Paul L. Caron

Saturday, April 23, 2005

Center for Public Integrity on Corporate Lobbying of the IRS

The Center for Public Integrity has published an interesting article, Influencing the IRS: Nearly 500 Companies Lobby the Tax Agency:

Nearly 500 companies and organizations have reported lobbying the IRS between 1998 and 2004, putting the nation's revenue collector among the top 30 most frequently lobbied federal agencies, according to a study of federal lobbying records by the Center for Public Integrity. In fact, more companies and organizations reported lobbying the IRS than the Navy, the Joint Chiefs of Staff and the President of the United States combined.

(Thanks to reader Ben Cunningham for the tip.)

April 23, 2005 in Think Tank Reports | Permalink | TrackBack (0)

IRS Help Wanted: Director, Fraud/Bank Secrecy Act within the Small Business/Self-Employed (SB/SE) Division

Irs_4The IRS is looking to fill the position of Director, Fraud/Bank Secrecy Act within the Small Business/Self-Employed (SB/SE) Division.

      • Salary:  $107,550 - $149,200
      • Deadline to Apply: May 2, 2005
      • Job Description:  The incumbent serves as Director, Fraud/Bank Secrecy Act within the Small Business/Self-Employed (SB/SE) Division. The incumbent is responsible for providing executive leadership and direction in coordinating the establishment of Service-wide fraud strategies, policies, and procedures. Coordinates the Fraud Referral Program for all operating divisions. Incumbent is also responsible for the Bank Secrecy Act (BSA) Program which analyzes examination results and other data sources, and also works with Taxpayer Education and Communications (TEC) to identify areas where education and outreach efforts can be most productive. BSA activities are conducted in cooperation with Treasury’s Financial Crimes Enforcement Network (FinCEN). Serves as principle advisor and consultant to the IRS Commissioner on all issues involving fraud referral to Criminal Investigation and the development of civil fraud cases, and Bank Secrecy Act strategic plans, programs and policy.

For more information, see here.  (Thanks to Michael Mulroney (Villanova) for the tip.)

April 23, 2005 in IRS News | Permalink | TrackBack (0)

Friday, April 22, 2005

CBPP Releases Two New Tax Reports

The Economist on The Case for Flat Taxes

This week's The Economist has an interesting article, The Case for Flat Taxes: "Pioneered in Eastern Europe, flat tax systems seem to work because they are simple."

April 22, 2005 in News | Permalink | TrackBack (0)

ABA Tax Section Submits Comments & Testimony

Rating TaxProf Blog

As readers of this blog know, I am on somewhat of a rankings bender, with our recent conference on law school rankings, weekly tabulation of the Top 5 SSRN Tax Papers, and monthly ranking of the Top 25 SSRN Tax Faculty.  So it was only a matter of time before I submitted TaxProf Blog to the folks at Juicy Studio who have created various measures of a blog's "readibility."  The results for TaxProf Blog:

Readability Results



Total sentences


Total words


Average words per Sentence


Words with 1 Syllable


Words with 2 Syllables


Words with 3 Syllables


Words with 4 or more Syllables


Percentage of word with three or more syllables


Average Syllables per Word


Gunning Fog Index


Flesch Reading Ease


Flesch-Kincaid Grade


The last three scores are the key:

Fog Index: "A rough measure of how many years of schooling it would take someone to understand the content. The lower the number, the more understandable the content will be to your visitors."  Here is how TaxProf Blog's 11.73 score ranks with other resources:

                                            Fog Index Scores




TV Guide, the Bible, Mark Twain


Reader’s Digest


Most Popular Novels


Time, Newsweek


Wall Street Journal


The Times, The Guardian

Reading Ease Index:  "An index number that rates the text on a 100-point scale. The higher the score, the easier it is to understand the document. Authors are encouraged to aim for a score of approximately 60 to 70."   Oops.

Flesch-Kincaid Grade Level:  "A rough measure of how many years of schooling it would take someone to understand the content."  I wonder how many 8th grade readers we have (my 8th grade son is not one of them!).

(Thanks to Professor Bainbridge for the tip.)

April 22, 2005 in About This Blog | Permalink | TrackBack (0)

Sullivan on Growing AMT Pressures State and Local Governments

Sullivan Tax_analysts_logo_31 Martin A. Sullivan (Contributing Editor, Tax Analysts) has published Growing AMT Pressures State and Local Governments, 107 Tax Notes 288 (2005), also available on the Tax Analysts web page as Doc 2005-7780, 2005 TNT 74-6.  Here is the Introduction:

The good news: The value of your home has doubled in five years. The bad news: So have your property taxes. Well, at least those taxes are deductible against federal income tax, right? Perhaps not.

If you are one of the growing number of the upper-middle class paying the individual alternative minimum tax, any increase in state and local income and property taxes will not reduce your federal taxes. The Reagan administration was able to persuade Congress to eliminate the deduction for state and local sales taxes, but not the deduction for state and local property and income taxes, as part of the reform of the regular income tax in 1986. However, the Tax Reform Act of 1986 eliminated the deduction for all state and local taxes for purposes of the individual AMT.

April 22, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Oprah's Tax Problems Redux: Can 5k Checks to 100 Employees Be Treated as Gifts Rather Than as Income?

Oprah_5Last year, we shamelessly blogged the tax consequences of Oprah Winfrey's giveaway of 276 new Pontiac G-6s to her studio audience in celebration of the 19th season of her talk show (see here, here, and here), culminating in Jon Stewart's hilarious spoof on The Daily Show).

With Tax Profs now in full exam prep mode and desperately looking for diversions, Howard Chapman (Chicago-Kent) sparked a spirited discussion on the TaxProf Discussion List yesterday when he recounted media reports that at an April 10 party celebrating O, The Oprah Magazine's 5th anniversary, Oprah gave $5,000 personal checks to 100 employees. The media reports note that having learned from the Pontiac episode, she wanted the employees to net $5,000 so she wrote the checks from her personal account:

Oprah told her grateful underlings: "I figured I would give you five things you could really use." Best of all, the bonuses were tax-free.

According to an interview on Good Morning America, it appears that Oprah's tax position is based on treating the payments as gifts within the 11k annual exclusion.  But there appears to be no authority for treating the payments as non-taxable gifts rather than as taxable compensation.

April 22, 2005 in Celebrity Tax Lore | Permalink | TrackBack (3)

Garrett and McCaffery Awarded Professorship and Chair at USC

Elizabeth Garrett and Edward J. McCaffery have been awarded a professorship and chair, respectively, at USC.  From the USC press release:

Garretthr_000_1Elizabeth Garrett will be appointed the Sydney M. Irmas Professor of Public Interest Law, Legal Ethics and Political Science. Garrett joined the USC Law faculty in 2003. A widely respected expert on the legislative process, direct democracy, the law of the political process, the federal budget process and administrative law, she is director of the USC-Caltech Center for the Study of Law and Politics and a member of the board of directors of the Initiative and Referendum Institute at USC. She holds a joint appointment with USC’s Department of Political Science. 


Mccaffreynew_1Edward McCaffery will be appointed the Robert C. Packard Trustee Chair in Law and Politics Science, and Visiting Professor of Law and Economics, California Institute of Technology. McCaffery joined the USC law faculty in 1989. An internationally recognized expert in tax law, he studies tax policies, tax structures, and law and economics. He teaches Income Taxation, Public Finance, Property, and Tax Law and Policy at USC and Law and Economics and Law and Technology at the California Institute of Technology. 



April 22, 2005 in Tax Profs | Permalink | TrackBack (0)

No Tax Classics

HeinOnline, the wonderful source of pdf copies of law review articles, has a great web site with 100 Legal Classics.  There are some great books here (including, for example, Blackstone's Commentaries and Story's Commentaries) but, as you may guessed, not a single tax classic.

April 22, 2005 in News | Permalink | TrackBack (0)

Thursday, April 21, 2005

Pratt Presents Normative Justifications for Food Excise Taxes Today at UCLA

Prattbw Ucla_1 Katherine T. Pratt (Loyola-L.A.) presents Normative Justifications for Food Excise Taxes today at UCLA as part of its Tax Policy and Public Finance Workshop series.  Here is the part of the abstract:

Various normative theories have different implications for the implementation of food excise taxes as a response to the obesity epidemic. Under the economic approach, excise taxes on a good are warranted if consumption of the good generates negative externalities or if consumers are making decisions about consumption of the good with incomplete information...

Under the behavioral economic approach, excise taxes might be justified to correct for systematic information-processing and decision-making errors people make with respect to their diets....

Under the critical realist perspective, the focus is on the commercial manipulation of the situation....

Food excise taxes also might be justified under the soft paternalism approach to protect people from their own choices if dietary decision-making is flawed (for example, because of incomplete information). Hard paternalism is a far more controversial and problematic rationale for food excise taxes.

Food excise taxes may be justified as a correction for day-in-day-out systematic information processing and decision-making errors that consumers make with respect to diet. As policymakers consider implementing food excise taxes to respond to the obesity epidemic, they should be careful to design food excise taxes to fit the normative justification for them.

The workshop is from 3:00 - 5:00 pm PST in Room 2448 at UCLA.  For Vic Fleischer's views, see here.

April 21, 2005 in Colloquia | Permalink | TrackBack (2)

Shaviro Presents The Politics of Narrowing the Fiscal Gap Today at NYU

Nyu_5Shavirod_3 Daniel N. Shaviro (NYU) presents The Politics of Narrowing the Fiscal Gap today at NYU as part of its Colloquium on Tax Policy and Public Finance series.  Here is part of the Introduction:

This is a preliminary draft of chapter 4 of a book in progress, tentatively entitled “The Use and Abuse of Fiscal Language.

Fiscal language failures have contributed in two crucial ways to our nation’s recent headlong rush towards a fiscal meltdown. First, they have encouraged viewing massively increased transfers from younger to older generations as “smaller government.” Second, they have permitted the architects of disaster to avoid any accurate public accounting for the magnitude of the generational transfers or the march towards insolvency. This lack of an accounting may have made a major political difference, even though there is widespread awareness of both the tilt towards current seniors and the growing default risk. Still, it would be naïve to think either that a flawed fiscal language is the sole culprit or that improving our fiscal language would guarantee improvement in our policies. There is a lot more at work politically, although fiscal language can importantly shape how choices are viewed.

To understand the politics of narrowing the fiscal gap, a lot more is needed than just denunciation of the last few years of federal budget policy. I see the needed analysis as having five stages. First, what were the politics of creating the fiscal gap? Second, what led to the political consensus from 1982 through 2001 that favored deficit reduction, and thus, however imperfectly given the flaws in the measure, narrowing of the fiscal gap? Third, why did that consensus collapse? Fourth, what must happen in order for policies that again but more decisively narrow the fiscal gap to be politically feasible? Finally, once the political preconditions for narrowing the fiscal gap were back in place, what sorts of budget rules could help push Congress in the right direction?

The Colloquium will be held in Room 202 of Vanderbilt Hall from 4:00 - 6:00 p.m. EST. Although the public is invited to attend, due to heightened security throughout NYU Law, please contact Haydee Torres so she can provide the Guard's desk with your name.

April 21, 2005 in Colloquia | Permalink | TrackBack (0)

Joint Tax Committee Releases Summary Table of Types and Tax Treatment Of § 501(c) Organizations

Blue_book_9The Joint Committee on Taxation yesterday released  Summary Table Of Types And Tax Treatment Of Section 501(c) Organizations (JCX-30-05), a very handy 8-page chart highlighting the characteristics and tax treatment of the organizations exempt from tax under § 501(c)(1) through (c)(28).  As an example, here is the chart for § 501(c)(3) organizations:

Year Exemption Introduced

Nature of Activities

Subject to UBIT?

Taxed on Investment Income?


Religious, Charitable, Scientific, Educational, etc.


Generally No (Except Foundations)

Contributions Deductible?

Subject to Private Inurement Rules?

Required to File Exemption Application?

Number of Entities on File 2004



Yes (Except for Churches)


April 21, 2005 in Gov't Reports | Permalink | TrackBack (0)

Raby & Raby on Shareholder Loans and Basis in S Corporations

Tax_analysts_72 Burgess J.W. Raby & William L. Raby have published Shareholder Loans and Basis in S Corporations, also available on the Tax Analysts web site as Doc 2005-8277, 2005 TNT 76-109  Here is the Conclusion:

S corporation shareholders in need of basis to deduct losses should seriously consider either:

  • contributing assets with sufficient tax basis to the corporation;
  • or borrowing the money needed and making a contribution to capital or a loan.

The tax reality is that shareholders in S corporations that have never been C corporations face no more tax consequences when withdrawing equity from the corporation than when repaying debt. Thus, in the interests of keeping matters simple, we prefer capital contributions rather than loans unless there are nontax reasons -- such as potential corporate insolvency or unwillingness of some shareholders to participate pro rata in what is being done -- that might make a loan position more desirable than a shareholder position.

In any event, the type of meaningless paper swap involved in Perry is a nonstarter. A practitioner would be hard-pressed to sign a return taking losses on that basis, even with full disclosure, because it likely would be deemed a frivolous position. Selfe, on the other hand, holds out some hope for the situation in which the money goes from a third party directly to the S corporation but the shareholder is, in economic reality, the borrower, as in Bolding. Lenders seem to like those arrangements. From a tax planning perspective, however, the client should recognize that direct money transfers from third parties to the S corporation are much more likely to be challenged -- and the outcome of those challenges is uncertain, as witness the Bolding loss in the Tax Court, while the cost of tax controversy can be substantial. Better that the shareholders create a clear paper trail showing that they borrowed the money personally and then contributed or loaned it to the S corporation. Most lenders will go that route if they would have gone the other, all other things, including collateral pledged, being the same.

Finally, there is the Oren situation. When multiple S corporations have substantially identical ownership, the problem of using profits in one to offset losses in another can be handled at the S corporation level by contributing 100 percent of the stock of the additional S corporations to one S corporation and making qualified S corporation subsidiary elections. When that has not been done, it is the path of least resistance to transfer funds from the entity that has or can get the cash to the entity that needs it. Oren illustrates that it is difficult to document those transfers in such a way as to give a shareholder tax basis in the loss entity. The tax practitioner should try to educate the client to resist the direct transfer temptation. Especially when shareholder basis is being sought to support losses, it is far better to take a cash distribution from one entity and then contribute or loan those amounts to the loss entity for which basis is needed.

April 21, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (1)

Colombo and Hill Testify at House Hearing on The Tax Exempt Sector

Us_capitol_4 The House Ways and Means Committee has released the testimony from yesterday's hearing on An Overview of the Tax-Exempt Sector.  According to the Hearing Advisory, the hearing was called:

to examine the legal history of the tax-exempt sector; its size, scope and impact on the economy; the need for congressional oversight; IRS oversight of the sector; and what the IRS is doing to improve compliance with the law. 


April 21, 2005 in Congressional News | Permalink | TrackBack (0)

GAO Releases Report on Governance, Transparency, and Oversight of The Tax-Exempt Sector

Gao_2 The Government Accountability Office yesterday released Tax-Exempt Sector: Governance, Transparency, and Oversight Are Critical for Maintaining Public Trust (52 pages).  Here is the part of the 1-page highlights:

Staffing trends and insufficient data have contributed to IRS being challenged in executing its oversight role. IRS has begun to increase staffing, obtain better data on tax-exempt entities, and increase its capacity to analyze and use the data it obtains. For the critical compliance issues IRS has identified, it has started special initiatives to improve compliance. States often oversee tax-exempt entities, frequently focusing on protecting the public from fraudulent activities and guarding against misuse of charitable assets. States and the IRS believe that more data sharing would make their oversight more efficient and effective. Consistent with our earlier recommendations, IRS has improved its processes for sharing its oversight data with the states, and Congress is considering expanded data sharing.

April 21, 2005 in Gov't Reports | Permalink | TrackBack (0)

Joint Tax Committee Releases Report on Historical Development and Present Law of Federal Tax Exemption for Charities

Blue_book_9The Joint Committee on Taxation has issued Historical Development And Present Law Of The Federal Tax Exemption For Charities And Other Tax-Exempt Organizations (JCX-29-05) (248 pages).  Here is the Introduction:

This document . . . provides a description of the historical development and present law of the Federal tax exemption for charities and other tax-exempt organizations. This document begins with an executive summary. Following the executive summary, Part I of this document provides an overview of organizations exempt from Federal income tax, including statistical information about the sector, reasons for tax exemption, and common tax law features of exempt organizations. Part II describes the history and evolution of the exempt status of organizations described in § 501(c)(3), including a discussion of the meaning of exempt purposes described in § 501(c)(3), the distinction between private foundations and public charities, a general history of the unrelated business income tax, and an overview of related organization structures used by exempt organizations. Part III contains a description of several types of organizations that are described in § 501(c)(3), including a discussion of the change in legal standards over time. Organizations described here are hospitals, elder care facilities, credit counseling organizations, low-income housing organizations, environmental organizations, and college sports organizations. Part IV provides statistical information showing the size and growth of the charitable and exempt sectors. Part V is an overview of tax and nontax benefits of exemption for § 501(c)(3) organizations and a summary of a Congressional Research Service document (included as an Appendix to this pamphlet) that lists the benefits of charitable exemption under Federal and certain State laws. Part VI is a description, including the legislative history, of the many various organizations that may qualify for tax-exempt status.

April 21, 2005 in Gov't Reports | Permalink | TrackBack (0)

Wednesday, April 20, 2005

Schmalbeck Presents Reconsidering Private Foundation Investment Limitations Today at Michigan

Schmalbeckr Michigan_1Richard Schmalbeck (Duke) presents Reconsidering Private Foundation Investment Limitations (forthcoming in the Tax Law Review) today at Michigan as part of its Tax Policy Workshop Series.  Here is part of the Introduction:

This article suggests that the two mainstays of investment regulation of private foundations –the excess business holdings rules of § 4943, and the jeopardizing investment rules of § 4944 – should be reconsidered. The result of reconsidering them, it will be argued, would reasonably be to reform the former and repeal the latter. These suggestions run against a prevailing mood that could be described as a deregulation counter-revolution, characterized by regret that efforts to "unleash" securities markets, public utilities, and the telecommunications industry, among others, may have overshot their marks.

April 20, 2005 in Colloquia | Permalink | TrackBack (0)

SOI Publishes 2002 Individual Income Tax Data

Irs_logo_77 The just-released Statistics of Income Bulletin (Winter 2004-05) includes Individual Income Tax Rates and Shares, 2002, by Michael Parisi (SOI). Here is the summary:

Taxpayers filed just over 130.0 million returns for Tax Year 2002, of which almost 91.0 million (or 69.9%) were classified as taxable returns. This represents a reduction of 4.0% in the number of taxable returns from 2001.

For related tables of data, see here. For related individual income tax statistics, see here.

April 20, 2005 in Gov't Reports | Permalink | TrackBack (0)

New York Law School Presents Annual Tax Lawyering Workshop Today on Beyond Tax Shelters: Written Tax Advice in Practice and Circular 230

NylslogoNew York Law School's Graduate Tax Program presents its Annual Tax Lawyering Workshop today on Beyond Tax Shelters: Written Tax Advice in Practice and Circular 230:

8:45 am: Introduction:  Ann F. Thomas (Managing Director, New York Law School Graduate Tax Program)

9:00 -10:30 am:  Formal Tax Opinions and Estate Plans: Overview of Purpose, Structure and Method:  Chair: Ann F. Thomas (New York Law School)

  • Formal Tax Opinions in Securities Offerings and Transactional Practice, by Kirk Wallace (Skadden, Arps, Slate, Meagher & Flom (New York))
  • Estate Plans, by Eileen Caulfield Schwab (Sidley Austin Brown & Wood (New York))
  • Comments:  Pamela Champine (New York Law School)

10:45 - 1:15 pm:  Introduction to Circular 230  Chair: Alan Appel (Bryan Cave (New York))

  • Context and Development of Revised Circular 230, by Linda Galler (Hofstra)
  • Scope and Application of Circular 230 – Decision Matrixes, by Kathleen McKay (Giancana Bryan Cave (Phoenix))
  • Circular 230 and Estate Planning, by William P. LaPiana (New York Law School)
  • Comments:  Anthony C. Infanti (Pittsburgh)

The workshop will be held in the 5th floor of the Wellington Center at New York Law School.

April 20, 2005 in Tax Conferences | Permalink | TrackBack (0)

Gerzog on How Do D'Ambrosio and Wheeler Fit Into the FLP Debate?

Gerzog_1 Tax_analysts_76 Wendy C. Gerzog (Baltimore) has published How Do D'Ambrosio and Wheeler Fit Into the FLP Debate?, 107 Tax Notes 387 (Apr. 18, 2005), also available on the Tax Analysts web site as Doc 2005-7352, 2005 TNT 74-58:

In her latest Estate and Gift Rap column, Prof. Wendy Gerzog looks at two cases and the family limited partnership and section 2036 debate.

April 20, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Moran Delivers Keynote Addresses at Fisk University and Colorado College

Tuesday, April 19, 2005

Dilley Presents The Truth About Social Security at Florida

Dilley Florida_1Patricia E. Dilley (Florida) presented The Truth About Social Security yesterday at Florida as part of its Faculty Enrichment Series.



April 19, 2005 in Colloquia | Permalink | TrackBack (0)

Tax Consequences of the Bartman Ball

This month's "Shop Talk" column in the Journal of Taxation by Sheldon I. Banoff (Katten, Muchin Zavis Rosenman, Chicago) & Richard L. Lipton (Baker & McKenzie, Chicago) has a fascinating discussion of the tax consequences of the most famous foul ball in baseball history -- the Bartman Ball (named after Cubs fan and scapegoat Steve Bartman who interfered with Moises Alou's attempt to catch the foul ball with the Cubs holding a 3-0 lead in Game 6 of the National League Championship Series (and leading 3-2 in games and just 5 outs away from the World Series)).  Among the issues discussed in First You Beat It, Then You Eat It: Bartman Ball Brings New Food for Thought:

  • Because the ball was purchased by the owner of Harry Caray's Restaurant for over 100k, is the purchase price deductible or must it be capitalized into basis?
  • If the latter, is the purchase amortizable?
  • If so, over what period -- 15 years (sec. 197) or 95 years (since the Cubs last went to the World Series)
  • Because the ball was demolished and bits of yarn added to the restaurant's $11.95 spaghetti sauce sold on Feb. 21-24 of this year, can any remaining basis be recovered on the restaurant's 2005 tax return?

April 19, 2005 in Scholarship | Permalink | TrackBack (0)

Kornhauser on Fairness and the Taxation of the Family

Mkornhause_2 Tax_analysts_88 Marjorie E. Kornhauser (Tulane) has published Fairness and the Taxation of the Family, 107 Tax Notes 376 (Apr. 18, 2005), also available on the Tax Analysts web site as Doc 2005-6493, 2005 TNT 74-57. Here is the Introduction:

The March 23rd meeting of the President's Advisory Panel on Tax Reform focused on perceptions of fairness in the tax system and how taxes affect families.  Each topic by itself is complicated; the intersection of the two compounds that complexity, especially since there is no agreement on the meaning of either "fairness" or "family."  There is an abundance of issues to consider and no shortage of viewpoints on any of them.  In this article I raise some of my favorite issues to help focus discussion on this important topic. Others, of course, will have their own favorites.  I begin by addressing the fairness issue and then discuss the concept of family within the context of specific tax issues, including the choice of taxable unit.

April 19, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Webcast and PowerPoint Presentations from Yesterday's Meeting of President's Tax Reform Panel

Tax_reform_panelA video webcast and PowerPoint presentations are available from yesterday's meeting of the President's Advisory Panel on Federal Tax Reform at the University of Maryland:

This meeting will focus on how state tax systems work, how they interact with the Federal tax system, and lessons about tax reform that can be learned from the experience of the states. In addition, the Panel will examine how our tax system affects decisions by American businesses to make investments in technological innovation and to acquire new tools and equipment.

Panel 1:  How Taxes Affect Business Investment

Panel II: How the Tax Code Interacts with State and Local Tax Systems

April 19, 2005 in Political News | Permalink | TrackBack (0)

Edrey Presents Social Contract and Optimal Taxation Today at Tel Aviv University

Edrey_1 Tel_aviv Yoseph M. Edrey (Haifa University Law School) presents Social Contract and Optimal Taxation today at Tel Aviv University's Tax Policy Colloquium.  Here is the table of contents for the paper:

  • I. Introduction
    • A. The Full Picture: Losses and Gains from Taxes and Public Goods
    • B. The “Reproductivity” Principle
    • C. The Purpose of Taxes
  • II. Demonstration?
    • A. The basic demonstration
    • B. Aren't we forgetting something? Is this the full picture?
  • III. Invisible Hand, Election, Annual Budget Law and Consent
    • A. Taxes Are Based on Consent
    • B. User Fee, Compulsory and Differential Payment?
      • 1. Free Rider and Compulsory Payments
      • 2. Do Different People Use Different Amount of Public Goods and Services

April 19, 2005 in Colloquia | Permalink | TrackBack (0)

Is the AMT Turbo Tax's Fault?

Jack Bogdanski (Lewis & Clark) asks: Is the AMT Turbo Tax's Fault?  See also the NY Times op-ed by Joel Thorndike (Director of Tax History Project and Contributing Editor, Tax Analysts), Hurts So Good (4/15).

April 19, 2005 in Tax Profs | Permalink | TrackBack (0)

Monday, April 18, 2005

Dodge on Theories of Tax Justice

Ssrn_logo_14Dodge_2 Joseph M. Dodge (Florida State) has posted Theories of Tax Justice: Ruminations on the Benefit, Partnership, and Ability-to-Pay Principles (forthcoming, Tax Law Review), on SSRN. Here is the abstract:

This essay considers the benefit, partnership, and ability to pay principles of tax justice with respect to their foundations and how they bear (if at all) on such issues as the role and size of government, the choice of the tax base, and the structure of rates and exemptions. The method of examination is primarily by way of critique of what I call the new benefit principle, or NBP, which has recently been invoked by some commentators. The broad thesis of this essay is that the NBP - as well as its sibling, the partnership theory of (income) taxation - is little more than a rhetorical counter to street Libertarian talk that assumes one's entitlement to market outcomes. The NBP and the partnership theory do not withstand analysis at the level of entitlement theory, and they do not prescribe a politically liberal taxing and spending role for government. Specifically, the NBP and, to a lesser extent, the partnership theory, tell us very little about what the tax system should look like, and they certainly do not favor a Schanz-Haig-Simons income tax base, or, for that matter, any personal tax base with progressive features. Neither can be implemented as a substantive tax fairness principle. In contrast, an objective ability-to-pay principle is compatible with leading social justice theories and clearly favors a realization income tax base. I also argue, contrary to Murphy & Nagel and Kaplow & Shavell, that the ability-to-pay principle, as a norm of tax fairness, has a legitimate (if not pre-emptive) role in tax theory.

April 18, 2005 in Scholarship | Permalink | TrackBack (0)

SOI Publishes Reconciling Corporation Book and Tax Net Income, 1995-2001

Irs_logo_77 The just-released Statistics of Income Bulletin (Winter 2004-05) includes Reconciling Corporation Book and Tax Net Income, Tax Years 1995-2001, by George Plesko (MIT, Sloan School of Management) & Nina Shumofsky (SOI). Here is the summary:

Differences in accounting rules for financial (book) and tax reporting purposes can lead to differences in the amount of income reported to shareholders and tax authorities. The differences in book and taxable income are reconciled for tax reporting purposes in Schedule M-1 of Form 1120. The Spring 2002 Statistics of Income Bulletin contained a detailed explanation of Schedule M-1 reconciliation with data for Tax Years 1996–1998. This article provides an overview of an updated and expanded set of Schedule M-1 tabulations for Tax Years 1995–2001.

For related corporation tax statistics, see here.

April 18, 2005 in Gov't Reports | Permalink | TrackBack (0)

Hamill on A Moral Perspective on "Big Business" Fair Share of America's Tax Burden

Ssrn_logo_15 Hamill_2 Susan Pace Hamill (Alabama) has published A Moral Perspective on "Big Business" Fair Share of America's Tax Burden, 1 Univ. St. Thomas L.J. 857 (2004). Here is the abstract:

This article applies the ethical frameworks of utilitarian ethics, egoism and virtue ethics to the questions of whether progressive versus flat tax structures are more fair. This article also examines the economic theory of supply side economics, often cited by proponents of flat and consumption tax structures, as well as the theory of marginal utility, often cited by proponents of progressive tax structures. The article concludes that neither theory offers any reliable scientific information backing up either structure.

April 18, 2005 in Scholarship | Permalink | TrackBack (0)

America's Favorite Hollywood Tax Accountant

IMDB's April 15 on-line poll asked: "Which movie accountant would you trust most to do your taxes for you?"  See if you can guess the #1 answer (who received 34.5% of the 7990 votes):

  • Bud Cort (The Life Aquatic with Steve Zissou)
  • Danny Glover (The Royal Tenenbaums)
  • Ben Kingsley (Schindler's List)
  • Rick Moranis (Ghostbusters)
  • Gene Wilder (The Producers)

(Thanks to the Tax Guru for the tip.)

April 18, 2005 in Celebrity Tax Lore | Permalink | TrackBack (0)

Willens on Expanding the Contours of a Straddle

Tax_analysts_87 Robert Willens (Lehman Brothers, New York) has published Expanding the Contours of a Straddle:  "DECS" Are Ensnared, 107 Tax Notes 246 (2005), also available on the Tax Analysts web site as Doc 2005-6284, 2005 TNT 69-33. The article examines a recent technical advice memorandum (TAM 2005-09-022) in which the IRS concluded that two contingent debt instruments created a straddle.

April 18, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Welcome Back to the Tax Blogosphere: Vic Fleischer

New_blogs Victor_fleischer A hearty welcome back to Vic Fleischer (UCLA), who rejoined the tax blogosphere last week with A Taxing Blog.  As recounted in Tax Bloggers Use Internet To Widen Tax Policy Appeal, 105 Tax Notes 1498 (Dec. 13, 2004), Vic and Jeffrey Kahn (Santa Clara) launched the tax blog movement with their article,  A Taxing Blog: The Uneasy Case for Blogging Taxation, and blog (A Taxing Blog), which lay dormant from October 13, 2003 until last week.

Vic describes the purpose of his blog as follows:  "For taxprofs, policy wonks, and other shameless tax nerds. Also a good deal of ranting about economics, deals, corporate finance, and venture capital."

By my count, Vic is the sixth tax professor with a blog:

When I joked to Vic that he was trying to put me out of business by reviving his blog, he kindly posted that "we're complements, not substitutes. Paul's blog is like the news section of the paper, and I'm the op-ed page."  I urge you to add Vic to your regular blogroll.

April 18, 2005 in Tax Profs | Permalink | TrackBack (0)

Sunday, April 17, 2005

Tax Cartoons

The Tax Guru has a wonderful roundup of April 15 tax cartoons.  My favorites are here, here, here, here, here, here, and here.

April 17, 2005 in Political News | Permalink | TrackBack (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is a lot of movement on this week's list of the Top 5 Tax Paper Downloads on SSRN, with 3 new papers and a new #1:: 

1.  Bias in Quarterly Estimates of Annual Effective Tax Rates and Earnings Management Incentives, by Johann Joseph Comprix (Arizona State University, W.P. Carey School of Business), Lillian F. Mills (University of Arizona, Eller College of Business and Public Administration) & Andrew Schmidt (Columbia Business School)

2.  Three Views of Tax, by Edward J. McCaffery (USC)

3.  The Missing Preferred Return, by Victor Fleischer (UCLA)

4.  Statistical, Identifiable and Iconic Victims and Perpetrators, by George Loewenstein (Carnegie Mellon University, Department of Social and Decision Sciences), Deborah Small (University of Pennsylvania, Wharton School) & Jeff Strnad (Stanford Law School)

5.  Taxes, Estate Planning and Financial Theory: New Insights and Perspectives, by Robert M. Dammon (Carnegie Mellon University, Tepper School of Business), Chester S. Spatt (Carnegie Mellon University, Tepper School of Business) & Harold H. Zhang (University of North Carolina, Kenan-Flagler Business School)

April 17, 2005 in Top 5 Downloads | Permalink | TrackBack (0)

Pdf Copies of President Bush and Vice-President Cheney's 2004 Tax Returns

Form_1040_1 President Bush and Vice-President Chaney have released copies of portions of their tax returns: 


Seal_1President Bush's 2004 Tax Return (10 pages, but no statements)

      • $784,291 AGI
      • $111,431 itemized deductions (including $77,785 charitable deduction)
      • $672,788 taxable income
      • $207,335 tax liability (no AMT)
      • $38,534 refund

Vp_sealVice-President Cheney's 2004 Tax Return (just Form 1040, with no schedules or statements) (2 pages)

      • $1,734,373 AGI
      • $405,695 itemized deductions (including $303,354 charitable deduction)
      • $1,328,678 taxable income
      • $393,518 tax liability (no AMT)
      • $102,663 tax owed

For press and think tank analysis, see:

TaxProf Blog maintains in the left column a permanent link to the Tax History Project at Tax Analysts, which contains copies of Presidential tax returns of:

  • George W. Bush
  • Bill Clinton
  • George H.W. Bush
  • Ronald Reagan
  • Jimmy Carter
  • Gerald Ford
  • Richard Nixon
  • Franklin Delano Roosevelt

April 17, 2005 in Political News | Permalink | TrackBack (1)

Cummings on No-Net-Value and Type D Reorganizations

Tax_analysts_86Jasper L. Cummings, Jr. (Alston & Bird, Atlanta) has published No-Net-Value and Type D Reorganizations, 107 Tax Notes 249 (2005), also available on the Tax Analysts web site as Doc 2005-6285, 2005 TNT 69-34. Here is the Introduction:

On March 9, 2005, the Treasury issued proposed regulations on so-called no-net-value transfers in what might be nonrecognition transfers to or by corporations, principally under §§ 332, 351, and 368.  The proposal attempts to resolve three big issues in the little subchapter C world:

  1. Can an insolvent corporation reorganize? (Answer: no, except when the creditors become the shareholders.)
  2. How is Helvering v. Alabama Asphaltic Limestone Co., which says that sometimes a corporation's creditors are its equity owners for reorganization purposes, applied? (Answer: sort of like Atlas Oil and Refining Corporation applied it.)
  3. Are we stuck with Spaulding Bakeries Inc. v. Commissioner and H.K. Porter Co., which say that § 332 does not apply if the parent does not receive a distribution on all classes of subsidiary stock it owns? (Answer: yes, but the liquidation may be a Type C reorganization instead of a taxable liquidation, which sort of defeats the purpose of upholding Spaulding Bakeries.)

April 17, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Nevada May Tax Brothels

MSNBC reports that Nevada's legislature is considering a bill that would tax the state's 28 legal brothels:

The brothels pay local taxes and license fees but have never been taxed by the state, which under the bill would impose a 10 percent tax on drinks and food and collect a $2 fee on each customer. The Nevada Brothel Association backs the bill, but not all bordello owners think it is a good idea.

Dennis Hof, owner of Moonlite BunnyRanch in Carson City, where the HBO "Cathouse" television show is filmed, said a bordello tax would be "ridiculous.  I'm paying big license fees," Hof said of the fees he pays to operate two bordellos in Lyon County. "If you had two McDonald's and sell 50 million hamburgers a year, it would cost you $300. I sell a little bit of sex and it costs me $200,000 a year. That's enough."

April 17, 2005 in News | Permalink | TrackBack (0)

Treasury Releases State-by-State Breakdown of Tax Cuts

Irs_logo_79The Treasury Department has released (JS-2379) state-specific data illustrating the benefits of the tax relief as a result of the Tax Reform Acts of 2001 and 2003.  Here are some of the most populous states:

For the other 45 states and the District of Columbia, see here.

April 17, 2005 in IRS News | Permalink | TrackBack (0)

GAO Releases Report on Reducing the Tax Gap

Gao_2 The Government Accountability Office has released Tax Compliance: Reducing the Tax Gap Can Contribute to Fiscal Sustainability but Will Require a Variety of Strategies (31 pages).  Here is the abstract:

The IRS's recent estimate of the difference between what taxpayers timely and accurately paid in taxes and what they owed ranged from $312 billion to $353 billion for tax year 2001. IRS estimates it will eventually recover some of this tax gap, resulting in a net tax gap from $257 billion to $298 billion. The tax gap arises when taxpayers fail to comply with the tax laws by underreporting tax liabilities on tax returns; underpaying taxes due from filed returns; or "nonfiling," which refers to the failure to file a required tax return altogether or in a timely manner. The Chairman and Ranking Minority Member of the Senate Committee on Finance asked GAO to review a number of issues related to the tax gap. This testimony will address GAO's longstanding concerns regarding tax compliance; IRS's efforts to ensure compliance; and the significance of reducing the tax gap, including some steps that may assist with this challenging task. For context, this testimony will also address GAO's most recent simulations of the long-term fiscal outlook and the need for a fundamental reexamination of major spending and tax policies and priorities.

Our nation's fiscal policy is on an unsustainable course. As long-term budget simulations by GAO, the Congressional Budget Office, and others show, over the long term we face a large and growing structural deficit due primarily to known demographic trends and rising health care costs. All simulations indicate that the long-term fiscal challenge is too big to be solved by economic growth alone or by making modest changes to existing spending and tax policies. Rather, a fundamental reexamination of major policies and priorities will be important to recapture our fiscal flexibility. Especially relevant to this committee will be deciding whether and how to change current tax policies and how to ensure that tax compliance is as high as practically possible. Tax law enforcement is one factor affecting compliance that has caused concern in the past, due in part to declines in IRS enforcement occupations, examinations, and other enforcement results. The recent turnaround in staffing and some enforcement results is good news, but IRS's recent compliance estimate indicates that compliance levels have not improved and may be worse than it originally estimated. Thus, sustained progress in improving compliance is needed. Reducing the tax gap would help improve fiscal sustainability, but will be challenging given persistent noncompliance. This task will not likely be achieved through a single solution. Rather, the tax gap must be attacked on multiple fronts and with multiple strategies over a sustained period of time, including reducing tax code complexity, providing quality services to taxpayers, enhancing enforcement of tax laws, and evaluating the success of IRS's efforts to promote compliance. Also important is obtaining current information on the extent of, and reasons for, noncompliance. IRS's 2001 tax gap estimate is based in part on recently collected compliance data for individual income tax underreporting. However, IRS does not have firm plans to obtain compliance data for other areas of the tax gap or again collect data on individual income tax underreporting. Finally, IRS lacks quantitative, long-term goals for improving taxpayer compliance, which would be consistent with results-oriented management.


April 17, 2005 in Gov't Reports | Permalink | TrackBack (0)

Saturday, April 16, 2005

Spotlight_2Deborah A. Geier (Cleveland State)

      • A.B., 1983, Baldwin-Wallace College
      • J.D. 1986, Case Western Reserve University


Geier_tnIn this three-part series, we profile the authors of one of the truly great federal income tax casebooks: Federal Income Tax: Doctrine, Structure and Policy -- Text, Cases, Problems (LexisNexis, 3d ed. 2004), by Joseph M. Dodge (Stearns Weaver Miller Weissler Alhadeff & Sitterson Professor of Law, Florida State), J. Clifton Fleming Jr. (Associate Dean & Ernest L. Wilkinson Professor of Law, Brigham Young University, J. Reuben Clark Law School), and Deborah A. Geier (Leon M. and Gloria Plevin Endowed Professor of Law, Cleveland State University, Cleveland-Marshall College of Law).

To earn my tuition as a student at Fairview Hospital School of Nursing in Cleveland in the mid 1970s, I worked at Rose Bridal Shoppe at 18th and Euclid downtown selling wedding gowns. On the other side of 18th and Euclid was Cleveland-Marshall College of Law, Cleveland State University. I remember thinking back then, “Wow, law school. There must be a lot of smart people in that building.” When I began working as a registered nurse in 1978 in Maternity Surgery (labor and delivery) at Fairview Hospital, I still had no inkling that I would someday be a lawyer and then law professor. But I had started to take classes during the day (I worked evening shift) at Cleveland State University for my undergraduate degree immediately upon graduating from nursing school, just because I wanted to be a college graduate. (I’ve always loved academics.) As I became increasingly dissatisfied as a registered nurse, however, my studies became the means to change careers. I began to think (audaciously, I thought) that I could, indeed, be a lawyer. When I learned that Baldwin-Wallace College in Berea (a Cleveland suburb) would give me a year’s worth of college credit for my three years of nursing school, I transferred. Even though the tuition at this private school was much higher, I could graduate that much sooner and get to law school. For one sleep-deprived year, I even went to school full time during the day and worked full time during the evening as the Assistant Head Nurse of Maternity Surgery, finally graduating with my bachelor’s degree in Psychology in 1983. I then took a deep breath, took the LSAT, and applied to the two Cleveland law schools. I was accepted to both and decided to attend CWRU. (I continued to work as an R.N. through my first two years of law school.)

When I started law school, I naturally assumed that I would somehow combine my background in medicine and the law. But then I took Basic Tax with Erik Jensen, and I was hooked. I took every tax class with Erik, Leon Gabinet, and Karen Nelson Moore (now a 6th Circuit judge) that I could. And I’ve followed in Erik Jensen’s footsteps ever since: clerking for the same federal judge for whom he clerked (Monroe G. McKay in the 10th Circuit), joining the tax group at Sullivan & Cromwell in New York, where he worked, and becoming a law professor in Cleveland (albeit at the other school, across the street from where I once worked selling wedding gowns).

I love living in Cleveland, where 5 of my 7 nieces and nephews live, and where the Cleveland Orchestra and Cleveland Indians both play (two of my favorite organizations). But I do enjoy visiting elsewhere every now and then, and have done so at the Universities of Florida (Gainesville), Michigan (Ann Arbor), and Alabama (Tuscaloosa). Next spring, I’ll be visiting at Washington University Law School in St. Louis. Because they have been kind enough to offer to pay for flights back and forth each week, I won’t have to miss my beloved Cleveland Orchestra concerts—or my weekly cello lesson. Yes, as an adult beginner student with no music lessons as a kid, I started cello lessons two years ago. As you might expect of an adult beginner student, I’m pretty awful, but I absolutely enjoy it to death. The members of the Cleveland Orchestra cello section certainly have nothing to fear from me, though.

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.

April 16, 2005 in Tax Prof Spotlight | Permalink | TrackBack (0)

Shapiro & Wrappe on The Periodic Adjustments for Intangibles

Wrappe Tax_analysts_logo_30 ShapiroAlan Shapiro & Steven Wrappe (both of Deloitte) have published IRS Comments on Periodic Adjustments for Intangibles:  Looking for the Silver Lining, also available on the Tax Analysts web site as Doc 2005-6378, 2005 TNT 71-8.  Here is the Introduction:

In January 2005, the IRS for the first time in over 10 years provided public comments on the interpretation of the commensurate with income standard and the requirement to make periodic adjustments. The IRS apparently has been considering the need for further guidance in this area as part of the expanding project to propose amendments to the cost-sharing regulations. The comments, if included in regulations, could substantially limit a taxpayer's ability to affirmatively use the commensurate with income standard and periodic adjustments in many situations. However, they could also provide welcome clarification of a taxpayer's ability to shift risk without running afoul of the periodic adjustment rules.

April 16, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Hellwig & Polsky on Taxing the Promise to Pay

Polskyg_2 Hellwig_1 Ssrn_23 Brant J. Hellwig (South Carolina) & Gregg D. Polsky (Minnesota) have posted Taxing the Promise to Pay (forthcoming in the Minnesota Law Review) on SSRN.  Here is the abstract:

The IRS recently disclosed that it has identified more than 100 executives at 42 leading public corporations that participated in a tax shelter designed to defer the recognition of income from the exercise of stock options. While the agency thus far has identified approximately $700 million in unreported gains from these shelters, it predicts that the revenue loss to the government will ultimately exceed $1 billion. Compared to most tax shelters, this particular transaction (commonly known as the "Executive Compensation Strategy" or "ECS") is remarkably simple. Rather than exercise the options individually, a participating executive instead transfers the options to a family limited partnership in exchange for the partnership's 30-year unsecured balloon promissory note. Very shortly thereafter, the partnership exercises the options, sells the underlying shares, and invests the proceeds in other investments. Pro-moters of the shelter claim that the partnership takes a cost basis in the options, resulting in little or no gain to the partnership upon exercise. Meanwhile, promoters assert, the executive does not realize income until principal payments are made the on the note 30 years in the future.

This shelter can be attacked from a variety of perspectives. Commentators who have previously examined the shelter have focused on whether the sale of the options to the partnership is made at arm's length. If the sale does not constitute an "arm's length transaction," regulations under IRC Section 83 effectively disregard the sale, causing the executive to recognize income when the partnership exercises the option and defeating the purpose of the shelter. Unfortunately, because the arm's length issue is inherently dependent upon the unique facts and circumstances of each transaction, it is not an ideal "silver bullet" issue for attacking the shelter.

Another way to attack the shelter is to argue that the mere receipt of the partnership's promise to pay constitutes a taxable event for the executive, thereby undermining completely the goal of the shelter. This Article analyzes this issue, concluding that, because the partnership's promise constitutes a third-party compensatory promise (i.e., one made by a party external to the service relationship), it is immediately taxable to the executive upon receipt. In discussing this issue, the Article examines the origin and development of the economic benefit doctrine, as well as the history and purpose of IRC Section 83. The Article closes with an explanation of why limiting tax deferral to the second-party promise context comports with sound tax policy.

April 16, 2005 in Scholarship | Permalink | TrackBack (0)

Friday, April 15, 2005

One Year Anniversary of TaxProf Blog

One_year_anniversaryPlease join with me today in celebrating the one year anniversary of TaxProf Blog.  I hope we have at least partially succeeded in our mission (announced in our very first post here) to provide both (1) permanent resources & links, and (2) daily news & information, of interest to law school tax professors, tax lawyers in private practice and government, and others in the tax community.  In our first year of operation, we have, among other things:

Thank you for joining us in our first year.  I hope you will stick around for what I hope will be many years to come.  I have opened the comment feature if you would like to share your thoughts on the blog and how we can serve you better in the future.

April 15, 2005 in About This Blog | Permalink | Comments (1) | TrackBack (2)

Symposium Today on The Next Generation of Law School Rankings

IndianaFollowing up on our recent article, What Law Schools Can Learn from Billy Beane and the Oakland Athletics, 82 Texas L. Rev. 1483 (2004), Rafael Gely and I are moderating a symposium on The Next Generation of Law School Rankings today at Indiana-Bloomington:

The U.S. News & World Report annual law school rankings are the 800-pound gorilla of legal education. Although met with varying degrees of skepticism and hostility, the U.S. News rankings affect virtually all aspects of law school operations. A myriad of alternative rankings have emerged in recent years, seeking better and more accurate ways of measuring law school performance. The goal of this symposium is to deepen our understanding of rankings and their effects on legal education. The participants in this symposium will examine the need for law school rankings; the effects of rankings on legal education; and the various new approaches to addressing the public's insatiable demand for ever more and increasingly sophisticated rankings, which permeate not only legal education but also all aspects of American life.

8:30 - 8:35 a.m.  Lauren Robel (Dean, Indiana), Welcome

8:35 - 8:45 a.m.  Paul L. Caron (Cincinnati) & Rafael Gely (Cincinnati), Introduction

Panel 1:  Framing the Rankings Debate

8:45 - 9:05 a.m.  Papers

9:05 - 9:20 a.m.  Commentary

9:20 - 9:35 a.m.  Questions and Discussion

Panel 2:  Ranking Methodologies

9:35 - 10:20 a.m.  Papers:

10:20 - 10:40 a.m.  Commentary:

10:40 - 10:55 a.m.  Questions and Discussion

10:55 - 11:10 a.m.  Break

Panel 3:  Ranking Methodologies

11:10 - 11:55 a.m.  Papers:

11:55 a.m. - 12:15 p.m.  Commentary:

12:15 - 12:30 p.m.  Questions and Discussion

12:30 - 1:45 p.m.  Lunch

Panel 4:  Other Voices in the Rankings Debate

1:45 - 2:15 p.m.  Papers:

2:15 - 3:00 p.m.  Commentary

3:00 - 3:30 p.m.  Questions and Discussion

3:30 - 3:35 p.m.  Jeffrey E. Stake (Indiana), Closing Comments

The symposium is made possible through the generous financial support of Foundation Press, Thomson-West, and the Indiana-Bloomington School of Law.

April 15, 2005 in Tax Conferences | Permalink | TrackBack (0)

Sullivan on Tax Reform Blues for the Blue States

Sullivan Tax_analysts_logo_31 Martin A. Sullivan (Contributing Editor, Tax Analysts) has published Tax Reform Blues for the Blue States, 107 Tax Notes 174 (2005), also available on the Tax Analysts web page as Doc 2005-7184, 2005 TNT 69-4.  Here is part of his provocative argument:

There is a striking relationship between high-tax states and states that supported Democratic Sen. John Kerry of Massachusetts in the last presidential election (so-called "blue states" because that is invariably how they are depicted on color television). All of the top 10 states listed in Table 1 went to Kerry in 2004. Of the bottom 10, all but one went for Bush. The figure below illustrates the lopsided burden placed on blue states. Although Kerry states are home to less than half the country's voters, they account for more than two-thirds of the deduction for state and local taxes.

April 15, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)