Paul L. Caron

Tuesday, January 31, 2006

Dean Responds to Santa Clara's Fall into U.S. News 3rd Tier

Santa_clara_jpegDean Donald Polden has issued a detailed response to Santa Clara's fall into the Third Tier (from #94 in 2005) in the 2006 U.S. News & World Report Law School Rankings.

January 31, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Solomon Delivers Annual NYU/KPMG Lecture Today on Circular 230 -- Impact on the Tax Profession


Eric Solomon (Deputy Assistant Secretary for Regulatory Affairs and Acting Deputy Assistant Secretary for Tax Policy, Treasury Department) delivers the Sixth Annual Lecture on Current Issues in Taxation, Circular 230 -- Impact on the Tax Profession.  The lecture is sponsored by the NYU Graduate Tax Program and KPMG. Also participating in the program are:

There is a reception at 5:00 - 6:00 pm, with the program at 6:00 - 8:00 pm. The location is NYU School of Law, Greenberg Lounge, 40 Washington Square South.  For more information, email here.

January 31, 2006 in Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Halperin Presents Taxation of Investment Income of Charities Today at Penn

Halperin_4 Penn_1Daniel Halperin (Harvard) presents As to Taxation of Charities -- The Issue Is Investment Income today at Penn as part of its Tax Policy Workshop Series.  Here is the Conclusion:

Whether the investment income of public benefit organizations should be taxed depends upon a value judgment regarding the trade off between current and future spending. Given an income tax which taxes investment income, the preference for deferred spending for charitable purposes may be greater than the preference for current spending. However, for the organization to be neutral between current and future spending, investment income may have to be exempt. Such exemption could encourage savings without the potential harm of a universal consumption tax, at least in some circumstances. Exemption would be reinforced if it were felt that the tax law should support or at least be neutral with respect to building an endowment. On the other hand, one might want a bias in favor of current spending if it is felt that under the current system endowments and charitable savings are likely to be larger than public policy would suggest.

Even if investment income were to be taxed, income from related activities is probably appropriately exempt. Here accumulation of an excessive endowment is not a concern. In many cases, exemption could be justified as consistent with normal tax principles. Even if tax would normally apply, as might be the case of funds used for a capital expenditure, exemption could facilitate the expansion of the organization, which in some circumstances could be desirable public policy.

The workshop begins at 4:30 p.m. EST in Gittis 1.

January 31, 2006 in Colloquia | Permalink | Comments (0) | TrackBack (0)

NY Times on Incentive Trusts

Interesting article in the New York Times, In Some Trusts, the Heirs Must Work for the Money, by Catherine M. Allchin:

In traditional trusts, beneficiaries receive money at a certain age, but in incentive trusts, heirs must reach milestones or take actions. For example, children might receive a $25,000 bonus when they graduate from college or marry. Or they might receive funds matching money they earn....

Money "is a two-edged sword," said George S. Holzapfel, an estate planning lawyer at Lasher Holzapfel Sperry & Ebberson in Seattle. "We've seen children get large sums of money before they're ready, and it can ruin their lives." Mr. Holzapfel recommends this type of trust to his affluent clients with young children. Many people want an incentive trust, he said, "so that if they happen to die early, their kids can still develop a strong work ethic and a good sense of values." Mr. Holzapfel, who has many wealthy clients in the technology and real estate fields, says he has seen a growing interest in performance-based trusts....

Critics, however, call incentive trusts too inflexible and say that some parents can be too controlling. A trust that offers a dollar for every dollar earned can be unfair, the critics say, because it gives big rewards to already-successful business people and much smaller amounts to heirs who may work just as hard but have chosen careers as, say, artists or teachers. (And unless other provisions are made in the trust, homemakers and volunteers may get nothing.) Critics also say that some incentives may go so far as to pay children to provide their parents with grandchildren.

For blogospere discussion, see:

January 31, 2006 in News | Permalink | Comments (0) | TrackBack (0)

Macey on Government as Contractual Claimant: Tax Policy and the State

Macey_1 Ssrn_logo_80 Jonathan R. Macey (Yale) has posted Government as Contractual Claimant: Tax Policy and the State on SSRN.  Here is the abstract:

This Article analogizes the state, in its role as tax collector, to that of an investor, or to be more precise, that of a residual claimant on the earnings of all of the people and firms subject to the taxing power of the state. The relationship between modern democracy and its citizens would be strengthened if this analogy were more widely acknowledged because it recognizes citizen-taxpayers as contracting partners with the state. Unlike other libertarian conceptions of the state’s taxing authority, the framework developed here does not jeopardize the state’s ability to collect the revenues it needs to provide for the protections of its citizens.

The state-as-investor framework developed in this Article leads to a number of tax policy improvements. The framework suggests limits on the government’s ability to change people’s tax status after they have already embarked on careers and made the sunken, non-diversifiable investments in human capital that such career training requires. The framework advanced here also suggests that people should be able to make a once-in-a lifetime payment in lieu of taxes to the state in order to discharge their tax liability. This approach articulated here also seems superior to the utopian suggestion offered by Ayn Rand that taxation be voluntary, as well as to the unrealistic suggestion made by Nozick that income taxes are violative of man’s natural rights.

January 31, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Oil Companies Report Record Earnings, Pay Record Taxes

Tax_foundation_logo_6In light of the media frenzy over the record 2005 earnings reported yesterday by Exxon Mobil and renewed calls for federal and state windfall profits taxes aimed at oil companies, the Tax Foundation this morning issued an interesting "Fiscal Fact" report,  Large Oil Industry Tax Payments Undercut Case for "Windfall Profits" Tax:

It is important to remember that net income reported on financial statements, is the result of subtracting income-based taxes from corporate gross earnings. Before shareholders receive a return on their investment, the government takes its significant share off the top. During 2005, these three companies paid a combined corporate income tax burden of $44.3 billion on their reported gross earnings. Compared to last year’s combined corporate income taxes of $29.7 billion, their burden for 2005 has increased by 49.2% and follows the overall trend of escalating corporate tax collections in the United States. In addition to corporate income taxes, the same companies paid or remitted over $114.5 billion in other taxes in 2005, including franchise, payroll, property, severance and excise taxes.


Pre-Tax Income

Corporate Income Tax

Corporate Tax Rate

Corporate Tax Per Employee











Exxon Mobil










Update:  Wall Street Editorial here.

January 31, 2006 in Think Tank Reports | Permalink | Comments (3) | TrackBack (0)

Tax-Exemption for Church Parking Lots

Howard Bashman has a round-up of newspaper articles about a recent split Pennsylvania Supreme Court decision, Wesley United Methodist Church v. Dauphin County Board of Assessment Appeals, No. 105-MAP-2004 (Pa. 12/30/05), permitting a church to treat its parking lot as tax-exempt property for local property tax purposes:

Appellant contends this Court’s decision in Second Church of Christ Scientist of Philadelphia v. City of Philadelphia, 157 A.2d 54 (Pa. 1959), is controlling and directly on point. In Second Church, two churches sought real estate tax exemptions for parking lots located on land contiguous to their buildings. This Court held church parking lots are not exempt from taxation as they are not “actual places” of religious worship and are not “necessary” for occupancy and enjoyment.

Times have changed since Second Church was decided in 1959. In this day and age, parking lots may be a necessity for a church, rather than just a convenience. People and churches have both moved away from towns, and many people are no longer living within walking distance of their church. To attend, they are required to drive and park a vehicle. With no available parking, church-goers may be forced to seek religious expression elsewhere, causing a decrease in membership and impeding the ability of the church to exist.

Section 204(a)(1) of the Assessment Law allows for tax exemption of ground adjacent to the church building which is necessary to permit actual worship. Just as appellant has granted tax exemptions to churches required by zoning ordinances to provide parking, the Church has established its parking lot is entitled to an exemption because it is “necessary for the occupancy and enjoyment of [Wesley].” Testimony established the parking lot was reasonably necessary and the Church could not exist without it. Based on this testimony, the granting of the tax exemption for the two parcels was in compliance with both the Constitution and the Assessment Law as being necessary. We hasten to point out that we do not hold all church parking lots are entitled to taxexempt status. However, if a church proves its parking lots are a reasonable necessity to the existence of the church itself, those lots are entitled to such status.

Chief Justice Cappy filed a blistering dissent, concluding:

[In Second Church,] we articulated the parameters that the Constitution required for the tax exempting statute, stating: ”The status of an actual place of worship has not been extended beyond ingress and egress, and light and air. We see no reason or, permission, because of the constitutional provision to extend it farther.” Accordingly, we concluded that parking is an adjunctive use of property that is not part of actual worship, and held that the churches were not entitled to the tax exemption they sought.

[O]n one point, the majority is correct -- “Times have changed since Second Church was decided in 1959.” The Pennsylvania Constitution in relevant part, however, has not. Therefore, Second Church remains the law and is controlling. Simply put, under its teaching, a tax exemption to the Church for its parking lot is violative of Article VIII, Section 2(a)(i) of the Pennsylvania Constitution and Section 204 of the General County Assessment Law.

For press reports, see:

January 31, 2006 in New Cases | Permalink | Comments (0) | TrackBack (0)

Graduates of Higher-Ranked Business Schools Get More Pay, Not Necessarily Better Education

There is an interesting article in today's Chronicle of Higher Education, Graduates of Best Business Schools Don't Always Draw Top Pay, Study Finds, by Katherine S. Mangan.  The article reports on a new study published in the Academy of Management Journal (Dec. 2005/Jan.2006), Being Good or Being Known: An Empirical Examination of the Dimensions, Anyecedents, and Consequences of Organizational Reputation, by Violina P. Rindova (R. H. Smith School of Business, University of Maryland), Ian O. Williamson (R. H. Smith School of Business, University of Maryland), Antoaneta P. Petkova (R. H. Smith School of Business, University of Maryland) & Joy Marie Sever (Harris Interactive).  Here is the abstract of the study:

Management researchers recognize organizational reputation as a valuable intangible asset that contributes to organizational performance. However, they have paid limited attention to the extent to which reputation encompasses different stakeholders’ perceptions that may have differential effects on the positive economic outcomes associated with the possession of a favorable reputation. In this paper we argue that organizational reputation consists of two dimensions that reflect: (1) the extent to which stakeholders perceive an organization as being able to produce quality goods; and (2) the extent to which the organization is prominent in the minds of stakeholders. We develop and test a model of the distinct antecedents and consequences of these dimensions of reputation in the empirical context of U.S. business schools. We find that prominence, which derives from the choices of influential third parties vis-à-vis an organization, contributes significantly to the price premium associated with the possession of a favorable reputation.

January 31, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Updated SSRN Rankings of Tax Faculty

Ssrn_logo_71SSRN has updated its new monthly rankings of 307 American and international law school faculties and 1,500 law professors by (among other things) the number of paper downloads from the SSRN data base.  Here is the new list (through January 1, 2006) of the Top 25 Tax Faculty in two of the SSRN categories: all-time downloads and new downloads (within the past 12 months):

                                                             Top 25 Tax Faculty SSRN Rankings

  All-Time Downloads

  Recent Downloads

Tax Faculty (School)

Tax Rank

Overall Rank

Tax Rank

Overall Rank

Louis Kaplow (Harvard)





Edward McCaffery (USC)





David Schizer (Columbia)





David Walker (BU)





Paul Caron (Cincinnati)





David Weisbach (Chicago)





Reuven Avi-Yonah (Michigan)





Steve Bank (UCLA)





Victor Fleischer (UCLA)





Terrence Chorvat (George Mason)





Daniel Shaviro (NYU)





Richard Kaplan (Illinois)





Elizabeth Garrett (USC)





Sam Thompson (UCLA)





Barbara Fried (Stanford)





Lee Anne Fennell (Illinois)





Jeff Strnad (Stanford)





Theodore Seto (Loyola-L.A.)





Joseph Bankman (Stanford)





Calvin Johnson (Texas)





Kyle Logue (Michigan)





Tanina Rostain (New York)





Kirk Stark (UCLA)





Susan Pace Hamill (Alabama)





Leandra Lederman (Indiana)





Michael Asimow (UCLA)





David Duff (Toronto)





Michael Knoll (Pennsylvania)





Joseph Dodge (Florida State)





Hugh Ault (BC)





Note that this ranking includes tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

The other SSRN ranking categories are:

These rankings, of course, are imperfect measures of faculty scholarly performance -- as are the existing ranking methodologies of reputation surveys, productivity counts, and citation counts. Our modest claim in our forthcoming article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. ___ (2006) (Symposium on The Next Generation of Law School Rankings), is that the SSRN data can play a role in faculty rankings along with these other measures.  Bill Henderson (Indiana) thinks we are too modest, and that SSRN may provide a better measure of faculty performance than these other methodologies.

January 31, 2006 in Tax Prof Rankings | Permalink | Comments (0) | TrackBack (0)

Camp on Posner and Easterbrook's Disagreement on the Meaning of "Tax Return" in Payne

Camp_2 Tax_analysts_257Bryan T. Camp (Texas Tech) has published The Function of Forms, 110 Tax Notes 531 (Jan. 30, 2006), also available on the Tax Analysts web site as Doc 2006-979, 2006 TNT 20-39. Here is part of the Introduction:

Judges Posner and Easterbrook [disagreed] in the case of In re Payne, 2005 U.S. App. LEXIS 27243 (7th Cir. Dec. 14, 2005) [blogged here]. There, two of the greatest legal minds on the current federal bench quarrel over the meaning of the term "return" (as in tax return), with one preferring form to function and the other vice versa. Although that case was a bankruptcy case, their disagreement provides a wonderful window into substance and form in tax administration. So this column explores the function of the formal requirement in section 6011 that taxpayers "make a return or statement according to the forms and regulations prescribed by the Secretary." Part I maps out the borderlands of tax administration and bankruptcy. Part II reviews the facts and opinions in Payne, which presents the most common interplay of tax and bankruptcy administration. Part III explains why Judge Posner is right and Judge Easterbrook is wrong in applying the tax administration concept of "return" to bankruptcy cases like Payne. Part IV then argues that Judge Posner is wrong to adopt a facts and circumstances test. Finally, Part V looks at the likely (ill) effects of the recently enacted bankruptcy reform legislation on those types of cases. So sit back, open some uneaten holiday candy, and read on.

January 31, 2006 in New Cases, Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

IRS Offers One-Day Workshops for 501(c)(3) Organizations

Irs_logo_194 The IRS is accepting registrations for one-day Workshops for Small and Mid-Sized 501(c)(3) Organizations to be held in various cities across the country:

The workshop, presented by experienced IRS Exempt Organizations specialists, will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. This introductory workshop is designed for administrators or volunteers who are responsible for the organization's tax compliance.

To register, see here.

January 31, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Monday, January 30, 2006

TaxProf Blog Tee-Shirts?

LeiterBrian Leiter of our sister Leiter's Law School Reports blog notes that a former Princeton grad student is selling "Secretly Reads Brian Leiter" tee-shirts here.  Brian reports:

I should note, publicly, that I know about it, and I even get some modest payment per shirt sold. That being said, I don't own one myself, and can't vouch for their quality or long-term value.

I am open to partnering with an entrepreneurial reader for a line of TaxProf Blog tee-shirts!  Send your suggestions here.

(Hat Tip:  Christine Hurt and Jennifer Mnookin.) 


January 30, 2006 in About This Blog | Permalink | Comments (1) | TrackBack (0)

The Role of Religious Faith in Tax Policy Analysis

Michael Livingston's paper, Rendering Unto Caesar: Religious Perspectives on Progressive and Flat Taxation, which he presented at UCLA on Friday (blogged here), has sparked a spirited blogosphere discussion.

Vic Fleischer gave a first hand report of the talk here, noting:

There is no question that one needs a theory of distributive justice to form a complete picture of tax policy. Some people may derive that theory from religious faith, others from philosophy. I have no problem with those who derive their preferences from religious faith. As a matter of scholarly discourse, I find it more useful to concentrate on the philosophy side. And even within philosophy, convincing others that one approach is better than another feels to me like trying to convert someone to another faith. As a tax policy scholar, I have no comparative advantage here.

Implicitly I'm arguing that traditional tools of tax policy, including public finance economics, can sometimes lead us to demonstrably right and wrong answers about the design of a tax system. I am a skeptic about the ability of law professors to convince anyone that the top marginal rate should be 35% by appealing to Rawls OR the Bible. But I do I have a lot of faith, so to speak, in tax law scholarship and economics to speak to the proper design of the system.

Nate Olman has responded in "Religious Arguments in the Law" or "Reasoning in God's Presence," which concludes:

Thinking about a policy question in religious terms -- in religious language if you will -- is going to change how one thinks about it. For this reason, religious arguments -- if they are well done -- are valuable even for non-believers, because they give one a new way of working through old issues. Aside from the difference that such religious thinking can make in terms of substantive outcomes, it also has value for the believer. By invoking religious texts and stories, the believer invites God into the conversation. The point is not necessarily for him to step in as the final arbiter of the dispute. Rather, it is a way of having the discussion in his presence. Cf. Isaiah 1:18 ("Come now, and let us reason together, saith the Lord"). It is important to realize, however, that one is having a discussion. Religious thought is not an abdication of reason or discussion; it is simply reasoning and discussion by other means.

January 30, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Memorial Service for Edwin S. Cohen

Cohen_2 We previously blogged (here and here) the news of the death of Edwin S. Cohen, Undersecretary of the Treasury in the Nixon Administration and longtime tax professor at Virginia, at age 91.  The University of Virginia School of Law will hold a memorial celebration for Professor Cohen on Saturday, February 18 at 12:30 p.m.

The keynote speaker will be Michael Graetz (Yale), a former student and protege of Professor Cohen's, who will reflect on Cohen's career and professional life. Additional speakers include:

  • John C. Jeffries, Jr. (Virginia's Dean)
  • Mortimer Caplin (former IRS Commissioner and founding partner of Caplin & Drysdale (Washington, D.C.)
  • Don Schapiro, Professor Cohen's former partner at Root Barrett (New York) and currently a partner at Chadbourne & Park (New York)
  • F. David Lake, Jr. special assistant to Cohen at Treasury and currently Senior Counsel (and former partner-in-charge of the Tax Department) at Wilmer Cutler Pickering Hale and Dorr (Washington, D.C.)
  • Edwin C. Cohen, artist and former Managing Director at General Atlantic Partners (New York)

For more details, see here.  Guests should RSVP online here.

January 30, 2006 in Obituaries | Permalink | Comments (0) | TrackBack (0)

Center on Budget and Policy Priorities Releases Tax Reports

Cbpp_logo_4 The Center on Budget and Policy Priorities has released several new tax reports:     

This paper, using data from the Federal Reserve Board and the Tax Policy Center, refutes the claims that the benefits from extending the capital gains and dividend tax cuts are widespread and that such an extension is critical for the strength of the stock market.

This analysis shows that the long-term trend towards increased income inequality, with income gains at the very top of the income spectrum dwarfing such gains among the middle class, has reasserted itself.

This analysis finds that capital gains income subject to taxation has become increasingly concentrated among the top one percent of the population. As a result, the benefits of extending the capital gains and dividend tax cuts are also likely to have become increasingly concentrated.

New forecasts issued by the Congressional Budget Office confirm that if the tax cuts and Alternative Minimum Tax relief are extended, the nation faces large and growing deficits over the next ten years, with total deficits of between $3.5 and $4 trillion over that period.

January 30, 2006 in Think Tank Reports | Permalink | Comments (0) | TrackBack (1)

Kaplan on Federal Tax Policy and Family-Provided Care for Older Adults

Rkaplan_3Richard L. Kaplan (Illinois) has published Federal Tax Policy and Family-Provided Care for Older Adults, 25 Va. Tax Rev. 509 (2005).  Here is the abstract:

An issue of enormous and increasing significance to the vast majority of older Americans, and their families, is who will care for them as they age and require assistance in their daily lives. Such assistance is usually denominated “long-term care,” because it is a chronic phenomenon that is not limited to some specific medical incident. Such care can be provided in a variety of settings, depending upon the intensity of the older person’s needs and the medical nature of those needs, but 80% of long-term care is provided by family members and close friends on an informal and typically unpaid basis. This phenomenon reflects a wide range of cultural norms in this country, as well as certain economic realities. As more Americans attain ages at which some assistance with daily life activities is typical, the federal tax treatment of family-provided elder care will become increasingly important.

This Article considers how the provision of informal care for older family members is taxed presently and how such treatment should be changed in light of changing family dynamics. It begins with a brief description of what informal elder care consists of and the impact of such care responsibilities on the family members who provide that care. The Article then considers how courts have assessed informal caregiving in the context of gratuitous transfers by the recipients of such care. It then examines the tax treatment of informal caregiving as it relates to the personal exemption and the deduction of medical expenses. The Article next analyzes a number of recent legislative proposals that would provide tax credits for family caregivers. The Article concludes with some policy responses to this growing societal concern.

January 30, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tax Relief for Reservists

Rand_jpeg Interesting report from The Rand Corporation showing, among othe things, that the tax relief provided to U.S. soldiers was a big factor in the finding that 72% of reservists called to active duty in Iraq increased their take-home pay.  A Wall Street Journal editorial today, Combat Pay, notes:

Approximately half the gains in the net pay increases came from the Combat Zone Tax Exclusion and other tax exemptions that shield soldiers' pay while they serve in harm's way. At least our troops on the battlefield can focus on the enemy, without also worrying about the IRS.

The study is Early Results on Activations and the Earnings of Reservists, by Jacob Alex Klerman, David S. Loughran & Craig Martin.  Here is the abstract:

In conducting the Global War on Terrorism, the Department of Defense (DoD) has relied heavily on the reserve components. A large fraction of the reserve force has been activated at least once since September 11, 2001, and many of these activations have lasted for more than a year. This more intensive use of the Reserves has been accompanied by concerns that many reservists suffer substantial financial losses because of being activated. Some legislative proposals at the federal and state levels would increase compensation of activated reservists to offset these financial losses. This report describes research using a sample of Army and Air Force reservists activated in 2001 and 2002 for the Global War on Terrorism. It combines information on their civilian earnings from Social Security Administration (SSA) data for 2001 with information on military earnings from DoD administrative files to estimate the effect of activation on their earnings. This measure of military earnings includes pays, allowances, and an approximation to the value of the federal tax preference accorded military allowances and military pay received while serving in a combat zone. The results on earnings and activation reported in this document are early and subject to a number of important caveats, but the estimates do imply less prevalent and severe earnings losses among activated reservists than do estimates derived from DoD survey data.

January 30, 2006 in News | Permalink | Comments (0) | TrackBack (0)

Spragens Wins ABA Tax Section's Pro Bono Award

Spragens_1Aba_tax_2Janet R. Spragens (American) will receive the ABA Tax Section's annual Pro Bono Award on Friday at the 2006 Midyear Meeting in San Diego.  From the press release:

Spragens founded one of the earliest and most successful low-income taxpayer clinics in the country in 1990 -- the Federal Tax Clinic at American University’s Washington College of Law -- and has served as its director since that time. Her work includes training and supervising law students representing low-income taxpayers in federal and state tax controversies often heard before the Tax Court, and teaching tax law classes. Spragens has been on the forefront of issues involving the rights of underserved taxpayers, and her testimony before the National Commission on Restructuring the Internal Revenue Service in 1997 was widely considered to be instrumental in achieving federal funding for non-profit low-income taxpayer clinics.

“Janet Spragens has been a mentor to many lawyers, such as me, who have been inspired and influenced by her considerable commitment to the pro bono community and to the welfare of low-income taxpayers,” said Les Book, professor of law and director of the Federal Tax Clinic at the Villanova University School of Law. “Her influence in the area of tax law will long be felt by those Americans who need it most and by those of us in the profession who have been guided by her work. She is truly a pioneer in the field of legal representation for low income taxpayers.”

Spragens began her legal career as a clerk for D.C. Federal District Court Judge Oliver Gasch, and then as an attorney with the Appellate Section of the Justice Department Tax Division. In 1973, she joined the faculty at the American University Washington College of Law, and has been a tax professor there since that time. Her many outside activities have included visiting professorships at Northwestern University, the University of San Diego, and law schools in Israel, Chile and China. She has served as executive director of the American Tax Policy Institute (1996-2001), and has long been active in the American Bar Association Section of Taxation, as a member of the council, and former chair, of the section’s Low Income Taxpayer and Teaching Taxation committees.

January 30, 2006 in ABA Tax Section, Tax Profs | Permalink | Comments (0) | TrackBack (0)

Call for Papers: Gender, Tax Policies, and Tax Reform in Comparative Perspective

Levy_1The Levy Economics Institute at Bard College has issued a call for papers for a conference on Gender, Tax Policies, and Tax Reform in Comparative Perspective on May 17-18 (2006):

The symposium will focus on the gender dimensions of tax policy and tax reforms in countries at different levels of development. Topics of interest include:

    • Gender biases in direct taxation, including biases in individual and joint filing, and the structure of exemptions, deductions, and allowances
    • Gender biases in indirect taxation, including VAT and excise or sales taxes
    • Impacts of personal income taxation on labor supply, household production, and time use
    • Gender issues in tax reform and fiscal decentralization
    • Methodological issues in tax burden and tax incidence analysis from a gender perspective

Papers can explore a single type of tax or a combination of taxes within one country or provide comparative analyses across developed or developing countries. We are also interested in papers that track changes over time.

The Symposium is being convened as part of the new Gender Equality and Economy Program at The Levy Economics Institute. This new program will consider how economic processes and policies affect gender equality, and how existing gender inequalities influence economic outcomes. It will stimulate reexamination of key economic concepts, models, and indicators—with a particular view to reformulating policy, and offer a broader view of what an economy is and how it functions. The purpose of the program is to contribute knowledge that improves women’s status and helps them realize their rights, in the United States and other countries.

The symposium will take place at The Levy Economics Institute, Bard College, which is located in Annandale-on-Hudson, about 100 miles north of New York City in the Hudson River Valley. The Levy Institute will cover normal travel expenses to and from the conference and accommodations.

If you are interested in presenting a paper, please send an abstract (of up to 1,000 words) of your proposed paper to Caren Grown and Jessica Dixon by January 30, 2006. Notification of decisions will be made by February 15, 2006.

(Hat Tip:  Jon Forman (Oklahoma).)

January 30, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Pakenham on State Tax Shelter Legislative Update

Pakenham Tax_analysts_255 Kathleen Pakenham (White & Case, New York) has published State Tax Shelter Legislative Update, 39 State Tax Notes 299 (Jan. 30, 2006), also available on the Tax Analysts web site as Doc 2006-553, 2006 STT 19-3.  Here is the Introduction:

Despite California's phenomenal success in introducing the first state-level tax shelter compliance regime -- the state claims to have assessed $1.4 billion in tax, interest and penalties -- other states have been slow to follow. Not surprisingly, two other high-tax states, Illinois and New York, were the first to pass similar legislation. Now Connecticut and Minnesota have enacted reporting requirements, Oregon has pending legislation, and the Multistate Tax Commission just approved a disclosure program to deal with abusive tax shelters. No two states have adopted the same approach, leaving taxpayers and their advisers with a hodgepodge of rules that are not only inconsistent with one another but also in some instances internally inconsistent.

January 30, 2006 in Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

How Did the 2003 Dividend Tax Cut Affect Stock Prices and Corporate Payout Policy?

Ssrn_logo_76Gene Amromin (Federal Reserve Bank, Chicago), Paul Harrison (Federal Reserve Board, Division of Research and Statistics), Nellie Liang (Federal Reserve Board, Capital Markets Section) & Steven A. Sharpe (Federal Reserve Board, Division of Research and Statistics) have posted How Did the 2003 Dividend Tax Cut Affect Stock Prices and Corporate Payout Policy? on SSRN.  Here is the abstract:

We examine the effects of the 2003 dividend tax cut on U.S. stock prices and corporate payout policies. First, using an event-study methodology, we compare the performance of U.S. stocks to that of other securities that should not have benefited from the tax change. We find that U.S. large-cap and small-cap indexes do not outperform their European counterparts, nor REIT stocks, over the event windows, suggesting little if any aggregate stock market effect from the tax change. In cross-sectional analysis, high-dividend stocks outperformed low-dividend stocks by a few percentage points over the event windows. On the other hand, non-dividend paying stocks are found to have outperformed the overall market by a small margin, but this result does not appear specific to the event windows, suggesting that non-tax factors were at play. Second, the tax change did appear to induce an increase in dividends, especially at firms where executive compensation was weighted more heavily toward stock than options. However, the effect on total payouts was more muted, as many firms scaled back share repurchases.

January 30, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, January 29, 2006

Top 5 Tax Paper Downloads

Ssrn_58There is 100% turnover on this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with five new papers debuting on the list:      

1.  [56 Downloads]  How Did the 2003 Dividend Tax Cut Affect Stock Prices and Corporate Payout Policy?, by Gene Amromin (Federal Reserve Bank, Chicago), Paul Harrison (Federal Reserve Board, Division of Research and Statistics), Nellie Liang (Federal Reserve Board, Capital Markets Section) & Steven A. Sharpe (Federal Reserve Board, Division of Research and Statistics)  [blogged here]

2.  [54 Downloads]  What Do We know About the Interstate Economic Effects of State Tax Incentives?, by Kirk J. Stark (UCLA) & Daniel J. Wilson (Federal Reserve Bank, San Francisco) [blogged here]

3.  [53 Downloads]  Domestic Law and Tax Treaties: The United States, by Anthony C. Infanti (Pittsburgh) [blogged here]

4.  [47 Downloads]  Lipstick, Light Beer, and Backloaded Savings Accounts, by Karen C. Burke (San Diego) & Grayson M.P. McCouch (San Diego) [blogged here]

5.  [45 Downloads]  Foreword: DaimlerChrysler v. Cuno and the Constitutionality of State Tax Incentives for Economic Development, by Kristin E. Hickman (Minnesota) & Sarah L. Bunce (Minnesota) [blogged here]

January 29, 2006 in Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

MIT Publishes Tax Policy and the Economy

Tax_policy_and_the_economy_1MIT Press has published Volume 19 of Tax Policy and the Economy (2005), edited by James M. Poterba (MIT, Department of Economics):

      • Introduction, by James M. Poterba
      • The Structure of Early Care and Education in the United States: Historical Evolution and International Comparisons, by Ann Dryden Witte Wellesley College), Department of Economics) & Marisol Trowbridge (Wellesley College, Department of Economics) (p. 1):
      • Most European governments have universal, consolidated, education-based ECE programs that are available from early in the morning to late in the evening throughout the year. European ECE programs are uniformly of high quality, generally last at least three years, and are funded to serve all children. The US ECE system is composed of three separate programs (Head Start, Pre-Kindergarten (Pre-K) and the child care voucher program) targeted to low-income children. With a few notable exceptions, US ECE programs are funded to serve less than half of the eligible children. US ECE programs developed quite separately. They have different goals, different funding sources, different administrations and policies, and generally last for an academic year or less. Pre-K and Head Start operate only 3 to 6 hours a day and are open only during the academic year. The average quality of US ECE programs is generally much lower than the average quality of European ECE programs. Further, the quality of US ECE programs varies widely even within local areas. Although the US has greatly increased expenditures on ECE, US governments pay only 40% of the costs of ECE, while European governments pay 70% to 90% of the costs of ECE. None of the major US ECE programs simultaneously provides work supports for parents, child development opportunities for children and preparation for school for low-income children. The evidence suggests that the US ECE system is neither efficient nor equitable. Consolidation of funding and administration of current US ECE programs could substantially lower transaction costs for parents and provide more stable care arrangements for children. Increased funding could improve the quality of existing programs, extend hours and months of operation, and make care available to all eligible families. Both the evaluation literature and the European experience suggest that such a consolidated, well-funded system could be successful in preparing poor children for school. Further, the benefits of such a program could well exceed the costs since it is precisely low-income children that benefit most from stable, high-quality ECE. However, such a targeted program will have neither the positive peer group effects nor the social-integration benefits of universal ECE programs.

Despite a $140 billion existing tax break for employer-provided health insurance, tax policy remains the tool of choice for many policy-makers in addressing the problem of the uninsured. In this paper, I use a microsimulation model to estimate the impact of various tax interventions to cover the uninsured, relative to an expansion of public insurance designed to accomplish the same goals. I contrast the efficiency of these policies along several dimensions, most notably the dollars of public spending per dollar of insurance value provided. I find that every tax policy is much less efficient than public insurance expansions: while public insurance costs the government only between $1.17 and $1.33 per dollar of insurance value provided, tax policies cost the government between $2.36 and $12.98 per dollar of insurance value provided. I also find that targeting is crucial for efficient tax policy; policies tightly targeted to the lowest income earners have a much higher efficiency than those available higher in the income distribution. Within tax policies, tax credits aimed at employers are the most efficient, and tax credits aimed at employees are the least efficient, because the single greatest determinant of insurance coverage is being offered insurance by your employer, and because most employees who are offered already take up that insurance. Tax credits targeted at non-group coverage are fairly similar to employer tax credits at low levels, but much less efficient at higher levels.

Tax haven countries offer foreign investors low tax rates and other tax features designed to attract investment and thereby stimulate economic activity. Major tax havens have less than one percent of the world's population (outside the United States), and 2.3 percent of world GDP, but host 5.7 percent of the foreign employment and 8.4 percent of foreign property, plant and equipment of American firms. Per capita real GDP in tax haven countries grew at an average annual rate of 3.3 percent between 1982 and 1999, which compares favorably to the world average of 1.4 percent. Tax haven governments appear to be adequately funded, with an average 25 percent ratio of government to GDP that exceeds the 20 percent ratio for the world as a whole, though the small populations and relative affluence of these countries would normally be associated with even larger governments. Whether the economic prosperity of tax haven countries comes at the expense of higher tax countries is unclear, though recent research suggests that tax haven activity stimulates investment in nearby high-tax countries.

This paper discusses the issues surrounding the proposals to conform financial accounting income and taxable income. The two incomes diverged in the late 1990s with financial accounting income becoming increasingly greater than taxable income through the year 2000. While the cause of this divergence is not known for certain, many suspect that it is the result of earnings management for financial accounting and/or the tax sheltering of corporate income. Our paper outlines the potential costs and benefits of one of the proposed "fixes" to the divergence: the conforming of the two incomes into one measure. We review relevant research that sheds light on the issues surrounding conformity both in the U.S. as well as evidence from other countries that have more closely aligned book and taxable incomes. The extant empirical literature reveals that it is unlikely that conforming the incomes will reduce the amount of tax sheltering by corporations and that having only one measure of income will result in a loss of information to the capital markets.

Arguments for eliminating the double taxation of dividends apply only to dividends paid by corporations to individuals. The double (and multiple) taxation of dividends paid by one firm to another - intercorporate dividends - was explicitly included in the 1930s as part of a package of tax and other policies aimed at eliminating United States pyramidal business groups. These structures remain the predominant form of corporate organization outside the United States. The first Roosevelt administration associated them with corporate governance problems, corporate tax avoidance, market power, and an objectionable concentration of economic power. Future tax reforms in the United States should mind the original intent of Congress and the President regarding intercorporate dividend taxation. Foreign governments may find the American experience of value should they desire to eliminate their business groups.

January 29, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Hanlon, Laplante & Shevlin on Conforming Book Income and Taxable Income

Michelle Hanlon (University of Michigan Business School), Stacie Kelley Laplante (University of Georgia) & Terry J. Shevlin (University of Washington Business School) have published Evidence for the Possible Information Loss of Conforming Book Income and Taxable Income, 48 J.L. & Econ. 407 (2005).  Here is the abstract:

Recent corporate accounting reporting scandals and aggressive corporate tax shelters have led for calls for regulatory reform. One such call is to conform (or reduce the gap between) the calculation of book and taxable income. Proponents of conformity focus on perceived benefits while ignoring possible costs. We examine one possible cost: the loss in information content to investors if one measure is removed from the information set. We provide evidence on this possible loss by examining the relative and incremental information content over the past 20 years of book and (estimated) taxable income for a large sample of firms. We find book income exhibits significantly greater relative explanatory power while both exhibit significant incremental explanatory power. Conforming the two measures at a minimum results in the loss of incremental explanatory power and if book income is conformed to the tax rules, an estimated 50% loss in the explanatory power of earnings.

January 29, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Tax Policy Center Releases New Distributional Analyses

The Tax Policy Center has generated new distributional analyses of the federal estate tax for 2006 under both current law and pre-EGTRRA law (T06-16 to T06-27), and four options that would expand the refundable child tax credit (T06-02 to T06-15).

January 29, 2006 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Sheppard on NYSBA Considers Partnership Questions

SheppardTax_analysts_242Lee A. Sheppard (Contributing Editor, Tax Analysts) has published NYSBA Considers Partnership Questions, also available on the Tax Analysts web site as Doc 2006-1566, 2006 TNT 18-5.  The article reports on the discussion about the proposed compensatory partnership interests regulations with two top Treasury officials at the January 24 New York State Bar Association annual meeting. 

January 29, 2006 in NYSBA Tax Section, Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

IRS Seeks Associate Chief Counsel (International)

Irs_logo_193The IRS is seeking to fill the Associate Chief Counsel (International) position. The Associate Chief Counsel (International) is responsible for providing top quality legal advice and support services on Federal tax matters (technical and litigation) involving international taxpayers and multinational organizations.

Major Duties: The Associate Chief Counsel (INTL) consults closely with the Internal Revenue Service's Commissioner, Large and Mid-Size Business (LMSB), in determining strategies, plans, and designs for a comprehensive, customer-oriented, national tax administration program to meet the needs of international taxpayers and practitioners. Serves as senior legal advisor and expert consultant to the Commissioner of Internal Revenue, Commissioner (LMSB), other Division Commissioners, the Chief Counsel, Division Counsel (LMSB), other Division Counsel, and other top ranking IRS and Treasury officials on the civil, criminal, litigation and any other legal matters of the Internal Revenue Service as they pertain to foreign and international issues. He/She represents these officials on sensitive and controversial legal matters related to these areas. Works closely with the Commissioner, Chief Counsel and Deputy Commissioner (LMSB) in formulating short and long range program policies, strategies and objectives to implement overall IRS strategy and vision. Participates in the integrated policies, programs, systems and strategies that effectively provide superior customer service and ensure fairness and equity in the enforcement of the office?s delivery of service and accountability to taxpayers. Provides strategic management and oversight of the Advance Pricing Program.

Salary: $109,808 - $165,200.

Application Deadline:  February 10, 2006.

For more information, see here.

January 29, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Saturday, January 28, 2006

Spotlight_1_1Michael Mulroney (Villanova)

        • B.S.C. 1954, Iowa
        • J.D. 1959, Harvard



Mulroney_1With no intended reflection on those who may follow me in the Spotlight, I can only assume that by asking me to do this one Paul Caron has about reached the bottom of the barrel of candidates for this blog feature who are over the age of 70.

Probably because of the number of appellate cases I’ve argued over the years, and the advice I’ve given to students in moot court competitions, I’m a bit uncomfortable in using the first person to describe myself. But here goes.

I peaked early in my formal education. Just as the Korean War began I graduated first in my Elkader, Iowa high school class of 28–a class rank that I would never again come close to achieving in college or law school. My aunt, the clerk of the local Draft Board, was somewhat apprehensive about the small-town public perception involved in giving me an educational deferment to get an economics degree from the University of Iowa when all the rest of my high school classmates were being sent off to war. However, she was able to rehabilitate herself in her own eyes by shipping me off to basic training (at Camp Caffee, Arkansas then, and maybe still today, the armpit of the universe) the day after college graduation.

Continue reading

January 28, 2006 in Tax Prof Spotlight | Permalink | Comments (1) | TrackBack (0)

WSJ's Top 5 Books on Dealing With the IRS

The Wall Street Journal's regular Saturday feature on the "Five Best Books" today is on IRS On Your Mind? Tax Expert Randy Blaustein Declares These Books To Be Major Assets:

  1. The IRS Problem Solver, by Daniel J. Pilla (Regan Books, 2003)
  2. Confessions of a Tax Collector, by Richard Yancey (HarperCollins, 2004)
  3. What the IRS Doesn't Want You to Know, by Martin S. Kaplan (Wiley, 2003)
  4. Tax This! An Insider's Guide to Standing Up to the IRS, by Scott M. Estill (Self-Counsel Press, 2000)
  5. J.K. Lasser's Your Income Tax 2006, by J.K. Lasser Institute (Wiley, 2005)

January 28, 2006 in Book Club | Permalink | Comments (0) | TrackBack (0)

Muntean on California's Tax Nonconforming Tax Conformity Legislation

Muntean_2 Tax_analysts_231Mark A. Muntean (Robert W. Wood, P.C., San Francisco) has published California's Nonconforming Conformity Legislation, 39 State Tax Notes 259 (Jan. 23, 2006), also available on the Tax Analysts web site as  Doc 2005-25936, 2006 STT 14-11.   Here is the opening:

Some people would argue that nonconformity has always been a way of life in California..... So it is no surprise that, like most things in California, tax conformity is more about nonconformity than it is about conforming to the federal tax code. Unfortunately for tax advisers, that results in a bit of a mixed bag.

Many states like California adopt the Internal Revenue Code as the basis for their state income tax law. Recently, California updated its tax conformity, conforming to the IRC as of January 1, 2005. The irony of the California tax "conformity" legislation is that it includes nearly 50 pages of nonconforming provisions in the form of exceptions to the IRC. By not conforming to the federal tax reduction provisions, and by simultaneously adopting revenue-raising provisions, California tax conformity frequently results in a state tax increase for many taxpayers.

Businesses generally prefer conformity because it has the potential of reducing their state tax compliance costs. Another odd aspect of California tax conformity is the effective date of the law change. Tax statute effective dates can be confusing, and they're obviously critical if it's your ox that is being gored. In California, effective dates often bear no relationship to federal effective dates, in a typical Golden State bait-and-switch.

The California conformity legislation, AB 115, ... was signed into law on October 7, 2005. However, California conforms to the IRC as enacted on January 1, 2005. Since January 1, 2005, two major federal tax bills have been passed by Congress: the Energy Tax Incentives Act of 2005 (the Energy Act) and the Highway Reauthorization and Excise Tax Simplification Act of 2005 (Transportation Act), yet California apparently decided not to conform to that legislation. Go figure.

January 28, 2006 in Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Bullard on Why States Should Not be Allowed to Offer 529 Plans

Bullard Ssrn_logo_75 Mercer E. Bullard (MIssissippi) has posted The Visible Hand in Government-Sponsored Financial Services: Why States Should Not be Allowed to Offer 529 Plans, 74 U. Cin. L. Rev. ___ (forthcoming 2006) on SSRN.  Here is the abstract:

In 1999, Congress granted states the exclusive right to sell 529 college savings plans, which parents use to invest on a tax-advantaged basis for their children's college education. This article argues that there is no logical connection between Congress's purpose of promoting investment in education and the existence of this state tax monopoly, and that parents may be worse off investing in state 529 plans than if they had instead invested taxable, privately offered mutual funds. State 529 plans offer no material benefits over private mutual funds, and they are uniquely susceptible to rent-seeking costs that will reduce investors' investment returns. In addition, 529 plans are exempt from regulations governing mutual funds, which significantly disadvantages plan participants. Congress should permit private firms to offer 529 plans in competition with states and even consider prohibiting states from offering such plans as long as they are exempt from the federal securities laws.

January 28, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Text of Letter Requesting IRS Investigation of Political Activities of Conservative Ohio Churches

We previously blogged press reports about the request by a group of clergy to have the IRS investigate the political activities of two large conservative Ohio churches.  Here is the 14-page letter sent to the IRS.  (Hat Tip:  Donald Tobin (Ohio State).)

January 28, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Friday, January 27, 2006

Joint Tax Committee Releases Explanations of Proposed Tax Treaties

Blue_book_13In connection with a hearing scheduled by the Senate Foreign Relations Committee for February 2, 2006, the Joint Committee on Taxation on Friday released explanations of proposed tax treaties between the United States and:

      • Sweden (Income Tax) (JCX-1-06) (50 pages)
      • France (Income Tax) (JCX-2-06) (26 pages)
      • France (Estate & Gift Tax) (JCX-3-06) (16 pages)
      • Bangladesh (Income Tax) (JCX-4-06) (72 pages) 

January 27, 2006 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Growing Income Inequality in America

The Center on Budget and Policy Priorities and Economic Policy Institute have released a new study, Pulling Apart:  A State-by-State Analysis of Income Trends, by Jared Bernstein, Elizabeth McNichol & Karen Lyons:

In most states, the gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s.  The study is one of the few to examine income inequality at the state as well as national level.

Here is the Conclusion:

Over the course of the two decades since the early 1980s, few states have experienced broadly shared growth. While overall the economy of the United States has grown over the period, most of the benefits of that growth have accrued to families at the top of the income distribution. Lower income families and families in the middle of the income distribution have seen their incomes grow only slowly. At the same time, incomes at the top of the distribution have increased substantially, thereby widening the gap in income between high-income families and poor and middle-class families.

Even the more broadly shared growth of the late 1990s has not reversed this long-term trend. In well over half the states, families at the bottom and the middle of the income distribution have failed to keep pace with the gains made by the richest fifth of families over the past decade, and consequently, in most states, the gap between high-income families and the middle-class and the poor has widened.

The increase in income inequality has resulted from a number of factors, including both economic trends and government policy. Both federal and state policies have contributed to the increasing gap in income, and both federal and state policies can be used to help mitigate or even reverse this trend in the future.

Among the many interesting data are:

Greatest Income Inequality Between Top and Bottom Quartiles in 2000s:

  1. New York
  2. Texas
  3. Tennessee
  4. Arizona
  5. Florida
  6. California
  7. Louisiana
  8. Kentucky
  9. New Jersey
  10. North Carolina

Greatest Increase in Income Inequality Between Top and Bottom Quartiles, 1980s to 2000s:

  1. Arizona
  2. New York
  3. Massachusetts
  4. Tennessee
  5. New Jersey
  6. West Virginia
  7. Connecticut
  8. Hawaii
  9. Kentucky
  10. South Carolina


January 27, 2006 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Hoose on The Conservative Case for Progressive Taxation

HooseMark S. Hoose (Southwestern) has published The Conservative Case for Progressive Taxation, 40 New Eng. L. Rev. 69 (2005).  Here is the abstract:

This article explores whether conservatives, in particular classical or institutional conservatives, should support the radical tax reform currently being promoted by various elements of the Republican party, or should instead support continuation of progressive income taxation. The article looks first at the different types of conservative thought prevalent today, and then briefly reviews both the current progressive income tax system and the various, mostly consumption-tax based, reform proposals. The article then compares the current system and the proposed consumption-based reforms based on the main tenents of classical conservative thought as set forth by Russell Kirk. The article then argues that the progressive income tax is consistent with natural law; that it does not in practice promote a narrowing uniformity or a classeless society (and in fact does promote social peace); and that it does not destroy private property to any significantly greater extent than any other form of taxation. The article concludes by pointing out that tax reform advocates are all tradition-destroying utilitarian economists at heart, and that prudent institutional conservatives should thus resist change and support an institution, our current income tax, that successfully raises revenue and keeps the social peace.

January 27, 2006 in Scholarship | Permalink | Comments (1) | TrackBack (0)

Law School Myths

Funny Wall Street Journal article, Fact or Fiction? Exploring the Myths About Lawyers, by Robin Kelsey:

As an alumnus of Yale Law School who spent less time practicing law than studying it, I take great pleasure in offering unrequested advice to people contemplating a career in law. Here are five myths about legal education and practice.

Myth #1: A legal education is a great means to embark on any of a variety of non-legal careers. Absolutely true. If studying law doesn't get you to embark on a non-legal career, then nothing will.

Myth #2: Legal thought is intellectually rigorous. Also true. Law students have been known to spend days debating whether an italicized comma differs in appearance from a normal comma, and which comma should be employed when citing sections of the United Hairstylists Personal Hygiene Code. As a lawyer might say, "that's not just rigor, that's rigor mortis." (i.e., "that's some deadly serious Latin rigor.")...

The other three myths are equally funny.

January 27, 2006 in Law School | Permalink | Comments (0) | TrackBack (0)

Death of Henry Zapruder

Zapruder I am sorry to bring you the new of the death of Henry Zapruder, a prominent tax lawyer at Baker & Hostetler in Washington D.C., at age 67.  From the Washington Post's obituary:

Henry G. Zapruder, 67, a prominent Washington tax lawyer who was a key adviser for a program that resulted in more than $1 billion for legal fees for impoverished clients, died of brain cancer Jan. 24 at his home in Chevy Chase. Mr. Zapruder, a partner in the Baker & Hostetler law firm, was repeatedly named by his peers to the "Best Lawyers in America" publication, most recently in September. He was known as "a man with a golden tongue," colleague Roger Pies said, for his ability to synthesize and communicate tax policies and legal issues. But he was most proud of his part in establishing what is now the Interest on Lawyers' Trust Accounts (IOLTA).

Mr. Zapruder was born in Brooklyn, N.Y., and raised in Dallas. His late father, Abraham Zapruder, a dressmaker, made the famous film of the assassination of President John F. Kennedy. Since the family owned the film, it controlled its use, which Mr. Zapruder found to be a burden, Pies said. The family stored the film at the National Archives and allowed scholars to use copies of the film for free and educators to use it for a nominal cost, but managing the use was costly. In 1999, after years of lawsuits and negotiation, the federal government bought the film for $16 million.

(Hat Tip:  Law Blog.)

January 27, 2006 in Obituaries | Permalink | Comments (0) | TrackBack (0)

"That" v. "Which"

Interesting article, Writing Better Briefs: That vs. Which, by Kenneth F. Oettle:

I stumbled on the preferred usage of that and which, probably in Strunk and White's Elements of Style, which says, "Careful writers, watchful for small conveniences, go which-hunting, remove the defining whiches, and by so doing improve their work." (4th Ed. at 59).

The oft-stated rule for using "that" and "which" as relative pronouns is that the clause should be introduced by "which," preceded by a comma, if you can omit the clause "without materially changing the meaning of the sentence." If you cannot omit the clause without materially changing the meaning of the sentence, then use "that" without a comma.

I do not find that explanation helpful. A lawyer should use words only if they add meaning. Otherwise, the words are just filler. If the words add meaning, then omitting them changes the meaning of the sentence, presumably materially, whether the words are preceded by "that" or by a comma and "which."

The best I can do in terms of articulating a rule is to recommend using "that" when you wish to distinguish one item from others in the same category, as in "the appeal that was dismissed," which tells the reader that other appeals were not dismissed. If you say "the appeal, which was dismissed," then the reader understands that you are speaking of only one appeal. If you say "the appeal which was dismissed," the reader doesn't know whether you can't punctuate correctly or whether you mix up that and which.

January 27, 2006 in News | Permalink | Comments (0) | TrackBack (0)

Tax Moves at Northwestern

Northwestern_logo Tax comings and goings at Northwestern: 



Sitkofro_4 Peroni Robert J. Peroni (left), James A. Elkins Centennial Chair in Law at Texas, one of the country's foremost International Tax scholars (and a co-author of the Taxation of International Transactions casebook with Charles Gustafson & Richard Pugh), has accepted a visiting position at Northwestern for Fall 2006.

Robert H. Sitkoff (right), Associate Professor of Law at Northwestern, one of the country's foremost Trusts & Estates scholars (and a co-author of the Wills, Trusts and Estates casebook with the late Jesse Dukeminier, Stanley M. Johanson & James Lindren), has accepted a tenured position at NYU.

January 27, 2006 in Tax Prof Moves | Permalink | Comments (0) | TrackBack (0)

DOJ Tax Division Looking to Hire White Collar Tax Prosecutors

Doj_jpeg_3 The Tax Division of the U.S. Department of Justice is hiring experienced attorneys to serve as federal prosecutors:

Trial attorneys in the Criminal Enforcement Sections handle or supervise criminal tax prosecutions in the federal district courts throughout the United States. Cases involve violations of criminal tax laws by taxpayers having legal sources of income, as well as cases involving financial fraud, health care fraud, organized crime activities, and narcotics trafficking. Applicants should have at least three years of post J.D. litigation experience which includes criminal or civil fraud trial experience, as well as exceptional academic credentials, and superior research, writing and oral communication skills. Applicants must be willing to travel.

For more information, or to apply, see here.

January 27, 2006 in IRS News | Permalink | Comments (0) | TrackBack (0)

Raby & Raby on Loss Deductions When Transactions or Partnership Interests Are Abandoned

Tax_analysts_236Burgess J.W. Raby & William L. Raby have published Loss Deductions When Transactions or Partnership Interests Are Abandoned, also available on the Tax Analysts web site as Doc 2006-1464, 2006 TNT 17-14. Here is the Introduction:

In a variety of situations, purchase options and alternative arrangements are used to hedge against market risk. For example, a land developer may secure an option on a piece of property that may be needed three or four years in the future. If the market price of the property drops, the option is allowed to expire unexercised and a deal is made to buy the land at the then market value. If land prices rise, the cost of that land is capped. Two recent technical advice memorandums involving corporate finance situations involve IRS agent challenges to section 165 losses sought by the taxpayers in those situations. After exploring these current IRS National Office rulings, this article will then look at losses from abandoning a partnership interest.

January 27, 2006 in Scholarship, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

Aizenman & Jinjarak on Globalization and Developing Countries - A Shrinking Tax Base?

Ssrn_logo_74Joshua Aizenman (UC - Santa Cruz, Department of Economics) & Yothin Jinjarak (Nanyang Technological University, School of Humanities and Social Sciences, Division of Economics) have posted Globalization and Developing Countries - A Shrinking Tax Base? on SSRN.  Here is the abstract:

This paper evaluates the impact of globalization on the tax bases of countries at varying stages of development. We see globalization as a process that induces countries to embrace greater trade and financial integration, and macro stabilization. This in turn should shift their tax base from "easy to collect" taxes [tariff, seigniorage, etc.] towards "hard to collect" taxes [VAT, income tax, etc.]. We confirm this prediction -- the revenue/GDP ratio of the "easy to collect" taxes declined by about 20% in developing countries between the early 1980s and the late 1990s, while the revenue/GDP of the "hard to collect" taxes increased by 9%. The relatively small initial base of "hard to collect" taxes in developing countries implied a net 7% drop in total tax revenue/GDP. Applying panel regressions and controlling for structural factors, we find that trade openness and financial integration have a positive relationship with "hard to collect" taxes, and negative relationship with the "easy to collect" taxes. The effects of globalization in our panel regressions are even larger than the effects of the institutional and political variables combined. Fiscal revenue from financial repression has also decreased, further reinforcing these results. The high income and the middle income countries managed to more than compensate for the revenue decline of the "easy to collect" taxes, increasing the total tax/GDP. In contrast, the upper and low income developing countries experienced sizeable drop in the tax/GDP. We also identify fiscal convergence: the coefficient of variation of tax revenue/GDP measures across countries declined substantially during 1980s - 1990s. The cross country variation declined by about 50% for seigniorage, about 30% for tariff, and about 15% for the "hard to collect" taxes. These results are consistent with the notion that improving the performance of the "hard to collect" taxes is more challenging than reducing the use of "easy to collect" sources of revenue.

January 27, 2006 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, January 26, 2006

Williams: In Defense of Tax Shelter Lawyers

J. Craig Williams of May It Please the Court has this interesting post:    Paying Taxes: Sport Or Folly?:

This article about the IRS prosecuting lawyers who come up with tax shelters did more than strike me. It's just plain wrong. Think about it. Congress passes laws that require us to pay taxes. Once you establish the rules and write them down, it's up to the lawyers to figure out the loopholes and the way around them.... So, when enterprising lawyers go out there and successfully figure out how to shelter money from taxes, the IRS takes aim and prosecutes the lawyers for being smart enough to figure out what they did wrong when they wrote the code. I'm not sure if the lawyers are being prosecuted because they showed the ... [idiocy] of the IRS and Congress to the rest of us or because the result of their work actually means less dollars in the government's hands and more money in our hands.

January 26, 2006 in News | Permalink | Comments (1) | TrackBack (1)

Grassley: Low-Rate Estate Tax, Not Repeal, "Best I Can Do"

Interesting article this afternoon from Bloomberg:  Low-Rate Estate Tax, Not Repeal, "Best I Can Do," Grassley Says, by Ryan J. Donmoyer & Mike McKee:

Congressional Republicans don't have enough votes to extend a repeal of the estate tax beyond 2010 and may have to settle for a compromise that limits the levy to bequests of more than $5 million, Senator Charles Grassley said. "If we could get a $5 million exemption with a 15 percent rate, I think that would be a decent compromise," Grassley, an Iowa Republican who heads the finance committee, said in an interview . "That's not going to satisfy the president, but I think that that's the best I can do in the United States Senate in order to get the votes to get it passed."

Republican leaders including Arizona Senator Jon Kyl and Majority Leader Bill Frist were forced to postpone a vote on permanently abolishing the tax in July when Hurricane Katrina devastated the Gulf Coast. Republicans said they were worried about creating the perception they were cutting taxes for wealthy families while mostly poor hurricane survivors struggled.

January 26, 2006 in News | Permalink | Comments (2) | TrackBack (2)

Livingston Presents Religious Perspectives on Progressive and Flat Taxation Today at UCLA

Ucla_law_logo_jpg_2Maliving_1 Michael A. Livingston (Rutgers - Camden) presents Rendering Unto Caesar:  Religious Perspectives on Progressive and Flat Taxation today at UCLA as part of its Tax Policy and Public Finance Workshop Series, moderated by Eric Zolt & Victor Fleischer.  Here is part of the Conclusion:

The first conclusion is the undeveloped and non-specific character of most religious commentary on progressive taxation and tax policy, generally. As compared to rather extensive materials on (say) aid to poor families, the treatment of AIDS victims and so forth, materials on tax policy tend to be rather generic in nature, limited to a general inclination for or against income redistribution together with the inevitable call for protection of the charitable deduction....

A second conclusion concerns the surprising consistency/overlap between superficially opposing religious viewpoints. While liberals not surprisingly support progressive taxation, and conservatives are understandably more skeptical, both share several normative critiques of the existing tax system. In particular, both liberal and conservative commentators support a tax system that is simple (as opposed to what all regard as the current excessive complexity); horizontally equitable (as opposed to what all perceive to be the current capriciousness or unfairness); and supportive of families and working people, although they surely disagree about how exactly to accomplish this....

The previous conclusion suggests a third, broader insight about organized religion and its role in public policy debates. The concern about religious participation in politics results, in part, from a fear that appeals to faith will displace appeals to reason: that is, that people who believe their positions to be supported by God will attempt to impose them unilaterally upon others and (at the same time) be impervious to opposing argument and hence unwilling to compromise. Religion and politics, it is asserted do not mix; and the former is best left entirely in the private sphere.

In the tax area, at least, these fears appear to be overstated. While tracing their positions back to Biblical verses or at very least to Biblical principles, the various denominations tend to develop these ideas in a manner—interpretation, argument, the weighing of different sources and the effect of changed circumstances—not especially different from methods used by secular scholars in applying secular texts. This is true, not because the authors lack confidence in the divine origin of the texts, but because the texts simply do not address modern political and economic problems in any kind of detail. The process thus inevitable involves reasoning by extension and analogy in a manner that will surely be familiar to anyone who has survived (suffered through?) a course in statutory interpretation or constitutional law. This is especially true of the Protestant tradition, in which different churches (or even individuals) have historically been free to interpret the same materials in radically different ways. The Catholic and Jewish traditions, or at least there American versions, face a similar challenge. Indeed, many of the techniques now used to parse statutes and the constitution were originally developed by religious exegesists, a fact of which I have constantly been reminded in writing this article.

It may be that taxation, because of its technical nature and the absence of specific Biblical guidance, is atypical in this regard, and that a debate on abortion or gay rights would lead to shriller arguments and less room for compromise. It may also be that religions are, so to speak, on “good behavior” in multi-denominational America and that, given a higher degree of religious concentration or political control, they would impose their views much more openly. All that can be said, based upon this survey, is that neither the most fervent hopes for spiritually inspired answers to social problems nor the darkest fears of religiously imposed solutions appear justified. At bottom, priests, rabbis and ministers are searching for answers from inexact guideposts in pretty much the same way as the rest of us. They have simply been doing it longer.

Update: Vic Fleischer (UCLA) reviews the talk here.

January 26, 2006 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Buchanan Presents Vickrey's Cumulative Income Averaging and Tax Reform Today at NYU

Buchanan_1 Nyu_15Neil H. Buchanan (Rutgers-Newark) presents Should We Adopt William Vickrey's Cumulative Income Averaging Tax System?  Progressivity and Simplicity in Tax Reform at NYU today as part of its Colloquium on Tax Policy and Public Finance series conducted by Alan Auerbach and Daniel Shaviro.  Here is the abstract:

This paper focuses on William Vickrey’s proposal to replace our current annual system of tax assessment with a new tax system that bases assessments on lifetime cumulative average income. After reviewing two key arguments in favor of the social goal of progressivity in taxation (a goal that Vickrey shared), I have examined whether adopting Vickrey’s cumulative averaging system would achieve a compelling change in the fairness of the tax system. While the current system undeniably creates a problem of horizontal inequity in that people with similar lifetime incomes can pay different tax rates based on the timing of those incomes, that inequity is ultimately not compelling enough to justify a significant restructuring of the U.S. tax system. The Vickrey system is, moreover, likely to be perceived as quite complicated by the public.

The poor, however, are uniquely burdened by the volatile nature of their income streams. I therefore endorse a plan recently offered by Lily Batchelder to allow low-income people to smooth their incomes in order to avoid a loss of tax benefits. This plan has the distinct advantage of not requiring a complete restructuring of the tax system, providing targeted relief to the neediest Americans through minimal legislative intervention.

At a minimum, though, the goal here has been to give Vickrey’s views on cumulative averaging another hearing. While my assessment has been a negative one, other voices should be heard on these issues. Even as we approach the tenth anniversary of his death, this and other proposals from Professor Vickrey deserve continued study and debate.

The Colloquium will be held in Room 120 of Furman 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 Rosemary Simon so she can provide the Guard's desk with your name.

January 26, 2006 in Colloquia | Permalink | Comments (0) | TrackBack (0)

WSJ on 6th Circuit's Dow Chemical COLI Decision

On Tuesday, we blogged the Sixth Circuit decision in Dow Chemical v. United States, No. 03-2360 (6th Cir. 1/23/06), which held that Dow Chemical's corporate-owned life insurance (“COLI”) policies on the lives of thousands of its employees lacked economic substance and thus disallowed deductions for interest incurred on loans used to pay the COLI premiums and for fees related to the administration of the policies. Today's Wall Street Journal reports on the case in Dow Chemical Is Ordered to Pay In "Janitors" Case, by Robert Guy Matthews.

January 26, 2006 in New Cases | Permalink | Comments (0) | TrackBack (0)

BNA Tax Management Advisory Board Meets Today on Corporate Tax

Bna_2The BNA Tax Management Advisory Board meets today at 5:30 pm (followed by a reception at 7:00 pm) at the Waldorf-Astoria Hotel in New York City to discuss three corporate tax papers:

  • The New Section 199 Regulations, by Beth Mary Benko (Ernst & Young, Washington, D.C.)
  • Reverse Triangular Merger or Sale: The Times Mirror Case, by Candace A. Ridgway (Jones Day, Washington, D.C.)
  • The New Section 704(b) Regulations, by Daniel F. Carmody (Morgan Lewis, Philadelphia, PA)

January 26, 2006 in Tax Conferences | Permalink | Comments (0) | TrackBack (0)

Luke Presents Taxation of Risk-Based Returns Inside Variable Insurance Products Today at Florida State

Luke_2 FsuCharlene D. Luke (Florida State) presents A Proposal for the (Non?) Taxation of Risk-Based Returns Inside Variable Insurance Products today at Florida State as part of its Faculty Enrichment Speaker Series.  Here is the part of the Introduction:

This Article explores a method (briefly raised in a prior article) to end wraparound insurance tax shelters while maintaining the subsidy for inside buildup — the removal of tax deferral for the risk-based returns generated inside variable insurance contracts but continuance of deferral for a “riskless” return portion, to be determined formulaically. This Article outlines the basic technical contours of this proposal and discusses its effectiveness in ending the wraparound insurance shelter, relying primarily on the more common assumption that an income tax does and should tax risk-based returns. The Article also, however, considers the value of the proposal in light of the more controversial taxation-and-risk literature, which suggests that an income tax — in its “pure” form and under idealized circumstances — does not tax risk-based returns in any case. I do not intend to take a position as to whether the taxation-and-risk literature is correct (at least not in this Article), but rather to explore what a subsidy might look like assuming that literature is correct. If that literature is correct, then the segregation of risk-based returns from riskless returns allows for the implementation of the only true type of subsidy available — a deferral for riskless returns.

January 26, 2006 in Colloquia | Permalink | Comments (0) | TrackBack (0)