”

June 30, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

IRS Releases Two New Publications on Car Donations

Wednesday, June 30, 2004

The IRS on Tuesday released two new publications dealing with charitable donations of automobiles (IR-2004-84):

Pub. 4302 — A Charity’s Guide to Car Donations
Pub. 4303 — A Donor’s Guide to Car Donations

June 30, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 29, 2004

Gentry & Hubbard on Success Taxes

Tuesday, June 29, 2004

William Gentry (Williams College - Economics Department) & R. Glenn Hubbard (Columbia Business School) have posted "Success Taxes," Entrepreneurial Entry, and Innovation on NBER. Here is the abstract:

Interest in the role of entrepreneurial entry in innovation raises the question of the extent to which tax policy encourages or discourages entry. We find that, while the level of the marginal tax rate has a negative effect in entrepreneurial entry, the progressivity of the tax also discourages entrepreneurship, and significantly so for some groups of households. These effects are principally traceable to the upside' or success' convexity of the household tax schedule. Prospective entrants from a priori innovative industries and occupations are no less affected by the considerations we examine than other prospective entrants. In terms of destination-based industry and occupation measures of innovative entrepreneurs, we find mixed evidence on whether innovative entrepreneurs differ from the general population; the results for entrepreneurs moving to innovative industries suggest that they may be unaffected by tax convexity but the possible endogeneity of this measure of innovative entrepreneurs confounds interpreting this specification. Using education as a measure of potential for innovation, we find that tax convexity discourages entry into self-employment for people of all educational backgrounds. Overall, we find little evidence that the tax effects are focused simply on the employment changes of less skilled or less promising potential entrants.

June 29, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Colombo Quoted in WSJ Article on Challenges to Non-Profit Hospitals' Tax Exemption

Tuesday, June 29, 2004

Tax Prof John Colombo (Illinois) is quoted in today's Wall Street journal (A Nonprofit Hospital Fights To Win Back Charitable Halo) on how non-profit hospitals face the loss of their local property tax exemptions on the ground that they are not operated for charitable purposes in light of the decreasing amount of care provided to poor and indigent patients.

June 29, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Am Law 100 Partner Salaries

Tuesday, June 29, 2004

As a follow-up to the post here about summer associate salaries topping $2,500 per week: American Lawyer today released its annual ranking of the compensation of those lawyers at the top of the food chain -- partners in the 100 top-grossing law firms. Equity partners at these firms rake in an average of $930,700, while non-equity partners struggle to make ends meet on $357,600. For comparison, see average law faculty salaries here, and "star" law faculty salaries here. Time to change the bromide to: those who can, do; those who can't, are green with envy.

June 29, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Blatt on Retention of Gift Tax in Wake of Estate Tax Repeal

Tuesday, June 29, 2004

William Blatt (Miami) presented Why Did Congress Repeal the Estate Tax But Not the Gift Tax? at the Critical Tax Conference at Rutgers-Newark. Here is part of the Introduction:

Part two of the article presents the conventional explanation for the decision to retain the gift tax -- that retention of the gift tax was necessary to protect the fisc. A side effect of the gift tax is that it blocks many income shifting techniques. Retention was necessary to forestall a hemorrhage in income tax receipts....

Part three of the article offers an alternative, deeper explanation for this decision ... [that] must accord with someone's values. Part three of the article then tries to define these values. This is not easy because such values are illiberal. The sociological literature describes how bequests create obligations that cannot be reciprocated, ones which bind future generations. The decision to tax gifts but not bequests preserves dynastic wealth. Seldom advanced in public debate, that effect appeals strongly to a small but powerful group in the country. Finally, part three looks for evidence of these values in the legislative arena.... Evidence of such values may also be found in the personal dynastic ambitions of the President and the Senate leadership. That group may have played a pivotal, if passive, role in retaining the gift tax.

June 29, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Infanti on Tax Code Discrimination Against Gays and Lesbians

Tuesday, June 29, 2004

Anthony Infanti (Pittsburgh) has published The Internal Revenue Code as Sodomy Statute, 44 Santa Clara L. Rev. 763 (2004). Here is the abstract from SSRN:

This article represents an attempt to bridge the gap between gay and straight understanding of the Internal Revenue Code's impact on same-sex couples. Through a combination of personal narrative and legal analysis, I try to explain how, from a gay perspective, the Code can be viewed as just another manifestation of the fluid mixture of hostility, bewilderment, and discomfort that generally characterize society's reaction to homosexuality. By explaining the experiences behind my perceptions of the Code, I hope to help my heterosexual colleagues to understand just how demeaning and oppressive the Code can seem to gays and lesbians - regardless of any net financial benefit that same-sex couples may receive, or any net financial detriment that they may suffer, under the Code.

June 29, 2004 in Scholarship | Permalink | Comments (2) | TrackBack (1)

Monday, June 28, 2004

U.S. Magistrate Allows Deposition of IRS Officials in Tax Shelter Case

Tuesday, June 29, 2004

Tax Analysts reports that U.S. Magistrate Judge Beth P. Gesner (U.S. District Court - Maryland) on Monday denied a government motion for a protective order to prevent the depositions of two IRS officials in the Black & Decker refund suit:

Gesner’s ruling leaves Frank Y. Ng, Director of Prefiling and Technical Guidance in the IRS Large and Midsize Business Division (LMSB), and David G. Harris, a former LMSB manager who reported to Ng, exposed for depositions in the case, and it could create a chilling effect among government officials at future speaking engagements, said one practitioner.

The ruling stems from the plaintiff’s attempt to depose Ng and Harris regarding statements that the IRS officers purportedly made in the past about Announcement 2002-2. In that announcement, the IRS said it would waive accuracy-related penalties under section 6662 for underpayments if a taxpayer disclosed tax shelters and other questionable transactions.

June 28, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Cumulative US News Law School Rankings

Monday, June 28, 2004

A new ranking of the Top 25 law schools (via, as measured by each school's cumulative US News Rankings since 1987. The top 10 (and their cumulative average scores):

1. Yale (1.00)
2. Harvard (2.40)
3. Stanford (2.67)
4. Chicago (4.60)
5. Columbia (4.60)
6. NYU (5.87)
7. Michigan (6.87)
8. Virginia (8.40)
9. Duke (9.47)
10. Penn (9.67)

June 28, 2004 in News | Permalink | Comments (0) | TrackBack (0)

New Tax History Book

Monday, June 28, 2004

John Tiley (Queen's College, Cambridge) has published Studies in the History of Tax Law (Hart Publishing, 2004), which contains the full text of the papers delivered at the first Tax Law History Conference in Cambridge (Sept. 2002) organized by the Cambridge Law Faculty’s Centre for Tax Law:

The papers ranged widely from the King John to the 20th century, from Tudor England’s Statute of Wills to the American taxes on slaves, from Hong Kong, Australia and Israel. The sources ranged from the Public Record office to the bowels of Somerset House. The topics ranged form the tax base through tax administration to tax policy making as well as providing detailed accounts of the UK’s remittance basis of taxation and the Excess Profits Duty of the First World War.

June 28, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

U.S. Joins Anti-Tax Avoidance Alliance

Monday, June 28, 2004

The U.S. joined Australia, Britain, and Canada in a global effort to combat tax avoidance by establishing a computer database listing of "tax dodgers and their accountants." Under the agreement announced in Sunday's Financial Mail following a secret tax summit in London, the four countries will share detailed information on individuals and companies that avoid tax.

June 28, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Bankman on Qwest Tax Shelter

Monday, June 28, 2004

Joe Bankman (Stanford) is quoted in today's Wall Street Journal in a story on Qwest's investment in a "Contested Liability Trust," which sounds identical to the KPMG "Contested Liability Accelerated Strategy" tax shelter, recently discussed here.

June 28, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Sunday, June 27, 2004

Levinger on The Case for Redistribution

Monday, June 28, 2004

Sagit Leviner (Michigan S.J.D. candidate) presented The Case for Redistribution in a Modern Democracy: Theological and Consequentialist Perspectives at the Critical Tax Conference at Rutgers-Newark. Here is part of the Introduction:

The first section of this paper outlines the merit-oriented rationale for the imposition of a heavier tax burden on the wealthy. The second section discusses the proper application of the tax theory in view of this rationale, and the third details the society-based rationale for the imposi-tion of greater tax burdens on the rich as well as corresponding taxation implications. Finally, this paper does not address the justification for using the tax system, rather than other means, for redistributional purposes, nor the practical aspects of choosing (an) exact tax rate(s). These issues, while important, are left to later discussions.

June 27, 2004 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Weekend Roundup

Top 5 Tax Paper Downloads

Sunday, June 27, 2004

There are two new papers on this week's list of the Top 5 Tax Paper Downloads on SSRN, debuting at #4 and #5:

1. Corporate Tax Avoidance and High Powered Incentives, by Dhammika Dharmapala (Connecticut - Economics Department) & Mihir Desai (Harvard Business School)

2. The New Dividend Puzzle, by William Bratton (Georgetown)

3. Tax, Corporate Governance, and Norms, by Steven Bank (UCLA)

4. The Undeserving Poor?: Welfare, Tax Policy, and Political Discourse, by Dorothy Brown (Washington & Lee), Stacy Dickert-Conlin (Syracuse - Economics Department) & Scott Houser (California State (Fresno) - Economics Department)

5. Fiscal Federalism and Tax Progressivity: Should the Federal Income Tax Encourage State and Local Redistribution?, by Kirk Stark (UCLA)

June 27, 2004 in Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

New Tax eJournal Soliciting Articles

Sunday, June 27, 2004

The eJournal of Tax Research, published by Atax (Australian Taxation Studies Program), University of New South Wales, Sydney, Australia, is soliciting articles for their next issue:

The eJournal is a double blind, peer-review refereed journal that publishes original, scholarly work on all aspects of taxation. The emphasis of the journal is the multidisciplinary nature of taxation and timely dissemination of tax research. It is guided by an Editorial Board consisting of 17 eminent tax academics and tax specialists from around the world. The coeditors of the eJournal are Rodney Fisher and Binh Tran-Nam.

June 27, 2004 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Tax Problems of the Rich & Famous: Mike Tyson

Sunday, June 27, 2004

Possible grist for the classroom tax mill: Mike Tyson's tax problems, as reported by Sports Illustrated. Tyson received a $14 million payment from promoter Don King to settle his $100 million lawsuit, to be combined with purses from seven fights over the next three years as part of a bankruptcy reporganization plan, to pay off a $34.8 million IRS tax lien against Tyson and his ex-wife. (Thanks to reader Dwight Thompson for the tip.)

June 27, 2004 in News | Permalink | Comments (1) | TrackBack (0)

Saturday, June 26, 2004

Tax Prof Spotlight: Jim Maule

Saturday, June 26, 2004

Image of Professor MauleJim Maule (Villanova) undoubtedly has one of the most eclectic backgrounds among the tax professorate. Although many tax scholars produce major work for both the professional and academic communities, Professor Maule’s wide-ranging interests and experiences set him apart in many ways.

Professor Maule is a Pennsylvania product (Penn B.S. 1973, Villanova J.D. 1976) who, like many young tax lawyers, left for Washington, D.C. for a few years (Attorney Advisor in Office of Chief Counsel, Clerk for Tax Court Judge Chabot, tax LL.M. from George Washington) before returning to Pennsylvania as a tax academic, first at Penn State-Dickinson then at Villanova, where he has taught since 1983.

Six months short of a quarter-century in this business, Professor Maule has carved out a unique niche in several areas. He is perhaps best known as the author of over a dozen BNA Tax Portfolios, including:

• 501-2 T.M., Gross Income: Overview and Conceptual Aspects
• 502-2 T.M., Gross Income: Tax Benefit, Claim of Right, and Assignment of Income
• 503-2 T.M., Deductions: Overview and Conceptual Aspects
• 504-2 T.M., Deduction Limitations: In General
• 505-2 T.M., Trade or Business Expenses and For-Profit Activity Deductions
• 506-2 T.M., Tax Credits: Concepts and Calculations
• 507-2 T.M., Income Tax Liability: Concepts and Calculations
• 525-2 T.M., State and Local Taxes
• 531-2 T.M., The Accelerated Cost Recovery System (ACRS)
• 560 T.M., Income Tax Basis: Overview and Conceptual Basis
• 590-2 T.M., Taxation of Real Estate Transactions: An Overview
• 597 T.M., Tax Incentives for Law-Income Areas
• 1510 T.M., State Taxation of S Corporations
Professor Maule received the 1993 BNA Tax Management Distinguished Author Award in recognition of this work and the many chapters in the digital Tax Practice Series that he has written. He publishes other work for the practitioner community through the many leadership roles he has held in the ABA Tax Section, including most recently as Editor of the Recent Developments in Partnership Tax report published annually by The Tax Lawyer. His participation in the ABA-TAX listserv is frequent and according to Jim, "the practitioners think they’re getting the better end of the deal, but they’re not, because I continue to learn about what’s happening in the practice world by paying attention to the questions and arguments that fill the list emails."

Professor Maule also is an important voice in tax academic circles, with several major works, including:

IRS Hot Asset Reg Re-Tuning Falls Flat, Causing Pain for Partner Estates, 94 Tax Notes 751 (2002)
Instant Replay, Weak Teams, and Bad Calls: An Empirical Study of Aleged Tax Court Bias, 66 U. Tenn. L. Rev. 351 (1999)
Tax and Marriage: Unhitching the Horse and Carriage, 67 Tax Notes 539 (1995)
Getting Hamr’d: Highest Applicable Marginal Rates That Nail Unsuspecting Taxpayers, 53 Tax Notes 1423 (1991)
His puns infect his writing as much as they do his teaching and everyday conversation, and he invites readers to try finding as many as they can in his articles. He says it’s genetic, and so perhaps being a tax academic was inevitable.

When asked by his high school classmates how he ended up in the tax world after putting his efforts into science and languages, Jim describes a transition from an interest in the science of business that took him to Penn to a fascination with the pervasiveness of tax that he encountered working at an accounting firm while at Wharton. "I continue to marvel," he says, "at the depth to which the tentacles of the income tax reach into almost every aspect of our lives. When I came to understand that Congress directs, or tries to direct, the nation through the tax laws, I decided that on a consistent long-term basis there would be much more happening in that area than in any other. When I look at tax, I sometimes think of the adage ‘Know thy enemy.’ I have a lot of compassion for people who don’t understand what’s going on in the tax world, who overpay taxes, who make mistakes running their lives and their businesses, and who struggle with compliance." He is a strong advocate of tax simplification and reform, and a very demanding law professor. "My goal in teaching is to prepare students for service to their clients, so I try to put students into the situations in which they will find themselves after they graduate. The most rewarding part of teaching, for me, is the phone call or email from a former student who thanks me for pushing them as I did because they found practice to be as I predicted it would be."

Professor Maule’s has immersed himself in tax law, genealogy, and technology. He has published several books and articles about the Maule family (including Better That 100 Witches Should Live: The 1696 Acquittal of Thomas Maule of Salem, Massachusetts, on Charges of Seditious Libel and Its Impact on the Development of First Amendment Freedoms). He has written several dozen computer programs, most related to tax and genealogy. He is the owner or co-owner of two small businesses in these areas:

• JEMBook Publishing Company, which publishes law and genealogy books
• TaxJEM Inc., which develops computer-assisted tax law instruction programs primarily for use by students
Professor Maule is a frequent speaker on the tax lecture circuit, appearing before tax practitioner and academic audiences. He has been quoted in legal and general circulation newspapers. It’s no surprise that his blog, dedicated principally to tax issues, carries the name of Mauled Again.

Professor Maule is the father of two grown children. His daughter Sarah Margaret belongs to the "artist in the family" branch and his son Charles Edward, currently studying in Harbin, China, has his eyes set on an academic career that blends law, history, and East Asian studies.

Each Saturday, TaxProf Blog shines the spotlight on one of the 700+ tax professors in America's law schools. We hope to help bring the many individual stories of scholarly achievements, teaching innovations, public service, and career moves within the tax professorate to the attention of the broader tax community. Please email me suggestions for future Tax Prof Profiles. For prior Tax Prof Profiles, see here.

June 26, 2004 in Tax Prof Spotlight | Permalink | Comments (0) | TrackBack (0)

Friday, June 25, 2004

ATPI Conference on July 8

Saturday, June 26, 2004

The American Tax Policy Institute is hosting a roundtable conference on Thursday, July 8, in Washington, D.C. on two ATPI-sponsored projects:

• 3:30 pm: George Zodrow (Rice) & Michelle Hendrix, Optimal Commodity Taxation of Traditional and Electronic Commerce

• 4:45 pm: Joseph Cordes (George Washington) & David Brunori (Tax Analysts & George Washington), The State Corporate Income Tax: Can (and Should) it be Saved

The conference will be held at the Ernst & Young Conference Center, 1225 Connecticut Ave. To RSVP (by June 28) and obtain copies of the papers, email Janine Hoke of ATPI.

June 25, 2004 in Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Tax Policy Group Criticizes Pending Tax Bill

Saturday, June 26, 2004

The Center on Budget and Policy Priorities has released a 5-page report, Misplaced Priorities: The Flawed House and Senate Corporate Tax Bills. Here is the Conclusion:

The House and Senate corporate tax bills raise significant revenue by curbing certain tax shelters and other tax breaks. Unfortunately, no consideration is being given to using these savings for deficit reduction, or failing that, to pay for the cost of extending the “middle-class” tax cuts or to finance more pressing priorities. The focus instead is on dubious tax breaks. Moreover, the House and Senate bills are likely to enlarge long-term deficits further, due primarily to the inclusion in these bills of various temporary tax breaks that likely will continually be extended or made permanent, possibly at considerable cost.

June 25, 2004 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Your Tax Inner Child

Friday, June 25, 2004

The Inner Child Test is sweeping the law professor blogosphere, with Professors Althouse (10 years old), Bainbridge (45) and Yin (16) enngaging in the self-analysis. Take the test here; for the record, here's Tax Prof Blog's score:

My inner child is forty-five years old today

My inner child is forty-five years old!

I've never really liked children, not even when I
was one. I want things neat, ordered, and
adult--fine wine instead of french fries, pina
coladas by the pool instead of beach sand
between my toes. Now if only my fellow adults
would stop acting like such, well, children!

June 25, 2004 in News | Permalink | Comments (2) | TrackBack (0)

Bizarre Non-Tax Story

Friday, June 25, 2004

Bizarre non-tax story of the week from The Smoking Gun:

While seated on the bench, an Oklahoma judge used a male enhancement pump, shaved and oiled his nether region, and pleasured himself, state officials charged yesterday in a petition to remove the jurist.
For the full story, "Here Comes the Judge," see here.

June 25, 2004 in News | Permalink | Comments (0) | TrackBack (0)

D.C. Tax Party

Friday, June 25, 2004

Washington, D.C. area Tax Profs and tax lawyers should check out the July 1 shindig sponsored by the Tax Section of the D.C. Bar:

The New Tax Practitioners' Committee of the Taxation Section invites you to our Annual Summer Networking Reception at the Senate Finance Committee's Hearing Room. This reception will provide an excellent opportunity for meeting new friends and renewing old acquaintances. Summer Associates will experience Capitol Hill and mingle with new and seasoned tax attorneys. This year's discussion will focus on the process of how the tax laws are developed and promulgated. (Hor d'Oeuvres, beer, wine and soft drinks included)

• Tom Ochsenschlager, AICPA VP Taxation
• Ed McClellan, Tax Counsel, Senate Finance Committee
• John Buckley, Chief Tax Counsel-Minority Staff, House Ways & Means Committee

Thursday, July 1, 2004, 5:00 pm–7:00 pm
Senate Finance Committee's Hearing Room
Everett M. Dirksen Senate Office Bldg
First Street & C Street, NE, Room SD-215

For further details, see here.

June 25, 2004 in News | Permalink | Comments (0) | TrackBack (0)

The Changing Face of Tax Scholarship

Friday, June 25, 2004

In yet another sign of how technology is changing the nature of tax scholarship, Newkirk Publications has announced that it will no longer publish its Monthly Digest of Tax Articles:

After more than 50 years of continuous publication, the Monthly Digest of Tax Articles will be discontinued after the December 2004 issue. Internet services have largely rendered our publication obsolete, and the economics of publishing the Digest no longer make business sense.

June 25, 2004 in News | Permalink | Comments (1) | TrackBack (0)

Brown on Racial Aspects of Social Security and Marriage

Friday, June 25, 2004

Dorothy Brown (Washington & Lee) has published Social Security and Marriage in Black and White, 65 Ohio State L.J. 111 (2004). Here is the abstract:

Social security benefits are available for individuals and their spouses. Spousal benefits, however are subject to certain limits where spouses also work in the paid labor market. Social security benefits are the greatest for spouses who do not work in the paid labor market and are the least for spouses who contribute roughly half of their household income.

Social security benefits also are available for surviving spouses. Surviving spousal benefits are reduced for dual wage earner couples. Surviving spousal benefits are the greatest for spouses who do not work in the paid labor market and are the lowest where wives contribute roughly half of their household income. Census Bureau data shows that African-American wives are more likely than White wives to contribute roughly half of their household income. As a result, African-American wives are more likely than White wives to be penalized by the social security limitations placed on dual wage earner couples. This article should encourage scholars who are interested in examining how African-Americans fare under our current social security system to include married African-American couples in their analysis.

June 25, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tax Obligations of Quakers

Friday, June 25, 2004

Interesting tax case reported yesterday on about Quakers' tax obligations. Here is the introduction:

In a court battle between the IRS and a group of Quakers, a federal judge has ruled that the Quakers must comply with a levy on the wages of a Quaker employee and "war tax protester" and that its refusal to honor the levy makes the Quakers directly liable for all of the employee's unpaid taxes.

But in a significant victory for the Quakers, U.S. District Judge Stewart Dalzell ruled that the Internal Revenue Service is not entitled to a 50 percent penalty because the church had "raised novel and important questions" about its rights under the Religious Freedom Restoration Act.

In his opinion in United States v. Philadelphia Yearly Meeting of the Religious Society of Friends, Dalzell said he agreed with the Quakers' argument that complying with the levy "substantially burdens its exercise of religion."

For the full story, see here. (Thanks to reader Steven Sholk for the tip.]

June 25, 2004 in News | Permalink | Comments (1) | TrackBack (0)

Thursday, June 24, 2004

Death of Tax Court Judge Charles Clapp

Thursday, June 24, 2004

The Tax Court yesterday announced the death of retired Judge Charles E. Clapp II. Judge Clapp was appointed by President Reagan in 1983 and served until 1993, when he assumed Senior Judge status until his retirement in 1998. Funeral services are Friday, June 25 in Duxbury, MA.

June 24, 2004 in News | Permalink | Comments (0) | TrackBack (0)

IRS Warns About Virgin Islands Tax Scam

Thursday, June 24, 2004

In Notice 2004-45 and accompanying press release, the Treasury Department and IRS today warned taxpayers about a tax scam involving phony claims of Virgin Island tax benefits under sections 932(c) and 934(g):

The Internal Revenue Service is aware that certain promoters are advising taxpayers to take highly questionable, and in most cases meritless, positions ... in order to avoid U.S. taxation and claim a tax benefit under the laws of the United States Virgin Islands (USVI). Promoters may also be advising taxpayers to take similar positions with respect to other U.S. possessions. This notice alerts taxpayers that the Service intends to challenge these positions in appropriate cases.

June 24, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Leiter on Easy Law School Tenure

Thursday, June 24, 2004

Brian Leiter (Texas) today reprises his piece, Why Is it So Easy To Get Tenure in Law Schools? Here's a sample:

[O]utside the ranks of the top 15 or so schools, most law schools tenure almost everyone they hire; and even within the top 15, a tenure review comparable to what one finds at Princeton or MIT is unheard of. One consequence: while the tenured ranks of the best philosophy departments are full of first-rate intellects (even if one might quibble about whether so-and-so's work is really "that significant"), the tenured ranks of the best law schools (including Yale and Harvard) are uneven, including not only first-rate intellects but also intellectual lightweights.

June 24, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)

Welcome to the Blogosphere: Bill Clinton

Thursday, June 24, 2004

As Tax Prof Jack Bogdanski departs the blogosphere, we welcome to the ranks our newest blogger: President Clinton. Check out his blog here. (P.S. It's a parody.)

June 24, 2004 in Celebrity Tax Lore | Permalink | Comments (0) | TrackBack (0)

Sheppard on Foreign Earned Income Exclusion

Thursday, June 24, 2004

Hale Sheppard has published Perpetuation of the Foreign Earned Income Exclusion: U.S. International Tax Policy, Political Reality, and the Necessity of Understanding How the Two Intertwine, 27 Vand. J. Transnat'l L. 727 (2004). Here is the abstract:

This Article discusses Section 911 of the Internal Revenue Code, also known as the Foreign Earned Income Exclusion (FEIE), as an example of a provision that has been sustained, not on the basis of sound economic analysis and compliance with established U.S. international tax policy, but rather because of effective lobbying and political circumstance. First providing an overview of the U.S. system of worldwide taxation, and the place of the FEIE within that framework, Mr. Sheppard explores the forces underlying the perpetuation of the FEIE. He demonstrates the that FEIE is inconsistent with each of the primary components of U.S. international tax policy, including meeting the revenue needs of the U.S. government in a fair and equitable manner, minimizing the burden of tax compliance and administration by reducing tax complexity, fostering economic efficiency through international tax neutrality, and ensuring the competitiveness of U.S. multinational businesses, but explains that the repeal of the FEIE is nevertheless improbable in the foreseeable future as a result of various political realities, such as the rebuilding of Iraq, the upcoming elimination or radical modification of major tax-based export promotion programs, a dwindling global presence of U.S. citizens due to fatal diseases and terrorism, and significant U.S. unemployment rates. He concludes by reemphasizing the complexity of tax policy issues, and by reminding the tax practitioner that a failure to comprehend the policy rationales behind a particular provision or set of provisions compromises the ability to dispense accurate and thorough advice.

June 24, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 23, 2004

IRS Provides Summer Tax Tips

Thursday, June 24, 2004

The IRS provides Summertime Tax Tips for:

• Newlyweds
• Students with Summer Jobs
• Parents with Kids in Summer Camps

June 23, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Say It Ain't So Jack -- Jack Bog's Blog Pulling the Plug

Wednesday, June 23, 2004

Tax Prof Jack Bogdanski (Lewis & Clark) is pulling the plug on Jack Bog's Blog on July 6 (its 2-year anniversary). Although only occasionally about tax law and law schools, Jack Bog's Blog was one of only three active blogs (to my knowledge) run by tax law professors. With Victor Fleischer's A Taxing Blog on hiatus since October, Jack's departure leaves Tax Prof Blog and Mauled Again carrying the Tax Prof blogosphere banner. With nearly 150,000 visitors in its 2-year run, Jack's Bog's Blog will be missed.

June 23, 2004 in Tax Profs | Permalink | Comments (3) | TrackBack (0)

Tax Reform in Iceland

Wednesday, June 23, 2004

True to its origins as one of the world's first tax havens (in the 870s, Vikings fled there from high taxes in Norway), Iceland has staged a remarkable economic turnaround in recent years, which this article attributes to reform of its tax laws, including dramatic reductions in personal and corporate income tax rates. (Apparently, trickle-down economics works even in sub-zero weather.)

June 23, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Professorial Musings on Student Evaluations

Wednesday, June 23, 2004

Law professors handle student evaluations of their teaching in various ways. One makes a ceremonial show of tossing them in the trash unopened. Another assiduously pores over each one, trying to extract pearls of wisdom to improve her classroom performance. A third worries that a drop from 4.5 (out of 5.0) to 4.4 will adversely affect his tenure chances.

Eric Rasmusen (Indiana) muses on his blog:

Why, then do we rely so heavily on student evaluations? It is hard to believe that professors and administrators do not realize how weakly they measure the amount a teacher has taught his students. Even if they did not, if good teaching was the objective, surely we would pay some attention to the syllabi and what kind of tests were given and use objective evaluators -- students or faculty observing single class sessions -- which we do not do in any serious way. Rather, I think that "good teaching" means "contented students" for the people who rely on student evaluations. Student evaluations are indeed a good way to measure this. And it is a reasonable objective. Administrators are trying to sell a product, and if you view the student as a customer rather than as someone to whom you have a moral obligation, you want to design a product that he wants. The student will likely want a course that has a low workload and gives him a pleasant feeling of accomplishment while being described as difficult course on an advanced topic. Professors have incentives similar to administrators-- it is more fun teaching contented students, and while it is quite difficult to know how to make students learn (I know that after 20 years I still don't know when I have succeeed and when I have failed, or even whether I, as opposed to the students' own efforts, make much difference), it is much easier to figure out how to make students pleased.
Mike Rappaport (San Diego) adds:
Interestingly, at one law school I know, the student evaluations ask the students many questions. Not a single one of them, though, asks how much the student believes he learned overall in the course. They ask all kinds of things, like how well the professor integrated current events, but not how much was learned. Hard teachers, who give a lot of work, would benefit from this question being asked. And so would the students.

June 23, 2004 in Tax Profs | Permalink | Comments (1) | TrackBack (0)

Rockefeller Institute Reports 8.1% Surge in State Tax Revenues

Wednesday, June 23, 2004

The Nelson A. Rockefeller Institute of Government has issued a 16-page report, State Tax Revenue Recovery Gathering Steam, detailing a 8.1% surge in state tax revenues in the January - March 2004 quarter. The biggest increases were registered by

• Alaska 43.9%
• Nevada 38.4%
• Delaware 21.0%
• Oklahoma 20.6%
• Maryland 20.3%
Three states recorded decreases in tax revenues:
• Michigan (8.0%)
• Kansas (1.4%)
• Louisiana (0.4%)
State corporate income taxes had the biggest increase, rising 15.2% in the quarter.

June 23, 2004 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 22, 2004

Walker on Efficiency of Equity Compensation

Wednesday, June 23, 2004

David Walker (Boston University) has posted Market Symmetry and the Tax Efficiency of Equity Compensation on SSRN. Here is the abstract:

At first blush, the deferral of employee income recognition associated with equity compensation appears to provide a tax advantage in a rising market but an offsetting disadvantage in a declining market. Merton Miller and Myron Scholes argued, however, that this apparent symmetry is misleading and that employees can hedge to ensure tax efficiency despite market uncertainty. This article demonstrates that the effect of employee hedging is fairly small, but that a combination of factors, including capital loss limitations, the possibility of employee-favorable ex post adjustments to equity compensation arrangements, and employee hedging, do cause compensatory stock grants and nonqualified options to be tax advantaged on an expected value basis.

June 22, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Commissioner's Testimony at Charitable Abuse Hearing

Wednesday, June 23, 2004

For the full text of IRS Commissioner Everson's 17-page testimony before Monday's Senate Finance Committee hearing on Charitable Oversight Reform: Keeping Bad Things from Happening to Good Charities, see here.

June 22, 2004 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

CBO Releases Budget Implications of Recognition of Same-Sex Marriage

Tuesday, June 22, 2004

The Congressional Budget Office yesterday issued a report, The Potential Budgetary Impact of Recognizing Same-Sex Marriages.

June 22, 2004 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Joint Committee on Taxation Releases Revenue Estimate of Jobs Act

Tax Issues Among Most Pressing Facing Higher Education

Tuesday, June 22, 2004

This week's Chronicle of Higher Education asks ten experts for their views on the most pressing legal issues facing higher education in the next five years. Two of the experts flagged tax issues:

• Tax Prof David Williams II (VP & General Counsel at Vanderbilt): As colleges search for new revenue streams, they will become more entrepreneurial. That will require legal analysis and attention to both contractual and transactional issues in areas like real estate, zoning, tax, and intellectual property. Colleges will have to deal with issues concerning unrelated business income, tax-exempt status, and the legal aspects of taking ideas, inventions, and products to the public market.

• Beverly Ledbetter (VP & General Counsel at Brown): As our institutions have grown intellectually, we have become more complex in both our structure and operations. The distinction between the academic world and the corporate sector is dissolving. As regulators try to sort out which hat we are wearing, tax consequences will surely follow. Will "hybrid" or "dual status" colleges become common?

June 22, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Senate Hearing on Charitable Abuses

Tuesday, June 22, 2004

The Senate Finance Committee today holds a hearing at 10:00 am EST on Charitable Oversight Reform: Keeping Bad Things from Happening to Good Charities. The Committee released a 19-page White Paper on various potential tax-exempt reforms:

The document reflects proposals for reforms and best practices in the area of tax-exempt organizations based on staff investigations and research as well as proposals from practitioners, officers and directors of charities, academia and other interested parties. This document is a work in-progress and is meant to encourage and foster additional comments and suggestions as the Finance Committee continues to consider possible legislation.
In addition, the Joint Committee on Taxation today released a 49-page report, Description of Present Law Relating to Charitable and Other Exempt Organizations and Statistical Information Regarding Growth and Oversight of the Tax-Exempt Sector (JCX-44-04).

The Committee hearing will be held in Room G50 of the Dirkson Senate Office Building. Streaming audio will be available via C-Span on After opening statments by Sens. Grassley and Baucus, the Committee will hear testimony from three panels:

Panel I

Mark Everson Commissioner, Internal Revenue Service

William Josephson, Assistant Attorney General (Charities), New York Attorney General's Office

Mark Pacella, President, National Association of State Charity Officials

Panel II

Jay Adkisson, Editor of & Director of Private Client Services, Select Portfolio Management, Inc.

J. J. MacNab, CFP CLU QFP, Analyst, Insurance Barometer, LLC

Confidential witness to discuss fundraising

Confidential witness to discuss exploitation of charitable assets for private gain

Panel III

Diana Aviv, President & CEO, Independent Sector

Derek Bok, President Emeritus, Harvard University

Willard Boyd, Professor of Law & President Emeritus, University of Iowa, and Director, Iowa Nonprofit Resource Center

Rick Cohen, Executive Director, National Committee for Responsive Philanthropy

Herman Art Taylor, President & CEO, BBB Wise Giving Alliance

Rock Ringling, Managing Director, Montana Land Reliance

June 22, 2004 in News | Permalink | Comments (0) | TrackBack (0)

Chetty & Saez on Dividend Response to Tax Rate Changes

Tuesday, June 22, 2004

Raj Chetty (Cal-Berkeley (Economics)) & Emmanuel Saez (Cal-Berkeley (Economics)) have posted Do Dividend Payments Respond to Taxes? Preliminary Evidence from the 2003 Dividend Tax Cut on the NBER web site. Here is the abstract:

The individual income tax burden on dividends was lowered sharply in 2003 from a maximum rate of 35% to 15%, creating a unique opportunity to analyze the effects of dividend taxes on dividend payments by U.S. corporations. This paper uses data from the Center for Research in Security Prices (CRSP) spanning 1980 to 2004-Q1 to analyze this issue. We find a sharp and widespread surge in dividend distributions following the tax cut, along several dimensions. First, the fraction of publicly traded firms paying dividends began to increase precisely in 2003 after having declined continuously for more than two decades. Nearly 150 firms have initiated dividend payments after the tax cut, adding more than $1.5 billion to aggregate quarterly dividends. Most of these firms initiated regular, recurrent payments rather than one-time special distributions. Second, many firms that were already paying dividends prior to the reform raised regular dividend payments significantly after the tax cut. Third, special dividends also rose, but the magnitude of this effect is likely to be small relative to the increases in regular distributions in the long run. All three of these effects are significant among all company sizes, and are robust to controls for profits and other firm characteristics. The surge in regular dividend payments after the 2003 reform is unprecedented in recent years. The Tax Reform Act of 1986, which also reduced the top individual tax rate on dividends significantly, led to a temporary, concentrated rise in special dividend payments. However, the number of regular dividend payers did not rise much after the 1986 reform.

June 22, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Gale & Kelly on "No New Taxes" Pledge

Tuesday, June 22, 2004

William Gale (Brookings Institution) & Brennan Kelly (Brookings Institution) have posted The "No New Taxes" Pledge on the Tax Policy Center (Brookings Institution-Urban Institute) web site. Here is the abstract:

This paper examines the "No New Taxes" Pledge, which has been signed by the President and 258 members of Congress. Although it is intended to restrict the size of government, the pledge probably hinders rather than helps efforts to restore fiscal responsibility. Evidence from trends in aggregate taxes and spending, the success or failure of budget rules, and the voting records of pledge signers casts doubt on the view that signing the pledge is an effective effort to "starve the beast" or an act of fiscal responsibility. If all of the signers uphold the pledge, it will prove impossible to repeal any part of the 2001, 2002, and 2003 tax cuts before President Bush leaves office, though the legislation could expire as scheduled even if all the signers supported extension. The pledge may also have implications for appropriate budget scoring rules.

June 22, 2004 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, June 21, 2004

Schizer Named Dean of Columbia

Monday, June 21, 2004

Photo of Dean SchizerTax Prof David Schizer today was named the new dean of Columbia. At 35 years of age, David is the youngest dean of the nation's leading law schools.

This appointment marks the growing influence of Tax Profs in legal education, coming of the heels of Carolyn Jones' selection as the new dean of Iowa.

June 21, 2004 in Tax Profs | Permalink | Comments (0) | TrackBack (0)