Yale Hosts Alternative Panel During Camara's Symposium Presentation

We previously have blogged (here and here) the controversy over the Yale Law Journal's decision to publish a symposium article (Control Mechanisms for Quasipublic Executives: The Intersection of Corporate and Constitutional Law) by Kiwi Alejandro Danao Camara (with Paul Gowder).  The symposium -- The Most Dangerous Branch? Mayors, Governors, Presidents and the Rule of Law: A Symposium on Executive Power -- is being held this weekend.

BlackProf notes the alternative panel hosted by a number of Yale student organizations at the time of Mr. Camara's symposium presentation::

[T]he symposium includes a presentation by Kiwi Camara, who has written on the issue and who, as a law student, repeatedly used the word "nig" to describe blacks on a class outline that was subsequently published on line. That, as you might imagine, caused a big stink. When the Yale Law Journal accepted an article that Mr. Camara had written, there was another hullabaloo, one that has resurfaced with his invitation to this symposium.

There is, at the time that Mr. Camara speaks, an alternative panel organized by a number of student organizations at Yale. The moderator is the fabulous Ron Sullivan - most recently executive director of the Public Defender Service of Washington DC and now award winning professor at Yale Law. The panel also includes Professor Richard Brooks, Professor Valerie Purdie-Vaughns of the Yale Psychology Department and Professor Randall Styers of the University of North Carolina Department of Religion. This panel focuses on the "marginalization of minorities in institutional decision-making." Hopefully the failure of Yale Law School ever to have a tenure track black woman on its faculty will also be addressed.

King & Roth on Broken Trust: Greed, Mismanagement, and Political Manipulation at America’s Largest Charitable Trust

Samuel P. King (Senior U.S. District Judge, District of Hawai‘i) & Randall W. Roth (Tax Prof at University of Hawai‘i) have published Broken Trust: Greed, Mismanagement, and Political Manipulation at America’s Largest Charitable Trust (University of Hawai‘i Press 2006):

Princess Bernice Pauahi Bishop was the largest landowner and richest woman in the Hawaiian kingdom. Upon her death in 1884, she entrusted her property--known as Bishop Estate--to five trustees in order to create and maintain an institution that would benefit the children of Hawai‘i: Kamehameha Schools. A century later, Bishop Estate controlled nearly one out of every nine acres in the state, a concentration of private land ownership rarely seen anywhere in the world. Then in August 1997 the unthinkable happened: Four revered kupuna (native Hawaiian elders) and a professor of trust-law publicly charged Bishop Estate trustees with gross incompetence and massive trust abuse. Entitled “Broken Trust,” the statement provided devastating details of rigged appointments, violated trusts, cynical manipulation of the trust’s beneficiaries, and the shameful involvement of many of Hawai‘i’s powerful.

This book brings to light information that has never before been made public, including accounts of secret meetings involving Supreme Court justices, and ways the judiciary avoided a public airing of its dirty laundry. "Broken Trust" also throws a spotlight on the legislature, the legal profession, the native Hawaiian community, and the media, showing how each functioned-or failed to function-during the two-year crisis and its aftermath. This book offers readers the opportunity to reexamine fundamental questions about unchecked power and civic responsibility that resonate far beyond the shores of America's 50th State.

WSJ: IRS Says New Rules Will Tighten Restrictions on Disclosure of Taxpayer Information

Interesting article in the Weekend Wall Street Journal:  IRS Claims Rule Changes Tighten Data Disclosure, by Robert Guy Matthews:

The IRS, responding to critics accusing the agency of loosening rules to let tax preparers disclose and sell taxpayer information, said proposed changes would actually tighten a 1974 law that has always allowed such disclosure. "There has been a mischaracterization," IRS Commissioner Mark Everson said Friday. "Clearly, our intention here is to tighten standards and not loosen. Our concerns in this came out of the fact that people were unaware that their returns were being prepared overseas."

Amid rising complaints about tax preparation being outsourced overseas, the IRS proposed revising its rules to make it clearer to consumers how tax preparers use their information. Taxpayer disclosure and use rules, a complicated tangle of regulations on how tax preparers can use private information, have allowed limited cross-marketing, such as providing taxpayer information to affiliated mortgage companies, financial-services firms and others. But taxpayers must give their consent. That requirement often is buried in small print and goes unnoticed.

Treasury & IRS Seek Public Comment on 2006-2007 Guidance Priority List

The Treasury Department and IRS have issued Notice 2006-36, inviting public comment on recommendations for items that should be included on the 2006-2007 Guidance Priority List:

Treasury's Office of Tax Policy and the Service use the Guidance Priority List each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance. The 2006-2007 Guidance Priority List will establish the guidance that the Treasury Department and the Service intend to issue from July 1, 2006, through June 30, 2007. The Treasury Department and the Service recognize the importance of public input to formulate a Guidance Priority List that focuses resources on guidance items that are most important to taxpayers and tax administration....

In reviewing recommendations and selecting projects for inclusion on the 2006-2007 Guidance Priority List, the Treasury Department and the Service will consider the following:

1. Whether the recommended guidance resolves significant issues relevant to many taxpayers
2. Whether the recommended guidance promotes sound tax administration
3. Whether the recommended guidance can be drafted in a manner that will enable taxpayers to easily understand and apply the guidance
4. Whether the Service can administer the recommended guidance on a uniform basis
5. Whether the recommended guidance reduces controversy and lessens the burden on taxpayers or the Service

Recommendations must be submitted by May 15, 2006 to be included in the original 2006-2007 Guidance Priority List.

TV Ad Campain Against the Estate Tax

The Free Enterprise Fund has launched a $3.7 million TV ad campaign to “Put the Nail in the Coffin -- Bury the Death Tax: Immediately. Permanently, Completely."  To watch the TV ad -- and the memorable line "End Taxation Without Respiration" -- click here.

NY Sun: Did Columbia Hire Faculty Member as Payoff for Help to President Bollinger in Affirmative Action Case?

Interesting article in Friday's New York Sun:  Bollinger on the Spot, by Curt A. Levey:

Columbia University and its president, Lee Bollinger, have some explaining to do. The university recently announced that its law school had awarded a coveted faculty position to Olatunde "Olati" Johnson, a woman with a scandal-plagued connection to Mr. Bollinger.

Ms. Johnson played a central role in the two-year-old Senate scandal known as Memogate, which involved, most notoriously, her recommendation that the judicial confirmation process be rigged to influence the outcome of a pair of pending federal court cases. The cases were the landmark challenges to affirmative action at the University of Michigan, and the defendant was the university's president at the time, Lee Bollinger. That Ms. Johnson should now find herself working under Mr. Bollinger raises questions about a conflict of interest and a possible payoff for services rendered.

(Hat Tip:  JD2B.)

Gregory Germain (Syracuse)

• J.D. 1985, Hastings
• LL.M. (Tax)  2001, Florida

 

 

I enrolled in law school intending to become a tax lawyer. I don’t know why I wanted to be a tax lawyer. I had no experience with the subject. I think it was because I liked money, and thought that tax law had something to do with it. As with many law students, however, circumstances took me in an entirely different direction.

I got a summer job after my first year of law school at the largest bankruptcy law firm in San Francisco. It was 1983, and the bankruptcy system was in a state of shambles. The Supreme Court had recently ruled the entire bankruptcy system unconstitutional because it vested bankruptcy judges, who did not have the Article III guarantees of life tenure or undiminishable salaries, with broad subject matter jurisdiction over matters only related to bankruptcy. Because of the enormous volume of bankruptcy cases (more bankruptcy cases are filed each year than all other federal court cases combined), the Supreme Court took the extraordinary step of staying its ruling several times, allowing the unconstitutional system to continue in the hope that Congress would soon fix the jurisdictional problem. Finally, after Congress repeatedly failed to act, the Supreme Court pulled the plug on the entire system. An emergency rule was slapped together to keep the bankruptcy courts open while more permanent measures could be worked out. It was a very interesting time to be involved in bankruptcy, and I was hooked. I took every commercial law course offered by my law school, and spent part of my third law school year as a judicial extern for the Chief Bankruptcy Judge in San Francisco, Judge Lloyd King, who later became the sole bankruptcy judge in Hawaii. I ended up taking only one tax class in law school, Tax I, from a young professor named Stephen Lind.

Continue reading

Why Are Law Professors So Unhappy?

Tax Prof Michael Livingston (Rutgers-Camden) blogged earlier this month about Why Are Law Professors So Edgy?  The reasons:

A friend of mine has come up with a novel explanation as to why law professors, who would seem to have a pretty privileged life, are so persistently uneasy...

[T]he professorate, according to my friend, is one of the few activities that is (a) very competitive, (b) primarily personal (that is, noncooperative) in nature, and (c) almost entirely devoid of objective standards that might be used to measure success or failure in the activity. Competitive, both because of the kind of people who go into it and the endless run of tenure, promotions, offers at supposedly better institutions or publications, and so forth. Individual, because our teaching and scholarship is with very limited exceptions done alone. But almost entirely subjective, because beyond the sheer volume of articles or citations, no one has ever come close to a rigorous system for evaluating academic performance or even what such a system would try to measure.... .

Like Einstein's theory of relativity, my friend's insight is deceptively simple but has enormous explanatory power. I have often marvelled at how a group of people with nearly 100 percent job security, writing articles that have no discernible impact on the world outside academia, both work so hard and are so obsessively worried about their standing in the pecking order. The answer is provided by the theory: they behave in this manner because they are doomed to compete, without anyone else to share the responsbility, in an activity in which they can never know whether they have succeeded or even what succeeding might mean. Like musicians singing to an empty hall, or athletes playing in an abandoned stadium, they have only themselves and a few ephemeral signposts--a good law review cover, a visit at a nominally "prestige" law school, what have you--to signal that they are advancing in their quest. It is a bitter fate indeed, although presumably someone has to do it.

Dave Hoffman (Temple) responds in Making Law Professors Happy:  "This makes the world I live in look quite grim, and I don't know that I buy the descriptive claim. Are professors any more unhappy than doctors, accountants, GM workers, or real lawyers? I doubt it.."

Text of Faux IRS Tax Refund Phishing Scam Email

I finally received one of those scam emails promising a tax refund for clicking on a faux IRS web site:

Date: Sat, 25 Mar 2006 18:37:59 +0800
To: paul.caron-at-uc.edu
Subject: receive a tax refund of $63.80
From: Internal Revenue Service service-at-IRS.Gov

After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $63.80. Please submit the tax refund request and allow us 6-9 days in order to process it.

A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.

To access the form for your tax refund, please click here.

Regards,

Internal Revenue Service

McCaffery & Baron on Thinking About Tax

Edward J. McCaffery (USC) & Jonathan Baron (University of Pennsylvania, Department of Psychology) have published Thinking About Tax, 12 Psychology, Public Policy, and Law 106 (Feb. 2006).  Here is the abstract:

This article reports the findings of several experiments about perceptions of various aspects of tax-law design. The authors find that people are vulnerable to a wide range of heuristics and biases in evaluating public finance systems, leading to inconsistent judgments and evaluations. These errors in judgment are specific instances of a more general isolation effect, whereby people respond quickly to a decision or choice set, focusing on salient aspects while ignoring or underusing logically relevant information that is not immediately before them. In tax and public finance, this tendency to make decisions as if with blinders on is problematic. As a result of it, skillful politicians can manipulate public opinion, and tax system design can be volatile on account of the possibility of eliciting preference reversals through purely formal rhetorical means. More troubling, the findings suggest a likely and persistent wedge between observed and optimal public finance.

SOI Releases 2004 Gift Tax Returns

The Statistics of Income Division has released Tax Stats Dispatch 2006-08: 2004 Gift Tax Returns:

A table showing data from Gift Tax Returns filed in 2004 is now available. This table, among other items, shows total gifts of the donors, deductions, credits, and the net gift tax. The data are classified by tax status and by size of the gifts.

For other gift tax statistics, see here.

Barbara Bush's Hurricane Donation Earmarked for Son's Business

Associated Press: Hurricane Donation Earmarked for Bush Firm:

Former first lady Barbara Bush gave relief money to a hurricane relief fund on the condition that it be spent to buy educational software from her son Neil's company. The chief of staff of former President George H.W. Bush would not disclose the amount earmarked for purchases from Ignite Learning.

Houston Chronicle:  Katrina Donation Ignites Debate; HISD Says Focus on Neil Bush's Software Didn't Violate Policy:

As Barbara Bush spent two hours championing her son's software company at a Houston middle school Thursday morning, a watchdog group questioned whether the former first lady should be allowed to channel a donation to Neil Bush's Ignite Learning company through Houston's Hurricane Katrina relief fund.

"It's strange that the former first lady would want to do this. If her son's having a rough time of it, couldn't she write him a check?" said Daniel Borochoff, founder of the American Institute of Philanthropy, a Chicago-based charity watchdog group. "Maybe she isn't aware that people could frown upon this."

Some critics said donations to a tax-deductible charitable fund shouldn't benefit the Bush family.

What Are Law Review Articles Editors Looking For?

As the window is closing on the semi-annual law review article submission season, a reader passed along  an overview of the results of a survey of the article selection processes at more than 150 law reviews conducted in 2005-06 by Jason Nace and Dylan Steinberg, Articles Editors of the University of Pennsylvania Law Review. The authors plan to publish the results in an article next year.  Among the many interesting results are:

Strongest positive influences in article selection process -- author:

1. Author is highly influential in her respective field
2. Author has published frequently in highly ranked law reviews
3. Author is employed at a highly ranked law school
4. Author has a large number of previous publications
5. Author has practice experience related to the manuscript submitted

Strongest negative influences in article selection process -- author:

1. Author is a student
2. Author does not have a law degree
3. Author has no previous publications
4. Author received her law degree from a poorly ranked law school
5. Author is employed at a poorly ranked law school

How frequently do you ask a faculty member to read the article before extending an offer of publication?

• Always:  7%
• Occasionally:  44%
• Never:  49%

Payne Reviews State Aid and the Pursuit of Educational Equity

A. Abigail Payne (McMaster University) has published a Review of Helping Children Left Behind: State Aid and the Pursuit of Educational Equity (MIT Press 2005) (John Yinger, ed.), 58 Nat'l Tax J. 843 (Dec. 2005).  Here is the abstract:

The editor of the book, John Yinger, has assembled an interesting group of authors to survey the issues around state aid reform and to analyze the reforms in specific states. The book is a good reference work from two perspectives. First, it provides a good overview of state aid financing schemes and of the issues one should consider when constructing or studying the effects of a state aid finance plan. Second, it provides a nice set of within–state analyses of specific reforms. The book, however, is not exhaustive in its review of the existing literature, nor does it address specific empirical analyses and the issues associated with these analyses. Any reader of this book should use it as a stepping stone for understanding the various issues associated with state education finance.

Secretary of Education to Review Accreditation Standards

The Secretary of Education’s Commission on the Future of Higher Education has released a Discussion Paper on Assuring Quality in Higher Education: Key Issues and Questions for Changing Accreditation in United States.  Here is part of the Introduction:

There has been growing criticism of higher education and the accreditation system and a growing debate over how to change accreditation. This growing debate centers around three major sets of questions and issues:

• Assuring Performance. How can the accreditation system be held more accountable for assuring performance, including student-learning outcomes, in accrediting institutions and programs?
• Open Standards and Processes. How can accreditation standards and processes be changed to be more open to and supportive of innovation and diversity in higher education including new types of educational institutions and new approaches for providing educational services such as distance learning?
• Consistency and Transparency. How can accreditation standards and processes be made more consistent to support greater transparency and greater opportunities for credit transfer between accredited institutions?

While the accreditation system has taken steps in recent years to address these issues, after almost twenty years of dialogue and debate, there is still no clear consensus on how to change accreditation to respond to these new demands.

Given the critical role of accreditation in assuring quality in higher education and providing a gateway to federal and state funding, the Secretary of Education’s Commission on the Future of Higher Education will, as part of its national dialogue, review the current system of accreditation and seek input from the accreditation community and other higher education stakeholders on how to change accreditation.

The purpose of this paper is to provide a basic understanding of the current system and propose the key issues and questions for use in this dialogue.

(Hat Tip:  Inside Higher Ed.)

WSJ on Lawyers and Blogging

Interesting article in today's Wall Street Journal: After (Billable) Hours: Lawyers Hoping to Escape Drudgery Trade One Form of Verbiage for Another, by Cameron Stracher:

The recent disclosure (by the New York Observer) that the anonymous legal blogger Opinionista is 27-year-old former law-firm associate Melissa Lafsky--following the recent disclosures (by The New Yorker and the New York Times) that former prosecutor David Lat was the voice behind the blog Underneath their Robes and that former Harvard law student Jeremy Blachman penned the blog Anonymous Lawyer--raises a question. Are all lawyers secret bloggers, frustrated writers or both? More important, should they keep their day jobs?

Lawyers and blogging go together like witches and stoning. According to a survey conducted by blogads.com, lawyers ranked fourth among both readers and posters to blogs. Many of the best-known blogs, such as instaPundit.com, are run by lawyers. It's easy to understand why blogging attracts the J.D. set: Few professions combine as much creative talent with so much mind-numbing work.

Each year thousands of otherwise perfectly normal college graduates with perfectly worthless degrees in the humanities venture into law school in the hope of landing a paying job that requires no science and little math. Many have been encouraged by college counselors who have told them that law school will "keep their options open"--code for delaying the inevitable for another three years--and it pays better than academia.

Law schools feed this myth because they need paying customers, even as the members of their own faculty are refugees from the very firms to which they are sending their students. Upon graduation, however, many students find that the entry-level jobs they get are little more than glorified secretarial positions. Sure, they pay well, but how many paper clips can you remove from a stack of documents before you start questioning your entire existence?

Canadian Anti-Tax Evasion TV Ad

Check out the hilarious spoof of the Canada Revenue Agency's anti-tax evasion TV ad "Hand In My Pocket" by Rick Mercer (the Jon Stewart of Canada):  Knee In My Pocket. (To watch the ad, click on "Video: Hand In My Pocket Spoof Ad" under "Week of March 14, 2006" in "Archives for Season 3.") (Hat Tip:  Jon Davis.) 

 

Center for American Progress Hosts Conference Today on Options for Tax Reform

The Center for American Progress is hosting a conference today on Options for Tax Reform in Washington, D.C.  Here are the speakers and their topics:

Panel I: Comprehensive Reform (9:05 a.m. - 10:45 a.m.)

• Speakers:
  • Chaka Fattahtah (U.S. Representative, Second Congressional District, Pennsylvania)
  • John Irons (Director of Tax and Budget Policy, Center for American Progress)
  • Maya MacGuineas (Director, Fiscal Policy Program, The New America Foundation)
  • Van Doorn Oooms (Senior Fellow, Committee for Economic Development)
  • Paul Weinstein Jr. (Chief Operating Officer, Progressive Policy Institute)
• Discussant:
  • William Gale (Arjay and Frances Fearing Miller Chair in Federal Economic Policy and Deputy Director of the Economic Studies Program, Brookings Institution)

Panel II: Education and Marriage (10:45 a.m. - 11:45 a.m.)

• Speakers:
  • Susan M. Dynarski (Associate Professor of Public Policy, Harvard University and Faculty Research Fellow, NBER)
  • Jeffrey Liebman (Professor of Public Policy, Harvard's Kennedy School of Government)
• Discussants:
  • Alan J. Auerbach (Director, Robert D. Burch Center for Tax Policy and Public Finance, University of California, Berkeley)
  • Austan Goolsbee (Robert P. Gwinn Professor of Economics, University of Chicago, Graduate School of Business)

Luncheon Panel: Future of Tax Reform - Overhaul or Incremental Change? (12:00 p.m. - 1:45 p.m.)

• Elizabeth Garrett (Vice Provost of Academic Affairs, University of Southern California and Member, President Bush's Advisory Panel on Federal Tax Reform)
• Peter R. Orszag (Senior Fellow, Brookings Institution)
• Gene B. Sperling (Senior Fellow, Center for American Progress)
• Jon Talisman (Founding Partner of Capitol Tax Partners)
• John Podesta - Moderator (President & CEO, Center for American Progress)

Panel III:  Rewarding and Encouraging Work, Supporting Parents, International Taxation (1:45 p.m. - 3:15 p.m.)

• Speakers:
  • Anne Alstott (Jacquin D. Bierman Professor of Taxation, Yale Law School)
  • Jason Furman (Senior Fellow, Center on Budget and Policy Priorities and Visiting Scholar at New York University’s Wagner School)
  • James Kvaal (Harvard University)
• Discussants:
  • Jonathan Gruber (Professor of Economics, Massachusetts Institute of Technology)
  • Daniel Halperin (Stanley S. Surrey Professor, Harvard Law School)
  • Robert Gordon (Senior Vice President for Economic Policy, Center for American Progress)

The conference will be held at the Center for American Progress, 1333 H Street N.W., 10th Floor, Washington, D.C.

Livingston on "Diversity," the ABA, and the Law Schools

Tax Prof Michael Livingston (Rutgers-Camden) offers his views on "Diversity," the ABA, and the Law Schools:

The ABA issue has attracted attention because it involves such a clear-cut, bald-faced interference in the operation of American law schools. But it is only the latest example of the damage done to law faculties by diversity programs: damage which, I think, has less to do with the candidates themselves than with the process that produces and nurtures them. Broadly speaking, these problems divide into three categories. (I will speak here largely of diversity hiring of faculty, although essentially the same issues apply to the student variety.)

The first problem relates to the organization of the hiring (admissions) process....

The second problem concerns the internal operation of the law school that hires on the basis of diversity criteria....

This leads to the third and in my view most significant problem with diversity programs: their effect on civility and free speech at the relevant institution....

Will the incipient rebellion against the ABA and AALS quell the ardor for diversity programs? I suspect not. The advocates of diversity find themselves today in more or less the same position as the advocates of segregation in the 1960s: they represent an ideology that one suspects even they realize is discredited, but pedal all the more furiously to keep it moving forward. Like the White Citizens Councils of the Civil Rights era, the ABA and AALS are attempting to intimidate the law schools into behavior that, if not actively illegal, is plainly defiant of the will of the courts and the emerging national majority. Sooner of later, they will fail. But old ideas and old professors die hard, and it won't be over anytime soon.

IRS Invites Taxpayers to Apply for Panel Membership

The IRS yesterday invited taxpayers to apply for membership on the Taxpayer Advisory Panel:

The IRS invites civic-minded individuals to help improve the nation’s tax agency by applying to be members of the Taxpayer Advocacy Panel. The panel provides a forum for citizens from each state to make suggestions regarding IRS decision making.

Taxpayer Advocacy Panel (TAP) members:

• Provide opportunities for citizen input and make recommendations to the IRS and Treasury on customer-service issues.
• Identify and prioritize taxpayer issues.
• Report annually to Treasury, the IRS and the National Taxpayer Advocate.
• Participate in meetings where taxpayers are invited to raise issues about their experiences with the IRS.
• Refer taxpayers who contact the panels to the IRS offices best able to address their issues.

The deadline to apply is April 28, 2006.  For a list of the current members, see here.  For further details, see:

• IR-2006-48
• JS-4135
• On-Line Application

Hines on Corporate Taxation and International Competition

James R. Hines Jr. (University of Michigan, Stephen M. Ross School of Business) has posted Corporate Taxation and International Competition on SSRN.  Here is the abstract:

Countries around the world continue to tax corporate income at significant rates despite downward pressures from international competition. Average statutory corporate income tax rates fell from 46 percent in 1982 to 33 percent in 1999, though tax bases simultaneously broadened, as a result of which average corporate tax collections actually rose from 2.1 percent of GDP in 1982 to 2.4 percent of GDP in 1999. Two pieces of evidence point to the possibility that mobile capital has received favorable tax treatment in recent years as a result of tax competition. The first is the experience of American multinational firms, whose average effective foreign tax rates fell from 43 percent in 1982 to 26 percent in 1999. The second is the cross-sectional pattern of tax rate-setting: small countries, facing elastic supplies of world capital, taxed corporate income at significantly lower rates than did larger countries in 1982. Corporate tax rates in 1999 did not substantially differ between small and large countries, implying that large countries set their tax rates in response to the same competitive pressures that small countries have always faced.

Cronin Named New UC Men's Basketball Coach

Whirlwind day for my beloved UC men's basketball team:

• Former coach Bob Huggins signed a 5-year deal to coach Kansas State.
• The NCAA declared two senior star players (James White and Jihad Muhammad) academically ineligble before tonight's NIT quarterfinal game.
• The depleted Bearcats lost 65-62 to South Carolina.
• Former UC assistant coach and current Murray State head coach Mick Cronin was named by UC to replace Interim Coach Andy Kennedy.
• Andy Kennedy was named head coach at Mississippi.

Peroni Presents Exploring the Contours of a Proposed U.S. Exemption (Territorial Tax System) Today at UCLA

Robert J. Peroni (Texas) presents Exploring the Contours of a Proposed U.S. Exemption (Territorial Tax System), 109 Tax Notes 1557 (Dec. 19, 2005) (with J. Clifton Fleming, Jr.), at UCLA today as part of its Tax Policy and Public Finance Workshop Series, moderated by Eric Zolt & Victor Fleischer.  Here is the abstract:

The Presidential Advisory Panel on Federal Tax Reform and the Joint Committee on Taxation staff have recently advanced similar proposals for a U.S. exemption system regarding particular foreign-source income of particular U.S. corporate taxpayers. According to the authors, both proposals are well meaning but ultimately flawed and unsuccessful attempts to simplify the U.S. international tax rules. The proposals, if enacted, would do little to provide simplification for most taxpayers and would intensify some existing complexities in existing law while adding new complexities of their own. Moreover, the new ownership neutrality defense of those exemption plans is largely capital import neutrality under a new label but with all the old defects. Thus, the authors conclude, it is not surprising that the proposed exemption systems would exacerbate the economic distortions caused by the current U.S. tax rules and that the reform panel's exemption proposal would largely continue the economic bias resulting from the deferral privilege. Further, the authors say that if fundamental international tax reform is to be accomplished, the Bush administration and Congress should consider replacing the present, largely ineffective, antideferral rules with a passthrough system for foreign corporations owned by U.S. persons that ends deferral completely for those shareholders. That approach would simplify the U.S. international tax system and substantially improve its economic efficiency and fairness.

Jackson Presents The Structure of Federal Spending Today at NYU

Howell Jackson (Harvard) presents Counting the Ways: The Structure of Federal Spending 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 Introduction:

As this conference volume aspires to be inter-disciplinary, let me declare at the outset the disciplinary boundary I propose to straddle: Budget Policy and Accounting. In the realm of budget policy, numbers are important. The size of the deficit, the level of public debt, and a handful of ratios, all have great political salience in budgeting decisions. When the CBO issues a report or the President unveils his annual budget proposal, these actions are immediately evaluated by reference to key budgetary measures. These measures are based on particular accounting principles, most of which were developed decades ago with minor adjustments over time. Accounting principles are not, however, immutable. Other principles apply in other jurisdictions and indeed different principles are applied in assembling the Financial Reports of the U.S. Government, to which neither the general public nor budget experts pay much attention. The question I explore in this paper is whether we should consider moving towards different methods of accounting to in form public debate over federal budget policy.

The structure of my analysis is straightforward. First, I review the key measures of fiscal performance that currently frame federal budget policy, examining both the content of these measures themselves and the principal reasons why these measures are thought to be relevant to public understanding of fiscal matters. I then identify several aspects of our federal government’s fiscal affairs that are not captured in these standard measures. Most of the areas I discuss are currently reported in the Financial Reports of the U.S. Government, though some appear only as supplementary materials and not in the principal statements of financial condition. In many cases, the information omitted for our traditional budgetary aggregates is material, and its omission compromises the integrity of public debate over fiscal decisions. I conclude with some preliminary thoughts about the implications of my critique of traditional budgetary measures and then suggest a general framework that should inform the rules of accounting for federal budget policy.

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.

Parry Reviews Theory and Practice of Excise Taxation

Ian W.H. Parry (Resources for the Future) has published a Review of Theory and Practice of Excise Taxation: Smoking, Drinking, Gambling, Polluting, and Driving (Oxford University Press, 2005) (Sijbren Cnossen, Ed.), 58 Nat'l Tax J. 837 (Dec. 2005).  Here is the abstract:

This book provides an interesting collection of essays from leading experts on a diverse range of topics related to excise taxation, including the taxation of tobacco, alcohol, gambling, pollution, solid waste, and road use, as well as various practical issues in tax design. In short, while this book provides highly useful background material on existing taxes across different countries and prior relevant literature, there is plenty of challenging research still to be done on various economic aspects of excise taxes and their alternatives.

Faculty Plagiarism Rocks Chinese Universities

Interesting story from Knight-Ridder:  In China, Faculty Plagiarism a "National Scandal," by Tim Johnson:

Charges of plagiarism roil China's universities, but they're not about students cheating. They're about professors who filch from one another. Some professors pilfer the work of other scholars. Some employ teams of graduate students and publish large numbers of articles with their names on the students' work. Among those implicated in recent scandals are a star legal scholar, a biomedical researcher and a journalism ethics teacher. The cases, exposed in the Chinese press, have people talking....

Universities adopt a lax review policy, partly because many administrators value a faculty that publishes widely. Some administrators are themselves accused plagiarists. "They don't care if your research results are your own. They just want to see results," Choi said. Some senior Chinese scholars produce so many articles each year that the output would defy credibility in the West. Graduate students make it possible in many cases.

WSJ: Beltway Tax Windfall

Interesting editorial in today's Wall Street Journal:  Beltway Windfall:

The next time some Washington potentate moans about the budget deficit, tell him not to blame the taxpayers. They're already doing their part to reduce it, as the latest Treasury figures on booming federal tax revenue show.

In the first five months of Fiscal 2006, through February, overall revenue continued to surge, growing at an overall rate of 10.3%, or an $81 billion increase from the year ago period, to $871 billion. That builds on the astonishing 15%, or $274 billion, revenue increase for all of 2005, which various fiscal wisemen assured us would fall off dramatically. Apparently not.

This year's double-digit increase is roughly triple the rate of inflation, reflecting strong gains in business profits and individual wages and bonuses -- both signs of a vibrant underlying economy. Corporate income taxes are up 30% so far this year, while individual income tax payments have climbed by 10.3% through February....

As for taxes, the revenue data are further proof of the success of the Bush tax cuts of 2003. The fastest way to stop this revenue windfall, and blow an even larger hole in the deficit, would be to fail to extend the 15% tax rate on capital gains and dividends through 2010, thus assuring a huge tax increase after 2008. The fear of such a tax hike is already weighing on investors and stock-market valuations. So what are GOP House-Senate tax conferees waiting for?

NY Cannot Tax Law Firm Income Received by Retired Tax Partner Living in Florida

Interesting article in today's New York Law Journal on the case of Matter of McDermott, No. 820099 (N.Y. Div. of Tax Appeals, 2/2/06), holding that New York State cannot tax the share of law firm income received by a retired New York City tax partner now living in Florida.  The case has nationwide implications, as it applies the limitation in 4 U.S.C. § 114 on state income taxation of pension income.

The article is Ruling Forecloses State Taxes on Ex-Partner's Profits; Decision Could Have Broad Implications for Professionals Whose Retirement Income Is Hedged to Partnership's Future Profits, by John Caher:

A retired Coudert Brothers partner living in Florida has convinced an administrative law judge that New York state has no right to collect personal income tax on the retirement monies he receives from firm profits.

John E. McDermott's pro se case before the state Division of Tax Appeals has potentially broad implications for retired lawyers, doctors and other professionals whose retirement income is hedged to the future profits of a partnership.

The ruling established for the first time in New York, and perhaps the first time anywhere, that a 1996 federal law barring state taxation of retirement income paid to nonresidents applies not only to accounts set aside for retirees but also to those linked to partnership profitability. The state has yet to determined whether to appeal the determination, which, ultimately, rests on federal law....

McDermott, now 74, joined Coudert Brothers as a tax associate in 1965 and became a general partner five years later. After 33 years with the firm, McDermott, who resided in Connecticut for virtually all of his working years, retired at the end of 1997.

Weisbach on The Case for a Consumption Tax

David A. Weisbach (Chicago) has published Claims of Right:  The Case for a Consumption Tax, 110 Tax Notes 1357 (Mar. 20, 2006), also available on the Tax Analysts web site as Doc 2006-4988, 2006 TNT 54-30:

The debate over the choice between income and consumption taxation has been ongoing since the beginning of the modern economy, seemingly without end. Those who argue for an income tax usually claim that taxing capital income is central to a fair tax system because those with capital income appear to have a higher ability to pay. Moreover, reducing taxes on investment income would seem to reduce the progressivity of our tax system, a result that is particularly worrisome at a time of growing inequality.

I will show here, through a simple example, that those arguments are wrong. They miss a basic point: A tax on investment income is implicitly a tax on labor earnings because it reduces the amount that can eventually be purchased with those earnings. By replacing that implicit tax on earnings with an equivalent explicit tax, such as a consumption tax, we can make everyone better off.1 Equally progressive consumption taxes that raise the same revenue as an income tax would have the same effect on incentives to work but would not distort savings decisions. They retain progressivity but are more efficient. Indeed, because the tax system would be more efficient, we could actually increase its progressivity. That should be a tantalizing prospect for those concerned about progressivity and the poor -- those who paradoxically seem to most favor taxing investment income.

NYSBA Tax Section Submits Letters and Reports to Federal and State Tax Officials

The New York State Bar Association Tax Section has submitted several letters and reports to federal and state tax officials on a variety of tax issues:

• Liability of Partners for Unpaid NYS Sales Taxes of LLCs (No. 1106)
  • Letter (3/17/06)
  • Report (18 pages)
• Proposed NYS Corporate Partner Regulations (No. 1105)
  • Letter (3/2/06)
  • Report (25 pages)
• Proposed Regulations Under Section 409A (No. 1104)
  • Letter (2/27/06)
  • Report (42 pages)

My Life. My Card. My Income.

The Tax Court today decided Martins v. Commissioner, T.C. Summary Opinion 2006-43 (3/22/06), which explains the tax consequences of failing to pay off credit card debts.  Mr. Martins was unable to pay the $21,800 he owed to American Express, which hired a collection agency to help it collect payment.  Mr. Martins eventually paid $15,000, and American Express released him from the remaining $6,800.  Result:  $6,800 of discharge of indebtedness income under section 61(a)(12).

IRS Web Site Soars in Customer Satisfaction Ranking

The IRS's redsigned web site has soared in the the University of Michigan's latest American Customer Satisfaction Index:  e-Government Satisfaction Index:

One example of a site that is listening to the voice of its customers is the Internal revenue Service’s redesigned public website, www.irs.gov, which relaunched in November 2005 based on analysis of online customer satisfaction data. Since last quarter, the IRS’ score has increased an impressive five points (7.4%) to a score of 73.

The IRS faces challenges on several fronts with its website. First, the site must make it easy for citizens to sort through huge quantities of forms, instructions and other information to find what they need. Second, for many people, dealing with taxes is not a favored activity so citizens tend to rate satisfaction lower.

Guided by information gathered through customer satisfaction analysis and confirmed in usability testing, irs.gov set about to make a number of critical changes to its site. The changes focused primarily in search and navigation and included adding a “most requested forms” section and relocating the top navigation bar to position customer roles and make the site more intuitive to use. The IRS also added an “I need to…” pull-down menu to enable users to quickly navigate to information on the task they are trying to accomplish and linked search results for forms and instructions so that a user gets both when typing in a particular name or number, among other changes. A new portal interface enabled the IRS to launch a new portlet to provide “Most Requested Forms and Publications” based on actual usage. The new design also has front page space for promoting electronic tools, services and products to customers to make fulfilling their tax obligation easier.

The five-point increase in citizen satisfaction is especially significant considering that the final months leading up to the mid-April tax filing deadline brings a large influx of visitors, many of whom are coming to the site for the first time. The fact that the IRS has been able to increase satisfaction scores to such a great extent before the final stage of tax season is testament to the effectiveness of making site enhancements driven by citizens’ feedback.

Also impressive is how favorably satisfaction with the IRS’ website compares to satisfaction with the IRS overall. The ACSI score for “all individual taxpayers” is 64, which is 14% lower than this quarter’s website score for the IRS. Clearly, the IRS’ web channel is doing a significantly better job of serving citizens from the customer perspective. This performance gap will help migrate citizens to the online channel where they can gather information and conduct business more conveniently, consistently and more cost-effectively.

Even more impressive, irs.gov outperforms the cellular phone industry aggregate (69), the cable and satellite TV industry aggregate (61), and the airline industry aggregate (66) ACSI-measured customer satisfaction scores.

For media coverage, see the Washington Post, IRS Web Site Gets High Marks Just in Time for Tax Season

Kaplan Reviews Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth

Richard L. Kaplan (Illinois) has published a Review of Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth (Princeton University Press, 2005) (by Michael J. Graetz & Ian Shapiro), 58 Nat'l Tax J. 831 (Dec. 2005).  Here is the abstract:

Instead of rehashing the tired arguments about whether or not the estate tax should exist, these scholars undertook an incredible series of high–level interviews with the leading actors involved in this critical debate. The result is an easily accessible but highly insightful examination of the tax climate in early 21st century America. It is a book with harrowing implications for Social Security and for the role of government more generally. At bottom, it is an indispensable guide to the realpolitik of modern tax policy and should be required reading for any analyst who hopes to understand the current lay of the political land.

Center for American Progress Proposes Open Source Tax Credit

The Center for American Progress has published An Open Source Tax Credit: Proposal and Economic Analysis, by John Irons & Carl Malamud.  Here is the executive summary:

An open source tax credit is proposed which would allow individuals who develop open source software to receive a tax credit worth 20 percent of their out-of-pocket costs. Corporations and self-employed individuals may already take a deduction for their development expenses for both open source and proprietary commercial software. The open source tax credit provides a similar incentive for individuals who currently have no means to deduct these expenses.

Subsidizing open source software development can also be justified on grounds of economic efficiency. Open source software development enhances the ability of other developers to create new products. It also enhances the development and dissemination of knowledge and ideas more broadly. Since the benefits to the broader software development community and the economy as a whole go well beyond the users of an individual software product, a policy that subsidizes open source development would increase economic efficiency.

Federal Court Tax Case Data

The Administrative Office of the U.S. Courts has released 2005 Judicial Business of the United States Courts.  Among the tax data contained in the reports are:

Number of tax cases in U.S. District Courts continue to increase (from Table C-2A Cases Commenced, by Nature of Suit, 2001 Through 2005):

• 2005:  1,385
• 2004:  1,314
• 2003:  1,244
• 2002:  1,151
• 2001:  1,020

Number of appeals commenced and terminated in 2005 in tax cases from U.S, District Courts to U.S. Courts of Appeals (2005) (from Table B-7 Nature of Suit or Offense in Cases Arising From the U.S. District Courts, by Circuit ) :

• Total:  317 commenced, 288 terminated
• Civil:  202 commenced, 168 terminated
• Criminal:  115 commenced, 120 terminated

Fleischer Named Editor of New Entrepreneurship & Law Journal

Kudos to Vic Fleischer (UCLA, moving to Colorado), who will be the editor of the new Entrepreneurship & Law Journal on SSRN.  The journal is sponsored by the Kauffman Foundation.  Vic describes the new journal:

As you would expect, the journal will publish working papers and accepted papers that touch on entrepreneurship & the law, broadly conceived. So we won't just look at regulation and intellectual property law (though plenty of that, don't worry) ... but also contract design, incentives, and all the stuff that substitutes or complements enforcement in the courts, like reputation. I'm also hoping to pick up papers that talk about the ways that law is affected by network theory, diffusion of innovations, social entrepreneurship, social responsibility, and all that good stuff.

So ... when you submit your next paper on SSRN, please be sure to check out the ERPN (Entrepreneurship Research Paper Network) and check the Entrepreneurship & Law box if your paper fits. I'm hoping that the network will have a large audience of finance and B-school scholars as well as law profs. I will plug interesting papers here on the Glom as time permits.

Law Prof Under Fire for Banning Laptops in Class

Interesting Associated Press article about Law Prof June Entman (Memphis): Law Professor Bans Laptops in Class, Over Student Protest:

A group of University of Memphis law students are passing a petition against a professor who banned laptop computers from her classroom because she considers them a distraction in lectures.

On March 6, Professor June Entman warned her first-year law students by e-mail to bring pens and paper to take notes in class. "My main concern was they were focusing on trying to transcribe every word that was I saying, rather than thinking and analyzing," Entman said Monday. "The computers interfere with making eye contact. You've got this picket fence between you and the students."

The move didn't sit well with the students, who have begun collecting signatures against the move and tried to file a complaint with the American Bar Association. The complaint, based on an ABA rule for technology at law schools, was dismissed.

Shameless plug:  I wrote about how faculty can use technology to counter the deleterious effect of student laptop use in Taking Back the Law School Classroom: Using Technology to Foster Active Student Learning, 54 J. Legal Educ. 551 (2004) (with Rafael Gely).  (Hat Tip:  Inside Higher Ed.)

Slemrod Presents Taxation and Big Brother: Information, Personalization, and Privacy in 21st Century Tax Policy Today at Toronto

Joel Slemrod (University of Michigan, Ross School of Business) presents Taxation and Big Brother: Information, Personalization, and Privacy in 21st Century Tax Policy at the University of Toronto today at 12:10 pm - 2:00 p.m. as part of the James Hausman Tax Law and Policy Workshop Series.  Here is the abstract:

The transmission and processing of information is at the core of taxation, and one of the great ongoing technological resolutions has been in information technology. Looking forward ten, twenty, or thirty years, what are the implications of technological advancements for tax policy? How will, and how should, tax policy be different twenty years from now than it is today?

This paper argues that, although the new technology greatly facilitates the use of taxpayer information to create a personalized tax system, there are forces pushing the tax system in the opposite direction, toward a radically depersonalized tax system, partly out of concern over the infringement on privacy of the information.

The workshop will be held in the Solarium (Room FA2), Falconer Hall, 84 Queen’s Park.

McMahon on An Income Tax Is Superior to a Wage or Consumption Tax

Martin J. McMahon, Jr. (Florida) has published Claims of Right:  An Income Tax Is Superior to a Wage or Consumption Tax, 110 Tax Notes 1353 (Mar. 20, 2006), also available on the Tax Analysts web site as Doc 2006-4658, 2006 TNT 54-29:

In summary, the case for exempting income from capital from taxation, through either a wage tax or a consumption tax, is based primarily on theoretical economic models that have little predictive value when applied to the real world. Even if those models were correct, shifting to a wage or consumption tax elevates economic efficiency over equity as a paramount criterion of tax policy. Compared with an income tax, either a wage or consumption tax would reduce taxes on those at the top of the economic pyramid and would require increasing the taxes of the relatively less fortunate, with little reason to believe that the before-tax incomes of wage earners will increase by more than their increased taxes. It surely can't be a valid goal of government to increase the welfare of the wealthy few at the expense of the numerous less wealthy.

Roch & Rushton on Social Context and Voting Over Taxes: Evidence from a Referendum in Alabama

Christine Roch (Georgia State University, Department of Economics) & Hael J. Rushton (Georgia State University, Andrew Young School of Policy Studies) have posted Social Context and Voting Over Taxes: Evidence from a Referendum in Alabama on SSRN.  Here is the abstract:

We investigate the relationship between racial diversity and support for redistribution and the financing of public goods. We focus on a 2003 referendum held in Alabama, which if approved would have amended Alabama's Constitution, raising substantial additional revenues for public education and at the same time greatly increasing the progressivity of the tax system. Using King's (1997) method of ecological inference to obtain estimates of white and black support for the referendum proposal, we use a weighted least-squares method suggested by King and find: first, that white support for the referendum was significantly less than black support; second, that white support for the proposal increased with the degree of racial and ethnic diversity by county, although diversity seemed to have only a weak effect on black support; and, third, that diversity remains significant in explaining white support even after accounting for the county's degree of segregation. In addition, we also examine the influence of a county's socio-economic context, finding some evidence of greater support for the referendum by white voters in more educated contexts and that the county's economic environment influenced support among blacks. After controlling for these socio-economic variables, diversity continues to significantly influence support. We explore the robustness of these results using both OLS and an FGLS approach suggested by Lewis and Linzer (2005).

ABA Tax Section Offers Teleconference & Webcast Today on Ethical Considerations for a U.S. Practitioner in Planning for a U.S. Multinational Client

The ABA Tax Section is offering a teleconference and webcast today on Ethical Considerations for a U.S. Practitioner in Planning for a U.S. Multinational Client from 1:00 - 2:30 p.m. EST:

Ethical considerations in representing cross border clients can no longer be ignored by U.S. practitioners: In the U.S., tax plans that result in fraudulent underpayment of foreign taxes may have criminal ramifications under Pasquantino; Overseas, foreign laws may place attorney-client privilege in jeopardy when an investment is financed with the proceeds of crime, including tax evasion; and foreign intermediaries may require extensive client identification under local KYC rules. This expert panel will discuss the U.S. practitioner’s ethical considerations in planning for a U.S. multinational client. Speakers will address rules in the U.S., the U.K., and the offshore community that are designed to promote the interests of government stakeholders in ways that may be contrary to client expectations.

• Joan C. Arnold (Pepper Hamilton, Philadelphia)
• Peter M. Cohen (Trident Trust, Atlanta)
• Richard Palmer (Ashurst, London)
• H. David Rosenbloom (Caplin & Drysdale, Washington, D.C.)
• Stanley C. Ruchelman (The Ruchelman Law Firm, New York) (moderator)

Larry Summers' Half-Eaten Dinner Roll for Sale on eBay

Interesting article in today's Harvard Crimson:  Summers’ Dinner Roll Draws eBay Bids:

Still waiting for Lawrence H. Summers to sign your dollar bill? A more delectable collectible is up for auction on eBay: a dinner roll, half eaten by the University president. Summers purportedly consumed the other half on March 14, when he joined some undergraduates for a meal at the Dunster House faculty dinner. But the busy president had to rush off to another engagement, so he left behind an unfinished dinner—and half of a roll. Seeing an opportunity to procrastinate on his economics thesis, one of the students in attendance, Jonathan P. Hay ’06, listed the bread roll with the online auction giant. “You have a chance to own a roll that has touched the mouth of one of the most influential and compelling figures in America today,” the listing reads. “I bet it even has his saliva on it.”

The eBay listing is here.  Bidding ends tonight at 8:40 p.m. EST.  (Hat Tip:  Chronicle of Higher Education.)

Update:

• The half-eaten roll sold for $12.50.
• eBay's software may be better than I thought:  it tells folks who want to buy a "similar item" to check out a Jimi Hendrix Original 1960s Poster Print.  The connection between Larry Summers and the Jimi Hendrix print?  The artist's name is Larry Smart!

In Praise of Judicial Humility

Interesting article in the National Journal:  In Praise Of Judicial Modesty, by Stuart Taylor:

The bottom line is that nonadherents understandably see originalism and living constitutionalism alike as smoke screens for imposing the justices' personal policy preferences. This is not healthy. How might we avoid the worst excesses of each approach?

The best answer is judicial modesty, in the sense of great hesitation to second-guess decisions by other branches of government. Embraced in general terms by then-Judges John Roberts and Samuel Alito during their Supreme Court confirmation hearings, the judicial-modesty approach is expounded more fully in a November 2005 Harvard Law Review article by Posner, a prolific and ideologically eclectic legal scholar.  [Richard A. Posner, Foreward: A Political Court, 119 Harv. L. Rev. 31 (2005).

I struck similar themes in an op-ed in the National Law Journal, A Need for Judicial Humility:

Judicial humility is neither liberal nor conservative. It recognizes that judges and lawyers hold no monopoly on wisdom; in certain situations, institutions other than courts may be better positioned to resolve a particular issue. Judicial humility manifests itself in a number of ways, including a recognition that not all dumb laws are unconstitutional or need to be rewritten by judges. One mark of a humble judge is that he not infrequently implements laws he neither would have passed (as a legislator) nor enforced (as a bureaucrat) in the first place.

I expanded on these themes in Affirmative Refraction: Grutter v. Bollinger Through the Lens of The Case of the Speluncean Explorers, 21 Const. Comm. 65 (2004):

The Article introduces a novel jurisprudential approach to judicial decision-making ­ what we refer to as a "jurisprudence of humility." Building on the recent work of ideologically diverse scholars, we argue that a jurisprudence of humility recognizes that judges and lawyers hold no monopoly on wisdom and that, in certain situations, institutions other than courts may be better positioned to resolve a particular issue. This jurisprudence of humility construct enables us to draw some rather surprising connections between The Case of the Speluncean Explorers and Grutter and span the gulf in the legal literature between statutory construction and constitutional interpretation.

Raskolnikov Presents Deceit, Deterrence, and the Self-Adjusting Penalty Today at Penn

Alex Raskolnikov (Columbia) presents Crime and Punishment in Taxation: Deceit, Deterrence, and the Self-Adjusting Penalty, 106 Colum. L. Rev. ___ (2006), at Penn today as part of its Tax Policy Workshop Series.  Here is the abstract:

Avoidance and evasion continue to frustrate the government's efforts to collect much needed tax revenues. This article articulates one of the reasons for this lack of success and proposes a new type of penalty that would strengthen tax enforcement while improving efficiency. The economic analysis of deterrence suggests that rational taxpayers choose among various avoidance or evasion strategies that are subject to identical statutory sanctions those that are more difficult for the government to find. I argue that many taxpayers do just that. Because probability of detection varies dramatically among different items on a tax return while nominal penalties do not take likelihood of detection into account, expected penalties for inconspicuous noncompliance are particularly low. Adjusting existing penalties will not solve the problem because what is (and is not) inconspicuous depends on a given tax return and, therefore, is not susceptible to the type of generalization on which the current penalties rely. I propose to complement the existing sanctions with a new penalty equal to a fraction of the legitimate subtraction item (such as a deduction, credit, or loss) reported on the same line of a return that contains the illegitimate one. With this penalty in place, the harder it is for the government to find a given avoidance transaction, the higher is the statutory sanction if the transaction is detected. The proposed penalty adjusts itself. As a result, the differences in expected penalties for many forms of avoidance and, to a lesser extent, evasion are reduced, the inefficient incentive to hide noncompliance is diminished, and the overall deterrence is improved.

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

Dowd on Distinguishing Between Short-Term and Long–Term Recipients of the Earned Income Tax Credit

Timothy Dowd (Joint Committee on Taxation) has published Distinguishing Between Short-Term and Long–Term Recipients of the Earned Income Tax Credit, 58 Nat'l Tax J. 787 (Dec. 2005).  Here is the abstract:

Since its enactment in 1975, the Earned Income Tax Credit (EITC) has evolved from a small program to alleviate some of the tax burden of the payroll and income tax on low–income working parents to become a significant part of the Federal government's redistribution efforts. This paper presents preliminary work from a unique data set and is meant to raise questions as well as present new evidence regarding the EITC. This study examines a panel of taxpayers over 15 years to determine the extent to which the EITC acts as a safety net for workers experiencing temporary income and employment shocks. I find that between 40 and 50 percent of EITC recipients claim the EITC for short periods of time (one to twoyears). Finally, I provide descriptive information about the characteristics of temporary versus more permanent EITC recipients, with a particular focus on the effects of changes in the economy and state welfare policies.

ASA Releases Repatriated Earnings Explode After Tax Cut

The American Shareholders Association has released a report, $217 Billion Repatriated Back to America in 2005; Additional $100 Billion Ready to Come Over in 2006. The report states that corporations have taken advantage of the new favorable tax rate applicable to repatriation of foreign profits to the United States to return $217 billion of foreign profits in 2005, with an additional $100 billion to be repatriated in 2006. These amounts are far in excess of the amounts predicted by the Joint Committee on Taxation prior to the passage of the American Jobs Creation Act of 2004:

Here are some of the study's "key points":

• The Invest in USA Act lowered the tax rate on repatriated profits to a flat rate of 5.25% for one year.
• International Strategy and Investment Group (ISI) research finds 350 companies announced $290 billion of repatriations to date.
• In response to lower tax rates, foreign subsidiaries increased their repatriations six fold from $36 billion in 2004 to $217 billion in 2005.
• Due to the surge in repatriations, companies are flush with cash, which is being used for capital investment, job creation, M&A activity, dividends, and share repurchases.
• The U.S. government will receive $17 billion of corporate tax revenue collections in addition to the less quantifiable, indirect impact of higher income, payroll, and corporate tax collections.

New Jersey Tax Cesspool: School Administrators Feed at Public Trough in State with Nation's Highest Property Taxes

The New Jersey State Commission of Investigation has released a remarkable report:  Taxpayers Beware:  What You Don’t Know Can Cost You -- An Inquiry Into Questionable and Hidden Compensation for Public School Administrators.  According to the press release:

The State Commission of Investigation (SCI) today issued the final report of a systemic investigation into questionable and hidden compensation for public school administrators and called for sweeping reforms to ensure full public disclosure, control and oversight of pay and benefit practices that cost New Jersey taxpayers millions of dollars every year.

Lucrative provisions of privately negotiated deals enable superintendents and others at the top tier of public school administration to receive compensation and benefits often well beyond the reach of any other class of public-service employees. It is not unusual for these arrangements to be structured such that they continue to benefit recipients with costly and, in some cases, irregular pensions and perquisites well into retirement.

The inquiry revealed numerous instances in which the prevailing system enables top school administrators to collect total monetary compensation – some of it obscured from public view – in excess of substantial salaries set forth in contracts. One particularly lucrative source of this added pay is the cashing-in of inordinate amounts of unused sick, vacation and other leave on annual basis and at retirement.

The Commission also found instances in which questionable or patently improper steps have been taken to inflate pensions by padding earnings throughout the course of employment, or in the years immediately preceding retirement, with an assortment of base salary add-ons, including cash stipends, bonuses and redemption of unused leave.

Further, an examination of data on income tax forms raises questions as to whether the full range of perks and payments received by administrators beyond base salaries are properly reported for federal and state tax purposes.

The report is particularly troubling since New Jersey schools are financed primarily through state and local property taxes, which the Tax Foundation reports are the highest in the nation.  Today's Wall Street Journal has a scathing editorial (Jersey School Scam) in response to the report.

WSJ Tax Articles

Several interesting tax articles in today's Wall Street Journal:

• Did a Group Financed by Exxon Prompt IRS to Audit Greenpeace?, a front-page story by Steve Stecklow:

Two and a half years ago, Public Interest Watch, a self-described watchdog of nonprofit groups, wrote to the IRS urging the agency to audit Greenpeace and accusing the environmental group of money laundering and other crimes. Last September, the IRS began a months-long audit of the U.S. arm of Greenpeace, known for steering its boats in the way of whaling ships and oil tankers. This month, Greenpeace says, it received notice from the IRS that the group "continues to qualify for exemption from federal income tax" as a nonprofit entity. Greenpeace says an IRS auditor told it that the PIW letter triggered the audit. The IRS won't say how it decided to audit Greenpeace. What is clear is where PIW has gotten a lot of its funding: Exxon Mobil Corp., the giant oil company that has long been a target of Greenpeace protests. "I believe organizations should be scrutinized and audited, but I just don't believe you should get targeted because ... you're a critic of Exxon Mobil," said John Passacantando, executive director of Greenpeace USA, the U.S. affiliate of Amsterdam-based Greenpeace International.

• In-House Critic Holds IRS Feet to the Fire; Taxpayer Advocate's Mandate Means Cooperation and Clashes With Commissioner, by Robert Guy Matthews:

For nearly three years, Nina Olson tried to get her bosses at the IRS to change an antifraud program that withheld thousands of tax refunds without notifying the suspected scofflaws. Tired of being rebuffed, Ms. Olson, the National Taxpayer Advocate, launched an attack. In January, she released internal IRS documents showing that, in more than 65% of the cases she investigated, the agency ultimately determined the suspicions were unfounded and coughed up the refunds. Faced with the wrath of lawmakers and IRS critics, IRS Commissioner Mark Everson ordered a review of the program and promised to let taxpayers know when their refunds were frozen. "Before going public, I had a lot of sleepless nights," Ms. Olson says now. "I didn't like embarrassing the IRS, but I didn't really have a choice. I had a moment of, 'What's going to happen to me after this comes out?'"

By any standard, Ms. Olson, who is 52 years old, has a tough job. As the taxpayer advocate, one of her tasks is to tell Mr. Everson what he's doing wrong -- and to take action if, in her view, injustices against taxpayers aren't resolved fairly and quickly. It makes for a delicate and sometimes rocky relationship. Generally, the two meet once a month and discuss problems. "It is really just a nutty position," she says. "You get to say to the boss, 'This is good, but...' " Mr. Everson says there's "undoubtedly a certain amount of tension in the relationship." But he adds, "I don't think that there is an undue amount of tension." The IRS has many people looking over its shoulder: the Treasury Department's Inspector General, an oversight board, Congress, and the Government Accountability Office. But only Ms. Olson is the designated "voice" of the taxpayer within the IRS. Congress created the position in 1998, when the IRS was under criticism for being unyielding and heavy-handed with taxpayers. Ms. Olson was appointed in 2001.

• Companies Target Your Tax Refund Authorities Crack Down On Businesses That Advance Customers the Money to Make a Sale, by Jeff D. Opdyke:

A variety of companies are trying to get their hands on your tax refund before you do, and state law-enforcement officials are cracking down on some of the practices. As the April tax-filing deadline approaches, businesses from tax-preparation firms to auto dealerships are offering consumers the opportunity to put their expected refund checks to work weeks before the IRS sends them out -- often by loaning them the expected amount for a high fee. Dozens of retailers, including Olive Garden restaurants and AMC move theaters, have begun offering gift cards in exchange for tax refunds to people who file using TurboTax, the popular tax-preparation software. H&R Block Inc. recently launched savings accounts for customers to channel their tax refunds. And hundreds of car dealerships will prepare your taxes if your refund is applied toward a down payment on a car.

But now, state officials are clamping down on some of these programs, claiming they saddle low and moderate-income families, recent college graduates and others with high fees. Last year about three of every four tax filers received a refund, according to the IRS. Those refunds totaled nearly $218 billion, or about $2,171 per household.

Foundation Press Publishes Administrative Law Stories

Foundation Press has published Administrative Law Stories, edited by Peter L. Strauss (Columbia):

Essay after essay in this fascinating book explores the statutory and historical setting of the cases discussed, rather than mere doctrine, examining in detail lawyers' judgments and tactics. Many use recently revealed papers of Supreme Court Justices to discuss often surprising elements of the decision by the Court. Students can learn a good deal about the handling of these disputes at the administrative level, before they ever get to court -- a perspective essential to understanding the field, but hard to pick up from the reported cases. Attention is paid to the ways in which many of these decisions affected future developments, with primary focus on context and on understanding the ways in which administrative disputes develop, and the roles that lawyers play in developing them.

For the table of contents, see here.  Professors can request a complimentary copy here.

Other titles in the Law Stories Series (for which I serve as Series Editor) are:

• Business Tax Stories (2005), edited by Steven A. Bank (UCLA) & Kirk J. Stark (UCLA) 
• Civil Procedure Stories (2004), edited by Kevin M. Clermont (Cornell)
• Constitutional Law Stories (2004), edited by Michael C. Dorf (Columbia)
• Employment Discrimination Stories (2006), edited by Joel William Friedman (Tulane)
• Environmental Law Stories (2005), edited by Richard J. Lazarus (Georgetown) & Oliver A. Houck (Tulane)
• Immigration Stories (2005), edited by David A. Martin (Virginia) & Peter H. Schuck (Yale)
• Intellectual Property Stories (2005), edited by Jane C. Ginsburg (Columbia) & Rochelle Cooper Dreyfuss (NYU)
• Labor Law Stories (2005), edited by Laura J. Cooper (Minnesota) & Catherine L. Fisk (Duke)
• Legal Ethics Stories (2005), edited by Deborah L. Rhode (Stanford) & David Luban (Georgetown)
• Property Stories (2004), edited by Gerald Korngold (Case Western) & Andrew P. Morriss (Case Western)
• Tax Stories (2003), edited by Paul L. Caron (Cincinnati)
• Torts Stories (2003), edited by Robert L. Rabin (Stanford) & Stephen D. Sugarman (UC-Berkeley)

Gamage Presents What Constitutes a "Tax Cut" or a "Tax Hike"? Today at Texas

David S. Gamage (Texas) presents What Constitutes a "Tax Cut" or a "Tax Hike"? at Texas today as part of its Faculty Colloquia Series.  Here is part of the outline:

This paper proposes the use of revenue intake as the baseline for most state-level income and sales taxes, and possibly for federal taxes as well. I plan to argue for this position on two levels. First, I hope to analyze which baseline better allocates the costs from policy risk and uncertainty. And second, I intend to consider which baseline is most compatible with the principles of representative democracy.

The workshop takes place in the Sheffield Room, Townes Hall 2.111, from 11:30 a.m. - 12:30 p.m.